Prerequisites
- Separate bank accounts per entity
- An executed MSA with the fee mechanics specified
- A bookkeeper or CPA with healthcare experience
Chart of accounts
The rule that matters most
Every PC uses the same chart of accounts, with the same account numbers meaning the same things. Then consolidation is a mechanical roll-up rather than a mapping exercise, per-PC unit economics are comparable, a new entity’s books are a template copy, and investors can be given per-entity detail without translation. Divergent charts of accounts across entities make consolidation manual forever, and it is very hard to fix retroactively.PC chart, the healthcare-specific parts
MSO chart
Revenue: net, not gross
The most common first-close error.
Your chargemaster rate is not what anyone pays. Booking charges as revenue overstates the business by the contractual adjustment rate, commonly 40–60%, and every metric built on it is wrong.
Accrual vs cash. On accrual, revenue is recognized when the service is performed, at the amount you expect to collect, with a receivable for the difference. Cash basis is simpler and materially less useful — it tells you nothing about AR, and investors and lenders will want accrual. Your CPA sets the estimation method.
Intercompany accounts
1
Create matched pairs
- PC: Management fee expense ↔ MSO: Management fee revenue
- PC: Intercompany loan payable ↔ MSO: Intercompany loan receivable
- PC: Intercompany interest expense ↔ MSO: Intercompany interest income
2
Book both sides in the same period, at identical amounts
3
Reconcile monthly
Intercompany balances must be equal and opposite. If the PC’s management fee payable and the MSO’s receivable diverge, one entity booked something the other didn’t, and that divergence compounds every month until someone reconciles it, usually during diligence.
4
Eliminate on consolidation
Management fee revenue and expense are the same dollars viewed twice. Consolidated revenue including both is double-counted, and it is one of the first things a quality-of-earnings review catches. Same for loans and accrued interest.
The three views
Produce all three monthly from the start. See How investors read MSO-PC financials.
When per-entity QuickBooks breaks
QuickBooks per entity works to roughly three to five entities. Past that the friction shows up as:- Manual consolidation in a spreadsheet, every month
- No automated intercompany elimination
- No consolidated cash view
- Growing close time — a week added per entity is not unusual
- Version-control problems on the consolidation workbook
Migrate before the close time becomes unmanageable, not after — a migration during a fundraise is a bad time.
Hiring the bookkeeper
Not a generalist. You want someone who has seen:- Net revenue recording with contractual adjustments
- AR aging and allowance estimation for healthcare
- 835-based cash reconciliation
- Intercompany accounting between related entities
- Multi-entity consolidation with eliminations
Verify it worked
- Identical chart of accounts across all PCs
- Revenue recorded net of contractual adjustments
- Contra accounts in place for adjustments and write-offs
- Patient credit balances recorded as a liability
- Matched intercompany account pairs on both sides
- Intercompany balances reconciled monthly and equal-and-opposite
- Eliminations applied on consolidation
- Three views produced monthly
- Bookkeeper has healthcare and multi-entity experience