Business Background
The client is a physician-owned rheumatology and infusion practice group operating across multiple clinic locations. Each location maintains its own books in QuickBooks Online, while a separate management company handles back-office operations. The practice also manages significant drug costs, with medications purchased through McKesson and patient revenue primarily coming through insurance billing.
With multiple entities, insurance adjustments, high-value drug purchases, and shared management services, accurate accounting requires close coordination between clinic reports, bank activity, and accounting records. The practice needed a reliable financial picture that reflected actual collections, expenses, and operating activity rather than figures that only appeared correct on the books.
Key Challenges
The practice faced several accounting gaps that made its financial reports difficult to rely on. Revenue, receivables, expenses, drug costs, and management fees each had issues requiring detailed review and reconciliation.
- Insurance Adjustments Missing: Revenue was recorded at gross charges without properly accounting for contractual adjustments, overstating what the practice could realistically collect from insurers.
- Unreconciled Accounts Receivable: A prior-year receivable did not tie to the clinic’s AR report or subsequent bank activity, making it difficult to determine what remained collectible.
- Disconnected Corporate Card: The corporate card feed had stopped syncing, leaving an entire month of expenses unrecorded and making reported profitability appear higher than it actually was.
- Unrecorded Drug Costs: McKesson invoices for one location had not been entered into the books, leaving cost of goods understated and creating an inaccurate view of practice margins.
- Unsupported Management Fee: The recurring MSO management fee lacked supporting calculations and documentation, creating uncertainty around the appropriate amount and accounting treatment.
These issues affected different parts of the financial statements but ultimately created the same problem: the books did not reflect the practice’s actual operations. Reliable reporting required each balance to be traced back to clinic records, invoices, bank activity, or supporting documentation.
Impact
The accounting gaps affected the practice’s ability to understand its actual financial performance. Recording patient revenue at gross charges instead of insurance-allowed amounts overstated revenue, while missing McKesson invoices understated drug costs. An unreconciled accounts receivable balance also made it difficult to determine which amounts were still collectible and how payments should be applied. At the same time, a disconnected corporate card feed left expenses missing from the books, temporarily making profitability appear stronger than it was.
These issues created a financial picture that could not be relied on for routine decision-making. With multiple clinic locations and an MSO structure, the practice needed its accounting records to connect with real clinic activity, cash movement, invoices, and supporting documentation. Until those gaps were addressed, the P&L could not provide a clear view of operating performance or give the physician-owner confidence in the numbers.
Requirements & Expectations
The practice needed its accounting records rebuilt so the financial statements accurately reflected actual clinic activity. This included correcting insurance adjustments, reconciling accounts receivable with clinic reports and bank activity, restoring missing corporate card transactions, recording McKesson drug costs, and reviewing the MSO management fee. The expectation was to create books that could be traced to reliable source records, provide a clearer view of revenue and expenses, and establish a stronger accounting foundation for maintaining each entity accurately going forward.
Strategic Approach
GATP took a source-driven approach to rebuild the practice’s financial records and connect each balance to supporting documentation. The team reviewed clinic reports, bank activity, card transactions, McKesson invoices, and existing accounting entries to identify gaps and inconsistencies. Revenue was adjusted to reflect insurance-allowed amounts, accounts receivable was reconciled against actual activity, missing expenses were recorded, and drug costs were captured. The MSO management fee was also reviewed to establish a more supportable accounting treatment while creating a cleaner process for ongoing reporting.
Comprehensive Solution
GATP addressed the accounting gaps by rebuilding the records around actual clinic activity, supporting documents, and cash movement, creating a more reliable foundation for ongoing financial reporting.
- Rebuilt Insurance Revenue: Recorded clinic charges for the six-month period and applied the appropriate insurance adjustments so revenue better reflected amounts allowed by payers.
- Reconciled Accounts Receivable: Compared the carried-forward AR balance with clinic reports and cleared payments to determine how receivables should be accurately reflected in the books.
- Restored Corporate Card Activity: Reconnected the corporate card feed and captured the missing transactions so expenses were fully represented in the affected period.
- Recorded Drug Costs: Reviewed and entered outstanding McKesson invoices for the affected location, bringing drug-related costs into the accounting records.
- Reviewed MSO Management Fees: Examined the recurring management fee and began rebuilding its accounting treatment around supporting calculations and the underlying management arrangement.
Together, these steps brought the books closer to the practice’s actual operations and established a stronger foundation for accurate reporting across its entities.
Measurable Results
GATP’s ongoing work has improved the reliability of the practice’s financial records, bringing reported revenue, expenses, receivables, and costs closer to actual clinic activity.
- Revenue now reflects insurance-allowed amounts instead of gross patient charges.
- Accounts receivable is being reconciled against clinic reports and cleared bank payments.
- The missing corporate card activity has been restored to the accounting records.
- McKesson drug invoices are now being captured as practice costs.
- The management fee is being rebuilt around a more supportable accounting basis.
- Six months of accounting records now have stronger connections to source documentation.
- Each entity has a cleaner foundation for accurate, ongoing financial reporting.
Key Takeaway
For a multi-location medical practice, accurate accounting depends on more than recording transactions as they appear. Insurance billing, contractual adjustments, high-value drug purchases, accounts receivable, corporate spending, and MSO arrangements all need to connect back to reliable source records. In this case, gaps across these areas made the financial statements difficult to trust and limited their value for decision-making. GATP’s work focused on tracing the books back to clinic reports, bank activity, invoices, and supporting documentation, then correcting the gaps found along the way. The result is a stronger accounting foundation that gives the practice a clearer view of its financial activity while making ongoing reporting easier to maintain. For practices managing multiple entities, clean books provide the clarity needed to make decisions with greater confidence.
Client Impact
The practice now has a clearer and more reliable view of its financial activity across key areas that previously lacked accurate support. Revenue is being reported closer to actual insurance collections, receivables are being tied to clinic and bank records, and previously missing expenses are being captured. Drug costs are also being reflected against actual invoices, improving visibility into practice margins. With the accounting records better connected to operational activity, the physician-owner has a stronger foundation for reviewing performance and maintaining accurate financial reporting across multiple entities.
Conclusion – Let’s Talk
Clean, accurate books give medical practice owners the confidence to understand where the business stands and make informed decisions. For multi-location practices with complex revenue, expenses, and entity structures, accounting needs to reflect what is actually happening in the business. GATP Solutions helps healthcare practices bring their financial records into order, maintain accurate reporting, and build a stronger foundation for growth. If your practice’s numbers need a closer look, let’s talk about how GATP can help.
