Healthcare Sector
Overview of the Sector
The Indian healthcare sector is one of the largest and most critical industries in the country, encompassing hospitals, diagnostics, pharmaceuticals, medical devices, insurance, and telemedicine. It serves a population of over 1.4 billion and operates through a mix of public and private systems, with increasing reliance on private players for quality care and innovation.
Driven by rising health awareness, lifestyle changes, increased life expectancy, and government initiatives like Ayushman Bharat, the sector has witnessed rapid expansion. The growth of digital health solutions, specialty hospitals, and wellness-focused services is further transforming how healthcare is accessed and delivered.
However, healthcare institutions often face challenges in managing fund flows, grant utilization, and ensuring compliance with healthcare-specific audit and regulatory standards. Accurate reporting and strong financial controls are essential for trust and long-term viability.
With rising investments, greater insurance penetration, and a focus on quality and affordability, the Indian healthcare sector is on a strong path of modernization and inclusive growth.
Auditing in the healthcare sector is imperative due to the industry’s multifaceted financial structures, regulatory sensitivity, and operational risk profile. Hospitals, diagnostic chains, nursing homes, pharmaceutical arms, and charitable medical trusts manage significant funds through patient revenues, insurance reimbursements, government grants, CSR-linked healthcare projects, and international aid — all of which require precise financial governance and transparent reporting.
The financial complexities of healthcare stem from varied income streams — including inpatient and outpatient billing, pharmacy sales, diagnostic services, surgeries, capitation arrangements, and third-party administrator (TPA) settlements. Revenue recognition policies must align with service delivery timelines and performance obligations, particularly under insurance or package-based models. Cost allocation across departments (clinical, surgical, support, administration) and accurate treatment of inventory — including medical consumables and drugs — further adds to the complexity.
Audit procedures are inherently challenging due to the sector’s high transaction volumes, dependency on integrated hospital management systems (HMS), and regulatory scrutiny under multiple laws including the Income Tax Act, Companies Act, Clinical Establishments Act, Drugs and Cosmetics Act, and GST. Particular attention is required for compliance with TDS on professional fees, PF/ESI on staffing contracts, GST on bundled services, and CSR fund utilization in charitable hospitals.
Fixed asset audits, especially for high-value medical equipment, must verify capitalization, depreciation, and maintenance logs. Internal audits must review procurement, vendor contracts, billing controls, pharmacy leakages, cash collections, insurance reconciliation, and adherence to standard operating protocols (SOPs). For charitable hospitals, compliance with exemption provisions under Sections 10(23C) and 12AB is critical to retain tax-exempt status.
In a sector where operational lapses have direct reputational and legal consequences, robust audit systems not only ensure financial integrity but also reinforce patient trust, institutional governance, and long-term sustainability.
1. Identifies Improper Billing Practices.
2. Early identification of aberration, if any.
3. To avail grants/subsidy from authority, if any.
4. To suggest better workflow methodologies.
5. Streamlined workflow of medical practice
Healthcare institutions, including hospitals, clinics, diagnostic centres, and charitable medical trusts, operate in a complex environment with high volumes of transactions, regulatory scrutiny, and varied revenue streams. At P. Srinivasan & Co., we offer specialized audit services tailored to the healthcare sector, ensuring financial transparency, regulatory compliance, and robust internal controls. Our audit approach covers patient billing systems, third-party administrator (TPA) settlements, pharmacy revenue, diagnostic income, and ancillary services, ensuring accurate revenue recognition and alignment with applicable accounting standards. We also verify capital expenditure on medical equipment and infrastructure, assess fixed asset management, and validate depreciation and maintenance tracking. Our team evaluates internal controls across procurement, payroll, pharmacy inventory, and cash collections to detect inefficiencies or leakages.
Healthcare entities must also comply with multiple statutory requirements under the Income Tax Act, GST law, ESI/PF regulations, and for charitable hospitals, provisions under Sections 10(23C) or 12AB. We assist in ensuring timely compliance with these obligations, including TDS on professional fees and GST applicability on bundled healthcare services. For institutions receiving CSR funds, grants, or foreign donations, we ensure fund tracking and reporting are accurate and in line with regulatory requirements.
By delivering structured and sector-aware audits, P. Srinivasan & Co. helps healthcare institutions enhance governance, strengthen stakeholder confidence, and operate with fiscal and operational discipline — all while staying aligned with evolving industry regulations.
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Systems & process setup & implementation
We design and create audit plan and execute audit procedures which enables our clients to have the audited reports at their fingertips -
Tax advisory
Designed to help clients understand and minimise the tax challenges that Educational Institutes face -
Authenticating Records
We look into the accounting records and provide valuable feedback and help the organisations win against any hurdles that come their way -
Strategize Growth
We help with people management, business planning and brainstorming ideas effective for the growth and development of the business/ organisations. -
Mergers & Acquisitions
As a Chartered Accountant, we play a crucial role in guiding businesses through the complexities of mergers and demergers.