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How to Finance a Quick Growing Medical OfficeRegardless of what industry experts say, opening a medical practice can be very rewarding and lucrative - if done well. As with any business, medical offices have their own industry specific financial challenges. The biggest challenge is adjusting to the long payment cycles of private insurance providers and Medicare/Medicaid. It is not unusual for claims to an insurance companies to take up to 120 days to get paid. This can wreck havoc in the office’s cash flow, forcing the business to carry operating expenses – rent, equipment leases and payroll – while waiting to get paid. This can be very expensive and prevent the office from growing and hiring additional staff. At its worst, it can threaten the very existence of the medical practice.
Want an instant medical factoring quote? Please click here to get an online quote now! Questions? Call (866) 730 1922 There is a financing tool that lets you capitalize on your slow paying insurance claims and turn slow payments into immediate payments. The solution is to factor your medical receivables. How does medical receivables factoring work? Medical receivables factoring is a type of financing that enables you to convert slow paying insurance claims into cash, by selling them to a medical factoring company. The medical factoring company pays you for them immediately and waits to be paid by the insurance companies. Factoring eliminates the slow payment cycle, reducing the payment time from 90 days to two days. This provides you with the necessary funds to meet office expenses, such as meeting payroll and paying rent. Medical factoring is fairly simple. Once a factoring arrangement is in place your office sends its weekly claims to the factoring company for immediate funding The factoring company calculates the actual amount paid by insurance companies (called the net collectibles) and advances you up to 80% of that amount. The remaining 20% (called the reserve) is used to settle billing discrepancies. Once the insurance company pays the medical claim, the remaining 20% is rebated, less the financing fee. The financing fee varies based on a number of parameters. Although qualifying for factoring is relatively simple, most financing companies will only work with medical offices that have net collectibles of at least $50,000. Contract terms usually get better as the practice grows. Medical practices, testing centers and medical supply companies that have over $200,000 a month in net collectibles are in the best position to get the best terms. This is because insurance payment processing can be very complex and there are a number of efficiencies that can be realized with high volumes. Advantages of medical office factoring Invoice factoring has many advantages over other financial products (e.g. loans or lines of credit). The most important is that factoring is recurring and happens every time you send a claim to the insurance company. This makes it a cash on demand product. As opposed to business loans and lines of credit, factoring receivables has flexible limits. Actually, the limits are based on business’s ability to grow, making it an ideal growth tool. Lastly, doctor office factoring is easy to qualify for. Want an instant medical factoring quote? Please click here to get an online quote now! Questions? Call (866) 730 1922
Need more information? Go to the Medical Factoring Resource Center to the main medical factoring page. |
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