A consortium of physicians agrees to provide services to the employees of a large county government. The agreement calls for monthly payments from the county to the consortium in the amount of $200,000 per month. County employees are not billed for services rendered by the consortium. All county employees are required to use the consortium under their health care program (any services rendered to county employees by other physicians are not covered under the health plan). During the month the consortium performed services for county employees for which it would have billed $170,000. The consortium referred patients to other health care providers for services they could not perform. The consortium estimates that patients will be billed $10,000 for those services. The amount of revenue that should be recognized for the month by the consortium is

Question

Quizplus · Accepted Answer

The correct amount of revenue to be recognized by the consortium for the month is $200,000. This is because the agreement specifies a fixed monthly payment of $200,000 from the county to the consortium, regardless of the actual value of services rendered or referred to other providers.

A Consortium of Physicians Agrees to Provide Services to the Employees