Medical factoring is the practice of advancing funds to medical providers who bill their-party vendors, like commercial insurance companies Medicare, Medicaid, Blue Cross/Blue Shield, and more. Factoring medical receivables is difficult for many factoring companies due to various complications with third party billers. If you’re searching for funding for medical providers and services, Factor Finders can help you get the working capital you need through medical receivables factoring.
Medical facilities include hospitals, home health care companies, mental health institutions, laboratories, rehabilitation centers, and therapy institutions.
The delay between when you perform a medical service and the time you are paid affects your business cash flow and medical factoring can help. Medical receivables factoring is when a factoring company buys the invoices a medical provider sends to a third party payer for services rendered, and advances up to 80% of the value of the invoices. The remaining 20% will act as collateral in case the provider’s bills don’t get paid, and when the payment is received, the remainder, minus a factoring fee, is returned to the medical provider.
Because of the way payment is received by healthcare institutions, medical service providers can wait months for their patients to pay the bill through insurance agencies, which means hospitals and other medical institutions have limited cash flow.
Figuring out the difference between the collectable amount and the billable amount is a major challenge to medical factors. The invoice total, or the billable amount, is not always the amount to be factored. Each insurance entity has its own ratio to decide how much the provider is paid, so factors are faced with the challenge of establishing the total collectable amount. To confirm the amount, a factor must understand the ratio analysis for each transaction. This can sometimes be too much of a headache for numerous medical factoring companies.
It’s a good thing that healthcare providers can count on Factor Finders to help them get the funding necessary to grow.