Question: When is a business loan is not an adequate strategy to meet working capital requirements of a hospital or other health professional? Answer: If the provider to improve its cash flow needs, but can not afford or are not his fault … Increase capacity and / or time constraints and the required amount of capital are not adequately served by the inherent limitations and sought delays in the process of credit.

While lending a viable part of the strategy and the traditional working capital of the country hospitals, they are not the financing vehicle available, they are not necessarily the most efficient way for the growth of a provider health, development, and in some cases the financial survival . The following case study illustrates how a hospital has a financing solution is best found by trial and error.

The hospital in California, called receivables financing medical with Sun Capital HealthCare, Inc. (SCH), while simultaneously applying for an asset-based credit line. In the initial interviews, the management of hospitals reported that their need was severe, the flow of money and its collection of receivables financing type of funding to improve medical decisions. It would be a predictable and stable cash flow is based solely on their hospital debts and the amount of resources would not be limited by the available assets of the hospital from a bank in evaluating fire-sale “prices. But after SCH submitted a letter of intent in the offer of the terms and conditions of the transaction, the hospital management rather than an asset-based loans held by one lender offered to run large regional, primarily because of their inability of the comfort zone of their traditional mind set cash.

Less than six months later, the hospital management is to ask to ensure SCH other receivables financing proposal to the amount of capital and the flexibility they need. Here are the reasons the hospital has to make the transition to finance receivables:

* After nearly six months, the administration of the hospital in the exact cash position still water, they were before their acceptance of asset-based lending.

* The credit facility was based on assets to their needs because of unrealistic and significantly “undervalued the bank unsatisfactory” rating of the assets held by the clinic.

* The Bank has been closely monitoring the requirements from the hospital (a major asset in the pool) and was quick to discredit the guarantee after 90 days aging achieved. Therefore:

o pay to the line of funding in this phase depends on hospital claims made within 90 days or less.

o The line has been exhausted “and then meet daily cash requirements has become a challenge.

* Hospital management reported that the significantly higher valuation of claims made by SCH and over a longer period of eligibility for the most appropriate solution to their financial needs loan.

to share with financing health care receivables, the institution of health capital in the short time in a stronger position in cash. They were successful in creating new services and procedures, resulting in hospital revenues, as a direct result of this strategy of working capital. In addition, because CHS has very experienced owner of the business of health care, support not only finance health care SCH-team in the position, hospital management and its consultants familiar with the operating board, for the survival of healthcare providers financial and subsequent growth was contributed.

In less than two years, was a traditional bank loan for the hospital, the medical now a financially strong institution made. Citing CEO of the hospital, “Without the help of Sun Capital Health Care Receivables financing program, we have never reached the level of financial health, to qualify us, and accordingly allowed the installation of a conventional bank financing. Thank you, Sun Capital HealthCare,> Inc.

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