Medical factoring is a financing tool that provides doctors, physicians and other medical professionals’ instant cash against their accounts receivables. These companies will buyout invoices and liens for a percentage of the total amount of the receivable. Medical receivable factoring companies advertise they will purchase billings at a discount of the face value of the receivable and by doing so they hold the lien on the claim.
There are several aspects to medical factoring. A company may purchase receivables from a medical professional that treats individuals. There are companies that purchase receivables from medical supply companies; and other companies that provide financing and factoring options to those companies that provide medical staffing services. Whatever the scenario, there are invoices and receivables that need to be collected, and when a company needs an infusion of cash and can’t wait for an invoice to be paid, they can elect to factor their invoices. The fact is if you can’t wait up to 90 days to get your receivables paid, these companies may help.
Medical Accounts Receivable Financing
- Diagnostic centers
- Drug counselors
- Medical equipment suppliers
- General practitioners
- Medical centers
- Medical clinics
- Medical staffing companies
- MRI centers
- Nursing homes
While medical receivable factoring may be attractive to some professionals it comes with a cost. While the costs may vary depending upon the A/R company the rates are generally much higher than a standard bank loan. Over the last several years we have seen an influx in these types of companies. During tough times, some people are forced into making decisions that they would otherwise avoid. Other companies like payday loans, structured settlement factoring and legal financing are under the microscope of law makers throughout the United States. The idea that a company can profit on a person or company that is having a financial meltdown, is legal yet frowned upon.
There are no current laws that make this form of financing illegal and there is no over site that specifically oversees the medical factoring industry. While this form of financing may be under the radar, it’s likely it won’t be for long.
Filed under: Medical Malpractice Law |