ACCOUNTING AND PRIVATE MEDICAL PRACTICE

Accounting and Private Medical Practice

Accounting and Private Medical Practice

Accounting

Accounting today is used by most people in the world in one way or another. Accounting is a system for identifying, reading, measuring, and interpreting the results of economic activities. Accounting is not only used in the business world but rather it is used by everyone in all types of situations. For example, trying to get a bank loan or trying to apply for a credit card the applicant must provide the company with their personal accounting information to get approved. Personal accounting information could be information such as their Long term assets and check to see if they have lots of liabilities such as owing other companies money for i.e. loans, credit cards, mortgagees.

The basic purpose of accounting is to provide relevant information to users such as creditors, government, investors, and decision makers to make economic decisions. These decisions concern the allocation and use of scarce economic resources such as, land, money, and labour. Resource allocation decisions can determine prices and wages. By the way we allocate our resources and how we use economic resources shape our world's economy in different ways. Financial accounting, management accounting, and tax accounting are the types of accounting information most widely used in the business community. Financial accounting referrers to information that describes the financial resources, obligations, equity, and activities of an economic entity. Management accounting involves information specifically designed to help aid managers in running the business in a successful way. Although management accounting information sometimes has non-financial factors it is still a major type of accounting information. (Weygandt, 2004) Tax accounting is the preparation of income tax retunes. Tax returns are based strictly on financial accounting information. The preparation of the tax return is not the tough element but rather the Tax Planning. Tax planning consists of anticipating the tax effects of business transactions and structuring these transactions in a manner that will legitimately minimize the income tax burden.

Accounting & Private Medical Practice

Management in private medical practice are frequently involved in cost analysis of new procedures due to the constantly changing science and technology. Also due to the health care organization especially the diagnostic division being tightly regulated by accreditation and regulatory bodies bringing a new procedure in-house requires in depth analysis prior to an any decision being taken.

In a private medical practice in a small community hospital we currently refer specimens for free PSA (prostatic specific antigen) to a large commercial laboratory. A prominent physician on staff has requested that us to start doing the test in-house to improve turnaround time. To do this, we would need to offer a total PSA and a free PSA together. We currently perform the total PSA in-house. The physician states that if he can have timely results for the paired test, he estimates that it will eliminate the need to perform approximately 60 prostate biopsies a year. (Bagranoff, 2008)

A billable procedure is a test that is billed to a ...