How Medical A/R Lenders Help the Health Care Industry

It stands to reason that businesses in the various healthcare subsectors—those involved in immediate care, diagnosis, medical technology, and medical IT for example—all require funding on a regular basis. But that’s easier said than done. The healthcare industry as a whole isn’t exactly attractive for prospective lenders and medical A/R lenders can truly be helpful in this regard.

Why Many Lenders Avoid Healthcare Businesses

It’s not difficult to understand why quite a few small businesses in the health care industry can’t get the funding they need from traditional lenders such as banks.

For one, healthcare businesses don’t have much in the way of assets. While they may use numerous pricey equipment to help them care for patients, the truth of the matter is that they don’t own them – they’re leased.

Another reason is that many companies have difficulty in billing and collecting accurately. That shouldn’t be surprising, since healthcare billing can be very complicated especially in light of the Affordable Care Act. And it’s a well-known fact that insurance companies are notorious for not paying the full amount billed to them.

Finally, there is the ongoing trend of increased mergers and acquisitions in the industry. Companies are merging and consolidating so that they can provide the widest breadth of service for patients. Companies which specialize only in certain tasks may find themselves out in the cold in the growing competition for patients.

How Medical A/R Lenders Help

But while traditional banks may be hesitant to lend to small clinics and hospices, medical A/R lenders are filling in the void. Small businesses in the healthcare industry have one obvious asset: their accounts receivable.

A/R lending is quite easy to understand. A clinic may have to wait for at least 30 days (and often for much longer than this) to get their money from the insurance carrier after they’ve treated a patient. This means the clinic often has trouble getting the working capital they need to pay off employees and buy medical supplies such as bandages, syringes, gloves, and medicines.

The A/R lender expedites the payment process by advancing 80% (this percentage varies depending on the lender) of the accounts receivable to the clinic right away. Then when the payment arrives in full, the clinic gets the rest of the money minus fees charged by the lender.

Additional Advantages

This setup offers a lot of benefits for clinics and other companies on healthcare. For one, the clinic doesn’t have to hire people to collect payments from recalcitrant insurance companies. The clinic employees can then instead focus on its most important job of providing quality care for the patients. It is the A/R lender who usually collects the payment on the clinic’s behalf.

This can even help clinics identify insurance companies with a poor payment record. In A/R lending, it’s the payer’s credit history which is crucial, and the lender can identify which insurance companies should be avoided in the first place.

With medical A/R lending, various small clinics and other companies in healthcare can get the funding they need at the time when they need it the most.

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Medical receivables lenders
Medical receivables financing is different from getting loans from medical financing companies. It is sometimes called medical factoring, and it is different from ordinary monetary assistance that is offered by lending institutions. As opposed to a loan, medical receivable financing puts more of an importance on the valuation of a company’s receivables and upcoming potential for earning, instead of on its prior business performance.

Medical receivables financing is a great solution to moving your small private medical practice forward.

Managing a business that is involved in any facet of the healthcare or medical services industry is tough enough just on its own. It can get more complicated when you add all the difficult billing processes to it that are currently being forwarded by healthcare payers from third-parties. Collecting the money owed to your small private medical practice can be extremely tedious and painful to do.

 

However, there is always the option to get monetary help from banking institutions that are traditional in nature. However, a lot of these lending institutions have some extremely strict criteria. This makes it harder for a lot of health care operations at the professional level to qualify to get financing, medical equipment loans, or working capital.

 

Medical receivables financing is different from getting loans from medical financing companies. It is sometimes called medical factoring, and it is different from ordinary monetary assistance that is offered by lending institutions. As opposed to a loan, medical receivable financing puts more of an importance on the valuation of a company’s receivables and upcoming potential for earning, instead of on its prior business performance. When you do medical receivable financing, you are getting rid of your medical invoices for fast cash, and you are not taking out a loan.

 

It is a speedier way to get the working capital that you need, because medical institutions and healthcare practices usually wait about a month to three months to get paid. They may be forced to take out small business loans from medical finance companies to get the resources they need to continue on with their further operations. These loans can take between one month and two months to get funding and approval. However, with medical receivables financing, you can get a quick influx of capital, and it is unnecessary to wait to get paid. When you use a medical receivable financing service, you can get the funding the day after you make the request, in some cases.

 

There is no limit to the availability. Medical financing companies base the amounts of their loans on the past performance of an enterprise, tax returns, and repayment  history too. You will need to have excellent performance and superb profitability to get the approval that you need for these loans and to qualify for any real funding.  This isn’t the case with a good medical receivable financing service. As long as the business you have is making invoices, you can get access to the capital that you require, and there is no cap on how much you can qualify for.

 

There are highly competent financing and lending advisors that can help you out in all areas of your healthcare and financing operations. Discuss with some of the medical receivables officers at a reliable company about just how much financing you can get for your company, and also let them help explore some of your options with you too.

 

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