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Revenue
 9 Months Ended
Sep. 30, 2020
Revenue From Contract With Customer [Abstract]  
Revenue

4.

Revenue

Revenue is primarily derived from services rendered to patients for inpatient psychiatric and substance abuse care, outpatient psychiatric care and residential treatment. The services provided by the Company have no fixed duration and can be terminated by the patient or the facility at any time, and therefore, each treatment is its own stand-alone contract.

As our performance obligations relate to contracts with a duration of one year or less, the Company elected the optional exemption in Accounting Standards Codification (“ASC”) ASC 606-10-50-14(a). Therefore, the Company is not required to disclose the transaction price for the remaining performance obligations at the end of the reporting period or when the Company expects to recognize the revenue. The Company has minimal unsatisfied performance obligations at the end of the reporting period as our patients typically are under no obligation to remain admitted in our facilities.

The Company disaggregates revenue from contracts with customers by service type and by payor within each of the Company’s segments.

U.S. Facilities

The Company’s facilities in the United States (the “U.S. Facilities”) and services provided by the U.S. Facilities can generally be classified into the following categories: acute inpatient psychiatric facilities; specialty treatment facilities; residential treatment centers; and outpatient community-based facilities.

Acute inpatient psychiatric facilities. Acute inpatient psychiatric facilities provide a high level of care in order to stabilize patients that are either a threat to themselves or to others. The acute setting provides 24-hour observation, daily intervention and monitoring by psychiatrists.

Specialty treatment facilities. Specialty treatment facilities include residential recovery facilities, eating disorder facilities and comprehensive treatment centers. The Company provides a comprehensive continuum of care for adults with addictive disorders and co-occurring mental disorders. Inpatient, including detoxification and rehabilitation, partial hospitalization and outpatient treatment programs give patients access to the least restrictive level of care.

Residential treatment centers. Residential treatment centers treat patients with behavioral disorders in a non-hospital setting, including outdoor programs. The facilities balance therapy activities with social, academic and other activities.

Outpatient community-based facilities. Outpatient community-based programs are designed to provide therapeutic treatment to children and adolescents who have a clinically-defined emotional, psychiatric or chemical dependency disorder while enabling the youth to remain at home and within their community.

The table below presents total U.S. revenue attributed to each category (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Acute inpatient psychiatric facilities

 

$

259,353

 

 

$

233,141

 

 

$

723,611

 

 

$

678,866

 

Specialty treatment facilities

 

 

211,796

 

 

 

201,169

 

 

 

597,886

 

 

 

595,473

 

Residential treatment centers

 

 

71,153

 

 

 

69,681

 

 

 

210,432

 

 

 

216,989

 

Outpatient community-based facilities

 

 

5,659

 

 

 

5,392

 

 

 

16,724

 

 

 

15,828

 

Revenue

 

$

547,961

 

 

$

509,383

 

 

$

1,548,653

 

 

$

1,507,156

 

 

The Company receives payments from the following sources for services rendered in our U.S. Facilities: (i) state governments under their respective Medicaid and other programs; (ii) commercial insurers; (iii) the federal government under the Medicare program administered by CMS; and (iv) individual patients and clients.

The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients and implicit price concessions. Contractual adjustments and discounts are based on contractual agreements, discount policies and historical experience. Implicit price concessions are based on historical collection experience. Most of our U.S. Facilities have contracts containing variable consideration. However, it is unlikely a significant reversal of revenue will occur when the uncertainty is resolved, and therefore, the Company has included the variable consideration in the estimated transaction price. Subsequent changes resulting from a patient’s ability to pay are recorded as bad debt expense, which is included as a component of other operating expenses in the condensed consolidated statements of income. Bad debt expense for the three and nine months ended September 30, 2020 and 2019 was not significant.

The following table presents revenue by payor type and as a percentage of revenue in our U.S. Facilities (in thousands):

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

Commercial

 

$

156,741

 

 

 

28.6

%

 

$

140,315

 

 

 

27.5

%

 

$

439,911

 

 

 

28.4

%

 

$

426,659

 

 

 

28.3

%

Medicare

 

 

96,536

 

 

 

17.6

%

 

 

76,906

 

 

 

15.1

%

 

 

244,721

 

 

 

15.9

%

 

 

223,027

 

 

 

14.8

%

Medicaid

 

 

261,341

 

 

 

47.7

%

 

 

256,370

 

 

 

50.3

%

 

 

767,075

 

 

 

49.4

%

 

 

750,631

 

 

 

49.8

%

Self-Pay

 

 

26,060

 

 

 

4.8

%

 

 

30,626

 

 

 

6.0

%

 

 

75,570

 

 

 

4.9

%

 

 

91,982

 

 

 

6.1

%

Other

 

 

7,283

 

 

 

1.3

%

 

 

5,166

 

 

 

1.1

%

 

 

21,376

 

 

 

1.4

%

 

 

14,857

 

 

 

1.0

%

Revenue

 

$

547,961

 

 

 

100.0

%

 

$

509,383

 

 

 

100.0

%

 

$

1,548,653

 

 

 

100.0

%

 

$

1,507,156

 

 

 

100.0

%

 

Contract liabilities in the U.S. Facilities primarily consisted of unearned revenue from CMS’ Accelerated and Advance Payment Program. In April 2020, the Company received approximately $45 million from CMS’ Accelerated and Advance Payment Program for Medicare providers, which the Company expects to repay over the 12 month period beginning in April 2021. Once repayment begins, the amount will be recouped from the provider’s or supplier’s new Medicare claims. Approximately $24.9 million and $22.5 million of contract liabilities are included in other accrued liabilities and other liabilities, respectively, on the condensed consolidated balance sheets. A summary of the activity in unearned revenue in the U.S. Facilities is as follows (in thousands):

Balance at December 31, 2019

 

$

1,896

 

Payments received

 

 

50,087

 

Revenue recognized

 

 

(4,593

)

Balance at September 30, 2020

 

$

47,390

 

U.K. Facilities

The Company’s facilities located in the United Kingdom (the “U.K. Facilities”) and services provided by the U.K. Facilities can generally be classified into the following categories: healthcare facilities; education and children’s services; and adult care facilities.

Healthcare facilities. Healthcare facilities provide psychiatric treatment and nursing for sufferers of mental disorders, including for patients whose risk of harm to others and risk of escape from hospitals cannot be managed safely within other mental health settings. In order to manage the risks involved with treating patients, the facility is managed through the application of a range of security measures depending on the level of dependency and risk exhibited by the patient.

Education and children’s services. Education and children’s services provide specialist education for children and young people with special educational needs, including autism, Asperger’s Syndrome, social, emotional and mental health, and specific learning difficulties, such as dyslexia. The division also offers standalone children’s homes for children that require 52-week residential care to support complex and challenging behavior and fostering services.

Adult care facilities. Adult care focuses on care of individuals with a variety of learning difficulties, mental health illnesses and adult autism spectrum disorders. It also includes long-term, short-term and respite nursing care to high-dependency elderly individuals who are physically frail or suffering from dementia. Care is provided in a number of settings, including in residential care homes and through supported living.

The table below presents total U.K. revenue attributed to each category (in thousands):

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Healthcare facilities

 

$

157,277

 

 

$

148,138

 

 

$

442,952

 

 

$

455,399

 

Education and Children’s Services

 

 

47,190

 

 

 

43,388

 

 

 

138,486

 

 

 

135,652

 

Adult Care facilities

 

 

80,876

 

 

 

76,342

 

 

 

236,334

 

 

 

229,023

 

Revenue

 

$

285,343

 

 

$

267,868

 

 

$

817,772

 

 

$

820,074

 

 

On an annual basis, the Company receives payments from approximately 500 public funded sources in the U.K. (including the NHS, Clinical Commissioning Groups (“CCGs”) and local authorities in England, Scotland and Wales) and individual patients and clients. The Company determines the transaction price based on established billing rates by payor reduced by implicit price concessions. Implicit price concessions are insignificant in the U.K. Facilities.

The following table presents revenue by payor type and as a percentage of revenue in our U.K. Facilities (in thousands):

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

U.K. public funded sources

 

$

258,508

 

 

 

90.6

%

 

$

242,747

 

 

 

90.6

%

 

$

740,329

 

 

 

90.5

%

 

$

740,492

 

 

 

90.3

%

Self-Pay

 

 

26,147

 

 

 

9.2

%

 

 

24,430

 

 

 

9.1

%

 

 

75,618

 

 

 

9.3

%

 

 

77,895

 

 

 

9.5

%

Other

 

 

688

 

 

 

0.2

%

 

 

691

 

 

 

0.3

%

 

 

1,825

 

 

 

0.2

%

 

 

1,687

 

 

 

0.2

%

Revenue

 

$

285,343

 

 

 

100.0

%

 

$

267,868

 

 

 

100.0

%

 

$

817,772

 

 

 

100.0

%

 

$

820,074

 

 

 

100.0

%

 

Contract liabilities in the U.K. Facilities primarily consist of unearned revenue due to the timing of payments received mainly in our education and children’s services and healthcare facilities. Contract liabilities are included in other accrued liabilities on the condensed consolidated balance sheets. A summary of the activity in unearned revenue in the U.K. Facilities is as follows (in thousands):

 

Balance at December 31, 2019

 

$

36,579

 

Payments received

 

 

124,691

 

Revenue recognized

 

 

(129,790

)

Foreign currency translation loss

 

 

(850

)

Balance at September 30, 2020

 

$

30,630