Financial Reporting Strategies for Medical Management Services

Financial reporting is all about reporting a company’s finances to all the stakeholders whoever are concerned. It may include clients, management, founders, employees, etc. It is done so that there is proper transparency among all the parties regarding how the finances are being collected and spent. 

But how financial reporting is necessary in the medical industry? Well, 47% of healthcare organizations cited improving financial performance and cost management as their top priority. It means, that regardless of the nature of business or organization, finance is the key responsibility for all of them. 

So, this article will cover some effective practices that will help you maintain financial reports for medical management services.

Financial Challenges In Medical Management Services

As per the report by Kaufman Hall on behalf of the American Hospital Association (AHA), “More than half of hospitals (53% of more than 900 sampled) are projected to have negative margins by the end of the year, compared to 39% in 2019”.

This is because of the numerous challenges that organizations have to face. The following are some of those challenges listed below:

Here, the simple demand and supply concept of economics can be noticeable. With the rising cost of hospital bills and more demand for healthcare among the population, the healthcare cost is continuously rising. 

This graph describes the changing rate of healthcare inflation at different times.

While paying hospital bills, you must have offered different payment options. For instance, you might pay upfront cash, through insurance, medicare, or Medicaid. While paying cash is the simplest and easiest method, insurance, Medicare or Medicaid are comparatively more complex. 

Hence, any mistake or delay causes huge damage to the financial reporting system of the medical management team.

There are guidelines set by organizations or authorities like HIPAA and CMS. These guidelines must be adhered to by every medical facility, which ends up making finances more complicated than before.

Key Components of Financial Reporting in Healthcare

Now that you are clear with the challenges management staff generally face while reporting finances, here are some pointers that are must-add in an appropriate report. Follow the list:

1. Tracking Revenue (Income)

The financial report must contain tracks or records of all the in and outflow of funds. Also, in the case of insurance claims or patient bills, it must also be ensured that all the payments are made on time with the correct amount.

2. Compliance Reporting

Each organization has to follow a set of rules and standards to rely on, and the same is the case for medical organizations. So, medical management services are there to keep a track record on all of them. 

The following are some of the reasons why it is necessary:

• Patient Safety: The compliance for the hospital contains guidelines and rules that can take care of the patient. For instance, tracking infection rates and medication errors.
  
• Organization Efficiency: With compliance, compliance reports can help executives make business decisions, analyze risks, and work on improving organizational efficiency.
  
• Legal Compliance: Medical facilities are generally bound to some legal requirements set up by governmental organizations like HIPAA and OSHA. So, compliance reports make facilities’ legal stand strong in case of any issue that might arise in the future. The facility can confirm that they were following all the necessary protocols set up by the organization.

This is how compliance reporting can help a medical facility in various ways.

3. Monitor Cash Flows

Organizations can track the inflow and outflow of cash with regular financial reporting by the management. This way, the management makes wise and informed decisions to take care of the funds with the minimum loss possible.

What are Some Strategies For Better Financial Reporting in Medical Management?

For managing funds at such a massive scale, their management needs to be carried out with caution. The following are some ways you can keep track of them:

• Use Financial Software: These programs can be of great help if used correctly. Ensure the management team knows about the latest programs and how software can play a key part in reporting finances.
  
• Focus on Patient Outcomes: In order to measure if all the equipment or resources in the facility are working right, focusing on patient outcomes can help significantly. The aim is to measure how the resources are used by the organization to take good care of the patient.
  
• Conduct Regular Audits: Audits are necessary to ensure that all the reports and finances are measured transparently without any disruption or laundering. There must be no complaint, and each transaction of cash inflow or outflow must be recorded timely.

Final Words

At last, managing financial reports for medical organizations and reviewing the terms of the management services agreement to ensure all financial arrangements are properly documented is equally necessary for any other organization.

That is why, this article discussed various financial challenges and key components of financial reporting that are necessary. 

If you find this article helpful in any way, consider sharing it with your team and colleagues as well.

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