Medical Doctor Financing Options
It’s not unusual for medical practices to run into issues with cash flow from time to time. In some cases, the cash flow issue can be solved by borrowing a bulk amount one time and paying off debt that is owed immediately. In other cases, cash ebbs and flows with some time periods of financial stability and others of debt due to the slow payment of claims by insurance companies. Depending on the type of issues that typically arise, medical doctors can decide if a doctor loan or medical factoring is the best solution to the problem.
Medical practices that are in need of immediate funds to pay off debt can benefit from a doctor loan. Doctor loans offer special rates and terms specific to medical industry professionals and can be a good option if the total amount needed is less than $100,000. Most medical practices seeking doctor loans fall under a few different categories, all experiencing a temporary increase in expenses for the betterment of the business.
- Practice expansion. Doctor loans can cover the cost of upfront practice expansion. As the new stream of income builds up, the loan can be paid back quickly.
- Major medical equipment. The latest technology comes with a price, but over time equipment pays for itself. A doctor loan fills in the gap in the meantime.
- Releasing old debt. Providers taking over an existing practice can also take over the debt. A loan is a good way to obtain funds upfront until the practice is thriving.
Unlike loans, which provide a one-time lump sum of funds and then a set term of repayment, medical factoring is a more flexible source of funds. Most practice providers who choose medical factoring for a funding source are regularly experiencing delays in claim payments. Insurance companies, as well as Medicare and Medicaid, can take 90 days or more to pay for claims. In the meantime, medical practice is responsible for maintaining salaries and overhead. Medical factoring programs provide an advance of the majority of the claim amounts and then reimburse the rest once the claim is paid. In exchange, the medical factoring program charges a small fee as a percentage of the total amount.
Depending on the type of debt a medical practice is experiencing, either a doctor loan or medical factoring may be a viable option to keep the practice in good financial standing when funds are not at an optimal amount.