Medical Office Rent: Mistakes to Avoid

Regardless of what industry pundits say, opening a medical practice can be both very rewarding and very lucrative. Of course, as with any business, medical offices have their own specific financial challenges. One of the biggest challenges for medical practices of all sizes is adjusting to the long payment cycles of private insurance providers and Medicare/Medicaid.

If you are new to practice or are just looking to change your current location, consider the following leasing pros and cons to help you make your decision.

However, there is a light at the end of the tunnel. There is a financing tool that lets you capitalize on your slow paying insurance companies and turn their slow payments into immediate payments. The solution is to factor your medical receivables.

Medical factoring presents an interesting financing alternative. It provides you with financing that is tied to your insurance claims. If you file more claims this month than last month, your financing goes up accordingly. It provides you with predictable cash flow, ensuring that you are able to meet your office expenses. You’ll have predictable money to pay rent, meet payroll and invest in growth.

And, medical factoring is ideal for small medical offices. Although most factoring companies have minimums, many will finance an office that is billing as little as $50,000 (net) per month.

The remaining 20% is called the reserve, and is used to settle billing discrepancies. Once the insurance company pays the medical bill, the remaining 20% is rebated, less the financing fee. The financing fee varies based on how long the invoices were financed.

Although qualifying for factoring is relatively simple, most financing companies will only work with medical offices that have net collectibles of at least $50,000. Terms usually get better as the practice grows. Medical practices, testing centers and medical supply companies that have over $200,000 a month in net collectibles are in the best position to get the best terms. This is because insurance payment processing can be very complex and there are a number of efficiencies that can be realized with high volumes.

If your small medical practice has slow cash flow but good growth prospects, then factoring may be the tool to help you finance your growth.

When it comes to rent an office space, getting the right information can be a daunting task. That’s why we put together this confidential report for you at medical office rent in miami fl

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