A EUR 50 million receivables financing facility for Health AG, provider of factoring services to German dentists and doctors is enabling the company to grow, while heeding strict German medical privacy standards. “NIBC has enabled us to grow our business in the way we want and for many years to come,” says Marcus Severin, Head of Finance and Compliance at Health AG.
“In our business, strict privacy regulations can make it hard to arrange financing. NIBC showed enormous persistence in finding a solution, working relentlessly to ensure it fully understood our market and its rules.”
Health AG is a fast-growing German factoring specialist. The Hamburg-based company ‘purchases’ patient invoices from the German health care market, mainly dentists. It immediately pays the medical professionals for their services and then collects the amounts due from patients. With this service, Health AG reduces the administrative work of medical practitioners so they can focus on their core healthcare activities, while enjoying enhanced cash flow.
“We have been growing steadily since we launched in 2005 and reached the point where we needed external financing to grow further,” Severin explains. Health AG approached several banks to arrange financing. “One of the major challenges was that any financier should adhere to the strict patient privacy rules in our industry.” A bank providing receivables financing facilities typically wants access to invoices to assess risk. However, invoices include data on patients’ health and are therefore protected under German privacy law.
“NIBC found a solution that fully respected privacy regulations, our first priority, while providing the financial support we needed to expand our business.”NIBC’s proposed structure included setting up a separate company that deals with the invoices and forwards the financing to Health AG. This means NIBC doesn’t need access to invoices. It gets general portfolio information instead. Only the new company (SPV Health Finanzierungs-GmbH) and Health AG see the invoices, enabling Health AG to provide its services while meeting all privacy requirements in an efficient and transparent way.
Setting up such a consistent financing structure that allows Health AG to add more financing partners in the future is a first in the German medical factoring industry. “This is an innovative structure that gives us a competitive advantage in our market,” Severin explains. “It took time to investigate ways to arrange this. NIBC never gave up exploring our business and market, until we found this solution.”