Medical factoring can be a tremendous help for healthcare practices which routinely bill insurance companies for their services. Insurance carriers are notoriously slow in making payments, and that can cause major cash flow issues for virtually all healthcare practices. While waiting for insurance claims to be paid, medical facilities are obliged to pay their regular monthly operating expenses, as well as all employees. Without a steady stream of income to handle those expenses, it can put the medical practice in serious jeopardy. Here’s how medical factoring can overcome this kind of problem.
How Medical Factoring Works
Medical factoring provides a perfect solution for slow paying insurance carriers, because it puts money in your hands almost immediately. All your insurance claims can be sold to a medical factoring company, which will advance you a sum of money equivalent to approximately 80% of the actual value of the claims. Once the insurance carrier actually pays on those claims, the other 20% of the claim value would be remitted to the medical practice, after subtracting out the factoring fee. Even Medicare and Medicaid claims can be handled in this manner, although some extra procedure will be necessary for these claims.
The beauty of this arrangement is that you can have funding in just a few days after having submitted your claims to the medical factoring company. This is a huge improvement over having to wait as long as 90 or 120 days to be paid by an insurance carrier. This can literally make the difference between staying afloat as a legitimate healthcare practice, and being forced to go out of business because you can’t meet your operating expenses.
Would Your Healthcare Practice Benefit by Factoring?
Many healthcare practices would definitely benefit by becoming involved with factoring. If you’re interested in finding out more about it, or about getting set up for factoring, contact us at Capital Finance Partners.