Doctor Williams is having trouble making ends meet. More often than not, his patients are covered by private insurers who tend to take a long time to settle the bills. His liquidity position has been deteriorating rapidly and he may need to choose between layoffs or closing the doors. How can he better manage his accounts receivables?
A) He should forget about layoffs, and hire more staff to handle the insurance claims.
B) He should decrease the overhead costs by moving to a smaller facility with less expensive rent.
C) He should consider contracting a factor to handle outstanding payments.
D) He should charge extremely high consultation fees and deny treatment to those who don't pay.

Question

Quizplus · Accepted Answer

Contracting with a factor can help Doctor Williams by providing a lump sum payment upfront for outstanding payments, reducing the risk of bad debts and improving liquidity. It would not be wise to hire more staff or charge extremely high consultation fees since this could lead to fewer patients and ultimately, less revenue. Moving to a smaller facility may help reduce overhead costs, but it may not solve the underlying issue of slow payment from private insurers.

Doctor Williams Is Having Trouble Making Ends Meet