Managing finances can be extremely challenging for healthcare professionals focused on patient care.
Luckily, Xero accounting software is designed to simplify and automate accounting for medical practices of all sizes.
This guide will walk through exactly how to leverage Xero's features to streamline healthcare accounting, integrations with popular medical platforms, tailored reporting, and more.
Introduction to Xero for Healthcare: Streamlining Accounting for Medical Professionals
Exploring Xero Accounting Software for Healthcare
Xero is a cloud-based accounting software that offers features tailored to the unique needs of healthcare practices. It provides tools to track patient payments, insurance claims, and other financial workflows specific to medical professionals.
With Xero, clinics can automate tasks like accounts receivable and payable to save time. It also generates custom reports on profitability by service, provider, patient demographics, and more to inform business decisions.
Its cloud-based access further enables multi-location practices to manage all accounting and reporting in one place for consolidated visibility. Xero aims to simplify healthcare accounting so providers can focus on patient care.
The Advantages of Xero for Healthcare Professionals
Xero offers several advantages that make it a strong choice for medical accounting needs:
- Specialized features like patient payment tracking and insurance claims management that align to clinical workflows
- Integration with major healthcare platforms like Cliniko, Timely, and more to unite systems
- Visibility into key metrics like profitability by service line, provider, patient type, and other dimensions to identify growth opportunities
- Accessibility with cloud-based access for multi-site clinics to manage accounting from anywhere
- Automation of tasks like accounts payable/receivable to save time and costs on manual processes
- Support from accounting advisors with healthcare expertise to optimize use of Xero
By streamlining workflows and providing data-driven insights, Xero enables healthcare professionals to gain efficiency, growth, and more sustainable operations.
Seamless Integrations with Healthcare Platforms like Cliniko and Timely
To make financial reporting seamless for healthcare providers, Xero offers integrations with popular platforms like Cliniko and Timely.
These practice management systems help automate clinical workflows like patient intake, billing, scheduling, and EHR. Tying them to Xero gives real-time visibility into patient accounting and a single source of truth.
Other healthcare apps available include Heydoc, MediRecords, and Homecare Medical. This eliminates manual duplication of data across systems for smoother operations.
Xero's open API also allows clinics to build custom integrations to their unique tech stack if needed. Its marketplace has 200+ healthcare-focused apps to extend functionality.
Automating Healthcare Accounting with Xero's Key Features
Xero takes advantage of automation, machine learning, and AI to simplify medical accounting. Key features that benefit healthcare providers include:
- Patient payments tracking against invoices and treatment plans to match collections to services
- Bulk insurance claims processing to get reimbursed faster and reduce outstanding receivables
- Accounts payable automation for streamlined vendor payments
- Reporting by service, provider, patient type, and other factors to analyze profit drivers
- Forecasting tools to improve budgeting and cash flow management
This reduces time on manual tasks to free up staff capacity for patient care. Advanced analytics also lend meaningful insights to enhance operations, profitability, and growth.
What are the two ways for accounting in the medical practice?
Medical practices have two main options for managing their financial accounting: cash basis and accrual basis.
Cash Basis Accounting
With cash basis accounting, income and expenses are recorded when cash actually changes hands. For example, revenue is recorded when payments are received from patients or insurance companies. Expenses are recorded when bills are paid.
This method is simpler, but doesn't always reflect the true financial situation of the practice since it ignores accounts receivable and payable. However, it can be easier for new practices with limited staffing to manage.
Accrual Basis Accounting
Accrual basis accounting records income when it is earned and expenses when they are incurred. For example, revenue is recorded when services are provided to patients, regardless of whether payment has been received yet. Expenses are recorded when goods or services are received, even if no payment has occurred.
This provides a more accurate picture of financial performance by matching revenues to the time period in which they were earned. However, it requires more complex record-keeping to track accounts receivable/payable. Most larger medical practices use accrual accounting.
In summary, cash basis is easier to manage but less accurate, while accrual better reflects financial health but requires more administrative effort. The size and needs of the medical practice typically determine which system is more suitable.
What are the two types of accounting in healthcare?
There are two main types of accounting commonly used in the healthcare industry:
Accrual Accounting
Accrual accounting records revenue when it is earned and expenses when they are incurred, regardless of when cash is exchanged. This means revenue is recorded when services are provided to patients, not when payments are actually received. Likewise, expenses are recorded when goods or services are received, not when bills are paid.
Accrual accounting provides a more accurate picture of financial performance because it matches revenue and expenses to the period in which they actually occurred. This is important for issues like revenue recognition and expense allocation. Most healthcare providers use accrual accounting because it complies with accounting guidelines and provides better financial insights.
Cash-Basis Accounting
Cash-basis accounting recognizes revenue when cash is received and records expenses when bills are paid. So if a healthcare practice treats a patient but does not receive payment until the next month, under cash-basis accounting, the revenue would not be counted until the payment was received.
Cash-basis accounting is easier to implement but does not always accurately match revenue and expenses. It provides less visibility into accounts receivable and payable. Still, it can be suitable for some small and medium healthcare practices focused on cash flow rather than accrual-based financial statements.
In summary, accrual accounting is preferred for compliance and accuracy, while cash-basis works for simplicity. Healthcare providers should choose the accounting method that best fits their oversight needs and financial reporting requirements.
How might accounting be used in a medical office?
Accounting is a crucial aspect of running an efficient medical office. Here are some of the key ways accounting can be leveraged:
- Billing and Insurance Claims: Accurate billing and coding ensures medical offices receive proper reimbursement for services provided. This involves submitting claims to insurance providers using the correct procedure and diagnosis codes. Accounting helps manage this process and reconcile payments.
- Accounts Receivable: Careful tracking of outstanding balances and overdue payments is essential. Accounting enables medical offices to send timely invoices, follow up on unpaid bills, and determine when accounts need to be sent to collections.
- Cash Flow Management: Medical offices have ongoing expenses like staff payroll, equipment, and supplies. Managing cash flow by forecasting income vs expenses, setting budgets, and monitoring bank balances is vital to ensure bills are paid on time.
- Taxes: Medical practices must pay a variety of taxes. Accounting handles tax payments and filings to avoid penalties.
- Reporting & Analysis: Financial reports help make informed decisions about growth, cost reductions, staffing, and more. Accounting transforms raw data into usable business insights.
- Compliance: Medical accounting ensures practices adhere to regulations around patient privacy, insurance standards, electronic records, and more. This protects the business from legal issues.
In summary, accounting is integral for medical offices to sustainably manage finances, remain compliant, analyze performance, and facilitate growth. Software like Xero provides easy tools to accomplish these accounting tasks.
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Do I need an accountant if I use Xero?
You may still benefit from having an accountant even if you use Xero. Here are some key reasons why:
- Expert advice: Accountants have specialized expertise that can provide guidance on complex accounting issues, tax optimization, financial planning, and more. They can advise you on best practices for managing finances in Xero.
- Analytics and reporting: While Xero offers reporting features, an accountant can provide customized analytics and financial reports to help you gain business insights. They can help you interpret cash flow, profit and loss statements, and KPIs.
- Tax preparation: Using Xero does not eliminate the need to file taxes properly. Accountants can ensure taxes are done accurately and help you identify deductions you may have missed.
- Audit support: If you get audited, an accountant can handle communications and documentation requests on your behalf. Their expertise can be invaluable in an audit.
- Outsourcing tasks: Accountants can handle administrative tasks like payroll, invoicing, and bank reconciliations so you can focus on running your healthcare business.
So while Xero is extremely useful, partnering with an accountant can take your financial management to the next level with specialized expertise tailored for the healthcare industry. They empower better decision making through analytics and advice.
Setting Up Xero for Healthcare: A Step-by-Step Guide for Medical Professionals
Creating Your Xero Account for Healthcare Management
To get started with Xero for your healthcare practice, simply go to Xero.com and click "Try Xero for free". Select the starter plan for your practice size and fill out the sign up details.
Once your 30-day free trial begins, customize your settings for healthcare financial management needs:
- Under Organization settings, classify your business industry as "Health". This will preset common healthcare accounts in your chart of accounts.
- Enable multicurrency if you need to bill patients and manage finances in multiple currencies. Xero supports over 160 currencies.
- Set up tracking categories to classify transactions by departments, locations, practitioners, insurance providers, or other healthcare attributes. This allows detailed financial reporting.
Customizing Your Chart of Accounts for Healthcare Specifics
Xero comes with preset accounts for healthcare practices, but you can further customize the chart of accounts to match your workflows:
- Add accounts for patient billing, insurance claims, different revenue streams (procedures, tests, etc.)
- Include liability accounts for managing HSA/FSA administration
- Segment accounts by department, practitioner, location, or medical service/procedure type
Check out apps in the Xero app marketplace that integrate with practice management platforms like Cliniko, Timely, Heydoc, and more. These can help automate account coding.
Importing Existing Healthcare Financial Data into Xero
If migrating financial data from another accounting platform, use Xero's import tools:
- Import account transactions from Excel CSV files
- Connect to bank feeds to automatically import latest bank, credit card, and loan accounts
- Use Xero's secure data import tool if handling large datasets
- Leverage apps like Jet Convert to transfer data from legacy platforms like QuickBooks
Reach out to an accounting partner to assist with data migration for more complex healthcare setups.
Managing Users and Permissions in a Healthcare Setting
Xero allows extensive customization of staff permissions for better security:
- Give "read-only" access to certain employees so they can view transactions without editing abilities
- Restrict access to sensitive financial data on a need-to-know basis
- Set up separate logins for different departments based on function (billing vs. payments)
- Limit employee ability to change key settings
Regularly review user permissions and update appropriately as staff roles evolve.
With the proper setup, Xero can provide robust accounting tools tailored for medical professionals. Reach out to the Xero advisory team if any questions arise when configuring your unique healthcare accounting and finance workflows.
Navigating Xero Features for Effective Healthcare Accounting
Xero provides a robust set of accounting tools tailored to the unique needs of healthcare practices. Key capabilities that enable efficient financial management include:
Efficient Patient Invoicing and Payment Processing with Xero
- Create customizable invoice templates to bill patients for visits, procedures, etc.
- Accept credit card and ACH payments directly in Xero or integrate with payment processors.
- Use automated payment reminders and online bill pay to simplify collections.
- Accept HSA/FSA card payments to facilitate patient reimbursements.
Streamlining Insurance Claims Management with Xero
- Send claims data directly from Xero to clearinghouses and insurance providers.
- Get notifications when claims are processed so you can track status.
- Easily match payments received to submitted claims.
- Gain insights into claims acceptance rates and revenue cycles.
Gaining Financial Reporting and Insights for Healthcare Practices
- Generate real-time reports on revenue, expenses, account reconciliation, budgets vs. actuals, and KPIs.
- Analyze performance by service, provider, insurance payer, and other dimensions.
- Forecast revenue and growth using historical performance data in Xero.
Tracking Expenses for Medical Supplies and Equipment Efficiently
- Create billable expense categories to capture costs for supplies, labs, equipment leasing etc.
- Configure approval workflows for purchasing and supplier payments.
- Maintain fixed asset register of medical equipment and depreciation schedules.
- Identify opportunities to reduce supply and operational costs.
With robust accounting tools specialized for medical practices, Xero enables better financial oversight to reduce revenue leakage and operational costs.
Leveraging Support and Resources for Xero in Healthcare
Resources to access help, find accountants familiar with medical practices, and stay up-to-date.
Exploring the Xero App Store for Healthcare-Specific Add-Ons
The Xero App Store offers various third-party applications and integrations tailored for the healthcare industry. These can help medical practices maximize Xero's accounting and billing capabilities.
Some popular apps include:
- Cliniko: Practice management software with features for patient records, appointment scheduling, and billing. It integrates with Xero for automated accounting.
- Timely: Online patient appointment booking and scheduling system that syncs with Xero.
- Heydoc: Patient communication platform allowing text messages and email. It connects with Xero to access accounting data.
Browsing the medical and healthcare categories in the App Store is a great way to discover new tools to boost productivity and organization.
Engaging with the Xero Community for Healthcare Accounting Tips
The Xero Community forums enable connecting with other users to exchange ideas and best practices. The community has specific spaces for discussing accounting issues faced by medical professionals.
Posting questions in the appropriate Healthcare category can help get advice from those experienced with medical accounting. Other users may provide tips on:
- Setting up healthcare-specific accounts and tracking diagnoses codes
- Configuring invoices for insurance claims
- Managing patient payment plans and statements
- Utilizing Xero's non-profit capabilities
Engaging in discussions provides an opportunity to learn from others using Xero in the healthcare field.
Utilizing Help Articles Tailored to Xero Healthcare Features
Xero offers help documentation with information and instructions tailored to the healthcare industry.
The Healthcare guides section covers topics like:
- Getting started with Xero for healthcare
- Setting up accounts for procedures and diagnoses
- Billing insurance companies and patients
- Generating specialized financial reports
Additionally, the Accounting glossary defines terminology for medical billing and healthcare payments.
These resources help learn the healthcare-specific capabilities in Xero.
Partnering with Accountants & Bookkeepers Specialized in Healthcare
Those new to medical accounting and billing can benefit from partnering with an advisor specialized in the healthcare industry.
The Xero Find an advisor directory lets you search for accountants, bookkeepers and support partners with healthcare experience.
Key tips when selecting an advisor include:
- Review their medical and healthcare client list
- Ask about their experience with medical coding and billing systems
- Discuss the healthcare-specific reporting they can provide
The right advisor makes it easier to leverage Xero's features tailored for clinics, hospitals, therapists and other medical professions.
Conclusion: Maximizing the Benefits of Xero for Healthcare Accounting
Recap of Xero's Impact on Healthcare Accounting Efficiency
Xero provides a number of features that can streamline accounting workflows for healthcare practices. Key benefits include:
- Automated invoicing and billing to get paid faster
- Integrations with medical software like Cliniko to sync patient data
- Bank feeds to automatically import transactions
- Customizable reports and dashboards to track metrics
By leveraging these capabilities, medical professionals can reduce time spent on administrative tasks and focus more on patient care.
Future-Proofing Your Practice with Xero's Scalable Solutions
As a cloud-based platform, Xero makes it easy to scale up a healthcare practice's accounting needs. Key advantages include:
- Ability to add unlimited users as the practice grows
- Flexible pricing tiers to upgrade features as required
- 700+ app integrations to incorporate new tools down the line
- Regular platform updates to leverage latest technologies
By building with Xero from the start, healthcare providers can avoid having to migrate systems and maintain accounting continuity as their patient base expands.
Finding Ongoing Support and Small Business Insights for Healthcare with Xero
For those new to practice management, Xero provides a wealth of resources:
- Setup guides and webinars tailored to the healthcare industry
- Active community forums to get advice from fellow users
- Library of ebooks and articles with relevant tips and best practices
- Certified advisors to provide personalized assistance
Leveraging these support options ensures healthcare professionals can continue optimizing Xero to meet their accounting needs as the business evolves.
