What You Should Know About Factoring Medical Receivables
In the healthcare industry, many professionals receive payment from third parties. This can include insurance companies, Medicare and Medicaid. The problem is that these third parties can take up to 120 days to process the claim and pay it. The providers who sent the claim often cannot wait that long for payment. This can create problems with the business’s cash flow and is the cause of why many medical businesses fail to thrive. For professionals who find themselves in this position and need the cash now, there is an option available called medical receivables factoring.
What is Medical Receivables Factoring?
Instead of sending a claim directly to the third party that is responsible for paying it, a medical professional can send it to a finance company, referred to as the factor. The factor then pays the professional a portion of the claim immediately and then sends the claim to the third party and waits for the payment. When payment is received for the claim, the factor then pays the remainder of the claim to the provider minus the financing fee.
What is the Advantage?
The advantage of medical receivables factoring is that medical providers can receive payment for the services provided at a much quicker rate. Instead of having to wait up to four months for the third party to make a payment, they simply have to wait a few days to receive the funds from the factor. This allows medical business owners to pay employees and other expenses in a timely manner. It can truly be the difference between an establishment thriving or failing.
Who can Participate?
Medical factoring is a process that is available to any medical institution that does not charge the patient directly. A third party must be the first source of payment. This could include pharmacies, medical hospitals and nursing homes as well as many others. Once a business has determined that it is indeed eligible to participate in medical factoring, it needs to seek out a factoring company. It is best to use a factoring company with experience and solutions available that are helpful to the business.
This process of factoring medical receivables can completely change a medical business. The businesses are able to have the cash that they have earned in a timely manner to keep the business running efficiently. Wages and office bills can all be paid appropriately when the cash flow is not at risk. Medical factoring can make this possible for many medical institutions.