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CONTENTS:
Unaudited
For the Six Months Ended
June 30, 2019 June 30, 2018
Operating Revenue
Net Patient Service Revenue $ 1,416,888 $ 1,324,675
Investment Income and Net Realized Gains on Sale of Securities 43,769 15,861
Contributions 229 459
Other Revenue 55,987 48,224
Net Assets Released from Restrictions for Operations 20,511 20,666
Total Operating Revenue 1,537,384 1,409,885
Operating Expenses
Salaries and Wages 556,930 504,872
Employee Benefits 148,150 133,236
Supplies and Other 646,180 595,528
Depreciation 59,891 55,036
Interest and Amortization 16,002 15,606
Total Operating Expenses 1,427,153 1,304,278
Other Items
Net Change in Unrealized Gains and Losses on Investments and Change in
Value of Alternative Investments 45,587 3,910
Third Party Reimbursement Settlements 575 40,091
Gain on Sale of Clinical Outreach Laboratory Business - 2,773
Net Change in Participation in Captive Insurance Program 49,988 17,761
Excess of Revenue over Expenses 206,381 170,142
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The Mount Sinai Hospital
Consolidated Statements of Financial Position
($ in 000's)
Unaudited Audited
June 30, 2019 December 31, 2018
Assets
Current Assets:
Cash and Cash Equivalents $ 102,543 $ 110,221
Short-Term Investments 296,930 452,833
Total Cash, Cash Equivalents and Short-Term Investments 399,473 563,054
Patient Accounts Receivable, net 395,216 370,347
Professional Liabilities Insurance Recoveries Receivable 39,453 39,453
Assets Limited as to Use, current portion 84,582 33,868
Due from Related Organizations, net, current portion 200,793 200,797
Inventories 38,905 39,921
Other Current Assets 58,001 35,178
Total Current Assets 1,216,423 1,282,618
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The Mount Sinai Hospital
Consolidated Statements of Financial Position
($ in 000's)
Unaudited Audited
June 30, 2019 December 31, 2018
Liabilities and Net Assets
Current Liabilities:
Accounts Payable and Accrued Expenses $ 198,386 $ 205,213
Accrued Salaries and Related Liabilities 148,831 114,823
Accrued Interest Payable 15,684 14,916
Accrued Construction and Capital Asset Liabilities 12,780 9,658
Current Portion of Long-Term Debt 33,380 33,380
Operating Lease Liability, Current Portion 15,326 -
Professional Liabilities, Current Portion 39,453 39,453
Other Current Liabilities 82,536 37,280
Total Current Liabilities 546,376 454,723
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The Mount Sinai Hospital
Consolidated Statements of Changes in Net Assets
($ in 000's)
Net assets at beginning of period - January 1, 2019 1,989,529 108,455 85,961 194,416 $ 2,183,945
Net increase in net assets without donor restrictions 175,328 - - - 175,328
Donor restricted contributions, net - 27,878 - 27,878 27,878
Net assets released from restrictions for operations - (20,511) - (20,511) (20,511)
Net assets released from restrictions for asset acquisition - (529) - (529) (529)
Net assets at end of period - June 30, 2019 2,164,857 115,293 85,961 201,254 $ 2,366,111
Net assets at beginning of period - January 1, 2018 $ 1,829,431 $ 104,359 $ 83,811 188,170 $ 2,017,601
Net increase in net assets without donor restrictions 146,414 - - - 146,414
Donor restricted contributions, net - 27,799 2,000 29,799 29,799
Net assets released from restrictions for operations - (20,666) - (20,666) (20,666)
Net assets released from restrictions for asset acquisition - (2,289) - (2,289) (2,289)
Net assets at end of period - June 30, 2018 1,975,845 109,203 85,811 195,014 $ 2,170,859
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The Mount Sinai Hospital
Consolidated Statements of Cash Flows
($ in 000's)
Unaudited
For the Six Months Ended
June 30, 2019 June 30, 2018
Operating Activities
Change in net assets $ 182,166 $ 153,258
Adjustments to reconcile change in net assets to net cash
provided by operating activities:
Depreciation 59,891 55,036
Amortization of deferred financing fees and bond premium/discount (103) (124)
Net change in unrealized gains and losses on investments and change
in value of alternative investments (45,587) (3,910)
Net donor restricted contributions (27,878) (29,799)
Transfers to affiliates 31,582 26,017
Gain on sale of clinical outreach laboratory business - (2,773)
Changes in:
Patient accounts receivable (24,869) (13,569)
Accounts payable and accrued expenses (6,827) (1,083)
Accrued salaries and related liabilities 34,008 7,259
Accrued interest payable 768 7,267
Due to/from related organizations (159,996) (105,037)
Other operating liabilities 74,428 (25,069)
Other operating assets (31,200) (1,206)
Net cash provided by operating activities 86,383 66,267
Investing Activities:
Acquisition of property, plant and equipment, net (94,612) (81,494)
Due from related organizations for capital purposes (8,437) (108,873)
Decrease/(increase) in investments, net 95,614 (323,763)
(Increase)/Decrease in assets limited as to use (50,763) (23,608)
Funding of self-insurance trust (28,073) -
Transfers to affiliates (31,582) (26,017)
Proceeds from sale of clinical outreach laboratory business - 2,773
Net cash used in investing activities (117,853) (560,982)
Financing Activities
Principal payments on long term debt (4,086) (4,677)
Net donor-restricted contributions 27,878 29,799
Net cash provided by financing activities 23,792 25,122
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Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2019 (Unaudited)
The accompanying unaudited interim consolidated financial statements as of June 30, 2019 and for the six
months then ended have been prepared in accordance with U.S. generally accepted accounting principles
applied on a basis substantially consistent with that of the 2018 audited consolidated financial statements of
The Mount Sinai Hospital (“MSH”). They do not include all of the information and footnotes required by U.S.
generally accepted accounting principles for complete consolidated financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair
presentation have been included.
MSH presumes that users of this interim financial information have read or have access to MSH’s audited
consolidated financial statements and that the adequacy of additional disclosures needed for a fair
presentation may be determined in that context. MSH’s audited consolidated financial statements for the
years ended December 31, 2018 and 2017 are on file, pursuant to MSH’s continuing disclosure requirements
and the information contained therein is incorporated herein. Accordingly, footnotes and other disclosures,
including disclosures related to the composition of the investment pool and details of investments that would
substantially duplicate the disclosures contained in MSH’s most recent audited consolidated financial
statements have been omitted.
Patient volumes and net operating revenue and results are subject to seasonal and other variations caused by
a number of factors. Monthly and periodic operating results are not necessarily representative of operations
for a full year for various reasons, including levels of occupancy and other patient volumes, interest rates,
unusual or infrequent items and other seasonal fluctuations. These same considerations apply to year-to-year
comparisons.
Certain amounts in the accompanying unaudited consolidated financial statements are projections based on
amounts that are only updated annually and are therefore projected for interim financial reporting purposes.
Such amounts and estimates are subject to change and are reevaluated by MSH periodically and on an annual
basis.
On October 23, 2018, Mount Sinai Hospitals Group (“MSHG”) became the sole corporate member and active
parent of South Nassau Communities Hospital (“South Nassau”). MSHG made an initial payment in 2018 of
$20 million to South Nassau and anticipates making additional payments of $20 million per year over the next
five years ($120 million in total) to South Nassau to support certain capital projects. South Nassau will not
become a Member of the Obligated Group as part of this affiliation.
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No.
(ASU) 2016-02, Leases, which requires lessees to report most leases on their statements of financial position,
but recognize expenses on their income statements in a manner similar to the prior accounting. The guidance
also eliminates current real estate-specific provisions. Lessors in operating leases continue to recognize the
underlying asset and recognize lease income on either a straight-line basis or another systematic and rational
basis. The provisions of ASU 2016-02 became effective for the Hospital for annual periods beginning after
December 15, 2018. The Hospital adopted ASU 2016-02 effective January 1, 2019 in its unaudited
consolidated financial statements as of and for the six month period ended June 30, 2019. The Hospital
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Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2019 (Unaudited)
adopted ASU 2016-02 following the modified retrospective method of application. As such, the prior period
consolidated financial statement amounts and disclosures have not been adjusted to reflect the provisions of
the new standard. There was no cumulative-effect adjustment to the prior period consolidated net assets as a
result of the adoption. The Hospital has made the transition-specific election to apply the package of practical
expedients which allows for the carryforward of historical assessments of (1) whether contracts are or contain
leases, (2) lease classification and (3) initial direct costs. Additionally, for operating leases entered into prior to
January 1, 2019, the Hospital has elected to utilize the operating leases’ initial lease term as of the date of
adoption to determine the discount rate used to initially measure the liability. Certain other accounting policy
elections and quantitative and qualitative information pertaining to the Hospital’s adoption of ASU 2016-02
are described in Note G.
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated
financial statements. Estimates also affect the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
For assets and liabilities required to be measured at fair value, MSH measures fair value based on the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. In order to increase consistency and comparability in fair value
measurements, MSH follows a fair value hierarchy that prioritizes observable and unobservable inputs used to
measure fair value into three broad levels, which are described below:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for
identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Observable inputs that are based on inputs not quoted in active markets, but corroborated by
market data.
Level 3: Unobservable inputs are used when little or no market data is available. The fair value
hierarchy gives the lowest priority to Level 3 inputs.
In determining fair value, MSH utilizes valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs to the extent possible as well as considers nonperforming risk in its
assessment of fair value. The table below excludes investments reported using the equity method of
accounting. Fair value for Level 1 is based upon quoted market prices. Fair value for Level 2 is based on
quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in
markets that are not active and model-based valuation techniques for which all significant assumptions are
observable in the market or can be corroborated by observable market data for substantially the full term of
the assets. Inputs are obtained from various sources including market participants, dealers and brokers.
Pooled investments are measured at net asset value as a practical expedient.
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Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2019 (Unaudited)
Financial assets carried at fair value by MSH as of June 30, 2019 and December 31, 2018 are classified in the
tables below in one of the three categories described above (in thousands):
Fixed Income
U.S. Government - 226,845 - 226,845
Corporate Bonds - 75,567 - 75,567
Total 191,403 302,412 - 493,815
Fixed Income
U.S. Government - 334,177 - 334,177
Corporate Bonds - 136,186 - 136,186
Total 144,150 470,363 614,513
This table does not include other investments that are not carried at fair value (approximately $236.1 million
at June 30, 2019 and $229.7 million at December 31, 2018). Pooled investments of approximately $30.2
million and $22.3 million are included within short-term investments at June 30, 2019 and December 31, 2018,
respectively.
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Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2019 (Unaudited)
Series 2010 bonds, including unamortized original issue premium of $4,106; maturing
217,595
through 2026 with interest rates varying from 1.81% to 5.00% per annum (a)
Series 2011A bonds, including unamortized original issue premium of $412; maturing
57,877
through 2041 with interest rates varying from 3.00% - 5.00% (b)
Series 2013 bonds, maturing serially through 2024 with fixed interest rate of 2.83% (c) 98,933
Series 2017 bonds, interest rates ranging from 3.83% to 3.98% (d) 382,000
Accounts receivable financing (e) 3,825
As of the most recent measurement period, MSH was in compliance with all required financial covenants for
its Long-term debt.
(a) In June 2010, MSH refunded and refinanced its outstanding Series 2000 bonds that had been issued
through the Dormitory Authority of the State of New York (“DASNY”) partially at par and partially at
101%. The new bonds, Series 2010, were issued as both taxable and tax-exempt bonds ($28.5 million
par amount of taxable bonds and $331.2 million par amount of tax-exempt bonds). The bonds mature
serially through July 1, 2026.
(b) In October 2011, DASNY issued $65.4 million of tax-exempt bonds (Series 2011A) on behalf of MSH.
The bonds were issued to finance MSH’s share of the costs of construction of a cancer treatment
center in the Leon and Norma Hess Center for Science & Medicine. The bonds mature serially through
July 1, 2041.
(c) In December 2013, Build NYC Resource Corporation issued $112.0 million of tax-exempt bonds (Series
2013A and B) on behalf of MSH. The bonds were issued to finance an expansion and renovation
project at MSH’s Queens campus. The bonds were privately placed with JPMorgan Chase and TD Bank.
The bonds mature through July 1, 2024.
(d) In December 2017, MSH entered issued $382.0 million of taxable bonds for general taxable purposes.
Certain proceeds of the bonds (approximately $106.0 million) were used to repay the outstanding debt
of Beth Israel Medical Center (“BIMC”) which MSH had previously guaranteed. Funds loaned to BIMC
from MSH are recorded as a component of due from related organizations. Other proceeds of the
bonds were used to repay a $40.0 million bank loan. The bonds are structured with interest only
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Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2019 (Unaudited)
payments until 2031 and two bullet maturities: one in 2035 and the other in 2048. Annual sinking
fund payments begin in 2031.
As security for its obligations under the Series 2010, 2011A, 2013 A and B bonds and Series 2017
bonds, MSH provided a gross revenue pledge and executed a mortgage on its patient care property.
Furthermore, MSH agreed to limitations on its ability to transfer assets, borrow additional funds as
well as other limitations. MSH agreed to maintain certain financial ratios including a debt service
coverage ratio and days cash on hand ratio and to maintain certain debt service and other reserve
funds (included in assets limited as to use).
(e) In October 2006, MSH entered into a term loan agreement with JP Morgan Chase Bank, N.A. The term
loan agreement was extended in 2013 and re-structured as a 7-year loan with 10-year amortization.
The loan was extended to expire in October 2020. Interest is fixed at 2.44%.
(f) In August 2014, MSH and the Icahn School of Medicine at Mount Sinai (“ISMMS”) entered into a
transaction pursuant to which Mount Sinai purchased a condominium interest of approximately
450,000 square feet of space located at 150 East 42nd Street to be used to consolidate corporate
services of the Mount Sinai Health System. The new space replaced existing leased and owned office
space to provide additional capacity for clinical and research activities. The condominium interest was
purchased by MSH and shortly thereafter transferred to a special-purpose, limited liability company,
formed by MSH (the “LLC”). MSH and ISMMS are obligated to guarantee, on a joint and several basis,
all of the obligations of the LLC which include note payments, operating expenses, taxes and other
carrying costs and charges, some of which expenses escalate on an annual basis. The principal amount
is $110.1 million, with monthly payments through March 2046, and interest at a rate of 8% per year,
with deferred payments until September 2015. The note is not an obligation under the Master Trust
Indenture. Loan payments and expenses are allocated to the corporate entities that use the space,
including MSH, ISMMS, BIMC, The St. Luke’s-Roosevelt Hospital Center (“SLR”), and The New York Eye
& Ear Infirmary (“NYEE”).
(g) In June 2016, MSH entered into a $9.8 million capital lease to finance the acquisition of hospital beds
for use by MSH, BIMC, SLR and NYEE. Lease term is seven years at an effective interest rate of 1.91%.
Principal payments on long-term debt subsequent to June 30, 2019 are as follows (in thousands):
2019 28,656
2020 36,109
2021 35,964
2022 37,646
2023 38,317
Thereafter 696,712
Total 873,404
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Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2019 (Unaudited)
Note E – Accounts Receivable for Services to Patients and Net Patient Service Revenue
Effective January 1, 2018 upon the adoption of ASU 2014-09, net patient service revenue is reported at the
amount that reflects the consideration for which the Hospital expects to be entitled in exchange for providing
patient care. The adoption of this standard, using a modified retrospective method, did not have a material
impact on MSH’s consolidated financial position, results of operations or cash flows as compared to what
reported amounts would have been under the prior standard.
The Hospital uses a portfolio approach as a practical expedient to account for categories of patient contracts as
collective groups rather than recognizing revenue on an individual contract basis. The portfolio consists of
major payor classes for inpatient revenue and outpatient revenue. Based on historical collection trends and
other analyses, the Hospital believes that revenue recognized by utilizing the portfolio approach approximates
the revenue that would have been recognized if an individual contract approach were used.
The Hospital’s initial estimate of the transaction price for services provided to patients subject to revenue
recognition is determined by reducing the total standard charges related to the patient services provided by
various elements of variable consideration, including contractual adjustments, discounts, implicit price
concessions, and other reductions to the Hospital’s standard charges. The Hospital determines the transaction
price associated with services provided to patients who have third-party payor coverage on the basis of
contractual or formula-driven rates for the services rendered (see description of third-party payor payment
programs below). The estimates for contractual allowances and discounts are based on contractual
agreements, the Hospital’s discount policies and historical experience. For uninsured and under-insured
patients who do not qualify for charity care, the Hospital determines the transaction price associated with
services rendered on the basis of charges reduced by implicit price concessions. Implicit price concessions
included in the estimate of the transaction price are based on the Hospital’s historical collection experience for
applicable patient portfolios.
Generally, the Hospital bills patients and third-party payors after the services are performed and the patient is
discharged. Net patient service revenue is recognized as performance obligations are satisfied. Performance
obligations are determined based on the nature of the services provided by the Hospital. Net patient service
revenue for performance obligations satisfied over time is recognized based on actual charges incurred in
relation to total charges. The Hospital believes that this method provides a reasonable depiction of the
transfer of services over the term of the performance obligation based on the services needed to satisfy the
obligation. Generally, performance obligations satisfied over time relate to patients receiving inpatient acute
care services or patients receiving services in the Hospital’s outpatient settings. The Hospital measures the
performance obligation from admission into the Hospital or the commencement of an outpatient service to
the point when it is no longer required to provide services to that patient, which is generally at the time of
discharge or the completion of the outpatient visit.
As substantially all of its performance obligations relate to contracts with a duration of less than one year, the
Hospital has elected to apply the optional exemption provided in ASU 2014-09 and, therefore, is not required
to disclose the aggregate amount of the transaction price allocated to performance obligations that are
unsatisfied or partially unsatisfied at the end of the reporting period. The unsatisfied or partially unsatisfied
performance obligations referred to above are primarily related to inpatient acute care services at the end of
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Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2019 (Unaudited)
the reporting period for patients who remain admitted at that time (in-house patients). The performance
obligations for in-house patients are generally completed when the patients are discharged, which for the
majority of the Hospital’s in-house patients occurs within days or weeks after the end of the reporting period.
Subsequent changes to the estimate of the transaction price (determined on a portfolio basis when applicable)
are generally recorded as adjustments to patient service revenue in the period of the change. For the six
months ended June 30, 2019, changes in the Hospital’s estimates of implicit price concessions, discounts,
contractual adjustments or other reductions to expected payments for performance obligations satisfied in
prior years were not significant. Portfolio collection estimates are updated based on collection trends.
Subsequent changes that are determined to be the result of an adverse change in the patient’s ability to pay
(determined on a portfolio basis when applicable) are recorded as bad debt expense. Bad debt expense for
the six months ended June 30, 2019 was not significant.
The Hospital has determined that the nature, amount, timing and uncertainty of revenue and cash flows are
affected by the following factors: payors, lines of business and timing of when revenue is recognized. Tables
providing details of these factors are presented below.
Net patient service revenue disaggregated by payor for the six months ended June 30, 2019 and June 30, 2018,
is as follows (in thousands):
Deductibles, copayments and coinsurance under third-party payment programs which are the patient’s
responsibility are included within the respective primary payor category above.
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Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2019 (Unaudited)
Net patient service revenue disaggregated by lines of service for the six months ended June 30, 2019 and June
30, 2018, is as follows (in thousands):
For the Six Months Ended
June 30, 2019 June 30, 2018
Inpatient Services 943,828 894,000
Outpatient Services 473,060 430,675
Total 1,416,888 1,324,675
At June 30, 2019, patient accounts receivable, net is comprised of the following components (in thousands):
Patient receivables 369,022
Contract assets 26,194
Contract assets are related to in-house patients who were provided services during the reporting period but
were not discharged as of the reporting date and for which the Hospital does not have the right to bill.
Transfers to affiliates consists of $31.6M as of June 30, 2019 ($26.0M as of June 30, 2018) for MSH’s funding of
ISMMS’s community practice plan deficits.
Note G – Leases
As described in Note A, the Hospital adopted ASU 2016-02 effective January 1, 2019. The Hospital leases
certain property and equipment under finance and operating leases, the classification of which is based on the
underlying terms of the agreement and certain criteria, such as lease term relative to useful life and total lease
payments compared to fair value, among others. Finance leases result in an accounting treatment similar to
an acquisition of the asset. For leases with initial terms greater than one year (or initially, greater than one
year remaining under the lease at the date of adoption of ASU 2016-02), the Hospital records the related right-
of-use assets and liabilities at the present value of the lease payments to be paid over the life of the related
lease. The Hospital’s leases may include variable lease payments and renewal options. Variable lease
payments are excluded from the amounts used to determine the right-of-use assets and liabilities unless the
variable lease payments depend on an index or rate or are in substance fixed payments. Lease payments
related to periods subject to renewal options are also excluded from the amounts used to determine the right-
of-use assets and liabilities unless the Hospital is reasonably certain to exercise the option to extend the lease.
The present value of lease payments is calculated by utilizing the discount rate stated in the lease, when
readily determinable. For leases for which this rate is not readily available, the Hospital has elected to use a
risk-free discount rate determined using a period comparable with that of the lease term. The Hospital has
made an accounting policy election not to separate lease components from non-lease components in contracts
when determining its lease payments, as permitted by ASU 2016-02. As such, the Hospital accounts for the
applicable non-lease components together with the related lease components when determining the right-of-
use assets and liabilities. The Hospital has made an accounting policy election not to record leases with an
initial term of less than one year as right-of-use assets and liabilities.
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Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2019 (Unaudited)
The following schedule summarizes information related to the lease assets and liabilities as of and for the six-
month period ended June 30, 2019 (in thousands):
Other Information
Operating cash flows from finance leases 1,820
Operating cash flows from operating leases 6,517
For finance leases, right-of-use assets are recorded in property, buildings and equipment and lease liabilities are
recorded in long-term debt in the accompanying consolidated statements of financial position. For operating
leases, right-of-use assets are recorded in right-of-use assets and lease liabilities are recorded in operating lease
liabilities, current and non-current, in the accompanying consolidated statement of financial position.
The following table reconciles the undiscounted lease payments to the lease liabilities recorded on the
accompanying consolidated statement of financial position at June 30, 2019 (in thousands):
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Notes to Consolidated Financial Statements
For the Six Months Ended June 30, 2019 (Unaudited)
Generally accepted accounting principles establish standards for accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or are available to be issued. The
standards are to be applied to subsequent events not addressed in other applicable accounting principles
generally accepted in the United States. The standards set forth the period after the balance sheet date during
which management should evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, the circumstances under which an entity should recognize events or
transactions occurring after the balance sheet date in its financial statements and the disclosures an entity
should make about events or transactions that occurred after the balance sheet date.
On November 27, 2018, MSH, BIMC, Montefiore Health System, and Maimonides Medical Center, collectively
the owners of Hospitals Insurance Company (“HIC”) and FOJP Service Corporation (“FOJP”), announced their
agreement to sell HIC and FOJP to The Doctors Company for $650 million, subject to closing adjustments. The
transaction closed on July 31, 2019 and the hospitals shared in the proceeds ratably according to their
ownership. MSH received approximately $166 million on August 1, 2019. HIC will continue to exist as an
admitted New York-domiciled insurer providing coverage to MSH and BIMC and related physicians.
For purposes of the accompanying interim consolidated financial statements, MSH has considered for
accounting and disclosure events that occurred through August 29, 2019.
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Utilization Statistics for
The Mount Sinai Hospital*
Page | 16
Icahn School of Medicine Mount Sinai Hospitals Group, Inc. Mount Sinai Medical
at Mount Sinai (Active Parent Holding Company) Center
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Review of Performance
For the Six Months Ended June 30, 2019
The creation of Mount Sinai Health System is an integral part of MSH’s long-term vision and strategy. MSH
management believes that, in the long term, an integrated health care system is central to meeting the
requirements of a changing health care environment. The model of care is changing not just for New York
hospitals, but for all health care providers, nationwide. Accountable care organizations, bundled
payments, pay for performance and quality outcomes, shared savings programs and full risk models are
becoming a reality and increasingly displacing the current system of fee- for-service. Expanded geographic
reach, an increased patient base and access to primary care physicians will be critical components of
successful systems in the future. Mount Sinai Health System was formed to address these changing
conditions. Notwithstanding the benefits to the formation of the health system, there are risks, including
execution risk and costs of integration.
In September 2015, MSHG entered into an agreement with the New York State Department of Health to
participate in the Vital Access Provider Safety Net Program (“VAP”). As a participant in this program,
MSHG was awarded approximately $81.4 million in funding to extend over three years. As of March 31,
2018, the full VAP award has been received. MSHG was also granted a temporary Medicaid rate
enhancement also extending over three years which ended on March 31, 2018. MSHG has also agreed to
complete a full asset merger of MSH, BIMC, SLR and NYEE by no later than December 31, 2019.
In October 2018, MSHG became the sole corporate member and active parent of South Nassau. In
connection with the transaction, MSH has agreed to contribute $120 million to South Nassau over five
years to assist in the development of capital projects. For the year ended December 31, 2018, $20 million
was contributed by MSHG as a transfer to affiliates by MSH. South Nassau did not become a Member of
the Obligated Group as part of this affiliation.
On November 27, 2018, MSH, BIMC, Montefiore Health System, and Maimonides Medical Center,
collectively the owners of Hospitals Insurance Company (“HIC”) and FOJP Service Corporation (“FOJP”),
announced their agreement to sell HIC and FOJP to The Doctors Company for $650 million, subject to
closing adjustments. The transaction closed on July 31, 2019 and the hospitals shared in the proceeds
ratably according to their ownership. MSH received approximately $166 million on August 1, 2019. HIC
Page | 18
Review of Performance
For the Six Months Ended June 30, 2019
will continue to exist as an admitted New York-domiciled insurer providing coverage to MSH and related
physicians.
Summary of Operations
For the six months ended June 30, 2019, MSH recorded an excess of operating revenue over operating
expenses before other items of $110.2 million and a $136.7 million increase in net assets without donor
restrictions. This compares to an excess of operating revenue over operating expenses before other items
of $105.6 million and an increase in net assets without donor restrictions of $146.4 million for the six
months ended June 30, 2018. Excess of operating revenue over operating expenses before other items
for the six months ended June 30, 2019 was $4.6 million higher than the same period in the prior year.
For the six months ended June 30, 2019, MSH recorded total operating revenue of approximately $1.54
billion: 61% from inpatient services; 31% from outpatient services; and 8% from other sources. MSH
recorded $1.42 billion in net patient service revenue, earned $43.8 million in unrestricted investment
income and net realized gains on sales of securities, received $0.2 million in unrestricted philanthropic
contributions, and recorded $56.0 million in other revenue and $20.5 million in net assets released from
restrictions for operations. Other revenue includes the receipt of Delivery System Reform Incentive
Payment revenue (DSRIP) and 340(b) contract pharmacy program revenue as well as revenue from
ancillary services, such as the cafeteria, parking lot and rental properties. DSRIP revenue is offset by
related expenses included in operating expenses. Net assets released from restrictions represent donor-
restricted contributions for which all donor restrictions have been satisfied during the reporting period.
Total operating revenue for the six months ended June 30, 2019 increased $127.5million, or 9%, as
compared to the six months ended June 30, 2018.
Net patient service revenue for the six months ended June 30, 2019 increased 7% as compared to the six
months ended June 30, 2018. The $92.2 million increase in net patient service revenue was a result of a
$49.8 million increase in net inpatient revenue and a $42.4 million increase in net outpatient revenue.
Inpatient discharges (excluding exempt units) increased by 918 over the prior year period. Outpatient
revenue increased 10% largely due to an increase in outpatient cancer and non-cancer infusion, and
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Review of Performance
For the Six Months Ended June 30, 2019
cardiology cases. The increase in net inpatient revenue reflects an increase in complex cases and third-
party payments.
Length of stay at the Manhattan campus remained the same as the prior year period, at 6.1. Overall case
mix for the Manhattan campus increased by 0.01 as compared to the prior year period.
Total operating expenses for the six months ended June 30, 2019, totaled $1.42 billion compared with
$1.30 billion for the six months ended June 30, 2018. Expenses for the first half of 2019 break down as
follows: 50% in salaries and benefits; 45% in supplies; 4% in depreciation and amortization and 1% in
interest expense.
Salaries and wages and benefits expense increased 11% for the six months ended June 30, 2019 as
compared to the corresponding period in 2018. Supplies expense increased 9% partly as a result of higher
costs related to increased surgical volume as well as in oncology and other, non-cancer infusion services.
Reflecting the increase in net patient service revenue, patient accounts receivable, net at June 30, 2019
increased by $24.9 million since December 31, 2018, remaining at a consistent 28% of net patient service
revenue at June 30, 2019 as compared to year-end. Days in accounts payable decreased from 65 days at
December 31, 2018 to 60 days at June 30, 2019.
During the six months ended June 30, 2019, MSH expended $94.6 million on capital acquisitions from
operations. MSH continues to provide ISMMS with liquidity in connection with ongoing projects related
to the strategic plan. The amounts provided to ISMMS are recorded as Due from related organizations on
the Consolidated Statements of Financial Position. The amounts provided to ISMMS are recorded as Due
from related organizations on the Consolidated Statements of Financial Position. The amount due to MSH
from ISMMS was approximately $359.2 million at June 30, 2019, an increase of $89.5 million since
December 31, 2018. As a result of these cash expenditures, Cash, short-term and pooled investments
decreased by $87.8 million (6%) between December 31, 2018 and June 30, 2019.
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Review of Performance
For the Six Months Ended June 30, 2019
Required Ratios
At June 30, 2019, the Long-Term Debt Service Coverage Ratio for MSH was 5.58x and the Days Cash on
Hand was 182 days.
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Review of Performance
For the Six Months Ended June 30, 2019
reach. South Nassau, a 455 bed, acute care hospital located in Oceanside, NY, serves over 900,000
residents on the south shore of Long Island. MSHS is continuing to expand its ambulatory/physician
network presence throughout the five boroughs, Long Island and New Jersey through owned practices
(such as in Hudson Yards and Cuba Hill, LI) and through network agreements (such as with One Medical).
Through its current efforts, MSH participates in various shared savings agreements, is a participant in a
Medicare ACO, and actively manages its Medicaid, at-risk population. MSHS also continues to focus on
recruiting key physicians in certain identified areas for growth, such as cancer, cardiac and surgical
services.
MSH will continue to focus on reducing its length of stay as a way to create additional capacity while
limiting the cost of investing in new units, as well as renovating certain departments and relocating others.
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