Growing Wealth 2008 in Review

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

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

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

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

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

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

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.

1. Accelerate cash flow - MAR funding provides an immediate infusion of cash without the lengthy application process of banks.
2. 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.
3. 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.
4. 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.
5. 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

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

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.