| According to the U.S National Library of Medicine | | | | perspective. In other words, how much of the |
| and the National Institutes of Health Medline | | | | amounts owed will be collection losses? How much |
| dictionary the word "stat is an adverb for the latin | | | | will actually be collected? |
| word: STATIM. Statim is an adverb that means | | | | What are other unique issues regarding medical |
| immediately or without delay. When a persons | | | | accounts receivable financing? There are potential |
| arrives at the hospital emergency room with a | | | | bankruptcy issues, lien priority issues and the "big |
| gunshot wound, the staff might say, "We need to | | | | bad wolf" issue: after a commercial finance |
| get this patient to surgery stat!" meaning | | | | company has purchased medical accounts |
| immediately, now. In a medical situation "stat" | | | | receivable, the federal government can assert lien |
| connotes extreme urgency. Does your medical | | | | priority on the assets of a bankrupt medical |
| business need to accelerate cash flow with | | | | company. One example of this is the case of |
| accounts receivable financing "stat"? | | | | American Investment Financial ("AFI") versus the |
| One of the greatest challenges for medical | | | | US also known as the internal revenue service. |
| professionals is managing their accounts receivable. | | | | AFI loaned over $800,000 to a pediatric and |
| Medical accounts receivable typically are the | | | | urgent care clinic. The clinic defaulted on their |
| largest asset on their balance sheet. It typically | | | | financial obligations to AFI and also defaulted on |
| takes 60 to 120 days or more to collect medical | | | | their tax obligations to the federal government. It |
| accounts receivable because of the long | | | | was undisputed that AFI had followed the rules |
| reimbursement process from third party payors, | | | | correctly in terms of filing their liens and |
| such as Medicare, Medicaid, and commercial | | | | perfecting their security interests. Nevertheless, |
| insurance companies. The collection process is long | | | | the court held that pursuant to Federal law, after |
| and complex. Disputes regarding payment | | | | a 45 day statutory safe harbor period had |
| amounts are common. Medical accounts receivable | | | | passed, the government's lien took priority. AFI |
| financing accelerates cash flow to pay for | | | | lost hundreds of thousands of dollars because of |
| expenses such as payroll, malpractice insurance, | | | | federal tax law and IRS regulations. It is no |
| rent, inventory and advertising. | | | | wonder that commercial finance companies look |
| What are the types of medical professionals that | | | | very carefully before they purchase medical |
| may qualify for medical accounts receivable | | | | accounts receivable. |
| financing? The following is a partial list: hospitals, | | | | Commercial finance companies will generally |
| medical centers, rehabilitation centers, medical | | | | advance an amount equal to 70% to 80% of a |
| laboratories, surgical centers, sports medicine | | | | borrowing base, which may be called "the |
| centers, MRI imaging centers, physical therapy | | | | aggregate amount of eligible accounts", "net |
| centers, substance abuse clinics, physical therapy | | | | realized value" or "net expected collections". You |
| centers, manufacturers and/or distributors of | | | | can expect the following items to be excluded |
| medical devices, and physician's practices whether | | | | from your borrowing base: accounts which are |
| general or specialized from A to Z such as | | | | subject to dispute, counterclaim or setoff; |
| anesthesiologists, gastroenterologists, obstetricians, | | | | accounts of any account debtor who has filed or |
| and Zygote - Morula Specialists. | | | | has filed against it a petition in bankruptcy; |
| How lengthy is the process to obtain medical | | | | accounts owed directly by patients or customers. |
| accounts receivable? It generally takes four to | | | | The bottom line: medical accounts receivable |
| eight weeks to obtain funding because of the | | | | financing, or medical factoring, is more difficult to |
| unique issues presented. The commercial finance | | | | obtain than other types of factoring because of |
| company must perform extensive audits and | | | | the legal risks and business risks faced by the |
| analysis of the prospective client's financial | | | | lenders. The process to obtain medical accounts |
| situation. They need to determine that the | | | | financing usually takes much longer than accounts |
| business is and will be a "going concern". They | | | | receivable financing for other industries, such as a |
| need to examine billing practices which often are | | | | manufacturer. This good news is, once the credit |
| outsourced. This may require a separate audit of | | | | facility is established, funding can take place in a |
| a third party. And they need to examine the | | | | day or less from your request for financing. You |
| forseeability of collection of the outstanding | | | | can have medical accounts receivable financing |
| accounts receivable by auditing the accounts | | | | "stat"! |
| receivable aging reports from a historical collection | | | | |