Introduction to Healthcare Accounting

Introduction to

Health Care Accounting

James C. Patton

February 26, 2007

Agenda

? Accounting Issues Impacting Not-For-Profit Health Care

Organizations

? Accounting Hot Topics

? Trustee Responsibility for Hospital Financial Viability

2

Accounting Issues Impacting Not-for-Profit

Health Care Organizations

? Revenue Recognition:

¨C

¨C

¨C

¨C

¨C

How hospitals are paid

Patient accounts receivable

Allowance for bad debts and charity

Allowance for contractual adjustments

Estimated third-party payor settlements

? Professional Liability

? Charitable Contributions

3

How Hospitals are Paid

? Major Sources of Payment for Services:

¨C Federal government (Medicare)

¨C State government (Medicaid, a joint program with the Federal

government)

¨C Private payors (BCBS plans and commercial payors)

¨C Patients (private payors)

4

How Hospitals are Paid

? Payment Methodologies:

¨C

¨C

¨C

¨C

¨C

Prospective

Per diem

Cost

Percent of charges

Capitation

? Payment methodologies impact accounting

5

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