Revenue Recognition

Ambulatory Services

Ambulatory services revenues consist of billing for the use of the centers’ facilities directly to the patient or third-party payor and, at certain of the Company’s centers (primarily centers that perform gastrointestinal endoscopy procedures), billing for anesthesia services provided by medical professionals employed or contracted by the Company’s centers. Such revenues are recognized when the related surgical procedures are performed. Revenues exclude any amounts billed for physicians’ surgical services, which are billed separately by the physicians to the patient or third-party payor.

Revenues from ambulatory services are recognized on the date of service, net of estimated contractual adjustments from third-party medical service payors including Medicare and Medicaid. During each of the nine months ended September 30, 2016 and 2015, the Company derived approximately 26% of its ambulatory services net revenues from governmental healthcare programs, primarily Medicare and managed Medicare programs.

Physician Services

Physician services revenues primarily consist of fee for service revenue and contract revenue and are derived principally from the provision of physician services to patients of the healthcare facilities the Company serves. Contract revenue represents income earned from the Company's hospital customers to supplement payments from third-party payors.

The Company records revenue at the time services are provided, net of a contractual allowance and a provision for uncollectibles. Revenue less the contractual allowance represents the net revenue expected to be collected from third-party payors (including managed care, commercial and governmental payors such as Medicare and Medicaid) and patients insured by these payors. The Company also recognizes revenue for services provided during the period that have not been billed. Expected collections are estimated based on fees and negotiated payment rates in the case of third-party payors, the specific benefits provided for under each patient’s healthcare plan, mandated payment rates under the Medicare and Medicaid programs, and historical cash collections.

The Company's provision for uncollectibles includes its estimate of uncollectible balances due from uninsured patients, uncollectible co-pay and deductible balances due from insured patients and special charges, if any, for uncollectible balances due from managed care, commercial and governmental payors. The Company records net revenue from uninsured patients at its estimated realizable value, which includes a provision for uncollectible balances, based on historical cash collections (net of recoveries). Net revenue for the physician services segment consists of the following major payors (dollars in thousands):



	Three Months Ended September 30,										Nine Months Ended September 30,
	2016					2015					2016					2015
Medicare	$	72,425		14	%	$	46,171		14	%	$	192,974		14	%	$	133,467		14	%
Medicaid	35,735			7		20,818			6		97,258			7		58,696			6
Commercial and managed care	403,859			80		256,593			75		1,065,583			78		731,192			76
Self-pay	107,721			21		47,093			14		241,086			18		135,662			14
Net fee for service revenue	619,740			122		370,675			109		1,596,901			117		1,059,017			110
Contract and other revenue	34,473			7		33,061			9		108,549			8		95,748			10
Provision for uncollectibles	(146,606		)	(29	)	(62,492		)	(18	)	(341,547		)	(25	)	(196,027		)	(20	)
Net revenue for physician services	$	507,607		100	%	$	341,244		100	%	$	1,363,903		100	%	$	958,738		100	%

During the three and nine months ended September 30, 2016, the Company's net fee for service revenue associated with self-pay, prior to the provision for uncollectibles, has increased primarily due to the consolidation of a previously unconsolidated affiliate that primarily provides emergency medicine services, which have a higher percentage of self-pay patients than historically experienced by the Company.