Tips for Financing your Home Health Care Agency

It would be wonderful if you could start a home health care agency and focus solely on helping people.

But it’s also important that this altruism be balanced by financial considerations, including making sure there’s always cash flow to continue operations, pay staff and get the word out to attract future clients.

Quality of care is certainly an asset, which can come from an experienced, dedicated staff. But great employees also need to be paid regularly, regardless of the amount of patients at any given time or the pending status of any insurance claims.

It’s the complex insurance reimbursement process that makes home health care agencies tricky to manage, since Medicare, Medicaid or private insurance options may take anywhere from 30 to 90 days to fully pay and process claims. If you don’t plan for this, it could leave you with some financial challenges.

Instead, consider an alternate option of medical receivable financing.

How it works

Your office works with a lender and receives two payments per claim. The first one pays 70 to 80 percent of the net payable value of your claim, which is what insurance is expected to pay. This sum goes directly into your bank at the point when claims are submitted.

The second payment, the remaining 20 to 30 percent, goes to your bank account when the claims are paid in full. It also includes a deduction for any financing fees.

Why it works

Having capital in place helps streamline your operation and availability to access funds as needed, rather than having to put spending off until the next payment, dig deeper into reserves, or go without.

How to get started

Private financial institutions familiar with medical receivable financing are more likely to approve this rather than banks. They will often have a simple application that involves looking at your financial information and examples of claims.

Many can provide funds in 7-14 days for smaller agencies and slightly longer for larger home health care agencies.

Oakwood Commercial Capital Group is happy to provide guidance to home health care agencies interested in these financing options.

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