Cash flow is a wonderful thing, that is, when it’s flowing. A smooth cash flow can give business owners a secure financial status and stable growth projections, but very few industries are afforded that luxury. Managing accounts payable and receivable can be tricky, as orchestrating a balance of cash flow can be unpredictable and out of the owner’s control.
This is especially true for the medical industry, where cash flow issues commonly occur from delayed insurance processing, putting an even bigger strain on the massive costs of purchasing medical equipment. While medical offices see high numbers come in, they frequently experience the inverse, and the balance of cash can often switch on short notice.
Why Medical Operations Need Funding
Medical office is a broad term encompassing private specialty practices like dentists, physicians and optometrists, as well as entire hospitals or even a large network of hospitals. The healthcare industry has generally stable income flow and a need for large purchases, making it an ideal candidate for funding companies to work with. But do medical offices want funding as much as funders want them? Absolutely. Medical offices are among FundKite’s top funded industries and have a wide range of uses that always vary.
Common Uses of Funding:
- New or updated equipment purchases or leasing
- Certifications and trainings for staff
- Financing advancements while insurance causes delays
- Opening new offices
- Buyout a business partner or purchase a stake in a second or third practice
- Consolidation on previous business investment loans and funding
- Refurbish reception and waiting areas
Medical businesses are unique from other industries in that they have extremely high overhead expenses. The profession is a vital job for communities, and doctors must ensure they always have the necessary supplies and equipment to bring their patients the highest level of care. While funders enjoy working with medical offices, the industry faces a unique set of challenges that require them to seek alternative funding.
Common Challenges Facing the Industry:
- Constant tech innovations, sometimes government mandated to update
- High overhead costs of purchasing equipment
- Banks are time-consuming and slow
- Insurance reimbursement can cause indefinite waiting
- Financial laws vary by state
Times are Changing
No industry has gone untouched by the digital revolution. A few years ago there was a government mandate to become ICD-10 compliant, requiring many physicians to update their office computers. Since medical offices have gone through a revamping of record keeping and billing, everything has become automated and is less reliant on human interaction.
A major challenge in funding a medical office is having time to discuss the logistics, as doctors have limited availability and need to prioritize patient care. In healthcare, patients should always come first, which is why the industry needs streamlined cash flow solutions to avoid delays in funding that could ultimately harm patient outcomes. Even if a bank funds a doctor’s private practice, the lengthy process of waiting for paperwork and conducting interviews can mean months go by before the loan is actually received. This long process simply does not work for today’s fast paced operations. With quick, 24-hour funding, it’s no wonder medical professionals are seeking online funding sources.
Bad Credit Okay (And Expected)
Loan decision criteria for banks has been tightening and is becoming more restrictive, despite the good economy. While the market is up, practices are looking to expand and turn to alternative funders to meet their quick financial needs. Funding also creates a more personal relationship by speaking to doctors in person to learn the details of large projects that need explaining.
By contrast, banks only see what appears on paper and commonly reject applications. After med school loans, private practice opening fees, and equipment purchases, medical practices can incur quite a bit of debt compared to the income ratio. Bad credit scores are actually quite common, especially when a business owner owns multiple practices. A special project like practice procurement might not show up on paper, making the personal relationship between funder and doctor more beneficial than a bank.