Inefficient accounting can hurt the profitability and overall success of any business, but its repercussions are particularly grave in the healthcare industry. Healthcare businesses with poorly managed finances will likely have difficulty paying their workers on time or acquiring necessary supplies and equipment. These bottlenecks, in turn, compromise worker morale and the quality of the services delivered. As a result, patients might not receive adequate-quality care and may turn to other competing organizations for their future health needs.
Luckily, modern financial management practices and technological solutions have made accounting for hospitals and healthcare providers much easier and more streamlined than it used to be, and the benefits don’t stop there. Healthcare businesses that modernize their accounting systems can look forward to more accurate records, improved compliance, and more realistic budgeting. They’ll also have more insight into real-time business performance, which can improve strategy and decision-making in the long term.
Here are four accounting best practices healthcare organizations would do well to implement sooner rather than later:
Hire Qualified Accountants
Bookkeepers perform the essential work of capturing, organizing, and maintaining a healthcare business’s vital financial records. However, healthcare providers looking to elevate their accounting systems need the additional expertise of qualified accounting staff. In addition to the administrative and transactional duties required of a bookkeeper, certified accountants can perform the more subjective work of interpreting bookkeeping data to extract valuable insights. They’re also required to stay up-to-date on current financial industry best practices and compliance mandates.
Accountants’ particular skills and knowledge render them well-equipped to help company owners understand the impact of their financial decisions, to make forecasts about potential future business trends, and to identify growth opportunities. They can also perform complex functions such as managing insurance claims and monitoring anti-fraud controls to prevent loss of revenue. Lastly, accountants can assist businesses dealing with legal issues by compiling financial evidence
Track Expenses Rigorously
Tracking expenses is an extremely time- and labor-intensive activity for busy healthcare organizations, but it’s an absolute must in order to keep business operations running smoothly. Companies that don’t have clear records of their expenditures are sure to encounter regular problems with their cash flow. Complete and accurate reports of expenses, on the other hand, can help business owners anticipate and plan for future spending. Intelligent, proactive financial planning ensures that companies never run out of money for necessary resources and can continue to operate as normal.
Keeping a comprehensive record of invoices is essential for accurate expense tracking. While many organizations do this by collecting and filing physical receipts, this abundance of paper documents takes up a lot of space, is vulnerable to damage, and can be difficult to search through. Business owners should instead consider employing e-invoicing solutions and other kinds of expenditure capturing software, which can safely store digital records on a secure, integrated platform.
Automate Accounting Functions
Invoicing isn’t the only function healthcare businesses can automate with the help of contemporary technology, either. Other examples of critical automation areas include payroll, supply chain, and revenue management. Process automation not only cuts the time spent on repetitive tasks by a large margin, but it also eliminates many of the costly errors associated with manual accounting. Overall, automated accounting systems’ vastly superior speed and accuracy can drive greater efficiency for healthcare companies that utilize them.
While many businesses may be leery of the steep overhead cost of automation software, it’s important to bear in mind that, in most cases, the long-term productivity gains are well worth the hefty investment. With digital solutions taking care of basic accounting functions, accounting staff can be deployed toward more complex, value-adding work such as analysis and forecasting. In the long run, this more efficient division of labor and resources can only boost healthcare providers’ overall profitability.
Exploring cloud-based solutions is another way healthcare businesses can leverage modern technology to fine-tune their accounting operations. Companies across their industries are increasingly migrating the bulk, if not the entirety, of their business operations to the cloud, and the healthcare industry is no exception. Cloud-first and cloud-only setups allow healthcare organizations to work round-the-clock, much faster and more flexibly than on-premise legacy systems.
These systems record transactions in real time, store that data safely, and make it accessible to authorized personnel on a company-wide level. Key benefits of cloud computing involve better collaboration between the accounting department and the rest of the business, protection of company data from security hazards and natural disasters, integrated data management, and much more.
What’s more, cloud-based solutions are fairly easy and inexpensive for companies to maintain. Maintenance procedures like backups and updates are typically included in these solutions’ regular subscription fees, and they’re also carried out completely by the cloud software providers. Businesses can then focus the greater part of their resources and manpower on other more integral priorities without having to worry about IT concerns.
By observing the abovementioned best practices, healthcare organizations can improve their accounting teams’ effectiveness by leaps and bounds. A rock-solid accounting system will in turn pave the way for companies to provide more efficient health services to all patients.