Understanding Medical Transcription Services
Definition and Importance of Medical Transcription
Medical transcription is the process of converting healthcare providers’ voice-recorded dictations into written reports. This service is indispensable for ensuring the accuracy, completeness, and accessibility of patient medical records. By transforming the spoken words of healthcare professionals into written documents, medical transcription plays a pivotal role in patient care, billing, and legal records. Accurate transcription is essential for creating and updating patient records, which are critical for delivering high-quality patient care and maintaining comprehensive medical histories.
Role of Medical Transcription in Healthcare Industry
Medical transcription is a vital component of the healthcare system, supporting the work of healthcare professionals by ensuring that patient records are meticulously maintained. The process demands a high level of attention to detail, as accuracy is paramount due to the high-stakes nature of healthcare. Accurate and up-to-date patient records are crucial for informed decision-making and effective patient care. Medical transcription services help healthcare providers maintain these records, thereby enhancing the overall quality of care and ensuring that patient information is readily available when needed.
Challenges Faced by Healthcare Providers
In-House Medical Transcription Challenges
Healthcare providers often encounter significant challenges when managing medical transcription in-house. These challenges include the high costs associated with hiring and training skilled medical transcriptionists, as well as the need for specialized equipment and software. Additionally, the administrative burden of overseeing the transcription process can be substantial, diverting valuable resources away from core clinical activities. In-house medical transcription can also be time-consuming, further straining the resources of healthcare providers. Outsourcing medical transcription services can help alleviate these challenges, allowing healthcare providers to improve their efficiency and productivity. By outsourcing, healthcare providers can focus more on patient care and less on the administrative tasks associated with transcription, ultimately enhancing their overall operational effectiveness.
Discounted Rates
When a factor advances you money on your receivables, they are actually making a legal purchase of your invoices at a discounted rate. This discounted rate can be a one-time flat fee, or it can vary depending on how long the factor owns the invoice, whereby the factor charges a certain percentage corresponding to the number of days that it takes for the invoice to be paid. It’s important that you know upfront how the factor determines its fees to make sure that you are getting the best deal for your invoices.
And of course, it all boils down to how your own company operates, how long it takes for your customers to pay your invoices and what you feel comfortable paying. In general, discount fees can be affected by a number of things, including the length of the contract to which you are willing to commit, the average monthly purchase volume of your account, the average size of your invoices, the number of account debtors (customers) you do work for and the credit quality of those debtors to name just a few variables.
Advance Rates
Among some other things to consider when selecting a medical transcription financing company are the factor’s advance rates. Advance rates are exactly what they sound like, the amount of money that a factor advances you up front upon purchasing your invoices. Currently, the industry norm is 80 percent. Of course this rate can vary, and oftentimes factors determine their advance rates on a client-by-client basis.
There are a number of aspects that could affect your advance rate, and they frequently depend on your customers’ payment history. In fact, most factors will ask that you provide a current accounts receivable aging report sometime during the approval process to get an idea of how long it takes for your customers to pay and if they generally pay the invoices in full. Quick payments and payments that are made in full will increase your chances of having a higher advance rate. In addition, some factors will increase the advance rate over time as your business grows and the factoring relationship solidifies.
On the other hand, if your customers routinely short-pay on your invoices or if they take longer to pay, your advance rate most likely won’t be as high. One example is signing a contract with a hospital that is net-60, and the hospital is notorious for paying 30 days late. Since it becomes harder to collect on invoices the longer they go unpaid, a factor that knows your clients pay in 90 days will not feel as comfortable advancing you a high amount on your invoices.
Of course there are both positives and negatives for high and low advance rates. For example, a factor advancing 95 percent upfront will probably charge higher discount fees, but you have the benefit of receiving funds for the entire invoice amount. On the other hand, a factor that advances 75 percent will charge lower discount fees, but you won’t be able to receive as much money up front.
Before making your decision based on the advance rate and discount fee alone, make sure to look into the factor’s extra fees. Some examples of “extra fees” that a factor may charge include application, origination and due diligence fees. These charges are often set in place to cover the costs of running credit and background checks on your customers, compiling and shipping legal documentation and putting a lien in place once you become a client.
Other factors will add in administrative fees for postage, long-distance phone calls, or computer time. Then there are fees associated with funding procedures, identifying set prices for a same-day wire to your bank account or an overnight transfer of funds. Most of the remaining costs can be bunched into the category of “penalty fees,” in which a factor could charge you more for misdirected payments, aged invoices or an early termination of your contract.
Although advance rates and discount fees tend to be the main concern when business owners are shopping for medical transcription receivables funding, I hope that this article has helped you realize that they are not the only two things to consider. There are a number of other types of fees that may or may not be tacked onto your funding deal, depending on the factor. In addition, like I stated in the previous article, depending on the volume your company is invoicing on a monthly basis and where you are located will all play a crucial role in your overall decision-making process.
I encourage you to read the third and final article in this series to explore the legal documentation involved with a medical transcription factoring deal. You will find that the length of time you are willing to commit to selling your invoices to a factor as well as the type of guaranty you are willing to sign are important aspects to consider when looking for the factor who will best be able to meet your medical transcription invoice financing needs.
