Lessons Learned From The Turbulent Financial Market

In the March 17, 2008 issue of HealthLeaders Media, the authors discuss the current credit storm and how it affects the healthcare market. Over the past weeks, much has been written and read about the turbulence in the financial markets. These authors, Peter Bruton, Scott B. Clay and Deborah Kolb-Collier, however go on to draw some interesting conclusions and make some timely recommendations for hospital executives for dealing with the financial markets in the future.

They note that hospitals and hospital systems should consider the following lessons learned from this volatile marketplace:

1. Hospitals should be planning how they can absorb the greater-than-anticipated cost of financing. Incorporating assumptions about tighter debt markets and volatile interest rates will be a critical part of financial and capital planning

2. Due to skepticism about the value of insurance, the market is likely to be more focused on the underlying credit of the borrower

3. Recent experience points to the value of diversifying financing sources. Putting too much of the organization's financial capability in a single financing vehicle can unduly increase risk in today's market

There is a financial tool that addresses these points. A Medical Accounts Receivable (MAR) funding program from Sun Capital HealthCare, Inc. provides a cash flow solution for providers that:

a. does not depend on the volatility of the credit markets since it is not a loan or credit instrument but rather a purchase and sale of an asset

b. allows a financial executive to effectively plan a consistent cash flow and to plan and control their costs of financing

c. is an additional funding tool for the healthcare executive that can be utilized quickly [funds are available within 24-48 hours of submission of claims]. The Sun Capital MAR funding program provides the flexibility that financial executives need to utilize all the financial tools at their disposal, thereby reducing the risk of putting all of a provider's financial capability in a single financing vehicle

Now more than ever, it is increasingly important that healthcare executives take advantage of the full range of financing and funding tools available.