The two most common ways to secure funding for your healthcare facility are loans and medical account receivable financing. Conventional lending companies offer loans based on fixed assets, which can be repossessed. Once repossessed they can be sold at auction or directly to another party to generate repayment of the amount owed. The concept of medical account receivable (A/R) financing is born from the idea that A/R should be treated as an asset to generate income.
Conventional lenders create winning circumstances for themselves
The majority of times, lending institutions create winning situations for themselves. When a loan defaults, the lender will repossess the equipment worth far more than the amount they loaned to the provider. For instance, if a physical asset is worth $200, the institution can attach it to a loan for $100 as collateral. If the loan is paid, it is done so with interest, which compensates the lender for the loan. Still, it ultimately makes the repayment more difficult for the provider because their monthly income has not increased. For short-term or one-time instances when cash falls short for expenses, this may be an option for consideration. However, the risks associated with repossession and the time it takes to secure these types of loans can make the risks outweigh the reward.
There is a financing solution physicians can benefit from
By considering accounts receivable as an asset, account receivables financing, often referred to as factoring, becomes a more attractive option. When medical providers and funding companies like PROVE partner together, both parties can benefit. The providers can use the aging accounts on the books that are more difficult to collect; PROVE steps in to buy qualified accounts receivables at a slight discount. This option provides immediate cash to providers for the work they performed in exchange for the rights to collect on the account. PROVE aims to collect on 100% of the retained bills, assuming that a collection can even be made at all.
Medical financing frees physicians from the risk of no collections
One of the greatest benefits to providers is that if accounts cannot be collected, there is no penalty or need to repay the funding company. PROVE purchases accounts outright and assumes all risks; there is no risk to the provider. This extraordinary benefit often facilitates an ongoing relationship with PROVE, assuring providers immediate payment for the treatments and services. By removing the risks associated with collections, many providers can reduce loss, streamline operations, and grow their practices by knowing exactly how much will be collected monthly. Guarantees are difficult to find in business, but with medical financing solutions there is the assurance of payment for your work.