Healthcare is hard. After years and years of medical school (plus continuing education), there are plenty of long hours and stressful situations day-to-day. Medical professionals face lots of unique financial challenges as well…workforce shortages, billing errors, rising costs, and expensive insurance to name a few.
Having a good partner on your team who specializes in healthcare accounting and tax strategies is essential to growing your practice and avoiding many unnecessary financial headaches. This post is all about how healthcare accounting provides tailored financial services to help doctors manage their finances and taxes efficiently so they can stay focused on their primary mission of helping people get well.
If you’re a medical professional who spends way too much of your valuable time stressing over finances…read on!
What is Healthcare Accounting?
Healthcare accounting is defined (by Indeed.com) as “the process of monitoring and recording a medical facility’s revenue and spending.” While that sounds like a simple task, it is vitally important when you consider how essential the medical industry is. If doctors aren’t able to operate their practices efficiently, they won’t be able to operate them effectively.
Medical accounting and general accounting are very similar, but there are some key differences. Most importantly, medical accountants have to abide by the Health Insurance Portability and Accountability Act (HIPAA).
Established in 1996, HIPAA was designed to protect patients’ privacy related to their healthcare and “individually identifiable health information.” That also includes healthcare accounting information.
Accountants are already under an obligation to protect their clients’ personal financial information. (See the Gramm-Leach-Bliley Act.) Those working in the healthcare industry are held to an even higher standard.
The Importance of Medical Accounting for Doctors
Doctors are given a huge amount of trust by the patients who depend on them for medical advice and care. It does no good to do a great job in the exam room, but fail to extend that same excellence into the back office where the finances are handled.
Having a dedicated healthcare accountant on your team is essential to growing your practice and avoiding unnecessary financial headaches.
That’s why doctors need specialized medical accounting services. Physicians face several unique financial complexities such as:
- diverse income sources
- complicated payroll situations
- high labor costs
- difficulty getting paid for services
- regulatory compliance
Unlike a general accountant, a healthcare accountant or medical CPA will be familiar with all of these situations as well as ways doctors can streamline their tax planning and optimize deductions at the end of the year.
Tailored Tax Strategies for Doctors: How a CPA Can Help
When it comes to taxes, doctors face all of the regular challenges…and then some. Physicians who operate their own private clinics are also small business owners. As such, they need to be prepared to deal with employment taxes, QBI, quarterly payments, retirement planning (SEP IRAs and 401(k) options), etc.
In some cases, physicians may own the building where their practice is located and lease parts of it to other businesses too. That puts them in the position of being a doctor, a small business owner, and a landlord simultaneously. Having a CPA that is skilled in all of those areas is a must.
Your healthcare accountant can also help you maximize deductions for medical expenses, continuing education, and equipment upgrades. With a little proactive planning, you’d be amazed at what a good healthcare CPA can do for your bottom line.
(Read more: “Small Business Tax Tips: The Strategies You Need To Maximize Your Savings”)
Healthcare Accounting Services: Supporting Financial Health for Medical Practices
Now that we’ve covered the importance of having a healthcare accountant on your team, let’s discuss the specific services accountants provide for medical professionals.
- Bookkeeping – accurately tracking and recording income and expenses
- Financial Statements – providing timely reports for better decision-making
- Payroll – making sure your staff is paid correctly and on time
- Budget planning – helping you spend your money wisely
- Auditing – ensuring the accuracy of all of your financial reports
- Compliance – guaranteeing good standing with HIPAA and other industry standards
- Regulations – navigating Medicare, Medicaid, and insurance reimbursements
Why Doctors Need a Dedicated Healthcare Accountant
Any good CPA can handle the services listed above. However, if you are a medical professional operating in a highly regulated (and potentially litigious) environment, you shouldn’t leave your accounting needs to just anyone. You deserve better.
That’s why it is in your best interest (and the interest of your patients) to partner with a dedicated healthcare accountant who understands the intricacies of the medical profession.
- Plan better for the future.
- Operate your practice more efficiently
- Maximize savings & manage treatment costs
- Stay compliant so you can focus on helping people get well.
Key Tax Tips for Doctors: A CPA’s Guide
Running a successful medical practice is complicated enough. There’s no need to make it worse by making a mess of your taxes. We recommend that our physician clients keep the following tax tips in mind:
- Remember that you are running a business. As such, you can take advantage of all of the tax deduction opportunities that any other business owner does. For more, be sure to also read the post we did on “16 Small Business Deductions To Really Save You Money This Year.”
- Plan for tax season all year long. Don’t wait until the last minute and hope it all works out ok. Work with your CPA year-round to make sure you’re making the most of your hard-earned money.
- Buy your building. If you are able, being a real estate owner vs a tenant is a great long-term financial investment. Your mortgage, interest, and other expenses are also tax deductible.
- Do lab work in-house instead of outsourcing. Outsourcing simple medical tests can is a big expense. By investing in some basic equipment, you can do a lot of your lab work in the office…increasing revenue opportunities while saving you time and money. Plus, that equipment is also deductible.
- Save for retirement. Many options are available for you to set aside money for retirement and save on taxes right now. Whether starting a retirement plan or restructuring your business to make you an employee, check with an experienced CPA to find out the best strategy for you.
The Role of Medical Accountants in Practice Growth
Healthcare accountants can greatly contribute to the growth and financial stability of your medical practice. Good financial management has a direct impact on your ability to provide top-notch patient care, expand your practice, and set yourself up for long-term sustainability. While you’re keeping an eye on your patients, their focus is on ensuring that your budget and processes are streamlined and ready whenever it’s time to hire new staff, merge with another practice, move into a larger space, or buy new equipment.
Ready for the Right Healthcare Accountant?
If you’re ready to find out how a healthcare accountant can help your practice, we’d love to talk with you. Over the 50+ years CRS CPAs has been in business, we’ve worked with lots of medical professionals.
You deserve a CPA partner who understands both the financial and medical industries. So schedule a call to start optimizing your healthcare finances today!
