HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY FINANCIAL REPORT JUNE 30,2009

Transcription

1 /5^^ HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY FINANCIAL REPORT JUNE 30,2009 Under provisions of state law, this report is a public document. A copy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court. Release Date ( / / W

2 Hospital Service District No.2 of St. Landry Parish, Louisiana And Opelonsas General Hospital Authority (d/b/a Opelousas General Health System) Years ended June and 2008 with Report of Independent Auditors MANAGEMENT'S DISCUSSION AND ANALYSIS AND BASIC FINANCIAL STATEMENTS TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS ixi INDEPENDENT AUDITORS' REPORT 1 and 3 BASIC FINANCL\L STATEMENTS Balance sheets 4 and 5 Statements of revenues, expenses and changes in net assets 7 Statenjents of cash flows 8 and 9 Notes to financial statements 1027 SUPPLEMENTARY INFORMATION Schedules of gross patient service revenues 30 and 31 Schedules of departmental direct operating revenues and expenses 3234 Schedules of net patient service revenues 35 Schedules of other operating revenues 37 Schedules of departmental operating expenses 3841 Departmental statistics 42 and 43 Schedules of per diem paid to board members 44 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 45 and 46 Schedule of findings and questioned costs 47 Schedule of prior year findings 48

3 HOSPITAL SERVICE DISTRICT #2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY (D/B/A OPELOUSAS GENERAL HEALTH SYSTEM) MANAGEMENT'S DISCUSSION AND ANALYSIS AND BASIC FINANCIAL STATEMENTS MANAGEMENT'S DISCUSSION AND ANALYSIS This section of the Hospital's annual financial report presents background information and management's analysis of the Hospital'sfinancialperformance durmg the fiscal year that ended June 30,2009. Please read it in conjunction with the financial statements in this report. Financial Highlights Opelousas General Health System showed an increase in earnings in excess of expenses of approximately 933 or a 37.1% increase over the prior year. The increase was due to the following: During the year, Opelousas General Health System's total operating revenues increased by 12,714 or 14.0% in 2009 and 6,360 or 7.5% in Expenses increased by approximately 11,911 or 13.49% in 2009 and 3,906 or 4.6% in The Hospital experienced income from operations of 3,174 in 2009 and income from operations of approximately 2,371 in During thefiscalyear, OGHS made capital investments for a total of approximately 5,091 in 2009 and 2,719 in The following is a list of significant items for 2009 followed by a list of significant items for 2008: PACS Upgrade Washer/Extractor Cardiography System Elite Digital Mobile CAim Fetal Monitors & Carts Epsilon Xray Generator Visum LED Dual Light Arthroscopy Endoscopy Towers Sonosite Ultrasound Probes Booster Pun^3 Elevator #5 Remodel Elevator #6 Remodel Office Renovations Informations Systems Renovations McKesson Project Architectural and Design Costs North Complex 5th Floor Offices CT Room Renovations Fetal Monitor Software License The source of the funding for these projects was derived from operations , ,454

4 HOSPFTAL SERVICE DISTRICT #2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY (D/B/A OPELOUSAS GENERAL HEALTH SYSTEM) MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) List of significant capital investments for 2008 are as follows: Laminar Flow Glovebox Isolator Instrument Detection System Leica MS3U Refurbished Surgical Microscope Bone Density Upgrade Preventative Maintenance Software Sterrad NX & Cart Sterilizer Coulter LH500 & LH750 Hematology System Dry Rom Renovations Laryngeal Videostoboscope Omni cell Cabinets (2) Konica Passthru CR Package CP Renovations Hyperbaric Renovations Boiler and Boiler Controls Renovations to Elevators 3 & 4 Security Cameron System in OB Digital Diagnostic Dual Detector Cooling Tower Network Upgrade Diagnostic Room Renovafions The source of the funding for these projects was derived from operations ,276 Required Financial Statements The basicfinancialstatements of the Hospital report information about the Hospital using Governmental Accountmg Standards Board (GASB) accounting principles. These statements offer shortterm and longtermfinancialinformation about its activities. The balance sheets mclude all of the Hospital's assets and liabilities and provide information about the nature and amounts of investments in resources (assets) and the obligations to Hospital creditors (liabilities). It also provides the basis for computing rate of return, evaluating the capital structure of the Hospital, and assessing the liquidity andfinancialflexibilityof the Hospital. All of the current year's revenues and expenses are accounted for in the statements of revenue, expenses, and changes in net assets. This statement measures improvements in the Hospital's operations over the past years and can be used to determine whether the Hospital has been able to recover all of its costs through its patient service revenue and other revenue sources. Thefinalrequired financial statement is the statement of cash flows. The primary purpose of this statement is to provide information about the Hospital's cash from operations, investing, andfinancingactivities, and to provide answers to such questions as where did cash come from, what was cash used for, and what was the change in cash balance during the reporting period. Financial Analysis of the Hospital The balance sheets and the statements of revenue, expenses, and changes in net assets report information about the Hospital's activities. These two statements report the net assets of the Hospital and changes in them. Increases or decreases in the Hospital's net assets are one indicator of whether itsfinancialhealth is iibpro ving or deteriorating. However, other nonfinancial factors such as changes in the health care industry, changes in Medicare and Medicaid regulations, and changes in managed care contracting should also be considered.

5 HOSPITAL SERVICE DISTRICT #2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY (D/B/A OPELOUSAS GENERAL HEALTH SYSTEM) MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Net Assets A summary of Opelousas General Health System's balance sheets are presented in Table 1 below. TABLE 1 Condensed Balance Sheets ASSETS Total Currents Assets Property, Plant & Equipment (less accumulated depreciation) Other Assets including board designated funds Total Assets to to 2008 Dollar Dollar 2007 Change Change ,304 28^85 3,553 2,719 76,136 23, ,435 63,434 26, ,062 66,073 18, ,408 12,702 (2,882) 13,373 L (2.639) 7,574 7,654 LIABILITIES Current Liabilities Longterm debt outstanding ,279 12,216 28,131 11,280 23,927 3,778 6, ,204 Total Liabilities , _ 5,140 NET ASSETS Invested in capital assets, net of related debt Restricted Assets Unrestricted Assets Total Net Assets Total Liabilities & Net assets 43,688 38,774 3,768 3,825 36,706 38,116 84,162 80, , ,062 40,273 4,914 (1,499) 3,911 (57) (86) 34,017 (1,410) ,201 3,447 2, ,408 13,373 7,654 As shown in Table 1, total assets increased by 13,373 to 134,435 in fiscal year 2009, up from 121,062 in fiscal year in

6 HOSPITAL SERVICE DISTRICT #2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY (D/B/A OPELOUSAS GENERAL HEALTH SYSTEM) MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Sununary of Revenue, Expenses, and Changes in Net Assets A summary of Opelousas General Health System's historical revenues and expenses for the fiscal years ended June 30, 2009, 2008 and 2007 is presented in Table 2 below: TABLE2 Condensed Statements of Revenue, Expenses, and Changes in Net Assets Revenue: Net Patient Service Revenue Other Operating Revenue ,572 2, ,282 2, ,033 2,273 From 2008 to 2009 From 2007 to 2008 Dollar Percent Dollar Percent Change Change Change Change 12, % 17.8% 6, % 4.9% Total Operating Revenue 103,380 90,666 84,306 12, % _ 6, % Expenses: Routine Services Ancillary Services General Services Fiscal & Administrative Services Depreciation 17,187 54,002 8,766 13,855 6,396 15,256 45,974 7,880 12,473 6,712 14,772 43,467 7,704 11,404 7, , ,382 (316) 12.7% 17.5% 11.2% 11.1% 4.7% 484 2, ,069 (330) 3.3% 5.8% 2.3% 9.4% 4.7% Total Operating Expenses 100,206 88,295 84,389 11, % I. 3, % Operating Income (loss) 3,174 2,371 (83) % 2, % Nonoperating Income (Loss): % 5_ (249) 63.5% Increase (decrease) in Net Assets 3,447 2, % 2, % Net Assets, Beginning of Year 80, ,892 2, % % Net Assets, End of Year 84,162 80,715 78,201 3, % s_ 2, %

7 HOSPFTAL SERVICE DISTRICT #2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY (D/B/A OPELOUSAS GENERAL HEALTH SYSTEM) MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) SOURCES OF REVENUE Operating Revenue The Hospital derived the majority of its revenuesfromin and out patient services, which translated to approximately 97% of total revenues in 2009,2008 and Patient service revenues include moniesfromthe Medicare, Medicaid and Champus programs and/or revenues from commercial thirdparty payors. Reimbursement for Medicare and Medicaid programs and conunercial thirdparty payors is based upon established contracts. The difference between the covered charges or gross revenue and reimbursement or net revenue is referred to as contracmal allowance. Other revenue includes cafeteria sales, gifr shop sales, rental income and other miscellaneous services. Table 3 presents the relative percentages of gross charges billed for patient services by payor for thefiscalyears ended June 30, 2009, 2008 and TABLE3 Payor Mix by Percentage Year Ended June Medicare Medicaid Medicare HMO Commercial/PPO Workers Comp Self Pay Other 44.55% 18.82% 3.38% 26.61% 1.67% 3.68% 1.29% 44.56% 18.89% 2.93% 26.75% 1J9% 3.35% 1.93% 48.88% 18.83% 1.31% 24.69% 1.32% 3.01% 1.96% % % %

8 HOSPITAL SERVICE DISTRICT #2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY (D/B/A OPELOUSAS GENERAL HEALTH SYSTEM) MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Other Revenue Other revenue includes cafeteria sales, rental income, and other miscellaneous services. TABLE 4 Other Revenue Year Ended June Other Revenue: Cafeteria Gift Shop Rental Income Nutritional Counselmg Outside Housekeeping & Laundry Services Miscellaneous , ,808 2,384 2,273 Investment Revenue Opelousas General Health System holds designated and restricted funds in its balance sheets that are invested primarily in money market funds and securities issued by the U.S. Treasury and other federal agencies. These investments earned 1,009 in 2009, 1,414 in 2008 and 1,251 in Operating and Financial Performance The following summarizes Opelousas General Health System's statements of revenue, expenses. Overall activity at the Hospital, as measured by patient discharges, increased to 8,872from7,939 in The 2008 discharges of 7,939 decreased from 2007 discharges of 8,255 by 316 (a decrease of 4.0%). The total patient days in 2009, were 38,497 as compared to 34,789 in 2008, for a difference of 3,708 (an increase of 10.67%). In 2008, total patient days decreased 1.6% from 34,789 in 2008 to 35,364 in Theaverage length of stay for acute care patients (excluding newborns and rehabilitation) was 4.1,4.1 and 4.0 for fiscal years 2009, 2008, and 2007 respectively. OGHS is maintaining its pafient days and discharges while maintaining ALOS, which is a tribute to case management and discharge planning. Note: Discharges and Patients days include Acute and Rehabilitation days

9 HOSPITAL SERVICE DISTRICT #2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY (D/B/A OPELOUSAS GENERAL HEALTH SYSTEM) MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) TABLES Patient and Hospital Statistical Data 2009 Year Ended June Discharges: Acute Care Rehabilitation Newborn Patient Days: Acute Care Rehabilitation Newborn Operating Room I/P Visits Outpatient Surgeries Emergency Room Visits Ou^)atient Registrations (Including ER) Deliveries Procedures: Lab Radiology CTScan Nuclear Medicine MRI Radiation Therapy Heart Cath Unit Cases Hyperbaric Oxygen Physical Therapy Average Daily Census: Acute Care Rehabilitation Newborn Average Length of Stay (excluding newborns): Acute Care Rehabilitation 8, ,316 36,045 2,452 2,547 3,648 5,471 29,889 96, ,947 57,991 13,691 1,476 2,952 3, , ,050 2,739 1,891 3,034 4,525 27,597 88, ,049 54,833 12, ,295 4,903 1,195 3,754 56, , ,048 32,212 3,152 2,077 3,215 4,615 27,408 87,276 1, ,520 53,179 12,584 1,641 3,113 3,842 1,373 2,646 52, VII

10 HOSPITAL SERVICE DISTRICT #2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY (D/B/A OPELOUSAS GENERAL HEALTH SYSTEM) MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Total net patient service revenue increased 12,290 or 13.9% from 2008 to 2009 as compared to an increase of 6,249 or 7.6% from 2007 to Both net and gross patient revenues show increases over the prior year. These increases are primarily due on one hand to higher reimbursement and on the other hand due to higher volumes (Table 5 patient aiwl hospital statistical data). Gross patient revenue increased by 43,601 or 16.0% as compared to In 2008, gross patient revenue increased from 2007 by 31,659 or 13.1 %. Allowances increased over prior year as described in Table 6 below: TABLE 6 Allowance Summary 2009 Year Ended June Allowances: Adminisdrative allowances Blue Cross discounts Charity allowances Contracmal Adjustments Medicare and Medicaid Managed care allowances Provision for uncollectible accounts 5 24, ,319 35,137 14, , ,709 31,417 13, , ,977 21,696 13,126 Total contractual allowances, discounts, and uncollectible accounts 215, ,403 The business office continues to streamline collection efforts and collected approximately 12,017 in cash over prior year, which translated in keeping days in accounts receivable consistent with prior year. Salary expenses increased by 7,838 or 22.5% from 2008 to 2009 and 1,029 or 3.0% from 2007 to Total salaries were 42,679 in 2009, 34,839 in 2008 and 33,810 in As a percentage of net patient service revenue, salary expense was approximately 42.4% in 2009, 39.5% in 2008 and 41.2% in Vlll

11 HOSPITAL SERVICE DISTRICT #2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY (D/B/A OPELOUSAS GENERAL HEALTH SYSTEM) MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Employee benefit expense increased in 2009 by 962 or 12.8% from 2008 and increased 832 or 12.4% from 2007 to Employee benefit expense represented 19.9% of salary expense in 2009, and 21.6% of salary expenses in 2008 and 19.8% in This increase is primarily due to continued increase in workman compensation claims, pension plan and health & dental claims. Provision for bad debts increased in 2009 by 998 or 7.2% from 2008 and increased 713 or 5.43% from 2007 to This increase is due to increased volumes and to a continued increase in uninsured patients. Depreciation expense decreased by 323 or 4.81% from 2008 to 2009 and decreased 330 or 4.7% from 2007 to The decrease is primarily due to disposition of equipment during the year. Interest expense increased by 30 or 2.02% from 2008 to 2009 and 70 or 5.0% from 2007 to Also, OGHS has incurred additional interest expense as a result of the IT Expansion Project. Total operating expenses increased by 11,911 or 13.5% from 2008 to 2009 and 3,906 or 4.6% from 2007 to 2008, for the reasons discussed above. Investment income consists of interest earnings onftjndsdesignated by the board of conunissioners and funds held by trustee under bond resolution. Investment income decreasedfromthe prior year given the fact that there were lower investment yields in the current year than in the previous year.

12 HOSPITAL SERVICE DISTRICT #2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL AUTHORITY (D/B/A OPELOUSAS GENERAL HEALTH SYSTEM) MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Capital Assets During fiscal year 2009, OGHS invested 5,091 in a broad range of capital assets as compared to 2,719 in This information is included in Table 7 below. TABLE? Capital Assets Nondepreciable capital assets Land Construction in Progress ,971 3,771 3,816 4,826 2, to to 2008 Dollar Dollar 2007 Change Change 2,200 (45) 2, Total nondepreciable capital assets 10,797 5,793 4,055 L= 5,004 _ 1,738 Depreciable assets Land improvements Automobiles Buildings Equipment 1, ,921 64,683 1, ,484 57,169 1, ,511 55, ,437 7,514 (30) 4 (27) 1,724 Total depreciable capital assets Less accumulated depreciation Total depreciable capital assets 150, , ,576 13, (84,880) (78,606) (72,558) (6,274) (6,048) 65,339 57,641 62, (4,377) Net property, plant, and equipment increased over the prior year, which is primarily due to die enhancement of existing facilities and equipment. OGHS added new facilities and renovated and improved existing services to accommodate continued growth in inpatient and outpatient services. X

13 HOSPITAL SERVICE DISTRICT #2 OF ST. LAJNDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPTTAL AUTHORITY (D/B/A OPELOUSAS GENERAL HEALTH SYSTEM) MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) LongTerm Debt At yearend for OGHS had 30,468 in shortterm and longterm debt outstanding in revenue bonds as compared to 22,710 in 2008 and 23,897 in 2(X)7. The debt amount is shown net, in the balance sheet, of the unamortized bond discount of 207 in 2009, 225 in 2008 and 243 in Capital leases at the end of 2009 touled 6,662, 8,367 in 2008 and 1,906 in 2007 which were included in current and longterm liabilities. More detailed information about the Hospital's longterm liabilities is presented in the notes to basic financial statements. Total debt outstanding, excluding other longterm liabilities, represented approxunately 27.6% in 2009, 25.7% in 2008 and 22.8% in 2007, of OGHS' total assets. Acquisition of Hospital Facility In April the Hospital completed Oie purchase of a 171 bed acute care facility located in Opelousas, Louisiana (Doctor's Hospital) for 5,000 in cash plus a note payable to the seller of 9,000 for a total purchase price of 14,000. In addition, the Hospital incurred direct costs associated with the acquisition of 1,090. Consequently, total acquisition costs amounted to 15,090. As a result of the acquisition, the Hospital is expected, to increase the quality of healthcare provided in St. Landry parish as well as surrounding parishes. The Hospital accounted for the acquisition using the purchase method of accounting. Contacting the Hospital's Financial Manager This financial report is designed to provide our citizens, customers, and creditors with a general overview of the Hospital's finances and to demonstrate the Hospital's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Hospital Administration. XI

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15 BRQUSSARD, PQCHE, LEWIS & BREAUX, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS 994 E. Pnidhommc Street Opdoiuas, Louisiana phone: 037) /kx: (J37) INDEPENDENT AUDITORS' REPORT Other Offices: Crowicy, LA (337) Lafayette, LA. (337) 98M930 New Iberia, LA (337) Church Point, LA (337) Frank A. Stagno, CPA* Scott J. Broussard, CPA* L. Charks Abshirc, CPA* P. John Blanchct, UL CPA* Martha B. Wyatt, CPA* Maiy A. Castine, CPA* Joey L. BreaiK, CPA* Craig J. Viator, CPA* Stacey E. Sin^^leton, CPA* John L.lBtre, CPA* Trida D. Lyons, CPA* Mary T. Miller, CPA* Elizabeth J. Moreau, CPA* Frank D. Bergeron, CPA* LonnieJ. Hebert, CPA* Retired: Sidney L. Broussard, CPA 1925^2005 Leon K. Pochi, CPA 1984 JmncB H. Breaux, CPA 1987 Efiua R. Walton, CPA 1988 George A. Lewii, CPA 1992 Geraldine J. Wimberky, CPA 1995 LiiwTcnce A. Cramer, CPA 1999 lutph Friend, CPA 2002 Donald W. Kelley, CPA 2005 George J. Trappey, HI, CPA 2007 Tern! P. Dressel, CPA 2007 Herbert Lemome 11, CPA 2008 To the Board of Commissioners Hospital Service District No. 2 and Board of Trustees Opelousas General Hospital Authority St. Landry Parish, Louisiana We have audited the accompanying basicfinancialstatements of Hospital Service District No. 2 of St. Landry Parish, Louisiana (the "District"), a component unit of the St Landry Parish Government and Opelousas (jeneral Hospital Authority (the "Hospital"), a public instrumentality of the State of Louisiana and a component unit of Hospital Service District No. 2 of St. Landry Parish, Louisiana, as of and for the years ended June 30,2009 and 2008, as listed in the table of contents. Tliese basic financial statements are the responsibility of the District's and Hospital's management Our responsibility is to express an opinion on these basicfinancialstatements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United Slates of America and the standards applicable tofinancialaudits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Hospital Service District No. 2 of St Landry Parish, Louisiana and Opelousas General Hospital Authority at June 30, 2009 and 2008, and the results of its operations and cashflowsfor the years then ended in conformity with accounting principles generally accqjted in the United States of America, Ccrn&cf FoMu Avcj.iitiD'tir: SoufC}' of Ltnitsianu (^rtig< d f'liiijjc Accniu\{3nti A Piofctnoiul Accounting CorporMion 1

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17 To the Board of Commissioners Hospital Service District No. 2 and Board of Trustees Opelousas General Hospital Authority St. Landry Parish, Louisiana The Management's Discussion and Analysis on pages i through xi are not a required part of the basicfinancialstatements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purposes of forming opinions on the basic financial statements taken as a whole. The supplementary information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basicfinancialstatements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basicfinancialstatements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated October 14,2009, on our consideration of the District's and Hospital's internal control overfinancialreporting on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control overfinancialreporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. opelousas, Louisiana October

18 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA BALANCE SHEETS June 30, 2009 and ASSETS CURRENT ASSETS Cash and cash equivalents Shortterm investments Patient accounts receivable, net of estimated uncollectible accounts of 25,990 (2009) and 21,554 (2008) Inventories Prepaid expenses Estimated third party payor settlements Other receivables ,097 16,195 3,111 1,245 4,U1 7,265 3,263 13,952 1,995 1, ,204 Total current assets 34,857 30,804 OTHER ASSETS Held by trustee for debt service; Cash and cash equivalents Investments Accrued interest receivable Held by trustee for equipment purchase under lease: Cash and cash equivalents Accrued interest receivable Internally designated for capital acquisition; Cash and cash equivalents Investments Accrued interest receivable Other longterm investments Deposits Unamortized expense Joint venture investments 3, ,681 1 _ 12, , , , , , Total other assets 23,442 26,824 CAPITAL ASSETS Nondepreciable capital assets Depreciable capital assets, net of accumulated depreciation 10,797 65,339 5,793 57,641 Total capital assets, net of accumulated depreciation 76,136 63,434 Total assets 134, ,062 See Notes to Financial Statements. 4

19 LL\BILrnES AND NET ASSETS CURRENT LIABIUTIES Accounts Payable Current maturities of longterm debt Current maturities of capital leases Employee compensation payable Other accrued expenses Estimated third party payor settlements ,317 1,534 1,071 6, , , ,031 Total current liabilities 15,994 12,216 LONGTERM LIABIUTIES Longterm debt, net of current maturities Longterm capital lease, net of current maturities Total longterm liabilities Total liabilities 29,151 21,468 5,128 6,663 34,279 28,131 50,273 40,347 NET ASSETS Invested in capital assets, net of related debt Restricted: For debt service Unrestricted 43,688 38,774 3,768 36,706 3,825 38,116 Total net assets 84,162 80,715 Total liabilities and net assets 134, ,062

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21 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS Years ended June 30, 2009 and Operating revenues: Net patient service revenues (net of provision for bad debts of 14,837 in 2009 and 13,839 for 2008) Other operating revenues Total operating revenues 100,572 2, ,282 2,384 90,666 Operating expenses: Routine services Ancillary services General services Fiscal and administrative services Depreciation and amortization 17, ,002 45, ,855 12,473 6,396 6,712 Total operating expenses 100,206 88,295 Operating income (loss) 3,174 2,371 Nonoperating revenues (expenses): Gain (loss) on disposal of capital assets Unrealized and realized gain (loss) on investments Noncapital grants and donations Investment income Interest expense Other Net incomefi"omjoint ventures (2) (142) 1,009 (1413) 921 (42) ,414 (1.483) (2) 231 Total nonoperating revenue Increase in net assets 3, Net assets beginning 80,715 78,201 Net assets ending 84, See Notes to Financial Statements. 7

22 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA STATEMENTS OF CASH FLOWS Years Ended June 30,2009 and CASH FLOWS FROM OPERATING ACTIVITIES Receipts from and on behalf of patients Payments to suppliers and contractors Payments to employees 101,624 (50,134) (42,399) 89,246 (38,024) (42,867) Net cash provided by operating activities 9,091 8,355 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Noncapital donations Other 1 (2) Net cash used by noncapital financing activities CD CASH FLOWS FROM CAPITAL AND RELATED FINANCING AcrrvrriEs Payments for the piirchase of capital assets Acquisition of business Principal payments on longterm debt Interest paid on longterm debt Proceeds from capital lease obligations Principal payments on capital leases (5,091) (6,090) (1,260) (1,482) (1.705) (4,312) 257 (1,205) (1.433) 7,627 (L166) Net cash used by capital and related financing activities (15,628) (232) CASH FLOWS FROM INVESTING ACnVITIES Investment income Net investment in joint ventures Purchase of investments Maturities of investments 1, (17,591) 16, (13,989) 16,293 Net cash provided by investing activities 831 4,395 Net (decrease) increase in cash and cash equivalents (5.706) 12,517 Cash and cash equivalents at beginning of year 17,631 5,114 Cash and cash equivalents at end of year 11,925 17,631 Reconciliation of cash and cash equivalents to the balance sheet: Cash and cash equivalents in current assets Restricted cash and cash equivalents Held by trustee for debt service Held by trustee for equipment purchase under lease: Internally designated for capital acquisition Total cash and cash equivalents 4,098 3,146 4,681 11,925 7,265 3,184 6, ,631 8

23 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA AND OPELOUSAS GENERAL HOSPITAL TRUST AUTHORITY STATEMENTS OF CASH FLOWS (CONTINUED) Years Ended June 30, 2009 and 2008 RECONCILIATION OF INCOME FROM OPERATIONS TO NET CASH PROVIDED BY OPERATING AdTVITIES Operating income Adjustments to reconcile operating income to net cash flows provided by operating activities Depreciation and amortization Loss on sale of capital assets Provision for bad debts (Increase) decrease in assets: Patient accounts receivable Inventories Prepaid expenses Other receivable Increase (decrease) in liabilities: Accounts payable Accrued expenses Estimated thirdparty settlements Other liabilities related to operating activities Net cash provided by operating activities ,174 2,371 6,396 (2) 14,837 (17,080) (1,116) (166) (883) 856 2, ,839 (14.945) (226) (760) _ 9,091 8,355 See Notes to Financial Statements. 9

24 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA Note 1. Organization and Significant Accounting Policies Reporting Entity: NOTES TO FINANCIAL STATEMENTS Hospital Service District No. 2 of St. Landry Parish (the 'T>istrict) is a political subdivision of the St Landry Parish Government, created by an ordinance adopted in 1953 by virtue of the authority of Louisiana Revised Statutes (R.S.) 46:1051 et seq. The purpose of the Hospital Service District is to provide health services to St. Landry Parish. The Board of Conrniissioners are appointed by the St. Landry Parish Government. As the governing authority of the Parish, for reporting purposes, the St. Landry Parish Government is the financial reporting entity for the District. Accordingly, the District was determined to be a component unit of the St Landry Parish Government based on GASB Statement No, 14. The accompanying financial statements present only the Hospital Service District No. 2 and its component units. The components units discussed below are included in the District's reporting entity because of the significance of their operational or financial relationships with the District. Blended Component Unit: The Opelousas General Hospital Authority (the "Hospital") was created under the laws of the State of Louisiana pursuant to a Trust Indenture executed on April 6, 1971 for the benefit of the District and is a public instrumentality of the State of Louisiana. The stated purpose of the Hospital is to acquire hospital facilities by lease, purchase, and gift or otherwise and to plan, establish, develop, construct and administer hospital properties for the use and benefit of the residents of the District. The District's Board of Commissioners also serve on the Board of Trustees of the Hospital. In addition, the Hospital owns 100% of OGH Medical Services, Inc. and OGH Medical Offices, Inc. These two entities have also been blended with the District's basic financial statements. On May 21,2002, the Hospital, by a vote of its board, changed the name of its operating entityfrom "Opelousas General Hospital" to "Opelousas General Health System." Basis of Accounting: The accompanying basic financial statements of the District have been prepared in conformity with generally accepted accounting principles (GAAP) in the United States of America as applicable to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standardsetting body for establishing governmental accounting and financial reporting principles. In June 1999, the GASB unanimously approved Statement No. 34 Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. Statement 34 established standards for externalfinancialreporting for all state and local governmental entities, which include a balance sheet; a statement of revenue and expenses and changes in net assets; and a direct method statement of cash flows. It requires the classification of net assets into three components invested in capital assets, net of related debt, restricted, and unrestricted. These classifications are defined as follows: Invested in capital assets, net of related debt This con^onent of net assets consists of capital assets, including restricted capital assets, net of accumulated depreciation, and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted This component of net assets consists of constraints creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. Unrestricted This component of net assets consists of net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt" 10

25 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA NOTES TO FINANCIAL STATEMENTS Note 1. Organization and Significant Accounting Policies (Continued) Other Significant Accounting Policies Enterprise fund accounting: The District and Hospital use enterprise fund accounting. Revenues and expenses are recognized on the accrual basis using the economic resources measurement focus. Based on Governmental Accounting Standards Board (GASB) Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, as amended, the District and Hospital have elected to apply the provisions of all relevant pronouncements of the Financial Accounting Standards Board (FASB), including those issued after November 30,1989, that do not conflict with or contradict GASB pronoimcements. Use of estimates: The preparation offinancialstatements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the fmancial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents: For purposes of the statement of cashflows,the District and Hospital considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Trade receivables and allowance for uncollectible accounts: Trade receivables are carried at the original billed amount less an estimate made for uncollectible accounts based on a review of all outstanding amounts on a monthly basis. Management determbies the allowance for uncollectible accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Trade receivables are writtenoff when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. Inventories: Inventories are valued at the latest invoice price, which approximates the lower of cost (firstin, firstout method) or market. Net patient service revenues: The Hospital has agreements with thirdparty payors that provide for payments to the Hospital at amounts different from its established rates. Payment arrangements include prospectively determined rates per discharge, reimbursed costs, discounted charges, and per diem payments. Net patient service revenue is reported at the estimated net realizable amounts from patients, third party payors, and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third party payors. Retroactive adjustments are accrued on an estimated basis in the period, the related services are rendered and adjusted in future periods as final settlements are determined. Income taxes; The District and Hospital ate political subdivision and exempt from taxes. II

26 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA NOTES TO FINANCIAL STATEMENTS Note 1. Organization and Significant Accounting Policies (Continued) Capital assets: The District and Hospital records all capital asset at historical cost, except for capital assets donated to the District or Hospital. Donated capital assets are recorded at fair market value at the date of donation. As indicated in Note 7, interest cost incurred on borrowed funds during the period of construction of capital assets are capitalized as a component of acquiring those assets. The District and Hospital provides for depreciation of its plant and equipment using the straightline method over the estimated useful lives of each class of depreciable assets. Equipment under capital lease obligations are amortized on the straightline method over the shorter period of the lease term or the estimated useful life of the equipment The following estimated useful lives are generally used: Land improvements Automobiles Buildings Equipment 225 years 310 years 1040 years 325 years Investments: Investments in debt and equity securities are reported at fair value except for shortterm highly liquid investments that have a remaining maturity at the time they are purchased of one year or less. These investments are canied at amortized cost. Interest, dividends, and gains and losses, both realized and unrealized, on investments in debt and equity securities are included in nonoperating revenue when earned. Investments include certificates of deposit, obligations of the U.S. Government Agencies and commercial paper issued by United States corporations with ratings of at least AI (Moody's) and P1 (Standard and Poor's) and the Louisiana Hospital Investment Pool. It is the Authority's intention to hold investments to maturity. Classification of revenues and expenses: The District and Hospital's statement of revenues, expenses and changes in net assets distinguishes between operating and nonoperating revenues and expenses. Operating revenues result from exchange transactions associated with providing health care services the District's and Hospital's principal activity. Nonexchange revenues, including taxes, grants, and contributions received for purposes other than capital asset acquisition, arc reported as nonoperating revenues. Operating expenses are all expenses incurred to provide health care services, other thanfinancingcosts. Grants and donations: Revenues from grants and donations (including capital contributions of assets) are recognized when all eligibility requirements, including time requirements are met. Grants and donations may be restricted for either specific operating purposes or for capital purposes. Amounts that are unrestricted or that are restricted to a specific operating purpose are reported as nonoperating revenues. Amounts restricted to capital acquisitions are reported after nonoperating revenues and expense. Restricted resources: When the District and Hospital has both restricted and unrestricted resources available to fmance a particular program, it is the policy to use restricted resources before unrestricted resources. 12

27 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA NOTES TO FINANCIAL STATEMENTS Note 1. Organization and Significant Accounting Policies (Continued) Compensated absences: The Hospital's employees earn paidtimeoff (PTO) hours at varying rates depending on years of service and employment status. Employees may accumulate PTO hours to a maximum of 480 hours, when this is reached further accumulation is ceased until PTO time is used, there is no cash option associated with this maximum bank. Bonus PTO is earned every 5'*' year beginning with the completion of the 10* year of ftilltime employment and this bonus amount will be prorated for parttime status. Employees with PTO hours remaining upon separation are paid in full. The Hospital also offered employees extended illness benefits (EIB) which was the compensated absence policy in effect prior to July 1, this policy has now been superseded by the abovementioned PTO policy. Employees that had balances in their EIB banks prior to July 1,1998 had their hoursfrozenand upon retirement, age 55 or older with 10 years of fulltime service, will be paid for these EIB hours at their base rate at the time of retirement with a limit of 10. The estimated amounts of these compensated absences payable is included in other accrued expenses under current liabilities in 2009 and Environmental matters: Due to the nature of the Hospital's operations, materials handled could lead to environmental concerns. However, at this time, management is not aware of any environmental matters, which need to be considered. Advertising costs: The Hospital expenses advertising costs as they are incurred. Total advertising costs expensed were 539 and 426 for 2009 and 2008, respectively. Unamortized expense: Unamortized expense consists of bond issue cost and is recorded as other assets on the balance sheet and is being amortized over the life of the related bond issue. The bond issue cost amortized is 24 and 24 in 2009 and 2008, respectively. Risk management: The District and Hospital are exposed to various risks of lossfromtort; theft of, damage to, and destruction of assets; business interruption; errors and omissions; employee injuries and illnesses; natural disasters; and employee health. Commercial insurance coverage is purchased for claims arising from such matters. Reclassifications: To be consistent with current year classifications, some items from the previous year have been reclassified with no effect on net assets. 13

28 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA NOTES TO FINANCIAL STATEMENTS Note 1. Organization and Significant Accounting Policies (Continued) New accounting pronouncements: In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements." This Statement defmes fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This Statement applies to other accounting pronouncements that require or permit fair value measurements. This Statement is effective for fmancial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The District and Hospital adopted this Statement as it applies to fair value measurements in accordance witii GASB Statement No. 31, "Accounting and Financial Reporting for Certain Investments and for External Investment Pools," as of July 1,2008. The adoption of this pronouncement had no effect on amounts reported in thefinancialstatements of the District and Hospital. Note 2. Net Patient Service Revenues The Hospital has agreements with thirdparty payors that provide for payments to the Hospital at amounts different from its established rates. A sununary of the payment arrangements with major thirdparty payors follows: Medicare Inpatient acute care services (and related capital costs) rendered to Medicare program beneficiaries are paid at prospectively determined rates per discharge. Acute care service rates vary according to a patient classification system that is based on clinical, diagnostic, and other factors. Outpatient services related to Medicare beneficiaries are reimbursed either on a prospective determined rate or a fee schedule. The Hospital is reimbursed for cost reimbursable items and Medicare bad debts at a tentative rate with final settlement determined after submission of annual cost reports by the Hospital and audits thereof by the Medicarefiscalintermediary. The Hospital's Medicare cost reports have been audited by the Medicare fiscal intermediary through June 30, Medicaid Inpatient services rendered to Medicaid program beneficiaries are reimbursed at prospectively determined rates per day. Certain outpatient services rendered to Medicaid program beneficiaries are reimbursed under a cost reimbursement methodology, subject to certain limits, while other outpatient services are reimbiu'sed on a fee schedule. The Hospital is reimbursed for outpatient services at an interim rate with final settlement determined after submission of annual cost reports by the Hospital and audits thereof by the Medicaid fiscal mtermediary. The Hospital's Medicaid cost reports have been audited by the Medicaid fiscal intermediary through June 30,2005. The Hospital has also entered into payment arrangements with certain commercial insurance carriers, health maintenance organizations, and preferred provider organizations. The basis for payment to the Hospital under these agreements includes prospectively determined rates per discharge, discounts from established charges, and prospectively determined rates. During the years ended June 30, 2009 and 2008, approximately 63% of the Hospital's gross patient service revenues were furnished to Medicare and Medicaid beneficiaries. Laws and regulations governing the Medicare and Medicaid programs are extremely complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates may change by a material amount in the near term. As a result of retroactive adj ustments of certain prior year cost reports, the Hospital recorded changes in estimates resulting in an increase in net patient service revenues of approximately 757 and 2,179 during the years ending June 30, 2009 and 2008, respectively. 14

29 Note 3. Designated Net Assets HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA NOTES TO FINANCIAL STATEMENTS Of the 38,101 and 38,116 of unrestricted net assets reported in 2009 and 2008, respectively, 0 and 8,718 have been designated by the Hospital's Board of Trustees for capital acquisitions and replacement Designated funds remain under the control of the Board of Trustees, which may at its discretion later use the funds for other purposes. Note 4. Deposits and Investments The District investing is performed in accordance with investment policies complying with state stamtes. Funds may be invested in direct obligations of the United States Government and its agencies pledged by its full faith and credit, certificates of deposit and savings accounts which are secured by FDIC or pledge of securities, and government backed mutual or trust funds. At June and 2008, all the District's deposits and investments were secured by Federal Deposit Insurance Corporation (FDIC) coverage. The Hospital (blended component unit) investing is performed in accordance with its investment policy. Funds may be invested in time deposits, money market investments accounts or certificates of deposits with financial institutions insured by the FDIC; direct obligations of the United States Government and its agencies; commercial paper issued by United States Corporations with a rating of A1 (Moody's) and P1 (Standard and Poor's) or higher; and the Louisiana Hospital Investment Pool. All of the securities have fixed maturities and it is the Hospital's intention to hold them until maturity. The Hospital, which is a public trust, is not required to comply with the collateralization requirements of the local depository law (per La. Atty. Gen. Op. No ). The District and Hospital's investments generally are reported at fair value, as discussed in Note I. At June 30, 2009 and 2008, the District and Hospital's investments consisted of the following, all of which were held in the District and Hospital's name by a custodial agent of the District and Hospital: Certificate of Deposit U.S. Government Agency Securities Municipal Bonds Fixed income Mutual Funds Commercial Paper , ,092 19,526 1, ,600 2,136 18,718 15

30 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA NOTES TO FINANCIAL STATEMENTS Note 4. Deposits and Investments (Continued) The carrying amounts of deposits and investments included in the District and Hospital's balance sheets are as follows: Carrying amount: Deposits Investments Included in the following balance sheet captions: Cash and cash equivalents Short term investments Held by trustee for debt service: Cash and cash equivalents Investments Held by trustee for equipment purchase under lease: 11,925 19,526 31,451 4, , L ,718 36,349 7, , Cash and cash equivalents 4,681 6,415 Internally designated for capital acquisition: Cash and cash equivalents 767 Investments 7,889 Other longterm investments , ,349 Custodial Credit Risk. Custodial credit risk is the risk that in the event of a bank failure, the Hospital's deposits may not be returned to it As of June 30,2009 and 2008, 1,528 and 5,876 of the Hospital's bank balances of 3,881 and 7,079, respectively were exposed to custodial risk of being uninsured and uncollateralized. The Hospital's investment policy limits the maximum fimds invested in any one financial institution may not exceed 33 1/3% of total hmds available for investment, except for the Hospital's lead bank which shall not exceed the greater of 2 million or 50% of total invested fimds. In accordance with SEAS No. 157, the Hospital groups assets andfinancialliabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: Level 1 Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes securities that are traded by dealers or brokers in active markets. Valuations are obtamed from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 Valuations for assets and liabilities traded in less active dealer or broker markets. For example, municipal securities valuations are based on markets that are currentiy offering similar fmancial products. Valuations are obtained from third party pricing services for identical or comparable assets or liabilities. Level 3 Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cashflowmodels and similar techniques, and not based on market exchange, dealer or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. 16

31 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH. LOUISIANA NOTES TO FINANCIAL STATEMENTS Note 4. Deposits and Investments (Continued) Below is a table that presents information about certain assets and liabilities measured at fair value on a recurring basis: Fair Value Quoted Prices In Active Markets For Identical Assets/ Liabilities Level 1 Significant Other Observable Inputs Level 2 Significant Unobservable Inputs Level 3 Investments 19,526 11, Beginning balance Purchases Sales Gains and (losses) Fair Value Measurements Using Significant Unobservable Inputs Level 3 1,580 6,332 (194) (24) Ending balance 7,694 Note 5. Accounts Receivable Patient accounts receivable reported as cunent assets by the Hospital at June 30,2009 and 2008 consisted of these amounts: Receivable from patients and their insurance carriers Receivable from Medicare ReceivablefromMedicaid Total patient accounts receivable Less allowance for uncollectibles amounts Patient accounts receivable, net 27,796 22, ,140 6, ,185 35,506 (25.990) (21.554) 16,195 13,952 17

32 Note 6. Concentrations of Credit Risk HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA NOTES TO FINANCIAL STATEMENTS The Hospital grants credit without collateral to its patients, most of whom are local residents and are msured under thirdparty payor agreements. The mix of receivables from patients and thirdparty payors at June 30, 2009 and 2008, was as follows: Note 7. Capital Assets Medicare Medicaid Other thirdparty payors Patients 19% 15% 33% 33% 100% 17% 18% 38% 27% 100% Capital asset additions, retirements, and balances for the years ended June 30, 2009 and 2008 were as follows: Nondepreciable capital assets Land Construction in progress Total nondepreciable capital assets Depreciable assets Land improvements Automobiles Buildings Equipment Total depreciable capital assets Less accumulated depreciation for: Land improvements Automobiles Buildings Equipment Total accumulated depreciation Total depreciable capital assets, net ] Balance 6/30/2008 L L 5_ L 3,771 2,022 5,793 1, , ,247 (L130) (113) (32,672) (44,691) (78,606) 57,641 Additions ^ L l L 2, , ,437 7,619 14,090 (65) (7) (2,585) (3.732) (6.389) Retirepients L _ (1.245) (1.245) (13) (105) (118) {^) ] Balance 6/30/2009 L 5 (84,880) 1 5,971 4,826 10,797 1, ,921 64, (1.195) (107) (35,257) (48,321) 65,339 18

33 Note 7. Capital Assets (Continued) HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA NOTES TO FINANCIAL STATEMENTS Balance Balance 6/30/2007 Additions Retirements 6/30/2008 Nondepreciable capital assets Land (45) 3,771 Construction in progress (863) Total nondepreciable capital assets Depreciable assets Land improvements Automobiles Buildings Equipment Total depreciable capital assets Less accumulated depreciation for: Land improvements Automobiles Buildings Equipment L L 4,055 1, ,511 55, ,576 (1.073) (104) (30,138) (41,243) i_ 2, ,276 2,599 (67) (9) (2,655) (3,981) _ (908) (30) (346) (552) (928) L L 5,793 1, ,484 57, ,247 (1.130) (113) (32,672) (44.691) Total accumulated depreciation (72.558) (6,712) 664 (78.606) Total depreciable capital assets, net 62,018 (4,113) (264) Depreciation expense for the years ended June 30,2009 and 2008 amounted to 6,389 and 6,712, respectively. The construction in progress represents the costs involved in relation to various renovations at the hospital as well as the IT expansion project. 19

34 Note 8. LongTerm Debt HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA NOTES TO FINANCIAL STATEMENTS A schedule of changes in the Hospital's noncurrent liabilities for 2009 and 2008 are as follows: Amount Balance Balance due within 6/30/2008 Additions Reductions 6/30/2009 one year Bonds payable: Revenue and refunding bond series ,505 Revenue bonds series ,430 Unamortized bond discounts (225) Total bonds payable (430) (830) 18, (207) (18) Capital lease payable: Cath lab lease Medquist lease Chase equipment lease Total capital lease payable L L L (668) (46) (991) (1,705) ,156 6,662 _ ,027 1,534 Notes payable: LifePoint Hospital note payable Total notes payable L= i 9, L 9,000 9,000 L= Amount Balance Balance due within 6/30/2007 Additions Reductions 6/30/2008 Bonds payable: Revenue and refundmg bond series 1999 Revenue bonds series 2003 Unamortized bond discounts Total bonds payable 3,910 20,230 (243) (405) 3,505 (800) 19, (225) (18) Capital lease payable: Cath lab lease Medquist lease Chase equipment lease Total capita] lease payable (647) (39) (480) 1, ,

35 HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA NOTES TO FINANCIAL STATEMENTS Note 8. LongTerm Debt (Continued) The terms and due dates of the Hospital's longterm debt, including capital lease obligations, at June 30,2009 and 2008 are as follows: Revenue and refimding bond series 1999 On December 22,1999, the Hospital issued 10,000 of Hospital Revenue and Refimding Bonds collateralized by a first mortgage on the leasehold interest of the facilities and pledge of hospital revenues, due serially to 2015 with an interest rate of 5.85%. The purpose of these bonds is as follows: Construction 1,625 Advance refunding of 1995 issue 6,550 Equipment acquisition 1,825 Total SmOQQ The portion of the proceeds related to the advance refunding along with 1,672 of Hospital funds were deposited into an irrevocable trust with an escrow agent to defease the First Leasehold Mortgage Hospital Revenue Bonds Series As a result, the Series 1995 Bonds are considered defeased and the liability has been removed from the Hospital's books. This advance refunding was undertaken to reduce total debt service payments over the next sixteen years by 1,699 and resulted in an econonuc gain (difference between the present values of the debt service payments on the old and new debt) of 16. This gain is being amortized over the new debt's life. Hospital revenue bonds Series 2003 During 2004, the Hospital issued 22,500 of hospital revenue bonds for purposes of capital additions to the hospital facility. Bonds Series 2003 has an interest ratefrom2.15% to 4.80%, collateralized by a first mortgage on the leasehold interest of the facilities and pledge of hospital revenues, due serially to The disbursement of the bond proceeds consisted of the following: Deposited into construction fund 19,975 Deposited into debt service reserve fund 1,859 Deposited into cost of issuance fund 200 Total funds actually received 22,034 Bond underwriter's fee 225 Bond discount 241 Total bond issue ^2*5^ Under the terms of the revenue bonds, the Hospital is required to maintain certain deposits with a trustee. Such deposits are included as restricted cash and investments in the balance sheet. The revenue bond indenture also places limits on the incurrence of additional borrowings and requires that the Hospital satisfy certain measures of fmancial performance as long as the bonds are outstanding. 21

36 Note 8. LongTerm Debt (Continued) HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA LifePoint Hospital Note Payable NOTES TO FINANCL\L STATEMENTS In April 2009, the Hospital purchased another local hospital as explained in note 16. In order to facilitate this transaction, the seller granted the Hospital a note of 9,000. Interest on the note was set at a variable rate of prime plus 0% to July 29,2009, prime plus 1 % to April 29,2010 and prime plus 4% thereafter with a maturity date of ^ril This note was secured by the acquired hospital buildings, equipment and inventory at that location. In July of 2009, this note was paid off with the proceeds of the issuance of revenue bonds by the Hospital. Capital lease obligations During 2005, the Hospital entered into a lease agreement for the purchase of equipment for the Cath lab. The total equipment cost associated with this lease is 3,202, with accumulated depreciation of 2,188 as of June 30, Monthly payments for this obligation are 58 with an interest rate of 3.2% until February of The Hospital entered into a lease agreement for the purchase of a speech recognition system for radiology. The total equipment cost associated with this lease is 105, with accumulated depreciationof 44 as of June 30,2009. The total Monthly payments for this obligation are 4 with an interest rate of 7.9% until May of During 2008, the Hospital entered into a lease agreement for the purchase of software and hardware. As of June 30, 2009 implementation was still in progress; costs associated with this lease are considered construction in process until fully implemented. Total costs associated with this purchase at June 30,2009 amounted to 3,738. Total monthly payments for this obligation are 103 with an interest rate of 3.73% with the final installment due December 19,2014. Schedule principal and interest repayments on longterm debt and payments on capital lease obligations are as follows: Years Ending June Principal 1, ,255 3,325 3,410 8,982 7,850 LongTerm debt Discount (18) (18) (18) (18) (18) (65) (52) Interest 1,697 1,663 1,671 1,421 1,167 3,276 1,179 Captial Lease Obligation Principal 1,534 1,067 1, , Interest Total 30,675 _ (207) 12, Note 9. Employee Retirement Plan The Hospital maintams a 401(a) Money Purchase Plan (defmed contribution plan) for which employees become immediately eligible to participate. Employees are required to contribute an amount equal to the existing Social Security and Medicare rate (7.65%). The Hospital provides nonelective contributions rangingfrom5 to 13 percent of the employees compensation based on credited years of service. The Hospital's contributions vest with employees based on years of service and employees become fully vested in the Hospital's contributions after 6 years. The Hospital's board of directors directs investments among the available investment options. TheHospital's contributions to the plan for the year ended June 30, 2009 and 2008 were 2,278and 1,942, respectively. The Hospital also offers its employees the option of participating in a 457 deferred compensation plan. Hospital does not contribute to the 457 deferred compensation plan on behalf of its employees. The 22

37 Note 10. Operating Leases HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH, LOUISIANA Hospital as lessee: NOTES TO FINANCIAL STATEMENTS Infusion pumps On March 31,2003, the Hospital entered into an operating lease agreement with Baxter Healthcare Corporation for the lease of one hundred ninetynine ({99) infusion pumps. The maximum term of the lease is sixty (60) months. On August 1, 2008, the Hospital entered into a new agreement with Baxter Healthcare Corporation to lease the infusion pumps for a twelve (12) month term. Total rental expense paid for the years ended June 30, 2009 and 2008 was 142 and 181, respectively. Hospital as lessor: Health Club Facility The Hospital entered into an agreement with Louisiana Physical Therapy. L.L.P. for the sale of virtually all of the equipment of the health club. In addition, they entered into an agreement with Louisiana Physical Therapy, L.L.P. (LPT) whereby LPT will lease the building and premises housing the health club for a monthly rental of 8. The initial term of the lease is for sixty (60) months beginning June 30,2003. The lease was renewed in June of 2008 for an additional sixty (60) months ending on May 31, In addition, any additional renovations or improvements to the facility, which are funded by the Hospital, will be reimbursed by LPT on a monthly basis over the remaining term of the lease. The future minimum lease receipts related to this lease are as follows: Note 11. Charity Care In addition, the Hospital has various office facility leases with doctors for various rental amounts. The Hospital provides care to patients who meet certain criteria under its charity care policy without charge or at amounts less than its established rates. The amount of charges excluded from revenue for services and supplies furnished under the Hospital's charity care policy were 631 and 486 in 2009 and 2008, respectively. 23

38 Note 12. Joint Ventures HOSPITAL SERVICE DISTRICT NO. 2 OF ST. LANDRY PARISH. LOUISIANA NOTES TO FINANCIAL STATEMENTS The Hospital is a participant in a joint venture with Acadian Homecare, LL.C. d/b/a SL Landry Home Care, in order to provide home health services to the patients of the Hospital service area. The Hospital has a 33% participation in the joint venture. The Hospital's equity interest in the joint venture was 9 at June 30,2009 and The Hospital recognized revenue related to the joint venture in the amount of 669 and 415 in 2009 and 2008, respectively all of which was distributed by the joint venture to the Hospital. Completefinancialstatements for the joint venture can be obtained from the Hospital upon request. The Hospital is a participant in a joint venture with private investors in St. Landry Sleep Medicine Real Estate Venture, L.L.C. The Hospital has a 36% participation in the joint venture. The Hospital has agreed to lease a building from St Landry Sleep Medicine Real Estate Venture, L.L.C. for a period of five years with the option to extend the term of the lease for two additional terms of five years in order to operate a Sleep Center. The lease will expire on January 10,2012 and the scheduled lease payments are 91 per year. The total lease expense reported for 2009 and 2008 was 95 and 92, respectively. The HospitaPs equity interest in the joint venture was 208 and 210 at June 30,2009 and 2008 respectively. The Hospital recognized a loss related to the joint venture of 2 in 2009 and income of 2 in There were no distributions to the Hospital by the joint venture. Complete fmancial statements for the joint venture can be obtained from the Hospital upon request. The Hospital is a participant in a joint venture with private investors in Sunset Healthcare Realty, LLC, in order to own and lease a building for an outpatient imaging center in Sunset, Louisiana. The Hospital invested 3 82 for 51 units of the 100 units available in the joint venture. Sunset Healthcare Realty, LL.C. leases landfromthe Hospital, on which a building was constructed, for 2 per month. The total lease income reported was 24 in 2009 and 2008, respectively. The building is leased to OGH Imaging, L.L.C, a joint venture in which the Hospital also participates. As of June 30, 2009 and 2008, the Hospital has recorded other receivables on the balance sheet of 1,604 and 1,648, respectively, which represents construction costs paid on behalf of the joint venture. The Hospital's equity interest in the joint venture was 253 and 266 at June 30, 2009 and 2008, respectively. The Hospital recognized revenue related to the joint venture of 53 and 11 in 2009 and 2008, respectively. The Hospital received distributions of 66 and 62 in 2009 and 2(X)8, respectively. Completefinancialstatements for the joint venture, can be obtained from the Hospital upon request. The Hospital is a participant in a joint venture with private investors in OGH Imaging, L.L.C, in order to operate an outpatient imaging center in Sunset. Louisiana to provide imaging services to the patients of the Hospital service area. The Hospital invested 494 for 52 units of the 100 units available in the joint venture. OGH Imaging, LX.C is leasing a building from Sunset Healthcare Realty. L.L.C, a joint venture in which the Hospital also participates. As of June 30, 2009 and 2008, the Hospital has recorded other receivables on the balance sheet of 96 and 150, respectively. These amounts represent equipment costs paid onbehalf of the joint venture. The Hospital's equity interest in the joint venture was 305and 104 at June 30,2009 and 2008, respectively. The Hospital recognized income related to the joint venture of 201 in 2009 and a loss of 230 in Complete financial statements for the joint venture can be obtained from the Hospital upon request. The Hospital was a participant in a joint venture with private investors in Opelousas CTA, LLC, to provide CT Angiography (CTA) to the residents of the District The Hospital sold its 31 % participation in the joint venture during 2008 for 167 resulting in a gain of 49. The Hospital's equity interest in the joint venture was 0 in 2008 and The Hospital recognized a loss related to the joint venture of 0 and 15 in 2009 and 2008, respectively. Complete financial statements for the joint venture can be obtained from the Hospital upon request. 24