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Paying for healthcare in America is complicated for everyone — there’s insurance companies to deal with, government benefits to handle and copays to collect. Keeping your home healthcare service running while you wait for insurance claims to come through might mean you need regular financing.
Beyond that, there’s equipment to buy, staff to hire and other costs that come with maintaining and expanding your business. We take you through what you need to know about getting the funds you need to keep things running smoothly.
Your home healthcare service might benefit the most from financing designed to help with cashflow gaps. But you might want to check out other loan types if you’re looking for funding to hire new staff, a new vehicle or update your equipment. Let’s take a look at your options.
Not usually. The process for getting an advance on Medicare and Medicaid payments is a little different than other types of invoice factoring or financing. That’s because Medicaid and Medicare typically don’t allow healthcare providers to sell a claim to a third party, meaning you can’t put a pending invoice up for collateral.
You do have a couple of options if your home healthcare service has patients enrolled in either of these programs. First, you can take out a line of credit, which doesn’t require business invoices as collateral.
Or, you can change your bank account to a sweep account — also sometimes called a managed account. A sweep account allows your factoring or financing company to access the account while it stays in your name. Why does this work? Medicare and Medicaid can only make payments to the provider. If the account’s still in the company’s name, it doesn’t care what you do with the funds after it makes a payment.
While it depends on the type of financing you’re looking for, lenders typically ask for the following information and documents at a minimum:
When it comes to getting business financing, main challenge for home healthcare services can be the bookkeeping. You’re keeping track of invoices coming from insurance companies, patients and the government. If your patients pay with both cash and credit cards, this can make things even more complicated.
To improve your chances of getting approved, make sure your bookkeeping is spotless, regardless of what type of loan you’re applying for. You might want to consider using accounting software or even hiring an accountant to keep track of all your payments.
Home healthcare services can also have difficulty getting approved for term loans — which include most real estate, vehicle and equipment loans — if you don’t have a steady cash flow coming into your bank account. In this case, you might want to find ways to cover your costs with an option like accounts receivable financing.
We gathered some business advice from Home Care Pulse, the home healthcare industry’s leading firm in satisfaction research and quality assurance, that could help you take your home healthcare service to the next level:
The fact is that most home healthcare services will need financing at some point. Invoice factoring and financing can help your business cover its bases, while other, larger loans can help your business pay for one-time expenses. Want to learn more about business loans? Check out our guide to learn how it all works and compare lenders.
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