Question

5.       Incentive revenue consists of

a.       bonuses from a DME company to use their supplies

b.       payments from patients to use premium services

c.       payments from insurance companies for meeting certain shared savings targets based on the payer contract

d.       reductions of taxes due for paying withholding taxes early

For questions 6-8, use the below balance sheet

For the question 5 above, use the below income statement

XYZ Hospital Systems Inc
Operating Revenue	20XX
Patient Service Revenue	$    36,000,000.00
Uncompensated Care & Bad Debts	$        (750,000.00)
Incentive Revenue	$       1,500,000.00
Other Revenue	$             25,000.00
Net Revenue	$    36,775,000.00
Expenses
Salaries and Wages	$    18,000,000.00
Supplies	$       3,000,000.00
Insurance	$       2,500,000.00
Rents	$          700,000.00
Depreciation	$          400,000.00
Total Expenses	$    24,600,000.00
Operating Income	$    12,175,000.00
Non-operating income
Investment Income	$          250,000.00
Net Income	$    12,425,000.00

Answer 1

Ans to 5 c. payments from insurance companies for meeting certain shared savings targets based on the payer contract

Because, B. payments from patients to use premium services will be part of revenue from patients, a. bonuses from a DME company to use their supplies will be other income, d. reductions of taxes due for paying withholding taxes early will be non operating income.