FASB and the AICPA audit guide are the standard setters for nonprofit hospitals and so the requirements are generally the same as other nonprofits, except for the items mentioned below.
A performance indicator (operating income/loss) must be reported, plus other changes in unrestricted net assets. This is called the “above/below the line” Statement of Operations (Activity) classification.
Statement of Operations -Above the line the line was operating income
Operating Revenues are
Patient Services Revenue is reported net of employee discounts, contractual adjustments, administrative adjustments and uncollectibles.
Capitation Revenue (or premium fees) from fixed fee insurance agreements. It is paid usually monthly.
Other operating revenue from ongoing operations of cafeteria, parking, gift shops, etc. Also, student tuition for teaching hospitals, donor contributions (supplies, equipment, medicines, etc.) and grants that must be used for operations or charity care. Service contributions that meet the criteria below are also included as other operating revenue. (service, supplies, $$)
Operating Expenses can be reported by object or function (program). However, the functional classification must be shown either in the statement or in the notes. Examples of functions are nursing service, other professional services, general services, administrative services, bad debt, depreciation and interest
Charity care is NOT recorded as revenue or expense or a contra account. The hospital’s charity care policy is only disclosed in the notes. No dollar amount is required. Not reported, mentioned in the NOTES, never give a $ amount Operating revenue minus operating expenses equals operating income/loss and is ‘the line.’ That is the split between operating and nonoperating activity.
Non-operating Revenue and Gains and Losses: Below the ‘line’
Examples of non-operating revenue: Donations for nonoperating activities, interest and dividends income from investments and endowments not designated for operating activities and unrestricted income from board-designated funds (assets whose use is limited).
Government grants are generally reimbursement grants and no revenue is recognized until the…