The provider, a home health care agency, approached Alleon Capital Partners with the need for accounts receivable factoring in order to meet its capital needs due to its high growth rate.
“In the case of this provider, he was growing so quickly that he needed to hire many new employees. Although his balance sheet was strong, his cash flow was weak due to having to pay new employees for their services before the insurance carriers were paying him”, says Ben Rutkevitz, Managing Director.
In most states, Medicaid takes up to three months to process a new patient into their system. Therefore a home healthcare agency has to sometimes wait 90 days to get paid from the state but at the same time they need to pay their nurses and aides who are providing services to these patients. This can put tremendous strain on healthcare providers, especially young ones that are not yet established.
Ben Rutkevitz adds, “What Alleon Capital provides, is the capital solution that allows medical providers to monetize their accounts receivable. This agency is providing a needed service to their community, and this factoring facility will help them grow at an even greater rate and serve many more individuals.”
“Traditional banks tend to not lend against a medical provider’s accounts receivable. They do not understand the market and the underwriting process is quite extensive. After realizing this two years ago, Alleon Capital Partners began specializing in this niche market area. What we have noticed is that medical providers who bill third party insurance carriers are all experiencing a delay in receiving payment from date of service that can range from 30 days up to three years if litigation is involved. This greatly hampers a medical provider’s cash flow, ability to purchase new equipment and/or expand their practices.
The effect this has is detrimental on the medical provider and their patients. Instead of focusing on how to heal and treat their patients, most medical practices today focus a lot of their time and energy on how to manage their cash flow. One of the intentions of Alleon Capital Partners is to assist medical providers in establishing the systems that within six to twelve months will allow the medical practice to be cash flow stable and will no longer require financing of any kind ” added Leon Chernyavsky, Co-founder and owner.
The medical provider used their existing, outstanding accounts receivable portfolio, that they would have had to wait months to see payment on, and now have the additional capital they need to maintain their expansion.
About the Author: Ben Rutkevitz is the Managing Director of Alleon Capital Partners (“ACP”). ACP is a specialty finance company focusing on providing capital solutions to the medical industry. Its target is small to mid-size medical providers that bill Medicaid/Medicare, HMOs, Commercial Medical, No-Fault, Worker’s Compensation or await payments from Personal Injury Settlements. To contact Ben Rutkevitz, please call 201-340-6346 or email him at benr@alleoncapital.com. You can also visit Alleon Capital Partners at www.alleoncapital.com or at their blog, http://medicalfinancingreceivables.co.
