I’m seeing more and more encouragement, no, insistence that doctors are going to have to get into the loan business. I’ve read two articles in the past two weeks that specifically target the need for doctors to finance patient payments. Many others allude to the need. Some of them are as simple as creating payment plans all the way to actually financing the care with a loan contract. One product site I ran across says straight up – ‘Hospitals are now Banks, too.’
We’ve all seen the statistics. HDHP’s have made patient financial responsibility climb astronomically in the last few years. It’s true that patients are having a harder and harder time managing their healthcare costs. Healthcare cost inflation has outpaced overall inflation by significant percentages in all but one of the last ten years. We are all paying more for healthcare, as a percentage of income, than we ever have before. That puts many families at risk for falling behind on their bills. Does that mean our practices/groups/clinics/hospitals need to become banks?
The wrong conclusion.
The facts about patient payment challenges have led many to conclude that doctors should start making loans to patients for their medical bills. Think about that. Do the labs who do medical diagnostic testing offer loans? Do Imaging Centers offer loans for MRI’s and X-rays? Do surgery centers allow patients to finance their surgeries? Some of these have short term payment plans but offering loans is the business of a bank, not a medical practice.
Imagine having a window or counter in your office where patients who cannot pay go to take out a loan. What happens when they can’t pay the loan? It reminds me of a movie called Repo Men, a futuristic movie where the medical establishment saves lives by replacing diseased or injured body parts, like hearts and limbs, and finances those who cannot afford to pay the full price. Like a mortgage. If the patient doesn’t pay the payments, the organ or limb gets repossessed. Brutally.
That’s a gross and drastic extreme imagined by Hollywood, but what are the true consequences of doctors becoming bankers? Let’s ask ourselves some questions.
If patients are paying off a loan to the doctor, will they view him or her the same?
Do doctors want their patients viewing them as a banker, or worse, a loan shark?
Do doctors now need to hire bankers to determine if someone is credit worthy?
What will happen to cash flow if payments are spread over 24, 36, 72 months?
How does a doctor determine what interest he will charge?
What are the ethics of charging interest for medical care?
Is your doctor expert in business and finance to the point where he can make loans profitably?
And the list goes on…
Imagine the ramifications of these questions and what your practice would look like if you started loaning money. Follow these questions to their logical conclusions and you will start to see why it’s a bad idea for doctors to become bankers.
Patients should be able to see their doctors as caring medical professionals, not men or women who make money from finance charges. If we blur that line we run the risks of alienating people who simply need medical care.
But what if they can’t afford it? It’s our job to determine if that’s true or not. By using tools to determine eligibility, do estimates, and then using that information to have financial conversations with our patients. We can discover their ability and willingness to pay. In most cases your patients can pay. For those who truly have no means to pay, there are options.
One option is to care for them at no charge or a charge they can afford. Another is to send them away to a practice who will treat them at the risk of not being paid. But the worst thing is to treat them without knowing if they are likely to pay or not, then try to chase the money and burn up precious practice resources.
To repeat, the truth is that most of your patients can afford your treatment and are willing to pay for it. They delay or refuse payment primarily because they don’t understand what they are paying for or the practice doesn’t demand on-time payment. Not because they can’t afford it. Those who can’t should be a slim minority and most doctors I’ve talked to are more than willing to treat them at reduced or no cost.
There are ways to prevent your practice from becoming a bank. You’ll have to set firm payment policies and enforce them while coupling them with a generous charity plan your doctors are comfortable with. With these in place, you should be able to keep your doctors seeing patients and not collecting loans.
If you are new to our blog, there are many posts that describe the tools and policies you’ll need to ensure on-time patient payments. We hope you’ll check them out.