Gamma Hospital provided services amounting to $10 million at its established bil
ID: 2340523 • Letter: G
Question
Gamma Hospital provided services amounting to $10 million at its established billing rates in the year ended December 31, 2018. Included in the $10 million were services of $8 million to Medicare patients. Medicare paid Gamma at 60 percent of Gamma’s established rates. Also included in the $10 million were $2 million of services to self-pay patients who did not meet Gamma’s criteria for charity care when admitted. Gamma collected $1.5 million from the self-pay patients during the year and estimated that 40 percent of the uncollected amount would not be collected. What amount should Gamma report as patient service revenue in its year 2018 financial statements?
Explanation / Answer
Gamma Hopital should recognize the revenue which is certain and there is no doubt in realization.
From medicare Patients : $ 8 Mn
From Self Pay : $ 1.5 Mn+ 0.5*60% = $ 1.80 Mn ( 40% of Uncollecible ( $ 0.5 Mn)is not ceratin )
Total " $ 9.80 Mn
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