The following table sets forth for each period indicated the volume and gross dollar amount of insurance claims received and fees recognized for each of the Company's two principal accounts receivable management services . In general, collections on most healthcare providers' new claims ("Ongoing") tend to average about 27 to 50 percent of the gross claim amount. Backlog collection ratios range from 0 to about 40 percent of the aggregate gross claim amount because many backlog claims have already been paid or denied by the insurance carriers prior to submission of the claims to UMC:
o Other revenue of $113,000 in 1998 increased by $78,000 compared to 1997 primarily due to increased funding fees related to Advance Funding Services and increased Consulting Services. Approximately $77,000 of this revenue related to services performed for AHO. Upon the acquisition of AHO, billing for services performed by UMC was terminated. Unless the Company is successful in generating new customers for these services, management believes that 1999 Other revenue will decrease accordingly.
PROFESSIONAL FEES expense increased $159,000 or 293% primarily due to the AHO acquisition. For the five months ended December 31, 1998, approximately $168,000 or 106% of this increase is associated with the AHO acquisition. AHO professional fees are primarily related to Medicare regulatory consulting services, financial statement audit expenses related to the acquisition, accruals for cost report preparation and the financial statement audit for the year ending December 31, 1998, and quality assurance and clinical oversight consulting services. Of the $168,000 in AHO professional fees, a one-time expense of $55,000 is included related to the audit of the AHO financial statements for the two years ended December 31, 1997.
INTEREST, NET increased $15,000 or 294% primarily due to the AHO acquisition. For the five months ended December 31, 1998, approximately $11,000 or 73% of this increase relates to AHO debt with the remaining increase attributable to the draw by the Company on its Credit Facility which first occurred in November, 1998. Effective December 31, 1998, UMC sold 1,000,000 shares of unregistered Common Stock in exchange for a $261,818 promissory note due from AHO to a third party note holder. This
Operating activities in 1998 used net cash of $218,000, compared to $96,000 net cash provided in operating activities during 1997. This decline is primarily due to increased trade accounts receivable primarily related to AHO Medicare claims in various stages of appeal, and decreased accrued liabilities including the Medicare settlement reserve partially offset by increased non-cash depreciation, goodwill amortization and provision for doubtful accounts expense. In 1998, cash flow from operations was not adequate to cover all working capital and liquidity requirements. Additional financing from the Company's Credit Facility was required. UMC has provided working capital loans to AHO totaling $635,000 and $507,000 at March 31, 1999 and December 31, 1998, respectively. These loans were required as a result of AHO cash shortages as explained below. Although it is UMC's intent to recover these loans, there can be no assurance that AHO will be able to repay these loans.