A nonprofit hospital had gross patient billings at established rates of $115 million in 2018. The hospital was subject to contractual price adjustments of $45 million and $5 million of its 2018 services were determined to be charity care. The hospital also has a policy of providing care before determining whether the patient meets charity care thresholds. In 2018, the hospital provided $8 million of services to people not expected to be able to pay at established rates. The hospital reduced these billings by 50%. How much is the hospital's 2018 patient service revenue?

Question

Quizplus · Accepted Answer

Patient service revenue is calculated using transaction price-that is, gross revenues less all the amounts that the hospital does not expect to collect because of explicit and implicit concessions and less transactions identified as charity care. (In this case, $115 million less explicit concessions of $45 million and less charity care of $5 million = $65 million. Implicit adjustments based on providing care without checking a patient's ability to pay resulted in another reduction of $4 million.)

A Nonprofit Hospital Had Gross Patient Billings at Established Rates