Medical & Dental Practices
Bookkeeping for medical and dental practices where insurance reimbursement timing, Medicaid rates, and high overhead make standard accounting fall short.
The Industry
A dental practice does $130,000 in production for the month. The front desk collects $9,500 in copays. Insurance deposits over the next 45 days total $71,000. Medicaid reimbursements trickle in at $6,800 on $17,000 billed. There are denied claims, contractual write-offs, and patient balances still outstanding. The owner logs into the bank account, sees roughly $87,000 in deposits, and has no clear way to connect that number back to the $130,000 the practice management system reported. The gap is some combination of adjustments, denials, pending claims, and balances that may or may not ever get collected. But nobody can say exactly how much falls into each bucket.
Medical and dental practices deal with a revenue cycle that most businesses never encounter. You perform the service, submit the claim, wait for adjudication, receive partial payment based on a contracted rate, write off the contractual adjustment, and then try to collect the remaining patient balance. That cycle runs 30 to 120 days depending on the payer. Meanwhile, payroll for your clinical and front office staff is due every two weeks. Rent, equipment loan payments, supply orders, and malpractice insurance premiums don’t wait for insurance companies to process claims. The practice management system tracks the billing side. QuickBooks tracks the financial side. And in most practices, those two systems never get properly connected.
Who This Covers
Who This Covers
Dentists, chiropractors, optometrists, physical therapists, dermatologists, podiatrists, urgent care clinics, and specialty practices. Any healthcare practice in the Phoenix area dealing with insurance reimbursement, Medicaid payments, and the disconnect between production reports and actual cash collected.
What Makes It Complex
What Makes It Complex
Multiple payer types paying different contracted rates on different timelines. Contractual adjustments that reduce billed amounts and need proper accounting treatment. Medicaid reimbursements well below commercial rates with longer processing windows. Denied claims requiring tracking and follow-up. Patient balances that age and may eventually need write-off. High fixed overhead including clinical staff, equipment financing, malpractice insurance, and specialized supplies. Practice management data that needs to reconcile to actual bank deposits every single month.
What We Handle
The central task is reconciling what the practice management system reports with what actually hits the bank account. Insurance payments often deposit as bulk amounts that need to be matched against individual claims. Contractual adjustments need to be recorded in QuickBooks so your books show actual collectible revenue, not gross production numbers that will never be realized. Medicaid payments require careful tracking because reimbursement rates are lower and the timing is less predictable than commercial insurance. We have direct experience with medical billing and Medicaid billing, which means we understand what those deposits represent and how to record them so your financial reports reflect reality.
Beyond revenue reconciliation, these practices carry significant overhead that needs proper categorization. Staff payroll for hygienists, assistants, therapists, front desk, and office managers. Equipment financing on operatory chairs, imaging machines, or therapy equipment. Supply costs that vary by procedure. Malpractice insurance premiums and licensing fees. Continuing education requirements. All of this gets categorized properly for tax purposes and tracked in a way that shows what it actually costs to run the practice, whether you want to see that per provider, per location, or at the practice level.
Revenue Reconciliation and Insurance Tracking
Revenue Reconciliation and Insurance Tracking
Practice management reports reconciled to QuickBooks every month. Insurance deposits matched to claims and posted correctly. Contractual adjustments recorded so revenue reflects what you will actually collect. Medicaid payments tracked separately showing reimbursement rates against billed amounts. Patient balances monitored so aging receivables stay visible. Write-offs documented properly for both financial reporting and tax purposes.
Overhead Management and Payroll
Overhead Management and Payroll
Payroll processed for clinical and administrative staff with correct tax withholdings and deposits. Equipment loans and lease payments tracked with depreciation schedules maintained. Supply costs categorized by type. Malpractice insurance, licensing fees, and continuing education expenses recorded as required costs of operating the practice. Accounts payable managed so vendor payments and supply orders go out on schedule. QuickBooks configured to show overhead per provider or per location depending on how your practice is structured.
Common Problems
The most common problem is that the practice management system and the accounting books live in separate worlds. The front office runs collection reports. The owner glances at the bank balance. But the two never get connected in a meaningful way. Contractual adjustments don’t get recorded in QuickBooks, so revenue looks higher than it actually is. Denied claims sit in the billing system but never show up in the financial reports. The owner thinks they collected $80,000 last month because that’s what deposited, but they don’t know how much was written off in contractual adjustments, how much is still pending with insurance, or how much has been denied and needs appeal. Financial decisions get made using numbers that don’t represent what actually happened.
Practices with meaningful Medicaid volume face a compounding problem. Medicaid reimbursement rates in Arizona can run 40 to 60 percent below commercial insurance rates for the same procedure. If Medicaid revenue isn’t tracked separately from commercial insurance, you can’t evaluate whether that patient mix is financially sustainable. A physical therapy practice might find that Medicaid patients account for 35 percent of visits but only 18 percent of collected revenue. Those visits consume the same staff time, the same supplies, and the same treatment room hours as commercially insured patients. Without the data broken out by payer type, you are guessing about whether to keep accepting certain plans or adjust your patient mix.
Books That Don't Match Reality
Books That Don't Match Reality
The practice management system reports $110,000 in collections. QuickBooks shows $94,000 in revenue. The bank deposits total $87,000. Three different numbers and nobody can explain the gaps. Contractual write-offs aren’t recorded. Denied claims are invisible in the financials. Revenue is overstated because gross production gets booked instead of net collectible amounts. The P&L tells a story that isn’t true.
Payer Mix Blind Spots
Payer Mix Blind Spots
No visibility into whether commercial insurance, Medicaid, or cash-pay patients are actually profitable after accounting for the overhead each visit requires. Medicaid volume growing without anyone evaluating the financial impact. Patient copay balances aging with no follow-up because they aren’t tracked in the accounting system. Insurance contracts renewed year after year without data showing which plans reimburse enough to cover the real cost of treating those patients.
What Changes
Practice management data reconciles to QuickBooks every month. You see actual collections by payer type, not just a total deposit number. Contractual adjustments are recorded so revenue reflects what was truly collected. Denied claims are tracked and visible. You know exactly how much came from commercial insurance, how much from Medicaid, and how much from patient payments. Write-offs are documented. When you look at your P&L, the numbers match what happened in the bank account and you can trust what you’re reading.
Overhead tracked by provider shows what it costs to keep each treatment room running. Staff payroll, supplies, equipment payments, and allocated rent give you a cost picture that you can hold up against reimbursement rates from different payers. You can evaluate whether adding an associate makes financial sense or whether a particular insurance plan is worth staying in network with. Tax returns capture equipment depreciation, malpractice insurance, licensing costs, and other deductions that apply specifically to healthcare practices. Quarterly estimated taxes account for the lag between services performed and insurance payments collected so you aren’t blindsided in April.
Financial Clarity by Payer Type
Financial Clarity by Payer Type
Revenue broken out by commercial insurance, Medicaid, and cash pay. Contractual adjustments visible showing the real gap between what you bill and what you collect from each payer. Denied claims tracked so nothing falls through the cracks. Monthly reconciliation between the practice management system and QuickBooks so the numbers always tie out and you can stop wondering where the money went.
Informed Practice Decisions
Informed Practice Decisions
Overhead per provider calculated showing the true cost of keeping the practice running. Insurance plan profitability evaluated with actual data instead of gut feeling. Equipment purchases and lease decisions backed by real cash flow projections. Tax preparation handled by someone who understands healthcare practice deductions and how revenue cycle timing affects estimated tax payments throughout the year.
Your Valley of the Sun Bookkeeper
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