8 tips to streamline healthcare expense management

If you work in the healthcare industry, you already know the impact expenses can have on your business—and how frustrating it can be to manually track expenses when your attention could be put to better use elsewhere.

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A fully manual process for medical expense tracking can open you up to a number of risks, including budget overruns and reporting errors. Failure to properly track medical expenses could also lead to tax or compliance issues, especially if you’re subject to Sunshine laws and other regulations requiring transparency and recordkeeping.

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The good news is that you can take steps to manage your healthcare business’s expenses a little easier—whether you run a medical office, hospital, clinic, rehabilitation center, urgent care facility, or provide out-patient or in-home services. Below are eight tips to help you do just that.

1. Create a clear expense policy

As a business owner or manager, it's your responsibility not only to establish policies for your practice, but also to educate your employees about those policies. This applies to everything from training and safety to—you guessed it—expenses.

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Which documents you’ll need to create will depend on the nature of your practice, but they might include an expense policy, reimbursement policy, credit card policy, or travel expense policy. They should provide clear guidelines for points like:

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• Who can make purchases
• What (if any) spending limits exist
• The expense report submission and approval process
• Specific examples of common expenses your practice sees

2. Consider pre-approvals

With pre-approvals, your employees must have their manager authorize a purchase before they can make it. This allows the manager to ensure the expense is necessary to your practice, complies with your internal spending policies, and fits into the broader budget before it’s incurred.

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Pre-approvals can be especially helpful for new employees who are still in their probationary period or for certain necessary, large expenses that exceed the spending limits outlined in your policies.

3. Automate your approval process

If you’re manually reviewing every expense your staff submits—every cotton swab, every tongue depressor, every home visit—you might be slowing down the process for everyone involved. Best-case scenario, you’re being inefficient when your time could be better spent elsewhere. In the worst case, you could be holding up legitimate reimbursements for purchases your employees made on behalf of your practice.

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One way to make the approvals process more efficient is to automate it—or at least certain parts of it. Some areas you might consider automating include:

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• Expense categorization
• Receipt collection
• Mileage tracking
• Reporting

4. Accurately categorize your medical expenses

To understand how your practice is spending money, it’s important to categorize each medical expense you incur.

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Accurate categorization powers your expense tracking, which gives you the insights you need to set realistic budgets or identify areas to cut back. It also helps you tell the difference between deductible and non-deductible expenses, which you’ll need to know if you plan on claiming tax deductions.

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Most healthcare businesses see the highest level of spending in the medical supply, staff salary, and administrative categories, but it’s not uncommon for your practice to see other types of medical expenses, too. If you aren’t sure how to record an expense, check out Ramp’s Business Expenses Category Classifier.

5. Document each purchase

If you aren’t documenting your purchases, you’re opening your clinic up to a lot of potential liability—in the form of both audit and compliance risk. To protect your practice, every purchase your employees submit should be backed by some form of documentation, whether it’s a receipt, invoice, or work order.

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Of course, physical receipts introduce their own challenges. After all, it’s easy to misplace paper receipts, and they can degrade over time, making them illegible. One way to sidestep these challenges is to opt for electronic receipts (e-receipts) whenever possible, or to require employees to submit a digital copy of their receipt alongside any expense submission.

6. Enable mobile expense submissions

There are many reasons you might find your staff on the move. Maybe your practice operates out of multiple branches, offices, or clinics, and you regularly have to move staff around day-to-day, or maybe you have staff traveling to attend a conference.

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Whatever the case, enabling mobile expense report submissions can help you streamline your expense submission process, so be sure to choose expense management software that offers a dedicated mobile app.

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After all, an app empowers your staff to submit expenses as they’re incurred. This can help avoid lost receipts and the headaches they cause. It can also provide greater transparency into how your business is spending money in real time, especially if the alternative is your employees submitting expenses on a weekly or monthly basis.

7. Take advantage of real-time reporting

It’s hard to know how closely you’re tracking against budget projections if you’re manually processing expense reports on a quarterly or monthly basis. This creates the risk of finding an unexpected budget variance when it’s too late to do anything about it.

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For this reason, most healthcare practices can benefit by automating their reporting process to run weekly or even daily. This provides increased transparency into how your practice is spending money so that, if you do spot a budget variance, you have time to either cut back elsewhere or find funds to fill the gap.

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As a bonus, many of the tips highlighted above (pre-approvals, automated approvals, mobile expense submissions) make real-time reporting easier to pull off.

8. Regularly audit SaaS vendor spending

Depending on the nature of your healthcare business, you might have contracts or subscriptions with several software vendors. Just a few examples include:

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• Electronic health record (EHR) software
• Medical billing software
• Appointment booking and scheduling software
• Telemedicine solutions
• Electronic prescription software
• Medical diagnosis software
• Hospital management software
• Medical imaging software
• Medical equipment management solutions

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If you don’t regularly audit your vendor spending, it’s difficult to tell whether you’re getting your money’s worth out of each software solution. A vendor audit can help you understand your usage rates for each software, how much you’re spending on each contract, and even help you uncover ways to save, like consolidating multiple contracts into one or negotiating during contract renewals.

Ramp makes healthcare expense tracking easy

Expense reporting for healthcare doesn’t need to be a headache. Implementing even a few of the tips above will help you to get a better handle on your business’s expenses so that you’re spending less time in spreadsheets and more time doing what matters: caring for patients.

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The right tools can help. With Ramp, you get corporate cards, expense management, bill payments, accounting automation, and reporting—all in one integrated platform. Our system allows employees to easily submit their expense reports, document receipts, gain manager approval, and receive reimbursements faster.

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By providing detailed insights and real-time visibility, Ramp simplifies medical expense tracking. Practices that use Ramp can look forward to fewer errors, less time spent on tedious accounting tasks, and greater financial productivity.