Health Financing: Accounting, Financial Statements, and Cost: Who Makes This Stuff Up?

Health Financing: Accounting, Financial Statements, and Cost: Who Makes This Stuff Up?
Charity care and bad debts

Charity care is providing free healthcare to individuals who are unable to pay for their healthcare services. Bad debts, on the other hand, occur when the patients are unable to pay for the healthcare services hence causing a breakdown in the financing of the hospital organization (Williams, & Dobelman., 2017). Unmanaged charity care can lead to bad debts; therefore, the hospital needs to allocate only the extra money for it. Most people do not budget for health; hence, they are easily caught up in the trap of difficulty of paying for health services. Apart from the use of extra funds for the allocation of charity care, medical insurance can be significant in protecting the hospital from falling into debts and at the same time save people from overspending and also assist those unable to pay for health services.

Information in financial statements

The notes to the financial statement are important, especially in managing the external financial statements. The notes in the financial statements include the following; advice on the significant accounting policies, representation of depreciating assets, valuing inventory, employee’s benefits, explanation of the intangibles, reveled contingencies, consolidated financial statements and reporting debts (Cleverley, & Cleverley., 2017).

Impact of patients on the cost of healthcare services

Healthcare costs keep rising every day, and sometimes, they are overrated because of the profit-making organizations in healthcare. Everyone has a role in playing a part in lower healthcare costs, including the patients. However, they lack enough information to support their arguments. They may not understand why certain cost is placed on certain procedures and treatment. Additionally, they are not positioned to make major decisions concerning health cost because of the absence of cost transparency and organizational policies which restricts them to participate in the negotiations (Zordich, & Menichetti., 2017).


Cleverley, W. O., & Cleverley, J. O. (2017). Essentials of health care finance. Jones & Bartlett Learning.

Williams, E. E., & Dobelman, J. A. (2017). Financial statement analysis. World Scientific Book Chapters, 109-169.

Zordich, T., & Menichetti, J. (2017). Engaging Patients and Lowering Costs: Technology to the Rescue. In Transformative Healthcare Practice through Patient Engagement (pp. 115-138). IGI Global.