So you’ve finally achieved your dream. You survived medical school and residency and are now running your own medical practice. All of the effort and sleepless nights, the expense and stress, it’s all paid off. You’re now doing what you set out to do: helping people. But what you didn’t realize is that running a medical practice isn’t just appointments and diagnoses, it’s also running a business. So who’s going to help you when your patients’ insurance companies are taking their time to pay claims, or when you need to buy new equipment and are looking at a dangerously low account balance? If any of this is uncomfortably familiar, it’s time for a crash course in health care financing.
There are two primary options when it comes to getting funding for the medical or health care field. There’s the more traditional bank loan designed specifically for the field, in the form of a doctor loan. With this option, you’ll be looking for a standard financial institution or bank. These frequently are offered with a maximum that has to do with the length of your training or practice and come in the form of either a lump-sum payment or a line of credit. Usually offering highly advantageous terms, you’ll have to make monthly payments until your loan is paid off.
The other big variety of health care financing is a version of factoring. With medical factoring, you’ll be collecting your outstanding invoices and selling them to a third party. That third party will pay you a portion of the outstanding sum upfront, and then will collect the payments from the insurance companies. After they’ve received the insurance payments, the third party will then pay you what remains after they’ve withheld their fee. As with the loan, this type of financing will usually have an upper cap that depends, in this case, on your average monthly billing.
Becoming a doctor is tough enough without having to deal with the stress that comes with taking care of people. Running any small business is stressful, but when peoples’ lives are on the line, the extra stress from finances is just unbearable. Whether you’re just opening your practice, in a rut, or trying to expand, you can take advantage of the various types of health care financing to get your practice running smoothly. When applied intelligently, you can be back to focusing on your patients in no time.