Receivables Financing for Medical Practices
You provided care. Claims were submitted. Insurance companies will pay in 45-90 days. But payroll is Friday, rent is due, and supplies need ordering. Medical receivables financing advances most of your AR value now so you can operate without waiting for payer timelines.
How much funding do you need?
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Medical Receivables Financing Explained
Your accounts receivable represent money insurance companies owe you. Medical AR financing converts this future revenue into immediate working capital.
The Healthcare AR Problem
Medical practices typically have 45-90 days of revenue outstanding as accounts receivable. A practice billing $400,000 monthly might have $600,000-$1.2M in AR at any time. This is capital trapped waiting for payer processing.
How AR Financing Works
Submit your insurance receivables to the financing company, which advances 80-90% of value within 24-72 hours. When insurance pays, you receive the remaining balance minus fees (typically 1-4% of AR value).
Payer-Specific Considerations
Medicare AR is highly secure but lower margin. Commercial insurance varies by payer. Self-pay receivables are riskier. AR financing terms often differ by payer mix quality.
Clean Claims Advantage
AR financing works best with clean claims and strong collection history. Practices with high denial rates or poor AR aging face more challenging terms. Clean revenue cycle management supports better financing.
The Medical Receivables Challenge
Healthcare operates on a delayed revenue model. You incur costs months before insurance payments arrive.
Reimbursement Timing Mismatch
Care delivered today generates revenue in 45-90 days. But salaries, rent, supplies, and overhead require payment now. The structural gap creates constant cash pressure.
Payer Processing Delays
Insurance companies set their payment timelines, not you. Medicare processes in 14-30 days. Commercial payers take 30-45 days. Medicaid can stretch to 90+. You have no control.
Denial and Rework Impact
Denied claims require correction and resubmission, extending already long cycles. Even a 4% denial rate creates significant cash flow disruption.
Growth Constraints
Adding providers or locations increases AR but working capital to support growth is trapped in receivables. Growth stalls waiting for reimbursements to catch up.
Seasonal and Volume Fluctuations
Patient volume varies seasonally. AR builds during busy periods but cash needs do not wait for reimbursements to normalize.
Credentialing Cash Gaps
New providers generate AR but cannot bill until credentialed with each payer. 3-6 month gaps between hire and revenue create predictable cash pressure.
Medical AR Financing Process
Turn your insurance receivables into working capital within days.
AR Submission
Provide your accounts receivable aging report, payer mix information, and claim documentation.
Submit AR data
AR Verification
We verify receivables, assess payer quality, and evaluate collection history. Clean AR verifies quickly.
24-48 hours
Advance
Receive 80-90% of verified AR value deposited to your account. Immediate working capital from services already rendered.
Same or next day
Collection & Rebate
When insurance pays, you receive remaining balance minus financing fee (typically 1-4% of AR value).
When payers pay
Turn Insurance Receivables Into Working Capital
Medical AR financing converts your outstanding insurance claims into immediate cash. Stop waiting for payer timelines and fund practice operations now with money insurance companies already owe you.
Immediate Cash From AR
Receive 80-90% of insurance receivables within 24-72 hours. Stop waiting weeks or months for reimbursement processing.
Payer Credit Matters
Insurance company creditworthiness is the primary factor. Medicare, Blue Cross, Aetna, United, and established payers make financing straightforward.
Scales With Practice
As your billing increases, your AR financing capacity grows automatically. No fixed limits that constrain growth.
Not a Loan
AR financing is a sale of receivables, not debt. You are accelerating payment on services already rendered.
Selective Financing
Finance only the receivables you choose. Large claim batches that strain cash flow, while letting smaller claims collect normally.
Predictable Cost
Financing fees are typically 1-4% of AR value. Know your exact cost when deciding which receivables to finance.
Medical AR Financing Applications
Situations where receivables financing helps medical practices manage cash flow.
Reimbursement Bridge
December services will not reimburse until February. Finance receivables to fund January operations without cash flow stress.
Typical funding: $50K-$300K
New Provider Funding
Credentialing takes 3-6 months. Finance existing AR to fund new physician salary during the revenue gap.
Typical funding: $75K-$200K
Equipment Purchase
Use AR financing to generate cash for equipment down payment or outright purchase without depleting working capital.
Typical funding: $50K-$150K
Payroll Bridge
Large insurance payment delayed by payer processing. Finance receivables to cover payroll on schedule.
Typical funding: $25K-$100K
Practice Growth
Adding locations or service lines increases AR. Finance receivables to fund growth without waiting for reimbursements.
Typical funding: $100K-$500K
Seasonal Cash Management
Manage seasonal volume fluctuations by financing AR during busy periods to smooth cash flow year-round.
Typical funding: Based on AR volume
AR Financing vs. Other Options
Understanding when medical receivables financing makes sense.
| Feature | AR Financing | Working Capital Loan | Line of Credit |
|---|---|---|---|
| Based On | Specific receivables | Overall practice | Credit approval |
| Primary Factor | Payer quality | Practice credit | Practice credit |
| Creates Debt | No | Yes | Yes when drawn |
| Scales With Revenue | Automatically | Fixed amount | Fixed limit |
| Speed | 24-72 hours | Days to weeks | Draw immediately |
| Typical Cost | 1-4% of AR | Interest rate | Interest on balance |
| Best For | AR-heavy practices | General capital | Recurring needs |
| Qualification | AR quality focused | Practice financials | Credit focused |
Medical AR Financing Requirements
AR financing focuses on your receivables quality and payer mix.
Insurance Receivables
Must have accounts receivable from insurance payers. Self-pay heavy practices may have limited options.
Insured patient base
Payer Quality
Strong payer mix with established commercial insurers and government programs. Better payers mean better terms.
Major payer contracts
Clean Claims History
Reasonable denial rates and effective collection processes. Chronic billing problems complicate AR financing.
Low denial rates
AR Aging
Fresh receivables are more valuable. AR over 90-120 days becomes harder to finance.
Healthy aging profile
Billing Documentation
Clear claim documentation and billing records. Ability to demonstrate services rendered and expected payment.
Clean documentation
Operating Practice
Active medical practice with ongoing patient flow generating new receivables.
Ongoing operations
AR financing qualification depends primarily on receivables quality and payer mix rather than practice credit scores.
Real Results
Dr. Jennifer W.
OB/GYN Practice, Denver CO
The Challenge
Jennifer's 3-physician OB/GYN practice typically had $450,000 in outstanding AR at any time. Adding a fourth physician required funding $180,000 in salary during the 4-month credentialing period before new billings would generate revenue.
The Solution
We established AR financing facility for $300,000 of her insurance receivables, advancing 85% ($255,000) within 48 hours. This provided capital to fund the new physician while maintaining normal operations.
The Result
New physician credentialed after 4 months and began generating revenue. AR financing bridged the gap without depleting reserves or taking on traditional debt. Practice revenue increased 32% with the additional provider.
“Adding a physician meant 4 months of salary before she could bill. AR financing let me use money I had already earned but not yet received to fund that investment.”
Medical AR Financing Data
Industry statistics on healthcare receivables financing.
Medical AR Financing Advantages
Strategic benefits of converting receivables to working capital.
Predictable Cash Flow
Convert variable reimbursement timing to predictable cash access. Know when you will receive funds.
No Balance Sheet Debt
AR financing is a sale of receivables, not a loan. Keeps your balance sheet cleaner for other financing needs.
Payer Credit Leverage
Insurance companies have strong credit. Their creditworthiness supports your financing access.
Growth Without Constraints
As practice revenue grows, AR financing capacity grows automatically. No need to renegotiate limits.
Maintain Vendor Terms
Pay suppliers within terms to maintain relationships and capture any early-pay discounts.
Focus on Care
Reduce cash flow stress so you can focus on patient care rather than collections timing.