Question

A hospital reports the following information:

Estimated bad debts—non-charity patients	$ 500,000
Contractual adjustments—third party payors	1,000,000
Direct gross billings to non-charity patients	5,000,000
Gross billings to insurance companies and Medicare/Medicaid	17,000,000
Charity care, estimated billing value	2,000,000
Charity care, cost	1,200,000

Net patient service revenue, as reported on the hospital's statement of activities, is:

	A.	$16,500,000
	B.	$21,000,000
	C.	$23,000,000
	D.	$22,500,000

Answer 1

OPTION D IS CORRECT

Net patient service revenue=$22500000

Net patient service revenue
Particulars	$(Amount)
A. Income
Gross billings to insurance companies and Medicare/Medicaid	17000000
Direct gross billings to non-charity patients	5000000
Charity care, estimated billing value	2000000
Total (A)	24000000
B. Total expenses
Contractual adjustments—third party payors	1000000
Estimated bad debts—non-charity patients	500000
TOTAL(B)	1500000
C Net patient service revenue (A-B)	22500000