April 2001

Healthcare Industry Continues to Be Attractive Market for Accounting Profession

In recent years the healthcare industry has become increasingly burdened by the constraints of managed care and stringent government regulations, causing more healthcare providers to seek the help of consultants to ensure compliance and offer suggestions on how to operate a more efficient practice in today’s business environment. Recognizing the opportunity to offer accounting and consulting services to a new line of clients, many accounting firms have expanded their practices into the healthcare market during the last several years.

Although the healthcare industry is by no means a new market for accounting services, those firms that choose to enter the industry often find the services they can provide are extensive and increasingly in demand. Accountants entering the market can advise their clients on government regulation compliance issues, help make practices more efficient, establish effective billing routines, and offer strategic planning. They can also provide expertise on issues such as contract negotiation, purchasing a practice, malpractice and risk management, and the use of technology to increase efficiency.

Harvey Susnick, a partner of David Berdon & Co., LLP, has been working in the healthcare industry for more than 20 years. His firm recently formed Berdon Healthcare Consulting LLC to expand on the expertise and resources it has made available to the industry for the past three years.

“The growth and profitability of healthcare practices are severely limited by the constraints of managed care and increasingly rigorous government regulation,” Susnick said. “The combination (of accounting and consulting) is offering doctors a way to make money instead of just telling them how they spent it.”

According to Susnick and Michael Wiley, also of Berdon Healthcare Consulting, accounting firms have an advantage over other healthcare consultants—the long-term relationships they traditionally have with their clients. This type of relationship is precisely the sort of association that doctors desire but have not been offered in the past. Instead of maintaining regular involvement with medical practices, consulting firms have provided a “one-shot service,” Susnick said.

Doctors have complained in the past that consulting firms have been hired to offer suggestions and advice for better running a practice, but when the firms leave there is no follow-up provided to facilitate their recommendations, Wiley said. Both he and Susnick believe that the lasting relationships accounting firms have with their clients ensure that all suggestions and recommendations are implemented.

Many industry insiders believe the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which took shape under former President Bill Clinton’s 1993 healthcare reform proposals, began the period of increased government regulation that has made it profitable for accounting firms like David Berdon & Co. to expand their services to healthcare.

The two biggest issues in the industry today are HIPAA and the dispute between healthcare providers and the federal government over funds Medicare reclaimed under the Balanced Budget Act, said New York State Society of CPAs’ Healthcare Committee Chair Stephen Golden.