In two separate paragraphs give your personal opinion to Chad MacLennan  and  Jeremy Labori 

 Jeremy Labori 

Making sure health organizations have a focused accounting system is crucial for a successful business revenue, as well as a well-put transaction illustration. Cash accounting is personal assets like the money an individual or a business has in a bank account. An accrual account tries to match an individual’s or business cost for more revenue. When revenue is earned, more cash is accumulated to both assets. Just like any labor, healthcare has different services, therefore providers at times are paid hourly and must match the principle of services given to patients. According to Marder, “accrual accounting is considered a much better accounting system for showing what is actually happening in a business, as to productivity.” (2016). Cash accounting isn’t as complex because a dollar earned is a dollar more to spend, whereas accrual is added when a service is done. Both systems have their essential grounds, but in health care accrual accounting is used to perform, earn, and repeat proper practices. Also for a business to run properly an accrual system must be established. For example QuickBooks, which organizes the business reports with easy access for review.

Thank you,

Jeremy Labori

References:

Accrual Accounting for Healthcare: A Guide for Doctors and Clinics. (n.d.)

 https://blog.capterra.com/accrual-accounting-for-healthcare-a-guide-for-doctors-and-clinics/#targetText=Both systems also use their, when you pay for it

 

Chad MacLennan 

HCA Healthcare is the largest healthcare provider in the nation with over 185 hospitals in 27 states in the United States and The United Kingdom.  (About us, 2019)  Daily HCA is held accountable to its Board of Directors and their investors so keeping accurate and relevant financial statements is key to their overall viability and success. 

Serving in a leadership role for HCA Healthcare we have access to multiple reports around revenue, but most important to us is around cash net revenue (CNR).  Our budget and financials for each month hinge on the charge capture process.  In this case, HCA Healthcare, is a cash accounting organization, by definition.  That is, they recognize revenue at the time cash is received.  (Gapenski & Reiter, 2016)

Most of our offices accept payments from Medicare, Medicaid and private payers.  Those services provided, on a specific date of service, creates a payment obligation by the insurance payers. (Gapenski & Reiter, 2016) However, at times, those charge captures can take months to complete and those charges will not appear on the CNR method previously mentioned.  In these circumstances some organization may use this method which is considered the accrual accounting method.  However, there are times when a patient is a private payer or does not have any insurance.  These services are not submitted to an insurance payer, so the patient is expected to pay out-of-pocket on the date of service (DOS); therefore, making that transaction a cash accounting transaction. 

In the background these monthly reconciliation reports are used to match a DOS with the charge capture process.  Accounting efforts must be made to reconcile each visit to ensure that insurance companies or private payers are sending fund to satisfy the revenue.  Assets being purchased for practices can impact how we look at a matching principle.  Typically, when creating a business case for a piece of medical equipment a proforma is calculated to determine the return on investment (ROI) of the use based on historical or projected needs for that piece of equipment.  How ever many years it is expected for that piece of equipment to pay for itself determines how to distribute that match.  (Gapenski & Reiter, 2016)

About us. (Retrieved August 14, 2019) HCA Healthcare. Retrieved from http://www.hcahealthcare.com/aboutus

Gapenski, L.C., & Reiter, K.L. (2016). Healthcare Finance: An Introduction to Accounting & Financial Management (6th ed.). Chicago, IL: Health Administration Press.