Question
During the current year, St. Louises Hospital (a not-for-profit entity) earned $10 million in patient service revenues based upon its standard billing rates. 80% of
During the current year, St. Louises Hospital (a not-for-profit entity) earned $10 million in patient service revenues based upon its standard billing rates. 80% of this revenue is reimbursed to the Hospital through 3rd party insurance companies and government healthcare programs. Based upon historical experience these organizations discount their reimbursements to the Hospital by 30% of the standard billing rate. The remainder of the patient revenue is billed to uninsured individuals. Based upon historical experience the Hospital believes that 60% of this revenue will be uncollectable. After accounting for allowances for contractual adjustments and uncollectable amount, what amount of net patient service revenue should St. Louises Hospital record for the current year ?
$10,000,000
$5,600,000
$6,400,000
$8,000,000
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