The health-care industry is not exempt when it comes to facing financial problems because of their accounts receivable turnover. Instead of concentrating on their medical practices, these health care provider companies are worried about how they will collect their money from their third party payers including the insurance companies. This can affect even the patients of the medical institutions because they won’t be able to provide medical services to their clients if they are having financial struggles. With these cash flow problems and other financial concerns affecting the medical companies, medical receivables factoring is one of the best solutions that a medical company could ever think of.
In a medical scenario setting, often times patients rely on their health insurance and other health companies to pay their hospital bills, however these third party companies are often slow in paying these medical institutions and this affects the whole cash flow of the medical company. Even doctors and physicians are not paid in due time because they have to wait for the day when the bills will be fully paid. This scenario compels these medical practitioners to choose medical accounts receivable factoring as their solution to their unpaid bills.
This type of financing is done when the patient incurs a medical bill. Sometimes the patient will pay for these bills, but mostly the insurance companies pay for these unpaid bills. These insurance claims are then sold to factoring companies at a discounted price. Once the medical company qualify for the factoring services, then an advance payment will be provided immediately to them depending on the amount of these unclaimed bills. The company will have a fund for their cash flows without worrying about the bills that they are waiting to be paid for by the insurance companies.
These medical factoring companies often charge a fee for buying the insurance claims from medical institutions. They will pay the medical companies usually two to five percent less than the value of the receivables. The amount will also depend on the risk factors that need to be considered by the medical factoring companies. Usually, insurance companies that are not known by these factoring companies are charged with higher rates to ensure security and protection against the unpaid bills.
Even medical institutions and other medical service providers are not exempted from financial issues concerning their cash flow. Often times, the third party payers take a long time to pay the medical claims from these medical institutions; thus medical receivable factoring is the solution that medical companies often choose.