What Medical Professionals Should Know About Accounting

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New developments and adaptations of technology and procedures within the medical profession are what drive our CPA firm to adapt our procedures to this dynamic and exciting industry. Our experienced professionals are specialists in accounting for the medical professional. Marcus, Fairall, Bristol is positioned to assist you in your professional practice with medical-based financial accounting services unique to medical accounting. This includes updates in financial management techniques and systems to streamline your office procedures and applying guidelines to avoid fees, criminal charges, and fines. 

Scroll down for more information on the practice of accounting as it pertains to the medical profession.

What Medical Professionals Should Know About Accounting

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Why is accounting important in healthcare?

In order to have a hassle-free healthcare practice, accounting is needed to achieve your financial goals. Accounting is important in the medical industry because every health facility depends on a prompt team of accountants to keep track of budgeting, taxes, expedite collections, and to smooth over current accounts to ensure smooth operations. Here are some areas where accountants can help medical professionals:

Medicines and other health-related services. 

Accountants keep track of the services provided to the patients. They ensure that the cost is correctly calculated and no party is charged incorrectly.

Insurance companies.

Healthcare accounting is responsible for determining the amount to charge for services whether the amount can be covered or not by the patient insurance.

Tax savings from medical equipment.

When investing in medical equipment to provide the best health services for your patients, you can save money on tax by using a depreciation tax shield. Healthcare accountants can help you determine the depreciation schedule the IRS requires you to use for your specific equipment. The rules the IRS uses does often does not make logical sense and hiring a professional accountant to navigate these rules can prevent a lot of stress.

What type of accounting do hospitals use?

Hospitals make use of a concept known as accrual accounting and most comply with US GAAP, an accounting standard established by the financial accounting standards board (FASB). It is a method of accounting that assigns revenues and expenses to the time they were incurred. It is different from cash accounting which only keeps track of when payment occurs. FASB have determined that accrual accounting is better at representing the financial situation of a firm than cash accounting. In addition, most creditors will require financial statements that comply with the standards set out by FASB before providing credit. There are 4 key points of accrual method and these are:

  • Income or revenue.
  • Expenses.
  • Accruals and deferrals
  • Financial indicators such as liquidity, profit, and leverage ratios

Do hospitals hire accountants?

Hospitals hire accountants to keep their financial records in order. Healthcare accountants must adhere to federal, state and local laws related to healthcare accounting and management. They should also know how government funding works in the public system and how insurance works in a private sector hospital.

Hospital accountants should be well-versed in the health sector to avoid any difficulties that may arise, including industry terminology and dynamics. When developing systems, they need to be front and center in health businesses in order for them to collect, examine and use information efficiently. Additionally, the accountant is also expected to assist in ensuring the business responds to regulatory charges, including those that have a financial impact.

How does financial planning influence health care organizations?

Since healthcare is confusing to understand because of the constant change in technology advancements or government mandates, the need for medical organizations to have financial planning is essential to achieve success in the business. Here are the factors that may influence healthcare organizations by financial planning:

  • Comparative benchmarks
  • Budgets that perform well and are accurate
  • Setting accountability
  • Keeping track of expenses and managing them
  • Achieving balance

Looking for a trusted CPA firm in El Paso, TX?

Are you looking for a Business Accountant in El Paso? If you have any questions regarding small business accountingforensic accounting, tax problemstax planning, nonprofit accounting, payroll tax, etc. give our firm a call!

Marcus, Fairall, Bristol + Co., PLLC
230 Thunderbird Dr Ste G, El Paso, TX 79912
Phone: (915) 775-1040
Email: info@marcfair.com