The Atlanta Journal-Constitution Knight Ridder/Tribune Business News
Jul. 22-- Brace on your own.
A Decatur-based firm intends to obtain a Dalton-based second hand and convert it in to a "virtual financial institution" to fund orthodontists and their patients using the Internet.
The thrift will make loans to consumers for orthodontic treatments, and also acquisition orthodontists' receivables-- the prices owed by clients-- for its very own financing profile, or to sell in the secondary market.
A lot more such specialized "online banks" can be en route, pointed out T. Stephen Johnson, chairman of PracticeBank Financial, which is buying Georgia Community Bank, with assets of $50 million.
The deal is expected to be completed by late September, if federal thrift regulators and Georgia Community Bank shareholders approve. Terms weren't disclosed.
"If we're successful, there are other types of professions that it should work for, such as plastic surgery, LASIK eye surgery and cosmetic dentistry," said Johnson, a founder of Alpharetta-based NetBank. "You're looking for any service that's a big-ticket item that insurance companies won't pay for."
In most of the United States, two years' worth of full traditional braces cost about $5,000. Ceramic brackets are about $500 extra. These costs do not include X-rays, extractions or special appliances.
Some 4 million Americans have braces on their teeth at any given time, according to the American Association of Orthodontics.
Problem is, not all insurance plans offer orthodontic coverage. And those that do only cover a portion of the total cost.
"At best, it's 50 percent," said Dr. Harold Enoch, a Marietta orthodonist who, like others, finances his patients' treatments.
"What PracticeBank will do is help the patient and the orthodontist to provide additional means of financing," said Enoch, a PracticeBank director.
PracticeBank will purchase the receivables of orthodontists like Enoch.
"My average accounts receivable at any given time is between $400,000 to $500,000," Enoch said.
PracticeBank also will make loans to help orthodontists expand their practices, Johnson said.
The privately held thrift holding company is being helped by a new regulation that permits financial institutions to accept checks in electronic form, beginning Oct. 28.
"This means that an orthodontist, or any other business, can simply take a check, swipe it through a machine and the check will clear, depositing the proceeds in the orthodontist's account, and charging the patient immediately," said Walter G. Moeling IV, PracticeBank's attorney. Find out more by going this Orthodontist Manly link.
"So there's no need for the physical proximity of a bank branch to deposit checks," said Moeling, a partner in the Atlanta law firm of Powell Goldstein Frazer & Murphy.
As for making consumer loans for orthodontic work, Johnson considers it "pretty safe."
"You don't get the wire out of your mouth unless you make the last payment," he said, chuckling.
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