Accounting for Healthcare Professionals: What Every Accountant Should Know
Medical practitioners are not just your regular clients—they operate in a tightly regulated and unique environment that comes with its own financial challenges. For accountants working with doctors, understanding the ins and outs of their industry is critical. Getting it wrong could lead to penalties, loss of licenses, or reputational damage for your clients. Here’s how you can help them thrive while staying compliant. The 2024 CIBA Practice Management Conference in November 2024 we looked at the requirements and risks surrounding medical practitioners from the perspective of an accountant.
Why Industry Knowledge Matters
The conference clearly highlighted the need to understand the legal environment surrounding a client when compiling financial statements. Being an accountant is not just managing numbers; it is about navigating a maze of regulations and expectations. Medical practitioners must be registered with the Health Professions Council of South Africa (HPCSA) and comply with strict standards for ethical and financial practices in line with the Health Professions Act, Act 56 of 1974. Failing to meet them can have serious consequences.
As their accountant, you need to:
Ensure accurate financial records that meet HPCSA standards.
Help clients stay on top of billing and income management.
Guide clients in handling patient payments transparently and ethically.
It’s not just about compliance—it’s about protecting your client’s practice and reputation.
The Four Biggest Risks (and How to Manage Them)
Medical practice accounting comes with specific risks you need to watch for. Here are the top four, along with tips to keep your clients in the clear:
Regulatory Compliance
Doctors must follow HPCSA rules covering everything from billing to expense reporting. Non-compliance can lead to hefty fines, legal trouble, or even suspension. Regular audits and checks can ensure your clients stay within the rules and avoid unnecessary headaches. Make sure that you understand the requirements and ask relevant questions relating to compliance.
The Business Management Policy is one of the documents issued by the HPCSA that contains requirements relating to medical practices. For example, it stipulates that health practitioners can operate only under these structures:
Solo practices
Partnerships or group practices
Personal liability companies (Incorporated practices - Inc.)
Franchises, as long as they comply with ethical rules
Outsourcing administration or using management companies is allowed, but only if ethical rules are upheld.
Financial Management Woes
Medical practices often struggle with unpredictable revenues (think irregular patient payments) and high fixed costs (like staff salaries and equipment). By creating solid budgets and financial forecasts, you can help your clients maintain healthy cash flow and grow sustainably.
Indemnity insurance is essential for medical practitioners, protecting them against malpractice or negligence claims by covering legal defense costs, settlements, or damages. Given the high liability risks in healthcare, this insurance safeguards personal assets and ensures practitioners can focus on patient care. It also reflects accountability and compliance with professional standards, mitigating financial and reputational risks in the event of a claim.
Taxation Traps
Taxes can get tricky for medical practitioners. Issues like underreporting consulting income, incorrectly classifying expenses, or missing VAT obligations are all too common. As their accountant, you can ensure accurate filings, claim legitimate deductions, and help them avoid penalties.
Data Privacy and Security
Doctors deal with sensitive patient information, including financial data. A breach of privacy laws like the Protection of Personal Information Act (POPIA) could be devastating. Help your clients by recommending secure systems for managing financial records and ensuring compliance with data protection laws.
How Accountants Can Add Value
Supporting a medical practice is about more than crunching numbers—it’s about being a trusted advisor. Here’s how you can make a real difference:
Ensure Compliance: Conduct regular reviews to ensure your clients meet both HPCSA and SARS requirements.
Use Technology: Use tools that streamline invoicing, payments, and record-keeping while safeguarding sensitive data.
Help Clients Grow: Help practitioners optimise expenses, make informed investments, and prepare for future growth.
The Bottom Line
Medical practitioners rely on their accountants not just for compliance but for peace of mind. By understanding their industry and proactively managing risks, you’ll not only protect your clients but also position yourself as an invaluable part of their team. And that’s a prescription for success.