Alleon Provides $2.4MM Medical AR Financing Facility to a MSO

Alleon Healthcare Capital closed a $2.4 million 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. 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.

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,” Ben Rutkevitz, vice president of business development at Alleon, said. “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.”

Alleon Healthcare Capital, a division of Alleon Capital Partners, is a specialty finance company focused on providing cash flow solutions for healthcare providers in the U.S.