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.
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