Exam 14: Health Care Providers

The LRF Healthcare Foundation donated 1,800,000 as a permanent endowment to a senior citizen health and welfare organization during the year.The foundation stipulated that the income and investment appreciation be used to maintain its preventive care center for the elderly.The endowment principal had an investment appreciation of $120,000 and investment income of $160,000.The organization spent $140,000 to maintain its preventive care center during the year.What is the amount of change in temporarily restricted net assets that the organization should report?

The amount of restricted revenue that should be recognized by Pelican in the year of the gift is

Medicaid is a federally sponsored and managed health care program for retirees.

Unlike businesses, not-for-profit health care providers often serve patients who they know will be unable to pay any portion of the amounts billed.

During the current year, a voluntary health and welfare organization receives $800,000 in unrestricted pledges.Of this amount, $300,000 has been designated by donors for use next year to support operations in the pharmacy.If 20 percent of the unrestricted pledges are expected to be uncollectible, what amount of unrestricted support should the organizations recognize in its current-year financial statements?

In the long run, the health of a hospital depends mainly on the demand for its services and the ability to meet that demand at a reasonable cost.

The Gulf Coast bank is holding a $750,000 donation in an independent permanent trust with the investment income dedicated for use by Coastal Hospital for operating purposes. The $750,000 principal should be:

During the current year, St.Louise's Hospital (a not-for-profit entity)earned, based on its normal billing rate, $1 million in patient service revenues.Many of these patients belong to a health plan that has an established pay schedule.Based on the specific services rendered to members of the plan, the hospital estimates that $0.05 million will not be collectible from the plan or the patient.Some of the patients are hospital employees.These employees are given a 50 percent discount on the services rendered.Employee discounts for the current year total $0.01 million.Some of the patients are uninsured and the hospital estimates that, of the amount billed to the uninsured patients, $0.2 million will not be collectible (bad debts).The amount of net patient service revenues for St.Louise's Hospital for the current year is

How do the three major financial statements of a private not-for-profit hospital differ from those of a government hospital?

Health care organizations provide uncompensated patient care as a matter of policy but not law.

Based upon St.Thomas Hospital's established billing rate structure, the hospital would have earned patient service revenue of $5,100,000 for the year.However, the hospital does not expect to collect this amount because of charity care provided in the amount of $600,000 and contractual allowances to third-party payers of $450,000.How much should the hospital record as patient service revenue for the year?

The statement of financial position of a not-for-profit health care organization should distinguish among unrestricted, temporarily restricted, and permanently restricted net assets.

A "term endowment" is a gift with donor specifications whereby

In prior years, a not-for-profit hospital received funds from a donor who restricted the use of those funds to providing nursing scholarships.During the current year $8,000 of scholarships were awarded.These scholarships should be reported

A hospital carried a 2-year malpractice insurance policy that allows for retroactive premium adjustments based on experience (claims actually incurred).The basic premium is $300,000, payable in advance.At the end of the first year the hospital estimates that it will have to pay an additional $80,000 in premiums as a result of claims filed in the current year and it estimates that it will incur additional premiums in the second year of $100,000 as a result of claims filed in the second year.The amount of insurance expense that should appear on the financial statements at the end of the first year should be

An accountant has encountered a perplexing financial reporting issue related to the hospital for which she is preparing financial statements.The issue is not specifically addressed by FASB statements.To which of the following sources would the accountant probably look first for industry-specific guidance?

The community hospital of Briarwood normally includes proceeds from sales of meals in its cafeteria as

In a not-for-profit health care organization, the cost of malpractice must be accrued if it is either probable that impairment has occurred or if the amount of loss can be reasonably estimated.

During a particular year, a not-for-profit hospital provides services that at standard rates would be billed at $400 million.This amount includes $20 million of charity care.Of the remaining $380 million, the hospital estimates that $240 million will be billed to third-party providers which, per contractual agreements, will pay only 75 percent of the standard rate (i.e., $180 million).Of the $140 million to be billed to individuals, the hospital estimates that $80 million will have to be written off as bad debts.The hospital should recognized net patient care revenue of

The services of Preferred Provider Organizations are prepaid and fixed.