Management of a medical practice includes more than just providing high-quality care to patients. Medical practitioners and practice owners must also be able to handle issues such as payroll, operating costs, billing, payments from insurance providers, equipment costs, taxes, and accounting. Healthcare companies are different from many other firms when it comes to finances, and having an accountant who knows how to deal with such differences will make things easier.
The ideal provider of healthcare accounting services is someone who not only understands the basics of accounting but also the realities of doing business in the health care field. An outsourced solution of accounting services for healthcare organizations can allow growing companies to get professional assistance without investing a lot in staffing the accounting department.
Why Medical Practices Need Specialized Accounting Support
Many financial functions exist in healthcare accounting that involve industry knowledge. A medical practice receives money from patients, insurance companies, and other sources; however, it must pay for payroll, clinical staff salaries, medical supplies, equipment, rent, and technology costs as well.
An understanding of these elements will allow an accountant to present financial data in a manner that would be more meaningful to a practice.
How Healthcare Finance is Different from Other Business Accounting
A medical practice may have a complex revenue cycle compared to a regular service firm. Not all amounts billed to a patient might get collected, and the collection time frame could be irregular.
The financial statements could include:
- Patient payments
- Insurance payments
- Receivable accounts
- Payroll and salaries
- Medical supplies
- Equipment purchases
- Facility and technology costs
- Provider payments
An accountant knowledgeable in these areas can understand the financial situation of the practice.
What to Look for in a Healthcare Accountant
Selecting an accountant involves more than just comparison of prices. The following issues must be considered when selecting an accountant for a medical practice – experience, scope of services, the method of communication, and financial workings in the health care industry.
Experience in Health Care Organizations
First, determine if the selected provider regularly works with health care organizations.
Relevant experience might include work in the following industries:
- Physician practices
- Dental practices
- Specialized clinics
- Outpatient facilities
- Groups of physicians
- Medical practitioners
Experience within the industry can allow an accountant to understand typical financial difficulties rather than having to learn everything from scratch.
Revenue and Expense Management
An accountant must understand how revenue and operating expenses influence a medical practice.
Find out how they deal with the following:
- Accounts receivable
- Compensation of the physician(s)
- Payroll
- Medical supplies
- Equipment
- Operating expenses
How Healthcare Accounting Services Can Improve Financial Organization
In order to understand how the practice is doing, a medical practice requires good financial records. These can be done through accounting for healthcare services.
Bookkeeping and Account Reconciliation
Good bookkeeping will ensure proper recording of financial transactions.
Some of the services an accounting firm can provide will include:
- Classification of transactions
- Reconciliation of the bank statement
- Reconciliation of credit card statement
- Recording of accounts payable
- Recording of accounts receivable
- Ledger management
Reconciliation will also allow identification of transactions that are either duplicated or missing from the accounting system and the real transaction statement.
Financial Reporting for Practice Owners
Financial reporting can allow physicians to know the status of the practice.
These may include:
- Profit & loss statement
- Balance sheet
- Cash flow statement
- Accounts receivable reports
- Expenses report
- Budget vs. actual reports
The key thing here is the understanding of the report.
How an Accountant Can Help Manage Healthcare Cash Flow
Cash flow can be particularly important for medical practices because revenue may be collected at different times from when services are provided.
Accounting outsourcing services for healthcare can appear profitable while still experiencing short-term cash flow pressure.
Tracking Accounts Receivable
An accountant could assist in managing receivables that are still pending and gathering information concerning how much is still owed to the practice.
Consistent reporting will assist practice owners in determining whether receivables are growing, shrinking, or staying the same.
Monitoring Operating Costs
Medical practices experience several operating costs, which include but are not limited to payroll costs, rental costs, equipment costs, technology costs, supply costs, insurance costs, and professional service costs.
When Outsourced Accounting Services for Healthcare Make Sense
Not every medical practice needs a large internal accounting department. Smaller and growing practices may benefit from outsourcing some or all accounting responsibilities.
Outsourced accounting services for healthcare can provide access to accounting professionals while allowing the practice to maintain a lean internal team.
Reducing the Administrative Burden
Doctors and practice administrators are already very busy with many operational duties.
Using an outsourcing service will help you save time because of the following duties:
- Bookkeeping
- Reconciliations
- Financial statements preparation
- Accounts payable
- Accounts receivable
- Month-end accounting procedures
It will free up your internal personnel to concentrate on patient care.
Growing Your Accounting Services Along With the Business
As a business grows it may need different services in accounting. This could help you to use more or less of the service as you require.
This option is especially beneficial for those businesses that cannot afford hiring additional accounting personnel just yet.
How Accounting Outsourcing Services for Healthcare Support Practice Growth
Medical practices often need financial information to support operational decisions. Outsource healthcare accounting services to help establish processes that provide this information consistently.
Supporting Budgeting and Financial Planning
Historical financial data will allow the practice owners to learn the trends in revenues and expenses.
The accountant will arrange the financial data used in budget preparation and comparison of actual performance with the expected results.
It will enable the practice owners to identify any changes that need to be considered.
Assisting in Expansion Decisions
Opening a new branch, employing more professionals, acquiring equipment, or introducing new services can have many financial ramifications.
The financial data related to these decisions will be arranged by the accounting service provider for discussion with the advice of the owners.
Signs You May Have Found the Right Healthcare Accountant
An ideal financial partner should have the ability to communicate clearly on financial matters as well as understand the inner workings of a medical practice.
This could include an accountant with:
- Experience in health care
- Clearly defined services
- Consistent financial reporting
- Regular communication
- Understanding of practice revenues and expenditures
- Ability to work together with other professionals
- Proper security procedures
- Scalable financial support for growth
The partnership should not just be about documentation but about organized financial assistance.
Selecting the ideal accounting firm for your medical practice goes beyond considering their overall accounting skills. Medical facilities have unique revenue processes, operational costs, payroll systems, equipment purchases, and other financial requirements. Choosing an experienced accountant ensures you receive better financial assistance and keeps your accounts in order.
If you need an accounting expert but do not want to hire another member on your staff, consider outsourcing healthcare accounting services using The Fino Partners. With the right outsourced accounting service, you will get all your finances taken care of in addition to your CPAs and financial advisors.
When searching for the ideal accounting company for your practice, ask yourself questions such as what level of experience they have in the healthcare industry, what services they offer, how often they communicate, how they conduct their reporting process, and how they secure your financial information. Your accounting partner should be able to organize your accounts while also providing important financial information for your medical practice.
