What basis is used to record patient service revenue in healthcare organizations?

In healthcare organizations, patient service revenue is typically recorded using the gross basis with established rates. This approach means that revenue is recognized based on predetermined rates for the services provided, rather than netting out discounts or allowances.

Using the gross basis helps to accurately reflect the total amount expected to be earned before any adjustments for discounts or bad debts. This is particularly important in the healthcare industry, where billing rates and negotiated prices can vary significantly due to contracts with insurers and discounts offered to self-pay patients. By recognizing revenue at these established rates, healthcare organizations are able to provide a clearer picture of their total service revenue and can better manage and report on their financial performance.

The accrual basis would recognize revenue when earned, which aligns with the gross basis, but it's less about anticipated revenue and more about recognizing earned revenue based on established rates.