A major hospital and nursing home company just reported a 14% drop in net income for the fourth quarter of 2006 from the same period last year. The company’s CFO said the drop was attributed almost exclusively to lower Medicare reimbursement rates. Although still very profitable, the company expects continued erosion of profits as further reimbursement rates are expected.
Today's medical provider must consistently have an adequate amount of working capital on hand to be able to meet current obligations and to grow the practice. A serious problem that hinders the cash flow of a healthcare provider is the amount of time the provider must wait for insurance companies and other third party payers to reimburse the practice for services rendered.
Third-party medical receivables comprise the largest liquid asset of healthcare providers. The receivables are often pledged as collateral to receive much needed working capital for healthcare providers. Although the ultimate receipt of the payments from health insurance companies and government programs are likely, traditional lenders often limit the amount of funding. It isn't because they don't want to grant loans. It's because they don't understand the collateral.
Getting the best deal for financing medical equipment doesn't stop at choosing the lender or lessor. It also involves negotiating a fair equipment price, residual, and other terms in the contract. Most terms in the contract must be negotiated at the inception of the deal. Utilizing a professional financial consultant or broker can benefit the customer in the negotiation process. 
Tightening cash flows coupled with the likelihood of increased capital spending are a cause for concern among healthcare system executives. In fact, the problem could become a crisis over time unless non-traditional strategies are employed,