If you’re a student or aspiring professional with a mind for managing money and an interest in the healthcare sector, you don’t have to choose one or the other. You may find your path leads to healthcare accounting, where both skill sets intersect. This field offers engaging and rewarding work to those ready to take on its inherent challenges.
Read on to learn more about the role of a healthcare accountant and find out how an online Bachelor of Science in Accounting degree from the University of Alabama at Birmingham can help you get started.
What is healthcare accounting?
From a financial perspective, the healthcare industry is a highly complex environment. As the market continues to evolve with new legislation, advanced and expensive technologies, and consumers’ increasing expectations for greater financial transparency, accounting professionals will continue to be in demand.
Healthcare accounting professionals gather, analyze, and interpret financial data. They maintain financial reports, balance sheets, cash flow analyses, and other records for healthcare organizations like insurance companies and hospitals. In turn, these organizations rely on these accounting services and records to remain compliant and make strategic decisions.
How is healthcare accounting different from regular accounting?
Healthcare accountants do much of the same work as certified public accountants (CPAs) and other accounting professionals. They apply the same generally accepted accounting principles (GAAPs) and financial management methods, and work with similar types of records and reporting systems. But the unique challenges facing healthcare accountants relate to the industry in which they work.
According to the Health Care Compliance Association (HCCA), healthcare accounting exists within a complex network of stakeholders, including:
- Healthcare providers and care facilities
- Insurance companies
- Employees and employers
- Pharmaceutical companies and medical device manufacturers
- Government agencies and lawmakers
As a result, a healthcare accountant will oversee more complicated accounts.
Another nuance of the healthcare industry is how payments are processed. The rate a hospital charges may be different from what is paid out for the services rendered. And the payment process itself is fairly complex, adding an extra level of difficulty to the already challenging role of the accountant. Payments are typically covered by two different parties: the insurance provider (which may be a business or the government, in the case of Medicare and Medicaid) pays a negotiated portion and the patient contributes in the form of copays, deductibles, and coinsurance. Patients also have the option to pay from a healthcare savings account (HSA).
Additionally, while a healthcare organization’s financial decisions certainly relate to the bottom line, these entities have plenty of other concerns and priorities to consider, including:
- Providing the highest-quality services possible
- Contributing to public health and reducing morbidity and mortality rates
- Ensuring workers in the healthcare industry are fairly compensated
- Maintaining profitability and viability so that they may carry out these missions
Unlike a traditional accounting firm in a corporate setting, where profit is the top priority, a healthcare accountant will have to be aware of these dynamic priorities and concerns. Without an accounting team, organizations could not deliver patient care, employ medical staff, or run their healthcare facilities in a cost-effective manner. Additionally, concerns surrounding healthcare fraud make the accountant’s job all the more important to healthcare institutions.
What are the job responsibilities of a healthcare accountant?
Healthcare accounting involves all four elements of financial management: planning, controlling, organizing and directing, and decision-making. Because healthcare accounting is much like traditional financial accounting, here are some of the general responsibilities and principles someone working in this field may address:
- Accounts receivable
- Accrual accounting
- Debt, credit, and capital management
- Financial reporting
- Fixed asset accounting
- Revenue recognition
- Strategic financing
- Tax filing
Other responsibilities, like payer mixes and revenue cycle management, are more specific to the healthcare industry.
In everything that they do, healthcare accountants must implement generally accepted accounting principles for recording and reporting so that organizations maintain compliance with state and federal laws. Noncompliant organizations are subject to substantial fines from the U.S. Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS).
Beyond the traditional job responsibilities of an accountant, aspiring healthcare accountants can expect to see the following changes, according to the Institute of Management Accountants (IMA):
- Financial roles are evolving and expanding within the healthcare sector.
- Executives are implementing more stringent risk management practices to avoid healthcare fraud and abuse.
- There is a greater emphasis on business analytics in healthcare accounting.
Joining a professional organization like the Healthcare Financial Management Association (HFMA) can give healthcare accountants industry connections and continued education to help them thrive in an increasingly complex professional environment.
How much do healthcare accountants make?
According to the U.S. Bureau of Labor Statistics, accountants and auditors across all industries earned a median salary of $70,500 in 2018, with the top 10% earning more than $122,840. Offering a slightly lower but industry-specific estimate, ZipRecruiter reports a national average salary of $61,019 in 2020 for those working as hospital staff accountants, noting that most of these professionals earned between $42,500 and $72,000 per year.
The healthcare accounting field can be a lucrative one for well-prepared professionals. Aspiring healthcare accountants should be aware that their actual earning potential will relate to a variety of factors such as their particular skill set, years of experience, and geographic region.
Preparing for a healthcare accounting career at UAB
If you’re interested in a career in healthcare accounting, start by choosing the right academic path. Most employers look for a bachelor’s degree in accounting — and the right education is essential to success in this profession.
An online Bachelor of Science in Accounting from UAB’s Collat School of Business will prepare you with the accounting skills and business acumen to help you succeed in the challenging healthcare accounting environment. Core courses like Internal Auditing, Operations Management, and the three-part Financial Accounting sequence can be taken on your own schedule, thanks to the program’s flexible and innovative online structure.
To learn more about the online accounting program, connect with UAB’s advising team today.