If you’re setting up a medical clinic, then you absolutely will need a bank loan unless you have enough capital to take care of all your expenses in the next 6 months. But because of the nature of the current health care system, more and more doctors are turning to medical business receivable funding.
With this funding option, doctors don’t have to wait for a very long time until the insurance company gives them their payments. That’s because, with medical business receivable funding, they can get a large chunk (as much as 80%) of the value of the receivable – in advance. Then when the insurance company pays the lender, the doctor gets the rest of the payment minus the fee the lender charges.
There are several reasons why receivable funding has become very popular in the health care industry:
- Doctors get the funding they need quickly. Banks take a very long time to approve a loan, and sometimes they may not provide a loan at all. But clinics need lots of working capital, all the time. There are payroll and overhead expenses, and those needs are immediate. Clinics also need to buy the latest medical equipment to provide the best care for their patients and to compete with other clinics and hospitals in the area.
- Doctors are spared from dealing with insurance companies. Dealing with insurance companies is one of the frustrating things about running your own clinic. Doctors often have to deal with insurance companies who just won’t pay the amount they billed. And then sometimes the doctors have to deal with a lot of paperwork. Even filling out information in the reimbursement forms is pretty tedious.
Many doctors are fed up with such requirements that they are saying no to insurance altogether. But with medical business receivable funding, you spare yourself from unnecessary headaches. That’s because it’s the lender who will collect the payments from the insurance companies.
- There’s no reason to hire staff or third-party billing systems for collections. This is another way for a doctor to save money. Dealing with insurance companies often means having to hire staff just for that purpose. But collecting the payment is part of the funding company’s services. So not only do doctors get the money they need, but they get this service as part of the package.
- Doctors will know in advance which insurance providers to turn down. Dealing with the insurance company sometimes result in underpayment. There are some insurance companies who won’t pay what the doctor charges them. Since the doctor believes that they didn’t get the money to which they were entitled, they may then react to this by no longer accepting patients who use that particular insurance company.
But with medical business receivable funding, insurance companies are investigated in advance. Also, a finance company that specializes in medical funding often has a list of insurance companies known to pay late or underpay. The doctor can then decide right away which insurance companies to refuse so that they don’t have to be underpaid.
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