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identification of specific medical supplies used while performing
a particular hospital procedure. Costs classified as Payroll,
Fees, and Cost of Sales--Supplies, Repairs, Leases and Rental,
must be recorded in the cost centers responsible for incurring
and controlling such costs. Supplies are charged to operations
during the period in which they are consumed or expended.
Petitioners use a specific identification requisition system to
identify and allocate appropriate supply costs to the consuming
cost center and to identify the period in which the supplies were
consumed. Fixed costs (such as depreciation, interest, rent,
taxes, and insurance), employee benefits, and certain overhead
costs (such as maintenance and repairs) are not departmentalized
under petitioners' accounting system but are recorded in
specified cost centers.
Thus, under petitioners' accounting system, petitioners
track patient revenue, operating expenses, and gross margins for
each hospital. They also track financial operating indicators on
such items as revenue, labor costs, and supply costs, among
others. The hospitals also maintain separate accounts for such
categories as Operating Room, Central Supply, Laboratory,
Pharmacy, Dietary, Plant Operations & Maintenance, Linen, and
Housekeeping.
Petitioners' Chart of Accounts
Petitioners' hospitals record their revenue and expenses
pursuant to a uniform chart of accounts promulgated by HCA's
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