Hazelgrove Lending Group, based in Redding, CA, explains how Shasta County medical offices can cover payroll while insurance claims pay: measuring the gap from claims aging, when working capital or a line of credit fits, what partners review, and the payroll records to keep in order. Health care had the most employer establishments and the largest payroll of any county sector in 2023.
Why practices run short with full schedules
A practice is paid after it treats patients: claims go out, payers process them, and the money arrives weeks later. Wages, rent and gloves are due regardless. In a steady month the practice's cash cushion may absorb the cycle. It breaks when something stretches the delay: a payer slowing down, a billing system change, a new provider whose credentialing is not finished, or a run of denied claims that need resubmitting.
Health care in Shasta County, CA
Health care and social assistance had the most employer establishments (666) and the largest annual payroll ($728.7 million) of any sector in County Business Patterns 2023. Within it, 142 were physician offices, 105 of them with a ZIP 96001 address. Payroll is a recurring cost on a fixed schedule, so a claims delay shows up on payday. The medical practices page covers the sector's wider funding needs.
Is payroll a legitimate use of borrowed business money?
Yes. Wages are a normal business purpose, and covering them while receivables are outstanding is one use of working capital. Working capital for a medical practice makes sense when the gap is temporary and the claims that will close it are already submitted. It does not make sense when payroll is short every month because the practice spends more than it collects; then a loan adds a payment to the underlying problem.
Measuring the gap from your claims aging
- Pull the accounts receivable aging report by payer.
- Note which payers have slowed and by how many days.
- List the paydays that fall inside that extra delay.
- Add the payroll and payroll taxes due on those days.
- Subtract cash on hand you can spare without missing rent or supplies.
The remainder is the gap you need to cover. Funding sized to that remainder covers the shortfall rather than a figure pulled from annual revenue; compare the total dollar cost either way.
Lump sum or revolving line for a practice?
If the delay is a one-time event, such as a single payer's system change, a working capital amount repaid over a few months fits. If delays come and go through the year, a line of credit drawn on payday and repaid when claims pay fits, because interest accrues only on what is drawn. Compare the total dollar cost with a lump sum.
Shrinking the gap itself
Borrowing covers the gap; billing habits can shrink it. Checking eligibility before visits, coding cleanly the first time, and working denials within days rather than weeks all shorten the time between treating a patient and being paid. Practices that track days in accounts receivable by payer can see which payers cause the delay and focus there.
Each week trimmed from the cycle is a week of payroll the practice no longer has to fund, which can make any future request smaller.
When the gap is not temporary
If payroll is short every month even when payers are on time, the problem is margin, not timing. Borrowing then only delays a harder decision about fees, scheduling or headcount. An honest look at a year of collections against costs tells you which case you are in before you ask anyone for money.
Keep payroll records ready
Partners reviewing a payroll-related request may ask for payroll reports and tax filings as well as bank statements. Make sure the practice's California payroll account and filings are current; the California employer account guide explains the registrations.
More reading
Other articles are on the blog.
