Recourse Financing: A Win for Patients and Providers

When providers decide to engage in patient financing, they often must choose between non-recourse and managed recourse financing. 

Of the two, managed recourse financing is the more patient-centric option as it is not only inclusive (accepting all patients no matter their balance or credit standing), but providers retain control over what action to take should a patient default on payment. Managed recourse financing also protects patients from unfair lending practices like punitive or retroactive interest. It allows providers to design an option that best fits the needs of their patients without any cap on the total loan amount. 

While non-recourse financing (initially developed for elective and cosmetic procedures, along with pet care) has long been a fixture of the healthcare industry, managed recourse financing empowers providers who want to prioritize the patient experience while optimizing revenue cycle management. 

Managed Recourse Financing Defined

Terms like recourse financing and non-recourse financing can be confusing. The key difference between the two is which party assumes the risk if a patient defaults. In non-recourse financing, the lender takes on the risk, essentially “buying” ownership of the loan. If the patient doesn’t pay, the lender can pursue payment however they see fit, including credit reporting and harsh collections practices. 

Managed recourse financing is different because the liability for payment and risk of non-payment remains with the provider. If a patient fails to pay off their loan, the net difference is returned to the provider to determine what should be done with the unpaid debt. Providers may choose to send a patient account to charity care (i.e., free or discounted healthcare), write it off as bad debt, or, as a last resort, send it to collections.

With soaring deductibles now the norm, managed recourse financing is applicable to the majority of healthcare costs for non-elective care. Insurance deductibles and credit scores can vary widely among patient populations, meaning recourse financing is the best option to ensure all patients qualify and receive sufficient financing for necessary medical care.  

The Patient’s Perspective: Top Benefits of Managed Recourse Financing

Access and equality in healthcare continue to be a challenge. 

Non-recourse financing typically requires hard credit checks, which means a large segment of patients (especially those from marginalized segments of the population) will be turned down. Often, many patients who need the help can’t even qualify for a non-recourse financing plan. This type of patient financing also generally sets credit limits based on a patient’s debt-to-income ratio, leaving many patients without the total amount needed to pay for healthcare services. 

In addition, all these added conditions come with administrative strain in the form of extensive paperwork and lengthy approval processes. 

Every patient deserves access to a flexible payment plan aligned with their individual needs. Managed recourse financing accomplishes this by:  

  • Eliminating barriers to affordable care. 
  • Increasing access to care. 
  • Breaking down the systemic exclusions that exist for many segments of the population.

Managed recourse financing encourages financial transparency by empowering providers to have discussions about how patients will manage their healthcare expenses before receiving a statement. 

Transparent conversations about healthcare costs reduce financial uncertainty for patients and improve their overall healthcare experience. A better patient payment experience drives revenue and patient loyalty, with over half of consumers reporting that they prefer healthcare providers who offer financing options that adapt to their needs. 

The Provider’s Perspective: Risk Management and Efficient Collections

Choosing the right patient financing partner carries significant implications for a provider’s revenue cycle, payment processes, patient experience, and the overall well-being of patients. Here are three reasons managed recourse financing is superior from the provider’s perspective: 

1. Financially Beneficial for Providers

Managed recourse financing produces a significant ROI, and total program yield is historically three to four times the size of a non-recourse program. Providers can see 80% collection rates in addition to retaining up to 100% of the patient community. Programs feature 100% inclusion, acceptance, and flexibility, driving down bad debt. 

2. Lighter Administrative Load

By partnering with a third-party managed recourse financing partner like AccessOne, the entire patient payments process is streamlined. During a time when healthcare staffing shortages are a significant challenge for providers, having a partner who takes on all aspects of account servicing, from sending statements to answering questions, can save hours of administrative work. There are no applications for staff to fill out, and patients even have the option to self-enroll. 

3. Control Over The Patient Experience

Finally, the patient payment experience is a crucial part of the overall patient experience. 

Providers lose control of the patient experience with non-recourse financing, which is one more compelling reason to choose a managed recourse route. Sadly, many lenders turn to potentially aggressive methods of pursuing payment… methods that could negatively impact both the reputation of a provider and patient loyalty. 

At the University of Kansas Health System (UKHS), high deductibles and rising out-of-pocket costs led to a new approach to sharing out-of-pocket costs of care prior to the point of service. In addition to helping eliminate financial stress with clarity in communications and patient estimates, the health system revamped its patient payment plan to include long-term 0% interest patient financing for patients in need. 

The results for UKHS have proven the success of the program as 95% of patients are current with their payments. 

Leveraging Managed Recourse Financing for Patient Engagement

As a healthcare provider in 2023, you’re probably looking for a way to help your patients manage out-of-pocket costs for care. It’s become a critical need for revenue cycle teams across the country, as patient payments account for 35% of provider revenue. Patients are healthcare consumers, and the health of the patient-provider relationship serves as the foundation for a financially healthy organization. 

On the contrary, excluding patients from financing options (often those that need it most) can cause a breakdown in the patient relationship and reduce total payments received by the provider. Non-recourse financing, in addition to rejecting segments of the patient population, often means exorbitant fees, high interest rates, retroactive penalties, negative credit reporting, and nefarious collection tactics. Think of it as a medical credit card; if the balance isn’t paid, the credit card company does whatever it takes to collect payment. 

Not exactly ideal for cultivating a long-term relationship based on trust. 

Offering a clear and structured payment pathway fosters stronger patient-provider relationships. A crucial element of providing excellent care is helping patients manage their healthcare payments in a way that makes them feel supported. When patients feel empowered with healthcare payment options, patient loyalty, collection rates, and the overall patient experience improves. 

Why AccessOne Is Committed To Managed Recourse Financing

Providers shouldn’t have to choose between getting paid for the work they do and offering an exceptional patient experience. 

In our efforts to make affordable healthcare a reality for all, AccessOne’s managed recourse financing solutions are designed to balance the needs of patients and providers with equal priority. The Hippocratic Oath is not limited to clinical care; it is integral to every step of the patient-provider relationship. As a leading third-party patient financing company, we offer flexible term limits and 0% interest payment plans to every patient that is in need of a financing plan. Patients also have the option to lower their monthly payment if needed.

In addition to ensuring all patients have access to affordable care, inclusive payment options are vital to the future sustainability of healthcare systems in America. Providers can be part of the solution by putting patients first with managed recourse financing. 

Both Patients and Providers Win With Managed Recourse Financing 

If you’ve been on the fence about offering patient financing or your existing patient financing program isn’t delivering the results you expected, it’s time to take a look at managed recourse options with a third-party patient financing company like AccessOne. 

Managed recourse financing has the potential to strengthen the patient-provider relationship while maximizing and accelerating payment. Your success as a provider is directly connected to your patient’s ability to pay. With managed  recourse financing, you can ensure every patient has access to fair financing, regardless of their current financial standing. 

Request your demo and start designing a patient repayment program that fits your healthcare system today.

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