Regardless of what industry pundits say, opening a medical practice can be both very rewarding and very lucrative. Of course, as with any business, medical offices have their own specific financial challenges. One of the biggest challenges for medical practices of all sizes is adjusting to the long payment cycles of private insurance providers and Medicare/Medicaid.
If you are new to practice or are just looking to change your current location, consider the following leasing pros and cons to help you make your decision.
You pay less up-front cash. Because of mortgage down payments and closing costs, buying a space is more expensive at the outset; leasing leaves you with more start-up. cash flow to put unto your practice. With leasing, there is also no risk of investment loss that comes with the ever-changing real estate market.
Medical receivables factoring (or medical factoring for short) is a financing tool that allows you to turn slow paying invoices into actual cash, by selling them to a medical factoring company. The medical factoring company pays you for them and waits to be paid by the insurance companies. It eliminates the slow payment cycle, reducing the payment time from 90 days to two days. This provides the medical office with the necessary funds to meet expenses, such as paying rent and staff. It also frees up capital to grow the business into new areas.
You can reduce your payments and tax paperwork: lease payments are a valid tax-deductible business operating expense, and leasing requires significantly less paperwork at tax time than owning.
The remaining 20% is called the reserve, and is used to settle billing discrepancies. Once the insurance company pays the medical bill, the remaining 20% is rebated, less the financing fee. The financing fee varies based on how long the invoices were financed.
Setting up a factoring account can take a couple of weeks, mostly because the medical factoring company will need to perform their due diligence and Audits. However, once the account is set up, the financing is continuous. You can usually get your claims funded within 24 hours of submitting them to the factoring company.
Leasing an office space is not for everyone, just as buying is not for everyone. Carefully consider your current and projected needs to find a solution that works best for you.
More Information:
When it comes to office space, getting the right information can be a daunting task. That's why we put together this confidential report for you at
medical office rent in miami fl
Categories
