Last week, we discussed the myriad benefits of employing a membership model in the Plastic Surgery industry. The main purpose of this model is generating loyalty to the practice whether it be for practice based non-surgical procedures or from affiliated med spas. This loyalty can also result in a great deal more referrals for surgery patients.
While many practices offer discounts on surgical procedures to patients in membership programs, financing these procedures can still be an enormous hurdle. Third party financing companies have significantly reduced approval rates, cover fewer procedures and take from 4-10% of the procedure value, oftentimes, the entire procedure, including fees paid to the surgery center and anesthesiologist. It’s no wonder many practices are adopting in-house financing programs as a complement to third party options, thus accepting more business and side-stepping many of the pitfalls of third party financiers. In some cases, practices are reducing their spend with the 3rd party financiers in favor of their own financing.
Many Plastic Surgeons focus on outbound marketing to drive business to their practice. Print ads, commercial spots, social media, etc. all serve to drive potential surgery leads to the operating table. However, financing complications can nullify the effectiveness of outbound marketing by impeding the number of leads resulting in surgeries. In our current credit crisis, it is entirely possible that out of 100 potential leads that walk into the office, only 15-20 will be approved for financing. Unless they can pay for the entire procedure out of pocket, the rest are likely to just walk out the door to a competitor. In-house financing puts the power to accept patients into the hands of the practice, and advanced financing software makes it easy to approve, track, and bill these payment plans.
Granted, extending credit to finance patients carries a bit of risk, but putting the right practices in place can mitigate these concerns and optimize the benefit to the practice. First and foremost, evaluating lending profiles helps the practice narrow down which customers are likely to pay back their loans, and which carry more risk. Once again, advanced in-house financing software has these tools built in, and can carry out credit and bank checks instantaneously. Patients already on membership plans are even easier to evaluate, as they should have a steady history of monthly payments by the time they seek out a larger procedure.
Hard costs are always a paramount concern when structuring lending plans, and the golden rule is ensuring that the down payment covers these costs before surgery is performed. In the case of Plastics, these hard costs consist of the surgery center and anesthesiologist expenses, and having these payments in-office ahead of time significantly minimizes risk. Our previous post on Dental Patient Financing goes into further detail on structuring these plans to make the numbers work in your favor.
In addition to dramatically expanding the customer base, in-house financing saves the practice the cost of paying out a percentage to a third party. A third party financier will often require 4-10% of the entirepayment, including that crucial down payment. Thus, if a $6,000 procedure requires a $3,000 down payment, the practice is required to pay out $240-$600 to their financing company.
With these numbers in mind, its no wonder so many Plastic Surgeons are giving their financing programs a nip-and-tuck, and expanding their business while allowing more potential patients to get the look they want.