Revenue Recognition and Accounts Receivables

12 Months Ended

Jun. 30, 2013

Receivables [Abstract]

Revenue Recognition and Accounts Receivables

4. REVENUE RECOGNITION AND ACCOUNTS RECEIVABLES

SunLink’s subsidiaries have agreements with third-party payors that provide for payments at amounts different from the subsidiaries’ established rates. A summary of the payment arrangements with major third-party payors follows:

Medicare—Inpatient acute care services rendered to Medicare program beneficiaries are paid at prospectively determined rates per Diagnosis Related Group. These rates vary according to a patient classification system that is based on clinical, diagnostic, and other factors. Inpatient nonacute services, certain outpatient services, and defined capital and medical education costs related to Medicare beneficiaries are paid based on a cost reimbursement methodology. Cost reimbursable items are paid at a tentative rate, with final settlement determined after submission of annual cost reports and audits thereof by the Medicare fiscal intermediary.

Medicaid—Inpatient and outpatient services rendered to Medicaid program beneficiaries are reimbursed either under contracted rates or reimbursed for cost reimbursable items at a tentative rate, with final settlement determined after submission of annual cost reports and audits thereof by the Medicaid fiscal intermediary.

Other—SunLink’s subsidiaries have also entered into payment agreements with certain commercial insurance carriers, health maintenance organizations, and preferred provider organizations. The basis for payment under these agreements includes prospectively determined rates per discharge, discounts from established charges, and prospectively determined daily rates.

The Company’s revenues before provision for doubtful accounts by payor were as follows for the years ended June 30, 2013, 2012 and 2011:

	Years Ended June 30,
	2013			2012			2011
Healthcare Facilities Segment:
Medicare	$	35,433		$	34,832		$	39,120
Medicaid		13,334			14,165			14,839
Self-pay		11,916			10,049			11,074
Managed Care & Other Insurance		25,660			25,755			28,095
Other		421			369			149
Revenues before provision for doubtful accounts		86,764			85,170			93,277
Provision for doubtful accounts		(11,853	)		(10,080	)		(12,849	)
Healthcare Facilities Segment Net Revenues		74,911			75,090			80,428
Specialty Pharmacy Segment Net Revenues		33,314			38,099			39,920
Total Net Revenues	$	108,225		$	113,189		$	120,348

The net revenues of the Specialty Pharmacy Segment are presented net of contractual adjustments. The provision for bad debts of the Specialty Pharmacy Segment is presented as a component of operating expenses in the Consolidated Statements of Operations and Comprehensive Earning and Loss.

Summary information for receivables is as follows:

	June 30,
	2013			2012
Patient accounts receivable (net of contractual allowances)	$	20,117		$	22,349
Less allowance for doubtful accounts		(7,761	)		(9,121	)
Patient accounts receivable—net	$	12,356		$	13,228

The following is a summary of the activity in the allowance for doubtful accounts for the Healthcare Facilities Segment and the Specialty Pharmacy Segment for the fiscal years ended June 30, 2013 and 2012:

	Healthcare Facilities			Specialty Pharmacy			Total
Fiscal year ended June 30, 2013
Balance at July 1, 2012	$	8,714		$	407		$	9,121
Additions recognized as a reduction to revenues		11,804			514			12,318
Accounts written off, net of recoveries		(13,232	)		(446	)		(13,678	)
Balance at June 30, 2013	$	7,286		$	475		$	7,761
	Healthcare Facilities			Specialty Pharmacy			Total
Fiscal year ended June 30, 2012
Balance at July 1, 2011	$	11,715		$	602		$	12,317
Additions recognized as a reduction to revenues		10,080			605			10,685
Accounts written off, net of recoveries		(13,081	)		(800	)		(13,881	)
Balance at June 30, 2012	$	8,714		$	407		$	9,121

Net revenues included a decrease of $166 for the year ended June 30, 2013 for the settlement of filings of prior year Medicare and Medicaid cost reports. Net revenues included an increase of $547, and $569 for the years ended June 30, 2012 and 2011, respectively, for the settlements and filings of prior year Medicare and Medicaid cost reports.