Compliance, Risk and Ethics in Medical Practice Finances
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In a medical practice, the most dangerous financial problems do not always arrive looking like fraud. Sometimes they arrive as a perfectly ordinary invoice, a quick favor or a request to “just fix” something. For the accountant behind the numbers, knowing when to stop and ask questions can make all the difference.
It is 4:45 on a Friday afternoon.
The work is almost done, the coffee has gone cold and everyone is thinking about going home. Then an email arrives from a medical practice client.
“Please change the date on this invoice to last month. We need it included there.”
It will take 30 seconds.
Nobody is asking for a complicated calculation. There is no suspicious person standing in a dark alley with a suitcase full of cash. It is simply a client asking for a small change.
So, do you change it?
This is where healthcare accounting becomes interesting.
More Than Debits and Credits
Working with a medical practice is not only about getting the numbers right. Behind those numbers are patients, medical aid claims, confidential information, tax, professional rules and people’s livelihoods.
A small decision in the accounting records can therefore become much more serious than it first appears.
The Health Professions Council of South Africa (HPCSA) sets ethical rules for healthcare professionals, including rules dealing with fees, referrals, advertising and patient records.
The Council for Medical Schemes (CMS) deals with the relationship between medical schemes and healthcare providers. The Protection of Personal Information Act (POPIA) protects personal information, including sensitive health information.
And, of course, the South African Revenue Service (SARS) still wants the tax side of the practice to be correct.
That means the accountant sitting behind the computer is much closer to healthcare compliance than he or she may realise.
When an Invoice Does Not Tell the Whole Story
Consider an ordinary-looking invoice.
A specialist pays a local general practitioner a monthly “administration fee”. The invoice looks professional. There is a date, an amount and a description.
Nothing immediately screams trouble.
But then someone asks one more question:
“What exactly is the administration fee for?”
It turns out that the amount depends on how many patients the general practitioner refers to the specialist.
Now the transaction looks very different.
Calling something an “administration fee”, “marketing fee” or “consulting fee” does not change what the payment is actually for. If money is being paid in return for patient referrals, there may be a serious ethical problem.
This is why accountants cannot always stop at the invoice.
Sometimes they need to look behind it.
The same problem appears in many forms. A doctor asks for a personal expense to be put through the practice. Cash received from patients somehow does not make it into turnover. A family member appears on the payroll, but nobody can clearly explain what work that person does.
Or perhaps a rejected medical aid claim is submitted again using a different code. Maybe a loan between the practice and its owner moves up and down for months without an agreement, repayment terms or proper paperwork.
Individually, these things can look small.
Together, they can tell a very different story.
When a Mistake Starts Looking Deliberate
Medical billing is another area where things can go wrong quickly.
Upcoding means billing a higher-value procedure than the one that was actually performed.
Unbundling means taking one procedure and splitting it into several separate claims to increase the amount claimed.
Sometimes a coding problem may genuinely be a mistake.
But imagine trying to explain that mistake after the same incorrect code has been used 40 times.
Suddenly, “Oops” becomes a much harder argument to make.
This is why checking claims against the actual treatment records matters. A medical aid claim should tell the same story as the clinical record.
If the two do not match, someone may eventually ask why.
The Boring Stuff Can Save You
Emails matter. Agreements matter. Authorisations matter. Treatment dates matter.
Even usernames and passwords matter.
If five employees use the same login for the billing system and someone changes a claim, who made the change?
Nobody knows.
If a doctor gives an unusual instruction over the phone and six months later nobody remembers exactly what was said, what proves the conversation happened?
Very little.
A short email saying:
“Just confirming your instruction from our call today…”
may not feel important when it is sent. Later, it could be one of the most useful documents in the file.
Good recordkeeping is not exciting, but neither is trying to explain a transaction two years later with no paperwork.
“I Was Only Doing What I Was Told”
This may be one of the most dangerous ideas in accounting.
Imagine a bookkeeper is instructed to record cash payments from patients as “donations” so that they are not included in the practice’s normal turnover.
The bookkeeper did not invent the idea.
The bookkeeper does not own the medical practice.
Perhaps the instruction even came directly from the doctor.
But whose username appears next to the entries?
Whose working papers show how the amounts were recorded?
Whose name may eventually have to explain them?
Following an instruction does not automatically make an incorrect transaction correct.
Accountants and bookkeepers are not expected to become police officers. They are, however, expected to use professional judgement.
If something clearly does not make sense, ask.
A useful habit is to ask three questions before processing anything that feels uncomfortable:
What really happened?
What documents prove it?
Would I be comfortable explaining this transaction if my own name appeared next to it?
Those three questions take less time than making another cup of coffee.
They can also prevent a great deal of trouble.
Small Controls, Big Difference
Good compliance does not need to mean another 100-page manual gathering dust on a shelf.
Often, it is the simple things that work.
Have a proper engagement letter explaining who is responsible for what. Do not let one person receive cash, record it, reconcile it and approve everything.
Regularly compare a few medical aid claims with the actual treatment records instead of waiting until year-end.
Keep important compliance dates in one calendar.
Ask someone else to look at unusual transactions, especially cash adjustments, loans and transactions involving owners or family members.
Most importantly, deal with problems when you first notice them.
An uncomfortable conversation today is usually much easier than an investigation two years from now.
There may even come a time when the problem is not one strange transaction but the client.
A client who repeatedly asks for dates to be changed, income to be hidden or questionable transactions to be processed is telling you something important.
At that point, protecting the client relationship should not be your only concern.
You have a professional name to protect too.
Before You Click “Post”
So, back to Friday afternoon.
The email is still sitting on the screen.
“Please change the date on this invoice to last month.”
The easiest option is to change it, close the laptop and go home.
The better option is to type one short reply:
“Before I make the change, please explain the reason for the new date and send me the supporting information.”
It may delay the weekend by five minutes.
But sometimes five minutes and one good question are all that stand between an ordinary Friday afternoon and a very expensive mistake.
