What is Medical Centers Bookkeeping?

Bookkeeping is the keeping of the books for healthcare so in this sense for example it starts with the bank accounts, the healthcare companies open a bank account and receive the payments from agencies. There are agencies for all those who care retirees at home, they are in the middle companies that they deal with Medicare, and they subcontracted this companies, they will receive their income from this middle agency that deal directly with Medicare and many of these small providers of services do not directly deal with Medicare. All that will be handled by an intermediary, and they will deal with the providers of each service, and this is how they receive income, when that happens then the accounting, the bookkeeping is straightforward, the income is the money received from the intermediary or Medicare directly. And all expenses are paid to third parties.

What are The Benefits of Having A CPA Specialized in Medical Centers?

The benefit will be the understanding of the industry from the CPA and how that knowledge will help the owner of the company to correctly classify the expenses and the elaboration of the tax return in the year and the decisions that the owner must take during the year for the administration of the business. Just to give an example, what will be easier dealing with Medicare directly or dealing with an intermediary, Medicare will always require more. So, if the owner doesn’t have the required licenses Medicare will not be able to provide for service and perhaps will be easier to deal with a provider in the middle because it depends on the ability of the vendor to have the capital to deal directly with Medicare and at the end of the year the correct classification of the expense for the elaboration of the tax return.

Healthcare Accounting Automation

Surveys indicate that accounts payable were the most likely department in healthcare accounting to be digitized and automated. In one survey, 38 percent of respondents showed supplier payment volumes increased over the last year. Also, hybrid and fully remote workforces require digitization. Paper processes are outdated and result in errors, duplicate billing, and strained vendor relationships.

Case Studies

California Cancer Associates For Research And Excellence[cCARE]

⇒ California’s biggest oncology and hematology practices had to migrate from manual processes to pay their bills.

Task

⇒They had to process more than 1,000 bills manually every month. In addition, they made two check runs per week, requiring approval

Solution

⇒ Using Quick Books and Mineral Tree automation, cCARE automated its payments. As a result, the process is now 80 percent faster.

Cascade Senior Living Services

⇒ Cascade handles the back-end office work on behalf of the centers that care for senior residents.

Task

⇒ Remote work and manual processes hampered Cascade’s efficiency. It resulted in a lack of visibility, unpaid invoices, and overpaying for some items.

Solution

⇒ Using Mineral Tree, end-to-end AP Automation drove down costs, cut inefficiencies, and centralized the process.

Healthcare accounting errors

⇒ Falling behind on new accounting procedures:

⇒ Falling behind when accounting changes are announced can be perilous. For example, many hospitals faced dire consequences when it became impossible to classify bad debt as an operating expense.

⇒ New accounting pronouncements come with advance notice. Therefore, accounting teams should remain proactive. AICPA updates their Audit and Accounting Guide at their November conference. Accountants should be ready to study the new guidance in November.

⇒ Ignoring credit balances and accumulating outstanding checks:

⇒ Some hospitals have millions on credit balances. They have to deal with it.

⇒ One way to handle it is by writing checks to reimburse patients and insurers. However, these checks must be tracked.

⇒ Some recipients of checks are dead or emigrated; again, the hospital might end up with millions in the form of unpaid checks reducing the balance statement of the institution.

⇒ Misstating allowances in the revenue cycle:

⇒ Third-party payers typically develop their fee schedules, but they vary from payer to payer, complicating the accounting process. On the accrual basis, where revenues and expenses are reported before the cash is on hand, allowances are often misstated in the revenue cycle.

⇒ Accountants can prevent this by implementing a revenue cycle tool to track billing, payments received, allowances, and other financial data. This tool will provide complex data with little room for error when determining receivables.

⇒ Overlooking the capitalizing of interest:

⇒ A hospital’s interest expenses paid on debt obligations are not reflected as an interest expense on the income statement. Instead, it must be capitalized as a construction cost incurred during the construction period.

The Benefits of outsourcing

Healthcare accounting is a tedious and complicated endeavor that is time-consuming. Even so, the IRS is unforgiving when they discover mistakes. For example, you pay a two percent penalty if you file your payroll taxes one day late. Fines can amount to as much as fifteen percent of the initial amount payable.   Outsourcing is a simple process and frees hospital and healthcare management from accounting worries and allows them to focus on day-to-day operations.

Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services.  This article cannot serve as a substitute for such professional services or advice.  Any decision or action that may affect the reader’s business should not rely solely on the contents of this article but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation.  This article is subject to change at any time and for any reason.