AUSTIN, Texas--(BUSINESS WIRE)--Big changes are coming for CFOs at laboratory companies, hospitals, and health systems that report financial performance using GAAP. These organizations will soon be required to comply with the new FASB Rule 606–Revenue Recognition Standard. That means all contracts, including managed care contracts and patient self-pay arrangements, must be reported in a different manner.
This is significant, for two reasons. First, all labs, hospitals, and health systems that report under GAAP must apply Rule 606’s new method to every contract to determine how to report revenue from that source. Experts say this will be a daunting and complex task.
Second, it’s expected that many labs, hospitals, and health systems will end up with different financial results due to change from the existing way they recognize revenue from different contracts. Each type of managed care contract, payer contracts involving patients with high deductibles, and patient self-pay arrangements must be assessed and the revenue reported in compliance with Rule 606. This could result in less revenue and profit in financial reports, compared to existing GAAP methods.
“In both laboratory and hospital sectors of healthcare, this is a significant and under-reported story,” stated Robert L. Michel, Editor-In-Chief of The Dark Report. “Many senior healthcare executives and managers are unaware of FASB’s Rule 606-Revenue Recognition Standard. Yet, it will soon be effective, with public companies required to comply first, followed by private companies and not-for-profit organizations.”
To help CFOs and managers at labs, hospitals, and health systems prepare to implement FASB Rule 606, Dark Daily is offering a timely webinar entitled, “Preparing your Lab Company or Hospital for Big Changes in Revenue Recognition Standards and Audits by Your CPA Firm,” taking place on Tuesday, May 30, at 1 pm EDT.
Presenters are Casey Hayes, Audit Partner, Ernst & Young, San Diego, CA, and Roger Newman, Financial Analyst, XIFIN, San Diego, CA.
During the 90-minute session, webinar participants will learn:
- Why ASC 606-Revenue Recognition Standard makes fundamental changes to the existing requirements for reporting revenue from individual contracts
- A framework to analyze the lab’s unique mix of contracts and payer types to comply with ASC 606
- The specific problems faced when analyzing data from contracts involving high-deductible health plans and the patient-pay component
- Specific ways that ASC 606 can improve the lab’s audited financial performance
- Reasons why implementation of ASC 606 can produce a weaker financial performance compared to a lab’s current accounting practices
- What—consistent with GAAP—a CPA firm will do when auditing records for compliance with ASC 606
- The risks for improper or inappropriate compliance with the new rule, from best to worst case
For more information about “Preparing your Lab Company or Hospital for Big Changes in Revenue Recognition Standards and Audits by Your CPA Firm” and to view webinar details, click here.