About two years ago Medicare published a news release that it was going to change the payment procedure for reimbursements to Hospice providers. At the time, these providers were paid every two weeks, so good cash management on the part of the provider would eliminate the need for any cash flow enhancement such as factoring. Enter Medicare to upset the applecart.
The new payment profile now requires the hospice provider to submit claims at the end of each month and payment will then come two to three weeks later. Looking at this one can see that the cash flow needed to sustain this type of business is no longer available based on this new procedure.
A very astute broker did some marketing and brought Xynergy Healthcare Capital a hospice in South Carolina that jumped at the opportunity to get back to weekly payments, irrespective of the fact that the Factor was making these advances and not Medicare. The client not only sustained his business but grew through two years of factoring. Just recently it was purchased by a large nation-wide hospice chain. From a commission point of view, the broker received over 24 month in commissions over $25,000. Not a bad result for reading an article.
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