Saturday, November 30, 2002

Troubled funding firm could pinch access to capital
ANDOVER, Mass. - National Century Financing Enterprise, which contracts to buy accounts receivables from healthcare companies, filed for bankruptcy last month after missing $30 million in payments to roughly 60 providers. The missed payments reportedly spawned serious cash crunches for providers.
In general, factoring companies like NCFE work more closely with home healthcare agencies than with HMEs. That's because HHAs have more staff and can't afford not to pay them if receivables lag. HMEs are less people intensive and can more easily accommodate an AR slowdown.

Nevertheless, "lenders aren't so quick to make broad distinctions between home healthcare and home medical equipment," said one industry watcher.

If lenders, a notoriously skittish bunch, perceive that HMEs are as vulnerable as HHAs to failures by NCFE and other AR companies, lending could dry up or terms become less favorable via higher interest rates.

"Markets are fragile," said M&A expert Dexter Braff. "If one big thing happens, there can be substantial trickle down impact. NCFE is not so far form the HME market that HME people can say, 'This doesn't affect me."' HME