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               and all routine collection efforts by the Hospital have
               been exhausted.

          b.   Will not be considered cancelled, but will be entered
               into a separate file to be held for possible collection.


    4.   That the recoveries of Bad Debt accounts be credited to a
          miscellaneous income account entitled 'Recoveries of Bad
          Debts, Fiscal Year 19xx".


    5.   That a quarterly report be made to the Board of Trustees.
          This report is to include:

          a.   Amounts written off as Bad Debts.

          b.   Amounts turned over to a collection agency.

          c.   Collection agency productivity.

          d.   Amounts of Recoveries of Bad Debts.


Background: Adequate financial reporting entails a recognition of un-
collectibility for certain accounts where all reasonable efforts have been
made at collection, but collection has not been effected. The Hospital has
several unpaid accounts which are for all practical purposes, uncollectible;
nevertheless, under current practices, these accounts are shown in the
financial reports as active accounts receivable. This situation results in
an overstatement of the amount of accounts receivable of the Hospital.
This recommendation permits uncollectible accounts to be written off as
a Bad Debt after a reasonable effort at collection has been made. Accounts
removed from the accounts receivable category in this manner would still
constitute a debt to the Hospital and could still be collected if an opportunity
arose. However, the financial reports could be adjusted to reflect the true
position of the Hospital's accounts receivable. Since the present procedure
became effective in October, 1968, there has been $3, 933, 645. 62 turned
over to agencies with $311, 044.68 collected, or a collection percentage of
7. 9%o. In order to collect $311, 044. 68, we paid to the agencies $124, 264. 09.
Last fiscal year, there were $2, 709, 951. 42 in uncollectible accounts in the
hands of the collection agencies. The total collection effort was 3. 54%.