Being a healthcare provider is an extremely taxing and demanding job, and one that will take a heavy toll on those who are involved in it, physically, mentally, emotionally and even financially. By virtue of the free market nature of the healthcare system in the United States, this means that healthcare providers are not public sector personnel, but will recover the money owed for services rendered from the patients who use their services.
Given the rather expensive nature of the healthcare provided, coupled with the diminished capacity that the patient will have in regards to actually seeking or returning to work, this means that the overwhelming majority of people do not have the necessary funds to hand to pay the full balance that they owe, outright. Instead, they will rely upon healthcare insurance providers to pay for the cost of their treatment as and when it should arise.
This is all very well for the patient, in that they are simply required to ensure that they settle their insurance premiums as and when they arise. For the healthcare provider however, the process is a lot more strenuous and demanding. This is because health insurance providers are notoriously slow when it comes to the release of funds, and so this poses major problems for the healthcare provider in terms of the liquidity of their business.
For example, the health practitioner maybe left in the unfortunate position of not having a sufficient level of working capital available to pay for their insurance premiums, i.e. the insurance intended to protect them against malpractice lawsuits and the like. Put simply, the longer the insurance company takes to finally settle the balance that is outstanding owed on the account of the patient, the more difficult life will be for the healthcare provider as they will struggle to meet their own financial obligations.
In order to break this impasse, medical accounts receivable factoring can be relied upon and indeed, medical accounts receivable factoring has been utilized by many healthcare providers with excellent results.
In basic terms, medical accounts receivable factoring simply refers to the process whereby a healthcare provider will be provided with a line of credit and where the value of the credit provided will be directly determined on a pro rata basis with respect to the net value that will be earned when the bills that they submit to the insurance company are paid up.
Therefore, one of the most directly beneficial features of this method of business financing is that the healthcare provider is able to acquire a significant amount of the money that they are actually owed, in a greatly reduced timeframe. Whilst the amount paid by the factoring company will differ between service providers, the market average range is currently set at 65-80%.
This means that the healthcare provider is able to more fully and properly dedicate themselves to the provision of clinical based services and features, as opposed to having to spend copious amounts of time with tedious administrative and financial issues.
