The financing options for physicians
There are several options available to physicians with regards to financing, and securing cash for short or long term needs. The types of financing options for physicians that are will most times be determined by the reason behind the need for cash, due to the fact that the security of “traditional loans” is generally determined by the ability to repay the money, and the perceived stability of the practice. If the need for cash is based upon a lack of ability to pay the current expenses, potentially due to a reduction in the number of patients or increases in the costs of running the practice, many traditional lending institutions will be hesitant to lend money due to the risk factors around repayment being high. If there is not an ability to pay your current bills and at the same time there is no plan to increase the revenues of the practice, why would there be increased cash available in the future to repay not only the balance of the debt but interest as well? These types of loans are considered too risky by many institutions, and are not granted due to a potential default which would necessitate repossession of collateral. Even though collateral in the form of material assets does provide security for the loan, it is not desired by most banks due to the added difficulties liquidating and recovering their money. Other reasons that are more favorable to acquiring financing are practice expansion or the need to secure a larger staff or space in order to facilitate practice growth. Although these types of loans are easier to secure, there are still difficulties involved as you must prove that you can provide enough collateral in the form of assets that can be seized if the expansion effort was to fail, as well as the immediate expansion of the patient base so as to pay additional interest on the loan. Traditional lending is very much rooted in the saying “if you need the money, it is tough to borrow it….if you have the money they will lend you any amount.”
While traditional loans are problematic for most physicians, there are alternative options in financing that can generate immediate free cash in a much more conducive way. Physician financing options that involve the purchase of accounts payable that exist on the books of a medical facility is a method of pooling money that is owed to the practice but has yet to be collected into an immediate payment. In any cases, the accounts receivable are the largest potential value with regards to assets, and yet most traditional institutions do not consider them assets as they cannot be liquidated in a traditional sense. The purchase of these accounts transfers collection rights to a third party, who then proceeds to collect the money owed. If there is a default on the account, the physician’s office who performed the services associated are not held responsible in any way for repayment, and all risk is assumed by the third party. As a source of physician financing, it is a far superior method of acquiring necessary funds as they can be used for any reason, to pay immediate expenses or to expand, and are without added payment burdens in the form of interest or collateral. Contact Med Care Solutions today to discuss this superior method of physician financing.