A nonprofit hospital had gross patient billings of $43 million, contractual adjustments of $8 million and charity care of $1,500,000 for 2018. In addition, the hospital also revised its estimate of bad debts for all 2018 accounts by $1,000,000. How much patient service revenue should the hospital report in 2018.

Question

Quizplus · Accepted Answer

If the information a nonprofit hospital uses to revise its estimates is not specific to an individual patient, the resulting revisions of estimates (up or down) should be reported as changes in estimates of the transaction prices-decreasing or increasing current period patient service revenue-not as bad debt expense. (Gross patient billings of $43 million less contractual adjustments of $8 million less charity care of $1.5 million less bad debts estimate of $1 million = $32.5 million.)

A Nonprofit Hospital Had Gross Patient Billings of $43 Million