New Financing Strategies

* Artist rendering.
Maryland Healthcare Financial Management Association Annual Institute
Capital Planning – New Financing Strategies
Tuesday, March 4, 2014
Richard Baum, Assistant Treasurer, NYU Langone Medical Center
Cautionary Statement Regarding Forward-Looking Statements
Certain statements included, incorporated by reference or verbally discussed constitute projections or
estimates of future events, generally known as forward-looking statements. These statements are
generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget” or other
similar words.
The achievement of certain results or other expectations contained in such forward-looking statements
involves known and unknown risks, uncertainties and other factors which may cause actual results,
performance or achievements described to be materially different from any future results, performance
or achievements expressed or implied by these forward-looking statements. NYUHC does not plan to
issue any updates or revisions to those forward-looking statements if or when changes in its
expectation, or events, conditions or circumstances on which such statements are based occur.
NYUHC’s operations are subject to various risks, including without limitation those risks described under
the heading, “Bondowners’ Risk and Matters Affecting the Health Care Industry” in the Official
Statement relating to NYU Hospitals Center Taxable Bonds, Series 2013A, available at
www.emma.msrb.org. If any of these or other risks occur, or if the assumptions underlying any of the
statements set forth in this document prove incorrect, the actual results may significantly differ from
those expressed or implied by such statements.
NYUHC does not update forward-looking statements retrospectively. Such statements are valid on the
date of publication and can be superseded.
Note: Cover image – artist’s rendering of future campus including NYU School of Medicine Facilities.
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Unique Structure for NYU Langone Medical Center
New York University
 NYULMC is an integrated academic
medical center in midtown Manhattan with
outpatient centers across the region:
 Tisch Hospital (546 beds).
NYU Langone Medical Center
 Hospital for Joint Diseases (157 beds).
 Ambulatory care network.
School of Medicine
(including Faculty
Group Practice)
NYU
Hospitals
Center
Key:
Member of the Obligated Group
CCC550
Sole member
Unincorporated division of
New York University
Note: Neither New York University nor its School of Medicine are obligated with
respect to NYUHC’s Bonds or commercial debt. No assets or revenues of New York
University or its School of Medicine are pledged to secure or available to pay debt
service with respect to NYUHC’s debt obligations. CCC550, NYU Hospitals Center’s
wholly owned captive insurance company, is also not obligated with respect to
NYUHC’s debt obligations and no assets or revenues of CCC550 are pledged to secure
or available to pay debt service with respect to NYUHC’s debt obligations.
 NYU Physician Network including NYU
School of Medicine (“NYUSM”) Faculty
Group Practice and private physicians:
 2,300+ physicians.
 Over 100 medical practices.
 NYULMC is a virtual entity with one
management team and one board of
trustees making the key decision across
the hospital and school of medicine.
 NYULMC FY 2013 operating revenues:
$3.3 billion (including NYUHC ~ $1.9
billion)
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Commitment to the “Pursuit of Excellence”
Investment in Technology
 EPIC - First fully integrated Clinical
and Billing system in New York
 Performance Dashboards
 Data Center - Key infrastructure
component for the future Campus
Transformation
 Broad System Implementation
 PeopleSoft - New Enterprise
Resource Planning System
 Enterprise Data Warehouse &
Business Intelligence
Dedication to Clinical Quality
Ranked #14
in the nation on the
“Best Hospitals
Honor Roll” with 12
nationally ranked
specialties
Ranked #1 for surgical
care
among the nation’s
academic medical centers
Ranked #1 for Patient
Safety and Quality.
Recipient of the 2013
Quality Leadership Award
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Expanding Inpatient and Ambulatory Facilities in Manhattan
Expanded ambulatory presence in the last
three years:
 Musculoskeletal Center (110,000 sq.
ft.)
 Ambulatory Center (300,000 sq. ft.)
 Outpatient Surgery Center (18,000 sq.
ft.)
 An extension clinic at NYUSM’s Joan
H. Tisch Center for Women’s Health
 Tisch Center for Men’s Health
 NYU Langone Internal Medicine – The
Miller Practice
Affiliated Hospitals (Manhattan and Brooklyn):
 Bellevue Hospital Center
 Gouverneur Healthcare Services
PERELMAN
 New York Harbor Veterans Affairs
Medical Center
 Woodhull Hospital Medical Center
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Growing Physician Presence Across Region
Expanded geographic presence
beyond Manhattan through new
physician relationships:
 Outpatient care centers (i.e.
Oncology, Orthopaedics)
 Specialist outreach programs
Acquired and opened outpatient
centers outside of Manhattan:
 Brooklyn Endoscopy and
Ambulatory Surgery Center
 Hudson Valley Cardiology
(Westchester, NY)
 Columbus Medical Center
(Queens, NY)
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NYULMC Campus Transformation Project*
Expand NYULMC patient care, research and education footprint to 3.5 million sq. ft. of facility space
 Tisch Hospital – elevator/lobby renovation - completed April 2013; 100% funded by philanthropy
 Energy Building – supply electricity to First Avenue campus - construction FY 2012 - 2016
 Science Building construction - NYUSM research facilities; University funded; construction FY 2013 2018 (300,000 sq. ft.)
 ED Renovation – Tisch Hospital; expected to open Spring 2014 (change from 6,900 to 16,900 sq. ft.)
 Kimmel Pavilion – new 22-story clinical pavilion on the First Avenue Campus; expected construction
FY 2014 – 2017 (830,200 sq. ft.)
* Artist rendering.
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Coordinated Approach for NYU Langone Medical Center

Utilize working capital lines of
credit to fund project cash flow
requirements on a revolving basis

Capture taxable and tax-exempt
market opportunities to “take out”
lines of credit with permanent
financings

Effectively fit debt with other
sources of funds – philanthropy
and equity

“Tranche” permanent debt to lower
cost of negative carrying cost

Coordinate sources of funding
across NYUHC and NYUSM debt
strategies



Projects are funded by each
respective campus (NYUHC
and NYUSM)
NYUHC is obligated on
NYUHC debt
NYUSM is part of NYU debt
structure
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NYU Hospitals Center: Taxable Debt Strategy
Long-Term Debt Outstanding as of January 31,
2014 ($000s)
Line of Credits
 NYUHC line of credit capacity ~ $500 million; diversified across 4
banks
 $150 million drawn; $350 million available as of January 31, 2014
 Provides flexible terms for use and repayment
 Lines of credit provides “bridge” funding to permanent debt
Taxable Fixed Rate Bonds Advantages/Disadvantages
 Utilize taxable permanent debt for campus transformation and
physician network expansion
 Market opportunities for lower cost
 Relative interest rates
 Seek to reduce pre-funding and carrying costs
 Short timeline to enter market
 Flexible use of funds
 Immediate access to proceeds
 Eliminates fees related to tax-exempt debt
 Make whole call provision
Tax-Exempt Debt Issue Advantages/Disadvantages
 Call provisions (10 year par call)
Underlying Debt Mix (000's)
Fixed
$ 1,106,699
88%
Variable
150,000
12%
$ 1,256,699
100%
 Amortizing principal payments annually creates debt capacity as
debt is paid down
 Longer timetable to close transaction
 Requires DASNY and NYSDOH approvals
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Managing Taxable Debt - Series 2012A $250 million and Series 2013A $350 million
 NYUHC established working capital discipline to fund liquidity and taxable bullet
repayment
 Capital and program reserve fund
 Debt retirement fund for 30-year taxable bullet principal repayment
 Defined flexible use of proceeds: General corporate purposes, including to repay certain
lines of credit, to pay the costs of various construction, renovation and equipping projects,
and working capital
 Seek market opportunities to tranche debt funding in taxable market
 Pricing:
Series 2012A – 4.42% (T + 188 bps) July 2012
 Pricing:
Series 2013A – 5.75% (T + 210 bps) July 2013
 NYUHC has been out front in its communications to the investor community
(tax-exempt and taxable investors)
 Repeated market updates on implications of Superstorm Sandy
 Investment banking conferences
 Transaction marketing (net roadshow, tour of NYUHC facility)
 Involvement of entire executive team in communication strategy
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Financial and Operational Performance Update
 Since 2007, NYUHC rating upgrades: “Baa3/BBB+/BBB+” to “A3/A-/A-”
 FY 2013 performance impacted by Superstorm Sandy
 Inpatient facilities at Tisch Hospital closed for 60 days
 Services at Hospital for Joint Diseases continued, with 7-day operations
 Outpatient facilities and majority of physician offices open throughout period
 Status Update:
 FEMA initial recovery monies received $179.3 million to date; continuing
calculations on funding recovery and mitigation efforts
 Continuing conversations with commercial insurance companies and NIH
 Operations restored throughout campus, with the exception of ED
 Urgent Care Center within Tisch Hospital
 New, expanded ED scheduled to open in Spring 2014
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NYUHC Financial Performance
($000)
Fiscal Year Ended August 31,
(Audited)
2012 (3)
2011
2012
$1,625,839
$1,830,158
$1,662,617
$385,837
$481,253
75,380
141,287
269,326
115,822
79,118
Total Operating Revenue
1,701,219
1,971,445
1,931,943
501,659
560,371
Total Operating Expenses
1,515,456
1,722,693
1,884,135
467,931
507,389
185,763
248,752
47,808
33,728
52,982
460
(1,803)
(41,252)
(31,847)
5,981
NYUSM Mission Support
(45,000)
(27,750)
(35,735)
(35,735)
(22,500)
Excess (deficiency) of
Revenue Over Expenses
141,223
$219,199
$(29,179)
$(33,854)
$36,463
21,551
(94,567)
169,200
10,306
8,995
$162,774
$124,632
$140,021
$(23,548)
$45,458
Net Patient Service Revenue
Other Operating Revenue
Gain from Operations
Other (1)
Other changes in unrestricted
net assets (2)
Net increase (decrease) in
unrestricted net assets
(1)
(2)
(3)
2013
Three Months Ending
November 30,
(unaudited)
2013
FY 2013 amount consists of ($33.7 million) in impairment on disposal of property, plant and equipment related to Superstorm Sandy and other non-storm related
disposals and ($7.6 million) investment return on underlying asset portfolio.
Other changes in unrestricted net assets includes valuation changes to pension and postretirement obligations and contributions/net assets released for capital
acquisition.
Superstorm Sandy occurred on October 29, 2012. Inpatient services at Tisch Hospital were closed for 60 days and resumed on December 27, 2012. An Urgent
Care Center has been operating in absence of a functioning Emergency Department. Thus, results for FY 2013 (inclusive of the three months ended November
30, 2012) include materially reduced operations.
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NYUHC Financial & Volume Metrics
Operating Margin (2)
EBIDA Margin (2)
Cash to Debt (%)
(2/3)
12.6%
12.5%
10.9%
9.5%
17.8%
15.8%
17.6%
16.0%
6.7%
87
12.5%
64
61
55
FY11
FY12
FY13
66
52
8.4%
2.4%
FY10
FY11
FY12
FY13
Nov-12 Nov-13
Days Cash on Hand (1/2)
FY10
FY11
135
141
144
FY13
Nov-12
Nov-13
Outpatient Visits (2)
261,835
240,770
118
FY12
290,881
FY10
Nov-13
Discharges (2)
264,734
37,408 37,929 38,045
131
26,676
108
63,381 72,823
FY10
Nov-12
FY11
FY12
FY13
(1)
(2)
(3)
Nov-12 Nov-13
FY10
FY11
FY12
FY13 Nov-12 Nov-13
6,540
FY10
FY11
FY12
FY13
7,998
Nov-12 Nov-13
Based on Master Trust Indenture methodology.
Superstorm Sandy occurred on October 29, 2012. Inpatient services at Tisch Hospital were closed for 60 days and resumed on December
27, 2012. An Urgent Care Center has been operating in absence of a functioning Emergency Department. Thus, results for FY 2013
(inclusive of the three months ended November 30, 2012) include materially reduced operations.
FY 2013 & November 2013 figures above are inclusive of NYUHC’s Series 2013A $350 million taxable bond issuance.
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Conclusion
 NYUHC is a highly integrated academic medical center with close ties to New York
University
 “Tireless Pursuit of Excellence”
 Patient care quality focus
 Commitment to invest in technology
 Positioning the Medical Center for the future of healthcare
 Solid execution of ambulatory care strategy
 Strong physician recruitment efforts
 Moving forward on campus transformation plan
 Maintaining strategic agility to execute plan through the capital markets
 Balance sheet reserves provide operating flexibility
 Issuance of fixed rate bonds and utilization of lines of credit for quick access to fund
capital plans
 Philanthropy – continued support by NYC community for combined medical center
enterprise
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