Ambulatory Surgery Centers: Working Capital Solutions

June 28, 2018 by CNH Finance, LP in category “Financing”

Ambulatory surgery centers provide vital services to patients while simultaneously taking a large burden off of general hospitals. However, ambulatory surgery centers need supplies, dedicated and trained staff, and much more to keep things running efficiently and effectively. Keeping a source of working capital is one of the biggest challenges facing ASCs across the country.

Ambulatory Surgery Centers Can’t Rely on Cash Flow

Cash flow poses an issue to every healthcare provider, but especially ambulatory surgery centers. Patient invoices are often on staggered payment schedules, and the processing time for insurance claims can take quite a while to get approved. In a single month, ASCs frequently end up with more expenses compared to incoming revenue.

Debt Can Make Things Worse

Ambulatory surgery centers have turned to loans in the past, only to end up in dire financial situations. Loans can provide a temporary infusion of working capital, but they also place debt on the balance sheets. Loans also provide a finite amount of capital. If finances get turned upside down in the future, ASCs will need to take out yet another loan, which will compound the liabilities on the books, and negatively impact credit ratings. Loans can cause ambulatory surgery centers to go bankrupt very quickly.

Renewable Capital without Debt

ASCs have another option for accessing working capital without placing debt on the books. Asset based lending provides a renewable source of debt-free working capital. Asset based lending can be arranged quickly to provide the funding needed to keep ASCs running. Asset based lending is essentially a revolving line of credit structured around the value of owned assets such as receivables, vehicles, facilities, equipment, and more. Ambulatory surgery centers can access the line of credit as needed, and for any purpose. When the balance owed is repaid, the amount of financing available is replenished. Like any other revolving line of credit, asset based lending can be used indefinitely. What’s more, as an ASC sees more patients, generates more receivables, or acquires more equipment, the amount of financing will also increase.

Get the Capital Your ASC Needs

CNH Finance specializes in solutions for the healthcare industry. We know traditional loans and cash advances can end up doing more financial harm than good in the long run. For these reasons and more, we provide asset based lending to practices and healthcare centers of all sizes, so they can keep treating patients and provide a better level of care. Contact our offices to learn more.

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