Succes story: Detroit Medical Center.

Position::Brief Article
 
FREE EXCERPT

What do you do when your line of credit is cut in less than half? That's the situation the Detroit Medical Center faced in early 2000 when its three local lending institutions sliced the traditional line of credit used to fund DMC's daily operations from $60 million to $24 million.

DMC'S challenge was to develop a system to generate cash flow for ongoing improvements--equipment, staffing, building, etc.--without having to liquidate marketable securities.

The DMC finance team responded by designing an asset-based and cash flow financing program with General Electric Capital that provides for a $60-million revolving line of credit secured by DMC's accounts receivable--even though DMC, like most health-care providers, has a low turnover in accounts receivable (typically 45 to 120 days).

Nick Vitale, DMC's chief financial officer, says that while DMC's program with GE Capital is unique, he expects...

To continue reading

FREE SIGN UP