The FASB has issued an Aounting Standards Update for the presentation and disclosure of patient service revenue, provision for bad debts, and the allowance for doubtful aounts for certain health care entities. The objective of the Update is to provide financial statement users with greater transparency about a health care entity’s patient service revenue and the related allowance for doubtful aounts.

Some health care entities regnize patient service revenue at the time the services are rendered regardless of whether the entity expects to llect that amount. Stakeholders have raised ncerns that such aounting practices result in a gross-up of patient service revenue and the related provision for bad debts. Additionally, because health care entities make their own judgments regarding adjustments to revenue and bad debts, those judgments are different from one health care entity to another and mparability is impaired, making analysis difficult for financial statement users.

The amendments in the Update require certain health care entities to change the presentation of their statement of operations by reclassifying the provision for bad debts associated with patient service revenue from an operating expense to a dction from patient service revenue ( of ntractual allowances and disunts). Additionally, those health care entities are required to provide enhanced disclosure about their policies for regnizing revenue and assessing bad debts. The amendments also require disclosures of patient service revenue ( of ntractual allowances and disunts) as well as qualitative and quantitative information about changes in the allowance for doubtful aounts.

The Update, which includes amendments to the XBRL taxonomy, is available from the FASB Aounting Standards Updates page.