Factor Your Medical Receivables with Exclusive Programs for
Healthcare Industry
Factoring is when a business sells its receivables for a service
or product delivered to another business. Many people in the
healthcare industry think that medical receivables can't be
factored because the "customer" is a person and not a business.
But medical receivables can be factored because in most cases,
your payment comes from Medicare, Medicaid, Blue Cross/Blue
Shield, Aetna, etc. In other words, the payment is coming to you
from a business, so the receivables CAN be factored.
In the past, healthcare professionals could depend on efficient
operations to keep their cash flowing, but that often is not
enough now. Increased costs and longer times for insurance
companies and Medicare to pay the bills are making it impossible
for them to keep their practices running smoothly.
Most factoring companies do not factor medical receivables, but
there are several that specialize in this niche. They fully
understand that accounts that are paid by third party payors
take more due diligence and more things have to be looked at
than with "regular" factoring. They know these receivables are
filed and paid differently by different states and then have
elaborate payment methods and computations. There are government
and insurance regulations, delayed reimbursements, HMOs,
contractual allowances, multiple payors and many more challenges
that are only found in the healthcare industry. The factors who
specialize in your industry know all the lingo and terminology
and will immediately understand your needs.
The healthcare businesses that will most easily be approved for
factoring are: Acute or Rehab or Specialty Hospitals,
Physicians, Surgery or Imaging Centers, Dialysis or Urgent Care
or Rehab Centers, Ambulance companies, Medical Labs, DME/HME,
Osteopaths, Oral Surgeons, Pharmacies, Home Health Care and
Workers Comp Healthcare Providers and some Chiropractor groups.
There are certain types of health related businesses that might
be more difficult to factor, mostly because the net collectable
value from the private insurance companies or government is too
small each month for a factor to be interested. These are small
chiropractors, dentists, cosmetic surgeons and Lasik doctors
(often not covered by insurance) and some nursing homes because
of credit problems.
Medical receivable factoring companies all have different
minimum monthly net collectable amounts, so ask your broker for
the one that will be able to help your business. Some work with
amounts as small as $35,000-$50,000, others have a minimum of
$200,000.
Once your account is set up with the factor, you will receive up
to 85% of the invoices within hours of turning them in each
week. When the bills are finally paid, you will receive the rest
of the amount owed, minus a small fee. The fee depends on many
things and will probably range somewhere between 2% and 6%.
You will lose all the stress of not knowing when you will be
paid for the work you are doing. You'll be able to pay all your
vendors and staff on time, you'll be able to keep up with all
your bills. You will even be able to hire more staff or buy more
equipment, because you'll know you can accept more business.
There have been instances when a medical business has been on
the brink of bankruptcy and decided to try factoring as a last
ditch effort and it saved them. They were able to turn
everything around and are thriving now.
Factoring should be considered as a tool for growth and
management, not as a last resort to save your business. Unless
your practice has very expensive equipment or diagnostic
devices, your largest asset is its accounts receivables and
these assets can be used to keep your business running smoothly
and growing.