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.
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.
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.
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.
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:
Due diligence Fee
Legal and documentation 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…
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.
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.
Part of PRN Funding’s commitment to maintaing strong relationships with our factoring referral network is writing articles for various invoice factoring publications. Now we’ve made it even easier for brokers to access those articles via a special section on our web site: Factoring Broker Articles. Check out one of the video description below:
Factoring Prospects: Weeding Out the Bad to Find the Good
As cash flow consultants, it’s your job to deliver companies with cash flow issues to the appropriate funding source. Although this task sounds easy enough on paper, in reality, it’s not always a simple feat. Picture this scenario: You find a candidate in need of cash flow who has been in business for two years, gets paid in less than 45 days and wants to expand. Eager to help this business owner get the cash he needs to expand, you refer this person to one of your factoring sources immediately. The factoring company has communicated to you that they are interested in pursuing the deal, and they’ll have an update for you as soon as they reach out to the prospect. The next day, you get a phone call from the factoring firm telling you that they are no longer interested in the deal. Has this ever happened to you? If so, then I have some good news. There are three questions cash flow consultants can ask their prospects that will drastically reduce the chances of the above situation ever happening again. And if it hasn’t happened to you yet, and you’re not asking the appropriate questions, then it’s only a matter of time before it will happen. Continue reading…
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.
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:
Medical Billing & Reimbursement career preparation
Certified Professional Coding for physician’s offices and hospital facilities
Alice Scott and Michele Redmond, co-authors of 12 books on medical billing and medical credentialing and co-owners of Solutions Medical Billing in Rome, NY, recently wrote an article in BC Advantage entitled: Protect Your Business with Your Medical Billing Service Contract.
The medical billing factoring specialists at PRN Funding pulled the highlights of the article for our medical billing service business owners’ benefit:
For the most part, the authors stressed that the importance of having a specifically tailored contract for medical billing services in place was to help medical billing business owners in the event that something goes wrong in the relationship.
The contract should include the following:
Specifics for your company. Don’t just use a sample contract. Make it entirely about your medical billing company.
All the services the medical billing company will provide and their fees.
How and when the billing company will be paid.
How the medical billing service will receive patient and claims information.
What happens if the the billing service doesn’t get paid.
The co-authors also highly recommend for medical billing business owners to hire a lawyer to write the contract. If that’s too costly, then at least have one look it over before using it.
Doing so will prevent medical billing companies from having a huge problem on down the line.
Check out page 12-13 of the latest BC Advantage for the entire article.
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.