Why Your Medical Practice Should Take Credit Cards

Just as an exercise, ask your front desk staff how often this scenario occurs: A harried patient walks into the clinic. The staff asks for the copayment and the patient claims to have no cash and no checkbook. Then the patient looks up hopefully and says, "You can just send the bill, right?"

Your practice can send a bill, of course, but for every degree of separation your patients have from your office, they become less and less likely to pay. And every minute your staff spends producing and mailing invoices is a minute not spent on other productive work.

Is there a better way? Most practice consultants advise accepting credit and check cards for copayments and for payments in full. That's because credit cards do the following:

• Ease payment headaches. Capturing charges at the time of the appointment is a more reliable way of getting reimbursed than sending out bills.
• Reduce billing costs. When charges are paid upfront, your staff doesn't have to take the time to create, mail, and follow up on invoices. Practice consultants estimate that the costs for invoices, ink, envelopes, postage, and labor add up to between $2 and $10 for each bill.
• Improve cash flow. When your practice receives payment for services at the time they're rendered, there's more cash available to pay for salaries, equipment, and rent.

The Shadow Side

Credit cards do have some drawbacks, of course. You need to purchase credit card terminals and printers, which can be several hundred dollars, and your financial institution will charge you a fee (usually between 1.5 percent and 3 percent) for each transaction billed. But most consultants believe that you'll more than pay for those charges in saved labor and supplies.

There are also costs to the consumers. Patient advocacy groups have pointed out, for instance, that patients can end up with sizeable debt, and interest payments, when they charge their medical bills. Indeed, a report released by The Access Project in January 2007 found that one-fifth of low- and middle-income households with credit card debt blamed it on medical expenses.

Paying in Full or in Part

Despite the added cost, credit cards offer benefits to both patients and physicians. Let's say a dental patient has run up $1,500 in bills. They can choose to put all the charges on their credit card at once. Or they might prefer that you charge their card monthly, perhaps to keep interest payments lower. (In order to do this, you need to have their signature on file.) Bottom line? Your practice gets reimbursed in full, even if the patient is paying the bill in parts. And they are able to pay off their debt at a pace that makes sense for their finances. (Your staff might also keep a list of consumer credit counseling organizations for patients who are getting in over their heads with medical debt.)

Some financial institutions are also now creating "medical" credit cards that can be kept on file at the doctor's office, or that can be billed at a later date once insurance reimbursement is negotiated. Taking these cards can help you gain and retain patients. That flexibility becomes increasingly important as more and more patients rely on health savings accounts over the next few years. (The Department of Treasury, in fact, expects the number of people with HSAs to jump from 3.2 million in 2005 to some 30 million by 2010. That's a trend you'll want to be a part of.)

Some practices even use credit cards as a creative way to handle chronic nonpayers. With the patient's agreement, the practice keeps the credit card information in the patient's file. If a patient shows up and claims to have forgotten their wallet, staff simply smiles and says, "That's no problem. We have your credit card information on file." This saves time and trouble for your staff, which adds up to cost savings in the long run.