REVENUE RECOGNITION AND ACCOUNTS RECEIVABLES

12 Months Ended

Jun. 30, 2014

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, 2014, 2013 and 2012:

	Years Ended June 30,
	2014			2013			2012
Healthcare Facilities Segment:
Medicare	$	33,943		$	34,229		$	31,563
Medicaid		17,380			17,723			19,014
Self-pay		11,208			12,481			10,131
Managed Care & Other Insurance		19,798			21,435			23,635
Other		383			811			413
Revenues before provision for doubtful accounts		82,712			86,679			84,756
Provision for doubtful accounts		(11,065	)		(11,770	)		(10,053	)
Healthcare Facilities Segment Net Revenues		71,647			74,909			74,703
Specialty Pharmacy Segment Net Revenues		33,322			33,314			38,099
Other Revenues		461			85			414
Total Net Revenues	$	105,430		$	108,308		$	113,216

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. During the current year, the Company modified the approach to developing the data used to determine the revenue sources by payor in the Healthcare Facilities Segment. All prior year amounts have been changed to consistently apply the approach used in the current year. There was no impact on total segment revenues.

Summary information for receivables is as follows:

	June 30,
	2014			2013
Patient accounts receivable (net of contractual allowances)	$	16,753		$	20,117
Less allowance for doubtful accounts		(6,903	)		(7,761	)
Patient accounts receivable—net	$	9,850		$	12,356

The following is a summary of the activity in the allowance for doubtful accounts for the Healthcare Facilities Segment and the Specialty Pharmacy Segment and Other for the fiscal years ended June 30, 2014 and 2013:

	Healthcare Facilities			Specialty Pharmacy			Other			Total
Fiscal year ended June 30, 2014
Balance at July 1, 2013	$	7,286		$	475		$	0		$	7,761
Additions recognized as a reduction to revenues		11,065			0			0			11,065
Bad debt expense		0			254			0			254
Accounts written off, net of recoveries		(11,702	)		(475	)		0			(12,177	)
Balance at June 30, 2014	$	6,649		$	254		$	0		$	6,903
	Healthcare Facilities			Specialty Pharmacy			Other			Total
Fiscal year ended June 30, 2013
Balance at July 1, 2012	$	8,714		$	407		$	0		$	9,121
Additions recognized as a reduction to revenues		11,770			0			0			11,770
Bad debt expense		0			514			83			597
Accounts written off, net of recoveries		(13,198	)		(446	)		(83	)		(13,727	)
Balance at June 30, 2013	$	7,286		$	475		$	0		$	7,761

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 $214 and $547 for the years ended June 30, 2014 and 2012, respectively, for the settlements and filings of prior year Medicare and Medicaid cost reports.