Healthcare Financing Cost Calculator

Model the full cost of third-party patient financing for your practice

Step 1 · Configure Your Practice
Enter your total annual revenue from procedures (e.g., 10,000,000 for $10M).
$
Industry average: 25–40% for elective procedures.
20%
Typical range: 5–12%. Higher rates reflect longer interest-free promotional terms.
10.0%
Step 2 · Your Results
$1,775,000
Estimated total annual cost of third-party financing
17.8% of financed revenue
Direct merchant fees
$1,000,000
Estimated indirect costs
$775,000
Projected 5-year total
$8,875,000
Step 3 · Understand the Breakdown
Direct Annual Cost
$1,000,000
Revenue × Financing % × Fee Rate
Monthly Cost
$83,333
Annual cost ÷ 12
5-Year Merchant Fees
$5,000,000
Direct fees only

Beyond the Merchant Rate: Additional Cost Factors

Approval criteria, patient relationships, portability, administrative effort
$775,000

1. How Generic Approval Criteria Affect Your Acceptance Rates

Third-party providers absorb default risk (hence the 10–15% merchant fees), but they manage it with generic scoring models that don't account for your patient relationships. A long-term patient returning for follow-up work may be declined simply because they don't meet a one-size-fits-all credit threshold — even when your practice knows they're virtually zero risk. Practitioners report these standardized criteria can reject up to half of patients a practice would confidently approve.

Example: A patient who's paid reliably for 3 years needs a second phase of implant work ($12,000). The third-party lender sees only a credit score, declines the application. The practice loses the procedure from a patient they know is near-zero risk.

2. Patient Relationship Risk When Collections Are Out of Your Hands

When a patient falls behind on a small balance, third-party providers follow standardized collection protocols — escalating calls, credit reporting, collection agencies. These processes don't account for a patient's history with your practice or their long-term value. You'd prefer to wait, offer flexible terms, or roll the balance into the next procedure. But with third-party financing, you have no say.

Example: A 5-year patient ($4,000–$5,000/year) has a $1,200 outstanding balance. An aggressive collection call sours the relationship permanently. Your practice would have waited 60 days or offered a discount on the next visit — preserving a relationship worth $20,000+ over the coming years. Instead, you lose the patient over a balance you never controlled.

3. Patient Portability and Revenue Leakage (~5–10% of financed volume)

When you approve a patient for a third-party financing card, they receive a credit line usable at any practice that accepts that card:

  • No patient loyalty: A patient you helped get approved can use that same card at your competitor
  • Lost phase 2 procedures: If they have $10,000 in credit and you use $6,000, another practice can capture the remaining $4,000
  • Reduced referral value: You paid the merchant fee to help them get financing, but don't own that patient relationship

This "leakage" represents an estimated 5–10% of your financed volume — procedures you could have captured if the financing was exclusive to your practice.

4. Administrative Effort ($25,000–$50,000 annually)

Managing third-party financing requires significant staff time that's rarely accounted for:

  • Training on multiple providers' processes, criteria, and promotional terms
  • Application support — helping patients apply, troubleshooting declines, explaining terms
  • Multiple portals — most practices use 2–3 providers, each with separate systems
  • Reconciliation — matching payments, handling disputes, managing promotional period expirations

For a mid-size practice, this typically amounts to 15–20 hours per week, or $25,000–$50,000 in annual labor costs.

When these indirect costs are factored in alongside direct merchant fees, the effective cost of third-party financing typically falls in the range of 17–22% of financed revenue — well above the advertised merchant fee rate.

Putting the Numbers in Context

Based on your inputs, your estimated annual financing cost of $1,775,000 is comparable to:

27 full-time staff
Additional team members at $65K each
10 treatment rooms
New rooms with full equipment ($150K–$200K each)
15–20%
Equivalent share of your bottom line profit
Growth investment
Marketing, technology, expansion, or cash reserves

An Alternative Worth Considering: Practice-Managed Financing

Many practices are exploring in-house financing to reduce costs and gain more operational control. It requires investment in software, compliance, and operations — but can offer meaningful advantages:

  • Lower total costs while maintaining patient access to care
  • Patient loyalty — financing exclusive to your practice
  • Complete control over approval criteria, terms, and collections — tailored to your relationships
  • Data ownership — insights into patient payment behaviors
  • Better patient experience — simpler process, flexible terms
  • Higher case acceptance — approve patients a generic lender would reject

Want to learn more? Learn how it works →

Important Disclaimer
Estimates are based on industry averages, published rates, and practitioner-reported data. Actual financing fees vary significantly by provider, promotional terms offered, transaction volume, individual practice agreements, and geographic location. This calculator provides educational estimates only and should not be considered financial advice. Consult your financing provider for exact rates and terms specific to your practice.