How to Offer Plastic Surgery Financing to Patients

Updated on April 1st, 2022
How to Offer Plastic Surgery Financing to Patients

In the United States, cosmetic surgery is a $10 billion industry that grows every year. Even during the pandemic in 2020, U.S. citizens spent around $9 billion on aesthetic plastic surgery.

Nevertheless, plastic surgeons are finding it challenging to keep up with the demand for their services. Although the demand is on the rise, competition is stronger than ever. More importantly, many clinics struggle with maintaining competitive prices.

This is why some clinics offer financing options to patients who don't have the funds upfront. Plastic surgery financing opens the gate for people who want plastic surgery but can't afford it right away while still providing an opportunity for clinics to make more money in the process!

Suppose your clinic doesn't offer plastic surgery financing options, and you're not flexible with payment plans. In that case, it can be difficult to stay on top of the competition. This article aims to explain how you can improve your plastic surgery business through consumer financing.

Plastic Surgery Financing Overview

Not so long ago, only people with deeper pockets could afford plastic surgery. Thanks to recent advances in technology, cosmetic surgery became acceptable to others as well. Breast augmentation, hairline correction, and body lifts are just a few examples of procedures that introduced new methods and equipment that made plastic surgery more affordable.

But even with advances, for most Americans, especially those who rely on personal loans for medical costs, plastic surgery remains beyond its reach.

The main reason is that almost all health insurance options don’t cover elective cosmetic procedures. People who want to improve their physical appearance often go with unsecured personal loans to pay the costs. 

An unsecured personal loan means that there isn't collateral for the loan. Instead, the borrower supports the loan with their assets, and the minimum loan amount depends on the borrower's credit score and credit history.

An average breast augmentation, for instance, costs around $6,525 in the United States, and other surgical procedures such as body lift can go all the way to $15,350, according to the same report. Keep in mind that the costs often don't cover extra fees such as anesthesia, hospital fees, and other healthcare fees.

As unsecured personal loans, plastic surgery loans typically go from $1,000 to $50,000. Still, it can vary depending on credit scores. Clients' credit scores also impact the interest rate, monthly payments, origination fee, and other medical credit elements.

Furthermore, patients can be hesitant to use traditional payment options. Credit cards usually come with a raised interest rate, meaning that even if the client uses a credit card, there are possible extra expenses of monthly interest rates and prepayment penalties.

Additionally, bad credit history means that lenders are less likely to provide the needed financial loan.

To attract more customers to your clinic, you need to provide payment options outside traditional financing. The more opportunities you provide, the more likely the customer will land at your doorstep and pay for the service.

Cosmetic Surgery Financing Benefits

To ensure your business stays afloat, you need to offer top-quality service first and foremost. But there are more quality plastic surgery clinics today than ever before, and it's subject to change in the future even further. Thus, when comparing clinics that offer a single way of payment to clinics that have several plastic surgery financing options, the latter usually enjoy several advantages. Some of the benefits are:

  • Bigger Patient Pool: Providing loan offers means providing service to customers with various financial backgrounds. The first client type is customers who can afford to pay for plastic surgery as a one-time payment either with cash or a credit card. But by focusing on that single group, you're stripping yourself from the second client type. The second type is people who theoretically can't afford a one-time payment or don't qualify for a conventional loan due to a poor credit score. But realistically, they have the financial power to pay for the service.  By limiting your payment options, you're directly pushing that client group away. Instead, it's better to convert them into paying customers.
  • Better Annual Revenue Gain: More users means bigger revenue. By covering all client types, you're creating more financial funnels for your business. If customers know that they can make the monthly payment for cosmetic surgery such as breast augmentation, they are more likely to accept. In the plastic surgery business, many clients are usually on the ropes when making the decision. Since they can't pay with a medical credit card, even if they have one, flexible payments can push the client in the right direction, thus increasing your overall annual revenue gain.
  • More Referrals: Although most small businesses focus on online and traditional marketing to spread the word, the reality is that referral is the king. Actually, customers are four times more likely to buy if referred by a friend. Research shows that referrals and a positive review have more power even than solid brand awareness. Following the same logic, more payment options mean more happy customers. And suppose the happy customer has a friend looking for cosmetic surgery. In that case, they are likely to refer your clinic to that friend, especially if the friend falls in the second client type and doesn't want to use credit cards to pay for cosmetic procedures.

It's no surprise that clinics that offer plastic surgery financing enjoy these benefits. As such, many clinics will try by offering internal loans. 

What Are Internal Loans?

Offering internal loans can be a reliable way of improving your financing options and patient financing.  Internal loans are a solution where a plastic surgery clinic provides personal loans and monthly payments without traditional credit transactions.

This way, the clinic becomes the lender that creates its plastic surgery financing solution. The business ensures that credit and loan transactions go smoothly both for the client and the clinic. That also means that the clinic takes on a heavy responsibility.

Keep in mind that you need to meet legal requirements to provide a loan to clients. Additionally, even though you want to be flexible, you still need to consider which clients qualify for the credit loan. Meaning, you need to have a solid financial background to assess which clients meet minimum monthly requirements.

Clinic employees need a strong understanding of loan policies and enforce them correctly since a minor error can result in a heavy hit to you as a lender. The penalty can be either financial or legal in the form of severe sanctions.

Clinics that decide to offer internal loans usually ask for an origination fee on their service. Meaning, clients need to pay a certain percentage of the total surgical cost in advance. The next step is to check the client's credit score and credit history to deduct if the customer qualifies for a plastic surgery loan.

Before you decide to take the internal loan road, let's check the possible challenges you might face.

Internal Loan Challenges

For cosmetic surgery clinics, numerous challenges can quickly occur if offering internal loans. You're the one handling and are the loaner providing an indirect personal loan amount.

Although this doesn't seem similar to a conventional personal loan at first glance, you still need to consider all traditional elements such as credit score.

Here are major challenges you're likely to face if you decide to take the route.

Loan Defaults

When providing a loan, you might provide one even though the customer doesn't necessarily qualify for a specific loan amount. This can result in loan default. Loan defaults happen when a client with a loan term doesn't pay the monthly payment on time.

For clients, loan defaults often result in severe credit score cuts and the impossibility of receiving future credit.

Although you might think that the debt isn't your worry, this can negatively affect your plastic surgery clinic. Not only do you have to somehow come up with the loan money, but you now also have to get it back.

Furthermore, although it often isn't your fault that the patient can’t afford plastic surgery financing, it can harm your company's branding in the eyes of other clients.

Default Rates

For lenders, default rates are a crucial measuring tool in determining credit risk exposure. If a lender has a high default rate, they often need to reassess their lending procedure. As such, the default rate can quickly stack up with just a couple of clients who fail to pay the loan and end up in debt.

Additionally, default rates are usually higher in healthcare financing compared to financing via a third-party lender. Although the default rate is a great way to keep an eye on your loss potential, it’s often too late if the default rate rises.

The default rate is the overall percentage of all loans that a lender writes of due to failed payments and can also refer to a higher interest rate forced on a client who misses their monthly payments on a loan.

To summarize, it can be hard to keep an eye on your default rate when simultaneously running a plastic surgery clinic.

Patient's Income & Credit Score

As mentioned earlier, it can be difficult to make rational decisions when you provide loans and offer cosmetic surgery services. It's essential to keep an objective approach when deciding if a client does qualify for personal loans and can pay the service.

The primary assessment is to check the patient's credit score, credit history, and current income. Since there are situations where a patient may be capable of paying the service, even with a bad credit score, it takes robust financing knowledge to make the right call.

Inexperience can lead to bad decisions that have adverse financial effects both on you and the patient.

Furthermore, a wrong decision cripples you in two ways. First, a patient that can't pay off the debt means a direct financial loss for you. Second, it can hinder you from providing the loan to a patient who can pay off the loan amount.

Financing Plastic Surgery Alternatives

Fortunately, there are alternatives if you're looking to provide plastic surgery financing but lack the experience necessary to judge a patient's credit score, the origination fee amount, or medical credit.

External Loan Programs

Opposite to internal loans, cosmetic surgery clinics can opt-in for external loan programs. External programs are often more accessible since you're not the one handling different medical financing options.

In other words, you allow third-party lenders to handle assessing client's credit score, possible payment plans, and loans. Finally, you don't have to worry about potential legal or administrative issues, resulting in a more streamlined and healthier financing planning.

For medical loans such as plastic surgery, the most typical external financing program is flexible finance plans. In other words, a plan tailored to the needs of a specific clinic and its potential customers.

This is a great way to tailor financial options to your customers and maximize your revenue since you won't use a general plan. Consumer financing can vary between industries, and you must go with one that fits your customer pool.

Third-party lenders often vary. For plastic surgery clinics, it's usually best to go with a  third-party lender that emphasizes the customer-first approach. The more a lending company pays close attention to customer's specifics, the better the chances that you'll offer reasonable financing solutions that benefit everybody.

Flexible Finance Plans Advantages

The most obvious benefit is that you're employing the service from a third-party financing provider who has vast financing knowledge and lending experience. But this main benefit spills over into other secondary benefits that play a massive role in your company's success. Here are some of the key benefits.

Better Conversion Rates

The better your flexible financing plans are, the greater the chance that you'll land a patient who not only is willing to pay but, more importantly, is capable of paying the service. This immediate boost your conversion rate can have a tremendous positive impact on your business.

Flexibility means paying attention to customer's needs but also capabilities. It is a sensitive balance between providing financial opportunities without compromising your revenue.

Some patients might be okay with certain monthly payments and the interest rate, but the origination fee can be why they decide to cancel the service. But, if you have a flexible plan that allows you to juggle the origination fee and monthly payments, it can provide that push the client needs to accept the plastic surgery offer.

Better Customer Loyalty and Retention

Research shows that a slight 5% increase in customer retention can increase revenue anywhere between 25% to 95%. A returning customer equals a paying customer for whom you don't have to pay secondary fees such as marketing costs.

It's no surprise that a single patient does more than one plastic surgery in their lifetime. A person going for a buttock lift might also come back for a breast augmentation or a breast implant removal.

If, besides quality service, you also offer reassuring financing options and personal loans, you can be sure to boost your retention.

Although plastic surgery is rising in popularity, people are still careful and won't go with the first cosmetic surgery clinic they find. This is usually your chance to build loyalty with customers and ensure they come back when they have to.

Better Market Competitiveness

Plastic surgery is a highly competitive market. Furthermore, people are willing to travel long distances (even cross-border) to get the best service possible.

Cosmetic surgery tourism is growing 25% per year, and the main reason is that customers can pay up to 80% less in other countries. That means that customers are willing to risk quality for a more negligible cost. In other words, even though people undergo plastic surgery for their looks, they still think about money.

By providing flexible personal loans, you're not only beating the domestic competition but international as well.

Picking the Right Plastic Surgery Third-Party Lender

When deciding on a third-party lender, you need to look out for a couple of things. As discussed previously, you want to go with one that pays close attention to your customers' needs and financial capabilities.

Always research and get to know the provider first to ensure their values and morals sync with yours. Going with a lender who only partners because they get their pie cut can mean that the lender ignores your needs. Commonly, this can result in generic medical credit plans that are the opposite of flexible.

Another thing to ensure when picking a third-party lender is to go with fair fees and who doesn't use prepayment penalties. Prepayment penalties are the fee a financing provider uses to force the borrower not to pay off their loan too early. This way, the lender can collect interest thanks to a slower payment schedule and negatively impact your brand.

Fortunately, it doesn't take much research to find the right provider if you know what you’re looking for.

Here's how to team up with Time Investment and create a financing solution tailored to your company's needs.

Time Investment & Flexible Plastic Surgery Financing Plans

Time Investment Company is a seasoned finance company with over 40 years of experience in consumer financing for plastic surgery clinics.

Since we have close ties with companies in different medical, healthcare, and cosmetic sectors, we know what clinics and clients need.

We know current customers’ paying possibilities and how to attract the right customers to your clinic and ensure they become returning customers.

Time Investment Company allows clinics to offer affordable payment solutions that benefit both you and your customers.

We are proud of our streamlined and straightforward process of providing loans. As soon as your patient confirms the order, we release the entire loan amount to you to get the necessary capital.

To learn further how you can start your flexible plan, schedule a call with one of our members, who'll be more than happy to explain the process in detail.

Create a Tailored Plastic Surgery Financing Plan

Plastic surgery is a high-potential business with long-term benefits. But to reap the benefits, first, you need to create a strong position in the market. A sure way to establish yourself is by making it easy for customers to pay for your service.

Get in touch with our strategic team, and they will help you create a custom plan for your business, so your customers get exactly what they need.

Sara Hafeman

With years of experience in the consumer financing industry, Sara Hafeman currently leads marketing and partner development at Time Investment.