7 best accounting software for healthcare: Features and key considerations

Healthcare accounting is the specialized process of tracking, managing, and reporting financial transactions in medical organizations. It must account for insurance reimbursements, patient payments, government funding, grants, and strict reporting requirements. This ensures compliance with federal regulations and helps organizations maintain financial stability.

How healthcare accounting is different from other industries

Healthcare accounting requires precise financial management, ensuring compliance with strict regulations, handling insurance reimbursements, and managing variable payment structures. Unlike standard business accounting, healthcare finances are tied to patient care, government funding, and third-party payers, making accuracy and compliance non-negotiable.

Complex revenue streams

Healthcare revenue comes from multiple sources, including insurance companies, patient out-of-pocket payments, and government reimbursements, rather than relying solely on direct payments like retail or service-based businesses. Each source follows a different billing structure, requiring meticulous documentation and tracking.

Claim processing or coding errors can lead to delayed payments, denied claims, or legal penalties. 1 in 5 of all healthcare claims are wrongly handled, especially due to billing mistakes. Wrongly handled claims delay payments, disrupt cash flow, and increase administrative costs for healthcare practices, forcing staff to spend time correcting errors instead of focusing on patient care.

Strict regulatory compliance

Healthcare accounting must meet federal and state regulations that do not apply to most industries. Financial records must align with HIPAA to protect patient financial and medical data, GAAP for standardized financial reporting, and Medicare and Medicaid guidelines that regulate how healthcare providers bill and receive reimbursements.

Failure to comply can result in significant fines, legal disputes, or loss of accreditation. The Office for Civil Rights (OCR) has issued over $144 million in penalties for HIPAA violations to date, emphasizing the need for accuracy and compliance in financial reporting.

Revenue cycle management (RCM) is critical

Medical organizations do not operate on a simple invoice-and-payment system. The revenue cycle begins with patient registration and insurance verification, followed by medical coding, claim submission, payment processing, and collections.

A single misstep, such as incorrect insurance details or coding errors, can stall payments for weeks or even months. Hospitals lose an average of 2% to 5% of net revenue due to inefficiencies in revenue cycle management, making it a crucial aspect of financial stability.

Managing high operational costs

Healthcare organizations face significant expenses beyond payroll and rent. Medical equipment, technology upgrades, malpractice insurance, legal fees, and emergency staffing contribute to rising costs. Small healthcare businesses spend an average of $11,357 in Q3, reflecting the ongoing financial burden even on smaller practices.

Additionally, hospitals spend over $39 billion annually on regulatory compliance. Without effective financial accounting practices, mismanaged finances can lead to operational inefficiencies, budget deficits, or even financial instability.

Best healthcare accounting software

Small practices often require cost-effective, user-friendly solutions that automate essential tasks like invoicing, payroll, and basic financial reporting. They need software that integrates seamlessly with insurance billing systems without overwhelming administrative teams.

On the other hand, large hospitals and healthcare networks deal with complex financial structures, including multiple revenue streams, compliance audits, and large-scale payroll management. These organizations require scalable, enterprise-level accounting solutions with advanced reporting, multi-location support, and regulatory compliance tools.

1. Sage: Best for large healthcare organizations

Sage Intacct is a cloud accounting software designed for the healthcare industry, offering powerful financial management tools for hospitals, clinics, and nonprofit healthcare organizations.

Endorsed by the AICPA and peer-reviewed by the Healthcare Financial Management Association (HFMA), it ensures compliance with industry standards while providing real-time financial insights.

Key benefits

• HIPAA-compliant with advanced audit trails to protect sensitive financial data.
• A dimensional general ledger simplifies financial tracking and reporting.
• Real-time dashboards help healthcare organizations with informed decision-making.
• Multi-entity customer support allows hospitals and clinics to manage finances across different locations.

Drawbacks

• Steep learning curve due to its extensive financial features.
• Pricing is undisclosed and may be costly for smaller healthcare practices.

Sage Intacct is best for large healthcare providers, hospitals, and multi-location clinics needing an advanced, HIPAA-compliant accounting solution with detailed financial tracking and reporting capabilities.

2. SoftLedger: Best for real-time financial data

SoftLedger is a cloud-based accounting platform tailored for the healthcare industry, offering real-time financial visibility and automation. It helps clinics, hospitals, and multi-location healthcare providers automate reconciliations, manage transactions, and consolidate financial data across entities. By eliminating the need for manual spreadsheets, SoftLedger allows healthcare teams to make faster financial decisions with up-to-date information.

Key benefits

• SoftLedger provides real-time financial updates, allowing healthcare providers to track revenue and expenses instantly.
• Its multi-entity consolidation feature simplifies financial reporting for organizations with multiple clinics or departments.
• The platform automates reconciliations and reporting, reducing manual work and errors.
• It integrates with various financial and healthcare systems, making data management more efficient.

Drawbacks

• The software has a learning curve, especially for advanced reporting features.
• Smaller healthcare teams may find it too complex, as it is built for multi-entity financial management.

SoftLedger is best for mid-sized to large healthcare organizations that need real-time financial tracking, automated accounting workflows, and seamless multi-entity consolidation. It’s a great choice for multi-location clinics, hospitals, and healthcare networks looking to streamline their financial operations.

3. Cliniko: Best for solo practitioners

Cliniko is a cloud-based practice management software launched in 2011, serving over 20,000 healthcare businesses across 70 countries. It helps medical professionals manage appointments, patient records, and financial transactions in one platform while ensuring compliance with industry regulations.

Key benefits

• Invoices are generated automatically from appointment bookings, making the process seamless.
• Patients can pay online using multiple payment methods, reducing delays.
• Data is secure with 2048-bit encryption and strict access controls.
• Pricing is flexible, with plans starting at $45 per month, making it accessible for smaller practices.

Drawbacks

• Lacks advanced accounting features needed by larger healthcare facilities.
• SMS reminders cost an extra 10¢ per message, adding to operational expenses.

Cliniko is best for small to mid-sized healthcare providers, including physiotherapists, chiropractors, and private clinics. It offers an easy-to-use solution that combines scheduling, patient records, and financial management in one system.

4. Flexi: Best on-premise accounting solution

Flexi is a comprehensive accounting software solution with over 30 years of experience designed to meet the unique financial management needs of the healthcare industry. Trusted by leading healthcare brands, Flexi offers both cloud and on-premises deployment options, providing flexibility and control over financial operations.

Key benefits

• Automates manual accounting tasks, enhancing efficiency and reducing labor costs.
• Improves information flow through multi-entity processing and accelerates the financial closing process.
• Enhances regulatory compliance and security, ensuring adherence to industry standards.
• Provides powerful analytic tools to prevent financial shortfalls and missed margins.

Drawbacks

• It may require a learning curve for users unfamiliar with comprehensive accounting systems.
• Pricing details are not publicly disclosed, necessitating direct contact for quotes.

Flexi is ideal for mid to large-sized healthcare organizations, including hospitals and integrated delivery networks. It offers a reliable and customizable accounting solution to streamline financial operations and ensure compliance.

5. FreshBooks: Best for easy invoicing

FreshBooks is a cloud-based accounting software that was founded in 2003 to help small businesses and self-employed professionals simplify their financial management. Today, it serves over 30 million users across various industries, including healthcare.

Known for its intuitive design and automation capabilities, FreshBooks has become a go-to solution for businesses that need easy invoicing, expense tracking, and financial reporting.

Key benefits

• The easy-to-use interface makes financial tasks straightforward for non-accountants.
• Customizable invoicing allows healthcare providers to create and send professional invoices quickly.
• Automated expense tracking helps categorize and manage financial records efficiently.
• Time tracking feature lets practitioners monitor billable hours seamlessly.
• Mobile app accessibility enables on-the-go financial management.

Drawbacks

• Limited reporting features may not be suitable for larger healthcare organizations.
• No inventory management makes it less ideal for practices that track medical supplies.
• Extra user costs can add up when adding additional finance team members.

FreshBooks is best for small healthcare practices, therapists, and solo practitioners looking for an easy-to-use, cost-effective solution to manage invoicing, payments, and basic accounting tasks without complexity.​​

6. MIP Fund Accounting – Best for nonprofit healthcare organizations

MIP Fund Accounting is a comprehensive financial management solution tailored for nonprofit organizations, including healthcare providers. Designed to handle the unique complexities of fund accounting, it offers both on-premise and cloud-based options to suit various operational needs. With over 40 years of experience, MIP has become a trusted partner for organizations aiming to manage their finances with precision and transparency.

Key benefits

• Tracks multiple funding sources to ensure accurate allocation and financial transparency.
• Customizable charts of accounts allow organizations to tailor financial reporting.
• Built-in payroll and HR management simplifies employee-related expense tracking.
• Advanced reporting tools help with compliance and strategic financial planning.
• Strong security features protect sensitive financial data and maintain confidentiality.

Drawbacks

• Complex features require training, making it less intuitive for first-time users.
• Pricing may be high for smaller healthcare organizations with limited budgets.

MIP Fund Accounting is best for nonprofit healthcare organizations, community health centers, and grant-funded medical programs. It provides detailed fund tracking, compliance-ready reporting, and secure financial management to ensure financial transparency.

7. Gravity: Best for multi-location healthcare organizations

Gravity is a cloud-based accounting solution for healthcare organizations operating across multiple locations. Built on the Microsoft Power Platform, it provides a scalable financial management system which follows HIPAA compliance and integrates seamlessly with electronic medical records (EMR), enterprise resource planning (ERP), and other essential business applications. It allows hospitals, clinics, and healthcare networks to consolidate financial data and manage budgeting.

Key benefits

• Multi-entity financial reporting consolidates data across multiple locations, improving financial oversight.
• Seamless EMR and ERP integration eliminates manual data entry and ensures accurate accounting.
• Advanced automation tools streamline billing, accounts payable, and revenue tracking.
• Customizable workflows allow healthcare organizations to tailor accounting processes to their needs.
• Real-time financial insights help improve budget control and financial planning.

Drawbacks

• The initial setup can be time-consuming, especially for organizations with complex financial structures.
• Some advanced features require additional training, which may increase onboarding time.
• Pricing starts at $375 per month, which may be costly for smaller healthcare practices.

Gravity is best for multi-location healthcare providers, hospital networks, and large clinics that need a centralized accounting system. It offers advanced financial tracking, automated reporting, and seamless integrations to improve efficiency.

Cloud-based vs. on-premise solutions: which is better for your practice?

Cloud-based accounting software is hosted online, allowing real-time access from anywhere. This flexibility is ideal for multi-location healthcare practices and remote teams. Cloud systems automate updates, enhance security with encrypted data storage, and reduce IT maintenance costs. Around 70% of healthcare organizations have migrated to cloud options in 2023 due to their scalability and cost efficiency.

Cloud software also integrates seamlessly with electronic health records (EHR), billing systems, and payroll platforms, streamlining operations. However, reliance on internet connectivity can be a limitation, and subscription-based pricing can become expensive over time.

On-premise accounting software, on the other hand, is installed locally on your practice’s servers, providing full control over data storage and security. This option is preferred by large healthcare organizations that handle sensitive patient financial records and must comply with strict regulatory requirements like HIPAA.

Since data is stored internally, on-premise solutions do not depend on internet connectivity, ensuring uninterrupted access. However, they require higher upfront costs for hardware and ongoing IT maintenance.

For small to mid-sized healthcare providers, cloud-based solutions offer cost-effective scalability, easy accessibility, and automated updates. An on-premise system ensures greater control and compliance for large hospitals, multi-specialty clinics, and organizations prioritizing data security.

How accounting software improves financial health for medical practices

Managing a medical practice requires financial stability to keep operations running smoothly. Poor cash flow, billing inefficiencies, and compliance risks can strain profitability and disrupt patient services. Accounting software helps eliminate these challenges, giving healthcare providers better financial control, fewer errors, and increased efficiency.

One of the biggest financial risks for medical practices is delayed payments and denied claims. Billing mistakes and manual processes slow down reimbursements, creating cash flow gaps. Automated invoicing and claim tracking reduce these delays, ensuring faster payments and steady revenue.

Payroll automation ensures that staff are paid accurately and on time, reducing administrative workload. Compliance-ready accounting software protects against regulatory penalties by ensuring financial records meet HIPAA, IRS, and Medicare guidelines.

You can simplify your expense management by integrating your healthcare accounting software with Ramp for even greater efficiency. With automated receipt capture, real-time spending insights, and AI-powered cost controls, Ramp helps practices reduce wasteful spending, improve cash flow, and optimize financial operations effortlessly.