North Memorial Health Care

Transcription

1 North Memorial Health Care Quarterly Financial Disclosure Statement Quarter Ended December 31, 2015

2 North Memorial Health Care Quarterly Financial Disclosure Statement December 31, 2015 Table of Contents Quarterly Disclosure: Fourth Quarter 2015 Overview of the Organization 2015 Q4 Unaudited Financial Statements North Memorial Health Care Consolidated Obligated Group - Consolidating Schedules Obligated Group - Financial Ratios Managements Discussion of Results & Operations Debt & Investment Summary

3 Tab 1 Quarterly Financial Disclosure Statement Quarter Ended December 31, 2015

4 Overview of the Organization North Memorial Health Care Quarterly Financial Disclosure Statement Quarter Ended December 31, 2015 Introduction: North Memorial Health Care is non-profit health care system serving the northwest quadrant of the Minneapolis, Minnesota metro area. North Memorial consists of2 hospitals, 311 employed providers, 5000 employees, ambulance services, clinics and joint ventures. North Memorial Hospital in Robbinsdale, MN is licensed for 518 beds and offers a broad range of inpatient and outpatient services. Some of these services include: emergency & trauma services, obstetrical care, Level 3 neo-natal intensive care, heart and vascular services, diagnostic imaging, stroke center, rehabilitation services as well as general medical and surgical care. North is certified as a Level 1 Trauma Center by the American College of Surgeons and is well known for its emergency and trauma services. At the hospital, North Memorial employs physicians in the areas of emergency services, cardiology, cardiac surgery, cancer care, hospitalists and intensivists. North Memorial owns and operates 15 primary care clinics, 2 retail clinics and 2 urgent care clinics. In addition, North Memorial has many independent clinic group affiliations which refer a majority of their business to Nmih. North Memorial has a large ambulance and air care division which serves much of Minnesota and western Wisconsin. This service currently has 135 ambulances with 27 bases and 7 helicopters based out of 6 locations. In addition to the Robbinsdale campus, North Memorial has a second hospital campus in Maple Grove, Minnesota. The Maple Grove Campus includes an 88,000 sq.ft. medical office building, a 112,000 sq.ft outpatient center and a 130 bed hospital with future expansion capacity up to 300 beds. The Maple Grove Hospital is owned by Maple Grove Hospital Corporation which is owned 7 5% by North Memorial and 25% by Fairview Health Services.

5 North Memorial Medical Center named Healthgrades America's 50 Best Hospitals: Recipient five years in a row Top 1 % of hospitals in the nation providing overall clinical excellence across a broad spectrum of conditions and procedures consistently for a minimum of seven consecutive years. North Memorial Medical Center named Healthgrades Distinguished Hospital Award for Clinical Excellence: Recipient ten years in a row Distinguished Hospitals for Clinical Excellence had an overall 26.4% lower riskadjusted mortality rate across 19 procedures and conditions where in-hospital mortality was the clinical outcome, compared to all other hospitals In 2016 HealthGrades recognized six North Memorial Medical Center specialty areas for Clinical Excellence: o Critical Care o Stroke Care o Neuroscience o Neurosurgery o Pulmonary Care o Gastrointestinal Care In 2016 HealthGrades recognized the following North Memorial Medical Center specialty areas in the top 5% in the nation: Treatment for Stroke GI Medical Treatment Overall Pulmonary Services In 2016 HealthGrades recognized North Memorial Medical Center with their highest level Quality Five Star Rankings for the following surgical/procedural areas: Treatment of GI Bleed Colorectal Surgeries Treatment of Sepsis Treatment of Respiratory Failure Treatment of Chronic Obstructive Pulmonary Treatment of Stroke Treatment of Heart Failure North Memorial Medical Center recognized by Healthgrades as a recipient of the Patient Safety Excellence Award: Recipient three years in a row

6 Top 10% of hospitals in the nation providing safe, high quality care based on analysis of inpatient data and safety indicators from Medicare and the Agency of Healthcare Research (AHRQ). DNV Comprehensive Stroke Center Certification for providing the most advanced treatment available for stroke patients Gold Plus Achievement Award Hospital from The American Heart Association and The American Stroke Association. In addition, NMMC was recognized as a recipient of the association's Target: Stroke Honor Roll, for improving stroke care Blue Distinction Center+ For Cardiac Care awarded by Blue Cross and Blue Shield of MN for quality cardiac care and efficiency Blue Distinction Center+ For Hip and Knee Replacement by Blue Cross and Blue Shield of MN for quality care, safety and efficiency Health Care Info1matics' Innovation Award received for using process improvement to reduce the number of elective inductions and Cesarean deliveries perfo1med before 39 weeks of pregnancy Diabetes: Education Recognition award from the American Diabetes Association for the Diabetes Self-Management Program In 2015, Maple Grove Hospital named one of the Nation's 100 Top Hospitals by Truven Health Analytics, a leading provider of information and solutions to improve the cost and quality of healthcare.

7 Tab2 Quarterly Financial Disclosure Statement Quarter Ended December 31, 2015

8 QUARTERLY DISCLOSURE CERTIFICATE To the best knowledge of the undersigned, the Unaudited Consolidated Financial Statements of North Memorial Health Care were prepared in accordance with generally accepted accounting principles from the Financial Accounting Standards Board, for the quarter ending, September 30, The Statements are true, correct and complete but shall be subject to audit and year-end adjustments if required. Aaron Bloomquist VP Finance - CFO North Memorial Health Care Date

9 North Memorial Health Care Financial Statements Senior Management 4th Quarter 2015

10 North Memorial Health Care Consolidated Statement of Revenue and Expenses For the Quarter and Period Ended December 31, 2015 (OOO's omitted)... 1-!.~.. 9~~-~-~E... Year to Date nuooo u n n H H oouo Revenue Patient Revenue Net Patient Revenue $ 221,392 $ 200,872 $ 827,025 $ 753,326 Provision for Uncollectible Accounts (5,693) (6,316) (23,266) (25,897) Total Net Patient Revenue 215, , , ,429 Other Operating Revenue 11,021 12,880 43,161 50,208 Net Revenue 226, , , ,637 Expenses Salaries and Wages 105,242 95, , ,970 Employee Benefits 21,014 21,175 96,661 92,214 Supplies 31,313 30, , ,930 Purchased Services 25,910 22,762 85,108 77,288 Other 24,921 21,587 82,827 77,090 Depreciation 10,686 10,780 42,089 42,809 Interest 2,972 3,278 12,598 13,273 Total Operating Expenses 222, , , ,574 Net Operating Margin 4,662 1,828 14,865 8,063 Net investment gain (loss) 7,693 6, ,990 Joint Venture Income I Other (6,481) (2,410) (7,577) (4,706) Minority interest (1,769) (1,215) (6,267) (3,993) Total Non-Operating Revenue (557) 2,506 (13,808) 5,291 Revenue over Expenses $ 4,105 $ 4,334 $ 1,057 $ 13,354 Operating Margin 2.1% 0.9% 1.8% 1.0% Profit Margin 1.8% 2.1% 0.1% 1.7% Operating Cash Flow Margin 8.1% 7.7% 8.2% 8.2% Labor expense percent of net revenue 55.7% 56.3% 58.6% 57.9%

11 North Memorial Health Care Consolidated Statement of Cash Flows For the Quarter and Period Ended December 31, 2015 (OOO's omitted) 4th Quarter Year to Date Net Cash Flows From Operating Activities Funds Provided by Operations Revenue over Expenses $ 4,105 $ 1,057 Depreciation and Amortization 10,016 41,638 Provision for Bad Debt 5,693 23,266 Gain on Sale of Assets Net Change in Unrealized (Gain) Loss on Investments (4,031) 13,042 Change in Minority Interest 1,769 6,267 Provision for Insurance Claims 1, Total Provided by Operations 19,271 86,315 Funds Provided by (Used for) Working Capital Net Patient Receivables (10,554) (27,165) Accounts Payable 13,333 4,504 Other, Net (8,519) (5,834) Net Funds Used for Working Capital (5,740) (28,495) Net Cash Flow from Operating Activities 13,531 57,820 Cash Flows From Investing Activities Purchases of Property and Equipment (14,346) (37,735) Proceeds from Sale of Asset - 65 Purchases oflnsurance Subsidiary Investments (182) (78) Net Purchases of Assets Whose Use is Limited (7,441) (12,965) Net Increase in Other Assets 8,625 6,079 Net Cash Flow Used by Investing Activities (13,344) (44,634) Cash Flows From Financing Activities Payments of Long-term debt (1,302) (14,151) Change in Deferred Credits (2,289) (5,185) Decrease in Contributed Capital (1,750) (5,488) Net Cash Flow From Financing Activities (5,341) (24,824) Decrease in Cash and Short-Term Investments (5,154) (11,638) Cash and Short-Term Investments, Beginning of Period 37,573 44,057 Cash and Short-Term Investments, End of Period $ 32,419 $ 32,419

12 North Memorial Health Care Consolidated Balance Sheet As of December 31, 2015 and December 31, 2014 (OOO's omitted) Assets... Liabilities ne~~ffit;e;... ne~-~ffit;e; r;e~~ffit;e-~ r;e-~effi i>e-~ Inc/(Dec) Inc/(Dec) Current Assets Current Liabilities Cash $ 32,419 $ 44,057 $ (11,638) Current Maturities $ 10,025 $ 9,450 $ 575 Accounts Receivable Accounts Payable 45,141 40,637 4,504 Net Patient 114, ,202 3,899 Accrued Expenses Other 9,316 11,198 (1,882) Vacation Pay 19,191 17,061 2,130 Inventories 9,338 8, Payroll Expenses 21,587 29,064 (7,477) Prepaid Expenses 5,903 5, Due to Third Party Payors 1,786 1, Assets limited as to use 2,169 2, Interest and Other 7,617 8,012 (395) Total Current Assets 173, ,004 (7,758) Total Current Liabilities 105, ,859 (512) Assets With Limited Use Other Liabilities Board Designated Investments 263, ,746 6,103 A.H.A.L Claims 7,822 6, $245,144 Payable under SEC Lending - 3,538 (3,538) Collateral under SEC Lending - 3,360 (3,360) Deferred Credits 20,361 25,546 (5,185) Bond Fund Investments 2,543 7,349 (4,806) Long-Term Debt, Less A.H.A.L Investments 7,615 7,627 (12) Current Maturities 243, ,286 (14,515) Restricted Investments 5,252 6,625 (1,373) Total Other Liabilities 271, ,336 (22,382) Total Assets w/limited Use 279, ,707 (3,448) Net Assets Caoital Debt Cost I Other $ 32,805 39,266 (6,461) Beginning of Year 440, ,073 13,820 Net Income 1,057 13,354 (12,297) Plant Assets Donated Property (7) Land and Improvements 26,933 24,000 2,933 Change in Restricet Balances (1,627) 446 (2,073) Accum Depree - Improvements (6,586) (5,973) (613) 440, ,890 (557) Buildings 351, ,804 7,320 Accumulated Benefit Accum Depree - Bldg (155,287) (140,840) (14,447) Obligation (22,436) (23,703) 1,267 Equipment and Fixtures 382, ,922 9,301 Contributed Capital (10,748) (5,260) (5,488) Accum Depree - Equip (295,204) (290,246) (4,958) Minority interest 16,174 9,907 6,267 Construction in Progress 12,111 15,386 (3,275) End of period 423, ,834 1,489 - Total Plant Assets 315, ,052 (3,738) Total Liabilities and Total Assets $ 800,624 $ 822,029 $ (21,405) Net Assets $ 800,624 $ 822,029 $ (21,405)

13 Leverage Ratios Debt Service Coverage Debt to Capitalization North Memorial Health Care Consolidated Key Indicators For December 31, 2015 and December 31, % % Liquidity Ratios Days Revenue in Accounts Receivable Average Payment Period Days of Cash on Hand Profitability Indicators Operating Margin Quarter Year to Date Profit Margin Quarter Year to Date % 1.8% 1.8% 0.1% % 1.7%

14 1. Organization North Memorial Health Care Notes to Consolidated Interim Financial Statements North Memorial Health Care consists of an integrated, multi-organizational healthcare system, serving patients in the northwest quadrant of Minneapolis and suburbs. The North Memorial structure includes the parent company North Memorial Health Care, wholly owned subsidiaries and joint ventures as follows: Entity North Memorial Health Care Maple Grove Hospital Oakdale Health Enterprises Institute For Athletic Medicine Oakdale Medical Center, LLC Maple Grove Surgery Center Minnesota Diagnostic Imaging Monticello Cancer Center Ownership 100% Tax- Exempt 75% Tax-Exempt 100% 37% Tax-exempt 100% Tax-Exempt 50% 60% 40% Services Hospital - Robbinsdale Primary Care Clinics Medical Transportation Cancer Center Cardiovascular Clinic Outpatient Clinics Hospital Ambulance Services Physical Therapy Medical Office Buildings Outpatient Surgery Outpatient Imaging Cancer Center Associated Health Assurance North Radiation Therapy Blaine Urgency Center, LLC Minnetonka Surgery Center 100% Tax-Exempt 50% 50% 78% Captive Insurance Company Radiation Oncology Urgency Center Outpatient Surgery

15 Crystal Imaging Center 50% Outpatient Imaging North Memorial Health Care is the sole member of the obligated group with regard to the Master Trust Indenture. Maple Grove Hospital was been accounted for on the equity method through Q From Q forward, Maple Grove Hospital is accounted for on the consolidation method. 2. Allowance and Provision for Uncollectable Accounts Patient Accounts Receivable: Accounts receivable are reduced by a contractual allowance and an allowance for uncollectible accounts. In evaluating the collectability of self pay accounts receivable (which includes both patients without insurance and patients with deductible and copayment balances that are currently due or are estimated to be due in the future for which third-party coverage exists for part of the bill), North Memorial analyzes its past history and identifies trends for each of its major payer sources of revenue to estimate the appropriate allowance for uncollectible accounts and a provision for uncollectible accounts. Management regularly reviews data about these major payer sources of revenue in evaluating the sufficiency of the allowance for uncollectible accounts. For receivables associated with services provided to patients who have third-party coverage, North Memorial analyzes contractually due amounts and provides an allowance for uncollectible accounts and a provision for uncollectible accounts, if necessary (for example, for expected uncollectible deductibles and copayments on accounts for which the third-party payer has not yet paid, or for payers who are known to be having financial difficulties that make the realization of amounts due unlikely). North Memorial's allowance for uncollectible accounts for self-pay patients was 40.0% of self-pay receivables at December 31, 2015 and 55.6% for the same period in North Memorial's self-pay write-offs decreased $1.7 from $21.6 million in 2014 to $19.9 million in N01ih Memorial has not changed its charity care or uninsured discount policies during the three months ended December 31, North Memorial does not maintain an allowance for uncollectible accounts from thirdparty payers, nor did it have any write-offs from third-pmiy payers. Patient Service Revenue: North Memorial recognizes patient service revenue associated with services provided to patients who have third-pmiy payer coverage on the basis of contractual rates for the services rendered. For uninsured patients that do not qualify for charity care, North Memorial recognizes revenue on the basis of its standard rates for services provided (or on the basis of discounted rates, if negotiated or provided by policy). On the basis of historical experience, a significant portion of North Memorial's uninsured patients and patients responsible for co-payments and deductibles

16 will be unable or unwilling to pay for the services provided. Thus, North Memorial records a significant provision for uncollectible accounts related to patient responsibility amounts in the period the services are provided. Patient service revenue, net of contractual allowances and discounts (but before the provision for uncollectible accounts), recognized, YTD, from these major payer sources, is as follows: Patient Service revenue (net of contractual Allowances and discounts) Third-Party Payers Self-Pay/Patient responsibility Total All Payers -"$~8~0-=-3=,5~9-=-1--"$'--_~2=3-"-,4=3-=-3-~$'----"8=2'-'-7-'-", 0-=--' Investments North Memorial invests its board designated funds in a well diversified portfolio of stocks, bonds, and real estate with the assistance of an independent investment advisor, Watershed Investment Consultants. The target allocation for the portfolio is 50% equities, 10% hedged equites, 30% fixed income and 10% real estate. In June of 2008 North Memorial elected to implement FASB 159 and as a result, securities are carried on the balance sheet at fair market value and the change in value for any period appears on the income statement. As of 12/31/15 the portfolio had a market value of $256.1 mil. and a cost basis of $245.lmil. 4. Debt North Memorial has two outstanding bond issues, the 2015 series and the 2011 series. The 2015 series balance is $44.9mil and has a fixed rate of 3.8%. The 2011 series consists of two fixed rate private placements of $60mil. and $15mil. with interest rates of 4.3% and 4.7%. North Memorial also guarantees 75% of the 2007 Maple Grove Hospital bonds. (See tab 5 for additional detail) 5. Contingencies North Memorial is a party in various legal proceedings and potential claims arising in the ordinary course of business. Although the outcome of these lawsuits cannot be predicted with ce1iainty, management believes the ultimate disposition of such matters will not have an adverse effect on North Memorial's financial condition or operations. N01ih Memorial purchases general liability, auto liability, helicopter liability and property insurance in the commercial marketplace. Worker's compensation is selfinsured through the company's captive insurance company subject to per claim caps with the worker's compensation reinsurance association. Medical malpractice is purchased commercially for the employed physicians and through the captive insurance for all other

17 staff with excess limits purchased commercially. Management works with its broker to determine appropriate coverage limits. Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action, including fines, penalties and exclusion from the Medicare and Medicaid programs. As a result, there is at least a reasonable chance that recorded estimates could change by a material amount in the near term. North Memorial 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 that would have a material effect on its consolidated financial statements.

18 Tab3 Quarterly Financial Disclosure Statement Quarter Ended December 31, 2015

19 North Memorial Obligated to Consolidated Financial Statements For the Twelve Months Ended December 31, 2015 YTD Non-Obligated Eliminations I YTD Obligated Group Members Rec lasses Consolidated Revenues Patient Revenue Patient Revenue 652, ,677 (5,953) 827,025 Provision for Uncollectible Accour (19,197) (9,070) 5,001 (23,266) Total Net Patient Revenue 633, ,607 (952) 803,759 Other Operating Revenue 62,237 7,007 (26,083) 43,161 Net Revenue 695, ,614 (27,035) 846,920 Expenses Salary and Wages 349,232 50, ,417 Employee Benefits 85,367 11,294-96,661 Supplies 89,963 23, ,355 Purchased Services 72,878 37,122 (24,892) 85,108 Utilities 8,505 1,566 (139) 9,932 Maintenance and Repairs 23,951 3,066 (47) 26,970 Rental 14, (1,386) 13,959 Other 23,281 9,256 (571) 31,966 Depreciation 32,281 9,808-42,089 Interest 5,200 7,398-12,598 Total Operating Expenses 705, ,067 (27,035) 832,055 Net Operating Margin (9,682) 24,547-14,865 Investment income (loss) 12, ,078 Unrealized gain (loss) (12,202) (840) - (13,042) Joint Venture & Other (7,577) - - (7,577) Minority Interest - - (6,267) (6,267) Revenue over Expenses (17,237) 24,561 (6,267) 1,057

20 Obligated to Consolidated Financial Statements As of: December 31, 2015 YTD Non-Obligated Eliminations I YTD Q.~!.!sated Group Members Reclasses Consolidated Assets Current Assets Cash ,528 32,419 Accounts Receivable Net Patient 84,538 29, ,101 Other 11,724 (1,519) (889) 9,316 Inventories 6,995 2,343 9,338 Prepaid Expenses 5, ,903 Assets Limited as to use Total Current Assets 109,435 64,700 (889) 173,246 Assets with limited Use Board Designated 256,229 7, ,849 Bond funds 837 1,706 2,543 A.H.A.L Investments 7,615 7,615 Restricted Investments 5, Total Assets Limited 257,066 22, ,259 Capital Debt Cost I Other (12,213) 5,340 39,678 32,805 Plant Assets Land and Improvements 25,824 1,109 26,933 Accumulated Depreciation (6,184) (402) (6,586) Buildings 220, , ,124 Accumulated Depreciation (126,225) (29,062) (155,287) Equipment & Fixtures 343,481 38, ,223 Accumulated Depreciation (273,112) (22,092) (295,204) Construction in Progress 11, Total Plant Assets 195, , ,314 Total Assets 549, ,506 38, ,624 Liabilities Current liabilities Current Maturities LTD 6,068 3,957 10,025 Due to third party payors 1, ,786 Accounts Payable 38,038 7,109 (6) 45,141 Accrued Expenses Vacation Pay 17,443 1,748 19,191 Payroll Expenses 19,345 2,242 21,587 Interest and Other 3,426 4,189 7,617 Total Current Liabilities 85,488 19,863 (6) 105,347 other liabilities A.H.A.L. Claims 7,822 7,822 Deferred Credits 23,003 (1,757) (885) 20,361 LT Debt less Current Maturities 101, , ,771 Total Other Liabilities 124, ,202 (885) 271,954 Net Assets Beginning of Year 378,882 64,486 (2,464) 440,903 Capital Contribution (42,983) 32,235 (10,748) Net change in unrealized gain on Foundation investments (1,627) (1,627) Net Income (17,241) 24,565 (6,265) 1, ,641 44,441 23, ,585 Minority interest 16,174 16,174 Accumulated Benefit Obligation (22,437) (22,436) End of Period 339,204 44,441 39, ,323 Total Liabilities and Net Assets 549, ,506 38, ,624

21 Obligated Group Ratios $(000) Days Cash on Hand Actual Actual Consolidated 12/31/ /31/ /31/2015 Cash & Investments 257, ,502 Borrowed Moneys< One Year 6,068 5,679 Unrestricted Liquid Funds 251, ,823 Operating Expenses 705, ,699 (less dep. & amort.) (32,281) (31,503) #Days Expenses per Day 1,843 1,691 Days Cash on Hand Debt to Capitalization Indebtedness 101, ,195 Plus Letters of Credit Plus Guarantees 106, ,568 Total Indebtedness 208, ,763 Net Assets - Obligated Group 549, ,038 Total Indebtedness + Net Assets 757, ,801 Debt to Capitalization Ratio Debt Service Coverage (rolling 12 mo.) (rolling 12 mo.) Net Revenue 695, ,284 Total Operating Expenses 705, ,699 Realized Gains (Losses) (12,202) (4,135) Plus Interest 5,200 5,662 Plus Depreciation 32,281 31,503 Plus Non-recurring Items Income Available for Debt Service 15,597 25,615 Debt Service Requirement 6,068 7,663 Debt Service Coverage

22 Tab4 Quarterly Financial Disclosure Statement Quarter Ended December 31, 2015

23 MANAGEMENT'S DISCUSSION OF FINANCIAL OPERATIONS Review of Financial Performance - Quarter ended 12/31/2015 North Memorial Health Care: Maple Grove Hospital is reported on the consolidation method, other joint ventures reported on the equity method. North Memorial experienced a fourth quarter profit on operations of $4.6mil. as compared to Q profit of $1. 8mil. Total revenue over expenses for the quarter was a profit of $4. lmil and included a net investment gain of $7. 7mil. YTD 2015 operating margin is a profit of $14.9mil. as compared to a 2014 YTD profit of $8. lmil. Total revenue over expenses YTD is a profit of $1. lmil and includes a break even investment return. Operating Income: NMHC operating income for the quarter ended September 30, 2015 was a profit of $4.7mil. or 2.1 %. As compared to 4th quarter 2014, total net revenue increased 9.3%. Net patient revenue increased by 10.2%, provision for uncollectible accounts decreased by (9.9%) and other operating revenue decreased (14.4%). Total operating expenses for the quarter increased by 8.0% with salaries increasing by 10.2%, employee benefits decreasing by (.8%), supplies increasing 2.7%, purchased services increasing by 13.8%, and depreciation decreasing by.9% as compared to Q NMHC operating income YTD 2015 was a profit of $14.9mil. or 1.8% as compared to a YTD 2014 profit of $8.lmil. or 1.0%. Total net revenue increased by 8.9%. Net patient revenue increased by 10.5%, provision for uncollectible accounts decreased by (10.2%) and other operating revenue decreased (14.0%). Total operating expense increased by 8.1 % with salaries increasing by 11.6%, employee benefits increasing 4.8%, supplies increasing by 4.1 %, purchased services increasing by 10.l %, and depreciation decreasing by (1.7%) as compared to YTD Non-operating Income Fourth quarter 2015 investment gains were $7.7mil. The investment portfolio had a gain of 2. 7% as compared to a custom index of 3.1 % for the same period. Fourth quarter joint venture income was a loss of ($6.5mil) which is the North Memorial share of the loss at Preferred One. YTD 2015 investment performance was break even The investment portfolio had a gain of (0.0%) as compared to a custom index of.6% for the same period. YTD joint venture income is a loss of $7.6mil.which is the North Memorial share of the loss at Preferred One. Nmih Memorial has since sold its interest in Prefe1red One.

24 Balance Sheet Cash has decreased from $44. lmil. at 12/31/14 to $32.4mil. as of 12/31/2015. Board designated investments have increased $6.lmil. YTD to $263.8mil. Total consolidated Net Assets increased from $421.8mil. as of 12/31/14 to $423.3 mil. at 12/31/15. During the third quarter the 2005 bonds were called and refunded with a new series 2015 issue. The 2015 series was issued with no reserve fund and the reserve fund from the 2005 series was used to retire outstanding debt. YTD, long term debt has decreased ($14.5mil).

25 Tab5 Quarterly Financial Disclosure Statement Quarter Ended December 31, 2015

26 North Memorial Health Care Debt and Investment Summary Debt Structure 12/31/2015 Outstanding Structure Final Credit (OOOs) Maturity Enhancement Int. Rate North Memorial 2015 Bond Issue- (1) 44,915 Fixed Rate 2035 None 3.8% 20 l IA Bond Issue- (2) 45,808 Fixed Rate 2018 None 4.3% 201 IB Bond Issue- (3) 12,101 Fixed Rate 2026 None 4.7% Oakdale LLC Maple Grove Mortgage 13,496 Fixed Rate 2033 None 2.9% Guarantees Maple Grove Hospital 132,576 Fixed Rate 2037 None 4.9% (guarantee 75%) 1- $44.9 Million refunding of2005 Series in Sept Refunding only, no new money was borrowed, same final maturity. 2- $60 Million private placement issue with Siemens. 15 year amortization, 7 year balloon. 3- $15 Million private placement issue with GE. 15 year amortization, 7 year put option. Long Term Asset Allocation Target Allocation 12/31/15 Actual Large Cap Equity 21% 21.6 % Small-Mid Cap Equity 9% 9.0% International Equity 20% 19.3% Hedged Equity 10% 10.5% Fixed Income 30% 29.5% Private Real Estate 10% 10.1%