You’ve started a private practice, and you’re working hard to get clients in the door. You can feel that all of your efforts are paying off. And they are, but there’s one thing missing: a good accounting system.
When it comes to the business side of your practice, accounting is a cornerstone. After all, you can’t make good decisions without reliable financial information. However, many doctors and administrators don’t have the time or expertise to do their own accounting. Even those who do often find that the work takes time away from other important tasks.
When you’re busy trying to grow your business, it’s tempting to just put aside all thoughts of accounting until tax time rolls around. Unfortunately, this is a mistake! A good system of bookkeeping just like Revenue Cycle Management will help you keep track of the money you make and the expenses you incur – so that when tax time comes around, you have much less stress!
Revenue Cycle Management (RCM) is a process for managing claims and payments for healthcare insurance providers, patients and doctors.
- A proper Revenue Cycle Management system will include the following features:
- Automation of data entry into billing systems.
- Automation of coding, including some level of artificial intelligence to ensure codes are accurate.
- Tools for patient engagement and payment tracking.
- Tools for claims status management, including denial management.
- Analytics tools to monitor financial health and cash flow.
Revenue Cycle Management is important because it provides accurate financial information by analyzing and reporting combined financial transactions. By using accounting, healthcare businesses can record and produce reports on their current financial status, identify strengths and weaknesses to increase profits, and solve problems with debt collection.
Some companies add aspects of practice management software to the mix, especially if they’re using an all-in-one accounting and office management platform.
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Table of Contents
Why is accounting important for a healthcare office?
Accounting helps you analyze the effectiveness of your business. In other words, it shows you how much money you’ve made and why. For example, if you’re running a successful medical practice, you need to know what’s driving that success. Is it new patients? More efficient workflow? If you don’t track your financials, it’s hard to pinpoint where the success is coming from.
Healthcare offices will benefit from a professional accountant to take care of the financials. By using the information provided by accounting, healthcare providers can make informed business decisions based on factual data.
Here are six benefits of having an accountant in a healthcare office.
Keep Track of Your Income:
An accountant can also help keep track of all your income. This allows you to know how much you are making each month and where that income is coming from. It also helps them create an accurate annual income report for tax purposes. An accountant can be helpful when trying to figure out how much to charge for certain services and procedures based on how much they make each month.
Keep Track of Expenses
Healthcare facilities have many expenses, from equipment, payroll, supplies, and other things. Keeping track of all these expenses can be overwhelming without accounting solutions. An accountant can organize all your expenses so that you can see exactly how much money is being spent on each thing in the office. This will enable you to make better financial decisions, reduce unnecessary spending, and increase profits.
More Accurate Record-Keeping
Healthcare is a unique industry. It’s one of the most complex, dynamic, and competitive industries in the world, but also one of the most rewarding.
From a business perspective, healthcare has its own set of challenges and demands. As a result, it is important for hospitals and medical practices to apply different strategies than other businesses. Healthcare accounting is particularly challenging due to changing regulations, service complexities and the growing number of stakeholders involved.
Revenue cycle management (RCM) is an effective solution to address these challenges and create new opportunities.
With the help of an accountant and revenue cycle management, there should be no need to worry about record-keeping errors. With accurate records, you can avoid any discrepancies that could lead to fines and penalties from the IRS and other regulatory agencies.
Better Tax Preparation
Accountants are trained in preparing taxes for businesses, individuals, trusts, and estates. An accountant will know what documents to gather so you have all the information needed for a proper tax filing. They can also help you get deductions for things such as travel expenses, entertainment, and more. They will also be able to help you take advantage of tax credits that you might not have known about otherwise.
Improved Cash Flow Management
An accountant is trained on how to manage cash flows into and out of your business. They can help you make sure that you have enough money coming in to pay your bills while keeping your budget balanced. They can also help you plan for things such as payroll, taxes, and other expenses so you don’t find yourself short on cash at the end of each month or quarter.
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Better Planning for Business Growth
Proper accounting results in better business planning and direction. For example, if you want to expand your business, you need to know how much money that expansion will cost you. You also need to know whether your current profits can support the additional costs that go along with the expansion.
Having an effective accounting solution allows you to make better decisions about expanding your business. You can decide whether the expansion is worth it or not based on what your financial reports tell you about your current profit levels versus the additional expenses you’ll incur with an expansion.
Takeaway
Good accounting practices are the backbone of any healthcare office. If a practice doesn’t have proper procedures in place, it will experience what most offices do when they don’t follow proper accounting procedures – increased expenses, record-keeping problems, difficulties staying compliant with various regulations and laws, higher taxes and penalties, and lower profits.
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