Case Selection for Patient Payment Plans: Building Your In-House Financing Strategy
Case Selection for Patient Payment Plans: Building Your In-House Financing Strategy
In our previous blog, we explored the financial benefits of becoming the bank for your patients through in-house financing. The next critical question is: which patients should receive this option? Strategic case selection is what separates successful in-house financing from potential financial headaches.
The Foundation: Established Patient Relationships Only
My number one rule for in-house payment plans is simple: no payment plans for new patients. In my practice, patients must be established for at least one year before they're eligible for in-house financing. This waiting period allows us to establish a history of on-time payments and build the trust and rapport essential for successful payment arrangements.
When new patients need financing for larger treatment plans, that's when third-party financing companies like CareCredit become valuable. Yes, you'll pay the financing fees, but you're also transferring the risk to an established lender who specializes in credit evaluation.
Structuring Payment Plans Around Treatment Timelines
The most effective payment plans align with your treatment schedule. For example, if a patient comes in with a broken tooth that needs an extraction and implant over an eight-month period, I create one comprehensive payment plan covering all phases of treatment including the bone graft, extraction, implant placement, and restoration, broken into eight monthly payments.
This approach works particularly well for extended treatments like Invisalign. A $5,000 Invisalign case over 10 months becomes much more manageable when structured properly.
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The Down Payment Strategy: Protecting Your Investment
Every payment plan requires either 25% down or coverage of all fixed lab costs, whichever isgreater. This isn't just about cash flow; it's about risk management. Using our Invisalign example, if the lab cost is $1,500 on a $5,000 case, the patient pays $1,500 upfront. This brings the treatment balance to $3,500, which then breaks down to $350 monthly payments over 10 months.
Here's why this strategy works: if the patient defaults after making the down payment, you're only out your time because all fixed expenses are covered. For a full mouth rehabilitation involving 28 crowns with $3,600 in total lab costs, that lab bill must be paid upfront before treatment begins.
The Psychology of Payment Amounts
Experience has taught me to keep monthly payments between $100 and $1,000. If a patient can't manage $100 monthly, they probably shouldn't proceed with elective treatment. Payments over $1,000 feel like a second mortgage to most people and create psychological resistance.
Keeping payments under $1,000 makes them feel more like a car payment, something most patients can mentally accept. This sweet spot maximizes treatment acceptance while maintaining reasonable payment expectations.
Treatment Timeline Considerations
I prefer to limit payment plans to the duration of treatment or 12 months, whichever is shorter. However, there's one important exception: if a payment plan results in $1,000 monthly payments that would extend to two years, I'll allow it. Why? Because I know I'm receiving $1,000 each month, my lab costs are already covered, and at that point it's pure profit with minimal additional investment.
Natural Accountability During Active Treatment
In-house financing works exceptionally well for extended treatments because you maintain an ongoing relationship throughout the process. When an Invisalign patient's card declines during their monthly visit, you can address it immediately and work together to resolve the payment issue. Progress continues once their account is current, ensuring treatment stays on track. The same applies to implant patients whose final restoration depends on maintaining their payment
schedule.
This built-in accountability system naturally reduces default risk. Patients understand that their treatment progress is connected to their payment commitment, creating a collaborative approach that benefits everyone involved.
Shifting Your Money Mindset
Many practitioners worry excessively about potential defaults. Here's the reality: once your fixed costs are covered through the down payment, you're receiving passive income. Even if a patient defaults partway through, you're typically only out your time, not your expenses.
We need to stop being pessimistic about money, especially passive income streams. Automated payments through Apex Payment Solutions become a steady revenue source with minimal ongoing effort. Something coming into the bank account is always better than nothing.
The Complete Framework
Successful case selection for in-house financing comes down to five key principles:
1. Patient Requirements: Only established patients with at least one year of payment history
2. Down Payment: 25% of treatment cost or full lab costs, whichever is greater
3. Payment Structure: Monthly payments between $100 and $1,000
4. Timeline: Treatment duration or 12 months maximum (with exceptions for high-value cases)
5. Leverage: Prioritize treatments where you maintain control throughout the process
Making It Work with Apex Payment Solutions
Our automated payment system makes this entire process seamless. Set up the payment schedule once, and the system handles collections automatically while providing complete payment history visibility. Our support team helps you establish the framework that works best for your practice's risk tolerance and patient demographics.
When implemented strategically, in-house financing becomes a powerful tool for increasing treatment acceptance while capturing the 10% that would otherwise go to third-party financing companies. The key is thoughtful case selection that protects your investment while serving your patients' needs.
Ready to implement strategic in-house financing in your practice? Contact Apex Payment Solutions for your free rate review and discover how our payment plan platform can help you keep more of what you earn while serving your patients better.
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