Why Outsource Payment Plans?

Balance: Revenue, Costs, & Cashflow

Patient payment plans have always been difficult to administer and many providers are discovering that offering extended payment plans is a balancing act between revenue and cost. When patients are offered extended payment plans, providers are rewarded with increased patient satisfaction and loyalty but the administrative costs of staffing, monthly statements, and payment processing increase dramatically. Alternatively, when extended payment plans are restricted then new appointments tend to drop dramatically. 

Patient Loyalty: Financial Driver in Healthcare


Why is Patient Loyalty Important?

"Acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one," according to Harvard Business Review. Research conducted by Frederick Reichheld of Bain & Company shows increasing customer retention rates by 5% increases profits by 25% to 95%. 

Patient Loyalty directly affects your bottom line. 


What matters most to the healthcare consumer?

Consumers are as likely to switch healthcare providers as hotels if they don’t get the service experience they expect. Studies have demonstrated patient expectations include: 

  • Financial affordability and options 
  • Clarity and transparency
  • Convenience 

Payment Plans Can Be Costly & Complex

Why are payment plans so expensive?


Experienced business office professionals and controllers intuitively know the administrative and financial strain extended payment plans can have on the bottom line. Indeed, a recent study on a healthcare provider's A/R revealed that 4% of accounts accounted for 40% of their monthly statements, 20% of their non-defaulted patient A/R, and 10% of their patient interactions. Select extended patient plans had internal costs exceeding 20% of the account's balance. 


Illustrative Example: Internal Cost

Patient payment plan of $25 per month for a $625 balance medical bill. 

$25 Monthly Statements ($1 per statement)

$40 Administrative (2,200 accounts per FTE)

$18.75 Payment Processing (3%)

$39.25 Carrying Cost (6% interest)


$123.00 (20% of balance) 


Compliance Complexities

If you accept patient payment plans in more than four installments or you charge a finance fee, you may be required to adhere to additional compliance requirements, including:

  • TILA
  • ECOA
  • EFTA
  • GLBA  
  • State debt, servicing, and collection laws

Precollection: Accelerate Patient A/R Cashflow

Best Practice Tip


Experienced A/R professionals have been implementing Precollection into their Patient A/R Recovery for years. Early intervention prior to sending to collections can typically account for a third of all collection payments.