A significant hospital and elderly care company just reported a 14% stop by post tax profit for the fourth quarter of 2006 through the same period during the past year. You can actually CFO said the drop was attributed almost exclusively to lessen Medicare reimbursement rates. Although still very profitable, this company expects continued erosion of profits as further reimbursement rates are anticipated.
For smaller groups, the down sides are magnified. The Medicare reimbursement decreases, along with skyrocketing malpractice insurance costs and slow time-to-collection waiting periods from vacation payors have placed many providers in a very precarious position. A large percentage of doctors have postponed important equipment purchases and laid off staff or are organizing layoffs soon.
These providers have zero capacity alter the laws regarding Medicare reimbursements, however usually takes matters within own hands by using their assets well. Medical receivables funding, or factoring, permits the provider for immediate cash for their look at billings. Other payors are commercial insurance companies, HMO’s, PPO’s, Blue Cross/Blue Shield, Medicare, Medicaid, while stating entitlement programs. Ordinarily, the provider must wait between 30 to 90 days to get the money they owe following the service has become performed. Factoring changes everything.
Factoring is not an loan: it does not take sale from your medical 3rd party receivables. It isn’t a possession based loan as well as a debt facility that banks offer. Unlike bank lines that can complement your complete assets, factoring only encumbers your medical receivables. Aside from that, regarded as off balance sheet transaction. This means that, your balance sheet is not going to reflect debt from factoring. This really is essential in the wedding the practice is actually for sale or new partners are added.
The advantages of factoring medical receivables are plenty of:
- Calibrating skills . stable and dependable earnings
- There isn’t any predetermined limit of funding. The total funded is simply confined to the pool of one’s 3rd party receivables
- No personal guarantees will be required
- No collateral apart from medical receivables
- Capital is produced for expansion, equipment, or even paying the bills in time
Which providers are candidates for factoring?
- MRI Centers
- Home health agencies
- Rehab centers
- Durable equipment suppliers
- Medical labs
- Alcohol abuse clinics
- Dialysis facilities
- Physician Groups
- Rehab centers
- Outpatient facilities
Among the many criticisms of factoring is the cost. However, increased competition means providers to have enjoyment from a lower life expectancy price of capital, that makes factoring medical receivables more attractive.