Healthcare practices should strongly consider the use of medical factoring to improve their working capital and cash flow; in fact, few industries could reap greater benefits from this financial instrument. In particular, the role of medical insurance often means very long delay times between the service provided and the receipt of payment for said services. Invoices can remain outstanding for as long as 120 days in some cases, which seriously stifles the healthcare company’s ability to grow.
Medical Factoring Offers Solutions to Unique Problems
Just like any business, the healthcare industry has to be concerned with the costs of everyday operation – this includes utilities and of course rent, payroll for employees, medical equipment, office renovations, the cost of their marketing plan and investments, and attorneys and consultants. The added cost of medical malpractice insurance can be burdensome if payments are not rolling in.
Top Reasons For Healthcare Factoring
In addition to the above, there are quite a few reasons why healthcare factoring is especially important for the medical industry; indeed, some of these are concerns that are exclusive:
Healthcare Reforms: Although regulations are a feature of every industry, healthcare is a special case due to the politics involved with Medicaid, Medicare, etc. All kinds of new initiatives emerge from Washington almost every year, and the medical industry needs to prepare to implement them financially.
Medical Malpractice Suits: This goes for any suit, of course; the costs associated with medical malpractice can be sky-high, and insurance is the only viable way to deal with it. A negative cash flow can be a death knell to getting full coverage, however – which is medical factoring can be of such utility in getting paid so as to have the necessary working capital.
Specialized Equipment: You cannot afford to fall behind in the equipment department – especially since there’s a direct correlation with the health of your patients. This means your older models need upgrades and renovations; sometimes, they need to be replaced.
In sum, then, the reason why healthcare practices employ medical factoring is to facilitate a business that is especially prone to cash shortages, due to the nature of medical insurance (primarily).