April 7th, 2007 | 
Author: 
Curt Matsen asked:
A “medical accounts receivable factoring” is specifically designed for the health care industry. Access for health facilities in these days costs a lot for typical patients. Moreover, as they would have a lower productive capacity after returning to society, an insurance company will usually give coverage for the patient, provided they have their current premiums.
The standard scenario in health care industry
Instead of cash, patients usually get an insurance card that can be given to health care establishment and the insurance company is the one that will be paying the bill on behalf of he patients. If you have been covered with programs like Medicaid or Medicare, the government takes care of the payment. The receivable/invoices in this scenario is to be paid by the insurance company.
All these health-care facilities require a large amount of cash to keep their operations working smoothly. The insurance company surely pays the bill, but only after a long time and a lot of complex paper works; something that health care facilities just do not want to deal with.
So, here comes a great alternative!
Due to this characteristic billing structure, several companies have started providing services in the area of medical accounts receivable factoring. With the assistance of a factoring company, the health care facility can stay focused at their task of saving lives, and avoid the complicated and lengthy process of payment recovery. Both companies reap benefits from this arrangement.
By using accounts receivable factoring, the health facilities can get a quick access to funds, making themselves efficient to take care of their payroll, and purchasing new tools and supplies. Industries and professionals involved also have to pay for the premiums of their medical practice insurance, as this can save them against malpractice lawsuits that are usually lengthy and at a great cost.
Why discount rate?
While the factoring company gets a repeated business for a multitude of patients and guaranteed payment from insurance companies, the long process involved in claiming the payments is chiefly responsible for the discount rate for health industry. Insurance companies in the health care system are famous for their slow release of medical payment, and can pose a significant liquidity problem for a health care facility.
The discount rate for medical factoring is one of the biggest when compared to other industries’ discount rates. A medical facility may only receive somewhere between 65% up to 80% of the face value of a medical bill.
Need of specialized factoring company
Medical accounts receivable factoring can be used by facilities such as hospital, clinics, nursing homes, or even medicine professionals like doctors and nurses. All of them can access the receivable factoring. Because of the distinctive nature of the medicine industry, a specialized factoring company is also required. This is because of the ins and outs of health care industry are effectively a whole field that requires a specialized company to understand.
Factoring Contract
A “medical accounts receivable factoring” is specifically designed for the health care industry. Access for health facilities in these days costs a lot for typical patients. Moreover, as they would have a lower productive capacity after returning to society, an insurance company will usually give coverage for the patient, provided they have their current premiums.
The standard scenario in health care industry
Instead of cash, patients usually get an insurance card that can be given to health care establishment and the insurance company is the one that will be paying the bill on behalf of he patients. If you have been covered with programs like Medicaid or Medicare, the government takes care of the payment. The receivable/invoices in this scenario is to be paid by the insurance company.
All these health-care facilities require a large amount of cash to keep their operations working smoothly. The insurance company surely pays the bill, but only after a long time and a lot of complex paper works; something that health care facilities just do not want to deal with.
So, here comes a great alternative!
Due to this characteristic billing structure, several companies have started providing services in the area of medical accounts receivable factoring. With the assistance of a factoring company, the health care facility can stay focused at their task of saving lives, and avoid the complicated and lengthy process of payment recovery. Both companies reap benefits from this arrangement.
By using accounts receivable factoring, the health facilities can get a quick access to funds, making themselves efficient to take care of their payroll, and purchasing new tools and supplies. Industries and professionals involved also have to pay for the premiums of their medical practice insurance, as this can save them against malpractice lawsuits that are usually lengthy and at a great cost.
Why discount rate?
While the factoring company gets a repeated business for a multitude of patients and guaranteed payment from insurance companies, the long process involved in claiming the payments is chiefly responsible for the discount rate for health industry. Insurance companies in the health care system are famous for their slow release of medical payment, and can pose a significant liquidity problem for a health care facility.
The discount rate for medical factoring is one of the biggest when compared to other industries’ discount rates. A medical facility may only receive somewhere between 65% up to 80% of the face value of a medical bill.
Need of specialized factoring company
Medical accounts receivable factoring can be used by facilities such as hospital, clinics, nursing homes, or even medicine professionals like doctors and nurses. All of them can access the receivable factoring. Because of the distinctive nature of the medicine industry, a specialized factoring company is also required. This is because of the ins and outs of health care industry are effectively a whole field that requires a specialized company to understand.
Factoring Contract
About Wade Henderson
Wade Henderson: Domestic and International Business Finance since 1995 specializing in challenge situations. "We prefer to find a way to get your loan done as opposed to finding a reason to turn it down.” Connect with me on Google+
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