Accounts Receivable Factoring

Medical Accounts Receivable Factoring


Because of the unique client billing structure in the healthcare industry, medical accounts receivable factoring is a special case of accounts receivable factoring.

It is rare for patients to pay cash in the healthcare industry.  The patients are the clients or the customers of healthcare facilities, but they often do not pay the facilities they visit.

When you go to the hospital and are provided service, you typically hand the facilities your insurance card.

The healthcare facilities then bill either your private insurance provider or the government if you have Medicare or Medicaid.

Because of this third party billing structure, there are several nuances involved, and therefore specialized medical accounts receivable factoring companies who provide healthcare facilities factoring services. 

The underlying issue here is that there is a long delay between the time when a healthcare facility provides patient care to the time the facility is paid by the insurance company.

The process involves a lot of red tape to say the least, and involves a long time thus affecting a healthcare business’ cash flows. Thanks to medical accounts receivable financing companies, healthcare facilities can accelerate their cash flows through funding of medical receivables.

Common reasons why companies need medical receivable financing services:

- Newer healthcare companies needing access to capital but could not obtain them because they are too new and don’t have a long enough track record

- Young / start up healthcare companies needing to fund payroll

- Healthcare companies looking to expand their existing business

- Healthcare companies looking to open new facilities

- Healthcare companies looking to grow through acquiring other smaller companies

- Healthcare companies in restructurings mode / bankruptcy financing

Who is medical accounts receivable factoring for?

Medical Accounts Receivable Factoring
No surprises.  As the title of the phrase suggests, medical receivable financing is for healthcare providers and companies such as doctors, clinics, hospitals, nursing homes and other healthcare companies are all qualified candidates for  medical accounts receivable financing.

Because healthcare is such a distinct niche, or industry, where the nature of a business’ clients and customers (or who pays them rather) is so different, a special type of accounts receivable factoring company is needed. 

Fret not however, special accounts receivable factoring companies are out there that provide asset based loans at competitive rates much like other industries.

Concluding Thoughts

The interesting thing about this specialized niche is that while the factoring companies are dedicated to serve the medical facilities in need, the companies do not fund receivables that are owed to healthcare facilities by the patients themselves, not the insurance company.

I do not understand why this is the case.  The other interesting thing about this niche is that although there are many companies that now understand how factoring in the medical industry works and are willing to serve the healthcare companies in need, a good number of healthcare companies have no idea that this service is available for them and therefore are unable to take advantage of the benefits.

If you, or someone you know is in the medical field and can benefit from accounts receivable factoring, help them realize the benefits available to them to grow and expand their heath care business.

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