Hospitals Nationwide Are Choosing Vendor Instapay

The Vendor Insta Pay Program Immediately Improves Cash Flow and Bond Ratings for Hospitals and Medical Clinics.

Troon Funding Services based in Tempe Arizona partnered with both Security Capital and Millennium Funding to support Hospital and Health Care Professionals in the Southwest.  The VendorInsta Pay program was developed as a third-party payment program to assist hospitals and health care clinics to pay vendors quicker, and to keep more money flowing through their local economy.

The pilot program was in New York just under two years ago.  Since that time Security Capital has received endorsements from the New York State Hospital Association, as well as from one of the nations largest pharmaceutical companies.  We currently have several hospitals under contract in the Northeast and Mid-West.

In short the program cost the hospitals nothing to implement, improves cash flow, and increases profitability with no long term contracts.

An important note, the Vendor Insta Pay program will not effect the hospital bond ratings or bank covenant agreements.   Since our program is base on taking assignment of existing accounts payable invoices the hospitals balance sheet remains unchanged.   How this works, we pay the vendor immediately upon acceptance of invoice by the hospital, and then the hospital reimburses us in agreed upon terms.

The program is un-secured to the hospital, and the executive level of the hospital is in complete control of what vendors can use the program.  Once Vendors are on the hospital approved list it is their choice to opt-in or opt-out of the program.

The bottom line, we step in as a third party quick payment solution.  The vendors will pay a small discount to get immediate payment on an invoice, thus improving their cash-flow and making them a stronger resource for the hospital.  Again, this program will not interfere with existing banking relationships.  The reason, many vendors already offer quick payment terms, i.e.: 2/10 net 30, although in today’s market conditions many hospitals either can’t or just don’t take advantage of these.

It is important to point out:

The Vendor Insta Pay program will not have a negative effect bond covenant cap limits.  On the contrary, many clients have seen their bond rating and credit rating improve because vendors are being paid faster.

Why…

• The Vendor Insta Pay Program does not lend and/or create additional debt to the hospital.

• We take an assignment of existing accounts payable, therefore the VIP program does not change the balance sheet and  funding of assignments remain un-secured.

• For the hospital, all that changes is the remit to address when payment is processed.  Imagine how much time will be saved by the accounts payable department not having to update vendors as to when payments will be processed.

In summary, we step in and buy the quick payment discount.  The vendor gets what they want, improved cash-flow and the hospital maintain their normal payment terms.

This is the right product for today’s economy because smaller and to a certain extent mid-level company’s are going to find traditional lending sources much more restrictive going forward.   Cash-Flow and access to working capital will be paramount as the economy starts to recover.

That being said, the vendors and hospitals are on a collision course as many of the county hospitals have been forced to slash budgets more so than that of their private counterparts, and it appears that outlook will not change in the immediate future.  Let’s take a look at some of the trends.

• During this economic downturn emergency rooms have been hit extremely hard, while at the same time studies confirm many Americans are putting off elective surgeries.

• Government budgets have been cut at every level, therefore funding has slowed or in some cases stopped.

• US Business leaders responding to their own financial challenges are being forced to cut their own budgets, therefore donation and foundation funding has dipped.

• According to the final report issued on March 6, 2009 by The Lewin Group, just in Arizona alone, they estimate that the Medicaid payment-to-cost ratio will decrease by nearly 6 percentage points from 79.3 percent to 73.4 percent due to AHCCCS payment freeze and reductions.

The end result, going forward hospitals as well as private industry must learn to work on a lower revenue number.  As Medicaid, Medicare, and other government funded programs continue to feel pressure, hospital executives will look to balance their budgets by increasing the cost of care therefore passing on increases to private insurance carriers and patients.

The projections above do not reflect any of the changes being proposed in the New Health Care Reform Act.   As in the movie War Games, after compiling the financial forecasts and projections within this bill, our computer programming concluded that there was no way to win and shut down…

Augmenting these challenges is our current banking environment.  As we discussed, the game has changed in the past year or so as it relates to banks, lending practices, and to a certain extent policies handed down from the highest level.   The bottom line is, banks are not lending and most likely will remain very conservative for some time to come.

That being said, there is an under tow in the commercial lending arena to return to basics. In the months and years to come underwriting guidelines and borrowers loan covenant agreements will be closely monitored and enforced.   Furthermore, many of the banks best customers will be, for the first time in many years, asked to put additional money into their business just to maintain existing lines of credit.  Growth and/or working capital will pose additional challenges.

For several years the pendulum was stuck wide open with regulation and sound credit policies taking a back seat.  Today that pendulum is anchored 180 degrees in the other direction.  To compound the problem, many of our largest fortune 1000 companies  in the past would look to the investment banks such as Bear, Merrill, Lehman’s, et cetera.   Today, those options don’t exist.

Due to recent events, the safety net is gone, and companies, both large and small, will be looking elsewhere for working capital.   As in the early 1980’s, businesses are struggling.  The good ones have done all the right things by cutting expenses, reducing inventories, and in general have learned how to work on lower revenue number while navigating the future without viability.

What’s happening is truly the perfect storm for our economy, and we feel we can offer a win, win, win solution…

That is where Millennium Funding, Security Capital Corp, and Troon Funding Services come in.  We are and have been leaders in the secondary funding market for the past two decades.   We have the talent, infrastructure, discipline, and working capital to help businesses grow.

Our family of companies offers several real world solutions within today’s monetary landscape.  We know, companies will be looking for funding alternatives to expand.  Furthermore, we understand how important it is to support business owners within the local community.  Healthy companies create more jobs; broaden the tax base, and supports growth for others within the district and/or region.

For more information contact :

Darren Grady

President :  Troon Funding Services

Arizona Office : 480-239-9879

Darren@TroonFunding.com

New York Office

Darren Grady

VP Southwest Region : Millennium Funding & Security Capital Corp

877-863-3760  ext 235

Darren@VendorInstaPay.com