Accounting is the least of medical students’ worries as they work their way to becoming full-fledged medical practitioners. Nevertheless, accounting remains a critical part of their life as these new doctors start up their own medical practices. A medical practice such as a clinic is no different from other businesses, and as such, a working knowledge of accounting is required if things are to run smoothly.
It is not unheard of for fledgling doctors to get into financial trouble because of their negligence towards the business’ accounting and finance needs. This is especially due to the fact that while at its core a medical practice is like any other business, there is an added variable in the equation with insurance companies and government-funded programs like Medicare. Figuring out how to properly deal with these variables and keep the practice flourishing while providing patients with quality healthcare is a daunting challenge and one that cannot be tackled alone.
Fortunately, this short guide should help distressed doctors find their bearings in the business landscape and make the best decision for their practice’s future.
Table of Contents
Getting started on medical practice accounting
Research the market
Accounting itself is fairly simple. However, when it comes to medical practices, the first and most important step is to familiarize yourself with the law of the land. Laws and regulations, as well as state-funded programs and insurance policies, tend to be different for every jurisdiction. Therefore, it is imperative that before setting up a medical practice, you should investigate and look into how other clinics in the locality operate and comply with regulations. This is a highly important step that must never be skipped, as knowing what to expect and what paperwork to get done to be fully compliant with regulations helps save businesses from untoward legal and financial implications.
Learn basic bookkeeping
Nobody can become an expert accountant overnight, nor can it be expected of a new business to have a highly experienced accountant or accounting team from the start. Learning basic bookkeeping and accounting is the only choice left to most doctors starting out with practice. Fortunately, basic bookkeeping to keep the business going when starting out is simple.
Before anything else, medical practitioners must decide on an accounting method to use for the business. EA publication titled “Accruals Versus Cash: Which Accounting Suits You Best?” provides an in-depth explanation of the two accounting methods i.e. cash-based accounting and accruals-based accounting.
Both methods of accounting have their pros and cons and must be assessed on a case-by-case basis. However, if we go by the popular option, Bench highlights the cash-based accounting method to be popular among medical practices. However, with accruals-based accounting being the need and the norm for scaling businesses, ultimately, medical practitioners should speak to a local industry expert to get a better opinion on which method to choose eventually.
Once an accounting method has been decided, we can begin with bookkeeping. Basic bookkeeping entails recording transactions and keeping the receipts and invoices for cross reference. Nowadays, pen-and paper-bookkeeping has fallen out of touch, being replaced by bookkeeping software such as QuickBooks, for example. Even without access to such software, a simple spreadsheet is enough to get the bookkeeping done when the business is tight on resources. The important thing is to have every transaction recorded accurately. EA publication titled “Debit Vs Credit: A Comprehensive Guide To Double Entry Accounting” is a great resource for new entrepreneurs to get a hang of basic bookkeeping before they can hire a bookkeeper.
Hire an accountant
As mentioned before, bookkeeping and accounting are strenuous responsibilities. While they can be handled by a medical practitioner to an extent, eventually the responsibility must be delegated to an accounting and/or finance professional.
If not, then you risk compromising the quality of care provided at the practice. Medical practice itself is a difficult line of work and piling on the accounting load on top of the medical work will inevitably lead to negative repercussions for the medical practitioner as well as the practice. Therefore, the best strategy to help deal with this issue is to handle the accounting until the practice grows enough to afford a dedicated accountant.
While this solution sounds simple, it is an undeniable reality that most businesses just cannot afford a seasoned accounting professional in the early months. Amid the prevailing recessionary spell in the aftermath of the pandemic, it just isn’t feasible for most businesses to throw money at the problem and make it go away. With this in mind, it may seem like there is no way out of the issue. However, thanks to modern technology and the world uniting to weather these difficult financial times, a new alternative has risen in popularity to support businesses: Staff Augmentation
Expertise Accelerated’s accounting solutions
Through staff augmentation, an entrepreneur can gain access to the same quality of professional skills and expertise at a fraction of the US cost by integrating remote professionals from the global talent pool into the business’ workforce through a third-party service provider.
Expertise Accelerated, led by veteran CPA Haroon Jafree is one such service provider. What EA provides its clients is a bridge to the global accounting talent pool. EA’s unique staff augmentation approach takes the client’s unique business and process needs into consideration, and trains and deploys high-quality handpicked remote accounting talent to create payroll savings and process efficiencies.
The staff augmentation solution is the perfect mix of cost-efficiency and expertise that small businesses require. By leveraging EA’s staff augmentation solutions, medical practitioners can provide the best care to patients without taking any pain for accounting and finance requirements.