Medical Receivables Financing: The Rx for Ailing Cash FlowThe current adverse financial structure of
healthcare industry has placed hospitals, medical groups, private practitioners and other providers in a perilous position. Cumbersome and bureaucratic third party billing systems with long time-to-collection waiting periods have resulted in inconsistent cash flows and limited capital for growth. Nationwide, two-thirds of physicians work in practices that are set up as small business. Payment cuts 18% over four years, together with soaring malpractice premiums and other overhead costs, have threatened to put such practices out of businesses. More than 50% of doctors have deferred plans to purchase much-needed new equipment, and 30% either have laid off staff or are planning layoffs in near future.
What is medical receivable financing?
Medical receivable funding is a means by which health care providers (Hospitals, Doctors, Outpatient Facillities, Physical Therapists, Dialysis Facillities, MRI Centers, Durable Equipment Suppliers, Rehab Centers, Medical Labs, & Substance Abuse Clinics) receive immediate cash for their billings to third party payors (i.e. commercial insurance companies, HMOs, Blue Cross/Blue Shield, Medicare and Medicaid).
What Factoring "Is Not:" • A Loan - Factoring is sale of your medical claims for services already delivered • Offered By Banks - Factoring is not an asset-based loan, nor is it a debt facility similar to those offered by banks.
Why not simply pick up phone and call a bank for a loan to get through crisis? Many of you already tried that and have been surprised to find that average practice may not have sufficient credit and assets with which to secure adequate working capital. Additionally, traditional banking loan application and approval process is long and involved. Debt is created for practice to repay, and personal guarantees are required. The practice becomes less desirable for resale or acquisition.
