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CPAs Lending a Helping Hand to Healthcare Executives

  • Published on May 25, 2018
  • by Martin Marc Schlesinger, Jr., CPA
Executives face many challenges as they strive for more efficient operations and ultimately for continuous growth and profitability. Those in the
healthcare industry will either rise and overcome these challenges by turning obstacles into opportunities, or stumble over
these hurdles and fall behind. This applies to all healthcare organizations from the single physician’s office to a large hospital system. It
is how these issues are approached, planned for, and executed that will ultimately determine success. This presents an opportunity for CPAs
to utilize their knowledge and experience for the benefit of healthcare executives.

American Healthcare Act (ACA)

A primary challenge of healthcare executives is the ACA and compliance with the associated regulations. President Trump has been taking
steps to modify or potentially eliminate ACA. There is much uncertainty as to if, when, and how modifications or elimination of some, or
potentially all, of these regulations will occur. Executives must plan for numerous scenarios from the status quo to full repeal and everything
in between. Financial modeling and forecasting should be utilized and performed on an ongoing basis as this evolves. Constant monitoring of
the regulatory environment, public sentiment, and judicial rulings along with modeling and forecasting should give the astute executive
the information they need to know which action plans to implement and when.

Cash Flow

Revenue and cash flow management are always on executives’ minds. Each year insurance payments seem to be reducing and
have been becoming more complicated to negotiate. Having in place superior coding, claim submission, and patient billing are
paramount to any provider. This is an excellent example of where proper forecasting and
analysis can benefit management. An organization’s CFO should be able to create and interpret these to determine which financial
options are most prudent.

Income Tax

Income tax considerations are always a major concern for organizations that are for-profit. The recent enactment of Sec 199A and the
modifications to SEC 179 will have incredible implications for those in the healthcare industry. With a potential reduced tax liability some may
decide to invest in additional assets, hire additional staff, retire debt, expand their campus, or increase benefit plans.

Quality of Care

All healthcare provider organizations are constantly working to improve the quality of care for patients. Many larger organizations
seem to be working towards integration of all levels of patient care to remove redundancies to expedite diagnosis and treatment as well as
reduce overall costs for the organization and patients. This challenge requires collaboration between all providers and the integration of
technology. Cost analysis of administrative processes should reveal those internal processes that can be streamlined for improved communication and efficiency.

Cyber Security

A significant challenge to the healthcare industry is associated with safeguarding patient data and
defending against malicious cyber activity. Recently we have seen numerous companies, cities, and state government agencies fall prey to
these attacks. Such an attack can be devastating to a healthcare organization. The investment to secure networks and systems can be staggeringly
high, but the consequences of not doing so can be even worse.

Advancement and Technology

New treatments and technology are constantly being developed. To deliver high-quality patient care, an organization needs to be on the cutting
edge. Additional equipment, facility improvement, and campus expansion all require capital. It is highly recommended to regularly meet and
communicate with the organization’s financial network. These discussions should include financial statements. Maintaining an excellent
working relationship with the organization’s bankers will facilitate the financing process.

Proper financial statement presentation including audited financial statements, compilations, and
reviews is vital in the financing process. Adherence to GAAP, SSARS, and other rulings must be paramount. Changes in the past few
years such as the Repair Regulations, SSARS 21, Revenue Recognition, and Sec 199A have changed how CPAs must perform and present these engagements.
With proper financial modeling, forecasting, budgeting, cost analysis, tax planning, and financial statement preparation, a CPA can
provide executives in the healthcare industry the information and guidance they need to overcome the everchanging challenges they face.