5 Advantages of Third-Party Financing Over In-House Financing

Offering financing solutions for your patients or clients could go a long way in helping them get the health and wellness care and services they want and need. Without payment solutions that work for them, 1 out of every 2 consumers surveyed in Synchrony's Healthcare Journey Research Consumers and Providers study reported that they would delay care due to out-of-pocket expenses.¹ Providers can choose to offer those financing solutions themselves or outsource financing to a third-party company.

Taking on in-house financing can give your patients or clients options to pay for treatment and services, but it could place additional demands on your staff. By choosing third-party financing, you could reduce your admin load, get paid faster and receive marketing assistance to promote the program to your patients and clients.²

It's important to understand the advantages of third-party financing versus in-house financing as you consider which solution is right for your practice or business.

In-House vs. Third-Party Financing: Understanding How They Work

Both in-house and third-party financing include the ability for patients and clients to pay for their treatments and services over time. Having streamlined financing solutions can help improve their experience, resulting in higher customer satisfaction and repeat customers.³ On the back end, however, they work differently for your practice or business.

In-house financing

With in-house customer financing, the practice or business funds the financing through payment plans and terms such as interest rates. In doing so, they must adhere to state and local lending regulations, including the Truth in Lending Act, which could require additional time and research to conform to those regulations.⁴ There also should be protocols in place to track payment plans as well as for collecting on late payments or nonpayments.

Setting up in-house payment plans could be a lengthy process to ensure all the pieces function correctly together. Once it’s up and running, in-house financing may demand a substantial amount of time to remain effective.² For example, an MGMA Stat poll questioned how medical practice collections have changed in 2022.⁵ As measured in days spent handling accounts receivable, the poll showed that 56% said their accounts receivable days have increased.⁵

Third-party financing

With third-party financing, a separate company is the lender and facilitator of the funds and payment plans via such solutions as a credit card or loan. That third-party financing company can also create a program that meets state and local lending regulations to ensure you are in compliance. Plus, the company takes on the responsibility of administering the payment arrangements and collecting payments, including late payments and nonpayments, freeing up your staff to focus on caring for your patients and clients.²

5 Advantages to Using Third-Party Financing

Third-party financing can be a strong choice for health and wellness providers thanks to the different ways it can help your practice or business. These include:

1. Fast payment, reduced stress on accounts receivable and less financial risk. The provider gets paid quickly and doesn’t need to spend months collecting based on the payment plan or trying to chase down late or missed payments For example, CareCredit handles billing and collections, and providers get paid within two business days, protecting them against payment delays and defaults.*

2. Less administrative work. The financing company does much of the work in setting everything up, including checking creditworthiness, creating the terms and conditions, ensuring regulatory or legal compliance, managing payments and addressing nonpayment. Additionally, some companies may even offer financing solutions that integrate with your practice management system or other practice software, which can help streamline the process of offering financing services.²

According to a Synchrony survey, more healthcare providers agree that in-house financing (72%) adds more hours of work for staff compared to third-party financing (53%). Additionally, more providers (67%) say third-party financing helps their billing process, compared to in-house financing (57%).⁶

3. Improved data security. Experienced third-party financing companies often understand the ins and outs of data security and can implement the necessary safeguards to protect both your data and your patients or clients’ data.⁷ Furthermore, they can be more responsive to ensure your financing platform has the latest security updates to help ward off cyber breaches.

4. Revolving credit. If the third-party financing company offers a revolving line of credit via a health and wellness credit card, this can help encourage future visits. For instance, when the patient makes payments and credit becomes available, they can use the card again up to their limit without needing another credit approval.⁸

5. Additional opportunity for external support. Patient and customer financing companies may offer training for practice staff so they understand not only how the financing solutions work, but also how to use the financing company’s online platform for implementing those solutions. Plus, those companies can often assist with marketing tools and resources to help educate your patients and clients on the financing program(s) available.

Key Considerations When Choosing a Third-Party Financing Company

If you make the choice to work with a third-party health and wellness financing company, make sure to do your research to find the specific solution and partner that works best for your culture and business goals. Some key considerations include:

• Approval process. Patients and clients shouldn’t have to wait to find out if they qualify for financing. Look for a third-party financing company that offers a quick and easy application process with an instant decision. This enables your patients, if they are approved, to move forward with treatment and services when they are ready.⁹
• Reputation in the industry. Not every third-party lender is suited for working with health and wellness providers. Find one that understands how your practice or business functions and what your patients or clients want or need. Having an extensive network of provider locations also speaks to a company’s reputation in the industry.
• Financial transparency. The terms and conditions of patient financing should be clearly spelled out so your patients or clients understand how the program works and what their responsibility will be regarding repayment. This includes interest rates, payment deadlines, how to make payments and consequences of not meeting their financial responsibilities.
• Customer support. The lending company should be readily available to health and wellness providers in the event of problems with payment processing or marketing initiatives. Likewise, they should be easy to contact for patients and clients who have questions about their account.

Learn More: How to find the right third-party financing company for your health and wellness practice or business

How Third-Party Financing Can Support Your Health and Wellness Practice

Working with a trusted third-party financing partner can help ease cost concerns for your patients or clients, making it easier for them to move forward with recommended treatments — without adding to your administrative workload.

Backed by Synchrony, a Fortune 200 company, CareCredit has served the health and wellness space for more than 35 years. The company features a network of more than 270,000 provider and retail locations, demonstrating its place as a trusted partner in the industry.

To help ensure providers have a smooth experience, CareCredit’s hands-on support team works with them to address needs and concerns quickly so they can get back to the business of helping their patients or clients.

Offer Flexible Financing at Your Practice

If you are looking for a way to connect your patients or clients with flexible financing that empowers them to pay for the care they want and need, consider offering CareCredit as a financing solution. CareCredit allows cardholders to pay for out-of-pocket health and wellness expenses over time while helping enhance the payments process for your practice or business.

When you accept CareCredit, patients or clients can see if they prequalify with no impact to their credit score, and those who apply, if approved, can take advantage of special financing on qualifying purchases.** Additionally, you will be paid directly within two business days.

Learn more about the CareCredit credit card as a financing solution or start the provider enrollment process by filling out this form.

Author Bio

Karon Warren is a freelance writer and editor with more than 20 years of experience covering small business and personal finance. In addition to her B2B writing experience in the healthcare industry, she has researched and written about finance topics related to banking, mortgages, credit cards, savings and more.

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