Practice Financing Part 2: Patient Lending Programs

In our last episode, we featured the first part of our Practice Financing discussion with Chris Panebianco, CMO of Bankers Healthcare Group, on loans and credit cards for physician practices.

This week, we continue our practice financing discussion with a focus on patient lending services.

Your ultimate goal as a healthcare provider is to provide the care that you spent years training to perfect.

However, to provide care to all patients rests upon the presumption that patients will be able to pay for services. In an ideal world, this would be the case. But sometimes, some patients present with an ailment that must be treated regardless of the cost; the challenge comes in mitigating the cost responsibility

In these instances, practices can turn to a financial practice called ‘Patient Lending’. It’s similar to loans, except the parties include the patient, the physician or practice, and another third party.

To learn more about this program and how it can help both physicians and patients, we spoke with Banker’s Healthcare Groups President of Patient Lending, Keith Grubele.

Keith Grubele: What a patient lending program does is it allows patients to have an option—to pay for that-out-of pocket responsibility that in many cases is very affordable for them. So essentially, we provide a specialized financing tool for the patient to be able to afford that deductible coinsurance, whatever that out-of-pocket responsibility is that they may not be able to afford, which unfortunately happens more often than not.

Physician’s Practice: How patients pay for these services and whom they pay directly varies by vendor or the provider, Grubele says. 

Keith Grubele: Healthcare providers have taken upon themselves to create some sort of internal payment methods for patients. While it's a very honorable effort, and it's a great idea to do in theory, oftentimes what happens is it divides the practice to where now they have to focus on both being a financial institution and a healthcare provider. That's the last thing we want to do.

I often find that I go into centers and come to realize that there are high paid nurses —their highly skilled nursing staff—which are better suited to obviously provide care to patients. They're now turned into glorified telephone collectors, if you will, where they're calling on patients and saying, “Hey, you know, we gave you a payment plan to be able to afford you out-of-pocket responsibility. You haven't been able to pay it. What can we do here?”

It causes a number of inefficiencies on the back side of the business. The most critical one that we've seen impacting healthcare providers today is larger and larger amounts of patient responsibility or patient AR that sits on their balance sheet. And it goes uncollected oftentimes because our primary goal is to provide care, not to provide a financial lending solution.

So, in many cases, if the provider has internal payment plans, if they've partnered with a vendor, a lot of third party vendors will set up very, very differently. The more successful or the better partner plans for the provider are ones that pay off that patient balance upfront, and that create affordable payment plans through their own platform to the patient.

Essentially, they provide patient with a financing tool through maybe a loan product, that loan proceeds or go directly to the healthcare provider to pay them off, and the patient then engages directly payments with the partner provider.

Physician’s Practice: Whether or not these programs are right for your practice is dependent upon the typical out-of-pocket cost of your services. The higher the cost of services, the more likely the patient lending programs might be good programs to implement.

Keith Grubele: Patient balances that are over $500 tend to be the most common ones that want to qualify. The reason why is that realistically at $500, the patients can either find a little bit of a balance on a credit card or some patients actually have up to $500 available in their bank accounts that they may be able to come out-of-pocket with. That tends to be the cutoff.

So, if you are doing some high-level imaging, if you are a specialist in a number of different fields where unfortunately out-of-pocket cost for the procedures or care that's offered amounts to more than $500. Those are generally your best facilities to look into a patient learning option. They're often the facilities that most often have cancellations because patients are scared of affording their or can't afford the responsibility, and they're ones that see large patient AR balances

So for anybody watching this, I normally would say, if you look at your balance sheet and see that you have patient responsibility or patient accounts receivable sitting on your balance sheet, you probably want to start asking questions, it's a great indicator that there's a challenge here. If you're turning away patients because of affordability, or seeing a high level of cancellations, again, great indicator that you should be looking for a patient lending platform to help create a more flexible solution for your patients.

Physician’s Practice: If you are interested in implementing one of these programs at your practice, you should know that there isn’t necessarily a one-size-fits-all format to patient lending systems. Grubele says that each vendor or practice takes their own little spin on how to solve for patient responsibility. 

Keith Grubele: Everybody seems to take their own little spin on how to solve for the patient response.

Ability problem, I think ultimately what you have to look at is your demographic of patients and find a solution that applies to as many of your patients as possible. A lot of solutions are not one size fits all their one size fits the very, very credit elite. A lot of them are very specific and the amount of monies they will allow a patient to utilize, or how long they'll allow a patient to make those repayments—which then pushes the affordability issue because if we take the same $500 and spread it over, let's say a full year over a three or four month period—the payment amounts drop very drastically and obviously affordability becomes a challenge.

I normally tell people look for a couple of things. Number one, something that's flexible enough to cover every patient demographic—you want a solution that can provide as close to 100% approval as possible, so that all of your patients get the benefit of the program, not just the few credit elite that will be qualified for it

The second thing I tell people is look for solutions that create flexibility for your patients. Today, most of our patients—and most Americans—have less than $500 in their bank account in the event of a medical emergency. The largest reason that people avoid care is because of the fear of cost.

There was a recent study, I think it was in, in Forbes that said that it's not so much even fear of COVID, it's actually the fear of being able to afford their health care during these COVID challenges, which are keeping people away from providing or receiving the care that they need.

So look for something that creates affordability. Look for something that's easily integrated into your practice. The last thing you ever want is to look for something to solve one problem that causes 10 others. And a lot of the software integrations, a lot of the platforms that are built out there, are built from a technological perspective and they don't realize that we're creating so much more labor and work to be able to implement into a practice to get it up and running. So look for something that's easy and efficient to implement.

You shouldn't have additional reporting additional paperwork, additional management or accounting practices to figure this out. It should seamlessly work into your process flow and create more of an efficient process for you on the back office side as, opposed to create more challenges or another account to balance.

Physicain’s Practice: Of course, with any program and especially one involving large finances, there are risks and liabilities that might be involved. Physicians should consider some of the following if interested in implementing these services at their practice. 

Keith Grubele: Another wonderful question. Actually, for me, it's interesting because often when I start talking to people, I find that the biggest risk of liability is not implementing anything. You know, I tell people, if we don't change, if we don't evolve, we become extinct. We're in a really kind of very touchy point in healthcare and healthcare is being affected from numerous different factors, not just the clinical aspect because of the COVID challenges that are coming on; the addition of the way that we're screening patients and how we have to provide care; the changes in something as simple as the waiting room area; but you're also facing some transitions and challenges from the financial climate, the economic climate, which is something we haven't seen in a long time. We've had a very strong economy, where a lot of people said, you know, things are going great. There's no really big concern or need to provide a patient financing solution, everybody easily had access to credit or credit card. That is all changing today.

For me, the biggest risk is not doing anything. Because if we do nothing, unfortunately, these patient responsibility balances will continue to go up. If the economy continues on the track it is on, a lot less patients are going to be able to afford those payments. And so that becomes a challenge.

When looking at a program to implement, I go back to a little bit of what we were discussing before: what is the current risk that you're taking right now, if you're offering every patient that comes into your practice and internal payment plan, and you're collecting on them internally? Well, you're bearing 100% of the risk today.

Anything that helps get you ahead and out of that situation is going to be an advantage and it's going to mitigate your risk, if you will, if you're doing nothing. Again, the risk is that unfortunately, other practices in your specialization, maybe offering programs like this, and if they are, are you losing patients to those centers that are making it more affordable for patients?

We often talk about the consumerism aspect of healthcare and how people are now finding it more important to be able to be shoppable for your patients to have a more consumeristic approach to it. Part of the big consumer experiences financing is making things affordable. We see it in every industry across the across the globe, and you're starting to see that now in healthcare where people are actually shopping their health care providers based on cost and affordability.

So, having an option that creates affordability, or I should say not creating an option that has for affordability of costs for patients is the largest risk you could probably take.