RIVERSIDE HEAL TH SYSTEM and OBLIGATED AFFILIATES Kankakee, Illinois Combined Financial Statements and Supplementary Information March 31, 2016
FINANCIAL STATEMENT CERTIFICATION The accompanying balance sheet (combining and combined) of Health System as of March 31, 2016 and the related Statement of Income (combining and combined) and changes in in General Fund Balance and Statement of Cash Flows for the period then ended on a calendar basis, have been prepared by management, which is responsible for their integrity and objectivity. These statements have not been complied, reviewed or audited by outside accountants. Health System maintains a system of internal accounting control designed to provide reasonable assurance that assets are safeguarded and that transactions are properly executed, recorded and summarized to produce reliable records and reports. To the best of managements knowledge and belief, the statements and related information were prepared in conformity with generally accepted accounting principles and are based on recorded transactions and managements best estimates and judgment. The statements contained within pertain to the following issues from the Illinois Finance Authority: Illinois Finance Authority, Revenue Bonds, Series 2013 CUSIP: 45203HRJ3, 45203HRKO, 45203HRL8, 45203HRM6, 45203HRN4, 45203HRP9 45203HR07, 45203HRR5, 45203HRS3, 45203HRT1 Illinois Finance Authority, Revenue Bonds, Series 2009 CUSIP: 45200FZM4, 45200FZL6, 45200FZN2 Illinois Finance Authority, Revenue Refunding Bonds, Series 2006C CUSIP: 45200B068, 45200BQ50, 45200B043, 45200B035, 45200B027, 45200BP93 45200BP85,45200BP77,45200BP69,45200BP51 Illinois Health Facility Authority, Variable Rate Demand Revenue Bonds, Series 2002B CUSIP: 45200PUS4 Illinois Health Facility Authority, Revenue Bonds, Series 1996A and 1996B CUSIP: 45200LME3 Illinois Health Facility Authority, Variable Rate Demand Revenue Bonds, Series 1994 CUSIP: 45200LAS5 ~\0~, ~~sz=--~b~il~id~o~u~g~la~s~.~c~p~a-="""""";;:::::::::::::::...ir Treasurer/Chief Financial Officer Health System
Combined Balance Sheets March 3 1, 2016 Assets 3/31/2016 Change Since 12/31/2015 Current assets: Cash and cash equivalents Short-term investments $ 35,779,369 39,880,203 (8,779,105) 797,780 Receivables: Patient and resident accounts, less allowance for doubtful accounts of approximately $16,300,000 in 2016 Other 44,949,482 2,562,721 47,512,203 6,007,892 1,170,596 7,178,488 Inventory of supplies, at lower of cost (first-in, first-out) or market value Prepaid expenses Current portion of estimated insurance recoveries 8,215,539 6,348, 143 11,957,348 (352,244) 2,875,368 10,635,532 Total current assets 149,692,805 12,355,819 Assets whose use is limited or restricted: By board of directors for capital improvements and other Under bond indenture agreements held by trustee Deposits under residency agreements Donor-restricted investments 220,568,636 11,087,834 7,098,965 2,889,876 241,645,311 2,094,022 18,304 (181,065) 1 1,931,262 Land, buildings, and equipment, net of accumulated depreciation 270, 734, 166 2,744,088 Other assets: Due from HealthCare Foundation, Inc. Deferred financing costs Long-term investments Estimated insurance recoveries Other assets 5,953, 196 1,963,297 3,527,492 5,349,155 1,246,734 18,039,874 (21,923) (40,596) 401 1,111,796 34,116 1,083,794 Total assets $ 680,112,156 18,114,963
Combined Balance Sheets March 31, 2016 3/31/2016 Change Since 12/31/2015 Current liabilities: Current installments of long-term debt Accounts payable Accrued expenses Estimated payables under third-party reimbursement programs Due to unconsolidated subsidiary $ 5,430,000 3,396,724 41,210,542 27,625,503 243,302 (3,291,874) 16,540,664 (1,740,298) Total current liabilities 77,906,071 11,508,492 Refundable security deposits Refundable advance residency fees Long-term debt, excluding current installments and unamo1iized 250,864 7,098,965 (32,560) (181,065) bond discount and premium Estimated insurance liabilities Other long-term I iabi lities 164,524,842 23,586,552 6,027,415 (10,161) 2,547,843 1,398,383 Total liabilities 279,394,709 13,255,708 Net assets: Unrestricted Temporarily restricted Permanently restricted 397,523,158 2,720,434 473,855 4,554,913 304,338 4 Total net assets 400,717,447 4,859,255 Total liabilities and net assets $ 680,112,156 18,114,963
RIVERSIDE HEAL TH SYSTEM Combined Statements of Operations For the Three Months ended March 31, 2016 and 2015 Revenue: Net patient service revenue $ 80,212,775 Provision for uncollectible accounts (1,999,590) Net patient service revenue less provision for uncollectible accounts 78,213,185 Resident and health center services revenue 2,040,871 Other revenue 1,318,870 Total revenue and other support 81,572,926 Expenses: Salaries and employee benefits 38,180,475 Purchased services and supplies 24,841,002 Depreciation and amortization 5,924,708 Utilities 1,304,845 Professional fees 202,042 Insurance 1,998,260 Interest 1,938,582 2015 Total expenses 74,389,914 Income from operations 7,183,012 Nonoperating (losses) gains: Investment (loss) income, net 5,047,316 Change in fair value of derivative instruments (525,962) Other, net 207,391 Total nonoperating (losses) gains, net 4,728,745 Revenue and gains (deficient) in excess of expenses and losses 11,911,757 Net assets released from restriction for purchases of land, buildings, and equipment (Decrease) increase in unrestricted net assets $ 11,911,757 2016 78,608,346 (1,902,462) 76,705,884 2,598,365 1,493,864 80,798,113 43,113,603 23,414,469 6,446,944 1,313,909 294,922 1,589,038 1,678,610 77,851,495 2,946,618 2,715,444 (1,231,34 7) 124,198 1,608,295 4,554,913 4,554,913
Combined Statements of Changes in Net Assets For the Three Months ended March 31, 2016 Increase in unrestricted net assets Temporarily restricted net assets: Contributions for specific purposes Investment return earned on temporarily and permanently restricted investments Net assets released from restriction for purchases of land, buildings, and equipment Increase in temporarily restricted net assets $ 2016 4,554,913 304,338 4 304,342 Change in permanently restricted net assets: Change in net unrealized gains and losses on permanently restricted investments Change in net assets Net assets at beginning of year Net assets at March 31, 2016 4,859,255 395,858, 192 $ 400,717,447
Combined Statements of Cash Flows For the Three Months ended March 31, 2016 2016 Cash flows from operating activities: Revenue and gains deficient of expenses and losses Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization Provision for doubtful accounts Amortization of bond discount, net Restricted contributions and investment return Changes in assets and liabilities: Patient and resident accounts receivable Other receivables Inventory of supplies, prepaid expenses, and other assets Accounts payable and accrued expenses Estimated payables under third-party reimbursement programs Estimate insurance receivables and liabilities Refundable security deposits, net Other long-term liabilities Net cash provided by operating activities Cash flows from investing activities: Net change in short-term investments Net change in assets whose use is limited or restricted Net change in long-term investments Acquisition of land, buildings, and equipment, net Net cash provided by investing activities Cash flows from financing activities: Proceeds (repayment) of long-term debt, net Reductions in deferred financing costs Net cash provided by financing activities Net change in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at March 31, 2016 $ 4,554,913 6,446,944 1,902,462 5,079 304,342 (7,910,354) (l,170,596) (2,523,124) 13,248,790 (1,740,298) (9,199,485) (32,560) (762,985) 3,123,128 (797,780) (1,931,262) (12,594) (9,191,032) (11,932,668) (10,161) 40,596 30,435 (8,779,105) 44,558,474 $ 35,779,369
AND OB LI GA TED AFFILIATES Combining Schedule Balance Sheet Information March 31, 2016 Senior Medical Oakside Living Assets Center Coq~oration Center Eliminations Combined Current assets: Cash and cash equivalents $ 24,549,340 3,629,086 7,600,943 35,779,369 Short-term investments 13,457,916 26,422,287 39,880,203 Receivables: Patient and resident accounts, less allowance for doubtful accounts of approximately $16,300,000 41,898,363 844,398 2,206,72 I 44,949,482 Other 24,695,296 562,000 (22,694,575) 2,562,721 66,593,659 1,406,398 2,206,721 (22,694,575) 47,512,203 Inventory of supplies 6,926,612 1,260,400 28,527 8,215,539 Prepaid expenses 6,204,804 46,969 96,370 6,348,143 Current portion of estimated insurance recoveries I 1,957,348 11,957,348 Total current assets I 16,231,763 I 9,800,769 36,354,848 (22,694,575) 149,692,805 Assets whose use is limited or restricted: By board of directors for capital improvements and other 220,568,636 220,568,636 l!ndcr bond indenture agreements held by trustee 8,413,401 341,164 2,333,269 I 1,087,834 Dcposib under residency agreements 7,098,965 7,098,965 Donor-restricted investments 2,889,876 2,889,876 Land, buildings, and equipment, net 231,871,913 341,164 9,432,234 241,645,311 of accumulated depreciation 222,585,829 11,179,438 36,968,899 270,734,166 Other assets: Due from HealthCare Foundation, Inc. 5,508,948 444,248 5,953,196 Deferred financing costs 1,465,666 73,766 423,865 1,963,297 Long-term investments 3,527,492 3,527,492 Estimated insurance recoveries 5,349, 155 5,349,155 Other assets 36,027 1,210,707 1,246,734 15,887,288 1,284,473 868,113 18,039,874 Total assets $ 586,576, 793 32,605,844 83,624,094 (22,694,575) 680,112,156
Combining Schedule - Balance Sheet Information March31,2016 Senior Medical Oakside Living Liabilities and Net Assets Center Coq~oration Center Eliminations Combined Current liabilities: Current installments of long-tenn debt $ 4,566,560 349,713 513,727 5,430,000 Accounts payable 2,603,730 2,668,460 19,94 I,889 (21,817,355) 3,396,724 Accrued expenses 38,731,108 618,926 2,737,728 (877,220) 41,210,542 Estimated payables under third-party reimbursement programs 27,625,503 27,625,503 Due to uncunsulidated subsidiary 243,302 243,302 Total current liabilities 73,526,901 3,880,401 23,193,344 (22,694,575) 77,906,071 Refundable security deposits 250,864 250,864 Refundable advance residency fees 7,098,965 7,098,965 Long-term debt, excluding current installments and unamortized bond discount and premium 128,661,986 7,522,264 28,340,592 164,524,842 Estimated insurance liabilities 23,586,552 23,586,552 Other Jong-term liabilities 3,842,996 1,161,103 1,023,316 6,027,415 Total liabilities 229,618,435 12,563,768 59,907,081 (22,694,575) 279,394, 709 Net assets: Unrestricted 353,764,069 20,042,076 23,717,013 397,523, 158 Temporarily restricted 2,720,434 2,720,434 Permanently restricted 473,855 473,855 Total net assets 356,958,358 20,042,076 23,717,013 400,717,447 Total liabilities and net assets $ 586,576, 793 32,605,844 83,624,094 (22,694,575) 680,112,156
Combining Schedule- Statement of Operations Information For the Three Months ended March 31, 2016 Senior Medical Oakside Living Center Coq~oration Center Eliminations Combined Revenue: Net patient service revenue $ 73,186,498 1,453,840 3,968,008 78,608,346 Provision for uncollectible accounts (1,808,782) (93,680) (1,902,462) Net patient service revenue less provision for uncollectible accounts 71,377,716 1,360,160 3,968,008 76,705,884 Resident and health center services revenue 2,598,365 2,598,365 Other revenue 1,489,931 19,776 98,794 (114,637) 1,493,864 Total revenue 72,867,647 1,379,936 6,665,167 (114,637) 80,798,113 Expenses: Salaries and employee benefits 38,966,514 716,390 3,430,699 43,113,603 Purchased services and supplies 21,181,818 329,894 2,017,394 (114,637) 23,414,469 Depreciation and amortization 5,752,347 153,684 540,913 6,446,944 Utilities 1,064,045 35,813 214,051 1,313,909 Professional fees 262,921 29,176 2,825 294,922 Insurance 1,534,076 19,481 35,481 1,589,038 Interest 1,419,581 99,507 159,522 1,678,610 Total expenses 70,181,302 1,383,945 6,400,885 (114,637) 77,851,495 Income (loss) Ii-om operations 2,686,345 (4,009) 264,282 2,946,618 Nonoperating (losses) gains: Investment loss, net 2,227,693 107,910 379,841 2,715,444 Change in fair value of derivative instruments (897,634) (204,141) (129,572) (1,231,347) Other, net 27,082 97,116 124,198 Net nonoperating losses 1,357,141 885 250,269 1,608,295 Revenue and gains in excess of expenses and losses 4,043,486 (3,124) 514,551 4,554,913 Other changes in unrestricted net assets: Net assets released from restriction for purchases of land, buildings, and equipment (Decrease) increase in unrestricted net assets $ 4,043,486 (3, 124) 514,551 4,554,913
RIVERSIDE HEAL TH SYSTEM Combining Schedule - Statement of Changes in Net Assets Information For the Three Months ended March 31, 2016 Senior Medical Oakside Living Center Coq~oration Center Increase in unrestricted net assets $ 4,043,486 (3,124) 514,551 Temporarily restricted net assets: Contributions for specific purposes 304,338 l nvcstment return earned on temporarily and permanently restricted investments 4 Net assets released from restriction for purchases of land, buildings, and equipment Increase in temporarily restricted net assets 304,342 Change in permanently restricted net assets: Change in net unrealized gains and losses on permanently restricted investments Change in net assets 4,347,828 (3,124) 514,551 Nel assets m beginning of year 352,610,530 20,045,200 23,202,462 Net assets at end of year $ 356,958,358 20,042,076 23,717,013 Eliminations Combined 4,554,913 304,338 4 304,342 4,859,255 395,858,192 400,717,447
Hospital Utilization The table below sets forth the Hospital's comparative information with respect to utilization for the years ended December 31, 2013 through December 31, 2015 and for the three months ended March 31, 2015 and 2016. For the Year Ended December 31: Three Months Ended March 31, 2013 2014 2015 2015 2016 Admissions 10,412 9,945 10, 199 2,626 2,769 Patient Days 50,962 50,073 52,616 13,939 14,581 Average Daily Census 140 137 144 155 160 Average Length of Stay (all services) 4.9 5.1 5.1 5.3 5.2 Outpatient Visits (non-emergency) 173,615 187,400 206,367 49,725 50,634 Emergency Care Visits 39,635 41,048 43,852 10,283 10,956 Outpatient Surgery 7,863 8,263 8,956 2, 112 1,789 Inpatient Surgery 2,625 2,484 2,610 633 646 Market Share Presence St. Mary's Hospital is the only other hospital in the community, and in the primary service area. Presence St. Mary's Hospital is a 303 licensed bed facility located within one-half mile of the Hospital. 2012 2013 2014 2015 St. Mary's St. Mary's St. Mary's St. Mary's Admissions Inpatient Surgery Outpatient Surgery * Emergency Room Visits Deliveries 62.1% 37.9% 67.9% 32.1% 68.6% 31.4% 54.1% 45.9% 65.1% 34.9% 65.0% 35.0% 65.9% 34.1% 72.8% 27.2% 71.7% 28.3% 67.9% 32.1% 70.3% 29.7% 56.8% 43.2% 59.7% 40.3% 69.1% 31.0% 73.1% 26.9% 66.8% 33.2% 72.3% 27.7% 72.8% 27.2% 58.6% 41.4% 74.4% 25.6% ********************************************* Source: Illinois CompData
Sources of Inpatient Revenue by Payor Type (Percent) Year Medicare Medicaid Blue Cross Commercial Other* 2013 60.1 13.4 12.9 2014 59.3 15.2 12.2 2015 59.7 15.6 12.3 2016 61.5 15.2 12.3 8.3 5.3 9.2 4.1 9.3 3.1 7.6 3.4 * Other includes private pay. Note 1: Net Patient Service Revenue Three Months Ended March 31, 2015 2016 Gross patient service revenue Less provision for: Contractual adjustments under third-party reimbursement programs Other Net patient service revenue $ 247,839,635 113, 196,691 54,430, 169 $ 80,212,775 $ 247,898,446 118, 187,892 51, 102,208 $ 78,608,346