Grow your Medical Practice with a Line of Credit
In business, cash is king. When the money stops flowing so does your growth. While it’s never a good idea to get into unnecessary debt, credit lines can be a hedge against cash flow droughts that affect every medical practice from time to time. In light of upcoming ICD-10 changes and the effort it takes to comply, making sure you have an emergency line of credit is something you should seriously consider.
The revenue cycle for medical practices is in a perpetual state of flux, and as a result is more complex than other businesses. Many patients pay through insurance and it often takes several months of time to receive each individual’s payment. Sometimes this can put practices in a quite a bind, especially when claims may be denied or payments are delayed. This is even more of a reality with the comprehensive adoption of the new ICD-10 coding system.
Since medical providers will still have to pay for all of their recurrent expenses like salaries, rent, medical supplies, and utilities, the new coding transition can quickly turn into mess, especially if the practice has not prepared beforehand. While the ICD-10 deadline looms closer, it’s vitally important that practices like yours are at least prepared to pay for expenses so that your doors can continue to operate normally until you can make the full transition.
Ideally, medical practices that are prepared for possible delays in their revenue cycle have several months’ worth of cash reserves on hand to help them through the rough patches. However, this is not the reality for all practices, so it’s important that practices have access to healthy lines of credit as an alternative means of covering their expenses.
Your credit lines should be large enough to keep you afloat for at least 3-6 months. Even if you feel that your medical practice is healthy enough to sustain itself and that you’re prepared for the ICD-10 transition, if you haven’t yet talked to a banker about your credit options, it would be a wise conversation to have very soon.
If you need more information or feel you need an assessment of your medical practice’s financial needs for an emergency line of credit, contact Concordis Practice management today.