How to Use Medical Factoring to Increase Revenue in Your Practice
Many small and midsize healthcare facilities struggle to manage cash flow. That is because one of their biggest sources of revenue is claim payments, which usually take a long time. Insurance companies can take 30 to 180 days to pay claims, leading to negative cash flow. In the meantime, hospitals have regular expenses that need to be paid. Delayed payments can make managing cash flow a challenge.
Improving Cash Flow
One of the ways to overcome the challenge of late payments is by negotiating with insurance companies. But this method is usually difficult. Another effective way to increase revenue at your practice is through medical receivables factoring. Medical factoring provides your facility with the needed funds, with your claims acting as collateral. This solution ensures you have funds to cover business expenses or any investments. The method allows you to have predictable cash flow, reduce financial challenges, and manage the business effectively.
Factoring Hospital Receivables
The concept of medical factoring is pretty easy. You get in touch with a medical factoring company that will fund your insurance claim by advancing you a part of the claim. The advance rates usually vary, but on average, you can get about 75% of the payable claims. Once the insurance company pays out, the factoring company settles the account and refunds you the remaining. Of course, they deduct the financing fee.
Things like the quality of the claims, your financing needs, the period it takes for a claim to get paid and how effective the medical collection method is, will determine the finance fee. Receivables can be used in most private medical insurance plans, plus Medicare and Medicaid. And if used correctly, it can help a company with predictable cash.
Getting the Process Started
It is important to find a factoring company as soon as possible. That is because receiving the funding can take time. The factoring company will need to send a team to assess your operations. This includes checking your financial statements, collection process, and procedures. Medical factoring can be used by healthcare facilities that have financial issues such as:
Cash flow problems
Are you in need of medical factoring? Get in touch with Charis Commercial Capital. We can help you assess the funding you need to solve the cash flow problem in your facility. Give us a call today.