Industry Supplement   |   November 2016
 

Revenue for healthcare providers

KPMG’s insights on industry ASC 606 implementation. With the new revenue recognition standard effective date approaching, KPMG offers insights on the most significant industry issues.

Applicability

Application of the new revenue standard

  • Company that is a healthcare provider
  • Company that is currently assessing the impact of the new requirements of ASC Topic 606
  • Company that is at an advanced stage of its ASC Topic 606 implementation

Effective dates

Mandatory effective dates and early adoption provisions:

Annual periods:

For public business entities and certain not-for-profit entities the effective date for annual periods is the fiscal years beginning after Dec. 15, 2017.

For all other entites the effective date for annual periods is the fiscal years beginning after Dec. 15, 2018.

Interim periods:

For public business entities and certain not-for-profit entities the effective date for interim periods is the fiscal years beginning after Dec. 15, 2017.

For all other entites the effective date for interim periods is the fiscal years beginning after Dec. 15, 2019.

Early adoption:

For public business entities and certain not-for-profit entities the effective date for early adoption is the fiscal years beginning after Dec. 15, 2016.

For all other entites the effective date for early adoption is the fiscal years beginning after Dec. 15, 2016.

Key impacts

  • Specific facts and circumstances should be considered in determining whether and when an agreement with a patient creates legally enforceable rights and obligations
  • A portfolio of historical data may be used to assess whether the collectibility criterion is met, which is not the same as applying the portfolio practical expedient
  • Judgment will be needed in determining whether price concessions have been implicitly provided
  • Significant decreases in the provision for bad debts will be common
  • Generally, in-patient healthcare services promised in a contract with a patient will be accounted for as a single performance obligation
  • It is likely that the transfer of control of in-patient healthcare services occurs over time

Report contents

  • Specific issues for healthcare providers
  • Expanded disclosures
  • Effective dates and transition
  • Impact on the organization

 

 

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