Add 5% to Your Client’s Net Income: Stop the Silent Money Siphon

Add 5% to Your Client’s Net Income: Stop the Silent Money Siphon

By ADMC member Cheryl Donahue

Expert tips can help protect your practices from needlessly losing money on credit card payments.

The system that allows a practice to collect money from their patients could cost them a lot more money than necessary. There are hidden costs that reduce their bottom line and they don’t even realize it! When a practice accepts credit cards, the fees have a big impact on their profit margins. Chances are, this revenue collection system costs significantly more money than it should, acting as a “silent siphon” that takes money from the practice. As a consultant, you should be looking at these costs, but merchant services is complicated and the monthly statements might as well be written in Egyptian hieroglyphics. Maybe your practices are processing through their practice management software or are locked into a contract with their current merchant services provider and you think they don’t have a choice. Here’s the great news: There are ways to reduce this cost WITHOUT switching providers. Yes…WITHOUT switching providers.

Unfortunately, the credit card industry has made it impossible to understand exactly what merchants are paying. There are hundreds of different cards (over 700 different VISA®, MasterCard®, and Discover Card® categories) with different costs spanning a wide range: from 0.05 percent to over three percent of the transaction total. Additionally, there are dues and assessments, monthly fees, equipment costs, transaction fees, PCI compliance and non-compliance fees; the list goes on and on! Most practices run their patients’ credit cards through their practice management software, so the cost of accepting credit cards increases because there is a middle man potentially pushing the rates higher.

It’s not always that simple to see what the practice’ true rate is. Many factors make up the total cost of accepting credit cards and a busy doctor, office manager or consultant cannot interpret all the intricacies of this industry.

What can consultants do to help their practices control these costs? Have a third-party expert that understands all aspects of the industry, knows the costs behind accepting cards, and can analyze the information to ensure the practice is processing at the lowest cost.

A Few Reasons Why the Practice is Needlessly “Flushing” Profits

Offices must use proper procedures when accepting a card. The same card may cost different amounts depending on how it is accepted. Most practices know when the patient presents their card in person and it is swiped into the terminal, it costs less than when a card number is keyed in. Data entered into the system when the card is keyed will determine the cost of the transaction. There can be several reasons why the practice is not getting the lowest rate possible on every credit card keyed in, such as:

The team member keying the credit card was not educated on proper procedure

The processor set up the practice incorrectly

The practice management software is an outdated version and not communicating data properly

Depending on rate structure, the processor may make more profit when the practice doesn’t enter in all the required information for each transaction. Processors have intentionally set up equipment improperly to increase profits. These reasons can siphon off anywhere between 0.5 to three percent of gross profit, which can translate to over five percent of net income. Having an expert to identify this is critical.

Another factor affecting rate is coding. Coding errors can cost thousands of dollars a year. During initial account setup, a human being data enters the information in the processor’s system. If the person entering this information makes a mistake, the practice will be charged a higher rate. One example we discovered was a practice who was coded incorrectly on their American Express transactions which wasted over $150 a month in profit!

Communication errors between practice management software and merchant processors cause rates to skyrocket. We uncovered a communication error for one of our orthodontic practices, worked with the processor and the software provider to fix that error and saved that California practice hundreds of dollars.

Consultants can benefit from utilizing Merchant Advocate as a revenue resource tool for clients. Merchant Advocate is 100% performance based so we do not get paid unless we save a practice money. Reach out to me and I will show you our simple process. Many ADMC members refer clients to us and would be happy to provide references for our organization and service.


This article is by ADMC member Cheryl Donahue, Director of New Business at Merchant Advocate.