Running a healthcare business isn’t child’s play—especially when it comes to the books. Accounting errors make life a huge hassle, from lost revenues to regulatory issues. Medical billing errors are one of the most common and costly problems facing healthcare businesses. They can lead to an interruption in your cash flow as well as slow down your entire operation.
To help you steer clear of these problems, we’ve listed the top 7 accounting mistakes healthcare businesses must not make, so you have less time devoted to paperwork and more time on patient care.
1. Overlooking Medical Billing Errors
Medical billing errors are a critical problem in healthcare accounting. They happen when claims are submitted with incorrect information, leading to delayed payments or claim rejections. Unobvious mistakes including patient details or procedural code mistakes can cause heavy revenue loss. Make your billing team re-check all details before sending them for claim submission to keep your revenue cycle smooth.
2. Ignoring the Importance of Revenue Cycle Management in Healthcare
Revenue cycle management healthcare is not just billing—it’s everything from patient registration to receiving payment. Poor management of the cycle can result in lost payments and cash flow problems. Using certain software and regular training for your staff can reduce errors and enhance efficiency.
3. Not Customizing Your Chart of Accounts for Healthcare Organizations
A generic chart of accounts will not cut it. Every healthcare organization must have a tailored chart of accounts for healthcare organizations that reflects its own particular services and revenue sources. This facilitates better tracking of revenues and expenses, making financial reporting clearer and more informative.
4. Confusing Accrual Accounting vs Cash Accounting in Healthcare
Accrual accounting vs cash accounting in the healthcare industry is something that needs to be understood. Accrual accounting accounts for revenue and expenses when they occur, while cash accounting accounts for them only when it involves money exchanged hands. Most healthcare companies are helped by accrual accounting due to the fact that it provides an accurate account of finances, particularly when handling insurance payments and delayed charges.
5. Failing to Detect Duplicate Billing in Healthcare
Duplicate billing occurs when a service is billed more than once, either accidentally or due to system malfunctions. Not only is it confusing, but it can also be grounds for audit and fine. Good checks and appropriate billing software can find duplicates prior to payout.
6. Neglecting Regular Financial Reconciliation
Balancing your accounts regularly keeps your records in line with bank statements and billing reports. Regular balancing catches mistakes early on, like late payments or incorrect postings, before they become full-blown issues later on.
7. Underestimating the Value of Professional Help
Accounting for healthcare is complex, and trying to do it all internally without expertise can lead to mistakes. Hiring in professionals who know the nuances of healthcare finance—specifically in areas like revenue cycle management and medical billing—can save your company money and distress.
If professional experience is what you need to help you get over these hurdles, consider reaching out to KB Tax Devisers. We have the best accounting and tax services for healthcare businesses, helping you avoid costly errors and optimize your financial processes.
Final Thoughts
Avoiding these accounting mistakes can actually improve the financial health of your healthcare practice. Avoiding inaccuracies in medical billing, automating your revenue cycle management processes, and applying the proper accounting techniques can make your practice run smoothly and profitably.
If you would like to protect your company from costly errors like medical billing mistakes and redundant billing consider reviewing your current accounting procedures or with a health finance expert today!
