In Dubai, the healthcare accounting system has grown rapidly over the past decades. It can be difficult for the hospitals to focus on the financial activities and patients at the same time. Hospitals are often challenged by shrinking staff, strict budgets, and changing regularities. Our healthcare accounting services will assist you in providing a higher level of personal care to your clients smoothly.
Healthcare accounting services is a difficult task. Nowadays, many challenges arise from issues such as accrual accounting and revenue recognition. Hospitals in the UAE handle large amounts of money, from patient fees to government funding. Proper healthcare accounting ensures accurate expense tracking and revenue. It is essential for budgeting, forecasting future health, and making informed decisions.
Moreover, the UAE healthcare system has strict financial regulations. It is crucial to keep the financial records accurate to avoid any unnecessary penalties or fines. Also, effective accounting helps to implement cost-effective measures and identify high-expenditure areas. Let us discuss the healthcare-specific challenges you can expect to encounter.
Facts about healthcare accounting
Healthcare accounting is an accounting system that communicates, records, and interprets projected economic and historical data, which are useful for the purpose of knowing the financial position and operating results of a clinic or hospital.
Accrual accounting
In healthcare accounting, accrual basis accounting is commonly used in hospitals and clinics. Accrual accounting is a comparison between income earned from patients and the cost incurred for the services they receive.
Cash accounting
Payment of cash and receiving of payments is more important in cash accounting. Cash accounting is a concept where the expenses and revenue are recognized.
Reimbursement
State, federal, or local regulatory agencies on state or federal averages. The standard hospital rates are not cost-based. Reimbursement rates are on the basis of federal or state averages.
Property and equipment
Assets are recorded at fair value or historical cost. Depreciations are recorded on all assets. The method of valuing assets, capitalization policy, and depreciation methods must be disclosed in the notes of financial statements.
Deprecation
Due to advances in technology, there is a high cost of repairs, and the productivity of fixed assets may decrease. These costs are allocated to its useful life to recognize such expenses. A separate accounting entry recognizes the purchase of the asset which can create liability also.
Accounting reports
Accounting reports are prepared on a regular basis to record the information on hospital activities. Regular reporting is important for conducting meaningful analysis in healthcare accounting.
- Changes in Net Assets as the Statement of Profit and Loss and Statement of Operations
- Balance sheet
- Statement of cash flow
Here is revenue for Clinics or Hospital:
- Revenue earned from patient visits
- Nursing or doctor services for a particular fee
- Insurance claims
Here are the major costs for Clinics or Hospitals:
- Administrative expenses
- Purchase of medical equipment or other supplies
- Software, lease expenses
- Purchase of services
Here are some of the gains:
- Sale of capital assets
- Sales of investments in securities
- Donations or gifts
- Investment Income
Main accounting transactions in hospitals
⸰ Debit Receivables
⸰ Credit Patients/Insurance claims
⸰ Debit Provision for Uncollected funds
⸰ Credit Receivable
⸰ Debit Bank
⸰Credit Receivables
Efficient billing
Timely and accurate billing ensures patients receive correct invoices and hospitals receive payment promptly. This helps to maintain positive patient relationships and avoid unnecessary billing disputes.
Resource optimization
Proper cost analysis can highlight the areas where resources like medication, equipment, or staffing can be optimized. It improves patient care delivery and shortens the wait times.
Data-driven decision making
Strong financial data collected through accounting can help to make informed decisions such as new equipment investment, overall patient experience, or expanding services.
Conclusion
If you have stronger relationships and tailored solutions, then you can overcome any complexities in clinics or hospitals in UAE. ebs is a prominent accounting firm in UAE, offering comprehensive services tailored to hospitals and clinics. In this blog, we discussed the major accounting tasks to be done in clinics and hospitals.
ebs has a dedicated team of healthcare accounting specialists who know the unique financial complexities of clinics and hospitals. ebs offers a wide range of services to meet the specific needs of the healthcare system in UAE.
- Accounting and bookkeeping
- Tax Planning and Compliance
- Management consulting
- Internal audit and risk management
ebs is a reliable and experienced partner for managing your clinic or hospital’s finances in the UAE. Their healthcare expertise, comprehensive service portfolio, and technology-driven approach will help you achieve financial stability, optimize operations, and ultimately focus on delivering excellent patient care.
Reach out to ebs for a consultation to discuss your specific needs and see how our services can benefit your healthcare facility. Moreover, we provide other services such as accounting and bookkeeping services, Auditing, Due Diligence audit services, and many more. So, you should get in touch with our experts to discuss our services and contact us today.
FAQs
How is accounting done in the hospitals?
An account is made with every element of business, such as supplies, personal accounts, real estate, capital, loans, cash, etc. In hospital accounting, these books are necessary to keep a cash book, charge register, checkbook, payroll, general ledger, and pay patients’ ledger.
Is accounting mandatory in UAE?
The Securities & Commodities Authorities (SCA) have declared it mandatory for businesses with IFRS. UAE has become a global financial center following the best practices in financial reporting.
What method of accounting are most healthcare organizations on?
There are main two accounting methods used in healthcare organizations, accrual and cash accounting. The accuracy of these method is the reasons why large health care facilities will use method in their accounting practice.