Medical billing, bookkeeping and taxes – these are likely the least exciting parts of running your physical therapy clinic.
Nevertheless, these aspects of financial management can make or break your business. From working with hundreds of clinic owners for over 15 years, MEG Business has seen many owners make the critical mistake of overlooking their finances. In order to help you stay financially robust and ensure sustained growth, you’ll need to adopt the mindset of a pro CFO.
To help, MEG Business is breaking down some financial essentials so that you can stay cash-flow positive and streamline your accounting process.
Mastering Physical Therapy Bookkeeping
1. Keep Business and Personal Finances Separate
This is Financial Management 101! Always keep your clinic’s finances distinct from your personal ones. This not only simplifies tracking and helps you stay compliant but also ensures a clearer picture of your clinic’s financial health. For example, if you’re planning on bringing new equipment into your PT clinic, using a business line of credit instead of personal can ultimately be more beneficial for business. Establishing a strong business credit profile can be used for securing better loan terms or larger credit lines in the future.
2. Embrace Modern Bookkeeping Tools
Gone are the days of paper ledgers and excel spreadsheets. Opt for reputable accounting software that’s tailored for healthcare or PT businesses. With automated tools like QuickBooks or FreshBooks, you can generate reports, track expenses and even integrate with your clinic’s scheduling software.
3. Reconcile, Reconcile, Reconcile!
At month-end, compare your book’s balance to your bank statement to catch any discrepancies or fraudulent activity. It’s best to keep a consistent eye on your books so that you can catch it early and not face any surprises come tax time.
4. Maintain an Eye on All Expenses
From the smallest to the largest, every expense matters. Regularly tracking them aids in budgeting, financial forecasting and maximizing tax deductions. For example if you’re hosting a workshop for patient education, keep a detailed record of all costs – from printed materials to refreshments. Over time, these records can help you budget for similar events in the future and determine profitability.
5. Documentation is King
Ensure all financial transactions are clearly recorded, and always have backup documentation on hand. Always keep purchase receipts, bank deposit slips and payroll records. Digitalize these documents to save space and ensure easy retrieval.
7. Consult a CPA or Bookkeeper
Don’t shy away from seeking expert help. Hiring a dedicated bookkeeper or accountant can free up your valuable time and ensure the financial integrity of your clinic. Your bookkeeper can regularly reconcile and organize your finances. Their expertise can uncover inefficiencies and potential savings.
Physical Therapy Billing Best Practices
1. Upgrade with Practice Management Systems
Physical therapy billing specialists can optimize your clinic’s accounting processes with accurate coding and consistent collections. Owners who try to tackle this on their own or as a fraction of an in-house role, often struggle to give it the time and attention it needs. MEG’s PT Billing service handles your medical billing from within your own EMR system to reduce redundancy and errors.
2. Always Verify Insurance Upfront
Before diving into a physical therapy session, make sure to verify your patient’s insurance coverage. Taking this proactive step can save countless headaches and ensure timely payments, which is why your front desk staff should be familiar with insurance verification. If you experience a rotating door of front desk help and are constantly retraining them, consider a virtual front desk for your PT clinic. MEG’s Virtual Front Desk personnel validate insurance details before patient services to prevent time-consuming claim disputes or denials.
3. Prioritize On-Time Collections
The quicker you send out invoices or bill insurance, the better your cash flow. Some clinics adopt a policy to send out invoices within 24 hours of a completed service, ensuring a consistent cash flow. To ensure prompt payment, stay updated on medical billing and optimize your process.
4. Pursue Unpaid Bills
Keeping track of unpaid bills and following up is essential. Whether through reminders or collection calls, ensure your clinic receives its dues. Establish a follow-up system, like sending reminders after 30, 60 and 90 days, followed by a final notice before potentially forwarding the bill to collections.
5. Stay on the Right Side of the Law
Regulations around billing, especially for government programs like Medicare, are stringent. Regular training and updates can ensure your billing practices remain compliant. The wrong code can lead to claim denials or even legal trouble. Regular training can keep staff updated. The practice management experts inside of MEG Academy can help you stay up-to-date with any policy changes.
6. Audits are Your Friend
Periodic audits can catch discrepancies, overcharges, and other issues before they become significant problems. An annual internal audit can help ensure billing compliance and assess the effectiveness of your billing processes.
7. Consider Outsourcing Non-Clinical Services with MEG
Outsourcing can be especially beneficial if your clinic is growing rapidly. MEG’s dedicated billing service and virtual front desk experts can adapt to your clinic’s changing needs without the need for you to hire and train additional staff. <<Download our Outsourcing Guide to Learn More!>>
Understanding Taxes for Your Physical Therapy Practice
1. Know Your Tax Structure
Depending on your business setup (LLC, S-Corp, sole proprietor), your tax obligations will vary. Ensure you understand which tax forms are relevant to your structure.
2. Stay Updated on Relevant Taxes and Deductions
Costs like clinic rent, utilities and even certain marketing efforts can be deductible. Regular consultations with a tax professional can help maximize these deductions. If you have employees, you’ll also be responsible for withholding payroll taxes and possibly paying unemployment taxes. It’s important to stay up-to-date with any changes in tax law or credits, such as the widely used Employee Retention Tax Credit.
3. Quarterly Estimated Taxes
Most business owners need to pay estimated taxes quarterly. Regularly review your income, expenses and profits to calculate and pay these taxes on time.
Navigating the intricacies of financial management can be challenging. However, by adopting a CFO’s mindset and following these best practices, you can transform these complexities into tools that foster growth and ensure the enduring stability of your physical therapy clinic.
Contact MEG for a personalized consultation to see how we can help you power your practice.