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The Benefits of Medical Receivables Financing

Nearly 20% of insured and 53% of uninsured Americans “report having problems paying medical bills in the past year that often cause serious financial challenges” reports Kaiser Family Foundation. On top of that, medical providers who handle personal injury cases have to wait many months or often years to get paid at the end of a case.

This adds to the financial stress of hospitals and healthcare providers as they face dwindling reimbursement levels and rising infrastructure costs.

As a result, many medical providers today are turning to medical receivables financing as a quick way to solve their cash flow problems. The benefits of this financing approach can make the difference between prospering and going under.

The Biggest Asset

Many medical providers who treat personal injury patients will often wind up with a huge outstanding portfolio of medical liens. Medical receivables financing is a transaction where a medical provider/practice sells its personal injury lien invoices to a third-party financial company. This is also known as “accounts receivable financing.”

Accounts receivable are usually the biggest asset of a medical practice. Medical funding companies will purchase the provider’s aging personal injury lien portfolio for an immediate cash infusion.

Elite Medical Receivables Solutions is a specialized funding company that supports healthcare providers used by plaintiffs in personal injury cases. We purchase their medical receivables and wait for the case to conclude to be paid. Elite assumes all the risk for the payment of the accounts receivable. In this situation, we purchase the receivables of a medical provider that treated the plaintiff in a personal injury lawsuit. When the case concludes, Elite is repaid from the economic proceeds from the settlement or verdict amount. If the case is lost, the medical business does not have to pay us back.

Medical financing can be used by:

  • Medical offices
  • Clinics
  • Individual physicians
  • Hospitals
  • Long-term care facilities
  • Rehabilitation centers
  • Surgery offices

Every industry suffers from slow payments, but in the medical profession, cash-flow problems are common. Medical companies that accept personal injury medical liens experience delays that can lead to trouble covering payroll, buying equipment, hiring new staff members or open new locations.

Practices in their first three years of operation get the best benefits from our funding solutions. Because of their lack of operating history, these practices often don’t have enough established cash reserves to cover overhead and payroll costs until medical liens pay off. By using medical financing to speed up cash flow, these startup practices can fund their growth and operations quickly.

Once a medical provider has established a relationship with a funding company, it can submit new billings to the funding company for consistent cash flow.

Many Benefits

Immediate cash. Once a funding relationship is in place, the funding company will often send the payment within a week. This is especially important to new or small practices that cannot take on more patients until they can hire more staff. With medical funding firmly in place, the practice can use the consistent cash flow from the funding company to cover its labor costs without waiting for liens to resolve.

Better than a bank loan. The first place many providers turn is their local bank. However, qualifying for a loan is difficult for young practices and those that have large debt or credit blemishes. Banks are often reluctant to make business loans secured by medical receivables. Banks will want to see a strong history of past performance and will not take into account future growth potential. Also, the time it takes to underwire a bank loan can be several months with personal guarantees often being required

Understanding medical businesses. Banks typically do not understand medical accounts receivable. In contrast, medical receivable finance companies focus specifically on financing healthcare and medical businesses and understand the pressure providers face. They have a thorough understanding of the complexities of billing, revenue cycle management, coding, monitoring and collecting medical receivables.

More funding as the practice needs it. As a provider’s invoices increase, the amount of potential funding available will increase. This makes invoice financing an ideal solution for a practice in an aggressive growth stage that needs funding to hire new staff, pay for more marketing and buy new equipment.

Return to focusing on patients. A well-run medical practice will have an efficient practice administrator. Unfortunately, the administrator cannot overcome delays caused by the legal system. The legal system is slow with delays in personal injury cases being common. By outsourcing the minutiae of collecting on medical liens, a practice’s office staff can return to focusing on the truly important work of improving the patient experience.

In today’s healthcare environment, medical providers face tremendous challenges. Providers must adapt to new billing coding systems, be up to date with digital changes, comply with evolving regulations, maintain certifications, pay for increasing malpractice insurance premiums and stay on top of changing copays and deductibles.

Managing cash flow does not have to be an additional burden, because today medical invoice financing is available. To survive and thrive, a medical provider will benefit greatly from having a funding partner to help them navigate these uncertain times.

Category: Insights
Last Updated: OnNovember 16, 2021