Guide aims to help hospitals comply with accounting changes

The Healthcare Financial Management Association has issued new guidance to help hospitals and health systems as they implement accounting changes.

The guidance is in reference to accounting standards issued by the Financial Accounting Standards Board in 2014. Calendar year 2018 is the first period for which healthcare organizations will apply the standards.

The accounting changes replaced revenue recognition guidance specific to healthcare with a single principles-based revenue recognition standard applicable to most industries, according to an HFMA report. Changes involve rules to calculate revenue. They also affect the assessment of bad debt, which is money owed to hospitals that can't be recovered.

Due to these changes, providers may need to alter accounting systems, create documentation, review contracts and add new disclosures and language to financial statements, association representatives said in a news release. But they do not anticipate that many providers will see effects to their bottom line.

"Some organizations may experience a change in the timing of revenue recognition, and possibly some significant financial statement adjustments," HFMA representatives added. "Changes in classification of certain items also could have a significant impact on key performance indicators used by management."

That's why the HFMA Principles and Practices Board has published a nine-page issue analysis. The analysis seeks to clarify for healthcare organizations the Financial Accounting Standards Board's revenue recognition standard and how each step within the standards board's model applies to recognition of net patient service revenue.

Access the analysis here.


More articles on healthcare finance:

HCA reportedly selling $1B in debt to aid Mission Health acquisition
Universal Health Services finance chief Steve Filton on cost containment and challenges hospital CFOs face
Medicare payments not covering care costs, many physician practices say


© Copyright ASC COMMUNICATIONS 2020. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.


Featured Webinars

Featured Whitepapers