If you’re a healthcare accounting leader, it’s likely you have a lot on your plate.
Unlike accountants working for most other businesses, your list of concerns doesn’t just begin and end with revenue and costs. Those who work in healthcare accounting understand the degree to which insurance and the general uncertainty surrounding patient intake and outake complicates matters. And trust us when we say an outdated accounting software system only adds an extra layer of complexity.
In our previous post about the challenges of nonprofit accounting, we noted that the first step in the process of overcoming the industry-exclusive challenges starts by knowing them and understanding how other organizations have confronted them. Healthcare accounting is no different.
Here are a few tricks to help you tackle the peskiest accounting difficulties in the field of healthcare.
1. An Inability to Report on Financial Performance Management
Many hospital administrators are simply unable to get a glimpse into how their organization is performing financially. And that’s a problem.
According to a survey commissioned by management consulting firm Kaufman Hall, only about 8 percent of healthcare finance leaders reported feeling “very satisfied” with their organization’s ability to track performance management. The survey also highlighted an overarching emphasis on identifying and managing cost reduction initiatives among members of management within healthcare organizations.
Much of the anxiety around financial performance management can be traced back to the limitations of accounting systems. Previously, healthcare organizations could purchase and use accounting software systems for a number of years without becoming overwhelmed with data. But that is quickly changing. Rapidly advancing technology has only increased the pace by which the economy moves, and many accounting systems simply can’t keep up—particularly when it comes to reporting.
Managing costs and making strategic investments starts with having data at your fingertips. Not all accounting software, however, can offer you this. As you review new software accounting vendors, ask their salespeople about how quickly their systems can generate reports as well as the insights these reports are able to offer. Perhaps more importantly, make sure the system they are selling can model and forecast metrics such as future revenue and labor utilization.
2. Keeping Up With All of the Changing Rules in Healthcare Accounting
Accountants are rightly viewed as “numbers people.” If you can’t interpret revenue and expense data, it’s unlikely you’ll advance very far in the profession.
For accounting leaders, however, the job isn’t simply a matter of processing numbers in your head and on the computer. In fact, the role of an accounting leader often resembles that of an attorney. You’re asked to interpret new pronouncements from the government and national accounting organizations quite often.
Take, for instance, funds for-profit healthcare organizations received recently through the CARES Act. To this day, the question of whether these grants will eventually be taxed remains unanswered. Given the sheer size of some of the grants received by some healthcare providers, it is fairly obvious the tax implications surrounding them will remain a primary concern over the next year, if not longer.
The onus is ultimately on finance and accounting leaders within healthcare organizations to monitor all changes to accounting guidance from national entities. You’ll want to start by bookmarking the AICPA website and subscribing to their newsletter. The same goes for the IRS website and their own mailing list.
Of course, there’s a chance their own pronouncements will not be entirely clear after you read through them. In those cases, be sure to reach out to any relevant contacts within the aforementioned organizations directly for clarity.
3. Managing Multiple Payers in Healthcare Accounting
Earlier, we mentioned how medical insurance companies create an additional layer of complexity for accounting in the field of healthcare. You’re not just handling a single payment from a person or business.
With volumes of data coming from multiple directions, it can be exceedingly difficult to keep track of revenue. What’s worse is many healthcare organizations still rely on rudimentary accounting systems, such as spreadsheets, to record and analyze data. Not only is this method ripe for error, but it also prevents healthcare companies from accessing the efficiencies offered through integration between accounting software systems and other relevant business applications.
One tried and true way of managing this complexity is through the use of an enterprise resource planning system (ERP). Such systems manage all functions within an organization, including accounting, supply chain and other internal processes. This will keep all of your data in one place and allow you to constantly evaluate how the organization is performing in the aggregate.
Regardless of whether your company is searching for accounting software or an entirely new ERP system, Timac Business Systems is here to help you in your search. Our software selection experts will work with your management, accounting and IT teams to develop a software solution tailored to your specific needs.
Contact us for a free product demo today!