Importance of Efficient Bookkeeping in Healthcare
There is an intimate connection between efficient medical bookkeeping and quality patient outcomes. Maintaining well-organized EHRs can make hospitals much more efficient.
Alarmingly, American hospitals are losing money! A recent survey laments the fact that 40% of hospitals in the US are operating at a loss. This is mainly because hospitals refuse to optimize their revenue cycles and do not keep well-maintained financial records.
Efficient bookkeeping practices are vital for the financial well-being of any business. But they are just as crucial in the healthcare industry. Healthcare professionals often deal with complex insurance billing and strict regulatory requirements, among other challenges. However, healthcare bookkeeping can help them stay on top of hospital operations while reaping the following benefits:
- Ensuring compliance
- Providing quality services
- Staying profitable
Let’s explore the key reasons why efficient bookkeeping is important in healthcare.
8 Benefits of Healthcare Bookkeeping
Did you know that a McKinsey survey predicted that the health industry would face a cost acceleration of $600 billion by 2027? It could make medical services a lot more expensive (and unaffordable) for the average populace. That’s why many hospitals are rushing to streamline their financial transactions, even outsourcing bookkeeping services.
After all, bookkeepers keep a watchful eye on the cash flow, ensuring that the hospital has ample funds to keep everything running. Let’s see what other benefits you can derive from the essential services of a healthcare bookkeeper:
1. Keeping Track of Data
Maintaining healthcare financial records can’t be easy if you are doing it without a bookkeeper’s help!
That’s especially true since over 90% of all US-based hospitals have adopted electronic health records or EHRs to easily share/update patients’ medical history throughout the nation. Only a dedicated financial expert with ample experience in efficient bookkeeping practices will be able to keep track of this data.
This person will also use these records to extract key financial data that will shed light on your hospital’s financial performance, leading to better-informed decision-making. That is the number one reason a healthcare manager must hire experienced bookkeepers and invest in efficient record-keeping.
2. Tracking Cash Flow
As mentioned above, many hospital administrators struggle with tracking cash flow. In the health niche, the conversion cycle for cash is between a month and half! That’s how much it takes for sales to mold into cash. Good bookkeepers excel at tracking cash flow to make sure that the hospital never runs out of cash to fund its essential operations.
Sadly, many hospitals find themselves running out of cash; one-half of them declared losses in 2022. The best way to overcome this issue is to invest in efficient bookkeeping.
3. Achieving Financial Goals
It’s not uncommon for hospitals to meet their financial goals, especially the ones acquired as a result of an M&A deal. Healthcare managers do not realize how to properly allocate hospital funds since they fail to track income/expenses. However, medical bookkeeping helps you track the revenue and decide how to allocate resources to the areas with the most potential.
That’s how hospitals achieve their financial goals by making informed decisions.
4. Monitoring Patient Transactions
How well are you tracking patient transactions? Digital payments are already on the rise in the world of healthcare and keeping track of every patient transaction that happens online can be a tough job unless you’re using efficient healthcare bookkeeping services.
Now, here is the problem: Due to health insurance payments, health administrators are responsible for keeping accurate transaction records. If administrative mismanagement causes someone to not monitor these payments, it can lead to insurance frauds and other problems. However, many hospitals are now using accounting software to track this payment or simply hiring experienced bookkeepers.
5. Communicating More Effectively
Organizations like HFMA focus a lot of strengthening financial communication between caregivers and their patients. Don’t forget that financial communication between health managers and stakeholders is equally important.
Accurate financial data can help you get the record straight and track your financial progress. You also communicate cold, hard facts to the key stakeholders (and investors) so they can make sound decisions regarding the future of your hospital.
Well-maintained healthcare documents will create a bond of trust between you and your stakeholders, ushering in an age of transparency that benefits everyone.
6. Creating Realistic Budget
Medical bookkeeping also plays a key role in budget creation.
You can track your expenses easily and create a very realistic budget. Record-keeping will discourage an organization from overspending, promoting a sense of fiscal responsibility. Hospital administrators end up implementing better cost control measures by keeping accurate medical records.
7. Planning Taxes Smartly
Bookkeeping services also help you plan your taxes properly. Luckily, more than half of the hospitals in the United States are exempt from state/federal taxes due to their non-charitable status. Keep in mind, however, that the remaining ones can still reduce their tax burden simply by employing proper tax planning. Once you modernize your cost management with bookkeeping, you’ll find ways to decrease your tax burden further.
8. Preparing for Audits
The healthcare industry is heavily regulated and regular audits make sure that these establishments are complying with these laws. That’s why health managers keep well-organized financial records to ensure they are ready to take on the IRS when the occasion arrives.
Financial record-keeping will simply enhance your compliance and keep you prepared for an audit. That is how your hospital can avoid heavy penalties and other legal complications.
Final Words
In a world of telehealth and electronic health records of patients, health providers can’t help but rely on efficient bookkeeping practices to run hospital operations smoothly. It helps them reduce costs without undermining the quality of patient care. Moreover, well-maintained financial records will help you gain a range of key insights into which areas might need a little improvement.
If you still have any confusion, contact the experts at Knight Home Care Financial to help you out in this situation. We’ll make sure that you’re keeping well-maintained healthcare financial records.
Embrace bookkeeping excellence – get your financial records in order now!
