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The Role of Accounting in the Medical Office


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An accounting department plays an enormous role within the medical office. As the backbone of the organization, the accounting department allows the organization to operate at its fullest potential. Without an accounting department, it would be impossible for any type of organization to operate in a cost effective manner.

General Accepted Accounting Principles (GAAP) are the common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP, are simply put, the customarily accepted ways of recording and reporting accounting information. Each organization may operate differently but all have to follow by set guidelines within the organizations community, state and at the federal level. If these standards and procedures are not followed the U.S. Security and Exchange Commission (SEC) will fine the organization and possibly pursue criminal action to enforce compliance.

Within accounting and financial management, there are four key elements recognized. The four elements are: Planning, Controlling, Organizing and Directing and Decision Making.

  • The planning element allows an organization to set forth goals and guidelines to ensure the future success and accomplishments of the medical office.
  • Controlling provides the organization the opportunity to ensure that all areas within the organization are following the previous planned goals and guidelines and also allows for an opportunity to fix any problems or issues which may arise.
  • Organization and directing within financial management is important because it guarantees that the medical office is working at its best possible potential and is well organized while directing provides the opportunity for the medical office to work on financial management on a day-to-day basis and fix any problems that may arise.
  • Lastly, decision making functions off of the planning, controlling and organizing and directing elements by gathering information and making the final decisions as to how the financial management will operate.

In an article written by Rushworth Kidder, President at Institute for Global Ethics, he states that while implementing and upholding a code of ethics is increasingly becoming more focused on by many organizations. Adhering to the highest standards of ethical conduct is especially important in the accounting profession where the financial decisions of a business are directly based on information and judgments provided by their accountants. This is important because without the information gathered by the accountants of an organization there would be no information to evaluate. Mr. Kidder also states in the article that in recent year’s domestic, and international, concern over business ethical standards, as well as social, and corporate responsibility has become increasingly more significant. This is evidenced by the emergence of both government and private organizations whose objectives are to define and/or enforce high ethical standards and by the willingness of businesses to incorporate their own ethical codes and value statements. The reason why this is important is because each individual organization is now reviewed to ensure that policies, guidelines, goals and standards are enforced within the organization.

When operating within a medical office, the accounting department is crucial to its success. The accounting department must follow by the set guidelines of the GAAP in order to avoid fees, fines and/or criminal charges. If any of these actions were to occur it would set a bad name for the named organization.

When operating a healthcare organization, the most important factor within the setting is the patient’s overall satisfaction while allowing the accounting department to operate financial functions accurately. This task can be tricky, however, will allow for an organization to operate at its best potential, and most importantly, cost effective.

One organization that providers can turn to for guidance in financial matters is HFMA (Healthcare Financial Management Association). HFMA is the nation's leading membership organization for healthcare financial management executives and leaders. More than 37,000 members—ranging from CFOs to controllers to accountants—consider HFMA a respected thought leader on top trends and issues facing the healthcare industry. For information visit www.hfma.org.

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