Accountants' Handbook Volume Two: Special Industries and Special Topics, Eleventh Edition

Chapter 36. PROVIDERS OF HEALTH CARE SERVICES

Martha Garner, CPA

PricewaterhouseCoopers LLP

THE HEALTH CARE INDUSTRY

(a) OVERVIEW.

Health care in the United States is provided by entities operating in all sectors of the economy. In the private sector, health care entities may be operated by religious organizations, owned by investors seeking a return on their investment, or sponsored by local communities. Public sector health care entities are operated at the federal, state, and local government levels. Consequently, health care providers may be subject to different accounting and reporting standards depending upon their "ownership" and form of organization.

Traditionally, the primary providers of health care services have been physicians, hospitals, and nursing homes. In the 1980s, cost containment pressures in the industry forced the development of less costly means of delivering certain services. Health maintenance organizations (HMOs) and other prepaid health care plans, home health agencies, ambulatory surgery centers, and specialty hospitals are among the alternative delivery systems and diversifications that have flourished in this climate. The rapidly growing elderly population has also focused attention on senior living communities, particularly those that offer residents health care services ranging from emergency nursing services to long-term inpatient-type care. In short, today's health care providers cover a broad spectrum of activities.

(b) NOT-FOR-PROFIT PROVIDERS.

This ...