In What Ways Would Each of the Three Major Statements of a Government Hospital Differ from Those of a Not-For-Profit Hospital? How Would They Differ from a For-Profit Hospital?

1. In what ways would each of the three major statements of a government hospital differ from those of a not-for-profit hospital? How would they differ from a for-profit hospital?

Even though both governmental and private (nongovernmental) not-for-profit healthcare organizations are accounted for several similarities, there are also possess substantial differences.Private nonprofit hospitals have to follow the provisions of FASB Statement No.117 as to the form and content of their financial statements.Therefore, the balance sheet of not-for-profit hospitals, but not that of a government hospital, must present the three groups of donor restrictiveness (unrestricted, temporarily restricted and permanently restricted).The operating statement should classify the revenues and expenses at a minimum by significant groups.Similarly, the report of changes in net assets shows the difference in each group of net assets and must indicate the number of net assets issued from restriction. This report may be linked with the statement of operations, and presented as a statement of activities (that shows the changes in the three categories of net assets) but not for profit health care organizations overall view operating activity as separate from changes that result from other activities. Hence, different statements are commonly used by private NFP health care entities. Governmental health care entities do not have an account comparable to the statement of changes in net assets.The report of cash flows must be classified into the three categories of returns and expenditures (operating, investing and financing ) rather than the four required classes for governmental healthcare organizations(operating, capital financing, noncapital financing and investing).One more thing we have to remember is that government healthcare facilities charge very nominal fees from their patients, but not for profit hospitals do not charge fees for the patients (Quizlet, n.d.)

2. What are the major categories of revenues and expenses for a healthcare organization?

The two major categories of revenues for a healthcare organization are patient care revenues and other revenues. Patient care revenues include regular services, additional nursing services, and professional services.Additional revenues include auxiliary sales, fees for educational programs, rental of facilities other than to residents, investment gains and losses, grants, and miscellaneous sources.In accordance with FASB standards, the significant expenses of a healthcare organization must be presented at least in two major categories, program service expenses and support services such as general/administrative expenses.The program service expenditure is typically classified either by function or object. Staff compensation, the payment for medicine and inventories and purchase of equipment and fixed assets are some of the cost of healthcare organizations (UMUC, 2017).

3. What are the differences between recording a hospital’s expenses by natural classification than by function? Why is there a difference between recording expenses by natural classification and by function?

According to FASB statement No. 117, expenses may be grouped using either a natural classification such as salaries, supplies, occupancy costs, rent, depreciation and so on. The second on is functional classification such as inpatient services, ancillary outpatient services, general and administrative services. The functional classification should be presented in the notes of firms financial statement If the expenses are classified using a natural classification (Quizlet, n.d.).

4. What are capitation fees and how should they be accounted for?

Capitation fees are those accepted in substitute for a healthcare organization’s agreement to provide specified services to a specified people.The capitation fees, based on some persons covered

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