Cleveland Clinic Health System Obligated Group - FMSbonds.com
Cleveland Clinic Health System Obligated Group - FMSbonds.com Cleveland Clinic Health System Obligated Group - FMSbonds.com
Cleveland Clinic Health SystemNotes to Consolidated Financial Statements (continued)3. Accounting Policies (continued)International Contract Revenue RecognitionThe System has management agreements with international organizations to provide consultingservices for various healthcare ventures. These scope of services range from managing currenthealthcare operations to managing the construction, training, organizational infrastructure andoperational management of future foreign healthcare entities. The management fees are receivedin advance and are deferred until the services have been provided. The System has recordeddeferred revenue related to international management agreements, included in other currentliabilities, of $32.4 million and $15.5 million at December 31, 2007 and 2006, respectively.Charity CareThe System provides care to patients who do not have the ability to pay and who qualify forcharity services pursuant to established policies of the System. Charity services are defined asthose for which patients have the obligation and willingness to pay but do not have the ability todo so. Charity care provided in 2007 and 2006, measured at established rates and includingdiscontinued operations, approximated $385 million and $324 million, respectively, and is notincluded in net patient service revenue.Concentration of Credit RiskThe System’s concentration of credit risk relating to accounts receivable is limited due to thediversity of patients and payors. Accounts receivable consist of amounts due from governmentprograms, commercial insurance companies, private pay patients and other group insuranceprograms. Revenues from the Medicare and Medicaid programs and one commercial payoraccount for approximately 30%, 2%, and 21% in 2007 and 29%, 5%, and 20% in 2006,respectively, of the System’s net patient service revenue. Excluding these payors, no one payorrepresents more than 10% of the System’s accounts receivable or net patient service revenue.10
Cleveland Clinic Health SystemNotes to Consolidated Financial Statements (continued)3. Accounting Policies (continued)The provision for uncollectible accounts is based upon management’s assessment of historicaland expected net collections considering historical business and economic conditions, trends inhealth care coverages and other collection indicators. Periodically throughout the year,management assesses the adequacy of the allowance for uncollectible accounts based uponhistorical write-off experience by payor category. The results of this review are then used tomake modifications to the provision for uncollectible accounts to establish an appropriateallowance for uncollectible receivables. After satisfaction of amounts due from insurance, theSystem follows established guidelines for placing certain past due patient balances withcollection agencies, subject to the terms of certain restrictions on collection efforts as determinedby the System.Cash and Cash EquivalentsThe System considers all highly liquid investments with original maturities of three months orless when purchased to be cash equivalents. Cash equivalents are recorded at fair value in theconsolidated balance sheets and exclude amounts included in long term investments andinvestments for current use.InventoriesInventories (primarily supplies and pharmaceuticals) are stated at the lower of cost (first-in,first-out method) or market.Property, Plant, and EquipmentProperty, plant, and equipment are stated at cost. Expenditures which substantially increase theuseful lives of existing assets are capitalized. Routine maintenance and repairs are expensed asincurred. Depreciation, including amortization of capital leased assets, is computed by thestraight-line method using the estimated useful lives of individual assets. Buildings are assigneda useful life of up to forty years. Equipment is assigned a useful life ranging from three to fifteenyears. Interest cost incurred on borrowed funds during the period of construction of capital assetsand interest income on unexpended project funds are capitalized as a component of the cost ofacquiring those assets. The System records costs and legal obligations associated with long-livedasset retirements.11
- Page 81 and 82: Voting Members of theBoard of Trust
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- Page 91 and 92: E. UTILIZATIONThe following tables
- Page 93 and 94: Statistical Information. The follow
- Page 95 and 96: I. COLLABORATIVE PROGRAMSIn additio
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- Page 127 and 128: Changes in Net AssetsNet AssetsTemp
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<strong>Cleveland</strong> <strong>Clinic</strong> <strong>Health</strong> <strong>System</strong>Notes to Consolidated Financial Statements (continued)3. Accounting Policies (continued)The provision for uncollectible accounts is based upon management’s assessment of historicaland expected net collections considering historical business and economic conditions, trends inhealth care coverages and other collection indicators. Periodically throughout the year,management assesses the adequacy of the allowance for uncollectible accounts based uponhistorical write-off experience by payor category. The results of this review are then used tomake modifications to the provision for uncollectible accounts to establish an appropriateallowance for uncollectible receivables. After satisfaction of amounts due from insurance, the<strong>System</strong> follows established guidelines for placing certain past due patient balances withcollection agencies, subject to the terms of certain restrictions on collection efforts as determinedby the <strong>System</strong>.Cash and Cash EquivalentsThe <strong>System</strong> considers all highly liquid investments with original maturities of three months orless when purchased to be cash equivalents. Cash equivalents are recorded at fair value in theconsolidated balance sheets and exclude amounts included in long term investments andinvestments for current use.InventoriesInventories (primarily supplies and pharmaceuticals) are stated at the lower of cost (first-in,first-out method) or market.Property, Plant, and EquipmentProperty, plant, and equipment are stated at cost. Expenditures which substantially increase theuseful lives of existing assets are capitalized. Routine maintenance and repairs are expensed asincurred. Depreciation, including amortization of capital leased assets, is <strong>com</strong>puted by thestraight-line method using the estimated useful lives of individual assets. Buildings are assigneda useful life of up to forty years. Equipment is assigned a useful life ranging from three to fifteenyears. Interest cost incurred on borrowed funds during the period of construction of capital assetsand interest in<strong>com</strong>e on unexpended project funds are capitalized as a <strong>com</strong>ponent of the cost ofacquiring those assets. The <strong>System</strong> records costs and legal obligations associated with long-livedasset retirements.11