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.
Moreover, understanding the intricacies of medical billing and coding can greatly impact a practice’s revenue cycle. Properly managing accounts receivable, dealing with denied claims, and ensuring timely payment are all essential for financial stability. The complexities involved often lead to confusion and stress, making it vital for new practitioners to prioritize learning about financial management as part of their practice’s foundation. Fortunately, this short guide should help distressed doctors find their bearings in the business landscape and make informed decision for their medical accounting practices in the future.
Table of Contents
Getting Started on Medical Practice Accounting
Research the market
Accounting itself is fairly simple. However, when it comes to medical accounting, 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.
Explore Technological Solutions
In the modern era, technology plays a pivotal role in streamlining accounting processes for medical practices. Utilizing specialized software can drastically reduce the time and effort required for bookkeeping and financial management. Platforms like QuickBooks, Xero, and FreshBooks not only automate the recording of transactions but also offer features such as expense tracking, invoicing, and financial reporting. This technological shift allows practitioners to focus more on patient care rather than getting bogged down by financial tasks.
Furthermore, cloud-based accounting solutions provide the added benefit of accessibility from anywhere, enabling practitioners to manage their finances on-the-go. With features like automated reminders for payments and the ability to easily generate financial reports, these tools simplify compliance with regulations and ensure accurate record-keeping. Incorporating such technological advancements into daily operations can enhance efficiency, reduce human error, and ultimately contribute to the practice’s financial health. As the healthcare landscape continues to evolve, embracing these solutions can be a game-changer for medical professionals.
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 medical 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.
Conclusion
In conclusion, navigating the financial landscape of a medical practice is crucial for long-term success. As new practitioners embark on their journeys, they must prioritize understanding accounting fundamentals, leveraging technology, and eventually seeking professional help to manage their finances effectively.
By integrating innovative solutions like staff augmentation from providers such as Expertise Accelerated, medical professionals can access high-quality accounting support without the burden of traditional costs. This approach enables them to focus on delivering exceptional patient care while ensuring their practice remains financially healthy and compliant with regulations. Ultimately, investing time and resources in accounting knowledge will pay dividends in the future.
