UPMC UNAUDITED QUARTERLY DISCLOSURE FOR THE PERIOD ENDED MARCH 31, 2012

UPMC UNAUDITED QUARTERLY DISCLOSURE FOR THE PERIOD ENDED MARCH 31, 2012

UPMC UNAUDITED QUARTERLY DISCLOSURE FOR THE PERIOD ENDED MARCH 31, 2012 TABLE OF CONTENTS Quarter Highlights...1 Organizational Overview...3 Management s Discussion and Analysis...4 Utilization Statistics... 12 Outstanding Debt... 13 Debt Covenant Calculations...14 Unaudited Interim Consolidated Financial Statements Report of Independent Registered Public Accounting Firm...16 Consolidated Balance Sheets... 17 Consolidated Statements of Operations and Changes in Net Assets...18 Consolidated Statements of Cash Flows...19 Notes to Unaudited Consolidated Financial Statements...20 The following financial data as of and for the three and nine month periods ended March 31, 2012 and 2011 is derived from the unaudited consolidated internal financial statements of UPMC. The unaudited interim consolidated financial statements include all adjustments consisting of normal recurring accruals that UPMC considers necessary for a fair presentation of its financial position and the results of operations for these periods. The financial information as of and for the twelve month period ended June 30, 2011 is derived from UPMC s audited consolidated financial statements. Operating and financial results reported herein are not necessarily indicative of the results that may be expected for any future periods. The information contained herein is being filed by UPMC for the purpose of complying with its obligations under Continuing Disclosure Agreements entered into in connection with the issuance of the series of bonds listed herein and disclosure and compliance obligations in connection with various banking arrangements. The information contained herein is as of March 31, 2012. Digital Assurance Certification, L.L.C., as Dissemination Agent, has not participated in the preparation of this Unaudited Quarterly Disclosure, has not examined its contents and makes no representations concerning the accuracy and completeness of the information contained herein. UPMC Unaudited quarterly disclosure March 2012

Quarter Highlights Period Ended March 31, 2012 For the nine months ended March 31, 2012, operating revenues increased by $746 million from the comparable period in the prior year, or 11.5%, to $7.2 billion due to growth in both Provider Services and Insurance Services. Operating income, which is reinvested in programs that support UPMC s mission, was $290 million for the period. Operating earnings before interest, depreciation and amortization totaled $584 million. Both of these metrics benefitted from incentive payments earned for demonstrating meaningful use of electronic medical records ( meaningful use revenue ) as well as retroactive Insurance Services payments. As of March 31, 2012, UPMC had approximately $4.1 billion of cash and investments. UPMC continued to expand its services within western Pennsylvania. For the nine months ended March 31, 2012: Hospital outpatient revenue per workday rose 21% from the comparable period in the prior year. Enrollment in UPMC s Insurance Services grew to over 1.8 million members, a 15.4% increase over March 31, 2011. Hospital medical-surgical admissions and observation cases rose 11.4% to 178,741 from the comparable period in the prior year, and Physician service revenue per weekday increased 8% from the comparable period in the prior year. UPMC s loss from investing and financing activities for the nine months ended March 31, 2012 was $50 million. UPMC made no material changes to its asset allocation policies during the quarter and continues to have a long-term perspective with regard to its investment activities. During the nine months ended March 31, 2012, UPMC made capital expenditures of $390 million. UPMC also invested $26 million to acquire ownership interests in and fund businesses based in western Pennsylvania, bringing the total capital and business investment in the region to $416 million. Construction continued during the third quarter of fiscal year 2012 for UPMC East, the new 156-bed community hospital in Monroeville scheduled to open in July 2012 that will serve the growing needs of the communities east of Pittsburgh. This $240 million investment allows for a state-of-the-art hospital set on 13.6 acres designed to put patients at the center of all care and services. UPMC East will have the latest technology and environmentally efficient construction and is expected to receive LEED certification. The project includes various improvements to benefit the local community, including intersections and roads around the site. Nearly 500 jobs will be created by the opening of UPMC East. The hospital s construction employs more than 300 local skilled workers. During the nine months ended March 31, 2012, UPMC made capital expenditures of $74 million related to UPMC East s construction. During the third quarter, UPMC opened, in phases, a new multi-specialty outpatient center on Lebanon Church Road in West Mifflin. Like the UPMC South Hills center in Bethel Park, UPMC West Mifflin brings world-class care to the local community by providing an array of clinical services, including a UPMC Cancer Center, Quest Diagnostics, advanced imaging and primary care and specialty physician offices. In Fiscal Year 2012, UPMC invested more than $7 million in this center, which occupies about 20,000 square feet of the 28,000 square-foot building. In June 2011, Pittsburgh-based Highmark Blue Cross Blue Shield ( Highmark ) confirmed its long-rumored entry into the provider market by declaring its intent to acquire West Penn Allegheny Health System ( WPAHS ). Highmark and WPAHS effectuated this by executing an Affiliation Agreement (the Affiliation Agreement ) in October 2011. Under the Affiliation Agreement, Highmark has provided WPAHS with $150 million of grants. The Affiliation Agreement provides for up to an additional $250 million in support primarily in the form of loans and $75 million for a future medical school. Following the execution of the Affiliation Agreement, Highmark also announced an affiliation with Premier Medical Associates and a commitment of an additional $500 million to create ambulatory care centers, medical malls, a health information exchange and partnerships with community UPMC Unaudited quarterly disclosure MARCH 2012 1

Quarter Highlights Period Ended March 31, 2012 hospitals and independent physicians. By deciding to buy WPAHS and create an integrated delivery and financing system ( IDFS ), Highmark transformed itself into a direct competitor of UPMC. This changed the health care delivery and insurance marketplace in the region, and precipitated UPMC s announcement in the Spring 2011 that it would not to renew its commercial insurance contracts with Highmark. In 2011, UPMC entered into provider contracts with national insurers Aetna, Cigna, UnitedHealthcare and HealthAmerica, which offer full access to UPMC facilities. In May 2012, Highmark and UPMC jointly announced an agreement in principle that provides for an orderly wind-down of the relationship between UPMC and Highmark by December 31, 2014. The parties agreed to complete formal agreements implementing the term sheet by June 30, 2012. UPMC Unaudited quarterly disclosure MARCH 2012 2

Organizational Overview Period Ended March 31, 2012 UPMC, doing business as the University of Pittsburgh Medical Center, is one of the world s leading IDFS. UPMC is based in Pittsburgh, Pennsylvania and primarily serves residents of western Pennsylvania. It also draws patients for highly specialized services from across the nation and around the world. UPMC s 21 hospitals and more than 400 clinical locations comprise one of the largest nonprofit health systems in the United States. UPMC has three major operating components: Provider Services, Insurance Services and International and Commercial Services. To support these operating components, UPMC has an array of integrated enterprise capabilities, including information services, human resources, regulatory/compliance, finance, treasury, risk management, facilities, quality and community relations. The costs of these services are allocated to the operating components. Provider Services UPMC s Provider Services include a comprehensive array of clinical capabilities consisting of hospitals, specialty service lines (e.g., transplantation services, woman care, behavioral health, pediatrics, cancer care and rehabilitation services), contract services (emergency medicine, pharmacy and laboratory) and more than 3,000 employed physicians with associated practices. Also included within Provider Services are supporting foundations and UPMC s captive insurance programs. Hospital activity is monitored in four distinct groups: (i) academic hospitals that provide a comprehensive array of clinical services that include the specialty service lines listed above and serve as the primary academic and teaching centers for UPMC and are located in Pittsburgh; (ii) community hospitals that provide core clinical services mainly to the suburban Pittsburgh and, with the addition of UPMC Hamot effective February 1, 2011, greater Erie populations; (iii) regional hospitals that provide core clinical services to certain other areas of western Pennsylvania; and (iv) pre- and post-acute care capabilities that include: UPMC HomeCare, a network of home health services, and UPMC Senior Communities, the facilities of which provide a complete network of senior living capabilities in greater Pittsburgh. Insurance Services UPMC holds various interests in health care financing initiatives and network care delivery operations that have 1.8 million members. UPMC Health Plan is a health maintenance organization ( HMO ) offering coverage for commercial and Medicare members. UPMC for You is also an HMO, which is engaged exclusively in providing coverage to Medical Assistance beneficiaries. UPMC Health Network offers preferred provider organization ( PPO ) plan designs to serve both commercial and Medicare beneficiaries. UPMC for Life is a Medicare product line offered by various companies within the Insurance Services division. UPMC Work Partners provides integrated workers compensation and disability services to employers. Community Care Behavioral Health Organization ( Community Care ) is a state-licensed, risk-bearing PPO that manages the behavioral health services for Medical Assistance through mandatory managed care programs in 35 Pennsylvania counties, including Allegheny County. International and Commercial Services The goal of UPMC s International and Commercial Services division is to leverage UPMC s capabilities to generate new revenue streams. This is accomplished by exporting medical expertise and management know-how internationally, pursuing commercialization opportunities and developing strategic partnerships with industry leaders. These ventures both support UPMC s core mission and help to revitalize the economy of western Pennsylvania. The first of the major international ventures, ISMETT, a transplant and specialty surgery hospital in Palermo, Italy, has performed 1,227 transplants since its founding in 1999. Other international ventures currently include UPMC Beacon, a private hospital, two cancer centers in Ireland, and remote second-opinion pathology consultations for patients in China and Singapore. UPMC Unaudited quarterly disclosure MARCH 2012 3

Management s Discussion & Analysis Period Ended March 31, 2012 Consolidated Financial Highlights (Dollars in millions) Financial Results for the Nine Months Ended March 31 2012 2011 Operating revenues $ 7,215 $ 6,469 Operating income $ 290 $ 313 Operating margin 4.0% 4.8% Operating margin (including income tax and interest expense) 2.7% 3.3% (Loss) gain from investing and financing activities $ (50) $ 275 Excess of revenues over expenses $ 234 $ 631 Operating EBIDA $ 584 $ 605 Capital expenditures and investments $ 416 $ 304 Reinvestment ratio 1.33 1.05 Selected Other Information as of Mar. 31, 2012 June 30, 2011 Total cash and investments $ 4,127 $ 3,951 Unrestricted cash and investments $ 3,486 $ 3,337 Unrestricted cash and investments over long-term debt $ 359 $ 245 Days of cash on hand 143 145 Days in accounts receivable 36 33 Average age of plant 8.7 8.0 Operating revenues for the nine months ended March 31, 2012 increased $746 million, or 11.5%, as compared to the nine months ended March 31, 2011, due primarily to increased Provider Services revenues of $475 million (including $285 million from UPMC Hamot) and Insurance Services revenues of $257 million. Operating income for the nine months ended March 31, 2012 decreased $23 million over the same period in the prior fiscal year, due primarily to lower Provider Services results. Meaningful use revenues and improved Insurance Services results were more than offset by increased physician investment and expense inflation. Loss from investing and financing activities of $50 million for the nine months reflects a return on UPMC s investment portfolio of 1.1% and interest expense of $91 million. UPMC funded $416 million of capital expenditures and business investments to enhance information technology, create new programs and services, and maintain infrastructure. Major projects included construction at UPMC East, enhancement of information technology infrastructure, and investments in various patient care software applications. UPMC Unaudited quarterly disclosure MARCH 2012 4

Management s Discussion & Analysis Period Ended March 31, 2012 Consolidating Statement of Operations Nine Months Ended March 31, 2012 (in millions) UNIT Provider Services International & Commercial Services Insurance Services Eliminations Consolidated Revenues: Net patient service revenue $ 4,677 $ 75 $ $ (616) $ 4,136 Provision for bad debts (176) (176) Insurance enrollment revenue 2,692 2,692 Other revenue 413 52 152 (54) 563 Total operating revenues $ 4,914 $ 127 $ 2,844 $ (670) $ 7,215 Expenses: Salaries, professional fees and benefits $ 2,603 $ 64 $ 122 $ (16) $ 2,773 Supplies, purchased services and general 1,827 56 2,629 (654) 3,858 Depreciation and amortization 283 7 4 294 Total operating expenses 4,713 127 2,755 (670) 6,925 Operating income $ 201 $ $ 89 $ 290 Operating margin % 4.1% 0.0% 3.1% 4.0% Rating agency operating margin % 2.4% (8.7)% 3.1% 2.7% Operating EBIDA $ 484 $ 7 $ 93 $ 584 Operating EBIDA % 9.8% 5.5% 3.3% 8.1% Operating Revenues By Division Operating INCOME By Division $2,500 $2,457 $180 $2,000 $1,500 $1,672 $160 $140 $120 $100 $1,000 $500 $979 $80 $60 $40 $73 $70 $0 $(500) Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 $42 ($236) Mar-12 $20 $0 $(20) Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 ($1) ($2) Total Provider Insurance ICSD Eliminations UPMC Unaudited quarterly disclosure MARCH 2012 5

Management s Discussion & Analysis Period Ended March 31, 2012 Revenue Metrics Provider Services Medical-Surgical Admissions and Observation Visits Inpatient activity as measured by medical-surgical admissions and observation visits at UPMC s hospitals for the nine months ended March 31, 2012 is 11% higher than the comparable period in 2011 (UPMC Hamot increase over prior year is 15,035). For the Nine Months Ended March 31 Trailing 12-Month (in thousands) 2012 Change 2011 250,000 Academic 106.1 3% 103.0 240,000 234,403 237,994 Community 57.9 36% 42.7 230,000 227,204 Regional 14.7 (1%) 14.8 220,000 219,747 Total 178.7 11% 160.5 210,000 204,831 207,063 212,729 205,828 200,000 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 QUARTER ENDING Outpatient Revenue per Workday UPMC s outpatient activity for the nine months ended March 31, 2012 (including UPMC Hamot impact) as measured by average revenue per work day increased by 21% from the comparable period in 2011. Hospital outpatient activity is measured on an equivalent work day (EWD) basis to adjust for weekend and holiday hours. For the Nine Months Ended March 31 Quarterly Average (in thousands) 2012 Change 2011 $8.0 $7.6 $7.6 Academic $ 4,736 13% $ 4,182 $7.5 $7.0 $6.7 $7.0 Community 2,013 47% 1,366 $6.5 $6.2 $6.4 Regional 582 12% 518 $6.0 $5.5 $5.6 $5.7 Total $ 7,331 21% $ 6,066 $5.0 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 QUARTER ENDING UPMC Unaudited quarterly disclosure MARCH 2012 6

Management s Discussion & Analysis Period Ended March 31, 2012 Revenue Metrics Provider Services (CONTINUED) Physician Service Revenue per Weekday UPMC s physician activity for the nine months ended March 31, 2012 as measured by average revenue per week day increased 8% from the comparable period in 2011. Physician services activity is measured on a week day basis. For the Nine Months Ended March 31 Quarterly Average (in thousands) 2012 Change 2011 $5.0 Academic $ 2,723 2% $ 2,661 $4.5 $4.4 $4.4 $4.1 $4.1 Community 1,632 19% 1,375 $4.0 $3.8 $3.9 $3.6 $3.6 Total $ 4,355 8% $ 4,036 $3.5 $3.0 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 QUARTER ENDING Sources of Patient Service Revenue The gross patient service revenues of UPMC are derived from third-party payers which reimburse or pay UPMC for the services it provides to patients covered by such payers. Third-party payers include the federal Medicare Program, the federal and state Medical Assistance Program ( Medicaid ), Highmark Blue Cross Blue Shield ( Highmark ) and other third-party insurers such as health maintenance organizations and preferred provider organizations. The following table is a summary of the percentage of the subsidiary hospitals gross patient service revenue by payer. Nine Months Ended March 31 Years Ended June 30 2012 2011 2011 2010 Medicare 42% 42% 42% 42% Medicaid 15% 15% 15% 15% Highmark 23% 23% 23% 23% UPMC Insurance Services 8% 9% 8% 9% National Insurers and Other 12% 11% 12% 11% Total 100% 100% 100% 100% UPMC Unaudited quarterly disclosure MARCH 2012 7

Management s Discussion & Analysis Period Ended March 31, 2012 OPERATING METRICS - Insurance Services Membership Membership in the UPMC Insurance Services Division increased 15.4% to 1,811,785 as of March 31, 2012. 2,000,000 1,750,000 1,811,785 1,500,000 1,477,358 1,500,581 1,532,700 1,570,032 1,608,482 1,659,593 1,665,677 1,250,000 1,000,000 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 QUARTER ENDING As of March 31, 2012 March 31, 2011 December 31, 2011 December 31, 2010 Fully Insured 279,677 224,888 232,071 220,377 Commercial Self-Insured 252,715 163,923 179,784 149,514 Medicare 110,348 99,663 101,977 93,491 Medical Assistance 158,991 149,835 156,334 142,635 Behavioral Health (Community Care) 671,886 626,563 669,474 620,765 Life Solutions 132,473 126,945 129,198 123,598 Work Partners 205,695 178,215 196,839 182,320 Total 1,811,785 1,570,032 1,665,677 1,532,700 Medical Expense Ratio UPMC Insurance Services Medical Expense Ratio remains stable reflecting alignment of premium rates with medical trends. Trailing 12-Month 100% 95% 90% 90.3 90.1 89.4 89.4 90.0 89.4 89.8 90.0 85% 80% Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 QUARTER ENDING UPMC Unaudited quarterly disclosure MARCH 2012 8

Management s Discussion & Analysis Period Ended March 31, 2012 KEY FINANCIAL INDICATORS (Dollars in millions) Operating Earnings before Interest, Depreciation and Amortization Operating EBIDA for the nine months ended March 31, 2012 decreased slightly as compared to the nine months ended March 31, 2011. For the Nine Months Ended March 31 Trailing Twelve Month EBIDA 2012 Change 2011 Operating Income $ 290 (7%) $ 313 Depreciation and Amortization 294 1% 292 $1,000 $800 $600 $400 $630 $657 $702 $762 $801 $864 $817 $780 Operating EBIDA $ 584 (3%) $ 605 $200 $0 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 QUARTER ENDING Unrestricted Cash Over Long- Term Debt Unrestricted cash over (under) long term debt increased from December 2011 as Operating EBIDA, investment gains, and other changes exceeded capital expenditures. $400 $300 $245 $359 $200 $100 $0 $(100) $73 $115 $(200) $(300) ($334) ($218) $(400) Jun-09 Jun-10 Jun-11 Sep-11 Dec-11 Mar-12 QUARTER ENDING Days in Accounts Receivable Consolidated Days in Accounts Receivable continue to be lower than industry averages due to UPMC s rigorous procedures in this area. By Division as of March 31 2012 Balance Days 2012 2011 40 37 38 Provider Services $ 818 46 46 36 36 Insurance Services 222 21 20 35 34 34 ICSD 27 60 69 33 33 Consolidated $ 1,067 36 36 30 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 QUARTER ENDING Sep-11 Dec-11 Mar-12 UPMC Unaudited quarterly disclosure MARCH 2012 9

Management s Discussion & Analysis Period Ended March 31, 2012 Market Share The chart below shows the increase in UPMC s estimated inpatient market share for fiscal years 2010 and 2011 (July 1 through June 30), by service area 1. For fiscal year 2011, estimated market share is displayed both excluding and including third and fourth quarter discharges for UPMC Hamot, which was integrated into UPMC February 1, 2011. The following table shows the decrease in medical-surgical discharges from all hospitals within each service area for the same period. This is the most recent market share data currently available. UPMC Inpatient Medical-Surgical Market Share July 1 through June 30 70% FY10 (excluding UPMC Hamot) MARKET SHARE 60% 50% 40% 30% 20% 55.7% 58.6% 58.6% 36.9% FY11 (excluding UPMC Hamot) FY11 (including UPMC Hamot) 38.6% 38.6% 30.2% 31.3% 33.0% 10% 0% Allegheny County Southwestern PA (10-County) Western PA (29-County) Total Medical-Surgical Discharges Within the Service Areas (All Hospitals) FY 2011 and FY 2010 July 1 through June 30 FY 11 FY 10 Percent Change Allegheny County 156,257 162,116 (3.61%) Southwestern Pennsylvania (10-County Region) 338,484 350,101 (3.32%) Western Pennsylvania (29-County Region) 506,857 521,758 (2.86%) 1 UPMC s three service areas are (1) Allegheny County, (2) a 10-county region including Allegheny, Armstrong, Beaver, Butler, Fayette, Greene, Indiana, Lawrence, Washington and Westmoreland counties and (3) a 29-county region which also includes Bedford, Blair, Cambria, Cameron, Centre, Clarion, Clearfield, Crawford, Elk, Erie, Forest, Huntingdon, Jefferson, McKean, Mercer, Potter, Somerset, Venango and Warren counties. UPMC Unaudited quarterly disclosure MARCH 2012 10

Management s Discussion & Analysis Period Ended March 31, 2012 Asset and Liability Management During the nine months ended March 31, 2012, UPMC s investment portfolio returned 1.1%. As of March 31, 2012, UPMC utilized 160 external investment managers, including 26 traditional managers, 28 hedge fund managers and 106 private equity managers. UPMC s investment portfolio has a long-term perspective and has generated annualized returns of 3.3%, 12.0% and 2.2% for the trailing one-, three- and five-year periods. Approximately 49% of the investment portfolio consists of securities that can be liquidated within three days. UPMC s annualized cost of capital during the period was 3.90%. This cost of capital includes the accrual of interest payments, the amortization of financing costs and original issue discount or premium, the ongoing costs of variable rate debt and the cash flow impact of derivative contracts. As of March 31, 2012, the interest rates on UPMC s long-term debt were approximately 80% fixed and 20% variable after giving effect to derivative contracts. Annualized interest cost for the variable rate debt for the period averaged 0.84%. The annualized interest cost for the fixed rate debt was 4.45%. UPMC has a credit facility which expires in June 2016 and has a borrowing limit of $350 million. As of March 31, 2012, UPMC had approximately $269 million available on the facility to fund operating and capital needs. UPMC is continuing efforts to standardize its bond covenants to be consistent with those contained in a Master Trust Indenture entered into in 2007 (the 2007 MTI ). The effort includes the replacement of all notes issued under its 1995 Master Indenture (the 1995 MTI ) with notes issued under the 2007 MTI. Until all of the notes issued under the 1995 MTI have been defeased, UPMC continues to comply with the covenants of both the 1995 MTI and the 2007 MTI. As of March 31, 2012, UPMC had met the requirements to defease 95.1% of the notes issued under the 1995 MTI. UPMC anticipates that this process may be completed before September 30, 2012. The table below compares reported Investing and Financing Activity for the nine months ended March 31, 2012 and 2011 by component. Investing and Financing Activity by Type Nine Months Ended March 31 2012 2011 (in thousands) Realized gains $ 68,928 $ 124,237 Interest, dividends and fees 25,746 33,517 Realized investment income $ 94,674 $ 157,754 Unrealized gains on derivative contracts 4,694 16,924 Other unrealized (losses) gains (53,335) 207,371 Impairment on cost-based investments (5,705) (15,500) Investment revenue $ 40,328 $ 366,549 Interest expense (90,671) (91,443) (Loss) gain on investing and financing activities $ (50,343) $ 275,106 UPMC Unaudited quarterly disclosure MARCH 2012 11

Utilization Statistics Period Ended March 31, 2012 The following table presents selected consolidated statistical indicators of medical/surgical, psychiatric, sub-acute and rehabilitation patient activity for the nine months ended March 31, 2012 and 2011 and the years ended June 30, 2011 and 2010. Nine Months Ended Years Ended March 31 June 30 2012 2011 2011 2010 Licensed Beds 4,510 4,503 4,505 4,164 Beds in Service Medical-Surgical 3,626 3,587 3,595 3,172 Psychiatric 390 394 394 426 Rehabilitation 149 157 157 160 Skilled Nursing 127 122 122 160 Total Beds in Service 4,292 4,260 4,268 3,918 Patient Days Medical-Surgical 724,070 675,153 918,947 863,852 Psychiatric 98,744 99,698 132,856 134,399 Rehabilitation 32,531 34,327 45,918 47,797 Skilled Nursing 27,066 27,031 36,050 40,570 Total Patient Days 882,411 836,209 1,133,771 1,086,618 Observation Days 58,004 46,448 63,346 50,087 Average Daily Census 3,420 3,447 3,445 3,206 Admissions and Observation Cases Medical-Surgical 139,671 127,577 175,178 165,893 Observation Cases 39,070 32,917 44,569 38,938 Subtotal 178,741 160,494 219,747 204,831 Psychiatric 6,240 6,073 8,243 9,166 Rehabilitation 2,578 2,848 3,796 3,765 Skilled Nursing 2,256 2,274 2,999 3,393 Total Admissions and Observation Cases 189,815 171,689 234,785 221,155 Overall Occupancy 80% 81% 81% 82% Average Length of Stay Medical/Surgical 5.2 5.3 5.2 5.2 Psychiatric 15.8 16.4 16.1 14.7 Rehabilitation 12.6 12.1 12.1 12.7 Skilled Nursing 12.0 11.9 12.0 12.0 Overall Average Length of Stay 5.9 6.0 6.0 6.0 Emergency Room Visits 449,457 384,262 534,537 482,599 Transplants (Pittsburgh) Liver 69 107 133 165 Kidney 87 119 135 185 All Other 270 280 369 385 Total 426 506 637 735 Transplants (ISMETT) Liver 51 44 62 70 Other 54 44 66 53 Total 105 88 128 123 UPMC Unaudited quarterly disclosure MARCH 2012 12

Outstanding debt Period Ended March 31, 2012 (in thousands) Issuer Original Borrower Series Amount Outstanding Allegheny County Hospital UPMC Health System 1997B $ 43,904 Development Authority UPMC Health System 1998B 18,205 UPMC 2003B 26,631 UPMC 2007A 100,000 UPMC 2007B 65,000 UPMC 2008A 318,875 UPMC 2008B 225,552 UPMC 2008 Notes 97,600 UPMC 2009A 384,091 UPMC 2010A 365,159 UPMC 2010B 100,000 UPMC 2010C 50,000 UPMC 2010D 150,000 UPMC 2010F 95,000 UPMC 2011A 106,843 UPMC Senior Communities, Inc. 2003 37,500 Allegheny County Industrial UPMC 2004A 75,510 Development Authority Erie County Hospital Authority Hamot Health Foundation 2006 23,731 Hamot Health Foundation 2007 30,119 Hamot Health Foundation 2008 7,497 Hamot Health Foundation 2010A 18,145 Hamot Health Foundation 2010B 9,225 Hamot Health Foundation 2010C 3,355 Pennsylvania Higher Educational UPMC Health System 1999A 76,841 Facilities Authority UPMC 2010E 330,352 None UPMC 2011B 100,000 Bayfront Regional Dev. Corp. 2007 14,485 Hamot Surgery Center, LLC 2000 5,465 UPMC Ireland Loan 187,843 UPMC Swap value 22,122 UPMC UPMC East loan 71,000 Various - Capital Leases and Loans 114,550 Total $ 3,274,600 Includes original issue discount and premium and other. Source: UPMC Records UPMC Unaudited quarterly disclosure MARCH 2012 13

Debt Covenant Calculations Period Ended March 31, 2012 Debt Service Coverage Ratio (Dollars in Thousands) Trailing Twelve-Month Period Ended March 31, 2012 Net Income $ 331,334 Adjusted By: Revenues Available for Debt Service from Properties Financed with Non-recourse Indebtedness (4,893) Net Unrealized Loss from Period 1 79,404 Depreciation and Amortization 1 396,760 Loss on Defeasance of Debt 1 18 Hamot Purchase Accounting Inherent Contribution 1 2,206 Pension Commitment 1 186 Realized Investment Impairments 1, 2 (8,295) Interest Expense 120,491 Revenues Available for Debt Service $ 917,211 Maximum Annual Debt Service 1995 MTI $ 220,178 Debt Service Coverage Ratio 1995 MTI 4.17X Historical Debt Service Requirements 2007 MTI $ 207,680 Debt Service Coverage Ratio 2007 MTI 4.42X Historical Debt Service Requirements All Debt and Leases $ 257,811 Debt Service Coverage Ratio All Debt and Leases 3.56X Liquidity Ratios As of March 31, 2012 Unrestricted Cash and Investments $ 3,486,367 Total Operating Expenses (includes interest expense) 7,015,085 Less: Depreciation and Amortization (294,141) Cash Operating Expenses $ 6,720,944 Daily Cash Expenses (Cash Operating Expenses/275) 24,440 Days Cash on Hand 142.7 Master Trust Indenture Debt $ 2,816,918 Unrestricted Cash to MTI Debt 1.24 Parent Unrestricted Cash and Investments $ 2,570,494 Maximum Annual Debt Service 220,178 Parent Cushion Ratio 11.67X (1) Non-Cash. (2) Reflects ultimate realization of previously impaired cost-based investments. I hereby certify to the best of my knowledge that, as of March 31, 2012, UPMC is in compliance with the applicable covenants contained in the financing documents for the bonds listed on the cover hereof and all applicable bank lines of credit and no Event of Default (as defined in any related financing document) has occurred and is continuing. C. Talbot Heppenstall, Jr. Treasurer UPMC UPMC Unaudited quarterly disclosure MARCH 2012 14

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 2012 UPMC Unaudited quarterly disclosure MARCH 2012 15

Report of Independent Registered Public Accounting Firm The Board of Directors UPMC Pittsburgh, Pennsylvania We have reviewed the accompanying consolidated balance sheet of UPMC and subsidiaries as of March 31, 2012, and the related consolidated statement of operations and changes in net assets for the three-month and nine-month periods ended March 31, 2012, and the consolidated statement of cash flows for the nine-month period ended March 31, 2012. These financial statements are the responsibility of the Company s management. We did not make a similar review of the related consolidated statement of operations and changes in net assets and the consolidated statement of cash flows for the corresponding periods of the prior year 2011. We conducted our review in accordance with the standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the auditing standards generally accepted in the United States, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements at March 31, 2012, and for the three-month and nine-month periods then ended, for them to be in conformity with U.S. generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of UPMC and subsidiaries as of June 30, 2011, and the related consolidated statements of operations and changes in net assets and cash flows for the year then ended, not presented herein, and in our report dated September 9, 2011, we expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph for the Company s adoption of the guidance provided by Accounting Standards Codification (ASC) 805, Business Combinations, and ASC 350-20, Intangibles-Goodwill and Other, effective July 1, 2010. In our opinion, the information set forth in the accompanying consolidated balance sheet as of June 30, 2011 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Pittsburgh, Pennsylvania May 10, 2012 UPMC Unaudited quarterly disclosure MARCH 2012 16

Consolidated Balance Sheets (Unaudited) (in thousands) March 31 June 30 2012 2011 Current assets Cash and cash equivalents $ 384,088 $ 386,718 Patient accounts receivable, net of allowance for uncollectible accounts of $142,844 at March 31, 2012 and $120,461 at June 30, 2011 635,520 532,548 Other receivables 431,826 380,415 Other current assets 119,128 99,412 Total current assets 1,570,562 1,399,093 Board-designated, restricted, trusteed and other investments 3,742,652 3,564,421 Beneficial interests in foundations 339,301 344,344 Net property, buildings and equipment 3,522,827 3,439,443 Other assets 402,722 376,201 Total assets $ 9,578,064 $ 9,123,502 Current liabilities Accounts payable and accrued expenses $ 417,360 $ 379,451 Accrued salaries and related benefits 408,011 397,493 Current portion of insurance reserves 291,400 283,336 Current portion of long-term obligations 155,955 263,788 Other current liabilities 367,941 245,255 Total current liabilities 1,640,667 1,569,323 Long-term obligations 3,118,645 2,976,925 Pension liability 139,860 143,188 Long-term insurance reserves 229,076 199,028 Other long-term liabilities 144,895 172,530 Total liabilities 5,273,143 5,060,994 Unrestricted net assets 3,729,776 3,489,251 Restricted net assets 575,145 573,257 Total net assets 4,304,921 4,062,508 Total liabilities and net assets $ 9,578,064 $ 9,123,502 See accompanying notes UPMC Unaudited quarterly disclosure MARCH 2012 17

Consolidated Statements of Operations and Changes in Net Assets (Unaudited) (in thousands) Nine Months Ended Three Months Ended March 31 March 31 2012 2011 2012 2011 Unrestricted net assets Net patient service revenue: Patient service revenue (net of contractual allowances and discounts) $ 4,135,782 $ 3,697,617 $ 1,404,735 $ 1,399,968 Provision for bad debts (175,808) (143,941) (57,077) (45,568) Net patient service revenue less provision for bad debts 3,959,974 3,553,676 1,347,658 1,354,400 Insurance enrollment revenue 2,691,808 2,452,754 929,355 828,330 Other revenue 562,780 462,291 179,400 177,878 Total operating revenues 7,214,562 6,468,721 2,456,413 2,360,608 Expenses: Salaries, professional fees and employee benefits 2,772,162 2,358,918 946,853 830,626 Supplies, purchased services and general 3,858,110 3,504,570 1,341,676 1,324,789 Depreciation and amortization 294,142 291,919 97,762 97,677 Total operating expenses 6,924,414 6,155,407 2,386,291 2,253,092 Operating income (excluding inherent contribution - Hamot affiliation and income tax expense) 290,148 313,314 70,122 107,516 Inherent contribution - Hamot affiliation (1,328) 61,746 (1,156) 61,746 Income tax (expense) benefit (5,315) (6,954) (592) 1,170 Asset impairment gain (loss) 1,091 (12,643) 1,091 (12,643) After-tax operating income $ 284,596 $ 355,463 $ 69,465 $ 157,789 Investing and financing activities: Investment revenue 40,328 366,549 172,263 77,100 Interest expense (90,671) (91,443) (31,027) (31,758) (Loss) gain from investing and financing activities (50,343) 275,106 141,236 45,342 Excess of revenues over expenses 234,253 630,569 210,701 203,131 Other changes in unrestricted net assets 6,272 23,744 5,933 13,480 Increase in unrestricted net assets 240,525 654,313 216,634 216,611 Restricted net assets Contributions 11,099 4,407 2,481 1,435 Net realized and unrealized gains on restricted investments 1,132 11,635 3,454 4,752 Assets released from restriction for operations and capital purchases (5,300) (5,612) (1,118) (2,254) Restricted net assets acquired 88,587 88,587 Net (decrease) increase in beneficial interests in foundations (5,043) 58,461 23,476 32,257 Increase in restricted net assets 1,888 157,478 28,293 124,777 Increase in net assets 242,413 811,791 244,927 341,388 Net assets, beginning of period 4,062,508 3,032,172 4,059,994 3,502,575 Net assets, end of period $ 4,304,921 $ 3,843,963 $ 4,304,921 $ 3,843,963 See accompanying notes UPMC Unaudited quarterly disclosure MARCH 2012 18

Consolidated Statements of Cash FlowS (Unaudited) (in thousands) Nine Months Ended March 31 2012 2011 Operating activities Increase in net assets $ 242,413 $ 811,791 Adjustments to reconcile increase in net assets to net cash provided by operating activities: Depreciation and amortization 294,142 291,919 Provision for bad debts 175,808 143,941 Change in beneficial interest in foundations 5,043 (58,461) Net change in pension liability (3,328) (80,382) Restricted contributions and investment income (12,231) (16,042) Inherent contribution - Hamot affiliation 1,328 (61,746) Restricted net assets acquired (88,587) Net change in trading securities (177,699) (260,757) Changes in operating assets and liabilities: Accounts receivable (330,191) (334,926) Other current assets (19,716) 8,909 Accounts payable and accrued liabilities 45,898 124,204 Insurance reserves 38,112 (2,630) Other current liabilities 121,530 81,248 Other noncurrent liabilities (31,328) (44,568) Net cash provided by operating activities 349,781 513,913 Investing activities Purchase of property and equipment (net of disposals) (389,310) (299,428) Investments in joint ventures (26,000) (10,650) Net increase in investments designated as nontrading (532) (7,638) Cash acquired in Hamot affiliation 13,892 Net increase in other assets (6,659) 15,149 Net cash used in investing activities (422,501) (288,675) Financing activities Repayments of long-term obligations (163,850) (70,045) Borrowings of long-term obligations 215,787 80,803 Restricted contributions and investment income 12,231 16,042 Net cash provided by financing activities 64,168 26,800 Effect of foreign exchange on cash and cash equivalents 5,922 (7,058) Net change in cash and cash equivalents (2,630) 244,980 Cash and cash equivalents, beginning of period 386,718 158,067 Cash and cash equivalents, end of period $ 384,088 $ 403,047 See accompanying notes. UPMC Unaudited quarterly disclosure MARCH 2012 19

Notes to Unaudited Consolidated Financial Statements (In Thousands) 1. Basis of Presentation UPMC is a Pennsylvania nonprofit corporation and is exempt from federal income tax pursuant to Section 501(a) of the Internal Revenue Code (the Code ) as an organization described in Section 501(c)(3) of the Code. Headquartered in Pittsburgh, Pennsylvania, UPMC is one of the world s leading integrated delivery financing systems. UPMC comprises nonprofit and for-profit entities offering medical and health-care-related services, including health insurance products. Closely affiliated with the University of Pittsburgh ( University ) and with shared academic and research objectives, UPMC partners with the University s Schools of the Health Sciences to deliver outstanding patient care, train tomorrow s health care specialists and biomedical scientists, and conduct groundbreaking research on the causes and course of disease. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ( GAAP ) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal and recurring nature. The accompanying unaudited interim consolidated financial statements include the accounts of UPMC and its subsidiaries. Intercompany accounts and transactions are eliminated in consolidation. For further information, refer to the audited consolidated financial statements and notes thereto as of and for the year ended June 30, 2011. 2. New Accounting Pronouncements Effective July 1, 2011, UPMC early adopted the guidance provided by ASU 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment issued by the Financial Accounting Standards Board ( FASB ) which simplifies how an entity tests goodwill for impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Accordingly, an entity will no longer be required to calculate the fair value of a reporting unit in the step one test unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. Effective July 1, 2011, UPMC early adopted the guidance provided by Accounting Standards Codification ( ASC ) 954-310, Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities. The guidance requires certain health care entities to present the bad debt expense associated with patient service revenue as a deduction from patient service revenue (net of contractual allowances and discounts) rather than as operating expense. 3. reclassifications Certain reclassifications were made to the prior period accompanying financial statements to conform to the current period presentation. These reclassifications had no impact on the changes in net assets or excess of expenses over revenues previously reported. 4. Significant Transactions Under certain provisions of the American Recovery and Reinvestment Act of 2009, federal incentive payments are available to hospitals, physicians and certain other professionals ( providers ) when they adopt certified electronic health record ( EHR ) technology or become meaningful users of EHRs in ways that demonstrate improved quality, safety and effectiveness of care. Medicaid providers can receive their initial incentive payment by adopting, implementing or upgrading certified EHR technology, but must demonstrate meaningful use of EHRs in subsequent years in order to qualify for additional payments. Hospitals may be eligible for both Medicare and Medicaid EHR incentive payments; however, physicians and other professionals may be eligible for either Medicare or Medicaid incentive payments. Medicaid EHR incentive payments to providers are 100% federally UPMC Unaudited quarterly disclosure MARCH 2012 20

Notes to Unaudited Consolidated Financial Statements (In Thousands) funded and administered by the states; however, the states are not required to offer EHR incentive payments to Providers. The Centers for Medicare and Medicaid Services ( CMS ) established calendar year 2011 as the first year states could offer EHR incentive payments. UPMC is entitled to receive Medicare and Medicaid incentive payments for the adoption of certified EHR technology for its eligible hospitals and employed physicians as UPMC has satisfied the statutory and regulatory requirements. As a result, during the three and nine months ended March 31, 2012, UPMC recognized, as part of other revenue, approximately $11,117 and $57,268, respectively, of meaningful use revenue. Also, if UPMC satisfies specified meaningful use criteria in future periods, UPMC may become entitled to additional incentive payments. 5. Net Patient Service Revenue and Accounts Receivable The provision for bad debts is based upon management s assessment of historical and expected net collections considering historical business and economic conditions, trends in health care coverage, and other collection indicators. UPMC records a significant provision for bad debts in the period services are provided related to self-pay patients, including both uninsured patients and patients with deductible and copayment balances due for which third-party coverage exists for a portion of their balance. Periodically throughout the year, management assesses the adequacy of the allowance for uncollectible accounts based upon historical write-off experience. The results of this review are then used to make any modifications to the provision for bad debts to establish an appropriate allowance for uncollectible accounts. Accounts receivable are written off after collection efforts have been followed in accordance with internal policies. The allowance for bad debts as of March 31, 2012, increased 19% over June 30, 2011, to $142,844. This is the result of an increase in the total MA pending receivable balance, which represents uninsured or under-insured patients in which UPMC is trying to attain Medical Assistance. In addition, UPMC has seen a decrease in the acceptance of these patient balances from Medical Assistance since June 30, 2011 and accordingly has increased the allowance for uncollectible accounts. Net patient service revenue is reported at estimated net realizable amounts in the period in which services are provided. The majority of UPMC s services are rendered to patients under Medicare, Highmark Blue Cross Blue Shield ( Highmark ), and Medical Assistance programs. Reimbursement under these programs is based on a combination of prospectively determined rates and historical costs. Amounts received under Medicare and Medical Assistance programs are subject to review and final determination by program intermediaries or their agents. For the nine months ended March 31, 2012, the percentage of patient service revenue, net of contractual allowances, derived from third party payers and self-pay patients is as follows: Nine Months Ended March 31, 2012 Third party 94% Self-pay 6% 100% Laws and regulations governing the Medicare and Medical Assistance programs are extremely complex and subject to interpretation. Compliance with such laws and regulations are subject to government review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from the Medicare and Medical Assistance programs. As a result, there is at least a reasonable possibility that the recorded estimates may change. UPMC Unaudited quarterly disclosure MARCH 2012 21

Notes to Unaudited Consolidated Financial Statements (In Thousands) 6. Fair Value Measurements As of March 31, 2012, UPMC held certain assets that are required to be measured at fair value on a recurring basis. These include cash and cash equivalents and certain board-designated, restricted, trusteed, and other investments and derivative instruments. UPMC s alternative investments are measured using either the cost or equity method of accounting and are therefore excluded from the fair value hierarchy table presented herein. The valuation techniques used to measure fair value are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs are generally unsupported by market activity. The three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, includes: Level 1: Level 2: Level 3: Quoted prices for identical assets or liabilities in active markets. Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-driven valuations whose inputs are observable or whose significant value drivers are observable. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following tables represent UPMC s fair value hierarchy for its financial assets (cash and investments) and liabilities measured at fair value on a recurring basis of as March 31, 2012 and June 30, 2011. The interest rate swaps are valued using internal models, which are primarily based on market observable inputs including interest rate curves. When quoted market prices are unobservable for fixed income securities, quotes from independent pricing vendors based on recent trading activity and other relevant information including market interest rate curves, referenced credit spreads and estimated prepayment rates where applicable are used for valuation purposes. These investments are included in Level 2 and include corporate fixed income, government bonds, and mortgage and asset-backed securities. The net asset value has been derived using quoted market prices for the underlying securities. Fair Value Measurements As of March 31, 2012 Total Carrying Level 1 Level 2 Level 3 Amount Assets Cash and cash equivalents $ 384,088 $ $ $ 384,088 Fixed income 390,758 645,485 1,036,243 Domestic equity 303,088 303,088 International equity 468,039 109,979 578,018 Public real estate 39,293 39,293 Commodities 37,900 37,900 Long/short equity 61,981 61,981 Derivative instruments 12,730 12,730 Total assets $ 1,685,147 $ 768,194 $ $ 2,453,341 Liabilities Derivative instruments 22,122 22,122 Total liabilities $ $ 22,122 $ $ 22,122 UPMC Unaudited quarterly disclosure MARCH 2012 22

Notes to Unaudited Consolidated Financial Statements (In Thousands) Fair Value Measurements As of June 30, 2011 Total Carrying Level 1 Level 2 Level 3 Amount Assets Cash and cash equivalents $ 386,718 $ $ $ 386,718 Fixed income 361,037 619,446 980,483 Domestic equity 338,263 999 339,262 International equity 488,501 112,929 601,430 Public real estate 41,485 41,485 Commodities 40,107 40,107 Long/short equity 40,008 40,008 Derivative instruments 2,962 2,962 Total assets $ 1,696,119 $ 736,336 $ $ 2,432,455 Liabilities Derivative instruments 17,338 17,338 Total liabilities $ $ 17,338 $ $ 17,338 7. Financial Instruments Substantially all of UPMC s investments in debt and equity securities are classified as trading. This classification requires UPMC to recognize unrealized gains and losses on substantially all of its investments in debt and equity securities as investment revenue in the consolidated statements of operations and changes in net assets. UPMC s investments in debt and equity securities that are donor-restricted assets are designated as nontrading. Unrealized gains and losses on donor-restricted assets are recorded as changes in restricted net assets in the consolidated statements of operations and changes in net assets. Gains and losses on the sales of securities are determined by the average cost method. Realized gains and losses are included in investment revenue in the consolidated statements of operations and changes in net assets. Investments in equity securities with readily determinable fair values and all investments in debt securities are measured at fair value using quoted market prices or model-driven valuations. Cash and cash equivalents and investments recorded at fair value aggregate $2,440,611 and $2,429,493 at March 31, 2012 and June 30, 2011, respectively. Investments in limited partnerships that invest in nonmarketable securities (private equity) are primarily recorded at cost if the ownership percentage is less than 5% and are reported using the equity method of accounting if the ownership percentage is greater than 5%. These investments are periodically evaluated for impairment. As of March 31, 2012 and June 30, 2011, respectively, UPMC had investments recorded at cost of $935,126 and $850,551. These investments include private equity limited partnerships recorded at cost, as well as assets recorded as other assets in the consolidated balance sheets. The fair value of long-term debt at March 31, 2012 and June 30, 2011 is $3,437,667 and $3,243,383, respectively, based on market prices as estimated by financial institutions. UPMC Unaudited quarterly disclosure MARCH 2012 23

Notes to Unaudited Consolidated Financial Statements (In Thousands) 8. Derivative Instruments UPMC uses derivative financial instruments ( derivatives ) to manage exposures on its debt and investments. By using derivatives to manage these risks, UPMC exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivatives. When the fair value of a derivative is positive, the counterparty owes UPMC, which creates credit risk for UPMC. When the fair value of a derivative is negative, UPMC owes the counterparty and, therefore, it does not incur credit risk. UPMC minimizes the credit risk in derivatives by entering into transactions that require the counterparty to post collateral for the benefit of UPMC based on the credit rating of the counterparty and the fair value of the derivative. If UPMC has a derivative in a liability position, UPMC s credit is at risk and fair market values could be adjusted downward. Market risk is the 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. Management also mitigates risk through periodic reviews of their derivative positions in the context of their total blended cost of capital. UPMC maintains interest rate swap programs on certain of its debt in order to manage its interest rate risk. To meet this objective and to take advantage of low interest rates, UPMC entered into various interest rate swap agreements. The notional amount under each interest rate swap agreement is reduced over the term of the respective agreement to correspond with reductions in various outstanding bond series. The following table summarizes UPMC s debt related interest rate swap agreements: Notional Amount at June 30, Swap Maturity Date UPMC Pays UPMC Receives March 31, 2012 2011 Floating to fixed 12/1/2025 3.60% 68% of one-month LIBOR Basis 2/1/2021 SIFMA Index 1 67% of three-month LIBOR plus.2077% Basis 2/1/2037 SIFMA Index 1 67% of three-month LIBOR plus.3217% $ 134,735 $ 141,030 53,905 53,905 46,095 46,095 $ 234,735 $ 241,030 1 The SIFMA Index is a 7-day high-grade market index comprised of tax-exempt variable rate demand obligations. UPMC has also entered into equity-related derivative instruments to manage the asset allocation in its investment portfolio. Under the equity index swap agreements UPMC pays a fixed income-like return in order to receive an equity-like return. The notional amount of these swaps is based upon UPMC s target asset allocation. UPMC Unaudited quarterly disclosure MARCH 2012 24

Notes to Unaudited Consolidated Financial Statements (In Thousands) The following table summarizes UPMC s equity related swap agreements: Maturity Date UPMC Pays UPMC Receives Notional Amount at March 31, 2012 June 30, 2011 10/7/2011 Three-month LIBOR plus.0600% 6/25/2012 Three-month LIBOR minus.2500% 6/25/2012 Three-month LIBOR plus.1700% 7/10/2012 Three-month LIBOR minus.3000% 10/25/2012 Three-month LIBOR S&P 500 Total Return Index $ $ 75,000 MSCI EAFE 50,000 50,001 Daily Total Return 1 S&P 500 Total Return Index 25,001 25,000 MSCI EAFE 50,001 Daily Total Return 1 S&P 500 Total Return Index 100,000 $ 225,002 $ 150,001 1 The MSCI EAFE Index is a free-float adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US and Canada. The fair value of UPMC s derivatives at March 31, 2012 and June 30, 2011 are classified in the consolidated balance sheets as follows: Balance Sheet Classification As of March 31, 2012 As of June 30, 2011 Other assets $ 12,730 $ 2,962 Long-term obligations (22,122) (17,338) $ (9,392) $ (14,376) The accounting for changes in the fair value (i.e., unrealized gains or losses) of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. None of UPMC s derivatives outstanding as of March 31, 2012 and June 30, 2011 are designated as hedging instruments and as such, changes in fair value are recognized in investing and financing activities as investment (loss) revenue in the consolidated statements of operations and changes in net assets. The effects of changes in the fair value of the derivatives on the consolidated statements of operations and changes in net assets for the nine months ended March 31, 2012 and 2011 are as follows: Type of Derivative Classification of Unrealized (Loss) Gain in Excess of Revenues over Expenses Nine Months Ended March 31 Amount of Unrealized (Loss) Gain in Excess of Revenues over Expenses Three Months Ended March 31 2012 2011 2012 2011 Interest rate contracts Investment revenue $ (4,793) $ 5,964 $ 2,391 $ 2,602 Equity index contracts Investment revenue 9,777 11,764 4,261 (4,265) $ 4,984 $ 17,728 $ 6,652 $ (1,663) UPMC Unaudited quarterly disclosure MARCH 2012 25

Notes to Unaudited Consolidated Financial Statements (In Thousands) UPMC s derivatives contain provisions that require UPMC s debt to maintain an investment grade credit rating from certain major credit rating agencies. If UPMC s debt were to fall below investment grade, it would be in violation of these provisions, and the counterparties to the derivatives could request payment or demand immediate and ongoing full overnight collateralization on derivatives in net liability positions. The aggregate fair value of all derivatives with credit-risk-related contingent features that are in a liability position at March 31, 2012 and June 30, 2011 is $22,816 and $16,942, respectively, for which UPMC has posted no collateral. If the credit-risk-related contingent features underlying these agreements were triggered to the fullest extent on March 31, 2012, UPMC would be required to post $24,313 of collateral to its counterparties. Pursuant to master netting arrangements, UPMC offsets the fair value of amounts recognized for derivatives, including the right to reclaim or obligation to return cash collateral from/to counterparties. 9. Pension Plans UPMC and its subsidiaries maintain defined benefit pension plans (the Plans ), defined contribution plans and nonqualified pension plans that cover substantially all of UPMC s employees. Benefits under the Plans vary and are generally based upon the employee s earnings and years of participation. The components of net periodic pension cost for the Plans are as follows: Nine Months Ended Three Months Ended March 31 March 31 2012 2011 2012 2011 Service cost $ 48,633 $ 44,311 $ 16,211 $ 14,770 Interest cost 43,890 37,632 14,630 12,544 Expected return on plan assets (59,739) (47,097) (19,913) (15,699) Recognized net actuarial loss 19,527 24,829 6,509 8,276 Amortization of prior service cost (1,572) (3,714) (524) (1,238) Net periodic pension cost $ 50,739 $ 55,961 $ 16,913 $ 18,653 The actuarial assumptions used to determine net periodic pension cost for the three and nine months ended March 31, 2012 and 2011 for the Plans are as follows: Three and Nine Months Ended March 31 2012 2011 Discount rate 5.35% 5.19% Expected rate of compensation increase 3.41% 3.75% Expected long-term rate of return on plan assets 8.00% 8.00% During the nine months ended March, 2012 and 2011, UPMC made contributions to the Plans of $53,764 and $134,606, respectively. UPMC Unaudited quarterly disclosure MARCH 2012 26

Notes to Unaudited Consolidated Financial Statements (In Thousands) 10. Contingencies UPMC is involved in litigation and responding to requests for information from governmental agencies occurring in the normal course of business. Certain of these matters are in the preliminary stages and legal counsel is unable to estimate the potential effect, if any, upon operations or financial condition of UPMC. Management believes that these matters will be resolved without material adverse effect on UPMC s financial position or results of operations. However, the ultimate outcome and effect on UPMC s financial statements is unknown. During August 2007, UPMC received a request for information from the Civil Division of the Department of Justice ( DOJ ) relating to an investigation into the health insurance and hospital services market in and around Pittsburgh, including any potentially anticompetitive agreements. This request covered several prior years. No specific violations, claims or assessments were ever made. Management cooperated with the information requests. In July 2011, the DOJ contacted counsel for UPMC to advise that the DOJ had formally closed its investigation of UPMC. Accordingly, UPMC believes that the matter has been resolved with no material adverse effect on UPMC s financial position or results of operations. In April 2009, a lawsuit was filed by West Penn Allegheny Health System ( WPAHS ) against UPMC and Highmark in the United States District Court for the Western District of Pennsylvania. WPAHS alleged that UPMC and Highmark violated the Sherman Antitrust Act and that UPMC tortiously interfered with WPAHS existing and prospective business relations. WPAHS sought equitable relief and unspecified compensatory, treble and punitive damages. In October 2009, WPAHS lawsuit was dismissed by the District Court. In November 2009, WPAHS appealed the District Court s dismissal. In November 2010, the Court of Appeals reversed the District s Court s dismissal and remanded the case to the District Court for further proceedings. In December 2010, UPMC and Highmark sought rehearing before the Third Circuit en banc, which was denied. In May 2011, UPMC and Highmark filed petitions for certiorari with the United States Supreme Court, asking the Court to uphold the District Court s dismissal and reverse the Court of Appeals. The District Court stayed further proceedings pending resolution of the petitions for certiorari. In October 2011, the United States Supreme Court denied those petitions for certiorari. On October 31, 2011, WPAHS voluntarily dismissed all of its claims against Highmark and moved for leave to amend its claims against UPMC. In particular, WPAHS sought leave to drop its claims that a UPMC-Highmark conspiracy caused its decline and to focus all of its remaining claims on a theory that UPMC s allegedly predatory tactics were solely responsible for its decline. Although UPMC opposed that WPAHS motion for leave, the Court granted WPAHS motion on April 23, 2012. UPMC s response to the Second Amended Complaint will most likely to be due on May 23, 2012. UPMC continues to believe that WPAHS allegations have no merit and expects that the matter will be resolved without any material adverse effect on UPMC s financial position or results of operations. However, the ultimate outcome and effect on UPMC s financial statements is unknown. In December 2010, a proposed class action was filed in United States District Court for the Western District of Pennsylvania by Royal Mile Company, Inc., and certain related entities and persons against UPMC and Highmark. In that action the plaintiffs alleged that UPMC and Highmark had conspired to allow Highmark to charge excessive, above-market premiums for health insurance. The complaint closely tracks the allegations made by WPAHS in its lawsuit (described above). The action has been designated as related to the WPAHS lawsuit and has been assigned to the same District Court Judge. Although the case had been stayed pending the disposition of petitions for certiorari being filed in the WPAHS lawsuit, the District Court Judge lifted the stay following the denial of the petitions for certiorari as detailed above. UPMC s response to the plaintiffs Complaint is due on May 23, 2012. UPMC continues to believe that the plaintiffs allegations have no merit and expects that the matter will be resolved without any material adverse effect on UPMC s financial position or results of operations. However, the ultimate outcome and effect on UPMC s financial statements is unknown. In March and April 2009, several related class action lawsuits were filed against UPMC and certain of its affiliates in the Federal District Court for the Western District of Pennsylvania ( District Court ) and the Court of Common Pleas for Allegheny County, Pennsylvania. The Federal District Court cases allege violations of The Fair Labor Standards Act ( FLSA ) on the basis that UPMC Unaudited quarterly disclosure MARCH 2012 27

Notes to Unaudited Consolidated Financial Statements (In Thousands) certain employees were not paid for all hours that they worked and were not properly paid overtime and, further, that these actions also violated the Employee Retirement Income Security Act ( ERISA ) and the Racketeer Influenced and Corrupt Organizations Act ( RICO ). The state court actions allege violations of the Pennsylvania Minimum Wage Act, The Wage Payment and Collection Act and common law on the same factual basis noted above. The lawsuits seek recovery of alleged unpaid wages and benefits and other monetary damages and costs. In December 2011, the Court in one of the federal class action lawsuits entered an Order granting UPMC s motion to decertify the collective action that been conditionally at an earlier date. The Court s Order dismisses the claims of all opt-in plaintiffs without prejudice. UPMC is currently evaluating the effect of the lawsuits on UPMC s financial position and results of operations. However, the ultimate outcome and effect on UPMC s financial statements is unknown. In November 2010, the DOJ opened an investigation into whether or not certain hospitals nationwide submitted claims to Medicare for payment related to the implantation of implantable cardioverter defibrillators ( ICDs ) that were excluded from Medicare coverage. UPMC is in the process of reviewing these claims related to this investigation. The outcome and ultimate effect on UPMC s financial statements cannot be determined at this time, however, it is not expected to have a material impact on operating results. In July 2011, a lawsuit was filed by Highmark, Inc. and Keystone Health Plan West, Inc. ( Highmark ) against UPMC, UPMC Presbyterian Shadyside, Magee-Womens Hospital of UPMC, UPMC Northwest, UPMC St. Margaret, UPMC Passavant, UPMC Horizon, UPMC Bedford and UPMC McKeesport ( UPMC ) in the United States District Court for the Western District of Pennsylvania. Highmark alleged that UPMC violated the Lanham Act, breached certain contracts and tortiously interfered with Highmark s existing and prospective business relations by making certain statements regarding the status of the Highmark/ UPMC relationship. Highmark sought equitable relief including a preliminary injunction and unspecified compensatory and punitive damages. In August 2011, UPMC moved to dismiss all of Highmark s claims and opposed Highmark s motion for a preliminary injunction. In October 2011, the Magistrate Judge issued a Report and Recommendation recommending that Highmark s motion for preliminary injunction be denied. Highmark filed objections to that Report and Recommendation on October 31, 2011. UPMC responded to Highmark s objections on or about November 17, 2011. On January 25, 2012, the Court denied Highmark s motion for preliminary injunction and UPMC s motion to dismiss without prejudice. On February 1, 2012, Highmark filed a renewed motion for preliminary injunction. UPMC opposed that motion on February 23, 2012 and filed a renewed motion to dismiss. Highmark opposed UPMC s motion to dismiss on March 18, 2012. Oral argument on all of the motions is tentatively scheduled for June 2012. UPMC believes that Highmark s allegations have no merit and expects that the matter will be resolved without any material adverse effect on UPMC s financial position or results of operations. However, the ultimate outcome and effect on UPMC s financial statements is unknown. In January 2012, UPMC Hamot was served with a Complaint in Pennsylvania federal court naming it as a defendant in a qui tam action, along with a private physician practice. UPMC Hamot moved to dismiss the Complaint on April 5, 2012. The outcome and ultimate effect on UPMC s financial statements cannot be determined at this time, however, it is not expected to have a material impact on operating results. 11. Subsequent Events Management evaluated subsequent events occurring subsequent to March 31, 2012 through May 10, 2012, the date the unaudited interim consolidated financial statements of UPMC were issued. During this period, there were no subsequent events requiring recognition in the consolidated financial statements that have not been recorded. In May 2012, Highmark and UPMC jointly announced an agreement in principle that provides for an orderly wind-down of the relationship between UPMC and Highmark by December 31, 2014. The parties agreed to complete formal agreements implementing the term sheet by June 30, 2012. The ultimate impact on UPMC s operating results and financial condition cannot be determined at this time. UPMC Unaudited quarterly disclosure MARCH 2012 28