When patients are faced with treatment plans of $1,000 or more, the reality is that many simply cannot pay the full amount upfront or put it on their credit card. This creates a critical decision point that can significantly impact both patient acceptance and your practice's bottom line.
The Third-Party Financing Dilemma
Most dental practices turn to third-party financing companies like CareCredit, Sunbit, and Cherry to help patients manage larger treatment costs. While these services solve the immediate problem of payment accessibility, they come with a substantial cost. Depending on the patient's credit score, treatment amount, and payment term length, these financing charges can range anywhere from 5% to 20% of the treatment cost. In some cases, patients may also be responsible for additional finance charges on top of what the practice pays.
A Different Approach: Becoming Your Own Bank
There's an alternative strategy that many practices overlook: accepting the risk of payment plans yourself. I understand the hesitation here – the fear of patient defaults has kept many practitioners from considering this approach. However, the real world numbers tell a compelling story.
The key principle is simple: as long as your default rate remains below the percentage you would pay to third-party financing companies, your practice comes out ahead. For example, if your practice finances $100,000 of treatment across 20 patients, and your default rate stays under $10,000 (10%), it still makes financial sense to be the bank for your patients.
Finding Your Comfort Level
The question becomes: what financing load are you comfortable carrying? This decision should be based on your practice's financial stability and risk tolerance. In my practice, I'm comfortable carrying 25% of the previous year's collections because of our consistently low default rate. Currently, that translates to about $650,000 annually.
For practices just beginning to implement in-house financing, I recommend starting with a more conservative approach. A comfortable starting point might be $50,000 in outstanding payment plans, or roughly 10% of your annual collections. This allows you to test the waters while maintaining financial security.
Making In-House Financing Simple with the Right Platform
The success of in-house financing depends on having the right tools to manage it effectively. This is where Apex Payment Solutions becomes essential. Our platform allows you to set up automated payment plans that run weekly, monthly, or annually based on your preferences. Once established, the platform handles collections automatically while providing you complete visibility into payment history for each patient.
The management side is straightforward: establish your comfort level for total outstanding payment plans and periodically review where you stand using the payment history reports. When you're comfortably below your threshold, you can offer payment plans freely. When approaching your limit, you might be more selective about terms or require larger down payments.
The Bottom Line
In-house financing with Apex Payment Solutions represents a strategic approach to driving down practice overhead while improving patient treatment acceptance. Our automated payment plan system creates a steady income stream while enabling patients to accept treatment they might otherwise decline. As you gain experience and confidence with the platform, supported by our dedicated team, you can gradually increase your comfort level and capture even more value for your practice.
The goal isn't to eliminate all risk – it's to make calculated decisions that benefit both your patients and your practice's profitability. When you're ready to explore how being the bank for your patients can become a significant competitive advantage, we're here to help with a free rate review to show you exactly how much you could be saving.
Want to learn the specifics of implementing in-house financing? Check out our next blog on Case Selection for Patient Plans, where we break down exactly which patients to offer payment plans to and how to structure them for success.
Ready to keep more of your hard-earned revenue? Contact Apex Payment Solutions today for your free rate review and discover how our payment plan platform can transform your practice's profitability.