A Long Term Acute Care Hospital chain with facilities nationwide found itself, as most facilities of this kind do, in a cash flow crunch month after month. Vendors were complaining about being paid in 120 – 180 days and very often had to threaten the hospital chain that additional products and supplies would be suspended if payments were not immediately made.
Having sought traditional lines of credit the LTACH found that these lines were not flexible enough and more importantly were being offered by financial firms or banks that had no understanding of the medical industry much less this highly specialized type of hospital. Very quickly the line was maxed out and in order to access cash, payments had to come from carriers to free up the line of credit keeping it in compliance with the borrowing amount stipulated by the terms and conditions of the loan. The cycle once again appeared where the LTACH had to await payments from carriers to access cash. It didn’t work!
Factoring the third party claims was the next solution they tried. Immediately evident was the familiarity that the factor (funder) had with the industry since such finance facilities are provided by healthcare finance specialists who know and understand the workings of the medical community. The LTACH simply sold its third party claims to the factor on a weekly basis and immediately experienced a positive cash flow position. On those occasions when months went into 5 weeks, the factor advanced at a higher rate to meet the additional cash flow requirements generated from the additional payroll period, a process that traditional lenders could not have done based on regulations governing traditional loans.
The question is can the facility afford the 2% or 3% reduction in bottom line to avail itself of this highly flexible finance strategy.
If so Xynergy Healthcare Capital is such a specialist and can offer this to any healthcare facility experiencing cash flow challenges.
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