Ophthalmology Business is focused on business topics relevant to the entrepreneurial ophthalmologist. It offers editorial, opinion, and practical tips for physicians running an ophthalmic practice. It is a companion publication of EyeWorld.
Issue link: http://digital.ophthalmologybusiness.org/i/138484
continued from page 24 In more ways than one, the downturn devastated the income and FICO scores of households that had been considered good credit risks. Many struggled to honor their mortgage and credit card obligations, but the payments were sometimes late. Most will be able to rebuild their credit when they successfully recover economic equilibrium, but it will take time. During the interim, a number of them will still need and want better vision. In the meantime, even consumers who never lost that equilibrium may be saddled with a FICO score that is no longer an accurate reflection of their creditworthiness. During Q4 of 2008 and through 2009, most banks slashed some credit lines and closed inactive credit lines, with the effect of reducing the amount of credit available to many consumers whose situations may not have been otherwise affected by the downturn. As a result, these individuals saw their available credit ratios shrink, which made them look "maxed out" on their credit lines. When these credit ratios shrink, so do the FICO scores of prudent consumers whose always-timely payments had made them excellent credit risks. Previously credit worthy non-working spouses and those with low income but good credit scores have been affected by the Ability to Pay Act, which requires banks to ensure that credit applicants have the ability (defined solely as income) to repay the credit they are requesting. And some of those consumers still want the benefits of LASIK, but their applications for credit are being declined by lenders still offering "one-size-fits-all" financing tied to the current FICO score and somewhat arbitrary measures of ability to 26 pay, even though they otherwise remain the same good risks they had been in the past. On average, up to 50% of all applicants are being declined, and many more are not even applying because they anticipate they will be declined. You are already aware of how your patients' credit acceptance affects your practice's procedure acceptance. You may have already realized that the traditional sources of credit you have relied upon are not offering those patients the credit they need. You need a "second look" credit source that can maximize approvals, not only for those with challenged credit, but also for those with good credit who cannot be approved by traditional lenders. Tough times have challenged the industry to come up with innovative, game-changing economic solutions, and that is what we are seeing now. While the financing partners you have used in the past are still doing business as usual, key industry experts have dared to reinvent healthcare consumer financing. They are making it easy to access the solution you and your patients need— you just may have to look elsewhere for an unprecedented degree of flexibility that results in considerably higher approval rates. This financial innovation means a consumer's FICO score determines not whether the application is approved or denied, but instead which bank will provide the applicant credit for vision/LASIK, dental, orthodontic, cosmetic, hearing, and veterinary services. The patient interface with the lender remains much the same. When applying online or at your office, patients instantly learn if they are approved by one of several lenders. Ophthalmology Business • July 2013 We can expect to see this innovative multi-bank flexibility give birth to other new credit products that will make it possible to approve many who may have been declined before the economic downturn, with minimal risk of loss. When you have "second look" financing options in place, many potential LASIK patients who have been declined by business-as-usual financing in the past may want to take a second look at you and what your practice can offer them. You already know who they are; you have their contact information and a golden opportunity to do some very focused marketing to bring them back in to your office. LASIK providers routinely communicate competitive advantages with regard to technology and experience, yet an innovative credit solution may be just as powerful a message; the first providers in their markets to signal that they offer "second look" financing may enjoy a valuable competitive advantage. Unemployment rates and other economic indicators will continue to fluctuate, even in the best of times. People with less-than-ideal FICO scores will continue to seek solutions for their vision problems. You can't solve their financial difficulties, but you can offer them better, more flexible financing options than in the past. You will look better when you make it possible for them to see better—any way you look at it, that's a win/win situation. OB Mr. Rabourn is the founder and managing principal, Medical Consulting Group, Springfield, Mo. He can be contacted at firstname.lastname@example.org.