Accounts Receivable, Net

9 Months Ended

Sep. 30, 2020

Accounts Receivable, Net

Accounts Receivable, Net

Note D — Accounts Receivable, Net

Accounts receivable, net represents outstanding amounts we expect to collect from the transfer of our products and services.  Principally, these amounts are comprised of receivables from Medicare, Medicaid, and commercial insurance plans.  Our accounts receivable represents amounts outstanding from our gross charges, net of contractual discounts, sales returns, and other implicit price concessions including estimates for payor disallowances and patient non-payments.

We are exposed to credit losses primarily through our accounts receivable. These receivables are short in nature because their due date varies between due upon receipt of invoice and 90 days. We assess our receivables, divide them into similar risk pools, and monitor our ongoing credit exposure through active review of our aging buckets. Our activities include timely account reconciliations, dispute resolution, and payment confirmations.  We also employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

As part of the new accounting standard discussed in Note A - “Organization and Summary of Significant Accounting Policies,” our expected loss methodology is developed using historical liquidation rates, current and future economic and market conditions, and a review of the current status of our patients and customers' trade accounts receivable balances. We also grouped our receivables into similar risk pools to better measure the risks for each pool. After evaluating the risk for each pool, we determined that additional credit loss risk was immaterial for the Patient Care segment.  For the Products & Services segment, an allowance for doubtful accounts is recorded, which is deducted from gross accounts receivable to arrive at “Accounts receivable, net.”  As of September 30, 2020, we have considered the current and future economic and market conditions resulting in an increase to the allowance for doubtful accounts by approximately $0.7 million since December 31, 2019.

Accounts receivable, net as of September 30, 2020 and December 31, 2019 is comprised of the following:

	As of September 30, 2020						As of December 31, 2019
			Products &						Products &
(in thousands)	Patient Care		Services		Consolidated		Patient Care		Services		Consolidated
Gross charges before estimates for implicit price concessions	$	157,191	$	21,765	$	178,956	$	202,132	$	27,551	$	229,683
Less estimates for implicit price concessions:
Payor disallowances		(47,314)		—		(47,314)		(58,094)		—		(58,094)
Patient non-payments		(6,916)		—		(6,916)		(9,589)		—		(9,589)
Accounts receivable, gross		102,961		21,765		124,726		134,449		27,551		162,000
Allowance for doubtful accounts		—		(3,317)		(3,317)		—		(2,641)		(2,641)
Accounts receivable, net	$	102,961	$	18,448	$	121,409	$	134,449	$	24,910	$	159,359