Revenue Recognition

12 Months Ended

Dec. 31, 2018

Revenue From Contract With Customer [Abstract]

10) REVENUE RECOGNITION

In May 2014 and March 2016, the FASB issued ASU 2014-09 and ASU 2016-08, “Revenue from Contracts with Customers (Topic 606)” and “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, respectively, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Under the new standards, our estimate for amounts not expected to be collected based on historical experience will continue to be recognized as a reduction to net revenue. However, subsequent changes in estimate of collectability due to a change in the financial status of a payer, for example a bankruptcy, will be recognized as bad debt expense in operating charges.

The performance obligation is separately identifiable from other promises in the customer contract. As the performance obligations are met (i.e.: room, board, ancillary services, level of care), revenue is recognized based upon allocated transaction price. The transaction price is allocated to separate performance obligations based upon the relative standalone selling price. In instances where we determine there are multiple performance obligations across multiple months, the transaction price will be allocated by applying an estimated implicit and explicit rate to gross charges based on the separate performance obligations.

In assessing collectability, we have elected the portfolio approach. This portfolio approach is being used as we have large volume of similar contracts with similar classes of customers. We reasonably expect that the effect of applying a portfolio approach to a group of contracts would not differ materially from considering each contract separately. Management’s judgment to group the contracts by portfolio is based on the payment behavior expected in each portfolio category. As a result, aggregating all of the contracts (which are at the patient level) by the particular payer or group of payers, will result in the recognition of the same amount of revenue as applying the analysis at the individual patient level.

On January 1, 2018, we adopted the new accounting standard using the modified retrospective method. The information in comparative periods have not been restated and continues to be reported under the accounting standards in effect for those periods. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated statements of income was as follows (in thousands):

			Balances Without
	As		Adoption		Effect
	Reported		ASC 606		of Change
For the twelve months ended December 31, 2018:
Net Revenue before provision for doubtful accounts			$	11,846,088
Less: Provision for doubtful accounts				1,088,267
Net Revenues	$	10,772,278	$	10,757,821	$	14,457

Other operating expenses	$	2,614,687	$	2,600,230	$	14,457

We group our revenues into categories based on payment behaviors. Each component has its own reimbursement structure which allows us to disaggregate the revenue into categories that share the nature and timing of payments. The other patient revenue consists primarily of self-pay, government-funded non-Medicaid, and other.

The following table disaggregates our revenue by major source for the years ended December 31, 2018, 2017 and 2016 (in thousands):

	For the year ended December 31, 2018
	Acute Care				Behavioral Health				Other		Total
Medicare	$	1,296,152	23	%	$	579,723	12	%			$	1,875,875	17	%
Managed Medicare		730,387	13	%		199,003	4	%				929,390	9	%
Medicaid		487,197	9	%		696,421	14	%				1,183,618	11	%
Managed Medicaid		554,438	10	%		975,567	19	%				1,530,005	14	%
Managed Care (HMO and PPOs)		2,093,890	37	%		1,395,980	28	%				3,489,870	32	%
UK Revenue		0	0	%		504,721	10	%				504,721	5	%
Other patient revenue and adjustments, net		167,570	3	%		483,417	10	%				650,987	6	%
Other non-patient revenue		390,271	7	%		204,042	4	%		13,499		607,812	6	%
Total Net Revenue	$	5,719,905	100	%	$	5,038,874	100	%	$	13,499		10,772,278	100	%

	For the year ended December 31, 2017
	Acute Care				Behavioral Health				Other		Total
Medicare	$	1,223,150	22	%	$	593,690	12	%			$	1,816,840	17	%
Managed Medicare		630,083	11	%		161,320	3	%				791,403	8	%
Medicaid		482,820	9	%		723,544	15	%				1,206,364	12	%
Managed Medicaid		511,844	9	%		876,907	18	%				1,388,751	13	%
Managed Care (HMO and PPOs)		1,949,435	36	%		1,412,086	29	%				3,361,521	32	%
UK Revenue		0	0	%		426,575	9	%				426,575	4	%
Other patient revenue and adjustments, net		219,056	4	%		498,915	10	%				717,971	7	%
Other non-patient revenue		468,295	9	%		213,682	4	%		18,463		700,440	7	%
Total Net Revenue	$	5,484,683	100	%	$	4,906,719	100	%	$	18,463		10,409,865	100	%

	For the year ended December 31, 2016
	Acute Care				Behavioral Health				Other		Total
Medicare	$	1,114,911	22	%	$	614,182	13	%			$	1,729,093	18	%
Managed Medicare		536,224	10	%		143,554	3	%				679,778	7	%
Medicaid		424,934	8	%		755,226	16	%				1,180,160	12	%
Managed Medicaid		444,164	9	%		793,234	17	%				1,237,398	13	%
Managed Care (HMO and PPOs)		1,845,571	36	%		1,407,458	30	%				3,253,029	33	%
UK Revenue		0	0	%		241,098	5	%				241,098	2	%
Other patient revenue and adjustments, net		284,872	6	%		456,350	10	%				741,222	8	%
Other non-patient revenue		462,274	9	%		233,905	5	%		8,253		704,432	7	%
Total Net Revenue	$	5,112,950	100	%	$	4,645,007	100	%	$	8,253		9,766,210	100	%