Curious about PRN Funding’s healthcare factoring services?

Check out our 2012 Trade Show schedule. We’d love to see you if you’re planning on attending any of the shows below:

Last month, the American Academy of Professional Coders (AAPC) announced the 2011 results for its annual salary survey of health care professionals on the business side of medicine. Participants included medical coders, medical billers, auditors, and physician practice managers.

Some of the survey’s findings include:

1. The average salary for a Certified Professional Coder (CPC) was approximately $46,800.
2. Approximately 62% of respondents said they work primarily in physician-based coding; 10 percent are hospital coders; and 16 percent said they do both types of coding.
3. Respondents work in every specialty, with the greatest number in family practice (10.3%) and internal medicine (5.7%). Others include emergency medicine (5.2%), general surgery (4.5%), and obstetrics/gynecology (4.3%)—rounding out the top five specialties.
4. The average wage in 2011 for a Certified Professional Coder (CPC®) was approximately $46,800 (up $1,400 from last year)

Click here to see all of the 2011 Medical Coding Salary Survey’s results.

The medical billing factoring and medical coding invoice funding specialists at PRN Funding came across an interesting article that we believe is important to share with our Medical Billing and Medical Coding readers. We summarized the article below. You can read the article in its entirety on HealthLeadersMedia.com, Ca Medical Biller to Pay $4.6M to Settle Fraud Allegations.

Federal prosecutors alleged that Janzen, Johnston & Rockwell Emergency Medicine Management Services Inc. inflated claims that it had coded on behalf of emergency room physicians in Louisiana and California, and as a result of the fraud allegations, JJ&R agreed to pay the federal government $4.6 million.

From approximately 2000 through 2007, JJ&R used a coding formula that tended to generate claims for a marginally higher level of evaluation and management service than physicians had actually provided. In addition, JJ&R allegedly often failed to comply with Medicare’s coding rules governing claims for teaching physicians, resulting in claims that were not properly payable.

A lot of questions can come up when a business owner starts researching medical billing funding solutions—the idea of selling their invoices to a factor or medical billing funding agency.  This article addresses some of the more frequently asked questions:

What differentiates a factoring firm who funds medical billing companies from a bank?
First and foremost, since medical billing factoring is not a loan, there is no debt on your medical billing company’s balance sheet. Moreover, factoring firms have the ability to make a quick decision regarding your medical billing funding options, while banks may take weeks—even months—to approve a loan.

Furthermore, factors determine lines of credit based on the creditworthiness of your customers, while banks focus on your company’s financial history and cash flow. In other words, a medical billing funding agency looks to your company’s future while banks place emphasis on your company’s past.

How long does it take to be approved for medical billing funding solutions?
In general, a medical billing funding agency will begin its due diligence process after receipt of a signed contract. This process can last anywhere between 1-5 business days, and money is moved at its conclusion. Thereafter, a medical billing service can receive funds in as little as 24 hours within verification.  See our medical billing factoring process and learn our medical billing funding options can benefit your medical billing business.

Click here to read more Frequently Asked Questions and Answers related to factoring for medical billing companies.

In this economy, many service-oriented small businesses are struggling to obtain cash on two fronts – (1) Acquiring or extending a line of credit and (2) Getting their customers to pay in a timely manner.

Outsourced medical billing providers are just one type of business that is being affected by the “double credit crunch.” On the one hand, banks have tightened up on their lending criteria, and most are slashing credit lines instead of extending them, which means the likelihood of a medical billing provider securing bank funding is slim-to-none. On the other hand, even though an outsourced company’s main job is to bill insurance companies correctly so physicians (their customers) get paid quicker, those same physicians are oftentimes notorious for stretching out their payables.

Fortunately, there is an alternative financing option that can help speed up the payables process.

Medical billing accounts receivable factoring is the conversion of receivables into cash by selling outstanding invoices to a factor. A viable option for medical billing companies in the early stages of business development and /or during rapid growth, accounts receivable factoring is a financial solution that gives medical billers immediate cash to manage operations more efficiently. Here are some additional key concepts about this practical financing alternative.

Medical Billing Accounts Receivable Factoring is:

• A way to fill the gap between when your company provides outsourced billing services and when the physicians pay. Simply put, medical billing invoice factoring can turn weeks into hours or days.

• Based on your customers’ credit history, not yours. If your company is providing billing services to a creditworthy physician’s office or medical facility, then your business is a good candidate for accounts receivable factoring.

• A simple, fast method to sustain your “business as usual” relationship with your customers. Your company can continue to provide medical billing services to your customers with a set-term payment; but with accounts receivable factoring, you no longer have to wait to be paid. By working with a factoring firm, your company can easily obtain cash advances of 80% of the invoiced amount. Cash can be obtained within hours and as often as needed.

• One of the oldest methods of providing working capital. Dating back 4,000 years, receivables factoring has long been used as a feasible and easy way for businesses to obtain cash flow in order to cover expenses while experiencing growth.

• A chance to obtain cash without providing personal collateral or increasing interest expense. Invoice factoring is not a loan and does not “muddy up” your medical billing company’s balance sheet. You do not accrue interest or penalties. The medical billing factoring fee is clear and objective; it is based on the size of the invoice, the length of time it takes to collect the payment, and the creditworthiness of your customers.

• An opportunity to build your outsourced medical billing company’s credit: With adequate cash flow, you can use money from accounts receivable factoring to clean up your debts as well as pay overhead, salaries and invoices. This will improve your credit history and make it easier to obtain credit from vendors and other financial institutions in the future.

By working with an accounts receivable factoring company, your company’s cash flow problems can be solved. In most cases, a medical billing company can receive the majority of what’s owed to them within hours of selling their invoices to a factor. Factoring for your medical billing company will help you avoid falling prey to today’s “double credit crunch” that so many other small businesses are enduring as a result of the current economic climate.

**NOTE: This article is a re-printed version of what was also published on FactoringInvestor.com.

Tracy Z wrote an interesting post on FactoringInvestor.com comparing and contrasting the cost Groupon vs. the cost of invoice factoring.

Rightfully so, Tracy defined the marketing lure of Groupon as “marketing with no upfront fees.” For cash-strapped business owners looking to make more sales, free advertising sounds like a good deal–That is until you break down the numbers:

• 50% discount to customer
• 25% fee to deal provider
• 25% net to business owner

In essence, the business owner only makes 25% AND they have to wait to get their portion, in installments, over time.Tracy outline a simple example, where 1/3 of the business owner’s profits was paid in 5 days, 1/3 in 30 days and the balance within 60 days:

$100,000

-$50,000 discount

-$25,000 fees

=$25,000 received by business owner (33% or $8,333 immediate advance, with the remaining $16,667 paid out over 60 days.)

Then Tracy used the same scenario as though the business owner were factoring:

$100,000

-$5000 factoring fee (average 5%)

=$95,000 received by business owner (80% advance or $ 80,000 upfront, with the balance less the fees received once debtor pays in full).

Pretty interesting comparison, huh?

Click here to read the article Tracy referenced in her post: Why Groupon is Poised for Collapse.

Mother and daughter, Alice Scott and Michele Redmond, wrote an excellent article in Issue 6.4 of BC Advantage. The duo are coauthors of 11 books on medical billing and medical credentialing and co-owners of Solutions Medical Billing Inc. The medical billing invoice funding experts at PRN Funding thought the information within the article would be quite beneficial to our medical billing business owner readers. Written below is a brief summary of the article, which appeared on pages 20-21 of the medical billing and coding magazine.

The ladies emphasized the fact that those medical billing company owners who are serious about making it in the business “learn to market effectively and quickly.” They go on to say that there are a number of different ways to market a medical billing service, and that the key to being successful is developing a marketing plan, and then sticking to it.

Utilizing referrals is a great way to get started. However, many business owners assume that referrals can only come from clients. So what do you do if your medical billing service is new, and you don’t have any clients yet? Remember that referrals can come from sources other than clients. Alice and Michele suggest asking yourself this question when looking for good referral sources: “Who do you know that is aware of your abilities and strong points?”

For example, you could reach out to doctors you worked for in the past and ask them to write a referral for you medical billing company, or check in with a teacher you remember from when you took medical billing classes, etc., etc.

Finally, the medical billing industry authors suggested that business owners “get someone to offer some inside information that gives you a little leverage in getting in to see a doctor about your service.” Tell your general practitioner about your medical billing business. Even if he/she cannot use your medical billing services, perhaps they could refer someone else who can.

The women concluded the article by reminding medical billing entrepreneurs that word-of-mouth marketing can only take your business so far, and that sooner or later, you will have to spend money to make a real marketing impression.

For medical billing companies who are just getting started, it might be hard for them to acquire the cash needed to implement a strong marketing program. Enter medical billing accounts receivable factoring. Startup medical billing companies can sell their invoices to a medical billing factor, and get cash upfront to cover those marketing costs. Visit PRN Funding’s medical billing factoring page to learn more about this financing alternative.

In an effort to combat the affects of the crumbling economy, service-oriented businesses have been getting creative with new ways to generate money.

Unfortunately for consumers, that creativity often translates into price hikes, additional fees, reduced services or cut backs on productivity. But does it have to be that way?

Take a look at the airline industry. When fuel prices soared last summer, airline giants started charging extra for what were once common courtesy services in addition to the original ticket price. They started with charging for snacks and drinks and then quickly moved onto charging checked bag fees, assigned seat fees, fuel surcharges, curbside check-in fees, etc.

Once the industry giants established that this additional fee policy was going to be part of the standard flight-booking procedures, it didn’t take long for all of the airlines to jump on the “Hidden Fee Bandwagon.” From a customer’s perspective, it seemed as though the airline industry as a whole started seeing dollar signs instead of thinking about its customers needs. Then along came Southwest Airlines with its clear thinking and its “No Fee Policy.”

In some ways, the accounts receivable factoring industry can appear to be a lot like the airlines industry. Both operate world-wide, both industries should be service-oriented, and both industries are notorious for tacking on extra fees in addition to the basic fee. Much like Southwest Airlines, the factoring industry has a handful of healthcare factoring companies who do not charge extra fees in addition to the base fee. This article will discuss three areas where factoring firms might insert hidden fees.

First and foremost, a business owner needs to understand the basics of how a factor charges for its factoring services. It’s important to note that healthcare factoring firms do not loan money; rather, they purchase a company’s invoices at a discounted rate. This discount rate can be a one-time flat fee, or it can vary depending on how long the factor owns the invoice.

In general, discount rates can be affected by a number of things, including the contractual commitment, the average monthly purchase volumes, the average size of the invoices sold, the number of account debtors (customers) that will be factored and the credit quality of those debtors. Variations in each of these will lead to potentially substantial changes in the fee structure. In many cases, factoring firms will have extra fees in addition to their factoring discount fee. More often than not, these “hidden fees” are disguised as set-up fees, administrative fees and penalty fees.

Set-up Fees
There are some factoring companies that start charging fees as soon as a potential client applies for healthcare factoring services. Set-up fees range from a minimal application fee of $25 to a hefty origination fee of $500. In some cases, factors will add in individual fees for due diligence procedures (i.e. running credit and background checks) and legal documentation fees (i.e. assembling legal documents and filing liens). When all is said and done, a new factoring prospect could be $1,000 out of pocket before knowing if he/she has been approved for funding.

When business owners are comparing and contrasting factoring companies, it’s important to inquire whether the factor charges specific set-up fees. Sometimes, the factor will say yes, and sometimes it will say no. It’s up to the business owner to decide whether or not the factoring services outweigh the start-up costs before moving forward.

Administrative Fees
In addition to application, origination and due diligence fees, some factoring firms charge their clients for the time it takes to compile and ship legal documents, billing for postage, long-distance phone calls, photocopying documents and/or time spent on the computer while assisting their clients. There are also fees associated with funding procedures. Most factors will institute set prices for a same-day wire or an overnight transfer of funds.

When a business owner is contemplating the notion of factoring his/her receivables, it’s important to factor any administrative costs into the equation. Without doing so, a business owner could wind up paying a lot more than he/she had initially anticipated.

Penalty Fees
The last way a factoring firm could potentially squeeze in some additional “hidden fees” is when it assigns fees for various “penalties.” Under this umbrella of penalty fees, a factoring firm could designate fees for misdirected payments, early termination of a contract, aged invoices, expedited funding (within 24 hours or less), not hitting a monthly minimum factoring requirement or going over the maximum allowable factoring amount. In addition, a healthcare factoring firm could also penalize its client by holding onto the funds within the reserve account (cash that is owed back to the client once payments have been received).

When choosing an accounts receivable factoring company, business owners should take the time to read all of the terms and conditions before signing on the dotted line. Entrepreneurs should not be afraid to dig deep into the factoring contract and ask a question when something is unclear. Otherwise, those hidden fees hidden fees will reveal themselves at a point where it’s too late to re-negotiate the terms.

So in conclusion, it does appear that the factoring industry is similar to the airlines industry in that players in both are notorious for charging “extra fees.” The plus side to this realization, however, is that both industries also have some players who stand firm in their “No Extra Fee Policy.” The bottom line-much like when shopping for the best airline deal, it’s extremely important to look at the all-inclusive price, including possibly extra fees, before agreeing to do business with an accounts receivable factoring company.

**NOTE: This article is a re-printed version of what was originally written for and published on eZineArticles.com as well as FactoringInvestor.com.

Awhile back, the owner of PRN Funding, LLC, Philip Cohen, was interviewed and featured on Factoring Investor’s web site. Check out a portion of the interview below:

Factoring account receivables is helping health care companies through these tough economic conditions opening the door to earning opportunities for cash flow consultants. FactoringInvestor (FI) caught up with Phil Cohen, Founder and President of PRN Funding, LLC, to fill us in on the specialized niche of healthcare funding.

FI: What transactions will your company consider funding?

PRN: PRN Funding, LLC has a very specific niche in healthcare funding. We provide factoring to vendors who sell goods or provide services to medical facilities. Moreover, our client base consists of medical staffing agencies, private duty home care agencies, medical transcription services, medical billing and medical coding companies and medical supply companies.

FI: How did you get your start in the factoring business?

PRN: Prior to founding PRN Funding, LLC, I spent the better part of a decade acquiring medical transcription firms as a national roll-up strategy. During this time, I noticed a trend. Many of the medical transcription services were well-run firms; however, they were selling their companies because of cash flow problems. Seeing this cash flow problem, I was able to identify an opportunity to help them – accounts receivable factoring. Over time, I’ve been able to expand into other healthcare vendor niches, including medical staffing, medical coding, medical billing and medical supplies.

FI: What unique benefits does your company provide?

Industry Expertise: PRN Funding, LLC understands the unique characteristics of the healthcare vendor industry. We are very familiar with traditional payment terms, industry jargon and day-to-day procedures associated with the healthcare vendor industry.

Extreme Flexibility: PRN Funding offers the utmost in flexibility to vendors who sell goods or provide services to healthcare facilities. Our clients choose when, who, how much and how long to factor their invoices.

No Hidden Fees: PRN Funding does not charge the following:

• Application Fee
• Origination Fee
• Due diligence Fee
• Legal and documentation Fee
• Administrative Fee
• Early Termination Fee

FI: What do you consider the best methods for finding deals?

PRN: Aside from our web site, PRN Funding relies very heavily on our brokers and cash flow consultants to refer us deals.

FI: How do you handle commissions to brokers or consultants?

PRN: We pay our brokers 10% of the fees we make for the life of the deal.

FI: What advice would you give to new professionals just starting out in the industry?

PRN: Now is a great time to get into the cash flow industry. Traditionally, small business owners relied heavily on credit cards to fund their business operations when they were not eligible for bank financing. The current economic situation has recently prompted many credit card companies to drastically reduce credit lines and raise interest rates for their customers who use small business credit cards. As a result, these business owners are in desperate need of a new alternative financing method to fund their business, and cash flow consultants have all of the tools to match those business owners with the appropriate funder.

FI: What is the most common business mistake you see people make?

PRN: The most common business mistake I see brokers make is that they present a lead to us without pre-qualifying it beforehand. It’s important for a broker to accurately assess a prospect’s need for funding and then match it with a funder who understands the prospect’s business model.

FI: Given the current economy, have you made any changes in the way you transact business?

PRN: In light of the changing economic climate, PRN Funding made the decision to branch out into a brand new healthcare funding niche. We formally launched PRN Funding’s home care factoring program in February. We recognized how long it takes for state-funded programs to pay private duty agencies, and we wanted to address the dilemma by offering these companies a factoring solution.

In addition, although there are more business owners applying for factoring as a result of the economic crisis, the quality of some of those applicants has gone down. Therefore, PRN Funding has had to tighten up on our due diligence process. Things that we may have been lenient on in the past, we are no longer able to do so…

Want to learn more? Click here to read the entire Factoring Investor Interview with Phil Cohen.

While the public’s confidence on the economy continues to spiral downward, the demand for health care in this country continues to grow.  According to the National Coalition on Health Care, the U.S. spent approximately 17% of its GDP in 2008 on health care costs.  That percentage is expected to jump to 20% by 2017.

Doctors’ offices will soon be flooded by 78 million baby boomers as they become eligible for retirement.  To handle this sudden influx, physicians will have little time for the day-to-day business operations of their practices and must focus primarily on patient care.  As a result, medical billing companies are seeing increased demand for their services.

More and more doctors are outsourcing services such as medical billing and coding to subcontractors, and these companies are reaping the benefits.  However, due to the slow pace at which insurance companies approve patient claims, it takes a while for doctors to be paid, and in turn it takes even longer for them to pay their vendors, especially medical billing companies.  According to the American Medical Billing Association, it takes an average of 90 days for paper claims to be reimbursed.  Granted the advent of an electronic claims system has lowered reimbursement times, it is still problematic for medical billing companies to wait to be paid.

For example, an insured patient goes in to see a doctor.  The cost of the visit is $100.  Because the patient is covered for this visit, the doctor must make a claim to the insurance company and wait an indefinite amount of time for the claim to be approved.  If the claim is not approved, the doctor must send more details of the visit.  This increased lag creates a problem for doctors who would rather spend their time with patients than following up on claims.  Therefore, doctors turn to experts and subcontract medical billing companies to handle these issues.

Whether they are start-ups trying to gain a market share of this ever-increasing business, or a veteran company trying to beat the slow-payments system of insurance companies and doctors, a viable and flexible option exists for companies called medical billing factoring.

Medical billing factoring is converting the accounts receivable of a business into cash by selling outstanding invoices to a ‘factor’ for a discount.  Accounts receivable factoring gives the medical billing business immediate access to cash so that it can manage its operations more efficiently.

Instead of waiting months to be paid by doctors’ offices, medical billing companies can use factoring services to get cash now to pay for their employees and ongoing business expenses.  They can also use the money to expand their businesses, such as hiring and training new employees or purchasing new equipment, in a time when the healthcare industry demands these companies more than ever.

Doctors need all the time they can get to provide care for their increased number of patients. While the amount of work has increased and the payments remain slow, outsourcing medical billing duties gives doctors more time with patients.  By factoring their receivables, medical billing companies do not have to wait to be paid and can continue expanding their businesses in a market that is favorable towards this niche.

NOTE: This was originally written for PRN Funding’s web site, and a re-print addition also appears on FactoringInvestor.com.