An essential hospital and elderly care facility company just reported a 14% drop in net income for the fourth quarter of 2006 from the same period just last year. Send out CFO said the drop was attributed almost exclusively to lessen Medicare reimbursement rates. Although still very profitable, the business expects continued erosion of profits as further reimbursement rates are predicted.nnFor smaller groups, the problems are magnified. The Medicare reimbursement decreases, in conjunction with skyrocketing malpractice insurance charges and slow time-to-collection waiting periods from other payors have placed many providers in a very precarious position. A large proportion of doctors have postponed essential equipment purchases and laid off staff or intend layoffs sooner.nnThese providers don’t have a capacity get a new laws regarding Medicare reimbursements, nevertheless they takes matters within their own hands using assets easier. Medical receivables funding, or factoring, allows the provider to acquire immediate cash for his or her 3rd party billings. Vacation payors are commercial insurance carriers, HMO’s, PPO’s, Blue Cross/Blue Shield, Medicare, Medicaid, while stating entitlement programs. Ordinarily, the provider must wait anywhere from 30 to 90 days to get their debts after the service has become performed. Factoring changes everything.nnFactoring is not a loan: this is the sale to your medical vacation receivables. It’s not a good thing based loan as well as a debt facility that banks offer. Unlike bank lines that could connect your complete assets, factoring only encumbers your medical receivables. On top of that, it is really an off balance sheet transaction. Simply put, the account balance sheet isn’t going to reflect debt as a consequence of factoring. This is often essential in the event the practice is designed for sale or new partners are being added.nnThe key benefits of factoring medical receivables are many:nn- Calibrating skills . stable and dependable cash flownn- There isn’t any predetermined limit of funding. The amount of money funded is limited by the pool within your vacation receivablesnn- No personal guarantees are requirednn- No collateral aside from medical receivablesnn- Capital is reached readily available expansion, equipment, or merely bill paying promptlynnWhich providers are candidates for factoring?nn- MRI Centersnn- Home health agenciesnn- Rehab centersnn- Durable equipment suppliersnn- Medical labsnn- Alcohol abuse clinicsnn- Dialysis facilitiesnn- Hospitalsnn- Physician Groupsnn- Essential centersnn- Outpatient facilitiesnnAmong the many criticisms of factoring could be the cost. However, increased competition means providers to relish a lesser worth of capital, which makes factoring medical receivables more attractive.
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