Business of Radiology 101
Income Statement: Revenues
Net Revenue = Gross Revenue - Discounts - Returns Revenue is defined as monies earned from the sale of goods and services. In radiology, Gross Revenue (also sometimes called Gross Charges) refers to the total claims value before discounts, returns, or adjustments (such as the insurance claims process) have been made. Net Revenue or Total Income describes the gross revenue after these adjustments and deductions have been made. In radiology, an income statement often begins with the Net Revenue of the business as it is more representative of actual monies coming into the business. In medicine, the majority of the difference between Net Revenue and Gross Revenue is usually determined by the contract the institution has with an insurance provider, and the percentage the insurance provider has agreed to pay for a procedure or service. In other businesses, the amount billed and that collected are usually very similar and Gross Revenue can be used. Also, most imaging services are performed with the promise of future payment by insurance companies meaning that the time the charge is billed and the time money is received are often not within the same financial period. These amounts are recorded as ‘Accounts Receivable’ on the balance sheet until the payment is received, illustrating one example of how the financial statements of a business interact and are in harmony with each other.