CONSOLIDATED FINANCIAL STATEMENTS

AND SUPPLEMENTARY INFORMATION

The St. Luke’s-Roosevelt Hospital Center and Affiliates

Years Ended December 31, 2019 and 2018
With Report of Independent Auditors

Ernst & Young LLP

 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Consolidated Financial Statements

and Supplementary Information

Years Ended December 31, 2019 and 2018

Contents

Report of Independent Auditors.......................................................................................................1

Consolidated Financial Statements

Consolidated Statements of Financial Position................................................................................3

Consolidated Statements of Operations ...........................................................................................4
Consolidated Statements of Changes in Net Assets (Deficit) ..........................................................5
Consolidated Statements of Cash Flows ..........................................................................................6
Notes to Consolidated Financial Statements....................................................................................7

Supplementary Information

Consolidating Statement of Financial Position ..............................................................................56

Consolidating Statement of Operations .........................................................................................57
Consolidating Statement of Cash Flows ........................................................................................58
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Report of Independent Auditors

The Board of Trustees

Mount Sinai Health System, Inc.

We have audited the accompanying consolidated financial statements of The St. Luke’s-Roosevelt
Hospital Center and Affiliates, which comprise the consolidated statements of financial position
as of December 31, 2019 and 2018, and the related consolidated statements of operations, changes
in net assets (deficit), and cash flows for the years then ended, and the related notes to the
consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements
in conformity with U.S. generally accepted accounting principles; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free of material misstatement, whether due to fraud or
error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the
United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the 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 financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.

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A member firm of Ernst & Young Global Limited
 Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects,
the consolidated financial position of The St. Luke’s-Roosevelt Hospital Center and Affiliates at
December 31, 2019 and 2018, and the consolidated results of their operations, changes in their net
assets (deficit) and their cash flows for the years then ended in conformity with U.S. generally
accepted accounting principles.

Adoption of ASU No. 2016-02, Leases

As discussed in Note 1 to the consolidated financial statements, The St. Luke’s-Roosevelt Hospital
Center and Affiliates changed their method of accounting for leases as a result of the adoption of
the amendments to the FASB Accounting Standards Codification resulting from Accounting
Standards Update No. 2016-02, Leases, effective January 1, 2019. Our opinion is not modified
with respect to this matter.

Supplementary Information

Our audits were conducted for the purpose of forming an opinion on the consolidated financial
statements as a whole. The accompanying consolidating statement of financial position as of
December 31, 2019, and the consolidating statements of operations and cash flows for the year
then ended are presented for purposes of additional analysis and are 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 audits 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. In our opinion, the information is fairly
stated in all material respects, in relation to the consolidated financial statements as a whole.

March 31, 2020

2
A member firm of Ernst & Young Global Limited
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Consolidated Statements of Financial Position

December 31
2019 2018
(In Thousands)
Assets
Current assets:
Cash and cash equivalents $ 114,486 $ 51,749
Patient accounts receivable, net 136,383 123,820
Professional liabilities insurance recoveries receivable, current portion 18,084 14,818
Assets limited as to use, current portion 67,808 75,648
Inventories 15,395 16,490
Other current assets 3,324 2,155
Total current assets 355,480 284,680
Pooled investments 48,363 42,976
Investments held by captive insurance companies 70,131 70,535
Assets limited as to use, less current portion 44,128 43,878
Beneficial interest in self-insurance trust 40,960 19,940
Other assets 31,719 30,946
Right-of-use assets 27,090 –
Professional liabilities insurance recoveries receivable, less current portion 82,385 67,504
Property, plant, and equipment, net 696,538 666,266
Total assets $ 1,396,794 $ 1,226,725

Liabilities and net assets (deficit)

Current liabilities:
Accounts payable and accrued expenses $ 105,355 $ 113,823
Accrued salaries and related liabilities 79,845 68,770
Accrued interest payable 690 741
Accrued construction and capital asset liabilities – 473
Long-term debt, current portion 18,800 17,721
Operating lease liabilities, current portion 4,426 –
Professional liabilities, current portion 18,084 14,818
Due to related organizations, current portion 77,152 100,249
Other current liabilities 34,145 45,390
Total current liabilities 338,497 361,985

Due to related organization, less current portion 277,027 128,518

Long-term debt, less current portion 292,084 310,800
Operating lease liabilities, less current portion 23,131 –
Accrued pension and other postretirement benefits, less current portion 50,290 57,640
Professional liabilities, less current portion 82,385 67,504
Estimated self-insurance liability 40,960 19,940
Other liabilities 307,942 281,817
Total liabilities 1,412,316 1,228,204
Commitments and contingencies
Net assets (deficit):
Net assets without donor restrictions (128,189) (102,992)
Net assets with donor restrictions 112,667 101,513
Total net assets (deficit) (15,522) (1,479)
Total liabilities and net assets (deficit) $ 1,396,794 $ 1,226,725

See accompanying notes.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Consolidated Statements of Operations

Year Ended December 31

2019 2018
(In Thousands)
Operating revenue
Net patient service revenue $ 1,178,745 $ 1,060,187
Investment income and net realized gains and losses on sales of securities 5,593 3,280
Contributions 1,236 13,092
Other revenue 132,927 140,415
Net assets released from restrictions 3,371 4,635
Total operating revenue before other items 1,321,872 1,221,609

Operating expenses
Salaries and wages 536,774 519,530
Employee benefits 170,464 166,720
Supplies and other 545,593 501,216
Depreciation and amortization 80,121 68,426
Interest and amortization 17,436 14,863
Total operating expenses before other items 1,350,388 1,270,755

Deficiency of operating revenue over operating expenses before other items (28,516) (49,146)

Other items
Change in net unrealized gains and losses on investments and assets limited as
to use and change in value of alternative investments 4,327 (302)
Gain on sale of clinical outreach laboratory business – 1,789
Net periodic pension and postretirement benefit costs (non-service related) (1,850) (2,202)
Deficiency of revenue over expenses (26,039) (49,861)

Other changes in net assets without donor restrictions

Transfer from The Mount Sinai Hospital – 25,000
Change in pension and other postretirement benefits liabilities to be recognized
in future periods 842 1,377
Total other changes in net assets without donor restrictions 842 26,377
Net decrease in net assets without donor restrictions $ (25,197) $ (23,484)

See accompanying notes.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Consolidated Statements of Changes in Net Assets (Deficit)

Net Assets with Donor Restrictions

Net Assets Purpose and Total Net Assets
Without Donor Time Permanent with Donor Total Net
Restrictions Restrictions Endowment Restrictions Assets
(In Thousands)

Net assets (deficit) at January 1, 2018 $ (79,508) $ 46,401 $ 59,743 $ 106,144 $ 26,636
Net decrease in net assets without donor
restrictions (23,484) – – – (23,484)
Donor restricted contributions, net – 4 – 4 4
Net assets released from restriction – (4,635) – (4,635) (4,635)
Total change in net assets (deficit) (23,484) (4,631) – (4,631) (28,115)
Net assets (deficit) at December 31, 2018 (102,992) 41,770 59,743 101,513 (1,479)
Net decrease in net assets without donor
restrictions (25,197) – – – (25,197)
Donor restricted contributions, net – 14,524 1 14,525 14,525
Net assets released from restriction – (3,371) – (3,371) (3,371)
Total change in net assets (deficit) (25,197) 11,153 1 11,154 (14,043)
Net assets (deficit) at December 31, 2019 $ (128,189) $ 52,923 $ 59,744 $ 112,667 $ (15,522)

See accompanying notes.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Consolidated Statements of Cash Flows

Year Ended December 31

2019 2018
(In Thousands)
Operating activities
Change in net assets $ (14,043) $ (28,115)
Adjustments to reconcile change in net assets to net cash provided by
operating activities:
Depreciation 80,121 68,426
Amortization of deferred financing fees 445 492
Transfer from The Mount Sinai Hospital – (25,000)
Change in pension and other postretirement benefits liabilities to be recognized in future
periods (842) (1,377)
Change in net unrealized gains and losses and realized gains and losses from investments
and assets limited as to use (3,645) 2,464
Net donor restricted contributions (14,525) (4)
Gain on sale of clinical outreach laboratory business – (1,789)
(Decrease) increase in cash resulting from a change in:
Patient accounts receivable, net (12,563) (16,184)
Accounts payable and accrued expenses (8,468) (4,809)
Accrued salaries and related liabilities and other current liabilities 4,256 16,396
Change in right-of-use assets 22 –
Net effect of increases and decreases in other operating assets and liabilities (10,118) (7,805)
Net cash provided by operating activities 20,640 2,695

Investing activities
Acquisitions of property, plant, and equipment, net (110,393) (188,797)
Proceeds from sale of clinical outreach laboratory business – 1,789
Decrease in assets limited as to use 11,396 14,623
Funding of self-insurance trust (11,383) (6,011)
Decrease in investments, net 20,392 5,424
Net cash used in investing activities (89,988) (172,972)

Financing activities
Principal payments on long-term debt (18,082) (124,392)
Proceeds from issuance of long-term debt – 104,899
Transfer from The Mount Sinai Hospital – 25,000
Proceeds from related parties, net 125,412 154,873
Net donor restricted contributions 14,525 4
Net cash provided by financing activities 121,855 160,384

Net increase (decrease) in cash, cash equivalents and restricted cash 52,507 (9,893)
Cash, cash equivalents and restricted cash at beginning of year 78,204 88,097
Cash, cash equivalents and restricted cash at end of year $ 130,711 $ 78,204
Reconciliation of cash, cash equivalents and restricted cash at end of year to the
consolidated statements of financial position
Cash and cash equivalents $ 114,486 $ 51,749
Assets limited as to use: cash and cash equivalents 16,225 26,455
Total cash, cash equivalents and restricted cash $ 130,711 $ 78,204

Supplemental disclosure of cash flow information

Assets acquired under finance lease obligations $ 106 $ –

See accompanying notes.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements

December 31, 2019

1. Organization and Summary of Significant Accounting Policies

Organization

The St. Luke’s-Roosevelt Hospital Center, d/b/a Mount Sinai West and Mount Sinai Morningside
(collectively, SLR), is a not-for-profit tertiary care teaching hospital that provides inpatient,
ambulatory, clinical, referred outpatient and emergency care to the community. SLR operates at
two main locations in New York City: Mount Sinai Morningside, located at 114th Street and
Amsterdam Avenue; and Mount Sinai West at 1000 10th Avenue. SLR is the sole member of two
other not-for-profit corporations: St. Luke’s-Roosevelt Hospital Center Foundation and St. Luke’s-
Roosevelt Institute for Health Sciences, a research organization. SLR is the sole member and
shareholder of two for-profit corporations: 425 West 59th Street Condominium, LLC (the 59th
Street Condominium), which owns and operates medical office space for hospital physicians; and
Manhattan Management Services, Inc., a physician practice management organization.
Augustus & James Corporation (A&J), a subsidiary of SLR, owns and operates two residential
buildings, is included in the statements.

Prior to September 30, 2013, Continuum Health Partners, Inc. (CHP) was the sole corporate
member of SLR, Beth Israel Medical Center (BIMC), and The New York Eye and Ear Infirmary
(NYEEI).

On September 30, 2013, BIMC, SLR, and NYEEI (together, the CHP Entities) consummated a
transaction pursuant to which the CHP Entities and The Mount Sinai Hospital (MSH), the Icahn
School of Medicine at Mount Sinai (ISMMS), and The Mount Sinai Medical Center, Inc. (MSMC)
came together to create the Mount Sinai Health System, an integrated health care system and
academic medical center (the Transaction). Pursuant to the Transaction, two new not-for-profit
entities were formed: Mount Sinai Health System, Inc. (MSHS) and Mount Sinai Hospitals Group,
Inc. (MSHG). MSHG was formed to be the sole member of MSH, BIMC, SLR and NYEEI. MSHS
was formed to be the sole member of MSHG, ISMMS and MSMC.

In February 2018, MSHG and South Nassau Communities Hospital (SNCH) executed a definitive
agreement pursuant to which MSHG would become the sole corporate member of SNCH and its
“active parent” under New York Law. The transaction became effective in October 2018. Pursuant
to the agreement, MSHG agreed to contribute $120.0 million over a five-year period to be used in
support of certain capital projects. For each of the years ended December 31, 2019 and 2018, MSH
contributed $20.0 million to SNCH, respectively. Effective September 2019, SNCH is doing
business as (d/b/a) Mount Sinai South Nassau (MSSN).

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

Principles of Consolidation

The accompanying consolidated financial statements have been prepared on the accrual basis of
accounting and include the accounts of SLR and its owned or controlled affiliates. All significant
intercompany accounts and transactions have been eliminated in consolidation.

Transactions among SLR and related organizations relate principally to the sharing of certain
services, facilities, equipment, and personnel and are accounted for on the basis of allocated cost,
as agreed among the parties. Amounts due from or to related organizations for these activities do
not bear interest, except for intercompany loans. The nature of SLR’s transactions with various
related organizations is described more fully in Note 11.

Cash and Cash Equivalents

SLR considers highly liquid financial instruments purchased with a maturity of three months or
less to be cash equivalents. Substantially all of SLR’s cash and cash equivalents are deposited with
two financial institutions at December 31, 2019 and 2018. Included in cash and cash equivalents
are amounts in excess of Federal depository insurance limits. Management does not believe the
credit risk related to those deposits to be significant. SLR does not hold any money market funds
with significant liquidity restrictions that would require the funds to be excluded from cash
equivalents.

Amounts within restricted cash include cash and cash equivalents held within assets limited as to
use and represent funds set aside based on management’s policy or contractual arrangements.

Patient Accounts Receivable

Patient accounts receivable and net patient service revenue result from the health care services
provided by SLR and is reported at the amount that reflects the consideration to which SLR expects
to be entitled in exchange for providing patient care. These amounts are due from patients, third-
party payors (including health insurers and government programs), and others and includes
variable consideration in determination of transaction price.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

Investments

A substantial portion of SLR’s investments are pooled for management purposes with those held
by related entities. MSMC has custody of investments held in the investment pool and records all
of the pooled investments in its financial statements, with a corresponding liability due to each of
the participants in the investment pool for their respective share of the pooled investments; the
pool participants report their respective share of the investment pool as “pooled investments.”
Pooled investments represent assets with donor restrictions that are perpetual in nature and
represents SLR’s endowment assets. Investment earnings on the pooled investments are recorded
by the pool participants, based on their pro rata share of the pool’s investment returns.

Investments, both pooled and non-pooled, consist of cash and cash equivalents, U.S. government
and corporate bonds, money market funds, equity securities, and interests in alternative
investments. Debt securities and equity securities with readily determinable values are carried at
fair value based on independent published sources (quoted market prices).

Alternative investments (nontraditional, not readily marketable securities), held in the investment
pool, may consist of equity, debt, and derivatives both within and outside the U.S. in multi-strategy
hedge funds, event-driven strategies, global investment mandates, distressed securities, and private
funds. Alternative investment interests generally are structured such that the investment pool holds
a limited partnership interest or an interest in an investment management company. The investment
pool’s ownership structure does not provide for control over the related investees and the
investment pool’s financial risk is limited to the carrying amount reported for each investee, in
addition to any unfunded capital commitment. Future funding commitments by members of the
investment pool for alternative investments aggregated approximately $194.0 million at
December 31, 2019.

Individual investment holdings within the alternative investments include nonmarketable and
market-traded debt and equity securities and interests in other alternative investments. SLR may
be exposed indirectly to securities lending, short sales of securities and trading in futures and
forward contracts, options, and other derivative products. Alternative investments often have
liquidity restrictions under which the pooled investment capital may be divested only at specified
times. Liquidity restrictions may apply to all or portions of a particular invested amount.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

Alternative investments in the pool are stated at fair value based upon net asset values as a practical
expedient. Financial information used to evaluate alternative investments is provided by the
respective investment manager or general partner and includes fair value valuations (quoted
market prices and values determined through other means) of underlying securities and other
financial instruments held by the investee, and estimates that require varying degrees of judgment.
The financial statements of the investee companies are audited annually by independent auditors,
although the timing for reporting the results of such audits may not coincide with SLR’s annual
financial statement reporting.

There is uncertainty in determining values of alternative investments arising from factors such as
lack of active markets (primary and secondary), lack of transparency into underlying holdings, and
time lags associated with reporting by the investee companies. As a result, the estimated fair values
might differ from the values that would have been used had a ready market for the alternative
investment interests existed and there is at least a reasonable possibility that estimates will change.

Investment Income

Investment income from the investment pool is allocated to investment pool participants using the
market-value unit method. The annual spending rate for pooled funds is approved by the Board of
Trustees annually (see Note 9). Realized gains and losses from the sale of securities are computed
using the average cost method.

In the absence of donor restrictions, investment income, realized gains and losses, the change in
net unrealized gains and losses on investments and change in value of alternative investments, is
reflected in the accompanying consolidated statements of operations within the deficiency of
revenue over expenses.

Inventories

SLR values its inventories, principally drugs and medical supplies, at the lower of cost or net
realizable value.

Assets Limited as to Use

Assets limited as to use primarily includes assets held by trustees under indenture agreements and
assets whose use is restricted for specific purposes. The current portion of assets limited as to use
consists of specific purpose funds and internally designated funds.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

Other Assets

Other assets consist principally of investments in various health care entities accounted for using
the equity method and rental properties held primarily for investment.

Deferred Financing Fees

Deferred financing fees represent costs incurred to obtain financing for various construction and
renovation projects at SLR. Amortization of these costs extends over the term of the applicable
indebtedness and approximates the effective interest method. Unamortized deferred financing fees
are reported as a direct deduction from long-term debt.

Property, Plant, and Equipment

Property, plant, and equipment are carried at cost and those acquired by gifts and bequests are
carried at fair value established at the date of contribution. Depreciation expense is computed
utilizing the straight-line method over the estimated useful lives of the assets which range from 3
to 40 years. In accordance with SLR’s policy, one-half year’s depreciation is recorded in the year
of asset acquisition, and a half year’s depreciation is recorded in the final year of the asset’s useful
life. 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.
When assets are retired or otherwise disposed of, the cost and the related depreciation are reversed
from the accounts, and any gain or loss is reflected in operations. Repairs and maintenance
expenditures are expensed as incurred.

Equipment under finance lease obligations is recorded at the present value of the minimum lease
payments at the inception of the leases and is amortized on the straight-line method over the shorter
of the lease term or the estimated useful life of the equipment. Such amortization is included in
depreciation and amortization in the accompanying consolidated statements of operations.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If such assets are deemed to
be impaired, the impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value. Assets to be disposed of are reported at the lower of
the carrying amount or fair value, less costs to sell.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

Other Liabilities

Other liabilities in the accompanying consolidated statements of financial position consist

primarily of the long-term portion of estimated payables to third-party payors and liabilities related
to the insurance program (refer to Note 7).

Net Assets Without Donor Restrictions

Net assets that are not subject to donor-imposed restrictions may be expended for any purpose in
performing the primary objectives of the organization. These net assets may be used at the
discretion of SLR’s management and the Board of Trustees.

Net Assets With Donor Restrictions

Net assets with donor restrictions are those whose use by SLR has been limited by donors to a
specific time period or purpose. Some donor restrictions are temporary in nature; those restrictions
will be met by actions of SLR or by the passage of time. Other donor restrictions are perpetual in
nature, whereby the donor has stipulated the funds be maintained in perpetuity.

Donor restricted contributions are reported as increases in net assets with donor restrictions. When
a restriction expires, net assets are reclassified from net assets with donor restrictions to net assets
without donor restrictions in the consolidated statements of operations and changes in net assets
(deficit).

Contributions

Contributions, including unconditional promises to give cash and other assets (pledges), are
reported at fair value on the date received. The gifts are reported as net assets with donor
restrictions if they are received with donor stipulations that limit the use of the donated assets.
When a donor restriction expires, that is, when a stipulated time restriction ends or purpose
restriction is accomplished, net assets with donor restrictions are reclassified to net assets without
donor restrictions and reported as net assets released from restrictions. Donor-restricted
contributions whose restrictions are met within the same year as received are reflected in net assets
with donor restrictions and net assets released from restrictions in the accompanying consolidated
financial statements.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

Performance Indicator

The consolidated statements of operations include the deficiency of revenue over expenses as the
performance indicator. Changes in net assets without donor restrictions, which are excluded from
the deficiency of revenue over expenses, include the change in pension and other postretirement
benefits liabilities to be recognized in future periods and the transfer from The Mount Sinai
Hospital in 2018 (see Note 11).

SLR differentiates its operating activities through the use of the deficiency of operating revenue
over operating expenses before other items as an intermediate measure of operations. For the
purposes of display, items which management does not consider components of SLR’s operating
activities are excluded from this measure and reported as other items in the accompanying
consolidated statements of operations.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenue and expenses
during the reporting period. The most significant estimates relate to patient accounts receivable,
amounts due from and to third party payors, professional liabilities and related insurance
recoveries receivable, and accrued pension and other postretirement medical benefit liabilities.
Actual results may differ from those estimates.

Tax Status

SLR and its consolidated not-for-profit affiliate organizations are tax-exempt organizations under
Section 501(c)(3) of the Internal Revenue Code. They are also exempt from New York State and
New York City income taxes. Accordingly, no provision for income taxes related to these entities
has been made. SLR files unrelated business tax returns annually and submits taxes as determined.
Such amounts are not significant to the consolidated financial statements.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

The Taxpayer Certainty and Disaster Tax Relief Act of 2019, signed into law on December 20,
2019, retroactively repealed IRC Section 512(a)(7) which subjected amounts paid or incurred by
an exempt organization to provide certain transportation fringe benefits to its employees to taxation
as unrelated business taxable income. The impact of the Taxpayer Certainty and Disaster Tax
Relief Act of 2019 was not significant to the accompanying consolidated financial statements.

Investments Held by Captive Insurance Companies

SLR’s investments held by captive insurance companies consist of assets which are pooled with
other assets maintained by the companies and include investments in marketable securities (91.6%
and 92.7% at December 31, 2019 and 2018, respectively) and alternative investments (8.4% and
7.3% at December 31, 2019 and 2018, respectively) that are recorded by the captive insurance
companies at fair value based on quoted market prices or other means for the companies’ holdings
of alternative investments, and capital contributions for certain captive insurance entities carried
at cost. The majority of investments held by captive insurance companies are categorized as
Level 1 within the fair value hierarchy. SLR reports an allocation of the fair value of the pooled
investments in its consolidated statements of financial position (see Note 3).

Recently Adopted Accounting Pronouncements

Effective January 1, 2019, the Hospital adopted ASU 2016-01, Recognition and Measurement of
Financial Assets and Financial Liabilities (ASU 2016-01). ASU 2016-01 requires business-
oriented health care not-for-profit entities to measure equity investments that do not result in
consolidation and are not accounted for under the equity method at fair value and recognize any
changes in fair value in the performance indicator unless the investments qualify for a new
practicability exception. SLR adopted ASU 2016-01 effective January 1, 2019. The adoption of
ASU 2016-01 did not have a material impact on the consolidated financial statements.

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update No. (ASU) 2016-02, Leases, which requires the rights and obligations arising
from the lease contracts, including existing and new arrangements, to be recognized as assets and
liabilities on the statements of financial position, including both finance leases (formerly referred
to as capital leases) and operating leases. ASU 2016-02 requires expanded disclosure related to
lease agreements to help the financial statement users better understand the amount, timing, and
uncertainty of cash flows arising from leases. The recognition, measurement and presentation of
expenses and cash flows arising from a lease primarily depend on its classification as a finance or
operating lease.

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Notes to Consolidated Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

SLR adopted ASU 2016-02 effective January 1, 2019, following the modified retrospective
method of application. As such, the 2018 consolidated financial statement amounts and disclosures
have not been adjusted to reflect the provisions of the new standard. There was no cumulative-
effect impact to the 2018 consolidated net assets as a result of the adoption. SLR has made the
transition-specific election to apply the package of practical expedients which allows for the
carryforward of historical assessments of (1) whether contracts are or contain leases, (2) lease
classification and (3) initial direct costs. Additionally, for operating leases entered into prior to
January 1, 2019, SLR has elected to utilize the operating leases’ initial lease term to determine the
discount rate used to initially measure the liability. Certain other accounting policy elections and
quantitative and qualitative information pertaining to SLR’s adoption of ASU 2016-02 are
described in Note 6.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows – Classification of
Certain Cash Receipts and Cash Payments, which addresses the following eight specific cash flow
issues in order to limit diversity in practice: debt prepayment or debt extinguishment costs;
settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates
that are insignificant in relation to the effective interest rate of the borrowing; contingent
consideration payments made after a business combination; proceeds from the settlement of
insurance claims; proceeds from the settlement of corporate-owned life insurance policies,
including bank-owned life insurance policies; distributions received from equity method investees;
beneficial interests in securitization transactions; and separately identifiable cash flows and
application of the predominance principle. The adoption of ASU 2016-15 did not have a material
impact on SLR’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows – Restricted Cash,
which requires that the statement of cash flows explain the change during the period in the total of
cash, cash equivalents, and amounts generally described as restricted cash or restricted cash
equivalents. SLR adopted ASU 2016-18 effective December 31, 2019. Therefore, amounts
generally described as restricted cash and restricted cash equivalents should be included with cash
and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts
shown on the statement of cash flows. SLR has adopted ASU 2016-18 using a retrospective
transition method.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits: Improving
the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU
2017-07 addresses how employers that sponsor defined benefit pension and/or other postretirement
benefit plans present the net periodic benefit cost in the income statement. Employers will be
required to present the service cost component of net periodic benefit cost in the same income
statement line item as other employee compensation costs arising from services rendered during
the period. Employers will present the other components of the net periodic benefit cost separately
from the line item that includes the service cost and outside of any subtotal of operating income,
if one is presented. The standard became effective for SLR for annual periods beginning after
December 15, 2018. SLR adopted ASU 2017-07 effective in its December 31, 2019 consolidated
financial statements, which required the service cost component of net periodic benefit cost related
to its defined benefit plan and other postretirement plan to be reported within salaries and wages
on the consolidated statements of operations and to present all other components of net periodic
benefit cost as a separate line item excluded from the subtotal for deficiency of operating revenue
over operating expenses before other items. Net periodic benefit cost was previously reported
within employee benefits expense on the consolidated statements of operations. The effects of the
adoption of ASU 2017-07 were applied retrospectively. Adoption of ASU 2017-07 did not have a
material impact on SLR’s consolidated financial statements.

In June 2018, the FASB issued ASU 2018-08, Not-for-Profit Entities (Topic 958); Clarifying the
Scope and the Accounting Guidance for Contributions Received and Contributions Made. ASU
2018-08 clarifies existing guidance in order to address diversity in practice in classifying grants
(including governmental grants) and contracts received by not-for-profit entities, and requires
entities to evaluate whether the resource provider receives commensurate value. In addition, the
standard clarifies the guidance on how entities determine when a contribution is conditional,
including whether the agreement includes a barrier (or barriers) that must be overcome for the
recipient to be entitled to the transferred assets (or a right of release of the promisor’s obligation
to transfer the assets). SLR adopted ASU 2018-08 effective January 1, 2019. The standard was
applied on a modified prospective basis to agreements that were not completed as of the effective
date and to agreements entered into after the effective date. The adoption of ASU 2018-08 did not
have a material impact to SLR’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use
Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a
Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for
capitalizing implementation costs incurred in a hosting arrangement that is a service contract with

16
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

the requirements for capitalizing implementation costs incurred to develop or obtain internal-use
software (and hosting arrangements that include an internal use software license). The accounting
for the service element of a hosting arrangement that is a service contract is not affected by the
standard. ASU 2018-15 requires an entity (customer) in a hosting arrangement that is a service
contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to
capitalize as an asset related to the service contract and which costs to expense. ASU 2018-15 also
requires the entity (customer) to expense the capitalized implementation costs of a hosting
arrangement that is a service contract over the term of the hosting arrangement, amongst other
provisions. The amendments in ASU 2018-15 are effective for annual reporting periods beginning
after December 15, 2020, and interim periods thereafter. Early adoption is permitted. The
amendments should be applied either retrospectively or prospectively to all implementation costs
incurred after the date of adoption. SLR early adopted ASU 2018-15 effective January 1, 2019,
prospectively. The adoption of ASU 2018-15 did not have a material impact on the consolidated
financial statements.

Other Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments. The new credit losses standard changes
the impairment model for most financial assets and certain other instruments. For trade and other
receivables, contract assets recognized as a result of applying ASU 2014-09, Revenue from
Contracts with Customers (Topic 606), loans and certain other instruments, entities will be
required to use a new forward looking “expected loss” model that generally will result in earlier
recognition of credit losses than under today’s incurred loss model. The ASU is effective for annual
periods beginning after December 31, 2021. SLR has not completed the process of evaluating the
impact of ASU 2016-13 on its consolidated financial statements.

In May 2019, the FASB issued ASU 2019-06, Intangibles – Goodwill and Other (Topic 350),
Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958), Extending the Private
Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-
for-Profit Entities. Under ASU 2019-06, entities that elect the goodwill accounting alternative will
amortize goodwill and perform a one-step impairment test, at either the entity level or the reporting
unit level, only when an impairment indicator exists. Entities that elect the intangible asset
accounting alternative may recognize fewer intangible assets in an acquisition, and they would be
required to elect the goodwill accounting alternative. Entities that elect to adopt the alternatives do
not have to demonstrate preferability and will follow the alternatives’ transition guidance. Entities

17
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

that elect this accounting alternative will amortize goodwill on a straight-line basis over 10 years
or over a shorter period if they are able to demonstrate that another useful life is more appropriate.
SLR has not completed the process of evaluating the impact of ASU 2019-06 on its consolidated
financial statements.

The FASB has amended certain guidance related to various disclosures in ASU 2018-13, Technical
Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10)—
Recognition and Measurement of Financial Assets and Financial Liabilities and ASU 2018-14,
Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20)—
Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. ASU
2018-13 includes several disclosure changes involving transfers between the fair value levels and
other updates related to fair value Level 3 investments. ASU 2018-13 also requires entities that
use the practical expedient to measure the fair value of certain investments at their net asset values
to disclose (1) the timing of liquidation of an investee’s assets and (2) the date when redemption
restrictions will lapse, but only if the investee has communicated this information to the entity or
announced it publicly. The guidance in ASU 2018-14 requires all sponsors of defined benefit plans
to provide certain new disclosures. Among other changes, ASU 2018-14 eliminates the required
disclosure for all sponsors of defined benefit plans to disclose the amounts in accumulated other
comprehensive income expected to be recognized as components of net periodic benefit cost over
the next fiscal year. The updates noted above have effective dates as follows with early adoption
permitted: ASU 2018-13: fiscal years beginning after December 15, 2019 and ASU 2018-14: fiscal
years ending after December 15, 2021. SLR has not completed the process of evaluating the impact
of ASU 2018-13 and ASU 2018-14 on its consolidated financial statements.

Reclassifications

Certain reclassifications have been made to the 2018 consolidated financial statements and
disclosures to conform to the 2019 presentation. These reclassifications have no impact on the net
assets previously reported.

2. Accounts Receivable for Services to Patients and Net Patient Service Revenue

Net patient service revenue is reported at the amount that reflects the consideration for which SLR
expects to be entitled in exchange for providing patient care.

18
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

2. Accounts Receivable for Services to Patients and Net Patient Service Revenue
(continued)

SLR uses a portfolio approach to account for categories of patient contracts as collective groups
rather than recognizing revenue on an individual contract basis. The portfolio consists of major
payor classes for inpatient revenue and outpatient revenue. Based on historical collection trends
and other analyses, SLR believes that revenue recognized by utilizing the portfolio approach
approximates the revenue that would have been recognized if an individual contract approach were
used.

SLR’s initial estimate of the transaction price for services provided to patients is determined by
reducing the total standard charges related to the patient services provided by various elements of
variable consideration, including contractual adjustments, discounts, implicit price concessions,
and other reductions to SLR’s standard charges. SLR determines the transaction price associated
with services provided to patients who have third-party payor coverage on the basis of contractual
or formula-driven rates for the services rendered (see description of third-party payor payment
programs below). The estimates for contractual allowances and discounts are based on contractual
agreements, SLR’s discount policies and historical experience. For uninsured and under-insured
patients who do not qualify for charity care, SLR determines the transaction price associated with
services rendered on the basis of charges reduced by implicit price concessions. Implicit price
concessions included in the estimate of the transaction price are based on SLR’s historical
collection experience for applicable patient portfolios.

Generally, SLR bills patients and third-party payors after the services are performed and the patient
is discharged. Net patient service revenue is recognized as performance obligations are satisfied.
Performance obligations are determined based on the nature of the services provided by SLR. Net
patient service revenue for performance obligations satisfied over time is recognized based on
actual charges incurred in relation to total charges. SLR believes that this method provides a
reasonable depiction of the transfer of services over the term of the performance obligation based
on the services needed to satisfy the obligation. Generally, performance obligations satisfied over
time relate to patients receiving inpatient acute care services or patients receiving services in SLR’s
outpatient settings. SLR measures the performance obligation from admission into SLR or the
commencement of an outpatient service to the point when it is no longer required to provide
services to that patient, which is generally at the time of discharge or the completion of the
outpatient visit.

19
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

2. Accounts Receivable for Services to Patients and Net Patient Service Revenue
(continued)

Substantially all of its performance obligations relate to contracts with a duration of less than one
year. Unsatisfied or partially unsatisfied performance obligations primarily relate to inpatient acute
care services at the end of the reporting period for patients who remain admitted at that time (in-
house patients). The performance obligations for in-house patients are generally completed when
the patients are discharged, which for the majority of SLR’s in-house patients occurs within days
or weeks after the end of the reporting period.

Subsequent changes to the estimate of the transaction price (determined on a portfolio basis when
applicable) are generally recorded as adjustments to patient service revenue in the period of the
change. For the years ended December 31, 2019 and 2018, changes in SLR’s estimates of implicit
price concessions, discounts, contractual adjustments or other reductions to expected payments for
performance obligations satisfied in prior years were not significant. Portfolio collection estimates
are updated based on collection trends. Subsequent changes that are determined to be the result of
an adverse change in the patient’s ability to pay (determined on a portfolio basis when applicable)
are recorded as bad debt expense. Bad debt expense for the years ended December 31, 2019 and
2018 was not significant.

SLR has determined that the nature, amount, timing and uncertainty of revenue and cash flows are
affected by the following factors: payors, lines of business and timing of when revenue is
recognized. Tables providing details of these factors are presented below.

Net patient service revenue disaggregated by payor comprises the following for the years ended
December 31:

2019 2018
(In thousands)

Medicare, excluding managed Medicare $ 295,709 $ 230,176

Medicare managed care 168,960 151,150
Medicaid, including Medicaid pending 82,236 83,124
Medicaid managed care 140,078 171,650
Blue Cross 191,651 179,720
Managed care 218,109 180,427
Commercial and other 69,606 58,111
Self-pay 12,396 5,829
$ 1,178,745 $ 1,060,187

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

2. Accounts Receivable for Services to Patients and Net Patient Service Revenue
(continued)

Deductibles, copayments and coinsurance under third-party payment programs which are the
patient’s responsibility are included within the respective primary payor category above.

Net patient service revenue disaggregated by lines of service comprises of the following for the
years ended December 31:

2019 2018
(In thousands)

Inpatient services $ 881,400 $ 792,459

Outpatient services 297,345 267,728
$ 1,178,745 $ 1,060,187

Patient accounts receivable, net is comprised of the following:

December
2019 2018

Patient receivables $ 120,362 $ 109,766

Contract assets 16,021 14,054
$ 136,383 $ 123,820

Contract assets are related to in-house patients who were provided services during the reporting
period but were not discharged as of the reporting date and for which SLR does not have the right
to bill.

Third-Party Payment Programs

SLR has agreements with third-party payors that provide for payment for services rendered at
amounts different from its established rates. A summary of the payment arrangements with major
third-party payors follows:

Medicare: Hospitals are paid for most Medicare patient services under national prospective
payment systems and other methodologies of the Medicare program for certain other services.
Federal regulations provide for adjustments to current and prior years’ payment rates, based
on industry-wide and Hospital-specific data.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

2. Accounts Receivable for Services to Patients and Net Patient Service Revenue
(continued)

Non-Medicare: In New York State, hospitals and all non-Medicare payors (including Medicare
and Medicaid managed care plans), except Medicaid, workers’ compensation and no-fault
insurance programs, negotiate hospitals’ payment rates. Outpatient services also are paid based
on a statewide prospective system. Medicaid rate methodologies are subject to approval at the
Federal level by the Centers for Medicare and Medicaid Services (CMS), which may routinely
request information about such methodologies prior to approval. Revenue related to specific
rate components that have not been approved by CMS is not recognized until SLR is
reasonably assured that such amounts are realizable. Adjustments to the current and prior
years’ payment rates for those payors will continue to be made in future years.

Other Third-Party Payors: SLR also has entered into payment agreements with certain
commercial insurance carriers and health maintenance organizations. The basis for payment to
SLR under these agreements includes prospectively determined rates per discharge or days of
hospitalization and discounts from established charges.

Medicare cost reports, which serve as the basis for final settlement with the Medicare program,
have been audited by the Medicare fiscal intermediary through 2012 and settled through 2011,
except for the years 2001 through 2004 for which final settlements have not been issued due to
pending litigation, although revisions to final settlements or other retroactive changes could be
made. Other years and various issues remain open for audit and settlement, as are numerous issues
related to the New York State Medicaid program for prior years. As a result, there is at least a
reasonable possibility that recorded estimates will change by a material amount when open years
are settled, audits are completed and additional information is obtained.
Settlements with third-party payors (see description of third-party payor payment programs above)
for cost report filings and retroactive adjustments due to ongoing and future audits, reviews or
investigations are considered variable consideration and are included in the determination of the
estimated transaction price for providing patient care. These settlements are estimated based on
the terms of the payment agreement with the payor, correspondence from the payor and SLR’s
historical settlement activity (for example, cost report final settlements or repayments related to
recovery audits), including an assessment to ensure that it is probable that a significant reversal in
the amount of cumulative revenue recognized will not occur when the uncertainty associated with
the retroactive adjustment is subsequently resolved. Such estimates are determined through either
a probability-weighted estimate or an estimate of the most likely amount, depending on the
circumstances related to a given estimated settlement item. Estimated settlements are adjusted in

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

2. Accounts Receivable for Services to Patients and Net Patient Service Revenue
(continued)

future periods as adjustments become known (that is, new information becomes available), or as
years are settled or are no longer subject to such audits, reviews, and investigations. For the years
ended December 31, 2019 and 2018, the net effect of SLR’s revisions to prior year estimates and
third-party settlements resulted in revenue of approximately $21.2 million and $12.9 million,
respectively, which is recorded in net patient service revenue in the consolidated statements of
operations.

Laws and regulations concerning government programs, including Medicare and Medicaid, are
complex and subject to varying interpretation. As a result of investigations by governmental
agencies, various health care organizations have received requests for information and notices
regarding alleged noncompliance with those laws and regulations, which, in some instances, have
resulted in organizations entering into significant settlement agreements. Compliance with such
laws and regulations may also be subject to future government review and interpretation as well
as significant regulatory action, including fines, penalties, and potential exclusion from the related
programs. There can be no assurance that regulatory authorities will not challenge SLR’s
compliance with these laws and regulations, and it is not possible to determine the impact (if any)
such claims or penalties would have upon SLR. SLR is not aware of any allegations of non-
compliance that could have a material adverse effect on the accompanying consolidated financial
statements and believes that it is in compliance with all applicable laws and regulations. In
addition, certain contracts SLR has with commercial payors also provide for retroactive audit and
review of claims.
There are various proposals at the federal and state levels that could, among other things,
significantly change payment rates or modify payment methods. The ultimate outcome of these
proposals and other market changes, including the potential effects of or revisions to health care
reform that has been or will be enacted by the federal and state governments, cannot be determined
presently. Future changes in the Medicare and Medicaid programs and any reduction of funding
could have an adverse impact on SLR. Additionally, certain payors’ payment rates for various
years have been appealed by SLR. If the appeals are successful, additional income applicable to
those years could be realized.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

2. Accounts Receivable for Services to Patients and Net Patient Service Revenue
(continued)

SLR grants credit without collateral to its patients, most of whom are insured under third-party
payor agreements. Significant concentrations of patient accounts receivable, net at December 31,
2019 and 2018, are as follows:

2019 2018

Medicare 30% 28%

Medicaid 19 23
Blue cross 15 17
Managed care and other 34 30
Self-pay 2 2
100% 100%

Uncompensated Care and Community Benefit Expense

For patients who are deemed eligible for charity care and patients who apply and qualify for
financial aid under SLR’s financial aid policy, care given but not paid for is classified as charity
care. For the years ended December 31, 2019 and 2018, the estimated cost of charity care was
approximately $23.5 million and $26.0 million, respectively. The estimated cost of charity care
includes the direct and indirect cost of providing charity care services and is estimated by utilizing
a ratio of cost to gross charges applied to the gross uncompensated charges associated with
providing charity care.

Vital Access Provider Safety Net Program and Medicaid Enhanced Rates

In September 2015, MSHG entered into an agreement with the New York State Department of
Health (NYSDOH) to participate in the Vital Access Provider (VAP)/Safety Net Program. MSHG
was awarded approximately $81.4 million in VAP funding over three years. In accordance with
the governing agreement, MSHG submitted quarterly reports to the NYSDOH, detailing how the
VAP funds were being expended, in line with approved objectives, budgets, timelines and
benchmarks. In addition, MSHG has committed to complete a full asset merger of MSH, BIMC,
SLR and NYEEI. The full asset merger is expected to be completed no later than January 1, 2021.
MSHG continues to have discussions with the NYSDOH regarding the provisions of the proposed
full asset merger.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

2. Accounts Receivable for Services to Patients and Net Patient Service Revenue
(continued)

The NYSDOH had also agreed to provide certain MSHG member hospitals with a temporary
Medicaid rate enhancement for three years. The Medicaid rate enhancement was not applicable to
SLR as they had historically and continue to be paid at this rate. The enhanced Medicaid rates
were paid to the MSHG member hospitals directly by the Medicaid program or Medicaid managed
care payors as patient services are rendered. The MSHG member hospitals recognized revenue
from the VAP payments on a quarterly basis as reporting requirements were completed and
approved expenditures were incurred. All amounts related to VAP funding for the MSHG member
hospitals were received by BIMC; amounts due to MSHG member hospitals related to VAP
funding are recorded as a component of due to related organizations. In accordance with VAP
stipulations, MSHG spent all remaining VAP funds during the first quarter of 2019.

The Medicaid rate enhancements ended on March 31, 2018. For the years ended December 31,
2019 and 2018, SLR recognized approximately $381,000 and $4.3 million, respectively, of VAP
funding in other revenue in the accompanying consolidated statements of operations. In the event
that conditions of the governing agreement are not met, funding associated with the VAP program
and the enhanced Medicaid rates will be refundable to the NYSDOH. Management believes the
possibility that the condition will not be met is remote.

3. Investments and Assets Limited as to Use

Investments and assets limited as to use are maintained as follows at December 31:

2019 2018
(In Thousands)

Pooled investments $ 48,363 $ 42,976

Non-pooled investments:
Assets limited as to use 111,936 119,526
Investments held by captive insurance companies 70,131 70,535
182,067 190,061
$ 230,430 $ 233,037

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

3. Investments and Assets Limited as to Use (continued)

The following table summarizes the composition of the total investment pool at December 31,
2019 and 2018; SLR’s interests in the pooled investment components is proportionate based on
the ratio of its pooled investment balance to the total of the pool. SLR owns 2.43% and 2.48% of
the investment pool at December 31, 2019 and 2018, respectively.

2019 2018
(In Thousands)

Cash and cash equivalents $ 25,165 $ 43,870

Fixed income:
Mutual funds 24,153 4,241
Equities:
U.S. equities 198,906 129,962
Global equities 59,771 47,802
Non-U.S. equities 168,754 133,291
Alternative investments:
Hedge funds:
Long-only equity(a) 315,111 213,772
Hedged equity(b) 339,801 324,608
Long/short credit(c) 58,749 64,407
Open mandate(d) 296,325 283,157
Macro(e) 105,610 122,529
Private investments:
Equity(f) 105,763 75,482
Credit/distressed(g) 62,827 65,216
Real assets(h) 233,203 224,672
$ 1,994,138 $ 1,733,009

(a)
Investments, consisting of publicly traded equity holdings with long positions.
(b)
Investments, consisting primarily of publicly traded equity holdings with both long and
short positions.
(c)
Investments, consisting primarily of publicly traded credit holdings with both long and
short positions.

26
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

3. Investments and Assets Limited as to Use (continued)

(d)
Investments with a balanced mix of asset exposures and strategies. Underlying
exposures primarily include publicly traded equity and credit positions in fundamental
value, relative value, and various arbitrage strategies. Investments may reflect a tilt
towards equity or credit with hedging and hold large cash positions if value
opportunities are not found.
(e)
Investments focused on global macro dislocations rather than micro-driven
opportunities. Holdings are both long and short in equity, fixed income, currency, and
futures markets.
(f)
Investments targeting buyout, growth equity, and venture opportunities that require time
to reach realization.
(g)
Investments in structured credit, claims, or distressed positions of either a minority or
controlling interest that require time to reach realization.
(h)
Real estate, natural resources, and asset backed royalty investments that require time to
reach realization.
The total return on the pooled investments comprises the following for the years ended
December 31:

2019 2018
(In Thousands)

Interest and dividend and other income $ 8,586 $ 6,615

Net realized gains on sales of securities 94,267 80,920
Change in net unrealized gains and losses and
change in value of alternative investments 195,198 (124,976)
Fees and other expenses (6,488) (7,136)
Total $ 291,563 $ (44,577)

SLR was allocated a total investment return from the pool based on agreements among the pool
participants and donor stipulations a gain of approximately $7.2 million for the year ended
December 31, 2019, and a gain of $1.1 million for the year ended December 31, 2018.

27
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

3. Investments and Assets Limited as to Use (continued)

Assets limited as to use consist of the following at December 31:

2019 2018
(In Thousands)

Cash and cash equivalents $ 16,225 $ 26,455

Fixed income 95,711 93,071
$ 111,936 $ 119,526

2019 2018
(In Thousands)
Held under indenture agreements:
Mortgage reserve fund (see Note 5) $ 41,615 $ 39,333
Modernization fund – 1,946
Escrow funds 2,513 2,599
44,128 43,878
Other externally designated funds:
Specific purpose funds 9,219 12,856
9,219 12,856
Internally designated funds 58,589 62,792
111,936 119,526
Less current portion 67,808 75,648
$ 44,128 $ 43,878

Investment income on assets limited as to use, pooled investments, and cash and cash equivalents
consist of the following at December 31:

2019 2018
(In Thousands)

Interest and dividend income $ 6,074 $ 5,442

Net realized loss on sales of securities (481) (2,162)
Change in net unrealized gains and losses on investments
and change in value of alternative investments 4,327 (302)
$ 9,920 $ 2,978

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

3. Investments and Assets Limited as to Use (continued)

The investment return on net assets with donor restrictions was a gain of approximately
$2.6 million for the year ended December 31, 2019, and a loss of approximately $2.2 million for
the year ended December 31, 2018.

4. Property, Plant, and Equipment

A summary of property, plant, and equipment is as follows at December 31:

2019 2018
(In Thousands)

Land and land improvements $ 5,518 $ 5,518

Buildings and building improvements 1,251,054 1,155,202
Equipment, including equipment held under finance leases 665,551 623,914
1,922,123 1,784,634
Less: accumulated depreciation and amortization (1,287,517) (1,207,402)
634,606 577,232

Construction in progress 61,932 89,034

Property, plant, and equipment, net $ 696,538 $ 666,266

Accumulated amortization associated with equipment held under finance leases was
approximately $4.6 million and $5.3 million at December 31, 2019 and 2018, respectively.
Substantially all property, plant, and equipment has been pledged as collateral under various debt
agreements. During 2019 and 2018, SLR capitalized interest expense of approximately
$2.7 million and $2.0 million, respectively, related to various construction projects.

29
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

5. Long-Term Debt

A summary of long-term debt and capitalized leases is as follows at December 31:

2019 2018
(In Thousands)

Insured mortgage loan(a) $ 180,876 $ 194,972

A&J(b) 101,953 103,792
59th Street Condominium(c) 29,568 31,312
Finance leases with interest rates ranging from
2.7% to 3.7% 1,154 1,557
313,551 331,633
Less: unamortized deferred financing costs, net 2,667 3,112
Less: current portion 18,800 17,721
$ 292,084 $ 310,800
(a)
In November 2005, SLR refinanced an existing FHA 241 Loan with an FHA 223 Loan.
DASNY issued St. Luke’s Roosevelt SLR FHA-Insured Mortgage Hospital Revenue
Bonds, Series 2005, the proceeds of which were used to refund the Series 1993A Bonds,
refund the Series 2000B Bonds, make the required deposit to the Debt Service Reserve
Fund, and pay the costs of issuance of the Series 2005 Bonds. As a result, SLR’s interest
rate on the FHA 223 Loan was 5.39% (reduced from 7.26% on the FHA 241 Loan) and
the repayment period was extended 121 months from April 2020 to May 2030.

In July 2014, Prudential Huntoon Paige Associates, Ltd. (Prudential) issued

Government National Mortgage Association (GNMA) securities, the proceeds of which
were combined with the proceeds of the liquidated assets of the Debt Service Reserve
Fund, to establish a defeasance account which will be used to refund the DASNY Series
2005 bonds underlying the FHA 223 insured mortgage and pay all GNMA issuance
costs, as well as the costs associated with the assignment of the mortgage from DASNY
to Prudential. The DASNY Series 2005 bonds were called on August 15, 2015 (the call
date). This transaction resulted in a reduction in the interest rate of the FHA 223
mortgage loan, effective July 10, 2014, to a fixed rate of 3.56% over the remaining term
and a decrease in the SLR mortgage reserve fund requirement of approximately
$5.5 million. Monthly payments for the loan are approximately $1.7 million, consisting
of principal and interest. At December 31, 2019 and 2018, the FHA 223 Loan balance
was approximately $180.9 million and $195.0 million, respectively.

30
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

5. Long-Term Debt (continued)

As a condition to insuring the FHA 223 Loan, the Federal Housing Administration
(FHA) requires that SLR maintain a Mortgage Reserve Fund (MRF) whose balance is
fully funded at the agreed-upon two full years’ debt service on the FHA 223 Loan.
During 2014, in addition to the reduced requirement relating to the advance refunding,
SLR received HUD approval to use MRF assets to acquire needed capital projects. At
December 31, 2015, the required MRF balance was approximately $41.6 million per
SLR’s agreement with HUD. However, during 2014, SLR received approval from its
mortgagor and HUD to borrow up to $12.0 million from the MRF in order to fund
essential capital projects (approximately $10.3 million was borrowed by SLR). At
December 31, 2018, the amount outstanding was $2.3 million. As of December 31,
2019, the full $10.3 borrowed was repaid and approximately $41.6 million is on deposit
in the fund, which represents the required balance.

Pursuant to these borrowings, SLR is required to maintain certain financial and

nonfinancial covenants. For the years ended December 31, 2019 and 2018, SLR was in
compliance with all covenants.
(b)
On November 1, 2007, A&J entered into a mortgage loan with a commercial bank for
$120.0 million, the proceeds of which was used to repay a real estate term note, its New
York State Health Facilities Association (NYSHFA) mortgage, and provide working
capital funds to SLR. The mortgage had a 10-year term, with interest only payments for
the first three years. The collateral for this loan was the Millicent Hearst Building.

In November 2018, A&J refinanced its outstanding 2007 mortgage loan with a new ten-
year mortgage loan based on a thirty-year amortization with a final balloon payment due
in November 2028. The refinanced loan, which was entered into with a commercial
bank for approximately $250.0 million, is a combined obligation of A&J and MSMC
Residential Realty LLC (collectively, the Mortgagor). Approximately $105.0 million of
the loan proceeds were allocated to A&J. The mortgage loan is secured by certain
properties of the Mortgagor. The mortgage loan bears interest at a rate of 4.10% and
payment of principal and interest are due quarterly (final principal payment of
approximately $82.4 million due in November 2028). Interest paid by A&J under the
refinanced loan for the years ended December 31, 2019 and December 31, 2018, was
approximately $4.2 million and $0.4 million, respectively. In accordance with the
mortgage, the Mortgagor is required to comply with certain covenants. For the year

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

5. Long-Term Debt (continued)

ended December 31, 2019, the Mortgagor was in compliance with these covenants. In
the event of default, the lender can only seek repayment from collateral of the Mortgagor
and not from any other assets of SLR (refer to the consolidating statement of financial
position).
(c)
In April 2008, SLR exercised its option to purchase commercial space condominiums
from a local developer. The commercial space is located across from the Mount Sinai
West campus and was rented from the developer for hospital operations. SLR created a
specific purpose entity, the 59th St. Condominium, to purchase and operate the
condominiums. The 59th St. Condominium entered into a $44.5 million mortgage with
an investment house to purchase the condominiums, as well as to provide funds to SLR
for capital improvements. The mortgage has a 20-year term and bears interest at 6.22%
per annum. Payment of principal and interest are due monthly. The mortgage is
collateralized by the condominiums. In the event of default, the lender can only seek
repayment from the 59th St. Condominium collateral and not from any other assets of
SLR (refer to the consolidating statement of financial position).

Pursuant to the debt agreement, the 59th St. Condominium is required to maintain
certain covenants. For the years ended December 31, 2019 and 2018, the 59th St.
Condominium was in compliance with all covenants.

Scheduled principal payments are as follows:

Long-Term
Debt
(In Thousands)

2020 $ 18,339
2021 19,090
2022 19,847
2023 20,634
2024 21,455
Thereafter 213,032
$ 312,397

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

6. Leases

As described in Note 1, SLR adopted ASU 2016-02 effective January 1, 2019. SLR leases certain
property and equipment under finance and operating leases, the classification of which is based on
the underlying terms of the agreement and certain criteria, such as lease term relative to useful life
and total lease payments compared to fair value, amongst other criteria. Finance leases result in an
accounting treatment similar to an acquisition of the asset.

For leases with initial terms greater than one year (or initially greater than one year remaining
under the lease at the date of adoption of ASU 2016-02), SLR records the related right-of-use
assets and liabilities at the present value of the lease payments to be paid over the life of the related
lease. SLR’s leases may include variable lease payments and renewal options. Variable lease
payments are excluded from the amounts used to determine the right-of-use assets and liabilities
unless the variable lease payments depend on an index or rate or are in substance fixed payments.
Lease payments related to periods subject to renewal options are also excluded from the amounts
used to determine the right-of-use assets and liabilities unless SLR is reasonably certain to exercise
the option to extend the lease. The present value of lease payments is calculated by utilizing the
discount rate stated in the lease, when readily determinable. For leases for which this rate is not
readily available, SLR has elected to use a risk-free discount rate determined using a period
comparable with that of the lease term. SLR has made an accounting policy election not to separate
lease components from non-lease components in contracts when determining its lease payments,
as permitted by ASU 2016-02. As such, SLR accounts for the applicable non-lease components
together with the related lease components when determining the right-of-use assets and liabilities.

SLR has made an accounting policy election not to record leases with an initial term of less than
one year as right-of-use assets and liabilities.

Operating leases with a present value of approximately $34.1 million were recorded as right-of-
use assets and liabilities as of January 1, 2019 upon the adoption of ASU 2016-02.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

6. Leases (continued)

The following schedule summarizes information related to the lease assets and liabilities as of and
for the year ended December 31, 2019 (in thousands):

Right-of-use assets and liabilities

Right-of-use assets – operating leases $ 27,090
Right-of-use liabilities –operating leases $ 27,557

Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases 6,702
Weighted-average remaining lease term – operating leases 7.77 years
Weighted-average discount rate – operating leases 2.74%

For finance leases, right-of-use assets are recorded in property, buildings and equipment and lease
liabilities are recorded in long-term debt in the accompanying consolidated statements of financial
position. For operating leases, right-of-use assets are recorded in right-of-use assets and lease
liabilities are recorded in operating lease liabilities, current and non-current, in the accompanying
consolidated statement of financial position.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

6. Leases (continued)

The following table reconciles the undiscounted lease payments to the lease liabilities recorded on
the accompanying consolidated statement of financial position at December 31, 2019
(in thousands):

Operating
Leases

2020 $ 5,115
2021 5,350
2022 4,489
2023 4,154
2024 3,249
Thereafter 8,392
Total lease payments 30,749
Less: imputed interest/present value discount 3,192
Total lease obligations 27,557
Less: current portion 4,426
Long–term portion $ 23,131

Total rental expense for the years ended December 31, 2019 and 2018 aggregated approximately
$3.3 million and $2.0 million, respectively. Sublease income and contingent rentals were not
significant. SLR leases certain properties owned by related entities.

7. Professional and General Liability Insurance Program

Prior to 2004, SLR, together with several other not-for-profit institutions, obtained primary and
excess professional and general liability insurance, on an occurrence basis, through a jointly owned
captive insurance company, which provided coverage through a combination of shared captive
limits and commercial carrier policies. Premiums were based on the experience of SLR and the
other institutions. During the five-year period from July 1999 through June 2004, the combined
losses of the captive members were expected to exceed the level of available insurance. The captive
members entered into an agreement to provide additional contributions to fund a trust and
additional insurance policies to assure adequate resources were available to cover all claims,
including those in excess of captive insurance limits. During 2013, as a result of favorable claims
development and regulatory changes related to the five-year period from July 1999 through

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

7. Professional and General Liability Insurance Program (continued)

June 2004, the captive insurance company commutated the additional insurance policies and
distributed excess funds from those policies and the trust to the captive members. All claims for
this five-year period that exceed the remaining commercial carrier limits have been recorded as a
liability of SLR. As of June 30, 2004, the jointly owned captive insurance company went into run
off and no longer writes premiums.

Effective July 1, 2004, SLR joined with other unrelated not-for-profit institutions to form a
segregated cell captive structure through CCC Insurance Company (CCCI). CCCI formed CCC
Insurance Company SCC and implemented a “cell captive” structure which replaced the previous
coverage structure. Under the cell captive program, primary coverage for individual claims for
each participating hospital is provided through a commercial insurance carrier on an occurrence
basis. The first layer of excess coverage under the program utilizes individual cells for each
participating hospital, under which invested assets and insurance related liabilities are segregated
for each participant and there is no shared risk among the entities.

The estimated undiscounted professional liabilities for asserted claims of the cell captive insurance
program (SLR’s cell) and for incidents that have been incurred but not yet reported as of
December 31, 2019 and 2018, aggregated approximately $60.9 million and $75.6 million,
respectively, and are reported within other liabilities in the accompanying consolidated statements
of financial position. Such estimates are reviewed and updated annually. Effective January 1, 2015,
the SLR segregated cell went into run off and no longer writes premiums.

As of January 1, 2015, SLR purchases professional liability insurance from Hospital Insurance
Company, a NYS admitted carrier. Professional liabilities representing the amount of SLR’s
medical malpractice liabilities that are reinsured from commercial and captive insurance
companies, are included in professional liabilities in the accompanying consolidated statements of
financial position. Such liabilities amounted to approximately $100.5 million and $82.3 million at
December 31, 2019 and 2018, respectively. The corresponding amounts due from the commercial
and captive insurance companies are reported under professional liabilities insurance recoveries
receivable on the accompanying consolidated statements of financial position.

Effective January 1, 2018, the Mount Sinai Health System Self-Insurance Trust (the Self-Insurance
Trust) was established to provide coverage in excess of current insurance program limits.
Currently, MSH, BIMC, SLR, and NYEEI participate in the Self-Insurance Trust, which is
irrevocable. As of December 31, 2019, the Self-Insurance Trust held investments of $17.4 million
on behalf of SLR and a receivable from SLR of approximately $23.6 million both of which are

36
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

7. Professional and General Liability Insurance Program (continued)

included in beneficial interest in self-insurance trust in the accompanying 2019 consolidated

statement of financial position. As of December 31, 2018, the Self-insurance Trust held
investments of approximately $6.0 million and a receivable from SLR of approximately $13.9
million.

In addition, as of December 31, 2019 and December 31, 2018, the Self-Insurance Trust had
actuarially determined liabilities of approximately $41.0 million and $19.9 million, respectively,
discounted at 3.5% which is included as estimated self-insurance liability in the accompanying
consolidated statements of financial position.

In addition to coverage for the participating hospitals’ professional liability, the program also
includes captive cells for coverage of physicians’ professional liability. In 2008, a second captive
cell was established for the policy year beginning July 1, 2008. Premiums for these physician
captive cells are to be paid by the participating physicians; however, the participating hospitals are
responsible for funding a portion of the cells’ initial capital and surplus requirements and could be
subject to additional capital contributions in the future if the equity of these cells falls below certain
levels. Coverage within the physician cells is pooled; however, there is no shared risk with the
hospital-liability cell captives. In 2018, SLR received distributions from both physician cells
representing dividends and return of equity.

The estimates for professional liabilities under the captive insurance program are based upon
complex actuarial calculations which utilize factors such as historical claim experience for SLR
and related industry factors, trending models, estimates for the payment patterns of future claims,
and present value discounting factors. As a result, there is at least a reasonable possibility that
recorded estimates will change by a material amount in the near term. Revisions to estimated
amounts resulting from actual experience differing from projected expectations are recorded in the
period the information becomes known.

Professional liability claims have been asserted by various claimants. The claims are in various
stages of processing and some have been and may ultimately be brought to trial. Furthermore,
there are known incidents that have occurred that may result in the assertion of additional claims,
and other claims may be asserted arising from services provided to patients in the past. It is the
opinion of management, based on prior experience and the advice of legal counsel, that the ultimate
resolution of professional liability claims will not have a significant effect on the accompanying
consolidated financial statements.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

8. Pension and Similar Plans and Other Postretirement Benefit Plans

Retirement Benefits

SLR provides pension and similar benefits to its nonunion employees through a solely sponsored
defined benefit plan (the Non-union Plan). On May 12, 2007, SLR froze the Nonunion Plan and
converted these nonunion employees on a go-forward basis to a defined contribution plan.
Contributions to non-union defined contribution plans approximated $4.7 million and $4.5 million
for the years ended December 31, 2019 and 2018, respectively.

Effective September 30, 2012, the Beth Israel Medical Center King’s Highway Division
Employee’s Pension Plan was merged with and into the St. Luke’s-Roosevelt Hospital Center
Employees’ Pension Plan.

SLR uses a measurement date of December 31 for its retirement and postretirement benefit plans.

Postretirement Benefits

SLR provides certain non-union retirees and their spouses with hospital and medical insurance
which supplements health coverage provided through the Medicare program for Medicare covered
retirees and provides primary coverage for retirees younger than 65 years of age. Employees are
generally eligible for this benefit if they commenced employment prior to 1988, and if the total of
their age and years of service at the time of their retirement equals or exceeds 70. Retirees
qualifying for the plan also receive $5,000 in life insurance benefits. SLR also provides benefits
to certain current NYSNA retirees and NYSNA employees entitled to future benefits.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

8. Pension and Similar Plans and Other Postretirement Benefit Plans (continued)

The following table sets forth the funded status of the non-union plans as of December 31:

Retirement Benefits Postretirement Benefits

2019 2018 2019 2018
(In Thousands)
Change in benefit obligation
Benefit obligation at beginning of
year $ 177,438 $ 196,535 $ 11,307 $ 12,569
Service cost – – 152 180
Interest cost 7,433 6,842 392 401
Plan participant contributions – – 372 357
Actuarial loss (gain) 19,413 (16,437) (965) (767)
Benefits paid (10,065) (9,502) (1,104) (1,493)
Medicare Part D subsidy – – – 60
Benefit obligation at end of year 194,219 177,438 10,154 11,307

Change in plan assets

Fair value of plan assets at
beginning of year 129,861 143,599 – –
Actual return on plan assets 25,262 (10,736) – –
Employer contribution 7,830 6,500 – –
Benefits paid (10,065) (9,502) – –
Fair value of plan assets at end of
year 152,888 129,861 – –
Funded status of the plans (41,331) (47,577) (10,154) (11,307)
Less current liability – – 1,195 1,244
Long-term liability $ (41,331) $ (47,577) $ (8,959) $ (10,063)

Weighted-average assumptions used to determine benefit obligations are as follows:

Retirement Benefits Health Retirement Benefits

2019 2018 2019 2018

Discount rate 3.30% 4.30% 2.95% 4.05%

Expected long-term rate of return
on plan assets 5.50% 5.50% N/A N/A

The accumulated benefit obligation for the retirement plan is approximately $194.2 million and
$177.4 million at December 31, 2019 and 2018, respectively.

39
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

8. Pension and Similar Plans and Other Postretirement Benefit Plans (continued)

SLR’s funding policy is to contribute amounts to the plan sufficient to meet the minimum funding
requirements set forth in the Employee Retirement Income Security Act of 1974, plus such
additional amounts as SLR may determine to be appropriate from time to time. SLR contributed
approximately $7.8 million and $6.5 million to the Non-union Plan in 2019 and 2018, respectively.
SLR expects to contribute $8.0 million to the plan in 2020.

The actuarial loss (gain) in 2019 and 2018 primarily relates to changes in the discount rate and
mortality table and improvement scale to measure the benefit obligations.

The following table sets forth the components of net periodic benefit cost (credit) for the years
ended December 31:

Retirement Benefits Health Retirement Benefits

2019 2018 2019 2018
(In Thousands)

Service cost $ – $ – $ 152 $ 180

Interest cost 7,433 6,842 392 401
Expected return on plan assets (7,100) (7,821) – –
Amortization of net prior service cost 40 40 – –
Amortization of actuarial loss (gain) 2,994 2,784 (1,909) (44)
Total net periodic benefit cost (credit) $ 3,367 $ 1,845 $ (1,365) $ 537

Retirement Health Retirement

Benefits Benefits Total
2019 2018 2019 2018 2019 2018
(In Thousands)

Other changes recognized in

unrestricted net assets
Actuarial loss (gain) $ 1,251 $ 2,120 $ (968) $ (717) $ 283 $ 1,403
Amortization of net prior service cost (40) (40) – – (40) (40)
Amortization of actuarial loss (gain) (2,994) (2,784) 1,909 44 (1,085) (2,740)
Total recognized in unrestricted
net assets $ (1,783) $ (704) $ 941 $ (673) $ (842) $ (1,377)

40
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

8. Pension and Similar Plans and Other Postretirement Benefit Plans (continued)

Health Retirement
Retirement Benefits Benefits
2019 2018 2019 2018
(In Thousands)
Amount unrecognized in unrestricted
net assets
Actuarial loss (gain) $ 83,181 $ 84,924 $ 252 $ (689)
Prior service cost 343 383 – –
$ 83,524 $ 85,307 $ 252 $ (689)

The actuarial loss (gain) and prior service cost included in unrestricted net assets at December 31,
2019, and expected to be recognized in net periodic benefit cost during the year ending
December 31, 2020, for the retirement and health retirement benefit plans are approximately
$2.9 million and $0.3 million, respectively.

Weighted-average assumptions used in determining the net periodic pension cost are as follows:

Health Retirement
Retirement Benefits Benefits
2019 2018 2019 2018

Discount rate 4.30% 3.60% 4.05% 3.30%

Expected long-term rate of return on
plan assets 5.50% 5.50% N/A N/A
Initial health care trend N/A N/A 6.50% 6.50%
Ultimate health care trend N/A N/A 5.00% 5.00%
Year in which ultimate care trend
is reached N/A N/A 2025 2025

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

8. Pension and Similar Plans and Other Postretirement Benefit Plans (continued)

The assumed health care cost trend rate has a significant effect on the amounts reported for other
postretirement benefits. A one-percentage-point change in the assumed health care cost trend rate
would have the following effects:

2019 2018
1% 1% 1% 1%
Increase Decrease Increase Decrease
(In Thousands)
Effect on total of service and interest cost
components $ 19 $ (17) $ 23 $ (21)
Effect on postretirement
benefit obligation 390 (352) 479 (433)

The expected long-term rate of return on plan assets assumption was based on expected rates of
return, plus inflation, less anticipated expense paid from the plan assets. The expected return rate
selected was consistent with historical returns and target percentages for various asset classes and
with the Non-union Plan’s desired investment return objectives (in the context of a long-term
inflation rate of 2.5%). The investment objective for the Non-union Plan is to achieve a targeted
long-term rate of investment return that is approximately 4.75% (5.50% at December 31, 2018).
SLR’s target asset allocations are 17% in equity securities (which includes equities, mutual funds,
and multi-strategy hedge funds), and 83% in debt securities (which includes fixed income and cash
equivalents).

Expected benefit payments by year as of December 31, 2019, follows:

Health
Retirement Retirement
Benefits Benefits
(In Thousands)

2020 $ 11,232 $ 1,213

2021 11,506 1,250
2022 11,544 1,162
2023 11,607 1,041
2024 11,554 836
2025–2029 56,290 3,218

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

8. Pension and Similar Plans and Other Postretirement Benefit Plans (continued)

Multi-Employer Defined Benefit Plans

SLR also provides pension and similar benefits to its union employees through various multi-
employer defined benefit plans. Approximately 79% of SLR’s employees are covered by union
plans. The total cost relating to multi-employer defined pension plans amounted to approximately
$37.1 million and $33.9 million for the years ended December 31, 2019 and 2018, respectively.

SLR’s contributions to the multi-employer defined benefit union plans and non-union defined
contribution plans are generally based on gross salaries or fixed annual amounts per employee. It
is SLR’s policy to fund accrued costs under these plans on a current basis. SLR contributions to
its multi-employer pension funds for the years ended December 31, 2019 and 2018, are as follows:

2019 2018
(In Thousands)

1199 SEIU Health Care Employees Pension Fund (1199)(a) $ 21,570 $ 19,176
New York State Nurses Association Pension Fund (NYSNA)(b) 14,461 13,598
1199 SEIU Health Care Employees Health & Welfare Fund(c) 41,871 40,073
New York State Nurses Association Health & Welfare Fund(c) 25,495 24,778
Other pension funds(d) 1,118 1,135
$ 104,515 $ 98,760

(a)
Represents less than 5% of total plan contributions, based on available Form 5500.

(b)
Represents greater than 5% of total plan contributions, based on available Form 5500.

(c)
This benefit fund provides medical benefits (health, dental, prescription, vision) for active
employees and retirees. Eligibility for benefit coverage level and type is dependent upon their
status as an active employee or retiree.

(d)
Consists of four pension funds in which SLR’s participation is individually and in the aggregate
insignificant.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

8. Pension and Similar Plans and Other Postretirement Benefit Plans (continued)

The following table includes additional disclosure information related to the 1199 SEIU Health
Care Employees Pension Fund and NYSNA Pension Fund.

Pension Expiration Date

Protection Act FIP/RP(b) of Collective-
EIN/Pension Zone Status(a) Status Surcharge Bargaining
Plan Number 2019 2018 Pending Imposed Agreement

13-3604862/001 (1199) Green as of Green as of

1/1/2019 1/1/2018 N/A No 9/30/21
13-6604799/001 Green as of Green as of
(NYSNA) 1/1/2019 1/1/2018 N/A No 12/31/22

(a)
A zone status rating of green indicates the plan is at least 80% funded.

(b)
Funding improvement plan (FIP) or rehabilitation plan (RP).

At the date SLR’s consolidated financial statements were issued, Form 5500 was not available for
the NYSNA or 1199 SEIU Health Care Employees Pension Funds for the year ended in 2019.

9. Net Assets With Donor Restrictions

Net assets with donor restrictions that are perpetual in nature represent endowment assets that have
been restricted by donors to be maintained in perpetuity and invested by SLR. SLR follows the
requirements of the New York Prudent Management of Institutional Funds Act (NYPMIFA) as
they relate to its endowment assets.

SLR has interpreted NYPMIFA as requiring the preservation of the fair value of the original gift
as of the gift date of the donor-restricted endowment fund, absent explicit donor stipulations to the
contrary. As a result of this interpretation, SLR classifies as endowment assets the original value
of the gifts donated to the permanent endowment and the original value of subsequent gifts to the
permanent endowment. Accumulations to the endowment assets are used in accordance with the
direction of the applicable donor gift. The remaining portion of the donor-restricted endowment
fund that is not classified in net assets with donor restrictions that are perpetual in nature is
classified as net assets with donor restrictions that are temporary in nature until the amounts are
appropriated for expenditure in accordance with a manner consistent with the standard of prudence
prescribed by NYPMIFA. In accordance with NYPMIFA, SLR considers the following factors in

44
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

9. Net Assets With Donor Restrictions (continued)

making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the

duration and preservation of the fund; (2) the purposes of SLR and the donor-restricted endowment
fund; (3) general economic conditions; (4) the possible effect of inflation and deflation; (5) where
appropriate and circumstances would otherwise warrant, alternatives to expenditure of the
endowment fund, giving due consideration to the effect that such alternatives may have on the
institution; (6) the expected total return from income and the appreciation of investments; (7) other
resources of SLR; and (8) the investment and spending policies of SLR. SLR’s policies provide
the guidelines for setting the annual spending rate (4.5%) and the treatment of any investment
returns in excess of the annual spending rate. The endowment spend rate is calculated on the
average three-year rolling market value of each endowed fund. Any excess investment returns
beyond the spending rate, to the extent available, are added to with donor restrictions and classified
appropriately.

SLR has adopted investment and spending policies for endowment assets that attempt to provide
a predictable stream of funding to programs supported by its endowment. Endowment assets are
invested in a manner to provide that sufficient assets are available as a source of liquidity for the
intended use of the funds, achieve the optimal return possible within the specified risk parameters,
prudently invest assets in a high-quality diversified manner, and adhere to the established
guidelines.

To satisfy its long-term rate-of-return objectives, SLR relies on a total return strategy in which
investment returns are achieved through both capital appreciation (realized and unrealized) and
current yield (interest and dividends). SLR targets a diversified asset allocation that places a greater
emphasis on equity-based investments to achieve its long-term return objectives within prudent
risk constraints.

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 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

9. Net Assets With Donor Restrictions (continued)

Net assets with donor restrictions that are temporary in nature are available to support program
activities as stipulated by donors. Net assets with donor restrictions that are perpetual in nature are
restricted to investment in perpetuity with the income expendable to support program activities as
stipulated by donors. Net assets with donor restrictions that are temporary in nature are restricted
as follows at December 31:

2019 2018
(In Thousands)

Education $ 1,390 $ 2,268

Equipment and construction 22,837 21,201
Research 1,917 1,628
Program improvements 9,569 5,244
Other 17,210 11,429
$ 52,923 $ 41,770

Net assets with donor restrictions that are perpetual in nature are restricted as follows at
December 31:

2019 2018
(In Thousands)
Investments to be held in perpetuity, the income from
which is unrestricted $ 38,818 $ 38,818
Investments to be held in perpetuity, the income from
which is temporarily restricted for:
Research 5,132 5,132
Education 3,535 3,533
Equipment and construction 3,541 3,541
Program improvements 8,718 8,719
$ 59,744 $ 59,743

Investments to be held in perpetuity are included in pooled investments, other assets and assets
limited as to use in the accompanying consolidated statements of financial position.

46
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

9. Net Assets With Donor Restrictions (continued)

For the years ended December 31, 2019 and 2018, net assets were released from restrictions by
incurring expenses and satisfying the restricted purposes of health education and program
improvement and research in the amount of approximately $3.4 million and $4.6 million,
respectively.

10. Functional Expenses

SLR provides healthcare and other services to residents within its geographical location. Expenses
related to providing these services for the years ended December 31, 2019 and 2018, are as follows:

2019 2018
Program Program
Health Care Support and Health Care Support and
and Related General and Related General
Services Services Total Services Services Total
(In Thousands)

Salaries and wages $ 459,069 $ 77,705 $ 536,774 $ 451,599 $ 67,931 $ 519,530

Employee benefits 153,898 16,566 170,464 150,381 16,339 166,720
Supplies and other 542,006 3,587 545,593 497,262 3,954 501,216
Depreciation and
amortization 80,121 – 80,121 68,426 – 68,426
Interest and amortization 17,436 – 17,436 14,863 – 14,863
$ 1,252,530 $ 97,858 $ 1,350,388 $ 1,182,531 $ 88,224 $ 1,270,755

The financial statements report certain expense categories that are attributable to more than one
healthcare service or support function. Therefore, these expenses require an allocation on a
reasonable basis that is consistently applied. Costs not directly attributable to a function are
allocated to a function based units of service basis or are otherwise allocated based on revenue.

47
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

11. Related Organizations

SLR has various transactions with other related organizations of MSHS. The following table
summarizes amounts due to related organizations at December 31:

2019 2018
(In Thousands)

BIMC, net intercompany transactions(a) $ (24,294) $ (25,536)

BIMC loan(a) (262) (448)
MSH, net intercompany transactions(b) (142,509) (73,538)
MSH loan(b) (167,027) (103,518)
ISMMS, net intercompany transactions(c) (20,087) (24,214)
MSMC Residential Realty LLC – (1,513)
(354,179) (228,767)
Less: current portion 77,152 100,249
$ (277,027) $ (128,518)

(a)
Net transactions charged (at cost) between SLR and BIMC for payroll and benefits charges and
various other shared services totaled approximately $24.3 million and $49.3 million during the
years ended December 31, 2019 and 2018, respectively.
In April 2011, SLR entered into a $1.6 million loan agreement with BIMC to finance capital
improvements. The loan has a ten-year term and bears interest at 5.0% per annum. Principal and
interest payments are due monthly.
(b)
Transactions charged (at cost) by MSH to SLR, totaled approximately $91.0 million and
$78.3 million during the years ended December 31, 2019 and 2018, respectively. Included in
the charges are certain employee health plan claims and premiums, which are paid by MSH and,
subsequently, charged to SLR. SLR has entered into a promissory note agreement with MSH
for up to $200 million to fund various capital projects, with interest-only payments until July 1,
2030. The loan balance of $167.0 million and $103.5 million in 2019 and 2018, respectively, is
included in due to related organizations, less current portion in the accompanying consolidated
statements of financial position.
(c)
SLR purchases professional services from ISMMS for the clinical care of its patients, teaching
and supervision of its residents, the performance of certain administrative functions, and various
strategic initiatives. Transactions charged (at cost) by ISMMS to SLR totaled approximately
$55.9 million and $61.4 million during the years ended December 31, 2019 and 2018,
respectively.

48
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

11. Related Organizations (continued)

SLR has an agreement with A&J (the Management Agreement) and conducts various transactions
with A&J. These transactions include payroll and benefits charges and various other shared
services. Among the requirements included in the Management Agreement, SLR, acting as agent,
shall collect all rents on A&J’s behalf and from these amounts collected, pay operating expenses
incurred in the management and maintenance of the premises. To the extent rents are insufficient
to meet these operating expenses, any required capital expenditures, or any indebtedness
obligations under the mortgage loan (see Note 5), SLR shall pay such costs or an indemnity fee to
A&J from its own resources. For these services, SLR shall be paid a management fee which shall
be the equivalent of the excess of rents collected over operating expenses incurred, up to an amount
not to exceed 2% of rents collected. Management fees paid under this agreement are considered to
be operating expenses of A&J in the operation of the premises. SLR charged management fees of
approximately $271,000 and $293,000 to A&J for the years ended December 31, 2019 and 2018,
respectively.

SLR has a management agreement and various transactions with BIMC and the 59th St.
Condominium. These transactions include payroll and benefits charges and various other shared
services. Among other requirements included in the management agreement, BIMC, acting as
agent, shall collect all rents on the 59th St. Condominium’s behalf and out of these amounts
collected, pay operating expenses incurred in the management and maintenance of the premises.
For these services, BIMC shall be paid a management fee of 1.25% of gross rental income received
by the 59th St. Condominium. Management fees paid under this agreement are considered to be
operating expenses of the 59th St. Condominium in the operation of the premises. The
management fees charged by BIMC to the 59th St. Condominium were approximately $121,000
and $107,000 for the years ended December 31, 2019 and 2018, respectively. Approximately 91%
of the leasable space is rented by SLR (which also approximates 98% of total rental income for
the 59th St. Condominium).

As discussed in Note 5 and in accordance with the mortgage loan agreement, approximately
$8.0 million of proceeds received from this financing was transferred to SLR. The balance
fluctuates based on transactions between SLR and the 59th St. Condominium. During 2019 and
2018, the 59th St. Condominium has continued to provide financing funding to SLR. A portion of
the financing has been repaid by SLR through various services provided to the 59th St.
Condominium. The balance at December 31, 2019 and 2018 is approximately $20.6 million and
$17.8 million, respectively. This amount carries no specific repayment terms, does not bear any
interest and is eliminated upon consolidation.

49
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

11. Related Organizations (continued)

Transfers from Affiliates

MSH transferred $25.0 million to SLR for EPIC funding in 2018. No such transfers were made in
2019.

12. Commitments and Contingencies

Litigation

SLR is a defendant in various legal actions arising out of the normal course of its operations. The
ultimate outcome of these cases cannot be predicted at this time. Management does not believe
that the ultimate outcome of these matters will have a material adverse effect on SLR’s
consolidated financial position.

Collective Bargaining Agreements

Approximately 79% of SLR’s employees are union employees who are covered under the terms
of various collective bargaining agreements. The 1199 contract will expire on September 30, 2021.
SLR’s contract with NYSNA will expire on December 31, 2022.

Other

SLR is self-insured, based on individual employees’ elections, for medical, dental, and
pharmaceutical benefits. SLR also is self-insured for unemployment benefits. Liabilities have been
accrued at December 31, 2019 and 2018, based on expected future payments pertaining to such
years (included in accrued salaries and related liabilities in the accompanying consolidated
statements of financial position).

50
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

13. Fair Values of Financial Instruments

For assets and liabilities requiring fair value measurement, SLR measures fair value based on the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. SLR follows a fair value hierarchy based
upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.
The three levels are defined as follows:

Level 1 – Quoted prices (unadjusted) in active markets that are accessible at the measurement
date for identical assets or liabilities. The fair value hierarchy gives the highest priority to
Level 1 inputs.
Level 2 – Observable inputs that are based on inputs not quoted in active markets, but
corroborated by market data.
Level 3 – Unobservable inputs are used when little or no market data is available. The fair
value hierarchy gives the lowest priority to Level 3 inputs.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest
level of input that is significant to the fair value measurement. In determining fair value, SLR uses
valuation techniques that maximize the use of observable inputs and minimize the use of
unobservable inputs to the extent possible, as well as considers nonperformance risk in its
assessment of fair value. Investments valued based upon net asset value (NAV) are not subject to
the valuation hierarchy.

Financial assets carried at fair value by SLR as of December 31, 2019, are classified in the table
below in one of the three categories described above:

Level 1 Level 2 Level 3 Total

(In Thousands)

Cash and cash equivalents $ 130,711 $ – $ – $ 130,711

Fixed income 95,711 – – 95,711
$ 226,422 $ – $ – 226,422
Investments measured at
NAV as a practical
expedient:
Pooled investments 48,363
$ 274,785

51
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

13. Fair Values of Financial Instruments (continued)

Financial assets carried at fair value by SLR as of December 31, 2018, are classified in the table
below in one of the three categories described above:

Level 1 Level 2 Level 3 Total

(In Thousands)

Cash and cash equivalents $ 78,204 $ – $ – $ 78,204

Fixed income 93,071 – – 93,071
$ 171,275 $ – $ – 171,275
Investments measured at
NAV as a practical
expedient:
Pooled investments 42,976
$ 214,251

The tables above exclude investments held by the captive insurance companies and investments
held with Self-Insurance Trust (see Note 1 and Note 7).

The following is a summary of total investments (by major category) in the investment pool with
restrictions to redeem the investments at the measurement date, any unfunded capital
commitments, and investment strategies of the investees as of December 31, 2019:

Redemption
Description of Carrying Unfunded Redemption Notice
Investment Value Commitments Frequency Period Funds Availability

Hedge funds:
Long-only equity $ 315,111 $ – Monthly/5 years 30 to 90 days 3 to 30 days
Hedged equity 339,801 – Monthly/3 years 30 to 90 days 30 to 45 days
Long/short credit 58,749 – Monthly 30 days 180 days
Open mandate 296,325 – Quarterly/Annual 60 to 90 days 30 days
Macro 105,610 – Quarterly /Semiannually 45 to 90 days 30 days
Private investments:
Equity 105,763 114,409 N/A N/A N/A
Credit/distressed 62,827 28,124 N/A N/A N/A
Real assets 233,203 51,514 N/A N/A N/A
$ 1,517,389 $ 194,047

52
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

13. Fair Values of Financial Instruments (continued)

Defined Benefit Plan Assets

The fair values of plan assets and fair value hierarchy at December 31 are as follows:

2019
Level 1 Level 2 Level 3 Total
(In Thousands)

Cash and cash equivalents $ 2,201 $ – $ – $ 2,201

Equities 1,893 – – 1,893
Fixed income 123,376 – – 123,376
Mutual funds 9,002 6,478 – 15,480
$ 136,472 $ 6,478 $ – 142,950
Investments measured at
NAV as a practical
expedient:
Multi-strategy hedge
funds 9,938
$ 152,888

2018
Level 1 Level 2 Level 3 Total
(In Thousands)

Cash and cash equivalents $ 2,362 $ – $ – $ 2,362

Equities 1,496 – – 1,496
Fixed income 104,627 – – 104,627
Mutual funds 7,359 4,929 – 12,288
$ 115,844 $ 4,929 $ – 120,773
Investments measured at
NAV as a practical
expedient:
Multi-strategy hedge
funds 9,087
$ 129,860

53
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

14. Other Revenue

Other revenue includes operating revenues that are not directly related to SLR’s patient services.
Major items included in other revenue are revenues derived from outreach pharmacy activities of
$79.8 million in 2019 and $74.9 million in 2018, grants and contracts revenue of $10.2 million in
2019 and $13.2 million in 2018, rental income of $12.2 million in 2019 and $13.2 million in 2018,
captive distributions of $282,000 in 2019 and $8.1 million in 2018 and distributions from
Healthfirst of $9.4 million for both years 2019 and 2018.

15. Liquidity and Available Resources

Financial assets available for general expenditure within one year at December 31, consist of the
following:

2019 2018
(In Thousands)

Cash and cash equivalents $ 114,486 $ 51,749

Patient accounts receivable, net 136,383 123,820
Assets limited as to use – internally designated 58,589 62,792
$ 309,458 $ 238,361

SLR has certain internally designated assets limited as to use which are available for general
expenditure within one year in the normal course of operations. Accordingly, these assets have
been included in the qualitative information above. SLR has other assets limited as to use for
donor-restricted purposes and debt service. These assets limited as to use, which are more fully
described in Note 3 are not available for general expenditure within the next year and are not
reflected in the amounts above.

As of December 31, 2019, SLR was in compliance with debt covenants; see Note 5.

16. Subsequent Events

For purposes of the accompanying consolidated financial statements, SLR has considered for
accounting and disclosure events that occurred through March 31, 2020, the date the consolidated
financial statements were issued. Except for disclosure below, there were no other subsequent
events transactions that resulted in recognition in the accompanying consolidated financial
statements or required additional disclosure.

54
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Notes to Consolidated Financial Statements (continued)

16. Subsequent Events (continued)

Due to the global viral outbreak caused by Coronavirus Disease 2019 (COVID-19) in 2020, there
have been resulting effects which could negatively impact SLR’s financial condition. The ultimate
impact of these matters to SLR and its financial condition is presently unknown. The
accompanying consolidated financial statements do not reflect the effects of these subsequent
events.

55
Supplementary Information
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Consolidating Statement of Financial Position

December 31, 2019

59th Street
SLR A&J Condominium Eliminations Total
(In Thousands)
Assets
Current assets:
Cash and cash equivalents $ 104,415 $ 1,177 $ 8,894 $ – $ 114,486
Patient accounts receivable, net 136,383 – – – 136,383
Professional liabilities insurance recoveries receivable,
current portion 18,084 – – – 18,084
Assets limited as to use, current portion 67,808 – – – 67,808
Inventories 15,395 – – – 15,395
Other current assets 2,451 610 263 – 3,324
Due from related organizations, current portion – 4,739 – (4,739) –
Total current assets 344,536 6,526 9,157 (4,739) 355,480

Pooled investments 48,363 – – – 48,363

Investments held by captive insurance companies 70,131 – – – 70,131
Assets limited as to use, less current portion 44,116 – 12 – 44,128
Beneficial interest in self-insurance trust 40,960 – – – 40,960
Other assets 31,719 – – – 31,719
Right-of-use assets 27,090 – – – 27,090
Professional liabilities insurance recoveries receivable,
less current portion 82,385 – – – 82,385
Property, plant, and equipment, net 674,493 8,103 13,942 – 696,538
Due from related organization, less current portion – – 20,634 (20,634) –
Total assets $ 1,363,793 $ 14,629 $ 43,745 $ (25,373) $ 1,396,794

Liabilities and net assets (deficit)

Current liabilities:
Accounts payable and accrued expenses $ 104,923 $ 359 $ 73 $ – $ 105,355
Accrued salaries and related liabilities 79,845 – – – 79,845
Accrued interest payable 537 – 153 – 690
Long-term debt, current portion 15,042 1,903 1,855 – 18,800
Operating lease liabilities, current portion 4,426 – – – 4,426
Professional liabilities, current portion 18,084 – – – 18,084
Due to related organizations, current portion 81,891 – – (4,739) 77,152
Other current liabilities 34,145 – – – 34,145
Total current liabilities 338,893 2,262 2,081 (4,739) 338,497

Due to related organizations, less current portion 297,661 – – (20,634) 277,027

Long-term debt, less current portion 164,858 99,837 27,389 – 292,084
Operating lease liabilities, less current portion 23,131 – – – 23,131
Accrued pension and other postretirement benefits, less
current portion 50,290 – – – 50,290
Professional liabilities, less current portion 82,385 – – – 82,385
Estimated self-insurance liability 40,960 – – – 40,960
Other liabilities 307,942 – – – 307,942
Total liabilities 1,306,120 102,099 29,470 (25,373) 1,412,316

Net assets (deficit):

Net assets without donor restrictions (54,994) (87,470) 14,275 – (128,189)
Net assets with donor restrictions 112,667 – – – 112,667
Total net assets (deficit) 57,673 (87,470) 14,275 – (15,522)
Total liabilities and net assets (deficit) $ 1,363,793 $ 14,629 $ 43,745 $ (25,373) $ 1,396,794

56
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Consolidating Statement of Operations

Year Ended December 31, 2019

59th Street
SLR A&J Condominium Eliminations Total
(In Thousands)
Operating revenue
Net patient service revenue $ 1,178,745 $ – $ – $ – $ 1,178,745
Investment income and net realized gains and
losses on sales of securities 5,540 – 53 – 5,593
Contributions 1,236 – – – 1,236
Rental income - 10,220 9,017 (7,018) 12,219
Other revenue 119,579 1,129 – – 120,708
Net assets released from restrictions 3,371 – – – 3,371
Total operating revenue before other items 1,308,471 11,349 9,070 (7,018) 1,321,872

Operating expenses
Salaries and wages 534,952 1,085 737 – 536,774
Employee benefits 169,965 260 239 – 170,464
Supplies and other 546,843 3,908 1,860 (7,018) 545,593
Depreciation 77,621 810 1,690 – 80,121
Interest and amortization 11,251 4,238 1,947 – 17,436
Total operating expenses before other items 1,340,632 10,301 6,473 (7,018) 1,350,388
(Deficiency) excess of operating revenue over
operating expenses before other items (32,161) 1,048 2,597 – (28,516)

Other items
Change in net unrealized gains and losses on
investments and assets limited as to use and
change in value of alternative investments 4,327 – – – 4,327
Net periodic pension and postretirement benefit
costs (non-service related) (1,850) – – – (1,850)
(Deficiency) excess of revenue over expenses (29,684) 1,048 2,597 – (26,039)

Other changes in net assets without donor

restrictions
Change in pension and other postretirement
benefits liabilities to be recognized in future
periods 842 – – – 842
Net (decrease) increase in net assets without
donor restrictions $ (28,842) $ 1,048 $ 2,597 $ – $ (25,197)

57
 The St. Luke’s-Roosevelt Hospital Center and Affiliates

Consolidating Statement of Cash Flows

Year Ended December 31, 2019

59th Street
SLR A&J Condominium Total
(In Thousands)
Operating activities
Change in net assets $ (17,688) $ 1,048 $ 2,597 $ (14,043)
Adjustments to reconcile change in net assets to net cash
provided by operating activities:
Depreciation 77,621 810 1,690 80,121
Amortization of deferred financing fees 366 22 57 445
Change in pension and postretirement benefits liabilities
to be recognized in future periods (842) – – (842)
Change in net unrealized gains and losses and realized
gains and losses from investments and assets limited as
to use (3,645) – – (3,645)
Net donor restricted contributions (14,525) – – (14,525)
(Decrease) increase in cash resulting from a change in:
Patient accounts receivable, net (12,563) – – (12,563)
Accounts payable and accrued expenses (8,468) – – (8,468)
Accrued salaries and related liabilities and other
current liabilities 4,256 – – 4,256
Change in right-of-use assets 22 – – 22
Net effect of increases and decreases in other
operating assets and liabilities (10,622) 563 (59) (10,118)
Net cash provided by operating activities 13,912 2,443 4,285 20,640

Investing activities
Acquisitions of property, plant, and equipment, net (110,393) – – (110,393)
Decrease (increase) in assets limited as to use 11,460 (22) (42) 11,396
Funding of self-insurance trust (11,383) – – (11,383)
Decrease in investments, net 20,392 – – 20,392
Net cash used in investing activities (89,924) (22) (42) (89,988)

Financing activities
Principal payments on long-term debt (14,543) (1,853) (1,686) (18,082)
Proceeds from (payments to) related parties, net 128,168 124 (2,880) 125,412
Net donor restricted contributions 14,525 – – 14,525
Net cash provided by (used in) financing activities 128,150 (1,729) (4,566) 121,855

Net increase (decrease) in cash, cash equivalents and restricted

cash 52,138 692 (323) 52,507
Cash, cash equivalents and restricted cash at beginning of year 68,502 485 9,217 78,204
Cash, cash equivalents and restricted cash at end of year $ 120,640 $ 1,177 $ 8,894 $ 130,711
Reconciliation of cash, cash equivalents and restricted cash at
end of year to the consolidated statements of financial
position
Cash and cash equivalents $ 104,415 $ 1,177 $ 8,894 $ 114,486
Assets limited as to use: cash and cash equivalents 16,225 – – 16,225
Total cash, cash equivalents and restricted cash $ 120,640 $ 1,177 $ 8,894 $ 130,711

Non-cash investing and financing transaction

Assets acquired under finance leases obligations $ 106 $ – $ – $ 106

58
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