I’d like to accept cards at my medical practice, but worry about fees; what are my options?

Not taking plastic can prove more expensive for your business in the long run than paying processing and merchant fees


While there is a cost associated with adding plastic as a payment option, consider how much it costs your business to only let patients pay by cash or check.

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Dear Your Business Credit,

I am a physician who owns a small family medical practice. When patients come in, we submit the charges to their insurance company, if they are insured, and then bill them for the balance.

We only accept payments by cash or check at the time of service to avoid credit card processing fees. However, with many patients taking months to pay us, our billing provider has suggested that we start accepting credit cards and health savings account debit cards, as well, to speed payments and improve our cash flow.

Do you think this is absolutely necessary – or is there some other way to encourage patients to pay us more quickly? On larger bills, the processing fees for credit cards will really add up. – Richard

Dear Richard,

I can understand why you don’t want to pay credit card processing fees. However, it is very likely costing you money as you wait for patients to mail in their checks. Every time you use a credit card to pay the practice’s bills when you’re short of cash, you are paying for those late receivables.

Check out all the answers from our credit card experts.

Ask Elaine a question.

See related:  How much it really costs your business not to accept credit cards

Want to get paid faster? Offer a wider array of payment options

With patients forced to cover an ever-growing share of their own health care costs out of pocket due to the growth of high-deductible plans, the more options you give them to pay you, the more likely it is you will be paid on time (or at all, in some cases).

And with many employer high-deductible health care plans connected to a tax-advantaged health savings account (HSA), more patients are using the debit cards associated with the HSAs to pay their share of their medical bills.

If you cut off that channel and force patients to pay you using their household cash, you are undoubtedly delaying the time it takes for them to pay you.

How delayed payments can affect your business’s performance

For insight into the financial issues for physicians to consider, I spoke with Vito Mazza, a consultant at the collection agency Kinum, who works for many medical practices.

By Mazza’s calculations, if you have $20,000 in accounts receivable that are delinquent – an amount that is typical for many small businesses – and generally operate at a 15 percent net profit, you will need to bring in an extra $133,333 in new sales to compensate for the bills that patients haven’t paid on time. He has calculated the costs of various-sized batches of late receivables on this chart.

Given that there is a limit to how many patients you can see in a week, trying to squeeze more appointments into your schedule to generate a cash cushion isn’t going to be a practical solution.

The economics of accepting credit cards

That said, there is a real cost to accepting credit and debit cards, as you note.

You must pay to maintain a merchant account (costs will vary according to factors like your transaction volume) and also pay swipe fees that average 2 percent for credit cards and have been capped at 21 cents per transaction for debit cards.

However, when you look at these costs in the context of what not getting paid is costing you, they will probably end up being lower. Some patients will probably stick with cash or checks.

Accepting cards can make your clients happier

Finding a way to make it easy for patients to pay you quickly will also add to patient satisfaction.

A survey by MedData found that 68 percent of consumers would prefer to pay their medical bills electronically. For a good overview of some of the latest tools physicians are using, see “The benefit of flexible payment options,” a recent article in Medical Economics magazine.

How to start accepting cards in a medical practice

So how do you make your practice whole? Depending on your state, you may be able to add a surcharge when patients pay with a credit card. For more information, see “Credit card trends to watch for 2019.” (Surcharges are banned in some states.)

It isn’t an easy time to run an independent medical practice because of all of the financial hassles. Taking a very proactive approach to cash-flow issues is essential.

I would encourage you to keep an open mind as new solutions pop up and to stay on top of the latest payment developments – or designate a staffer to do this if you’re too busy.

It’s a shame doctors have to take time from the practice of medicine to focus on payment issues, but in today’s environment, there’s no alternative.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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