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There are two types of receivables that are considered for financing, healthcare receivables payable by insurance companies and government agencies like Medicare and Commercial Accounts Receivables owed by buyers like hospitals for daily use items or services.
Insurance, Medicare and Medicaid Receivables is funded by our Healthcare Provider Factoring program.
Healthcare Provider Factoring is a means by which the healthcare provider is granted a receivables based credit line that is based on the net realized value for his/her billings to third-party payors (i.e. commercial insurance companies, HMO’s, Blue Cross-Blue Shield, Medicare and Medicaid). Schedule A Call
For medical providers that have accounts receivable with a net realized value (NRV) of $500,000 or less, we offer our Healthcare Invoice factoring program which is a funding program that purchases your billings (net realized value) at a discount. Clients that exceed $500,000 in accounts receivable (NRV) and meet our criteria for financing will be proposed an asset based receivable financing program that is priced at a prime plus schedule.
Commercial Medical Related Accounts Receivable
Some Medical industries are not invoicing third-party payors and fall under the ordinary commercial accounts receivable financing program. There are many flexible invoice factoring programs for this type of medical business.
We receive many inquires from medical and nurse staffing agencies looking for a receivable based line of credit. Medical Staffing Factoring is considered a commercial grade receivable. Major medical industries along with many other suppliers selling to large companies need our services to close the cash flow gap.
Factoring companies or asset based finance companies that specialize in healthcare receivable financing will base their decisions on several factors and may vary from lender to lender. The first thing that needs to be evaluated is the net realized value (NRV) of the receivables.
The primary reason for this evaluation is to determine the quality of the receivables that are going to be considered for the “funding base”, also know as the borrowing base. Ineligible items such as private copay receivables, contractual reserves, and receivables past 180 days will not be considered and will be excluded from the funding base. This evaluation will determine the advance rate.
The second thing is to conduct a third party payer analysis and compliance review. Since the factoring company or asset based lender is going to collateralize on the receivables, this review will identify clinical liability issues that expose the client and the finance company regarding the receivables (Collateral). Verification of proper and current licensing, a review of current surveys and frequency of payment for each payer class will be evaluated.
And last, "financial statements". Factoring companies are usually more liberal and flexible than asset based lenders due to the nature of the collateral that will be encumbered. Asset based lending institutions will be more diligent and base their funding decision on a good balance sheet, proof of profitability, and reviews mentioned above. Factoring companies are more concerned with the quality of eligible receivables and competency within the clients billing department. Funding decisions are not based heavily on a balance sheet that may show major fluctuations but so long as it can provide proof of profitability, the factoring company may still go forward with funding the client.
Healthcare providers are considering receivables financing as a viable option in funding their growth. The demand for this type of service is much needed within the Healthcare industry. Receivable based financing creates predictable cash flow in an unpredictable payment cycle industry.
Receivable Financing Rates
Financing Rates at 0.69% to 1.59%
Learn more about frequent questions asked by medical/healthcare providers.
Q: What kind of medical practice/business do you fund? A: We specialize in providing capital to healthcare providers nationwide including doctors, medical practices, nursing homes, hospitals, home healthcare companies, rehab clinics, MRI and radiology centers, ambulance service providers, laboratories and others with receivables payable by Medicare, Medicaid, HMO's, and private insurance.
Q: Do you fund chiropractor clinics? No, nor certain types of longer turning worker's compensation, personal injury, or no-fault accounts receivable.
Q: Do you fund self-pay receivables? A: No.
Q: How do you determine what the Net Realized Value (NRV) of the receivables are? A: We must do an audit and calculate the average percentage of collectible receivables within recent months, usually 4 to 6 months of collectible history to establish your NRV.
Q: Do you provide a billing and collection service with the receivable finance program? A: Yes, we now offer billing and collections aside from the financing. Each service stands on its own, if you no longer need the financing, you can stay with the billing and collections service or vice versa. We will have a vested interest in your success and by offering a billing and collections service, we feel that your business will be more efficient and successful.
Q: Do you have a minimum time that the program has to be in place? A: Yes, At least one year.
Q: How does my billing company or our in house office send you what we electronically uploaded for billing? A: We supply the integration that makes a file copy of your uploads and forwards the exact information to us. This can be explained with more detail.
Q: I understand that Medicare/Medicaid receivables are not assignable, how are we supposed to assign them to a factoring company? A: We have to establish a lock-box under your business name, and then forwards the funds to us. More details can be obtained on this issue.
Q: I own a temporary employment nurse staffing agency, do I qualify under your medical receivables program? A: We have a program for staffing agencies in general. If your businesshttps://www.1stcommercialcredit.com/admin/entries/pages/32097-factoring-finance-and-asset-based-lending-for-medical-receivables# invoices to a commercial account and not Medicare/Medicaid or HMO's, then you would fall under our normal temp-staffing funding program.
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