Outside doctors fee in P&ampl Account

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This query is : Resolved

Adobe Edit (Querist)

10 May 2025 Hi,
In the Inpatient bill summary, outside doctor's surgery fee and anesthesia fee mentioning in the bill and the same amount is paid to the doctor's on month end. Should we show the outside doctor's fee in income as fee received and book the same in expenses or we can directly show the outside doctor's fee as fee payable. My doubt is whatever the amount received is paid to the doctor and hospital doesn't retain any money, so we need not show under income and expenses

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

12 August 2025 Great question! Here's the usual accounting treatment for outside doctors' fees when the hospital acts just as a pass-through (i.e., collects fees from patients and then pays doctors without retaining any amount):

Treatment:
Do NOT record the outside doctor’s fees as your income or expense because the hospital is just collecting and passing on the amount.

Instead, record it as a liability (payable) when collected from patients and then reduce the liability when paid to the doctors.

Journal entries:
When collecting from patient (including outside doctor fee):

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Cash/Bank A/c Dr. (Total amount including doctor fee)
To Patient Fees Received A/c (Amount excluding outside doctor fee)
To Outside Doctors Fee Payable A/c (Outside doctor fee amount)
When paying outside doctors:

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Outside Doctors Fee Payable A/c Dr. (Paid amount)
To Bank/Cash A/c (Paid amount)
Summary:
This avoids inflating your income and expense.

The hospital acts as a collection agent for the outside doctor fees.

If you record it as income and expense, it will unnecessarily inflate both your revenue and expenses with zero impact on profit, which is not advisable.

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