Accessing capital is critical for long-term care facilities looking to expand services, upgrade technology and enhance patient care within an increasingly competitive and demanding market. While traditional paths like property company loans have been relied upon for years, emerging complementary asset-based lending (ABL) solutions from specialty healthcare lenders offer ways to increase cashflow to meet the evolving needs of these facilities. This guide for long-term care facility owners provides an overview of these financing solutions and their potential to unlock additional liquidity for operations. 

The rise of ABL from specialty healthcare lenders

Specialty healthcare lenders have emerged as key players in today’s financing landscape, offering ABL solutions that meet the needs of long-term care facilities. These lenders have an in-depth understanding of healthcare facility operations, regulatory compliance, and revenue cycles.  

  • Industry-specific knowledge: With a deep understanding of healthcare regulations, reimbursement models, and operational challenges, these lenders’ structure ABL solutions to cater to these unique factors. 
  • Flexibility: Specialty healthcare lenders tend to be more flexible in their approach to financing, offering customized terms and repayment structures that support the cashflow dynamics of healthcare facilities. 
  • Scalability: Specialty lenders provide scalable financing solutions that can grow alongside the healthcare facilities, ensuring they can access capital as needed. 

Consider this real-life example. A long-term care facility was facing financial pressures imposed by decreasing reimbursement rates from their insurance companies and extended payment terms. Their cashflow was becoming increasingly strained, making it difficult for them to meet their monthly expenses. By leveraging a flexible $1.2M revolving line of credit from eCapital, they gained access to the funds they needed to cover payroll, purchase essential supplies, and maintain quality care standards. 

Benefits of complementary ABL

Complementary ABL solutions offer several advantages, empowering long-term care facilities to leverage their accounts receivables to increase access to working capital. 

  • Enhanced liquidity: By leveraging assets such as accounts receivable, and facilities up to $50 million with ABL, long-term care facilities can access the liquidity needed to address pressing financial needs. 
  • Flexibility in financing structures: ABL solutions from healthcare lenders offer unparalleled flexibility in structuring financing agreements, allowing facilities to tailor repayment schedules and terms to align with their cashflow cycles. 
  • Scalability and adaptability: ABL is scalable and adaptable to changing financial requirements. As healthcare facilities grow and evolve, ABL solutions can easily expand alongside them, providing access to additional capital to support expansion initiatives, equipment upgrades, or new services offerings. 

Navigating the ABL landscape

Navigating the ABL landscape requires careful consideration and strategic planning. Facility owners must understand their needs, evaluate options, and negotiate terms to ensure optimal outcomes. 

  • Considerations for healthcare facility owners: Assess financial needs, evaluate available options, and set strategic goals.
  • Identifying suitable specialty healthcare lenders: Seek out lenders with expertise in the healthcare industry, a track record of successful lending partnerships and a commitment to understanding the facility’s specific needs and challenges. 
  • Tips for negotiating terms and structuring ABL agreements: Prioritize alignment with long-term objectives and maximizing benefits. Clear communication, transparency, and collaboration with lenders are key to negotiating favorable terms and ensuring that the ABL solution meets your facility’s needs.  

In conclusion, the significance of complementary ABL solutions for long-term care facilities cannot be overstated. By exploring ABL options and tapping into the expertise of specialty healthcare lenders, facility owners can access the additional capital needed to drive growth and innovation within their facilities in an ever-evolving healthcare landscape. ABL stands as a transformative strategy in healthcare financing, serving as a complementary solution to typical property company loans, and providing the capital essential for ensuring long-term success.  

Author Bio

With more than 20 years of experience in specialty finance, Tim Peters is the President, Head of ABL Group of eCapital. In this role, he leads a dedicated team responsible for originating, managing, and monitoring eCapital’s healthcare portfolios and market strategy. Before joining eCapital, Tim Peters founded and was the CEO of CNH Finance, a specialty finance company specializing in the healthcare sector. CNH Finance was acquired by eCapital in 2022.