Collections are Only Increasing
Collections are a critical, yet often painful part of running any successful medical practice. What makes things difficult is that not only are offices sending invoices after services have been rendered, but that it can also take weeks to find out what to even charge the patient. Furthermore according to the Kaiser Family Foundation's 2020 Employer Health Benefits Survey, copays and deductibles are only increasing as more and more patients enroll in High Deductible Health Plans ("HDHP").
Percentage of Workers Enrolled in a Plan with a Deductible Greater than $2,000
What this means is that the need to collect payment from patients is only increasing. To that end, we've laid out several steps doctor's can take to better manage and streamline the collections process, from technology solutions to simple forms.
Steps To Reduce Your Collection Time
1. Use a Virtual Terminal
A Virtual Terminal is a powerful technology solution that you can combine with your in-office credit card terminal streamline your collections process. While the vast majority of your payments may be made in person, any doctor (especially dentists) knows that often payment needs to be collected well after a patient has left the office. While traditionally this might have meant manually sending invoices by mail, email or over the phone, a time-intensive and error-prone process, with a virtual terminal the whole process can be automated, freeing up your offices' valuable resources.
Collecting Payment: With and Without a Virtual Terminal
As can be seen in the table above, there are numerous benefits to adding a virtual terminal to your practice.
In fact, studies have shown that by sending invoices via email or text message collection times can be reduced by over 50% and this number is expected to only increase as more and more people choose to pay online.
Not only can you reduce your collection times, but additional benefits of using a virtual terminal include minimizing security risks and reducing your credit card fees (further discussed below).
Minimizing Security Risks
All virtual terminals come with a "vault" or "card-on-file" feature. What this means is that once you've collected your patient's credit card information, it is stored securely and safely in the virtual terminal for future use. Furthermore, in the event the credit card information is compromised, it is the processors liability and not yours. This is a big deal and a major difference with Credit Card Authorization Forms (discussed below), where if a breach occurs you could be on the hook for hundreds of thousands of dollars in fines.
Reducing Your Credit Card Fees
Credit card fees vary depending on how you get paid. For example, payments made over the phone have higher fees than payments made in person. By and large, these fees (known as Interchange Fees) increase the "riskier" a payment method is deemed to be. To reduce these Interchange Fees, many virtual terminals come with an added feature known as "Interchange Optimization."'
Interchange Optimization: Interchange optimization is a technique whereby a processor ensures that credit cards are processed in the cheapest manner possible by submitting transaction data in order to qualify for lower rates.
Virtual terminals are able to "optimize" interchange by automatically submitting additional data on each transaction. Importantly this means that you can take payments just as you normally do and the payment process requires no additional data or information from you or your patients.
Interchange optimization is particularly important if you accept business credit cards or card-not-present (keyed or ecommerce) transactions, as these card-types typically carry higher fees.
To illustrate what the Interchange Optimization savings could look like, we have included a table of interchange fees for various Mastercard Credit Cards below:
Mastercard Interchange Table
You will note that Data Rate II fees are significantly cheaper than Data Rate I fees. In order to qualify for the lower rates afforded to Data Rate II, Mastercard requires additional information be submitted and a virtual terminal is the most seamless way to do this.
By using a virtual terminal transactions may qualify for Data Rate II Interchange Rates, resulting in an automatic reduction in fees of ~1%.
Free Virtual Terminal
At Zilment we believe in lowering credit card processing fees, not raising them. That's why we are able to offer a Free Virtual Terminal on every processing plan chosen through Zilment. To get a Free Virtual Terminal click here.
2. Credit Card Authorization Forms
A credit authorization form is a document that grants a business permission to charge a customer's credit card on a recurring basis - whether on a monthly basis or when services are performed. Credit card authorization forms are most often used by businesses that take payments over the phone or email, and add an extra layer of protection to avoid chargebacks (transaction disputes).
Chargebacks: Chargebacks occur when a customer is able to successfully dispute a transaction. This not only results in a refund to the customer but also typically results in expensive chargeback fees (typically $20 to $100 per occurrence).
For medical practitioners, a simple yet effective way to make sure you're paid on time (while reducing chargeback risks) is to include a credit card authorization form in your patient onboarding materials. This form allows you to collect a patient's credit card details, billing information and makes it extremely difficult to dispute the transaction down the road.
We've provided a template that you can use as is or edit to include your business name and logo.
Important Payment Security Information
If you do decide to collect a credit card authorization form, it's important to know that you have important responsibilities when it comes to protecting your patient's credit card information. By accepting credit cards you are subject to PCI Compliance standards, which state that you must "restrict physical access to cardholder data." Thus storing these forms in a secure and safe place is a must as failure to do so could result in a breach and strict fines. You might have also noticed that the template above doesn't ask for your customer's CVV number (three digits on back), as it's a violation of PCI standards to store this information as well.
What this mean's is that practically speaking you will need to call your patients as all card-not-present transactions require a CVV to be authorized.
A safer and more convenient way to store this information is by using a Card on File feature which comes with any Virtual Terminal (see above). Not only does it reduce potential liability and credit card fees, but it also allows a business to process payments without having to request a CVV code, eliminating the need to call the patient to speak over the phone.
Conclusion
The need to collect payment from patients is only increasing as more and more insurance plans require higher deductible and copays. While historically the collections process could be characterized as time-intensive and error prone, solutions such as virtual terminals can not only streamline the process but also reduce collection times by over 50%, reduce your credit card fees and reduce breach risks.
At Zilment we believe in lowering credit card processing fees, not raising them. That's why we are able to offer a Free Virtual Terminal on every processing plan chosen through Zilment. To get a Free Virtual Terminal click here