The accounting department is the backbone of any business or institution. Since this is the only department that deals with all the funds coming in and out. This department is essential to gain cost-effectiveness in the finances of an organization.
Similarly, accounting firms in medical businesses play a vital role, as well. It is considered more critical and challenging in healthcare since this industry adapts changes rapidly. The accounting firms in the medical business have to abide by the Generally Accepted Accounting Principles (GAAP) instructions to avoid criminal charges, fees, or fines.
As a healthcare practitioner, you rely on finance professionals to ensure that your business is running on its full potential. Of course, you have to pay the bills, rent, buy equipment, and make a profit so that you can continue to flourish in your business and practice.
So what are the functions of healthcare accounting firms? Stay tuned to find out. Before we get to that, let us understand what GAAP is.
What is GAAP?
Generally Accepted Accounting Principles (GAAP) are the universally accepted accounting rules. These procedures and standards are applied to any organization to maintain the finances, statements, and reports. In a nutshell, it means a universal method of bookkeeping.
We all know that every organization works based on its mechanism; the accounting department in any organization must follow the GAAP guidelines. By this, it helps to record and manage the finances by state. Organizations tend to go beyond the standards, but the basic principles never change.
Revenue cycle management
Accounting is highly essential in the Revenue Cycle Management (RCM) of the medical business. No business exists without revenue; this is what generates the company to operate further. However, in healthcare, RCM is:
- Manage the medical office’s payments that are received
- Tracking and processing, which tends to become complex
- Decide the eligibility of a patient for a specific service
- Collection of copays
- Conducting coding services and procedures properly
- Keep track of the denied claims
Are you thinking of building a health accounting career? Think no further.
When these tasks are taken care of with dedication and attention, your practice is in safe hands.
Responsibilities of a Healthcare Accountant
Healthcare accounting revolves around four elements.
- Planning
Planning for an organization is essential if they wish to grow. You need to set goals and targets to achieve that success in the present and future medical business
- Controlling
Controlling is necessary at all times, or else things could go out of hand. Nothing is fixed at the right time and can then become irreversible. Thus it would be best if the guidelines and goals are being controlled and set on the spot if needed.
- Organizing and directing
The general rule states that anything that is not controlled and organized can never follow a straight path; keeping a check and balance is necessary. A medical office that gets held and directed can work on its full potential. It calls for constant work in the accounting department to ensure everything goes well.
- Decision Making
This element is backed by the other three mentioned. If all of the above operate efficiently, decision making is a piece of cake. Having sound financial accounting decisions will lead to better working at the medical business with guaranteed future prosperity.
It is important to note that healthcare accounting is nothing out of the ordinary; it mostly follows the traditional accounting practices. Some of them are as follows:
- Accounts receivable
- Debt, credit, and capital management
- Fixed asset accounting
- Strategic financing
- Accrual accounting
- Financial reporting
- Tax filing
- Revenue recognition
Other responsibilities that include revenue management cycles and payer mixes are more for the healthcare sector.
What changes would a healthcare accountant face?
With the traditional job description, a healthcare accountant should be well equipped and prepared for the changes and challenges he or she would face and be able to adapt quickly. According to the Institute of Management Accountants (IMA), these are some of the changes that you would have to face:
- The executives are implementing more strict risk management methods to avoid healthcare-related fraud or abuse.
- The financial roles are progressing and diversifying within the healthcare sector.
- Emphasis on healthcare business analytics is being encouraged.
Payments and bills
A hospital receives its revenue by accepting payments from its patients, putting it the right way; insurance companies of these patients pay the bills.
When you have no accounting system or whether the accountant is inexperienced, you will not be able to ensure your hospital is functioning appropriately. Your bills will be left unpaid. You can not pay your hospital staff salaries, and you won’t have anything for yourself either. The healthcare accounting firm is needed to maintain the records of all the payments to avoid any mishap.
Managing treatment goals
Again, the aid of an accountant gets necessary in this field. Cost-effectiveness is highly essential due to how the entire framework runs. It requires active and improved financial management for which dynamic accounting systems become a crucial need. Doctors and accounts need to work side by side here.
Conclusion
It is now pretty clear that, just like any other organization, the accounts department is essential for medical businesses. It plays a very significant role that you may not even realize.
