Medical Billing Companies Increase Cash Flow Through Factoring

While the public’s confidence on the economy continues to spiral downward, the demand for health care in this country continues to grow.

According to the National Coalition on Health Care, the U.S. spent approximately 17% of its GDP in 2008 on health care costs. That percentage is expected to jump to 20% by 2017.

Doctors’ offices will soon be flooded by 78 million baby boomers as they become eligible for retirement. To handle this sudden influx, physicians will have little time for the day-to-day business operations of their practices and must focus primarily on patient care. As a result, medical billing companies are seeing increased demand for their services.

More and more doctors are outsourcing services to subcontractors, and these companies are reaping the benefits. However, due to the slow pace at which insurance companies approve patient claims, it takes a while for doctors to be paid, and in turn it takes even longer for them to pay their vendors, especially medical billing companies. According to the American Medical Billing Association, it takes an average of 90 days for paper claims to be reimbursed. Granted the advent of an electronic claims system has lowered reimbursement times, it is still problematic for companies to wait to be paid.

For example, an insured patient goes in to see a doctor. The cost of the visit is $100. Because the patient is covered for this visit, the doctor must make a claim to the insurance company and wait an indefinite amount of time for the claim to be approved. If the claim is not approved, the doctor must send more details of the visit. This increased lag creates a problem for doctors who would rather spend their time with patients than following up on claims. Therefore, doctors turn to experts and subcontract medical billing companies to handle these issues.

Whether they are start-ups trying to gain a market share of this ever-increasing business, or a veteran company trying to beat the slow-payments system of insurance companies and doctors, a viable and flexible option exists for companies called medical billing factoring.

Medical billing factoring is converting the accounts receivable of a business into cash by selling outstanding invoices to a ‘factor’ for a discount. Accounts receivable factoring gives the medical billing business immediate access to cash so that it can manage its operations more efficiently.

Instead of waiting months to be paid by doctors’ offices, medical billing companies can use factoring services to get cash now to pay for their employees and ongoing business expenses. They can also use the money to expand their businesses, such as hiring and training new employees or purchasing new equipment, in a time when the healthcare industry demands these companies more than ever.

Doctors need all the time they can get to provide care for their increased number of patients. While the amount of work has increased and the payments remain slow, outsourcing medical billing duties gives doctors more time with patients. By factoring their receivables, companies do not have to wait to be paid and can continue expanding their businesses in a market that is favorable towards this niche.

Philip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche player in the medical billing invoice financing market place. Through a process known as factoring, PRN Funding provides business owners with the financial resources needed to grow and effectively compete in the industry. With no minimums or fixed terms, PRN Funding provides medical billing companies with flexible and immediate access to capital. We give you the freedom to factor what you want, when you want, whom you want, for as long as you want. Prior to founding PRN Funding, Mr. Cohen was an executive officer of The MRC Group, a national provider of Medical Transcription Services. Contact Philip Cohen at toll-free 866.776.5407 or via email at pcohen@prnfunding.com. Please visit PRN Funding, LLC on the web at http://www.prnfunding.com/

Article reprinted with permission by PRN Funding, LLC.