Factoring for Doctors: Is This Your Best Option?

Doctors who run their own clinics invariably need money to continue their practice. That’s a problem inherent in the industry, since insurance companies are the ones paying the bills and they are notoriously slow payers. Sometimes they don’t even pay the bill in full. This is why many doctors ask for loans, and why factoring for doctors has become immensely popular.

But if you’re a doctor, do you try to get loan or do you take advantage of the services of a medical factor?

Loans for Doctors

Some lending institutions offer loans specifically for doctors. Like most loans, you get a specific amount and then you pay every month. What you need is a steady stream of patients, and every month should bring in enough cash to enable you to make your monthly payment for the loan.

The loan amount you get depends on several factors. How long you’ve trained, your work experience, and even your specialty can affect this amount.

Medical Factoring

Technically, this is not a loan at all. The medical factor takes your invoices, and in return you get an advance on the value of the invoice. You may get as much as 80% of the value right away. The last 20% will be sent back to you once the insurance company pays the amount on the invoice in full, minus the fees for the medical factor.

For some clinics, the advantage of medical factoring goes beyond merely getting an advance. Medical factors deal with the insurance company, and they take care of the payment collection. This allows you to fully concentrate on providing the right care for your patients. You won’t have to hire additional employees to collect the payments for you.


So which is better for you? It all depends on what you need the money for, and what’s actually available for you.

Let’s say for example you need the money to expand your business (or buy a high-end medical equipment), or you want to take care of a debt that’s charging you a very high interest rate. Then in all probability you’ll need a medical loan. You can take the time to apply for the loan, and since it’s a one-time problem you can afford to go through the excruciatingly complicated loan application process.

But if you have a working cash flow problem, you’ll need either a line of credit or a medical factoring service. Since a line of credit can be very difficult to set up and there may be a limit involved, your only other viable choice is factoring.

With factoring for doctors, there’s no real limit except for the value of the invoices you’re pulling in. The higher you charge your patients, the more leeway you get in terms of the advance money you will receive. Once you’ve set up a factoring line for your business, you don’t need to reapply for more advance funds if you need them. You only need to give the factor more invoices.


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3 Important Things to Know About Medical Factoring for Doctors

Why is medical factoring for doctors important? It’s because medical factoring can mean the difference between a thriving practice or an endless frustration over uncollected bills and the resulting inability to properly sustain a high standard medical practice.

Medical and Financial Management Skills 

For physicians, a successful healthcare practice can be seen not only in the number of satisfied patients that the doctor treats, but also in the improved quality of life that he or she is able to provide as a result of pain and disease management.

In turn, the attainment of such results are generally dependent on two things: the medical and human relations skills of the doctor, and his or her financial management acuity. While both may be learned in school, it is only through experience that the desired level of excellence in patient care and financial management are achieved.

However, even if a physician may have impressive medical skills and is highly experienced in financial management, there are other things that could get in the way of successful health practice. Fortunately, there are also corresponding ways by which medical factoring could be the solution to such obstacles. 

Overhead Costs

One of the concerns of private health care practitioners (as opposed to doctors who work in hospitals) is overhead costs. A physician who practices in a private capacity has to deal with the payment for utilities and rent, as well as staff salaries. Overhead costs are subject to economic forces and geographical location, and their fluctuation can severely affect cash flow.

Delays in Payment

Collecting from health insurance companies can take a long time. Even if it has already been weeks or possibly months since the medical treatment had been given, physicians often experience delays in payment.

On paper, physicians may have a lot of accounts receivables but they cannot spend the figures that are indicated as receivables. Such “payments” cannot be used to pay staff salaries, nor can they be used to buy medical materials or equipment, which is why a doctor may often be cash strapped.

Again, this could be directly tied to the economy. The Corporation for Enterprise Development recently released a new study which showed that 44% of Americans are experiencing poverty in terms of liquid assets. This means they live from paycheck-to-paycheck, since they have less than 3 months savings, if any.

Although as a whole, the public still sees the importance of prioritizing health care above their other needs, there are times when matters relative to health care, such as the payment of insurance premiums, become a non-priority.

Time Constraints

Due to the nature of their profession, physicians dealing with time constraints or time pressures are a distinct part of doctors’ lives. Generally, their concentration is fixed upon two major aspects: actual patient care and the upgrading of their own skills and knowledge through seminars, conferences, and advanced studies. Such things can often reduce their time for reviewing the minute financial details of their private practice, which in turn, can cause cash flow problems.

Medical Factoring

It is in these three important areas that medical factoring for doctors become crucial. Basically, medical factoring can free up the cash flow of physicians so that they can devote their time to providing excellent medical care, instead of worrying about where to get funds. If you are a private health care practitioner, get in touch with Neebo Capital to find out how we can help you.