Medical Transcription Invoice Factoring Case Study

The medical transcription factoring specialists at PRN Funding recently invited one of our current medical transcription clients to “spill the beans: in a tell-all interview about how PRN Funding helped her MT service more than double in size. Although it’s posted on PRN Funding’s web site, we also included a copy of it on The Factoring Blog for all of our MTSO readers:

Launching a New Company
In May 2009, Terri Davis started Clear Choice Transcription, a diverse transcription company specializing in the medical field. Having spent 13 and a half years in the industry, Davis knew she would need help managing cash flow to meet payroll and keep vendors happy until the client payments started coming in. She also knew standard financing was not an option. This is when she decided to look into special medical transcription factoring.

“When we launched, our largest client was giving us overflow work only, and some of the smaller clients who were paying very quickly were not enough to fund payroll for future growth. Similar to other business owners in this industry, I did not have a lot of tangible assets to offer a bank as collateral. That’s a good thing in that there’s not a lot you need to purchase, but it made it very difficult to get standard financing,” says Davis.


A Flexible Factoring Lender
Clear Choice Transcription’s flexibility in working with their customers gives them the ability to work with different size medical practices, as well as clinics and hospitals. Clear Choice offers differing pricing structures and domestic and overseas transcription options, works within varying Electronic Medical Record (EMR) programs, and with different dictation styles and templates. And so they appreciated a lender who was flexible working with them.

That flexibility, and expertise, is what sold Davis on PRN Funding, even though they considered other funding partners.

“They were very knowledgeable in the medical transcription industry, and the information I received was very impressive. From the very beginning, they worked with me whenever we needed something a little different. For instance, we had to break a large client’s invoice down into different parts due to issues with the client’s billing system. Instead of simply saying no, PRN Funding immediately presented a very easy factoring solution and it worked out very well,” she says. “And I genuinely like the people at PRN Funding. Their response time is great and they made me feel we were on the right track in partnering with them.”

PRN has an intimate knowledge of the medical transcription industry that helps them help their clients.

“We’re unique in the medical transcription factoring industry in that before I started PRN Funding I worked for the nation’s largest medical transcription company,” says founder Phil Cohen. “So I know the industry inside and out and we have a good number of clients in the space. Having worked in the industry for such a long time, my account managers and I bring a lot of expertise to the table.”

Stabilizing Cash Flow
“In this business, as I am sure with most, without cash flow you’re dead in the water. You can’t pay your people, you can’t move forward, and growth is most times impossible,” Davis says. Medical transcription financing was a great option for Clear Choice Transcription, allowing Davis to bring in the people she needed in order to take on more work while continuing to meet payroll obligations. ”

Terri’s largest client was having some issues with their accounts payable system, getting invoices processed, and there were invoices that were aging out past 60 days,” Cohen recalls. “She was stressed about the fees involved with medical transcription funding, but it was nothing compared to the stress she would have felt if she wasn’t able to make payroll.”


Quadrupling Business Growth
Medical transcription factoring with PRN Funding gave Davis the stable cash flow she needed to quadruple Clear Choice billings in just a nine-month period.

“Thanks to PRN Funding, we had the cash flow we needed to bring in enough people to convert this very large client into a full service account, instead of just the overflow work we had been receiving. That was a huge growth for us. It also helped us bring on new clients, too,” Davis explains.

In the beginning Clear Choice had 25 medical transcriptionists in the U.S. and an offshore vendor. Today, they have 110 medical transcriptionists in the U.S. and about 150 on their offshore team. In a very short time frame, Clear Choice Medical Transcription had grown dramatically.

Value-Add: Peace of Mind
To Davis, knowing she has PRN Funding behind her gives her a secret weapon in the competition for new clients.

“It’s the security of having them there. If there’s a client we’re chasing after and their terms need to be extended to 45 or 60 days, knowing in the back of my mind that I have access to the cash flow immediately after invoicing gives me a very big bargaining chip with the prospect. It’s very helpful in bidding on new clients, to know that we can accommodate their needs without over-extending ourselves.”

As an ongoing PRN Funding client, Davis is excited about the future.

“In this industry, if you don’t have a huge bankroll in the beginning it’s very difficult to get started. We were lucky to find PRN Funding in the beginning, and I’m looking forward to continued growth,” Davis says.

Medical Staffing Invoice Factoring Case Study A Factoring Case Study

The allied health staffing factoring specialists at PRN Funding recently invited one of our previous respiratory therapist staffing clients to “spill the beans” in a tell-all interview about his experiences with using PRN Funding as a medical staffing factor . Although it’s posted on PRN Funding’s web site, we also included a copy of it on The Factoring Blog for all of our medical staffing agency owners to read:

The New “Old-time” Banker: Growing in a recession
When Greg Donnelly bought a small respiratory staffing company in 2006, he immediately set to work growing the business, focusing on providing excellent care and nurturing solid client relationships. First Select Medical Staffing gained a foothold in the market and began to grow, from five therapists to 51. What Donnelly didn’t count on was the deepening recession and resulting credit crunch. His relatively new fast-growing company needed funding for payroll: his first payroll in 2006 was $700, and by April of 2008 it was $40,000 every two weeks.

“Banks weren’t lending to small businesses, especially one that was a staffing company: they didn’t have a lot of experience with companies like mine,” Donnelly recalls.

A medical staffing lender who understands He started looking into funding options and found PRN Funding, LLC, a medical staffing factor, and Phil Cohen.

“I wanted someone who would understand my business and had a track record. Right off the bat his company name told me he understood the medical field. PRN is medical shorthand for patient administered treatments, on an as-needed basis. When we first met and I showed Phil my business plan with my respiratory niche, the increasing demand due to aging population and the seasonal capabilities of respiratory therapy, he totally understood it. He’s a very knowledgeable businessman and I was very impressed. PRN Funding was very responsive from the very beginning and they stayed right with me for any questions I had. I wasn’t just an entity, they made me feel like I was important to them.”

Phil Cohen, founder and President of PRN Funding, felt that even though First Select was non-bankable, they were a fit for PRN Funding. “First Select met all of our criteria very comfortably. They were a start-up company, selling to customers with very good credit. Unfortunately accounts were taking longer to pay than expected and First Select did not have the cash flow to meet its payroll.”

First Select had contracts with more than 100 hospitals and long-term acute care facilities with customers among some of the best in the nation, such as the Cleveland Clinic. Though his clients were stable, the recession affected their cash flow like all other businesses which resulted in their stretching payables to vendors like First Select Medical Staffing.

AR Funding to survive, thrive, monetize
Factoring was a very good option for First Select, allowing Donnelly to grow the business without worrying about having the cash flow to meet payroll and tax obligations. Additionally, it allowed First Select to grow revenue and, in doing so increase the value of the company. PRN Funding gave Donnelly the flexibility to factor invoices when he wanted, without being locked into a contract.

“What was nice about it was that I’d send in my invoices and funds were always available, whether the amount I needed went up or down. I didn’t have to worry that the cash would be there to meet payroll and other obligations. I could focus on growing my company. I don’t think I would have been as successful without it. Like anything else there’s a price to it, but I found the cost very reasonable in order to have that security blanket.”

Value-add: trusted business counselor
Beyond a medical staffing payroll funding solution, Donnelly found a business advisor in Cohen with whom he could discuss business challenges both operational and financial, and rely on for impartial and educated advice.

“Phil was a great sounding board for me and that’s incredibly valuable when you’re in business for yourself. We’d meet for lunch periodically and he’d give me advice if I asked for it. He’s a very experienced businessman and he’s willing to share his knowledge. He would play devil’s advocate and that helped me make decisions. He was interested in my company’s growth, but I didn’t feel it was because he wanted me to factor more invoices. He was an advocate for my company and its growth, and helped where he could, to survive in such a harsh economic environment.”

“I felt the same comfort level with his people; he had obviously instilled a high work ethic in his employees.  My primary representative was excellent. When he was away and I worked with another representative, it seemed as if they had been handling me from day one. I really think it’s the organization Phil built around him that makes PRN Funding stand out.”

Finding a buyer: an unusual role
By 2009, First Select was more than doubling in size each year and Donnelly was working 24/7. Other interests caused him to think about selling the business and he turned to Phil for advice.

“He was very sincere about giving me information so that I would maximize my return on investment. He gave me his opinion on the value of my business, the earnings multiple that was appropriate for similarly sized companies in the medical staffing industry, and how to negotiate an earn-out provision from the sale. I found his advice very helpful in negotiations with several strategic and financial buyers. And I thought that was very impressive given that whoever bought the company might not use his services. He wasn’t worried about keeping First Select as a client, he was trying to help me with advice like he always has.”

In an unusual twist, it was Phil who found the buyer for First Select. “At PRN Funding we have a philosophy that is different than most, we don’t treat clients like we are the end game. Factoring is by definition a bridge to get from point A to point B. When a client comes to us and says I’m ready to move on, I think I can go to a bank, we’ll make the introductions and help them package their business whether for a bank, for sale, or self funding. It’s like sending your kids off to college – it’s gratifying to see them grow, but you know you’ll miss them.”

“Phil was sincere about helping me, I still feel that to this day,” Donnelly says. He has since gone on to start another business venture and has no hesitation in calling on PRN Funding again if needed.

“I still stay in touch because he just feels like a good friend. With PRN Funding, I not only gained a funder, I gained a business colleague in Phil. Whenever we met, I’d leave feeling that we’d had a good conversation and he’d offered good advice. When I was younger, you could go to your local bank and they knew you and you called your banker by their first name. If you needed a loan you’d sit down and talk about it, you had a relationship. Guess what? With PRN Funding I found someplace I can do that again.”

Check out Greg Donnelly’s YouTube interview about how allied health staffing factoring worked for his company:

How Medical Facilities Can Establish Reality-Based Turnaround Times

“When it comes to establishing realistic turnaround-time (TATs), clearly defined expectations are crucial.” That’s the mantra of Elizabeth S. Roop’s article in the November 22 edition of For the Record Magazine. Her article discusses the importance for medical transcription service organizations (MTSOs) to achieve an appropriate balance between speed, quality and consistency with their TAT service-level agreements.

Ms. Roop points out a number of things for medical providers to consider when contracting with an outsourced medical transcription vendor, namely:

  1. High quality, ability to meet TATs and affordability are all pieces of the same triangle. Skimping on any of the three will affect the triangle’s properties. For example, if a hospital demands an MTSO have produce high quality and high speed records, then it must be willing to pay a high premium for those services.
  2. Be sure to take into account any unique medical facility characteristics (i.e. type of records, frequency, required skill levels,  etc.).
  3. Prepare and negotiate ahead of time to handle staffing fluctuations and possible overflow situations. Two scenarios where volume fluctuations are hard for MTSOs absorb are: (1) When a hospital chooses to outsource all of its medical transcription, leaving no in-house staff to pick up the slack; and (2) When a hospital uses an MTSO to supplement in-house overflow. (NOTE: Keep in mind, in either of these situations, an MTSOs cash flow can dramatically change. Receivables can take longer to come in even though the work levels are increasing. One way to counter this situation is to use a medical transcription factoring firm.)
  4. Busy clinicians can also alter turnaround times. It’s important for medical facilities to establish proactive relationships with their clinicians to help avoid nasty surprises and ensure that clinicians are aware of how the quality and timeliness of their dictation impacts the speed with which they receive reports.

In addition to the author’s suggestions, medical transcription industry experts suggest the following tips on how to manage TAT:

  1. Establish whether medical transcription work can be outsourced offshore and make any necessary accommodations to ensure TAT can be met if it will not be.
  2. Clearly define penalties for nonperformance  as well as any “cure” period during which service can be brought back up to par. Also consider specific rewards for outstanding performance.
  3. Conduct due diligence, including checking MTSO references with case mix and TATs similar to what will be expected.
  4. Select an MTSO appropriately sized for the expected demand and ensure it has the resources to handle fluctuations.

Decision Health’s 2010 Private Duty Conference Overview

Last week, PRN Funding exhibited at Decision Health’s 13th Annual Private Duty National Conference and Expo in Las Vegas, NV.

Overall, it was a wonderful conference. Phil Cohen (President of PRN Funding, LLC) and Nikki Flores (Marketing Manager) had the opportunity to speak with a number of  home care agency owners who were interested in using PRN Funding’s private duty factoring services sometime in the future.

PRN Funding is looking forward to exhibiting that Decision Health’s 2011 Private Duty Conference and Expo next year!

Cash Flow Problem – Try Invoice Factoring

There was an article in today’s Wall Street Journal entitled: Fast Money talked about how many companies are using “what was once a controversial way of obtaining quick money–Selling their invoices to a factoring firm.

Although business owners suggest a number of reasons to take advantage of factoring, one of the biggest attractions is no longer having to wait to be paid. Other business owners use accounts receivable factoring to help them get their companies up and running. Still, some business owners see use factoring to help them bridge the cash flow gap for a short period of time.

Still, these same business owners who use factoring also admit that there are some drawbacks, namely the cost of factoring.

The article also included a factoring snap shot for those business owners who are thinking of working with a factor.

  1. Ask Around – Talk to other people in your industry who have used a factoring firm.
  2. Check References – When you find a factoring firm you want to work with, ask them for references.
  3. Choose a Factor who Understands Your Business – Take the time to provide sample invoices for the factoring firm to review ahead of time.
  4. Listen – Communicate with the factor over the phone to get an idea of how the factor will interact with your customers.
  5. Negotiate – Once quoted, try negotiating the rates.
  6. Be choosey – About which invoices you want to factor.

PRN Funding Prepped for Decision Health’s Private Duty Conferece

According to a press release issued last week on their site, the private duty factoring firm will be exhibiting again at Health Decision’s Annual Private Duty Conference and Expo next month.

Private duty and home care agency business owners are encouraged to stop by booth #209 to learn more about an alternative financing option, invoice factoring.

PRN’s August Invoice Factoring Bulletin

Check out some of PRN Funding’s most recent factoring transactions:

A Nurse Staffing Agency Brings on a New Client
This nurse staffing agency owner was ecstatic when she heard that she had won a contract with a local healthcare network. Being an approved nurse staffing vendor in the system meant that she had the ability to fill shifts in five new facilities. The only problem with this growth opportunity is that in order to become a part of the network, the Alabama staffing agency owner had to agree to 60-day payment terms. She didn’t want to walk away from the opportunity, but she also knew that she would not be able to float payroll for that long.

The business owner remembered a postcard she had received earlier that month from PRN Funding, LLC, an accounts receivable factor who specializes in funding nurse staffing agencies likes hers. She dialed the toll-free number and within minutes was connected with a factoring specialist. After a brief interview over the phone, the agency owner realized that PRN Funding was presently accepting payments from the healthcare network, so she was pre-approved for funding. She factored her first invoice two weeks later and hasn’t had to worry about meeting payroll since.

A Private Duty Home Care Agency Gets Paid Quicker
Providing in-home private duty services and being reimbursed by a state’s Medicaid Waiver program has its pros and cons. On the plus side, state dollars are guaranteed to be paid, but one big drawback is it can take a month or longer to receive those funds. As her client list increased, the owner of a home care agency in Massachusetts was having difficulty adjusting to the state’s new invoice approval process. In short, it meant that the home care agency owner would have to wait 30 days to receive a check instead of the historical two-week turnaround time.

A month before this change in the invoice approval process was to take place; the agency owner contacted PRN Funding because she saw one of their posts on a social networking site. She was relieved to know that PRN Funding was already very familiar with various states’ Medicaid Waiver programs. At the conclusion of her initial conversation, the private duty agency owner filled out a factoring application. The following week, she factored her first monthly invoice and received cash the same day.

A California Healthcare Staffing Business Finally Opens its Doors
Without tangible collateral or a profitable operating history, this California healthcare staffing agency owner was unable to qualify for a line of credit at a bank. He found PRN Funding’s Web site late one night when he was researching small business financing solutions. The entrepreneur submitted an online application, and received a call from a healthcare staffing factoring specialist from PRN the next morning.

Within a week, PRN Funding had approved the agency owner’s first two clients, so he was finally able to start placing employees. The following week, the healthcare staffing business owner factored his first invoice, which provided him with instant working capital to pay his payroll taxes and meet his first payroll.

Click here for more information on PRN Funding’s accounts receivable factoring services.

ACE10 Overview

Last week, PRN Funding exhibited at AHDI’s 2010 Conference and Expo at the Hilton Austin in Austin, Texas. Overall, this medical transcription trade show was a good one.

Thanks to the Around the World Contest, PRN Funding’s team of medical transcription invoice funding specialists were able to meet a lot of the show’s attendees. Medical Transcription Service Owners (MTSOs) were especially intrigued by PRN Funding’s factoring services.

PRN Funding looks forward to exhibiting at ACE11 in Phoenix, AZ next year!

Small Business Lending Fund and State Small Business Credit Initiative Blocked

TradingMarkets.com reported on the vote over the Small Business Lending Fund and State Small Business Credit Initiative today. Republicans blocked the small business bill with a 58-42 vote this morning.

The bill was intended to create the Small Business Lending Fund, which would set aside $30 billion to help local community banks get the capital they need to lend money to small businesses. In addition, the bill would help support small business initiatives run by states across the country that are struggling due to local budget cutbacks.

Click here to read the speech US Senator Patty Murray gave shortly before the vote.

United Way Names Cleveland Invoice Factoring Firm a 2010 Pacesetter

Taken from the official PRN Funding press release:

Last week, PRN Funding, LLC was recognized as a United Way 2010 Pacesetter. The Cleveland-based accounts receivable factoring firm was one of the first 84 companies to lock in their increased campaign donations to the United Way.

“PRN is pleased to be in a position to provide leadership assistance to support the United Way in fulfilling its crucial mission.”

The donations will be used to fund the 202 health and human service programs that help of 450,000 Greater Cleveland residents every year.

With years of experience in healthcare industry, PRN Funding has a precise understanding of the unique challenges within healthcare vendor industries. PRN Funding offers financial resources to these companies by purchasing their accounts receivable–a process known as ‘factoring’, which provides the cash needed to sustain and grow a healthcare business.

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