FAR - NFP - HealthCare Orgs

Question 1

Types of HCOs

Answer 1

Hospitals, nursing homes, medical groups, clinics, home health agencies, rehab centers, HMOs, assisted living

Question 2

HCO Legal structure

Answer 2

NFP:

• religiously affiliated
• community based
• private university

Private

• investor owned
• for profit

Public:

• Federal, state, municipal
• County/Parish
• Public University

Question 3

HCO GAAP

Answer 3

NFP:

• FASB
• Contributions
• No equity

Private:

• FASB
• No contributions

Public:

• GASB
• Gov’t transactions
• Enterprise Fund (usually)

Question 4

Gov’t Hospital Funds

Answer 4

• Unrestricted general fund

Donor - restricted fund:

• specific purpose
• plant replacement & expansion
• endowment

Question 5

Revenues

Answer 5

Patient Service

• Daily Patient services
• Other nursing services
• Other professional services

Premium fees
- based on agreement to provide services for specific fee (medicare, HMOs, capitation fees)

Resident service fees
- equip rentals @ nursing home

Other revenues
- derived from ongoing activity other than patient services (visitor meals)

Question 6

Net Patient revenues - Deductions / Adj.

Answer 6

Gross Patient Service Revenue

Less (deductions) :

• charity services
• contractual adjs
• uncollectible accounts (public HCO)

DON’T DEDUCT BAD DEBT EXPENSES

Question 7

Charity Care

Answer 7

Services to persons who demonstrated inability to pay

Never expected to be collected

Not recognized as revenue, receivable, or bad debt

Question 8

Contractual adjs

Answer 8

initially record revenue @ gross w/ contractual adjs recorded to contra-revenue

Question 9

Bad Debts

Answer 9

NFP:

• revenues @ gross
• Bad debt expenses

Public:

• Revenues net of adj. for uncollectible amounts
• no bad debt expense

Question 10

Gains

Answer 10

not part of primary activities:

• sales of invest. in secs
• sales of capital assets
• gifts/donations

Question 11

Expense

Answer 11

Report by function

• nursing (patient care)
• professional (labs/radiology)
• general (dietary, nonmedical)
• fiscal (admission, acct)
• admin (executive)
• natural expense

Question 12

NFP Healthcare Org Financials

Answer 12

1) Statement of Financial Position (B/S)
2) Statement of Operations
3) Statement of Changes in Net Assets
4) Statement of Cash Flows

Question 13

Public (Gov’t) Hospitals Financials

Answer 13

1) Statement of Net Position (B/S)
2) Statement of Revenues, Expenses, & Changes in Net Position
3) Statement of Cash Flows

Question 14

NFP Health Care Org Equity

Answer 14

1) Unrestricted Net Assets
2) Temp Restricted Net Assets
3) Perm. Rest. N/A

Question 15

Public (Gov’t) Hospital Equity

Answer 15

1) Net Invest. in Capital Assets
2) Rest. Net Position
3) Unrest. Net Position

Question 16

Gov’t Hospital - Statement of CFs

Answer 16

1) direct method required
2) 4 categories (similar to proprietary funds)
3) no distinction made between unrestricted & restricted CFs

Question 17

Nongov’t NFP Hospital Reporting

Answer 17

• Follow FASB

Similarities w/ gov’t reporting found w/

• patient service revenues
• charity services
• deductions from revenues (except for bad debts)
• premium fee revenues

Question 18

true/false

Cash Flows from Noncapital Financing Activities and Cash Flows from Capital and Related Financing Activities are required sections of the cash flow statement for governmental healthcare agencies.

Not-for-profit healthcare agencies report cash flows from financing activities (a single category)

Answer 18

True

Question 19

capitation fees

Answer 19

Payments made to health care providers for comprehensive client coverage provided for a fixed fee; e.g., HMOs

Question 20

How is charity care recognized in the financial statements of a not-for-profit hospital?

Answer 20

It is not recognized. (Not as revenues, receivable, or bad debt in the financial statements of a not-for-profit hospital.) Charity care is reported in the notes to the financial statements, however.

Question 21

How are “contractual adjustments” reported by health care organizations?

Answer 21

Contractual adjustments are a contra account deducted from patient service revenues in deriving net patient service revenues, which is the first line in the statement of operations for a health care organization