The healthcare industry requires careful record-keeping for all expenses and incoming profits. Even a small mistake could derail the financial status of a hospital or a private practice. Accuracy is the key to keeping financial data updated and useful at all times. Too often administrators must make snap decisions based on the current financial totals. Reviewing the 5 common accounting errors in the healthcare industry and how to avoid them helps the administrators avoid an unnecessary financial disaster.
1. Failing to Outsource Some of the Accounting Requirements
Failing to outsource some of the accounting requirements makes it difficult for the hospital or practice to keep accurate financial records. It can also create a slowdown for financial information. The most common accounting mistake made in healthcare is a failure to ask for assistance when it is needed. Overworked medical staff and administrators need help sometimes and outsourcing can give them the assistance they need during busier seasons. Hospitals and private practices that need help through outsourcing can contact medical accounting firms for help right now.
2. Failing to Reconcile Balance Sheets and Identify Cash Flow
Failing to reconcile the balance sheets can make it difficult to determine how much cash flow the hospital or practice has at any given moment. It’s vital that the balance sheets are managed in a timely manner since most hospitals and practices must control spending and order supplies more frequently. Managing the balance sheets and ensure that all totals are accurate prevents financial errors that prove costly later.
3. Data Entry Errors
Data entry errors occur when the staff is overworked and must enter data at accelerated speeds. To mitigate these risks, it is necessary to double-check the totals and slow down the process. When accounting staff is overburdened mistakes are made and totals are inaccurate. Reviewing better ways to take some of the stress off the accounting department helps the facility avoid data entry errors and keep all information updated properly.
4. Failing to Document Business Expenses
Failing to document business expenses proves costly at the end of the year. A common issue here is the choice to go paperless. While it is great for the environment, it isn’t great for an accountant who has to track all the expenses for the hospital or a private practice. It is absolutely vital for all business expenses to be documented on paper files to give the accounting department more accurate totals for tax season. If the expenses aren’t documented, the facility could be spending more money than necessary on tax implications and lose money that could have been useful to the facility and its doctors.
5. Avoiding Doing Daily Bookkeeping
Avoiding daily bookkeeping leads to inaccuracies and overspending. It is paramount to enter all daily expenses into the accounting software and keep track of these expenses each day. If the information isn’t entered into the system each day, the totals are inaccurate and lead to high costs and overdrafts. This could create an avoidable financial crisis for the practice or hospital.
Hospitals and private practices need accurate financial data to make decisions about their facilities and how they treat patients. Understanding where their profits are going and how they are used could present the administrators with better solutions to everyday challenges. Reviewing common errors and how to mitigate them can prevent administrators from facing financial difficulties and giving their patients a higher standard of care.