Heathcare is a strategic sector for the UAE supported by a policy framework policies designed to develop the UAE as a hub for a range of healthcare services. This policy framework includes a regulated environment for patient care and also beneficial tax environment especially under the VAT law.

For many patients and providers, the provision of healthcare is also subject to healthcare insurance. Insurance claims play a large aspect of an operator’s income and cashflow model. In supporting our healthcare clients, management of insurance payments in the healthcare sector can lead to a range of challenges that impact healthcare providers’ operations and cash flow management. These issues require strategic approach to manage the process of insurance claims effectively. In this article we discuss the common issues and our approach to minimise cashflow challenges, increase operational effectiveness whilst maximising benefits under VAT refunds processes.

Common Healthcare Provider Issues

• Claim Denials: Claims may be rejected due to insufficient documentation that fails to establish the medical necessity of the service or lacks essential details. There are services not covered by the patient’s insurance policy leads to denied claims. Providers must manage these policy exclusions and understand the issues under coverage to minimize denials.
• Delayed Payments: Insurance companies can be slow in settling claims, which can strain providers’ cash flow, especially for smaller clinics. Delays in obtaining pre-authorization from insurance companies postpone both treatments and payments, negatively impacting patient care and financial health.
• Underpayments and Patient Responsibility Issues: Discrepancies between what healthcare providers charge and what insurance companies are willing to pay often result in underpayments, making reconciliation and negotiation difficult. High-deductible insurance plans increase the difficulty of collecting patient payments, leading to higher accounts receivable and a greater risk of bad debts. This adversely strains the financial stability of healthcare practices.
• Regulatory Compliance: Staying compliant with evolving insurance regulations in the UAE is important as non-compliance leads to severe penalties. Providers must also adhere to the documentation requirements, ensuring that every claim is supported by comprehensive medical records and meets regulatory standards.
• Dispute Resolution: Appealing denied or underpaid claims is a lengthy and complex process. Healthcare businesses must identify the specific claime, invoice, gather additional documentation, submit multiple appeals, and negotiate with insurance companies.

As a result, healthcare providers need to adopt a proactive approach to navigate insurance payment challenges, as these issues impact both operations and tax obligations affecting cashflow. Understanding these effects is essential for effective financial management and regulatory compliance. An effective financial model which provide transactional and timely reporting is important to optimize UAE tax liabilities, enhance financial performance, and ensure adherence to the new Corporate Tax Law.

6 key strategies for providers to implement effective tax planning:

1. Understand Revenue Recognition

In the UAE, healthcare providers must align revenue recognition with local accounting standards to comply with VAT regulations introduced in 2018. Accurate timing of revenue recognition is essential, with revenue being recorded when services are rendered, and payments are received to correctly calculate VAT liabilities. Providers also need to manage deferred revenue from prepaid services, such as retainers for medical procedures, ensuring it is recognized in the appropriate financial period. This careful management supports accurate financial reporting and helps avoid issues during tax audits by the Federal Tax Authority (FTA). Utilizing a robust accounting system such as Zoho Books can help manage deferred revenue from prepaid services, streamline financial reporting, and avoid issues during tax audits.

2. Optimise Deductions and Credits

Healthcare providers can optimize their tax position by claiming all eligible VAT input credits. This requires maintaining detailed records of VAT-inclusive business expenses, such as medical supplies, equipment, and professional services. Proper documentation and claiming of these credits can significantly reduce overall VAT liability. With the introduction of Corporate Tax in the UAE, Zoho Books supports managing operational expenses and claiming deductions effectively, enhancing financial performance and cash flow. management of these expenses allows providers to maximize deductions, thereby reducing VAT liabilities and improving cash flow. The native Zoho Books reporting and transactional export tools provide ideal functionality to support efficient and compliant refund claims and queries under any tax audit.

3. Tax-Efficient Structure of the Business

In the UAE, healthcare providers must choose the right business entity—such as a limited liability company (LLC), branch of a foreign company, or a free zone entity—each with distinct implications for VAT registration and compliance. Working with tax advisors such as SimplySolved can help providers select the most tax-efficient structure, considering VAT and potential future corporate tax impacts.

4. Plan for Tax Payments

Healthcare providers must ensure timely VAT payments to avoid penalties and fines, which requires accurate calculation of VAT liabilities and setting aside adequate funds quarterly. Regular reconciliation of VAT accounts helps prevent discrepancies and ensures compliance with FTA regulations. An effective cash flow management is necessary for VAT obligations. Providers should regularly review cash flow projections to maintain sufficient liquidity for VAT payments without affecting other operational needs. Leveraging accounting system is strategic to enhance VAT calculation accuracy and streamline account reconciliation, reducing compliance risks and shielding themselves from financial penalties. VAT refunds can play an important role in cashflow management. An efficient transactional report that satisfies the FTA procedures can reduce risks and issues in providing accurate claims and speed up refunds.

5. Mitigate Risks of Tax Audits

Accurate record-keeping of all transactions, including invoices and receipts, is essential under the Tax Procedures Law, compliance and preventing discrepancies during audits. Conducting regular internal audits helps identify potential issues before they escalate during an FTA audit. These audits should focus on VAT compliance, revenue recognition, and expense management to ensure alignment with UAE tax laws.

6. Collaborate with Tax Experts

Consulting with tax professionals such as SimplySolved on VAT and Corporate Tax in the UAE is recommended option to effectively mitigate business risks. Our tax consultations ensure healthcare providers remain updated on frequent changes in Tax Laws, avoid costly errors, and seize tax-saving opportunities. By leveraging our expertise, providers can optimize tax strategies, enhance financial performance, and mitigate risks of regulatory non-compliance.

By adopting these strategies, healthcare providers can improve cash flow and manage tax liabilities more effectively. This approach allows providers to capitalize on available tax benefits and focus on delivering the highest quality patient care.

Our understanding of healthcare businesses with a practical emphasis in optimising systems and proceses, with a particular focus on the transactional level accuracy creates better reporting and efficiecies . This ensures clarity in discrepancies and provides clear reference points, which are essential for managing disputes. Our technology-driven methods enhance accuracy and transparency that lead to efficient and effective resolution.

We address these issues with a service-oriented approach that optimise both financial and operational tasks to streamline business processes. As a Premier Zoho Partner, we implement the accounting system for hundreds of clients across various industries, including the healthcare.

How We Can Help

Healthcare organisations strive to enhance operational efficiency, improve patient care, and maintain financial stability. To achieve these goals, they must reach an optimal level of operations by addressing key issues with robust IT systems that streamline processes and reduce errors. SimplySolved and Zoho Books delivers a comprehensive solution for managing financial tasks, enhancing operational efficiency, and reducing discrepancies.

Our comprehensive approach integrates automation, efficient expense management, and real-time financial reporting to optimize healthcare financial operations. By leveraging automation, we streamline insurance claims, enhance cash flow, and simplify vendor payments, which allows healthcare providers to concentrate on delivering high-quality patient care.

As a strategic Zoho partner, we guide healthcare clients in leveraging Zoho Books to optimize their financial management and reduce manual errors. Our expertise in tax compliance and legal matters allows us to provide targeted solutions that address critical issues, simplify administrative workflows, and improve overall performance. Through these solutions, we help our clients achieve superior operational excellence and enhance the quality of patient care.

About SimplySolved

At SimplySolved, we save your time, resources, and costs. Whether you need help with Outsourced Accounting, Finance, Corporate Tax, Employee Management & Payroll, or ERP & Zoho Implementation. we have the expertise and solutions to help.

Subscribe to mailing list