Bookkeeping & Payroll for Medical Practices

Nurses are typically covered by the Nurses Award 2020, which sets minimum wages by classification. Those minimums are reviewed each year and rise from the first full pay period on or after 1 July (the 2026 review lifted modern award minimum wages by 4.75%), so confirm the current rate for the relevant level on the Fair Work Pay Calculator. Allied health professionals may be covered by the Social, Community, Home Care and Disability Services Industry Award, or by a more specific award for their profession. Doctors may have specific contract terms rather than award coverage. Always confirm the applicable award for each staff member and ensure your payroll system applies the correct rates and conditions.

Medicare typically processes rebates within 7–14 days of claiming, but payments can take up to 30 days or longer if there's an audit query. Some practices claim directly with Medicare (instant payment) while others bill patients first. To forecast cash: estimate your monthly billing volume, apply your typical rebate rate, and delay cash inflow by 30 days. Track actual rebate payment cycles to refine your forecast. Set aside a cash reserve or operating line of credit to cover payroll when rebates are delayed.

Annual leave accrual is typically 20 days per year (4 weeks) for full-time staff under most healthcare awards. Part-time staff accrue pro-rata. Long service leave accrual is typically 1 day per year of service (or 8.67 days per year under some awards). Sick leave is usually 10 days per year, paid but not cumulative (use it or lose it annually). Casual staff typically receive a loading instead of leave accrual (around 20%). Check the specific award for exact rates. Accrue leave monthly and track the liability for financial reporting.

Direct Medicare claiming (where the practice claims Medicare directly) results in faster payment directly to the practice. Patient billing involves the patient paying upfront, then claiming their rebate from Medicare separately. Direct Medicare claiming improves practice cash flow but requires practice accreditation. Bulk billing (where practices claim Medicare and write off the gap) is common for some services. Your practice software can manage both models. Track revenue separately: rebate income, private patient fees, and gap income.

Medical equipment (imaging machines, diagnostic equipment, computers) is a capital asset and must be depreciated over its useful life for both accounting and tax purposes. Categorize equipment by type and useful life (e.g., computers 4 years, diagnostic equipment 5–10 years). Record the purchase cost, depreciation rate, and accumulated depreciation in your GL. Depreciation is a non-cash expense that reduces taxable income. The ATO publishes depreciation rates (Division 40 rules). Maintain a fixed asset register with all equipment details.

A provider number is a unique identifier issued by Medicare to medical practitioners and allied health professionals who bill Medicare. You need a provider number to claim Medicare rebates. Provider numbers are linked to your name, qualifications, and location. If you employ a clinician, they typically maintain their own provider number (they bill Medicare under their number). Some practices employ salaried clinicians where the practice may bill under the practice provider number. Confirm who holds provider numbers in your practice and ensure billing processes reflect the correct provider.

You must contribute the Superannuation Guarantee (currently 12%) to eligible employees' super funds. This applies to salaried doctors, nurses, and allied health professionals. OTE includes their salary but typically excludes bonuses and performance payments. Contributions must be paid quarterly within 28 days of the quarter end. Employees can nominate their preferred super fund, otherwise you must use a default fund. Ensure your payroll system calculates and remits super correctly each quarter.

As a medical practice, you must comply with the Privacy Act 1988 and the Australian Privacy Principles (APPs), which govern how you collect, use, and disclose patient information. You must have privacy policies, consent procedures, and secure data storage. If you're a bulk-billing practice, you must comply with Medicare compliance rules. If you provide services to private insurance holders, you may need to comply with health insurance regulations. Some practices are accredited under RACGP or other bodies, which have additional compliance requirements. Maintain compliance documentation and update policies regularly.

Track revenue by clinician: total rebates + patient fees + insurance claims attributed to each clinician. Track labour costs: their salary + super + on-costs. Calculate gross margin = (revenue – labour cost) / revenue. For example, if a clinician generates $300,000 in annual revenue with $150,000 in labour costs, margin is 50%. Compare margins across clinicians and services to identify where your practice is most profitable. Use this data to make hiring, service expansion, and pricing decisions.

Your practice P&L should include: (1) revenue (rebates, patient fees, insurance claims), (2) direct costs (staff wages, super, allowances), (3) operating expenses (rent, utilities, supplies, equipment leases), and (4) overhead costs (admin, accountant, insurance). Calculate gross margin (revenue – direct costs), then operating profit (gross margin – operating expenses). Review P&L monthly to track trends. Compare actual vs. budget to identify variances. Use quarterly P&Ls to discuss with your partners or financial advisor. Annual P&Ls are essential for tax planning.