Protecting Your Flank: Structuring Financing vs Low-Cost Competitors

Those of you who have read my books or recently been through my training program know that the most important component of case acceptance is your ability to communicate the value of treatment at your practice during the initial consultation – a skill equally shared between the Doctor and Treatment Coordinator, with support roles by other front-office staff.

That being said, the issue of cost is a significant decision factor and cannot be ignored.

There are two keys to remember when it comes to the issue of price shopping on the part of your patients. First, when it comes to pricing your services, you do not have to be the least expensive option, but you do have to be competitive. Second, for families who are sensitive to price – those that I refer to in my books as Stretchers – your financing options are a much more important consideration than the difference in fees between you and the other options.

In most circumstances, you will become “bullet-proof”, comparison-wise,  if you can offer an option (for traditional braces) that consists of a down-payment in the $500 to $800 range, coupled with a monthly payment of under $200. The key here is the monthly payment. This is because, in my experience, once you get below $200 a month, the need to find easier financing terms virtually disappears from the decision process. In other words, by getting under $200, the monthly payment, comparison-wise, becomes a non-issue.

This is not to say that you have to offer this option, as demographics in your market will play a role in its effectiveness. All I am saying is that once you get to that point in your pricing you no longer need be overly concerned about competitors who under-cut you on price and try to compete on that basis. Ideally, the goal should be to get as close to $200 a month for each case without going over; i.e. $197.50 per month.

I recognize that for many of you, this may require you to extend payments beyond the treatment time. In a perfect world, you would never do that. Unfortunately, you don’t live in one, and you cannot dictate pricing terms to the marketplace due to the level of competition in your profession. 

Don’t drink the Kool-Aid that some well-meaning but misguided people are selling you on the subject of extending terms; you are very unlikely to have a significant problem with collections by doing so. I encourage you to follow the process in my book No to Lost Cases and experiment with offering this option, together with payment-in-full and a within-treatment-terms financing plan. The vast majority of your patients will pay you in full irrespective of how you finance treatment; most are not “deadbeats” and with some common-sense parameters that I outline in the book, you should be fine. In fact, I’m still waiting for a single practice to take this step and inform me otherwise.

The goal here is not to be the practice offering the easiest terms, but to be the one that is offering premium quality at competitive terms. As you know, there is a segment of the market that does not care about quality and will not respond to your offer; as it is the one that only cares about who has the lowest fees and rock-bottom payment terms. Those patients will, in spite of your efforts here, still want to go elsewhere.

Let them.