Understanding, Managing and Solving the Cash Flow Crunch
There has been little change to the main revenue cycle benchmarks for healthcare practices in the past 10 years. Average-performing practices resolve claims in 40-50 days. Unfortunately, this rigid timeline is not keeping pace with the speed and need of business today.
Practices face three main challenges when it comes to managing their cash flow:
- Clinical: Shifting models of care delivery mean different reimbursement rates for virtual versus traditional in-person care.
- Operational: Increasing productivity and staffing demands on the workforce due to the pandemic paired with increasing supply costs.
- Financial: Challenges in securing flexible capital to cover costs and reinvest in your business.
All of this can be unpredictable, time-consuming and expensive for practices to manage while trying to provide the highest level of care to their patients at the same time.
To solve these cash flow challenges, practices typically turn to three traditional financial solutions, each with their own advantages and obstacles:
- Bank loans: While bank loans typically provide good rates depending on guarantors, they come with a heavy administrative burden, restrictions and usually only cover a short-term solution to cash flow gap funding.
- Asset-based lending: This option provides more flexibility on the amount of funding a practice can get, but has substantially higher overhead to maintain.
- Factoring programs: Typically tied to receivables submitted to insurance can get practices advances on capital but may come with high costs to the practice.
In a recent survey done by C2FO and TPS, more than half of respondents indicated they used either a line of credit or factoring program to gain access to cash. Furthermore, we know that many practices today are investing their time and money on multiple tools and solutions to streamline their operations – but may be overlooking a new way to optimize access to the capital they need.
The next generation of these solutions optimizes cash management within your billing work-flow. New models like embedded capital financing may provide a better solution. With embedded capital financing tools practices can access capital on demand, in a simple to use, low risk way in contrast to traditional banking models.
C2FO is a technology platform that gives you early access to cash flow from your medical payments. C2FO connects with clearinghouses and payers to improve your access to cash flow that can help your overall financial performance.
Integrating C2FO financing technology can simplify your cash flow process and provides:
- Cash the next business day
- Data science capabilities that enable high advance rates and payment predictability
- No change to your Provider claims management system
- Dedicated C2FO engagement team available for service and support
As a TriZetto Provider Solutions platinum partner, C2FO provides this service to healthcare practices and hospitals. C2FO provides easy, cost efficient ways for providers of all sizes to access capital early on payments for claim receivables.
To learn more about the ways C2FO can help your business, click here.