TOPIC OF DISCUSSION:
Medical Factoring and financing your insurance claims using medical receivables factoring.
Managing cashflow can be challenging for any small to midsize hospital. Slow paying accounts like claim payments from medical insurance companies can slow business cash flow. With medical insurance claims taking anywhere from 30 to 180 days to pay, a hospitals main source of revenue is being crippled. Few companies have the financial resources to wait more than 90 days for payments – let alone 180 days. This delay puts hospitals in a difficult position.
So what can be done to sole this cash flow dilemma?
FINANCING CLAIMS IMPROVES CASH FLOW:
A simple way to improve cash flow would be to speed up insurance claim payments, however negotiating faster payments with insurance companies in almost impossible.
If you elect to finance your insurance claims using medical receivables factoring you can get the cash you need to cover ongoing expenses. Factoring will provide your hospital with immediate funds using your claims as collateral. Factoring provides predictable cash flow which can minimize financial problems, enabling you to manage your business more efficiently.
HOW DOES FACTORING HOSPITAL RECEIVABLES WORK:
The hospital uses Factor App to find the Factor that best fits their needs. Factor App delivers a few professionally vetted Factors that are interested in earning your business. Once you select the Factor that best fits your business you’re ready to start Factoring.
Slow payments from medical insurance companies, Medicaid and Medicare can affect your cash flow. A factoring program can finance medical insurance claims in as little as two days, after accounts setup. You’ll have funds on hand to pay employees, suppliers, rent and day-to-day expenses.
Slow-paying claims are typically funded in two installments. The first installment is called the advance and is deposited into your account after you submit the claims for financing. The second installment is called the rebate, and provides the remaining funds once the claim is paid in full.
A Factor will fund your open insurance claims by advancing a portion of the claim amount. The advance varies based on circumstances but on average 80-85 percent of the net payable claim amount can be advanced. Once the medical claims are paid, the Factor settles the account and rebates the remaining percentage owed, less their finance fee.
The finance fee is usually determined by the type of financing needs you require, the quality of your claims, time it takes to get the claim paid and the effectiveness of your medical collections process. Factors may offer your hospital a volume discount, therefore enabling larger accounts to negotiate a lower fee.
Receivables factoring can be used to fund most types of third party medical insurance claims. Including most private medical insurance plans as well as Medicaid and Medicare. Factoring provides hospitals with predictable cash flow to help maintain expenses such as facilities, payroll and equipment costs.
TIME TO FUNDING:
There will be some due diligence that needs to be done by the Factor. Depending on the size of your facility and the complexity of your operations. In most cases the Medical Factor needs to send a team to your site to review operations; including financial statements, procedures, and the collections process. All and all this may take a few weeks.
Every Factor is different. This is why it is so important to use Factor App and get a few offers before making your decision on which Factor to work with. The Costs associated with factoring your medical receivables varies based on the size of the financing facility, the creditworthiness of your insurance providers, and other important criteria. Generally costs range from 2% to 3.5% per 30 days. There are several things that can affect the net cost, so make sure you ask each Factor a series of important questions when deciding which Factor is right for you.
DOES YOUR HOSPITAL QUALIFY FOR MEDICAL FACTORING:
There is not obligation when using Factor App. Get the information you need to make a good business decision. If you hospital is having cash flow problems that are due primarily to slow pay claims, then implementing a receivables factoring plan may be just the answer. Unlike traditional lines of credit, medical factoring is used by hospitals that have cash flow problems, tax problems, losses, restructuring issues or a bankruptcy in process.
Download Factor App – and get immediate help from a few Factors that are eager to help your business by supplying cash flow and in some cases back end office support.
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