| Medical Billing Articles (updated Frequently)
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| How to Finance your Medical Office, Medical Supply or Medical Testing Company |
| By: Invoice Factoring Group |
Although many experts speak of gloom and doom in the medical
industry, the fact is that this industry keeps growing by leaps
and bounds. Every year, the demand for medical services, medical
testing (e.g. MRI Centers, Testing Centers, etc) and medical
supplies keeps getting stronger. This trend is expected to
continue as the population ages.
However, even though the growth trend looks good, running a
medically related business keeps getting more and more
challenging. In the past, doctors and medical suppliers could
expect to get large and quick reimbursements for their services.
Cash flow was reasonably easy to manage. However, Medicare,
Medicaid and 3rd party insurance companies have put in place
strict compensation guidelines. These guidelines can be
summarized in two simple points: you can look to receive less
money than before and you should be prepared to wait longer to
get paid.
This creates a financial "perfect storm" for medical industry
companies. On one hand, you are getting paid less and waiting
longer for your money. On the other hand, your operating
expenses remain the same or perhaps are higher. You still need
to pay your employees and your suppliers. In almost all cases,
this limits your ability to pursue new opportunities and grow
your business. In some cases, it may even threaten your ability
to continue to operate your business.
Is there a way to "fix" the cash flow problem?
If your business's main cash flow problem is not being able to
afford to wait 30 to 90 days to get paid by insurance companies
and Medicare, then factoring
your invoices could be the right solution for you.
The factoring proposition is very simple. Factoring is a way of
financing, in which a factoring company provides you with
advance payments based on your outstanding accounts receivable
(or invoices). You get funding as soon as you invoice. The
factoring funds it and waits to get paid until the insurance
companies or Medicare pay the invoices.
Factoring has advantages over loans and lines of credit. First,
factoring financing lines do not have arbitrary limits. The
maximum amount of monthly financing is solely determined by your
ability to invoice. If your business grows, your financing grows
automatically. Also, factoring companies don't require the same
collateral that banks do, so new businesses or doctors' offices
can usually qualify easily.
How does medica
l factoring work?
The process is fairly simple. Once an agreement is established
with a factoring company, it works as follows:
1. Your office submits your weekly (daily or monthly) billings
to the insurance company and to Medicare/Medicaid. (note:
sometimes this task can be handled by the factor on your behalf)
2. Your office sends a copy of the billings to the factoring
company.
3. The factoring company advances you up to 85% of Net
Collectables within 48 hours. Funds are sent by wire or direct
deposit. The remaining 15% is called a "reserve" and used to
settle billing discrepancies at time of payment. This is
returned to you once the invoices are paid.
4. The factoring company waits to be paid by the insurance
company or Medicare/Medicaid.
5. Once the factoring company is paid, they settle out the
transaction and rebate you the remaining 15%, less their fee.
The advantage of medica
l factoring
Factoring is ideally suited for medical offices and testing
centers that are growing quickly and cannot afford to wait the
usual 30 to 90 days that it takes to be paid by insurance
companies or Medicare. It can provide you with ongoing
financing, streamline your cash flow, and most of all, relieve
the stress of not knowing when you'll be paid.
Copyright © 2005 Commercial Capital LLC All rights reserved.
This article may be reprinted, provided the resource box is
included with live links
About the author:
About Invoice Factoring Group
Invoice Factoring Group
(http://factoring.qlfs.com)
can provide you with a free medica
l and doctor office factoring quote. Marco Terry, its
president, can be reached at (866) 730 1922.
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| Keywords: Medical Claim demand for medical, medical industry, cash flow, medical, Medical Claim, services medical testing, factoring company, medical services medical, factoring, medically |
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