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There’s a reason that the California Healthcare Foundation has raised $10 million to create a low interest loan pool for California clinics serving low-income and uninsured persons – and it’s not because they have cash on hand.

We regulary recommend that private practice owners prepare their practices for unforseen circumstances by building up several months cash on hand.  This isn’t easy to do, and the temptation to bleed cash out of a business for personal income is difficult to resist when building up a stockpile of cash – but, boy can it be worth it.

Having several months of operating cash on hand both prepares a practice for opportunity that may present itself (expansion, new hires) as well as protection against downturns in the economy or other undesirable scenarios.

Have a strategy of infusing cash back into your practice over several months or years in order to meet a reasonable objective for cash on hand.  Whatever you do, avoid having to dip into credit lines that require a bail out such as this.

The state as of August is deferring to providers Medi-Cal payments, which account for up to 50 percent of health center revenue, to address the state’s crisis. According to the California Primary Care Association, the action is costing its 700 member clinics and health centers $1,500 each minute that the state budget impasse continues.

Some 41 percent of clinics report being able to cover operating expenses without Medi-Cal reimbursement for 30 days or less, according to the association. Interest on traditional lines of credit available for these clinics can range as high as 14.5 percent.

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Click here or call (888) 827-5613 for information on a free program dedicated to helping private practices throughout the U.S. strategically adjust to the slowing economy.  Free program runs through March 31st, 2009 and is open to practice owners and administrators of any healthcare discipline.

Tannus Quatre PT, MBA is a practice consultant and principal with Vantage Clinical Solutions, Inc., a national healthcare consulting and management firm located on the west coast.  Tannus can be reached through the Vantage Clinical Solutions website by clicking here.