Your Success: It's All About Your Working Capital Strategy and Monthly Cash Flow Plan

Medical Accounts Receivable Financing
Propels Provider Growth and Profitability

"C-Suite" healthcare executives are choosing medical accounts receivable (MAR) funding as an important tool in their business financing strategies. MAR funding's flexibility and immediate cash infusion reduces their dependency on debt-incurring bank loans and lines of credit as their sole forms of financing. It provides a predictable and steady cash stream and the amount of medical accounts receivable funding is not limited by a bank's often under-valued assessment of the provider's assets.

This cash-flow solution for working capital is not only debt-free, it also grows as patient volume and claims increase, and boosts liquidity by utilizing currently available assets while maintaining debt capacity. It increases purchasing power as well as provides working capital needed to create a monthly cash flow plan, meet payroll and overhead, reduce debt and cut costs by using cash discounts. Healthcare providers can also use this cash infusion to purchase new equipment, upgrade systems and software, enhance employee development, expand existing facilities or fund the construction or purchase of a new building.

When seeking a stronger cash position, whether in growth mode or fiscal difficulty, healthcare executives are turning to Sun Capital HealthCare, Inc. (SCH), a respected leader in medical accounts receivable financing and business receivable funding. Customized to each provider's requirements, SCH's medical accounts receivable financing program can provide cash within 24-48 hours of submission of claims. No commitment fees, prepayment penalties or unused line fees are incurred.
           
"Sun Capital has greatly eased the strain on our business that can occur with the ups and downs of our monthly cash flow plan," stated Pain Net, Inc. Executive Vice President Robert Snyder. "Because with Sun we are always in control of our business receivable funding, we receive funding on receivables only when we decide to submit them, which enables us to be virtually debt-free within 48 hours."

According to SCH President and Chief Operating Officer Howard Koslow, bank credit lines are often insufficient to meet a provider's working capital needs and monthly cash flow plan, especially when a conventional bank determines a line based on a significantly "under-valued" valuation of the provider's assets. Additionally, the bank may be quick to disqualify that collateral once the aging reaches 90 days. Koslow noted that "this often happens because most conventional banks do not have the deep understanding and working knowledge of the healthcare business, its industry specific regulatory requirements and cash flow challenges, and that is where Sun Capital HealthCare is peerless."

Providers in expansion mode use MAR funding to reduce the debt on their balance sheets and invest their asset pool into ramping up in many human capital and business-generating areas that increase hospital revenues and support growth and expansion.

"Sun Capital HealthCare was the direct reason why our medical services company went from $0 to $60 million in 18 months," reported EDCare President Jeffrey Schillinger. "Sun Capital HealthCare, Inc. helped my business when we started out by providing us with medical accounts receivable financing and business receivable funding and kept us in business during our growth."

For providers in fiscal difficulty or already in post bankruptcy reorganization, SCH has established precedent-setting judicially approved programs for debtor-in-possession funding.

"Our 100-bed University Community Medical Center needed immediate liquid cash and a monthly cash flow plan without encumbrance or increased debt load to keep operating after both our financing company and property note holder went into bankruptcy within months of each other," noted Roy Rodriguez, CEO and Managing Partner of Quantum Healthcare, the former owner of San Diego-based UCMC. "In Sun Capital, we found a medical accounts receivable financing source that truly understood our business, and cared about our patient and employee community."

Koslow noted that SCH stepped in when Chino Valley Medical Center in Chino, California "maxed out" its bank credit limit and could not secure additional capital to fulfill payroll and operating expenses. According to Ray Verdugo, former financial advisor for the 126-bed hospital, "Sun's initial business receivable funding provided debt-free cash to pay off the existing asset-based line of credit, plus additional short-term working capital to keep census going, and support management's ultimate monthly cash flow plan and financial strategy to position the hospital for purchase."

Today healthcare providers-including hospitals and healthcare networks, skilled nursing facilities, rehab centers, ambulatory surgical centers, physician group practices, and DME/HME companies- must continually evaluate their current financial strategies. Medical accounts receivable financing should be a key tool in that process.