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What is Medical Working Capital?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 28 October 2016
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    Conjecture Corporation
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Medical working capital is money used to finance expenses associated with starting or running a medical facility. There are numerous ways to raise medical working capital, including taking out loans, seeking investors, and applying for grants to finance needed medical equipment. Costs associated with opening and running a practice can be very high, and access to medical working capital is critical for care providers and their staffs.

One option for medical working capital is a loan. Loans can be used to build or buy a structure to use for a clinic and may also be applied to purchases of medical equipment used in the facility. Some financial institutions specialize in medical working capital and may have customized loan products available. Interest rates and terms vary, and it may be possible to get competitive quotes by applying to several companies.

Some practitioners turn to investors. People are invited to purchase shares in the practice, with their money being used as the medical working capital to open the practice and keep it running. This technique can be used for hospitals and clinics of all sizes. Requests for donations may also be requested, especially if a practice provides services to low income members of the community or offers special services to vulnerable groups, like children or patients with particular disorders. Philanthropists may contribute medical working capital to make sure these services remain available.

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Grants are also sometimes available. Physicians can usually apply for money from the government or private organizations if they agree to offer certain types of services or to hold their fees at a low rate to make medical care affordable to members of the community. People opening a practice can get information about available grants to finance new medical clinics, and it is also possible to get grants for continuing clinic operations.

When seeking medical working capital, people need to have a clear plan with detailed documentation, discussing the kind of practice, the services it offers, and how it intends to work with the community. Financial records need to be made available, along with information about estimated operating expenses. This information is used to determine whether the practice is operating efficiently, a concern for donors who want their money to be used effectively, as well as lenders who want to get repaid. For new practices, having a clear plan in place shows people that the heads of the practice are organized and ready to start work.

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