Charity care is reported as part of which financial concept?

• A. Net patient revenue
• B. Operating income
• C. Charity care is part of community benefit expense and is reported separately; reduces net patient revenue
• D. Cash equivalents

Answer: (C)

Charity care is treated as a cost of fulfilling the nonprofit mission and is shown as a separate line item within community benefit expense. At the same time, it lowers the amount of revenue the hospital expects to collect from patient services, so it reduces net patient revenue. This dual treatment reflects that charity care is both a cost (reported under community benefit) and a reduction to revenue (net patient revenue) because services were provided without expected payment. It isn’t about cash equivalents, and it isn’t simply a component of operating income by itself without the community benefit disclosure.