Children s Health Care d/b/a Children s Hospitals and Clinics of Minnesota May 27, 2016
CHILDREN S HOSPITALS AND CLINICS OF MINNESOTA Admits by Pediatric Service Line 2015 Admits % of Total Anesthesiology 10 0.1% Cardiology 347 2.4% Critical Care 1,022 7.0% Emergency Medicine 9 0.1% Endocrinology 1 0.0% ENT/Otolaryngology 160 1.1% Gastroenterology 51 0.3% General Medicine 62 0.4% General Surgery 598 4.1% Hematology/Oncology 1,005 6.8% Infectious Disease 44 0.3% Neonatology 2,681 18.2% Neurology Neurosurgery 394 191 2.7% 1.3% Other Specialties 169 1.1% Pediatric 7,590 51.7% Subspecialty Surgery 143 1.0% Urology 211 1.4% Totals 14,688 100.0% Source: Children s internal records Table 2 Net Change in Admitting Physicians 2011 2012 2013 2014 2015 Beginning 1,198 1,145 1,178 1,136 1,051 of Year Net Change (53) 33 (42) (85) 64 End of Year 1,145 1,178 1,136 1,051 1,115 Source: Children s internal records
Table 3 Employee Collective Bargaining Agreements Occupation Number of Employees at 12/31/15 Union or Association Contract Expiration Dates at 12/31/15 Registered Nurses 1,535 Minnesota Nurses Assoc. (MNA) Service Workers 469 Local No. 113 - Service Employees International Union (SEIU) 05/31/2019 02/28/2018 Other 12 Local No. 70 (L70) 04/30/2017 Total Contract Employees 2,016 Source: Children s internal records.
Table 4 Acute Pediatric Service Line: Inpatient Discharges Volume and Market Share (excludes chemical dependency, psychiatry, neonates, and newborns) By Metropolitan * Hospital System - All Patient Origins (Ages 0-14) Hospital 2011 2012 2013 2014 2015 Children s System 9,131 55.8% 8,946 54.4% 9,073 55.5% 10,132 59.3% 9,881 60.7% Fairview System 2,672 16.3% 3,072 18.7% 3,148 19.2% 2,965 17.4% 2,803 17.2% Gillette 1,701 10.4% 1,784 10.9% 1,713 10.5% 1,787 10.5% 1,743 10.7% Hennepin County 834 5.1% 801 4.9% 788 4.8% 818 4.8% 679 4.2% Allina System 842 5.1% 747 4.5% 759 4.6% 607 3.6% 483 3.0% North Memorial 344 2.1% 357 2.2% 273 1.7% 165 1.0% 177 1.1% Ridgeview 152 0.9% 143 0.9% 96 0.6% 71 0.4% 59 0.4% Methodist 313 1.9% 243 1.5% 174 1.1% 182 1.1% 165 1.0% Regions 143 0.9% 109 0.7% 130 0.8% 119 0.7% 79 0.5% HealthEast System 118 0.7% 115 0.7% 104 0.6% 67 0.4% 46 0.3% Lakeview 21 0.1% 15 0.1% 10 0.1% 14 0.1% 11 0.1% Maple Grove 87 0.5% 93 0.6% 85 0.5% 142 0.8% 152 0.9% Regina 3 0.0% 7 0.0% 1 0.0% 3 0.0% 2 0.0% Total 16,361 100% 16,432 100% 16,354 100% 17,072 100% 16,280 100.0% *Metropolitan Hospital Systems are defined by the Minnesota Hospital Association (MHA) as Region 4 (7-County Metro) Reporting Hospitals, Region 4 Counties include: Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington Counties Source: MHA Region 4 Hospitals (7-County Metro Hospitals) Standard Market Share Report, All Patient Origins, Ages 0-14.
Table 5 Neonatology Service Line: Number of Patient Days and Market Share By Metropolitan * Hospital System - All Patient Origins (Ages 0-14) Hospital 2011 2012 2013 2014 2015 Children s System 29,077 31.1% 34,178 34.7% 39,259 37.1% 41,837 38.7% 40,977 37.0% Allina System 18,633 19.9% 13,375 13.6% 10,952 10.4% 11,988 11.1% 10,769 9.7% Fairview System 18,533 19.8% 22,139 22.5% 25,990 24.6% 23,542 21.8% 24,820 22.4% Hennepin County 6,099 6.5% 7,877 8.0% 7,990 7.6% 6,873 6.4% 7,567 6.8% North Memorial 6,146 6.6% 5,158 5.2% 4,215 4.0% 4,255 3.9% 4,484 4.1% Methodist 3,760 4.0% 3,856 3.9% 3,556 3.4% 3,658 3.4% 4,560 4.1% HealthEast System 4,210 4.5% 3,739 3.8% 4,428 4.2% 5,305 4.9% 5,637 5.1% Regions 2,116 2.3% 2,039 2.1% 2,122 2.0% 2,535 2.3% 2,488 2.2% Ridgeview 2,086 2.2% 1,990 2.0% 2,043 1.9% 1,878 1.7% 1,778 1.6% Maple Grove 2,349 2.5% 3,776 3.8% 4,753 4.5% 5,854 5.4% 7,186 6.5% Lakeview 366 0.4% 184 0.2% 263 0.3% 283 0.3% 312 0.3% Regina 97 0.1% 129 0.1% 119 0.1% 115 0.1% 98 0.1% Gillette 9 0.0% 6 0.0% 5 0.0% 5 0.0% 3 0.0% Total 93,481 100.0% 98,446 100.0% 105,694 100.0% 108,128 100.0% 110,679 100.0% *Metropolitan Hospital Systems are defined by the Minnesota Hospital Association (MHA) as Region 4 (7-County Metro) Reporting Hospitals, Region 4 Counties include: Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington Counties Note: The neonatology service line is defined by MHA as DRG s: 385-390, which includes neonates hospitalized in all levels of NICU s (excludes normal newborns). Note: Children s acquired Allina s Special Care Nursery in Q2 2012 Source: MHA Region 4 Hospitals (7-County Metro Hospitals) Standard Market Share Report, All Patient Origins
Table 6 December 31 st 2015 Number of Staffed and Licensed Beds Licensed Minneapolis St. Paul Total Regular Beds 153 126 279 Bassinets 132 62 194 Total 285 188 473 Staffed Beds 271 157 428 Source: Children s internal records.
Table 7 Admissions and Patient Days (All admissions including acute pediatrics, chemical dependency, psychiatry, newborns and neonates) For the Year Ended December 31, Admissions 2010 2011 2012 2013 2014 2015 Perinatal Services 1,874 2,175 2,612 2,836 2,891 3,276 Intensive Care Services 1,746 2,190 2,237 2,156 2,600 2,032 Medical & Surgical Services 8,831 7,844 7,736 8,032 9,010 9,380 Total 12,451 12,209 12,585 13,024 14,501 14,688 Patient Days 2010 2011 2012 2013 2014 2015 Perinatal Services 35,369 35,333 41,590 47,507 50,347 46,715 Intensive Care Services 10,955 14,068 14,125 15,875 17,272 17,713 Medical & Surgical Services 33,445 30,334 31,310 32,477 34,758 36,385 Total 79,769 79,735 87,025 95,859 102,377 100,813 Average Daily Census 218.5 218.5 237.8 262.6 280.5 276.2 Source: Children s internal records. Table 7 Discharges and Patient Days (All discharges including acute pediatrics, chemical dependency, psychiatry, newborns and neonates) For the Year Ended December 31, Discharges 2010 2011 2012 2013 2014 2015 Perinatal Services 1,820 2,195 2,641 2,855 2,847 3,292 Intensive Care Services 1,135 1,456 1,587 1,538 1,995 1,234 Medical & Surgical Services 9,536 8,521 8,355 8,652 9,602 10,162 Total 12,491 12,172 12,583 13,045 14,444 14,688 Patient Days 2010 2011 2012 2013 2014 2015 Perinatal Services 35,369 35,333 41,590 47,507 50,347 46,715 Intensive Care Services 10,955 14,068 14,125 15,875 17,272 17,713 Medical & Surgical Services 33,445 30,334 31,310 32,477 34,758 36,385 Total 79,769 79,735 87,025 95,859 102,377 100,813 Average Daily Census 218.5 218.5 237.8 262.6 280.5 276.2 Source: Children s internal records.
Table 8 Volume of Certain Outpatient Services For the Year Ended December 31, 2010 2011 2012 2013 2014 2015 Outpatient Surgical 16,577 16,807 15,940 15,552 15,423 17,048 Cases Emergency 80,094 88,674 90,673 88,840 95,675 96,206 Department Visits Clinic Visits 130,852 150,306 263,527 352,363 367,806 362,785 Total 227,523 255,787 370,140 456,755 478,904 476,039 Source: Children s internal records. Table 9 Percent of Revenue by Payer Year Ended December 31, 2010 2011 2012 2013 2014 2015 Medicaid 15.2% 16.4% 17.4% 15.3% 16.3% 16.6% Medicaid Managed Care 26.1% 25.7% 24.1% 26.7% 26.3% 26.4% HMO/PPO 55.4% 54.1% 54.4% 54.6% 53.9% 53.8% Commercial Insurance and Other 1.2% 1.2% 1.2% 1.8% 3.0% 1.5% Payers Self-Pay 2.1% 2.6% 2.9% 1.6% 0.5% 1.7% Total 100% 100% 100% 100% 100% 100% Source: Children s internal records.
Capitalization Table (Dollars in thousands) December 31, 2015 December 31, 2014 Series 1995B Bonds $14,000 $15,200 Series 2004A Bonds 19,325 20,050 Series 2004A-1 Bonds 18,300 19,025 Series 2004B Bonds 27,500 29,950 Series 2007A Bonds 93,250 95,300 Series 2010A Bonds 30,710 44,020 Total Long Term Debt $203,085 $223,545 Unrestricted net assets 691,724 641,479 Total long-term debt and unrestricted net $894,809 $865,024 assets Ratio of long-term debt to total capitalization 22.7% 25.8% CHILDRENS HOSPITALS AND CLINICS OF MINNESOTA Debt Service Coverage Table Fiscal Year Ended December 31, 2015 2014 (Dollars in thousands) (Deficit) Excess of revenue over expenses $47,347 $47,771 Net change in unrealized losses (gains) on 31,419 (3,981) investments Change in unrealized interest rate swap (682) 10,626 valuation Financing costs* 4,641 5,343 Depreciation and amortization 40,564 39,415 Revenue available to pay debt service $123,289 $99,174 Actual long-term debt service $12,820 $13,253 Historical long-term debt service coverage ratio 9.6x 7.5x Maximum annual debt service* $13,639 $14,325 Historical coverage of maximum annual debt service* 9.0x 6.9x *Excludes cost of swaps
Fixed Payor Interest Rate Swaps December 31, 2015 (Dollars in thousands) Swap Fair Value Notional Amount Outstanding Rate Paid Rate Received Counter Party 2004A $(5,059) $20,050 4.127% 70% LIBOR Piper Jaffray Financial Products, Inc. 2004B (4,727) 29,950 4.266 70% LIBOR Piper Jaffray Financial Products, Inc. 2007A1 (11,513) 47,650 3.518 67% LIBOR Piper Jaffray Financial Products, Inc. 2007A2 (11,516) 47,650 3.518 67% LIBOR Piper Jaffray Financial Products, Inc. Totals $(32,815) $145,300
Consolidated Summary of Revenues and Expenses and Other Changes in Unrestricted Net Assets ($000) December December 2015 2014 Revenue Net Patient Service Revenue $785,795 $755,743 Other 33,110 29,537 Foundation Transfers 8,275 9,186 Total Revenue 827,180 794,466 Expenses Salaries, Benefits and Other 727,638 710,714 Depreciation and Amortization 40,674 39,518 Financing costs 9,992 11,001 Total Expenses 778,304 761,233 Operating Income 48,876 33,233 Nonoperating Gains Investment Income, Net 17,851 18,937 Income on Investments Accounted for Under Equity Method 4,407 2,521 Net Change in Unrealized Losses on Investments (31,542) 3,730 Change in Interest Rate Swap Valuation 682 (10,626) Other 0 0 Total Nonoperating Gains, Net (8,602) 14,562 Excess of Revenue Over Expenses 40,274 47,795 Other Changes Net Assets Released from Restrictions Capital Acquisitions 5,441 6,878 Application of FAS 158 on the RSVP Plan 4,530 (8,354) Increase in Unrestricted Net Assets $50,245 $46,319 * Includes Children s Foundation and CHIN, which are not members of the Obligated Group. Children s Foundation and CHIN combined accounted for $24 and $(111) in the change in unrestricted net assets for the fiscal years ended December 31, 2014 and 2015, respectively.
Consolidated* Summary Statements of Financial Position ($000) Assets Cash, Cash Equivalents and Short Term Investments December 31, 2015 December 31, 2014 $21,897 $70,033 Other Current Assets 149,190 131,610 Donor Restricted Cash and 49,164 47,992 Investments Unrestricted Investments 496,763 455,124 Other Assets 47,783 49,682 Land, Building & Equipment Net 387,606 390,043 Total Assets $1,152,403 $1,144,484 Liabilities Current Liabilities $126,451 $147,917 Fair Value of Interest Rate Swaps 32,815 33,497 Long Term Debt Less Current 204,137 224,939 Portion Other Long Term Liabilities 25,119 23,132 Total Liabilities 388,522 429,485 Net Assets Unrestricted 691,724 641,479 Temporarily Restricted 42,295 43,372 Permanently Restricted 29,862 30,148 Total Net Assets 763,881 714,999 Total Liabilities and Net Assets $1,152,403 $1,144,484 * Includes Children s Foundation and CHIN, which are not members of the Obligated Group. Children s Foundation and CHIN combined had total net assets, which include both restricted and unrestricted net assets, of $83,982, and $79,949 as of December 31, 2014 and 2015, respectively. The combined unrestricted net assets of Children s Foundation and CHIN were $1,865 and $1,754 as of December 31, 2014 and 2015, respectively.