Multi-site medical practices have unique challenges when it comes to accounting. Because services are spread out over several sites as well as several physicians, it is necessary to capture the costs and revenues in a timely manner. Capturing this information is only the first step, however. What comes next – allocating it to the correct accounts and departments – can often be the real challenge.
Revenue allocation for multi-site, multi-physician practices can be done in a number of different ways. When collecting the revenue, it is very important to have it assigned to the site as well as to the physician that was responsible for generating the income. The accounting software must be able to assign the revenue no matter where the doctor is working when he charges the fee. In many practices with more than one site, doctors may, for example, work two days a week at one location and three days a week at another. Each site will need to be capable of correctly accounting for that doctor's work and revenue generated regardless of where the work was performed.
Cost centers help when dealing with multi-site practices. A cost center will track expenses for each location and each physician that is part of the medical practice. Overhead costs for each location can vary greatly and cost centers will clearly let the partners of a multi-site practice know where the costs are being generated and if they are in line with expectations. For example, if one site's costs are considerably higher than another site’s for any reason, the administrator will have the information to check into the problem.
Some expenses affect single locations – for example, a facility that handles x-rays would need to purchase x-ray equipment and hire an x-ray technician, whereas another facility would not – and some expenses affect all the locations of a medical practice – such as software or tax preparation. Determining what these costs are and allocating them to the correct site is important.
When a medical practice has the correct data from its multiple sites, it becomes easy to create a realistic budget based on the costs of the previous year. An accounting system should be used to collect all the information from each site and integrate it into a useable financial statement. This involves having a chart of accounts that will, when correctly set up, allow the reporting of profit and loss for each location and each physician as well as an overall income statement. Without an accounting system that covers all the sites, there is way to be positive that all bases are being covered.
There are several good reasons that allocating costs is important to a multi-site medical practice. When costs are assigned correctly, the types of costs at each location can easily be analyzed, which is very important in the budgeting process. With a budget that is based on accurate cost allocation it is possible not only to see expense overages quickly, but also to correct expense overages quickly. Keeping track of expenses is essential for internal planning. 
