Hospitals Move To Cash Investments As Short Term Pressures Mount

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

When Does a Healthcare Provider Need MAR Funding?

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.

How MAR Funding Has Worked For Various Providers

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.

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

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.