Working Capital for Healthcare Funding

Economic Downturn Squeezes Hospitals' Ability to Borrow Money

2008-11-24T11:22:00.005-05:00

As a result of a bad U.S. economy, a new report notes that hospitals, which employ 5 million people nationwide, could be facing uncertain times as their financial health falters and their ability to borrow funds for improving facilities and updating technology is squeezed.

The report shows the credit crunch is increasing the costs of borrowing money, making it more difficult for hospitals to find the financing for facility and technology improvements. It indicates hospitals have delayed or will delay capital investments in the near future:

56 percent are holding off on renovations or plans to increase capacity or considering postponements

45 percent are delaying the purchase of clinical technology or equipment

39 percent are putting off investments in new information technology

Sun Capital HealthCare, Inc. (SCH) provides a debt-free funding solution for hospitals and healthcare providers that can help alleviate the financial stress associated with not having sufficient up-front cash to meet overhead and finance necessary improvements.

Healthcare executives can use the funds generated from SCH's Medical Accounts Receivable (MAR) Funding program to improve return on investments (ROI's) by financing deferred projects, such as renovations or the purchase of needed equipment, at today's costs and seeing the benefits of their investment sooner.

HOSPITAL CREDIT RATINGS CONTINUE TO SLIDE

2008-11-20T09:21:00.005-05:00

A recent article in H&HN Magazine ,online, noted the continuing decline of hospital credit ratings due to the economic crisis. The author, Randy Edwards, cited several experts that were interviewed for the article as giving health care administrators the following advice:

pay attention to day-to-day business as there are new revenue sources and savings to be found

shore up physician relationships - through effective recruitment and retention strategies

A medical accounts receivable program from Sun Capital HealthCare, Inc. can be a financial solution to reimbursement delays while at the same time ensuring a healthier balance sheet that is more attractive to the credit markets. Because SUN's program is not a loan, the provider can utilize its receivables as a cash flow solution for generating working capital rather than as an obstacle to growth and proftability. Additionally, the flexibility in SUN's MAR funding program allows the provider to use the funds to follow the above advice.

With the healthcare marketplace becoming increasingly competitive, a provider's survival as well as growth depends on an effective financial strategy and using all the financial tools available.

Obama Urged to Overhaul Healthcare, Stat

2008-11-18T13:17:00.004-05:00

In a letter to Obama, the Business Roundtable, the National Federation of Independent Businesses, AARP and the Service Employees International Union urge that a healthcare overhaul be a priority in the administration's first 100 days.

In their letter, the groups link healthcare reform with the nation's bleak economic conditions.

Obama made healthcare reform a central plank of his presidential campaign, pledging a sweeping effort to expand coverage and lower costs. But since his victory, he has not indicated how he plans to proceed with an overhaul that could cost hundreds of billions of dollars and spark an intense political battle.

In a national radio address Saturday, Obama made a general reference to healthcare reform, listing it with energy, education and tax relief as "key priorities."

Sun Capital HealthCare, Inc. Provides Funding Solutions for the Healthcare Industry

2008-11-17T13:47:00.008-05:00

Sun Capital HealthCare, Inc. (SCH) will participate in the Healthcare and Capital (HCap) Conference as a funding solution provider for the healthcare industry from November 19-21, 2008 in Washington, DC.

HCap is designed specifically for C-suite healthcare leaders and financial executives. The forum provides attendees with avenues to discover how they can get maximum access to capital as well as fosters creative entrepreneurial thinking about healthcare.

SCH financial professionals will be on hand for one-on-one meetings with HCap attendees to discuss how SCH's Medical Accounts Receivable (MAR) Funding program can serve as a debt-free funding solution.

With MAR Funding, healthcare providers can count on immediate and predictable cash flow without having to worry about tying up other assets or increased interest rates.

Using the Computer to Manage the Elderly and Chronically Ill Health Problems

2008-11-11T12:00:00.013-05:00

A recent review focused on ways to motivate the elderly and chronically ill to use computers in order to learn how to better manage health problems.

It focused on health IT systems where patients or consumers interact with the technology and receive patient-specific information in return. These include home monitoring systems with interactive disease management or self-management technology, educational or decision aid software tailored to the patient's needs, online patient support groups, tailored health reminder systems where interactions are linked with personal health records, and patient-physician e-mail systems.

The elderly were defined in the study as those with a mean age greater than 65 years; the chronically ill as those with conditions such as diabetes, asthma, heart failure, chronic obstructive pulmonary disease and mental illness; and the underserved as minorities, low-income populations and those living in medically underserved geographic regions.

The review was directed by lead investigator Holly Jimison, Ph.D., an associate professor of medical informatics and clinical epidemiology, OHSU School of Medicine.

What will motivate the elderly, the chronically ill and the medically underserved to use interactive information technology systems to actively help manage their own health problems?

The Presidential Election and Your Medical Reimbursements

2008-11-04T15:45:00.002-05:00

Once you read this article, you will no doubt know the result of the Nov. 4th presidential election. However, the medical business is the medical business! Under either administration, attempting to lower the budget deficit will first involve reimbursement reductions. Once again the medical provider will bear a significant portion of the expense toward a lower federal debt.

Neither candidate has discussed reducing the size of governmental healthcare so healthcare will still be cumbersome at best...and....if government decides to "mess with" the existing system, one can be confident to anticipate more delays, and overall less efficiency. Is this year's election unique when considering healthcare? Not really!

We have now seen the credit market virtually disappear as shown in The Wall Street Journal article dated November 4th, 2008. Medical Accounts Receivable (MAR) Funding is truly the answer for increased cash flow and funding growth/expansion to your medical practice or business. Increasing your services or products, funded by your existing and future medical claims (A/R), can mitigate decreased reimbursements by eliminating the waiting time to receive payment, without the "help" of financial institutions currently in gridlock. It also allows the provider to build a new line of services or products previously unaffordable if not for MAR Funding. A medical provider of any kind, with a continual flow of Medical Accounts Receivable as well as an existing bucket of receivables awaiting payment, can literally use the payments due tomorrow, to fund new business opportunities today. This is a real, and highly effective solution. Think about it!

Will Technology Cure Health Care — Or Kill It?

2008-11-03T10:24:00.014-05:00

Obama has said that technology will save health care. Information technology is quickly becoming a medical resource: Google recently launched an online medical records service that claims online searches is where consumers turn first for health information.

Computerization can eliminate as much as 30 percent of medical costs that are due to inefficiency, according to Dr. Dean Ornish, founder of the nonprofit Preventive Medicine Research Institute. And advanced diagnostics will encourage prevention and reduce costly reactive treatment. Thanks to technology, such diagnostics are now within the reach of consumers. As more people test themselves, doctors and insurers may face the additional burden of just-in-case surgery and a “previvor” mentality. So, will new technology cure health care, or kill it?

Hospitals Move To Cash Investments As Short Term Pressures Mount

2008-10-28T09:38:00.005-05:00

Under pressure from the troubled economy, hospitals are turning to their investment cash flow as a source of capital, according to a recent article in Healthcare Finance News.

Despite reimbursement delays and decreased revenue, hospitals and healthcare systems must still support costly healthcare information technology, facility upgrades and maintenance. As a result, they have focused on rebalancing their investment portfolios.

However, Sun Capital HealthCare (SCH) offers a debt-free funding program for hospitals and healthcare providers that serves as an excellent source of working capital in order to meet their financial demands.

SCH's Medical Accounts Receivable (MAR) funding program can be used as a strategic funding tool in order to:

Accelerate cash flow by turning receivables into working capital
Alleviate fiscal stress with an immediate infusion of cash

Realize cost savings from vendor discounts and other operational improvements

Protect credit ratings by making the balance sheet healthier

Improve ROI's of capital programs by financing deferred projects at today's costs and seeing the benefits sooner

Generate new revenue streams by quickly responding to market opportunities without lengthy credit applications

BASEBALL and HEALTHCARE

2008-10-24T13:26:00.007-05:00

The Oct. 24th issue of the New York Times has an interesting article "How to Take American Health Care From Worst to First." In it the authors, Billy Beane, Newt Gingrich and John Kerry, note how the big payroll baseball teams are not in the World Series while the team with the second lowest payroll is. They attribute this to the fact that Tampa Bay uses a data-driven approach to decisions rather than the traditional approach that was based on a manager's experience and a few statistics.

The authors cite several examples that support their argument that "a health care system that is driven by robust comparative clinical evidence will save lives and money." Many other observers are also pushing an analagous approach to healthcare by emphasizing that quality of outcomes can be greatly enhanced with the use of technology, not just in new diagnostic and drug discoveries, but in communications and measurement of results to reduce human error and analyze what treatments do and do not work. Of course, a major issue in moving towards this type of approach to medicine is how will the technology be paid for, especially by the smaller hospitals and speciality services. One solution to this financial conundrum, especially with today's liquidity crunch, is through a medical accounts receivable funding program from Sun Capital HealthCare. Sun's program transforms a provider's medical receivables from a non performing asset into a cash flow solution to reimbursement delays that is not subject to the wild swings of today's credit markets.

Healthcare is like baseball in other ways as well. While the researchers and device makers often seem to be trying to hit a home run [so their stockholders can earn a return], in many ways 'small ball' can yield a better result. Reducing obesity, getting more exercise, good eating habits and focusing on prevention is a lot less costly in the long run and a lot healthier, both for the patient as well as the healthcare system.

Technology in Medicine - Emerging Trends

2008-10-22T08:25:00.028-05:00

One of the paradoxes of increasingly powerful computer-based technologies is the declining cost and a hold out in hopes of reducing healthcare costs in future. An example of a up and coming developing new technology is the Smart Intensive Care Unit .

In an Intensive Care Unit (ICU) , heart rate, blood pressure, blood flow and other measurements are carried out routinely. The analysis of these parameters is quite time consuming for the puposes of analysis and continuing therapy. In an ICU setting, there could be wide variations of the patient's vital signs and it is critical for the nurse or doctor to be alerted quickly for deterioration of the patient's condition.

The relatively new introduction is the " Smart ICU" which contains a neural network operating on " fuzzy logic" - in simple terms this is a method to represent mathematically vague and imprecise human measures such as " almost", " very" and " quite far away" which cannot traditionally be designed in digital systems, which operate on "on-off" conditions.

It will be a major challenge for healthcare providers to keep abreast of these emerging new technologies and methods, training in their use, and budgeting for their acquisition.

HEALTH CARE REFORM

2008-10-15T16:55:00.005-05:00

"Growing Health-reform Challenge For Next President" is the title of an article on yahoonews.

The author, Kevin Freking, discusses primarily the challenges of cost and coverage reform rather than the credit crunch in the financial markets. He aptly notes that there is a long history of failed health reforms and that the job has only gotten tougher with the financial meltdown.

Financial services companies, such as Sun Capital HealthCare, which provides debt-free funding resources to healthcare providers and suppliers, can only do so much for the industry. While cash-flow problems stemming from reimbursement delays from third party payors and the government can be mitigated by Sun's "cash flow solution to working capital needs, the underlying problems of the industry remain: a poor allocation of healthcare resources, a lack of emphasis on prevention, an aging and more obese population which will lead to greater need for healthcare resources, growing malpractice insurance premiums driving doctors away from practice, etc.

If we believe that a healthy populace is a desired goal of this country, both from the point of view of consumers of the goods and services that this nation produces and as users of healthcare services, then the whole delivery system of healthcare needs to be re-engineered, including pharmaceutical discovery and manufacturers, medical device development, and providing of medical treatment. A holistic approach needs to be incorporated, using modern management techniques, so that the national investment in healthcare is productive.

Without Reform, a Health Care Bailout May Be Needed

2008-10-14T15:08:00.005-05:00

At this year's 23rd Cerner Health Conference, Neal Patterson, CEO of Cerner Corp., pounded home the message that a health care bailout may soon become a reality.

According to Patterson, with costs escalating, the health care industry could very well be headed for a crash that could mirror - or dwarf - the $700 billion Wall Street bailout.

"The Wall Street bailout is a one-time number," Patterson said. "To bail out health care, it is not a one-time fix. When the bailout comes...it's going to be a very gloomy day."

He predicts that some hospitals and health organizations eventually may quit honoring government reimbursement programs - he used Medicare as an example - because the programs do not cover the costs of providing the service.

Sun Capital HealthCare, Inc. to Exhibit at Medtrade Fall 2008

2008-10-09T14:18:00.006-05:00

Sun Capital HealthCare, Inc. (SCH) will exhibit at Medtrade Fall 08 from October 28 - 30, 2008 in Atlanta, GA.

Medtrade Fall is the largest international tradeshow dedicated to the home medical equipment (HME) and durable medical equipment (DME) industry. Thousands of professionals in the industry gather together in search of products, technologies, and services that will increase their operational efficiencies and their bottom line.

SCH will have financial professionals on hand at Booth 2163 to share with HME/DME providers how SCH's Medical Accounts Receivable (MAR) funding program can accelerate cash flow and make their balance sheet healthier whether in growth mode or fiscal stress.

Sun Capital Group Exhibits At the Turnaround Management Association's Annual Convention

2008-10-08T16:11:00.004-05:00

Sun Capital Group, Inc. (SCG) will offer an alternative funding solution at the Turnaround Management Association's (TMA) annual convention on October 27-29, 2008.

TMA is the premier professional community dedicated to corporate renewal, turnaround management, restructuring and distressed investing industry.

SCG financial professionals will be on hand at Booth 221 to share with TMA professionals how SCG can be a strategic funding source when they are in both preventative and reactive client counseling modes.

SCG's accounts receivable funding program provides an alternative funding solution that accelerates cash flow and makes a company's balance sheet healthier.

How Do These Economic Conditions Affect My Medical Business?

2008-10-07T12:42:00.003-05:00

What are the boundaries of our recent economic catastrophe? Unfortunately, the answer tells us the boundaries are endless and there is no immunity to this financial holocaust.

Medical providers have seen (or very shortly will see) payment intervals begin to extend from all carriers. Starting with government payors, we see California and Illinois not paying for services or equipment already rendered. Other states will undoubtedly follow in the same pattern. State revenues are coming to a screeching halt with decreased tax collections, no ability to borrow in the short term and increased demand for municipal and governmental services. The federal government just committed to a $700 billion bail out of our financial institutions. One must immediately assume that, as in the past, federal reimbursements will decrease in dollars paid, and become significantly protracted.

Commercial carriers have significant exposure to the current financial woes through their investments in mortgage backed securities and derivative instruments. Logic tells us that delayed payments provide "float income" which can offset, although minimally, some of their losses. Not a pretty picture for the medical community. Solutions are few, as conventional lenders are not in that business as of now!

Medical Accounts Receivable (MAR) funding is truly the only solution. The modest discount paid for this service is worth the expense. MAR funding provides a predictable steady cash flow and up-front capital to fund infrastructure additions designed to generate additional income through additional services or products. It is the only game in town...and....coincidentally the best solution for the medical community.

Margins Squeezed? Here's Where to Find Operational Efficiencies

2008-10-06T16:03:00.007-05:00

The current economic downturn has caught many businesses in an unanticipated margin squeeze. Healthcare organizations are no exception, with the impact being felt from the declining value of investment portfolios, reduced access to capital, increasing supply costs, and a rising proportion of uninsured patients.

Per an article in HealthLeaders Media, there is something organizations can do to ensure they are generating the margin necessary to fund future operations and investments. A margin improvement audit.

When determining a margin requirement, your target margin should be an operating margin that is sufficient to meet your board's financial performance expectations and fund future capital requirements.

In addition to operating margin, operating cash flow and existing debt service along with other sources and uses of cash should be considered. Medical Accounts Receivable (MAR) Funding is a financing tool that can generate opportunities to reduce operating expenses, increase cash flow, and boost revenue.

With MAR Funding, cash flow can be accelerated by turning receivables into working capital. Operational improvements can be attained by realizing cost savings from vendor discounts with the immediate cash generated through MAR Funding. Also, new revenue streams can be created by having the up-front debt-free cash needed to quickly respond to market opportunities as they arise.

State Medicaid Programs for Long Term Care

2008-10-01T13:03:00.010-05:00

State Medicaid programs will spend $1.6 trillion on long-term care in the next twenty years.

Medicaid spending for long-term care will grow at a faster rate than overall health care spending, faster than Medicare, and faster than the national Gross Domestic Product.

"This report shines a spotlight on the need to better prepare for long-term care expenses and to explore ways to provide consumers with greater access to home and community based care options," said Karen Ignagni, President and CEO of AHIP. "Many Americans underestimate their risk of needing long-term care, underestimate the cost of care, and many erroneously believe they have long-term care coverage."

States with the highest projected expenditures over the next twenty years includes New York ($271 billion), California ($230 billion), and Pennsylvania ($104 billion). States with the fastest growing Medicaid long-term care expenses are Alaska (7 percent), California (6.4 percent), and Arizona (5.9 percent).

Accounts Receivable Financing in High Demand as Banks Tighten Lending

2008-09-29T16:06:00.006-05:00

As traditional bank lending continues to constrict for healthcare providers and commercial companies alike, accounts receivable financing is on the rise.

A/R financing utilizes a company's balance sheet as a source to generate working capital. There are two types:

Accounts Receivable Funding - The purchase of your accounts receivable so that the cash infusion to a company results from the sale of your receivables and not as a loan.

Asset-Based Lending - Accounts receivable is used as primary collateral for lending money, thereby adding debt to a company's balance sheet.

By actually purchasing a company's accounts receivables through accounts receivable funding, companies can use their A/R as a source for working capital without tying up other assets or depending upon economic conditions for favorable interest rates, such as with asset-based lending.

Can America's Perverse Payment System Be Fixed?

2008-09-26T09:10:00.007-05:00

Mark Taylor, in the Sep. 26, 2008 issue of Hospitals & Health Networks magazine, asks this question in his article "Experiments in Payment". In it he discusses several new experiments in revising the payment system that are attempting to mitigate the current system, which he calls "a mess." As he and others see it, the current method provides little incentives to hospitals, physicians and other providers to work together, which in turn leads to overuse and duplication of services, as well as often neglecting preventive services and chronic disease.

The overriding principle in these experimental payments systems is to provide financial incentives based on quality measurements. But how do you measure quality? Is it strictly what happens during the patient stay, or thirty days after discharge, or 6 months after discharge? If your incentives are based on post-discharge results, how do you adjust if the patient does not follow the post treatment plan the physician or hospital designated? And if you bundle payments, how do you allocate the payment to the various providers? All tough questions.

While there is no question there needs to be remedies to the current payment system to provide incentives for delivering quality treatment, there is more important problems to address to get control of the healthcare system. First and foremost, preventive medicine must be emphasized. Political leadership, both in the public and private sectors, needs to get on the bully pulpit to drive this message and dollars must be invested to back up this message and change behavior.

Fraud must be reduced and the system must be redesigned so that malpractice considerations and insurance companies are not driving medical practice, which often includes unneccessary tests and procedures, which further increases the risk to the patient. We need to get some control over medical and pharmacutical research by addressing the question - at what point do we spend billions of dollars to add one or two months of life expectancy?

Healthcare reform has to be re-engineered from top to bottom. Experiments in the payment system are only one small step in the process.

Home Remote Patient Monitoring

2008-09-24T08:58:00.011-05:00

The home remote patient monitoring sector of the healthcare industry is an emerging market that suffers from a lack of reimbursement policy support. However, despite such obstacles, several key growth trends will counteract negative factors and lead to strong definitive growth.

Successful exploration and implementation of new payment strategies focus on bottom-line cost savings. In addition, new market participants are expected to increase demand and the need for home remote patient monitoring services in the near future.

GE Healthcare, a business of General Electric Co., is entering a potential $5 billion market providing health monitors for the elderly who live alone.

What Type of Third Party Claims Do Not Qualify for MAR Funding?

2008-09-23T14:49:00.005-05:00

To determine if a medical provider can qualify for MAR funding, the focus must not be on the provider's services or goods, but must always look toward "who the payor is." We should examine the qualities of a payor that qualifies for MAR funding first. Examples of such companies are Aetna, Cigna, United Health, Blue Cross/Blue Shield, GHI Medicare (gov't) and Medicaid (gov't).

What makes these companies appropriate for MAR funding? These insurance companies have: 1) contracts with providers and therefore are directly paid by the carriers

2) pay "out of network" reimbursements to those patients who use providers that are not "in their plan." BUT...in all cases, they carry medical coverage which has virtually limitless patient funding amounts, and are not contingent upon legal outcome or compensation-board approval.

So we ask, is a Chiropractor (for example) able to use MAR funding? The answer is YES...however, that provider can only sell the claims of "traditional" type carriers as exemplified above. Unfortunately, Chiropractors usually have the majority of their payors as workers compensation or personal injury carriers. These cannot be MAR funded as the payment has a contingency on it, and there is no contract, or obligation to pay until such adjudication is reached. Suppose the Chiropractor is predominantly paid by Medicare, then we have a MAR funding opportunity.

The case can be made however, that personal injury carriers are insurance companies, and therefore can be used in MAR funding. Correct, however the contracts under which patients get reimbursements are auto or casualty contracts, and not medical coverage, refuting that theory.

Suppose a provider has both traditional carriers and some workers compensation/ personal injury, will the MAR funding company entertain that kind of provider? Yes! The MAR funding company will purchase only those claims paid by the traditional payors!

To see if you qualify for MAR funding...look to the payor!

Sun Capital Group, Inc. Honors Employees

2008-09-22T15:23:00.009-05:00

Sun Capital Group, Inc. (SCG) recently awarded their 5-year to 10-year employees with a special gift to celebrate their dedication and commitment to the company.

22 employees received brass pins with white stones symbolizing the number of years each employee has been with SCG.

To date, SCG has funded billions of dollars of accounts receivables for their clients in the commercial, government and healthcare industries.

SCG clients utilize SCG's accounts receivable funding programs to generate an immediate cash infusion and reduce dependency on debt-incurring bank loans and lines of credit as their sole source to obtain working capital.

Doctor Owned Hospitals

2008-09-18T13:58:00.007-05:00

"Doc ownership takes a legal hit" is the title of an article posted on 9/15/08 at Modern Healthcare.com. It has an interesting discussion of the legal issues involved in the on-going competition between physician owned hospitals and competing hospitals.

The decision to dismiss a suit against Baptist Hospital in Little Rock by a group of physicians who own a competing cardiology clinic was based on a technicality. Nonetheless, the issue is continuing to create debate within the healthcare community nationally.

In my opinion, doctors should be doctors, not owners of hospitals, for several reasons.

The potential conflict of interest when the doctor admits a patient to a facility. Does the doctor's facility provide the same level of service as the competing hospital? Will it have the same degree of emergency facilities immediately available if there is a problem? Will the financial incentive of admitting the patient to the doctor's hospital override the possibility that the competing hospital will be better for the patient? Not easily answered questions are they.

The most likely groups of doctors who would open hospitals would be the specialists who have the most profitable practices. Consequently, they would siphon off most of the profitable patients from the competing hospitals, leaving those hospitals with a patient mix that will bring additional financial burdens.

It is hard enough to run a healthcare facility with all the challenges, fiscal constraints and competing demands of the healthcare industry - just ask any hospital CEO - without having the extra burden of managing a hospital that could conceivably make them less effective doctors.

The healthcare industry - the challenges never end!

Congress, AMA Mull Better Ways for Medicare to Pay Doctors

2008-09-17T08:39:00.021-05:00

Congress, AMA Mull Better Ways for Medicare to Pay Doctors.

The way Medicare pays doctors is a mess. Every year or so, an automatic pay cut looms, and Congress scrambles to come up with a last-minute, temporary patch to block the cuts. The most recent scramble ended in July, when Congress overrode a presidential veto to pass a patch that runs through the end of next year.

Everybody knows this is a silly way to run things, but nobody’s managed to come up with a better alternative. At hearing in Congress yesterday, a few key players tried to move in that direction.

Several key figures are trying to make some changes.

Miami Physicians Confess to Scam Medicare of $6.8 Million

2008-09-15T15:16:00.005-05:00

Miami physicians Carlos Contreras and Ramon Pichardo pled guilty last week to defrauding the Medicare program in connection with a $6.8 million HIV infusion fraud scheme.

Contreras admitted that, from November 2002 through April 2004, he conspired with others to submit approximately $6.8 million in fraudulent Medicare bills, he signed documents containing false information about treatments purportedly given to HIV-positive patients and he approved medically unnecessary treatments at CNC.

He also admitted that the clinic received approximately $4.2 million from the Medicare program as a result of his and his co-conspirators' conduct. In November of 2002, Contreras entered into an agreement with Carlos Benitez, Luis Benitez, Thomas McKenzie, Pichardo and others to operate CNC as a fraudulent HIV infusion clinic.

According to federal officials, Contreras admitted that the Benitez brothers would refer HIV-positive Medicare beneficiaries to the clinic, provide staff members to work at the clinic and transport patients to CNC in exchange for a substantial share of CNC's profits.

In addition, they said, Contreras was aware that the patients referred to CNC by the Benitezes were paid cash kickbacks in exchange for visiting the clinic and allowing their names to be used to bill the Medicare program. He also agreed to approve expensive and medically unnecessary HIV infusion claims at the clinic, and to falsify medical records.

THE CHALLENGES FOR NON-PROFITS

2008-09-11T10:50:00.010-05:00

"A variety of emerging or intensifying factors threaten the future performance and credit quality of the nation’s not-for-profit health care system. Growing concerns include “unquenchable demand” for health care services and related growth in new health care technology and health care costs, the sustainability of managed care rate increases; the slow erosion of employer-based health insurance; reductions in Medicaid eligibility and reimbursement; the growing burden of rising bad debt and charity care; the government’s long-term ability to adequately fund Medicare without future reductions; and the availability of an adequate and affordable labor supply."

The above statement from the 'Environmental Scan' in the current [9/11/08]issue of H&HN magazine paints a foreboding picture for non-profit providers of healthcare. Demand for healthcare is increasing due to increasing demographic trends while the costs of developing new technologies, medications and operational costs for delivering those services are also increasing. Coupled with the financial pressures on Medicare and reimbursement cuts, it is apparent that the healthcare system is in crisis.

Where will the capital that is needed to address these issues come from? As the article indicates, performance determines the quality and amount of credit. And banks are reluctant to lend money when financial performance [profitability and balance sheet ratios] does not conform to their expectations and willingness to accept risk [the exception being the subprime mortgage market...but that is another story]. And since equity is not a viable option for non-profits, the delivery of healthcare to the most vulnerable segments of the population is at risk. Non debt or equity financing, such as that provided through Sun Capital HealthCare's Medical Accounts Receivable funding program, is a tool to both increase working capital and reduce the financial impact of cash flow problems resulting from reimbursement delays. Even though Sun Capital has kept the lights on and doors open for facilities in fiscal crisis, as well as provided the means for hospitals to grow, until the issue of rising costs is adequately solved, the scary prognostication outlined above will continue.

Congress to Delay Health Care Overhaul

2008-09-10T09:20:00.003-05:00

Congress is likely to delay a health care overhaul. They will continue needling health care companies and likely to bide time on major reforms.

Democrats have launched probes of some of the country's largest drugmakers and passed laws curbing marketing tactics used by insurers. Analysts expect those efforts to continue this fall while party leaders begin laying the groundwork for broader changes after the November elections.

With a Democratic administration and Congress next year, analysts say the slowing economy, rising food and gas prices, and new tensions with Russia will take precedence over health reform.

How Do Municipalities Handle Cash Flow Challenges?

2008-09-09T11:31:00.004-05:00

Over the past few weeks we have seen state medical agencies (Medicaid) curtailing their provider reimbursements. A common theme nationwide, providers of all kinds are suffering from "the budget has not been passed yet" disorders. How do state agencies expect a medical professional to care for patients, pay for supplies, pay rent, buy new and updated equipment and feed his/her family? State agencies should know better!

It is interesting to note that when state or local municipalities have short falls in cash flow, they can and usually issue very short term bonds (tax free to investors) called "revenue anticipation notes" (RAN's), "tax anticipation notes" (TAN's), and "bond anticipation notes" (BAN's). These securities are issued specifically to fill the cap created by short term cash flow deficiencies, and once the main source of funds arrives (the "revenue" "taxes" or "bonds") the short term notes are paid off. Municipalities have such abilities, but providers do not.

So what do providers have to fill the cash flow gap? Medical providers can use a strategy very similar to "revenue anticipation notes." A provider can sell his/her medical claims in anticipation of payment, through MAR (medical accounts receivable) funding. The sale of these anticipated payments can only be done through a finance facility specifically accustomed and designed to buy these receivables.

So the question is answered...medical providers can use the same strategy that municipalities use. A revenue anticipation note issued by cities, states and counties is a debt instrument. MAR funding is not! It is the sale (not borrowing) of the asset in anticipation of payment by a third party payor. If doubt arises when considering MAR funding, think for a moment....municipalities do something very similar almost every month!

Hospitals Battle With Competing Health Care Proposals

2008-09-08T09:52:00.008-05:00

Mid Coast Hospital recently proposed a new $3.5 million urgent care and diagnostic center as an alternative to a proposed alliance with Parkview and Central Maine Medical Center (CMMC) made earlier this year.

In an effort to overcome financial challenges and ensure a continued ability to meet current and future community health care needs, Parkview announced their plans to join forces with CMMC in June '08. However, Mid Coast hospital contends they are prepared to meet the health care needs of the entire mid-coast region with a plan that will cost an estimated $18.5 million per year less than what it would cost CMMC to continue to operate Parkview hospital.

Parkview officials called Midcoast's assertion "absurd" saying that Midview's proposed urgent care and diagnostic center isn't about integrating care and saving the community money - it's about trying to run Parkview out of business.

According to health care financial analysts, the battle between these two hospitals comes as no surprise. Before Mid Coast built their current hospital, it was in the courts for four years being fought out between them and Parkview.

"AN EXCELLENT INVESTMENT"

2008-09-03T09:39:00.009-05:00

This is the title of an interesting article that appeared in the May 2008 issue of HHN Magazine by Michael Bilton. It is not about finances, although in a way it ultimately is. Rather, the author points out that an "annual community health assesment" can be a valuable tool for a hospital's planning. By understanding what the healthcare needs of the community are, a healthcare executive can plan a strategy and allocate financial resources towards those programs for which there is the greatest demand in the community.

Identifying the needs of your marketplace so that you can target your services towards meeting those needs is one of the basic principles of running a business. Borrowing this strategy from the business world can enable healthcare executives to better develop service lines and prevention programs that will increase their market share and enhance their financial performance.

And when it comes to financial performance, healthcare executives are increasingly using another tool used in the general business world - accounts receivable financing. The unique medical accounts receivable funding program from Sun Capital HealthCare, Inc. has proven itself to be a valuable tool for healthcare organizations in fiscal stress as well as those poised for growth and profitability.

Declining Liquidity = Low Bond Ratings for Hospitals

2008-09-02T09:41:00.004-05:00

Per a recent statement made by Standard & Poors (S&P), hospital bond ratings across the U.S. have plummeted due to continued declines in liquidity.

Because interest rates are based upon the creditworthiness of the issuer and the conditions in the financial market, many hospitals and healthcare providers are finding it more and more difficult to get and maintain a positive bond rating.

SCH's MAR Funding program can provide a much needed boost to hospitals' and healthcare providers' credit ratings. MAR funding is not dependent on the availability of credit and serves as a source for working capital that can actually be used to improve liquidity.

By using the cash flow generated from MAR funding as working capital, profitability can be restored and a healthier balance sheet can be attained.

Medicare Improvements for Patients and Providers

2008-08-29T08:22:00.002-05:00

The Medicare Improvements for Patients and Providers Act of 2008 enacted July 15, 2008 created changes to the Medicare program. These changes have been communicated to affected parties (such as - physicians, therapy services, DMEs).

As a result of the new law, the mid-year 2008 Medicare Physician Fee Schedule (MPFS) rate reduction of -10.6% is retrospectively replaced with the fee schedule rates in effect from Jan - June 2008, which reflected a 0.5 percent update from 2007 rates. Additionally, MPFS payment rates are being revised to increase the fee schedule amounts for certain mental health services. More information on physician pay issues is available at Centers for Medicare & Medicaid Services (CMS).

Under the Medicare statute, Medicare pays the lower of submitted charges or the Medicare fee schedule amount. Claims with dates of service July 1 and later billed with a submitted charge at least at the level of the January 1- June 30, 2008, fee schedule amount will be automatically reprocessed. Any lesser amount will require providers to contact their local contractor for direction on obtaining adjustments. Non-participating physicians who submitted unassigned claims at the reduced nonparticipation amount also will need to request an adjustment.

CMS will be implementing other provision of the legislation in the coming months and will announce additional information as it becomes available.

A Need for MAR Funding

2008-08-27T10:28:00.003-05:00

"I have a wonderful opportunity to provide additional services (or products) for my patients, but I have no financial ability to fund the build-out needed to accomplish that task." If you have said that, or even thought it, you have a major symptom indicating a need for MAR funding.

The way for any medical provider to increase profitability is to provide services or products for his/her patients that previously were outsourced or referred out. Not many medical providers realize that they have a cash bucket available for such expansion. The laziest asset any business has is its accounts receivable.

Medical providers, depending on their practice-type and size can have as much as a million dollars (or more) in medical claims awaiting payment at any given time. What a great source for financing expansion or growth. MAR funding will give the provider the financial tool needed for such expansion and will not eliminate or reduce his/her cash flow.

Pekin Hospital in Good Financial Health

2008-08-25T10:53:00.003-05:00

Despite indications of financial troubles in the spring, the new CFO of Pekin Hospital says they are doing just fine.

The hospital plans to make use of an internal physician recruiter to replace physicians in normal staff turnover and new positions as one of the ways to keep their hospital competitive and profitable.

One of the hospital's biggest challenges is that of maintaining a positive image. Patient satisfaction is critical to the hospital's success; therefore, Pekin is looking for new ways to attract top notch physicians to help maintain this standard.

By using Medical Accounts Receivable (MAR) Funding as a source to generate working capital, Pekin hospital can use the immediate cash to upgrade technology and keep the hospital looking attractive for physicians and patients alike.

Large Increase in Number of Companies At Risk of Defaulting On Their Debt

2008-08-22T08:57:00.005-05:00

The August 19, 2008 issue of The American Bankruptcy Institute Update reviewed comments from credit rating agencies which indicates that the number of companies most at risk of defaulting on their debt has soared this summer due to a decrease in consumer spending and the on-going credit crisis.

In a recent report, Moody's Investors Service stated that 63 companies had the weakest liquidity rating and were in danger of defaulting on their debt. This is an increase of almost 19% in just one month.
Recently, Standard & Poors listed 156 companies as most at risk of default...its highest total since May 2003. S&P went on to state that these companies are at risk of defaulting of $352 billion which is three times the last month's total.
S&P also reported that as of August 11th, 52 companies have defaulted on debt worth $41 billion.

The financial community expects the current credit crisis to continue for some period of time. It is expected that the number of companies which will actually default on debt to increase substantially in the coming months as they struggle with low liquidity. It should be noted that many of these companies are not using one of their best assets, their accounts receivable, as a source of working capital as they face default. Many companies could reduce the risk of defaulting on their debt by selling their accounts receivables.

Healthcare companies can also benefit from a specialized form of A/R funding called MAR Funding. MAR Funding enables healthcare companies to sell their third party claims and receive cash right away instead of waiting 30, 60 or 90 days for reimbursement.

HEALTHCARE REFORM TO HIT THE AIRWAVES

2008-08-21T14:57:00.005-05:00

Viewers watching the upcoming nominating conventions will see a new advertising campaign advocating for healthcare reform, as reported in AHA News. Backed by some major healthcare associations, the effort is meant to provide impetus and urgency to tackle this major component [as much as 15% of GDP] of this country's economy.

Providers, suppliers, financial services companies, as well as consumers all have a stake in finding a new approach to making quality healthcare affordable and accessible throughout the country. The vested interests for maintaining the status quo might finally be challenged so that "business as usual" will no longer be the case when the next administration comes into office.

Record shattering deficits, an ill conceived war sapping our energy and resources, trade imbalances, a weak dollar, the crisis in the financial markets, global warming, energy independence, social security reform, are all huge problems that will advocate for time and money in the corridors of power in Washington. The healthcare industry will have to compete with all these issues to get the priority level and financial support needed in Washington to deliver our industry's services much more efficiently and effectively to a growing population that lives longer and places more demands on the industry.

Hopefully, the ad campaign will focus on heightening the awareness of and urgency to find better ways of delivering healthcare. Now is not the time to advocate any single approach as that will only enable the entrenched interests to divide and conquer and maintain the status quo.

When Does a Healthcare Provider Need MAR Funding?

2008-08-19T12:27:00.004-05:00

Since the introduction of electronic billing capabilities, medical practitioners have seen their cash flow improve significantly. However, in many cases, the improvement has just moved the problem from horrid to bad.

Electronic billing works well if all the entries are correct and additional medical information is not required by the carrier. Given any of these two events, reimbursements once again become protracted. What is the indication then, which alerts the medical provider to seek MAR funding? The most common symptoms are the following:

1. Struggling to make payroll
2. Being forced to delay payments to vendors
3. Using a personal credit card for business expenses
4. Feverishly opening envelopes to find checks for working capital

Experiencing any of these symptoms is a sure indication that your cash flow is not what it could be. MAR funding gives predictable, steady cash flow and is the only form of finance that grows and coincides with your billing cycle. So, if you see approximately that same number of patients in a day, you can almost guarantee your cash flow for that day with the use of MAR funding.

New Law to Help Warn of Hospital Financial Crises

2008-08-18T15:34:00.007-05:00

A new law enacted in New Jersey will require that an early-warning system is in place to help spot financially troubled hospitals before it's too late.

This year alone, four hospitals in New Jersey have closed due to financial woes. A fifth hospital will close its doors on Wednesday.

The new law will give the NJ Department of Health and Senior Services the authority and access to information necessary to monitor hospital finances. The department will then be able to identify financially troubled hospitals long before a crisis occurs.

Hospitals across the country facing similar financial crunches should strongly consider adding Medical Accounts Receivable (MAR) Funding to their financial portfolio. MAR Funding provides an immediate infusion of cash which can be used especially when a hospital or healthcare provider is under fiscal stress.

HEALTHCARE IN A LOUSY ECONOMY

2008-08-14T08:20:00.004-05:00

Jeff Lutz describes 6 lessons to be learned about the healthcare industry in a lousy economy in the August 14, 2008 issue of H&HN magazine .

Healthcare isn't immune to economic cycles - witness the auction bond market

The payer mix changes - co-pays and deductibles are up and fewer people are covered by commercial insurance

As the self-pay portion of the bill rises, bad debts increase

Hospital volume drops off, especially the "good stuff" - as insurance costs increase and unemployment increases, families use less health care and more ER facilities

Everybody is expanding geographically to capture market share - increasing marketing and advertising costs to meet the increased competition

Mergers happen more quickly - because hospitals lack the financial muscle to ride out the economic downturns

On an upbeat note, Lutz does note that while hospitals are not happy with their profit margins, those with strong balance sheets are able to invest in physicians, services and technologies and position themselves for the future when the economy turns.

Many healthcare and financial commentators also notes those healthcare organizations that have strong balance sheets are better able to survive the fluctuations in the financial markets. A key to a strong balance sheet is managing debt and controlling your financial ratios. One tool healthcare executives use is a Medical Accounts Receivable funding program from Sun Capital HealthCare Inc.

The cash infusion that you receive from Sun Capital is debt-free and without the restrictions normally associated with bank loans and lines of credit. As Lutz indicates, by having a strong balance sheet, healthcare organizations in a lousy economy can improve their performance and more readily survive the financial fluctuations of a lousy economy.

California Freezes Medi-Cal Payments

2008-08-13T11:09:00.008-05:00

California freezes Medi-Cal payments to thousands of healthcare facilities in July.

Medical providers who care for low-income Californians are scrambling to find funds to keep their doors open, as the failure of lawmakers to pass a budget forces the state to halt payments to them.

Most of the facilities have no immediate plans to turn away patients, the providers warn that a budget stalemate that drags on through the summer will affect care. In the meantime, they are turning to banks, foundations and their own reserves for emergency cash to pay the bills.

During last year's budget standoff, many providers reported paying astronomical interest rates for temporary credit. This year promises to be just as tough. Banks are financially squeezed and reluctant to offer bridge loans. Medical Accounts Receivable (MAR) funding may be the answer for some.

A Financial Tool That Protects Your Business From Fluctuations in Revenue Cycle

2008-08-12T14:03:00.003-05:00

Fluctuations in revenue cycle is a common dilemma for healthcare providers as they strive to maintain inventory, pay overhead, expand, and even make a profit.

To address this issue of "fluctuations in revenue cycle", you must ascertain whether the financing tools available move concurrently with your revenue stream, since cash flow is determined by your revenue cycle, not your billing cycle.

Loans, including lines of credit and asset based lines, have a common limitation to solving the dilemma. Dollar availability is fixed and cannot be reused until some portion (or all) is paid back.

Selling stock is another financing tool. However equity financing addresses long term financial questions and is not typically used as a solution for short-term cash flow problems resulting from revenue cycle fluctuations.

A financial tool that directly follows the revenue cycle is Medical Accounts Receivable (MAR) Funding. It provides a cash-flow solution to your working capital needs. Simply put, you deliver your product or service and get paid within 24-48 hours. There are virtually no limits on the amount of funding available and no requirements before you can receive additional funding.

Hospital Borrows and Loses Millions

2008-08-11T09:27:00.005-05:00

Carilion Clinic is losing and borrowing millions as it converts from a hospital to a clinic system.

Construction and recruiting physicians to support the changes has taken a toll on Carilion's bottom line. That, combined with other expansion projects, a down economy and a volatile market, has Southwest Virginia's largest hospital system reporting a $39.7 million loss for the first six months of the fiscal year.

Hospital revenue bonds worth $50 million and $110 million were issued July 1 for Carilion. Of the $160 million, Carilion has already spent $52 million, according to a bond prospectus dated July 8.

Another source of obtaining working capital to fund Carilion's capital improvement projects is Medical Accounts Receivable (MAR) Funding. MAR funding is a customized funding program for healthcare providers/suppliers. By using the funds generated from MAR Funding, no debt is incurred allowing for a healthier balance sheet and an opportunity to improve credit rating when additional bond issues are under consideration.

Hospital Closings - So Who Cares?

2008-08-07T09:06:00.003-05:00

Emily Friedman has written a blistering article in the August 6th issue of H&HN Magazine on the subject of hospital closings, one that I would suggest anyone with an interest in the healthcare system should read. She paints a bleak vision of the future, unless something changes in the way we view the delivery of healthcare to our citizens. While covering hospital closings for 30 years, she sees some common factors in the current spate of closings that "...are frightening as they are disheartening."

The first factor she cites is "market mania", the idea that market economics will make the healthcare system work for everyone. But, she notes that the "...economics of healthcare, far from being humane, have become Darwinian" with its reliance on a market ideology that, in her opinion, is a failed ideology. Unless, as she notes, "....you think that it's just fine to have 16 boutique hospitals in every wealthy suburb while people in poor communities die for lack of basic emergency care."

The second factor she discusses is "a lack of anything resembling planning." As Ms. Friedman notes, "...we plan golf-course communities, downtown renaissances, parks, transportation systems, olympic sites and public bathrooms; surely we can find a way to have at least a semi-rational distribution of hospital resources."

Ms. Friedman cites a number of other factors that have contributed to what she clearly feels is a critical turning point for the healthcare industry. With the growing disparity between the "have" and "have not" hospitals in terms of revenues, margins and access to capital, the "...question is whether the luckier hospitals feel any obligation to those that are vulnerable" and, I would add, do the well-to-do patients feel any obligation to those less fortunate.

Those of us on the business side of healthcare, such as Sun Capital HealthCare, Inc. which provides medical accounts receivable funding, can address financing for the healthcare industry, but as Ms. Friedman points out, there is a more profound question that the country as a whole must resolve and that is what do we want our hospital and healthcare system to be.

Medicare Bill Could Lead to Tougher Hospital Inspections

2008-08-06T15:17:00.011-05:00

The new medicare bill could lead to tougher hospital inspections.

In 1965, the year Medicare and Medicaid legislation was passed, Congress gave the “Joint Commission,” a professional accreditation organization established in 1951, the unique authority to inspect hospitals and determine whether they meet the patient health and safety standards required to treat Medicare patients.

Today, the Joint Commission collects $113 million in annual revenue, mainly from the fees it charges hospitals for telling them whether they comply with federal regulations. The hospitals that are inspected are the ones that foot the bill to be accredited and 99% of the hospitals that are inspected by this entity are generally accredited.

Thanks to the Medicare bill that Congress passed earlier this month, however, the Joint Commission will no longer enjoy unique authority over hospital inspections.

CMS Proposes Rules for New Rates

2008-08-04T16:16:00.005-05:00

CMS just released a proposed rule to update its approach for paying hospital outpatient and ambulatory surgery center services.

The new rates are based on a 50-50 blend of the 2007 payment rate and the 2009 payment, which represents 65 percent of the hospital outpatient rate.

According to CMS, the proposed rule will build on efforts across Medicare to transform the program into a prudent purchaser of healthcare services, paying based on quality of care, not just quantity of services.

The new rule would include a 3 percent annual inflation update to Medicare payment rates for most services that would be paid under the outpatient PPS. That increase would apply to hospitals that report data on seven outpatient quality measures. Facilities not submitting the data would receive only a 1 percent update.

More than 4,000 hospitals and community mental health centers are expected to participate in the program in 2009.

Healthcare Turnaround Industry Expected to See an Increase

2008-08-01T16:31:00.004-05:00

As profitability trends continue to slope downward for the healthcare industry, turnaround professionals are expected to be called upon.

The capital markets will soon not be a viable source of revenue for the healthcare sector as debt burdens continue to increase due to rising labor costs, the growing number of uninsured patients, and lower Medicare reimbursements.

Many turnaround professionals are advocating Medical Accounts Receivable (MAR) Funding as a funding alternative for the healthcare industry. MAR Funding serves an an ideal financial strategy for quick cash infusion that can begin turning revenue quickly.

Universal Health Care Is Possible -- With No Premiums or Deductibles

2008-07-30T12:33:00.016-05:00

Universal Health Care Is Possible -- With No Premiums or Deductibles

Imagine a proposal for health care reform that guarantees free, high-quality health care for all Americans. No premiums. No deductibles. In this plan, the government insists that all insurers offer the same comprehensive benefits to everyone, including: office and home visits, hospitalization, preventive screening tests, prescription drugs, some dental care, inpatient and outpatient mental health care, and physical and occupational therapy.

If this sounds too fantastic to be true, you need to read Healthcare, Guaranteed: A Simple, Secure Solution for America by Dr. Ezekiel Emanuel. He offers a bold, refreshing plan for health care in America. The beauty of his proposal is four-fold: It faces up to the fact that reform won't pay for itself, and it offers a funding mechanism that is fair and efficient and could deliver high-quality care nationwide. It regulates insurers, forcing them to concentrate on quality. Finally, and perhaps most importantly, this plan insulates our health care system from the lobbyists who, today, have far too much control over our health care system.

MAR Funding Underwriting Benefits

2008-07-29T15:18:00.004-05:00

Aside from the many benefits already discussed throughout these blogs, still more benefits can be found in the unique and precise manner in which Sun Capital HealthCare, Inc. (SCH) underwrites a prospective client. One would certainly ask "how can underwriting benefit my medical business/practice?"

SCH's underwriting/audit staff performs its duties for the benefit of SCH in order to determine, net collectible amount per code and carrier and to affirm strong and consistent systems and controls used by the applicant. Although SCH receives the voluminous results of each audit performed, the data and results determined can be of extreme value to the medical provider. SCH's staff has experience in finance, accounting, coding, medical compliance and business administration. So often, the audit determines that better front office controls are needed to affirm ample and proper insurance coverage. The practitioner or business owner quite often is not aware of these deficits and, following the SCH audit, will take corrective action to remediate such situations.

During past audits the SCH team has found that some in-network reimbursements have been paid at lower dollar amounts for no reason. Carriers sometimes make these errors and do not follow their own fee schedule. SCH has recovered literally tens of thousands of dollars in adjustments for the medical professional by just auditing in-network reimbursements. Once again, this is not SCH's primary business model; it is not a recovery company.

The underwriting process in most cases is free of charge with no up-front fees. The medical professional gets a free x-ray of his/her business and can gain by this process alone. Reimbursement amounts brought to the practitioner by SCH, may actually provide that business owner the ability to decline certain procedures due to low reimbursements by all carriers.

MAR Funding has many benefits, but even the process of qualifying can provide medical practitioners/owners with invaluable information and insight.

Current Economy's Trickle Down Effect On Hospitals' Finances

2008-07-28T10:02:00.005-05:00

Rising health insurance deductibles, soaring drug co-payments and explosive gas prices are all having a trickle-down effect on hospitals' financial positions across the U.S.

The trend has meant more patients delaying procedures and preventive care, more uninsured patients, and less reliable payment methods - all of which can put a squeeze on hospital finances.

The current trends may represent a fundamental shift in health care and hospitals will have to come up with ways to plug revenue drains and generate more income.

Medical Accounts Receivable (MAR) Funding can be utilized by hospitals and healthcare providers as a way to increase revenue and reduce costs. It can be used to accelerate cash flow by turning a non-performing asset, accounts receivable, into working capital. MAR Funding also allows healthcare providers/suppliers to take advantage of cash discounts and/or quantity discounts as well as other cost savings from vendors. It is often used to fund various management tools which can reduce overall costs of operations.

A HEALTHY BALANCE SHEET

2008-07-23T17:08:00.005-05:00

Jeff Lutz, in the July 23, 2008 issue of H&HN magazine, discusses the Detroit healthcare market in a lousy economy. He discusses several lessons for healthcare from the events that are occuring in his hometown market due to the bad economy.

He does, however, strike an optimistic note at the end when he notes "...those with strong balance sheets are picking up market share and investing in physicians, services and technologies for the future."

Once again, it seems that the mantra for success in the healthcare business, whether in good times or bad, is having a healthy balance sheet. The best prescription for being healthy is to effectively use all the tools available and find the best combination that works for the provider's specific situation. One of those tools should be Medical Accounts Receivable {MAR} funding. It is a debt-free method to fund working capital and accelerate your cash flow. The flexiblity of a Sun Capital HealthCare MAR Funding program allows you to determine the dosage that works best for you when in combination with the other financing options you have.

A healthy balance sheet gives the healthcare executive the maximum flexibility for finding growth and profitability. And the Sun Capital MAR funding program can be customized to your specific needs.

World's Largest Collaborative Online Encyclopedia of Medicine and Health

2008-07-23T12:06:00.005-05:00

World's Largest Collaborative Online Encyclopedia of Medicine and Health.

The Medpedia Project announced the formation of the world's largest collaborative online encyclopedia of medicine called Medpedia. Physicians, medical schools, hospitals, health organizations and public health professionals are now volunteering to collaboratively build the most comprehensive medical clearinghouse in the world for information about health, medicine and the body. This free public site will officially launch at the end of 2008, and a preview site becomes available today at http://www.medpedia.com/.

The Medpedia Project is an extraordinary global effort to collect, organize and make understandable, the world’s best information about health, medicine and the body and make it freely available on the website Medpedia.com. Physicians, health organizations, medical schools, hospitals, health professionals, and dedicated individuals are coming together to build the most comprehensive medical resource in the world that will benefit millions of people every year.

Medicare Pays Millions to Fraudulent Billers

2008-07-22T10:18:00.004-05:00

A recent congressional investigation discovered that CMS paid nearly 500,000 fraudulent claims. Between 2000 and 2007, CMS "reimbursed" numerous medical equipment providers who used dead doctors' Medicare numbers to write prescriptions and order equipment.

The Senate Permanent Subcommittee on Investigations estimates that somewhere between $60 million and $92 million was lost to fraud.

Per a statement made by Herb B. Kuhn, CMS's deputy director, CMS has taken steps to implement policy changes and new procedures so that invalid or inactive PIN's are not used by unscrupulous DME providers in the future.

COST vs. VALUE

2008-07-17T14:27:00.005-05:00

I listened to an interesting discussion on public radio this morning while in my car. Ths issue was the state of cancer research and treatment. One of the comments made by a doctor was that too often when discussing alternative treatment plans with patients, the medical professionals fail to adequately discuss the likely outcomes. Costs and side effects are readily understood and communicated. However, since the various therapies are not curative but rather life extending, it is a difficult decision to make when you consider the "value" of adding 3 months to a life when the "cost" of the treatment can financially destroy a family.

Cost versus value...a balancing act.

Cost versus value is also a balancing consideration at the provider level, especially when looking at alternative financial solutions to the fiscal issues facing hospitals, including equity, debt and Medical A/R funding. Equity solutions are not always available, nor are they available to all providers [e.g. non profits]. Debt financing solutions can be less costly than A/R funding solutions, but they aren't necessarily the best "value" solution when the "hidden costs" of debt or bank financing are added in. The most effective financial solutions for healthcare financing should involve a combination of these three financial tools. By having a balanced financial portfolio, including debt financing, Medical Accounts Receivable [MAR] funding programs from a company like Sun Capital HealthCare Inc. , and equity financing where applicable, the healthcare provider will be well positioned for having a healthy balance sheet and financial results.

Ratings Drop as Hospitals Bleed from Bottom Line

2008-07-16T16:03:00.004-05:00

Per recent reports, bond ratings for hospitals have dropped significantly.

In many of these cases, the reasons for the downgrades were similar - big operating losses in fiscal 2007, declining patient volume, and concerns about the hospitals' ability to turn themselves around.

Medical Accounts Receivable (MAR) funding presents an opportunity for hospitals and other healthcare providers to protect and maintain bond ratings. MAR Funding boosts liquidity which makes for a healthier balance sheet.

A Cardiology Practice Benefits From MAR Funding

2008-07-15T14:50:00.006-05:00

A cardiology practice consisting of 5 physicians contacted Sun Capital HealthCare (SCH) to see if we had any thoughts on how to maintain their income in an environment of decreasing reimbursements and higher operational costs. Our suggestion was simple, they should provide other services and/or procedures during the same working day in order to increase revenue.

As a cardiology practice, over 75% of their patients get annual stress testing, which the practice did not perform. They used a local stress testing lab. Wouldn't revenue geometrically increase if they provided that procedure and billed the full fee rather receiving a small referral fee? Unfortunately, there was no additional equity available to build such an addition.

SCH suggested the use of the group's laziest asset, their existing accounts receivable. Close to one million dollars in A/R was sitting on their balance sheet doing nothing. SCH opened the account and purchased the existing A/R to provide the large infusion to set up the lab.

On a daily basis thereafter, the cardiology group sold their daily billing to SCH in order to level out cash flow and eliminate expense pressures. The result, almost double the existing income was created simply by using the laziest asset in any business, accounts receivable.

HME Providers Forms Vendor Alliance With Sun Capital HealthCare

2008-07-14T14:01:00.005-05:00

Sun Capital HealthCare, Inc (SCH) has been selected to join HME Providers' vendor alliance program as a preferred provider of Medical Accounts Receivable (MAR) Funding.

Members of HME Providers will be able to benefit from SCH's customized service which serves as a debt-free funding solution for healthcare companies. HME/DME providers can use MAR Funding as a source of working capital to create a monthly cash flow, meet payroll and overhead, reduce debt and cut costs by using cash discounts, as well as for a variety of other funding needs.

HME Providers currently offers more than a dozen vendor business-to-business alliances and passes all special program savings onto their members.

How MAR Funding Has Worked For Various Providers

2008-07-10T08:46:00.006-05:00

A quick case study of a very satisfied Sun Capital HealthCare (SCH) client can provide you with a "real life" example of how MAR Funding can be of use in your medical practice, business or facility.

Our most recent success story starts with a group of "walk-in" clinics in the southwest. Cash flow and growth challenges brought the practice manager to SCH for solutions. After evaluating the practice and determination of their net realizable fees, SCH advanced on the practices's existing bucket of receivables providing a "cash infusion" for the purchase of new, and updating of existing facilities.

Cash flow was previously so unpredictable that bank lines were used and unfortunately could not be paid back in time for the next payroll need. The bank called the line and the pressure was unbearable.

SCH paid off the bank line, and provided the level, predictable and useful cash flow needed to make payroll, pay for supplies and overhead. SCH is proud to be an important part of the growth and survival of this profitable practice. Read another SCH success story.

Rethinking Patient Flow

2008-07-09T10:02:00.004-05:00

Joe Flower wrote a very interesting article "Change The Model" in the July 9, 2008 on-line issue of H&HN Magazine, discussing the increasingly difficult climate for hospital survival. In it, he notes that while capital is necessary to a provider's growth and success, "the most important input a hospital needs is patients". And the critical factor in patient flow is the primary care physician.

However, he notes the decline in primary care doctors, to the point that in 2005, only 8% of medical school graduates were going into family practice. If the hospital model is dependent on patient flow coming from primary care physicians [or from specialists who themselves have been referred to by primary care physicians], then this shrinking of primary care doctors necessitates a rethinking of the hospital model and where and how the flow of patients can be generated. Flower's solution is that hospitals must increasingly take on the role of primary care providers and he suggests a number of ways to do this.

His solutions, however, seem to fall short of really addressing the issue of increasing the supply of primary care physicians. Companies like Sun Capital HealthCare, Inc. can provide the financial means and working capital hospitals need, but for the healthcare system to survive, the need to attract more primary care doctors into the system must be addressed. Financial incentives, medical school curriculums, geographical considerations, electronic records/remote capabilities, etc. all must be considered when looking at redefining the hospital model and reinvigorating a healthy healthcare system that is referral based. Let's bring back "housecalls" to the healthcare system.

Hospital Costs Vary While Quality is Indiscernable

2008-07-08T14:03:00.027-05:00

The Herald Tribune article explains how to evaluate a hospital for its quality and cost of its services.

An appendix, the mysterious little organ in the abdomen, is much the same in everyone. So why would it cost, on average, $61,737 to remove it at one hospital, and $17,437 at another? The phenomenon goes beyond surgery, even to common ailments that virtually every hospital sees.

Hospitals base those charges on their internal costs -- the price for bandages, the salaries of nurses, and so on -- and on what they think their local market can support, said David Verinder, chief financial officer at Sarasota Memorial Hospital.

Hospital Shelves Plans to Build Teaching Hospital

2008-07-08T09:04:00.009-05:00

Boca Raton Community Hospital has backed out of building a teaching hospital in partnership with 2 universities, as a result of financial problems.

This fiscal year, the hospital had $40 million in operating losses. Hospital officials say they are planning to sell an 80-acre property bought in anticipation of the project to recover a large chunk of the expenses incurred.

Boca Community Hospital is now taking aggressive steps to turn around their financial position. MAR funding is a tool used by hospitals with similiar fiscal difficulties as a way to accelerate cash flow, boost liquidity and get their finances back in shape.

By incorporating MAR funding to their financial turnaround strategy, Hospital officials will be in a better position to revisit the development of a teaching hospital.

Debt Default Rates On The Rise

2008-07-03T09:30:00.004-05:00

The June 26th issue of ABF Journal contained an interesting article in which Turnaround Industry Professionals noted that they expect debt default rates to climb substantially. They predicted that debt default rates will rise above 10% in 2009 as the credit crunch continues to disrupt working capital for many healthcare companies.

In a recent Turnaround Management Association poll, about 70% of the respondents expected a surge of defaults in the next three years, with 2009 being especially large. Further, about 94% of the TMA poll respondents said credit is tighter this year and 80% stated that traditional lenders have become less active and are putting more restrictive covenants and conditions on the loans they do make.

Of course, this tightening on traditional loans is creating a working capital shortage for many healthcare businesses and is causing them to seek alternative sources of working capital. Many have discovered that Medical Accounts Receivable (MAR) Funding can be an excellent source of working capital without restrictive covenants/conditions and without putting incremental debt on the balance sheet.

Hospital CFO's Should Seek Nurses' Input

2008-07-02T10:40:00.004-05:00

According to healthcare experts at the recent HFMA annual conference, nurses are a key part of a hospital's revenue cycle and their input should be sought after from hospital CFO's.

Nurse input is especially beneficial during the development of organizational business plans experts say. "You have to involve all parties in strategic financial planning," said Susan Sanders, associate vice president for patient services at QHR Consulting. "Sharing information between the nursing staff and finance can be a big improvement in the creation of annual budgets and business plans."

Nurses are also great resources for market research. They can be a great help in developing new product lines or offering new services as they often know vendors as well as clinical colleagues in other hospitals.

Hospital CFO's should be sure that nursing managers understand the impact of overall hospital profitability. They should be aware of the importance of a hospital's liquidity position.

The experts say that the nursing and finance departments need to work together on nurse retention as well.

Cut in reimbursements for medicare

2008-07-02T08:37:00.007-05:00

With physician reimbursements set to drop 10 percent, doctors will begin evaluating whether to stay with Medicare.

Senate Republicans blocked action last week on Democratic-backed legislation that would have averted the fee cut by instead reducing payments to insurers that provide benefits through Medicare Advantage plans. Republicans said that the insurer cuts, which the House approved, were too deep and that the Bush administration had threatened to veto the measure. Congress is set to be in recess until July 7.

HFMA ANI Conference in Las Vegas June 22 - 27th

2008-06-27T10:52:00.004-05:00

The Healthcare Financial Management Association (HFMA) held its Annual National Institute/Conference in Las Vegas, NV from June 22nd through June 27th. As always, the focus of the event was to provide educational opportunities for healthcare financial professionals to help them understand the ever-changing financial environment they deal with on a day-to-day basis.

This year, there was much discussion regarding the financial difficulties many healthcare providers are dealing with due to the decrease in liquidity. While still faced with increasing costs and decreasing payments, it is not unusual for healthcare providers to be operating with a negative net income. The lack of liquidity only compounds the problem by making it more difficult and expensive to obtain traditional financing such as loans. Therefore, there was strong interest among healthcare providers to discuss alternative sources of financing such as Accounts Receivable Financing.

As an exhibitor at the HFMA ANI, Sun Capital HealthCare, Inc. had the opportunity to discuss its Medical Accounts Receivable (MAR) Funding solution with a large number of attendees at the conference. It was a surprise to many attendees that they can obtain this alternative source of financing without adding debt to their balance sheet. Many attendees commented this could be an important source of financing during this period of low liquidity.

More and More U.S. Hospitals Filing for Chapter 11

2008-06-25T16:10:00.003-05:00

Recent studies have shown that more than 2,000 hospitals in the U.S. are not generating enough money to fund operations. A large portion of these hospitals are being forced to file for Chapter 11 under the Bankruptcy Code.

Sun Capital HealthCare (SCH) offers hospitals in similar situations a debt-free funding solution. Several years ago, in the wake of the NCFE collapse, SCH aided several healthcare companies regain their footing by creating a post petition funding plan which allowed them to continue operations, pay employees, and fulfill other pre-petition vendor obligations.

SCH's MAR Funding solution can help turnaround the capital structure of a healthcare company in danger or act as an ally for healthcare companies ready for growth.

AMA's Cure for Claims Campaign

2008-06-24T08:56:00.009-05:00

AMA Aims to Cure What Ails Claims Process:

AMA has begun the Cure for Claims campaign. An AMA board member William A. Dolan, M.D, said their goal in this campaign is to hold health insurance companies accountable for making claims processing more cost-effective and transparent, and to educate physicians so they are no longer at the mercy of a payment system that detracts from patient care.

In conjunction with this campaign the association has published its first report card on the insurance companies. The report card provides an in-depth look at the claims processing performance of Medicare and seven national commercial health insurers.

Electronic Medical Records

2008-06-24T08:30:00.007-05:00

In the June 24, 2008 issue of The New York Times, the editorial "Our Pen-and-Paper Doctors" bemoans the snails pace at which American doctors are converting to modern technologies, especially when compared to physicians from other countries. It goes on to say that without this conversion, the benefits of healthcare reform will become irrelevant.

Money, not enough of it, of course, is always to blame. But inertia is also at work here. For this country to improve the delivery of healthcare and reduce the financial burden of paying for it, not only must the institutional barriers that currently exist be broken down, but the healthcare paradigm must change to one of preventive care rather than curative care. Today, with the costs of drugs and technology so high, it often seems that profits drives the healthcare system. Since so much of healthcare is now in the hands of corporate structures [providers, suppliers, drug companies and insurers], whose only responsibility is to deliver quarterly profits to shareholders, the health of the nation is at risk. Yes, we can develop the greatest drugs and the most advanced research tools and technologies. But to really make a difference in the health of the nation, we must get back to the basics and change bad habits and live healthier lifestyles.

Institutional change is always hard. But until our country makes the committment to change the way we do things, which will require sacrifices from all of us, things will not improve. There are too many vested interests in staying the course.

Sun Capital Group Exhibited at 24th Annual AIRA Conference

2008-06-23T08:49:00.009-05:00

Earlier this month, Sun Capital Group (SCG) attended and exhibited at the AIRA (Association of Insolvency and Restructuring Advisors) bankruptcy and restructuring conference.

The event had a successful turn-out including financial advisors, attorneys, business turnaround consultants, accountants, crisis managers and many other individuals in the business turnaround, restructuring and bankruptcy practice areas.

According to Jim Beutel, SVP of Sales and Business Development of SCG, interest was high for SCG's customized working capital strategies. "Many of the attendees had clients currently in dire situations, either in the midst of bankruptcy proceedings and/or a restructuring transition, or with these challenges closely looming," said Beutel.

Beutel spoke with AIRA professionals about how SCG's debt-free accounts receivable funding program has successfully supported many businesses in turnaround mode.

Wall St. vs. Main St. - Healthcare Financing

2008-06-20T09:40:00.003-05:00

An article by Matthew Weinstock in the June 20th issue of H&HN online makes some interesting observations about the intersection of Wall St. with Main St. in setting the future direction for healthcare. Wall St. is looking for returns on the bonds they've bought while Main St. [the public] is looking for increased access to quality healthcare.

A common thread tying the two objectives together is investing in information technology. As has been discussed here before, IT investments, whether it's electronic medical records, remote links to specialists, improved operating systems and controls, etc. are seen as providing the tools needed to develop metrics and other measurement approaches for evaluating the quality of healthcare delivered by providers.

However, there is a growing gap between the elite not-for-profit health care systems with their smaller and/or rural counterparts. What worries Beth Ward, CFO for the Moses Cone Health Systems in N.C. "is an ever-widening gap with hospitals that have trouble surviving market downturns. She noted that some hospitals in North Carolina with lower credit ratings have put much of their capital plans on hold." The natural consequence of doing this will only make it harder for these hospitals to compete in the future as their ability to adapt to new market conditions, generate new revenue streams and/or develop and implement a new business model for how they operate in their market.

What the elite hospital systems rely on to support their growth and expansion is "... strong balance sheets to fund expensive information technology projects with the hope of improving patient safety and quality of care". One way for the not so succesful hospitals to improve their balance sheets is to add a MAR [medical accounts receivable] funding program from Sun Capital HealthCare Inc. to their financial toolbox.

Physician Reimbursements Flawed

2008-06-18T13:53:00.011-05:00

The American Medical Association said recently that insurance companies often fail to properly reimburse doctors, needlessly adding more than $200 billion a year to the nation's healthcare tab.

In a six-month period beginning in October an analysis found that doctors in the U.S. spend 14% of the fees they receive from insurers and Medicare on the process of collecting those fees, in a report issued at an AMA annual meeting in Chicago.

The analysis sized up insurers and Medicare on how often they paid on time, how often they denied claims and how often they paid at the contracted rate and other measures.

Medicare outperformed commercial insurers in many areas, and some insurers paid physicians' bills better than others!

How To Expand Your DME/HME Business Without Incurring Debt

2008-06-17T13:07:00.005-05:00

Expanding a business invariably requires cash infusion. Traditionally, we think of two ways to do so: borrowing money (debt) and selling stock (equity). While both are viable methods, they're not the only, nor necessarily the best, option for a DME/HME provider's growth. A third tool is medical accounts receivable funding, which uses your non-performing asset, your receivables, and turns it into readily available cash.

Borrowing Money is easily understoond and offered by a wide variety of lending institutions. However, any DME/HME owner who has gone to a bank has experienced the limitations of debt financing. Small businesses are often disqualified and personal guarantees are usually required. Most credit lines are limited and insufficient due to the bank's "under-valued" valuation of assets. Consequently, your credit line can easily "max out" and you will be right back where you started. Finally, there are other fees along with the interest rate that increase the "real" cost of borrowed money.

Selling Stock has the advantage of no interest payments and you have not increased your borrowing. However, by selling stock, you often relinquish significant ownership. Your investors may not understand your business and often seek to exercise control that limits your decision making. Finally, they take a significant share of your profits, which becomes costly over the long run.

Medical Accounts Receivable Funding (MAR Funding) utilizes an asset, your accounts receivables, to generate cash flow without borrowing money or selling stock. Every DME/HME provider can "cash in" their medical claims that are awaiting payment, for immediate use to fund your expansion. The advantages of MAR Funding include no funding caps and availability grows as you expand your business, without going through yet another application process. And, there are no costs incurred when not in use. However, MAR Funding can only be utilized through a very specialized funding company, such as Sun Capital HealthCare, Inc.

DME/HME providers should evaluate all these financial tools when selecting a strategy for expanding their business.

Sun Capital HealthCare Exhibits At ANI: The Healthcare Finance Conference

2008-06-16T12:44:00.006-05:00

Over 5,000 healthcare financial professionals will gather in Las Vegas next week for the ANI: The Healthcare Finance Conference where Sun Capital HealthCare, Inc. (SCH) will be an exhibitor.

The annual conference is the Healthcare Financial Management Association's (HFMA) premier educational and networking event which provides members with ideas and tools to help their organization achieve outstanding financial and operational results.

SCH will be on hand at Booth 313 to discuss Medical Accounts Receivable (MAR) Funding with attendees. SCH's customized MAR Funding program is a debt-free solution for healthcare providers/suppliers whether they are in fiscal trouble or growth mode.

All attendees are encouraged to stop by Booth 313 and meet with Jim Beutel, SVP of Sales and Business Development for SCH, and/or Fred Leder, VP of Business Development, to speak one-on-one about the benefits of incorporating MAR Funding in their financial strategies.

For DME/HME Providers, Inventory Is A Matter of Survival

2008-06-11T10:34:00.012-05:00

To a DME/HME provider, inventory is a matter of survival! Your biggest concern is delivering the last unit in inventory and not having the cash to replace it. If a customer calls seeking that item, you could lose the account because you can't deliver. If it's a new prospect calling, you'll lose them to a competitor. Further exacerbating the problem, you may only be days away from your Medicare or insurance payment. This theme is quite common to DME/HME providers'. If you disappoint a client or prospect and cannot deliver, you've no doubt lost them.

You can avoid this scenario by having adequate start-up capitalization to meet your business plan's forecasted demand through loans, lines of credit, or equity partners. However, when you outgrow your initial capitalization, arranging financing to meet current demand can be time consuming and limited by the terms of your capitalization. And you need to be able to forecast demand pretty accurately. A solution to this dilemma is to accelerate your cash flow to keep it current with your inventory needs.

A DME/HME provider has a powerful funding tool to do so. Medical Accounts Receivable (MAR) funding enables you to utilize a non-performing asset, your receivables, to generate debt-free readily available cash. With this funding tool, the flow of your daily invoicing can generate a flow of daily cash and your funding availability grows as your accounts receivable grow. MAR funding is the most efficient form of cash flow enhancement in the financial marketplace. Loans and lines of credit are important tools for a successful financial strategy, but when adequate cash flow is critical to managing your inventory, Medical Accounts Receivable (MAR) Funding should be evaluated.

Capital Markets: Impact on Healthcare Providers

2008-06-11T10:25:00.007-05:00

In the June 11, 2008 issue of H&HN Magazine, Lee Ann Runy's article on "Presenting Your Story to the Capital Markets" has some very interesting insights for hospital executives facing the turmoil of the capital markets and their impact on healthcare providers. In the article she cites Fred Hessler, managing director at Citi, as follows:

With capital harder to come by, hospitals need to return to the basics, says Fred Hessler,managing director at Citi, focusing once again on what has always been important to the capital markets: robust cash flow and a strong balance sheet. “The future earnings potential of hospitals will be challenged. Strong cash flow and balance sheets can absorb the shock to earnings potential,” he says.

As is pointed out, these two criteria have always been important, not only to the capital markets, but also to the success of the hospital itself. The difference today is that because access to debt has been severely tightened, those hospitals who have not paid sufficient attention to their financial strategies and put together effective financial planning to implement their growth or survival strategies are becoming more and more financially hard pressed.

Debt-free funding that accelerates a hospital's cash flow can provide working capital to meet the financial needs of the hospital while at the same time, by making their balance sheet healthier, they can protect their credit ratings. Sun Capital HealthCare's MAR [medical accounts receivable] funding programs exclusively for the healthcare industry is a proven successful financial tool that more and more healthcare executives are adding to their financial toolbox. Because of its flexibility, it can effectively be used in conjunction with a capital and/or debt strategy to fund the financial needs of hospitals.

Quake Safety Costs Affect California Hospitals

2008-06-09T12:24:00.004-05:00

Hospitals across Southern California are pouring millions of dollars into structural improvements to satisfy a strict new state law mandating seismic upgrades, but it's still uncertain whether hospital officials will meet a looming deadline - and how they'll pay for it.

"Hospitals are really up against the gun," said Jim Lott, executive director of the Hospital Association of Southern California, an industry trade group. "Here in Southern California, we have a much higher concentration of hospitals at risk (for earthquake damage) and with about 40 percent of hospitals already operating in the red, you can see how serious this is."

Hospitals in the South Bay already have spent millions of dollars on studies and construction plans. Officials have until the end of this year to submit a report to the state detailing how they plan to meet the seismic requirements by the 2013 deadline.

Ten hospitals have closed in part or completely over the last decade, leaving gaping holes in the Los Angeles County's health care network. Officials at many of the struggling hospitals cited the impending seismic upgrades as reasons for their closure.

Hospital executives throughout the South Bay say they are hoping to avoid additional debt in paying for these upgrades.

Many of these hospitals would benefit from adding Medical Accounts Receivable (MAR) funding to their financial strategies in order to pay for these mandatory upgrades. MAR funding is a proven debt-free method of generating working capital. Sun Capital HealthCare (SCH) transforms a hospital's accounts receivable into a cash flow solution by purchasing the hospital's third party claims and advancing them cash within 24-48 hours of submission to SCH.

This funding solution can be used as a tool to fuel growth and profitability.

ELECTRONIC RECORDS

2008-06-05T08:28:00.006-05:00

Electronic record keeping is much in the news in the healthcare industry, as is the issue of measuring healthcare "quality" and the two seem to intersect. There is little disagreement that moving in this direction is good for the health of the nation. By having electronic records, it is thought that effective metrics can be developed that can allow healthcare consumers to evaluate alternative services, hospitals, etc. By having electronic records, the ability to diagnose and treat patients from remote locations is enhanced, which can mean providing better healthcare to rural cities and locations which may not have the local availability of a wide spectrum of healthcare services, specialists. etc. And by going digital, perhaps we can cut down on the errors caused by illegible prescripitions issued by doctors.

The question is how and who is going to pay for this. The big hospitals with access to multiple sources of capital will have a much easier time in finding the funding resources for implementing government as well as non government mandated electronic records. But with so many smaller and rural hospitals struggling fiscally, the additional capital burden of upgrading their existing technology could become onerous.

Coupling this scenario with the liquidity crunch and tightening of credit by the traditional lending sources, the use of MAR [medical accounts receivable] funding as an additional tool in the financial arsenal of healthcare executives is becoming increasingly important. More and more are turning to funding sources such as Sun Capital HealthCare Inc. to solve their cash flow problems. Debt-free, virtually immediate availability of funds, no funding caps and unrestricted use of funds are just some of the reasons that healthcare providers and suppliers are taking advantage of this financial tool. They are discovering that it is not just for organizations in financial trouble but that it is an effective tool for funding growth and expansion as well.

If your healthcare organization is facing the question as to how to fund the requirements of implementing and/or upgrading an electronic medical records capability, MAR funding could well be a solution.

Medicare Fraud Prevention

2008-06-03T12:41:00.007-05:00

Medicare fraud costs the government millions of dollars! Losses create higher premiums, deductibles, and co-payments. They can also prevent Medicare from offering more services and better coverage.

Medicare fraud can be found in many types of billings. For example:
- Medicare Part A (nursing homes, residential facilities, hospitals and hospices)
- Medicare Part B (physician services)
- Medicare Part C (medicare advantage or Part D prescription drug benefit)
- Durable Medical Equipment suppliers

Preventive measures can be performed by:
- Thoroughly reviewing the explanation of Medicare Benefits or Medicare Summary Notice
- Protecting your Medicare card number
- Asking questions
- Reporting suspected fraud or abuse

Growing Wealth 2008 in Review

2008-05-30T14:18:00.007-05:00

Last week, Sun Capital Group (SCG) served as an exhibitor and the Premier Sponsor for the Growing Wealth 08 Convention in San Francisco. Designed by the American Cash Flow Association, the event provided attendees with educational workshops as well as direct contact with exhibitors.

Sun Capital Group led 2 workshops. Jim Beutel, SCG's senior vice president of Sales and Business Development, taught a class on Medical Accounts Receivable (MAR) Funding. His session focused on how MAR Funding should be used as a source for working capital in today's financial environment as well as how consultants can recognize and capitalize on opportunities.

Fred Leder, SCG's VP of Business Development, instructed a class titled "Overcoming Objections for Factoring Transactions." His class was geared towards both seasoned and novicelike consultants and provided an in-depth and practical lesson they can use when finding and closing deals.

Growing Wealth 09 will be held in Orlando, Florida.

The Chief Financial Steward

2008-05-27T15:05:00.003-05:00

As reported in the May 27, 2008 issue of H&HN magazine, healthcare CFO's are strategic partners in determining how organizations can best invest in medical technology. The credit crunch has hit the auction rate bond market hard, driving up the costs of financing and "...requiring CFO's and treasurers to quickly identify alternative sources of credit....organizations that did not establish diversified debt structures are now paying the price."

MAR [Medical Accounts Receivable] funding is a tool that CFO's are turning to as an alternative source of funding. Since it is debt free, using a/r funding can make your balance sheet healthier, thereby protecting your bond rating. Furthermore, by funding capital programs at today's dollars by using a non-performing asset, the CFO can achieve improved cash flow and future capital availability.

Sun Capital HealthCare, Inc.'s flexible MAR funding program is an effective tool for financing medical technology to both meet the EMR requirements as well as to improve operational efficiencies.

Google Health

2008-05-21T11:55:00.007-05:00

The Internet search giant’s service, Google Health, at www.google.com/health, is the latest entrant in the growing field of companies offering personal health records on the Web.

Google enters the field of personal health records with a leading online brand, deep pockets and a wealth of technical skills.

More than two dozen companies and institutions announced that they are partners with Google Health. The partnerships are not exclusive arrangements.

It will be interesting to see how soon this will become a natural part of our healthcare system. Enhancing or improving the quality of the claims submitted by the service providers.

COMPETITIVE BIDDING - SIZE MATTERS

2008-05-15T12:44:00.009-05:00

Needless to say, the controversy over competitive bidding is only going to get hotter.

As reported in HME News, Washington is taking another look at the process after the latest round of bid winners were announced.

The winners naturally anticipate they will be able to grow their business and capture increased market share. Additionally, with more volume they think they will be able to cut their costs since they will be able to use volume purchases to offset the price increases that vendors have passed through. Those who lost the competitive bidding wars are concerned about whether they will be able to stay in business. And the vendors will walk a tightrope in going after the winners to increase business without threatening the losers who will still have markets to serve.

While the impetus for the program revolved around the idea of reducing the costs to medicare, the proof will ultimately be in how much of a cost reduction actually will occur. And at what cost? Some of the questions I have are as follows: Will the winners put the losers out of business or drive them to more effectively uncover new markets? Is this another example of bigness triumphing over the small guy and putting people out of work. And what protection is there in the next round of bidding, if the winners have reduced the number of competitors, that would keep the winners from increasing their medicare bids without fear of competition. These are just some of the issues surrounding the competitive bidding process.

Cyber Crimes Affecting Healthcare Providers

2008-05-14T15:13:00.007-05:00

Finjan’s Malicious Code Research Center (MCRC) detected the server, which was used as a Command and Control (C&C) for the Malware that was executed on infected PCs. This same server was also drop off point for private information being harvested by the Malware. The C&C server allowed the attacker to harvest information and control the infected systems. The other issue, as Finjan explained, was that the captured data was left unprotected, and available to anyone online malicious or otherwise.

The data in the files varies from claims with patient data and records, to bank data on customers, business related email, and in a few cases, captured Outlook accounts with email communications.

This theft of data has been a major concern for healthcare providers. Infected PCs are a serious business problem that requires proactive action since it is no longer just a technical IT problem. The existence of large amount of data on a server that hackers can easily manage and control shows the rapid evolution of cybercrime. This wreaks havoc with healthcare providers who must comply with HIPPA guidelines and protect patient data from cyber criminals.

A Hospital Faces Tough Financial Choices About Its Future

2008-05-12T09:55:00.004-05:00

Stevens Hospital treats about 42,000 patients a year - about twice the number the space was built for. Now the hospital is faced with a critical financial decision: Should they invest in a major upgrade or invest in constructing a new hospital altogether?

Hospital board members are faced with the challenge of how to acquire enough capital for either decision they make. The cost of a new emergency department is estimated at $20 million to $30 million. The cost of building an entirely new hospital will likely cost about 10 times as much.

The hospital's recent lack of financial stability is also causing problems. Their low levels of cash on hand has caused a downgrade in bond ratings, which would make borrowing for improvement projects, equipment or construction more costly.

By using Medical Accounts Receivable (MAR) funding, this hospital would be able to protect and maintain a favorable bond rating. MAR funding does not add debt to the balance sheet, and therefore can provide significant savings on interest costs.

By including MAR funding to their financial strategy, Stevens hospital will also have a method of increasing cash flow for necessary upgrades and/or new equipment purchases.

NOT JUST FOR THE FISCALLY CHALLENGED

2008-05-07T15:00:00.003-05:00

MAR [Medical Accounts Receivable] funding is not just for the fiscally challenged healthcare providers. As healthcare leaders and financial executives look for more tools to add to their financial toolbox, they are realizing that they can use the flexibility of a Sun Capital HealthCare MAR funding program to fund long term growth and expansion.

There are several strategic reasons for healthcare executives to utilize their third pary claims [or A/R] as a debt-free funding source.

Accelerate cash flow - MAR funding provides an immediate infusion of cash without the lengthy application process of banks.
Provider is under fiscal stress - while cash flow is often an obstacle to growth or profitability, MAR funding turns a non performing asset, third party claims, into working capital that will yield an internal rate of return.
Realize cost savings from operations - MAR funding allows providers/suppliers to take advantage of cash discounts and/or quantity discounts and/or other savings typically offered by vendors. Other improvements in operations that typically are outside the context of capital budgets and/or new marketing programs to generate additional revenue are some of the other ways that can yield cost savings at the operational level.
Protect credit ratings for bond issues - by using MAR funding and not adding debt to the balance sheet, substational savings on long term interest costs could be realized by maintaining or improving the provider's credit rating.
Reduce costs of capital expenditures - by using MAR funding to finance otherwise deferred capital projects or those "below the cut-off line" of current capital budgets, providers could take advantage of negotiating costs with suppliers and vendors at today's prices rather than at an increased cost in the future.

In the current economic climate that is fiscally challenging healthcare providers, one lesson to be learned is to not put all your financing options into one basket. Another lesson is to use all the funding tools, including MAR Funding, available in your financial toolbox to implement your strategy for growth and expansion.

Sun Capital Group: Premier Sponsor at Growing Wealth LIVE 2008

2008-05-07T09:16:00.002-05:00

Sun Capital Group, Inc. (SCG) will be the premier sponsor and major exhibitor at Growing Wealth LIVE Convention on May 22-25, 2008 in San Francisco.

Growing Wealth LIVE is a financial event targeted to those who work in or provide services to cash flow management, real estate or foreclosure markets, etc. The event will feature educational workshops and direct contact with multi-industry exhibitors that provide services that can be added to, or support the attendees' current business services portfolios.

SCG will be located at booths 110, 112, 119 and 121 with financial professionals on hand to discuss accounts receivable funding programs for the healthcare, commercial and government industries.

Due to the current liquidity crunch, additional debt and lines of credit are more and more difficult to obtain from banks. Now is an opportune time for growing wealth consultants to add SCG's debt-free funding programs to their business services portfolios.

HealthCare Finance:101

2008-05-01T08:44:00.005-05:00

Traditionally, finance courses, whether in Business School, an MBA program, or a healthcare management course, teach that there are two ways to raise needed capital for your facility: debt or equity financing. But in the increasingly complex financial marketplace with its many demands for capital, these two methods may not be sufficient for the financial needs of the healthcare industry.

The commercial sector has long used a third funding tool, more so around the world than in the United States. It is projected that as much as 60% of financial transactions around the world use "commercial factoring" as a funding tool in their financial strategies while in the US it is only about 9% and in the healthcare industry it is less than 1%. The healthcare industry has been late to add this tool to their financial planning even though many international transactions, as well as many of the largest US corporations, have found it a very valuable funding strategy.

Sun Capital HealthCare, Inc. is changing that. Their MAR [medical accounts receivable] Funding program has been specifically designed and exclusively offered to the healthcare industry. It has taken the best features of commercial factoring, that it is debt-free and uses a non-performing asset - the provider's accounts receivable [i.e. claims] - to provide needed working capital, and applied it to the healthcare industry.

Because of Sun Capital HealthCare's intimate knowledge of the healthcare industry, including understanding such issues as reimbursement, coding, claim valuation, and provider contracts, all within a heavy regulatory context, they have developed a funding program that uniquely meets the needs of the healthcare industry. By adding Sun Capital HealthCare's MAR funding program to their financial mix, healthcare providers and suppliers have both emerged from fiscal stress as well as successfully expanded their business.

In today's economic environment, the healthcare industry is under increased financial pressure. Sun Capital HealthCare's MAR funding program is a proven tool that healthcare executives should be adding to their financial tool box.

HME/DME Manufacturers Look For Ways to Help Providers Reduce Costs

2008-04-29T15:17:00.004-05:00

In the past, if Medicare cut reimbursement, HME/DME providers more often than not pressured manufacturers to decrease product pricing a comparable amount. However, a recent article featured on hmenews.com reports that manufacturers are no longer complying with this old strategy.

"This is not an environment where manufacturers can fund these changes," said Carl Will, Invacare's group vice president for HME. "Even with competitive bidding, it's not likely that prices are going down. Manufacturers are under significant pressure and in an already low-margin business."

Manufacturers may not be able to decrease costs; but they can help control them. At Pride, employees help providers with coding and billing, which speeds up the claims process and increases cash flow. Another way to increase cash flow that should be considered by providers is Medical Accounts Receivable (MAR) funding. With MAR funding, debt-free funds are available for everyday operations, business growth, expansion, etc.

Providers can also use MAR funding to increase their purchasing power. They can use the increased cash flow to take advantage of volume order discounts and save money on freight charges by reaching the 500-pound minimum for free shipping available by most manufacturers.

Former President Bush Sr. Greets HealthCare Executives

2008-04-24T08:36:00.022-05:00

Michael Koslow, Sr. Vice President for Marketing and Jim Beutel, Sr. Vice President, Business Development for Sun Capital HealthCare Inc. had the pleasure of meeting President George H.W. Bush, the 41st President, at the recent HealthCare CFO conference held at the Mariott Sawgrass Resort in Ponte Vedra Beach, FL.

The former president was the keynote speaker and honored guest at the 3 day conference bringing together healthcare executives with leading healthcare solution providers. President Bush Sr. brought his well known charm to the podium as he addressed the audience and demonstrated his practical approach to problem solving with numerous stories and anecdotes from his many years in public service. He also encouraged the many people attending the conference to continue to search for new and better ways to deliver affordable healthcare to the citizens of the country.

Sun Capital HealthCare's participated as a national solution provider, offering healthcare executives additional funding solutions for the financial stresses they are experiencing, especially during the current economic downturn and credit crunch. A number of CFO's, when discussing their hospital's financial needs and plans with Koslow and Beutel, noted how they could take strategic advantage of Sun Capital's debt-free MAR [medical accounts receivable] Funding program, even though their hospitals are currently performing very well.

Protecting their bond ratings and funding future planned capital expenditures at today's lower costs clearly demonstrated how forward thinking CFO's can use the flexibility of MAR funding as an important tool in an overall strategic financial plan for long-term growth and viability. They reinforced Sun Capital HealthCare's platform that MAR Funding is not just for healthcare providers in distress, but is a cash-flow solution that can provide working capital for growth and expansion.

Creative Financial Solution for Funding Those "Below the Line" Projects

2008-04-22T08:52:00.002-05:00

Marcus Evans hosted an important National Healthcare CFO Summit in Ponte Vedra, FL last week. The event was designed to provide a unique, interactive and educational forum where healthcare financial leaders could receive important updates, and share ideas and experiences regarding key strategic initiatives in healthcare finance.

Of coure, the main focus for many of the attendees was to gan insight on what healthcare providers can do to help offset the continuing decline in their financial positions. As we all know, costs continue to rise while payments are slowing down which puts healthcare providers in a difficult financial position.

During the conference, one Chief Financial Officer at a not-for-profit hospital was lamenting the fact that the current liquidity crunch has caused him to put several very important projects "below the line" meaning that, although they were valuable, revenue producing projects, the hospital just did not have the funds to invest at the time. He just could not put more debt on his balance sheet.

At one of the conference sessions, the CFO heard a presentation on Medical Account Receivables (MAR) Funding and recognized that this unique financial vehicle could well be just what the doctor ordered. MAR funding will enable the healthcare provider to obtain working capital without putting debt on the balance sheet.

In this case, the CFO is evaluating doing some of the unfunded projects using MAR funding.

Sun Capital HealthCare, Inc. to Exhibit at Annual Medtrade Spring Show

2008-04-18T09:55:00.012-05:00

For the past 5 Medtrade shows, Sun Capital HealthCare (SCH) has made a strong presence for themselves amongst the DME/HME community. This year will be no exception.

SCH will be exhibiting at the annual Medtrade Spring show in Long Beach, California on May 7-8th, 2008. The event will highlight the newest healthcare products and related services being brought to the market with more than 400 exhibiting companies showcasing 90,000 net square feet of products and services.

Sun Capital HealthCare will be located at booth 1161 with financial professionals on hand to discuss how their Medical Accounts Receivable (MAR) funding program can be effectively used to boost liquidity while maintaining debt capacity in the midst of the current liquidity crunch.

MAR Funding: Not Just A Tool For The Financially Stressed

2008-04-17T12:42:00.013-05:00

Having just returned from the HealthCare CFO conference in Florida, a number of interesting and creative strategies emerged from our one-on-one meetings with leading financial executives.

The current liquidity crisis was the main issue healthcare leaders were concerned about. The financial pressures were not only severely impacting the poorly performing hospitals that were in fiscal stress, but even the large well financed and well performing hospitals were increasingly concerned about where they go from here. The impact of rising costs and reduced liquidity in the bond market were of major concern for two major reasons:

Where was the hospital going to get its future capital funding from if the bond markets dried up?

Further, if the hospitals go to the banks to increase their credit lines and take on more debt, how was this going to affect their credit ratings and subsequently their interest expenses?

After discussing with one hospital CFO, in a successful and profitable hospital, how a medical accounts receivable [MAR]program from Sun Capital HealthCare works, he identified a very effective role that MAR funding can perform within his overall financial strategy. Instead of taking on additional debt that could affect his financial ratios and increase the costs of his next series of bonds, he suggested that he could use a MAR funding program to protect his current AAA bond rating. Additionally, the costs of MAR funding would be far less than the increased costs associated with any drop in his bond rating over a 14 or 20 year bond issue.

This is just another reason why more and more healthcare financial executives are adding MAR funding to their financial strategies. Given the financial conditions in today's healthcare markets, MAR funding is no longer just for the financially distressed hospitals. This debt-free funding tool can be used in many different ways to protect and enhance the financial resources of healthcare providers.

Phillipsburg Hospital Plans to Reopen After Bankruptcy

2008-04-16T16:05:00.006-05:00

2 years ago, Phillipsburg Hospital was forced to close due to growing financial problems. Last week, the Moshannon Valley Economic Development Partnership announced its plans to study what would be needed to reopen the hospital and develop a strategy for it.

Moshannon would like to create a partnership and take a "leadership role" in developing a plan that would work with elected leaders, health care experts, and other professionals in the community. They intend to hire an outside consultant to study the area's demographics to determine the best approach for offering health care.

The partnership would also look for expertise from its board members as well as options including various funding sources to ensure the hospital's financial health.

A vital component of the hospital's new financial strategy should include Medical Accounts Receivable (MAR) funding. MAR funding is a proven successful tool for generating debt-free working capital which can be used to capitalize on growth opportunities and to ensure financial survival.

Medical Accounts Receivable (MAR) Funding: How Simple or Difficult Is It?

2008-04-16T15:10:00.002-05:00

MAR funding is a process that a provider can participate in with no disruption to the usual routines. The entire process from application to funding can be summarized as follows.

As with all financial processes, an application for funding is the initial task. The application will give the MAR funding source the basic information about the applicant and his/her business (practice). Information on the applicant's receivables is a key component to understanding if MAR funding is the best choice for the applicant.

Looking at the receivables allows the underwriter to determine if the payor is the correct type for this strategy, and if the provider has the ability to bill and collect efficiently. These issues give the funder a comfort level that he will be paid for the claims he purchases. Duplication of claims is a problem that must be evaluated to determine if such events occur infrequently. Denials, and payor requests for more documentation are events that affect the overall decision on whether to move forward.

Following the application process, the claims have to be valued. Determining net collectible value is absolutely essential when purchasing medical A/R. The funding source wants to buy something that is worth the amount of money paid for it! As we all know, providers bill; and then get paid two very different amounts. The funding source must determine the payable amount for each claim to the payor.

Finally, basic searches and filings are done to protect the funder's collateral (which is the A/R). The MAR funding source cannot buy receivables that are pledged to other financial institutions. Legal review of any existing loans or financing facilities is done to make sure that the collateral is free to be sold. The provider's electronic transmission of claims to be sold is then set up so that the funding process can be quick and efficient.

Once all completed, the accounts is opened for business and the provider can change his reimbursement time from 60 -75 days to 24-48 hours by selling any or all of his claims regularly.

A simple process that facilitates an amazing product!

A Cost Reduction Strategy

2008-04-09T13:54:00.004-05:00

A recent article in HME News highlighted the need for cost reductions from manufacturers of home medical equipment. It pointed out that in the "good" old days, a viable provider strategy to cut costs was to pressure manufacturers. However, in these economic times, that is not likely to be successful since manufacturers are already under intense financial pressure and often working on thin margins. The current era of "competitive bidding" further intensifies that overall cost pressures for HME and DME providers.

A tool that providers can use to cut their costs is to use a Medical Accounts Receivable [MAR] funding program that allows them to take advantage of cash discounts many manufacturers offer in return for fast payment. Reimbursement delays affect the cash flow of providers and consequently providers want to delay payment to manufacturers, all of which combine to put cost and price pressures throughout the system. However, a MAR funding program accelerates the provider's cash flow without adding debt. And by doing so, it can minimize the pressures for cost reductions on the part of the manufacturers. Furthermore, the manufacturer can use an accounts receivable funding program to accelerate their own cash flow from their customers. In either case, given the increasing cost pressures on medical equipment, both customer and supplier could benefit by adding an accounts receivable funding program to their financial strateies.

Will MAR Funding Disrupt My Billing Procedures?

2008-04-08T11:33:00.003-05:00

A common concern expressed by medical practitioners of all types is the potential disruption that Medical Accounts Receivable (MAR) funding may have on the billing and coding process currently in use by the facility. Medical professionals do not want to interfere with these processes since changes usually cause interruption of payments, possible audits by regulatory bodies and minimally a further delay in receiving payments.

What the medical provider must understand is that MAR funding occurs once the billing process has taken place. It is difficult sometimes for doctors, DME’s, home healthcare providers and even hospital administrators to initially understand the difference the difference between billing / collections, and a MAR financing facility. Since this financial strategy involves the medical claims, it is very often mistaken for a billing and collections service. MAR funding is a means by which the provider’s reimbursement process is accelerated through the sale of the claims already submitted to the carriers, but still await payment. The reality is, that the provider can bill and submit claims to the carriers and be paid within a 48 hour period through MAR funding. No other financing vehicle works as quickly, requires no other collateral aside from A/R (claims) and is virtually limitless in volume as long as valid claims are available for funding.

So, to directly answer the concern “Will MAR Funding Disrupt My Billing Procedures? Absolutely not! MAR funding will accelerate your cash flow, provide an instant cash infusion and allow the medical practitioner to run and efficient and worry free business……..without disrupting the normal administrative activities performed by member of your staff.

IMMEDIATE WORKING CAPITAL

2008-04-03T09:42:00.007-05:00

The current headlines, focusing on the credit crunch resulting from the mortgage crises, highlight the financial squeeze that is being put on hospitals so that they can meet their ongoing overhead costs. What is often overlooked in the current dialogue is the costs associated with missed opportunities to grow or expand revenues - through acquisition, expanding facilities, adding new services, purchasing new equipment, upgrading systems and even engaging in a more aggressive marketing approach.

Having access to immediate working capital that allows the healthcare provider to take advantage of opportunities now is also critical to long term growth and survival. Medical Accounts Receivable [MAR]Funding is the funding tool that allows CFO's to access immediate working capital to take advantage of these short term opportunities that translate into long term gains. Once a MAR Funding program is set up, the provider does not have to go through a lengthy application process or time consuming paperwork that can unnecessarily delay the provider's ability to act quickly. With MAR Funding, since it is not a debt financing vehicle, the provider merely submits the medical receivable to the funding source, such as Sun Capital HealthCare, Inc., and can get a cash infusion within 24-48 hours of submission of claims.

Financial Tools Available to Protect Your Business From Fluctuations in Revenue Cycle

2008-04-02T15:15:00.003-05:00

The question of which financial tool to use in order to overcome fluctuations in revenue cycle arises very often as providers strive to keep up with pay overhead commitments and perhaps even have a few dollars left over to feel their business is not "hand to mouth."

The operative phrase shown above is "fluctuations in revenue cycle." There is no way to address this issue without evaluating the financial vehicles available to medical businesses and ascertaining whether these financing tools actually move concurrently with the regular occurring billing/overhead cycle (imitating the revenue cycle). Loans, of all kinds to include (but not limited to) lines of credit, asset based lines and unsecured lines of credit have one common theme which in fact limits their ability to solve the question presented. Simply put, they all have limits. Loans of any nature are fixed in dollar availability, and once fully drawn upon, are no longer useful until some portion (or all) is paid back.

To further illustrate, imagine a medical practice has acquired a loan of $50,000. On the first of the month the business needed the full loan value for rent, insurance, payroll, phones, other utilities, and normal monthly expenses. A piece of diagnostic machinery breaks and repair is immediately needed. Payments from Medicare and other carriers are not due for a week. There is no more line available for use until part or all of the line has been returned to the lender. The obvious conclusion....loans will not work because they do not follow the revenue cycle.

The only financial tool that directly follows the revenue cycle is Medical Accounts Receivable (MAR) funding. Simply put, the provider delivers healthcare, and will get paid in no more than 48 hours. The key here is there is no limit or requirement for the first MAR funding to be paid back in order to draw down again, daily, weekly or in any time interval desired. The more receivables generated, the more financing is immediately available for the business...truly a revenue based financing facility.

New Wave of Hospital Bankruptcies

2008-04-01T15:27:00.005-05:00

In 2002, the collapse of National Century Financial Enterprises (NCFE), one of the nation's largest healthcare lenders, suddenly left dozens of hospitals without financing and started a wave of hospital bankruptcies throughout the country, reports a recent article on Mondaq.com.

Five years later, in September 2007, nearly 2 dozen private hospitals were in "dire financial straits and in danger of bankruptcy or closure." This current financial crisis for hospitals is not the result of a single triggering event; but, rather reflects the profound industry changes that are making it increasingly difficult for small and mid-size hospitals to operate profitably. The article reports, among the factors contributing to the current crisis are freezes in Medicare reimbursement rates, reductions in Medicaid payment rates, increasing numbers of uninsured patients, and the growing competition from ambulatory surgery centers and specialty hospitals.

Amid all the healthcare industry woes, however, there are still opportunities available. Mondaq reports that healthcare is still a growing industry in the U.S. due to an aging population and technological advances. Hospitals that survive the current crisis will be able to take advantage of these trends.

However, in order to make it past the current credit crunch, hospitals will need to consider a wide variety of financing alternatives. The article points out some financing alternatives including asset-based loans, equipment leases, bond financing and Medical Accounts Receivable (MAR) funding as possible solutions.

A comparison between bank financing and MAR Funding can be seen in the graphic below:

Avoiding Common Traps That Lead to Distress

2008-03-28T15:01:00.004-05:00

The Turnaround Management Association posted an excellent article on its website, Managing to Avoid Failure; Avoiding Common Traps That Lead to Distress by Tyrone Courtman and Andres Wild, both of Cooper Parry LLP.

The article discusses that both external issues and internal issues lead to business distress and, all too frequently, to outright failure of the business. Internal issues include: complaceny, lack of objectivity in analyzing the business, not allocating time for thinking/planning, lack of strategic planning, lack of communication with employees and not providing appropriate motivation for employees. External issues are many and include cutthroat competition, harsh economic conditions, high cost of borrowing, and even the inability to obtain investments required for the business. Indeed more firms fail when market liquidity falls.

In times of low liquidity businesses must expand their thinking and explore alternative sources of financing. Accounts Receivable Funding can be an effective financing source for businesses in the healthcare, commercial and government industries during periods of low liquidity.

Demand for Beds Fueling Hospital Construction

2008-03-27T15:44:00.006-05:00

$41 billion dollars worth of new hospital and clinics were under construction during the fourth quarter of 2007. According to the article in H&HN Magazine, the driving force for this construction spree is the demand for beds. New technology and new equipment [i.e. imaging rooms, etc.] are contributing, but the addition of beds is what is keeping the pace of hospital construction going. And the pace is continuing in spite of the credit crunch in the financial markets and in spite of the reimbursement issues from Medicare and Medicaid that hospitals are facing.

How will they pay for this? Adding Medical Accounts Receivable (MAR) funding to their financial strategy is an additional financial tool that healthcare executives can take advantage of. By transforming a non-performing asset, the hopsital's receivables, into cash through a purchase and sale of that asset, medical accounts receivable funding is not just a financial solution for a hospital in fiscal stress. The immediate cash infusion and the ability to plan for a consistent cash flow makes MAR funding a financial strategy for growth and expansion as well....and one who's cost and availability is not subject to the fluctuations of the financial market since it is debt-free.