Is a medical practice bankable?

Why lenders like medical

Recurring patient relationships, a licensed profession, non-discretionary demand and low failure rates. On paper a medical practice is close to an ideal small-business credit, and SBA lenders compete for acquisition files in this space.

Payor mix is the number that changes the answer

Two practices with identical collections can look completely different depending on who pays them and how quickly.

• Commercial insurance — reasonable rates, predictable remit, the healthiest part of most mixes.
• Medicare — reliable but rate-constrained, and slower than commercial.
• Medicaid — lowest reimbursement and slowest remit, and in some states materially so.
• Self-pay and cash — fastest collection and highest realization, and the most volatile.

Collections, not production

Production is what you billed. Collections is what arrived. The spread between them is your realization rate, and it exposes coding problems, denial rates and follow-up discipline better than any other single figure. Bring it — most practices do not, and having it marks you as run rather than merely busy.

Acquisition is the strongest use

Buying a practice, buying into one, or acquiring a retiring physician's panel are all excellent SBA 7(a) files, for the same reason as dental and veterinary work: the value is goodwill, conventional lenders will not finance goodwill, and the SBA guarantee is what makes it possible.

Credentialing timelines matter here in a way buyers underestimate. If you cannot bill under the practice's contracts on day one, model the revenue gap and tell the lender you have modelled it.

Medical receivables factoring is its own product

Factoring insurance receivables is specialized — the payer is an insurer rather than a customer, remittance is partial and adjusted, and denials complicate the buyback. Generalist factors handle it badly. It works, but it needs a funder who does healthcare specifically.

Where medical files get declined

• Days in A/R above 75–90 with no working capital facility to bridge it.
• Payor concentration in slow-remit programs with no reserve.
• Cash-basis books on a business whose entire dynamic is timing between service and payment.
• Provider-dependent revenue where one physician produces nearly everything.
• Billing and coding problems visible as a widening production-to-collection gap.

Why practices take advances they shouldn't

Insurance remits slowly and unevenly while payroll and lease are fixed and monthly. A practice waiting 75 days on A/R can look cash-poor while being entirely healthy.

Medical receivables factoring solves the actual problem — the timing of the remittance — without taking a share of every deposit. It needs a funder who does healthcare specifically.