Slow payments by Medicare and other major insurers can create serious cash flow problems for many medical facilities. A recent article published in Medscape Today details a lawsuit filed by the American Medical Association to defend a prompt-pay law adopted by Georgia legislators. The law is intended to speed the processing of insurance payments to health care providers and to provide guidelines regarding the maximum allowable amount of time before insurance companies are required to pay for services rendered under their policies. Insurers had challenged the provisions of the law, stating that they would put an undue burden on already overtaxed administrative staff and could result in added costs being passed along to patients.
Slow payments are nothing new for most healthcare providers; hospitals and private practices are accustomed to working around the delays in payment typical with Medicare and other insurance providers. Small surgical clinics are among the hardest hit because their services typically require a specialized medical environment, advanced equipment and highly skilled professional staff. These requirements all add up to added expenses for surgical centers that must be paid on a regular basis. For many surgical clinics, even the expected delays in payment from Medicare and major insurers can create ongoing cash flow problems that may threaten the ongoing operations of these vital health care providers.
Some clinical environments are reducing their hours, limiting their services or turning away patients due to cash flow difficulties. In some cases, this can result in patients waiting for weeks or months to be seen in a surgical clinic or in fewer care options for existing patients. A little added financial help could often alleviate the need for these cost-cutting measures and provide valuable breathing room for smaller outpatient surgical clinics that depend on regular payments to meet payroll expenses, maintain their overhead and keep necessary equipment up and running for their patients. Unfortunately, the current business credit crunch may limit access to traditional lending options for these health care providers. Finding an alternative way to manage the gap between services to patients and payment by the insurance companies can help clinics and smaller health care organizations to stay solvent even in challenging economic times.
Asset-based loans differ from traditional arrangements in a number of ways:
• Asset-based loans are fully collateralized with outstanding invoices or purchase orders
• Approval for these loans depends more upon the creditworthiness of Medicare and other insurance companies than upon the credit history of the health care provider
• Unlike bank loans, asset-based arrangements can often be approved within days and funded within a working week
• Application processes are much simpler and easier to manage than those of traditional lending institutions
For surgical clinics that routinely maintain large numbers of outstanding invoices due from Medicare and other major insurance firms, asset-based loans can provide immediate cash to manage ongoing obligations. Surgical clinics can use the funds to handle emergency repairs, hire additional staff and provide enhanced services to their patients.
Medical factoring companies like 1st Commercial Credit are an ideal source for immediate funding in the health care field. By seeking financial arrangements from 1st Commercial Credit or other firms in the asset-based lending community, surgical clinics can remain on the cutting edge of modern medical care.