Monday, January 4, 2016

Health Insurance Deductible Financing: The Growing Need for Accessible Payment Plans to Cover Out-of-Pocket Expenses

Since the Affordable Care Act was singed into law, the number of insured has been on the rise, meaning patients have greater access to high cost procedures crucial to their health, but a noticeable roadblock has started to emerge blocking the path to payment for many patients... high deductibles.  The downside of insuring those with preexisting conditions is that higher deductibles are unavoidable.  With stagnant wages, rising medical costs, and increased insurance costs, the purchasing power of patients is on the decline but their need for quality healthcare has not changed. 

The average deductible for an unsubsidized Bronze plan under the ACA is $5,731.  For a middle-income family facing a high cost surgery or procedure, this could be a devastating blow considering that many families don't have that kind of cash available after paying for everyday expenses.  Creating an easily accessible path to payment for patients on a budget relieves a heavy burden and allows families to stay focused on the decisions that matter most, those concerning their health and not their pocketbook.  While patients have some options in terms of payment plans or patient financing, most options fall short on either the administrative or patient side.

In-House Billing

When administration staff cannot collect full payment up front, patients are often put on payment plans.  Problems often arise when busy administrators try to act as a bill collector in addition to all their other responsibilities.  Outstanding receivables start to pile up and patients stop returning phone calls.  As deductibles increase and out-of-pocket costs rise, more and more patients need payment plans to pay off their balances resulting in expanding collection problems. 

Medical Credit Cards

Medical credit cards are a very popular option in today’s market for financing out-of-pocket medical expenses.  Administrators often utilize 3rd party credit card programs to outsource billing and collections and to get upfront payouts for qualified patients, greatly improving cash flow.  While these credit cards often carry short-term promotional terms that can be attractive to patients, high default interest rates often over 26% only create more financial trouble for patients.  Patients often fail to recognize the pitfalls of these credit cards when faced with a serious medical procedure, putting the focus on their health and not realizing the long-term financial repercussions. 

For administrative staff, the best approach in most cases is for professional bill collectors to collect the bills but the bill collectors don't need to be the bad guys.  Simple, straight forward payment plans with fixed terms and no “gotcha rates” will be crucial to the financial health of families facing rising deductibles as well as for administrators that want to leave their patients in good hands while still getting up-front payouts to help manage cash-flow.

Wednesday, November 20, 2013

When it comes to financing a cosmetic medical procedure, patients don't need another credit card.

In today's elective medical marketplace the predominant means for financing cosmetic medical procedures are medical credit cards.  Credit card based patient finance programs can be a handy tool for financing small, repeat transactions but are not well suited for large, one time purchases such as a cosmetic procedure.  Medical credit card programs are loaded with fine print, excess charges, and high default interest rates (usually close to 30%).  Patients are generally sold the credit card option with a 0% promotion (usually 12 months) which is great but if the patient does not pay off the balance within the promotional period they have a big problem on their hands.  Many patients have no idea that the default interest rate is so high and of course most of them do not take the time to read the fine print.

patient financingMedical credit cards don't just cause problems for patients, they cause problems for providers too.
  When a patient gets their notice in the mail that the promotional period has passed and they see that they now have a 30% interest credit card, patients many times become angry at the provider for offering the program to them in the first place.   In addition, the provider gives up control of the patient transaction because the credit card product can be used at any other provider who offers the same program.  That means that their marketing dollars might benefit their competition.  A provider gets the patient in the door; they get approved for the credit card and then can use that line of credit at their competitor.

Patients and providers are both better served by a patient financing program that uses a closed-end, fixed-rate installment loan instead of a credit card.  The provider keeps control of the transaction and patients have a loan with a low fixed rate of interest, a fixed payment, and set term.  The patient is told upfront exactly how much they will be paying for the procedure with interest and because most of these program use simple interest, patients can pay off early with no penalty to avoid interest charges

Thursday, May 9, 2013

East Bridge Funding Announces the Formation of Sunstone Acceptance Company

May 9th, 2013 - Charleston, SC: East Bridge Funding (EAST BRIDGE) has expanded its at-need funeral financing program and is now marketing the program exclusively to the funeral home industry under the name Sunstone Acceptance (Sunstone).  Sunstone provides funeral homes with the ability to offer their families a closed-end, fixed-rate installment loan to pay for funeral expenses at the time of need. The program is non-recourse to the funeral home and is available in all 50 states.

“The funeral industry is a great opportunity for us,” said Daniel O'Connor, Managing Director of East Bridge Funding. “There are not a lot of true at-need financing options out there for funeral homes. Most of the programs we have seen are billing and servicing, or account management programs and the few standard loan programs that do exist are priced for marginal credit or second look financing. While these options are useful to funeral homes, we felt that the industry needed a solution that offers the same type of pricing and terms to both funeral homes and families that you would expect from a major bank finance program. Families will appreciate the security of having an affordable monthly payment on a fixed-rate installment loan and attractive APR, while the funeral home will increase there service offering at a very minimal cost.”

The Sunstone Acceptance financing program can be used by participating funeral homes that have access to the web.  Applications are submitted online and decisions are generated within minutes. The paperwork can be executed in the funeral home or can be sent to the family member electronically for execution via email. “To be effective, we knew the program had to not only offer attractive terms, but also had to be easy to use for both the funeral home and the family,” said Mr. O’Connor. “Our program has also benefitted from having a funding partner who maintains a strong reputation for providing excellent service to debtors. We couldn’t be happier with how this program has developed and are excited to offer it under the Sunstone Acceptance brand”.

Wednesday, May 1, 2013

East Bridge Funding Announces Direct to Consumer Loan Program

East Bridge Funding (EAST BRIDGE) has partnered with a specialty lending company to launch a direct to consumer finance program. The program provides approved applicants access to an unsecured loan that they can use to make larger purchases (purchases over $5,000). The program is available in all 50 states and takes minutes to apply.

“Because of our influence and recognition in the consumer financing space, we constantly have consumers contacting us directly for loans,” said Daniel O'Connor, Managing Director of East Bridge Funding. “That’s really not what we do. Our focus is installing programs for retailers and service providers so that they can in turn offer financing terms to their customers. However, we always thought it would be great to offer a traditional direct loan service so we could help customers who call us direct. Since our service offering focuses on unsecured lending, we needed a finance partner that could provide a program with attractive terms and rates for unsecured loans and that is just what we found. Customers can apply in minutes and usually have the funds within a week.”

East Bridge Funding sees this as not only an opportunity to help those consumers contacting them direct but also their business clients. Daniel O'Connor explains, “Sometimes, we are approached by businesses who have had difficulty getting approved for consumer finance programs because of underwriting issues related to the product or the business. These businesses can send customers to us for an unsecured loan that can then be used to make the purchase. Using this method, there is no cost to the retailer like there is with most consumer financing programs or credit card transactions.”

Friday, January 18, 2013

Furniture Dealers Seek Finace Options for Customers with Average Credit

Financing has always played a very important role in the marketing efforts of furniture retailers.  Drive past any furniture store and you will most likely see messages in the windows that read "financing available",  "No interest financing", or "no payments until...".  Furniture stores use financing programs to make their large ticket items more affordable to the general public.  When the economy went south in 2008 many of the programs that the furniture dealers relied on disappeared or the credit restrictions where increased to the point that furniture dealers saw large decreases in approval rates leading to declines in sales at a time when they desperately needed them.  Only those customers with near perfect credit were granted access to credit with these programs.

Fast forward to today. Not much has changed with the primary finance programs of the major providers. They are still not approving what they used to pre-2008.  However, multiple programs have been introduced to the industry that focus on those individuals with poor credit (Scores below 630).  Some of them can even approve individuals without a credit check.  They work because the debtors in these programs are charge exorbitant amounts of interest and fees to offset the risk associated with financing such high risk individuals on an unsecured basis.  This also enables the lender to keep the cost to the merchant or retailer relatively low (similar to what they pay for prime programs) so they have become popular in the industry.

Now the issue that furniture dealers face is how to get financing for the person who has "average credit" or scores from 630-720.  Many of these customers are declined by primary providers, but these types of customers would never agree to the fees and interest attached to no credit check or leasing programs. In their minds they have good credit and expect the same kind of terms and promotions offered by primary programs.  East Bridge has seen a large increase in dealers contacting us looking for that "middle ground" program.  Luckily for them, there are lots of 2nd look options available. The problem that dealers run into is that the interest rates charged to the debtor in these programs are generally in the high teens or low 20's (which is a reasonable rate for unsecured debt to someone with less than perfect credit), so the lender must increase the fees to the dealer to make up the rest of the risk. This creates the unusual circumstance where a dealer will pay less in financing charges for someone with a poor credit score than a decent one.  With current and changing lending laws in the debtors favor, there isn't any magic solution to this problem.  Dealers have begun to understand that if a 2nd look program is inexpensive to the retailer, the approval rate will be poor because there is little room for risk that lender can take for approvals.  The key to success for a dealer is to find a program that works within their margins but can still be effective in approving average credit.  Dealers need programs that are designed to fit into their sales model based on what they sell, how they sell it, their customer demographic, and where they sell it (online, in-store, etc).

Contact East Bridge Funding to learn more about the types of furniture financing programs that might work for your business.

Wednesday, August 22, 2012

East Bridge Launches Consumer Finance Program for Online Retailers.

East Bridge Funding (EAST BRIDGE) has launched a new consumer program that allows online retailers and service providers the ability to offer their customers the same finance options, including promotional programs, as brick and mortar stores. This program is available now to businesses nationwide selling products online or over the phone to customers within the United States.

 “Consumers who shop online for major purchases want the same financing options that are available to customers purchasing these products and services from local businesses.  Why should consumer finance programs be exclusive to brick and mortar retailers?” asks John O'Connor, Sales and Marketing Director of East Bridge Funding.  “Online retailers have low overhead and can deliver direct pricing that brick and mortar stores can't compete with, but one advantage that brick and mortar stores have had is the ability to secure effective consumer finance programs.  Many banks and financing companies have not offered these types of programs to businesses selling products and services online because of an increase in assumed risk associated with an online sale. We feel we have put together a program that works for the online retailer but address and controls the added risk in the process.”

John continued by saying “To be successful, the program must be easy to use from both the business side and the customer side. This program has the ability provide instant decisioning on submitted applications and the entire paperwork process is handled electronically, making it fast as well as inexpensive. Businesses can transact with consumers over the phone or the web and execute the needed documents for funding via email.  The process is quick and effective and retailers won't need to make any major changes in their sales process to utilize the program.”

The program is available today to businesses that qualify.  A due diligence process is required for approval to use the program. Companies must be in good financial standing and will be required to submit specific documentation.

Thursday, May 10, 2012

US Online Retail Sales Rise 17% In 1Q

Online retail spending increased 17% in the first quarter of this year according to a recent Wall Street Journal article. East Bridge has seen a large increase in the number of online retailers contacting us looking for finance programs for their products or services. Putting together financing programs for online retailers brings new challenges to lending institutions. Online retailers typically have smaller margins than that of brick-and-mortar stores so it is more difficult for them to absorb the costs associated when offering programs to customers. In addition, because there is no face to face interaction with customers, lenders and retailers have to take extra steps to make the transaction simple and easy as well as preventing fraud. East Bridge is working with a number of lending sources on new programs for jewelry financing, furniture, and specialty products.