Interview with Terry Silance, Director, ENT/Audiology, CareCredit

Terry Silance

CAROLYN SMAKA: This is Carolyn Smaka from Audiology Online, and today I'm talking with Terry Silance from CareCredit. Terry, before we get into CareCredit - I always ask the people I interview to tell me about their background.

TERRY SILANCE: Sure. I've been in medical equipment/medical product sales and management my entire career. I worked as a Regional Sales Manager for a company called Pharmacia prior to GE Healthcare, and I was also in field sales and sales management in the hearing industry with Rexton. In 2003, I came on board with CareCredit to bring it to the audiology market.

CareCredit has been in business now for about 25 years, and we've been in the audiology market for about eight years. I have a bachelor's degree in marketing from Indiana University, and I also happen to be married to an audiologist.

SMAKA: So as my husband would say, you're kind of an audiologist by proxy.

[Laughter]

Terry, I see CareCredit brochures at almost every health provider where I'm a patient.

SILANCE: We are a business-to-business company, so although we don't market to consumers, we do have a base of seven million patients out there.

We service a lot of markets - dental, vision, veterinary, chiropractic, weight loss, cosmetic surgery, dermatology, orthotics, prosthetics, and others. We do a lot of financing across many markets. It's a healthcare line of credit, not a one-time loan, and you can use it over and over again (subject to credit approval).

So, we do a lot of what we call "cross-shop business" - that is, patients may open up a CareCredit account to use with their dentist, and then they will walk into a hearing aid practice and say, "I have CareCredit;do you take it?" It's becoming increasingly more recognizable to the consumer, as you've noticed.

SMAKA: For professionals, what are the benefits of offering CareCredit?

SILANCE: Well, Carolyn, the main benefit we promote with CareCredit is enabling a patient to obtain the optimal technology for them. Oftentimes a professional will make a recommendation for a particular technology based on the patient's audiological and lifestyle needs, but when the patient has a price objection, they'll offer the next lower level of technology or alternative products which are lower in price. Then, they'll continue dropping to lower and lower-priced products until they reach a comfort level with the patient based on price. Now they're selling a price point versus selling the right product for the hearing loss.

So the key benefit is this: sell and fit what you recommend. Fit the patient with the optimal product for them. We know that there are times a lower priced product is recommended at the start for a patient and that's fine, but try to get your patients into the recommended products without down selling.

What we've found with financing is that payments are easier for consumers to digest than a lump sum price. Our data show that when financing is available, patients will actually spend more money and get a better product, and you'll have a happier client. They will actually spend up to $1,600.00 more to get better technology with a payment plan, as compared to having to pay in full with a check or put it on a credit card. Happier clients also mean more word-of-mouth referrals.

SMAKA: Many seniors typically look at their finances on a monthly basis. They may get Social Security, pension or whatever other benefits on a monthly basis, at least in my experience with seniors. Is that correct?

SILANCE: Right. They can handle monthly payments because it fits into their monthly finances, as opposed to a large lump sum payment where they have to tap into savings or look at other options.

When somebody says, "Oh, $3,000.00 is too much," break the price down to the minimum amount, whether that's a monthly amount or a daily amount. Maybe it's $5 a day, a trip to Starbucks. Isn't your hearing worth much more than a cup of coffee? It's a good way to manage price objections.

SMAKA: Are professionals concerned that if they offer CareCredit, it will cannibalize other payment forms? So for example, a patient who would have ordinarily written a check now uses financing instead?

SILANCE: While that may be a question from some professionals who have never used CareCredit, it is not an issue that we actually see in practices who offer CareCredit.

We recommend that you offer all forms of payment, up front to each patient. For example, a practice might say, "We accept cash, credit cards, checks, and we accept CareCredit which offers a financing plan. Which option is best for you?" You want to make it easy for the patient purchase from you - and to purchase now - so that they can treat their hearing loss immediately.

Some people might think that if they offer a financing plan, every patient will opt for the financing plan and it will cost them more as a business since the fees to the practice are slightly more than those for credit cards. However, even in very busy practices that offer financing up front and equal with other payment forms, it usually only equates to maybe 10 to 20 percent of their total sales at maximum. Some of the patients who use financing may be those who would not have purchased had the option not been available, and some who use financing may be purchasing higher technology as a result, too. So, that cannibalization really does not take effect. In fact, oftentimes when you offer a payment plan, it prompts the patient to say, "Well, you know what? I'll just pay with a credit card." However, you've made it clear that you're easy to do business with and you are flexible and customer-oriented by offering payment options.

SMAKA: That makes sense. Why wouldn't a practice want to offer financing?

SILANCE: There is really no reason not to make financing available. One thing I'll hear practices say is "Our patients don't need it." They may think that's the case simply because they don't offer it;they're waiting for the patient to ask for financing before offering it. Or, what they do is offer financing after they've downsold from the recommend technology to the lowest price point available, and then offer financing if the patient is still hesitant. With that type of offer in mind, they think their patients don't need it;in reality these patients may be settling for lower end technology than what is optimal for them.

SMAKA: What about the 'tested not sold' or the people who need hearing aids but don't purchase? I wonder if financing would make a difference to that number.

SILANCE: We have actually conducted "tested, not sold" surveys to look at exactly that question. What we've found is that practice owners assume that if a patient doesn't purchase hearing aids from their practice, the patient will return when they're ready to buy. But our data show that only three percent of the "tested not sold" patients will return to a practice, and 20 percent will purchase elsewhere. They were not satisfied with something in the first practice, and oftentimes it boils down to price point, they were not convinced the hearing aid was worth the price, or the practice didn't make it easy to do business with them. Financing can impact these areas. Looking at "tested, not sold" is very important to our industry if we are going to have a greater impact into reaching people who need our services.

SMAKA: Let's get back to the fees for a minute. You mentioned that financing fees to a practice are typically slightly higher than the fees to use credit cards.

SILANCE: Exactly, and what practices tell us is that once they sell one additional hearing aid per month because they have the financing option available, it offsets all the fees and more. Our best practices see on average a 24 percent increase in business after they start making CareCredit available. That increase is measured in higher average selling prices and more units.

Here's another way to look at it. If you run a $10,000 advertisement, how much is it costing you per referral? For every person who purchased from you based on that advertisement, you need to figure in your advertising costs. Maybe it's costing $325 - $350 per referral. Think of financing fees as part of your marketing and advertising budget. Historically there has not been a lot of financing in our industry until CareCredit came along. Financing will drive your business, and there has to be a paradigm shift in thinking about the associated fees as marketing costs to be absorbed in your budget.

SMAKA: What does a practice need to do to begin offering CareCredit?

SILANCE: It's a simple, one-page application that is completed and submitted to us. After a quick credit check and verification that the practice is truly a practice, we'll send out a start up kit and have a field trainer contact them to schedule a training session. That's it - then they're up and running.

There are no hidden costs. There are no maintenance fees and no monthly fees. It's just like if you process a credit card, you pay a processing fee. We will follow whatever your refund policy is and we don't charge any restocking fees or penalty fees on refunds. So if you have a return, you just process a refund just like you process a sale, and the transaction is reversed as if the sale never occurred.

SMAKA: Let's talk about the patient experience. So, a patient decides to purchase hearing aids and wants to use CareCredit. How does it work?

SILANCE: It's really simple. It's fastest and easiest if you have the patient complete the application in your office;it takes a couple of minutes. You contact CareCredit to submit the information and you'll get an immediate response. Then you can proceed with ordering the technology and managing the patient's treatment.

SMAKA: With CareCredit, the patient has the option of various payment plans including a no-interest plan, correct?

SILANCE: Yes. When you discuss payment options with the patient, this can be part of the discussion. You can indicate, "We'll take a check, a credit card, and we also have a financing plan through CareCredit. Which option is best for you?"

SMAKA: What you're saying is, the professional is offering the service so they take ownership of it, just like they take ownership of their hearing warranty, batteries and technology. You don't refer patients to the manufacturer if they have questions or need something.

SILANCE: Exactly. That whole patient experience is the responsibility of the hearing professional. Discussing payment options, just like discussing the benefits of hearing aids, is the responsibility of the hearing professional. You'll end up with a more informed, satisfied customer.

SMAKA: With the economy the last few years, have you seen an increase in patients using financing?

SILANCE: Yes, we have. Financing is an option that can really help a practice reach their sales goals. In difficult economic times, you have to be flexible and you have to make it easy for people to buy and get the help that they need.

SMAKA: Are today's seniors more comfortable with financing because you see it everywhere today - appliances, automobiles, etc.?

SILANCE: Yes, definitely. Consumers are seeing advertisements for financing in all sorts of industries - electronics, furniture, cars etc. Everybody advertises financing.

CareCredit is also a very recognized name. I suggest to practices who offer CareCredit to use the name in their advertising. If you're offering financing, you might just say: "Financing by CareCredit", "We accept CareCredit" or "We have financing available with the CareCredit card," because it may attract consumers who have already opened a CareCredit account at another practice such as their dentist or veterinary office.

CareCredit is a part of GE Capital. The mature market knows GE, it's the oldest company on NASDAQ, and they trust GE.

SMAKA: I know some professionals who give the patient the cost of the hearing aids both ways when they begin their counseling. They say, "This technology will cost you X amount, or X per month if you go with a 12-month deferred interest plan".

SILANCE: Absolutely. A lot of very successful practices do that very same thing. They will be up front and equal across the board and say, "Here is your cost if you write a check or use a credit card, and here's how much it is per month on a no-interest plan."

A lot of practices today have multiple locations with many dispensing professionals. As a practice owner, you have to give your staff the right tools to do business and to make the business successful. You also have to meet the needs of your patients.

If you have many locations, do you really know what the 'tested not sold' rate is and why? You staff might report, "That patient wasn't ready for hearing aids", but do you know for a fact that cost wasn't an issue? Maybe a payment plan would have made all the difference. As an owner, you have to give your people all the tools you can to make it easy for them to manage their patients. Financing is one of those tools.

I visit a lot of practices. I will often hear a very different counseling presentation at various locations of the same practice. So location A will only offer a few payment options and one brand of hearing aid, while location B will offer several brands and other payment options. That does not send a good message to a patient who visits location A and is not offered a payment plan, while their friend was offered a payment plan at location B. As an owner, my philosophy would be a seamless approach in business and a consistent standard of care across locations. Patients should be offered the same types of products, receive the same high level of service, and be offered the same financing options at all locations.

SMAKA: We've only been talking about hearing aids. Can CareCredit be used for other audiological procedures or equipment? I'm thinking aural rehabilitation classes, tinnitus treatment, assistive listening devices, FM systems...the list goes on.

SILANCE: Yes. The terms and conditions state it has to be a product of your business or a service of your business. We finance testing procedures;we work with products for tinnitus. We work with cochlear implant manufacturers for upgrades on their software for their cochlear implants. Patients can use it for otology services as well, such as PE tubes, etc. Many, many otolargyngology practices utilize CareCredit. It is generally used for services, products or procedures that are not covered or not fully covered by insurance.

SMAKA: Thanks Terry, great discussion today. If people reading this would like more information, where would you direct them?

SILANCE: For more information about CareCredit, check out our website at www.carecredit.com or drop me an e-mail at tsilance@carecredit.com.