What are medical accounts receivable and how can they be used to generate cash?
“Medical accounts receivable” are the outstanding and unpaid accounts that remain on the books of a medical provider. These accounts represent treatments and services that have been completed for a patient, and the collections process is proceeding which will result in the eventual payment being received by the provider, or the account being written off as “uncollected.” During the process of collection of an account, the longer the bills remain unpaid by the patient or a third party, the statistically more difficult they become to collect, and the more chance there is of default. This is why the collections process is generally about speed, and attempting to collect on the accounts as quickly as possible so as to avoid the risks associated with default over time. Additionally, the fast collection of an account provides the cash-on-hand necessary in order to continue to maintain operations of the facility itself. The expenses associated with treatment are not limited to the medical provider’s time, but will also include supplies, rent, utilities, equipment payments and payroll. All of these things must be paid on time by the facility even if the accounts receivable that are owed to the facility have not been collected for that period, creating a unique problem for many medical providers in that they can easily owe more in a period on expenses related to the treatment of patients than the amounts collected from those patients.
In the cases of times when more cash is owed than is collected by a medical provider, reserve cash must be drawn upon in order to keep credit ratings and accounts in good order with vendors. In many cases, multiple months of this same state compounds itself into a situation where the cash reserves are depleted and the medical provider either needs to somehow secure a loan of some sort or find another source of cash to pay for expenses while waiting for collections activities to complete. Alternative medical funding programs like those offered through Med-Care Solutions provide the options that many providers find crucial in times like these, providing them with the ability to sell the rights to collection of the accounts at a small discount in exchange for an immediate payment. This option removes all risk of default from the medical provider as there is no penalty for uncollected accounts, and no need for repayment if the collections process fails to produce a payment. The medical accounts receivable on the books of the provider are simply purchased outright by Med-Care Solutions, and the cash that would be received from the patient or insurance company is paid by Med-Care instead. The lengthy periods of uncollected funds and the inability to accurately predict income in order to cover expenses through the patient load are eliminated through the medical accounts receivable funding process, and valuable resources once bogged down by collections activities are able to be freed up to concentrate on the important tasks associated with treating patients. Contact Med-Care Solutions today.