Partners HealthCare System, Inc. and Affiliates Report on Federal Awards in Accordance with OMB Circular A-133 September 30, 2013 EIN

Transcription

1 Partners HealthCare System, Inc. and Affiliates Report on Federal Awards in Accordance with OMB Circular A-133 September 30, 2013 EIN

2 Report on Federal Awards in Accordance with OMB Circular A-133 Index September 30, 2013 Page(s) Part I - Financial Statements Independent Auditor s Report Consolidated Financial Statements and Notes to Consolidated Financial Statements Schedule of Expenditures of Federal Awards and Notes to Schedule of Expenditures of Federal Awards Part II - Reports on Compliance and Internal Controls Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor s Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A Part III - Federal Award Findings and Questioned Costs Schedule of Findings and Questioned Costs Summary of Status of Prior Year Findings Management s Views and Corrective Action Plan...108

3 Part I Financial Statements

4 Independent Auditor s Report To the Board of Directors of Partners HealthCare System, Inc. and Affiliates Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Partners HealthCare System, Inc. and Affiliates (Partners HealthCare), which comprise the consolidated balance sheet as of September 30, 2013 and 2012, and the related consolidated statements of operations, changes in net assets and of cash flows for the years then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. PricewaterhouseCoopers LLP, 125 High Street, Boston, MA T: (617) , F: (617) ,

5 Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Partners HealthCare as of September 30, 2013 and 2012, and the results of their operations, their changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the consolidated financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 13, 2013 on our consideration of Partners HealthCare s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Partners HealthCare s internal control over financial reporting and compliance. December 13,

6 Consolidated Balance Sheets Years Ended September 30, 2013 and 2012 (dollars in thousands) Assets Current assets Cash and equivalents $ 471,322 $ 486,932 Investments 1,439,299 1,256,984 Collateral held under securities lending arrangements 229, ,985 Current portion of investments limited as to use 1,813,490 1,735,373 Patient accounts receivable, net of allowance for bad debts ( $104,044; $111,850) 813, ,918 Research grants receivable 109, ,758 Other current assets 326, ,668 Receivable for settlements with third-party payers 68,854 48,265 Total current assets 5,272,208 4,804,883 Investments limited as to use, less current portion 2,771,216 2,325,279 Long-term investments 957, ,097 Pledges receivable, net and contributions receivable from trusts, less current portion 165, ,096 Property and equipment, net 4,235,839 3,885,858 Other assets 499, ,768 Total assets $ 13,900,900 $ 12,622,981 Liabilities and Net Assets Current liabilities Current portion of long-term obligations $ 361,249 $ 293,322 Accounts payable and accrued expenses 690, ,013 Accrued medical claims and related expenses 121,833 - Accrued compensation and benefits 623, ,607 Collateral due under securities lending arrangements 229, ,985 Current portion of accrual for settlements with third-party payers 36,052 44,759 Unexpended funds on research grants 160, ,136 Total current liabilities 2,223,500 1,830,822 Other liabilities Accrual for settlements with third-party payers, less current portion 87,787 7,861 Accrued professional liability 443, ,404 Accrued employee benefits 648,128 1,625,024 Interest rate swaps liability 232, ,340 Accrued other 158, ,911 1,570,076 2,669,540 Long-term obligations, less current portion 3,097,280 2,839,940 Total liabilities 6,890,856 7,340,302 Commitments and contingencies Net assets Unrestricted 5,805,066 4,131,437 Temporarily restricted 792, ,012 Permanently restricted 412, ,230 Total net assets 7,010,044 5,282,679 Total liabilities and net assets $ 13,900,900 $ 12,622,981 The accompanying notes are an integral part of these consolidated financial statements. 3

7 Consolidated Statements of Operations Years Ended September 30, 2013 and 2012 (dollars in thousands) Operating revenue Net patient service revenue, net of provision for bad debts ( $102,409 ; $123,725) $ 6,769,743 $ 6,828,189 Premium revenue 1,349,525 - Direct academic and research revenue 1,242,819 1,176,002 Indirect academic and research revenue 351, ,595 Other revenue 632, ,551 Total operating revenue 10,346,039 8,981,337 Operating expenses Employee compensation and benefits 5,224,242 4,864,713 Supplies and other expenses 2,108,313 2,113,614 Medical claims and related expenses 1,061,630 - Direct academic and research expenses 1,242,819 1,176,002 Depreciation and amortization 434, ,330 Interest 116, ,413 Asset impairment charge - 114,356 Total operating expenses 10,188,400 8,790,428 Income from operations 157, ,909 Nonoperating gains (expenses) Income from investments 146, ,875 Change in fair value of nonhedging interest rate swaps 48,522 (11,881) Gifts and other, net of fundraising and other expenses (56,194) (44,352) Academic and research gifts, net of expenses 49,206 80,784 Contribution income - affiliates 254,205 - Total nonoperating gains, net 442, ,426 Excess of revenues over expenses 600, ,335 Other changes in net assets Change in net unrealized appreciation on marketable investments 74,522 95,701 Change in fair value of hedging interest rate swaps 117,813 (11,258) Funds utilized for property and equipment 57,224 62,679 Change in funded status of defined benefit plans 835,651 (700,088) Other (11,590) 192 Increase (decrease) in unrestricted net assets $ 1,673,629 $ (200,439) The accompanying notes are an integral part of these consolidated financial statements. 4

8 Consolidated Statements of Changes in Net Assets September 30, 2013 and 2012 Temporarily Permanently (dollars in thousands) Unrestricted Restricted Restricted Total Net assets at October 1, 2011 $ 4,331,876 $ 783,798 $ 337,913 $ 5,453,587 Increases (decreases) Income from operations 190, ,909 Income (loss) from investments 136,875 2,980 (211) 139,644 Gifts and other (44,352) (10,104) 34,383 (20,073) Academic and research gifts, net of expenses 80, ,784 Change in net unrealized appreciation on marketable investments 95,701 27, ,529 Change in fair value of interest rate swaps Nonhedging (11,881) - - (11,881) Hedging (11,258) - - (11,258) Funds utilized for property and equipment 62,679 (26,204) - 36,475 Change in funded status of defined benefit plans (700,088) - - (700,088) Other 192 (1,386) 1, Change in net assets (200,439) (6,786) 36,317 (170,908) Net assets at September 30, ,131, , ,230 5,282,679 Increases (decreases) Income from operations 157, ,639 Income from investments 146,631 10, ,952 Gifts and other (56,194) 9,612 35,009 (11,573) Academic and research gifts, net of expenses 49, ,206 Contribution income - affiliates 254,205 8, ,146 Change in net unrealized appreciation on marketable investments 74,522 23, ,126 Change in fair value of interest rate swaps Nonhedging 48, ,522 Hedging 117, ,813 Funds utilized for property and equipment 57,224 (36,246) - 20,978 Change in funded status of defined benefit plans 835, ,651 Other (11,590) - 1,495 (10,095) Change in net assets 1,673,629 15,757 37,979 1,727,365 Net assets at September 30, 2013 $ 5,805,066 $ 792,769 $ 412,209 $ 7,010,044 The accompanying notes are an integral part of these consolidated financial statements. 5

9 Consolidated Statements of Cash Flows September 30, 2013 and 2012 (dollars in thousands) Cash flows from operating activities Change in net assets $ 1,727,365 $ (170,908) Adjustments to reconcile change in net assets to net cash provided by operating activities Contribution income - affiliates (263,146) - Change in funded status of defined benefit plans (835,651) 700,088 Asset impairment charge, net of cash portion - 112,379 Loss on refunding of debt - 54 Change in fair value of interest rate swaps (166,335) 23,139 Depreciation and amortization 434, ,330 Provision for bad debts 102, ,725 (Gain) loss on disposal of property (848) 1,489 Net realized and change in unrealized appreciation on investments (344,585) (326,822) Restricted contributions and investment income (88,289) (103,153) Cash premium received upon issuance of bonds - 22,181 Increase (decrease) in cash resulting from a change in Patient accounts receivable (119,412) (170,567) Research grants receivable 12,050 5,452 Other current assets (9,251) 18,350 Pledges receivable and contributions receivable from trusts 21,486 25,592 Other assets 45,892 (84,983) Accounts payable and accrued expenses 46,244 54,184 Accrued medical claims and related expenses Accrued compensation and benefits (3,010) 55,269 Settlements with third-party payers 38,999 (62,638) Unexpended funds on research grants (10,468) 9,359 Accrued employee benefits and other (208,806) (304,956) Net cash provided by operating activities 380, ,564 Cash flows from investing activities Purchase of property and equipment (703,083) (471,082) Proceeds from sale of property 4, Purchase of investments (2,314,810) (1,955,070) Proceeds from sales of investments 2,247,631 1,551,262 Cash acquired through affiliations 17,668 - Net cash used for investing activities (747,640) (873,977) Cash flows from financing activities Payments on long-term obligations (112,715) (44,366) Proceeds from long-term obligations, net of financing costs 400, ,632 (Increase) decrease in auction rate securities holdings (23,830) 30,000 Deposits into refunding trusts - (89,611) Restricted contributions and investment income 88, ,153 Net cash provided by financing activities 351, ,808 Net (decrease) increase in cash and equivalents (15,610) 47,395 Cash and equivalents Beginning of year 486, ,537 End of year $ 471,322 $ 486,932 The accompanying notes are an integral part of these consolidated financial statements. 6

10 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) 1. Organization and Community Benefit Commitments Partners HealthCare System, Inc. (PHS) is the sole member of The Massachusetts General Hospital (MGH), Brigham and Women s Health Care, Inc. (BWHC), NSMC HealthCare, Inc. (NSMC), Newton-Wellesley Health Care System, Inc. (NWHCS), Partners Continuing Care, Inc. (PCC), Partners International Medical Services, LLC (PIMS) and Neighborhood Health Plan, Incorporated (NHP). PHS appoints the two physicians who are the members of Partners Community HealthCare, Inc. (PCHI). The individual serving as the PHS President and Chief Executive Officer is the sole member of Partners Harvard Medical International, Inc. (PHMI). PHS, together with all of its affiliates, is referred to as Partners HealthCare. Partners HealthCare currently operates two tertiary and seven community acute care hospitals in Massachusetts, one facility providing inpatient and outpatient mental health services and four facilities providing inpatient and outpatient services in rehabilitation medicine and long-term care. Partners HealthCare also operates physician organizations and practices, a home health agency, nursing homes, and a graduate Level program for health professions. Partners HealthCare provides services to patients primarily from the Greater Boston area as well as New England and beyond. In addition, Partners HealthCare is a nonuniversity-based Non-profit private medical research enterprise and is a principal teaching affiliate of the medical and dental schools of Harvard University. Partners HealthCare also operates a licensed, not-for-profit managed care organization that provides health insurance products to the Medicaid, Commonwealth Care (a health insurance program for uninsured adults who meet income and other eligibility requirements) and commercial populations. PHS is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (IRC). All affiliates of PHS, except for PCHI, PIMS, NHP and Newton-Wellesley Physician Hospital Organization, Inc. (NWPHO), are also tax-exempt organizations under Section 501(c)(3) of the IRC. NHP is a tax-exempt organization under Section 501(c)(4) of the IRC. Accordingly, no provision for income taxes related to these tax-exempt entities has been made. PCHI and NWPHO are taxable entities and PIMS is a single member LLC that is disregarded for income tax purposes. As of September 30, 2013, PCHI has available net operating loss carryforwards of approximately $32,000 for income tax purposes, expiring in 2018 through Community Benefit Partners HealthCare s community benefit programs include working with communities to address a number of public health issues including racial disparities, alcohol and substance abuse among young people, infant mortality, domestic violence and cancer. Partners HealthCare provides economic opportunity for low income Boston residents by helping people advance into nursing and other healthcare careers through its public school partnerships and workforce development programs. In addition, twenty-one community health centers are licensed by or affiliated with Partners HealthCare entities and provide high quality, culturally competent primary care and access to Partners HealthCare s hospitals. Partners HealthCare invests in these health centers infrastructure, programming and operation and also helps with relocation, renovation and other capital requirements. The Massachusetts Attorney General s Community Benefits Guidelines direct health maintenance organizations and Non-profit acute care hospitals to prepare annual reports documenting the status and Level of their community benefit programs and initiatives. These annual reports serve the important purpose of providing the public with access to useful information about these programs 7

11 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) and initiatives. Partners HealthCare files its report annually with the Massachusetts Attorney General. The report summarizes community benefit activities on a system-wide basis. In addition, each of the acute care hospitals within Partners HealthCare has a community benefit planning and service delivery structure and files separate community benefit reports. Partners HealthCare s nonacute care hospitals also file community benefit reports annually. Uncompensated Care Partners HealthCare provides care to all patients regardless of their ability to pay. The cost of providing that care is reflected in the statements of operations. The cost related to those patients for which Partners HealthCare receives either partial or no reimbursement for healthcare services provided is summarized as follows: State Programs Uncompensated Care Free care services are partially reimbursed to acute care hospitals through the statewide Health Safety Net (HSN) established by the Massachusetts Health Care Reform Law (Chapter 58 of the Acts of 2006). A portion of the funding for the HSN is paid by hospitals through a statewide hospital assessment levied each year by the Massachusetts Legislature. All acute care hospitals in the state are assessed their share of this total statewide hospital assessment amount ($160,000 in 2013 and 2012) based on each hospital s charges for private sector payers. Partners HealthCare s hospitals report this assessment as a deduction from net patient service revenue. Hospitals are reimbursed for free care based on claims for eligible patients and eligible services that are submitted to and adjudicated by the HSN. Rates of payment are based on Medicare rates and payment policies. The HSN is projected to be under-funded by approximately $78,118 and $133,200 in 2013 and 2012, respectively, with approximately $21,924 and $36,400 in 2013 and 2012, respectively, allocated to Partners HealthCare s hospitals. This shortfall is allocated to hospitals based on their share of total statewide patient care costs. Each hospital s share of the overall state shortfall cannot exceed its total free care reimbursement. Hospitals with a high proportion of free care and government funding receive more favorable reimbursement, including limiting their shortfall allocation to no more than 15% of their payments for free care. In aggregate, Partners HealthCare s acute care hospitals received uncompensated care funding covering 54% of the estimated cost of free care provided in 2013 and 39% of the estimated cost in 2012, excluding the assessment. Medicaid Medicaid is a means-tested health insurance program jointly funded by state and federal governments. States administer the program and set rules for eligibility, benefits and provider payments within broad federal guidelines. The program provides health care coverage to lowincome children and families, pregnant women, long-term unemployed adults, seniors and persons with disabilities. Eligibility is determined by a variety of factors, which include income relative to the federal poverty line, age, immigrant status and assets. Medicaid payments to Partners HealthCare providers do not cover the full cost of services provided. In aggregate, reimbursement from Medicaid covered 59% and 57% of the estimated cost of services provided in 2013 and 2012, respectively. In addition, Medicaid premium revenue paid to NHP for the care of Medicaid patients enrolled in NHP did not cover the medical expense and administrative costs of care for these enrollees. In aggregate, the premium revenue paid to NHP by Medicaid was $4,339, or 0.5%, less than the cost of care. 8

12 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Federal Program Medicare Medicare is a federally sponsored health insurance program for people age 65 or older, under age 65 with certain disabilities and any age with end-stage renal disease. For many years, Medicare payments have not kept pace with increases in the cost of care provided at many hospitals. Additionally, payments to physicians have seen little or no increases over the past several years. Compounding this shortfall in payments is the shift of care from higher paying inpatient services to lower paying outpatient services. Consequently, Medicare payments to Partners HealthCare also do not cover the full cost of services provided. In aggregate, reimbursement from Medicare covered 74% of the estimated cost of services provided in 2013 and 76% of the estimated cost of services provided in For free care, Medicaid and Medicare, the total estimated cost of services provided by Partners HealthCare exceeded the net reimbursement received under these programs by $1,085,938 and $994,684 for the years ended September 30, 2013 and 2012, respectively. The estimated cost of services provided is either obtained directly from a costing system or based on an entity specific ratio of cost to gross charges. In the latter case, cost is derived by applying this ratio to gross charges associated with providing care to free care, Medicaid and Medicare patients. The following summarizes, by program, the cost of services provided, net reimbursement and cost of services in excess of reimbursement for each year: Years Ended September 30, Cost of services provided Free care, including assessment payment to HSN of $56,028 and $53,550 in 2013 and 2012, respectively $ 163,326 $ 165,303 Medicaid 755, ,157 Medicare 2,477,719 2,301,132 $ 3,396,159 $ 3,189,592 Net reimbursement Free care $ 45,069 $ 35,136 Medicaid 441, ,068 Medicare 1,823,213 1,744,704 $ 2,310,221 $ 2,194,908 Cost of services in excess of reimbursement Free care $ 118,257 $ 130,167 Medicaid 313, ,089 Medicare 654, ,428 $ 1,085,938 $ 994,684 9

13 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Bad Debts In addition to free care and inadequate funding from the Medicaid and Medicare programs, there are significant losses related to self-pay patients who fail to make payment for services rendered or insured patients who fail to remit co-payments and deductibles as required under the applicable health insurance arrangement. The provision for bad debts of $102,409 in 2013 and $123,725 in 2012 represents charges for services provided that are deemed to be uncollectible. The estimated cost of providing these services was approximately $38,205 and $39,936 for 2013 and 2012, respectively. 2. Summary of Significant Accounting Policies Basis of Accounting The accompanying consolidated financial statements have been prepared on the accrual basis of accounting and include the accounts of PHS and its affiliates. Significant interaffiliate accounts and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates are made in the areas of patient accounts receivable, research grants receivable, pledges receivable, investments, receivables and accruals for settlements with third-party payers, accrued professional liability, accrued compensation and employee benefits, interest rate swaps and accrued other. Fair Value of Financial Instruments The fair value of financial instruments approximates the carrying amount reported in the consolidated balance sheets for cash and equivalents, certain investments and investments limited as to use, collateral held and due under securities lending arrangements, patient accounts receivable, research grants receivable, accounts payable and interest rate swaps. More information can be found in Note 6, Fair Value Measurements. Cash and Equivalents Cash and equivalents represent money market and highly liquid debt instruments with a maturity at the date of purchase of three months or less. Most of Partners HealthCare s banking activity, including cash and equivalents, is maintained with several national banks and from time to time cash deposits exceed federal insurance limits. It is Partners HealthCare s policy to monitor these banks financial strength on an ongoing basis and no losses have been experienced to date. Investments Investments in equity securities with readily determinable fair values and all investments in debt securities (marketable investments) are measured at fair value based on quoted market prices. The change in net unrealized appreciation on these marketable investments is excluded from excess of revenues over expenses. 10

14 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Alternative investments, including hedge funds and private equities, do not have readily ascertainable market values. Alternative investments are valued by the investment manager and assessed for reasonableness by management using the following methodology: investments in securities sold short or traded on a national securities exchange are valued based on quoted market prices; investments in securities that are not traded and restricted securities of public companies are valued based on amounts reported by the fund manager and evaluated by management. The reported value of these investments represents the amount Partners HealthCare would expect to receive if it liquidated its investments at the balance sheet date on a nondistressed basis. Investments in hedge funds, private equity, private debt and other private partnerships (collectively, private partnerships) for which Partners HealthCare owns more than 5% of the overall investment are generally recorded as equity method investments. The change in value of equity method investments is included in excess of revenues over expenses as a component of income from investments. All other investments are recorded at cost. Income from investments (including realized gains and losses, change in value of equity method investments, interest, dividends and endowment income distributions) is included in excess of revenues over expenses unless the income or loss is restricted by donor or law. Income from investments is reported net of investment-related expenses. Investments whose cost exceeds fair value are reviewed each quarter to determine whether these investments are other-than-temporarily impaired. Externally managed marketable investments with fair value below cost are considered to be other-than-temporarily impaired and, accordingly, the unrealized depreciation is recognized as realized losses through a write-down in the cost basis of these investments. All other investments are subject to a further review, which considers factors including the anticipated holding period for the investment and the extent and duration of below cost valuation. A similar write-down is recorded when the impairment on these investments has been judged to be other-than-temporary. Depending on any donor-imposed restrictions on the underlying investments, the amount of the write-down is reported as a realized loss in either temporarily restricted net assets or in excess of revenues over expenses as a component of income from investments, with no adjustment in the cost basis for subsequent recoveries. Partners HealthCare has an endowment spending policy for pooled endowment funds. A fixed distribution rate for spending is determined each year which will come from either income and/or net accumulated appreciation. Investments Limited as to Use Investments limited as to use primarily include assets whose use is contractually limited by external parties as well as assets set aside by the boards (or management) for identified purposes and over which the boards (or management) retain control such that the boards (or management) may, at their discretion, subsequently use such assets for other purposes. Certain investments corresponding to deferred compensation are accounted for such that all income and appreciation (depreciation) is recorded as a direct addition (reduction) to the asset and corresponding liability. 11

15 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) 22Securities Loaned Investments that have been loaned to another institution are reported as pledged assets within investments in the consolidated financial statements. Investments held by the custodian on behalf of Partners HealthCare as collateral on the securities lending transaction are also reported as assets on the balance sheet. Because the collateral must be returned in the future, a corresponding liability is also reported in the consolidated financial statements. Derivative Instruments Derivatives are recognized on the balance sheet at fair value. Partners HealthCare designates at inception whether the derivative contract is considered hedging or nonhedging for accounting purposes. For hedges, Partners HealthCare formally documents at inception all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking various accounting hedges. Partners HealthCare uses its derivatives which are designated as hedging for accounting purposes as cash flow hedges. Cash flow hedges are used to minimize the variability in cash flows of interest-bearing liabilities or forecasted transactions caused by changes in interest rates. Changes in the fair value of derivatives designated for hedging activities that are highly effective as hedges are excluded from excess of revenues over expenses. Hedge ineffectiveness, if any, is recorded in excess of revenues over expenses. For nonhedging derivatives, changes in the fair value are recorded in excess of revenues over expenses. Patient Accounts Receivable Partners HealthCare receives payments for services rendered from federal and state agencies (under the Medicare and Medicaid programs), managed care payers, commercial insurance companies and patients. Patient accounts receivable are reported net of contractual allowances and reserves for denials, uncompensated care and doubtful accounts. The Level of reserves is based upon management s assessment of historical and expected net collections, business and economic conditions, trends in federal and state governmental and private employer health care coverage and other collection indicators. Research Grants Receivable Partners HealthCare receives research funding from departments and agencies of the U.S. Government, industry and corporate sponsors and other private sponsors. Research grants receivable include amounts due from these sponsors of externally funded research. These amounts have been billed or are billable to the sponsor, or in limited circumstances, represent accelerated spending in anticipation of future funding. Research grants receivable are reported net of reserves for uncollectible accounts. Other Current Assets Other current assets include prepaids, nonpatient and research receivables, premiums receivable, and reinsurance recoveries. Reinsurance recoveries, net of allowances as of September 30, 2013 were $2,360. Property and Equipment Property and equipment is reported on the basis of cost less accumulated depreciation. Donated items are recorded at fair value at the date of contribution. All research grants received for capital are recorded in the year of expenditure as a change in unrestricted net assets. Property and equipment is reviewed for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Depreciation of property and equipment is 12

16 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) 3calculated by use of the straight-line method at rates intended to depreciate the cost of assets over their estimated useful lives, which generally range from three to forty years. Interest costs incurred on borrowed funds during the period of construction of capital assets are capitalized, net of any interest earned, as a component of the cost of acquiring those assets. In March 2012, Partners HealthCare made a strategic decision related to a change in scope and direction for its clinical information systems. In making that decision, management reassessed information system projects currently underway, including a system-wide patient administrative system, and concluded that certain costs that had been capitalized no longer had future value. Accordingly, an impairment charge of $114,356, which related to actual amounts incurred and capitalized in previous periods, was recorded in the year ended September 30, Asset Retirement Obligations Asset retirement obligations, reported in accrued other, are legal obligations associated with the retirement of long-lived assets. These liabilities are initially recorded at fair value and the related asset retirement costs are capitalized by increasing the carrying amount of the related assets by the same amount as the liability. Asset retirement costs are subsequently depreciated over the useful lives of the related assets. Partners HealthCare records changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original liability estimate. Partners HealthCare reduces these liabilities when the related obligations are settled. Other Assets Other assets consist of long-term receivables, deferred financing costs, intangible assets, prepaid ground rent, malpractice insurance receivables (Note 14), investments in healthcare related limited partnerships and benefit assets for over-funded defined benefit plans. Deferred financing costs are amortized over the terms of the related obligations. The carrying value of other assets is reviewed if the facts and circumstances suggest that it may be impaired. Compensated Absences In accordance with formal policies concerning vacation and other compensated absences, accruals of $225,967 and $205,957 were recorded as of September 30, 2013 and 2012, respectively. Unexpended Funds on Research Grants Research grants received in advance of corresponding grant expenditures are accounted for as a direct addition to investments limited as to use and unexpended funds on research grants. Self-Insurance Reserves Partners HealthCare is generally self-insured for employee healthcare, disability, workers compensation and certain other employee benefits. These costs are accounted for on an accrual basis to include estimates of future payments for claims incurred prior to year end. Net Assets Permanently restricted net assets include the historical dollar amounts of gifts and the income and gains on such gifts which are required by donors to be permanently retained. Temporarily restricted net assets include gifts and the income and gains on permanently restricted net assets which can be expended but for which restrictions have not yet been met. Such restrictions include purpose restrictions where donors have specified the purpose for which the net assets are to be spent, or time restrictions imposed by donors or implied by the nature of the gift (capital projects, pledges to be paid in the future, life income funds) or by interpretations of law (gains available for 13

17 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) appropriation but not appropriated in the current period). Unrestricted net assets include all of the remaining net assets of Partners HealthCare. More information can be found in Note 16, Restricted Net Assets. Realized gains and losses are classified as unrestricted net assets unless they are restricted by the donor or law. Unless permanently restricted by the donor, realized gains and unrealized net appreciation on permanently restricted gifts are classified as temporarily restricted until appropriated for spending by Partners HealthCare in accordance with policies established by Partners HealthCare and the Massachusetts Uniform Prudent Management of Institutional Funds Act (UPMIFA). Net losses on permanently restricted endowment funds are classified as a reduction to unrestricted net assets until such time as the fair value of these funds exceeds historical cost. Gifts and Grants Unconditional promises to give cash and other assets to Partners HealthCare are reported at fair value at the date the promise is received. Conditional promises to give are recognized when the conditions are substantially met. Gifts are reported as either temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. Donor-restricted contributions whose restrictions are met within the same year as received are reported as unrestricted gifts in the accompanying financial statements. Gifts of long-lived assets with explicit restrictions that specify use of assets and gifts of cash or other assets that must be used to acquire long-lived assets are reported as additions to temporarily restricted net assets if the assets are not placed in service during the year. Grants and contracts normally provide for the recovery of direct and indirect costs, subject to audit. Partners HealthCare recognizes revenue associated with direct and indirect costs as direct costs are incurred. The recovery of indirect costs is based on predetermined rates for U.S. Government grants and contracts and negotiated rates for other grants and contracts. Contributed Securities Partners HealthCare s policy is to sell securities contributed by donors upon receipt, unless prevented from doing so by donor request. For the years ended September 30, 2013 and 2012, contributed securities of $29,017 and $23,853, respectively, were received and liquidated. Donors restricted the proceeds received from the sale of these contributed securities of $4,553 and $5,345 for long-term purpose for the years ended September 30, 2013 and 2012, respectively. Statement of Operations All activities of Partners HealthCare deemed by management to be ongoing, major and central to the provision of healthcare services, teaching, research activities and health insurance are reported as operating revenue and expenses. Other activities are deemed to be nonoperating and include unrestricted gifts (net of fundraising expenses), net change in unexpended academic and research gifts, change in fair value of nonhedging interest rate swaps, contribution income from affiliates (Note 3) and substantially all income (loss) from investments. Academic and research gifts largely consist of donor contributions (and the related investment income including realized gains and losses) designated to support the clinical, teaching or research efforts of a physician or department as directed by the donor. These gifts are reported as unrestricted, net of related support expenses, when donor restrictions are of a general nature that are inherent in the normal activities of the organization. 14

18 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Partners HealthCare recognizes changes in third-party payer settlements and other estimates in the year of the change in estimate. For the years ended September 30, 2013 and 2012, adjustments to prior year estimates resulted in an increase (decrease) to income from operations of ($17,503) and $111,169, respectively. The ($17,503) decrease in income from operations for the year ended September 30, 2013 includes $79,020 recorded as deferred revenue and more fully described below. The $111,169 increase in income from operations for the year ended September 30, 2012 is comprised of $48,290 in favorable settlements with commercial payers and $62,879 in favorable settlements from government payers, including $27,146 associated with Partners HealthCare s share of a Department of Health Services settlement to compensate hospitals nationwide for past underpayments related to an error in Medicare s rural floor budget neutrality adjustment. Effective October 1, 2007, the Centers for Medicare and Medicaid Services (CMS) adopted the MS-DRG patient classification system (MS-DRGs) for inpatient services to better recognize severity of illness in Medicare payment rates for acute care hospitals. The adoption of MS-DRGs resulted in the expansion of the number of diagnosis related groups (DRGs), a system of classifying patients for purposes of inpatient reimbursement. By increasing the number of DRGs and more fully taking into account patients severity of illness in Medicare payment rates for acute care hospitals, the use of MS-DRGs encourages hospitals to improve their documentation and coding of patient diagnoses. CMS has determined that the adoption of the MS-DRGs has increased aggregate payments to hospitals due to additional documentation and coding without a corresponding increase in actual patient severity of illness. CMS is required by its enabling statute to maintain budget neutrality by prospectively adjusting the Medicare payment rate to eliminate the effect of changes in DRG classification that do not reflect real changes in case-mix. CMS requires Congressional authority, however, to recoup any overpayments made in prior years. In 2007, Congress granted CMS the authority to recoup overpayments made to hospitals in 2008 and 2009 resulting from increased coding and documentation, which CMS did through rate reductions in 2011 and Under the American Taxpayer Relief Act of 2012, Congress granted CMS the authority to recoup overpayments made to hospitals in 2010 through 2012 through rate reductions in 2014 through In 2010, Partners HealthCare recorded the estimated overpayment amounts received in 2008 and 2009 of $38,509 as deferred revenue and amortized this amount into net patient service revenue in 2011 and 2012 to offset the rate reductions. In 2013, Partners HealthCare recorded the estimated overpayment amounts received in 2010 through 2012 of $79,020 as deferred revenue to be amortized into net patient service revenue in 2014 through 2017 to offset the rate reductions. Management believes this accounting treatment better reflects the financial impact of this rate methodology and more accurately presents the recognition of revenue. For the years ended September 30, 2013 and 2012, amortization of these overpayments amounted to $0 and $19,254, respectively. The statement of operations include excess of revenues over expenses. Changes in unrestricted net assets which are excluded from excess of revenues over expenses include change in net unrealized appreciation on marketable investments, change in fair value of effective hedging interest rate swaps, contributions of long-lived assets (including assets acquired using contributions which by donor restriction were to be used for acquisition of such assets) and change in funded status of defined benefit plans. 15

19 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Net Patient Service Revenue Partners HealthCare maintains agreements with CMS of the United States Department of Health and Human Services (DHHS) under the Medicare program, The Commonwealth of Massachusetts (the Commonwealth) under the Medicaid program and various managed care payers that govern payment for services rendered to patients covered by these agreements. The agreements generally provide for per case or per diem rates or payments based on discounted charges for inpatient care and discounted charges or fee schedules for outpatient care. Certain contracts also provide for payments that are contingent upon meeting agreed upon quality and efficiency measures. Partners HealthCare recognizes patient service revenue associated with services provided to patients who have third-party payer coverage on the basis of contractual rates for the services rendered. For uninsured patients that do not qualify for charity care, Partners HealthCare recognizes revenue on the basis of its standard rates (subject to discounts) for services provided. On the basis of historical experience, a significant portion of Partners HealthCare s uninsured patients are unable or fail to pay for the services provided. Consequently, Partners HealthCare records a provision for bad debts related to uninsured patients in the period the services are provided. For the years ended September 30, 2013 and 2012, patient service revenue net of contractual allowances and discounts (before the provision for bad debts) is as follows: Years Ended September 30, Patient service revenue (net of contractual allowances and discounts) Third-party payers $ 6,638,603 $ 6,728,031 Uninsured patients 233, ,883 Total all payers $ 6,872,152 $ 6,951,914 Net patient service revenue includes estimated retroactive revenue adjustments due to future audits, reviews and investigations. Retroactive adjustments are considered in the recognition of revenue on an estimated basis in the period the related services are rendered, and such amounts are adjusted in future periods as adjustments become known or as years are no longer subject to such audits, reviews and investigations. Contracts, laws and regulations governing the Medicare, Medicaid and HSN programs (Note 1) and managed care payer arrangements are complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change by a material amount in the near term. A portion of the accrual for settlements with third-party payers has been classified as long-term because such amounts, by their nature or by virtue of regulation or legislation, will not be paid within one year. Partners HealthCare provides either full or partial charity care to patients who cannot afford to pay for their medical services based on income and family size. Charity care is generally available to qualifying patients for medically necessary services. Partners HealthCare reports certain bad debts related to emergency services as charity care. Charity care is reported at gross charges with an offsetting allowance, as there is no expectation of collection. Accordingly, there is no net patient service revenue related to charity care. 16

20 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Medical Claims and Related Expenses NHP contracts with various community health centers, hospital-based primary care physician practices and other health care providers for the delivery of services to its members. NHP compensates these providers on a capitated, fee-for-service, or per diem basis. The cost of contracted health care services is accrued in the period in which services are provided and include certain estimated amounts. The estimated liability for medical claims payable and related expenses is actuarially determined based on analysis of historical claims-paid experience, modified for changes in enrollment, inflation and benefit coverage. The liability for medical claims and related expenses represents the anticipated cost of claims incurred but unpaid at the balance sheet date. The estimates for claims expense may be more or less than the amounts ultimately paid when claims are settled. Such changes in estimates are reflected in the current period consolidated statements of operations. In the normal course of business, NHP identifies and recoups overpayments through reductions in future payments made to providers and hospitals. Such overpayments are the result of, among other things, coordination of benefits and provider claim audits. For the year ended September 30, 2013, NHP identified approximately $34,500 of recoveries related to claim overpayments made for both current-year and prior-year paid claims, which are reflected as a reduction to medical claims and related expenses in the accompanying consolidated statements of operations. At September 30, 2013, NHP s accounts receivable include $2,270 relating to such overpayments. Premium Revenue Premiums are due monthly and recorded as earned during the period in which members are eligible to receive services. Premiums received prior to the first day of the coverage period are recorded as unearned premiums in accounts payable and accrued expenses. Reinsurance Reinsurance premiums are reported in medical claims and related expenses and reinsurance recoveries are reported as reductions in medical claims and related expenses. Settlements NHP contracts with the Executive Office of Health and Human Services (EOHHS) and certain providers based on historical and anticipated experience. These methods of reimbursement result in year-end settlements based on actual versus anticipated experience. Settlements payable also includes amounts for risk-sharing incentives, which are based on specific contractual provisions between NHP and these providers. The settlements are intended to include both reported and unreported incurred claims at September 30, Premium Deficiency Reserve NHP recognizes premium deficiency reserves based upon expected premium revenue, medical expense and administrative expense levels, and remaining contractual obligations using NHP s historical experience. Anticipated investment income is not included in the determination of premium deficiency reserves since its effect is deemed to be immaterial. As of September 30, 2013 the premium deficiency reserves total approximately $6,493 and are included in accrued medical claims and related expenses in the accompanying consolidated balance sheets. 17

21 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Claims Adjustment Expenses Claims adjustment expenses (CAE) are those costs expected to be incurred in connection with the adjustment and recording of health claims. NHP has recorded an estimate of unpaid CAE associated with incurred but unpaid claims, which is included in medical claims and related expenses in the accompanying consolidated financial statements. Management believes the amount of the liability for unpaid CAE at September 30, 2013, is adequate to cover NHP s cost for the adjustment and recording of unpaid claims; however, actual expenses may differ from those established estimates. Adjustments to the estimates for unpaid CAE are reflected in operating results in the period in which the change in estimate is identified (Note 9). Other Revenue Other revenue includes institutional revenue (for example, billing for services provided to other healthcare providers), royalties and management services. Adoption of New Accounting Guidance Partners HealthCare adopted new accounting guidance related to the classification of contributed securities in the consolidated statement of cash flows and retroactively applied the guidance to fiscal year Acquisitions NHP and Cooley Dickinson Health Care Corporation and Subsidiaries (CDHCC) contributed their net assets to Partners HealthCare on October 1, 2012 and July 1, 2013, respectively. As a result, Partners HealthCare recorded contribution income of $263,146 reflecting the fair value of the contributed net assets of NHP of $152,461 and of CDHCC of $110,685 on their respective transaction dates. Of this amount, $254,205 represents unrestricted net assets and is included as a nonoperating gain in the accompanying consolidated statements of operations and changes in net assets. Restricted contribution income of $8,431 and $510 was recorded within temporarily restricted net assets and permanently restricted net assets, respectively, in the accompanying consolidated statement of changes in net assets. 18

22 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Assets, liabilities, and net assets assumed as of the acquisition dates are as follows: NHP CDHCC Total Assets Cash and cash equivalents $ 12,461 $ 5,207 $ 17,668 Assets limited as to use and investments 230, , ,608 Patient accounts receivable, net - 20,463 20,463 Property plant and equipment 4,224 76,514 80,738 Other assets 56,202 7,056 63,258 Total assets acquired $ 303,438 $ 240,297 $ 543,735 Liabilities Accounts payable and accrued expenses $ 25,616 $ 16,073 $ 41,689 Accrued medical claims and related expenses 120, ,916 Accrual for settlements with third-party payers - 11,631 11,631 Long-term debt - 61,812 61,812 Accrued pension and post retirement benefits - 25,205 25,205 Other liabilities 4,445 14,891 19,336 Total liabilities assumed 150, , ,589 Net Assets Unrestricted 152, , ,205 Temporarily restricted - 8,431 8,431 Permanently restricted Total net assets 152, , ,146 Total liabilities and net assets $ 303,438 $ 240,297 $ 543,735 A summary of the financial results of NHP from the period October 1, 2012 through September 30, 2013 and of CDHCC from the period July 1, 2013 through September 30, 2013 that is included in the consolidated statements of operations and changes in net assets is as follows: NHP CDHCC Total Total operating revenue $ 1,351,361 $ 47,006 $ 1,398,367 Total operating expenses 1,332,641 50,385 1,383,026 Income (loss) from operations 18,720 (3,379) 15,341 Nonoperating gains (expenses), net 1,245 (12,802) (11,557) Excess (deficit) of revenues over expenses 19,965 (16,181) 3,784 Pension related changes - 2,255 2,255 Other changes 7,825 6,765 14,590 Increase (decrease) in unrestricted net assets $ 27,790 $ (7,161) $ 20,629 19

23 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) A summary of the consolidated financial results of Partners HealthCare for the years ended September 30, 2013 and 2012, as if the transactions had occurred on October 1, 2012 is as follows (unaudited): Total operating revenue $ 10,501,763 $ 10,433,477 Total operating expenses 10,331,840 10,229,669 Income from operations 169, ,808 Nonoperating gains 445, ,317 Excess of revenues over expenses 615, ,125 Pension related changes 851,141 (703,876) Other changes 239, ,207 Increase / (decrease) in unrestricted net assets $ 1,706,273 $ (187,544) 4. Levels of Capital and Surplus On an annual basis, NHP is required to calculate its risk-based capital (RBC) and submit this calculation to the Massachusetts Department of Insurance (DOI). RBC is the minimum Level of capital deemed necessary for a managed care organization based upon the types of assets held and business written, calculated in accordance with the managed care organizations RBC formula that was adopted by the National Association of Insurance Commissioners (NAIC). If an organization s Total Adjusted Capital, as defined, falls below RBC, the Insurance Commissioner is required to take actions considered necessary to protect policyholders and creditors. The annual calculation is done as of December 31, as that is NHP s fiscal and statutory year-end. Management believes that NHP s RBC exceeds the minimum levels. As of December 31, 2012 NHP s RBC was 309%. PHS has committed to maintain NHP s RBC at a minimum of 300%. NHP s current contract with EOHHS requires NHP to maintain a minimum net worth and/or financial insolvency insurance in an amount equal to the Minimum Net Worth calculation as defined in Massachusetts General Law 176G, Section 25. At December 31, 2012, the minimum net worth requirement, as determined in accordance with EOHHS guidelines, was $75,300. NHP s GAAP net worth was $165,800 at December 31, 2012 and statutory net worth was $160,300 at December 31, NHP s statutory net worth exceeds the EOHHS requirements by $85,000 at December 31, Investments and Investments Limited as to Use Investments are either separately invested or included in pooled investment funds. The Partners HealthCare System Pooled Investment Accounts (Partnership) is structured as a single general partnership composed of four investment pools, with PHS and substantially all of its affiliates participating in the pools as partners. Each partner s interest in the Partnership is based on its underlying investments in one or more of the four separate pools. Amounts included in the investment pools are accounted for using the fair value method whereby each partner is assigned a number of units based on the fair value of the assets of a pool at the time of entry of the funds into the pool. Current fair value is used to determine the number of units allocated to additional amounts placed in a pool and to value withdrawals from a pool. Income from investments of the 20

24 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) pools, including realized gains and losses, is allocated on a unitized basis to a partner based on the partner s share of units in a pool. The Partnership invests in private partnerships whose assets include equity, fixed income and other investments. As of September 30, 2013, the Partnership has unfunded commitments of approximately $353,000 which will be drawn down by the various general partners over the next several years. The maximum annual drawdown is expected to be less than 2% of investments and investments limited as to use. Investments and investments limited as to use are recorded in the balance sheet as follows: September 30, Current assets Investments $ 1,439,299 $ 1,256,984 Current portion of investments limited as to use 1,813,490 1,735,373 3,252,789 2,992,357 Investments limited as to use, less current portion 2,771,216 2,325,279 Long-term investments 957, ,097 $ 6,981,105 $ 6,207,733 Investments limited as to use consist of the following: September 30, 2013 September 30, 2012 Current Long-Term Current Long-Term Portion Portion Portion Portion Internally designated funds Reserved for capital expenditures $ 854,265 $ - $ 804,234 $ - Unexpended academic and research gifts - 2,331,946-1,932,845 Deferred compensation - 191, ,397 Other 771, , , ,216 1,625,747 2,731,574 1,385,484 2,285,458 Externally limited funds Unexpended funds on research 160, ,136 - Contributions held for others 4,272-3,428 - Professional liability trust fund - 39,642-39,821 Held by trustees under debt and other agreements 22, , ,743 39, ,889 39,821 $ 1,813,490 $ 2,771,216 $ 1,735,373 $ 2,325,279 21

25 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Investments and investments limited as to use are reported at either fair value or on the equity or cost methods of accounting. The composition of these investments, segregated between pooled investments and those that are separately invested, is as follows: September 30, 2013 On Equity On Cost At Fair Value Method Method Total Pooled investments Invested cash equivalents $ 63,146 $ - $ - $ 63,146 Separately managed investments 2,297, ,297,413 Mutual funds 607, ,991 Commingled funds 959, ,607 Private partnerships - 722,516 1,628,480 2,350,996 3,928, ,516 1,628,480 6,279,153 Separately invested Invested cash equivalents 145, ,545 Equities 12,273-14,247 26,520 U.S. Government and domestic fixed income securities 33, ,653 Mutual funds 359, ,633 Other 59,380-77, , ,669-92, ,952 $ 4,537,826 $ 722,516 $ 1,720,763 $ 6,981,105 Separately managed investments include cash and equivalents of $284,815, equities of $660,847 and fixed income securities of $1,351,751 as of September 30, September 30, 2012 On Equity On Cost At Fair Value Method Method Total Pooled investments Invested cash equivalents $ 50,258 $ - $ - $ 50,258 Separately managed investments 2,165, ,165,550 Mutual funds 646, ,358 Commingled funds 522, ,574 Private partnerships - 690,286 1,700,243 2,390,529 3,384, ,286 1,700,243 5,775,269 Separately invested Invested cash equivalents 149, ,238 Equities 16,323-9,196 25,519 U.S. Government and domestic fixed income securities 5, ,169 Mutual funds 169, ,875 Other 9,194-73,469 82, ,799-82, ,464 $ 3,734,539 $ 690,286 $ 1,782,908 $ 6,207,733 22

26 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Separately managed investments include cash and equivalents of $281,109, equities of $395,146 and fixed income securities of $1,489,295 as of September 30, For the private partnerships reflected in the balance sheet at cost, the difference (unrecorded net unrealized appreciation) between the value reported by the investment managers and the cost for these investments was $745,013 and $648,893 as of September 30, 2013 and 2012, respectively. The fair value and gross unrealized depreciation of investments and investments limited as to use, with a fair value less than cost, that are not deemed to be other-than-temporarily impaired at September 30, 2013 are as follows: Less than 12 Months 12 Months or Greater Gross Gross Fair Unrealized Fair Unrealized Value Depreciation Value Depreciation Pooled investments Separately managed investments $ 41,024 $ (2,490) $ 14,410 $ (263) Commingled funds 316,899 (9,682) 153,011 (6,546) 357,923 (12,172) 167,421 (6,809) Separately invested Equities (44) U.S. Government and domestic fixed income securities 12,152 (111) 1,376 (794) Mutual funds 41,562 (1,153) - - External trusts - - 7,488 (1,787) 53,714 (1,264) 9,559 (2,625) $ 411,637 $ (13,436) $ 176,980 $ (9,434) In addition, for certain private partnerships recorded at cost, gross unrealized depreciation amounted to $21,559 as of September 30, 2013, with $17,648 of that amount unrealized for 12 months or greater. Based on management s quantitative and qualitative assessment, investments whose cost exceeds fair value are not considered to be other-than-temporarily impaired at September 30, Management believes these investments will recover their values and there is no intention to liquidate these positions. 23

27 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Investment income and gains (losses) from cash and equivalents, investments (including long-term) and investments limited as to use are comprised of the following: Years Ended September 30, Unrestricted Dividends, interest and other income $ 54,710 $ 58,122 Endowment income distributions, net of reinvested gains 32,272 30,714 Net realized gains (losses) on investments Realized gains 267, ,560 Other-than-temporary impairment (85,879) (41,099) Change in value of equity method investments 19,971 46,856 Recovery on endowment funds 893 2,324 Total investment activity included in excess of revenues over expenses 289, ,477 Change in net unrealized appreciation on marketable investments 74,522 95,701 Total unrestricted investment activity 363, ,178 Temporarily restricted Dividends and interest income 5,146 3,738 Endowment income distributions (38,182) (36,668) Net realized gains (losses) on investments Realized gains 53,844 30,695 Other-than-temporary impairment (15,351) (6,709) 5,457 (8,944) Change in value of equity method investments 4,701 11,924 Change in net unrealized appreciation on marketable investments 24,695 30,252 Recovery on endowment funds (893) (2,324) 28,503 39,852 Total temporarily restricted investment activity 33,960 30,908 Permanently restricted Dividends and interest income (7) 47 Net realized gains (losses) on investments 170 (258) Change in net unrealized appreciation on marketable investments Total permanently restricted investment activity $ 398,524 $ 382,775 24

28 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Investment income included in operating results and excess of revenues over expenses is comprised of the following: Years Ended September 30, Investment income included in operations and reported in other revenue $ 11,816 $ 10,997 Investment income included in nonoperating gains and reported in Income from investments 146, ,875 Academic and research gifts, net of expenses 130, ,605 Total investment activity included in excess of revenues over expenses $ 289,077 $ 255,477 Securities Lending The Partnership may lend securities to qualified financial institutions through a program administered by the Partnership custodian. All loans are callable at any time and are fully collateralized. Income is earned based on the collateral held and invested during the period of lending. Collateral requirements are 102% and 105% for domestic and foreign securities, respectively. The custodian continually monitors borrowers creditworthiness and protects against borrower default through full indemnification. If a borrower failed to return a loaned security whose market value has increased over the amount in collateral, the custodian will cover the difference. The custodian will also cover operational losses, such as the failure of the borrower to make substitute dividend payments to the lender. The fair value of loaned securities and related collateral at September 30, 2013 and 2012 is as follows: Loaned Loaned Securities Collateral Securities Collateral Equities, U.S. government, domestic and foreign fixed income securities $ 223,389 $ 229,400 $ 102,785 $ 105,985 Income generated by the Partnership from securities lending arrangements was $561 and $490 for the years ended September 30, 2013 and 2012, respectively. 6. Fair Value Measurements Fair value is defined as 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 (also referred to as exit price). Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. In determining fair value, the use of various valuation approaches, including market, income and cost approaches, is permitted. 25

29 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Fair Value Hierarchy A fair value hierarchy has been established based on whether the inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the reporting entity s assumptions about the inputs market participants would use. The fair value hierarchy requires the reporting entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In addition, for hierarchy classification purposes, the reporting entity should not look through the form of an investment to the nature of the underlying securities held by an investee. The hierarchy is described below. Level 1 Level 2 Level 3 Valuations using quoted prices in active markets for identical assets or liabilities. Valuations of these products do not require a significant degree of judgment. Level 1 assets and liabilities primarily include debt and equity securities that are traded in an active exchange market. Valuations using observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; broker or dealer quotations; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities primarily include debt securities with quoted prices that are traded less frequently than exchange-traded instruments as well as debt securities and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Valuations using unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 includes assets and liabilities whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques reflecting the reporting entity s assumptions about the assumptions market participants would use as well as those requiring significant management judgment. Valuation Techniques Pooled investments (except for private partnerships, which are reported on either the equity method or cost method of accounting), separately invested cash equivalents, debt and equity securities, and collateral held under securities lending arrangements are classified within Level 1 or Level 2 of the fair value hierarchy as they are valued using quoted market prices, broker or dealer quotations, or other observable pricing sources. Certain types of investments are classified within Level 3 of the fair value hierarchy because they have little or no market activity and therefore have little or no observable inputs with which to measure fair value. The valuation of interest rate swaps is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. 26

30 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) The following tables summarize fair value measurements at September 30, 2013 and 2012 for financial assets and liabilities measured at fair value on a recurring basis: Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Fair Value Markets for Observable Unobservable at Identical Items Inputs Inputs September 30, (Level 1) (Level 2) (Level 3) 2013 Assets Pooled investments Invested cash equivalents $ 13,988 $ 49,158 $ - $ 63,146 Separately managed investments 1,483, ,828-2,297,413 Mutual funds 607, ,991 Commingled funds - 959, ,607 2,105,564 1,822,593-3,928,157 Separately invested Invested cash equivalents 145, ,057 Equities 9,760 2,513-12,273 U.S. Government and domestic fixed income securities 18,773 14,880-33,653 Mutual funds 359, ,306 Other ,591 9,681 59, ,995 66,993 9, ,669 $ 2,638,559 $ 1,889,586 $ 9,681 $ 4,537,826 Collateral held under securities lending arrangements $ 229,400 $ 229,400 Liabilities Interest rate swaps $ 232,005 $ 232,005 27

31 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Fair Value Markets for Observable Unobservable at Identical Items Inputs Inputs September 30, (Level 1) (Level 2) (Level 3) 2012 Assets Pooled investments Invested cash equivalents $ 8,742 $ 41,516 $ - $ 50,258 Separately managed investments 1,270, ,025-2,165,550 Mutual funds 646, ,358 Commingled funds - 522, ,574 1,925,625 1,459,115-3,384,740 Separately invested Invested cash equivalents 149, ,238 Equities 14,027 2,296-16,323 U.S. Government and domestic fixed income securities 3,749 1,420-5,169 Mutual funds 169, ,875 Other 121-9,073 9, ,010 3,716 9, ,799 $ 2,262,635 $ 1,462,831 $ 9,073 $ 3,734,539 Collateral held under securities lending arrangements $ 105,985 $ 105,985 Liabilities Interest rate swaps $ 398,340 $ 398,340 For the years ended September 30, 2013 and 2012, the changes in the fair value of the assets measured using significant unobservable inputs (Level 3) were comprised of the following: Balances at beginning of year $ 9,073 $ 10,383 Total gains (losses) Dividends and interest income Realized gains on investments Realized loss on investments (8) (16) Change in net unrealized appreciation on investments Purchases Sales (175) (2,044) Balances at end of year $ 9,681 $ 9,073 The net unrealized gain on Level 3 investments held at September 30, 2013 was $

32 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) 7. Pledges Receivable and Contributions Receivable from Trusts Pledges receivable represent unconditional promises to give and are net of allowances for uncollectible amounts. Pledges are recorded at the present value of their estimated future cash flows. Pledges collectible within one year are classified as other current assets, net of allowances, and total $91,281 and $109,766 as of September 30, 2013 and 2012, respectively. Estimated cash flows due after one year are discounted using published treasury bond and note yields that are commensurate with estimated collection risks. The blended discount rate was 0.8% and 0.4% for 2013 and 2012, respectively. Pledges are expected to be collected as follows: September 30, Amounts due Within one year $ 111,141 $ 128,865 In one to five years 140, ,811 In more than five years 11,084 18,418 Total pledges receivable 263, ,094 Less: Unamortized discount 4,715 2, , ,528 Less: Allowance for uncollectibles 29,857 29,452 Net pledges receivable 228, ,076 Contributions receivable from trusts 27,881 25,786 $ 256,376 $ 277, Property and Equipment Property and equipment consists of the following: September 30, Land and land improvements $ 172,530 $ 160,838 Buildings and building improvements 5,348,349 4,854,254 Equipment 1,348,621 1,276,372 Construction in progress 591, ,567 7,461,263 6,782,031 Accumulated depreciation (3,225,424) (2,896,173) Property and equipment, net $ 4,235,839 $ 3,885,858 Depreciation expense for the years ended September 30, 2013 and 2012 was $429,734 and $415,593, respectively. Interest costs, net of interest earned, aggregating $20,771 and $16,754 were capitalized in 2013 and 2012, respectively. 29

33 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) For the years ended September 30, 2013 and 2012, fully depreciated assets with an original cost of $241,091 and $186,182, respectively, were written off. 9. Accrued Medical Claims and Related Expenses These liabilities include estimates of expected trends in claims severity, frequency, and other factors, which could vary as the claims are ultimately settled. In establishing this reserve, management has utilized the services of actuaries to review the reasonableness of the reserves based principally upon the historical experience of NHP. As a result of changes in estimates of insured events in prior years and recoveries, the liability on claims existing on October 1, 2012, decreased $26,081 in the year ended September 30, Decreases and increases of this nature occur as the result of claim settlements and recoveries during the current year and as additional information is received regarding individual claims, causing changes from the original estimates of the cost of these claims. Ongoing analysis of the recent loss development trends is also taken into account in evaluating the overall adequacy of the reserves. Amounts are in thousands in the following table: September 30, 2013 Balance at beginning of year $ 120,916 Less: Premium deficiency reserve (9,552) Medical loss ratio rebate payable (202) Accrual for claims adjustment expenses (2,759) Claim recoveries (4,484) Plus: Settlements payable, net 19,559 Net balance at beginning of year 123,478 Incurred related to Current year 1,242,333 Prior years (26,081) Total incurred 1,216,252 Paid related to Current year 1,103,374 Prior years 107,009 Total paid 1,210,383 Net balance at end of year 129,347 Plus: Premium deficiency reserve 6,494 Medical loss ratio rebate payable 4,701 Accrual for claims adjustment expenses 2,855 Claims recoveries 1,991 Less: Settlements payable, net (23,555) Balance at end of year $ 121,833 30

34 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Medical claims and related expenses in the accompanying consolidated statements of operations include these amounts along with other nonclaims related costs. These nonclaims related expenses were for directly delivered services and medical cost risk sharing and incentives, totaling approximately $13,181 for the year ended September 30, Long-Term Obligations Long-term obligations issued by PHS and its affiliates consist of the following: September 30, Massachusetts Health and Educational Facilities Authority (Authority) Revenue Bonds Partners HealthCare System Series C, average fixed interest rate of 5.00%, final maturity in 2013 $ - $ 3,960 Partners HealthCare System Series D, variable interest rate of 0.05% and 0.18% at September 30, 2013 and 2012, respectively, final maturity in , ,500 Partners HealthCare System Series E, average fixed interest rate of 5.00%, final maturity in ,475 5,633 Partners HealthCare System Series F, issued in multiple subseries, average fixed interest rate of 5.00%, variable interest rate of 0.17% and 0.29% at September 30, 2013 and 2012, respectively, final maturity in , ,097 Partners HealthCare System Series G, issued in multiple subseries, average fixed interest rate of 4.91%, variable interest rate of 0.19% and 0.36% at September 30, 2013 and 2012, respectively, final maturity in , ,084 Partners HealthCare System Series H, variable interest rate of 0.11% and 0.16% at September 30, 2013 and 2012, respectively, final maturity in , ,154 Partners HealthCare System Series I, issued in multiple subseries, average fixed interest rate of 4.77%, variable interest rate of 0.06% and 0.17%, at September 30, 2013 and 2012, respectively, final maturity in , ,792 Partners HealthCare System Series J, average fixed interest rate of 5.00%, final maturity in , ,118 Partners HealthCare System Series P, variable interest rate of 0.06% and 0.18% at September 30, 2013 and 2012, respectively, final maturity in , ,000 Massachusetts Development Finance Agency (Agency) Revenue Bonds Partners HealthCare System Series K, issued in multiple subseries, average fixed interest rate of 4.74%, variable interest rate of 0.34% and 0.44% at September 30, 2013 and 2012, respectively, final maturity in , ,775 Partners HealthCare System Series L, average fixed interest rate of 4.93%, final maturity in , ,937 Partners HealthCare System Series 2007 taxable bonds, fixed interest rate of 6.26%, final maturity in , ,000 Partners HealthCare System Series 2011 taxable bonds, fixed interest rate of 3.44%, final maturity in , ,000 Partners HealthCare System 2012 Taxable Senior Notes, fixed interest rate of 4.11%, final maturity in ,000 - Other obligations 6,798 7,125 Capital lease obligations 4,060 2,087 Total long-term obligations net of premiums and discounts 3,482,359 3,133,262 Less: Current portion 361, ,322 Auction rate securities held 23,830 - $ 3,097,280 $ 2,839,940 31

35 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) As of September 30, 2013 and 2012, respectively, Partners HealthCare was holding $23,830 and $0 of the Series F and Series G Revenue Bonds issued as auction rate securities (ARS). Although not legally extinguished, the bonds held by Partners HealthCare have been reflected as extinguished under generally accepted accounting principles. Aggregate maturities and payments of long term obligations during the next five years and thereafter, and other amounts classified as current liabilities, are as follows: Bonds Supported by Partners Scheduled HealthCare Maturities Liquidity Total 2014 $ 54,994 $ 306,255 $ 361, ,614-56, ,681-63, ,529-64, ,433-68,433 Thereafter 2,867,853-2,867,853 $ 3,176,104 $ 306,255 $ 3,482,359 The scheduled maturities represent annual payments as required under debt repayment schedules. The current portion of long-term obligations includes the payments scheduled to be made in 2014 along with variable rate bonds supported by Partners HealthCare liquidity. The variable rate bonds supported by self liquidity provide the bondholder with an option to tender the bonds to Partners HealthCare. Accordingly, these bonds are classified as a current liability. The fair value of long-term obligations was $3,559,469 and $3,377,755 as of September 30, 2013 and 2012, respectively, and would be classified as Level 2. The carrying amount of the variable rate debt is a reasonable estimate of its fair value. The fair value of the fixed rate debt is estimated based on quoted market prices for the same or similar issues. Interest expense approximates interest paid, net of capitalized interest, during the years ended September 30, 2013 and Taxable Bonds In December 2011, PHS issued $250,000 of Partners HealthCare System Taxable Bonds Series The bond proceeds, net of issuance costs of $1,632, were used to make a voluntary contribution to Partners HealthCare s defined benefit pension plans. In November 2012, PHS issued $400,000 of Partners HealthCare System Taxable Senior Notes. Proceeds from the notes were used to make a voluntary contribution to Partners HealthCare s defined benefit pension plans ($200,000) and to finance certain capital projects ($200,000). 32

36 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Agency Revenue Bonds In January 2012, PHS issued $331,320 of Partners HealthCare System Series L Revenue Bonds plus bond premium of $22,181. The bond proceeds, net of issuance costs of $3,056, were used to finance certain capital projects totaling $260,834 and to refund a portion of Partners HealthCare System Series B Revenue Bonds ($73,205), a portion of Partners HealthCare System Series C Revenue Bonds ($5,279) and a portion of Partners HealthCare System Series E Revenue Bonds ($11,127), all of which were issued as fixed rate bonds. Partners HealthCare Series 2007, 2011 and 2012 taxable bonds, the Authority s Series D through J bonds and the Agency s Series K and L bonds and the Series P loan to PHS, (collectively, PHS Bonds) are uncollateralized general obligations of PHS supported by guarantees from BWHC, The Brigham and Women s Hospital, Inc. (BWH), MGH and The General Hospital Corporation (the General) which may be suspended under certain conditions. PHS bond agreements contain certain covenants, including a minimum debt service coverage ratio and limitations on additional indebtedness and asset transfers. Credit Agreement Partners HealthCare maintains a $150,000 Credit Agreement (the Agreement) that provides access to same day funds. Advances under the Agreement bear a variable rate of interest based on the London Interbank Offered Rate (LIBOR). There were no amounts outstanding under the Agreement as of September 30, The Agreement expires in June Derivatives Interest Rate Swaps Partners HealthCare uses derivative financial instruments principally to manage interest rate risk and has entered into derivatives to lock in fixed rates for anticipated issuances and refundings of debt. By using derivative financial instruments to manage the risk of changes in interest rates, Partners HealthCare exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contracts. When the fair value of a derivative contract is positive, the counterparty has a liability to Partners HealthCare, which creates credit risk. Partners HealthCare minimizes its credit risk by entering into derivative agreements with several counterparties and requiring the counterparty to post collateral for the benefit of Partners HealthCare based on the credit rating of the counterparty and the fair value of the derivative contract. When the fair value of a derivative contract is negative, Partners HealthCare has a liability to the counterparty and, therefore, it does not possess credit risk. Under certain circumstances Partners HealthCare may be required to post collateral for the benefit of the counterparty. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest rate changes is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. Partners HealthCare utilizes interest rate swaps to manage fluctuations in cash flows resulting from interest rate risk on certain of its variable rate revenue bonds. These bonds expose Partners HealthCare to variability in interest payments due to changes in interest rates. Management believes that it is prudent to limit the variability of its interest payments. To meet this objective and to take advantage of low interest rates, Partners HealthCare entered into various interest rate swap 33

37 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) agreements involving the exchange of fixed rate payments by Partners HealthCare for variable rate payments from several counterparties based on a percentage of LIBOR. The following is a summary of the outstanding positions under these interest rate swap agreements at September 30, 2013: Effective Date Notional Rate Amount Maturity Paid Rate Received Hedging Status 5/1/03 $ 150,000 7/1/ % 67% 1-month LIBOR Nonhedging 7/1/03 16,800 7/1/ % 67% 6-month LIBOR Hedging 7/1/05 150,000 7/1/ % 67% 1-month LIBOR Nonhedging 7/1/05 46,200 7/1/ % 67% 6-month LIBOR Hedging 7/1/07 150,000 7/1/ % 67% 1-month LIBOR Nonhedging 7/1/09 100,000 7/1/ % 67% 1-month LIBOR Hedging 7/1/11 100,000 7/1/ % 67% 1-month LIBOR Hedging 7/1/13 100,000 7/1/ % 67% 1-month LIBOR Nonhedging 7/1/15 100,000 7/1/ % 67% 1-month LIBOR Hedging 7/1/17 100,000 7/1/ % 67% 1-month LIBOR Hedging Partners HealthCare designates its interest rate swaps that are used to minimize the variability in cash flows of interest-bearing liabilities or forecasted transactions caused by changes in interest rates as hedging instruments at the inception of each contract, with the intention of maintaining hedge accounting treatment over the term of the agreement. However, circumstances may arise whereby the variability in cash flows exceeds the threshold for hedging qualification or the structure of the bonds or the timing of the forecasted transaction is changed, resulting in de-designation of the hedge. Partners HealthCare de-designated $550,000 of its interest rate swaps when they ceased to qualify for hedge accounting. Hedging swaps are designated as cash flow hedges; accordingly, the change in fair value of the effective portion of the hedge is reflected as a change in unrestricted net assets and the ineffective portion of the hedge is reflected as a component of nonoperating gains (expenses) in the consolidated statements of operations. Nonhedging swaps are swaps that have been dedesignated as hedges; accordingly, the change in fair value is recorded as a component of nonoperating gains (expenses) in the consolidated statements of operations. The fair value of interest rate swaps is as follows: September 30, Balance sheet location Derivatives designated as hedging instruments Interest rate swaps liability $ 99,868 $ 223,788 Derivatives not designated as hedging instruments Interest rate swaps liability 132, ,552 $ 232,005 $ 398,340 34

38 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) The effects of interest rate swaps on the consolidated statements of operations are as follows: Amount of Gain (Loss) Amount of Gain (Loss) Recognized in Recognized in Excess Changes in Unrestricted of Revenues Net Assets Over Expenses Years Ended September 30, Years Ended September 30, Statement of operations location Derivatives designated as hedging instruments Change in fair value of hedging interest rate swaps $ 116,995 $ (12,076) $ - $ - Amortization of swaption premiums - - 1,386 1,471 Hedge ineffectiveness - - 5,539 (2,830) Derivatives not designated as hedging instruments Change in fair value of nonhedging interest rate swaps ,415 (9,704) Reclassification of net asset balance upon hedge de-designation (818) (818) $ 117,813 $ (11,258) $ 48,522 $ (11,881) Partners HealthCare s interest rate swaps contracts contain provisions that require collateral to be posted if the fair value of the swaps exceeds certain thresholds. The collateral thresholds reflect the current credit ratings issued by major credit rating agencies on Partners HealthCare s and the counterparty s debt. Declines in Partners HealthCare s or the counterparty s credit ratings would result in lower collateral thresholds and consequently the potential for additional collateral postings by Partners HealthCare or the counterparty. As of September 30, 2013 and 2012, the aggregate fair value of all interest rate swaps was a liability of $232,005 and $398,340, respectively, for which Partners HealthCare had posted collateral of $22,663 and $133,383, respectively. Partners HealthCare has established procedures to ensure that liquidity and securities are available to meet collateral posting requirements. Upon the occurrence of certain events of default or termination events identified in the derivative contracts, either Partners HealthCare or the counterparty could terminate the contracts in accordance with their terms. Termination results in the payment of a termination amount by one party that attempts to compensate the other party for its economic losses. If interest rates at the time of termination are lower than those specified in the derivative contract, Partners HealthCare will make a payment to the counterparty. Conversely, if interest rates at such time are higher, the counterparty will make a payment to Partners HealthCare. Derivatives - Other Partners HealthCare also enters into options and futures primarily as hedges on securities and indices primarily related to foreign currency. Forward contracts are used as currency hedges. These agreements are limited in use and generally do not exceed one year and are included in separately invested investments. 35

39 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) 12. Commitments Leases Partners HealthCare has capital and noncancelable operating leases for certain buildings and equipment. Minimum future lease commitments under noncancelable leases for the next five years and thereafter are as follows: Capital Leases Operating Leases 2014 $ 1,826 $ 183, , , , , ,380 Thereafter ,198 Total lease payments 4,395 $ 1,218,839 Less: Amount representing interest 335 Capital lease obligations at September 30, 2013 $ 4,060 Rental expense under operating leases approximated $177,554 in 2013 and $169,317 in Construction Projects BWH is constructing a building (the Brigham Building for the Future or BBF) and a parking garage (the Brigham Patient Parking project or BPP). The BBF will expand research and clinical space on the BWH campus, with a focus on the Neuroscience and Musculoskeletal programs, and increase flexibility for future campus redevelopment while allowing for lease consolidation. The associated land is leased to BWH by the Commonwealth through Phase 1 of the project, which involved the construction of two smaller facilities to be used by the Commonwealth, was completed in Phase 2 of the project, which involves the site preparation and construction of BBF, is ongoing. As of September 30, 2013, accumulated costs incurred related to the BBF approximated $24,864 with approximately $31,417 in outstanding construction contracts. Phase 2 costs are expected to be approximately $499,000, with occupancy scheduled for late BPP locates a 400 space parking facility under BWH s 15 Francis Street entrance. BPP mitigates a parking shortage on campus and also satisfies commitments to the community and regulators. BPP includes a greening landscaped park over the garage as required by the City of Boston. BPP s total project cost is expected to be approximately $63,500. Construction is underway with accumulated costs of approximately $30,410 as of September 30, 2013 and outstanding construction contracts of approximately $25,207, with the garage opening scheduled for Spring

40 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) 13. Pension and Postretirement Healthcare Benefit Plans Substantially all employees of Partners HealthCare are covered under various noncontributory defined benefit pension plans and various defined contribution pension plans. In addition, certain affiliates provide subsidized healthcare benefits for retired employees on a self-insured basis, with the benefit obligation being partially funded. These retiree healthcare benefits are administered through an insurance company and are accounted for on the accrual basis, which includes an estimate of future payments for claims incurred. Total expense for these plans consists of the following: Years Ended September 30, Defined benefit plans $ 275,096 $ 172,800 Defined contribution plans 139, ,781 Postretirement healthcare benefit plans 9,683 8,875 $ 424,752 $ 313,456 Information regarding benefit obligations, plan assets, funded status, expected cash flows and net periodic benefit cost follows within this footnote. Benefit Obligations Defined Benefit Pension Postretirement Plans Healthcare Benefit Plans Change in benefit obligations Benefit obligations at beginning of year $ 4,441,164 $ 3,346,936 $ 140,344 $ 113,682 Service cost 245, ,453 6,293 4,730 Interest cost 191, ,042 5,036 5,561 Plan amendments - 2, Actuarial (gain) loss (610,840) 796,201 (15,268) 14,733 Benefits paid (85,811) (74,249) (5,025) (4,816) Expenses paid (4,019) (4,497) - - Employee contributions 52-6,949 6,454 Affiliation 83, Benefit obligations at end of year $ 4,260,555 $ 4,441,164 $ 138,329 $ 140,344 The accumulated benefit obligation for all defined benefit pension plans at the end of 2013 and 2012 was $4,025,049 and $4,148,507, respectively. 37

41 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Defined Benefit Postretirement Healthcare Pension Plans Benefit Plans Weighted-average assumptions used to determine end of year benefit obligation Discount rate 5.05% 4.15% 3.15% % 2.65% % Rate of compensation increase Professional staff 4.45% 4.45% N/A N/A Other than professional staff 3.00% % 3.00% % N/A N/A Healthcare cost trend rate for next year N/A N/A 6.50% 7.00% Rate to which the cost trend rate is to decline N/A N/A 5.00% 5.00% Year that rate reaches the ultimate trend rate N/A N/A Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plans. A one-percentage-point change in assumed healthcare cost trend rates would have the following effect: One-Percentage-Point Increase One-Percentage-Point Decrease Effect on postretirement benefit obligation $ 978 $ (906) Plan Assets Postretirement Defined Benefit Pension Plans Healthcare Benefit Plans Change in plan assets Fair value of plan assets at beginning of year $ 3,114,884 $ 2,368,991 $ 45,982 $ 33,334 Actual return on plan assets 367, ,042 5,041 6,194 Employer contributions 474, ,597 3,814 4,816 Employee contributions 52-6,949 6,454 Benefits paid (85,811) (74,249) (5,025) (4,816) Expenses paid (4,019) (4,497) - - Affiliation 58, Fair value of plan assets at end of year $ 3,925,818 $ 3,114,884 $ 56,761 $ 45,982 The assets of the defined benefit pension plans are aggregated in a single master trust (Master Trust) and managed as one asset pool. The investment objective for the Master Trust is to achieve the highest reasonable total return after considering (i) plan liabilities, (ii) funding status and projected cash flows, (iii) projected market returns, valuations and correlations for various asset classes and (iv) Partners HealthCare s ability and willingness to incur market risk. Oversight of the management of Partners HealthCare s investable assets, including the Master Trust, is provided by the Investment Committee of the PHS Board of Directors. The Committee seeks to add incremental returns by manager selection and asset allocation (increasing/decreasing allocations within allowable ranges based on current and projected valuations). The Committee is supported by a professional staff, an outside investment consultant and a pension actuarial consultant. 38

42 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Partners HealthCare utilizes a policy benchmark allocation that balances projected returns, correlations and volatility of various asset classes within the overall risk tolerance. The allocations are actively managed based on relative valuations among and within asset classes and the perceived ability of managers to outperform passive benchmarks. Exposure by asset class is the sum of the net exposures reported by each manager. Asset performance is monitored monthly and the portfolio is rebalanced if asset classes exceed explicit ranges. The following table presents the capital allocations, reported exposures of the allocations and policy benchmarks by manager mandate within the Master Trust. Some managers, particularly real assets and less market sensitive managers, invest allocated capital among multiple policy benchmark asset classes. September 30, 2013 September 30, 2012 Reported Policy Reported Policy Dollars Exposures Benchmark Dollars Exposures Benchmark Global equity $ 177,304 4 % 3 % $ - 0 % 3 % Traditional U.S. equity 549, , Traditional foreign developed equity 500, , Traditional emerging markets equity 494, , Private equity 240, , Real assets 343, , Less market sensitive managers 1,271, ,005, Fixed income managers 348, , $ 3,925, % 100 % $ 3,114, % 100 % Inflation defensive strategies include investments in real estate assets, commodities, timber and inflation protection bonds. Other exposures include currency and volatility based strategies. Within the Master Trust, assets are allocated to managers with investment mandates that may range from a single sub-asset class to very broad mandates; with restrictions that range from long-only to unconstrained; and with management structures ranging from separately managed funds to mutual/commingled funds to private partnerships. Less market sensitive managers employ absolute return, long/short equity and diversified strategies, which in the aggregate are expected to generate positive returns on a consistent basis. Investment risks (concentration, correlation, valuation, liquidity, leverage, mandate compliance, etc.) are measured at the manager Level as well as the pool level. The postretirement healthcare benefit plans assets are commingled funds, with the objective of achieving returns to satisfy plan obligations and with a Level of volatility commensurate with Partners HealthCare s overall financial profile. 39

43 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) The following table presents plan assets, by form of ownership, as of September 30, 2013 and 2012 measured at fair value on a recurring basis using the fair value hierarchy defined in Note 6: Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Fair Value Markets for Observable Unobservable at Identical Items Inputs Inputs September 30, (Level 1) (Level 2) (Level 3) 2013 Defined Benefit Pension Plans Invested cash equivalents $ 59,826 $ - $ - $ 59,826 Separately managed investments 452, , ,450 Mutual funds 472, ,768 Commingled funds - 863, ,109 Private partnerships - 996, ,739 1,860, ,248 2,076, ,739 3,925,818 Postretirement Healthcare Benefit Plans Commingled funds 2,200 49,057 5,504 56,761 Total plan assets $ 987,448 $ 2,125,888 $ 869,243 $ 3,982,579 Fair Value Measurements Using Quoted Prices Significant in Active Other Significant Fair Value Markets for Observable Unobservable at Identical Items Inputs Inputs September 30, (Level 1) (Level 2) (Level 3) 2012 Defined Benefit Pension Plans Invested cash equivalents $ 5,053 $ - $ - $ 5,053 Separately managed investments 463, , ,901 Mutual funds 403, ,749 Commingled funds - 351, ,562 Private partnerships - 963, ,243 1,717, ,036 1,488, ,243 3,114,884 Postretirement Healthcare Benefit Plans Commingled funds 3,748 38,924 3,310 45,982 Total plan assets $ 875,784 $ 1,527,529 $ 757,553 $ 3,160,866 In evaluating the Level at which Partners HealthCare s private partnerships have been classified within the fair value hierarchy, management has assessed factors including, but not limited to price transparency, the ability to redeem these investments at net asset value at the measurement date, and the existence or absence of certain restrictions at the measurement date. Investments in private partnerships generally have limited redemption options for investors and, subsequent to final closing, may or may not permit subscriptions by new or existing investors. These entities may also have the ability to impose gates, lockups, and other restrictions on an investor s ability to 40

44 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) readily redeem out of their investment interest in the fund. At September 30, 2013 and 2012, certain private partnerships where Partners HealthCare has the ability and the right to redeem interests within the next twelve months have been classified as Level 2 investments in the plan assets fair value table. During the years ended September 30, 2013 and 2012, the change in the fair value of the plan assets measured using significant unobservable inputs (Level 3) is comprised of the following: Balances at beginning of year $ 757,553 $ 618,341 Total gains Dividends and interest income 3,787 2,984 Realized gains on investments 60,893 22,577 Realized losses on investments - (1,270) Change in net unrealized appreciation on investments 27,932 28,244 Purchases 53, ,867 Sales (34,552) (26,043) Transfers into Level Balances at end of year $ 869,243 $ 757,553 The net unrealized gain on Level 3 investments held at September 30, 2013 was $248,

45 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Funded Status The funded status of the plans recognized in the balance sheet and the amounts recognized in unrestricted net assets follows: Defined Benefit Postretirement Pension Plans Healthcare Benefit Plans End of year Fair value of plan assets at measurement date $ 3,925,818 $ 3,114,884 $ 56,761 $ 45,982 Benefit obligations at measurement date (4,260,555) (4,441,164) (138,329) (140,344) Funded status $ (334,737) $ (1,326,280) $ (81,568) $ (94,362) Amounts recognized in the balance sheet consist of Noncurrent assets $ - $ - $ 1,001 $ 1,157 Current liabilities (2,493) (2,597) (3,477) (3,636) Long-term liabilities (332,244) (1,323,683) (79,092) (91,883) $ (334,737) $ (1,326,280) $ (81,568) $ (94,362) Amounts not yet recognized in net periodic benefit cost and included in unrestricted net assets consist of Actuarial net loss (gain) $ 843,148 $ 1,636,265 $ 11,816 $ 30,525 Prior service cost (credit) 11,007 13,192 (20) (62) $ 854,155 $ 1,649,457 $ 11,796 $ 30,463 Amounts recognized in unrestricted net assets consist of Current year actuarial (gain) loss $ (707,747) $ 723,124 $ (16,875) $ 11,026 Amortization of actuarial gain (loss) (107,057) (33,424) (1,810) (1,091) Current year prior service cost (credit) - 2, Amortization of prior service (cost) credit (2,183) (1,846) $ (816,987) $ 690,132 $ (18,664) $ 9,956 At the end of 2013 and 2012, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of plan assets were as follows: Accumulated benefit obligation in excess of plan assets Projected benefit obligation $ 3,042,196 $ 4,441,164 Accumulated benefit obligation 2,943,202 4,148,507 Fair value of plan assets 2,791,146 3,114,884 42

46 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Expected Cash Flows Information about the expected cash flows for the defined benefit and postretirement healthcare benefit plans is as follows: Defined Benefit Pension Plans Postretirement Healthcare Benefit Plans Expected employer contributions 2014 $ 184,241 $ 6,235 Medicare Subsidy Expected benefit payments (receipts) 2014 $ 178,929 $ 6,520 $ (285) ,388 7,128 (269) ,908 7,610 (249) ,138 8,158 (229) ,372 8,723 (209) ,465,353 34,281 (756) Net Periodic Benefit Cost Defined Benefit Postretirement Pension Plans Healthcare Benefit Plans Service cost $ 245,002 $ 190,453 $ 6,293 $ 4,730 Interest cost 191, ,042 5,036 5,561 Expected return on plan assets (270,798) (236,965) (3,435) (2,486) Amortization of Prior service cost (credit) 2,183 1,846 (21) (21) Actuarial net (gain) loss 107,057 33,424 1,810 1,091 Net periodic benefit cost $ 275,096 $ 172,800 $ 9,683 $ 8,875 Amounts expected to be amortized from unrestricted net assets into net periodic benefit cost during the year ending September 30, 2014 are as follows: Defined Benefit Pension Plans Postretirement Healthcare Benefit Plans Actuarial net loss $ 44,182 $ 118 Prior service cost (credit) 3,937 (20) 43

47 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Defined Benefit Pension Plans Postretirement Healthcare Benefit Plans Actuarial net loss $ 44,182 $ 118 Prior service cost (credit) 3,937 (20) Defined Benefit Postretirement Healthcare Pension Plans Benefit Plans Weighted-average assumptions used to determine net periodic pension and postretirement cost Discount rate 3.70 % % 5.30 % 2.65 % % 4.15 % % Expected return on plan assets 7.75 % % 8.25 % 7.50 % 7.50 % Rate of compensation increase Professional staff 4.45 % 4.45 % N/A N/A Other than professional staff 3.00 % % 3.00 % % N/A N/A Healthcare cost trend rate for this year N/A N/A 7.00 % 7.50 % Rate to which the cost trend rate is to decline N/A N/A 5.00 % 5.00 % Year that rate reaches the ultimate trend rate N/A N/A Partners HealthCare uses a long term return assumption which is validated annually by obtaining long term asset return, volatility and correlation projections for relevant asset class indexes; modifying volatility and correlations to reflect the actual historical experience of the active managers; calculating the expected return using benchmark weights and indexes; and comparing the return assumption to the sum of the expected return and the historical outperformance of the actual return versus the benchmark. Partners HealthCare regularly monitors the active risk of the Master Trust by a statistical regression of the return series of the actual portfolio to that of the policy benchmark. Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plans. A one-percentage-point change in assumed healthcare cost trend rates would have the following effect: One-Percentage-Point Increase Decrease Effect on service and interest cost $ 51 $ (48) 44

48 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) 14. Professional Liability Insurance Partners HealthCare insures substantially all of its professional and general liability risk on a claims-made basis in cooperation with other healthcare organizations in the Greater Boston area through a captive insurance company, Controlled Risk Insurance Company Ltd. (CRICO). PHS owns 10% of CRICO. The investment is accounted for on the cost basis of accounting. The policies cover claims made during their respective terms, but not those occurrences for which claims may be made after expiration of the policy, except for certain tail liabilities which CRICO has assumed on an occurrence basis through December 31, Management intends to renew its coverage on a claims-made basis and has no reason to believe that it will be prevented from such renewal. Partners HealthCare follows the accounting policy of establishing reserves to cover the ultimate costs of medical malpractice claims, which include costs associated with litigating or settling claims. The liability also includes an estimated tail liability, established to cover all malpractice claims incurred but not reported to the insurance company as of the end of the year. The total malpractice liability of $443,688 and $441,404 at September 30, 2013 and 2012, respectively, is presented as accrued professional liability in the consolidated balance sheets. These reserves have been recorded on a discounted basis using an interest rate of 3.50% and 2.75% at September 30, 2013 and 2012, respectively. Partners HealthCare also recognizes an insurance receivable from CRICO, at the same time that it recognizes the liability, measured on the same basis as the liability, subject to the need for a valuation allowance for uncollectible amounts. The insurance receivable of $355,332 and $351,382 at September 30, 2013 and 2012, respectively, is reported as a component of other assets in the consolidated balance sheets. Management is not aware of any claims against Partners HealthCare or factors affecting CRICO that would cause the expense for professional liability risks to vary materially from the amount provided. 15. Concentration of Credit Risk Financial instruments that potentially subject Partners HealthCare to concentration of credit risk consist of patient accounts receivable, research grants receivable, pledges receivable, certain investments and interest rate swaps. Partners HealthCare receives a significant portion of its payments for services rendered from a limited number of government and commercial third-party payers, including Medicare, Medicaid, Blue Cross and Blue Shield of Massachusetts, Harvard Pilgrim Health Care and Tufts Health Plan. Research funding is provided through many government and private sponsors. Pledges receivable are due from multiple donors. Partners HealthCare assesses the credit risk for pledges based on history and the financial wherewithal of donors, most of which are individuals or organizations well known to Partners HealthCare. Investments, which include government and agency securities, stocks and corporate bonds, and private partnerships and other investments are not concentrated in any corporation or industry or with any single counterparty. Alternative investments are less liquid than Partners HealthCare s other investments. The reported values of the alternative investments may differ significantly from 45

49 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) the values that would have been used had a ready market for those securities existed. These instruments may contain elements of both credit and market risk. Such risks include, but are not limited to, limited liquidity, absence of oversight, dependence upon key individuals, emphasis on speculative investments and nondisclosure of portfolio composition. Partners HealthCare minimizes the credit risk it is exposed to under interest rate swap agreements by utilizing several counterparties and requiring the counterparties to post collateral for the benefit of Partners HealthCare when the fair value of the swap is positive. Partners HealthCare minimizes its counterparty risk by contracting with six counterparties, none of which accounts for more than 30% of the aggregate notional amount of the swap contracts. 16. Restricted Net Assets Restricted net assets are available for the following purposes: September 30, Temporarily restricted Charity care $ 99,808 $ 95,576 Buildings and equipment 97, ,584 Clinical care, research and academic 595, ,852 $ 792,769 $ 777,012 Permanently restricted Charity care $ 19,664 $ 19,326 Buildings and equipment 2,433 2,433 Clinical care, research and academic 390, ,471 $ 412,209 $ 374,230 Endowment Partners HealthCare s endowment consists of over 1,000 individual funds established for a variety of purposes. The endowment includes both donor-restricted endowment funds and funds designated by the boards to function as endowment. As required by generally accepted accounting principles, net assets associated with endowment funds, including funds designated by the boards to function as endowment, are classified and reported as restricted or unrestricted based on the existence or absence of donor-imposed restrictions. Partners HealthCare has interpreted UPMIFA as requiring the preservation of the value of the original gift of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, Partners HealthCare classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts donated to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by Partners HealthCare in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with 46

50 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) UPMIFA, Partners HealthCare considers several factors in making a determination to appropriate or accumulate donor-restricted endowment funds. These factors include: the duration and preservation of the fund; the purposes of the organization and the donor-restricted endowment fund; general economic conditions; the possible effect of inflation and deflation; the expected total return from income and the appreciation of investments; other resources of the organization; and the investment policies of the organization. Endowment Funds with Deficits From time to time, the value of assets associated with individual donor-restricted endowment funds may fall below the value of the initial and subsequent donor gift amounts. When such endowment deficits exist, they are classified as a reduction to unrestricted net assets. Deficits of this nature reported in unrestricted net assets were $338 and $1,231 at September 30, 2013 and 2012, respectively. These deficits resulted from unfavorable market fluctuations that occurred after the investment of new permanently restricted contributions or subsequent endowment additions. The following presents the endowment net asset composition by type of fund as of September 30, 2013 and 2012 and the changes in endowment assets for the years ended September 30, 2013 and 2012: Endowment net asset composition by type of fund as of September 30, 2013 Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowment funds $ (338) $ 468,273 $ 397,472 $ 865,407 Board-designated endowment funds 903, ,593 Total funds $ 903,255 $ 468,273 $ 397,472 $ 1,769,000 47

51 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Changes in endowment net assets Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets at September 30, 2012 $ 853,737 $ 433,316 $ 359,985 $ 1,647,038 Investment return Investment income 4,067 4, ,868 Net realized and unrealized appreciation (depreciation) 83,141 66, ,341 Total investment return 87,208 71, ,209 Contributions 3,963 (202) 35,008 38,769 Appropriation of endowment assets for expenditure (37,535) (38,291) - (75,826) Other changes (4,118) 1,731 2,197 (190) Total changes 49,518 34,957 37, ,962 Endowment net assets at September 30, 2013 $ 903,255 $ 468,273 $ 397,472 $ 1,769,000 Endowment net asset composition by type of fund as of September 30, 2012 Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowment funds $ (1,231) $ 433,316 $ 359,985 $ 792,070 Board-designated endowment funds 854, ,968 Total funds $ 853,737 $ 433,316 $ 359,985 $ 1,647,038 48

52 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) Changes in endowment net assets Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets at October 1, 2011 $ 794,151 $ 404,753 $ 323,736 $ 1,522,640 Investment return Investment income 3,808 3, ,732 Net realized and unrealized appreciation (depreciation) 85,996 62, ,070 Total investment return 89,804 66, ,802 Contributions 11, ,387 45,817 Appropriation of endowment assets for expenditure (37,005) (37,319) - (74,324) Other changes (4,508) (634) 1,245 (3,897) Total changes 59,586 28,563 36, ,398 Endowment net assets at September 30, 2012 $ 853,737 $ 433,316 $ 359,985 $ 1,647,038 Conditional Pledge During 2009, the General signed an agreement (Ragon Agreement) with The Massachusetts Institute of Technology (MIT), The President and Fellows of Harvard College (Harvard) and The Phillip T. and Susan M. Ragon Foundation (Ragon Foundation) to establish the Phillip T. and Susan M. Ragon Institute (Ragon Institute) as a joint research center of the General, MIT and Harvard with the purpose of harnessing the potential of the immune response to combat and conquer human diseases, integrating biomedical research with emerging engineering technologies (with the main initial focus being the development of an AIDS vaccine) and educating and training scientists. The Ragon Foundation committed to provide funding for the Ragon Institute of $100,000 over ten years through the General (as the administrative home for the Ragon Institute), beginning retroactively on January 1, The Ragon Foundation has the ability to slow, suspend or eliminate funding based on restrictions described in the Ragon Agreement. Additionally, any funding not paid by December 31, 2017 will no longer be due by the Ragon Foundation. Due to the conditions within the Ragon Agreement, funding is recognized when received, with no pledge receivable recorded for the balance of the commitment. Through September 30, 2013, total funding of $64,000 was received, with $10,000 received for the year ended September 30, 2013, and total net expenses of $48,662 were incurred, including $10,331 for the year ended September 30, As of September 30, 2013, unspent funding of $15,338 has been recorded as temporarily restricted net assets, to be released to unrestricted net assets after qualifying expenses have been incurred. 49

53 Notes to Consolidated Financial Statements September 30, 2013 and 2012 (dollars in thousands) 17. Functional Expenses Total operating expenses by function are as follows: Years Ended September 30, Healthcare services $ 6,577,800 $ 6,449,354 Research and academic 1,594,449 1,538,597 Medical claims and related expenses 1,061,630 - General and administrative 954, ,477 $ 10,188,400 $ 8,790, Contingencies Partners HealthCare is subject to complaints, claims and litigation which have risen in the normal course of business. In addition, Partners HealthCare is subject to reviews and investigations by various federal and state government agencies to assure compliance with applicable laws, some of which are subject to different interpretations. Governmental review of compliance by healthcare institutions, including Partners HealthCare, has increased. 19. Subsequent Events Partners HealthCare has assessed the impact of subsequent events through December 13, 2013, the date the audited financial statements were issued. During this period, there were no subsequent events that require adjustment to the audited financial statements. 50

54 Schedule of Expenditures of Federal Awards

55 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER DIRECT RESEARCH CFDA Agency CFDA Program CFDA # BWH MGH McLean Other Total Consumer Product Safety Commission Consumer Product Safety Commission 93. $ - $ 64,201 $ - $ - $ 64,201 Consumer Product Safety Commission - 64, ,201 Department of Commerce Measurement and Engineering Research and Standards , ,696 Department of Commerce - 6, ,696 Department Of Defense Air Force Defense Research Sciences Program ,225, ,225,392 Basic and Applied Scientific Research , , ,408 Basic Scientific Research , ,631 Basic, Applied, and Advanced Research in Science and Engineering , ,016 Defense Advanced Research Projects Agency (45,266) - - (45,266) Military Medical Research and Development ,562,392 16,675,207 1,153, ,195 25,101,596 Naval Medical Research Unit San Antonio , ,810 Research and Technology Development ,258, ,313-2,409,014 U.S. Army Medical Research Acquisition ,802 1,215, ,600-1,539,192 Department Of Defense 7,209,019 24,454,864 1,596, ,195 33,970,793 Department of Education National Institute on Disability and Rehabilitation Research ,077,842 1,077,842 Department of Education ,077,842 1,077,842 Department of Health and Human Services Academic Research Enhancement Award (15) (15) Agency for Healthcare Research and Quality (AHRQ) 93. 5,322, ,322,688 Aging Research ,796,631 12,644, ,628 25,010,532 Alcohol Research Programs , , ,923-1,622,606 Allergy, Immunology and Transplantation Research ,442,199 48,716, ,158,517 Arthritis, Musculoskeletal and Skin Diseases Research ,683,825 5,420, ,076 15,532,854 Assistance for Torture Victims , ,271 Assistance Programs for Chronic Disease Prevention and Control (17,068) - - (17,068) Assistant Secretary for Preparedness and Response , ,872 Biomedical Research and Research Training ,826,702 16,265, ,517-27,535,455 Biometry and Risk Estimation-Health Risks from Environmental Exposures , ,129 Blood Diseases and Resources Research ,802,510 1,643, ,446,382 Cancer Biology Research ,353,795 6,645, ,999,660 Cancer Cause and Prevention Research ,341,812 8,686, ,028,517 Cancer Centers Support Grants ,422, ,422,980 Cancer Construction , ,104 Cancer Control ,812 1,145, ,172,083 Cancer Detection and Diagnosis Research ,977,570 10,284, ,262,203 Cancer Research Manpower , , ,096 Cancer Treatment Research ,339,828 13,420, ,760,267 The accompanying notes are an integral part of this schedule. 51

56 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED DIRECT RESEARCH, CONTINUED CFDA Agency CFDA Program CFDA # BWH MGH McLean Other Total Cardiovascular Diseases Research ,055,840 24,668, ,467 66,096,248 Center for Disease Control & Prevention , ,378 Centers for Disease Control and Prevention_Investigations and Technical Assistance , ,153 Centers for Medicare and Medicaid Services (CMS) Research, Demonstrations and Evaluations , ,993 Child Health and Human Development Extramural Research ,651,500 13,185, ,603 16,060,059 Comparative Medicine, Instrumentation, Research Infrastructure ,000 1,411, ,705-2,021,540 Diabetes, Digestive, and Kidney Diseases Extramural Research ,967,029 32,742, ,709,945 Digestive Diseases and Nutrition Research , ,697 Discovery and Applied Research for Technological Innovations to Improve Human Health ,634,471 22,600, ,234,999 Drug Abuse and Addiction Research Programs ,016 7,289,554 11,102,988 18,636,558 Emergency Medical Services for Children , ,906 Environmental Health ,425, ,425,954 Extramural Research Programs in the Neurosciences and Neurological Disorders ,292,147 37,215,913 2,149,934-50,657,994 Fogarty International Research Collaboration Award (22) (22) Food & Drug Administration , ,174 Food and Drug Administration_Research , ,689 Human Genome Research ,777, , ,240,078 International Research and Research Training , ,766 Kidney Diseases, Urology and Hematology Research , ,160 Lung Diseases Research ,300,701 3,445, ,745,954 Maternal and Child Health Federal Consolidated Programs ,918, ,918,394 Medical Library Assistance , , ,174,859 Mental Health Research Grants ,653,439 20,368,809 9,870,660-35,892,908 Minority Health and Health Disparities Research , , ,531 National Center for Research Resources , , ,126 National Center on Sleep Disorders Research ,429, , ,552,111 National Institutes of Health Contracts 93. 1,630,979 8,716, ,044-11,026,471 Nursing Research , , ,039 1,575,930 Occupational Safety and Health Program , ,116 Oral Diseases and Disorders Research ,576,638 1,889, ,466,046 Population Research , , ,369 ARRA - Recovery Act Comparative Effectiveness Research - AHRQ ,170,283 3,924, ,094,393 Research and Training in Complementary and Alternative Medicine ,918 9,350, ,496-10,462,068 Research on Healthcare Costs, Quality and Outcomes ,358, ,382-4,800 4,034,929 Research Related to Deafness and Communication Disorders ,826 2,823, ,782,258 Substance Abuse and Mental Health Services_Projects of Regional and National Significance , ,341 ARRA - TRANS-NIH RECOVERY ACT LOAN REPAYMENT SUPPORT ,446, ,446,233 ARRA - TRANS-NIH RECOVERY ACT RESEARCH SUPPORT ,909,503 3,908, ,467 (15,419) 7,281,341 Trans-NIH Research Support ,044,863 6,385, ,430,095 Vision Research ,857,677 2,318,497 26,764-5,202,938 Department of Health and Human Services 317,231, ,017,337 26,344,498 1,921, ,514,813 The accompanying notes are an integral part of this schedule. 52

57 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED DIRECT RESEARCH, CONTINUED CFDA Agency CFDA Program CFDA # BWH MGH McLean Other Total Department of Homeland Security Assistance to Firefighters Grant , ,776 Department of Homeland Security 506, ,776 Department of Justice Department of Justice Office of Justice , ,668 Department of Justice 136, ,668 Department of Veterans Affairs Department of Veterans Affairs 93. (904) 79, ,319 Sharing Specialized Medical Resources VA Boston Healthcare System , ,158 Veterans Administration Medical Center , , ,210 Department of Veterans Affairs 584, , ,116 National Aeronautics and Space Administration Aerospace Education Services Program , , ,162,402 Exploration , ,483 Technology Transfer National Aeronautics and Space Administration 925, , ,237,149 National Science Foundation Biological Sciences , ,623 Computer and Information Science and Engineering ,296 91, ,605 Education and Human Resources , ,987 Engineering Grants , , ,823 Social, Behavioral, and Economic Sciences , ,919 ARRA - TRANS-NSF RECOVERY ACT RESEARCH SUPPORT , , ,745 National Science Foundation 998,733 1,287, ,987-2,622,702 National Security Council Central Intelligence Agency , ,426 National Security Council - 185, ,426 Total Direct Research $327,592,911 $364,588,411 $28,277,629 $3,709,231 $724,168,182 The accompanying notes are an integral part of this schedule. 53

58 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Agency for International Development Agency for International Development EngenderHealth, Inc. 93. GHS-A $ 29,421 $ - $ - $ - $ 29,421 Johns Hopkins University 93. AID-OAA-G , ,309 USAID Foreign Assistance for Programs Overseas Diagnostics for All AID-OAA-G-I , ,312 Eastern Virginia Medical School GPO-A , ,888 Eastern Virginia Medical School PPA (8,481) (8,481) International Medical Corps AID-OFDA-A , ,118 International Union Against Tuberculosis , ,756 President and Fellows of Harvard College AID-AFDA-A / 190, ,832 Agency for International Development 267, , ,155 Department Of Defense Air Force Defense Research Sciences Program Luna Innovations 93. FA C (1) - - (1) Basic and Applied Scientific Research Johns Hopkins University N , ,776 Reimers Systems, Inc A (2,248) - - (2,248) Texas A&M University N , ,118 Basic Scientific Research Trustees of Boston University W911NF , ,804 Basic Scientific Research - Combating Weapons of Mass Destruction Digital Infuzion N C , ,554 Basic, Applied, and Advanced Research in Science and Engineering Massachusetts Institute of Technology FA , ,176 Defense Advanced Research Projects Agency Arsenal Medical, Inc. 93. A , ,689 Department of Defense Dana Farber Cancer Institute 93. W81XWH , ,176 LiveData, Inc (385) - - (385) Wake Forest University Health Sciences 93. N C , ,349 Military Medical Research and Development American Burn Association W81XWH , ,281 Beth Israel Deaconess Medical Center W81XWH (4,582) (4,582) Brigham and Women's Hospital, Inc W81XWH , ,532 Brigham and Women's Hospital, Inc W81XWH (1,267) (1,267) Brigham and Women's Hospital, Inc W81XWH P00-143, ,234 Children's Hospital of Boston W81XWH , ,508 Children's Hospital of Boston W81XWH , ,201 Children's Hospital of Boston W81XWH , ,267 Cincinnati Children's Hospital Medical C W81XCWH , ,468 Dana Farber Cancer Institute W81XWH (8,892) - - (8,892) Dana Farber Cancer Institute W81XWH , ,279 Energid W81XWH-09-C (5,238) - - (5,238) Harvard School of Public Health , ,104 iwalk, Inc ,096 19,096 Mass General Hospital-CIMIT W81XWH ,862 8,862 Mass General Hospital-CIMIT W81XWH ,410 52,410 Mass General Hospital-CIMIT W84XWH (5,252) (5,252) Mass General Hospital-CIMIT DAMD Mass General Hospital-CIMIT W81XWH ,254-35,254 Mass General Hospital-CIMIT W81XWH ,542-26,473 80, ,618 Mass General Hospital-CIMIT W81XWH (346) (346) Mass General Hospital-CIMIT W81XWH (11,449) (11,449) McLean Hospital Corporation W81XWH (2,667) (2,667) Northeastern University W81XWH ,108 38,108 NorthShore University HealthSystem Resea W81XWH , ,347 Organogenesis, Inc W81XWII , ,060 President and Fellows of Harvard College W81XWH , ,888 President and Fellows of Harvard College W81XWH , ,651 President and Fellows of Harvard College W81XWH , ,548 Regents of the University of Calif. SD W81XWH , ,837 Rutgers University W81XWH , , ,521 Samueli Institute For Information Biolog W81XWH (1,301) - - (1,301) The accompanying notes are an integral part of this schedule. 54

59 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Spaulding Rehabilitation Hospital PY074968/W81XWH , ,415 Spaulding Rehabilitation Hospital W81XWH , ,918 Spaulding Rehabilitation Hospital W81XWH , ,382 Stratatech Corporation W81XWH-12-C (8,445) - - (8,445) The Geneva Foundation W81XWH , ,923 The University of Texas Health Science W81XWH , ,340 Ultra Diagnostics, Inc W81XWH , ,832 University of California at San Diego W81XWH , ,312,854 2,059,537 University of Delaware , ,562 University of Delaware W81XWH , ,870 University of Pittsburgh W81XWH , ,642 Veterans Education and Research Associat W81XWH , ,595 Office of Navel Research AnthroTronix, Inc. 93. N C , ,748 Reimers Systems, Inc. 93. N C , ,252 Research and Technology Development Massachusetts Institute of Technology N , ,613 U.S. Army Medical Research Acquistion Battelle Memorial Institute 93. W911NF-11-D , ,563 Henry M Jackson Foundation 93. HU D , ,442 Rutgers University 93. W81XWH , ,489 Spaulding Rehabilitation Hospital 93. W81XWH , ,421 Uniformed Services University Medical Research Projects Henry M Jackson Foundation HU , ,152 Department Of Defense 3,479,268 3,615,128 61,727 2,001,242 9,157,365 Department of Education National Institute on Disability and Rehabilitation Research Carolinas Medical Center H133A ,855 2,855 Carolinas Medical Center H133A ,987 68,987 Craig Hospital H133A ,180 3,180 JFK JOHNSON REHABILITATION INSTITUTE H133A Spaulding Rehabilitation Hospital H133A , ,259 Spaulding Rehabilitation Hospital H133A ,465 4, ,638 Spaulding Rehabilitation Hospital H133N , ,226 University of New Hampshire H133A , ,142 Department of Education 84,465 82,800-75, ,671 Department of Energy Office of Science Financial Assistance Program Mayo Clinic DE-SC , ,963 Northeastern University #DE-SC (7,524) (7,524) The MIND Institute (547) - - (547) Department of Energy 76,439 (547) ,892 Department of Health and Human Services ACA Grants for New and Expanded Services under the Health Center Program Regina Villa Associates, Inc Affordable Care Act Streamlined surveillance for ventilator-associated pneumonia Harvard Pilgrim Health Care U54CK (1,585) - - (1,585) Agency for Healthcare Research and Quality (AHRQ) Abt Associates, Inc HHSA , ,177 Abt Associates, Inc. 93. HHSA I (12,880) (12,880) American College of Radiology 93. 1R01HS , ,865 Beth Israel Deaconess Medical Center 93. HHSA , ,093 RAND Corporation 93. HHSA I 4, ,910 Westat, Inc. 93. HHSA I/HH 18, ,070 Yale University 93. HHSA , ,405 Aging Research Boston University R01AG , ,779 Boston University R01AG , ,310 Boston University School of Medicine U01AG ,999 73,999 Brandeis University R01AG , ,593 Brigham and Women's Hospital, Inc P01AG , ,095 Brigham and Women's Hospital, Inc R01AG , ,601 Brigham and Women's Hospital, Inc R01AG , ,807 Brigham and Women's Hospital, Inc P01AG , ,801 Brigham and Women's Hospital, Inc R01AG (1,170) - - (1,170) Brigham and Women's Hospital, Inc R01AG (8,236) - - (8,236) Broad Institute, inc R01AG A1 1, ,212 Broad Institute, inc R01AG , ,299 Broad Institute, inc R01AG , ,364 Broad Institute, inc RO1AG , ,213 The accompanying notes are an integral part of this schedule. 55

60 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total California Pacific Medical Center R01AG A1 102, ,941 California Pacific Medical Center R01AG Cold Spring Harbor Laboratories R01AG , ,566 Columbia University R01AG , ,733 Fred Hutchinson Cancer Research Center U01AG , ,566 Harvard School of Public Health U01AG , ,580 Hebrew Rehabilitation Center for Aged R37AG , ,736 Hebrew Rehabilitation Center for Aged P01AG , ,298 Hebrew Rehabilitation Center for Aged R01AG , ,382 Joslin Diabetes Center R01AG , ,047 Koronis Biomedical Technologies Corporat R44AG A ,176 55,176 Mass General Hospital-CIMIT P01AG , ,001 Mass General Hospital-CIMIT P50AG , ,824 Mass General Hospital-CIMIT P50AG , ,474 Mass General Hospital-CIMIT R01AG , ,692 Mass General Hospital-CIMIT U01AG , ,711 Mass General Hospital-CIMIT U01AG , ,425 Mass General Hospital-CIMIT U01AG , ,451 Massachusetts Institute of Technology RF1AG , ,396 National Bureau of Economic Research P01AG , ,788 NCIRE U01AG , ,854 President and Fellows of Harvard College P01AG (19,663) - - (19,663) President and Fellows of Harvard College P30AI , ,603 President and Fellows of Harvard College R01AG , ,911 President and Fellows of Harvard College U01AG , ,299 Regents of the University of Calif. SD U19AG , ,697 Regents of the University of Calif. SD U01AG (48) (48) Regents of the University of California R01AG , ,068 Regents of the University of California U01AG , ,099 Regents of the University of Michigan R01AG , ,847 Rush University Medical Center R01AG , ,426 Rush University Medical Center R01AG , ,270 Rush University Medical Center R01AG , ,961 Rush University Medical Center R01AG , ,873 Spaulding Rehabilitation Hospital R01AG A2-2, ,973 Trustees of Boston University R01AG , ,152 University of California at San Diego R01AG , ,692 University of California at Santa Barbar U01AG (1,671) (1,671) University of Connecticut Health Center R01AG A1 210, ,266 University of Pennsylvania U01AG , ,623 University of Pittsburgh U01AG , ,733 University of Washington U01AG , ,901 University of Washington - Seattle U01AG , ,240 Vanderbilt Medical Center R01AG , ,504 Vanderbilt University R01AG , ,167 Washington University U01AG , ,071 Yuma Therapeutics R41AG , ,977 AIDS Education and Training Centers University of Massachusetts at Worcester H4AHA , ,154 Alcohol Research Programs Fenway Community Health Center U01AA , ,193 President and Fellows of Harvard College R01AA , ,966 Research Foundation for Mental Hygeine, HHSN C - (49,382) - - (49,382) Trustees of Boston University R21AA A1-30, ,132 Trustees of Boston University R01AA , ,102 The accompanying notes are an integral part of this schedule. 56

61 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Wayne State University R21AA , ,580 Allergy, Immunology and Transplantation Research Baylor Research Institute U19A , ,158 Baylor Research Institute U19AI , ,405 Beth Israel Deaconess Medical Center U01AI , ,636 Beth Israel Deaconess Medical Center U19AI , ,037 Beth Israel Deaconess Medical Center U19AI , ,869 Beth Israel Deaconess Medical Center UM1AI , ,137 Boston Biomedical Research Institute R01AI (82,203) - - (82,203) Brigham and Women's Hospital - Internal UM1AI Brigham and Women's Hospital, Inc R56AI A2 - (1,132) - - (1,132) Brigham and Women's Hospital, Inc P30AI (1,302) - - (1,302) Brigham and Women's Hospital, Inc R01AI , ,627 Brigham and Women's Hospital, Inc U01AI , ,267 Brigham and Women's Hospital, Inc UM1AI , ,389 Broad Institute, inc U01AI , ,234 Children's Hospital of Boston R01AI , ,001 Children's Hospital of Boston U01AI , ,935 Children's Hospital of Boston R01AI , ,309 Children's Hospital of Boston R01AI , ,363 Columbia University R01AI , ,640 Columbia University R01AI , ,072 Columbia University U19AI , ,302 Columbia University U54AI S Dana Farber Cancer Institute R01AI , ,335 Dana Farber Cancer Institute P01AI , ,705 Duke University U19AI (1,009) - - (1,009) Duke University U19AI (229) (229) Duke University U19AI (444) - - (444) Emory University P01AI , ,951 Emory University U19AI (33,650) - - (33,650) Emory University U19AI , ,871 Feinstein Institute for Medical Research U19AI , ,959 Fenway Community Health Center UM1AI , ,222 Fenway Community Health Center UM1AI , ,947 FHI UM1AI , ,352 Fraunhofer CMI R01AI A1 24, ,311 Fraunhofer CMI R01AI , ,869 Fred Hutchinson Cancer Research Center U01AI (4,661) (4,661) Fred Hutchinson Cancer Research Center UM1AI ,108, ,108,585 Georgetown University U01AI , ,236 Harvard Global Health Institute P30AI , ,901 Harvard Medical School U54AI S1 2, ,502 Harvard Medical School P01AI , ,618 Harvard Medical School P01AI , ,879 Harvard Medical School P01AI , ,864 Harvard Medical School U01AI (40) (40) Harvard Medical School U54AI (1,674) (1,674) Harvard Medical School U54AI ,089, ,089,184 Harvard Medical School Centers for Aids P30AI (290) - - (290) Harvard Medical School Centers for Aids P30AI , ,958 Harvard School of Public Health R01AI , ,710 Harvard School of Public Health UM1AI , ,725 Harvard School of Public Health UM1AI , ,143 The accompanying notes are an integral part of this schedule. 57

62 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Harvard University Center for AIDS Resea P30AI (636) - - (636) Harvard University Center for AIDS Resea P30AI , ,569 Institute for Clinical Research, Inc U01AI , ,431 Integrated BioTherapeutics, Inc R43AI , ,751 Intelligent Bio-Systems R44AI , ,503 Mass General Hospital-CIMIT R01AI A1 110, ,365 Mass General Hospital-CIMIT P30AI (453) (453) Mass General Hospital-CIMIT R01AI , ,010 Mass General Hospital-CIMIT R01AI (33,947) (33,947) Mass General Hospital-CIMIT R01AI , ,865 Mass General Hospital-CIMIT R37A , ,634 Mass General Hospital-CIMIT R37AI , ,831 Mass General Hospital-CIMIT U01AI , ,903 Mass General Hospital-CIMIT UM1AI , ,755 Massachusetts Eye and Ear Infirmary P01AI , ,365 Massachusetts Eye and Ear Infirmary P01AI , ,441 Medical Research Council of South Africa R01AI , ,438 Minitube of America, Inc R42AI , ,209 Mount Sinai Medical Center U01AI (493) (493) Mount Sinai School of Medicine R01AI , ,404 Mount Sinai School of Medicine U01AI , , ,940 North Carolina State University R01AI , ,832 Northeastern University R01AI , ,498 Ohio State University R21AI , ,954 Osel, Inc R33AI , ,894 President and Fellows of Harvard College P30AI , ,059 President and Fellows of Harvard College U54AI , ,836 President and Fellows of Harvard College P01AI , ,415 President and Fellows of Harvard College P01AI , ,339 President and Fellows of Harvard College P30AI , , ,255 President and Fellows of Harvard College P30AI , , ,507 President and Fellows of Harvard College R01AI , ,386 President and Fellows of Harvard College U01AI , ,697 President and Fellows of Harvard College U54AI , ,782 President and Fellows of Harvard College U54AI , ,021 President and Fellows of Harvard College R01AI , ,683 President and Fellows of Harvard College R21AI (7,225) (7,225) Regents of the University of California N01-AI , ,286 Scripps Research Institute UM1AI ,114, ,114,802 Social and Scientific Systems, Inc U01AI (2,074) - - (2,074) Social and Scientific Systems, Inc UM1Al , ,777 Social and Scientific Systems, Inc U01AI Social and Scientific Systems, Inc UM1AI (12,767) (12,142) Universal Stabilization Technologies, In R21AI , ,520 University of Kentucky ResearchFoundati R01AI University of Maryland at Baltimore R01AI , ,205 University of Maryland at Baltimore U01AI (3,633) - - (3,633) University of Maryland at Baltimore U19AI , ,781 University of Maryland at Baltimore U19AI , ,559 University of Pennsylvania R01AI , ,948 University of Pittsburgh R01AI , ,715 University of Pittsburgh, School of Medi R21A , ,253 University of Texas R01AI , ,387 The accompanying notes are an integral part of this schedule. 58

63 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total University of Texas Health Science Cente U19AI , ,679 University of Texas Health Science Cente U19AI ,083 42, ,486 University of Texas Health Science Cente U19AI , ,627 University of Texas Southwestern Medical U01AI , ,157 University of Wisconsin U01AI , ,522 Vanderbilt University R01AI , ,957 Yale University P01AI , ,918 Yale University U19AI , ,510 Yale University U19AI ARRA - Emergency Medical Services for Children Columbia University S02MC , ,831 ARRA - Strategic Health IT Advanced Research Projects (SHARP) President and Fellows of Harvard College TR0001/01-801, ,766 The University of Texas Health Science TR , ,095 ARRA Accelerating Adoption of Comparative Effectiveness Research (CER) Children's Hospital of Boston R18AE , ,865 Harvard Pilgrim Health Care R18AE , ,961 Arthritis, Musculoskeletal and Skin Diseases Research Boston University R01AR , ,401 Fenway Community Health Center U01AR , ,334 New England Research Institute, Inc R01-AR , ,430 Stanford University R01AR , ,133 University of Colorado Health Sciences C R01AR University of Michigan R01AR A1 23, ,216 University of Michigan R01AR University of Minnesota R01AR A1-14, ,676 University of North Carolina, Chapel Hil R01AR (335) - - (335) University of Oklahoma Health Sciences C R01AR (20,033) - - (20,033) Assistance for Torture Victims Gulf Coast Jewish Family Services, Inc ZT0137/01-62, ,106 Gulf Coast Jewish Family Services, Inc ZT0075-1, ,255 Assistance Programs for Chronic Disease Prevention and Control Mount Sinai School of Medicine U01DP Biomedical Research and Research Training Beth Israel Deaconess Medical Center R01GM , ,226 Brigham and Women's Hospital, Inc R01GM , ,808 Brigham and Women's Hospital, Inc P01GM , ,450 Broad Institute R01GM , ,979 Harvard Pilgrim Health Care U01GM S1 (2,935) (2,935) Harvard School of Public Health U54GM , ,988 Johns Hopkins School of Public Health R01GM , ,505 Mayo Clinic U19GM , ,793 Northwestern University R01GM (14,952) - - (14,952) President and Fellows of Harvard College U54GM President and Fellows of Harvard College P01GM A1-66, ,120 President and Fellows of Harvard College R01GM , ,612 President and Fellows of Harvard College U54GM , ,232 President and Fellows of Harvard College P01GM , ,343 Tufts University R01GM , ,307 University of California, Santa Cruz R01GM University of Chicago R01GM , ,019 University of Cincinnati R01GM , ,883 University of Pittsburgh P50GM ,836 10, ,169 University of Southern California U24GM , ,504 University of Texas Medical Branch at Ga P01GM (122) - - (122) University of Virginia R01GM (721) - - (721) Biomedical Research Technology NCIRE P41EB , ,693 Blood Diseases and Resources Research Beth Israel Deaconess Medical Center R01HL , ,480 Brigham and Women's Hospital, Inc R01HL , ,097 Brigham and Women's Hospital, Inc R01HL , ,936 The accompanying notes are an integral part of this schedule. 59

64 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Center for Blood Research, Inc P01HL (2) (2) Center for Blood Research, Inc P01HL (6,966) (6,966) Children's Hospital P01HL , ,537 Children's Hospital U01HL (2,084) (2,084) Children's Hospital of Boston P01HL , ,659 Children's Hospital of Boston P01HL , ,056 Children's Hospital of Boston R01HL , ,251 Children's Hospital of Boston U01HL , ,618 Dana Farber Cancer Institute P50HL , ,949 Dana Farber Cancer Institute P50HL , ,483 Dana Farber Cancer Institute U01HL Duke University R01HL (403) (403) Duke University R01HL , ,503 Duke University U01HL (168,465) (168,465) Harvard University R01HL , ,089 New England Research Institute, Inc U01HL (25,810) (25,810) Washington University U01HL (3,807) (3,807) Washington University U01HL , ,916 Cancer Biology Research Beth Israel Deaconess Medical Center R01CA Brigham and Women's Hospital, Inc P01CA , ,487 Brigham and Women's Hospital, Inc U01CA , ,841 Children's Hospital of Boston P01CA (1,615) (1,615) Dana Farber Cancer Institute P01CA (177,325) - - (177,325) Dana Farber Cancer Institute P01CA , ,785 Dana Farber Cancer Institute P01CA Dana Farber Cancer Institute R01CA , ,318 Dana Farber Cancer Institute R01CA , ,862 Dana Farber Cancer Institute R01CA , ,413 Dana Farber Cancer Institute R01CA , ,919 Dana Farber Cancer Institute P01CA (67,789) - - (67,789) Georgetown University R01CA , ,567 Harvard Medical School R01CA , ,512 Indiana University R01CA , ,248 Johns Hopkins University R01CA , ,722 MD Anderson Cancer Center P01CA , ,115 Molecular Insight Pharmaceuticals, Inc R44CA , ,522 Mount Sinai School of Medicine P01CA , ,795 President and Fellows of Harvard College R01CA , ,719 Regents of the University of California R01CA , ,210 University of Pennsylvania U01CA (104) - - (104) University of Pennsylvania U01CA , ,536 University of Texas Southwestern Medical U01CA , ,580 University of Texas, MD Anderson Cancer P01CA , ,852 University of Texas, MD Anderson Cancer P01CA , ,434 University of Wisconsin - Madison U01CA , ,634 Vanderbilt University R01CA , ,550 Cancer Cause and Prevention Research Baylor College of Medicine R01CA , ,403 Beth Israel Deaconess Medical Center K23CA , ,055 Brigham and Women's Hospital, Inc R01CA A ,568-70,568 Brigham and Women's Hospital, Inc R01CA (915) - - (915) Broad Institute, inc R01CA , ,286 California Pacific Medical Center R21CA A1 85, ,111 Children's Hospital of Boston R01CA , ,204 The accompanying notes are an integral part of this schedule. 60

65 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Columbia University R01CA , ,362 Dana Farber Cancer Institute R21CA , ,620 Dana Farber Cancer Institute R01CA , ,353 Dana Farber Cancer Institute R01CA , ,689 Dana Farber Cancer Institute R01CA Dana Farber Cancer Institute R01CA , ,022 Dana Farber Cancer Institute R21CA A1 14, ,096 Florida State University R01CA (22) (22) Fox Chase Cancer Center R01CA A1 31,221 6, ,600 Fred Hutchinson Cancer Research Center R01CA , ,275 Fred Hutchinson Cancer Research Center U01CA A1 44, ,137 Fred Hutchinson Cancer Research Center U01CA (17,502) (17,502) Fred Hutchinson Cancer Research Center U01CA , ,205 Harvard School of Public Health P01CA , ,068 Harvard School of Public Health R01CA ,303, ,303,499 Harvard School of Public Health R01CA , ,628 IGI Technologies, Inc R42CA , ,952 Imperial College of Science, London R01CA (70,439) (70,439) International Agency for Research on Can U01CA , ,126 Mass General Hospital-CIMIT R01CA , ,420 Massachusetts Institute of Technology R01CA , ,668 MAYO CLINIC ROCHESTER R01CA , ,333 Memorial Sloan-Kettering Institute Cance U01CA , ,607 Ohio State University P01CA A1 111, ,160 President and Fellows of Harvard College R03CA A1 16, ,638 President and Fellows of Harvard College UM1CA , ,353 President and Fellows of Harvard College R01CA , ,578 President and Fellows of Harvard College R01CA , ,139 President and Fellows of Harvard College R01CA , ,149 President and Fellows of Harvard College U19CA , ,460 Regents of the University of Michigan R01CA , ,437 Regents of the University of Minnesota R21CA (3) (3) Temple University R01CA A1-26, ,068 Trustees of Dartmouth College P01CA A1 137, ,047 Trustees of Dartmouth College R01CA Trustees of Dartmouth College U19CA , ,571 University of Hawaii P01CA , ,995 University Of Massachusetts R01CA , ,303 University of Massachusetts at Amherst U01CA , ,587 University of Miami R01CA , ,984 University of Pittsburgh R01CA , ,757 University of Rochester R01CA A1 28, ,823 University of Rochester R01CA A1 11, ,567 University of Texas Health Science Cente R01CA A1 (79) (79) University of Texas, MD Anderson Cancer R01CA (38) (38) University of Texas, MD Anderson Cancer U19CA (43,998) (43,998) University of Vermont R21CA A2 31, ,083 Cancer Centers Support Grants Beth Israel Deaconess Medical Center U54CA (79,661) - - (79,661) Beth Israel Deaconess Medical Center P50CA (8,037) - - (8,037) Beth Israel Deaconess Medical Center P50CA ,967 61, ,615 Beth Israel Deaconess Medical Center P50CA , , ,602 Brigham and Women's Hospital, Inc P50CA , ,214 Dana Farber Cancer Institute P50CA (20,444) - - (20,444) The accompanying notes are an integral part of this schedule. 61

66 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Dana Farber Cancer Institute U54CA , ,279 Dana Farber Cancer Institute P30CA , ,240 Dana Farber Cancer Institute P30CA , ,944 Dana Farber Cancer Institute P30CA S5 (721,916) (22,949) - - (744,865) Dana Farber Cancer Institute P50CA S2 - (6,724) - - (6,724) Dana Farber Cancer Institute P30CA (11) - - (11) Dana Farber Cancer Institute P30CA (7,160) - - (7,160) Dana Farber Cancer Institute P30CA (12,149) (12,149) Dana Farber Cancer Institute P30CA (994,985) - - (994,985) Dana Farber Cancer Institute P30CA ,581,431 2,679, ,260,443 Dana Farber Cancer Institute P50CA (10,189) (10,189) Dana Farber Cancer Institute P50CA , ,163 Dana Farber Cancer Institute P50CA , ,833 Dana Farber Cancer Institute P50CA , , ,602 Dana Farber Cancer Institute P50CA , ,784 Dana Farber Cancer Institute P50CA (20,893) - - (20,893) Dana Farber Cancer Institute P50CA (4,484) (1,046) - - (5,530) Dana Farber Cancer Institute U54CA ,710 60, ,569 Dana Farber/Harvard Cancer Center P50CA (8,122) - - (8,122) Dana Farber/Harvard Cancer Center P50CA , ,758 Dartmouth College U54CA , ,946 Harvard School of Public Health U54CA , ,910 Massachusetts Institute of Technology U54CA , ,549 Massachusetts Institute of Technology U54-CA , ,143 Massachusetts Institute of Technology U54CA , , ,586 MD Anderson Cancer Center U54CA , ,887 President and Fellows of Harvard College U54CA , ,655 President and Fellows of Harvard College U54CA , ,611 President and Fellows of Harvard College U54CA , ,068 President and Fellows of Harvard College U54CA ,405 61, ,097 The Methodist Hospital Research Institut U54CA , ,592 The Methodist Hospital Research Institut U54CA (15,698) - - (15,698) University of Texas U54CA (4,927) - - (4,927) University of Texas, MD Anderson Cancer U54CA , ,615 University of Texas, MD Anderson Cancer U54CA , ,241 Washington University U54CA , ,384 Cancer Control Dana Farber Cancer Institute P50CA , ,669 Dana Farber Cancer Institute U10CA , ,357 Massachusetts Institute of Technology U54CA (54) - - (54) National Childhood Cancer Foundation U10CA President and Fellows of Harvard College P50CA , ,555 President and Fellows of Harvard College P50CA , ,552 President and Fellows of Harvard College P50CA , ,362 University of Texas, MD Anderson Cancer P50CA , ,053 University of Texas, MD Anderson Cancer P50CA , ,362 Cancer Detection and Diagnosis Research American College of Radiology U01CA ,171 1, ,922 American College of Radiology U01CA , ,043 American College of Radiology U01CA , ,250 Beth Israel Deaconess Medical Center R01CA , ,671 Brigham and Women's Hospital, Inc R01CA , ,051 Broad Institute, inc U24CA , ,985 Children's Research Institution R01CA , ,313 Dana Farber Cancer Institute R21CA A1-16, ,185 The accompanying notes are an integral part of this schedule. 62

67 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Dana Farber Cancer Institute R01CA A1-26, ,376 Dana Farber Cancer Institute R01CA , ,101 Dana Farber Cancer Institute R01CA , ,022 Dana Farber Cancer Institute R33CA , ,474 Fred Hutchinson Cancer Research Center P01CA , ,442 Mass General Hospital-CIMIT R01CA A1 8, ,541 Northeastern University U01CA , ,619 Oregon Health & Science University (OHSU U01CA A1-11, ,450 Physical Sciences, Inc R44CA (72) - - (72) Physical Sciences, Inc R44CA A1-2, ,258 Robin Medical, Inc R44CA University of Chicago U24CA , ,293 University of Texas Health Science Cente U01CA S1-23, ,387 University of Texas Southwestern Medical R01CA , ,916 Cancer Research Manpower Mass General Hospital-CIMIT R25CA , ,750 President and Fellows of Harvard College R01CA , ,578 Cancer Treatment Research American College of Radiology U01CA , ,768 Beth Israel Deaconess Medical Center R01CA , ,693 Boston University R01CA , ,296 Brigham and Women's Hospital, Inc R01CA , ,536 Brigham and Women's Hospital, Inc U01CA , ,062 Children's Hospital of Boston R01CA , ,118 Columbia University P01CA (2,625) - - (2,625) Dana Farber Cancer Institute P01CA A1-79, ,978 Dana Farber Cancer Institute R01CA , ,490 Dana Farber Cancer Institute P01CA , ,109 Dana Farber Cancer Institute P01CA (1,898) (1,898) Dana Farber Cancer Institute P01CA (2,441) (2,441) Dana Farber Cancer Institute P01CA , ,761 Dana Farber Cancer Institute P01CA , ,686 Dana Farber Cancer Institute R01CA ,435 22, ,486 Dana Farber Cancer Institute R01CA ,145 43, ,033 Dana Farber Cancer Institute U01CA S1-257, ,289 Duke University U10CA Frontier Science & Technology Research F U10CA , ,841 Gynecologic Oncology Group U10CA , ,630 Johns Hopkins University U01CA , ,570 Johns Hopkins University U01CA , ,426 Johns Hopkins University U01CA , ,059 Lynntech, Inc R44AI , ,778 Mass General Hospital-CIMIT P01CA , ,066 Mass General Hospital-CIMIT R21CA , ,664 National Childhood Cancer Foundation U10CA (10,945) - - (10,945) Pennsylvania State University R01CA A1-15, ,579 President and Fellows of Harvard College R01CA A1 - (5,223) - - (5,223) President and Fellows of Harvard College P01CA , ,737 Regents of the University of Calif. SD P01CA A1 10, ,412 University of Chicago U10CA , ,944 University of Massachusetts at Lowell R01CA , ,775 University of Michigan U10CA , ,000 University of Pennsylvania R01-CA (5,882) - - (5,882) University of Pennsylvania R01CA /05 - (1,175) - - (1,175) University of Pennsylvania R01CA (57,222) (57,222) The accompanying notes are an integral part of this schedule. 63

68 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total University of Pennsylvania R01CA , ,618 University of Pittsburgh R03CA (20) - - (20) University of Virginia R01CA R - (69) - - (69) Cardiovascular Diseases Research Beth Israel Deaconess Medical Center R01HL (530) (530) Beth Israel Deaconess Medical Center R21HL A2-27, ,629 Beth Israel Deaconess Medical Center UM1HL A1 4, ,805 Beth Israel Deaconess Medical Center P01HL , ,008 Beth Israel Deaconess Medical Center R01HL , ,955 Beth Israel Deaconess Medical Center R01HL , ,554 Beth Israel Deaconess Medical Center R01HL , ,582 Beth Israel Deaconess Medical Center U01HL , ,878 Beth Israel Deaconess Medical Center UM1HL , ,850 Boston University Medical Center R01HL , ,713 Brigham and Women's Hospital, Inc U01HL , ,886 Brigham and Women's Hospital, Inc R01HL Brigham and Women's Hospital, Inc R01HL (12,489) - - (12,489) Brigham and Women's Hospital, Inc R01HL , ,643 Brigham and Women's Hospital, Inc R01HL , ,025 Brigham and Women's Hospital, Inc U01HL (348) - - (348) Brigham and Women's Hospital, Inc U01HL , ,395 Brigham and Women's Hospital, Inc U01HL Brigham and Women's Hospital, Inc U01HL Brigham and Women's Hospital, Inc U01HL , ,305 Case Western Reserve University R21HL , ,033 Children's Hospital of Boston U01HL , ,282 Children's Hospital of Oakland U19HL , ,568 Columbia University R01HL , ,231 Cornell University Weill Medical College U34HL , ,403 Decimmune Therapeutics, Inc R44HL , ,975 Draper Laboratory R21HL , ,358 Duke Clinical Research Institute U01HL (3,465) (3,465) Duke Clinical Research Institute U01HL , ,225 Duke Clinical Research Institute U01HL Duke Clinical Research Institute U01HL , ,600 Duke University U10HL , , ,677 Duke University R01HL , ,625 Duke University U01HL (49,776) (49,776) Duke University U01HL (11,109) (14,737) - - (25,846) Duke University U10HL ,090 8, ,365 Duke University R01HL , ,256 Duke University U10HL , ,984 Duke University U10HL (13,772) (13,663) DVX, LLC HL , ,854 E.P. Limited R44HL A2 (20,256) (20,256) Emory University U01HL , ,685 E-Trolz, Inc R43HL (8,969) (8,969) Fred Hutchinson Cancer Research Center R01HL , ,980 Fred Hutchinson Cancer Research Center U01HL , ,506 George Washington University R01HL A1-199, ,771 Harvard Medical School R01HL (13,923) (13,923) Harvard Medical School U01HL (694) (694) Harvard Pilgrim Health Care R01HL , ,940 Harvard Pilgrim Health Care R01HL , ,449 The accompanying notes are an integral part of this schedule. 64

69 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Lawrence Berkeley National Laboratory R01HL , ,677 Mass General Hospital-CIMIT R01HL , ,953 Mass General Hospital-CIMIT R01HL , ,942 Mass General Hospital-CIMIT R01HL A1 239, ,132 Mass General Hospital-CIMIT R01HL , ,183 Mass General Hospital-CIMIT R01HL , ,280 Mass General Hospital-CIMIT U10HL , ,137 Mass General Hospital-CIMIT U10HL , ,167 Mass General Hospital-CIMIT R01HL , ,917 Mass General Hospital-CIMIT P01HL , ,752 Mass General Hospital-CIMIT P30DK , ,871 Mass General Hospital-CIMIT R01HL , ,543 Mount Sinai School of Medicine R01HL A Mount Sinai School of Medicine U01HL , ,652 Mount Sinai School of Medicine U01HL , ,104 Mt. Sinai Medical U01HL , ,471 New England Research Institute, Inc U01HL , ,452 New York University Medical Center U01HL , ,249 New York University School of Medicine U01HL , ,827 Northeastern University R21HL , ,699 Ohio State University R21HL , ,219 Paragonix Technologies, Inc R43HL , ,240 Pennsylvania State University R21HL , ,810 Pennsylvania State University U10HL , ,596 President and Fellows of Harvard College R01HL , ,643 President and Fellows of Harvard College R21HL A1 32, ,316 President and Fellows of Harvard College R01HL , ,396 President and Fellows of Harvard College R01HL , ,577 President and Fellows of Harvard College R01HL , ,252 President and Fellows of Harvard College T21HL (8,070) (8,070) Regents of the University of California R01HL , ,320 Regents of the University of California R01HL , ,951 Social and Scientific Systems, Inc R01HL , ,675 The University of Texas Health Science R01HL , ,371 Tufts University R01HL , ,083 University of California at Riverside R01HL , ,242 University of California at San Diego U54HL , ,248 University of Cape Town HHSN C 294, ,087 University of Iowa R01HL , ,205 University of Maryland U01HL , ,560 University of Mississippi Medical Center R01HL A1 206, ,715 University of Pennsylvania R01HL A1 250, ,099 University of Pennsylvania U54HL , ,984 University of Pittsburgh R01HL (125,296) (125,296) University of Texas at Austin R01HL , ,354 University of Toledo U01HL , ,902 University of Washington R01HL (1) - - (1) University of Washington R01HL , ,578 Vanderbilt University U19HL , ,405 Vanderbilt University U19HL , ,699 Wake Forest University Health Sciences R01HL , ,266 Washington University Medical Center R01HL , ,515 Wright State University R01HL A1 7, ,927 The accompanying notes are an integral part of this schedule. 65

70 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Yale University R01HL (26,315) (26,315) Yale University U34HL , ,795 Center for Disease Control & Prevention Family Health International (1,489) - - (1,489) Harvard School of Public Health 93. 1U90TP , ,975 John Snow, Inc , ,796 Trustees of Boston University (83) - - (83) Center for Medicare and Medicaid Innovation National Quality Forum 93. HHSM c (1,266) (1,266) Centers for Disease Control and Prevention_Investigations and Technical Assistance Association of American Medical Colleges U36/CCU , ,863 Association of American Medical Colleges , ,731 Harvard Pilgrim Health Care U54CK , ,751 Olive View-UCLA Education and Research I U01CK , ,761 Trustees of Boston University U01DD , ,032 Centers of Excellence Harvard Medical School D34HP , ,888 Child Health and Human Development Extramural Research Boston Medical Center R00HD , ,837 Boston University R01HD , ,529 Boston University R01HD , ,529 Children's Hospital R21HD (3,005) - - (3,005) Children's Hospital of Boston R21HD , ,810 Children's Hospital of Boston U01HD ,048 8, ,247 Cornell University Medical Center DE D ,444 14,444 Fenway Community Health Center U01HD , ,179 Harvard School of Public Health R01HD , ,032 Health Research, Inc R01HD , ,865 Indiana University R01HD , ,770 ISS, Inc R43HD A1-29, ,794 Joslin Diabetes Center R00HD , ,065 Judge Baker Children's Center R01HD ,548-37,548 Mass General Hospital-CIMIT U54HD , ,782 Mass General Hospital-CIMIT P01HD , ,955 President and Fellows of Harvard College R01HD , ,673 Rehabilitation Institute of Chicago R24HD , ,457 RTI INTERNATIONAL U01HD , ,865 Simbex, LLC R24HD , ,523 Simbex, LLC R44HD Trustees of Boston University R01HD , ,353 Trustees of Boston University R01HD , ,460 Trustees of Boston University R24HD , ,756 University of Massachusetts at Worcester R01-HD , ,419 University of North Carolina, Chapel Hil U01HD , ,510 University of Rochester U19HD , ,148 University of Virginia R01HD , ,380 Wadsworth Center R01HD , ,577 Community Services Block Grant Tufts University U01AG ,193 44,193 Cooperative Agreements to Improve the Health Status of Minority Populations Morehouse School of Medicine, Inc MPCMP , ,913 Coordinated Services and Access to Research for Women, Infants, Children, and Youth Dimock Community Health Center H12HA , ,352 Diabetes, Digestive, and Kidney Diseases Extramural Research Beth Israel Deaconess Medical Center R24DK (12,783) 75, ,735 Beth Israel Deaconess Medical Center U19DK (16,064) - - (16,064) Beth Israel Deaconess Medical Center P01DK , ,094 Beth Israel Deaconess Medical Center R01DK ,541-12,541 Beth Israel Deaconess Medical Center U01DK , ,549 Beth Israel Deaconess Medical Center U19DK (57,992) - - (57,992) Boston Medical Center P30DK , ,644 Boston Medical Center P30DK , ,265 The accompanying notes are an integral part of this schedule. 66

71 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Boston Medical Center P30DK , ,828 Boston Medical Center P30DK , ,225 Boston Medical Center R01DK , ,045 Boston Obesity Nutrition BMC P30DK , ,979 Brigham and Women's Hospital, Inc R21DK (1,720) - - (1,720) Brigham and Women's Hospital, Inc R01DK , ,446 Broad Institute, inc R01DK A1-97, ,395 Broad Institute, inc U01DK , ,218 Case Western Reserve University U01DK , ,952 Case Western Reserve University N01-DK Children's Hospital P30DK , ,250 Children's Hospital P30DK (18,742) - - (18,742) Children's Hospital of Boston R24DK , ,875 Children's Hospital of Boston P30DK , ,309 Children's Hospital of Boston P30DK , ,403 Children's Hospital of Boston P30DK , ,493 Children's Hospital of Boston R01DK , ,394 Children's Hospital of Boston R01DK , ,969 Geisinger Clinic R01DK , ,053 George Washington University U01DK , ,305 Geisinger Clinic U01DK , ,162 George Washington University P01DK (7,455) - - (7,455) Kaiser Foundation Research Institute R01DK , ,320 Maine Medical Center R24DK , ,557 Mass General Hospital-CIMIT R01DK (2,154) (2,154) Mass General Hospital-CIMIT R21DK , ,275 Mass General Hospital-CIMIT P30DK A1 113, ,736 Mass General Hospital-CIMIT P30DK , ,661 Mass General Hospital-CIMIT P30DK (4,262) (4,262) Mass General Hospital-CIMIT P30DK S Mass General Hospital-CIMIT P30DK (252) (252) Mass General Hospital-CIMIT P30DK Mass General Hospital-CIMIT R01DK , ,478 Mass General Hospital-CIMIT R01DK , ,257 Massachusetts Institute of Technology R01DK , ,709 Montreal Heart Institute R01DK , ,153 Montreal Heart Institute U01DK , ,962 Montreal Heart Institute U01DK (4,407) - - (4,407) New England Research Institute, Inc R01DK A2 - (1,867) - - (1,867) New England Research Institute, Inc R01DK , ,024 Nivarta, Inc R43DK , ,239 President and Fellows of Harvard College R01DK A1 63, ,314 President and Fellows of Harvard College P01DK , ,299 President and Fellows of Harvard College R01DK President and Fellows of Harvard College R01DK , ,585 President and Fellows of Harvard College U01DK , ,000 Regents of the University of California R01DK , ,686 Regents of the University of California R21DK , ,749 Trustees of Boston University R01DK , ,799 Trustees of Boston University R01DK , ,182 Tufts Medical Center, Inc R01DK , ,063 University of Iowa R24DK (1,539) (1,539) University of New Mexico R01DK , ,886 The accompanying notes are an integral part of this schedule. 67

72 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total University of North Carolina, Chapel Hil U01DK (9,203) - - (9,203) University of Oklahoma Health Sciences C R01DK (7,542) - - (7,542) University of Pennsylvania U01DK S2-1, ,263 University of Pittsburgh R01DK , ,588 University of Texas Southwestern Medical U01DK , ,298 University of Washington R01DK , ,154 University of Washington - Seattle R01DK , ,507 Vanderbilt University U01DK ,453 66, ,010 Digestive Diseases and Nutrition ResearchMontreal Heart Institute R01DK , ,630 Discovery and Applied Research for Technological Innovations to Improve Human Health Boston University R21EB (2,440) (2,440) Brigham and Women's Hospital, Inc U54EB , ,113 Cornell University R01EB , ,126 Kitware, Inc R01EB A1 10, ,673 Mass General Hospital-CIMIT U54EB , ,588 Mass General Hospital-CIMIT R01EB , ,376 Mass General Hospital-CIMIT R01EB , ,412 Massachusetts Institute of Technology R01EB Massachusetts Institute of Technology R01EB , ,417 Northeastern University R01EB , ,499 Northeastern University R01EB , ,403 Precibio Medical Devices, LLC R43EB A1-17, ,125 President and Fellows of Harvard College R01EB , ,935 President and Fellows of Harvard College R01EB , ,956 Rensselaer Polytechnic Institute R01EB , ,200 Sunnybrook Health Science Center R01EB , ,264 University of California at San Diego R01EB , ,137 University of California at San Diego R01EB , ,826 University of California at San Diego R01EB , ,921 University of California at San Francico R01EB , ,533 University of Cincinnati U54EB , ,350 University of Virginia R01EB , ,854 Drug Abuse and Addiction Research Programs Boston Medical Center R01DA , ,482 Fenway Community Health Center R21DA , ,839 Fenway Community Health Center R21DA , ,458 Inflexxion R43DA , ,500 Mass General Hospital-CIMIT K24DA , ,156 McLean Hospital Corporation R01DA , ,307 McLean Hospital Corporation R21DA , ,940 McLean Hospital-Internal R03DA , ,565 McLean Hospital-Internal U10DA , ,896 MGH Internal R01DA (1,858) - (1,858) Mount Sinai School of Medicine P01DA S ,753-9,753 Mount Sinai School of Medicine P01DA ,980-71,980 Northeastern University R01DA ,156-83,156 Northeastern University R37DA , ,521 President and Fellows of Harvard College R01DA ,075-12,075 President and Fellows of Harvard College R01DA , ,873 Regents of the University of California R01DA , ,776 Trustees of Boston University R21DA A1-33, ,425 University of Hawaii R01DA , ,336 University of Massachusetts at Worcester R01DA A1-53, ,684 University of Pennsylvania R01DA , ,373 University of Pennsylvania R01DA , ,606 The accompanying notes are an integral part of this schedule. 68

73 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Weill-Cornell Medical College R01DA , ,835 Environmental Health Board oftrusteesu of Illinois P20ES , ,452 Broad Institute U01ES , ,952 Broad Institute, inc U01ES , ,870 Children's Hospital of Boston R01ES , ,395 Columbia University R01ES , ,279 Harvard School of Public Health P01ES (14,373) (14,373) Harvard School of Public Health R01ES (907) (907) Johns Hopkins University P01ES , ,152 Johns Hopkins University RD , ,657 Massachusetts Institute of Technology P30-ES , ,604 President and Fellows of Harvard College R01ES A1 2, ,923 President and Fellows of Harvard College R21ES A1 111, ,483 President and Fellows of Harvard College R01ES , ,372 President and Fellows of Harvard College R01ES S1 49, ,331 President and Fellows of Harvard College P30ES , ,626 President and Fellows of Harvard College P30ESOOOO02-48 (138) (138) President and Fellows of Harvard College R01ES (5,013) (5,013) President and Fellows of Harvard College R01ES , ,979 President and Fellows of Harvard College R01ES , ,866 President and Fellows of Harvard College R01ES , ,453 President and Fellows of Harvard College R01ES , ,874 President and Fellows of Harvard College R21ES , ,646 The Curators of the University of Missou R01ES , ,904 Trustees of Dartmouth College P01ES , ,554 Trustees of Dartmouth College P20ES (200) (200) Tufts University R01ES , ,147 Tufts University U01ES , ,986 University of Michigan R01ES , ,270 Extramural Research Programs in the Neurosciences and Neurological Disorders Angion Biomedica Corp R44NS , ,155 Beth Israel Deaconess Medical Center U01NS Boston University R21NS , ,691 Boston University R01NS , ,863 Boston University Medical Center R01NS , ,837 Brigham and Women's Hospital, Inc U54NS ,430, ,430,427 Brigham and Women's Hospital, Inc R01NS , ,296 Brigham Young University R03NS , ,677 Brown University R01NS , ,039 Children's Hospital R01NS , ,583 Children's Hospital R21NS , ,463 Children's Hospital of Boston R01NS , ,105 Children's Hospital of Boston R01NS , ,488 Columbia University P50NS , ,914 Convergence Medical Devices, Inc R44NS Dana Farber Cancer Institute R01NS , ,565 Electrical Geodesics, Inc R43NS A1-20, ,009 Emory University U01NS A1 354, ,973 Georgetown University U54NS , ,376 Highland Instruments R44NS , ,877 Indiana University R01NS A1 134, ,537 Indiana University R21NS , ,425 Johns Hopkins University U01NS (2,224) - - (2,224) Mass General Hospital-CIMIT R01NS , ,085 The accompanying notes are an integral part of this schedule. 69

74 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Mass General Hospital-CIMIT U10NS , ,091 Mass General Hospital-CIMIT P01NS , ,218 Mass General Hospital-CIMIT P50NS (12,620) (12,620) Mass General Hospital-CIMIT R01NS , ,722 Mass General Hospital-CIMIT R01NS , ,385 Mass General Hospital-CIMIT U01NS , ,903 Mass General Hospital-CIMIT U01NS Massachusetts Eye and Ear Infirmary R01NS , ,093 Massachusetts Institute of Technology R01NS , ,808 Mayo Clinic Jacksonville R01NS , ,674 MGH Chapel Fund P01NS Ohio State University U01NS , ,920 Ohio State University R01NS , ,887 President and Fellows of Harvard College R56NS A1-24, ,242 President and Fellows of Harvard College R01NS , ,261 President and Fellows of Harvard College R01NS , ,757 Regents of the University of California U24NS , ,453 Regents of the University of California P50NS , ,422 Regents of the University of California R01NS , ,330 Regents of the University of California P50NS , ,000 Regents of the University of Michigan U01NS , ,369 Regents of the University of Michigan U01NS , ,743 Regents of the University of Michigan U01NS , ,325 Regents of the University of Minnesota U54NS (19,717) - - (19,717) Regents of the University of Minnesota U01NS Scripps Research Institute U01NS , ,535 Seneb Biosciences, Inc R43NS , ,968 Tourette Syndrome Association U01NS University of Alabama, Birmingham U01NS , ,488 University of California at Davis R25NS , ,080 University of California at Santa Barbar U01AG (160) - - (160) University of Cincinnati P50NS , ,973 University of Cincinnati U01NS , ,880 University of Maryland at Baltimore U01NS , ,628 University of Maryland at Baltimore U01NS (6,554) (6,554) University of Maryland at Baltimore U01NS , , ,551 University of Massachusetts at Worcester R01NS , ,637 University of Massachusetts at Worcester R01NS , ,993 University of Massachusetts at Worcester U01NS , ,770 University of Minnesota U01NS , ,531 University of North Carolina, Chapel Hil R01NS , ,266 University of North Carolina, Chapel Hil U01NS , ,159 University of Pennsylvania R21NS A1 36, ,035 University of Pennsylvania U01NS , ,850 University of Rochester, Medical Center R01NS (13,385) (13,385) University of Wisconsin - Madison P01NS , ,424 Virginia Commonwealth University R01NS ,155-91,155 Wake Forest University R01NS , ,085 Washington University U01NS , ,098 Yale University U01NS , ,676 Food & Drug Administration Harvard Pilgrim Health Care 93. HHSF T-0006 (2,530) (2,530) Harvard Pilgrim Health Care 93. HHSF (5,669) (5,669) Harvard Pilgrim Health Care 93. HHSF I 1, ,387 The accompanying notes are an integral part of this schedule. 70

75 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Harvard Pilgrim Health Care 93. HHSF I/H 275, ,277 Harvard Pilgrim Health Care 93. HHSF I-H 88, ,621 Harvard Pilgrim Health Care 93. HHSF I-HH 29, ,402 Harvard Pilgrim Health Care President and Fellows of Harvard College , ,917 University of Cincinnati 93. HHSF A 4, ,173 Food and Drug Administration_Research Emory University R01FD (24) - - (24) University of Kansas Medical Center R01FD University of Rochester R01FD , ,603 Global AIDS Beth Israel Deaconess Medical Center U2GPS , ,233 Botswana Harvard AIDS Institute Partners U2GPS , ,529 Harvard School of Public Health U01GH , ,739 Harvard School of Public Health GPS , ,767 President and Fellows of Harvard College U01GH , ,443 President and Fellows of Harvard College U01GH , ,886 Weill-Cornell Medical College U2GGH , ,660 HIV Emergency Relief Project Grants Public Health Solutions H89HA , ,117 Human Genome Research Broad Institute U54HG , ,020 Broad Institute, inc U54HG , ,701 Broad Institute, inc P50HG , ,142 Broad Institute, inc P50HG , ,955 Broad Institute, inc U54HG , ,297 Dana Farber Cancer Institute U01HG , ,739 Dana Farber Cancer Institute U01HG , ,989 Fred Hutchinson Cancer Research Center U41HG , ,057 Geisinger Clinic R01MH S1 24, ,713 Harvard Medical School P50HG , ,347 Memorial Sloan-Kettering Institute Cance U01HG , ,628 President and Fellows of Harvard College P50HG , ,296 Regents of the University of California R01HG , ,403 Stanford University P01HG , ,594 Stanford University U54HG , ,857 University of California at Berkeley U01HG S1 (352) (352) University of Rochester R01HG Immunization Research, Demonstration, Public Information and Education_Training and Clinical Skills Improvement Projects Khmer Health Advocates U58DP (633) - - (633) Injury Prevention and Control Research and State and Community Based Programs Boston University INTF2330M , ,293 Innovations in Applied Public Health Research Harvard School of Public Health P01TP , ,282 International Research and Research Training American University of Beirut D43TW A1 15, ,794 Harvard School of Public Health D43TW , ,715 Mass General Hospital-CIMIT K01TW , ,123 Kidney Diseases, Urology and Hematology Research Duke University R01DK Lung Diseases Research Albert Einstein College of Medicine R01HL (2,341) - - (2,341) Beth Israel Deaconess Medical Center R01HL A1 13, ,974 Boston University Medical Center R01HL , ,930 Boston University Medical Center R01HL , ,225 Brigham and Women's Hospital, Inc P01HL , ,020 Children's Hospital of Boston U01HL , ,462 Dana Farber Cancer Institute R01HL , ,927 Duke University U10HL , ,573 Georgia Institute of Technology R01HL Harvard School of Public Health R01HL (320) - - (320) Mayo Clinic U01HL , , ,958 MIRTECH INC R41HL , ,317 The accompanying notes are an integral part of this schedule. 71

76 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Mount Sinai School of Medicine R01HL , ,677 Mount Sinai School of Medicine R01HL , ,970 Mount Sinai School of Medicine R01HL , ,085 National Jewish Health R01HL , ,421 National Jewish Medical and Research Cen U01HL , ,398 Pennsylvania State University U10HL President and Fellows of Harvard College R01HL , ,063 President and Fellows of Harvard College R01HL , ,159 President and Fellows of Harvard College R01HL , ,724 Regents of the University of Minnesota U10HL , ,468 Regents of the University of Minnesota U1OHL , ,313 University of Alabama R01HL (3,659) - - (3,659) University of Alabama R01HL , ,085 University of California at San Diego U10HL University of California at San Francico U01HL , ,050 University of Iowa R01HL , ,257 University of Maryland R01HL (366) (366) University of Pennsylvania R01HL , ,707 Maternal and Child Health Federal Consolidated Programs National Coalition for Health Profession U22MC24100:03-8, ,229 National Coalition for Health Profession UC7MC , ,771 University of Massachusetts at Worcester H30MC (1,000) - - (1,000) Maternal and Child Health Services Block Grant to the States Altarum Institute HHS (8,402) - - (8,402) Medical Library Assistance Brigham and Women's Hospital, Inc U54LM , ,319 Partners HealthCare System, Inc U54LM , ,115 Mental Health Research Grants Beth Israel Deaconess Medical Center P50MH ,388 (21,030) - - 8,358 Beth Israel Deaconess Medical Center R01MH , ,667 Beth Israel Deaconess Medical Center U01MH , ,357 Brigham and Women's Hospital, Inc R01MH A1-107,891 53, ,329 Brigham and Women's Hospital, Inc R01MH A1-21, ,178 Brigham and Women's Hospital, Inc P50MH , ,192 Brigham and Women's Hospital, Inc P50MH (1,793) - (1,793) Brigham and Women's Hospital, Inc R01MH , ,454 Brigham and Women's Hospital, Inc R01MH , ,151 Brigham and Women's Hospital, Inc R01MH , ,612 Butler Hospital P50MH , ,560 Butler Hospital U01MH , ,192 Center for Psychological Research, Train R44MH (6,963) - - (6,963) Children's Hospital of Boston R01MH , ,079 Children's Hospital of Boston R01MH , ,811 Children's Memorial Hospital (Illinois) R01MH , ,186 Fenway Community Health Center R01MH Fenway Community Health Center R21MH , ,537 Fenway Community Health Center R34MH , ,623 Fenway Community Health Center R01MH , ,050 Harvard Medical School R01MH (8,662) - (8,662) Harvard Medical School R01MH (916) (916) Harvard Medical School R01MH Harvard Medical School R01MH ,953-16,953 Harvard School of Public Health R01MH , ,697 Harvard University R01MH (2) - - (2) Henry M Jackson Foundation U01MH , ,104 Johns Hopkins University UM1AI , ,033 Kaiser Foundation Research Institute R01MH , ,038 Kaiser Foundation Research Institute R01MH ,546-22,546 The accompanying notes are an integral part of this schedule. 72

77 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Mass General Hospital-CIMIT R01MH A1 42, ,999 Mass General Hospital-CIMIT R01MH A ,600-99,600 Mass General Hospital-CIMIT R01MH ,695-7,695 Mass General Hospital-CIMIT R01MH , ,213 Mass General Hospital-CIMIT R01MH , ,135 Mass General Hospital-CIMIT R01MH (164) (164) Mass General Hospital-CIMIT R01MH , ,824 Mass General Hospital-CIMIT R01MH , ,074 Mass General Hospital-CIMIT R25MH ,839-13,839 Massachusetts Institute of Technology R01MN , ,185 McLean Hospital Corporation R21MH A1-27, ,136 McLean Hospital Corporation P50MH (32,701) - - (32,701) McLean Hospital Corporation R01MH , ,106 McLean Hospital Corporation R01MH , ,435 Michigan State University R01MH S1-25, ,169 Mount Sinai School of Medicine P50MH , ,408 Mount Sinai School of Medicine P5OMH ,105-7,105 Mount Sinai School of Medicine R01MH , ,319 New England Research Institute, Inc R01MH , ,361 New York University School of Medicine R01MH , ,224 NorthShore University HealthSystem Resea R01MH , ,148 President and Fellows of Harvard College R01MH , ,863 President and Fellows of Harvard College R01MH , ,206 President and Fellows of Harvard College R01MH , ,669 Regents of the University of California R01MH , ,023 Research Foundation of State University R01MH (2,513) - - (2,513) Rush University Medical Center R01MH (2,058) - - (2,058) Social and Scientific Systems, Inc BRS-IMPCT-S Torrey Pines Institute for Molecular Stu R01MH A ,164-80,164 Tufts Medical Center, Inc R01MH , ,499 University of California at Davis R01MH ,467-78,467 University of Maryland R01MH , ,563 University Of Massachusetts U01MH , ,553 University of Pennsylvania R01MH , ,204 University of Puerto Rico R01MH , ,362 University of Rochester P50MH , ,130 University of Rochester R01MH (20,120) - - (20,120) University of Texas Southwestern Medical U01MH S1 - - (5,057) - (5,057) University of Texas Southwestern Medical U01MH , , ,626 University of Texas Southwestern Medical U01MH , ,395 University of Utah R01MH (9,773) - (9,773) University of Utah R01MH ,203-11,203 University of Washington R01MH , ,550 University of Washington R01MH , ,826 Yale University School of Medicine R01MH Microbiology and Infectious Diseases Research Beth Israel Deaconess Medical Center R01AT , ,728 Beth Israel Deaconess Medical Center U01AI (527) - - (527) Draper Laboratory R21AI (7,351) (7,351) Harvard Medical School P30AI Mass General Hospital-CIMIT U01AI , ,754 The accompanying notes are an integral part of this schedule. 73

78 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Minority Health and Health Disparities Research Case Western Reserve University R21MD , ,888 Harvard Pilgrim Health Care R01MD , ,142 Mass General Hospital-CIMIT R01MD , ,866 Mount Sinai School of Medicine R01MD , ,498 President and Fellows of Harvard College R01MD A1 40, ,408 University of Massachusetts at Worcester R01MD (77) - - (77) Model State-Supported Area Health Education Centers Abt Associates, Inc HHSA I- - (1,496) - - (1,496) National Center for Advancing Translational Sciences President and Fellows of Harvard College KL2TR , ,844 President and Fellows of Harvard College UL1TR , , ,975 University of North Carolina, Chapel Hil KL2TR , ,300 University of Pittsburgh UH2TR , ,090 National Center for Education in Maternal and Child Health President and Fellows of Harvard College U54AI , ,249 National Center for Research Resources American College of Radiology U10CA Brigham and Women's Hospital, Inc P41RR , ,861 Draper Laboratory R21RR , ,053 Harvard Catalyst - The Harvard Clinical KL2TR Harvard Medical School UL1RR ,552, ,552,529 Harvard Medical School UL1RR , ,367 Harvard University UL1TR S1 6,088, ,088,560 Harvard University UL1TR ,829, ,829,487 Massachusetts Institute of Technology R01OD , ,343 President and Fellows of Harvard College KL2RR , ,232 President and Fellows of Harvard College UL1RR , (1,944) (16) President and Fellows of Harvard College UL1RR (22,455) (9,566) (2,953) - (34,974) President and Fellows of Harvard College UL1RR , ,835 President and Fellows of Harvard College UL1RR02S President and Fellows of Harvard College KL2TR , ,310 President and Fellows of Harvard College KL2TR , ,800 President and Fellows of Harvard College UL1TR ,957 51,532 7, ,300 President and Fellows of Harvard College R21RR Technest, Inc R44RR A2 (141) (141) National Center on Sleep Disorders Research Beth Israel Deaconess Medical Center R01HL Beth Israel Deaconess Medical Center R01HL A1 352, ,503 Beth Israel Deaconess Medical Center P01HL , ,904 California Pacific Medical Center R01HL , ,515 National Institutes of Health Contracts Actuarial Research Corporation 93. GS-23F0058T 42, ,068 AFYA, Inc 93. HHSP WC - (2,684) - - (2,684) Agiltron, Inc. 93. HHSN C - (4,800) - - (4,800) American College of Radiology /RTOG0825-4, ,636 Benaroya Research Institute at Virginia 93. N01-AI , ,995 Boston University 93. N01-HC ,317 (563) ,754 Broad Institute, inc. 93. HHSN C 10, ,976 Broad Institute, inc. 93. HHSN C 135, ,307 Case Western Reserve University 93. HHSN C - (338,223) - - (338,223) Case Western Reserve University 93. HHSN C - 396, ,215 Children's Hospital of Boston 93. HHS C 11, ,086 Children's Hospital of Philadelphia (The 93. 7U10CA , ,033 Dana Farber Cancer Institute 93. 5R37DK , ,289 EMMES Corporaton 93. N01EY , ,214 Fisher Bioservices 93. HHSN C - 71, ,386 Harvard Stem Cell Institute 93. HHSN P - 43, ,498 Johns Hopkins University 93. HHSN C 101, ,404 Lumicell Diagnostics, Inc. 93. HHSN C - 6, ,004 The accompanying notes are an integral part of this schedule. 74

79 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Mass General Hospital-CIMIT 93. HHSN C/N0 814, ,897 Mass General Hospital-CIMIT 93. HHSN C 246, ,544 Massachusetts Institute of Technology 93. 5R37EB , ,291 Mayo Clinic 93. N01-CN , ,697 Mount Sinai Hospital 93. HHSN C 563, ,101 New England Research Institute, Inc N01HC New England Research Institute, Inc. 93. HHSN C 230, ,410 New England Research Institute, Inc. 93. N01HC , ,046 Polestar Technologies, Inc. 93. W81XWH-10-C , ,583 President and Fellows of Harvard College 93. GS-10F-0261K/HHSN271 75, ,314 President and Fellows of Harvard College 93. HHSN C 116, ,499 President and Fellows of Harvard College 93. P03ES (1,544) (1,544) RAND Corporation 93. HHSP WC (239) (239) Regents of the University of California 93. N01-AI , , ,652 Robin Medical, Inc. 93. HHSN C (22,294) (22,294) Robin Medical, Inc. 93. HHSN C 114, ,799 SAIC-Frederick, Inc XS091 - (1) - - (1) SAIC-Frederick, Inc. 93. HHSN E 13,953 63, ,521 Stanford University 93. HHSN C 14, ,621 Thomas Jefferson University 93. GS-10F-0261K/HHSN271 5, ,013 University of Alabama 93. HHSN C 70, ,477 University of Buffalo 93. HHSN C 258, ,199 University of California at San Diego 93. HHSN C - 37, ,360 University of California at San Francico 93. N01A , ,307 University of California at San Francico 93. N01-AI , ,369 University of California San Francisco 93. N01-AI , ,810 University of Florida 93. HHSN C 220, ,530 University of Massachusetts at Worcester 93. HHSN C - 9, ,269 University of North Carolina, Chapel Hil 93. N01-HC , ,193 University of Rochester 93. HHSN C - (1,845) - - (1,845) University of Toledo 93. HHSN C 156, ,027 University of Wisconsin - Madison 93. HHSN C - 58, ,257 NIEHS Superfund Hazardous Substances_Basic Research and Education Dartmouth College P42ES , ,966 President and Fellows of Harvard College P42ES , ,966 Trustees of Boston University P42ES , ,031 Nurse Education, Practice and Retention Grants Boston College UD7HP , ,507 Mass General Hospital-CIMIT D11HP , ,836 Nursing Research Boston College R15NR , ,221 Boston University R01NR ,797 15,797 Penn State University College of Medicin R01NR , ,499 President and Fellows of Harvard College R01NR , ,088 Occupational Safety and Health Program Harvard School of Public Health U19OH , ,017 Harvard School of Public Health U19OH IMA World Health (8,329) - - (8,329) President and Fellows of Harvard College R01OH , ,965 Oral Diseases and Disorders Research Brigham and Women's Hospital, Inc R01DE , ,679 Carolinas HealthCare System U01DE , ,838 Massachusetts Institute of Technology R01DE , ,859 MD Anderson Cancer Center R03DE A1 (59) (59) Physical Sciences, Inc R44DE (98) 23, ,704 Physical Sciences, Inc R22DE (228) - - (228) Stanford University R01DE , ,888 The University of Texas Health Science R01DE (2,572) (2,572) University of North Carolina, Chapel Hil U01DE , ,397 The accompanying notes are an integral part of this schedule. 75

80 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Population Research President and Fellows of Harvard College R21HD Project Grants and Cooperative Agreements for Tuberculosis Control Programs Medical Research Council of South Africa U51PS , ,757 Rapid Expansion of Antiretroviral Therapy Programs for HIV-Infected Persons in Selected Countries in Africa and the Caribbean Harvard School Underof the Public President's Health Emergency Plan for AIDS Relief 6U51HA (9,067) (9,067) Harvard School of Public Health U51HA (22,063) - - (22,063) Weill-Cornell Medical College U91HA , ,519 ARRA - Recovery Act Comparative Effectiveness Research - AHRQ American College of Radiology R01HS , ,341 Brigham and Women's Hospital, Inc R01HS Harvard Clinical Research Institute (HCR R01HS , ,099 Harvard Pilgrim Health Care R01HS ,809 29, ,403 ImproveCareNow, Inc R01HS , ,010 Mass General Hospital-CIMIT R18HS , ,151 Olmsted Medical Center R01HS , ,998 Stanford University R01HS , ,250 University of California at San Diego R01HS , ,734 University of California at San Francico R01HS , ,648 University of Washington - Seattle R01HS , ,327 Refugee and Entrant Assistance_Targeted Assistance Grants Gulf Coast Jewish Family Services, Inc ZT0080-2, ,755 Research and Training in Complementary and Alternative Medicine Ayer and Kuris Research Engineering, Inc R43AT ,723 45,723 Beth Israel Deaconess Medical Center R01AT , ,347 Beth Israel Deaconess Medical Center R01AT , ,747 International Association of Yoga Therap R13AT (2) (2) Mass General Hospital-CIMIT R01AT , ,414 Mass General Hospital-CIMIT P01AT , ,490 Mass General Hospital-CIMIT R01AT , ,277 Mass General Hospital-CIMIT R01AT , ,371 Mass General Hospital-CIMIT U01AT , ,662 Mass General Hospital-CIMIT R21AT , ,492 Spaulding Rehabilitation Hospital R43AT , ,326 University of Michigan R01AT , ,801 University of Pennsylvania UH2AT , ,259 Wake Forest University P50AT , ,646 Research on Healthcare Costs, Quality and Outcomes Brigham and Women's Hospital, Inc R18HS , ,237 Children's Hospital of Boston U18HS , ,438 Crotched Mountain Foundation R18HS (15,157) - - (15,157) Florida State University College of Medi R01HS , ,226 Harvard Pilgrim Health Care R18HS , ,744 Harvard School of Public Health R18HS , ,878 Mass General Hospital-CIMIT R01HS , ,171 President and Fellows of Harvard College R01HS , ,553 Regents of the University of Michigan R01HS , ,698 Society of Hospital Medicine R18HS , ,588 Trustees of Boston University U18HS (57,481) (57,481) Trustees of Dartmouth College R01HS REVI ,713 1,713 University of Illinois at Chicago U19HS , ,121 University of North Carolina, Chapel Hil R18HS , ,187 Vanderbilt University R18HS , ,325 Yale University U18HS , ,947 Yale University School of Medicine U18HS , ,840 Research Related to Deafness and Communication Disorders Boston University P50DC , ,341 Boston University R33DC , ,756 Cincinnati Children's Hospital Medical C R01DC , ,962 Mass General Hospital-CIMIT R33DC ,710 8,710 Massachusetts Institute of Technology R01DC A ,988 58,988 Northwestern University P50DC A1-14, ,980 Regents of the University of California R01DK A1-37, ,365 The accompanying notes are an integral part of this schedule. 76

81 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Trustees of Boston University R01DC , ,518 State Survey and Certification of Health Care Providers and Suppliers Northwestern University EAM238-25, ,000 Test for Suppresssion Effects of Advanced Energy Harvard School of Public Health R01HD S McLean Hospital Corporation U24NS , ,564 University of Colorado U01CA , ,475 ARRA - TRANS-NIH RECOVERY ACT LOAN REPAYMENT SUPPORT Brigham and Women's Hospital, Inc U54LM , ,978 National Space Biomedical Research Insti NBPF , ,884 ARRA - TRANS-NIH RECOVERY ACT RESEARCH SUPPORT Allen Institute for Brain Science RC2MH (5,885) - - (5,885) American College of Radiology U01CA S2-1, ,871 Barrow Neurological Institute at St. Jos RC1NS , ,818 Beth Israel Deaconess Medical Center R01HL A1 34, ,961 Beth Israel Deaconess Medical Center RC1EB Beth Israel Deaconess Medical Center RC2CA (71,131) - - (71,131) Brigham and Women's Hospital, Inc R21HL , ,746 Brigham and Women's Hospital, Inc U54EB S3 - (2,200) - - (2,200) Broad Institute RC2MH (12,981) - - (12,981) Broad Institute, inc RC2MH (1,813) (1,813) Broad Institute, inc U19AI , ,638 Brown University RC1HD , ,683 Case Western Reserve University U19AI S Children's Hospital of Boston R01AI Dana Farber Cancer Institute R01CA (45,974) - - (45,974) Dana Farber Cancer Institute RC2HL , ,023 Dana Farber Cancer Institute RC2HL (27) (27) Dana Farber Cancer Institute P30CA S6 - (12,884) - - (12,884) Dana Farber Cancer Institute RC2CA (1,647) (1,647) Elder Services of the Merrimack Valley (59) - - (59) Fred Hutchinson Cancer Research Center RC2CA , ,436 Harvard Medical School RC4MH ,267-30,267 Harvard Medical School RC2GM (14,339) (14,339) Johns Hopkins University RC2NS (333) - - (333) Johns Hopkins University P50ES S1-2, ,442 Johns Hopkins University U01CA S - 38, ,000 Massachusetts Eye and Ear Infirmary P01AI , ,694 Massachusetts Eye and Ear Infirmary P01AI (4,851) - - (4,851) Massachusetts Institute of Technology RC1AG Massachusetts Institute of Technology RC1RR (129,499) - - (129,499) Massachusetts Institute of Technology RC2DE (138) - - (138) Massachusetts Institute of Technology R01HL A MAT TEK, Inc R44AR (1,308) (1,308) Mount Sinai School of Medicine U01AI S1 (8,223) (8,223) NCIRE RC2AG (11,096) (10,759) New York University School of Medicine RC1HL (273) - - (273) Ohio State University R01NS A1 3, ,819 Physical Sciences, Inc R44CA (322) - - (322) President and Fellows of Harvard College R01HD A2 (1,922) (1,922) President and Fellows of Harvard College P30AI S President and Fellows of Harvard College UL1RR S1 - (41,340) - - (41,340) President and Fellows of Harvard College R01CA S President and Fellows of Harvard College R01LM The accompanying notes are an integral part of this schedule. 77

82 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Regents of the University of California RC2DA (14,303) - - (14,303) Rush University Medical Center RC2AG (33,822) (33,822) Schepens Eye Research Institute P01AI (32,015) - - (32,015) Tufts University RC2ES , ,221 University of Alabama RC2AR (9,099) (9,099) University of Alabama, Birmingham RC2AR (13,108) (13,108) University of Arkansasfor Medical Scien R01MH , ,196 University of California at Berkeley U01HG S University of California at San Diego RC2AG (12,352) (12,352) University of Chicago RC2HL (21,747) (21,747) University of Cincinnati R01NS A1-61, ,166 University of Cincinnati R01NS (1,400) - - (1,400) University of Colorado RC2CA (8,429) - - (8,429) University of Colorado R01DK A2 - (17,326) - - (17,326) University of Colorado RC2CA , ,845 University of Medicine and Dentistry of RC2HL (9,866) (9,866) University of Pennsylvania RC4AG , ,607 University of Pittsburgh RC1HL (5,845) (5,845) University of Pittsburgh RC2AR (13,076) (13,076) University of Pittsburgh P50GM S1 10,427 (3,725) - - 6,702 University of Pittsburgh RC1HL , ,948 University of Pittsburgh, School of Medi RC1NS (6,016) - - (6,016) University of Rochester U54NS (120) (120) University of Southern California RC4AG , ,303 University of Washington RC2AG , ,822 University of Wisconsin - Madison RC1CA , ,812 Utah State University R01AG (6,790) (6,790) Wistar Institute RC2CA Yale University U19AI (1,116) (1,116) Yale University School of Medicine RC2NS (64) (64) Trans-NIH Research Support Duke University Medical Center R01NS , ,693 Massachusetts Institute of Technology R01GM , ,912 Northeastern University DP1OD , ,503 President and Fellows of Harvard College U54HG , ,200 Scripps Research Institute R01CA (3,918) (3,918) University of Massachusetts at Worcester UH2TR , ,929 Vision Research Massachusetts Eye and Ear Infirmary R01EY A1 336, ,204 Massachusetts Eye and Ear Infirmary R01EY , ,858 Massachusetts Institute of Technology P30EY , ,344 Schepens Eye Research Institute R01EY , ,585 Tufts University R01EY A1 53, ,546 Department of Health and Human Services 61,770,772 57,110,760 1,041, , ,787,544 Department of Homeland Security Centers for Homeland Security Northeastern University ST-061-ED , ,677 Northeastern University COE-2008-ST-061ED-00-54, ,124 Northeastern University HSHQDC-10-D , ,185 Northeastern University , ,071 Department of Homeland Security Northeastern University 93. BOA#HSHQDC-10-D , ,811 Department of Homeland Security - 235, ,868 The accompanying notes are an integral part of this schedule. 78

83 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Department of Transportation National Highway Transportation Safety Administration (NHTSA) Discretionary Safety Grants Foster-Miller, Inc ,774-2,774 Department of Transportation - - 2,774-2,774 Department of Veterans Affairs Sharing Specialized Medical Resources Boston Veterans Affairs Medical Center ,565 11,565 Department of Veterans Affairs ,565 11,565 Environmental Protection Agency Environmental Protection Agency Boston University , ,057 Science To Achieve Results (STAR) Research Program Board of Trustees U of Illinois RD , ,484 Dartmouth College RD , ,282 National Jewish Health RD , ,697 University of Michigan RD (788) (788) Environmental Protection Agency 152, ,732 National Aeronautics and Space Administration Aerospace Education Services Program Massachusetts Institute of Technology NNX08AX15G - 1, ,491 National Space Biomedical Research Insti SMST , ,688 National Aeronautics and Space Administration - 216, ,179 National Science Foundation Biological Sciences Duke University IOS , ,589 Regents of the University of Minnesota DBI , ,194 Computer and Information Science and Engineering University of Pennsylvania CNS , ,813 Engineering Grants Echelon Biosciences Incorporated IIP , ,409 Northeastern University EEC , ,054 Ohio State University CBET , ,469 Remedium Technologies, Inc (6,182) - - (6,182) University of Massachusetts at Amherst CMMI , ,287 University of Texas at Austin CBET , ,792 Mathematical and Physical Sciences Trustees of Boston University DMS , ,457 National Science Foundation Nanofiber Solutions, LLC , ,824 Social, Behavioral, and Economic Sciences Johns Hopkins University ,062-98,062 Trustees of Boston University SMA , ,614 National Science Foundation 106, ,413 98,062-1,133,382 U.S. Department of State Peace Corps Global Health Service Corps , ,642 U.S. Department of State National Academies (The) 93. S-LMAQM (14,625) - - (14,625) U.S. Department of State - 213, ,017 Total Research Pass Through $65,938,308 $62,808,048 $1,203,677 $2,953,111 $132,903,144 The accompanying notes are an integral part of this schedule. 79

84 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED DIRECT RESEARCH TRAINING CFDA Agency CFDA Program CFDA # BWH MGH McLean Other Total Department Of Defense Military Medical Research and Development $ 86,176 $ 880,706 $ - $ - $ 966,882 Department Of Defense 86, , ,882 Department of Energy Office of Science Financial Assistance Program , ,525 Department of Energy - 375, ,525 Department of Health and Human Services Aging Research ,040,114 1,368, ,409,010 Alcohol Research Programs , ,962 Allergy, Immunology and Transplantation Research ,136,236 2,158, ,294,660 Arthritis, Musculoskeletal and Skin Diseases Research ,673, , ,477,885 Biomedical Research and Research Training , , ,837,538 Blood Diseases and Resources Research , ,821 Cancer Research Manpower ,656,556 5,884, ,541,066 Cardiovascular Diseases Research ,028,891 3,210, ,239,493 Career Development Awards , ,297 Child Health and Human Development Extramural Research , ,858 7, ,696 1,958,858 Diabetes, Digestive, and Kidney Diseases Extramural Research ,046,088 5,871, ,917,492 Digestive Diseases and Nutrition Research , ,255 Discovery and Applied Research for Technological Innovations to Improve Human Health , , ,057,474 Drug Abuse and Addiction Research Programs , ,317 1,487,099-2,458,205 Environmental Health (1,255) 313, ,025 Extramural Research Programs in the Neurosciences and Neurological Disorders ,343 3,037,853 (1,800) - 3,976,396 Geriatric Academic Career Awards , ,106 Human Genome Research , ,573 International Research and Research Training , , ,702 Kidney Diseases, Urology and Hematology Research (7,758) - - (7,758) The accompanying notes are an integral part of this schedule. 80

85 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 U.S. Department of State Mental Health National Research Service Awards for Research Training (4,220) 28,534-24,314 Mental Health Research Career/Scientist Development Awards ,284 1,083,621 84,378-1,183,283 Mental Health Research Grants ,758 3,782,851 1,021,118-5,468,727 National Center for Research Resources , ,177 National Center on Sleep Disorders Research , ,893 Lung Diseases Research ,316, , ,709,477 Mental Health National Research Service Awards for Research Training (4,220) 28,534-24,314 Mental Health Research Career/Scientist Development Awards ,284 1,083,621 84,378-1,183,283 Mental Health Research Grants ,758 3,782,851 1,021,118-5,468,727 National Center for Research Resources , ,177 National Center on Sleep Disorders Research , ,893 National Research Service Award in Primary Care Medicine , ,917 National Research Service Awards_Health Services Research Training , ,509 Nurse Education, Practice and Retention Grants , ,013 Nursing Research ,695 65, ,962 Oral Diseases and Disorders Research , ,582 Research and Training in Complementary and Alternative Medicine , , ,283 Research on Healthcare Costs, Quality and Outcomes , , ,304 Research Related to Deafness and Communication Disorders (49) - - (49) ARRA - TRANS-NIH RECOVERY ACT RESEARCH SUPPORT , ,237 Trans-NIH Research Support , , ,261 Vision Research , ,484 Department of Health and Human Services 25,526,610 33,692,514 2,626, ,696 61,983,434 Professional and Cultural Exchange Programs - Citizen Exchanges (7,917) (7,917) U.S. Department of State (7,917) (7,917) Total Direct Research Training $25,604,869 $34,948,745 $2,626,614 $137,696 $63,317,924 The accompanying notes are an integral part of this schedule. 81

86 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH TRAINING PASS THROUGH CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Department of Energy Office of Science Financial Assistance Program Northeastern University DE-SC $ - $ (7,533) $ - $ - $ (7,533) Department of Energy - (7,533) - - (7,533) Department of Health and Human Services Aging Research Boston University T32AG (40) - - (40) Boston University T32AG , ,421 Harvard Medical School T32AG , ,895 Harvard Medical School T32AG , ,910 National Bureau of Economic Research T32AG , ,264 President and Fellows of Harvard College T32AG ,225 40, ,207 President and Fellows of Harvard College T32AG , ,360 President and Fellows of Harvard College T32AGOO , ,335 President and Fellows of Harvard College K01AT ,837 20,837 President and Fellows of Harvard College T32AG (9,639) (9,639) President and Fellows of Harvard College T32AG (167) - - (167) President and Fellows of Harvard College T32AG , ,043 Allergy, Immunology and Transplantation Research Beth Israel Deaconess Medical Center T32AI (13,405) (13,405) Boston Medical Center T32AI , ,401 Harvard Medical School T32AI (4) - - (4) Harvard Medical School T32AI (14,312) - - (14,312) Harvard Medical School T32AI , ,480 New England Regional Center for Biodefen U54AI , ,743 President and Fellows of Harvard College P30A , ,140 President and Fellows of Harvard College P30AI (15,658) - - (15,658) President and Fellows of Harvard College P30AI , ,465 President and Fellows of Harvard College P30AI , ,757 President and Fellows of Harvard College T32AI , ,085 President and Fellows of Harvard College T32AI , ,523 President and Fellows of Harvard College T32AI , ,973 President and Fellows of Harvard College T32AI , ,077 President and Fellows of Harvard College U54AI , ,812 President and Fellows of Harvard College T32AI , ,749 President and Fellows of Harvard College T32AI , ,687 ARRA - Preventive Medicine Residency Program Griffin Hospital, Medical Education D5HHP ,105 32,105 Blood Diseases and Resources Research Children's Hospital of Boston T32HL A1-40, ,635 Children's Hospital of Boston T32HL , ,985 Children's Hospital of Boston T32HL , ,728 Harvard Medical School T32HL (744) - - (744) The accompanying notes are an integral part of this schedule. 82

87 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH TRAINING PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total President and Fellows of Harvard College T32HL , ,495 President and Fellows of Harvard College KL2TR , ,749 President and Fellows of Harvard College T32HL , ,908 Cancer Centers Support Grants Dana Farber Cancer Institute P50CA , ,830 Dana Farber Cancer Institute P50CA , ,679 Dana Farber Cancer Institute P50CA , ,554 Cancer Research Manpower Dana Farber Cancer Institute K05CA , ,969 Dana Farber Cancer Institute T32CA , ,450 Dana Farber Cancer Institute T32CA , ,104 Dana Farber Cancer Institute T32CA (1,634) - - (1,634) President and Fellows of Harvard College T32CA , ,808 President and Fellows of Harvard College T32CA , ,826 Cardiovascular Diseases Research Beth Israel Deaconess Medical Center T32HL , ,497 Beth Israel Deaconess Medical Center T32HL , ,669 Beth Israel Deaconess Medical Center T32HL , ,890 Boston University School of Medicine T32HL , ,636 Children's Hospital of Boston K12HL Newark Beth Israel Medical Center K23HL , ,379 President and Fellows of Harvard College T32HL (425) (425) Centers of Excellence Harvard Medical School D34HP (6,837) - - (6,837) Child Health and Human Development Extramural Research Brigham and Women's Hospital, Inc K12HD (2,325) - - (2,325) Children's Hospital of Boston T32HD , ,400 Children's Hospital of Boston T32HD (547) (547) Children's Hospital of Boston T32HD , ,569 University of Pittsburgh K12HD ,888 82,888 Diabetes, Digestive, and Kidney Diseases Extramural Research Joslin Diabetes Center T32DK , ,876 National Institute of Diabetes and Diges F32DK , ,050 Extramural Research Programs in the Neurosciences and Neurological Disorders Harvard School of Public Health T32NS (1) - - (1) President and Fellows of Harvard College T32NS , ,823 Geriatric Training for Physicians, Dentists and Behavioral/Mental Health Professionals Beth Israel Deaconess Medical Center T32HP , ,884 International Research and Research Training Instituto de Efectividad Clinica y Sanit D43TW A1 36, ,349 Vanderbilt Medical Center R24TW ,278 31, ,865 Vanderbilt University R24TW Vanderbilt University R24TW , ,307 Lung Diseases Research President and Fellows of Harvard College T32HL , ,808 Maternal and Child Health Federal Consolidated Programs President and Fellows of Harvard College T76MC , ,456 Mental Health National Research Service Awards for Research Training Judge Baker Children's Center T32MH (1,240) (1,240) Judge Baker Children's Center T32MH , ,840 The accompanying notes are an integral part of this schedule. 83

88 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 RESEARCH AND DEVELOPMENT AND RESEARCH TRAINING CLUSTER, CONTINUED RESEARCH TRAINING PASS THROUGH, CONTINUED CFDA Agency CFDA Program Pass-Through Sponsor CFDA # Pass-Through Number BWH MGH McLean Other Total Mental Health Research Grants Judge Baker Children's Center T32MH , ,848 Judge Baker Children's Center T32MH ,530 65, ,931 Judge Baker Children's Center T32MH , ,927 President andfellows of Harvard College T32MH , ,515 UniversityofMassachusetts at Amherst K01MH (34) (34) National Center for Advancing Translational Sciences President andfellows of Harvard College KL2TR , , ,268 National Center for Research Resources President andfellows of Harvard College KL2TR ,057 (97) ,960 National Institutes ofhealth Contracts Beth Israel Deaconess Medical Center 93. 5T32AG , ,325 National Research Service Award in Primary Care Medicine Beth Israel Deaconess Medical Center HP (10,633) - - (10,633) Children's Hospital of Boston T32HS , ,059 Children's Hospital of Boston T32HP Children's Hospital of Boston T32HP Children's Hospital of Boston T32HS , ,493 National Research Service Awards_Health ServicesResearch Training Children'sHospital ofboston T32HS , ,124 Children's Hospital of Boston T32HS , ,072 Research and Training in Complementary and Alternative Medicine President andfellows of Harvard College K01AT (4,131) (4,131) Substance Abuse andmental Health ServicesAdministration American Psychiatric Association ( APA ) , ,969 Trans-NIH Research Support President andfellows of Harvard College KL2RR Department of Health and Human Services 1,614,038 2,285, ,699 4,031,419 National Aeronautics and Space Administration National Aeronauticsand Space Administration National Space Biomedical Research Insti 93. PF02303 (1,023) (1,023) National Space Biomedical Research Insti 93. PF , ,870 National Aeronauticsand Space Administration 50, ,847 Total Research Training Pass Through $ 1,664,885 $ 2,278,149 $ - $ 131,699 $ 4,074,733 Total Research and Development and Research Training Cluster $ 420,800,973 $ 464,623,353 $ 32,107,920 $ 6,931,737 $ 924,463,983 The accompanying notes are an integral part of this schedule. 84

89 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 CONSTRUCTION PROGRAM CFDA Agency CFDA Program CFDA # BWH MGH McLean Other Total Department of Health and Human Services ARRA - TRANS-NIH RECOVERY ACT RESEARCH SUPPORT $ 2,249,656 $ - $ - $ - $ 2,249,656 Department of Health and Human Services 2,249, ,249,656 Total Construction Program $ 2,249,656 $ - $ - $ - $ 2,249,656 The accompanying notes are an integral part of this schedule. 85

90 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 OTHER PROGRAMS CFDA Agency CFDA Program CFDA # Pass-Through Number BWH MGH McLean Other Total Department of Agriculture Department of Health and Human Services School Breakfast Program INTF3502M $ (18,401) $ - $ - $ - $ (18,401) Special Supplemental Nutrition Program for Women, Infants, and Children INTF3502M , ,361 Special Supplemental Nutrition Program for Women, Infants, and Children INTF3502M , ,238 Special Supplemental Nutrition Program for Women, Infants, and Children INTF350M , ,935 Department of Agriculture 424,837 1,032, ,457, ,238 1,032, ,475,534 Affordable Care Act (ACA) Childhood Obesity Research Demonstration U18DP , ,222 ARRA PREVENTING HEALTHCARE-ASSOCIATED INFECTIONS FA , ,892 Bilingual/Bicultural Service Demonstration Grants (2,723) (2,723) Centers for Disease Control and Prevention_Investigations and Technical Assistance U01DD , ,953 Centers for Disease Control and Prevention_Investigations and Technical Assistance INTF3406MM (297) - - (297) Family Planning_Services F Family Planning_Services FPHPA (1,660) (1,660) Family Planning_Services FPHPA , ,837 Family Planning_Services , ,624 HIV Care Formula Grants , ,008 HIV Care Formula Grants EHSSALARYRESERVE HIV Care Formula Grants INTF4943MM , ,521 HIV Care Formula Grants INTF4943MM , ,030 HIV Care Formula Grants MA0401L1T ,340 8,340 HIV Care Formula Grants MA040B1T ,269 73,269-76, ,656 15, , , , , ,937 The accompanying notes are an integral part of this schedule. 86

91 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 OTHER PROGRAMS CFDA Agency CFDA Program CFDA # Pass-Through Number BWH MGH McLean Other Total HIV Emergency Relief Project Grants H89HA , ,025 Mental Health Research Grants R01MH , ,656 National Bioterrorism Hospital Preparedness Program INTF ,766 21,766 National Bioterrorism Hospital Preparedness Program INTF6207PP (2,450) (2,450) National Bioterrorism Hospital Preparedness Program INTF6207PP ,534 33,534 National Bioterrorism Hospital Preparedness Program INTF6207PP ,778 64,778 National Bioterrorism Hospital Preparedness Program INTF6207PP ,562 28,562 National Bioterrorism Hospital Preparedness Program INTF6207PP , ,505 National Bioterrorism Hospital Preparedness Program INTF6207PP ,809 32,809 National Bioterrorism Hospital Preparedness Program INTF6207PP , ,500 National Bioterrorism Hospital Preparedness Program INTF620PP ,080 23,080 National Bioterrorism Hospital Preparedness Program ,076 3,076 National Institutes of Health Contracts 93. INTF2351MM , ,343 National Institutes of Health Contracts 93. INTF301HH , ,507 National Institutes of Health Contracts 93. INTF3122HH , ,430 National Institutes of Health Contracts 93. INTF3210MM , ,372 National Institutes of Health Contracts 93. INTF4971M , ,934 National Institutes of Health Contracts 93. (4,815) ,775 11, ,055 62, , ,160 (4,815) 507,586-16, ,546 Research on Healthcare Costs, Quality and Outcomes R18HS , ,999 Department of Health and Human Services 640,271 1,309, ,287 2,716,129 Total Other Programs $ 1,065,108 $ 2,341,867 $ - $ 766,287 $ 4,173,262 The accompanying notes are an integral part of this schedule. 87

92 Schedule of Expenditures of Federal Awards Year Ended September 30, 2013 STUDENT FINANCIAL AID CLUSTER CFDA Agency CFDA Program CFDA # BWH MGH McLean Other Total Department of Education Rehabilitation Training_State Vocational Rehabilitation Unit In-Service Training $ - $ 46,177 $ - $ - $ 46,177 Federal Direct Student Loans ,869,698 26,869,698 Department of Education - 46,177-26,869,698 26,915,875 Department of Health and Human Services Nurse Faculty Loan Program (NFLP) , ,612 ARRA - Nurse Faculty Loan Program ,952 6,952 Department of Health and Human Services , ,564 Total Student Financial Aid Cluster $ - $ 46,177 $ - $ 26,978,262 $ 27,024,439 TOTAL FEDERAL EXPENDITURES $ 424,115,737 $ 467,011,397 $ 32,107,920 $ 34,676,286 $ 957,911,340 The accompanying notes are an integral part of this schedule. 88

93 Notes to Schedule of Expenditures of Federal Awards September 30, Organization Partners HealthCare System, Inc. (PHS) is the sole member of The Massachusetts General Hospital (MGH), Brigham and Women s Health Care, Inc. (BWHC), NSMC HealthCare, Inc. (NSMC), Newton-Wellesley Health Care System, Inc. (NWHCS), Partners Continuing Care, Inc. (PCC), Partners International Medical Services, LLC (PIMS) and Neighborhood Health Plan, Incorporated (NHP). PHS appoints the two physicians who are the members of Partners Community HealthCare, Inc. (PCHI). The individual serving as the PHS President and Chief Executive Officer is the sole member of Partners Harvard Medical International, Inc. (PHMI). PHS, together with all of its affiliates, is referred to as Partners HealthCare. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal grant activity of Partners HealthCare and is recorded on the accrual basis of accounting. Beginning in fiscal 2013, the Schedule includes the federal grant activity of the MGH Institute of Health Professions, Inc. (IHP). IHP maintains a different fiscal year-end (June 30) and previously had its own stand-alone audit performed in accordance with the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations (OMB Circular A-133). The information in the Schedule is presented in accordance with the requirements of OMB Circular A-133. Therefore, some amounts presented in the Schedule may differ from amounts presented in or used in the preparation of the basic consolidated financial statements. Negative amounts represent adjustments to amounts reported as expenditures in prior years. Catalog of Federal Domestic Assistance (CFDA) and pass-through numbers are provided where available. The Schedule identifies expenditures (in separate columns) of The Brigham and Women s Hospital, Inc. (BWH), The General Hospital Corporation (MGH) and The McLean Hospital Corporation (McLean). The Schedule combines expenditures of IHP, The Spaulding Rehabilitation Hospital Corporation (SRH), North Shore Medical Center, Inc. (NSMC), Newton-Wellesley Hospital (NWH), Brigham and Women s Faulkner Hospital, Inc. (BWFH), Martha s Vineyard Hospital (MVH), Nantucket Cottage Hospital (NCH), and Cooley Dickinson Hospital (CDH) under the column Other. These entities are all affiliates of Partners HealthCare. Expenditures reported for IHP cover the period July 1, June 30, Expenditures reported in the Other column are delineated in the table that follows: 89

94 Notes to Schedule of Expenditures of Federal Awards September 30, 2013 BWFH CDH IHP MVH NCH NSMC NWH SRH Total Research and Development Direct Programs $ - $ - $ 476,656 $ - $ - $ - $ 4,800 $ 3,227,775 $ 3,709,231 Research and Development Passed Through Other Organizations , ,795,617 2,953,111 Research Training Direct Programs , ,696 Research Training Passed Through Other Organizations , ,699 Student Financial Aid ,978, ,978,262 Other Programs 35, ,216-23,080 21,766 64,778 28, ,287 $ 35,885 $ 592,216 $ 27,612,412 $ 23,080 $ 21,766 $ 64,778 $ 33,362 $ 6,292,787 $ 34,676,286 90

95 Notes to Schedule of Expenditures of Federal Awards September 30, Pass-Through Funds from the Commonwealth Of Massachusetts The Schedule includes expenditures of $3,239,075 passed through the Commonwealth of Massachusetts including CFDA numbers , , 93, , , , , 93,889 and all reported in Other Programs. Under Other Programs, the Schedule includes total expenditures of $207,605 for CFDA number reported in the Other column. These expenditures include $35,885 for BWFH, $33,534 for CDH, $23,080 for MVH, $21,766 for NCH, $64,778 for NSMC and $28,562 for NWH. 4. Federal Student Loan Programs During the year ended June 30, 2013, IHP authorized the following amounts of new loans under the Federal Direct Student Loan Program: Federal Direct Student Loans - Grad Plus $ 12,808, Federal Direct Student Loans - Direct Plus 121, Federal Direct Student Loans - Stafford 1,935, Federal Direct Student Loans - SLA 12,004,736 Total Federal Direct Student Loans $ 26,869,698 As of June 30, 2013, IHP had loans outstanding of $376,136 for loans issued as part of the Nurse Faculty Loan Program and ARRA - Nurse Faculty Loan Program. The ARRA loans (CFDA # ) were $39,938 and the Non-ARRA loans (CFDA # ) were $336,

96 Notes to Schedule of Expenditures of Federal Awards September 30, Facilities and Administrative Costs The predetermined facilities and administrative cost rates for BWH, MGH, McLean and SRH were based on financial information submitted utilizing the method prescribed in Principles for Determining Costs Applicable to Research and Development Under Grants and Contracts With Hospitals, contained in the Code of Federal Regulations, Title 45, Part 74, Appendix E (OASC-3). The predetermined facilities and administrative cost rates for IHP were based on financial information submitted utilizing the short form method prescribed in OMB Circular A-21 Cost Principles for Educational Institutions. Partners HealthCare affiliates negotiated and were awarded predetermined facilities and administrative cost rates and fringe benefit rates as follows: Hospital Rate Type Period Covered Rate BWH On-site research Oct 1, Sep 30, % Off-site research Oct 1, Sep 30, % Fringe Oct 1, Sep 30, % - 36% IHP On-site research Oct 1, Sep 30, % Off-site research Oct 1, Sep 30, % Fringe Oct 1, Sep 30, % - 37% MGH On-site research Oct 1, Sep 30, % Off-site research Oct 1, Sep 30, % Fringe Oct 1, Sep 30, % - 37% McLean On-site research Oct 1, Sep 30, % Fringe Oct 1, Sep 30, % SRH On-site research Oct 1, Sep 30, % Fringe Oct 1, Sep 30, % - 37% 6. Research Center In March 2010, BWH received award number 1G20RR , CFDA number totaling $6,089,770 from the National Center for Research Resources of the Department of Health and Human Services for purposes of constructing the Brigham MRI Research Center (BMRC). The 2013 costs are included in the Construction Program on the Schedule. Additional construction costs of $0 and $2,701,962 were capitalized in Partners HealthCare s consolidated financial statements in 2013 and 2012, respectively. 7. Women, Infants and Children (CFDA Number ) In addition to the $1,457,133 presented in the Schedule for the Special Supplemental Nutrition Program for Women, Infants and Children grants, Partners HealthCare determines participant eligibility for receipt of food vouchers. The food vouchers for which Partners HealthCare determined eligibility amounted to $5,312,576 in

97 Notes to Schedule of Expenditures of Federal Awards September 30, Subrecipients During 2013, Partners HealthCare provided $156,065,475 to subrecipients in the Research and Development and Research Training Cluster as follows: Subrecipient BWH MGH McLean SRH Total Acoustic Medical Systems $ 162,281 $ - $ - $ - $ 162,281 Adcare Hospital of Worcester ,944-12,944 Advanced Cell Technology , ,122 Africa Academy for Public Health - 12, ,830 AIDS Healthcare Foundation - 19, ,535 Albert Einstein College of Medicine 257,530 2, ,379 Alere Wellbeing - 149, ,100 Alosa Foundation 276, ,302 American Academy of Pediatrics - 93, ,255 American College of Radiology - 121, ,666 Anakena Solutions - 548, ,901 Arizona State University - 169, ,509 Arkansas Children's Hospital - 77, ,058 Asociaci'on Civil Impacta Slud y Educ 166, ,147 Aurum Institute 19, ,246 Autism Speaks - 276, ,715 B.C. Centre For Excellence in HIV/AIDS - 45, ,000 Banner Research Institute 28, ,673 Baylor College of Medicine 399, , ,179 Baystate Medical Center 5, ,389 Bedford VA Research Institute - 98, ,940 Beth Israel Deaconess Medical Center 1,916,390 3,359, ,275,940 Boston Children's Hospital 2,748,811 1,575, ,324,617 Boston College - 49, ,872 Boston Medical Center 233, , ,574-1,333,553 Boston University 1,111,742 1,125,404-95,132 2,332,277 Boston VA Research Institute - 2, , ,046 Brandeis University - 116, ,587 Broad Institute 957,156 2,730, ,687,357 Bronx-Lebanon Hospital Center - 31, ,442 Brookhaven National Laboratory - 41, ,632 Brown University 44, , ,608 Bryn Mawr College - 46, ,425 Butler Hospital - 65, ,227 Brigham and Women's Hospital - 5,710, ,588 6,403,095 CAB Health & Recovery Service California Pacific Medical Research Institute 64, ,475 CALM Technologies - 383, ,351 Cambridge Health Alliance ,367 2,367 Cambridge Polymer Group - 33, ,917 Cardiff University - 93, ,068 Case Western Reserve University 1,075, , ,273,926 Cedars Sinai Medical Center 31,850 19, ,573 Charles Stark Draper Laboratory 10,829 7, ,913 Children's Memorial Hospital 9,985 6, ,563 Children's Mercy Hospital 17,000 8, ,287 Children's Hospital Medical Center 3, ,093 Children's Hospital Los Angeles - 96, ,846 Children's Hospital of Philadelphia 151,756 90, ,950 Children's Research Institute - 32, ,337 93

98 Notes to Schedule of Expenditures of Federal Awards September 30, 2013 Subrecipient BWH MGH McLean SRH Total Cincinnati Children's Hospital Medical Center 78, , ,185 Cleveland Clinic 275, , ,120 Colorado State University 135, ,235 Columbia University 620,027 1,019,232 27,267-1,666,526 Committee for Boston Public Housing - 33, ,282 Connecticut Children's Medical Center - 14, ,551 Cornell University 37, , ,482 Corporation For Scientific Research In Nutrition 175, ,662 Dallas VA Research Corporation - 102, ,709 Dana Farber Cancer Institute 3,548,310 1,745, ,293,679 Dartmouth College - 373, ,313 Department of Veterans Affairs - 7, ,025 Docbox - 328, ,888 Drexel University 28, ,846 Duke University 1,824, , ,930,452 Educational Testing Service , ,467 Emmes Corporation - 199, ,790 Emory University 21,501 46, ,854 Epivax - 87, ,754 Erasmus - 258, ,480 Evaxion Biotech North America - 28, ,875 Feinstein Institute For Medical Research 360, ,000 Fenway Community Health Center - 980, ,228 Fiotec 12, , ,344 Florida International University 25, ,745 Forsyth Institute 232, , ,047 Foundation of Thai Gerontology & Development 38, ,556 Fraunhofer Institut Techno - 31, ,461 Fred Hutchinson Cancer Research Center 7, , ,098 Frontier Science & Tech Research Foundation 109, ,046 Fundacao Medica Do Rio Grande Do Sul 10, ,999 Fundacion Hospital Nacional De Ninos 15, ,500 GE Global Research 527, ,621 Geisinger Clinic 292, ,839 George Washington University - 191, ,072 Georgetown University - 208, ,138 German Cancer Research Center 142, ,836 Gheskio 194, ,056 Gifu University - 50, ,917 Global Health Uganda - 37, ,958 Glycovaxyn 255, ,405 Hartford Dispensary ,756-77,756 Harvard Clinical Research Institute - 42, ,662 Harvard Pilgrim Healthcare 120, ,884 Harvard University 7,762,046 3,978, ,064-11,957,420 Harvard Vanguard Medical Association 211, ,255 Hazelden - 14, ,727 Health Research 719, ,098 Healthcore 19, ,021 Hebrew Rehabilitation Center 93, ,056 Hebrew University of Jerusalem - 27, ,000 Henry M. Jackson Foundation - 17, ,663 Holland Bloorview Kids Rehabilitation Hospital - 173, ,045 Hospital For Special Surgery 22, ,204 Hospital Physicians In Clinical Research - 33, ,207 Howard University 91, ,927 94

99 Notes to Schedule of Expenditures of Federal Awards September 30, 2013 Subrecipient BWH MGH McLean SRH Total Immune Disease Institute 89,177 78, ,698 Imperial College London 14, ,864 Indiana University 87, ,298 Innovative Micro Technology - 1, ,682 Instituto Nacional De Salud Publica 48, ,568 Insup Lee - 109, ,432 Int'l Centre For Diarrhoeal Disease Research - 256, ,708 International Advisory Products and Systems - 91, ,644 Isomics 382,044 26, ,302 ISPED - 40, ,348 Jackson Laboratory 22, , ,361 Johannes Gutenberg University Mainz 63, ,727 Johns Hopkins University 1,050, , ,618-1,613,892 Joslin Diabetes Center 18,659 1,339, ,357,759 Kaiser Foundation Research Institute 889, , ,167,830 Karolinska Institutet - 103, ,130 Kennedy Krieger Research Institute - 41, ,712 Kitware 796, ,198 Klinikum Rechts Der Isar - 69, ,394 La Biomed Research Institute 160, ,982 Lahey Clinic - 190, ,979 Lancet Laboratories 25, ,395 Lata Medical Research Foundation - 1,173, ,173,141 Lawrence Livermore National Laboratory 60, ,026 Legacy Emanuel Hospital 3, ,314 Leids Universitair Meidsch Centrum - 128, ,476 Louisiana State University - 30, ,563 Lovelace Biomedical & Environment 256, ,917 Massachusetts Design Group 18, ,788 Massachusetts Eye & Ear Infirmary 53,949-25,524-79,474 Massachusetts General Hospital 6,356, , ,298 6,884,502 Massachusetts Institute of Technology 1,123,907 2,395, ,519,009 Mayo Clinic 2,932,171 10, ,942,171 Mbarara University - 717, ,720 McCord Hospital - 164, ,367 McGill University - 729, ,338 McLaughlin Research Institute 8,329 10, ,009 McLean Hospital 20, , ,030 Medical College of Wisconsin - 59, ,798 Medical University of South Carolina 148,413 6, ,925 Meharry Medical College - 21, ,057 Memorial Sloan Kettering Cancer Center 182, , , ,182 Minneapolis Heart Institute Foundation 11, ,500 Mirtech 103, ,544 Moberg Research - 25, ,541 Mount Sinai School of Medicine 196, , ,027,199 NICHQ - 371, ,291 National Jewish Health 68, ,545 National Taiwan University - 33, ,347 Nationwide Children's Hospital - 204, ,465 Nemours - 34, ,099 New England Complex Systems Institute - 44, ,110 New England Research Institutes 271, , ,451 New York Medical College 355, ,375 New York University 149, , ,768 Northeastern University 263, , ,759-1,042,218 95

100 Notes to Schedule of Expenditures of Federal Awards September 30, 2013 Subrecipient BWH MGH McLean SRH Total Northwestern University 731,578 50,838 1, ,788 Ohio State University 1,955, , ,056,626 Oracle America - 73, ,843 Oregon Health and Science University 97, , ,261 Orlando Health - 21, ,458 Outcomesciences 90, ,935 Pacific Institute For Research and Evaluation - 10, ,177 Palo Alto Institute For Research & Education 91,559 14, ,315 Partners In Health 212,085 90, ,528 Pennsylvania State University 43, ,772 Periphagen 283, ,133 Phoenix Children's Hospital - 23, ,216 Physical Sciences - 109, ,962 Princeton University - 5, ,353 Probiogen Ag - 48, ,783 Puget Sound Blood Center 20, ,608 Purdue University 76, ,234 Queens University 10, ,213 Recovery Network Of Programs ,589-13,589 Reliant Medical Group 82, ,718 Research & Testing Laboratory - 6, ,113 Research Foundation of CUNY 75, ,574 Revere Public Schools - 1, ,719 Rhode Island Hospital 55, , ,052,946 RTI International 21, ,581 Rush University 424, ,694 Rutgers University 27, ,784 Salk Institute For Biological Studies 261, ,627 Schepens Eye Research Institute 69,462 33, ,710 Science Research Laboratory - 71, ,821 Scripps Research Institute 2, ,599 32, ,938 Seattle Children's Hospital 114,728 21, ,236 Seoul National University 28, ,080 Simon Fraser University - 20, ,697 Social & Scientific Systems 10,525, ,525,823 Socios En Salud Sucursal Peru 1,779, ,779,078 Southern Illinois University Carbondale 65, ,585 Southern Methodist University 44,554 37, ,822 Spaulding Rehabilitation Hospital - 954, ,820 SSTAR ,630-33,630 St. Louis University 7, ,319 St. Mary's Catholic Mission Hospital Trust - 4, ,474 Stanford University 500, , ,278,217 State University of New York 1,187, , ,877,866 Steward Saint Elizabeth's Medical Center 18, ,000 TECHEN - 50, ,896 Technische Universitat Munchen - 7, ,290 Temple University 37,500 8, , ,484 The Florida State University 37,077 95, ,541 The Hospital For Sick Children - 67, ,464 Tufts Medical Center 13, , ,720 Tufts University 303, ,561 41, ,943 Tulane University 85, ,970 Umkhuseli Innovation and Research Management 234, ,332 United States Department Of Agriculture - 56, ,101 Universitatsklinikum Erlangen - 12, ,879 96

101 Notes to Schedule of Expenditures of Federal Awards September 30, 2013 Subrecipient BWH MGH McLean SRH Total Universite Laval - 62, ,965 University College London - 144, ,654 University of Alabama 761, , ,486,118 University of Alberta - 130, ,484 University of Arizona 76, ,688 University of Calgary - 14, ,561 University of California 3,627,679 2,488, ,116,391 University of Capetown 131, , ,513 University of Chicago 4,644,508 22, ,666,589 University of Cincinnati 217, , ,300 University of Colorado 145, , ,875 University of Connecticut - 136, ,420 University of Florida - 47, ,230 University of Guelph 8, ,354 University of Hamburg-Eppendorf - 5, ,000 University of Houston - 53, ,422 University of Illinois 178, , ,699 University of Iowa 234, ,663 University of Kansas 43, , ,765 University of Kwazulu-Natal 205, , ,256 University of Louisville Research Foundation - 33, ,583 University of Maryland 155, , ,893 University of Massachusetts 16, , ,670 University of Medicine & Dentistry of NJ 112, ,894 University of Miami 98, , ,464 University of Michigan 529, , ,412 University of Minnesota 282,868 9, ,906 University of Missouri Health Care System - 183,578 46, ,176 University of Nebraska 515, ,294 University of New Hampshire 276, ,962 University of New Mexico 51, ,678 University of North Carolina 1,218,555 77, ,296,280 University of Oklahoma Health Science Center - 9, ,089 University of Oxford - 238, ,407 University of Pennsylvania 638, , ,068,509 University of Pittsburgh 1,541,116 1,132, ,673,315 University of Pretoria 14, ,750 University of Rochester Medical Center 15, ,689 98, ,160 University of South Florida 79,564 29, ,487 University of Southern California 488,426 1,215, ,703,637 University of Stellenbosch 43, , ,853 University of Sydney 24, ,000 University of Texas Health Science Center 239,932 2,017, ,256,969 University of Toronto - 65, ,232 University of Utah 706,124 20, ,342 University of Vermont State Agriculture College 75, ,477 University of Virginia 20,573 7, ,173 University of Washington 3,357, , ,815,412 University of Wisconsin 331, , ,891 University of Zimbabwe 49, ,872 Vanderbilt University Medical Center 800, , ,418,139 Virginia Commonwealth University 56, ,666 Wake Forest University 271,237 18, ,911 Wayne State University 56,754 21, ,732 Whitehead Institute For Biomedical Research 52, ,041 Wits Health Consortium 552, , ,320 97

102 Notes to Schedule of Expenditures of Federal Awards September 30, 2013 Subrecipient BWH MGH McLean SRH Total Worcester Polytechnic Institute 182, ,088 WVU Research Corporation - 56, ,855 Y R Gaitonde Centre For Aids Research Education 21,274 62, ,252 Yale University 567, , ,580-1,605,051 $ 87,271,767 $ 63,853,244 $ 3,407,935 $ 1,532,529 $ 156,065,475 98

103 Part II Reports on Compliance and Internal Controls

104 Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Board of Directors of Partners HealthCare System, Inc. and Affiliates We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the consolidated financial statements of Partners HealthCare System, Inc. and Affiliates (Partners HealthCare) which comprise the consolidated balance sheet as of September 30, 2013, and the related consolidated statements of operations, changes in net assets and cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued our report thereon dated December 13, Internal Control Over Financial Reporting In planning and performing our audit of the consolidated financial statements, we considered Partners HealthCare s internal control over financial reporting ( internal control ) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of Partners HealthCare s internal control. Accordingly, we do not express an opinion on the effectiveness of Partners HealthCare s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity s consolidated financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. PricewaterhouseCoopers LLP, 125 High Street, Boston, MA T: (617) , F: (617) ,

105 Compliance and Other Matters As part of obtaining reasonable assurance about whether Partners HealthCare s consolidated financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of consolidated financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. December 13,

106 Independent Auditor s Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 To the Board of Directors of Partners HealthCare System, Inc. and Affiliates Report on Compliance for Each Major Federal Program We have audited the compliance of Partners HealthCare System, Inc. and Affiliates (Partners HealthCare) with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended September 30, Partners HealthCare s major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of Partners HealthCare s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Partners HealthCare s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Partners HealthCare s compliance. Opinion on Each Major Federal Program In our opinion, Partners HealthCare complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30, Other Matters The results of our auditing procedures disclosed instances of noncompliance, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items and Our opinion on each major federal program is not modified with respect to these matters. PricewaterhouseCoopers LLP, 125 High Street, Boston, MA T: (617) , F: (617) ,