Concierge healthcare services bring unique accounting challenges and opportunities
Once thought to be within reach only for celebrities or the very wealthy, concierge healthcare services and concierge mental health services– also known as boutique, retainer-based or direct primary care providers – have been growing in popularity over the past decade.
We'll explore this growing trend and discuss some of the accounting challenges unique to these types of providers and how they can capitalize on opportunities.
Understanding concierge healthcare and mental health services
Physician burnout is propelling more physicians toward concierge medicine. More than 93% of physicians admitting to feeling burnout at some point, according to a Medical Economics survey.
The reasons physicians experience burnout may have little to do with their interactions with patients. It’s more often the administrative burden taking its toll, including paperwork, electronic health records and interactions with payers that take time away from patient care and contribute to a lack of work-life balance. Coupled with the fact that traditional primary care physicians can have as many as 2,000 patients, it's no wonder concierge medical services and concierge mental health care are becoming attractive alternatives. According to Grandview Research, the U.S. concierge medicine market was valued at $6.1 billion in 2022, with an expected compound annual growth rate of more than 10% from 2023-2030.
The operational model of concierge healthcare providers
In the concierge model, clients pay a monthly or sometimes annual membership fee. This allows providers to reduce their patient load, with 400-600 as a typical range. As a result, patients have access to benefits they might not receive from a traditional physician's office, including same-day appointments, shorter wait times, longer appointments, access to the physician's direct line or cellphone number, and medicine delivered to their door or available right in the doctor's office at a discounted rate.
Beyond these basic tenets, the way a concierge healthcare provider operates can vary widely. Some devote themselves strictly to concierge medicine, while others continue to operate as traditional medical offices but offer concierge services as an upgrade. Some bill insurance for specific procedures or appointments while others include unlimited office-based and telehealth appointments in the monthly fees. Fees for concierge providers can vary widely as well, from under $100 to thousands per month.
Financial challenges unique to concierge medical services
In exchange for more face-to-face time with patients and less paperwork, concierge healthcare and concierge mental health services may forgo some of the benefits and protections, especially in the financial space, that a health system or traditional private practice business model may provide.
Here are some of the challenges they face.
There is no financial umbrella
A doctor or mental health provider working within a large health system may never even know when a patient doesn't pay their bill on time, as many systems have centralized billing departments to handle finance-related interactions. Furthermore, a large healthcare system consisting of hospitals, primary care and specialist offices has a diversity of revenue that even a multi-practice direct-care physician network does not. A concierge medical provider network is solely in charge of chasing down outstanding payments. Failure to do so could affect the future of the business more immediately and profoundly than it would within a larger health system.
Many different types of expenses/revenues
Concierge medicine takes many different forms, with some providers accepting insurance and others charging a higher membership fee for more comprehensive care. In those cases where a provider accepts cash or insurance payments for specific procedures, their finance department has to collect and account for one-time payments and also manage accounting for monthly membership fees, increasing the complexity of revenue recognition.
Complex reporting requirements
If you're operating a network of concierge medicine and concierge mental health service providers, overseeing the overall health of your business is more complicated, especially without the right accounting software.
Legacy accounting software like QuickBooks requires financial information for each business within an organization to be stored in a separate database. This means if you want to see expenses, revenues and other financial data for a practice within your concierge healthcare provider network, you'll have to do it one by one. Without spending hours copying and pasting information from each provider into a single spreadsheet, you have no way of knowing how each practice within the network contributes to the greater whole.
See why Gravity is the best alternative to QuickBooks.
How can Gravity Software help concierge healthcare providers?
High overhead is a major issue for medical providers in private practice. Here are a few ways Gravity Software can help reduce some of that burden by improving accounting efficiency while providing a comprehensive financial picture.
Simplifying invoice processing and accounts payable
Sending reminder emails, identifying which accounts are almost due or past due and processing payments are all tasks that take up time and – especially when it comes to collecting payments from hard-to-reach clients – may make your team feel like they're spinning their wheels in the mud. With Gravity Software, your team can:
- Automatically email billing reminders for invoices that have reached a specific age
- Use Gravity's seamless integration with Microsoft Power Automate to send billing reminders via SMS text or other contact methods
- Offer clients an online payment portal for a convenient payment experience.
- Process ACH or credit card payments right within the software, providing additional convenience and security that will increase your chances of receiving on-time payments
- Automate significant portions of the accounts payable process, including AI-assisted vendor invoice data entry
Managing subscription billing and revenue recognition
Since membership fees are a significant factor in what differentiates concierge medicine from other types of medical practices, it's imperative to manage them effectively. Gravity Software's Subscription Billing module allows your team to easily define contract start and end dates, designate how often a member is to be billed, and even charge a credit card that is on file.
One of the most challenging parts of operating a business with recurring revenue is ensuring that revenue is recognized in the correct accounting period. Gravity's Revenue Recognition module offers:
- Deferral schedules that can be created manually or automated through invoices.
- The option to recognize revenue on a monthly, quarterly or annual basis.
- The ability to choose at what point in the accounting period the revenue is reported.
Advanced financial reporting
It's imperative to understand how your concierge medicine business is faring overall while also being aware of the contributions each provider is making. This allows financial inefficiencies to be quashed and revenue-earning opportunities to be identified. With Gravity's advanced financial reporting capabilities, users can:
- Run simple financial reports, such as income statements or general ledger transactions, with one click.
- Run more complex reports, including those pertaining to a single practitioner, with only a few clicks.
- Easily turn your data into colorful, easy-to-understand visualizations with Power BI so that even those without accounting acumen can make business-bolstering decisions.
- Use Jet Reports to even further ease the reporting burden by allowing teams to work in the familiar environment of Excel and even to drill down into transaction-level data right within Excel.
Download our whitepaper, "7 trends redefining healthcare accounting," to learn more about what's shaping accounting within today's healthcare industry.
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