Selling Healthcare Receivables through Established Relationships- The Benefit of Forward Flow Agreements

Selling delinquent debt has become commonplace in many industries, but it remains limited in the healthcare arena, for many reasons. Hospital financial services executives remain concerned with maintaining control over their account inventory and minimizing public relations risks. Moreover, the unique nature of medical debt requires that healthcare providers conduct considerable due diligence before embarking on the sale of their medical debt. The charitable mission of many acute care facilities, along with the public relations concerns that may result from aggressive third party collection tactics, dissuades many providers from selling their debt. Additionally, the absence of secondary markets has served to hold prices down.

However, facilities that have established a relationship with a collection vendor are now more comfortable with the possibility of an outright sale of their debt, as opposed to the traditional contingency fee contract relationship. In fact, forward-flow agreements are becoming more popular as healthcare providers seek to maximize revenue and immediate cash infusions. Ideally, these agreements contemplate the sale of receivables on a monthly basis, with the benefit of a look-back period which allows for more accurate pricing. As hospitals become more comfortable in the sale of their receivables, we expect that forward-flow agreements will become a routine avenue for revenue maximization.

Jorge M. Abril, P.A. encourages its clients to evaluate the sale of their delinquent receivables as a viable strategy for increasing cash revenues while minimizing their public relations risks.

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