Medical practices typically bill insurance carriers and government payers, which can result in reimbursement cycles that take several weeks or longer to complete. During that time, practices still need to cover payroll, rent, medical supplies, and equipment costs.
As practices grow, they may need to purchase diagnostic or treatment equipment, expand office space, or bring on additional providers, each of which can require a distinct type of financing tailored to the size and timing of the investment.
Common cash-flow challenges
Reimbursement delays from insurers, denied or underpaid claims, and the cost of maintaining compliance can create working-capital pressure for medical practices.
Typical operating expenses
- Staff and provider compensation
- Medical supplies and pharmaceuticals
- Facility rent and utilities
- Diagnostic and treatment equipment maintenance
- Billing, compliance, and malpractice insurance costs
Growth and equipment needs
Adding imaging equipment, upgrading electronic health record systems, or opening a second location are common growth steps that may call for dedicated financing rather than draining working capital.
Receivables and cash-flow timing
Because much of a practice's revenue is tied up in pending insurance claims, some practices look at financing options that take outstanding receivables into account.
Real estate and expansion
Practices purchasing or renovating office space may consider commercial real estate financing to support that investment separately from day-to-day operations.
Financing options that may fit
- Equipment financing for diagnostic and treatment technology
- Business lines of credit for reimbursement timing gaps
- Commercial real estate financing for office space
- SBA financing for practice acquisition or expansion