Medical Receivables

Medical Factoring: A Financing Program Without Recourse

By April 14, 2020 No Comments

In the medical accounts receivable financing industry, also known as medical factoring, a funding company provides healthcare facilities a credit line or outright payment for backed assets. The credit line or payment is based on the net realized value of outstanding billings to insurance companies, HMOs, Medicare, or Medicaid. Different financing programs are available through factoring companies ranging from loans and lines of credit against the asset of receivables. For instance, PROVE buys medical accounts receivables, a more advantageous and secure option compared to credit-line based programs.

Risks associated with traditional credit-line programs

Credit-line types of programs bear providers additional expenses in monthly principal and interest payments. These payments can quickly become overwhelming if injury cases take months to settle. Additionally, these types of programs are with “recourse,” so the provider still assumes the full risk of the non-performing asset. The principal and interest must continue to be serviced and repaid regardless of the outcome of the case. If no settlement is made in favor of you or your client, the interest, as well as the loan amount itself, must still be repaid. This type of program is not advantageous to the medical provider since they shoulder all the risk. 

Financing with no risks 

PROVE creates financing programs for partners to ensure they have financial solutions to meet their business needs. Our accounts receivable purchasing programs assume 100% of the risk, even in the event of no recovery of the debt. We divert the risks associated with collections and aging of accounts away from your practice and onto us. As soon as we pay providers for the medical assets, we assume ownership over those accounts. These types of programs allow practices to continue providing services without the effect of lengthy payment timeframes. Your medical practice or surgery center should never not have enough cash on hand to keep daily functions when companies owe money for services you have already provided. With PROVE’s receivables program, we assume all the risks, and you get the rewards of prompt payments.

Immediate funding despite positive cash flow

The financial juggling act of having enough revenue coming in to sustain the operations that are providing services to those in need is a delicate one. No matter what, you need staff, supplies, and a building in order to provide services to patients today. If they cannot be paid for, then you cannot offer services that bring in revenue in the future.

Many times medical accounts receivables show more than enough revenue to continue operations, but the time-consuming collection process creates unnecessary financial difficulty. A bad month of slow collections on the accounts receivables can put your operation in the position of not being able to cover expenses, even though there is plenty of revenue on the books. This is where a bridge is necessary; an outright purchase of the debt brings in immediate funding required to keep the doors open and remove the risks of never collecting what is owed to you.

Your practice is not unique in facing the challenges of financial juggling. The long delays between the times you provide services and the time you actually receive payment, coupled with the nightmare of third-party billing and bureaucracy, create cash-flow problems in thousands of practices nationwide. Businesses just like yours, orthopedic practices, physical therapy centers, hospitals, nursing homes, equipment providers, radiology centers, surgery centers, and a multitude of other medical businesses face these same issues every day. Accounts receivables can create a false picture of success because it takes longer to collect the debts than you have to pay your expenses. Medical factoring firms like PROVE can give you the peace of mind you need to do what you do best— provide medical services to patients. Contact us today to inquire about the accounts receivables programs we offer medical providers.