Revenue Recognition

Ambulatory Services

Ambulatory services revenues consist of billing for the use of the centers’ facilities directly to the patient or third-party payor and, at certain of the Company’s centers (primarily centers that perform gastrointestinal endoscopy procedures), billing for anesthesia services provided by medical professionals employed or contracted by the Company’s centers. Such revenues are recognized when the related surgical procedures are performed. Revenues exclude any amounts billed for physicians’ surgical services, which are billed separately by the physicians to the patient or third-party payor.

Revenues from ambulatory services are recognized on the date of service, net of estimated contractual adjustments from third-party medical service payors including Medicare and Medicaid. During the nine months ended September 30, 2015 and 2014, the Company derived approximately 26% and 25%, respectively, of its ambulatory services revenues from governmental healthcare programs, primarily Medicare and managed Medicare programs.

Physician Services

Physician services revenues primarily consist of fee for service revenue and contract revenue and are derived principally from the provision of physician services to patients of the healthcare facilities the Company serves. Contract revenue represents income earned from the Company's hospital customers to subsidize contract costs when payments from third-party payors are inadequate to support such costs.

The Company records revenue at the time services are provided, net of a contractual allowance and a provision for uncollectibles. Revenue less the contractual allowance represents the net revenue expected to be collected from third-party payors (including managed care, commercial and governmental payors such as Medicare and Medicaid) and patients insured by these payors. The Company also recognizes revenue for services provided during the period that have not been billed. Expected collections are estimated based on fees and negotiated payment rates in the case of third-party payors, the specific benefits provided for under each patient’s healthcare plan, mandated payment rates under the Medicare and Medicaid programs, and historical cash collections.

The Company's provision for uncollectibles includes its estimate of uncollectible balances due from uninsured patients, uncollectible co-pay and deductible balances due from insured patients and special charges, if any, for uncollectible balances due from managed care, commercial and governmental payors. The Company records net revenue from uninsured patients at its estimated realizable value, which includes a provision for uncollectible balances, based on historical cash collections (net of recoveries).

Net revenue for the physician services segment consists of the following major payors (in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30,					Period from July 16 - September 30, 2014 ⁽¹⁾
	2015										Period from July 16 - September 30, 2014 ⁽¹⁾
Medicare	$	44,196		13.0	%	$	125,593		13.1	%	$	29,163		12.9	%
Medicaid	18,456			5.4		48,318			5.0		13,217			5.9
Commercial and managed care	254,171			74.5		716,361			74.7		166,340			73.6
Self-pay	53,851			15.7		168,744			17.6		45,233			20.0
Net fee for service revenue	370,674			108.6		1,059,016			110.4		253,953			112.4
Contract and other revenue	33,062			9.7		95,749			10.0		25,171			11.1
Provision for uncollectibles	(62,492		)	(18.3	)	(196,027		)	(20.4	)	(53,193		)	(23.5	)
Net revenue for physician services	$	341,244		100.0	%	$	958,738		100.0	%	$	225,931		100.0	%


(1)	On July 16, 2014, we completed the acquisition of Sheridan. As such, historical amounts for periods prior to that date are not included.