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Factoring for Medical Groups

May 5th, 2010 · No Comments

Invoice factoring for medical providers is similar in concept to that of other industries such as sfaffing companies, manufacturers and distributors.  But in practicality, it is much more complicated because of the uncertainties in billing.  In fact, many factoring companies will fund most any sector but won’t touch anything to do with health care.

A factoring company devoted to medical accounts receivable factoring conducts an extensive amount of due diligence at the beginning of the relationship.   An audit is conducted that checks EOB’s (explanation of benefits) against the amount billed as well as a history of collections per third party payer.  This is because the provider rarely receives 100% of the amount billed.  Factoring companies must know in advance how much the client is expected to receive compared to the gross amount billed.  Since they are advancing up to 85% of the net collectible expected value, factors must have a good handle on what that expected amount will be.

Many medical providers balk at paying for the audit because it can be expensive (starting at $2,500 and can be as much as $15,000 depending on the size of the client).  But they must understand that if the factoring company footed the bill for every applicant, they would go broke because of those that are just “kicking the tires” or simply didn’t qualify.  They do make every effort to prequalify an applicant before it gets to that point.

Tags: Medical invoice factoring · medical financing · medical receivables factoring · medical working capital

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