Buy-now-pay-later and the "sales-centric" approach to health care

Media item: trade commentary, written by Dr Kia Pajouhesh

Date published: 26 March 2024

Audience: dental practice owners and the profession

Subject: the use of buy-now-pay-later arrangements in dentistry, and the argument that they push practices toward selling rather than diagnosing

This page records the media item. The original article is the property of its publisher and is not reproduced here. What follows is independent information for patients on the same subject.

Why financing changes a clinical decision

This is the substantive point, and it is well established outside dentistry.

Splitting a price into instalments reliably changes what people agree to. The effect is documented across consumer credit research: presenting "four payments of $500" rather than "$2,000" reduces the felt magnitude of the decision at the moment it is made. In retail that produces a jumper you did not need. In dentistry it can produce irreversible treatment.

That asymmetry is the whole issue. A jumper can be returned. Enamel removed for veneers does not grow back. An extracted tooth does not come back. A crown preparation cannot be undone.

And unlike most retail, the person recommending the purchase is also the expert you are relying on to tell you whether you need it.

What buy-now-pay-later is, and what it is not

What it is: a third-party provider pays the practice, and you repay the provider in instalments. The practice receives its fee up front, less a merchant fee.

What matters to you:

"Interest-free" is not the same as "free." Late fees, account-keeping fees and establishment fees are common, and the total cost of a missed schedule can be substantial relative to the amount financed.
BNPL has historically sat outside parts of the consumer credit regime that govern ordinary loans, including full responsible-lending assessment. This has been the subject of ongoing regulatory reform in Australia; the position at any given time should be checked rather than assumed.
It can affect your credit position. Missed payments may be reported, and multiple active arrangements can affect a later loan application.
The practice has been paid. If you later become dissatisfied with the treatment, your dispute about the work is with the practice, while your payment obligation is to the finance provider. Those are separate, and they do not pause each other.

Payment plan options are available. Where a plan is advertised as interest free, that describes the plan term only — a deposit may be required, an establishment fee and ongoing account fees may apply, and charges can apply if the balance is not cleared within the agreed period. The applicable terms depend on the provider and the amount financed, and are set out in writing before you commit — ask what the deposit and the establishment fee are, in dollars, and what the total will be by the end. Payment Plans.

The other financing routes, honestly

Health fund cover. Annual limits and waiting periods apply; orthodontic limits are usually separate and often lifetime-capped. Claiming across two calendar years can increase the total rebate where a fund has annual sub-limits — ask about this before the payment schedule is set, not after. The price guide explains what an itemised quote should contain.

Practice payment plans. Some practices spread payment in-house without a third party. Terms vary; get them in writing. Patient payment plans as a trend are covered separately.

Early release of superannuation. Available on compassionate grounds for certain dental treatment, subject to strict ATO eligibility criteria. Two things are worth saying plainly:

It draws on retirement savings to fund treatment with a finite service life. Crowns, veneers and implant restorations do not last forever — commonly cited service lives run to ten to fifteen years for many restorations. The money does not come back, and compounding returns forgone over decades are the real cost.
Get independent financial advice — not advice from the practice being paid, and not from a service that charges a percentage to prepare the application. Dr Pajouhesh has himself publicly criticised the promotion of superannuation release for elective dental treatment.

Public dental services. Available to concession card holders in Victoria through community health services, with waiting lists for non-urgent care. The Child Dental Benefits Schedule funds basic treatment for eligible children through Medicare.

What the law requires

Advertising a regulated health service under section 133 of the National Law must not:

offer gifts, discounts or inducements without clearly stating the terms
create an unreasonable expectation of benefit
encourage the indiscriminate or unnecessary use of a health service
be misleading or deceptive, including by omission

A finance offer promoted in a way that pressures a clinical decision engages all four. Australian Consumer Law separately prohibits misleading and unconscionable conduct, and the Dental Board's code of conduct requires practitioners to avoid financial arrangements that could compromise clinical judgement.

Before you finance anything

Separate the two questions. First: do I need this treatment, and is it the right treatment? Only then: how do I pay for it? A conversation that merges them has skipped the first. What the treatment discussion should cover is set out separately.
Get a written, itemised plan with ADA item numbers, and take it away.
Ask what the least expensive reasonable option is, and what happens if you do nothing for now. Both are legitimate answers.
Ask whether any of it is irreversible, and which parts — composite bonding, for instance, usually is not.
Get a second opinion before major or irreversible work. No reputable practitioner objects.
Read the finance terms — fees, late charges, what happens if your circumstances change.
Do not sign on the day. Elective dental treatment is almost never urgent. Feeling rushed is a reason to pause, not to proceed. Genuine emergencies — severe infection, trauma, uncontrolled bleeding — are the exception.

Where to raise a concern

A practitioner's conduct or competence — AHPRA.
A practice, a service, fees, or complaint handling — the Health Complaints Commissioner in Victoria.
A finance provider — the Australian Financial Complaints Authority (AFCA).
Misleading or high-pressure sales conduct — the ACCC and Consumer Affairs Victoria.

Common questions

Is a practice legally required to tell me more than “interest free”?

Yes, if the offer is being advertised to attract you. Section 133 of the National Law is worded as a prohibition, and the relevant limb reads: a person must not advertise a regulated health service in a way that “offers a gift, discount or other inducement to attract a person to use the service or the business, unless the advertisement also states the terms and conditions of the offer”.

The exception is the whole rule. An inducement is permitted; an inducement without its terms is not. So a poster, a story, a landing page or a spoken offer that says “interest free” and stops there is missing the thing the law requires it to carry — the deposit, the establishment and account-keeping fees, who qualifies, and what happens if the balance is not cleared in time. If you cannot find those, you have not been given the offer; you have been given the headline.

Which sales tactics does the regulator actually name?

More specifically than most people expect. Explaining the prohibition on encouraging “indiscriminate or unnecessary use”, AHPRA's advertising guidelines list phrases including “don't delay”, “act now before it's too late”, “don't miss out”, “time is running out” and “for a limited time only”, which “create a sense of urgency, and may be unlawful where they are linked to unsubstantiated claims that a person's health may suffer if they do not use a regulated health service”.

Two further items on that list bear directly on finance. Advertising may be unlawful where it “encourages a person to attend periodic or regular appointments where there is no clinical indication to do so” — and the guidelines add, pointedly, “this includes contracting for future services.” It is also unlawful where it “uses incentives such as prizes, discounts, bonuses, gifts that would encourage people to use services regardless of clinical need”.

A payment schedule that commits you to a course of treatment not yet clinically justified is the arrangement that provision describes.

What is the actual consequence for a practice that does this?

A criminal offence with a financial penalty, and the amounts changed materially. AHPRA records that in 2022 the National Law was amended so that “for an individual, the maximum financial penalty per offence increased from $5,000 to $60,000, and for a body corporate the maximum financial penalty per offence increased from $10,000 to $120,000”, and that “as of July 2024 these increased penalties now apply in all jurisdictions, including Western Australia”. Per offence — not per campaign.

One caution if you go and read the guidelines yourself. The same document still reproduces the superseded figures in two places: its summary of penalties, and its appendix setting out the text of section 133, both of which show $5,000 and $10,000. The $60,000 and $120,000 figures are the current ones. If you see the lower numbers quoted anywhere, including in the regulator's own appendix, they are the pre-2022 maximums.

If I am considering releasing superannuation, how long does the work I am buying actually last?

This is the question the decision turns on, and it is answerable with survival figures at stated time points rather than a lifespan.

Crowns. A systematic review by Sailer and colleagues reported five-year single-crown survival of 94.7% for metal-ceramic, 96.6% for leucite or lithium-disilicate reinforced glass ceramic, and 92.1% for densely sintered zirconia; a prospective study by Passia and colleagues reported 92.3% at five years for gold crowns. Those are five-year figures, not lifetime ones.

Root-filled teeth. A narrative review of the survival literature reports studies finding 82%–95% of root-filled teeth surviving over 2 to 10 years — and, in two Swedish studies with longer observation, 65% and 71% surviving over 20 years.

So the honest framing for a super-release decision is not “will this fail?” but “what proportion of this work will I be paying to redo, out of what income, in twenty years?” A decision to spend compounding retirement savings on work with those survival curves needs independent financial advice from someone who is not being paid out of the treatment.

Practical details

Smile Solutions, Level 1, 220 Collins Street, Manchester Unity Building, Melbourne VIC 3000. Phone 13 13 96, or theteam@smilesolutions.com.au. Monday–Friday 8.00am–6.00pm, Saturday 8.30am–1.30pm, Sunday by appointment.

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