In this blog post, we’ll explore the basics of health care accounting and why it’s such an important part of the health care industry. Health care accounting is the process of monitoring and reporting financial transactions related to a health care facility, its patients, and its providers. It is an essential part of the financial management of health care organizations and provides important insights into how well the organization is operating. Health care accounting is a comprehensive system that must be maintained in order to ensure proper financial accountability. It is also used to ensure compliance with government regulations, manage budgets, and recognize revenue. Moreover, health care accounting is used to provide stakeholders with an understanding of the organization’s overall financial well-being. Ultimately, it is a vital tool for health care organizations to ensure their continued financial stability.
What does a health care accountant do?
A health care accountant is responsible for the following duties:
Accrual accounting
A health care accountant uses accrual accounting, in which a business recognizes expenses and income as soon as they are incurred or earned. Consider a patient who needs emergency care and visits a hospital emergency room. It is the responsibility of the health care accountant to record the associated revenue and expenses because the hospital bills the patient right away.
Accrual accountants in the healthcare industry assist their organization in maintaining more accurate records. They are very organized because it can be difficult to track money that the organization hasn’t yet received. To manage complex formulas and functions and give better insight into the activity that takes place over the course of a given quarter, this professional uses cutting-edge software.
Cash accounting
Some health care accountants might use cash accounting depending on where they work. When an organization actually pays or receives money, it records expenses and revenue using cash accounting. An organization can use this process to more precisely understand the available funding. However, patients may take months to pay, so a health care accountant must exercise exceptional planning and organizational skills.
Reporting
A healthcare accountant is in charge of creating numerous documents that detail the business’s financial operations. Depending on the relevance of the documents, they might disclose these to senior management, shareholders, or the general public. Changes in net assets, statements of operations, and cash flows are some of the data that health care accountants compile for these reports.
Depreciation tracking
A health care accountant is in charge of tracking the value of depreciating assets used by hospitals and other facilities, such as IT infrastructure and medical equipment. They start by figuring out the asset’s initial cost and estimating its useful life. The assets depreciation expense can then be recorded for each month, quarter, or year.
Dealing with credit balances
Patients who moved to other facilities may still owe hospital or other healthcare facility credit balances and unpaid checks. Larger organizations may obtain credits worth hundreds of thousands of dollars, so it’s crucial to manage these credits properly. A health care accountant must be up to date on the most recent requirements because some states require accountants to turn over excess funds to the government.
What is health care accounting?
The activity of tracking and documenting a medical facility’s income and expenses is known as health care accounting. This procedure is crucial to ensuring that the facility stays within its budget and can deliver the best patient care possible. Additionally, health care accounting makes sure that the facility complies with the financial guidelines established by the local, state, and federal governments.
Education and training for a health care accountant
To be employed in their positions, health care accountants must possess at least an associate’s degree in accounting. Even though this degree can be in general accounting rather than health care accounting, pursuing a health care-specific accounting degree can be beneficial. Some people who want to work in health care accounting decide to get their bachelor’s in accounting.
By advancing your education, you can set yourself apart from other candidates. A second bachelor’s degree in health care is something some professionals choose to pursue. A master’s degree in health care with a focus in business administration may be advantageous for other people. By passing the relevant state exam after completing your desired level of education, you can become a Certified Public Accountant. Additionally, the Commission on the Accreditation of Healthcare Management Education offers continuing education courses. This can assist you in keeping abreast of the most recent legal developments affecting the healthcare and business sectors.
Please be aware that Indeed is not connected to any of the businesses or certifications mentioned in this article.
Health care accounting vs. general accounting
The privacy laws that their professionals adhere to are the primary distinction between health care accounting and general accounting. Health Insurance Portability and Accountant Act compliance is required of those who work in the field of health care accounting. It’s crucial for a health care accountant to maintain confidentiality because they might need to see patients’ private medical information while performing their duties. A health care accountant has a duty to protect patient information from unauthorized hospital staff and outside organizations.
Although they adhere to a different act, general accounting professionals are still required to uphold security and confidentiality with regard to patient information. The Gramm-Leach-Bliley Act guarantees that accountants uphold confidentiality and safeguard clients’ data against threats and unauthorized access. General and health care accounting share many similarities besides this distinction, including the recording and monitoring of a client’s expenditures and income.
Health care accountant work environment
Health care accountants may work in large hospitals or in smaller private practices, creating a wide range of work environments. Larger businesses may hire a group of accountants to keep track of costs and income. Excellent written and verbal communication skills are necessary in this type of environment. Smaller businesses may only hire one or two accountants to handle all of the facility’s accounting needs.
Health care accountants are in charge of recording all of a facility’s financial activities, so they have a lot of responsibilities all year long. During tax season, which begins in January and lasts until mid-April, they might be particularly busy. After tax season is over, a health care accountant might experience slower work periods, giving them some flexibility with their schedules.
CALC: Accounting in The Healthcare Environment
FAQ
What is healthcare cost accounting?
Paying adequate attention to the company’s finances has an impact on the facility’s long-term viability, which is another reason accounting is crucial in a healthcare manager’s role.
What is patient accounting in healthcare?
Cost accounting is used in healthcare organizations to calculate the price of each service or item used to provide patient care, giving precise information that can be used for analytics and decision-making. For instance, labor, supplies, depreciation, and overhead are all part of the price of an X-ray.
