Patient accounting deals specifically with each individual patient. This includes the services they received, medicines and other items used in their care, and the bills generated. It also includes tracking payments from patients, insurance companies, and third parties like charities.
Hospital accounting has two primary goals. One is to help the hospital operate efficiently by making sure that it has money available to pay its expenses and is effectively collecting its revenue. The second is to create financial statements in line with the hospital accounting standards.
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Like any business, hospitals need effective bookkeeping and accounting processes that cover all areas of operations. In order for the hospital to manage its money, it needs to have data on everything from the most expensive medical equipment to how much is spent refilling restroom paper towels.
Accounting compliance is critical for hospitals. Besides routine financial audits, hospitals may also face audits from insurance companies and healthcare regulators. The accounting system must comply with GAAP and regulatory requirements.
The principal purpose of patient accounting is to track patient-related services and then receive payment for care. The EMR or EHR is the first step as these records detail what care the patients receive. These records then need to be converted into billing statements through properly coding each service and procedure for insurance purposes.
Often, the accounting team is divided into groups of specialists. One group might deal with the technicalities of collection from insurance companies, while a more customer service-oriented group deals directly with patients.
The patient revenue cycle is one of the most complex revenue cycles because, unlike in other businesses, multiple parties may pay for the same services in vastly different ways. Besides the challenge of getting the proper accounting structure in place, there are a few areas with increased challenges.
The first challenge is getting insurance companies to accept a claim. Each insurance company and even adjuster has its own idiosyncrasies. However, getting the claim accepted usually comes down to the quality of the information provided. Medical staff need to fully and clearly document all care so that accounting staff can properly code it. This information then needs to be transferred to the insurance companies along with any other needed supporting information.
The traditional paper invoice might be easier to generate with current patient accounting software. Payments would then typically be made by check and entered by accounts receivable personnel. The problems with this approach are the declining use of checks, the chance that patients might miss mailed invoices, and the need for the patient to call in to collect more information.
Many hospitals are moving to online payment portals that allow patients to see their balances, view additional information about their costs, and pay directly online. These portals can be convenient and are widely used in many types of businesses. However, it is yet another separate piece of software used by the hospital. The key to successfully using a payment portal is to make sure that it syncs with other accounting systems instead of running separately.
In addition, hospitals rarely run under a single system. They might be made up of different medical groups that joined together over time, still operate largely independently, and continue to use the patient accounting software that they have always used. Adding to this complexity is that each patient often sees a mix of different hospital departments as well as providers who are fully independent of the hospital.
In most hospitals, this means more accounting labor hours spent overcoming the inefficiencies in each process. Much of the work is done by junior accounting staff, but senior accountants and managers also need to supervise the work and develop the necessary procedures. This means that key decision-makers are forced to take time away from moving the hospital and patient care forward to take care of tasks that actually could be made with improved patient accounting software.
Health care accounting includes several unique aspects that don't apply to general or business accounting. Health care facilities large and small must deal with the intricacies of layered economic components associated with patient payments, such as private insurance and government-backed programs. These exist alongside traditional and routine accounting processes such as tracking revenue and cash flow.
These and other complexities make health care accounting a dynamic, intriguing profession, but it also demands that individuals have a thorough understanding of how accounting in health care works. Doing so will help lay a foundation that can make these complexities significantly more manageable.
At its core, health care accounting has several similarities to other professional accounting roles. For instance, health care accountants analyze reports, maintain financial records and track cash flow analyses. The fundamental difference between health care accounting and other types of accounting involves the complex healthcare-associated layers of these functions.
These layers represent multiple parties associated with health care, such as patients, insurance companies, health care providers, pharmaceutical companies, and government agencies. Each of these subsets come with their own accounting and financial nuances, and they sometimes intertwine. Payment tracking, for instance, typically involves tracking money from patients, providers, and insurance companies.
Accounting in health care follows generally accepted accounting principles (GAAP). This is the adopted accounting framework of the U.S. Securities and Exchange Commission and the Internal Revenue Service. Accordingly, many basic and advanced concepts of general accounting apply these principles, including but not limited to the following.
The method of accrual accounting is an anticipatory model that enables a business to record revenue and expenses before they are received or paid out. In a care delivery situation, this model will build credits and debits into the system once a facility produces the means of generating a transaction, such as a bill for a hospital visit or prescription.
This method helps health care facilities obtain a more accurate picture of the transactions that may occur within a given time frame, like a quarter or fiscal year. This accuracy is the reason why large health care facilities will use this method in their accounting practice.
Like other entities that follow GAAP, health care organizations produce financial reports that indicate their fiscal performance. Relevant audiences for this information include the public, hospital trustees, and senior management.
Details in these reports may include cash flows, balance sheets, statements of operations, and changes in net assets. Tax-exempt hospitals are also required to itemize uncompensated community care benefits such as charity care.
Health care providers are major users of IT infrastructure, capital equipment, and commercial buildings, all of which depreciate over time. As with depreciation accounting in other sectors, this process involves calculating the cost of the asset in question as well as its useful life.
Hospitals can be reimbursed in multiple ways, adding to the complexity of accounting in health care. They might receive capitation, which involves a fixed amount per patient per month/year. In this system, providers receive payment regardless of the services used by a patient but are responsible for all overruns. Alternatively, a provider could be paid per diem (per day) at an amount typically set by the payer, or on a case-by-case basis, for example through Medicare Severity Diagnosis Related Groups (MS-DRGs).
Most health care providers are paid by a mix of public and private entities. At a large hospital, accountants may recognize revenue from hundreds of different payers. The portion of revenue from each type of payer is critical to hospital profitability.
Writing a check is one response to this credit accumulation. However, providers like hospitals often end up with numerous outstanding checks due to recipients who have died or moved. In some states, funds from such uncollected checks must be turned over to the state government because of unclaimed property laws.
The George Washington University HCMBA curriculum includes traditional MBA coursework in financial and managerial accounting alongside electives in topics such as Health Care Quality, Trends in Health Systems, and Regulatory Affairs.
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Coming soon, however, Emory Healthcare is working toward consolidating patient bills and statements. With our move to Epic's MyChart patient portal, patients who receive care on or after October 1, 2022, will receive statements and bills that combine hospital/facility and provider charges.
Emory Healthcare is pleased to offer its patients the ability to pay their Emory physician statements and Emory hospital statements online through a secure payment system. Patients now have a fast, secure, and convenient way to manage their statements online, 24 hours a day, 7 days a week.
During Your Hospital Stay
An admissions counselor is available weekdays to help you during your stay to discuss any issues. Please call extension 35150 or (559) 353-5150 from outside the hospital to arrange an appointment.
After You Have Left the Hospital
For billing questions after you have left the hospital, please call Patient Financial Services at (559) 353-7009 Monday - Friday between the hours of 9 a.m. - 4 p.m. PST or email patientfinservices@valleychildrens.org. 0852c4b9a8
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