DISCUSSIONS
Financial Policy (graded)
Describe the relationship between financial planning and strategic planning.
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Professor Williams
Charity Care
9:53 PM
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One component of community benefit is charity care-what is this and how is it utilized to a NFP HCO’s advantage. How would you go about calculating charity care potentially…try the following problem:
An uninsured patient receives services with charges of $5,000 from a hospital. The hospital staff bills the patient $2,000 and records $3,000 as charity care. If the hospital’s ratio of cost to charges is 50%, what amount would the hospital recognize as charity care in Schedule H of IRS Form 990?
The hospital would take 50% of what they recorded as charity care ($3000) or $1500 as charitycare on Schedule H of IRS Form 990: (50% X $3000) is $1500.00.
The total cost was
= $5,000and – $2000 (patient billed)
= $3000 (charity care)
50% of $3000 = $1500 would be recognize onthe Schedule H of IRS Form 990 $1500 (50% X $3000)
