Process of Accounting in Healthcare Sector

The healthcare industry is a growing sector and plays a significant role in the public well-being of the country. While the Australian medical industry is continuously contributing towards the nation’s health, its financial health is lagging to some point. Although healthcare is a glorified industry, there are many challenges in its taxation, accounting, and bookkeeping process.  

Accounting in the healthcare industry is a specific accounting system that accumulates, communicates, and interprets historical or projected economic data valuable to ascertain the hospital’s operating activities & financial position. Here, the word ’‘accumulation’ refers to the process of classifying & recording the transactions which frequently take place in a hospital. And, ’‘communication’ refers to reporting the recorded information to the users of accounting, whereas ’‘interpretation’ refers to the analysis & evaluation of the reported data. The notion behind it is to streamline the process so that the accounting can effortlessly be implied and applied by the users to whom it belongs.  

Process of Accounting in Healthcare Industry 

Setting up a System: 

The initial step is to set up a system to post transactions in the ledger, identify errors, and adjust unadjusted trial balance if found flaws in the transactions. Nowadays, it is crucial to efficiently set up an appropriate system to perform all the required actions without human error. MYOB, Sage, Quickbooks are some software accounting firms used to perform accounting for the medical industry. 

Collection of Accurate Data: 

The second step is to collect accurate data to perform flawless accounting for hospitals. It is a crucial step and should be done correctly as even a minor mistake could affect the whole accounting process. Make sure you hire a reliable service provider and safely share the accurate data to perform accounting smoothly. You can even plan to hire an outsourced CFO Sydney to perform the accounting for your business, and you can share the data via dropbox, google drive, or email daily/weekly as per your workload and requirements. 

Identification & recording of transactions in Journal: 

After acquiring the correct data, the next step is identifying the business transactions and recording them in journals. The business entity has to identify financial & monetary transactions. In this, only business transactions are recorded and not the personal account transactions of the owner. After proper identification, the process of recording begins. The fundamental of recording transactions is based on the policy followed by the entity, i.e., accrual or cash basis of accounting. 

Processing of Data: 

After identification & recording of transactions in the Journal, this step initiates the final accounting process, including posting transactions in the ledger, identifying errors, adjusting unadjusted trial balances, preparing financial statements, and finalising closing entries.  

Review, Follow up, and Revision 

The last step is to review, follow up, and revise the whole process. It is essential to review activities regularly and make revisions to avoid mistakes while processing the data. It is important to mark that all the valuable information related to hospitals’  

actions are presented in a statistical form that is historical and projected in nature. 

Wrapping Up-

Accounting for the healthcare industry acts similarly to other businesses, but it is crucial to understand and follow the correct accounting procedure. You can reach out to outsourced accounting services that specialise in healthcare accounting and have worked with multiple businesses in the healthcare industry.