ELECTRONIC BOARD PACKET MEETING. Thursday, April 29, :00pm* LEE MEMORIAL HOSPITAL - BOARDROOM 2776 Cleveland Avenue, Fort Myers, FL

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1 ELECTRONIC BOARD PACKET LEE COUNTY TRAUMA SERVICES DISTRICT BOARD OF DIRECTORS MEETING Thursday, April 29, :00pm* LEE MEMORIAL HOSPITAL - BOARDROOM 2776 Cleveland Avenue, Fort Myers, FL *(Held concurrently with the Lee Memorial Health System Board Meeting) ELECTRONIC BOARD PACKET

2 Any Public input is limited to three minutes and a Request to Address the Board of Directors card must be completed and submitted to the Board Administrator prior to meeting. LEE COUNTY TRAUMA SERVICES DISTRICT BOARD OF DIRECTORS MEETING Thursday, April 29, :00 PM* *Held concurrently with the 1:00 pm Lee Memorial Health System Board of Directors Meeting LEE MEMORIAL HOSPITAL - BOARDROOM TENTATIVE AGENDA 1. CALL TO ORDER LEE COUNTY TRAUMA SERVICES DISTRICT MEETING (Richard Akin, Board Chairman) 2. Public Input - Agenda Items: Any Public input is limited to three minutes and a Request to Address the Board of Directors card must be completed and submitted to the Board Assistant prior to meeting. 3. Introduction of Steve Hubbard, Trauma Survivor 4. Meeting Minutes 12/3/09 and 1/5/10 (Approval) (Linda Brown, MSN, ARNP, Board Secretary) 5. Regional Advisory Committee on Trauma Services (Update) (Co-Chairs, Patricia Harrington, PhD & Marilyn Stout) 6. Operations Report 1 st & 2 nd Quarter-FY 2010 (Acceptance) (Dr. Drew Mikulaschek, Medical Director, Trauma) 7. Trauma District Financials FYTD March 31, 2010(Acceptance) (Ben Spence, System Director, Reimbursement) 8. Trauma District Audit Report for FY2009 (Acceptance) (Ben Spence, System Director, Reimbursement) 9. Old Business 10. New Business 11. Date of next LEE COUNTY TRAUMA SERVICES DISTRICT MEETING: August 26, :00pm Lee Memorial Hospital Boardroom *(Held concurrently with Lee Memorial Health System Board Meeting) 12. ADJOURN LEE COUNTY TRAUMA SERVICES DISTRICT MEETING V:\PRESENTATIONS\2010\TRAUMA\042910\ Trauma Tentative Agenda.docm

3 BOARD OF DIRECTORS PUBLIC INPUT AGENDA ITEMS: Any public input pertaining to items on the Agenda is limited to three minutes and a Request to Address the Board of Directors card must be completed and submitted to the Board Assistant prior to meeting. Refer to Board Policy: 10:15E: Public Addressing the Board Non-Agenda Item: Individuals wishing to address the Board on an item NOT on the Agenda, the Board office must be notified of subject matter at least seven (7) days prior to the meeting to allow staff time to prepare and to insure the matter is within the jurisdiction of the Board.

4 LEE COUNTY TRAUMA SERVICES DISTRICT BOARD OF DIRECTORS MEETING MINUTES UNAPPROVED-Thursday, December 3, 2009-UNAPPROVED LOCATION: Lee Memorial Hospital Boardroom, 2776 Cleveland Avenue, Ft. Myers, FL MEMBERS PRESENT: Richard Akin, Board Chairman; Nancy McGovern, RN, MSN, Board Vice Chairman; Marilyn Stout, Board Treasurer; Linda Brown, MSN, ARNP, Board Secretary; Lois Barrett, MBA, Director, Steve Brown, M.D., Director; Frank La Rosa, Director; Dawson McDaniel, Director; Jason Moon, Director MEMBERS ABSENT: James Green, Director OTHERS PRESENT: James Nathan, President/CEO; Cathy Stephens, Board of Directors Liaison; Jim Humphrey, Board Counsel; Larry Antonucci, M.D., Chief Operating Officer; Chuck Krivenko, M.D., Chief Medical Officer/Clinical & Quality Services; Donna Giannuzzi, RN, Chief Patient Care Officer; John Wiest, Chief Financial Officer; Jon Cecil, Chief Human Resource Officer; Charles Swain, Chief Compliance Officer & Internal Audit Officer; Doug Luckett, Chief Administrative Officer/GCMC/CCH; Gaile Anthony, Chief Administrative Officer/LMH; Kathy Bridge Liles, VP of Womens and Childrens Services; Cindy Brown, VP Patient Care Services; Sally Jackson, System Director of Community Projects; Karen Krieger, System Director/Public Affairs; Ben Spence, Controller/Acute Care & Reimbursement; Anne Rose, VP Revenue Cycle; Ben Keller, Chaplain; Marliese Mooney, PLC Consultant/Planning Committee; J. Keith Arnold, Government Relations/Consultant; Donald Brown, Guest; Mr. & Mrs. James Spangler, Guests; Bob Johns, Guest; Frank Gluck, Reporter/News Press; Isabel Firth, Administrative Secretary/Board of Directors NOTE: Documents referred to in these minutes are on file by reference to this meeting date in the Office of the Board of Directors and on the Board of Directors website at for public inspection. SUBJECT DISCUSSION ACTION FOLLOW- UP MEETING CALLED TO ORDER The Board of Directors Meeting was CALLED TO ORDER at 1:10pm by Richard Akin, Board Chairman. PUBLIC INPUT AGENDA ITEMS MEETING MINUTES 2010 TRAUMA BOARD MEETING SCHEDULE REGIONAL ADVISORY COMMITTEE ON TRAUMA SERVICES FY 2010 Appointments OPERATIONS REPORT LEE COUNTY TRAUMA DISTRICT FINANCIALS OLD BUSINESS/ NEW BUSINESS NEXT REGULAR SCHEDULED MEETING There were NO Public Input Agenda Items. Linda Brown asked if anyone wished to make any additions or corrections to the Lee County Trauma Services District Board of Directors Meeting minutes of August 27, The 2010 Trauma District Schedule was presented as revised, changing the Dec 2 meeting date to November 18, 2010 for approval (Exhibit 1). Marilyn Stout gave an update on the recent meeting. She also announced long time member David Dilley will be resigning from the Committee, however, all remaining members have elected to stay (Exhibit 2). Drew Mikulaschek reviewed the Operations Report for 4 th Qtr, FY 2009 (Exhibit 3), noting substantial drops. Discussion ensued. Ben Spence reviewed the Lee County Trauma District Financials for Fiscal Year 2009 Year End Report (Exhibit 4). There was no OLD or NEW Business at this time. The date of the next REGULAR meeting of the Board of Directors is the Annual Organizational Business Meeting on Thursday, January 5, 2010, 1:00pm, Lee Memorial Hospital Boardroom. A motion was made by Linda Brown to approve the Lee County Trauma Services District Board of Directors Meeting Minutes of August 27, The motion was seconded by Marilyn Stout and it carried with no opposition. A motion was made by Marilyn Stout to approve the 2010 Trauma District Board Schedule (Exhibit 1). The motion was seconded by Nancy McGovern and it carried with no opposition. A motion was made by Nancy McGovern to approve the FY 2010 Regional Advisory Committee on Trauma Services Appointments (Exhibit 2). The motion was seconded by Dawson McDaniel and it carried with no opposition. A motion was made by Linda Brown to accept the Operations Report for 4 th Qtr, FY 2009 (Exhibit 3). The motion was seconded by Marilyn Stout and it carried with no opposition. A motion was made by Marilyn Stout to accept the Lee County Trauma District Financials for Fiscal Year Year End Report (Exhibit 4). The motion was seconded by Linda Brown and it carried with no opposition. ADJOURNMENT The Board of Directors meeting was ADJOURNED at 2:02 pm by Chairman Richard Akin. Minutes were recorded by Cathy Stephens, Board Administrator. Linda Brown, MSN, ARNP Board Secretary

5 LEE COUNTY TRAUMA SERVICES DISTRICT BOARD OF DIRECTORS ANNUAL ORGANIZATIONAL MEETING MINUTES Tuesday January 5, 2010 LOCATION: Lee Memorial Hospital - Board Room, 2776 Cleveland Avenue, Fort Myers, FL MEMBERS PRESENT: Richard Akin, Board Chairman; Marilyn Stout, Board Vice Chairman; Dawson McDaniel, Board Treasurer; Linda Brown, MSN, ARNP, Board Secretary; Steve Brown, M.D., Director; Frank La Rosa, Director; Nancy McGovern, RN, MSM, Director; Lois Barrett, MBA, Director, James Green, Director; Jason Moon, Director MEMBERS ABSENT: OTHERS PRESENT: James Nathan, President/CEO; Cathy Stephens, Board Administrator; Jim Humphrey, Board Counsel; Larry Antonucci, M.D., Chief Operating Officer Hospital & Physician Services; Chuck Krivenko, M.D., Chief Medical Officer/Clinical & Quality Services; Anne Rose, VP Revenue Cycle; Donna Giannuzzi, RN, Chief Patient Care Officer; Doug Luckett, Chief Administrative Officer/GCMC/CCH; Charles Swain, Chief Compliance Officer; Gaile Anthony, Chief Administrative Officer; Sally Jackson, System Director Community Projects; Cynthia Brasher, System Director Spiritual Services; Tom Presbrey, M.D., Chairman/Physician Leadership Council; John Iacuonne, M.D., Executive Director/The Children s Hospital; Karen Krieger, System Director/Public Affairs; Donald Brown, Guest; James and Margaret Spangler, Guest; Mike Ellis, Guest; Isabel Firth, Administrative Secretary/Board of Directors; NOTE: Documents referred to in these minutes are on file by reference to this meeting date in the Office of the Board of Directors and on the Board of Directors website at for public inspection. SUBJECT DISCUSSION ACTION FOLLOW -UP MEETING CALLED TO ORDER The Meeting was CALLED TO ORDER at 1:20 p.m. By Richard Akin, Board Chairman PUBLIC INPUT AGENDA ITEMS CONFIRMATION OF 2010 BOARD OFFICERS There was NO Public Input at this time.. Jim Humphrey said pursuant to Chapter the Laws of Florida pertaining to the establishment of the, under 212 of that Special Act provides that the Lee County Board of Directors Trauma Services District shall have the same officers as the Lee Memorial Health System Board. Jim announced the following 2010 officers for the Lee County Trauma Services District Board of Directors: Chairman: Richard Akin Vice Chairman: Marilyn Stout Treasurer: Dawson McDaniel Secretary: Linda Brown OLD BUSINESS/ NEW BUSINESS There was NO Old Business or New Business at this time. ADJOURN The Lee County Trauma Services Board of Directors District Meeting was ADJOURNED at 2:00 p.m. By Richard Akin, Board Chairman. Linda L. Brown, MSN, ARNP Board Secretary

6 Board of Directors Meeting Trauma Director s Report April 29, 2010

7 TRACS Data: 1st Q, FY2010 # Pt s # TA Lee 406 (74%) 130 Collier 57 (10%) 55 Charlotte 42 (8%) 36 Hendry 28 (5%) 25 Glades 5 (1%) 5 Other 14 (2%) 12 TOTAL : 12.2% 0.7%

8 TRACS Data: 2nd Q, FY2010 # Pt s # TA Lee 437 (76%) 119 Collier 49 (8.5%) 48 Charlotte 39 (7%) 30 Hendry 31 (5%) 28 Glades 2 (0.5%) 2 Other 17 (3%) 14 TOTAL : 2.5% 12%

9 Avg. Trauma Alerts per Month (ytd) TA/Mo

10 Trauma Service Admissions per Month (ytd) TS adm

11 Avg. ISS > 15 per Month (ytd) ISS>15

12 Trauma District Financial Statement Fiscal Year to Date as of March 31, 2010 Budget Actual Prior Year act - bud % var act - py % var TRAUMA VISITS 5,535 3,748 5,402 (1,787) -32% (1,654) -31% TOTAL PATIENT REVENUE 4,366,724 3,210,823 4,158,667 (1,155,901) -26% (947,844) -23% CONTRACTAUL ADJUSTMENTS 1,397,352 1,732,000 1,845, ,648 24% (113,000) -6% BAD DEBT EXPENSE 1,965, ,000 1,223,000 (1,315,026) -67% (573,000) -47% TOTAL DED FROM REVENUE 3,362,378 2,382,000 3,068,000 (980,378) -29% (686,000) -22% NET PATIENT REVENUE 1,004, ,823 1,090,667 (175,523) -17% (261,844) -24% OTHER OPER REV 24, , , , % (56,781) -30% TOTAL OPERATING REV 1,028, ,205 1,277,831 (69,511) -7% (318,625) -25% OPERATING EXPENSES TOTAL SALARIES & BENEFITS 2,178,889 2,024,544 2,010,645 (154,346) -7% 13,899 1% SUPPLIES & OTHER SERVICES 56,254 38,287 32,927 (17,967) -32% 5,360 16% PURCHASED SERVICES 1,012, , ,662 (70,495) -7% (22,782) -2% TOTAL OPER EXPENSES 3,247,517 3,004,710 3,008,233 (242,807) -7% (3,523) 0% EBITDA (2,218,801) (2,045,505) (1,730,402) 173,296-8% (315,103) 18% DEPRECIATION/AMORT/INT 19,980 19,980 19,781 (0) 0% 199 1% GAIN(LOSS) FROM OPER (2,198,821) (2,025,525) (1,710,621) 173,296-8% (314,904) 18% Estimated Trauma Readiness Costs 1,000,000 1,000,000 1,000, % 0 0% Total Trauma District Loss (3,198,821) (3,025,525) (2,710,621) 173,296-5% (314,904) 12%

13 Lee County Trauma Services District Financial Statements September 30, 2009 and 2008

14 Index September 30, 2009 and 2008 Page(s) Report of Independent Certified Public Accountants...6 Financial Statements Balance Sheets...7 Statements of Operations and Changes in Net Assets...8 Statements of Cash Flows...9 Notes to Financial Statements

15 September 30, 2009 and 2008 Introduction This section of the annual financial report of (hereinafter referred to as "Trauma District" or the "District") presents management's discussion and analysis of the financial position and performance of the District for the years ended September 30, 2009 and This discussion has been prepared along with the financial statements and related footnote disclosures, and they should be read in conjunction therewith. This discussion, the financial statements and footnotes are the responsibility of the District's management. The Trauma District was created as an independent special district pursuant to Chapter 189, Florida Statutes, by the 2003 Florida Legislature with the express purpose of financially supporting the provision of trauma services in Lee County, including the comprehensive emergency medical services for victims of trauma and trauma-related injuries provided by the State of Florida Level II Trauma Center operated by Lee Memorial Health System (the "System"). Governance for the Trauma District is entrusted to the same publicly elected board as serves the System. The Trauma District provides a mechanism for the System to make the financial operations of its trauma services program transparent to the community, and may provide an avenue to seek a stable, longterm funding source such as a local referendum. Purpose of the Trauma District the best patient centered healthcare system in the State of Florida through the balancing of quality, access and cost. To achieve this vision, the Board works within a strategic plan and evaluates existing and new service offerings based upon community needs and economic viability. A key component of that strategy is significant involvement of physicians in the resource allocations of the Board as well as examination of regional and national healthcare trends. In keeping with its strategy, the Board found that on both a state and national level, trauma centers are facing major financial hurdles that threaten their viability. Given that the provision of trauma services is an enhancement, which is provided on a voluntary basis by the System, it is necessary that trauma program financing not compromise core hospital services that generate positive revenue. Dating back to 1999, the Board began to hear of increasing dissatisfaction within the physician community related to providing on-call coverage for the Trauma District. Trauma services were creating a barrier between the System and specialty physicians, in effect, driving physicians away and making it more difficult for the System to compete for vital physician services and referrals. Because the Board recognized the community need for a trauma program, a solution to stabilize local sales tax referendum that would have provided funding for a broad array of community services including emergency medical services, mental health services, primary care services, and trauma services. This was put before the Lee County voters in November 2002 and failed to pass. Creation of the Trauma District was an outgrowth of the sales tax referendum defeat. During the campaign, there was widespread public support for the trauma center and a trauma-only sales tax referendum that continues to exist today. This support resulted in the creation of the Trauma District so as to enable voters, at some point in the future, to focus public funding solely on trauma care. The Trauma District has created a Regional Advisory Committee comprised of representatives from a five county area in order to secure the appropriate community and regional support. 1

16 nalysis (Unaudited) September 30, 2009 and 2008 An interlocal agreement between the District and the System has been executed that sets forth the responsibilities of both agencies. In order to avoid duplication of overhead, the System provides the District with all of its support functions such as general administration, legal services, business and financial operations, information technology, and all hospital clinical services, excluding physician services. Overview of the Financial Statements Our annual report consists of a series of financial statements prepared in accordance with accounting standards generally accepted in the United States of America. Balance Sheets at September 30, 2009 and 2008 Assets consist of patient accounts receivable from the provision of professional medical services by employed trauma surgeons, as well as equipment used by these surgeons in the office portion of their practice. The District opened a cash account in 2009 for a High Risk Driver s Program that requires the attendees to pay cash. The funds are used to pay the speakers of the class and for supplies and educational materials. Liabilities include accrued physician specialty support payments, payroll withholdings related to the employed trauma surgeons and their office staff, as well as a small amount of payables related to the same. The remaining account is the intercompany payable/receivable with the System. Statements of Operations and Changes in Net Assets at September 30, 2009 and 2008 The Trauma District is expected to operate at a loss, excluding funding received from the System. The System agreed to provide funds to the District equal to any operating loss. As such, the District does not generate any net assets during the year. The District did not have any net assets at September 30, 2009 and For fiscal years 2009 and 2008, funding for the District was generated from four key sources. The majority of funding came from monies provided by the System, much of which is provided by the Medicaid Low Income Pool Program. The System provides funding to eliminate any operating loss. Collections for the provision of trauma surgeon professional medical services provided substantial funds. A third source in fiscal years 2009 and 2008 was community support via contributions to the Lee Memorial Health System Foundation, Inc. (the "Foundation"). A fourth source of funding is the fines assessed on those ticketed for running red lights. Expenses include labor and benefits for employed trauma surgeons and support staff, payments to specialty physicians for providing professional services to trauma center patients and purchased servic include funding the operation of a single surgery suite, staffing for the rapid provision of services devoted to trauma patients, and reimbursing the Hospital for the actual cost, net of collections, of providing hospital services to all trauma patients. 2

17 nalysis (Unaudited) September 30, 2009 and 2008 The System management asserts that there are opportunity costs that are related to providing trauma service. The computation of these costs is reasonable and determined as objectively as possible. Management quantified these dollars by comparing costs of operations at the Hospital, which provides the trauma services, to similar operations at the four acute care hospitals. Studies that have viewed total economic impact, such as the recent study commissioned by the Governor of the State of Florida, do include these types of costs. The additional cost to be trauma ready at all times is estimated at $2.0 million per year. Opportunity costs relate to profits that could be realized by utilizing the trauma space on more profitable types of service. financial statements to the audited financial statements for the year ended September 30, LEE COUNTY TRAUMA SERVICES DISTRICT Statement of Operations Reconciliation Between Unaudited Internal Financial Statements and Audited Financial Statements Year Ended September 30, 2009 Unaudited Internal Audited Financial Statements Adjustments Financial Statements Operating revenues Net patient service revenue $ 2,060,815 $ (169,042) $ 1,891,773 Other revenue 319, ,535 Total operating revenues 2,380,350 (169,042) 2,211,308 Operating expenses Salaries, wages and benefits 3,977,282 92,000 4,069,282 Supplies and other 65,989-65,989 Purchased services 1,928, ,585 2,067,840 Depreciation 39,761-39,761 Total operating expenses 6,011, ,585 6,242,872 Operating loss (3,630,937) (400,627) (4,031,564) Interest expense (1,106) - (1,106) Transfers from Lee Memorial Health System 3,632, ,627 A 4,032,670 Change in net assets $ - $ - $ - A - To eliminate the total impact on net assets. Capital Assets At September 30, 2009 and 2008, the Trauma District had $190,484 and $243,987, respectively, invested in capital assets. (A breakdown of these assets can be found in Note 4 to the financial statements.) Capital assets are comprised of equipment, furniture and fixtures for the trauma surgeon office. Debt Outstanding There is no debt outstanding. All cash inflows and outflows are accounted for by the System via an inter-company payable/receivable with the District. It is anticipated that the District will operate at a negative cash flow position, thereby requiring increasing amounts of support by the System. 3

18 nalysis (Unaudited) September 30, 2009 and 2008 Corporate Compliance The healthcare industry is subject to numerous laws and regulations which include, but are not limited to, matters such as government rules relating to healthcare participation, licensure and accreditation standards, reimbursement for patient services as well as Medicare and Medicaid fraud and abuse. Providers that are found to have violated these laws and regulations may be excluded from participating in government healthcare programs, subjected to fines or penalties or be required to repay amounts received from previously billed patient services. As the District is dedicated to being legally and ethically correct in all of its actions, the Board has voluntarily established a corporate compliance program to assist in maintaining an ethical climate and to provide a mechanism to prevent, detect, and correct compliance violations. All employees, agents, medical staff, volunteers and any other individual doing business with or performing functions at the District will meet our legal and ethical standards. Balance Sheets at September 30, 2008 and 2007 Assets consist of patient accounts receivable from the provision of professional medical services by employed trauma surgeons, as well as equipment used by these surgeons in the office portion of their practice. The District does not maintain a separate bank account, as all cash is the responsibility of the System. Liabilities include accrued physician specialty support payments, payroll withholdings related to the employed trauma surgeons and their office staff, as well as a small amount of payables related to the same. The remaining account is the intercompany payable/receivable with the System. Statements of Operations and Changes in Net Assets at September 30, 2008 and 2007 The Trauma District is expected to operate at a loss, excluding funding received from the System. The System agreed to provide funds to the District equal to any operating loss. As such, the District does not generate any net assets during the year. The District did not have any net assets at September 30, 2008 and For fiscal years 2008 and 2007, funding for the District was generated from two key sources. The majority of funding came from monies provided by the System, much of which is provided by the Medicaid Low Income Pool Program. The System provides funding to eliminate any operating loss. Collections for the provision of trauma surgeon professional medical services provided substantial funds. A third source in fiscal years 2008 and 2007 was community support via contributions to the Lee Memorial Health System Foundation, Inc. (the "Foundation"). A fourth source of funding is the hich has provided funds through fines assessed on those ticketed for running red lights. Expenses include labor and benefits for employed trauma surgeons and support staff, payments to specialty physicians for providing professional services to trauma center patients and purchased include funding the operation of a single surgery suite, staffing for the rapid provision of services devoted to trauma patients, and reimbursing the Hospital for the actual cost, net of collections, of providing hospital services to all trauma patients. that are related to providing trauma service. The computation of these costs is reasonable and determined as objectively as possible. Management quantified these dollars by comparing costs of operations at the Hospital, which provides the trauma services, to similar operations at the er four acute care hospitals. Studies that have viewed total economic impact, such as the recent study commissioned by the Governor of the State of Florida, do include these types of 4

19 nalysis (Unaudited) September 30, 2009 and 2008 costs. The additional cost to be trauma ready at all times is estimated at $2.0 million per year. Opportunity costs relate to profits that could be realized by utilizing the trauma space on more profitable types of service. The opportunity costs foregone are estimated at $1.5 million per year. Below is a table that reconcile financial statements to the audited financial statements for the year ended September 30, LEE COUNTY TRAUMA SERVICES DISTRICT Statement of Operations Reconciliation Between Unaudited Internal Financial Statements and Audited Financial Statements Year Ended September 30, 2008 Unaudited Internal Audited Financial Statements Adjustments Financial Statements Operating revenues Net patient service revenue $ 1,528,994 $ - $ 1,528,994 Other revenue 321, ,917 Total operating revenues 1,850,911-1,850,911 Operating expenses Salaries, wages and benefits 4,317,887 9,663 4,327,550 Supplies and other 81,313-81,313 Purchased services 1,854,516 1,369,127 A 3,223,644 Depreciation 36, ,044 Total operating expenses 6,290,468 1,379,082 7,669,551 Operating loss (4,439,557) (1,379,083) (5,818,640) Interest income 1,106-1,106 Transfers from Lee Memorial Health System 4,438,451 1,379,083 B 5,817,534 Change in net assets $ - $ - $ - A - Services purchased from Lee Memorial Hospital for Trauma patients. Also a $46,726 adjustment was made to reverse an overaccrual at year end. B - To eliminate the total impact on net assets. Capital Assets At September 30, 2008 and 2007, the Trauma District had $243,987 and $277,690, respectively, invested in capital assets. (A breakdown of these assets can be found in Note 4 to the financial statements.) Capital assets are comprised of equipment, furniture and fixtures for the trauma surgeon office. Debt Outstanding There is no debt outstanding. All cash inflows and outflows are accounted for by the System via an inter-company payable/receivable with the District. It is anticipated that the District will operate at a negative cash flow position, thereby requiring increasing amounts of support by the System. 5

20 Report of Independent Certified Public Accountants To the Board of Directors of In our opinion, the accompanying balance sheets and the related statements of operations and changes in net assets, and of cash flows present fairly, in all material respects, the financial position of (the "District") at September 30, 2009 and 2008, and the changes in its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the District's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. September 30, 2009 on pages 1 to 5 is not a required part of the financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. December 18,

21 Balance Sheets September 30, 2009 and Assets Current assets Assets whose use is restricted $ 68,230 $ - Accounts receivable from patients, net of allowance for estimated uncollectibles of $1,310,686 in 2009 and $874,825 in , ,352 Total current assets 684, ,352 Noncurrent assets Capital assets, net 190, ,987 Due from Lee Memorial Health System 197,883 5,448 Total assets $ 1,073,106 $ 832,787 Liabilities and Net Assets Current liabilities Accrued payroll $ 383,369 $ 265,772 Other accrued liabilities 243, ,459 Total current liabilities 626, ,231 Noncurrent liabilities Other liabilities 446, ,556 Total liabilities 1,073, ,787 Commitments and contingencies Net assets Unrestricted - - Total liabilities and net assets $ 1,073,106 $ 832,787 The accompanying notes are an integral part of these financial statements. 7

22 Statements of Operations and Changes in Net Assets Years Ended September 30, 2009 and Operating revenues Net patient service revenue, net of provision for doubtful accounts of $2,437,962 in 2009 and $2,580,277 in 2008 $ 1,891,773 $ 1,528,994 Other revenue 319, ,917 Total operating revenues 2,211,308 1,850,911 Operating expenses Salaries, wages and benefits 4,069,282 4,327,550 Supplies and other 65,989 81,313 Purchased services 2,067,840 3,223,644 Depreciation 39,761 37,044 Total operating expenses 6,242,872 7,669,551 Operating loss (4,031,564) (5,818,640) Other changes in net assets Interest (expense) income (1,106) 1,106 Transfers from Lee Memorial Health System 4,032,670 5,817,534 Change in net assets - - Net assets Beginning of year - - End of year $ - $ - The accompanying notes are an integral part of these financial statements. 8

23 Statements of Cash Flows September 30, 2009 and Cash flows from operating activities Received from patient care services $ 1,858,616 $ 1,828,350 Payments to employees (3,951,685) (4,620,381) Payments to suppliers (2,011,107) (3,375,974) Other receipts 319, ,917 Net cash used in operating activities (3,784,641) (5,846,088) Cash flows from noncapital financing activities (Increase) decrease in due from Lee Memorial Health System (192,435) 30,789 Transfers from Lee Memorial Health System 4,032,670 5,817,534 Increase in assets whose use is restricted (68,230) - Net cash provided by noncapital financing activities 3,772,005 5,848,323 Cash flows from capital and related financing activities Transfers (purchases) of capital assets 12,636 (2,235) Net cash used in capital and related financing activities 12,636 (2,235) Change in cash and cash equivalents - - Cash and cash equivalents Beginning of year - - End of year $ - $ - Reconciliation of operating loss to net cash used in operating activities Operating loss $ (4,031,564) $ (5,818,640) Adjustments to reconcile operating loss to net cash used in operating activities Depreciation 39,761 37,044 Provision for bad debts 2,437,962 2,580,277 Changes in Accounts receivable from patients (2,471,119) (2,280,921) Accrued payroll 117,597 (292,831) Other accrued liabilities 115,017 (509,573) Other liabilities 7, ,556 Net cash used in operating activities $ (3,784,641) $ (5,846,088) 9

24 Notes to Financial Statements September 30, 2009 and Description of Reporting Entity and Summary of Significant Accounting Policies Description of Reporting Entity (the "District") is a not-for-profit organization located in Fort Myers, Florida. The District is a special purpose unit of local government created by special act of the 2003 Florida Legislature, Chapter , Laws of Florida, Special Acts, 1963 as re-codified by Chapter , Laws of Florida, Special Acts The District is classified as an independent special district under laws of Florida. The District serves as an integral member of the continuum of care includes Lee Memorial Hospital (the "Hospital"). Accounting Standards The District uses the proprietary fund method of accounting whereby revenues and expenses are recognized on the accrual basis. The District has 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 or contradict Governmental Accounting Standards Board ("GASB") pronouncements.. Basis of Presentation The accompanying financial statements of the District have been prepared on the basis that the District will continue as a going concern, which contemplates realization of assets and satisfaction of liabilities in the normal course of business. The District has a net loss from operations of $4,031,564 and $5,818,640 for the years ended September 30, 2009 and 2008, respectively, but has received funding from the System to the extent necessary. Per the Interlocal Agreement pursuant to the provisions of Section , Florida Statutes (2002) between the System and the District, the Hospital shall provide monetary support to the District in a sufficient amount so there is no financial loss (or gain) to the District. The Interlocal Agreement shall continue for a period of fifty years and may be terminated by either of the parties for cause, which shall be determined as the failure of the non-terminating party to fulfill any responsibility imposed by the Interlocal Agreement after receiving written notice of the same from the terminating party, which failure is not cured within 60 days after receiving such notice. Transfers from the System were $4,032,670 and $5,817,534 for the years ended September 30, 2009 and 2008, respectively. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Assets Whose Use is Restricted Assets whose use is restricted consists of cash received from the District's High Risk Driver's Program that requires attendees to pay cash. The funds are used to pay the speakers of the class and for supplies and educational materials. These assets are comprised of cash, which are stated at fair market value in the accompanying financial statements. Capital Assets Capital assets have been recorded at cost or fair market value at date of purchase or donation, respectively. Routine maintenance and repairs are expensed when incurred. Expenditures that materially increase the value, change the capacity or extend the useful life of an asset are capitalized. 10

25 Notes to Financial Statements September 30, 2009 and 2008 Major asset classifications and estimated useful lives are generally in accordance with those recommended by the American Hospital Association. The straight-line method of computing depreciation is used for all depreciable assets as summarized below: Buildings and improvements Equipment, furniture and fixtures 5 40 years 5 15 years Net Patient Service Revenue Patient service revenue is recorded by the District at its established rates. Contractual adjustments under third-party payment agreements represent the difference between established rates for services and amounts paid by the third-party payors. Contractual adjustments are deducted from the District's established rates to arrive at net patient service revenue. Income Taxes The District has been recognized by the Internal Revenue Service as a tax-exempt organization as furtherance of the District's tax-exempt purpose is exempt from Federal and State income taxes. The Code provides for taxation of unrelated business income under certain circumstances. The District has no material unrelated business income; however, such status is subject to final determination upon examination of the related income tax returns by the appropriate taxing authorities. Concentrations of Credit Risk Financial instruments which potentially subject the District to concentrations of credit risk consist principally of accounts receivable from patients. The District grants credit without collateral to its patients, most of whom are local residents and are insured under third-party payor agreements. The mix of receivables from patients and third-party payors as of September 30, 2009 and 2008 is as follows: Medicare 6% 4% Medicaid 10% 16% Managed care 4% 17% Insurance 12% 9% Self-pay and other 68% 54% 100% 100% Fair Value of Financial Instruments The carrying value of net accounts receivable from patients, accrued payroll and other accrued liabilities approximates fair value due to the short-term nature of these accounts. Reclassifications Certain items in the 2008 financial statements have been reclassified to conform to the 2009 presentation. These reclassifications had no effect on net assets, changes in net assets, or cash flows. 11

26 Notes to Financial Statements September 30, 2009 and Net Patient Service Revenue Net patient service revenue for the years ended September 30, 2009 and 2008 consists of the following: Gross patient service revenue $ 7,981,202 $ 7,177,379 Third-party payor and other contractual adjustments (3,651,467) (3,068,108) Provisions for doubtful accounts (2,437,962) (2,580,277) Net patient service revenue $ 1,891,773 $ 1,528,994 For Medicare cost reporting services, the District is considered a department of the Hospital. by the intermediaries for all years through September 30, Estimated third-party settlements estimates of the ultimate settlements for each program year. Differences between amounts estimated and actual settlements will be reflected as adjustments to contractual expense in the period in which the determination of such differences is made. Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. The District believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrongdoing. While no such regulatory inquiries have been made, compliance with such laws and regulations can be subject to future governmental review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from the Medicare and Medicaid programs. 3. Related Party Transactions The System provides the District with all of its support functions such as general administration, legal services, business and financial operations, information technology and all hospital clinical services, excluding physician services, at no additional cost. All normal operating expenses of the District are paid by the System and recorded by the District. Expenses of $6,203,111 and $6,216,654 were paid during the years ended September 30, 2009 and 2008, respectively, by the System on behalf of the District. The District reimburses the Hospital for the actual cost, net of collections, of providing hospital services to all trauma patients. Patients are categorized as trauma patients based upon the guidelines defined in the Florida Department of Health Florida Trauma Registry Manual. Expenses include labor and benefits for employed trauma surgeons and support staff, payments to specialty physicians for providing professional services to trauma center patients, and purchased services from the Hospital inclusive of funding the operation of a single surgery suite and staffing for the rapid provision of services devoted to trauma patients. The System allocates the amount of hospital net gain or loss on trauma patients through a monthly intercompany allocation. This amount equaled a net gain/loss of $0 for the year ended September 30, 2009 and a net loss of $1,415,853 for the year ended September 30, 2008 and is included in purchased services in the Statements of Operations and Changes in Net Assets. 12

27 Notes to Financial Statements September 30, 2009 and 2008 At September 30, 2009 and 2008, the District had a receivable from the System of $202,297 and $5,448, respectively. 4. Capital Assets Capital asset additions, transfers and retirements, and balances for the years ended September 30, 2009 and 2008 were as follows: Balance at Additions Retirem ents Balance at Septem ber 30, and and Septem ber 30, 2008 Transfers Transfers 2009 Buildings and improvements $ 114,232 $ - $ - $ 114,232 Equipment, furniture and fixtures 376, ,352 Totals 490, ,584 Less: Accumulated depreciation for Buildings and improvements (73,167) (9,900) - (83,067) Equipment, furniture and fixtures (187,172) (29,861) - (217,033) (260,339) (39,761) - (300,100) Construction-in-progress 13,742 (13,742) - Capital assets, net $ 243,987 $ (39,761) $ (13,742) $ 190,484 Balance at Additions Retirem ents Balance at Septem ber 30, and and Septem ber 30, 2007 Transfers Transfers 2008 Buildings and improvements $ 121,454 $ (7,222) $ - $ 114,232 Equipment, furniture and fixtures 366,895 9, ,352 Totals 488,349 2, ,584 Less: Accumulated depreciation for Buildings and improvements (63,266) (9,901) - (73,167) Equipment, furniture and fixtures (160,029) (27,143) - (187,172) (223,295) (37,044) - (260,339) Construction-in-progress 12,636 1,106-13,742 Capital assets, net $ 277,690 $ (33,703) $ - $ 243,987 Depreciation expense was $39,761 and $37,044 for the years ended September 30, 2009 and 2008, respectively. 5. Subsequent Events The District evaluated subsequent events through January 15, 2010, which is the date the financial statements were issued. 13

28 LEE COUNTY TRAUMA SERVICES DISTRICT BOARD OF DIRECTORS OLD BUSINESS

29 LEE COUNTY TRAUMA SERVICES DISTRICT BOARD OF DIRECTORS NEW BUSINESS

30 ADJOURNMENT LEE COUNTY TRAUMA SERVICES DISTRICT DATE OF THE NEXT REGULARLY SCHEDULED *LEE COUNTY TRAUMA SERVICES DISTRICT MEETING: Thursday, August 26, :00pm* LEE MEMORIAL HOSPITAL - Boardroom 2776 Cleveland Ave, Ft. Myers, FL *(Held concurrent with the Lee Memorial Health System Board of Directors Meeting)