Your Dumbest Money Questions Answered

Andrea (00:03):
Well, hi there. I am Andrea Watkins, and if you're listening to this while juggling three patient calls, checking in a couple patients, taking a payment, selling skincare, and trying to catch your doctor in between procedures, you might be working in an aesthetic practice.

Blake (00:17):
And I'm Blake Lucas and this is Practiceland. This is not Your doctor's podcast. Welcome back to Practiceland. Thank you all so much for listening and again, please make sure you're sharing and subscribing to the podcast. Love you guys coming back every week for some great content. Today, Eva's back with us. You may remember Eva was with us earlier talking about conversions, but today is a little bit different. I'm going to put myself in the hot seat a little bit. I'm handing over the controls to Eva and she's going to ask me some questions today, so we're going to see how this goes. I'm really excited. Eva, I'll hand over the reins to you.

Eva (00:55):
Hi Blake.

Blake (00:56):
Hey.

Eva (00:58):
The inspiration for today came from something that you have been doing for a very, very long time. What is that thing that you've been doing?

Blake (01:08):
I've been lucky enough to be at PatientFi for a minute now, and every time we bring on a new employee, I take him through kind of what's been dubbed PatientFi 101, which is our kind of a history lesson in PatientFi, but also a crash course in financing and lending. We do have a lot of people, it may be a surprise we do have a lot of people coming in with no financing backgrounds like our marketing teams and even some of our customer support teams. They may be coming in with great experience from whatever industry they were before, but this could be a big switch for them. So I take 'em through all those things. And really also too, I kind of make a joke that it's the class in high school that we should have had that should have taught us all about financing and helped us prepare to be adults that we never really got. And so it's something I'm very proud of and it's something that I think a lot of employees get a lot out of too. So there's some value here.

Eva (01:58):
I was a good student, that probably doesn't surprise you, but we had to take the Iowa test of basic skills when I was in elementary school, middle school. Do you remember that?

Blake (02:09):
No. What is that?

Eva (02:11):
It's sort of like the whatever state test you guys did.

Blake (02:15):
Oh yeah.

Eva (02:15):
That was what we had in Minnesota. It was called the Iowa Test. Well, there was one module of the Iowa test that I never passed and my mom, I am 49 and she still makes fun of me and that module was called Calculating the Best Buy.

Blake (02:29):
Ooh, nice. So that is very, very on topic.

Eva (02:34):
I am going to throw myself on the sword of embarrassing financial knowledge today and I'm going to try to help everybody not make some of the mistakes that I've made and maybe we can all learn from the stuff that, so I am actually a little surprised that in your job descriptions for hiring at PatientFi that you don't require any kind of knowledge of finance or finance products, that it's just not there.

Blake (03:04):
I feel like a lot of those things are skills that can be taught. All these things are very easy for people to learn and pick up and we all have our own personal experiences, whether it's dealing with student loans or credit card debt or I made a dumb car purchase, which I did do a few years ago, so we've all

Eva (03:22):
You did?

Blake (03:22):
Oh yeah, bought a car I should not have bought that. Just,

Eva (03:26):
Oh, I can't wait to hear that story.

Blake (03:27):
Yeah, well it's like the car you want, but it's like, no, it's not the smart financial decision. So dealing with that now, but those are skills that people can learn very easily and can be taught. So I feel like my perspective on hiring is I'd rather have people come in with those skills that are more natural or things that can't be taught, like the empathy and great customer service and listening skills or active listening and looking for some of those things. And we go back to thinking about hiring and stuff.

Eva (03:59):
I had the chance to work with one of your coworkers and she was tremendous and I watched her present to the staff at a medical spa. She had me come along and she actually had come from Allergan and was the Botox rep or one of the skincare reps. So she took that skillset. I totally get what you're saying and why you would transfer people over with different skills, not necessarily finance.

Blake (04:24):
And it's just finding that great talent. We have a lot of people, there's actually probably 30 or so people that came from Apple from technology backgrounds and working also in the retail stores and I think Apple's known for their customer support. So it's taking those skills and just transferring it and I think you can learn financing and hopefully those that are listening that maybe are thinking like, oh, financing scares me or it's not a topic I like, I just don't care or I don't, this hopefully sparks that interest and helps you realize, oh, it's not that scary. Anyone can figure this out.

Eva (04:57):
What kinds of things do your students or your new hires not know that surprise you?

Blake (05:07):
I don't know if I'm necessarily surprised, but I think the things that are most common definitely are first thing off the bat is the difference between APR and interest rate. Those are two totally different things and a lot of people don't realize that. I see, you're writing these things down already

Eva (05:22):
I don't know either, Blake.

Blake (05:23):
Love it. Love it. No, yeah, see exactly. We get through life and it's like, no, this is not, you deal with this occasionally it's those big, well, you never deal with it that often, but when you do, it's usually the big things, right? It's like buying a house or a car or a big purchase for something like that that you really start to pay attention to some of these things. But yeah, interest rates and APRs are not the same thing.

Eva (05:46):
Well, okay, let's start there since I don't know.

Blake (05:48):
Get right into that. Yeah, so your interest rate and an annual percentage rate or your APR are two different things. Your interest rate is simply the cost to you to borrow money. So for every dollar that you borrow or your financed amount or your principal amount is a term for that. Your interest rate is the amount that it costs you and that's usually shown as an annual percentage. So that's where you kind of get that confusion where annual percentage rate, interest rate, but they are actually different. So interest rate is just basically the cost for the funds directly over time that you're charged. Your annual percentage rate is a great way for you to great tool to compare loans and it's something actually to protect consumers. So you're going to see, usually when you're comparing mortgages or you're comparing auto loans, the APR is really going to help you look at those two different products and decide which one's the best one for you.

(06:46):
So you might have two loans with the exact same interest rate but different APRs. And when an APR represents is all the additional fees that could get charged for taking out that loan. So that could be things like origination fees, documentation fees, administration fees. Using PatientFi as an example, we do not charge any upfront fees for loans. So there's no documentation fees, no origination fees, no application fees, none of that stuff. So in our scenario, your interest rate and your APR will always be identical, so they can be the same. So you might have a 10% interest rate and a 10% APR that can be exactly the same, but if you've ever bought a house and you have a mortgage and you're looking, we're going through that whole, there's so many documents if you can remember, but there's one that we will go through and give you a breakdown of all of your rates and kind of the cost of everything. One will show your interest rate and right now that might be what like six, 7%. I forget where mortgages are right now.

Eva (07:44):
If you just bought a house.

Blake (07:45):
Yeah, so right now you might see six or 7% on your interest rate, but then when you go down a little bit, you're going to see APR and you might see it's a whole percentage point higher and that's because it's going to include all those extra fees that you have to pay. So now if you're looking at two different APRs, that can definitely help you. You might see one shows 5.4% and one says 5%. Okay, this one over here, it's going to cost me less in total to take out this loan, which helps me as a consumer.

Eva (08:15):
I think what I want to know is where would I get screwed in this deal?

Blake (08:20):
What you want to be able to do is look at, so every deal that you're going to do or every type of loan that you're going to have, you're going to have something called a TILA Box, which stands for Truth in Lending Act. So government imposed this, so on your loan documentation, it's usually on the very first page there's a box that shows the amount that you're going to borrow, the interest rate that you're going to pay, the dollar amount of interest that percentage represents, and then the total. And if you're looking at that box and you're seeing an interest rate and you're seeing an APR and you're seeing two different things there and they're very different, drastically different, there's something going on.

Eva (09:09):
Is it accurate if I say the interest rate is to borrow the money and the APR is to finance the entire amount?

Blake (09:16):
Close. Yeah, yeah. The interest rate is the cost over time that you pay. It's the amount that's generating over the amount that you borrowed, so as the longer you have a balance, the more interest you pay where APR is going to include that, but also these one time maybe hidden fees that might be lost in the fine print. The APR is supposed to bring that to the surface to protect you as a consumer to make sure, hey, okay, I know what my interest rate is, but this APR is super high. Why? So there must be something else in here that's causing that to go up.

Eva (09:53):
That makes sense. Okay. Are you ready for me to embarrass myself again?

Blake (09:59):
Yeah, go for it.

Eva (10:00):
I finished school, grad school in 2000. I'm still paying off my student loan. It's year 25,

Blake (10:08):
Man,

Eva (10:10):
Nobody told me at 18 or 22 or 24, that student loan was actually like a credit card, and that that interest was going to compound and compound and compound and I don't even like to think about it because I know how much I've paid in and it's something like quadruple or quintuple, the amount that I ever borrowed in the first place.

Blake (10:31):
Yeah, it's brutal and that's a song I've heard many times and it's brutal.

Eva (10:36):
That actually warms my heart a little.

Blake (10:38):
Yeah, you're in a boat with a lot of people.

Eva (10:41):
A lot of people at this point. It's been there for so long that the interest is paid and so now it doesn't even make sense for me to pay that thing off because it's cheaper for me to, it's like the bill is like $200 a month. And I don't feel it. Whereas if I paid the whole thing off in one big lump sum to make it go away, I would definitely feel that. And also I'm pretty sure ask me again in November, I know the date when it hits 25 years on the nose. I'm pretty sure it's going to get, I don't know for sure, but I'm very much crossing my fingers that it's going to get wiped out and forgiven.

Blake (11:20):
Forgiven.

Eva (11:21):
Everything I've read suggests that's true, but regardless,

Blake (11:25):
I know those student loans are brutal and the thing that always gets me to is that even if you declare bankruptcy, you can't get rid of them. They're protected even in that situation. So it's unbelievable that you put 18 year olds into those situations.

Eva (11:41):
If it doesn't get forgiven, I'm still going to pay the whole thing off and I'm just going to prevent my own kids from ever doing something like that that would be saddled around their neck for the rest of their life. Because mine's small. I mean if you ever read in the student loan subreddit, some of the people who've got 200, 300, 400, doctors.

Blake (12:02):
Yeah, right. Oh my gosh.

Eva (12:03):
Yeah, they're in really, really serious trouble.

Blake (12:08):
Yeah, absolutely. Yeah. Then they throw to try to help those borrowers to make sure that they pay, they change the payment terms to, what is it? It's based off of your monthly income, so it's like income based monthly payments, which are another awful trap because, and you may not have a choice, that might be your only option, otherwise you can't even pay it, but the entire payment pretty much is interest. There's really nothing paying down your balance, it's all just going towards the interest that's being accumulated.

Eva (12:43):
You're just kicking the can down the road.

Blake (12:45):
Yep, yep. Which like you said,

Eva (12:47):
I did that a lot.

Blake (12:49):
No, you're not the only one. There's so many people that are in that same boat. It's awful.

Eva (12:53):
You said the word payment terms there and we haven't talked about that yet. So is there an easy way to understand how we should think about, look at and review payment terms?

Blake (13:03):
Yeah, kind of mentioned that TILA box and that's a really important term to know about or just understand is that very first page of most loans are going to have, they are required by law to have. So if you don't see that maybe run, but there's going to be a page that's on there that shows a breakdown of everything. So it's going to show you, your monthly payment is going to show you your APR. It's going to show you the total amount of interest in dollars and then how much you're going to pay or how many payments that you need to make. So maybe it's a 36 month loan, you're going to pay $300 a month for 36 months. At the end of that, this is the total amount you're going to pay with interest and principle. And so it gives you a really, really helpful breakdown.

(13:45):
It makes it very clear and that's kind of the idea behind Truth in Lending is to be transparent and show the consumer exactly what they're signing up for. So I think it's really important to know that, but I think it also kind of just depends on your own personal financing or finances and budget and understanding what you can and cannot afford and trying to make the best decision for you and your family or you personally just on what you really can afford and not try to, in so many times we do it, but we overstretch ourselves and push a little bit too far. We really want that thing and maybe even just waiting six months a little bit more just to save up can help.

Eva (14:25):
Are there any traps in terms that you've ever seen? Do predatory practices ever show up in that part of a loan agreement?

Blake (14:35):
No. There are other things that can happen that might be in the fine print. I've seen this where one, especially when it comes to 0% interest offers, so those are very prevalent. They've been around for decades, very common to see that. And by no means are they predatory necessarily, but there are situations where the interest rate can change. So if you miss a monthly payment for whatever reason, maybe your debit card changed numbers and you forgot to update it on the autopay or you forgot to move money from one account to the other to make sure the autopay went through. Just simply that simple of a mistake can trigger what I feel like is a bit predatory, which is a new interest rate that becomes applicable to your total balance and now you're stuck with that and the 0% is gone and you're now in this 30% plus type of interest rate loan that now, oh boy, this is going to be tough to pay off.

Eva (15:32):
And then I imagine if you'd wanted to try to talk to somebody about it, you would find yourself

Blake (15:39):
Fighting an uphill battle, one, trying to get ahold of someone and then two, they're just trained to not be empathetic or just like to hammer down the policy and go, Nope, this is the documentation you signed and that's it. I think also too, there's other things that you always want to make sure that you're aware of. One, anytime you're in a high pressure sales type of situation, to have the confidence to say, hold on, I'd like to read this. I'd like to slow down. I'd like to leave and think about it, whatever it may be. Trust your gut in those situations when you have that feeling, don't give into that high pressure sales type of situation.

Eva (16:19):
Giving me flashbacks. So when I was about, let's see, it was a 2000, the first car I bought myself was a 2000 Mazda. It was a protege five, but that's like the Mazda three now And the car, I remember at some point I remember going backwards and looking up the total amount that I financed and it was something like $18,000.

Blake (16:46):
Okay, for a used car. Not too bad.

Eva (16:47):
No, it was new. It was new, but this was in 2000 and I'm pretty sure the price of a Mazda three now is not much more than $18,000.

Blake (16:56):
No, no. So that's not too bad. That's a big,

Eva (16:59):
I was there by myself. They knew I needed a car and they kept me there for something like nine hours.

Blake (17:08):
That's got to be against torture laws, you know what I mean? It's literally like you're an interrogation.

Eva (17:15):
Physically painful. And a lot of it was them just leaving me sitting there near the coffee pretending that they had to do something.

Blake (17:23):
Right. And they're gone for half an hour, 45 minutes and then they come back and then you're just like, oh, exhaust. And by that time you're so committed.

Eva (17:29):
You're exhausted and you're like, just get me out of here. I'm going to die if you keep me here one more minute.

Blake (17:34):
Right? And you're so committed to it that you're like, no, I got to see this through. I got to,

Eva (17:39):
So the arc of my feelings about that car were, I love my new car. Oh my God, I overpaid for this car. But you know what, Blake? I kept that car for 16 years and then I sold it for $3,000 and I once at the end of that car, having that car calculated what it cost me a year to own that car. It was something like $52 a month. I mean it was so, so, so, so low. I still won. Most people don't keep their cars for 16 years.

Blake (18:09):
No, that's unbelievable. I struggled to keep my cars for four or five years and then I start to get long in the tooth and I'm like, okay.

Eva (18:16):
Okay, so now you brought up the car, so you got to tell the story about the car that you bought.

Blake (18:20):
Well, no, I dumb, and my family needed a bigger car and so we could have just gone with the go find a used Tahoe or something like that from five or 10 years ago or something with not too many miles. And then I ended up finding a Cadillac and I was like, oh, why not we do that? It was just a few years ago in the height of the used car market where it was just the chip shortage, so didn't even really negotiate was like, oh, cool. Yeah, same kind of thing. Just really wanted the new car and that was mistake. Absolutely mistake.

Eva (18:59):
Are you still underwater on the car?

Blake (19:01):
Oh yeah, fully underwater on that one, probably about 10 grand. So that's fantastic. So we all make mistakes.

Eva (19:08):
You're committed now.

Blake (19:09):
Committed now, and hey, I'm on your path of going to 16 years. I'm going to get my money's worth out of this dang thing.

Eva (19:15):
But do you love the car?

Blake (19:16):
Absolutely love the car. Actually I do. Absolute, absolutely love the car. It's been perfect for us. I have twin boys and my wife and the dog and if we want to go somewhere, go camping or do something, it fits everybody. It's fantastic. I love it. If I could talk to myself back then and would've been like, no, let's go find a used one. Don't do this.

Eva (19:36):
I should point out that my experience with that first car really taught me a lot about my future car purchases and I have not ever made a mistake like that again. I mean that the damage was permanent and the lessons were good.

Blake (19:51):
Yeah, absolutely. You make that mistake once, you'll never do it again.

Eva (19:55):
And you can, I mean, being able to walk away is really the trick. I don't need a car today.

Blake (20:01):
Make them fight over each other, go to different dealerships, make them fight over each other. You don't need to sign anything today.

Eva (20:08):
Okay, so let's kind of bring it into cosmetic surgery financing a little bit. In a practice, how many different ways to pay are there in a typical practice?

Blake (20:20):
I mean obviously you have credit card, check, cash, that kind of stuff, but then you start to get into the financing options. I think what's been entrenched for years is the care credits or Alphaeon credit type of program, so those would be your medical credit cards, those being exactly the same as any big box retail credit card. They may be branded a little bit differently or branded towards healthcare, but in reality, those are repackaged products that came from retail, from standard retail. So with the big draw there is going to be like the 0% offers. So you might get six months, 12 months, 18 months, 24 or whatever it may be, and you have to pay off whatever balance you have on that card within that timeframe or you pay a pretty significant interest penalty. This is typically compounded interest. So that is not the same as simple interest and I think that's going back to one of the questions you asked me earlier about what are the things that people don't know.

(21:19):
This is a big one and is a complicated one, so I'll try not to get into the weeds too much, but compound interest is not the same as simple interest. You may get an auto loan through your credit union that might just have a simple interest rate to it. So it's very straightforward. Compounded interest is just that it's interest charged on top of interest as you get through it. So one of the ways that these banks try to squeeze a little bit more extra money out of you is, I'll try to do a simple example. Let's say you charge a hundred dollars to your card and every single day there's a little bit of interest that accumulates. So what compounded interest is going to do is let's say you swipe for a hundred dollars. I'm going to use some kind of big numbers just to make it simple.

(22:06):
This is maybe a little bit more dramatic than what it would be in real life, but let's say after day one you owe $10 an interest. If you're going to pay off your balance that day, it'd be $110, but usually you go a whole month and then you make another payment. What compounded interest is going to do is going to take that $10 and it's going to add it to the hundred and convert it to basically a principal balance. So that's the amount you borrowed. So it's almost like you charged $110 to your card and then on day two it's going to use that percentage rate and use 110 as the starting number and not a hundred. Then it's going to, so now day two, your interest might be at $12. So every single day it's compounding on top of itself. So the interest is getting added to your principal balance and then they're calculating the percentage based off that new larger number as opposed to saying it's a hundred every single day and then calculating that interest and then just adding, then there's a bucket of interest that's growing

Eva (23:09):
Your examples extreme, right?

Blake (23:12):
Yeah, that's very extreme.

Eva (23:13):
It wouldn't wouldn't be $10.

Blake (23:14):
It wouldn't be $10, but that's just to show to understand how that can grow very quickly. The other thing that these medical credit cards can do is not only is it a daily compounded interest rate, so let's say you sign up for one of these 0% offers, you may have six months to pay off your balance before the interest kicks in, but what they're doing is they're calculating that interest in the background from the data purchase and they're doing that daily compounded interest, so they're calculating that and then let's say six months in a day, you still have a balance. They're going to take all of that interest and then they're going to add it to principle and then charge interest going forward on that new balance. So that's again, same kind of idea there. It's all that compounded interest that can add up very, very, very quickly, can be difficult for many people to get out from underneath.

Eva (24:06):
Anyone who's ever gotten a credit card and used it without having the money to pay the bill should have learned this lesson by now.

Blake (24:16):
And the tough part is to, if you're a day late, dollar short, or even if you just accidentally miss a payment somewhere down the line, just human error, you just forgot or whatever it was, it doesn't matter. The interest is there and you have no recourse and that was the agreement and you're done. And so that can be really, really tough to deal with.

Eva (24:37):
PatientFi's plans don't have compound interest, right?

Blake (24:41):
No. Going back to what we talked about is customer service or the patient and the provider being our north star, one of the main key differences is that we do charge just a simple interest on our programs. We don't do compounded interest ever, even though we very easily could, we decided that wasn't in our best interest and we decided even though we could make more money doing it that way, it's not worth it.

Eva (25:05):
If a patient misses a payment on a PatientFi plan, what happens to them?

Blake (25:11):
Right now? Nothing. We do have a 10 day grace period for most of our payments, and so you have 10 days to make up that payment. After that, there can be just a standard late fee, 10 bucks or 15 bucks, whatever it might be, but the interest penalty if you're on a 0% promotional plan with us does not come crashing down on you, doesn't change your promo. You still have the same end date, so if you have a tough month, maybe even two, you can get caught back up and still pay off by that promotional end date and take advantage of that offer.

Eva (25:44):
That's really unusual.

Blake (25:47):
Especially in the lending space. So it's again, going back to we want to be that friendlier option. We truly understand our audience, I think like our providers and our patients, and we want to help patients see the results that they want and not have to be left with hefty interest penalties. It's a great question for coordinators and providers to ask their lenders what happens in this situation? Because if let's say they do miss a payment and then all that interest comes crashing down and the patient is extremely upset, obviously because now they have this huge interest balance that they have to pay off, that does come back to the practice in some way. There's a reputational risk there where now it's, Hey, practice, you coordinator, you recommended this product to me and look where I am now. And that can have negative consequences to you and your business and the repeat business that 'em with just a bad taste in their mouth. And so I highly recommend coordinators, if you listen to this, ask your lenders, what happens if my patient misses a payment?

Eva (26:52):
So cash, check, credit card, financing, but financing is still getting kind of lumped into one big bucket and we've talked about the medical credit cards and now we got to get to the others, like whatever PatientFi is, that is not the other things that I just said. So how is it different?

Blake (27:15):
Yeah, I would say defining PatientFi a little bit, it would be really like an installment payment plan or a very similar to a loan patient. The way that we work is we obviously direct deposit funds to the medical provider or the doctor's office, so there's not really a change of cash to the patient. Then to the borrower you might see with a traditional loan or even an auto loan where you might go in and they might hand you a check and say, take this to the dealership where you actually are the recipient of those funds. So we are really more like an installment program that helps patients pay for procedures and make it more accessible.

Eva (27:53):
If I asked you why,

Blake (27:55):
Yeah.

Eva (27:55):
Does that question even make sense?

Blake (27:58):
Why we do it that way?

Eva (27:59):
Yeah,

Blake (27:59):
I think PatientFi was really born out of plastic surgery and a lot of our first customers, initial investors too, our plastic surgeons, and so we felt like that was the best way to support our providers. It was the simplest way and also too for borrowers and patients, it's less complicated so I can quickly apply and pay for something without really having to do any legwork besides the application process. And maybe

Eva (28:28):
Was there somebody was frustrated with the customer experience or the patient experience in this area and said, I'm going to fix it.

Blake (28:35):
Yeah, exactly. I think, well, besides maybe doing a credit card, the only other financing options before that might've been going to my bank and taking out a loan and then coming back and you think of that.

Eva (28:46):
I had a client years and years ago who went over to the local credit union and set up a deal with them where her patients could get loans from the credit union for treatments.

Blake (28:57):
And even that, as much as you try to streamline that process, that's a major interruption into your sales flow or just routine. And as a coordinator, that makes it really difficult to convert. Now I got to wait for them to go over to the credit. Can you imagine today?

Eva (29:13):
You're in front of me and you're ready to buy and you're like, but you got to go over to the other side of town and meet this person and sit down at the table and fill out the papers.

Blake (29:22):
Yeah, absolutely. We talk about just an absolute halt like screech the brakes, but so beyond maybe the credit cards, there's not really, there really wasn't really any other options and you may have to go through this really convoluted, clunky way of doing things. And so to be able to provide patient really got started with the idea that we want to do better by patients and we want to do better by doctors. We felt like both parties were being a little bit taken advantage of from the status quo of things and felt like this is a ripe opportunity for us to change things.

Eva (29:57):
What year was that?

Blake (29:59):
This was 2017 when PatientFi really first got started and we spent a year, year and a half building a product and then going live in 2018 into medical provider's offices. That has always been our guiding North Star is to be the friendlier option to do right by providers and do right by patients and offer them a safe financial option compared to what was already out there.

Eva (30:25):
What kind of feedback did they give you in those early days? When did you start?

Blake (30:29):
I started in February of 2018.

Eva (30:35):
Before the launch?

Blake (30:36):
Yeah, before the company started actually, our birthday's coming up here next week, so eight years that we've been doing business. I came in just short of a year. And then my initial role, well, there was just only a few of us in a room type of thing, getting this thing started. So that was really fun. It a wild, wild time sales too. So I was going to trade shows doing all things traveling.

Eva (30:59):
And so when you introduced the product to providers, you said that you were doing that. What did they say to you when they understood how it was different? Do you remember any of that feedback?

Blake (31:10):
Yeah, I mean, the way we got started to our product has evolved over the years, so even just what we offered in those early days is very different than what we offer today. Initially, the product that we were providing was an in-house financing option. So what we wanted to do is kind of flip the script and give leverage back to the doctor's offices. Up until that point, every time you finance a patient, you lose money flat out you would lose money. So we wanted to find a way to provide a safer payment option for patients and then at the same time make financing profitable for practice. And so our product was very different. We'd learned very quickly over the years that doctors love the idea, but maybe don't want to be a bank because essentially in that model, they're the lender, they're the bank and that.

(31:58):
So there's a lot of inherent risk when it comes to that. So for a lot of doctors, they're like, I don't know if I love that idea. And we learned that the fees that we pay for financing, we've worked into our bottom line and we've been profitable for many, many years using these programs. But what we don't like is the customer service that we receive. The lack of attention from our account reps, what we feel like is a little bit predatory on the financing side for our patients where they miss a payment, all this interest comes crashing down on them, looking at PatientFi's product that solves so many of those things, we would much rather switch to you guys, but obviously if you can pay us upfront like we do with these other lenders will make the switch. And so PatientFi over the years has been able to grow and establish and be able to really, I mean it comes down to cash being able to pay these doctors upfront for all the loans that they're putting through.

Eva (32:54):
Is there a financial genius behind the scenes making this all run? Like Oz?

Blake (32:59):
Yeah. Oh my gosh, absolutely. We've been able to attract some absolutely amazing talent at the top. Our chief risk officer, John Roberts is absolutely amazing and probably the unsung hero of everything because it's his beautiful mind that comes up with the decisioning and the approvals and how much we should approve for and all those different types of things. And the risk side of it that keeps us profitable every single year and growing every single year. Credit is due to our marketing teams that I think in our practice, success managers and BDMs, that all are so close to the medical providers that they are constantly in that feedback loop where they're hearing how things are going or seeing what the challenges are and trying to think around the curve and provide additional service. I think the challenge that you have is being in this space as a lender is you quickly become a commodity.

(34:00):
It is a very competitive space now. Our rates, if you want to talk about pricing, our rates are very, very competitive against anyone else that you want to look at us against. What makes us different, what makes us special is the people that we assign to you as your practice success manager who really truly do care and typically come from that industry, like the aesthetic industry that we have former practice coordinators that are on our staff that were doing it for 15 years that, it was funny, cuz I trained them and then now they're on our staff as practice managers. And it's unbelievable because they have such amazing firsthand knowledge of how things work.

Eva (34:41):
Why haven't these people been on the podcast yet?

Blake (34:43):
Oh, we got to get 'em on. Yeah, I could start name dropping some people, but yeah, it is fantastic. But then our marketing teams too, also coming from the aesthetic industry and having just a wealth of knowledge there and creating programs that I think provide tremendous value. You could throw things at the owners all day, but when it comes down to it, and the reason why we even have this podcast, it's about the coordinators, the ones that actually talk about it on a daily basis, and those are the people that we care about just as much or more than the owners or the doctors.

Eva (35:17):
I'm proud to be part of that team in my own way. Alright, I want to try to take this back to applications. So I'm going to tell you my last embarrassing story. We needed a mattress, we had our previous one for a decade. The springs were sticking out

Blake (35:36):
Too long.

Eva (35:37):
You suffer, you're 10 years older too, and so you really need to sleep, right?

Blake (35:43):
It's important.

Eva (35:44):
Absolutely. So finally I was like, okay, we're doing it. I got a member in my head in the back of my mind, I'm like, you can't spend more than 4,500. And that was a lot in my mind.

Blake (35:53):
That's a lot In the mattress.

Eva (35:55):
This for me was the ceiling. Oh, I'm about to get really embarrassed.

Blake (35:58):
That's got must have computer chips in there analyzing sleep and it's got wifi.

Eva (36:04):
Yeah, I think I'm splurging here. This is my ceiling right in my mind. So se go to the mattress store together. You don't do this by yourself. You both got to sleep on it. And what I don't realize in the moment is that the mattresses that they have in the front where they lead you to try mattresses, they're all like 6,000 to 10,000.

Blake (36:34):
Oh my gosh.

Eva (36:35):
Okay. So these are the featured mattresses. Let's say these are the top shelf of the mattresses. They're the most attractive looking.

Blake (36:43):
Yeah, they're beautiful. The hand sewn, hand stitched,

Eva (36:48):
They ask you, what do you guys want? And you start describing what you want in your mattress. And so she points you to try this one and you lay down and you go, oh,

Blake (36:59):
Oh, this is heaven. It's a cloud.

Eva (37:01):
Oh, I need it. Okay. And so you're trying, well, what you don't realize is she's only letting you try the mattresses between six and 10 and the rest of them are like redheaded stepchildren in the back corner. Right? The $4,500 mattress is like, it's like in the garbage can in the back.

Blake (37:25):
Yeah, it's awful. And you lay on it and it probably feels just like a plank of wood and you're like, this is awful. Why would I want this?

Eva (37:32):
And so I've analyzed this scenario over and over and over, and what I realized was it was set up exactly to do what it did. It was designed this way because when we finally sat down at the table, the mattress we wanted was $10,000, but it wasn't, it was only 422 a month.

Blake (37:57):
Oh, I can afford that.

Eva (37:59):
Of course I can.

Blake (38:02):
It's the monthly payment. Oh, Eva, you gotgot, they gotcha.

Eva (38:08):
I got got. You got got on the Cadillac

Blake (38:10):
On the car. I walked right into it.

Eva (38:11):
I got got on the mattress. But I've spent a lot of time thinking about this as framing as an example, because if you are a patient coordinator and you're presenting options to your patient, you're not going to trap them into doing more than they want. But the idea that they can afford more than they think they can is valid here because if you're presenting it like it's zero interest and it's this much a month for this long. And also by the way, you don't have to start paying for 30 days, which I didn't with the mattress either. It was just like tomorrow you get to sleep great. And you don't even have to think about it for a month.

Blake (38:52):
Yeah, how amazing.

Eva (38:55):
So that's my example of how the financing can get you a much higher ticket item than the person may think that they can afford. And I would never have dropped 10 grand that day on that mattress.

Blake (39:10):
Now you love the mattress though.

Eva (39:13):
No, I hated it.

Blake (39:14):
Oh no.

Eva (39:15):
It was a disaster. I was falling off the side. So then I had to go back in and I had to return that mattress and I exchanged it for another mattress that I hate. So I'm actually still in trouble with this mattress.

Blake (39:30):
Oh, you're 0 for two on the mattress. Oh no.

Eva (39:32):
Yeah. And you can't return the second one. I have to warranty it out. There is actually something wrong with it, but you have to have the do not remove under penalty of law tag.

Blake (39:45):
Oh no.

Eva (39:46):
To file a warranty claim and I can't find it.

Blake (39:49):
Oh no. Awful. I thought you go to jail for taking those off.

Eva (39:55):
Well, I didn't take it off. My husband's going to jail.

Blake (39:58):
Yeah, he's like, rip that off.

Eva (40:00):
I have no idea where it went.

Blake (40:03):
Oh no.

Eva (40:03):
What can we learn from this?

Blake (40:06):
Well, I hope that, I mean with the example of if you did actually love the mattress, you did get twice as much mattress for Yeah,

Eva (40:17):
Let's say I was sleeping perfectly for the last two and a half years since this happened. I wouldn't be complaining right now. I'd be like, is the greatest thing I ever did because I got the best mattress, way more mattress than I ever could have imagined and I only have to pay whatever it is, 267 a month.

Blake (40:36):
And I think when I think about practices that maybe don't have or don't talk about financing options, and we've talked about this in other episodes, but there's usually two trains of thought or two complaints that they might have, which is either my patients don't have the credit profile or they just can't afford it, no type of thing, which is not necessarily true. And we have soft inquiries for that exact reason. So there's zero negative impact to apply and see if you can get approved. And many times they can, and many times you get approved for a lot more than you think they can. And so that can completely change the conversation. And then the other side of it is the opposite, which is, oh no, I have very affluent demographic. They can absolutely afford it. They can pay cash for these things. Why would they need financing?

(41:28):
I'm not even going to bring it up. But you forget that. Why do those people have money? Because it's not because they're good at spending money, it's that they're good at spending other people's money and not their own. And so many times they see the value in financing because it allows 'em to keep the cash that they have in their account and use it for whatever they want or save it or make money on it and then pay monthly for it either at a low interest rate or 0% interest rate promos and those types of things and then pay it off within that timeframe. And so in both those situations, what it allows you to do is talk about the complete solution, which is the full treatment, which you don't have to take away or start to chip away at things they can't afford it or it's not in the budget or whatever it may be. Now you can actually talk about the whole thing, which is going to lead to higher satisfaction rates from patients, which is going to lead to more repeat business. And it's financing becomes that gift that just keeps on giving if you can bring it up early and often.

Eva (42:29):
More revenue for the practice, more surgery, all good things coming from just removing all the friction from that one part of the process.

Blake (42:40):
Yeah, absolutely. Yeah,

Eva (42:46):
I think the last thing that's important in this tiny part of the process, it really is, it's so important and yet it's such a small moment if it's done correctly. It's like anything, you do a lot of hard work to make something really simple and easy for people. I think, oh, that was easy. Oh my gosh, you have no idea how much work we did to make it easy. Kind of like having a podcast.

Blake (43:17):
Yeah. So much work involved.

Eva (43:23):
You're touching on things that the practice doesn't always understand how with every form of payment, I would even argue if someone writes you a check, now you got to take it to the bank. There's still a cost to every form of payment that somebody, I don't know, if you give me a bag of cash, what would the cost be? Money laundering? I have to figure out how to launder the money. I'm not sure. But with the ways people pay now credit cards, how does the practice pay in this scenario with PatientFi? Where is the cost to them?

Blake (44:01):
Yeah, I mean similar to the cost of credit cards where there's a merchant rate for swiping a Visa, MasterCard, American Express, you're going to pay a small percentage of each transaction. That same type of idea applies to really any type of third party lender that you're going to bring into your practice. I think all the major names are going to process it that way, which is a transaction that comes off the top of the amount that's financed. Those fees can range. And actually more recently there's different types of models now in that pricing. So early days, it could be just a fixed rate that you would pay on each transaction and that would go up depending on the term selection or the length of the 0% promotion that you want to offer. Essentially the longer the term in any of those cases, the higher fee that the doctor's going to pay for that.

(44:57):
What's changed more recently in the last few years, and I think this is due to competition in the space, is risk-based pricing, which takes into account the borrower or the patient's credit profile and then charges a fee essentially based off of the level of risk of that borrower. So if you have more borrowers coming in with perfect credit scores, you're going to be paying significantly lower fees for those. And then if you have the riskier borrowers coming in, the fee for that patient's going to be higher. And so what that does, or the benefit to the practice for that is two things. One, they typically will see higher approval rates like that lender

Eva (45:38):
Amounts you mean?

Blake (45:40):
First rates, and then also two amounts that they're approved up to absolutely, you could see a change there too, but just getting into the door or getting approved that first approval, you're going to see that increase in just approvals. Reason being is the lender might be more willing to take a risk or go lower into some of those subprime or would be the lower credit scores. So think mid six hundreds, low six hundreds, maybe even diving into the five hundreds in the FICO score ranges. For you as a coordinator, that's a great thing, obviously there's two things I think coordinators care about, which is how many of my patients can you approve and how much can you approve them for? And so the first one gets taken care of with these risk-based pricing. For owners, they like the idea of risk-based pricing because then the fees to them are as low as maybe 1.9 or the fees become lower on what those higher.

(46:39):
I think the marketing spin on that though, that's a little bit of a marketing spin. So I think it's important for coordinators and owners to think about when you're looking at risk-based pricing is what is the combined rate that I'm going to pay? What's the average rate essentially that I will pay? Not just like, Hey, this 1% or 2% rate looks fantastic, but are you actually going to tap into that? And so one, it's kind of having a good understanding of the makeup of your demographic, which can be hard. You don't know people's credit scores. So it's kind of a test to see where you end up. I'd say in most cases you're going to average out at about six or 7%. So even though you're loving this 2% rate that they're advertising, in reality, if you took all the fees that you paid, that combined rate is probably closer to six or 7% on average.

(47:31):
And so the lender's still making the amount of money that they wanted to from the beginning, but they're just kind of spinning it a little bit with the marketing, but you can see higher approval rates, so that could help you convert more patients. So there's that give and take in that scenario. The other thing too is line assignments, we call it in the industry, but it would say, what are patients approved up to? So another thing that comes into play is like, yeah, they got approved, but they got approved for $500. That's worthless at that point, who they got another

Eva (48:04):
Sad trombone.

Blake (48:07):
And so at that point, they can't really move forward at all. And so there is kind of a balancing act between those things. When lenders are looking at it, they're trying to find that perfect medium of I need to be able to approve as many patients as I can or many borrowers as I can without putting myself in too much risk where I'll be out of business next year because I approved everyone and no one paid me back. But also too, I need to approve as much people, but I also need to approve them for enough to cover whatever the average cost of treatment might be. And I think at PatientFi, we really pride ourselves at extremely high approval rate as well as some of the highest line assignments or approval amounts in the industry. And now we go up to like $50,000 in many cases. So that was fantastic for medical providers with they're trying to cover those larger treatment ticket costs.

Eva (49:04):
There really is a lot of need for approvals that high and it seems shocking, but facelifts are regularly 30,000 and higher,

Blake (49:17):
Right. Absolutely.

Eva (49:19):
So PatientFi does this risk-based pricing, is that how you do it with everybody or can they choose another way?

Blake (49:26):
That's a great question. We actually allow our providers to choose so you can go with risk-based pricing, you feel like that's going to be the better option for you, and maybe you have a little bit more information on rates that you're being charged now and can see that, okay, I'll definitely see an improvement here or save costs if I go that route. Or you can go with a traditional fixed route as well. But I think what's really important is that none of that is hidden to you. And if there's any question or if there's any misunderstanding of it, that you should be able to get someone on the phone instantly to be able to discuss that and go through it in great detail. And we provide that to anyone that's interested in our program.

Eva (50:08):
Where do providers get tricked by financing companies? Does that happen?

Blake (50:14):
Some lenders might only provide certain types of payment plans to qualifying patients, and so that becomes very difficult for, I think that puts more pressure on the practice to try to convert that patient into maybe a payment plan that they don't want and that doesn't feel right. And there are situations where, okay, we're only going to give 0% interest offers as an example to certain credit tiers and reserve it maybe just for the highest tiers. And so it becomes kind of like this VIP group that's difficult to get into. And so then majority of patients fall into just high interest rate type of payment plans, which so from some people that might be a better option just because it's more structure. But also too maybe a poor experience for most patients, I would assume where now they're a bit disappointed where now, hey, I got approved but I didn't get what I wanted or maybe even didn't get approved for enough on top of that.

(51:16):
So it's insult to injury, but so I think that's where providers sometimes can be led astray. And a PatientFi, every patient gets approved for every offer. So if you're approved with PatientFi, you're going to see every offer that's available to you that the provider has preselected. And so if that's a 0% offer, you're going to get that. Or if it's our fixed rate plans, you're going to see all of those options to you and be able to make as a patient or a borrower, make that decision and not have to worry about, well, did I qualify for it?

Eva (51:48):
Okay. I have a goofy question for you. We're going to end with something my final embarrassment, maybe not embarrassing, but maybe just transparent.

Blake (52:01):
Okay.

Eva (52:03):
I think back on some of the things I have put on payment plans and I see a theme, which is I buy things on payment plans which are boring, not fun, and they're just really awful. I bought gutters for my house on a five-year loan and it came with a coupon book and I had to mail the coupon every month. It was not that long ago, Blake.

Blake (52:33):
A coupon book. Amazing.

Eva (52:35):
The mattress, not fun.

Blake (52:36):
Boring.

Eva (52:38):
What do you think is wrong with my brain That I'm willing to finance boring, not fun things, but not things that make my life better.

Blake (52:51):
I think if I could step into my psychiatrist role maybe a little bit, but well, I think this is true, this may not true of you, but I think it's true of many people too, is that in the aesthetic world or especially in plastic surgery, that is a very vulnerable position that I think a lot of patients put themselves into. You're starting out from a place of man, there's a part of me that I feel like could be better and that could be a very self-conscious place to be in. And then you finally go into doctor's office and there's a ton of information that they give to you and that can be very scary and overwhelming, and you're showing off maybe a part of your body that you're just not happy with, and that's embarrassing and that's uncomfortable. Then it comes to, okay, let's open up your finances and try to figure out and let's identify, can you even afford this?

(53:46):
And talk about really opening the wound and really jumping into what's the most vulnerable place I can be in. I think that all of those things combined and it's just being so overwhelming that people aren't thinking about financing this. It is just not the first thing they think of. Also too, add in coordinators and their own comfort level and confidence talking about financing options. We've had whole episodes about how to position financing and how it can really change your practice, but it still can be a big struggle for so many coordinators to talk about because it is uncomfortable. Nobody wants to talk about money. It's like religion, politics, money. There's all the things that you probably trained not to talk about in good conversation. So yeah, I think it's all those things and it is scary and overwhelming, and so we kind of have to take that sting away somehow. And I think that starts with the coordinators and the relationships they can quickly build and just showing that confidence and then that's going to turn things around for patients.

Eva (54:48):
I like where you're going with that, and if I put my conversion hat on, there's so many things that slow people down from getting to that yes,

Blake (54:58):
Yeah.

Eva (54:59):
Yes, I'm moving forward that we should not let, can I pay for it? Be one of those things. If it's this easy to knock this one out of the way, we should knock it out of the way and then we can talk about other things like, no, it's not going to hurt. Or, yes, we can help you figure out where it fits in the calendar, but not can I afford it?

Blake (55:22):
Yeah, that shouldn't be the scary thing that needs to be removed from the equation. And now focus on the thing that obviously coordinators are so great at that they've trained for so long. Focus on the things that they love to talk about and do. And to add to the idea of this slowing down in the process when you're looking at financing options, I think it's so important for coordinators to position financing early and often. So try to get that financing application in front of them before they even come into the office, have that taken care of so that there's not this shock to their system as soon as they come in or make it difficult to talk about once they're finally in that consultation. Getting that done early helps streamline the whole process and makes it very seamless and takes away to that maybe fear of affordability or accessibility for the patient. The thought of how am I going to pay for this now goes away because you've had that conversation early.

Eva (56:23):
I like how you guys have made the new patient calculator so easy to use and find, and I'll give you a hack that maybe you haven't even heard of yet. But if I send the link to the practices patient calculator, I send that URL as a link, as a text message. They can save it to their home screen

Blake (56:46):
Ah.

Eva (56:47):
On their phone, like an app icon. Then just have the calculator handy on their phone anytime.

Blake (56:54):
Oh, that's fantastic. That's a great idea. Put it on an iPad in the office too. Just bing, bing calculator and you start talking about it.

Eva (57:02):
Oh, that's such a good idea.

Blake (57:04):
Yeah. And then the other thing that hopefully coordinators, if you're using PatientFi, you've seen in past releases, we're always adding new features, but there is ability to print out or email slash text customized payment plans. So once a patient applies and is approved, you can go into their page, that user page, and you can go into the calculator and then type in custom amount for whatever the treatment's going to cost. And then it will showcase all of your payment plans and the monthly payments associated with that amount that they're going to finance. And you can text that to them. You can email 'em the PDF, you can download it, print it if you want, throw it in their file, give it to them in a consultation. So there's this nice, beautiful branded payment calculator page that you can give to your patients. Got a wild customer service story or a sticky patient situation? Send us a message or voicemail if your tale makes it into our "She did what?" segment, we'll send a thank you gift you'll actually love. Promise no cheap swag here.

Andrea (58:06):
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