Understanding How Medical Factoring Company Works
Healthcare jobs are extremely demanding and time-consuming jobs that will seriously affect those involved physically, mentally, emotionally, and financially. Health care providers are not public sector personnel but will charge service fees to patients using their services.
Enjoying the help of medical factoring company
Given the rather expensive nature of the medical care provided, coupled with the patient’s limited ability to seek or return to work, this means that the vast majority of people they owe directly. Instead, they will depend on health insurance providers to pay for their treatment as needed. Whether you are a doctor or any other healthcare provider who accepts insurance as payment for your services, you are undoubtedly painfully familiar with the tedious and sedentary pace at which the billing cycle occurs. The potential physician can wait more than 4 months before the transaction is fully finalized and closed.
In the meantime, you still need to have enough working capital on hand to cover employee salaries, consumables, and other items, not to mention rent and electricity. Even if there is a significant cash reserve, it can quickly deplete to near-critical levels due to unacceptably long periods required to complete the billing cycle. Fortunately, there is a direct solution to your problems: medical factoring. Free up the cash you are entitled to so that your business solvency is always maintained, and you don’t have to worry about the logistical nightmare of a crazy cash fight at the end of the month.
One of the most impressive and obvious benefits of using healthcare factoring is that the entire insurance collection cycle is greatly simplified, ensuring that downtime is also reduced, and often exponentially. With medical factoring, you can receive your insurance benefits in just 2 business days. The method of financing a business is simpler and more efficient than applying for a bank loan when the business’s credit rating is in question. Due diligence checks are required, and the potentially damaging impact of credit requirements. Another big drawback when applying for a bank loan is that the lender will only be willing to lend a certain amount at any given time to a specific borrower, and to assure you that the borrower will not default, you will need large amounts of the deposit. Eventually, you will run out of fixed assets that can be pledged as collateral, significantly reducing this particular financing method’s viability.
With this in mind, how exactly does factoring work for healthcare providers?
- The medical office, or a staff member acting on its behalf, must file a pending claim with Patient X’s insurance company.
- A copy of the insurance claim filed with the insurance company is then to the factoring company, which uses it to keep records and recover the money owed.
- The factoring company, after successfully receiving a copy of the insurance award, will transfer the specified amount of the remaining insurance award to the doctor’s office.
- When the insurance company makes a payment, the factoring company assumes the insurance benefit’s entire balance, releasing the doctor’s office’s outstanding funds less their fees.