Medical practice funding that plans for claims lag

In depth

How claims lag shapes your cash

Medicare builds a wait into the rules. Its contractors can't pay a clean electronic claim until the 14th day after receiving it, and paper claims wait until the 29th day. Commercial plans and Medicaid programs follow their own contracts and schedules, and a denied or pended claim resets the clock. A clean claim is one the payer can process without chasing more information, so coding and documentation are cash-flow tools too.

So this week's payroll gets paid from claims filed weeks earlier. A growing practice feels it most: more visits this month means more cash tied up in claims before any of it comes back.

Deductibles add a second lag. When most of them reset in January, more of each visit becomes patient responsibility, collected at the desk or billed later. Track days in accounts receivable by payer, since that number tells a funder more about your cash than total billings do.

New providers and the credentialing gap

Enrolling a new physician or nurse practitioner with each payer takes time, and their claims can't be paid until it's done. Salary starts on day 1. The same gap opens when you add a location that needs its own enrollment. Timelines vary by payer, so ask your billing team for realistic dates rather than best cases, and budget for payers that ask for more documents midway.

A line of credit sized to the ramp-up fits this well: draw monthly while credentialing runs, then repay as the new provider's claims start paying. A short advance with a daily debit is a poor match, because the revenue it's meant to bridge hasn't started yet.

Openbook Capital shows each offer's total payback, cost in dollars, payment schedule and estimated APR side by side. For a ramp-up, look hardest at the payment schedule, since the early months are the tightest.

Equipment and practice purchases

Equipment financing covers imaging, lasers and lab analyzers, with the equipment as collateral and a fixed payment. Compare it against a lease if you expect to upgrade before the equipment wears out.

Buying a practice or a partner's share is a different scale of decision. SBA 7(a) loans can fund a change of ownership, including a partial one, and SBA 504 loans finance buildings and long-life equipment, though not working capital or inventory. Both take longer to close than short-term funding, so start early. Our SBA guide walks through the programs.

Keep a building purchase and a cash gap in separate conversations. A 504 loan's long-term, fixed-rate structure suits real estate, while a working capital need is better met by a line you can pay down in months, not decades.