Many medical practices are not aware of the benefits of medical receivables factoring. Most practices, however, are quite familiar with the complications of billing for services to third party insurance companies and government institutions such as Medicare. Receivables factoring helps fill the gap in cash flow between billing and reimbursement.

Stabilize Cash Flow

A successful practice may bill thousands of dollars for services every day, but it can be a long time before that practice can actually put that money to use. Slow repayments are the norm, especially those that come through the administrations Medicare and Medicaid. In the meantime, payroll needs to be met and other overhead costs to maintain the facility must be paid. Factoring can provide the funds almost as soon as the invoices are sent, keeping the operation running smoothly.

Practical Financing for Every Day

Sometimes a health care provider will seek out a loan or other means of financing to bridge the gap between repayments. Medical receivables factoring can provide greater flexibility with minimal impact to a practice’s debt profile. Factoring does not show as debt on a balance sheet as a loan does. An important consideration in factoring is that the provider is not required to factor all or even most of the

billing. The practice factors only the amount needed to meet its obligations. There is no set minimum or maximum month to month.

How It Is Done

The health care provider sends in an invoice. The factoring company then pays 75%-80% of the expected receivables right away. Once the invoices are paid, the provider receives the balance due, minus any applicable fees. Invoices may involve a variety of agencies such as HMO/PPO, managed care, private insurance, Medicare and Medicaid. A great advantage to using a factoring company is the assurance that changes in healthcare legislation and coding procedures are always on the radar. Practitioner are better able to regularly recoup the full value of their services.

How to Get Started

Incorporating medical receivables factoring into a billing system takes some preparation. Before factoring can begin, there is a review of the practice. The factoring service will carefully go over documents relating to patient billing history and the account receivables summary page. This process takes time. Once the practice is deemed viable, factoring can begin immediately.

More medical practices could benefit from medical receivables factoring. It can help take the stress out of managing operational costs by ensuring steady cash flow into the practice without adding to debt. It is another tool to allow health care providers focus less on billing, and more on providing quality health care.