There are a number of complexities and challenges that the asset based money lenders face when they lend in the health care market. However, if you are into secured money lending, there are a few specific lending as well as revenue cycle management tactics to follow. This will lead to effective lending against Medicare receivables.
However, easy as may sound there are a few things that you should be aware of and at the same time have an efficient and experienced team to deal with the unique set of issues that are most commonly associated in such type of lending.
- First, you will need to know that the overall outpatient migration. This is expected to continue fully giving rise to a most obvious question such as: what will be the final outcome of those specific health care facilities that no longer requires the present levels of real estate assets?
- Next up, you will need to know the specific trends that are particularly detrimental to the LTACH’s and SNFs or Long Term Acute Care Hospitals and Skilled Nursing Facilities.
It is seen in most of the cases patients prefer home care over onsite care increasingly. This points out to several directions.
- This is why it is all the more necessary to consider the real estate properties of health within its peripheries as well as the perspective of the industry agnostics.
- It is also required to consider the necessities in terms of the transition of it from a typical health care facility to a specific purpose facility.
- In addition to that, the money lenders must also look at all of the demand factors as well as its costs including the overall need for such health care specific real estate whether or not it diminishes over time.
Therefore, all this leads to a simple inference: what are the ways in which the asset based money lenders can best protect them against such challenges? This should be the concern for all lenders irrespective of their stature or nature, whether they are traditional banks or credit unions or any online money lenders such as https://www.libertylending.com/ or others.
Points to consider
It is important for the asset based money lenders to look into a few specific points before they lend so as to make sure that their money is well protected and at the same time the yields on their investments are high enough to sustain such a competitive market.
- First, the money lenders must understand the behavior of the borrowers what they are doing in order to protect the collateral help by the money lenders against those specific trends that pose considerable threats to the value of the assets.
- Secondly, it is also required by the asset based money lenders to make sure that they know about the common practices that comprises of revenue cycle management and stay current on it.
In this matter and function, the Chief Financial Officer plays the most significant role of the leader. It is therefore required that you have a continuous, clear and frequent communication with the CFO on the specific behavior of the payers, private or government organizations.
However, it is paramount that these practices are followed before any such issues arise because it is only then you will be able to know about the early warning signs against pressures and stresses that the companies usually face while moving forward.
Underlying financial performance
In addition to that, the organizations must also consider the underlying financial performances and focus on the ways to achieve the different and diverse investment objectives that you may have. At this point, it may be wise for you to act as an early advocate of such specific transactions that will ideally refinance or repay all of your debt obligations.
Typically, it is the risk of liquidity that becomes the most significant factor because when it is in a tight situation this will result in several conditions that will pose big enough additional challenges making things even more vulnerable. These conditions include:
- The diminishing value of returns for the enterprise
- The significant increase in the cost of recovering the collateral held
- The damage caused in reputation and lastly
- The lack of sharing responsibilities by most of the junior participants in the specific capital structure.
However, it will be easy for you as well as all of your stakeholders to come out of such a sticky situation to a more salvageable level if start the process early enough for example when the company has adequate liquidity. This will provide you with an increased opportunity to deal with the seller’s market currently to reach to this level.
Unique aspect of payments
Lastly and perhaps most importantly, it is essential for the asset based money lender to understand the payment aspect which is unique by itself when it concerns Medicare. There are a few specific points to consider such as the time it might take to get the payments reimbursed.
The payment is an important aspect specifically because Medicare does have the power to assess and decide it to be overpaid to a health care entity. This they can do even years after the initial bill was paid. This is because of the following chain reactions:
- Medicare usually takes years to audit an annual cost report that may be submitted to it by a hospital
- This may in turn result in a substantial un-matured and un-liquidated repayment risks provided that Medicare determines it has overpaid the health care provider for a significant period of time since the initial payment of a claim.
In addition to that, the courts may also generally hold that even if the specific statute of limitations prevents a creditor to file a suit to collect the due amount, it does not necessarily bar the money lender from invoking the remedies that will recoup or set off the debt against any other claims made by the debtor against the creditor.
In other words, it can still be recovered by Medicare through offset of payments that are owed to the supplier or the provider otherwise.