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finance _15_

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Investment, Money, Financial, Credit Card

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									Medical Receivables Financing

The Rx for Ailing Cash Flow

The current adverse financial structure of the healthcare industry has
placed hospitals, medical groups, private practitioners and other
providers in a perilous position. Cumbersome and bureaucratic third party
billing systems with long time-to-collection waiting periods have
resulted in inconsistent cash flows and limited capital for growth.
Nationwide, two-thirds of physicians work in practices that are set up as
small business. Payment cuts 18% over four years, together with soaring
malpractice premiums and other overhead costs, have threatened to put
such practices out of businesses. More than 50% of doctors have deferred
plans to purchase much-needed new equipment, and 30% either have laid off
staff or are planning layoffs in the near future.

What Factoring "Is Not:"

o A Loan - Factoring is the sale of your medical claims for services
already delivered

o Offered By Banks - Factoring is not an asset-based loan, nor is it a
debt facility similar to those offered by banks.

Why not simply pick up the phone and call a bank for a loan to get
through the crisis? Many of you already tried that and have been
surprised to find that the average practice may not have sufficient
credit and assets with which to secure adequate working capital.
Additionally, the traditional banking loan application and approval
process is long and involved. Debt is created for the practice to repay,
and personal guarantees are required. The practice becomes less desirable
for resale or acquisition.

Unlike bank lines that can tie up all of your assets, factoring involves
only your third party medical claims

o No collateral other than accounts receivables

o No financial guarantees

o Unlimited amount of dollars

Factoring provides   working capital without adding debt to your balance
sheet. There is no   predetermined maximum limit. This working capital
arrangement is not   limited in amount as many bank products are nor is it
subject to banking   "regulations."

Surveys of physicians have identified the following immediate needs:

The creation of solid dependable cash flow

Decrease in the reimbursement interval between the time service is
provided and payment is received
Increase in the overall percentage of claims collected

Reduction in administrative costs

Ready availability of cash for new equipment, expansion of office space,
the addition of new partners, and practice marketing

This "wish list" would be complete if access to this working capital
could be created debt-free. The physician practice would then have the
financial freedom to focus on business growth and patient satisfaction,
instead of focusing on how to meet the next payroll or malpractice
premium payment. Is such a solution possible? Fortunately, the answer is
YES!

								
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