Setting up Xero for Medical Clinics

A standard "Small Business" Xero setup does not work for medical practices. You have complex flows of money (Medicare, Private Health, Patient Gaps) that require a specific structure.

1. Separation of Income

Do not dump all deposits into "Sales." You need to separate:
- Patient Billings: (If you employ the doctors).
- Service Fees: (If independent doctors pay you a fee).
- Incentive Payments: (Government grants).

2. The Medicare Clearing Account

When Medicare pays you a lump sum of $10,000, it might relate to 50 different patients seen by 4 different doctors. You cannot just reconcile this to "Sales."
You must use a Clearing Account. Your PMS (like Halaxy) sends the invoice data to the clearing account, and the bank deposit clears it out. If it doesn't balance to $0, you have a problem.

3. Tracking Categories

Use Xero Tracking Categories to track revenue and expenses by Location (if you have multiple clinics) or by Doctor.