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Business Finance Healthcare Finance: An Introduction to Accounting and Financial Management

a. To determine: Difference between net revenues and gross revenues. Introduction: Revenue refers to the income which is earned out of business operation after considering deduction for returned merchandise and discounts. Net revenue is ascertained after subtracting costs from gross revenue. Net revenue reflects the amount of revenue ascertained from services provided for patient care in comparison to revenue earned from food services or parking fees. Gross revenue reflects the charges associated with the patient care services. The only difference between net revenue and gross revenue is deduction from the revenue which includes bad debt , charity care and receipt of payment from third party such as insurance companies. It can be concluded that the gross revenue earned from patient service does not include deductions whereas net income reflects the total earning after factoring for all deductions such as bad debt, charity care. b. To determine: Difference between other revenues and patient service revenues. Introduction: Revenue refers to the income which is earned out of business operation after considering deduction for returned merchandise and discounts. Net revenue is ascertained after subtracting costs from gross revenue. Premium revenue falls under other revenue, which reflect obligation to provide services on the part of the reporting organization. Patient service revenue reflects the obligation to make payment to the reporting organization. Premium revenue is generally reported in the beginning of each month, whereas patient service revenue is generally reported at the time of providing the service. It can be concluded that patient service revenue involves the generation of revenue by providing services to the patient, whereas other revenue includes earnings from concession rentals, non patient food service and parking fees. c. To determine: Difference between bad debt and charity care and how they are represented on the income statement. Introduction: Healthcare can be defined as the efforts made by licensed and trained professional to restore or maintain emotional, mental and physical well-being. In other words, healthcare is about improvement and maintenance of health by recovery, treatment, prevention of injury, illness or diseases. Losses from bad debt occur due to failure on the part of the organization to collect revenue from insurance companies or patients that are capable of making payment towards their health care services. The charity care on the other hand includes the health care services that are given to the people that do not have the capacity to pay for such services. In the income statement, the amount pertaining to the charity care is reflected as footnotes at the end of the financial statement, whereas bad debt is reflected in the form of operating expense. Bad debt occurs due to the operational incapability of the health care provider to collect their dues from insurance companies and patients that have the capacity to pay for the services rendered. Charity care includes services rendered to the people that do not have the capacity to pay for the same.

a. To determine: Difference between net revenues and gross revenues. Introduction: Revenue refers to the income which is earned out of business operation after considering deduction for returned merchandise and discounts. Net revenue is ascertained after subtracting costs from gross revenue. Net revenue reflects the amount of revenue ascertained from services provided for patient care in comparison to revenue earned from food services or parking fees. Gross revenue reflects the charges associated with the patient care services. The only difference between net revenue and gross revenue is deduction from the revenue which includes bad debt , charity care and receipt of payment from third party such as insurance companies. It can be concluded that the gross revenue earned from patient service does not include deductions whereas net income reflects the total earning after factoring for all deductions such as bad debt, charity care. b. To determine: Difference between other revenues and patient service revenues. Introduction: Revenue refers to the income which is earned out of business operation after considering deduction for returned merchandise and discounts. Net revenue is ascertained after subtracting costs from gross revenue. Premium revenue falls under other revenue, which reflect obligation to provide services on the part of the reporting organization. Patient service revenue reflects the obligation to make payment to the reporting organization. Premium revenue is generally reported in the beginning of each month, whereas patient service revenue is generally reported at the time of providing the service. It can be concluded that patient service revenue involves the generation of revenue by providing services to the patient, whereas other revenue includes earnings from concession rentals, non patient food service and parking fees. c. To determine: Difference between bad debt and charity care and how they are represented on the income statement. Introduction: Healthcare can be defined as the efforts made by licensed and trained professional to restore or maintain emotional, mental and physical well-being. In other words, healthcare is about improvement and maintenance of health by recovery, treatment, prevention of injury, illness or diseases. Losses from bad debt occur due to failure on the part of the organization to collect revenue from insurance companies or patients that are capable of making payment towards their health care services. The charity care on the other hand includes the health care services that are given to the people that do not have the capacity to pay for such services. In the income statement, the amount pertaining to the charity care is reflected as footnotes at the end of the financial statement, whereas bad debt is reflected in the form of operating expense. Bad debt occurs due to the operational incapability of the health care provider to collect their dues from insurance companies and patients that have the capacity to pay for the services rendered. Charity care includes services rendered to the people that do not have the capacity to pay for the same.

Solution Summary: The author explains the difference between net revenues and gross revenues.

Healthcare Finance: An Introduction to Accounting and Financial Management

Healthcare Finance: An Introduction to Accounting and Financial Management

6th Edition

ISBN: 9781567937411

Author: Louis C. Gapenski, Kristin L. Reiter

Publisher: Health Administration Press

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Healthcare Finance: An Introduction to Accounting and Financial Management

Ch. 3 - Prob. 1.1STQ Ch. 3 - Prob. 1.2STQ Ch. 3 - Prob. 2.1STQ Ch. 3 - Prob. 2.2STQ Ch. 3 - Prob. 2.3STQ Ch. 3 - Prob. 3.1STQ Ch. 3 - Prob. 3.2STQ Ch. 3 - Prob. 3.3STQ Ch. 3 - Prob. 3.4STQ Ch. 3 - Prob. 3.5STQ

Ch. 3 - Prob. 4.1STQ Ch. 3 - Prob. 4.2STQ Ch. 3 - Prob. 4.3STQ Ch. 3 - Prob. 5.1STQ Ch. 3 - Prob. 5.2STQ Ch. 3 - Prob. 5.3STQ Ch. 3 - Prob. 6.1STQ Ch. 3 - Prob. 6.2STQ Ch. 3 - Prob. 7.1STQ Ch. 3 - Prob. 7.2STQ Ch. 3 - Prob. 7.3STQ Ch. 3 - Prob. 8.1STQ Ch. 3 - Prob. 8.2STQ Ch. 3 - Prob. 8.3STQ Ch. 3 - Prob. 8.4STQ Ch. 3 - Prob. 9.1STQ Ch. 3 - Prob. 9.2STQ Ch. 3 - Prob. 9.3STQ Ch. 3 - Prob. 10.1STQ Ch. 3 - Prob. 10.2STQ Ch. 3 - Prob. 11.1STQ Ch. 3 - Prob. 11.2STQ Ch. 3 - Prob. 12.1STQ Ch. 3 - Prob. 12.2STQ Ch. 3 - Prob. 12.3STQ Ch. 3 - Prob. 13.1STQ Ch. 3 - Prob. 13.2STQ Ch. 3 - Prob. 13.3STQ Ch. 3 - Prob. 13.4STQ Ch. 3 - Prob. 14.1STQ Ch. 3 - Prob. 14.2STQ Ch. 3 - Prob. 14.3STQ Ch. 3 - Prob. 15.1STQ Ch. 3 - Prob. 15.2STQ Ch. 3 - Prob. 16.1STQ Ch. 3 - Prob. 16.2STQ Ch. 3 - Prob. 3.1Q Ch. 3 - Prob. 3.2Q Ch. 3 - Prob. 3.3Q Ch. 3 - Prob. 3.4Q Ch. 3 - Prob. 3.5Q Ch. 3 - Prob. 3.6Q Ch. 3 - Prob. 3.7Q Ch. 3 - Prob. 3.8Q Ch. 3 - Prob. 3.9Q Ch. 3 - Prob. 3.1P Ch. 3 - Prob. 3.2P Ch. 3 - Prob. 3.3P Ch. 3 - Prob. 3.4P Ch. 3 - Prob. 3.5P Ch. 3 - Prob. 3.6P Ch. 3 - Prob. 3.7P Ch. 3 - Prob. 3.8P Ch. 3 - Prob. 3.9P

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