More Physicians taking to Merchant Loans

More Physicians are taking to merchant loans for financing for their practice. This must be considered a barometer with regard to financing in the medical industry. An increasing number of medical practices, both Physicians and Dentists turning to these methods of financing may be a cause for alarm.

The short term gain is the cash flow the practice needs. However, with an average repay term of only 6-9 months, the repayment schedule's negative impact on the Practice's monthly cash flow may make the disadvantages outweigh the advantages for some practices. Careful consideration to the impact on monthly cash flow must take place.

10 to 20 years ago, physicians, including Dentists remained in traditional financing programs, primarily at banks. The ever increasing financial challenges of Insurance reimbursement rates and insurance premiums erode the net profits of Medical practices. The trend is sure to continue as insurance liability rates do not appear to be leveling off to the level of inflation. The trend in recent years has been for reimbursement rates to decrease, rather than increase, so the trends are not in favor of the Physicians in this regard as well.