February 1, 2023
A professional accounting solution can help every medical practice operate more efficiently. Nitra partners with MBSATA to share best practices that can help your business.
This story is part of a series on medical accounting written by Nicholas Turturro at MBSATA, the largest independent bookkeeping firm in New York City.
Here’s a hard truth about opening a private practice: the education and expertise doctors gain during years of medical training does not always translate into the skills needed to run a successful business.
There are few better examples than accounting. While most doctors are certainly capable of handling their finances, the tedious tasks involved in medical accounting take them away from more important aspects of a practice that demand attention. That is especially true if you are the primary revenue engine. The simple truth is that medical professionals aren’t accounting specialists, nor should they be.
Knowing when to forgo DIY solutions and hire professionals is an important part of steering a practice. When it comes to accounting—or real estate or legal work, for that matter—most doctors are well served to put themselves in the hands of experts.
The success of a new business can often be boiled down to two major variables: money and time. How these resources get allocated can define your experience in private practice. Often, business owners fixate on money. “If I do it myself, I’ll save X” is a common refrain among hungry entrepreneurs. Yet in truth, your time is often worth far more than any savings that are realized.
Again, accounting is a good example. Many business owners forgo hiring an accounting professional in favor of apps or off-the-shelf software solutions. More often than not, this results in many hours of lost time, a lack of in-house expertise, bookkeeping that falls behind and very little in the way of cost savings.
Poor accounting increases risk, whether that means lost revenue opportunities or triggering a federal tax audit. This is true for any business, but it is particularly so for a medical practice, where unique billing systems are both complicated and highly regulated. Shaky accounting makes room for errors that could cost your practice exorbitant amounts of money, especially if you aren’t outsourcing your medical billing to a third-party provider. Late payroll, surprise deficits, missing cash flow and audits are all possible risks.
Even simple lapsed bookkeeping can have negative consequences. Dated books can be incredibly difficult to catch up, because the day-to-day tumult of running a practice leaves little spare time. The result is a “resource leak” that grows ever deeper. A resource leak is a lapse in efficiency that costs your company either money or time. In the case of poor accounting, leaks can cost you both.
Resource leaks come in many different forms across all industries, but the most dangerous are those that get bigger as they sit unaddressed. The longer a medical practice’s books fall behind, the longer it will take to clean them up, meaning more time or money has to be spent to do so. What started as an opportunity to save money instead leads to additional costs.
Luckily, there are solutions that every practice can implement, regardless of your experience in the field of finance. You can hire bookkeeping, accounting and tax specialists who will keep your practice legal, compliant, optimized and running smoothly. To hire the right accounting professionals, it helps to understand basic bookkeeping and accounting functions that business owners must address, so you can make an informed decision about what is best for your practice.
Let’s break down the specific functions of bookkeeping, because this encompasses a lot of key accounting functions and transaction cycles that doctors will encounter.
Of course, there are many other accounting functions, such as auditing or financial valuation, but most doctors entering practice can focus on the basics. The idea is to understand enough to hire the right team and keep your practice on track.
There are many factors to consider when selecting an accountant. Naturally, as a bookkeeping and accounting advisory company, we frequently go through the process of hiring accountants to provide service for our clients. Here are the top factors we consider when looking for accounting services.
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