For many doctors who are just starting their private practice, as well as for hospitals and nursing homes, it may not be easy to get the startup capital or operational cash flow needed to operate your business. When banks aren’t as open and enthusiastic about lending money to medical professionals and businesses, factoring becomes the only real possibility. You just have to hope that you get low rates for medical factoring so that you don’t overpay your financing.
Sure, the more innovative medical companies get millions in financing, but for most health clinics it doesn’t come easy. There’s also the very distinct possibility that you haven’t paid off your student loans yet. And if that’s case, the government may even ban you from billing Medicare and Medicaid to get you to pay back your loans first.
But how do you get low rates? It’s not as easy as just checking Google for low rates, however. Just because a factor boasts that it offers rates as low as 1.5% a month doesn’t mean that such a rate will apply to your business.
What you need is the right medical factor, that’s already configured to specialize in your industry. Here are some things you need to check:
- The factor should have extensive experience working with companies or clinics like yours. By doing so, you’ll know that the medical factor knows which procedures and processes work best in your case. They already have a basic working system in place, and all they need to do is to tweak it to fit your situation. They don’t have to set up a brand new system from scratch. That’s means less work for them, and lower rates for you.
- They already have prior experience with health insurance companies you normally deal with. Factoring provides you with the advance money you need to run your clinic, but it all depends on whether the paying customer actually pays on time.
For doctors that usually means insurance companies. You may be able to get low rates if the medical factor has worked with these insurance companies before, and the factor has confirmed that the insurance company does pay in full and on time. They no longer have to do extensive background checks on the insurance companies, as this has already been done before. It also assuages any worries that they won’t get paid back.
It also helps if you only deal with a select group of insurance companies, which helps lessen the worries of the medical factor. The more insurance companies are involved, the higher the risk of not getting paid.
- You give them high-value invoices. It would be better if you have only a few patients, but each one owes you a lot of money for your services. This is better than dealing with numerous invoices worth very little money. For the medical factor, each invoice requires the same amount of work to process, so it would be beneficial for everyone if you only submit high value invoices.
- You have a long term relationship with the medical factor. Medical factors charge more for short term deals. It might be better to find a factor you can trust and do business with them for the long haul.
Find the right medical factor, and you’ll get comparatively low rates for medical factoring.