Medical Practice Funding

A private practice delivers care first and gets paid later. A visit is coded, a claim is submitted, a payer reviews, sometimes denies or requests records, and eventually a remittance arrives. During that interval your staff, malpractice premium, lease and supplies are all paid on time. A practice with strong patient volume can still feel cash-starved because so much of its revenue is in accounts receivable.

Growth makes this worse. A new provider takes months to build a panel and credential with payers, and billing typically does not start flowing until well after their first day. This page looks at the cash mechanics of a medical practice and the funding approaches that tend to fit them.

Understanding the reimbursement gap

Insurance reimbursement times vary by payer, claim type and how clean the submission is. Clean claims may be paid in a few weeks, while denials, appeals and coordination-of-benefits issues can stretch the cycle to months. Patient responsibility - deductibles and copays - adds smaller balances that are collected over time.

A practice with $120,000 in monthly billings and an average payment lag of 45 days is carrying a large receivable balance at all times. Here is where an honest look at days in accounts receivable helps: reducing it by even a week can free up significant cash, and working capital can bridge the remaining gap.

• Payer processing time and claim denials
• Credentialing delays for new providers
• Patient-responsibility balances collected slowly
• Out-of-network or specialty claims that need appeals

Technology and equipment

Electronic health record systems, patient portals, telehealth setups, and cybersecurity requirements are an ongoing cost of doing business. Clinical equipment - ultrasound, EKG, lab analyzers, exam tables, in-office procedure tools - can add revenue lines but demands upfront cash.

Longer-lived medical equipment is often financed with the equipment as collateral, spreading the cost across years. Working capital, by contrast, is better suited to covering payroll and operating costs while claims clear. A specialist at Fidelity Funding can help you decide which fits each need, and you should consult your advisors on compliance obligations such as HIPAA.

Adding a provider: the real cost

Hiring a physician, nurse practitioner or PA means salary, malpractice coverage, credentialing, a room, equipment and support staff. Revenue typically ramps gradually as the schedule fills and payers begin to pay.

As a hypothetical, say a practice adds an NP at $11,000 a month all-in. If it takes three months to reach a full schedule and another 45 days for payments to flow, the practice might need around $45,000 to $50,000 to carry the new provider to break-even. Planning for that ramp, rather than hoping for an early start, is the difference between healthy growth and a cash scramble.

A worked example: bridging the receivable gap

Say a practice has $85,000 in payer receivables that are 60 days out, with $60,000 of payroll and rent due before they pay. A $50,000 advance at a 1.25 factor rate has a total payback of $62,500. If the receivables arrive as expected, the practice repays from collections, and the $12,500 cost is the price of not missing payroll.

That might be acceptable once, but if it becomes a pattern, the root cause - slow billing, denials, or too thin a reserve - needs attention. Funding fixes a timing problem; it does not repair a billing process. Terms depend on the funding partner and underwriting.

Cash payments and cards

Many practices take cards for copays, self-pay services and cosmetic or wellness offerings. Processing costs can add up on those transactions. Fidelity Funding's card-processing partner, PayPilot by MCCPS, offers a merchant statement review and competitive pricing, with modern terminals and POS integration, which may help practices that take significant card volume.

Billing basics that reduce how much you must borrow

The cheapest working capital is the money you collect faster. Verify insurance at scheduling, collect copays at check-in, submit claims within a day or two of the visit, and work denials weekly instead of monthly. A practice that cuts its days in accounts receivable by even a few days frees up cash it would otherwise need to borrow.

Track your clean-claim rate and your top denial reasons. If one payer or code accounts for most delays, fix that process first. Funding is best used for the genuine timing gap that remains, and for growth investments, rather than as a permanent patch for slow billing.

Applying

The Fidelity Funding application is short, and the initial review uses a soft credit pull only, so your score is not affected. A funding specialist reviews options with you, decisions can often come within hours, and funding often within about 24 hours once approved, subject to the funding partner. If a payer delay or a new hire is straining the budget, a short conversation can clarify your choices.

This article is for general information only and isn’t financial, legal or tax advice. Funding approval, amounts and terms are set by funding partners and depend on underwriting.