Physician Financing Issues
Financing options for physicians can come in numerous forms, but will generally take on a traditional format involving bank loans, interest, potential penalties involved with late payments, potential seizure of collateral, and an inability to influence future revenues directly. Quite simply, physician financing is both difficult to secure due to a lack of tangible assets that can be repossessed if the loan and interest are not paid back, and the failure of traditional institutions to consider the accounts receivable as an asset, even though in many cases they represent the largest pool of available cash to the office. This is due to the accounts receivable not being able to be guaranteed as far as collection, which puts banks at an aversion to loaning money that potentially cannot be collected back in the case of a default. Even though the bank itself could take control of the account and attempt collections themselves in order to recoup their money, they generally do not have the staff, expertise or the willingness to go down that road. A better bet for them is to simply deny the loan unless there is substantial collateral in the form of physical assets that can be repossessed.
Alternative physician financing models involve the purchase of assets from the physician’s books, in the form of the accounts receivable. In this form of financing, the physician’s office is paid directly for the rights to collect on the account. While this may seem strange as to why the risks of collections defaults would be assumed by a third party, the fact of the matter is that the business model of these third-party financing operations figures in defaults and collections delays as part of their process, and as a result they have more ability to wait for payments than a typical physician’s office does. In a general sense, the money that is to be collected for services performed by any medical provider is needed as soon as possible in order to keep the flow of services moving to future patients. The collection of accounts allows for the payment of salaries, the purchase of necessary equipment and supplies, and the payments on rent and mortgages. When there are interruptions in the collections process, or expensive procedures are provided but not immediately compensated for due to legal battles or other unforeseen circumstances, the physician’s office themselves are left scrambling to figure out how to pay their own bills, even though it is through no fault of their own tha they are short on cash for the month.
Physician financing options available through Med-Care Solutions solve these types of common cash-flow problems that are faced by even the best collections departments. Through prompt payments to the office directly from Med-Care Solutions, the physician’s office can count on being paid within the same month as the treatments being provided, allowing the physician or healthcare provider to be guaranteed the ability to cover their own expenses and treat additional patients. Contact Med-Care Solutions directly to discuss the options available to you.