What Is the Difference Between Medical Receivables Financing and Healthcare Factoring?

As a healthcare provider, getting payments for the services you’ve provided can be challenging. There are two main ways to get medical financing that don’t involve taking out a loan. One is healthcare factoring; the other is third-party medical receivables financing. While similar in that another entity is playing the role of collector, there are distinct differences between the two.


Elements in Common


With both medical receivables and healthcare factoring, service providers partner with a factor. The factor acts as a liaison between the provider and the person or persons paying the bill. An invoice is submitted to a patient or insurer, and the factor facilitates the payment, releasing the service provider from the time-consuming work of collecting said payment.


Both types of medical financing also generate capital based on work you’ve already done. Therefore, your credit isn’t up for review. Because other parties owe the balance, the factor takes their credit rating into account and works out payment with them.


Elements in Contrast


The factor in Healthcare Factoring simply purchases unpaid invoices from you and collects from the patients listed on the invoices. The main expertise of this factor is collection, so the company in question may not specialize in healthcare billing. You submit the invoices you want to sell to the factoring company. When the factor accepts the invoices, it offers an advance payment, which is a percentage of the total due. After the company collects, the remainder of the payment, minus an agreed-upon service fee is sent to you.


If you get your medical financing through third-party medical receivables, however, you are working with a factor that is well versed in the specific nuances of the billing process within the healthcare field. A factoring company that handles medical receivables understands the timeline by which you typically get paid from third-party entities such as Medicare, HMOs or private insurance companies. By taking on the responsibility of working with these groups, your factor can use its expertise to ensure that the third party is paying the appropriate amount for the invoice you provide. This knowledge can be instrumental in making sure that you get paid for the work you do in a timely manner.


It’s possible to receive medical financing without having to qualify for a certain credit rating by selling your invoices to a factoring company. Whether you need a straight collection company or a factor that works with third parties, you can get the working capital you need to be successful.


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