Medical Practice Cash Flow Solutions: Bridge Insurance Payment Delays

The Healthcare Reimbursement Challenge

Healthcare is one of the few industries where you deliver the service immediately but can wait months to collect. You see the patient today, document and code the encounter, submit claims, handle denials and requests for information, and then wait for the payer’s payment cycle to run—regardless of whether payroll is due on Friday.

Medicare often moves faster than many commercial payers, but there’s still a defined waiting period (a “payment floor”) before payment can be determined on clean claims. CMS’s Medicare Learning Network notes a minimum wait of 14 days for electronic claims and 29 days for paper claims when checking clean-claim payment status. Source (CMS MLN).

Commercial insurance timelines can be longer—especially when pre-authorization, medical necessity reviews, or coordination of benefits are involved. On top of payer timing, patient responsibility (copays, deductibles, coinsurance) adds another layer: collections don’t always happen at time of service, and patient balances can age out if follow-up isn’t consistent.

The larger your practice becomes, the larger your A/R becomes. One benchmark-driven way to think about this is “days in A/R” (how long it takes to collect on charges). A revenue-cycle benchmarks article frames 40–50 days as average and 60+ days as below average performance, depending on payer mix and specialty. Source.

Key stat: If your practice runs $100,000/month in revenue and has 45–60 days tied up in A/R, that’s roughly $150,000–$200,000 sitting in outstanding receivables at any given time. That doesn’t mean the practice is “unhealthy”—it means your cash conversion cycle is structurally delayed by reimbursements.

This guide covers every financing option available to healthcare practices, from equipment financing to A/R-based working capital, so you can focus on patient care instead of cash flow stress.

7 Types of Financing Available to Medical Practices

1. Medical Equipment Financing (Best for: Diagnostic Equipment, Technology, Dental Chairs)

Equipment financing uses the equipment itself as collateral, which often produces better pricing and longer terms than unsecured working capital. For many practices, this is the cleanest way to upgrade technology without draining cash reserves that are needed to float reimbursements and payroll.

Typical terms include $10K–$500K, 5–12% APR, and 2–7 year terms, with approvals commonly in 24–72 hours when the quote is clear. Credit scores of 640+ are often preferred, but options exist for lower scores (sometimes with larger down payments).

Real scenario: A dental practice needs two new digital X-ray systems ($65,000 total). An equipment loan at 8% APR over 5 years is about $1,318/month, while improved diagnostics and workflow can support significantly higher monthly production.

2. Medical A/R Financing (Best for: Insurance Reimbursement Delays)

A/R financing (including factoring/purchasing) is designed specifically for delayed reimbursements. Rather than borrowing based solely on credit score, the program advances cash against eligible receivables and collects as payers reimburse. For practices with strong payer mix and consistent claims volume, it can be an ongoing cash-flow tool rather than a one-time loan.

Typical structures include advances of 70–90% of eligible A/R value and fees that can look like 2–5% per 30 days (depending on payer, aging, volume, and structure). Setup often takes 2–5 days. In many cases, A/R quality matters more than the owner’s credit score.

Real scenario: An urgent care has $280,000 in outstanding claims (average age ~45 days). An A/R program advances ~$238,000 (85%) within a few days to cover payroll and supplies while claims process.

3. Practice Working Capital Loans (Best for: Operational Expenses)

Working capital term loans provide a lump sum for payroll, supplies, rent, marketing, or general operating expenses. They’re fast and flexible, but typically more expensive than equipment financing because they’re usually unsecured and short-term.

Typical terms: $25K–$250K, 10–25% APR, 6–24 months, funded in 1–3 days. Credit requirements often start around 620+. The key is matching payment size to reimbursement timing so fixed payments don’t create stress if a payer cycle slips.

Real scenario: A specialty practice hires two new physicians. Credentialing can take 90–120 days, but payroll starts immediately. A short-term working capital loan can bridge the ramp until claims begin paying reliably.

4. Business Lines of Credit (Best for: Recurring Cash Flow Needs)

A line of credit is revolving: you draw, repay, and draw again. For practices with recurring A/R timing gaps or predictable seasonal patterns, a line can be a cost-effective “buffer” so you don’t need a new loan each time reimbursements run behind.

Typical terms: $25K–$500K, 12–20% APR, with approval in 3–5 days for many programs. Many lenders prefer 660+ credit and 2+ years in practice. You pay interest only on what you use, but lines often require annual renewals and updated financials.

Real scenario: A multi-physician practice maintains a $150,000 line. When reimbursements lag, it draws $40K–$60K for payroll and supplies, then pays down when remittances arrive.

5. Practice Expansion Loans (Best for: Second Locations, Major Growth)

Expansion financing supports second locations, major renovations, or adding new service lines. These are larger, longer-term facilities and typically require strong financials and documentation. SBA can be a fit when timelines allow.

Typical terms: $100K–$2M at 8–15% APR over 5–15 years (longer for real estate). Approval may take 7–30 days for some conventional lenders, and 30–90 days for SBA. These products often require personal guarantees and a clear expansion plan.

6. Practice Acquisition Financing (Best for: Buying an Existing Practice)

Acquisition loans finance the purchase of an established practice, often including goodwill, equipment, and working capital. Underwriting is thorough because lenders review the target practice’s cash flow, payer mix, and sustainability, along with your credentials and credit.

Typical terms: $250K–$5M, 7–12% APR, 7–15 years, with timelines often 30–90 days due to valuation and due diligence. SBA is common in practice acquisitions.

7. Revenue-Based Financing (Best for: Emergency Situations)

Revenue-based financing is speed-first funding based on deposits, repaid via daily/weekly ACH. It can solve urgent problems—like an unexpected equipment failure—when a practice needs cash within 24–48 hours and other products can’t move that quickly.

Typical terms: $25K–$250K, factor rates 1.20–1.40x, 4–18 months. It’s usually the most expensive option. A realistic approach is to use it only when the business impact of waiting is worse than the financing cost.

Cost example: Borrow $50,000 at a 1.30 factor rate = repay $65,000 total.

Managing Insurance Reimbursement Delays

Insurance reimbursement is the #1 cash flow challenge for many practices. You provide care now, then wait for payers to process claims, request documentation, and issue payment.

Understanding Medical A/R Cycles

• Medicare: often faster than commercial, but still has clean-claim payment floors (CMS MLN)
• Commercial payers: timelines vary; denials and coordination issues can slow cycles
• Patient responsibility: can be the slowest without strong point-of-service collection

Best A/R Financing Solutions

• A/R factoring/purchasing: best for large eligible A/R and strong payer mix; costs often quoted as fees per 30 days; setup takes a few days.
• A/R-based line of credit: best for recurring needs; borrowing base tied to A/R quality; requires ongoing reporting.
• Working capital term loan: best for specific short-term needs (credentialing gaps, provider ramp); fixed payments regardless of payer timing.

Improving Your A/R to Reduce Financing Needs

• Verify eligibility before service when possible
• Submit claims quickly (same day or within 24–48 hours)
• Follow up aggressively on claims aging beyond 30 days
• Appeal denials promptly and track denial reasons by payer
• Collect patient responsibility at time of service when feasible

Medical Equipment Financing: Preserve Cash While Upgrading Technology

Medical equipment is expensive, but it’s essential for care quality and competitiveness. Equipment financing lets you upgrade technology while preserving cash for payroll and supplies.

What Qualifies for Medical Equipment Financing

• Diagnostic equipment: X-ray, ultrasound, CT, EKG, spirometers
• Dental equipment: chairs, imaging, sterilization, CAD/CAM
• Surgical equipment: tables, anesthesia, lights, endoscopy
• Veterinary equipment: radiography, ultrasound, anesthesia, lab equipment
• Practice technology: EMR/EHR, servers, telehealth systems, computers

Practice Expansion & Acquisition Financing

Growth is capital intensive. Expansion and acquisition financing can be structured to align payments with practice cash flow, but it typically requires strong financials and more documentation than fast working capital products.

Working Capital for Payroll & Operations

Working capital is your “stability tool” when reimbursements lag—covering payroll, supplies, rent, and vendor payments while A/R converts to cash.

Helpful related resources: working capital loans and equipment financing.

New Practice & Startup Financing

New practices are financeable, but underwriting looks different because cash flow is still ramping. Many lenders rely on credentials, experience, and a plan—plus personal credit and liquidity.

How to Qualify for Medical Practice Financing

Healthcare lenders often evaluate A/R quality, payer mix, and practice stability—not just credit score. You’ll move faster by having your A/R aging report and financials ready.

Medical Practice Financing Options Compared Side-by-Side

Medical Practice Financing Frequently Asked Questions

How Our Free Matching Service Works

CommercialLendingBroker.com is a free matching service. We’re not a lender. We connect practices with lenders and brokers who understand reimbursement cycles. You compare offers and choose what works best—there’s no obligation.