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How to choose the best patient financing solution for providers and patients

When a hospital is fiscally healthy, more patients can be physically healthy. With decreased collections and the rise of bad debt associated with patient receivables, healthcare providers are evaluating patient financing solutions. Below are some key differences to understand as you consider potential solutions.

Opt-in Only Program vs. Comprehensive Program (Opt-in and Auto Assign together)

In an ideal scenario, a patient who cannot pay the medical balance in full inquires about payment options and agrees to "opt-in" to a program. This is a great solution for the roughly 20 percent of patients who will opt-in prior to their unpaid balance going to bad debt. However, most patients do not make payment commitments at time of service and are unlikely to opt-in once they are away from their provider.

A comprehensive program allows the 20 percent of patients who are ready to opt-in to do so, but also extends the offer to the other 80 percent who do not opt-in but still cannot pay. An Auto-Assign program allows the provider to send those patients who are delinquent an offer to enroll in a program before they are sent to collections. The combination of an Opt-In and Auto Assign solution offers a payment option to 100 percent of those who need help, not just to the 20 percent that opt-in.

Interest-Bearing vs Interest-Free Patient Financing Programs

Charging interest can be detrimental to collections and patient satisfaction. While it does shift some risk and cost to the patient, interest-bearing solutions typically require patients to qualify, reducing the number of participants. Additionally, these programs can lead to greater default rates because the balance becomes unmanageable.

An interest-free program means every patient qualifies. As a result, more patients get the payment help they need, which increases overall collections. Because collections are much higher in an interest-free program, the provider should see a demonstrable ROI, net of any fees. However, make sure the patient financing partner can prove performance and will support it with contractual guarantees. A strong partner will have no problem guaranteeing financial performance. 

Funded Recourse Program vs Non-Recourse Program

A recourse program underwrites the provider, all patients qualify, receivables are funded upfront, and any uncollected balances are sent back to the provider so they can send to collections. The key to success for a recourse program is the engagement, funding and reconciliation expertise of the patient financing partner. Providers should require partners to conduct an assessment of past collections, set performance goals and guarantee recourse caps. Just like performance guarantees, if a patient financing partner is confident in their program, capping recourse will not be an issue.

Non-recourse solutions can also be a good fit for providers, especially for those who do not need upfront funding of the receivable. In these non-recourse programs, the provider is paid as the patient pays. 

With an experienced patient financing partner, recourse solutions are the most patient friendly and lead to the best financial outcomes for providers. The best patient financing partners can offer both program types.

Make sure the patient financing partner you choose is steeped in both consumer financing AND healthcare revenue cycle experience. This is a program for YOUR patients - make sure they are well taken care of in the healthcare financial journey. For more information, visit CarePayment.

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