What is Healthcare Accounting?
Healthcare accounting is the financial reporting and management discipline for hospitals, clinics, and other care providers. It covers patient revenue (cash, insured, government), clinical and non-clinical costs, contractual adjustments with payers, and regulatory compliance with health authorities.
How It Works
- Capture revenue by patient case and payer type (cash, private insurance, government).
- Recognise contractual adjustments where the insurer pays less than the gross invoice.
- Track direct clinical costs (consumables, drugs, doctors’ fees) and indirect costs (utilities, admin).
- Reconcile claims with insurers and provision for denied or pending claims under IFRS 9 expected credit loss.
Saudi Context
Saudi healthcare is regulated by the Ministry of Health and the Council of Cooperative Health Insurance (CCHI). Most expatriate care is insured under CCHI policies, while Saudi nationals can use public or private channels. Private healthcare also charges 15% VAT on most services with specific exemptions.
Example
A Riyadh private hospital invoices an insurer SAR 25,000 for a surgery, but the policy reimburses SAR 22,000 after a SAR 3,000 contractual adjustment. The hospital records SAR 22,000 net revenue and the SAR 3,000 as a revenue adjustment, not bad debt.