The Importance of Accounting in the Medical Office

Woman doing paperwork in a doctors office

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An accounting department plays an enormous role within the medical office. As the backbone of the organization, the accounting department allows it to operate at its fullest potential. Without an accounting department, it would be impossible for any type of organization to operate in a cost-effective manner.

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles (GAAP) are the common set of accounting principles, standards, and procedures that companies use to compile their financial statements. Simply stated, GAAP is the customarily accepted way of recording and reporting accounting information.

Each organization may operate differently but all have to follow a set of guidelines established within the organization's community, state, and at the federal level. If these standards and procedures are not followed, the U.S. Security and Exchange Commission (SEC) will fine the organization and possibly pursue criminal action to enforce compliance.

Key Elements of Accounting and Financial Management

Within accounting and financial management, there are four key elements recognized. The four elements are Planning, Controlling, Organizing and Directing, and Decision Making.

  • The planning element allows an organization to set forth goals and guidelines to ensure the future success and accomplishments of the medical office.
  • Controlling provides the organization the opportunity to ensure that all areas within the organization are following the previous planned goals and guidelines and also allows for an opportunity to fix any problems or issues which may arise.
  • Organization and directing within financial management are important because they ensure the medical office is working efficiently and up to its best potential. Directing provides the opportunity for the medical office to work on financial management on a day-to-day basis and fix any problems that may arise.
  • Lastly, decision making uses the planning, controlling and organizing and directing elements by gathering information and making the final decisions as to how the financial management will operate.

Accounting and the Medical Office

When operating within a medical office, the accounting department is crucial to its success. The accounting department must follow the set guidelines of the GAAP in order to avoid fees, fines, and/or criminal charges. If any of these actions were to occur it would set a bad name for the named organization.

When operating a healthcare organization, the most important factor within the setting is the patient’s overall satisfaction while allowing the accounting department to operate financial functions accurately. This task can be tricky. However, it will allow for an organization to operate at its best potential, and most importantly, be cost-effective.

One organization that providers can turn to for guidance in financial matters is HFMA (Healthcare Financial Management Association). HFMA is the nation's leading membership organization for healthcare financial management executives and leaders. As of January 2020, more than 50,000 members—ranging from CFOs to controllers to accountants—consider HFMA a respected thought leader on top trends and issues facing the healthcare industry.

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Article Sources

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  1. Healthcare Financial Management Association. Membership Overview.