What's Your Bad Debt Policy?

Bad debt and charity...seems reasonably easy to differentiate the two. Many hospitals that I come into contact are confused when they are trying to report expenses related to these two categories. The Healthcare Financial Management Association is providing guidance on this issue. Their statement is as follows:

"The Financial Accounting Standards Board (FASB) and Governmental Accounting Standards Board (GASB) have clearly stated that charity care results from an entity's decision to forego revenue. Bad debts, on the other hand, result from the patient's nonpayment for services that have met the criteria for revenue recognition."