Question

What makes healthcare accounting unique?

Answer 1

Health care accouting is unique for the following reasons,

Unlike other busniesses the revenue does not come from sales / services, it comes from hospital inpatient, outpatient, clinic and
specialty services. Some health care centres do also have income from cafeteria, Interest on deposits and Misc. The revenues are generated from tests, drugs, surgeries.

In regard to expenses, major item will be salary and drugs.

They always have unpredictable cash flows, changing technology. Further, this industry needs too much captial and has to maintain adequate cash flows.

The industry mainly follow accural accouting.

Like other industries, the asset’s depreciation expense will be recorded across each accounting period, but however because of changing technolgy, a asset may soon be obsolete.

Unlike other industries, revenue is not generated from service receipient, here they can be reimbursed in multiple ways.

Accumulation of credits in accounts receivable is one of the major concern. This happens when the amount collected via payers and/or patients for a service is greater than the due from the patient.

Health care organizations do not have profit maximization as goal, but still they have to earn some profit for their survival and to go bankrupt.

There are number of unique aspects of health care that require a solid understanding before one can start health care accounting.