"This Is Gonna Cost You"

A timely title in the March 3 issue of the HealthLeaders Financial E-newsletter. Everywhere you read about the business of healthcare, the lament is the same. The liquidity crunch hitting the financial markets is driving up interest costs on debt for hospitals across the country. especially those using auction-rate debt. Furthermore, as one CFO is quoted in the article, "...it is taking over all the time of the accountants, investment bankers and CFO's."

Perhaps moreso now than at any other time previously, today's healthcare financial executives need to find additional resources to meet their financial needs - without going into more debt. A solution: accelerate your cash flow and generate more working capital from your operations. However, reimbursement delays compound the problem so that your cash flow is often an obstacle to profitability rather than a source of working capital.

There is a funding tool that does provide a cash flow solution to your working capital needs. Add Sun Capital HealthCare Inc.'s Medical Accounts Receivable [MAR]Funding program to your fiscal strategies and your cash flow becomes a solution rather than a problem. By selling your receivables, you can have cash within 24-48 hours of submission. Instead of sitting on your balance sheet and not yielding any return, Sun Capital's MAR funding program, specifically designed for and exclusively offered to healthcare executives, can help overcome both the liquidity crunch and the reimbursement delays.

Moving from crisis management to strategic planning

A special commission in New Jersey has issued a report dealing discussing financially ailing hospitals in the state. Five have filed for bankruptcy since July 2006 and 16 acute care hospitals have closed in the last decade. N.J. is one of two states that require hospitals to provide Charity Care through which hospitals are reimbursed from public insurance funds for costs associated with the poor. While reimbursement rates are part of the problem, Heather Howard, the New Jersey health commissioner, said officals are working on a early warning system for rescuing financially troubled hospitals. "Unfortunately, a hospital will sometimes come in on Friday and say, 'We can't meet payroll; can you help us out.' "Ms. Howard said, "I want to move from a culture of crisis management to one of strategic planning."

New Jersey's experience has relevance for the healthcare industry, especially in the current liquidity crunch. Effective financial planning using all the financial tools available to the healthcare industry is even more important today. An underutilized financial tool is medical accounts receivable [MAR] funding. More and more providers are adding MAR funding to their financial portfolio because it is debt-free and provides a predictable cash flow to their finances. It transforms your accounts receivable into a cash flow solution for generating working capital rather than an obstacle to growth and profitability.

Choosing the Right Funder

An increasing number of healthcare providers and suppliers have discovered that Medical Accounts Receivable (MAR) Funding is a viable solution to combat the demands on cash flow.

However, when selecting the right funder for your company, it is important to find the answers to the following questions to ensure you are making the best choice:

Flexibility:
Are you required to sell all of your claims or can you choose which claims you want to fund? The funder you select should have a flexible program that allows you to stay in control.

Funding Procedure:
How long will it take to process and fund your claims? A seasoned funder knows the importance of having a rapid turnaround time so that funding is available to you as you need it, when you need it.

Hidden Fees:
Are there any miscellaneous fees you may be charged along the way? Some funding sources will charge audit fees, report fees, and due diligence fees which are not disclosed in the contract.

Service:
Does the funder offer any value added services? Will there be one-on-one attention to your account as needed? It is important to choose a funder who has a commitment to client satisfaction and who knows and understands the pressures and demands of the healthcare business.