Medical Account Receivable Financing
The concept of “medical account receivable financing” is born from the idea that accounts receivable themselves should be treated as an asset within the medical field, and should be able to be used as a source to generate income that is necessary at any point in time. Traditional lending facilities offer loans based upon “fixed assets” which essentially means anything that can be repossessed and sold at auction or directly to another party in order to generate repayment of the amount owed. The majority of times, traditional lending institutions will overcompensate with the attached assets, creating a situation where a physical asset that can be sold for $200 is attached to a loan for $100 as collateral, thus making it a winning situation for the lending institution if the loan is defaulted upon due to the fact that they will repossess equipment worth far more than the amount they loaned to the physician or medical provider. If the loan is paid back, it is done so with interest which compensates the facility for the loan, but ultimately makes the repayment more difficult for the medical provider due to the fact that nothing has been done to increase the monthly income. For short-term or one-time problems that arise where cash falls short for expenses this may be an option for consideration, however the risks associated with repossession and the timeframes it takes to secure these types of loans can generally make the risks outweigh the reward. By simply taking the accounts receivable into account as an asset, medical account receivable financing becomes a far more attractive option.
Through a simple legal arrangement between the medical provider and a third party like Med-Care Solutions, the accounts receivable are purchased for qualified accounts at a slight discount from their total amount, thus providing immediate cash to the medical facility for the work they have already performed in exchange for the rights to collect on the account. The benefits to both parties are obvious in that the medical provider gets to use accounts that have been aging on the books and becoming more and more difficult to collect upon as a way to generate immediate cash through a payment, and Med-Care Solutions gets to collect a higher amount than was paid to the provider, assuming that a collection can be made at all. The most beneficial element to the medical provider in medical account receivable financing is that in the event that the account is not able to be collected upon, there is no penalty or need for repayment of the money. Because the purchase of the account is outright, then there is no risk on the part of the medical provider with regards to collection, and all risk has been assumed by Med-Care Solutions. Because of the extra-ordinary benefit that this type of situation has to a medical provider, many will opt to enter into an ongoing relationship with Med-Care Solutions in order to continue accounts receivable purchases in an ongoing basis, assuring immediate payments for the work they do. By removing the risks associated with collections, many medical providers are able to reduce and streamline waste in operations associated with collections activities, and therefore grow their practices by knowing exactly how much will be collected on a month to month basis. Guarantees are difficult to find in business, but with medical account receivable financing options that are arranged through Med-Care Solutions, the assurances of getting paid for the work you do is there.