ACCOUNTING FOR BAD DEBT
For the first time, not-for-profit hospitals must disclose on the Internal Revenue Service Form 990 the cost of bad debt and how much of that expense is from patients who cannot afford medical care
Calculate bad debt at cost. Estimate how much bad-debt expense is attributable to patients eligible for free or discounted care under the organization’s charity-care policy. Explain the method used to come up with the figures and any rationale for including any other bad debt as community benefits.