3. Does the bank fully understand your billing process, ongoing financial requirements, and financial management procedures?
If your practice is successful, you no doubt spend considerable time dealing with the health of your patients. Still, you recognize that you are primarily responsible for assuring the financial health of the practice, including your ability repay loans or meet longer term financial obligations.
You need a bank that supports the steps you have taken to manage billing, collections, equipment financing, technology systems, business and malpractice insurance, staffing needs, and other aspects of your business. It should appreciate your decision to have a comptroller or rely on highly-competent staff to deal with these critical business issues on a day-to-day basis. Perhaps you have even retained an outside firm to handle billing and collections. Regardless of your approach, you require a lender that understands how your approach to managing your practices finances results in your ability to meet your financial obligations.
4. What if you need funds to expand your practice?
Perhaps you are planning to add more physicians, expand into another community, or build or rent more office space. You will need funds to purchase or lease equipment and fixtures, hire more support staff, and pay other recurring or one-time costs. When considering your ability to handle this debt, you want a bank that will accurately take into account your practice history, medical specialty, and professional standing at your current practice as well as your plans to build and maintain a patient load and/or revenue stream through your expansion.
5. Adding physicians should increase revenue, but does the bank understand that billings for those doctors will initially be delayed?
New physicians joining your practice, especially those whose patients follow them, may quickly begin to generate billings. However, they must file new applications with the insurers you accept before claims are paid. This could require 90 days or more. This is more or less the same for all practices, but the bank must understand these circumstances when providing you with working capital or a line of credit to support new doctors.
This is a challenging financial time for medical practices. The cost of providing patient care, including equipment, personnel, administrative technology, and facilities is constantly rising. Meanwhile, claims payments levels and time frames require constant monitoring to maximize revenue. Practices that seek additional funds will find no shortage of lenders offering to finance their business. But they need to carefully review and identify which bank can understand and support their specific needs.
Chad Pfeif is a branch president who specializes in providing financing to medical practices. He is an alumnus of The Graduate School of Banking at Colorado.