Who Benefits from Medical Factoring?Posted by Factor Funding Co. on June 30, 2015
Like any other business, medical companies must constantly keep an eye on their bottom line. In fact, money is important to healthcare providers more so than ever because of the increased demand for good patient care and affordable services.
Despite increasing demand, patients and their insurers can be slow to pay what they owe to their providers. In light of the ongoing struggle to maintain healthy cash flows, these four types of healthcare companies can benefit by using factoring as a source of financing.
Substance Abuse Centers
When people think of healthcare providers, they often overlook the centers that help people overcome addictions to drugs and alcohol. However, these companies provide a vital service to the communities in which they are located.
- These companies may face shortages on cash for which factoring can come in handy. Factoring allows these centers to:
- Hire and train staff
- Buy basic supplies like sheets, blankets, and hygienic items for clients
- Pay overhead costs like insurance and utilities
- Expand services to take on more patients
Unfortunately, some patients may not have insurance, or they may have providers that are slow to pay invoices. Rather than struggling to keep a sufficient cash flow, these centers can factor third-party payer or vendor accounts to get cash quickly.
Like substance abuse centers, walk-in clinics also help patients who may not have insurance or may be unable to pay their bills in full. These clinics may require a certain amount of cash upfront, but rely on patients to pay the remainder of their bills later.
When a client cannot or will not pay an outstanding debt, it becomes difficult for the clinic to take care of obligations like:
- Making payroll
- Paying utilities
- Buying supplies like syringes, gauze pads, bandages, and medications
- Hiring more staff to take care of patients
By factoring invoices from vendors and third-party payers, as well as clients in good financial standing, the clinic can get the money it needs to operate.
Medical Transport Companies
Medical transport businesses are essential to the healthcare industry. They provide rides for patients who are too old or too infirm to drive. They also deliver equipment and supplies to clinics and hospitals.
To stay in business and maintain a healthy cash flow, these companies can rely on factoring. Factoring their invoices will allow medical transport companies to:
- Hire and train drivers
- Pay for expenses like gasoline, oil changes, and new tires
- Pay for toll expenses
- Cover insurance costs
- Pay taxes and tags on their fleet vehicles
These types of expenses cannot be avoided and must be paid on time. Factoring can give these companies the cash they need to serve their patients and drive safely.
Home Healthcare Companies
Like medical transport businesses, home healthcare providers also need money to take care of everyday essentials. Home healthcare companies dispatch specialized caretakers like nurses and therapists to patients' homes. They often face expenses like:
- Hiring and training nurses and therapists that can drive to patients' homes
- Repairing and tagging company-owned vehicles
- Gas expenses
- Buying supplies like medications, bandages, and ostomy items for home bound patients
Many patients who are bound to their homes are insured by Medicare or Medicaid. Because these insurers are known to pay lesser amounts and can be slow in remitting payment, home healthcare companies can get cash now by factoring those invoices.
Medical companies of all sorts need money sooner rather than later. When they cannot wait for an insurer to remit payment and need to raise cash for supplies, insurance, and other essential costs, these companies can maintain their cash flow and care for patients by using factoring as a source of financing.