Doctors Bridge Slow Healthcare Payments with Revolving Credit Lines

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How Doctors Bridge Slow Healthcare Payments with Revolving Credit

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Timely and accurate insurance payments are just what the doctor ordered, but they’re not always what you’ll get.

Nearly 90% of Americans are enrolled in a health insurance plan, which has made treatment more widely available, and also helped doctors to see more patients.

But while an influx of patients is good for business, treating patients without receiving the agreed-upon payments can lead to working capital shortages and cash flow issues. This culture of delayed insurance payments can actually make treating patients expensive, if you don’t take a proactive approach.

All too often, medical professionals encounter issues with overly scrupulous insurance companies that reject payment requests at the slightest error. This can be frustrating. But, a medical bridge line of credit can cure this temporary lack of cash flow, and help you continue operating until payments roll around.

girl gives doctor slow healthcare payment, he bridges it with a revolving line of credit

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Diagnosing Practice Cash Flow Issues From Accounts Receivable Slowdowns

If you’ve had your own medical practice for a number of years, then you probably know that receiving payments from insurance providers is no easy task. Even if your paperwork is in order, then you’re probably still bound to play the waiting game. That’s where a medical bridge line of credit can come in handy.

As of 2011, medical practices can lose approximately 10% of profit due to claim rejections. This is a significant percentage, especially with more Americans taking advantage of the potential for treatment.

Improving your collection process to make it more efficient and prevent payments from falling through the cracks can mitigate this, but it might not eliminate it altogether.

What Can Cause Delayed Insurance Payments?

For medical professionals, there are a variety of reasons that insurance payments might roll around later than anticipated. Even a minor mistake along the process can trigger insurance payments to be delayed for quite a while. But not all mistakes are easily resolved— some invoices may be delayed as many as three or four times.

These are some of the most common reasons that insurance companies delay payment to medical practices:

  • The claim was coded incorrectly by office staff
  • Your practice isn’t listed as a credentialed provider for the billed insurance company
  • Slow-moving investigation process for improperly coded claims

These mistakes can lead to delays in your insurance payments, but they’re not the only contributing factors. Generally, insurance companies have a tendency to make these payments in larger installments, rather than pay as they receive doctor invoices—even if the paperwork is completely copacetic on your end. 

So it’s not uncommon to receive payment 3-4 times per year, especially for smaller practices.

But the problems you might encounter don’t end there. Total patient spending on copayments has decreased in recent years, but overall patient costs have actually increased. Between 2006 and 2016, total out-of-pocket spending increased by 54%, from $525 to $806 on average.

Delays in patients paying insurance companies can account for these late payments on your part as well.

How Medical Bridge Lines of Credit Can Help You Treat Delayed Payments

Unfortunately, there’s no easy way to get around dealing with insurance companies altogether. But there are other ways to keep your practice moving full steam ahead, without cash flow issues forcing you to scale things down.

The best way to go about doing this is medical bridge lines of credit.

This is a common tactic for medical practices that experience cash flow issues, especially as the end of the year approaches.

How Does a Medical Bridge Line of Credit Work?

Here’s the basics of how a revolving line of credit works. First, doctors are given a credit line with a maximum of anywhere from $10K to $5Mil.

You can then draw funds from this total immediately via electronic transfer, giving you 24/7 access to your credit line to use whenever, wherever, and for any medical purpose.

The funds you draw are the only funds you need to use. You don’t have to use the entirety of their credit line, but instead can draw out only a portion of it at a time. This gives you the peace of mind you need to have the funding you need available, but never over-borrow.

As you receive payments, you can then replenish the money withdrawn from the credit line. The amount drawn will get added back into the total, where you’ll be able to withdraw more funds as the need arises.

This “revolving” feature is especially useful, as you can repeat this process as often or infrequently as you like. 

How Revolving Business Lines of Credit for Doctors Help

When working capital is tight, take out the amount of capital you need to smooth over any expenses without worry. And when you aren’t in need of funds, you don’t have to use them.

Different than small business loans for doctors and dentists, revolving credit lines give medical professionals the freedom to borrow only the amount that they need to withdraw at a time, instead of having to use the total amount borrowed at once.

While waiting for healthcare payments to process, the doctors we help use revolving credit lines to cover expenses that their limited working capital isn’t able to.

Purchase medical supplies in bulk,  cover utilities, pay insurance bills, and anything else you would otherwise have to wait for healthcare payments to process in order to cover.

Should you choose not to use funds from their credit line, the total amount you borrowed will remain available for them to use when they’re ready with no penalties or consequences of any kind.

Benefits of Revolving Lines of Credit for Doctors

  • 90% of All Medical Professionals Approved: We believe in giving back to those who give so much to the community. That’s why over 90% of all doctors, dentists, and medical professionals of all kinds receive approval for a revolving credit line.
  • True APR Interest Rates: While most financing options follow higher factor rates, our revolving business lines of credit for doctors follow lower, more desirable APR rates.
  • Lower Cost of Capital: By only paying for what you use, you can be sure that you never over-borrow, therefore utilizing the lowest-cost capital funding option for your practice.
  • No Real Estate Collateral Requirements: You don’t have to put your medical practice at risk when you get a revolving credit line. No more leveraging your assets in return for the working capital you need.
  • No Prepayment Penalties: Pay off your credit line as much or as little as you like without worrying about any fees or penalties.
  • Only $10K/Monthly in Gross Sales Needed: If your medical practice does at least $10K a month in gross sales then you may very well qualify for revolving credit.
  • Build Your Business Credit:  Every time you draw from and replace capital from your credit line, you effectively build your FICO. This puts your practice in a desirable financial position for further growth opportunities.
  • Expand Your Credit Line: If doctors find their medical practice in a period of growth and are seeking additional funds, NBC can expand revolving credit lines faster than any bank or traditional lender.

How to Apply for Revolving Credit Lines for Doctors & Dentists

Through our expedited and simplified process, the majority of doctors and medical professionals who apply for revolving credit receive access to funds within 24 hours after applying.

Give us a call to see if revolving credit lines are the best funding option to bridge your slow healthcare payments at (877) 482-3008 or apply online today to fill out our 1-minute online application, and get the funds you need to cover costs, take on more patients, and provide a higher quality of care!

Last Updated on October 23, 2019

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About the Author, Joe Camberato

Joseph Camberato, CEO of National Business Capital, developed a passion for business at a young age. Joe started his company in 2007 in his spare bedroom and has grown to secure over $1 Billion dollars in financing for small business owners nationwide. National’s team has an amazing culture and has been name the #1 Top Workplace on Long Island 3 years in a row and counting. Joe is a trusted financial expert who’s published more than 2,000 articles in the last 3 years. His articles have generated over 5 million page views and has been featured on blogs such as Google News, Yahoo, CNBC, Forbes Magazine, etc. His passion has also inspired him to build the "GrowByJoe” YouTube channel where he shares his insights into small business trends and tips for growth. Joe also holds a seat on Forbes Finance Council and is an active member of the Young Presidents' Organization (YPO), a global leadership community.

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Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advice from National Business Capital and the author. Do not rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely on this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there may be errors, omissions, or mistakes.