Business Finance Solutions

Terry McDermott asked:




With all the talk about swine flu, epidemics and pandemics, it is no wonder the general public gets a bit edgy about the possibility of becoming ill. But there is another type of epidemic associated with healthcare, only this epidemic will not make you physically ill. But it may leave your physician financially debilitated.

The issue facing your physician is cash flow and the epidemic is the amount of time it takes many doctors and medical facilities to get paid by those responsible for medical reimbursements. Typically, these are the payments provided by Medicare, Medicaid and health insurance companies. Once your doctor provides a service to you and the other patients of his or her practice, the bills for this service, less your co-pay, is forwarded on to a third-party. Then the waiting game begins.

At any given time, your doctor may be awaiting payments totaling tens-of-thousands of dollars. Meanwhile, rent, salaries, supplies, insurance and all of the expenses of running a business must be paid. Granted, awaiting payment from clients and customers is a problem in virtually every industry. But when you are relying on complex bureaucracies like the Federal government and major health insurance for the vast majority of your revenue, the delays can be a major financial challenge.

To address and rectify this ongoing dilemma, many medical practitioners and facilities are taking advantage of companies that provide a solution in the form of medical receivables factoring. Simply stated, a factoring company advances cash to a business based on the anticipated revenues from the invoices they have issued. In the case of the medical industry, these would be claims for reimbursement. These medical invoices are stated as accounts receivables in financial records. As such, they are considered assets since, eventually, they should be collected.

Typically, a factoring company will issue up to 85% of the value of these invoices to the physician immediately. The balance, less a fee for providing the factoring service, is forwarded to the physician once the invoices have been paid. Fees for medical invoice factoring can be as little as 1-