About Extend Credit

This author has not yet filled in any details.
So far Extend Credit has created 38 blog entries.

Membership – Annual versus Monthly plans

Deciding on annual versus monthly billing can be one of the biggest challenges of do-it yourself membership programs. Annual plans seem to present the easiest option in terms of origination and maintenance, but monthly plans hold many advantages that may be worth the extra effort. Let’s take a look at why: At first glance, annual membership plans are appealing due in large part to their simplicity. One annual payment per customer means very little work in terms of tracking and billing the membership. This means less office work for the practice, and less of a headache tracking down payments every month. However, limiting membership choices to annual billing could have a great effect on both the number of people that sign-up and retention. Thus it is not a decision that should be made solely out of convenience or fear. A pet-care group – with over 1 million active membership plans – recently estimated that their customer base would be about 50% smaller if they didn’t offer monthly membership plans. The reasoning, simply put, is that annual payments are hard to afford up front and hurt renewal rates by forcing one large spending decision every year. If money is already tight, customers may be less likely to renew with a hefty renewal payment, especially if they haven’t used the service much in recent months. On the other hand, a monthly option breaks the commitment into easy-to-swallow installments and combined with auto-renewals, results in no inflection points during which the customer determines if it is worth it to renew or not. With a little bit of planning, the business can make sure that services delivered do not exceed payments received, making the only concern — billing.  While the task [...]

2017-01-18T17:22:18+00:008:10 am|

Training Staff to Communicate Value

If you’ve been reading the blog so far, the potential benefits of membership programs – increased loyalty, steady revenue stream, and consistent care for patients – should be clear. However, a key factor in launching a successful program is communicating the value of the membership to the customer.  We can throw around numbers all day, but if the clientele doesn’t understand how a membership improves their care, the program is unlikely to get off the ground. In the case of a sole proprietorship, the business owner can easily sell the program to the customers. They understand all the benefits, and have a vested interest in signing people up. But the larger the staff, the more crucial it becomes to educate, train, and motivate people to effectively sell the memberships. The most common obstacle is that many employees in these positions don’t view themselves as salespeople. People don’t become Veterinary assistants, Dental Hygienists, or Nurse Practitioners with hopes of racking up upsells, so some pushback may occur. In these cases, the key is educating the staff on the value to the customer, rather than the value to the business. Let’s talk about a Veterinary practice as an example. As we discussed last week and in previous posts, membership programs encourage regular Vet visits, thus leading to healthier pets. As opposed to putting off care for financial reasons, pet owners on membership plans pay a small amount each month, and gain regular access to their practitioner. This allows frequent check-ups, as opposed to only visiting when huge problems arise. Now, while the staff at the Vet practice has little interest in selling membership programs, they likely have a strong interest in helping pets. If the employee believes the membership helps pet owners take better care of their [...]

2017-01-18T17:27:11+00:008:12 am|

The Power of Membership

This week, we’re shifting the focus to membership programs, a powerful tool for maintaining loyalty and creating a steady stream of business. Membership programs provide an easy mechanism to bundle a suite of products and services together that meet the basic, and in some cases, advanced, needs of customers.  They typically have a modest monthly price that is paid over the course of the year in which the customer consumes the services. Let’s take a look at the effects of membership programs in three healthcare fields. Veterinary Medicine In veterinary medicine, membership plans simply make it easier for vets to provide care to pets. According to the Bayer 2011 Veterinary Care Usage Study, pet owners overwhelmingly want quality veterinary care for their pets, but fiscal concerns often put price before loyalty. Many pet owners find themselves bouncing between lowest bidders for each procedure, instead of creating a lasting relationship with a particular doctor. By creating Veterinary wellness plans with an affordable price and level payment structure, Veterinarians can give pet owners a viable avenue to consistent, preventative care, while ensuring the pet receives the best care possible. It’s no surprise that over 1.5 million pet owners are currently enrolled in these programs. Dentistry Dentists face a similar challenge in terms of providing consistent and affordable care to a population that desperately needs it. Only about 50% of the U.S. population has dental coverage. The other half pays for each procedure out of pocket, and as a result, may go longer than recommended between check-ups, wait around for a favorable coupon deal from a site such as Groupon, or completely forego treatment. As time goes by, problems compound, creating the need for more expensive procedures down [...]

2016-10-29T16:36:43+00:008:14 am|

Managing Risk, with an Eye on Reward

It's time to confront a hard and uncomfortable truth: extending credit comes with risk. Even with best practices employed across the board, every payment plan carries the risk of a loss. The more your practice relaxes approval standards to accept more business, the larger the risk. We have doctors in our network who employ hard and stringent credit requirements, only providing payment plans to the safest candidates. As a result, their number of approved procedures is small, but so is their hard default rate. On the flip side, there are gung-ho practitioners with more relaxed requirements who approve nearly everyone who walks through the door. While their default rates are higher, the revenue and profit stream from the procedures and interest on the plans make the ends justify the means. One of the most important decisions one can make when establishing an in-house financing program is picking a comfortable place on the risk/reward spectrum. However, the great advantage of creating your own in-house program is that once that decision has been made, modern technological tools make it easy to set-up and automate your program based on the parameters you've established. The very beginning of the process — evaluating a potential customer — should begin with set parameters on a number of factors. Modern automated software can run credit, banking and fraud checks at the click of a mouse, and that mouse click may very well be the end of the evaluation for our more safety conscious lenders. If all the numbers meet a pre-set minimum, then it's time to schedule the procedure and set the payment plan! Those that meet the set standard will carry the smallest default risk, making this system a safe bet [...]

2016-10-29T16:36:43+00:0011:16 pm|

Managing Risk: Individual Based Credit Assessment

As we discussed last week, optimizing returns on in-house financing starts with managing risk. And managing risk starts with evaluating patient profiles to minimize default rates. Our last post suggested a uniform system running credit and bank checks as well as other procedures for each candidate, with minimum requirements for each. However, this is just a starting point, and today we’ll explore why a more three-dimensional approach can be beneficial. Imagine a patient walks into your office seeking a $3,000 dollar procedure, with a hard cost of $500, but can only put $1,000 down. You check their credit and bank check scores and they are just below the minimal threshold in your system, painting them as a potential risk. Do you turn them away? While conventional wisdom suggests barring anyone who doesn't meet minimal requirements, the fact of the matter is credit scores have dropped nation-wide as a result of the current financial crisis. Scores below 690 are becoming common, making it increasingly difficult to obtain loans, even for those with a steady income and satisfactory financial track record. Simply cutting everyone off based on credit removes a large percentage of the population from your demographic. Sticking to hard and fast credit requirements will certainly minimize your risk, but in the above example, do you allow the patient to take their $1,000 out the door? If your practice already has no trouble filling your appointment book, then by all means let them go. But if you’re not at capacity, it may be beneficial to work them in. Before the procedure even begins, the patient above has covered all hard costs, and put $500 in your pocket. Even if they immediately default — the absolute worst-case [...]

2015-06-08T18:10:37+00:0011:18 pm|

Managing Risks: Origination Workflow

Today’s blog continues our series on maximizing the effectiveness of in-house financing, by controlling factors influencing your returns. As we discussed last week, a proactive approach pays dividends in terms of preventing soft defaults from turning into hard defaults. This week we’ll examine how a practice can employ smart origination practices; proactively evaluating patient profiles at the beginning of the process and hopefully identifying those patients most likely to stay on track. An important factor in successful origination workflow is uniformity. The process must always start with the same basic steps; each person that walks in the door must be treated the same. This not only makes the entire process easier to track and manage, it also protects the practice in case of legal action if the payment plan is not approved. A good starting point is running simple credit, banking, and fraud checks for every potential candidate, with minimum thresholds for each. The right automated software can take care of this with a few button-clicks, and keep a record throughout. This gives a simple picture of the risk profile, and in a super-conservative system, these thresholds can be treated as hard criteria for approval. However, in light of the current credit crisis and drops in average credit scores nation-wide, these numbers may not paint an entirely accurate picture. For this reason, it may be prudent for a practice to add a subjective element to the process, while still following a uniform procedure. This can be achieved by appointing an administrator with the power to override the above criteria and modify the process, who is responsible for making the final decision. This can be as simple as asking a few questions to see if someone is [...]

2017-01-18T17:30:51+00:008:20 am|

Maximizing Returns and Handling Missed Payments

Today begins our new series of blog posts examining the various steps of successfully offering payment plans, and how to maximize the effectiveness of your in-house financing program. To begin, we’ll look at various factors that effect your total return on the payment plans you offer. How you can make the biggest return on your loan by controlling a key factor: proactively controlling default rates. How should one calculate possible returns from an in-house financing program? First off, an in-house system means helps you accept patients that have been turned down by 3rd party financing companies. Part of your total return is calculating the fees that would have been paid if the patient had been approved. These discounts are typically in the 5-10% range for prime or near-prime credit, and higher for lower credit. So, we can count that amount as part of your return. We can also add the interest that will be paid on the payment plan. From that, subtract the hard default rate — essentially the percentage rate at which customers default completely — as a percentage of the total dollar amount. Finally, subtract the interest you would have earned on the discounted amount you would have received if you had been able to get the customer approved by a 3rd party lender. A simple example would be a $3,000 dollar procedure, with $600 up front, resulting in a $2,400 loan. Assume a 12 month at 10% payment plan and the 3rd party discount rate is 8%. With a 4% return on your money from the 3rd party financing company, you would have $2,546. Doing a payment plan, assuming a 2.5% hard default rate, you would have almost $250 in additional net profit – 10% straight to the bottom line [...]

2016-10-29T16:36:43+00:008:23 am|

Ophthalmologists: Visualizing Better Financing

Many Ophthalmologists enjoy a steady baseline of business, as the majority of services offered (cataracts surgery, canaloplasty, etc.) are essential, vision saving endeavors, and are often covered by private insurance, Medicare or Medicaid. However, other procedures or upgrades offered by Ophthalmologists, such as Lasik Surgeries and lens upgrades can benefit from in-house financing, aiding in building office visits while generating an additional revenue stream. In addition to treating vision-threatening disorders such as cataracts and glaucoma, many Ophthalmologists can also free patients from minor vision problems through Lasik surgery. Booking a high volume of Lasik surgeries creates a strong revenue stream for the practice, and many offices will focus on outbound marketing to drive potential Lasik leads to the operating table. While insurance may cover some of these surgeries, many patients will pay out of pocket or have a significant deductible or co-pay that must be met, thus creating a need for financing assistance. Unfortunately, third party financiers have significantly reduced their approval rates, slashing the number of surgical leads doctors can accept. With financing approval rates as they are, it is entirely possible that only 10-15% of interested patients can end up booking a surgery.  Not to mention that the approval often comes with a 6-10% discount fee paid to the financier. It’s no wonder many Ophthalmologists are beginning to take financing into their own hands, allowing them to choose whom they accept, and ultimately booking more procedures. While providing loans in house means taking on a bit of risk, implementing smart payment plan practices can greatly reduce said risks. For example, requiring a down payment that covers all the hard costs (such as the surgery center or officer overhead), and protects the practice if the patient defaults. [...]

2017-01-18T17:32:43+00:008:25 am|

Optometrists: Seeing Past the Competition

With the plethora of discount online suppliers of glasses and contacts, many Optometrists see customer loyalty as a growing challenge to their business. It has become common practice for patients to patronize an Optometrist for an eye-exam, and then take the prescription to whichever online retailer offers the best deal that week. While the doctor-patient relationship may accrue some loyalty, at the end of the day it is nearly impossible for a brick-and-mortar business to keep its pricing on consumables competitive with online retailers, or big box stores such as Walmart or Costco. It's no wonder that many Optometrists are looking into membership programs as a means to ensure loyalty and increase revenue. As we've explored before, the membership phenomenon can have a powerful effect on consumer behavior. In what a 2007 Harvard Business School study referred to as a “fee-to-savings” link, once a consumer has committed a small fee to a membership program at one business, they are consistently more likely to patronize that business over competitors. Furthermore, the loyalty that comes with a consumer's commitment to a membership program carries benefits beyond that single member’s spending. A 2011 Colloquy Loyalty Census, entitled “The Billion Member March,” showed that members of a loyalty program are 75% more likely to refer other members to that service. From a practical standpoint, Optometrists can make these principles work to their benefit by bundling custom membership plans with eye-exams. While they have the patient in-office for their exam, the Optometrists can create a monthly membership plan that covers their contacts, lenses, etc. for the next year. Using advanced membership software with a Wellness Plan module, the practice can build plans that fit the unique needs of each individual customer, and then carries further [...]

2016-10-29T16:36:44+00:008:30 am|

Financing with Surgery Centers to Maximize Volume

As we mentioned previously, in-house financing can be a powerful tool for Cosmetic Surgeons, allowing them to take control of their patient financing and increase revenue, while saving payments to third party financiers. While down payments on these financing plans are often dictated by the hard costs involved (surgery center, anesthesiologist, etc.) one surgical group is taking this concept one step further by getting an agreement from their surgical center to also finance some portion of their fees, thus lessening the required down payment, and further increasing the number of procedures. In our most recent post on the subject, we discussed covering at least the hard-costs in the down payment, and putting the rest on a payment plan. For example, a practice may charge $6,000 for a procedure, of which $3,000 goes to the surgical center and anesthesiologist. This dictates the minimum down payment is $3,000, ensuring the office is covered on hard costs from square one. But what if a patient can only put down $2,000? Most Cosmetic Surgeons wouldn't want to necessarily turn that person away every time, especially if they have room in their surgery schedule to fit them in. It turns out, the surgical center feels the same way. An empty surgery room is lost revenue in their eyes, so if they can be persuaded to accept a portion of the $2,000 as a down payment and generate a payment plan for the rest, the surgery center can also maximize the use of their facility. Granted, the possible risk involved if the patient defaults makes this strategy slightly more aggressive, but for the surgery group we spoke to, the immense upsurge in their number of office visits more than made up for it. If the surgeon [...]

2017-01-18T17:34:45+00:008:32 am|