Throughout many years of working in the patient financing industry and as the VP of Healthcare Partnerships at Momnt, I’m frequently asked about approval rates and merchant fees. While both are fundamental aspects of a healthy finance program, they don’t always tell the whole story. The accommodation rate, payment factor, and activation rate are key metrics that are not yet commonly discussed but significantly affect practice profitability and patient experience. 

Accommodation Rate

The accommodation rate measures how many times a lender has approved the total requested amount to the patient versus how many times they’ve given partial approval. One of the largest frustrations I’ve heard from providers over the years is low accommodation rates. Investing time and effort into a patient evaluation, only to have them walk out the door without scheduling treatment because the approval they received only covered half of the treatment plan, has undoubtedly been a point of concern. 

This is why it’s important to look at accommodation rates and not just the approval rates, which can be misleading. If a patient needs $15,000 for care, but the maximum approval is $7,500, this would typically result in unscheduled care. Although it’s an “approval”, it yields the same results as a decline. If a lender approves 6 out of 10 applications, but only 3 of them meet the total requested amount, they would have a 60% approval and a 50% accommodation rate. Compare that with a lender that approved 5 of those applications, but met the request on all of them. They would have a lower approval rate at 50%, but a 100% accommodation rate. This higher accommodation rate would potentially yield two more treatment plans accepted. I have observed a vast difference in accommodation rates in healthcare lending. While it may be one of the biggest differentiators in the market, it is rarely discussed or understood.  

Payment Factor 

The payment factor is the percentage of treatment a patient must pay monthly to pay off that loan. It is determined by factors like APR%, loan length, and, in some cases, origination fees paid by the patient. Patient financing has historically been driven by promotional products such as 6 months same-as-cash, or 24-month zero-interest plans. These promotions make it easy for patients to begin treatment now and focus on the cost of care over an extended period. Many patients have come to expect these types of offerings, and are motivated to make buying decisions in a practice, much like they would as a consumer in a retail setting. 

With rising healthcare costs, there is a growing demand for a more affordable payment plan than a promotional loan. This is where extended loan products come into play, and, more specifically, where payment factors can be critical. A payment factor of 3% on a $10,000 treatment plan would be $300, while a payment factor of 1% would be $100. It is clear to see how this would influence a patient's decision to move forward with care. As we look at treatments like dental implants, where a full mouth implant solution can be north of $50,000, promotional financing becomes far less impactful, while plans with a low payment factor will have a meaningful impact. A payment factor closer to 1% will be significantly different than even a 2% payment factor, which could yield a monthly payment requirement of $1,000/month.

Activation Rate 

The activation rate simply measures how many of the approved credit lines actually transacted. When you add up approval rates, accommodation rates, and affordability (payment factor) you start to see a bigger picture. Combined with ease of application, consumer trust in the financial product, and the right amount of options being offered to the patient, you ultimately arrive at the activation rate. In the case of low accommodation rates, it would be natural to have low activation rates. However, much more is at play here, as you start to consider the entire patient experience. If 5 out of 10 approvals wind up transacting, that would yield a 50% activation rate, while 8 transactions from 10 approvals would yield an 80% activation rate. The higher activation rate would suggest a better overall product that patients chose to move forward with.

Lenders with high approval rates don't always lead to more funded treatment plans. Consider these three metrics the next time you review your patient financing program. You might realize you've been stepping over dimes to save pennies.

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