What makes accounting for physician groups unique?

Physician group practices, hospitals, and other medical facilities have very different and distinctive accounting
procedures. Using different billing codes, and reimbursement codes such as CPT codes, Current Procedural Terminology,
are a major difference between medical offices. CPT codes are often used in physician group practice offices to designate
the payment received by the patient, taking into account all of the characteristics and procedures that were used by the
patient. The reimbursement methods for which physician group practices are paid, and the how other medical facilities
are paid, is one of the major differences between the two.

The wages are also accounted differently in a group practice then they would be for a hospital. At a hospital
wages are usually generated by a salary type pay basis. For a group practice the accounting method for payment is based
on the amount of patients they see to and also any stipulations made that would split the profits equally or based on
percentages. This is an area that can, may, cause problems for many group practices as they may misinterpret pay wage
agreements or receive less pay then expected due to a high overhead or other accounting reasons.

Many physician group practices need to be able to code better than hospitals in some cases. Group practices do
not have the resources and clout that a hospital may have over an insurance carrier, and may lose compensation due to
incorrect billing/coding.

Why are the valuation methods important for physician groups?

Valuation methods primarily deal with physicians who are retiring or leaving the group practice, and how much
that physician will get in the way of compensation. They are many methods as to how these numbers are calculated and
a common method would be an easy-in easy-out valuation. This type allows for a entering physician and leaving
physician to pay the exact same amount. There would no extra-costs associated with leaving or entering physicians and
the only accounting procedure that might be relevant would be the accrued depreciation of equipment that would be
prevalent on tax statements. There are also other valuation methods that would include the value of the practice and
could include a retirement settlement based on the entire worth of the practice. Many practices do not allow for
settlement/retirement bonuses because they believe the monetary reward should have been made during the years as a
practicing physician in the group.