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A Normal or Strategic Business Imperative for Doctors?
If you, or your medical practice, can’t qualify for a traditional business loan, or if you don’t have time to wait for those funds, there are other alternative financing options that might be the answer — especially when those funds will equal a big return.
AR and PO financing (accounts receivable and purchase order financing) are two choices for business owners, and medical practices, when they need immediate capital, or have lower credit scores.
Assessment: This graphic should help decide if AR or PO financing is right for you.
Source: Dan Bischoff
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Filed under: Healthcare Finance, Practice Management | Tagged: accounts receivable financing, DME, How Healthcare AR and PO Financing Works, puchase order financing, www.healthcarefinancials.com |
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More On ARs … Timeline to Payment
I work in an MDs office collecting ARs. In my experience, primary care insurance claims generally take about 30-45 days to pay. Some secondary insurances still require manual claims submission following the receipt of the EOB from the primary insurance. The secondary insurance may then take another 30-45 days to pay the remaining portion of the bill.
So, already waiting for that secondary payment, we are at nearly 90 days on a small portion of your AR claims’ balances. Then, there may be a patient balance remaining that is nearly 90 days old before the first patient bill has been mailed.
Generally, it is best practice to send patients 3 bills (one per month) over the course of 3 months or approximately 90 days before considering a collections company and removing the balance from active AR. That means your 60-121+ timeline cannot be zero for ARs. If they are, you may have a problem.
What problem?
Too many ARs means you are not collecting enough. Too few ARs means the MD is not working enough.
Both are BAD for any medical practice!
Andrea
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