Accounting Strategies for Multiple Entity Healthcare Agencies

As a healthcare business grows, it is common to expand to other locations to serve the needs of the local community. We often see businesses have multiple entities in the healthcare industry. Nursing homes, home care providers, and assisted living facilities gain a positive reputation within an area and then decide to open a new location within the same region but serving a different populace.

The brand name is already established, and often people are already familiar with the facility, so it becomes a no-brainer to open in the new location. Opening a healthcare business in another place can be exciting and helpful to people who need the services the company provides. However, it’s important to have an appropriate and well-thought-out plan arranged before doing so.

In particular, you need to make sure that your accounting procedures are set up properly. Here are a few tips to follow when opening up a new healthcare business entity.

1) Make Sure You Have Standard Procedures in Place

When accounting for multiple businesses, it’s important to have a structured set of procedures in place to record transactions. You can’t have one entity booking journal entries according to one method while the other accounts for transactions differently.

To ensure your processes are maintained, have your current bookkeeping team write a set of standard operating procedures (SOPs) for all of the transactions that are typically recorded each month. SOPs should include accounts payable and receivable processes, payroll, general ledger accounting, and financial reporting.

2) Have the Right Accounting Software

When expanding to a new location, you must make sure that your accounting software can handle transactions for two or more locations. Journal entries must be recorded according to the business that incurs them to be compliant with GAAP.

Thus, your accounting software must have the ability to record transactions between locations. It should also provide the option for consolidated financial reporting.

Consolidated financial reporting is typically used for quarterly and year-end reporting. If an audit or review is required, typically, it will occur for the entire company. In addition, tax returns will usually be filed based on the entire company’s earnings, not just those of one branch.

3) Make Communication a Priority

It can be easy for owners and employees of a company that has multiple entities to forget about the branches that they aren’t working at regularly.

For example, if you have a healthcare company that has three different branches — one in Austin, one in Killeen, and one in San Antonio — it can be easy for staff members to forget that the other branches exist. However, all three branches are part of the same company and should be aware of each other. Keeping communication between all three can be done through regular online meetings or monthly on-sites.

Establishing a schedule to encourage connection can go a long way. Emails and online chats between accounting teams should be supported.

4) Ensure You Hire the Right Managers

Having a management team in place that knows what they are doing and can be trusted to handle difficult situations in an appropriate manner can be a huge help to business owners. At the original location, you should have begun the process of training employees who were reliable in the management of the business.

If employees have been fully trained and can be trusted to manage the business, you can offer them management roles at the new location. This approach can greatly reduce the amount of time you will need to spend shuffling between both locations so that you can make more high-level decisions.

While it may take a bit of time to put in place, once done, it can be quite beneficial to the owner and staff.

5) Compliance Should Be a Priority

Assisted living and nursing facilities must be fully aware of their compliance requirements. There are significant reporting requirements outside of the regular accounting duties such as payroll, accounts receivable, and accounts payable.

Documentation must be kept to support recommendations for treatment, and billing activities must be appropriately coded. The documentation becomes especially important when submitting claims to health insurance companies.

These businesses will not provide reimbursement coverage for treatment, visits, care, or other items unless it can be proven that it was truly needed. Thus, having records available to answer any questions that come up can make a huge difference in ensuring the collection of monies due.

About Knight Home Care Financial

Knight Home Care Financial, based in Austin, Texas, was founded by Amy L. Knight, CPA. The company focuses on providing outsourced accounting solutions for healthcare industries, including assisted living, hospices, and nursing facilities.

Financial services provided include back-office support, reporting, and tax preparation. Knight Home Care Financial is known for the top-tier services that we provide our clients. If you would like to learn more about our services, contact us to schedule a consultation today!