A few orthodontic and dental consultants are vehemently against the concept of obtaining a credit report and/or making a credit evaluation of patients in order to make financial arrangements proportional to risk. Years ago, I realized that the goal of these consultants for their clients was substantially different than my own. Those who are opposed to the idea of obtaining a credit report and using risk information have a goal limited to growing the practice. They seem to believe that having a large practice is the be all and end all of having achieved practice “success.”
Zuelke & Associates purpose for recommending credit evaluations is also to grow the practice and since our history has proven that our clients’ case acceptance rates and annual production and income are substantially greater than that of the national average, we know that our purpose is being accomplished. Since “A” category patients make up 65% to 75% (80% to 85% is some practices!) of all new patient exams, and since such patients are allowed $0 down payment when necessary and are allowed long term, even longer than treatment time payment terms, case acceptance on those “A” category patients goes up far more than the case acceptance that is lost by the financial restrictions on the 25% to 35% of patients in the “B” and “C” risk categories.
However, the goal behind our credit evaluation recommendations is also to create quality of life within the practice by avoiding the serious problems associated by bringing high risk patients into the practice in a financially out of control situation.
Those consultants, dentists, and orthodontists who say that you can bring a high risk person into the practice by offering a $500 down payment and long term (even longer than treatment time) financing, and do that without terrible patient related problems as a result, are simply not telling the truth! I have aggressively studied this issue for 45 years since I entered the financial world and I have learned a few things. The 35 years that I have focused on patient financing have taught me a few more. For instance, 90%+ of high risk patients who are financed in the practice will become 30+ days (2 payments) delinquent! That is true whether the practice gets a $500 down payment or gets the 50% of net after insurance down payment the Z&A program requires.
The very small percentage of new patients in the high risk categories, defined as the “B-” and “C” patients, live a lifestyle and/or have a level of morality that makes the odds of such a patient paying properly on a payment plan almost zero.
So, you may ask, if our high down payment requirement does not stop high risk patients from becoming delinquent, what’s the point? The point is that high risk patients put into treatment without appropriate financial arrangements cannot be controlled once they inevitably become delinquent. They have no “equity” in their treatment and just as 95%+ of all foreclosures/repossessions of automobiles, homes, RV’s, furniture, etc., have loan balances greater than the value of the product being purchased (hence, the debtor allows the repossession) so also do practices have tremendous financial loss when they allow high risk patients into the practice with low down payments and long term financing.
However the financial loss these practices suffer, while significant, is nothing compared to the clinical, administrative, and social problems these practices have with these financially out of control patients. I have mentioned those details often enough in this space that I won’t do it again now but there is not a doctor reading this who, by their sixth month in practice did not notice the relationship between patient delinquency and poor clinical cooperation, failed appointments, etc.
These same high risk patients, when started with appropriate down payments and appropriate payment plans, have substantial equity in their case and when they inevitably become delinquent a practice with a good delinquency control program will be successful, well over 80% of the time, keeping the account under control and being appropriately and fully paid.
So, is getting credit evaluations and structuring financial arrangements according to risk for everyone? Nope! It’s not. If negative relationships with a lot of your patients, along with too frequent instances of poor clinical cooperation, missed appointments, and a lousy rate of patient referrals is something you choose to live with as long as the result is a “big” practice then credit evaluations are not for you.
On the other hand, you can go onto the web and in 45 seconds, and for $5, obtain a 100% accurate credit grade along with a specific recommendation for a down payment and contract length appropriate for the risk (www.getzacc.com). By doing so (and assuming you pay attention to the recommendation!) you will enjoy much improved case acceptance among the vast majority of your new patients who are low risk. You will also, of course lose a few points of case acceptance with the much lower number of high risk patients who are unable or unwilling to pay you appropriately, but again, the case acceptance gain among the “A” patients significantly exceeds the loss of starts from the “B” and “C” categories of patients. As a result you will enjoy a practice filled with high quality patients who are paying you perfectly along with 20%-25% of your patients of higher risk but under perfect control. The result, 100% of the time, is a highly profitable practice and a doctor and team enjoying strong relationships with all of their patients and a great quality of life within the practice.