Is Your Healthcare Practice Fiscally Healthy?
Just because your practice is busy doesn’t mean you are running a financially sound business. We routinely speak to healthcare practices experiencing poor performance despite reporting packed patient appointment calendars. However, if you don’t accurately track your cash flow, record your expenses on time, or have good systems in place for billing and collections, your practice might be heading for the red.
Of course, as a medical practice, care facility, or clinic, medical professionals must serve many masters in the payment chain, so if accounting, billing, and collections systems are inadequate, things can go haywire in a short time. Besides billing patients, healthcare organizations must have systems in place for handling multiple insurance platforms, which, as everyone knows, can range from capitation programs, where the insurer provides a set dollar per month with overages left to the patient, per diem rates (a set fee per day) or a schedule based on the procedure. And then there are Medicare and Medicaid patients who rely on yet another set of rules. Needless to say, if cash flow is an issue, billing software performance is certainly the best first place to examine. That’s because errors or unchecked issues with any of your stakeholders—patients, payor organizations, or the government—could be starving your practice of income.
To keep a healthy practice, your accounting professional should be providing you with information that is the key to building a successful practice. For example:
- Providing oversight that invoicing and accounts payables are timely and correct.
- Helping you to develop an annual budget, and measuring both expense and revenue against budget
- Design and produce accounting reports required to measure various performance indicators
- Develop ways to track your reimbursements
- Develop budget allocations from your annual budget plan
- Develop financial reporting to track performance, comply with any loans or bank covenants, and aid in future planning.
In addition, like any other business, the accounting staff and outside professionals work together to develop proper bookkeeping records, payroll requirements (including the assurance that adequate withholding and retirement deposits are made in a timely manner) and that your time and billing systems are tracking payables and receivables.
If any of your current systems are limited in their ability to deliver required reporting, or are simply out of date for today’s efficiency and patient security needs, it may be time to consider a formal system review. In this way, you can also see what competitive products are available that have features to enable the practice to keep pace with the automated needs of today’s practice. Even simple upgrades like patient portals and online payment options might facilitate improved customer experience while at the same time delivering improved cash flow and reduced appointment no-shows.
It is always a smart idea to sit with your accountant at least once a year (but twice a year or even quarterly might be more beneficial, depending on your unique situation) to discuss planning, review performance, and determine steps and best practices for the business. This includes tax planning and staffing needs, as well as large purchase planning.
If you feel that your practice is not getting the oversight you feel is required to build a healthier business, you may want to reach out to our team for a no-obligation conversation about your issues, goals, and aspirations for success. We look forward to your inquiry.