FASB Issues Accounting Standards Updates for Certain Health Care Entities

The Financial Accounting Standards Board issued an Accounting Standards Update in July 2011 regarding “Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities.”

This update applies to entities within the scope of Topic 953, Health Care Entities that recognize large amounts of patient service revenue at the time of service even though the entities do not assess a patient’s ability to pay. The changes are as follows:

• Reclassifying the provision for bad debts associated with patient service revenue from an operating expense to a deduction from patient service revenue on their statement of operations.  
• Providing enhanced disclosure about their policies for recognizing revenue and assessing bad debts.  
• Disclosing patient service revenue as well as qualitative and quantitative information about changes in the allowance for doubtful accounts.  

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