Is Asking For A Payment Guarantee Bad Business?

I don’t know of any other business where a person buys a product (or service), and walks out the door without giving some sort of financial commitment.

So, why do doctors’ offices allow people to get medical care and walkout the door without offering some sort of payment guarantee?

If you think about it, only doctor offices and financial institutions allow this. But here is the kicker. Financial institutions asses a person’s creditworthiness before they lend anybody any money. When a doctor provides medical care, they are extending the patient credit just like a financial institution does but without a guarantee.

Oh yeah, I forgot; we check the patient’s insurance and some spend hours on the futile task that is insurance eligibility. But let’s be honest. Flashing an insurance card doesn’t guarantee anything. Why not spend the same time on something that offers a better guarantee?

So what do we do?

For private medical practices, I don’t think it is unreasonable to ask patients for a payment guarantee. This can be done several ways. For example, the doc could ask for a down payment or an upfront deposit. Another solution is to keep the patient’s credit card on file and process the card should the patient become delinquent. Or, like the hotel industry, providers could put a “hold” on the credit card just in case insurance doesn’t go through.

I can hear some people say “… oh, that would never work in my office.” “Patients will leave and go to the practice down the street.”

We thought that too. But there really wasn’t any practical evidence that we would have a mass exodus. Nobody that we knew of had tried it before; so there really was only one way of finding out.

After much thought and deliberation, we decided to require parents to leave a credit card on file in order to be seen by one of our physician. There are some exceptions and rules we follow, but other than those exceptions, all patients must leave a card on file if they wish for us to continue providing medical care.

The downside? A handful of patients left. The upside? Our A/R dropped drastically. Now, instead of being health care collectors, we are now able to go back to being health care providers. Not to mention, we were able to provide the best care possible to those that truly value our service and understand that we have to get paid for what we do.

I really wish more practices would start requiring patients for payment guarantee. I understand it is a departure from the medical practice norm; but think about it, it isn’t uncommon in any other place. Hotels and car rental companies require one to leave a credit card on file. Blockbuster did to. Unless you are on a pay-as-go cell phone plan, you have to provide a credit card to cellphone companies.

So why can’t we?

Think about this… if people owe the practice more and more money, how will one continue to provide medical care? A broke doctor doesn’t do anybody any good.

Start requiring a credit card from your patients. You’ll thank me later.

8 thoughts on “Is Asking For A Payment Guarantee Bad Business?”

  1. We’ve been debating this in our adult medicine practice and are going to do it. Found your post as we searched to validate the idea. It just makes sense. I anticipate losing a few patients on this, but primary care is undersupplied anyway so the practice will be fine. I’m not sure the types of patients who will leave over this are the types of patients I want anyway. You don’t emphasize the decrease in hassle even for those patients who will pay their bills. It’s 2012 – we ought to not be mailing paper invoices to patients in anticipation of receiving checks to cover obligations they know about from a paper EOB they received from their insurance company that matches the paper EOB we received in the office…there has to be a way to eliminate 3 or those paper steps. The credit card approach does this.

    1. Chad,

      Thank you for you comment. Obviously, I agree with you 100%. I think it is time for those of us in the medical field, to start doing things the rest of the business world is doing.

      Good luck with the credit card and thing.


      1. I have been after ny doc to do this to but he doe snot want to take this step but really he does not look at the reports. I beleieve that the patients who will leave over this, are the patients that probably not pay there bills. Can you please share the form you use at your office and also did you come up with a “script” so to speak for your staff & patients- a letter perhaps.

        1. There is a famous, well known saying that I’m sure you’ve heard of. It goes like this, if you lend a friend $50 and you don’t see him ever again, was it worth it?

          Applied to pediatrics, let’s say you implement a credit policy and you don’t see certain families ever again… would it be worth it?

          I think so…


  2. This is a concept we have struggled with in our neuropsychol0gy practice. I really appreciate your post. You have verbalized / validated what I have felt for a long time. We have gotten more assertive about requiring all patient responsibility (after we have called to get verification of benefit) at time of service. But that doesn’t protect us if insurance should deny the claim. Your idea of keeping a CC on file is a good one.

    I have just discovered your blog and look forward to reading it. Thanks!

    1. Cindy,

      I know it is a difficult step to take for a practice. It falls outside of the norm for most practices. But because most are afraid, we don’t do it. Thus, we are in this mess where we have to hunt people down for money.

      I tell patients, we don’t want to be in the medical collection business. We want to take care of children. And giving us a guarantee that we will be paid for our services will ensure we can continue doing just that.

      Thank you for stopping by and leaving a note. I’m glad you’ve found PediatricInc useful. That is the intent.

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