Home Medical Practices The Relevance of Bookkeeping for Medical Practices

The Relevance of Bookkeeping for Medical Practices

A hospital or medical practice’s main function is to provide quality health care to patients, and everything else is secondary. Being able to treat the sick and ensuring that patients are healthy are the top priorities, but a medical practice, just like any other business, has numerous aspects that should not be ignored.

One of these departments is the financial part of the business. Keeping financial information accurate and up to date is important to see if you are actually making a profit. This can also help you make sound management decisions that can help you improve the organization as a whole.

Some hospitals have bookkeepers on their payroll. Some, like private doctors, have part-time ones that they see about once or twice a month. Regardless, having someone maintain your books for you can be beneficial, and here are some of the advantages that you can get if you have up to date and accurate books that you can review.

You Can See Where Your Money Goes

Expenses can rack up without you knowing it. Costs such as those needed for utilities or even trivial purchases can increase, and you might lose control over them if you are not able to see figures on a periodic basis.

If you can provide a list of expenses, no matter how small, to your bookkeeper, he or she will be able to provide a breakdown of the money that you spend based on the period that you want. You can even see trends month to month.

This way, you will be able to manage and control your expenses in whatever area you desire, whether it be payroll, phone bills, or representation expenses. This will allow you to ultimately have larger profits if you can lower the outflow of cash from your business.

You Can See If You Are Profitable

The main purpose of any business, which is why you have a medical practice in the first place, is to know if you are actually making money. Getting regular revenue is not a good enough sign, though, as expenses may be eating all of these up.

A bookkeeper can provide all entries necessary to provide you with financial statements, the most important of which is called a profit and loss statement. This provides you with information as to whether how much you are owning or losing money from month to month.

Payroll, Insurance, and Taxes Monitoring

Keeping your accounts accurate is not only about putting in numbers into databases. All information pertaining to these transactions must be accurate. This is a responsibility that you or your staff may not be able to do as you would be busy taking care of your patients.

It is very important to monitor different data such as:

  • Patient Information
  • Insurance Information
  • Tax Information

Keeping accurate records is necessary as you would not want to spend extra time and costs to correct records. You may also be liable to any violations and legal suits if your records are not accurate and up to date, especially when tax filing season comes around.

Accurate Scheduling for Payables and Receivables

Many payables and receivables will be realized depending on agreed-upon terms. Installment payment for treatments is very common, and you might need to wait for payments coming from insurance companies. Similarly, goods or services acquired may be paid off after a couple of months.

As a bookkeeper, it is very important for him to be able to provide you with payable or receivable schedules. This will allow you to know when you will have money coming in, or when you will have any existing payments due.

By being able to read a financial statement, all of this information will be available to you. However, reports made by a bookkeeper will allow you to prepare to receive or make payments whenever they need to be collected. This will also allow you to monitor any overdue accounts so that you can make the necessary follow-ups.

Decision-Making Data

Financial statements are filled with information that will give you an idea of what’s going on in your business. It can also provide you with data that you can use when making minor and major decisions on how you would run your hospital or private practice.

Financial statements can let you decide as to which departments are most profitable, so maybe that’s where you should focus most of your budget on. It can also tell you if you are spending too much on staff, which may lead you to make cutbacks to lessen expenses.

It can also provide you with information that can let you decide if it would time to expand, or at worst give you a reason to downscale the business due to losses. All of these can be gleaned from financial statements, which is why accurate information provided to you periodically is a must.

Should You Hire or Outsource Bookkeepers? 

For large hospitals, having a bookkeeper on your payroll is a must. This is due to the large number of transactions that would be coming your way every day. If you are running a private practice, however, or if you belong to a small to middle-sized hospital, then getting a bookkeeper outside would be the better move.

You can hire freelancers to come in once every few weeks to update your books or provide you with the needed reports. You can also hire outsourcing companies that can do the job for you.

While the latter option may tend to be more expensive, it also has the advantage of being more professional and can provide certainty of continuity even if the person assigned to you leaves or decides to stop working altogether.

Conclusion

Bookkeeping is an integral part of any business, and hospitals and medical practices are no exception. Consider setting aside some resources for this process, whether by hiring personnel or outsourcing bookkeeping procedures, so that you will be able to have a clearer view and better handle of your organization by having accurate and understandable numbers that you can review and act upon.

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