Parktown Medical Center, Inc.. is a small health care provider owned by a publicly held corporation. It employs 7 salaried physicians, I0 nurses, 3 support stafl, and 3 clerical workers. The clerical workers perform such tasks as reception, correspondence, cash receipIs, billing, and appointment scheduling. All are adequately bonded. Most patients pay for services rendered by cash or check on the

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Parktown Medical Center, Inc.. is a small health care provider owned by a publicly held
corporation. It employs 7 salaried physicians, I0 nurses, 3 support stafl, and 3 clerical
workers. The clerical workers perform such tasks as reception, correspondence, cash
receipIs,
billing, and appointment scheduling. All are adequately bonded. Most patients pay for services rendered by cash or check on the day of their visit.
Sometimes.
however, the physician who is to perform
services appr
credit based on an interview. When credit is approved, the physician files a memo v
one of the clerks to set up the receivable using data the physician generates.
The servicing physician prepares a charge sup that 1s given to one or the clerKs Ior
Dicing and preparation of the patient S bill. At the end of the dav.
one of the clerks uses
the bills to prepare
a revenue summarv and. in cases of credit sales. to update the
counts receivable subsidiary ledger.
The front
office clerks receive cash and checks
directly from patients and give each
patient a prenumbered receipt. The clerks take turns opening the mail. The clerk who
opens that day's mail immediately stamps all checks "for deposit only.
" Each day, just
before lunch. one of the clerks Drepares a list of all cash and checks to be deposited in
Parktown S bank account. The office 1s closed from I2 noon until 2:00 P.M. for lunch.
During that time,
the office manager takes the daily deposit to the bank. During the
lunch break the clerk who opened the mail that day uses the list of cash receipts and
checks to update patient accounts.
The clerks take turns preparing and mailing monthly statements to palients witn
unpaid balances. Une or the clerks writes or uncollectible accounts oniy arter the phy-
SiCian Who Dertormed the respective services believes the account will not pav and
communicates that belief to the office manager. The office manager then issues a credit
memo to write off the account. which the clerk processes
The office manager s
upervises the clerks.
issues write-oft memos, schedules an-
bank deposits, reconciles Dank
stalemens, and per-
Torms general correspondence dues
Additional services are performed monthlv ov a local accountant who posts sum-
maries prepared by the clerks to the general ledger, prepares income statements
files the appropriate pavroll forms and tax returns
REQUIRED
a. Identify at least three weaknesses in Parktown's revenue cycle procedures, explain
the associated problem, and propose a solution. Present your answer in a three-
column table with these headings: Weakness. Problem. Solution
b. Draw a BPMN diagram to depict Parktown's revenue cycle revised to incorporate
our solutions to step a.

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