In short

Accounting for a medical practice turns reconciled collections into management information: collections per provider, net collection rate after contractual adjustments, payer mix, overhead per visit and cash flow around delayed reimbursement. It also covers the year-end work a tax preparer needs, including a fixed asset schedule for equipment, accrual adjustments where the practice reports on an accrual basis, and documentation of owner compensation and distributions between partners.

Reports practice owners actually use

Most practice owners want three answers each month: how much did we collect, what did it cost to deliver care, and how much can partners safely take out. We build a monthly package that answers those directly:

  • Collections by provider and payer, so changes in payer mix are visible early
  • Overhead ratio, operating costs as a share of collections, trended month to month
  • Days in accounts receivable from your billing reports, alongside our cash figures
  • Cash forecast that reflects typical reimbursement lag

Compensation and partner draws

Many group practices pay providers on a formula tied to collections or production. We calculate the inputs from the reconciled books, document the calculation and keep owner draws and distributions out of expense accounts, which avoids disputes and year-end surprises.

Accounting method

The IRS explains in Publication 538 that a taxpayer must use an accounting method that clearly reflects income, and that changing methods generally needs IRS consent. Many practices keep cash-basis books for tax and want accrual-style receivable figures for management. We keep both views consistent and agree the approach with your tax preparer.

Budgeting for equipment and expansion

Before you commit to a new location, provider or major piece of equipment, we model its effect on cash and overhead using your own historical figures, not industry averages.

Key terms

Definitions for terms used on this page:

  • Accounts Receivable: Accounts receivable is money customers owe your business for goods or services already delivered.

Medical Practices problems this addresses

  • Insurance payments arrive weeks after the visit and rarely equal the billed charge
  • Contractual adjustments and write-offs get mixed up with true bad debt
  • Practice-management reports and the bank deposits never seem to agree
  • Provider compensation formulas depend on collections that are hard to measure
  • Equipment purchases and leases are large and need consistent treatment