Finance | Nonoperating Revenue

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This area deals with the planning, development, establishment, analysis, and assessment of financial management processes for an organization's capital, budget, accounting, and related reporting systems.

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Nonoperating Revenue

Posted by: Deborah Martin on September 4, 2008 at 9:14PM EST

What percentage of nonoperating revenue would be considered too much since it isn't derived from patient care? It plays an important role for many organizations in tough economic times.

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(6) Comments

Posted by: Dan Galles on September 5, 2008 11:01AM EST

Maybe you could clarify the question. Nonoperating revenue as a percentage of what? net operating Income? Gross Patient Revenues? Net revenues? If an organization showed a loss from operations the percentage would be multiples more than the loss. If it was a percentage of gross revenues or net revenues it would have to be a significant amount on a regular basis to cause any issues.

Posted by: Robert Ray on September 5, 2008 4:21PM EST

I believe that you would only consider nonoperating revenue to be too much, in context with operating revenue, if this revenue source was the most significant contributing factor to the organization reaching its monthly financial goals.

Posted by: Edmund Lafer on September 5, 2008 5:07PM EST

An organization needs to have a positive operating revenue to maintain its survival. It can perhaps get through some down times in operations if it has non-operating revenues it can use to cover any shortfalls in operations.
I think an organization has to be careful with its non-operating revenue too- too much for a not for profit org might raise flags and put the not for profit status in jeopardy- although a for profit subsidiary might help mitigate this.

Posted by: Deborah Martin on September 6, 2008 11:29AM EST

The comment posted by Edmund on September 5 is exactly where my question is coming from. What is 'too much' for a not for profit company. As noted in our reading, there have been instances where the not for profit status has been challenged due to the amount of revenue derived from non patient care activities.

Posted by: Ihab Sadoon on September 6, 2008 8:38PM EST

Too much is more than 50% percent of total Org. revenues, because in my opinion the main goal of healthcare org. is to offer healthcare services and get revenue from that, so Operating Revnue should be dominant from the total Org. revenues

Posted by: Crystal Stallings on September 22, 2008 5:03PM EST

I attended an Advisory Board education program where they were discussing future of healthcare organizations and stated that much of the bottom line would come down to philantrophy. with the costs of taking care of the uninsured charity and bad debt, I can see why.