VANGUARD HEALTH SYSTEMS INC - FORM 8-K - EX-99.3 - January 19, 2011

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8-K - FORM 8-K - VANGUARD HEALTH SYSTEMS INCg25814e8vk.htm
EX-99.1 - EX-99.1 - VANGUARD HEALTH SYSTEMS INCg25814exv99w1.htm
EX-99.2 - EX-99.2 - VANGUARD HEALTH SYSTEMS INCg25814exv99w2.htm
EX-99.4 - EX-99.4 - VANGUARD HEALTH SYSTEMS INCg25814exv99w4.htm
Exhibit 99.3
THE DETROIT MEDICAL CENTER AND SUBSIDIARIES
 
 
         
    September 30,
 		 
   
2010
 
    (Unaudited)
 		 
    (In thousands)  
 
Assets
       
Current assets:
       
Cash and cash equivalents
  $ 31,811  
Net patient accounts receivable
    181,137  
Estimated third-party payor settlements
    24,404  
Other accounts receivable
    36,677  
Current portion of assets whose use is limited or restricted
    3,056  
Securities lending collateral
    14,835  
Other current assets
    34,698  
         
Total current assets
    326,618  
Assets whose use is limited or restricted:
       
Board-designated funds for capital improvements
    38,119  
Board-designated funds for specific purposes
    62,311  
Professional liability funds
    166,132  
Funds held in trust under bond agreements
    32,419  
Endowment funds
    66,565  
Donor restricted funds
    82,028  
         
      447,574  
Property and equipment, net
    442,790  
Other noncurrent assets
    38,007  
         
Total assets
  $ 1,254,989  
         
Liabilities and net assets
       
Current liabilities:
       
Accounts payable and accrued expenses
  $ 198,772  
Accrued compensation and related amounts
    62,613  
Estimated third-party payor settlements
    47,732  
Payable under securities lending program
    14,835  
Current portion of long-term debt
    24,494  
Current portion of accrued professional liability losses
    12,200  
         
Total current liabilities
    360,646  
Other liabilities:
       
Long-term debt, less current portion
    468,140  
Accrued retirement liability
    184,766  
Accrued professional liability losses, less current portion
    182,428  
Other noncurrent liabilities
    50,563  
         
Total other liabilities
    885,897  
         
Total liabilities
    1,246,543  
Net assets (deficit):
       
Unrestricted
    (140,150 )
Temporarily restricted
    82,030  
Permanently restricted
    66,566  
         
Total net assets
    8,446  
         
Total liabilities and net assets
  $ 1,254,989  
         


1

 

THE DETROIT MEDICAL CENTER AND SUBSIDIARIES
 
 
                                 
   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2010
   
2009
   
2010
   
2009
 
    (Unaudited)
 		 
    (In thousands)  
 
Unrestricted revenue and other support
                               
Net patient service revenue
  $ 504,812     $ 502,652     $ 1,502,975     $ 1,476,340  
Other revenue
    37,437       33,666       117,231       101,227  
                                 
Total unrestricted revenue and other support
    542,249       536,318       1,620,206       1,577,567  
Expenses
                               
Salaries, wages, and benefits
    227,130       223,975       671,572       660,179  
Services, supplies, and other
    198,622       202,832       601,593       589,099  
Provision for uncollectible accounts
    67,360       72,362       195,043       198,837  
Professional liability insurance
    319       5,548       11,924       23,688  
Interest
    7,242       8,137       22,141       24,252  
Regulatory settlement expense
    30,000       —       30,000       —  
Depreciation and amortization
    20,015       20,449       58,866       60,735  
                                 
Total expenses
    550,688       533,303       1,591,139       1,556,790  
                                 
Income (loss) from operations before unrealized gains (losses) on investments
    (8,439 )     3,015       29,067       20,777  
Unrealized gains on investments
    11,275       13,606       4,423       32,186  
                                 
Income from operations
    2,836       16,621       33,490       52,963  
Other nonoperating income;
                               
Investment income and other
    1,997       3,426       1,720       3,045  
                                 
Excess of revenue over expenses
  $ 4,833     $ 20,047     $ 35,210     $ 56,008  
Unrestricted net assets
                               
Excess of revenues over expenses
  $ 4,833     $ 20,047     $ 35,210     $ 56,008  
Net assets released from restrictions for long-lived assets
    1,558       1,155       4,172       3,418  
Other changes
    (1,527 )     455       (1,584 )     610  
                                 
Increase in unrestricted assets
    4,864       21,202       37,798       60,036  
Temporarily restricted net assets
                               
Contributions
    (806 )     2,971       3,315       9,037  
Investment income
    803       1,634       5,461       (6,809 )
Unrealized gain in fair value of investments
    9,305       8,653       3,669       21,666  
Net assets released from restrictions for long-lived assets
    (1,545 )     (1,155 )     (4,139 )     (3,414 )
Net assets released from restrictions for operations
    (2,763 )     (2,533 )     (7,734 )     (7,542 )
Other changes
    1,508       9       4,108       (1,064 )
                                 
Increase in temporarily restricted net assets
    6,502       9,579       4,680       11,874  
                                 
Permanently restricted net assets
                               
Contributions
    38       101       190       106  
Other changes
    —       (10 )     500       (10 )
                                 
Increase in permanently restricted net assets
    38       91       690       96  
                                 
Increase in net assets
    11,404       30,872       43,168       72,006  
Net deficit at beginning of period
    (2,958 )     (160,742 )     (34,722 )     (201,876 )
                                 
Net assets (deficit) at end of period
  $ 8,446     $ (129,870 )   $ 8,446     $ (129,870 )
                                 


2

 

THE DETROIT MEDICAL CENTER AND SUBSIDIARIES
 
 
                 
   
Nine Months Ended September 30,
 
   
2010
   
2009
 
    (Unaudited)
 		 
    (In thousands)  
 
Operating activities
               
Increase in net assets
  $ 43,168     $ 70,838  
Adjustments to reconcile increase in net assets to cash provided by operating activities:
               
Depreciation and amortization
    58,864       60,735  
Provision for uncollectible accounts
    195,043       198,837  
Changes in operating assets and liabilities:
               
Net patient accounts receivable
    (253,399 )     (232,816 )
Other current assets
    10,883       15,352  
Accounts payable and accrued expenses
    46,369       18,715  
Other current liabilities
    (39,383 )     (78,891 )
Accrued retirement liability
    686       23,276  
Accrued professional liability losses
    (394 )     (5,129 )
Other operating activities
    (4,089 )     (2,224 )
                 
Cash provided by operating activities
    57,748       68,693  
Investing activities
               
Purchase of property and equipment
    (63,589 )     (50,597 )
Assets whose use is limited or restricted
    (4,082 )     (25,550 )
Other investing activities
    6,515       (905 )
                 
Cash used in investing activities
    (61,156 )     (77,052 )
Financing activities
               
Proceeds on revolving line of credit notes
    —       10,278  
Repayments of long-term debt
    (40,077 )     (12,441 )
                 
Cash used in financing activities
    (40,077 )     (2,163 )
                 
Decrease in cash and cash equivalents
    (43,485 )     (10,522 )
Cash and cash equivalents at beginning of period
    75,296       38,430  
                 
Cash and cash equivalents at end of period
  $ 31,811     $ 27,908  
                 


3

 

THE DETROIT MEDICAL CENTER AND SUBSIDIARIES
 
 
1.   PROPERTY AND EQUIPMENT
 
The components of property and equipment are summarized as follows:
 
         
    September 30,
 		 
   
2010
 
    (Unaudited)
 		 
    (In thousands)  
 
Property and equipment:
       
Land & land improvements
  $ 14,097  
Buildings & building improvements
    865,410  
Equipment
    1,210,782  
Construction in progress
    22,728  
         
Total property, plant and equipment
    2,113,017  
Less allowance for accumulated depreciation
    (1,670,227 )
         
    $ 442,790  
         
 
2.   OTHER NONCURRENT ASSETS
 
The components of other noncurrent assets are summarized as follows:
 
         
    September 30,
 		 
   
2010
 
    (Unaudited)
 		 
    (In thousands)  
 
Other noncurrent assets:
       
Intangibles
  $ 122  
Deferred debt issuance costs
    8,178  
Deferred compensation
    1,383  
Excess insurance recoverable
    13,247  
Other
    15,077  
         
    $ 38,007  
         


4

 

 
THE DETROIT MEDICAL CENTER AND SUBSIDIARIES
 
SUPPLEMENTAL BALANCE SHEET INFORMATION—(Continued)
 
 
3.   LONG-TERM DEBT
 
The components of long-term debt are summarized as follows:
 
         
    September 30,
 		 
   
2010
 
    (Unaudited)
 		 
    (In thousands)  
 
Long-term debt consists of the following:
       
Michigan State Hospital Finance Authority (MSHFA) Bonds:
       
Series 1993A, interest at 6.25% to 6.5%, due 2018
  $ 100,280  
Series 1993B, interest at 4.80% to 5.75%, due 2023
    93,175  
Series 1995, interest at 5.75% to 6.7%, due 2026
    28,400  
Series 1997A, interest at 5.0% to 5.5%, due 2027
    142,690  
Series 1998A, interest at 5.0% to 5.25%, due 2028
    108,650  
Obligations under capital leases
    14,057  
Notes payable and other obligations
    5,382  
         
Notes payable and other obligations
    492,634  
Less current portion
    (24,494 )
         
    $ 468,140  
         
 
4.   OTHER NONCURRENT LIABILITIES
 
The components of other noncurrent liabilities are summarized as follows:
 
         
    September 30,
 		 
   
2010
 
    (Unaudited)
 		 
    (In thousands)  
 
Other noncurrent liabilities, less current portion:
       
Other postretirement liability
  $ 12,754  
Deferred compensation liability
    1,498  
Due to third party payors
    3,132  
Minority interest in Berry Center, LLC
    (48 )
Other
    33,227  
         
    $ 50,563  
         


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