How Medical Receivables Factoring Can Help Your Clinic Stay in Business

These days, it’s not entirely surprising to see clinics closing down. They stop doing business because patients aren’t coming in due to high costs of health care, or there’s too much competition in an area and you have to set your clinic apart from the rest. In all likelihood, you’ll need a quick infusion of cash to help your clinic operate and thrive. And this is where medical receivables factoring comes into the picture.

Medical factoring companies can help you because they can advance you the money owed to you by insurance companies. If you have enough capital, you can do the following to help your medical clinic rise above the competition.

  • Boost your advertising. With the money you get from the factor, you can advertise your clinic more effectively. Perhaps you can start a website, and if you already have one you may want to set aside a budget to improve it. You can make it more attractive, feature more articles, and perhaps also improve SEO so that your clinic’s website is ranked at the top of the search results when patients in your area are looking for clinics online. All these require the help of professionals, and they cost money.
  • Upgrade your equipment. You can also feature more advanced technological equipment in your clinic. Not only do these new tools help you treat your patients more effectively, but your clinic also becomes more attractive to patients.

You can get better diagnostic tools so that you can find out what’s wrong with your patients. You can give them more comprehensive and more accurate tests to help with the diagnosis.

You can also get new tools to help you get more patients. You may offer different solutions for certain ailments so that your patients will have several options.

If you think that your current equipment is still ok, then you can still use your funds to make sure that they are properly maintained. By helping your equipment last longer, you can get full value for them for as long as possible.

  • More personnel. It’s not easy to run a clinic all by yourself. That’s especially true when your advertising succeeds and you have an influx of new patients. You may run yourself ragged trying to take care of them all.

But with enough capital, it may be possible for you to hire new nurses and doctors. You may even hire doctors with a different specialty so that you can expand the range of your health services.

This is especially true for dental clinics. If you’ve been specializing in preventive dentistry, for example, then by getting new dentists on board you may be able to offer new dental services such as braces, aligners, and crowns.

With medical receivables factoring, your medical clinic can thrive when others have failed to survive.

Why You Need Medical Receivables Factoring

Medical receivables factoring is a special type of financing that can help businesses in the health care industry. Whether you’re a medical or dental clinic serving residents in your community or a business that caters to health care centers, with factoring you can get the funding you need more readily than if you apply for a bank loan.

How It Works

Factoring is simple. Instead of waiting for an interminable length of time for your customer or insurance company to pay the invoice, you simply submit the accounts receivable to the factor instead. The factor offers about 80% of the value of the accounts receivable in advance, which you can then use for your own purposes. Once the customer finally pays the factor in full, you then can receive the rest of the money once the factor has deducted its fees.

Purpose of Medical Factoring

There are many possible reasons why a business in the health care industry will want an infusion of cash. One very common reason is to boost the cash flow to help pay for employees such as receptionists and nurses. It’s not really a good idea to miss a weekly salary payment when you’re running your own business and you rely on dedicated staff to help you out.

The cash flow can also help buy supplies that medical clinics need, such as bandages and gloves. These supplies need to be replenished on a regular basis, and that means you need to have your cash flow ready to cover the expenses.

Another good reason is to procure more equipment. Even if you buy used medical equipment, the expense can be very high and can really put a dent on your cash flow. But more sophisticated equipment can put you at an advantage over your competitors.

So how can you get the funding you need? Banks are not as reliable a lender as they once were, and that means you need alternative sources of funding. For many clinics and other businesses in the health care, medical factoring stands as a reliable source of funding that’s unmatched in the benefits it provides.

Special Concerns

Medical receivables factoring is much like other types of factoring in other industries. However, some aspects of it are unique to the medical profession.

For example, there is the matter of dealing with medical insurance companies. Collecting payments is a common task delegated to factors, and in this case it is an extremely welcome relief for a lot of doctors. But medical factors must be experienced in dealing with these insurance companies to avoid any surprises.

Medical insurance companies often contest medical bills, so as a result they do not pay for the whole amount stated in the accounts receivable. As such the factor must expect this.

Another common occurrence is the slow payment of invoices. It’s not terribly unusual for insurance companies to pay only after 90 or even 120 days. This means that medical factors shouldn’t charge exorbitant rates for payments that go past 30 days.

Medical receivables factoring can be very helpful for clinics. But you need to make sure that you get an experienced medical factor so that you can maximize the benefits.