As part of a 2018 Small Business Accounting Insights Survey, Accounting Today conducted an analysis of the healthcare sector, among others, to examine the state of the sector as we look ahead toward 2019. For the purposes of the survey, the health care sector includes physician and dental practices, which are both slightly larger and in existence longer compared with small businesses as a whole. Both types of practices also have complex financial and accounting needs.
When compared with the universe of small businesses, the respondents’ businesses were slightly larger and in practice longer. Approximately 82 percent of the practices are at least five years old, and 55 percent are more than ten years old.
The analysis identified certain challenges the healthcare sector faces, such as:
- Rapid changes in technology that affect medical treatments, record keeping and practice management—all calling for significant capital
- Uncertainty about the insurance industry, specifically regarding changes in the Affordable Care Act
- Changes in models for healthcare delivery
- Widespread consolidation as many practices are bought by large hospital networks
Healthcare small businesses are more likely to have non-tax and non-sales-tax-related audits, most likely because the sector is much more regulated than other small businesses, given the need to answer state and federal regulators, insurers and several government payors.
Despite these challenges, the analysis reveals that when compared with small businesses as a whole, the health care sector is quite healthy. More than 70 percent reported a profit for 2017, and healthcare owners are more likely to have reported increased revenue in the previous 12 months (61 percent versus 51 percent of other small businesses). Additionally, when it comes to financial challenges, health care small businesses are more likely to quickly contact their accountants, with 45 percent seeking outside advice versus 34 percent of small business owners overall.
When it comes to accounting, most healthcare practices use bookkeeping, tax planning, other tax and payroll services. However, one significant gap was identified—although fraud is a major problem for medical practices, respondents did not indicate an interest in fraud or forensic accounting services. This could indicate a reactive approach to cybersecurity breaches rather than a proactive approach that could help medical and dental offices save millions of dollars and lost time.
What’s ahead in 2019? Healthcare and dental practice owners are optimistic. In fact, 70 percent expect their revenues and profits to increase, though 73 percent expect to maintain their staff levels. Cash flow, a common challenge among small businesses, was cited by over 30 percent of healthcare respondents as a problem over the previous 12 months.
If you have questions about the new rules or other questions related to your medical practice or dental practice contact Angie Walters at 214-635-2547 or Erick Cutler at 214-635-254 or fill in the form below.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.