Revenue the patient does not pay
Claims are approved, part-approved, rejected and resubmitted across months. A clinic recognising revenue at billed value is reporting income it will not collect — and paying doctors a share of it.
A clinic's accounting difficulty is that most of its revenue is not paid by the person receiving the service. Insurance receivables are approved, partially approved, rejected and resubmitted over months, and a clinic that recognises revenue at the billed amount without provisioning for rejections is reporting income it will never collect.
What we handle
- Revenue recognition net of expected rejections and disallowances, based on your own claims history rather than an optimistic assumption.
- Insurance receivables by payer and ageing — so you can see which insurers pay, which delay, and how much is genuinely collectible.
- Cash versus insurance mix, because the two have entirely different working capital profiles.
- Consumables and pharmacy stock — including expiry management and its cost.
- Doctor and practitioner remuneration — fixed, percentage-of-billing and hybrid arrangements, accrued as earned.
- Equipment — capitalisation, depreciation over realistic clinical lives, and the accounting for finance and lease arrangements.
- VAT on healthcare — where the exemption and zero-rating apply, and the input tax recovery consequences.
Ask a clinic what proportion of billed claims is ultimately collected and you will usually get an estimate. The figure is knowable from claims data, and the gap between billed and collected is often several percent of revenue — enough to turn a reported profit into a loss. It should be a measured provision, not an assumption.
Reviewed 18 August 2026 by Ahmed Nabil Selim. UAE tax rates, thresholds and deadlines change — confirm the position for your period before relying on it.
Healthcare — frequently asked questions
At the amount the clinic expects to be entitled to, which is not the amount billed. Under IFRS 15, variable consideration — here, the likelihood of rejection, disallowance or partial approval — is estimated and constrained, so revenue is recognised net of expected reductions based on the clinic's own historical claims experience by payer. Recognising gross billings and treating rejections as a bad debt later overstates revenue in every period and misrepresents the trend.
Qualifying preventive and basic healthcare services supplied by recognised medical institutions and professionals are generally zero-rated, together with certain related medicines and medical equipment as prescribed, while some other health-related supplies fall outside that treatment. Zero-rating is materially better than exemption for a provider because it preserves input tax recovery. Because the boundaries turn on the nature of the service and the status of the provider, elective and cosmetic services in particular should be reviewed specifically rather than assumed.
As an expense accrued in the period the underlying services are delivered, matched to the associated revenue — and calculated on the revenue the clinic actually expects to collect rather than gross billings, unless the contract genuinely says otherwise. Where the contract pays on billings but the clinic recognises revenue net of expected rejections, the mismatch needs to be understood and modelled, because it can make a busy clinic structurally unprofitable at the margin.
Is this your situation?
Tell us how the business is set up and where the numbers currently stand. We will tell you what is required and what it costs to have it handled properly.
Talk to an accountant →