It wasn’t too many years ago when the hot trend in the physician world was the purchase of medical practices by hospitals. The theory was that not only would the hospitals benefit by an influx of referrals, the physicians would not have the headache of managing their practice and therefore earn more and work less.

Unfortunately, this rosy scenario has not always worked out and, as a result, many doctors are terminating their contracts with the hospitals. This has forced the physicians to re-establish their practices. For most doctors, maintaining their customer base isn’t a problem, as most patients will follow them back into private practice. The main issue is practice management in general, and financing in particular.

Although the physician may have no trouble getting financing for capital expenditures, a more ongoing problem is how to pay expenses and overhead incurred during the 60 to 90 days it takes to get paid from third party payors. As doctors and other providers are getting financially squeezed because of pressures reduce costs, the need for funding becomes greater. Even the most efficiently run practices need short term working capital as their businesses grow, and as a result of this need, healthcare financing companies have sprung up to provide medical receivables funding.

Even though the largest asset of most providers is their accounts receivable, most banks won’t lend money on that asset. Loan officers often lack the specialized knowledge of the healthcare claim billing and collection process. Because there can be a significant difference between the expected amount to be paid versus the face amount of the billings, banks are leery of using it as collateral. In a medical factoring situation, the funding company purchases the outstanding receivables of the practice, thereby assuming an ownership position in the receivables. Because the ownership of the receivable has changed, the practice also passes along the credit risk to the funding source.

ADVANTAGES OF RECEIVABLES FUNDING

* There is no monthly debt service because the funding is not a loan.

* It is an off-balance sheet transaction since the client is selling an asset.

* The client can receive fresh cash weekly, thus providing a manageable flow of funds.

* Because the only asset that is encumbered is the receivables, the healthcare firm can pursue other types of financing concurrent to this program.

* Factor fees tend to be much less than paying a billing company.

* No personal guarantees are required. The factoring company is more interested in the credit of the payor.

THE FUNDING PROCESS

1. The provider completes a client application and submits it to the funding source along with a due diligence fee. The due diligence fee helps the funding source defray costs of researching and analyzing the practice’s billing methods and procedures and to verify that the net collectible billing is accurately reflected on the firm’s books.

2. The funding source sends out a Letter of Intent, which specifies what can be done for the healthcare provider.

3. After receipt of the signed Letter of Intent, the funding source draws up a Purchase and Sales Contract for the client. This contract specifies the fees to be charged and the advance rate to the provider.

4. The funding source performs final due diligence, and provides reports to the client’s management as to the integrity of the billing and collection system.

5. The factor advances 70%-80% of the net collectible receivables to the client’s bank account.

6. When the invoice is paid to the factor, the remaining amount (invoice total less the advance less the factor fee) is wired to the customer’s account.

The factoring of medical receivables is a relatively new industry, but is also rapidly growing. It can provide much-needed working capital to providers for meeting expenses, making investments and taking advantage of early payment discounts.

Kent Harlan has been a CPA since 1984 and has provided consulting, accounting
and financial services to several industries. He is the owner of Ozarks Capital Funding, LLC,
a Springfield, MO based company offering financing in the areas of accounts receivable factoring,
equipment leasing, asset based lending, and healthcare provider financing.
website: http://www.ocflink.com

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Quality, dependable Medical Equipment is an important component of every medical practice. It can’t be overstated that while the practice of medicine is an art, Medical Equipment is the science behind the implementation of that art.

Increasingly, patients are becoming more sophisticated in their understanding of the medical supplies and Medical Equipment that is being used to treat them. This means that a health care provider needs to know and understand not only how their equipment operates, but also have confidence that the Medical Equipment they use is of the highest quality.

Your Medical Equipment needs to be reliable and of a high quality.

The tools of your profession, whether it’s a stethoscope or a nebulizer, can now all be ordered online over the internet, generally at substantial savings. This means an easier approach to Medical Equipment management.

Both the professional and home health consumer are now ordering many of their Medical Equipment and medical supplies right from their computer. Prices are low and the quality is excellent. If you work in the health care field you’ll need medical supplies to help you with your work. Quality products that you know you can depend on will give you greater confidence during stressful situations.

About The Author

Mike Yeager, Publisher

http://www.a1-medical-supplies-4u.com/

mjy610@hotmail.com

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Like most people, you probably shop around before you spend your money. And after you buy something, you protect it, right? You keep insurance on your house, get the oil changed regularly on your car, and most important, when you or your family are sick, you get the best healthcare you can.

What about your healthcare information? Are you doing everything you can to make sure that your private health information is protected? Do you know what your healthcare privacy rights are?

Congress passed the Health Insurance Portability & Accountability Act (HIPAA) in 1996. The HIPAA Privacy Rules, which were created by the Department of Health & Human Services, became effective in April 2003.

You now have the rights you need in order to make sure that your healthcare information is safe. If you have any concerns that it isn’t, then you can complain to your provider or complain directly to Health & Human Services.

Rest assured, should you complain to Health & Human Services, your complaint will be investigated. Since April 2003, more than 15,000 complaints have been received and addressed.

So, what are your healthcare privacy rights?

First, all healthcare providers such as doctors, dentists, optometrists, etc., are required to give you a copy of their Notice of Privacy Practices. Has yours?

Each time you visit a new provider for the first time, their office should give you a copy of their Notice of Privacy Practices. If they don’t — insist that they do.

The copy of the Notice must be one that you can take with you, or, your providers may arrange to mail it to you. But, they do not get to just show it to you, and then keep it themselves.

HIPAA requires the Notice to explain to you, in plain language, what your rights are, what your provider’s responsibilities are to protect your privacy, and it must tell you how your healthcare information can be used and shared. If the Notice doesn’t tell you your rights, insist on getting one that does.

Next, you have the right to look at and get a copy of your entire health record that is maintained by each of your providers. Why would you want a copy of your health records?

Because unscrupulous employees at doctors’ offices can — and do — steal health information and use it to steal identities, or sell it to others who will.

Example: in 2004, an employee of a cancer center in Seattle stole the identity of a patient, and used the information to spend over $9000 on fake charge cards. That person was sentenced to 16 months in federal prison.

Example: just last year, a disgruntled former employee in Providence stole the health information of 200,000 patients. He was caught before he could do any damage, and was recently indicted. There are many more examples of stolen health information.

What if your information is stolen from your provider? If this should happen, your provider must notify you so that you can take the necessary steps to protect yourself, such as run a credit report, check for fraudulent use of your credit cards and bank accounts, etc.

So, you should request a copy of your health records from all your providers. They are required to give you the copy within 30 days of your request.

If your providers cannot give the copy to you within 30 days, they must notify you of their reasons in writing, and then give you a copy within another 30 days.

If your providers do not give you a copy of your health records within a total of 60 days, you can complain to them, or you can file a complaint directly with Health & Human Services.

You may ask for and receive as many copies of your health records as you like, as often as you like. Your rights do not limit the number of copies you may have.

Your providers are allowed to charge you a reasonable, cost-based fee for the copying and postage.
Some providers will give you the first copy of your records at no charge, but charge you for additional copies. Other providers will charge you for every copy.

What if you get a copy of your health record and notice that something is not correct? You now have the right to ask your healthcare providers to change the information in your health record if you think that it is incomplete or is not accurate. They can refuse your request to change the information, but if they do, they must furnish the reason for the denial to you in writing.

If you are given a written denial, then you have the right to submit your reasons for disagreeing with the denial, and your reasons must be added to your health record.

Your healthcare providers are allowed to share your health information with other providers. For example, when your primary physician refers you to a specialist, only the appropriate parts of your health record are given to the specialist so that you can be given the best treatment possible.

In the same way, your providers are allowed to share your health information with your insurance companies, so they can be reimbursed for your care.

Your providers are not required to ask for your authorization in order to share your health information with your other providers or your insurance companies, though it is very common for them to do so.

However, there are a number of other situations in which your provider is legally allowed to share your health information — without your authorization. Do you know what they are?

For example, all states require your providers to disclose information about certain communicable diseases to your local health department. Your providers may disclose this information without your authorization, but they must also track, or otherwise account for, the disclosure.

Other examples include disclosures to law enforcement officials when requested with a court order, court-issued warrant, or subpoena. Your providers may disclose the requested information without your authorization, but again, they must also track or otherwise account to you for the disclosure.

There are several other kinds of disclosures your providers must track, and the Notice of Privacy Practices that your providers give to you should tell you specifically what they are. If the Notice doesn’t give you this information — then ask that it be provided to you.

The most important thing you need to know about the disclosures that can legally be made without your authorization is that your providers must track those disclosures, and they must tell you about them whenever you ask.

Remember, your providers do not have to keep track when they share your health information with other providers who are also caring for you, and they do not have to keep track when they share your health information with your insurance company for reimbursement, or payment, reasons.

But any other kind of disclosure that is made without your authorization must be tracked, and you have the right to know what those disclosures have been.

And don’t forget — if your health information is stolen or otherwise disclosed illegally, your providers must notify you.

Next, you have the right to restrict with whom your providers may share your health information. But, your providers are not necessarily required to agree to your restrictions.

For instance, you can ask that your providers not share your information with certain members of your family. Most providers will agree to this kind of restriction.

However, they will not usually agree to a request to restrict disclosures they need to make to other providers for your treatment, nor will they agree to restrict disclosures to your insurance company. And, your providers always have the right to share your health information in case of an emergency.

Last, you have the right to ask your healthcare providers to communicate with you through a particular address or phone number. For example, if you don’t want them to call you at home with test results, you may ask them to call you at work instead.

Or, you may not want to receive test results on a postcard, but instead want them mailed to you in a sealed envelope. As long as your request is reasonable, your providers must communicate with you in the way that you ask.

Congress and Health & Human Services have given you some significant rights with respect to your healthcare information. These rights are important tools that you can use to help protect your health and personal information. No one is a better watchdog for your information than you. Know your rights, and use them to make sure your healthcare providers are doing everything required by law to protect you and your precious information.

© Lane R. Hatcher, 2006

In addition to more than 15 years experience in healthcare systems and management, Lane R. Hatcher has been the HIPAA Compliance Officer for the largest military hospital in the U.S. for more than three years. Feel free to contact her with any questions about your healthcare privacy rights, or information on how to file a privacy complaint, at lanerhatcher@yahoo.com.

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