Chapter 18D - Accounting for Health Care Organizations...

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Unformatted text preview: Accounting for Health Care Organizations Chapter 18 Learning Objectives Account for unique hospital revenue sources Prepare journal entries for hospital transactions Prepare government hospital financial statements Understand key differences between accounting & reporting for government and nongovernment not-for-profit hospitals Prepare nongovernment not-for-profit hospital financial statements Development of GAAP Industry associations assist in development of GAAP American Hospital Association Healthcare Financial Management Association AIPCA Health Care Organizations audit guide, together with GASB & FASB standards, constitute GAAP Governmental Hospitals Report as enterprise activities If functioning as separate legal entity, hospital will be a special purpose government engaged in business-type activities Primary difference from other BTAs will be certain revenue recognition practices Governmental Hospital Restricted Funds Specific Purpose Funds used to account for assets restricted by donors and grantors Plant Replacement & Expansion Funds used to account for financial resources restricted by donors or grantors for capital asset purposes Endowment Funds used to account for principal of permanent endowments, term endowments, and similar gifts Unique Measurement & Display Features Distinguishing primary activities Classes of revenues Gains Donations Expense classification Restricted assets Property, plant, & equipment Distinguishing Primary Activities Health Care Audit Guide applies FASB Concept #6 Revenues and expenses come from ongoing major or central operations Gains and loses are incidental items GASB #34 adopts these same ideas and adds expectation of consistency with operating cash flows Reporting issue Revenue for one hospital may be gain for another Contributions Could be revenue if hospital has major, ongoing fund-raising activity Will still be nonoperating revenue in governmental hospital For hospitals without ongoing fund- raising activity, contributions are gains Classes of Revenues Patient service revenues Daily patient services Other nursing services Other professional services Premium fees revenues from other organizations based on agreement to provide services for specific fee Other revenues derived from ongoing activity other than patient services Deductions from patient service revenues Charity services indigent patients Policy discounts members of groups that receive discounts as a result of hospital policy Contractual adjustments third-party payments that are lower than standard rates by contract Uncollectible accounts Contractual Adjustments Reimbursement rates based on national or regional averages Standard hospital rates not based on cost Difference needs to be adjusted at time service is provided so that receivables will reflect amount expected to be collected Sample patient service...
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This note was uploaded on 10/17/2011 for the course ACCT 4325 taught by Professor Staff during the Spring '08 term at UT Arlington.

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Chapter 18D - Accounting for Health Care Organizations...

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