Basic Accounting

A financial product that provides cash flow, cash infusion and asset protection…

Medical professionals today are presented with many challenges outside of their diagnostic and treatment expertise.

The business of medicine has become a serious concern for providers of all kinds.
With growing demand from a population living longer, aided and abetted by “baby boomers” reaching stage in life when medical treatment has become more frequent, medical practitioners could use an additional eight hours to the already crowded twenty-four currently in use.

Add to this picture a Federal deficit causing our leaders in Washington DC to decrease reimbursements to the medical community as a whole (causing the same affect from the non-governmental payers), with the thought in mind that savings generated by lower payments to doctors (et al) will, in itself, actually have an affect on the government’s finances.

The final straw is added to the scenario as patients and their attorneys are convinced that mal-practice suits offer a better retirement plan to individuals (and counsel) than IRA’s, pension accounts and hard work.

In the end, the medical professional is working more hours, and receiving less payment for services rendered, under the intense pressure that a lawsuit is an ever present probability.

The reality described above is the proximate cause of fewer talented and motivated individuals entering the medical profession, and the professionals already practicing medicine, leaving!
Unlike the news media however, this article will suggest solutions to the devastating picture painted above.

If we were to wave a magic wand and suddenly arrive at three solutions, these answers would have to:

1. provide a cash flow solution for the slow and protracted payment system inherent in the medical community,
2. provide a cash infusion for building other sources of income during the business hours currently in affect and
3. provide a means by which a medical practitioner can protect from judgment, the largest asset found in his/her business… accounts receivable.

Enter, Medical Accounts Receivable funding (MAR funding).

No other form of finance is structured to provide immediate and unlimited debt-free cash flow, a large initial cash infusion and a built-in asset protection capability.

An analysis of the process of MAR funding, will explain it all.

Every medical practitioner that is paid by third party payers, has an existing bucket of medical accounts receivable providing a slow, unpredictable cash flow for their business.
This is the laziest asset one finds in doing an analysis of businesses.

Many group practices have upward of $750,000 in delayed payments coming from the insurance companies and governmental payers.

The most efficient thing to do with such an asset is to convert it to cash, and use such cash to provide additional income for the practice.

An example recently addressed by us was a Cardiology group in Southern Florida.
This group of professionals described the exact scenario outlined in the first paragraph herein.
“We work more hours daily, see more patients, and we are still going to have less income than last year.”
The question was then posed, “what percent of your patients do you prescribe annual stress testing?”
To which they responded that they require over 80% of their patients to endure stress testing at least once per year.
Following up we asked how much of that stress testing was outsourced to other facilities, the answer was … all!

Moving forward we advised this group to sell their existing A/R and build a stress test lab of their own.
The cost involved in selling these claims would be overwhelmingly recovered from this new daily source of income.
Astutely however, one of the physicians noted that if they sold the current A/R they would not have the cash flow, as unpredictable as it was, for daily overhead and working capital. Not so!

MAR funding puts back the cash flow, in an even more predictable and steady manner.
Although past receivables have been sold off in this scenario, the newly generated ones each day can similarly be sold to establish a regular daily funding pipeline.
This is a true example of “having your cake and eating it too.” Add to this the “icing” on that cake, asset protection.
The best way to protect an asset is not to own it. The sale of A/R is a natural way to protect assets yet also solves a business need for the medical group.

Martin Hayes is a Customer Service Specialist with Principle Commercial Corporation.

For more information about medical accounts receivable (MAR) funding or commercial loans for medical facilities please visit http://www.PrincipleCommercial.com/MedicalAR

Useful Links:

If you are a homeowner then you are eligible for a consolidation loan.