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.

According to the ADVANCE Perspective HIM Blog, the American Academy of Professional Coders, a trade association dedicated to serving the medical coding industry, recently created an ICD-10 resource site in preparation for the government’s mandated ICD-10 changeover in October 2013.

ICD-10 is expected to affect all heathcare professionals, not just the administrative medical coders and medical billing staff.

Among the key features include:

• An ICD-10 code conversion tool allowing users to translate an ICD-9 code to ICD-10 instantly;
• ICD-10 news and articles from industry experts helping prepare for implementation;
• Two interactive floor plan tools that show how ICD-10 affects all aspects of a practice or health plan; and
• An online application used to track and graphically measure the ICD-10 implementation progress.

For further information about ICD-10 implementation, please visit the AAPC ICD-10 site.

Advance Perspective’s HIM Blog recently re-posted a blog post by Don Fornes of EHR Software Advice, in which he discussed the ever-changing eletronic health record (EHR) market and how it’s impacting vendors’ cash flow. The medical transcription factoring specialists and medical billing and coding invoice funding specialists at PRN Funding took the liberty of summarizing the bulk of the post below:

In a nutshell, Fornes’ article talked about how most people would think that the Federal subsidies for EHR implementation would create a massive boom for EHR software industry, however, this concept couldn’t be further from the truth. Based on the data points that Fornes has observed over the past few months, he thinks that most EHR software vendors are actually experiencing a cash flow crunch.

According to Fornes, these EHR software vendors have been pouring cash into marketing and brand awareness initiatives to remain top-of-mind for physicians’ practices and medical facilities, however, most providers have taken a “wait-and-see” approach to EHR adoption.

Couple these two scenarios with the increasing shift for the software industry as a whole to shift to cloud computing because of low monthly pricing.

As a result of EHR vendors investing a lot of money into their business expansion, providers writing fewer checks than anticipated and the checks that are written are much smaller and more spread out, a difficult cash flow scenario has been playing out for a number of vendors. Fornes commented how he’s seen “some EHR vendors stretching their payables out 90 or even 120 days.”

Overall, it was a very informative article, however, what Fornes left out what that EHR vendors have the ability to drastically improve their cash flow by factoring their invoices. For example, an EHR vendor could sell its invoices to PRN Funding and receive cash the same day.

Click here to read Fornes’ original blog post.

PRN Funding offers financing services to healthcare vendors. Most notable, PRN Funding offers healthcare staffing payroll funding, medical transcription invoice funding, medical coding factoring and medical billing AR funding. Most recently, PRN Funding also provides private duty home care factoring agencies.  By purchasing these companies’ accounts receivables, PRN Funding provides the cash needed for them to sustain and grow their healthcare business.  With that said, we are pleased to announce some of our most recent factoring transactions:

A Nurse Staffing Agency Finally Gets Approved for AR Financing
In an attempt to get her company started, this Illinois nurse staffing agency owner borrowed from friends and family, maxed out all of her credit cards and fell behind on her bills. Naturally, her poor personal credit was greatly hindering her ability to obtain ongoing business financing from a traditional lender.

Frustrated from being turned down, the nurse staffing agency owner started researching alternative financing options and came across PRN Funding’s nurse staffing invoice funding web site. Through her research, she learned that PRN Funding based its credit decision on her customers’ creditworthiness, rather than her own. The agency owner applied online that day and after hearing ‘no’ for so long, she was finally approved for a line of credit.

An Allied Health Staffing Agency Works with Long-Term Care Facilities
Two business partners from Louisiana knew that in order for them to start a successful medical staffing agency in a down economy, they would have to focus a specialized staffing niche. So instead of placing RNs, LPNs and CNAs, they chose to focus on providing various types of therapists to help fill gaps exclusively at long-term care facilities. Within two months of opening their doors, the savvy business partners had more shifts to fill than therapists. However, they couldn’t hire additional therapists because their cash flow was continuously held up by slow payments from the long-term care facilities.

The business partners were familiar with factoring, and they knew that most general factors wouldn’t be comfortable purchasing receivables that could consistently age out past 90 days. Luckily, a friend of one of the partners suggested they approach PRN Funding because it was a factoring firm that specialized in allied health factoring. The business partners called in on a Friday, received documents the next day, and factored their very first allied health invoice by the end of the week. Having a better cash flow allowed them to bring on three new therapists that month, and they haven’t had to turn down new business since.

Tennessee Business Owner Uses Medical Coding Invoice Factoring to Improve Cash Flow
When this entrepreneur first started her medical coding business, she coded exclusively for one physician. Over the years, the business owner’s outsourced medical coding services expanded steadily. She gradually started hiring new coders and while simultaneously adding multiple doctors to her portfolio.  Then the economy turned south, and with it, the business owner’s receivables started coming in slower.

At first, the medical coding entrepreneur tried to make up for the lack of cash flow by paying her own bills with credit cards, and paying the coders out of her own pocket. It didn’t take long before her credit cards were maxed and her savings account had dwindled. While flipping through an industry magazine, she found an ad for PRN Funding’s medical coding factoring services. According to the ad, PRN Funding’s factoring services could help her get paid quicker, so she dialed the toll-free number and was connected to a medical coding factoring specialist immediately. Two weeks later, she submitted her first medical coding invoice for factoring, and she worried less about her company’s cash flow.

Click here for more information on PRN Funding’s accounts receivable factoring services.

Mrs. Carla Peacock was The American Academy of Professional Coders 100,000th registrant to become a part of the medical coding association.

The AAPC is celebrating this triumphant membership milestone by awarding Mrs. Peacock with an all-expense paid trip to the 2011 AAPC Conference, scheduled for April 3-6 in Long Beach, CA. She will also receive a free Certified Professional Coder (CPCA) exam along with a 2011 AAPC webinar subscription to help earn CEUs.

Click here for more details on the 100,000th AAPC member.

TRS Institute, the nation’s leading provider of AHDI-approved online medical transcription and speech recognition training programs, announced that it was adding a Medical Billing and Coding curriculum to its course offerings.

The new curriculum will include:

1. Medical Billing & Reimbursement career preparation
2. Certified Professional Coding for physician’s offices and hospital facilities
3. Accelerated program for Medial Billing and Coding

Click here to read the entire article in the Kansas City Star.

The American Academy of Professional Coders (AAPC) will be holding it’s 2011 Conference in Long Beach, CA April 3-6.

Currently, the medical coding organization is looking for speakers to to present on current topics and the latest trends in health care and welcomes submissions from all specialties and sectors of the health care community.

Those interested in being considered as a 2011 AAPC Conference speaker need to submit a completed application no later than September 30, 2010.

According to AAPC’s web site, ”The AAPC Speaker Selection Committee will review all applications and select those topics that are fresh, relevant, and engaging to the intended audience.”

For more information, visit the AAPC web site or email Sandra Nestman in the conference department at: sandra.nestman@aapc.com.

Last week, BusinessWeek published an article entitled: Health-Care Bill Surprise: 1099 Nightmare, and we thought the small business owners who read The Factoring Blog should be aware of its contents.

In essence, the article says: Small business owners should be aware of page 737 of the recently-approved healthcare reform bill, as it contains a three-paragraph provision, inserted by Democrats on the Senate Finance Committee to help offset the cost of the bill. In a nutshell, this insertion requires companies to report to the IRS payments of more than $600 a year to any vendor. The intent is noble: to capture $2 billion or more a year in taxes on income that currently goes unreported by contractors and small businesses.

Business advocates fear that the new rule will create a massive paperwork headache for small businesses because come 2012, the new rule will expand 1099-MISC reporting to include payments to companies, and for goods as well as services.

Read more here: Health-Care Bill Surprise: 1099 Nightmare.

Did anyone see Vanessa Best’s article in the July issue of BC Advantage? In the article, How to Jumpstart a Successful Medical Billing Business (page 31-32), Vanessa lists 10 steps to start a medical billing and consulting business:

1. Choose a business type.
2. Choose the name.
3. Develop a business plan.
4. Learn about your market.
5. Keep abreast of the medical field.
6. Get reasonably priced software from vendors listed with the BBB.
7. Develop your marketing strategy.
8. Launch your marketing campaign.
9. Establish how much your time is worth and set fees for service.
10. Put it in writing!

Although the medical billing account receivable specialists agree with everything on Vanessa’s list, we thought medical billers and medical billing consultants should add one more thing to the list.

Team up with a medical billing accounts receivable factor. Most medical billing companies and medical billing consultants have to wait weeks to be paid for their billing services. Imagine a world where you sent an invoice to a physician, and you got paid on the same day. PRN Funding’s medical billing account receivable program is designed to do just that!

Check out our medical billing factoring web page for more details.

Even though Jacksonville, FL was not one of the more desirable cities for a medical coding conference, the 2010 AAPC Conference ended up being a good one for PRN Funding.

Phil Cohen (PRN Funding’s owner), Vera Pereskokova (Account Manager) and Nikki Flores (Marketing Manager) had the pleasure of speaking with a number of medical coding business owners and medical coding consultants during the show. All of them showed a great interest in PRN Funding’s medical billing factoring services as well as our medical coding invoice funding program.

Congratulations to Lori H. of Compass Coding Services, who was the lucky winner of our iPod Shuffle and $50 iTunes gift card drawing!