by Alleon Capital on 06/23/16 at 11:32 am
Home healthcare companies; I want to talk a little bit about why we as a medical accounts receivable financing company see so many requests for financing from home healthcare, and why I also think it is very important in today’s environment for home healthcare companies to have a line of credit backing them. The first time is that home healthcare companies are very labor intensive. They have to send a nurse or an aid to a patient’s home. They provide sometimes a few hours a day, sometimes 24 hours a day service, and the home healthcare company has to pay the employee for their time. In a lot of cases, if the home healthcare company is getting reimbursed by Medicaid or from commercial insurance, the home healthcare company is waiting sometimes 30, 60, or 90 days to get repaid by their insurance carriers. So what happens is a situation where if the home healthcare company is taking on a new patient, they have to pay out of pocket for the nurses cost, until they get reimbursed by the insurance carrier. This places a tremendously heavy cash flow strain on the home healthcare provider. Maybe organically, the home healthcare provider can grow one to two clients a month, but anything more than that starts to be very expensive. So having a line of credit or a factoring facility backing them home healthcare provider really allows them to grow quickly. Instead of waiting 60 days to get paid by the insurance carrier, they can get paid in one to two days. Now instead of taking on two patients a month they can take on 20 patients a month. We see this time and time again, where the provider is growing very slowly, they get a line of credit, and all of a sudden their growth skyrockets. In most places, the demand is there, the problem is the provider can’t meet the demand, cover the cost, and continue to sustain their operations.
I hope that gives a little more color about home healthcare factoring. If you have any more questions about this or any other medical financing topics, shoot me an email at email@example.com