Health care is one of the five largest industries in the United States — and growing rapidly. According to a report from Fortune, Americans spent approximately $3.65 trillion on health care in 2018, which is a 4.4% increase from the year before. As the cost of treating patients increases, the need for accounting in health care grows.
Health care poses unique challenges to accountants, as decisions made by the accounting department impact the patient’s overall well-being and satisfaction. Health care industry accountants must be well-versed in billing and insurance law to ensure each patient receives the proper care in the most cost-effective way.
Due to the increased need for accounting in health care, doctors’ offices, urgent care facilities, hospitals and other medical centers are looking to hire more employees with accounting and auditing backgrounds. Individuals seeking to work in an expanding field should inquire about Rider University’s online Master of Accountancy.
The Role of Accounting in Health Care
A health care facility cannot operate smoothly without well-allocated resources and an accurate and timely billing department, making accounting in health care so critical to the industry.
- Medicine and other health-related services. Doctors can prescribe medicine and provide certain services, but they need to refer patients to different locations, such as labs, for testing and other needs. Health care accountants are responsible for keeping track of the exact services provided to patients and the costs accrued so no party is charged incorrectly.
- Insurance companies. According to the Institute of Management Accountants, “The physician is in the position of both deciding what services a patient needs as well as being paid for providing those services.” The health care industry has been criticized for this aspect because it incentivizes physicians and other health specialists to order services for patients. Insurance companies can deny requests from hospital billing departments that they deem unnecessary. It’s the job of accountants in health care facilities to learn the appropriate amount to charge for services that will be covered by the patient’s insurance.
- The health of the patient. Accounting in health care is critical because the stakes are so high. While accountants must be sure hospitals are operating cost-efficiently, they also must bill for potentially lifesaving procedures. The Emergency Medical Labor and Treatment Act ensures all people in the U.S. can get treatment regardless of their ability to pay. Patients in desperate need of attention could be hospitalized for months with no ability to pay or insurance. In these situations, accountants need to be innovative and resourceful in finding ways for these patients to pay their bills, such as offering reduced rates or setting up payment plans.
Skills Needed for Accounting in Health Care
To become a skilled health care accountant, students must learn how to develop creative, cost-effective solutions and hone various mathematical and analytical skills.
- Analytical and math proficiency. Accounting in health care requires analyzing and computing numerical data. Accountants use key performance indicators, such as beds filled in a hospital in conjunction with the cost of labor, to analyze a hospital’s financial stability. Their analytical ability could be tested by studying insurance policies and records and looking for anomalies indicating potentially fraudulent charges.
- Organizational skills. Health care accountants must work with numbers and monitor all financial data, from insurance payouts to hospital maintenance costs. Whether accountants work in a large hospital or a small private practice, their ability to organize and maintain all financial documents is crucial to their success.
- Creative thinking. According to Healthcare Business News, operating margins for nonprofit hospitals fell to 1.7% in 2017 from 2.7% in 2016, with many hospitals operating at a loss. In turn, health care accountants must come up with innovative ways to combat increased labor costs, flat insurance payouts and other factors, such as by reducing spending on redundant hospital machinery.
Help America’s Health Care System Improve
According to the Institution of Management Accountants, the American health care industry is growing almost twice as quickly as the broader economy. As health care expands, its need for skilled accountants increases. Earning a Master of Accountancy can open the door to a fast-growing and potentially lucrative profession. Students pursuing a career in accounting in health care might want to consider Rider University’s online Master of Accountancy.
Rider University’s online Master of Accountancy can be adjusted to fit the schedules of full-time students and working professionals. The program’s versatility can help graduates pursue work in many different areas of the health care field. Learn more about how to get started on your Master of Accountancy from Rider University today.