Alleon Healthcare Capital (“Alleon”), a specialty finance company focused on providing healthcare accounts receivable financing, medical accounts receivable factoring, and cash flow solutions to medical providers in the U.S., recently closed a $2,400,000 medical accounts receivable financing facility with a Management Service Organization (“MSO”) in California.
The MSO provides non-clinical management services to providers that are part of Independent Practice Associations (“IPA”). The services help enhance revenues, contain costs and improve quality. The MSO specializes in assisting organizations start up an IPA within two to three months, negotiating health plan contracts, setting up IT infrastructure, assisting with custom branding and marketing services, as well as coding, billing, and collection services.
The MSO generates its revenue by charging its IPA clients a management fee as a percentage of revenues received from health insurance carriers. The MSO approached Alleon seeking financing for its accounts receivable due from its IPA clients in order to restructure its debt and enable its growth plan. Each time the MSO takes on a new IPA client it is required to hire additional staff to set up new IT infrastructure, deal with regulatory compliance, and credential the new client. Payments from the client can take up to 60 days to be received by the MSO so working capital was needed.
The Owner of the MSO said, “I was blown away by Alleon’s services. The process was seamless and quick. I’m very impressed by the professionalism with the staff. Everyone is pleasant to work with and I enjoy interacting with their team. I enjoy it so much that I suggested to have weekly calls with them. They have a team that is very knowledgeable and was open to understanding our business model, processes, and cliental base. Right now, with the state of emergency on COVID-19, a lot of our healthcare community partners and providers are concerned with their businesses and possible delays in payments. I’ve let them know of our financial partner and how comfortable and quickly they have been in funding our needs. One thing that I am confident with now is that when times comes for more growth, I know Alleon will be there to help us and make sure we have what we need to meet our business goals. It’s been such a pleasure working with them. We are excited and looking forward to a long-term partnership”.
The financing facility was made up of accounts receivable billed to IPAs with an advance rate of up to 80%.
“We see the value-based revenue model as a growing part of the healthcare sector. We are very excited to be working with this MSO and its team to help service more IPAs, which in turn will have a positive impact on patients. During these uncertain times it is more important than ever to for us at Alleon to assist medical providers and their administrators with financing solutions” said Ben Rutkevitz, V.P. of Business Development at Alleon.
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