May 25, 2022
There is nothing new about the concept of banding together to create greater leverage in order to improve purchasing power and outcomes. The medical community has applied the Group Purchasing Organization model to everything from equipment to linens. There has never been a GPO, however, that could be applied to financing - and for good reason. Financing is highly individualized. The pricing and terms are not based on the size of the purchase but rather on an assessment of risk; every practice group must be measured independently. It’s been apparent that this was a hurdle that could not be cleared; the GPO concept could really never be employed to secure improved financing. This, however, has recently changed and medical groups across the country are seeing big differences.
A few years ago, the team at CMAC partners began to realize that the value in the GPO model went beyond the most obvious benefit of size. What seemed to get buried behind the biggest advantage of volume was the benefit of data and the knowledge it brought. While that may be a minor item in linen, it could play a big role in financing and here's why.
Borrowers operate either in a complete vacuum or at best in a rarefied atmosphere. Because banks and borrowers keep each other's information confidential, none of that is shared and the only basis to get a semblance of the market is through an RFP process generally limited to a few lenders servicing the local area. For all intents and purposes, borrowing is like the lay person buying a diamond, it is a blind item.
Because CMAC Partners has access to data gained through thousands of proposals it has received in responses to hundreds of RFPs, it has accumulated data that can be used on behalf of its clients to gain optimal responses based upon known data.
In its simplest concept, CMAC acts as a GPO for groups seeking financing. CMAC Partners secures more than $500 million annually for medical groups and that number carries as much leverage as can be found in any type of GPO. It’s like applying Sir Isaac Newton’s Second Law of motion - that $500 million "Mass" combined with the expertise of CMAC as the "Accelerant" produces a “Force” that results in terms and conditions that are rarely matched by those seeking financing independently. The Financial GPO improvements include:
- Lower Rates
- Higher Loan to Value
- Elimination of Personal Guarantees
- Lower Bank Origination Fees
- Higher Distributions Through Lower Debt Service Coverage Ratios
Perhaps the most outstanding feature of this particular GPO is that the only cost is based upon a fraction of savings whenever bank terms are in place or have been proposed and only if the group decides to make use of the GPO outcome. More information about the "pay from savings" approach is available at www.CMACPartners.com.