![]() The patient can see how the down payment affects their monthly payments and helps them decide the right mix for themselves. The company lets patients use a slider loaded with their financial and insurance information. To help offset the move toward third-party financing, OrthoFi offers flexibility to patients in determining their down payments and monthly fees. This is in contrast with OrthoFi, which charges 2-3%. The typical discount rate for third-party financing is 10-13%, says Gelles, which means that on the whole, a doctor is only getting 87-90 cents on the dollar for those aligner treatments. While third-party financing does solve the issue of cash flow, it also comes with the downside of reduced overall revenue. But that percentage has been trending upward, and aligner companies like Align Technology have even started partnering with third-party financing operations to meet this new demand on Invisalign cases. Third-party financing in orthodontics is nothing new, typically making up about 3% of all transactions compared to in-house financing. OrthoFi’s data shows that once aligner treatments make up 45-50% of the business, it begins to strain cash flow. Still, it becomes an issue for practices with a higher reliance on aligner treatments. Many orthodontists can cover the increased upfront costs through revenue from the rest of their business. Third-party financing seems like a solution to the problem, allowing someone else to take on the patient’s loan and giving the practice the full amount up front. So, patients are not willing to depart with that much money to get started,” says Gelles.īut if an orthodontist accepts the lower down payment, they could find themselves upside down on their transaction with the aligner provider. “We know that trying to get $1,500 to $1,800 down from a patient to cover the lab fee on day 1 has a very negative impact on conversion rate. But patients have shown that they are less willing to accommodate it. ![]() What’s more, the lab fees create a conundrum for orthodontists who might want a higher down payment than average from patients to pay their aligner providers. OrthoFi has noticed that orthodontists are starting to consider third-party financing through companies like CareCredit to offset the upfront costs. ![]() “What I am seeing, because of the rapid increase in the use of aligner treatment within a practice, is increasing openness and desire to think about third-party financing,” says Gelles. Whether in combination with bracket treatment or on their own, aligners typically come with lab fees that put a strain on the cash flow of an orthodontic practice. Orthodontists are embracing aligners at much higher rates as part of their treatment offerings. But that has also affected cash flow for practices.Īnother trend in orthodontics has exacerbated this cash flow issue. In particular, staffing has become more expensive and candidates harder to find, causing practices to increase fees to compensate. It also boosted cash flow for orthodontists that needed revenue quickly to pay for staff and overhead.īut the last and likely final federal stimulus came in March 2021, and now in 2022, down payments and pay-in-full cases have returned to normal levels.īut like COVID-19 itself, some effects from the pandemic have had a lingering impact on the industry. Year-over-year, it was a boon for a temporarily crippled industry. Not only were patients returning, but they were also electing to pay more money and, in some cases, all of it, up front. “The pandemic and the related federal stimulus have been really interesting in terms of impacting average down payment and average percent pay-in-full, which actually has gone up since the end of the office closures,” says Oliver Gelles, senior vice president of OrthoFi. With the $2 trillion CARES Act placing cash in the hands of millions of Americans, suddenly a lot of people had some money to put toward elective procedures. Cash Flow CrunchĪccording to OrthoFi, one trend emerged soon after the spring lockdowns. Patient volumes have returned to a relatively normal level across dentistry, and with the latest surge peaking without further shutdowns, the future seems brighter.īut the initial shock from 2020 has had some unexpected effects on patient financing. With nearly 2 years of hindsight, the pandemic’s effects on the orthodontic industry were severe but luckily short-lived. With higher overhead due to staffing issues and increased lab fees from a higher reliance on aligner treatments, many orthodontists are experiencing a cash flow crunch.
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