unm hospital university of new mexico health sciences center

Transcription

UNMHOSPITAL
UNIVERSITYOFNEWMEXICO
HEALTHSCIENCESCENTER
CLINICALOPERATIONS
FINANCIALSTATEMENTSAND
SUPPLEMENTARYINFORMATION
JUNE30,2013AND2012
UNMHOSPITAL
UNIVERSITYOFNEWMEXICOHEALTHSCIENCESCENTER
CLINICALOPERATIONS
FISCALYEAR2013OFFICIALROSTER
MichaelOlguin
Socorro,NM
WilliamLang
Albuquerque,NM
MichelleCoons
Albuquerque,NM
DebbieJohnson
Albuquerque,NM
JerryGeist
Albuquerque,NM
WarrenLaskey,MD
Albuquerque,NM
ElizabethJoyce
Naseyowna‐Chalan
Albuquerque,NM
RoxaneBly
Albuquerque,NM
JaneWishner
Albuquerque,NM
BoardofTrustees
Chairperson(Termexpires5/31/15,Regentappointed)
Vice‐Chairperson(Termexpires5/31/15,Regentappointed)
Secretary(Termexpires5/31/14,Regentappointed)
Member(Termexpires1/30/15,Regentappointed)
Member(Termexpires2/28/14,AllIndianPueblo
Council–Regentappointed;resigned2/22/13)
Member(Termexpires4/30/14,Countyappointed)
Member(Termexpires3/22/14,Countyappointed)
UNMHOSPITAL
CLINICALOPERATIONS
FISCALYEAR2013OFFICIALROSTER(CONTINUED)
AdministrativeOfficers
RobertG.Frank,Ph.D.
President–UniversityofNewMexico
PaulRoth,M.D.
Chancellor‐UNMHealthSciencesCenter
Dean,SchoolofMedicine‐UNMHealthSciencesCenter
AvaLovell
SeniorExecutiveFinancialOfficer‐UNMHealth
SciencesCenter
SteveMcKernan
ChiefExecutiveOfficer‐UNMHospitals–Chief
OperatingOfficer‐UNMHealthSystem
EllaWatt
ChiefFinancialOfficer‐UNMHospitals
UNMHOSPITAL
CLINICALOPERATIONS
TABLEOFCONTENTS
ReportofIndependentAuditors.......................................................................................................1
Management’sDiscussionandAnalysis.........................................................................................5
FinancialStatements:
StatementsofNetPosition..............................................................................................................22
StatementsofRevenues,ExpensesandChangesinNetPosition..................................23
StatementsofCashFlows................................................................................................................24
NotestoFinancialStatements..........................................................................................................26
SupplementaryInformation:
Schedule1:ComparisonofBudgetedandActualRevenuesandExpenses..........68
Schedule2:PledgedCollateralbyBanks..............................................................................69
Schedule3:ScheduleofIndividualDepositandInvestmentAccounts...................70
RequiredSupplementaryInformation:
Schedule4:PostemploymentBenefitsOtherthanPensions
ScheduleofFundingProgress...............................................................................................71
ReportofIndependentAuditorsonInternalControloverFinancial
ReportingandonComplianceandOtherMattersBasedonan
AuditofFinancialStatementsinAccordancewithGovernment
AuditingStandards........................................................................................................................72
SummaryScheduleofPriorYearAuditFindings.....................................................................74
ScheduleofFindingsandResponses.............................................................................................75
ExitConference.......................................................................................................................................76
REPORTOFINDEPENDENTAUDITORS
TheUniversityofNewMexicoHealthSciencesCenter
BoardofTrusteesand
Mr.HectorBalderas,NewMexicoStateAuditor
ReportontheFinancialStatements
We have audited the accompanying financial statements of UNM Hospital (the
“Hospital”),adivisionoftheUniversityofNewMexico,StateofNewMexico,operated
by the University of New Mexico Health Sciences Center Clinical Operations,
organized as the University of New Mexico Hospital, as of and for the years ended
June 30, 2013 and 2012, and the related notes to the financial statements, which
collectivelycomprisetheHospital’sbasicfinancialstatementsaslistedinthetableof
contents. We have also audited the budget comparison (Schedule 1) presented as
supplementaryinformationfortheyearendedJune30,2013.
Management’sResponsibilityfortheFinancialStatements
Management is responsible for the preparation and fair presentation of these
financialstatementsandbudgetcomparisoninaccordancewithaccountingprinciples
generally accepted in the United States of America; this includes the design,
implementation,andmaintenanceofinternalcontrolrelevanttothepreparationand
fair presentation of financial statements that are free from material misstatement,
whetherduetofraudorerror.
Auditor’sResponsibility
Our responsibility is to express opinions on these financial statements and budget
comparison based on our audits. We conducted our audits in accordance with
auditing standards generally accepted in the United States of America and the
standardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards,
issuedbytheComptrollerGeneraloftheUnitedStates.Thosestandardsrequirethat
we plan and perform the audit to obtain reasonable assurance about whether the
financialstatementsarefreefrommaterialmisstatement.
1
BoardofTrusteesand
Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamounts
and disclosures in the financial statements. The procedures selected depend on the
auditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementof
the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s
preparationandfairpresentationofthefinancialstatementsinordertodesignaudit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Hospital’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
presentationofthefinancialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriateto
provideabasisforourauditopinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all
materialrespects,thefinancialpositionoftheHospitalasofJune30,2013and2012,
andthechangesinitsfinancialpositionanditscashflowsfortheyearsthenendedin
accordance with accounting principles generally accepted in the United States of
America. In addition, in our opinion, the budget comparison referred to above
presentsfairly,inallmaterialrespects,thebudgetarycomparisonfortheyearended
June 30, 2013 in conformity with accounting principles generally accepted in the
UnitedStatesofAmerica.
OtherMatters
RequiredSupplementaryInformation
AccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequirethat
management’s discussion and analysis on pages 5‐21 and the schedule of
postemployment benefits other than pensions schedule of funding progress for the
yearendedJune30,2013onpage71bepresentedtosupplementthebasicfinancial
statements.Suchinformation,althoughnotapartofthebasicfinancialstatements,is
requiredbytheGovernmentalAccountingStandardsBoardwhoconsidersittobean
essential part of financial reporting for placing the basic financial statements in an
2
UniversityofNewMexicoHealthSciencesCenter
BoardofTrusteesand
appropriate operational, economic, or historical context. We have applied certain
limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we
obtained during our audit of the basic financial statements. We do not express an
opinionorprovideanyassuranceontheinformationbecausethelimitedprocedures
do not provide us with sufficient evidence to express an opinion or provide any
assurance.
OtherInformation
Our audit was conducted for the purpose of forming opinions on the financial
statements and budget comparison that collectively comprise the Hospital's basic
financialstatementsandbudgetcomparison.Theaccompanyingscheduleofpledged
collateral by banks and schedule of individual deposit and investment accounts
(Schedules 2 and 3, respectively) are presented for purposes of additional analysis
andarenotarequiredpartofthebasicfinancialstatements.
The accompanying schedules of pledged collateral by banks and individual deposit
and investment accounts (Schedules 2 and 3, respectively) are the responsibility of
managementandwerederivedfromandrelatedirectlytotheunderlyingaccounting
and other records used to prepare the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audit of the basic
financial statements and certain additional procedures, including comparing and
reconcilingsuchinformationdirectlytotheunderlyingaccountingandotherrecords
used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards
generallyacceptedintheUnitedStatesofAmerica.Inouropinion,theaccompanying
schedules of pledged collateral by banks and individual deposit and investment
accounts are fairly stated, in all material respects, in relation to the basic financial
statementsasawhole.
3
BoardofTrusteesand
OtherReportingRequiredbyGovernmentAuditingStandards
In accordance with Government Auditing Standards, we have also issued our report
datedOctober 18, 2013 on our consideration of the Hospital's internal controlover
financialreportingandonourtestsofitscompliancewithcertainprovisionsoflaws,
regulations,contracts,andgrantagreementsandothermatters.Thepurposeofthat
report is to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an
opiniononinternalcontroloverfinancialreportingoroncompliance.Thatreportis
an integral part of an audit performed in accordance with Government Auditing
Standards in considering Hospital's internal control over financial reporting and
compliance.
Albuquerque,NewMexico
October18,2013
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UNMHOSPITAL
CLINICALOPERATIONS
MANAGEMENT’SDISCUSSIONANDANALYSIS
June30,2013and2012
This section of the UNM Hospital’s (theHospital) annual financial report presents
management’sdiscussionandanalysisofthefinancialperformanceoftheHospital
during the fiscal years ended June30, 2013 and 2012. This discussion should be
read in conjunction with the accompanying financial statements and notes.
Managementhaspreparedthefinancialstatementsandtherelatednotedisclosures
alongwiththisdiscussionandanalysis.Assuch,thefinancialstatements,notes,and
thisdiscussionaretheresponsibilityofHospital’smanagement.
UsingtheAnnualFinancialReport
This annual report consists of financial statements prepared in accordance with
Governmental Accounting Standards Board (GASB) Statement No.34, Basic
Financial Statements – and Management’s Discussion and Analysis – for State and
LocalGovernments,asamended.
The financial statements prescribed by GASB34 (thestatement of net position,
statementofrevenues,expenses,andchangesinnetposition,andthestatementof
cash flows) present financial information in a form similar to that used by
commercialcorporations.Theyarepreparedundertheaccrualbasisofaccounting,
whereby revenues and assets are recognized when the service is provided, and
expensesandliabilitiesarerecognizedwhenothersprovidetheservice,regardless
ofwhencashisexchanged.
Thestatementsofnetpositionincludeallassetsandliabilities.Overtime,increases
or decreases in net position (thedifference between assets and liabilities) is one
indicator of the improvement or erosion of the Hospital’s financial health when
considered with nonfinancial facts such as patient statistics and the condition of
facilities.Thisstatementincludesallassetsandliabilitiesusingtheaccrualbasisof
accounting,whichisconsistentwiththeaccountingmethodusedbyprivatesector
institutions.
The statements of revenues, expenses, and changes in net position present the
revenuesearnedandexpensesincurredduringtheyear.Activitiesarereportedas
eitheroperatingornonoperating.Apublichospital’sdependencyonstateorcounty
aid can result in an operating deficit since the financial reporting model classifies
suchaidasnonoperatingrevenues,whichisthecasewiththeBernalilloCountyMill
Levy received by the Hospital. The utilization of capital assets is reflected in the
financial statements as depreciation, which amortizes the cost of an asset over its
expectedusefullife.
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UNMHOSPITAL
CLINICALOPERATIONS
MANAGEMENT’SDISCUSSIONANDANALYSIS(CONTINUED)
June30,2013and2012
The statement of cash flows presents information related to cash inflows and
outflowssummarizedbyoperating,capitalandnoncapitalfinancing,andinvesting
activities.
CondensedSummaryofNetPosition
AsofJune30
2012
2011
$ 261,331,960
254,687,891
54,602,911
249,665,274
270,357,736
51,195,980
251,141,828
286,030,852
47,422,338
$ 570,622,762
571,218,990
584,595,018
$ 104,243,261
179,051,105
104,150,537
185,731,050
108,155,360
196,892,752
$ 283,294,366
289,881,587
305,048,112
$ 102,310,629
39,610,263
145,407,504
112,680,519
35,444,198
133,212,686
127,194,482
30,656,581
121,695,843
$ 287,328,396
281,337,403
279,546,906
Assets
Currentassets
Capitalassets,net
Noncurrentassets
Totalassets
2013
Liabilities
Currentliabilities
Noncurrentliabilities
Totalliabilities
NetPosition
Netinvestmentincapitalassets
Restrictednetposition,expendable
Unrestrictednetposition
Totalnetposition
At June30, 2013, total Hospital’s assets were $570.6million compared to
$571.2million at June30, 2012. The Hospital’s most significant assets at June30,
2013 were net capital assets of $254.7 million, followed by cash and cash
equivalentsof$102.7million,andthentotalnetreceivablesof$101.1million.The
Hospitalmanagesallcashreceiptsanddisbursementsforallitsaffiliates,theUNM
PsychiatricCenter(UNMPC)andtheUNMChildren’sPsychiatricCenter(UNMCPC),
which are collectively referred to as “The Center.” The due to affiliates in the
liability section of the statement of net position reflects all intercompany cash
transactions.
At June30, 2012, total Hospital’s assets were $571.2million compared to
$584.6million at June30, 2011. The Hospital’s most significant asset at June30,
2012 was net capital assets of $270.4million, followed by total net receivables of
$106.0million,andthencashandcashequivalentsof$88.5million.
At June30, 2013, 2012, and 2011, the Hospital’s current assets of $261.3million,
$249.7million, and $251.1million, respectively, were sufficient to cover current
6
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
liabilities of $104.2million (current ratio of 2.51), $104.2million (current ratio of
2.40),and$108.2million(currentratioof2.32),respectively.
The Hospital’s liabilities totaled $283.3 million at June30, 2013 compared to
$289.9million at June30, 2012. Bonds payable of $165.9 million was the largest
liability,followedbyaccountspayableof$31.1million.
The Hospital’s liabilities totaled $289.9 million at June30, 2012 compared to
$305.0million at June30, 2011. Bonds payable of $171.2 million was the largest
liability,followedbyaccountspayableof$26.8million.
Total net position as of June30, 2013 increased by $6.0million to $287.3million,
due to an operating loss of $88.3million offset by net nonoperating revenues of
$94.3million.Unrestrictednetpositiontotaled$142.2millionatJune30,2013.
Total net position as of June30, 2012 increased by $1.8million to $281.3million,
due to an operating loss of $59.8million offset by net nonoperating revenues of
$61.6million.Unrestrictednetpositiontotaled$129.6millionatJune30,2012.
CondensedSummaryofRevenues,Expenses,andChangesinNetPosition
YearEndedJune30
2013
2012
2011
Totaloperatingrevenues
$ 638,053,576
633,205,357
625,049,712
Totaloperatingexpenses
(726,361,454)
(693,028,692)
(667,655,495)
Operatingloss
(88,307,878)
(59,823,335)
(42,605,783)
Nonoperatingrevenues,expense
andotherrevenues
94,298,871
61,613,832
52,676,924
Totalincreaseinnetassets
5,990,993
1,790,497
10,071,141
Netposition,beginningofyear
281,337,403
279,546,906
269,475,765
Netposition,endofyear
$ 287,328,396
281,337,403
279,546,906
OperatingRevenues
The sources of operating revenues for the Hospital are net patient services, state
and local contracts and grants, and other operating revenues, with the most
significant source being net patient services revenues. Operating revenues were
$638.1million, $633.2million, and $625.0million for the years ended 2013, 2012,
and2011,respectively.
Netpatientservicerevenueiscomprisedofgrosspatientrevenue,netofcontractual
allowances, charity care, provision for doubtful accounts, and any third‐party cost
report settlements. Net patient service revenues were $629.6million,
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UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
$617.7million, and $618.1million for the years ended 2013, 2012, and 2011,
respectively.
Net patient service revenues for 2013 of $629.6 million increased $11.9 million
from$617.7millionin2012,whichrepresentsa1.9%increase.Increasedvolumes
at the Primary Care Clinics, Clinical Neurosciences Center and Orthopedic Clinic
contributedtothisincrease.
Net patient service revenues for 2012 of $617.7 million decreased $328,000 from
$618.1million in 2011, which represents a 0.1% decrease, and it is reflective of a
full year of reductions in revenue associated with the decrease in Medicaid
outpatient payment rates compared to seven months of revenue reductions in FY
2011. In addition, the Hospital final settled the 2006, 2007, 2008, and 2009
Medicaid cost reports in fiscal year 2011 which increased net patient revenue by
$14.4millioninfiscalyear2011.Duringfiscalyear2012,nocostreportswerefinal
settled. In December 2011, the newly remodeled Clinical Neurosciences Center
(CNC) opened. The 31,000 square foot clinic houses several services including
neurosurgery, adult, and child neurology, neurodiagnostics lab, pain consultation
andtreatmentcenter,andpainandspinephysicaltherapyclinic.Thefacilityserves
as a multidisciplinary center of excellence, serving the state of New Mexico for a
broad range of neurological and chronic conditions including brain
injury/pathology, epilepsy, peripheral neuropathy, movement disorders, stroke,
memorydisorders,Alzheimer’sandneuromusculardiseases.
YearendedJune30,
Inpatientdays
Discharges
Outpatientvisits
Emergencyvisits
UrgentCareClinic
2013
2012
2011
156,553
26,593
493,682
78,428
16,595
156,124
27,095
474,900
72,682
12,280
155,941
27,685
465,044
75,140
6,978
Inpatientdaysfor2013increased429from2012,whichrepresentsa0.3%increase.
TheHospitalhasbeenoperatingatanoccupancyrateof86%foradultbeds.
Inpatientdaysfor2012increased183from2011,whichrepresentsa0.1%increase.
TheHospitalwasoperatingatanoccupancyrateof88%foradultbeds.
8
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
On November 1, 2010, the Medical Assistance Division (MAD) implemented an
Outpatient Prospective Payment System (OPPS) for Medicaid outpatient payment
rates. The payment rate is at 100% of the Medicare standard rate. The Managed
CareOrganizations(MCOs)alsoimplementedOPPSduringfiscalyear2011.Asthis
methodofreimbursementisbasedatlessthantherecoveryofcost,thischangehad
a negative impact tothe net patient servicesrevenues for UNM Hospital and
continued to negatively impact net patient services revenues for fiscal year 2012
and2013.
Beginning on July1, 2005 and effective for fiscal years 2013, 2012, and 2011, the
HospitalenteredintoareimbursementagreementfortheStateCoverageInsurance
(SCI)program.ThisprogramispartoftheNewMexicoSCIMedicaidplan,fundedin
part by the New Mexico Human Services Department (HSD). Funding is modeled
after a capitated payment program. Funds are remitted to the Hospital on a per
member per month basis for all state approved members. For the years ended
June30, 2013, 2012 and 2011, the Hospital recognized revenue of $39.7 million,
$38.7million,and$38.3million,respectivelyundertheSCIprogram.AsofJune30,
2013,2012and2011,therewereapproximately9,900,9,400,and9,200activeSCI
enrollees,respectively.
TheSCIprogramisavailabletolow‐income,uninsuredworkingadultswithfamily
incomebelow200%oftheFederalPovertyLevel(FPL).TheSCIplanfeaturescost
sharingdesignedtoensurethatlow‐incomeparticipantswouldhaveaccesstocare.
The state contracts with managed care organizationstoprovide Medicaid services
toeligibleandenrolledmembers.
OnJanuary10,2012,theHumanServicesDivision(HSD)announcedapprovalofthe
UNMHSC patient‐centered medical home (PCMH) pilot project. The PCMH pilot
programprovidesaspecificmanagementmodelofcarethatfocusesonimproving
chronic conditions including diabetes, depression, hypertension, hyperlipidemia,
obesity, and metabolic syndrome. Enrollment in the pilot program began April 1,
2012 withpatients that were ona waiting list with HSD. Enrollmentincreased to
10,214 by January 2013. Enrollment in the SCI program has declined since
February 2013. Prior to pilot program approval, the HSD suspended any new
enrollment into this program, although re‐enrollments continued to be allowed.
HSD eliminated the 30‐day grace period for re‐enrollment under the SCI program
effective July1, 2010. This resulted in consistent declines in enrollment from July
2010forwarduntiltheJanuary2012PCMHpilot.
9
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
The SCI program will be eliminated with New Mexico’s Centennial Care beginning
January 2014. It is expected that 94% of SCI enrollees will be transitioned to
Medicaid.
For the years ended June 30, 2013 and 2012, UNM Hospital provided
IntergovernmentalTransfers(“IGTs”)totheStateofNewMexicointheamountsof
$16.3 million and$15.5 million, respectively. Due to the current economic
conditionsintheStateofNewMexicoandnationally,theStatewasunableforfiscal
years 2013 and 2012 to fund a portion of the non‐federal share to obtain federal
matching funds as described in the CMS Special Conditions/Approval, thereby
jeopardizingtheviabilityoftheStateCoverageInitiative(“SCI”)programandUpper
Payment Limit (“UPL”). As a result, UNM Hospital entered into a Memorandum of
UnderstandingwiththeStateofNewMexicounderwhichUNMHospitalagreedto
anintergovernmental transfer to fund the non‐federal share of the Medicaid
payment pursuant to federal Medicaid regulations at 42 CFR 433.51 (Eligible
OperatingFunds).ThelossoftheSCIprogramandUPLfundingwouldhavealarge
detrimentalfinancialimpacttotheHospitalwhichprovidesservicestotheenrollees
in the SCI and Medicaid Fee‐For‐Service Programs. This loss would have also
threatened the health, welfare and well‐being of the enrollees in the SCI and
Medicaid Fee‐for‐Service Programs. The IGTs are recorded as a reduction of net
patientservicerevenuesintheaccompanyingstatementofrevenuesandexpenses.
The Hospital offers a financial assistance program called UNM Care to which all
eligible patients are encouraged to apply. This program assigns patients primary
careprovidersandenablesthemtoreceivecarethroughouttheHospitalandatall
clinic locations. This program is available to Bernalillo County residents who also
meetcertainincomethresholds.EffectiveJanuary1,2010,theincomethresholdis
300% of the FPL. Patients may apply for this program at various locations
throughouttheHealthSciencesCenter(HSC)andvariouscommunitylocations.As
of June30, 2013, 2012, and 2011, there were approximately 26,500, 32,500, and
30,500 active enrollees, respectively. The Hospital does not pursue collection of
amounts determined to qualify as charity care, with the exception of copayments.
ThecostofcharitycareprovidedunderthisprogramforfiscalyearsendedJune30,
2013, 2012 and 2011 was $130.8million, $129.5million, and $126.2million,
respectively.
The Hospital provides care to patients who areeither uninsured or under‐insured
andwhodonotmeetthecriteriaforfinancialassistance.TheHospitalencourages
patients to meet with a financial counselor to develop payment arrangements.
Although the Hospital pursues collection of these accounts usually through an
10
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
extended payment plan or a discounted rate, interest is not charged on these
accounts, liens are not placed on property or assets, and judgments are not filed
againstthepatients.Theseaccountsarefullyreservedandrecordedasprovisionfor
uncollectibleaccounts.Provisionexpenserecordedforfiscalyears2013,2012and
2011was$102.2million,$98.1million,and$67.0million,respectively.Thecostof
care provided to patients who are either uninsured or under‐insured and who do
not meet the criteria for financial assistance for years ended June30, 2013, 2012
and2011was$49.5million,$48.3million,and$32.9million,respectively.
The 2009 American Recovery and Reinvestment Act (ARRA) incorporated the Health
Information Technology for Economic and Clinical Health Act (HITECH). The HITECH Act
included an incentive funding program meant to encourage the use of electronic health
records(EHR)byproviders.Thefundingispredicatedonimplementationand“meaningful
use” of the EHR. The criteria for meaningful use includes: improve quality, safety and
efficiency; engage patients; improve care coordination; reduce health disparities through
datasharing;andtoensureprivacyandsecurity.OnJuly13,2010,CMSissuedthefinalrule
formeaningfuluseoutliningStage1EHRfunctionalityobjectivesaswellasclinicalquality
measures. During fiscal year 2012, the Hospital received and recognized as revenue the
firstyearpaymentforMedicaidmeaningfuluseintheamountof$4.1million.Thefirstyear
paymentforMedicaremeaningfuluse,intheamountof$1.4million,wasreceivedAugust
24,2012andwasincludedinotheroperatingrevenueandreceivablesintheaccompanying
2012financialstatementsascompliancewiththerecognitioncriteriawasmetduring2012.
TheHospitalhasattestedtoandreceivedthesecondyearMedicaidpaymentintheamount
of $3.3 million on January 21, 2013. This was included in other operating revenue and
receivables in the accompanying 2012 financial statements as the discharges upon which
the attestation was based occurred prior to fiscal year 2013. During FY13 the Hospital
receivedandrecognizedasrevenue$255,000forMedicaidmeaningfulusefor13hospital
mid‐levelcareproviders.
The Medicare Recovery Audit Contract (RAC) program was created through the
MedicareModernizationActof2003(MMA).Thisisaprogramtoreviewhealthcare
claimsinordertoidentifyandrecoverinappropriatepaymentsmadetoproviders
for fee‐for‐service Medicare. In 2006, Congress mandated expansion of the RAC
program to all 50 states. The RAC program encompassing New Mexico became
effectiveinMarch2009,withConnollyConsultingAssociates,Inc.asthecontractor.
TheRACcontractorcanrequestupto348records(previously399records)every
45days and can review claims from June 2008 and forward. In June 2012, the
HospitalreceiveditsfirstlargeRACrequesttoreview399accountsfor$5.9million
in Medicare payments. Of this request, $1.9 million was denied and payments
returnedtoMedicare.Theremaining$4.0millionwasreviewedbytheRACauditor
11
UNM
MHOSPITAL
L
UNIV
VERSITYOF
FNEWMEX
XICOHEALT
THSCIENCE
ESCENTER
R
CLIN
NICALOPER
RATIONS
MAN
NAGEMENT’SDISCUSSIONANDA
ANALYSIS(C
CONTINUED)
June
e30,2013a
and2012
and approved with
w
no reffunds due to Medicarre. During FY 2013, the Hospitaal
receiived five ad
dditional reequests for 1,392 recoords for $13
3.8 million in Medicarre
paym
ments. To date, $3.9 million haas been denied and d
demands fo
or refund tto
Mediicare have been
b
receiv
ved, $5.5 million had b
been auditeed with no refunds due,
and $4.4 million is pending a decisiion by the RAC audittor. All refu
unds due tto
MediicarefortheeRACauditsplusanesstimateonp
pendingclaiimshavebeeenrecordeed
asarreductionin
nNetPatien
ntServiceReevenues.
OperratingExpe
enses
Operratingexpen
nsesfortheeHospitalin
ncludeitem
mssuchaseemployeeco
ompensatio
on
and benefits, medical
m
seervices, meedical supp
plies, and equipmentt. The mosst
significantexpen
ndituresweereforemplloyeecomp ensationan
ndbenefits.
Comp
pensation and
a
benefits combineed were $3
359.1millio
on, $350.8million, an
nd
$337
7.1millionfo
ortheyearssendedJunee30,2013,2012and2
2011,respecctively.
The following pie
p charts depict
d
the operating eexpense mix for the yyears endeed
June30,2013,2012and20
011:
12
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
For the year ended June30, 2013, operating expenses, including depreciation of
$32.2million, totaled $726.4million, an increase from 2012 of $33.4million or
4.8%.Theoverallincreasewasattributedtoanincreaseinemployeecompensation
of$6.3million(2.2%),employeebenefitsof$2.0million(3.2%),medicalsuppliesof
$11.1 million (10.1%), medical services of $10.5million (9.4%), and purchased
services of $5.3 million (18.8%). Employee compensation increased as a result of
increased FTEs in nursing, ambulatory and support areas. Employee benefits
increasedasaresultofincreasedhealthinsurancecostsandannualadjustmentsto
the Hospital’s other post‐employment benefits liability based on actuarial review.
Medical supplies increased as a result of increased implant, pharmaceutical and
biologics costs. Medical services increased as a result of increased support of
physicianprovidersandresidentprograms.Purchasedservicesincreasedduetoan
increaseincostsfortheprovisionofpost‐acutecareforUNMCarepatients,remote
hostingoftheHospital’selectronicmedicalrecordandpatientbillingsystems,and
transcriptionofphysiciandictations.
For the year ended June30, 2012, operating expenses, including depreciation of
$34.2million,totaled$693million,anincreasefrom2011of$25.4millionor3.8%.
The overall increase was attributed to an increase in employee compensation of
$15.1 million (5.5%), medical services of $2.8million (2.6%), equipment of
$3.7million(15.3%),occupancyof$1.6million(13.4%)andpurchasedservicesof
$2.8 million (10.7%). The Hospital implemented a 2.5% general wage increase in
October2011,resultingintheincreaseincompensation.Medicalservicesincreased
as a result of increased support of physician providers and resident programs.
Equipment and occupancy increased primarily due to software maintenance and
licensing associated with the electronic medical record and building repair and
maintenance,respectively.Purchasedservicesincreasedduetoanincreaseincosts
fortheprovisionofprimarycareforUNMCarepatientsaswellasimplementation
ofthespeechrecognitiontranscriptionsystem.
NonoperatingRevenuesandExpenses
For the year ended June30, 2013, $94.3 million has been recorded as net
nonoperating revenue in the accompanyingstatementsof revenues, expenses,and
changesinnetposition.
AtJune30,2013and2012,theBernalilloCountyMillLevytaxsubsidywasthemost
significantnonoperatingrevenue,totaling$78.5millionin2013and$77.5millionin
2012. This tax subsidy is provided for the general operations of the Hospital. The
Hospital received this tax subsidy by voter endorsement for the services the
13
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
Hospital provides. The voters approved the renewal of the mill levy in the
November2008 election. The mill levy is subject to approval by the Bernalillo
Countyvoterseveryeightyears,anditwillbeupforrenewalintheNovember2016
election.
The next largest source of nonoperating revenue in 2013 was $13.7 million in
InvestmentIncomecomparedto$3.5millionin2012.UNMHospitalreceived$12.7
million in dividends from its investment in TriWest in 2013 compared to
$2.3million in 2012. State appropriation funding was $5.2million compared to
$5.1million in 2012. Included in this amount for 2013 and 2012 was $4.7million
and $4.5million for Carrie Tingley Hospital (CTH), respectively, and $524,000 for
YoungChildrenHealthCenter,forboth2013&2012.Statelandrevenueandoiland
gasroyaltiesforCTHfor2013and2012were$732,598and$800,825,respectively.
Capitalappropriationswerereceivedin2013intheamountof$577,000;however,
therewerenocapitalappropriationsin2012.
Contributionrevenuewas$3.0millionfor2013comparedto$2.9millionin2012.
TheprimarysourceforcontributionsistheannualChildren’sMiracleNetworkdrive
whichraised$653,000in2013.Alsoincludedindonatedrevenuearepledgesfrom
theCarrieTingleyHospitalFoundation.Inaddition,thereweredonationsthatwere
used for pediatric anesthesia, Women’s Faculty Midwife Clinic and pediatric
emergency department. All donation monies are received by the UNM Hospital
Foundationandaredrawnuponbythehospital.
The largest nonoperating expense recorded in 2013 was $7.8 million for bond
interest expense. The largest nonoperating expense recorded in 2012 was
$20.2million, for strategic capital projects such as the Clinical Neurosciences and
PainCenterandtheSouthwestMesaprimarycareclinicatCentralandUnser.There
was no expense recorded for strategic capital projects, referred to as Capital
Initiatives, in 2013. Refer to Note18 in the accompanying notes to the financial
statements.
Included in nonoperating expense was $7.8million and $8.0million of interest
expenseoncapitalasset‐relateddebtfortheyearsendedJune30,2013and2012,
respectively. This debt consists of Federal Housing Administration (FHA) insured
Hospital Mortgage Revenue Bonds issued on October14, 2004, in the aggregate
principalamountof$192.3million.Interestonthebondsrangesfrom2%to5%and
ispayablesemi‐annuallyoneachJanuary1andJuly1.TheSeries2004bondswere
issued for the purpose of financing the construction, equipping, and furnishing of
the Barbara and Bill Richardson Pavilion. The 478,000square foot pavilion was
placedintoserviceinJune2007.
14
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
CapitalAssets
At June30, 2013, the Hospital had $254.7million invested in capital assets, net of
accumulated depreciation of $313.6 million. Depreciation charges for fiscal year
2013 totaled $32.2million compared to $34.2million and $34.7million in fiscal
years2012and2011,respectively.
AsofJune30,
2013
Land,buildingandimprovements
Buildingserviceequipment
Fixedequipment
Majormoveableequipment
Constructioninprogress
Lessaccumulateddepreciation
Netpropertyandequipment
2012
2011
$ 182,067,206
156,400,725
15,464,906
210,374,242
3,961,372
180,495,764
152,380,444
15,386,603
196,099,993
9,462,680
179,105,032
145,974,304
15,288,399
208,908,842
10,080,171
568,268,451
553,825,484
559,356,748
(313,580,560)
(283,467,748)
(273,325,896)
270,357,736
286,030,852
$ 254,687,891
During2013,thelargestcapitalincreaseswerewithinmajormoveableequipment
($14.3 million), building service equipment ($4.0 million) and land, building and
improvements,($1.6million).Thelargestcapitalexpenditurewastheinstallationof
the final new room for Interventional Radiology which included a single‐plane
angiographylab.Thenextlargestgroupofcapitalpurchaseswasfornewultrasound
equipment,includingseveraltransesophagealechocardiogrammachineswhichuse
high‐frequencysoundwavestoproduceagraphicoutlineoftheheart’smovement,
endoscopy ultrasounds, a urology ultrasound, an ultrasound for anesthesia, an
ultrasound for the heart station, and several ultrasound machines for radiology.
Another significant capital expenditure was for the Intravenous Pharmacy
renovation project which constructed a new Modular ISO Class 7 Chemo Sterile
station with sterile prep clean rooms and two ante rooms to provide a fully
operational drug compounding area. Capital purchases for the operating room
included a surgical microscope, surgical tables, a Constellation LXT vision system
withanembeddedlaser,apediatricheartlungmachine,anautomaticsurgicalslush
machinefortrauma‐minimizingtissuecooling,cordlesssurgicaldrills,aminic‐arm,
and other various surgical equipment. Building improvements included main
operatingroomflooringreplacement,andnewshowersandwaterlinereplacement
inthewestwing.Buildingserviceequipmentincludedassetsfortheinterventional
radiology renovation, HVAC upgrades in the main hospital building, fire sprinkler
upgrades, replacement of the domestic soil pipes, and assets related to the
emergencydepartmenttriageroomrenovation.
15
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
During 2012, the largest capital increases were within building service equipment
($6.4million),andland,buildingandimprovements,($1.4million).Majormoveable
equipment decreased from 2011 ($12.8 million) due to $24.2 million in retired
equipment,offsettingadditionsof$11.4million.TheHospitalbeganPhaseIofthe
Lawson implementation and the system was placed into service January 2, 2012
affecting Human Resources, Payroll, Accounts Payable, Materials Management,
Inventory Control, Purchasing, General Ledger, Fixed Assets, and Financial
Reporting functions. The Cerner Surginet module was also placed into service
during fiscal year 2012. In addition, UNMH installed a boiler for central plant
operations,replacedalargesectionofsewerlineintheolderportionofthehospital,
renovated the Emergency Room Triage area, and renovated the Interventional
RadiologyDepartmenttoaccommodatethenewbi‐planeangiographicsystem.The
largest capital expenditure in the major movable equipment category was the
purchase of a bi‐plane angiographic system for the Interventional Radiology
Department. Other purchases included an advanced ventilation and monitoring
systemforanesthesiausedintheoperatingrooms,aC‐armforthepainclinic,x‐ray
equipmentandaprescriptionautomationdispensingsystemforthefamilypractice
clinic, ultrasound machine for use at women’s faculty and midwife clinic, an
endobronchial ultrasound with videoscope for pulmonary services, an
echocardiogram machine for the heart station, new washers and disinfectors to
sterilizeoperatingroomequipment,andaneyelaser.
DebtActivity
TheHospital’sbondspayabletotaled$165.9millionand$171.2millionatJune30,
2013and2012,respectively.Thecurrentportionofthisdebtwas$5.2millionand
$5.0million at June30, 2013 and 2012, respectively. This debt is related to the
Federal Housing Administration (FHA) insured Hospital MortgageRevenue Bonds,
Series2004, issued by the UNM Board of Regents for the purpose of financing the
construction,equipping,andfurnishingofthe478,000‐square‐footBillandBarbara
RichardsonPavilion.TheprojectwasplacedintoserviceJune2007.
Theloanguaranteeisconsideredfederalassistancesubjecttotherequirementsof
Office of Management and Budget (OMB) Circular A‐133 and the Single Audit Act.
Accordingly,theloanguaranteeisconsideredafederalawardforpurposesofUNM’s
June30,2013and2012SingleAudit.
16
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
ChangeinNetPosition
TheHospital’stotalchangeinnetpositionshowedanetincreasefor2013and2012.
Total net position (assets minus liabilities) is classified by the Hospital’s ability to
usetheseassetstomeetoperatingneeds.Unrestrictednetpositionmaybeusedto
meet all operating needs of the Hospital. A portion of the Hospital’s net position
may be restricted as to use by sponsoring agencies, donors, or other nonhospital
entities. Restricted net position represents funds generated by contributions and
gifts.Therestrictednetpositionisfurtherclassifiedastothepurposeforwhichthe
funds must be used. Net position increased approximately $6.0million in 2013.
Some of the major reasons for the increase include a $4.8million increase in
operating revenue and a $32.7 million increase in net nonoperating revenue. The
increaseinnetnonoperatingrevenuewasduetoa$20.2milliondecreaseincapital
initiativesanda$10.1millionincreaseininvestmentincome.Theseareoffsetbya
$33.3millionincreaseinoperatingexpense.
FactorsImpactingFuturePeriods
OnAugust2,2013,theCentersforMedicare&MedicaidServices(CMS)releasedthe
fiscal year 2014 Inpatient Prospective Payment (IPPS) Final Rule. The IPPS rates
will increase by a market basket increase of 2.5%, less a 0.8% market basket
reductionmandatedunderthePatientProtectionandAffordableCareAct(PPACA),
less a 0.8% documentation and coding reduction mandated by the American
TaxpayerReliefActof2012,andlessa0.2%reductiontooffsetprojectedincreases
associated with new admission and medical review criteria for inpatient services.
The impact of this reduction is expected to be minimal. The IPPS Final Rule
implements PPACA changes to Medicare Disproportionate share hospital (DSH)
payments. In FY 2014, the Hospital will continue to receive 25% of the DSH
payment previously received using the traditional formula. This 25% will be
included in the “base” DRG payments for each Medicare inpatient discharge. The
remainingDSHfundingwillberedistributedbasedoneachDSH‐eligiblehospital’s
ratioofuncompensatedcarerelativetothetotalforallDSH‐eligiblehospitals.Low‐
incomepatientdayswillbeusedtodeterminetheuncompensatedcareratios.This
portionoftheMedicareDSHfundingwillbepaidasaflatamountoneachMedicare
inpatient discharge. The Hospital expects Medicare DSH funding to increase by
approximately$8million.TheIPPSFinalRulealsoallowshospitalstobillMedicare
Part B, after receiving a claim denial, for hospital services that were previously
billed under Part A. Hospitals have one year from the date of admission to bill
PartBforadmissiononorafterOctober1,2013.
17
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
On July 8, 2013, CMS issued the proposed calendar year 2014 Outpatient
ProspectivePaymentrule.CMSproposedtoraisethebaseOPPSPaymentratebya
market basket increase of 2.5%, less a productivity adjustment of 0.4% and
reductionsrequiredunderPPACA.Theproposedruleincludespackagingcertainof
services and supplies into payment for other supportive services. These include
packaging of drugs, biologicals and radiopharmaceuticals that function as supplies
whenusedindiagnostictestsorprocedures;drugsandbiologicalsthatfunctionas
suppliesordevicesinasurgicalprocedure;laboratorytests;proceduresdescribed
by add‐on codes; certain ancillary services and device removal procedures. CMS
also proposes to collapse the current five levels of evaluation and management
(E&M)codesforoutpatientvisitsintoasinglecode.TheimpactoftheE&Mcoding
changeontheHospitalisestimatedat$1.4million.
ThePatientProtectionandAffordableCareAct(PPACA)wasenactedonMarch23,
2010. PPACA expands Medicaid eligibility provisions, Medicare and Medicaid
reforms, and private insurance market reforms. Medicaid expansion under PPACA
includesneweligibilitycriteriaestablishingaminimumfloorforMedicaidcoverage
to133%oftheFederalPovertyLevel(FPL),(withthe5%incomedisregardallowed
in section 2002 of PPACA, the effective rate is 138% FPL), eliminating other non‐
income‐basedcriteria(suchasage,disability,orassettesting).Thepopulationmost
impacted by the new optional eligibility criteria is expected to be childless adults.
States are also prohibited from reducing Medicaid or Children’s Health Insurance
Program(CHIP)eligibilitythatwasinplaceonthedateofPPACAenactment.PPACA
provides additional federal financing through the Federal Medical Assistance
Percentage(FMAP)fornewlyeligibleMedicaidpatientsbeginningin2014.
PPACAincludeslegislationonHealthExchanges.HealthExchangesareexpectedto
facilitate the purchase of health insurance for qualified individuals and small
employers. A qualified individual is a lawful resident with income between 133%
and 400% of the FPL. Federal subsidies for premiums under Health Exchanges
become available beginning 2014. Health Exchanges are designed to be
“one‐stop‐shopping” where participants can compare and purchase insurance
coverage. Insurance coverage will have essential health benefits that cover benefit
costs ranging from 60% to 90% with out‐of‐pocket limits equal to health savings
accountcurrentlawlimits.
18
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
Health Plan reforms under PPACA include a set of required essential benefits
including, but not limited to, emergency services, hospitalization, maternity and
newborncare,mentalhealthandsubstanceusedisorderservices,preventativeand
wellnessservices,andpediatricservices,includingoralandvisioncare.Plansmust
also not require copayment or deductible on preventative services. For plan years
beginning after September23, 2010, existing plans must provide coverage to
dependent children until age26 (unless eligible for other coverage), eliminate
lifetime aggregate dollar limits and annual dollar limits on essential benefits,
eliminate pre‐existing condition exclusions for children up to age19, and prohibit
rescindingofcoverageexceptincasesoffraud,intentionalmisrepresentation,and
nonpaymentofpremium.Effectivein2014,existinginsuranceplansmusteliminate
annual aggregate benefit limits, provide coverage of dependents to age26
regardless of eligibility for other coverage, eliminate pre‐existing condition
limitationsforadults,andeliminatewaitingperiodsofgreaterthan90days.
On June 28, 2012, the U.S. Supreme Court ruled on certain provisions of PPACA.
Theydeclaredthatthe“individualmandate”requiringindividualstobuyinsurance
ortopayafineamountedtoataxandthatthegovernmenthastheabilitytoimpose
suchatax.Therulingalsodeclaredthatstateshavetheabilitytonotparticipatein
Medicaid expansion and to avoid the penalties described in PPACA. PPACA also
reduced the annual market basket increase for Medicare inpatient and outpatient
hospitalservicesforservicesrenderedonorafterOctober1,2010.
TheNewMexicoHealthandHumanServicesDepartment(NMHSD)willimplement
the revised New Mexico Medicaidprogram “Centennial Care” beginning January 1,
2014. New Mexico will provide coverage based on household size with income
below 138% of the federal poverty limits (FPL). NMHSD projects approximately
170,000 people will be eligible for this expanded coverage. UNM Hospitals
estimates that 75% of its current UNM Care enrollment and 90% of UNM SCI
patients will be eligible for Medicaid under Centennial Care. The State’s SCI
program will be eliminated with Centennial Care and enrollees are expected to
enroll in Centennial Care or purchase insurance on the New Mexico Health
Insurance Exchange. The Medicaid expansion will provide coverage for patients
thatarecurrentlyprovidedcarebyUNMHospitalsunderfinancialassistanceoras
selfpay. However, there are likely to be implementation risks associated with
Centennial Care that could cause delays in Medicaid eligibility. The NMHSD is
implementingneweligibilitysoftwarethatwillnotbefullyfunctionaluntilJanuary
2014,whichmaycauseabackloginpatientenrollmentforthefirsthalfofcalendar
year 2014. Centennial Care will blend long term care, acute care services, and
19
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
behavioral health into a single delivery system. The managed care organizations
participatinginCentennialCarewillbereducedtofourthatwillcoverallservices
coveredunderCentennialCare.Theremaybedelaysincoverageasthischangein
participating MCOs may cause delays in enrollment and patient to physician
assignment.
The New Mexico health Insurance Exchange (NMHIX) will be available to people
withincomesabove138%FPLandwillprovidesubsidizedhealthinsuranceupto
400% FPL. NMHIX estimates approximately 187,000 adults will qualify for
exchange coverage, with 58,000 of those residing in Bernalillo County. UNMH
estimates 25% of UNM Care enrollees and 10% of current UNM SCI enrollees will
qualify for coverage under the exchange. The NMHIX has established a target
enrollment of 16,000 new members in Bernalillo County by July 2014. Exchange
enrollment will begin in October 2013. UNM Hospitals is designated as a site for
enrollmentwithadirectconnectiontoNMHIX.Duetothecostsofhealthinsurance
offered, individuals may choose to opt out of coverage. Thereis also the riskthat
employer groups may reduce or eliminate existing coverage in favor of sending
employeestotheexchangetopurchasehealthinsurance.
TheMedicaidSupplementalUpperPaymentLimit(UPL)fundingwillbeeliminated
effective January 1, 2014. The FY 2014 UPL payment is estimated to be
$26.4million.ThiswillpaidintwopaymentstocoverJulythroughDecember2013.
TheHospitalexpectstoenterintoMemorandumsofUnderstandingwiththeStateof
New Mexico for UPL, under which UNM Hospital agrees to anintergovernmental
transfer in the amount of $8.1millionto fund the non‐federal share of Medicaid
paymentpursuanttofederalMedicaidregulationsat42CFR433.51.Asthelargest
safety net hospital in New Mexico, the Hospital is working closely with NMHSD to
replacethissupplementalfundingwithenhancedMedicaidfee‐for‐serviceandMCO
baserates.Theoutcomeofthesediscussionshasnotbeendetermined.
TheDeficitReductionActof2005establishedtheMedicaidIntegrityProgram(MIP)
toidentify,collect,andpreventoverpaymentsmadeunderfee‐for‐serviceMedicaid.
ThetwooperationalfunctionsofMIPare1)toreviewtheactionsofthoseproviding
Medicaidservicesand2)toprovidesupportandassistancetothestatestocombat
Medicaidfraud,wasteandabuse.TheMIPinNewMexicohasbeeninitiated,andthe
HospitalreceivedarequestforrecordsinJanuary2010.TheHospitalreceivedthe
results in October 2012 and refunded $34,660 to the State. There have been no
furtherrequestsforrecords.
20
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
CurrenteconomicconditionsintheStateofNewMexicowillcontinuetoimpactthe
HospitalsastheStateseekstoidentifyrevenuesourcesandexpenditurereductions.
The SCI Program will be eliminated with New Mexico’s Centennial Care beginning
January2014.Asdiscussedaboveundernetpatientrevenues,theStatewasunable
forfiscalyears2013and2012tofundaportionofthenon‐federalsharetoobtain
federal matching funds as described in the CMS Special Conditions/Approval,
thereby jeopardizing the viability of the State Coverage Initiative (“SCI”) program.
As a result, the Hospital entered into Memorandums of Understanding with the
State of New Mexico for each year, under which UNM Hospital agreed to
intergovernmental transfers in the amount of $16.3 million and $15.5million, in
fiscalyears2013and2012,respectively,tofundthenon‐federalshareofMedicaid
paymentpursuanttofederalMedicaidregulationsat42CFR433.51.
The mill levy is based on property values. Given the state of the economy, it is
possiblethattheamountofthemilllevymayremainflatorpotentiallydecreaseas
the result of reduced property values and slowdowns in the building construction
industry.
In 1997, the Hospital contributed $2.6 million to TriWest Healthcare Alliance
(TriWest), an organization formed to administer healthcare benefits to military
retirees and dependents of active duty personnel in the CHAMPUS/TRICARE
Western Region, in exchange for 2,613shares of common stock, which represents
an approximate 10.8% ownership of TriWest as of June 30, 2013. In July 2009,
TriWest successfully bid for the T‐3 Contract with TRICARE. In March 2012, the
Contract was awarded to United Healthcare upon protest and re‐bid. On July 2,
2012,theU.S.GovernmentAccountabilityOffice(GAO)announcedthatithaddenied
TriWest’s protest of the award to United Healthcare. TriWest determined that it
would not seek further legal action regarding the loss of the contract. TriWest’s
contract with TRICARE terminated on March 31, 2013. TriWest has bid on a
program with Veterans Affairs (VA) to provide a limited network. In September
2013, TriWest was awarded a five‐year contract with the Department of Veteran
Affairs to provide health care services to Department of Veteran Affairs
BeneficiariesunderthePatientCenteredCommunityCare(VAPCCC)program.
ContactingtheHospital’sFinancialManagement
This financial report is designed to provide the Hospital’s patients, suppliers,
taxpayers, and creditors with a general overview of the Hospital’s finances and to
showtheHospital’saccountabilityforthemoneyitreceives.Ifyouhavequestions
about this report or need additional financial information, contact the Hospital’s
FinanceandAccountingDepartment,Attn:Controller,P.O.Box80600,Albuquerque,
NM87198‐0600.
21
UNMHOSPITAL
CLINICALOPERATIONS
STATEMENTSOFNETPOSITION
June30,2013and2012
Assets
Currentassets:
Cashandcashequivalents
Marketablesecurities
Assetswhoseuseislimitedheldbytrusteefordebtservice
Receivables:
Patient(netofallowancefordoubtfulaccountsandcontractualadjustmentsofapproximately
$168,550,000in2013and$170,063,000in2012)
DuefromUniversityofNewMexico
Estimatedthird‐partypayorsettlements
BernalilloCountyTreasurer
Other
Totalnetreceivables
Prepaidexpenses
Inventories
Totalcurrentassets
Noncurrentassets:
Bondissuancecosts
Assetswhoseuseislimited:
Heldbytrusteeformortgagereservefund
Heldbytrusteefordebtservicereserve
Heldbytrusteeforcollateral
Heldbytrusteeforredemptionfund
ByUNMHospitalBoardofTrustees
Totalassetswhoseuseislimited
Capitalassets:
Nondepreciableassets:
Land
Constructioninprogress
Depreciablecapitalassets,net
Capitalassets,net
Totalnoncurrentassets
Totalassets
Liabilities
Currentliabilities:
Accountspayable
Accruedpayroll
DuetoUniversityofNewMexico
Bondspayable–current
Interestpayablebonds
Accruedcompensatedabsences
Estimatedthird‐partypayorsettlements
Otheraccruedliabilities
Totalcurrentliabilities
Noncurrentliabilities:
Bondspayable
Duetoaffiliates
NetOPEBobligation
Totalnoncurrentliabilities
Totalliabilities
NetPosition
Netinvestedincapitalassets
Restricted,expendable
Forgrants,bequests,andcontributions
Inaccordancewiththetrustindentureanddebtagreement
Unrestricted
Commitmentsandcontingencies
Totalnetposition
Seeaccompanyingnotestofinancialstatements.
22
2013
2012
$ 102,650,474
34,139,155
8,629,411
88,524,765
34,078,394
8,524,724
68,261,887
137,013
26,454,703
1,261,556
5,028,472
101,143,631
4,390,015
10,379,274
261,331,960
71,322,034
1,505,063
23,232,083
1,306,277
8,656,244
106,021,701
2,847,710
9,667,980
249,665,274
3,224,762
3,578,790
14,941,334
13,513,150
3,823,469
2,005
19,098,191
51,378,149
12,616,931
13,513,150
3,828,000
2,005
17,657,104
47,617,190
1,747,245
3,961,372
248,979,274
254,687,891
309,290,802
570,622,762
1,747,245
9,462,680
259,147,811
270,357,736
321,553,716
571,218,990
31,103,685
19,251,147
7,817,742
5,240,000
4,020,600
18,672,192
16,519,287
1,618,608
104,243,261
26,754,020
14,683,929
17,976,513
4,985,000
4,119,659
18,062,439
16,655,436
913,541
104,150,537
160,650,412
13,151,888
5,248,805
179,051,105
283,294,366
166,205,367
14,705,624
4,820,059
185,731,050
289,881,587
102,310,629
112,680,519
12,214,044 27,396,219 145,407,504 10,472,537
24,971,661
133,212,686
287,328,396
281,337,403
$
UNMHOSPITAL
CLINICALOPERATIONS
STATEMENTSOFREVENUES,EXPENSESANDCHANGESINNETPOSITION
YearsEndedJune30,2013and2012
Operatingrevenues:
Netpatientservice
$
Stateandlocalcontractsandgrants
Otheroperatingrevenues
Operatingexpenses:
Employeecompensation
Benefits
Medicalservices
Medicalsupplies
Depreciation
Equipment
Occupancy
Purchasedservices
Othersupplies
Other
Operatingloss
Nonoperatingrevenues(expenses):
BernalilloCountymilllevy
Stateappropriation
Capitalappropriation
StateofNewMexicoLandandPermanentFundproceeds
Capitalinitiatives
Investmentincome(interest,dividends,gains,andlosses)
Equityinincome(loss)ofTriCoreandTriCoreLabSvcCorp.
Interestoncapitalasset‐relateddebt
Capitalgrantsandgifts
Bequestsandcontributions
Othernonoperatingrevenue
Othernonoperatingexpense
Netnonoperatingrevenues
Increaseinnetposition
$
2013
2012
629,564,202
2,960,003
5,529,371
638,053,576
617,730,781
10,000,417
5,474,159
633,205,357
295,562,277
63,494,436
122,247,904
121,391,422
32,201,262
28,875,494
12,940,959
33,506,729
7,868,230
8,272,741
726,361,454
(88,307,878)
289,299,835
61,509,456
111,741,312
110,251,549
34,232,544
28,534,786
13,619,314
28,208,333
8,092,956
7,538,607
693,028,692
(59,823,335)
78,457,065
5,219,500
577,000
732,598
‐
13,681,081
1,441,087
(7,770,258)
1,296,265
1,686,531
442,897
(1,464,895)
94,298,871
5,990,993
281,337,403
287,328,396
77,542,303
5,057,700
‐
800,825
(20,194,800)
3,547,542
1,429,949
(7,958,752)
186,801
2,747,759
‐
(1,545,495)
61,613,832
1,790,497
279,546,906
281,337,403
23
UNMHOSPITAL
CLINICALOPERATIONS
STATEMENTSOFCASHFLOWS
Cashflowsfromoperatingactivities:
CashreceivedfromMedicaidandMedicare
Cashreceivedfrominsuranceandpatients
Cashreceivedfromcontractsandgrants
Cashpaymentstoemployees
Cashpaymentstosuppliers
CashpaymentstoUniversityofNewMexico
CashpaymentstoStateofNewMexicoforintergovernmentaltransfer
Cashpaymentstoaffiliates
Otherreceipts
Netcash(usedin)operatingactivities
Cashflowsfromnoncapitalfinancingactivities:
CashreceivedfromBernalilloCountymilllevy
Cashreceivedfromstategeneralfundand
otherstatefundappropriations
CashreceivedfromStateofNewMexicoLandandPermanent
Fund
Cashpaymentsforotherthancapitaloroperatingpurposes
Cashreceivedfromcontributionsforother‐than‐capitalpurposes
Netcashprovidedbynoncapitalfinancingactivities
Cashflowsfromcapitalfinancingactivities:
Interestpaymentsoncapitalassets‐relatedtodebt
Principalpaymentsofbonds
Purchasesofcapitalassets
CashpaymentstoUniversityofNewMexico
Cashreceivedfromstategeneralfundand
otherstatefundcapitalappropriations
Capitalgrantsandgiftsreceived
Cashpaymentsformortgage‐relatedactivities
Netcashusedincapitalfinancingactivities
Cashflowsfrominvestingactivities:
Proceedsfromsalesandmaturitiesofinvestments
Purchaseofinvestments
Interestanddividendsoninvestments
Netcashprovidedbyinvestingactivities
Netincrease(decrease)incashandcashequivalents
Cashandcashequivalents,beginningofyear
Cashandcashequivalents,endofyear
24
2013
2012
348,088,846
302,210,331
1,996,768
(290,385,306)
(268,830,051)
(132,254,983)
(21,033,597)
(1,523,621)
6,985,127
(54,746,486)
338,674,433
282,930,096
9,875,258
(297,539,074)
(246,984,711)
(126,213,272)
(15,457,867)
(4,431,473)
4,422,839
(54,723,771)
78,501,786
77,492,498
5,219,500
5,057,700
739,042
(24,861)
1,686,531
86,121,998
798,913
(297,730)
2,747,759
85,799,140
(8,184,272)
(4,985,000)
(16,357,854)
‐
(8,391,801)
(4,790,000)
(18,680,905)
(18,994,800)
577,000
1,296,265
(816,673)
(28,470,534)
‐
186,801
(745,674)
(51,416,379)
40,857,867
(43,557,685)
13,920,549
11,220,731
14,125,709
88,524,765
$ 102,650,474
37,779,310
(40,182,052)
2,873,085
470,343
(19,870,667)
108,395,432
88,524,765
$
UNMHOSPITAL
CLINICALOPERATIONS
STATEMENTSOFCASHFLOWS(CONTINUED)
2013
Reconciliationofoperatinglosstonetcashusedinoperatingactivities:
Operatingloss
Adjustmentstoreconcileoperatinglosstonetcashprovidedby
(usedin)operatingactivities:
Depreciationexpense
Provisionfordoubtfulaccounts
ReductioninlaboratoryexpensesofTLSC
Changeinassetsandliabilities:
Patientreceivables
DuefromUniversityofNewMexico
Estimatedthird‐partypayorsettlementsreceivables
Otherreceivablesandprepaidexpenses
Inventories
DuetoUniversityofNewMexico
Estimatedthird‐partypayorsettlementsliabilities
Duetoaffiliates
Accruedexpenses
Accountspayable
Netcash(usedin)operatingactivities
$ (88,307,878)
32,201,262
102,205,099
‐
(99,144,952)
2,929,582
(3,222,620)
492,521
(711,293)
(10,158,771)
(136,149)
(1,523,621)
5,605,717
5,024,617
$ (54,746,486)
9,836,145
25
2012
(59,823,335)
34,232,544
98,082,895
(5,110)
(103,315,931)
(983,259)
(9,136,659)
(1,176,479)
(1,454,961)
2,204,713
2,785,576
(4,461,588)
(9,655,910)
(2,016,267)
(54,723,771)
UNMHOSPITAL
CLINICALOPERATIONS
NOTESTOFINANCIALSTATEMENTS
June30,2013and2012
NOTE1. DESCRIPTIONOFBUSINESS
UNM Hospital (theHospital), operated by the University of New Mexico (UNM)
HealthSciencesCenter(HSC),iscertifiedasashort‐termacutecareproviderwitha
fullrangeofmedicalservicesprovidedmainlytotheNewMexicocommunity.UNM
is a state institution of higher education created by the New Mexico Constitution.
TheaccompanyingfinancialstatementsoftheHospitalareintendedtopresentthe
financial position and changes in financial position and cash flows of only that
portionofthebusiness‐typeactivitiesofUNMthatisattributabletothetransactions
of the Hospital. The Hospital is not a legally separate entity and is, therefore,
reportedasadivisionofUNMandincludedinthebasicfinancialstatementsofUNM.
TheHospital,asadivisionofUNM,isnotalegalentityandhasnocomponentunits.
TheHospital’sfacilitiesareleasedfromBernalilloCounty(theCounty)byUNM.The
leaseprovidesfora$1annualrentalpayment,anallocationoftheCountymilllevy,
andmedicaltreatmentforAmericanIndiansasrequiredbya1952agreementwith
the federal government, and is contingent on approval of the mill levy by the
electorate every eight years with the last voter approval in November2008.
Effective as of November18, 2004, the UNM Board of Regents and the Board of
County Commissioners entered into a First Amendment to the Original Lease, as
amended,(theLease),underwhich,amongotherthings,(i)thetermoftheOriginal
Lease was extended until June30, 2055, which is after the maturity of the
Department of Housing and Urban Development (HUD)‐insured loan (refer to
Note10,BondsPayable);(ii)theHospitalwasauthorizedtoobtaintheHUDinsured
loan; (iii)the Hospital was authorized to encumber the Lease with a leasehold
mortgage;and(iv)theactionsthataretobetakenconcerningtheoperationsofthe
HospitalintheeventofadefaultundertheHUD‐insuredloanweredescribed.
TheUNMBoardofRegentsistheultimategoverningauthorityoftheHospital,butit
hasdelegatedcertainoversightresponsibilitiestotheUNMHSCBoardofTrustees.
TheHospitalisgovernedbytheUNMHSCBoardofTrustees,whichconsistsofnine
members,includingsevenmembersappointedbytheUNMBoardofRegents,oneof
whomisnominatedbytheAllIndianPuebloCouncil,andtwomembersappointed
bytheCountyCommission.
In 2007, UNM Carrie Tingley Hospital (CTH) inpatient unit relocated to the
Barbaraand Bill Richardson Pavilion, a new addition to the Hospital known as
Children’sHospitalandCriticalCarePavilion(CHCCP).Asaresult,CTH’shealthcare
providernumberwasterminated,andCTHbecameapediatricunitoftheHospital.
26
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE1. DESCRIPTIONOFBUSINESS(CONTINUED)
CTH was created in 1989 by the legislature of the State of New Mexico to provide
careandtreatmentforthephysicallychallengedchildrenoftheStateofNewMexico
inneedoflong‐terminpatientoroutpatientcare.AbriefsummaryofCTH’sfinancial
resultsfortheyearsendedJune30isasfollows:
Operatingloss
Nonoperatingrevenue
Total(decrease)innetposition
$ 11,294,475 10,447,921
(17,740,599) (17,002,584)
(6,446,124) (6,554,663)
6,063,326 5,782,845
(382,798) (771,818)
3,554,501 4,326,319
$ 3,171,703 3,554,501
NOTE2. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES
Basis of Presentation. The accompanying financial statements have been prepared
using the economic resource measurement focus and the accrual basis of
accounting, in accordance with U.S.generally accepted accounting principles for
healthcareorganizations,andarepresentedinaccordancewiththereportingmodel
as prescribed in Governmental Accounting Standards Board (GASB) Statement
No.34,BasicFinancialStatements–andManagement’sDiscussionandAnalysis–for
StateandLocalGovernments,asamendedbyGASBStatementNo.37,BasicFinancial
Statements – and Management’s Discussion and Analysis – for State and Local
Governments: Omnibus; and GASBStatement No.38, Certain Financial Statement
Note Disclosures; and GASB Statement No. 63, Financial Reporting of Deferred
Outflows of Resources, Deferred Inflow of Resource, and Net Position. The Hospital
followsthebusiness‐typeactivities’requirementsofGASBStatementNo.34andNo.
63. This approach requires the following components of the Hospital’s financial
statements:

Management’sdiscussionandanalysis.

Basicfinancialstatements,includingastatementsofnetposition,statements
of revenues, expenses, and changes in net position, and statements of cash
flowsusingthedirectmethodfortheHospitalasawhole.

Notestofinancialstatements.
27
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE2. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)

GASBStatement No.34 and subsequent amendments including GASB
Statement No. 63 as discussed below, established standards for external
financial reporting and requires that resources be classified for accounting
andreportingpurposesintothefollowingthreenetassetcategories:

Net Investment in Capital Assets – Capital assets, net of accumulated
depreciation and outstanding principal balances of debt attributable to
theacquisition,construction,orimprovementofthoseassets.

RestrictedNetPosition–Expendable–AssetswhoseusebytheHospitalis
subjecttoexternallyimposedconstraintsthatcanbefulfilledbyactions
of the Hospital pursuant to those constraints or that expire by the
passageoftime.

Unrestricted Net Position – Assets that are not subject to externally
imposed constraints. Unrestricted net position may be designated for
specificpurposesbyactionoftheBoardofTrusteesortheUNMBoardof
Regents or may otherwise be limited by contractual agreements with
outsideparties.
Changes in Accounting Policies and Statements. Effective July 1, 2012, the Hospital
adopted GASB Statement No. 63, Financial Reporting of Deferred Outflows of
Resources, Deferred Inflow of Resources, and Net Position. This statement had
minimal impact on the Hospital’s financial statements or related accounting and
financialreporting.Theprimaryeffectsofimplementingthesestatementswereto
change all previous references from “net assets” to “net position,” change the line
itemfor“investedincapitalassets,netofrelateddebt”to“netinvestmentincapital
assets,” and to classify certain assets and liabilities as “deferred inflows” and
“deferred outflows.” At June 30, 2013, the Hospital had no items meeting the
criteriaof“deferredinflows”or“deferredoutflows.”
Recent Accounting Pronouncement. GASB Statement No. 65, Items Previously
Reported as Assets and Liabilities, is required to be implemented effective July 1,
2013, and thus will be adopted by the Hospital next fiscal year. The statement
establishesaccountingandfinancialreportingstandardsthatreclassify,asdeferred
outflows of resources or deferred inflows of resources, certain items that were
previously reported as assets and liabilities, and recognizes, as outflows of
resources or inflows of resources, certain items that were previously reported as
assetsandliabilities.Amongthemoresignificantimpactsof thisstatementtothe
Hospital,debtissuancecostsareexpensedasincurredratherthancapitalizedand
28
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
amortized under previous guidance. Changes required by this statement are
requiredtobeappliedretroactivelybyrestatingfinancialstatementsforallperiods
presented,andthusinthenextyear’sfinancialstatements,theHospitalwillrestate
netpositioneffectiveJuly1,2012torecordtheimpactofexpensingbondissuance
costs. Management is currently evaluating other impacts of this standard on the
Hospital’sfinancialstatements.
Use of Estimates. The preparation of financial statements in accordance with
U.S.generally accepted accounting principles requires management to make
estimatesandassumptionsthataffectthereportedamountsofassetsandliabilities
and the disclosure of contingent assets and liabilities at the financial statement
dates, and the reported amount of revenues and expenses during the reporting
periods.Duetouncertaintiesinherentintheestimationprocess,actualresultscould
differfromthoseestimates.
GrantsandContracts.Revenuefromgrantsandcontractsisrecognizedtotheextent
of direct costs and allowable indirect expenses incurred under the terms of each
agreement. Funds restricted by grantors for operating purposes are recognized as
revenuewhenthetermsofthegranthavebeenmet.
OperatingRevenuesandExpenses.TheHospital’sstatementsofrevenues,expenses,
and changes in net position distinguish between operating and nonoperating
revenuesandexpenses.Operatingrevenues,suchaspatientservicerevenue,result
from exchange transactions associated with providing healthcare services, the
Hospital’sprincipalactivity.Exchangetransactionsarethoseinwhicheachpartyto
the transaction receives and gives up essentially equal values. Operating expenses
areallexpensesincurredtoprovidehealthcareservices.
NonoperatingRevenuesandExpenses.Nonoperatingrevenueincludesactivitiesthat
havethecharacteristicsofnonexchangetransactions,suchasappropriations,gifts,
investmentincome,andgovernmentlevies.Theserevenuestreamsarerecognized
underGASBStatementNo.33,AccountingandFinancialReportingforNonexchange
Transactions. Appropriations are recognized in the year they are appropriated,
regardless of when actually received. Bequests and contributions are recognized
when all applicable eligibility requirements have been met. Investment income is
recognizedintheperiodwhenitisearned.Themilllevyisrecognizedintheperiod
itiscollectedbytheCounty.Capitalinitiativesexpenseisrecognizedintheperiodin
29
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
whichtheHospitalincursanobligationtomakepaymentstoUNMHSCasevidenced
byanexecutedMemorandumofUnderstanding(MOU)betweenUNMHSCandthe
Hospital.
Intergovernmental Transfers. Intergovernmental transfers are recognized in the
period in which the Hospital incurs an obligation to make payments to other
governmental entities as evidenced by executed Memorandums of Understanding
(MOU)betweentheStateofNewMexicoandtheHospital.Allobligationsoccurring
during fiscal year 2013 and 2012 were paid in fiscal year 2013 and 2012,
respectively.DuetotherecurringnatureoftheMOUtofundaportionofthenon‐
federal share to obtain federal matching funds for the State Care Initiative (SCI)
program and since the SCI program is for the provision of patient care,
intergovernmental transfers (IGT) were recorded as a reduction of net patient
servicerevenues.
Cash and Cash Equivalents. The Hospital considers all highly liquid investments
(excluding amounts whose use is limited) purchased with an original maturity of
threemonthsorlesstobecashequivalents.
InvestmentsandInvestmentReturn.Investmentsarerecordedatfairmarketvalue.
At June30, 2013 and 2012, investments consist of obligations of the
U.S.governmentandU.S.governmentagencies.Investmentincomeincludesinterest
andrealizedandunrealizedgainsandlossesoninvestments.Investmentincomeis
reportedasnonoperatingrevenuewhenearned.
TheHospitalfollowsGASBStatementNo.40,DepositandInvestmentRiskDisclosures
–anamendmentofGASBStatementNo.3.Thisstatementaddressescommondeposit
andinvestmentrisksrelatedtocreditrisk,concentrationofrisk,interestraterisk,
and foreign currency risk, and also requires certain disclosures of investments at
fair values that are highly sensitive to changes in interest rates, as well as deposit
andinvestmentpoliciesrelatedtotherisksidentifiedinthestatement.
Assets Limited as to Use by UNM Hospital Board of Trustees. The investment in
TriWest Healthcare AllianceCorporation (TriWest) is accounted for using thecost
method. The investment in TriCore Reference Laboratories (TRL or TriCore) is
accountedforusingtheequitymethod.
30
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
Aportionofassetslimitedastouseisclassifiedintheaccompanyingstatementsof
netpositionascurrentassetsastheseassetsarerestrictedbytheFederalHousing
Administration(FHA)andtheUNMHospitalBoardofTrusteestocoverthecurrent
portionoflong‐termdebtandaresubjecttoapprovalbytherespectiveparties.
Inventories. Inventories consisting of medical, surgical and maintenance supplies,
and pharmaceuticals are stated at the lower of cost or market. Cost is determined
using the first‐in, first‐out valuation method, except that the replacement cost
methodisusedforpharmacyandoperatingroominventories.
BondIssuanceCosts.Bondissuancecostsrepresentthebondissuancecostsforthe
Federal Housing Administration Insured Hospital Mortgage Revenue Bond. The
bondissuancecostsareamortizedoverthetermsoftherelatedindebtednessusing
theinterestmethod.
CapitalAssets.Capitalassetsarestatedatcostoratestimatedfairvalueondateof
acquisition.Donatedpropertyandequipmentarestatedatfairmarketvaluewhen
received.TheHospital’scapitalizationpolicyforassetsincludesallitemswithaunit
cost of more than $5,000. Depreciation on capital assets is calculated using the
straight‐linemethodovertheestimatedusefullivesoftheassetsasindicatedinthe
“Estimated Useful Lives of Depreciable Hospital Assets,” Revised 2008 Edition
publishedbytheAmericanHospitalAssociation.Repairsandmaintenancecostsare
charged to expense as incurred. On a quarterly basis, the Hospital assesses long‐
livedassetsinordertodeterminewhetherornotitisnecessarytoretire,replace,or
impairbasedonconditionoftheassetsandtheirintendeduse.Duringfiscalyear
2013,theHospitalrecognizedimpairmentofcapitalassetstotaling$442,000asthe
result of a significant, unexpected decline in the service utility of the assets in
accordance with GASB 42, “Accounting and Financial Reporting for Impairment of
CapitalAssets.”
Net Patient Service Revenues. Net patient service revenues are recorded at the
estimated net realizable amount due from patients, third‐party payors, and others
for services rendered. Retroactive adjustments under reimbursement agreements
withthird‐partypayorsareaccruedonanestimatedbasisintheperiodtherelated
services are rendered and adjusted in future periods as final settlements are
determined.
31
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
Contractual adjustments resulting from agreements with various organizations to
provide services for amounts that differ from billed charges, including services
under Medicare, Medicaid, and certain managed care programs, are recorded as
deductions from patient revenues. The Hospital is eligible for and receives
additionalMedicaidreimbursementforthegapbetweentheamountthatwouldbe
equal to the Medicare reimbursement per discharge compared to the Medicaid
payment per discharge. This upper payment limit (UPL) is based on the
reimbursementthatwoulduseMedicarereimbursementprinciples.Thisamountis
recordedasanoffsettocontractualadjustments.WithrespecttotheStateCoverage
Initiative(SCI)program,fundingismodeledafteracapitatedpaymentprogram.
FundsareremittedtotheHospitalonapermemberpermonthbasisforallstate‐
approvedmembers.Therefore,contractualadjustmentsarerecordedasadeduction
frompatientrevenueinitsentirety.
Capitatedpaymentsarereceivedonamonthlybasisandarerecordedasanoffsetto
contractual adjustments in the amount of approximately $39,696,000 and
$39,061,000foryearsendedJune30,2013and2012,respectively.Accounts,when
determined to be uncollectible, are charged against the allowance for doubtful
accounts.
CharityCare.TheHospitalprovidescaretopatientswhomeetcertaincriteriaunder
itscharitycarepolicywithoutchargeoratamountslessthanitsestablishedrates.
TheHospitaldoesnotpursuecollectionofamountsdeterminedtoqualifyascharity
care; therefore, they are deducted from gross revenue, with the exception of
copayments.
BernalilloCountyTaxes.Theamountofthepropertytaxlevyisassessedannuallyon
November1onthevaluationofpropertyasdeterminedbytheCountyAssessorand
is due in equal semi‐annual installments onNovember10 and April10 of thenext
year. Taxes become delinquent 30days after the due date unless the original levy
datehasbeenformallyextended.TaxesarecollectedonbehalfoftheHospitalbythe
CountyTreasurerandareremittedtotheHospitalinthemonthfollowingcollection.
RevenueisrecognizedinthefiscalyearthelevyiscollectedbytheCounty.
Bond Premium. The premium associated with the issuance of the FHA Insured
Hospital Revenue Bonds is amortized using the effective‐interest method over the
lifeoftheseriesofbonds.
32
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
Income Taxes. As part of a stateinstitution of highereducation, the income ofthe
Hospital is generally excluded from federal and state income taxes under
Section115(1) of the Internal Revenue Code. However, income generated from
activities unrelated to the Hospital’s exempt purpose is subject to income taxes
underInternalRevenueCode,Section511(a)(2)(B).
Net Investment in Capital Assets. Net investment in capital assets, represents the
Hospital’stotalinvestmentincapitalassets,netofoutstandingdebtrelatedtothose
capitalassets.Totheextentdebthasbeenincurredbutnotyetexpendedforcapital
assets,suchamountsarenotincludedasacomponentofnetinvestmentincapital
assets.Thereare$13.5millioninunspentbondproceedsatJune30,2013and2012,
reservedfordebtserviceasrequiredbythetrustee.
Risk Management. The Hospital sponsors a self‐insured health plan in which the
Center(UNMPsychiatricCenterandUNMChildren’sPsychiatricCenter,collectively,
theCenter)alsoparticipate,asallemployeesareunderthecentralizedumbrellaof
the Hospital. Blue Cross and Blue Shield of NewMexico and HMO New Mexico
(BCBSNM and HMONM) provide administrative claim payment services for the
Hospital’s plan. Liabilities are based on an estimate of claims that have been
incurredbutnotreportedandinvoicesreceivedbutnotyetpaid.AtJune30,2013
and2012,theestimatedamountoftheHospital’sclaimsandaccruedinvoiceswas
$3.2millionand$4.1million,respectively,whichisincludedinaccruedpayroll.As
the Hospital receives all cash and pays all obligations of the Center, the estimated
amount of the Center’s claims and accrued invoices recorded in the Hospital’s
accrued payroll was approximately $280,000 and $410,000 at June30, 2013 and
2012,respectively.Theliabilityforclaimsincurredbutnotreportedwasbasedon
actuarialanalysiscalculatedusinginformationprovidedbyBCBSNM.
Changes in the reported liability during fiscal years 2013 and 2012 resulted from
thefollowing:
Currentyear
Beginningof claimsand
fiscalyear
changesin
liability
estimates
2012–2013
2011–2012
Claim
payments
Balanceat
fiscal
year‐end
$4,135,438 30,797,448 (31,718,091) 3,214,795
$ 4,156,180 28,739,109 (28,759,851) 4,135,438
33
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
FinancialReportingbyEmployersforPostemploymentBenefitsOtherThanPensions.
TheHospitalandtheCenterprovideotherpostemploymentbenefits(OPEB)aspart
of the total compensation offered to attract and retain the services of qualified
employees.OPEBincludespostemploymentmedicalanddentalhealthcareprovided
separately from a benefit or pension plan. GASBStatement No.45, Accounting and
FinancialReportingbyEmployeesforPostemploymentBenefitsOtherThanPensions,
establishes standards for the measurement, recognition, and display of OPEB
expense/expendituresandrelatedliabilities(assets),notedisclosures,andrequired
supplementary information (RSI) in the financial reports of state and local
governmentalemployers.
Estimates for 2013 were based upon the 2012 actuarial calculations, as permitted
by GASB 45. In 2011, the OPEB obligation estimate was actuarially determined
individually for each entity (theHospital and the Center), and the liabilities and
expenses were allocated to each reporting entity based on the applicable full‐time
equivalent(FTE)basedontheinformationfromthe2010report.
DuetoAffiliates.TheUNMHospital(theHospital)receivesallcashonbehalfofthe
BehavioralHealthOperations(theCenter)andpaysallobligations.Amountsdueto
affiliatesconsistmainlyofcashcollectedinexcessofexpensespaidanddonotbear
interest.
State Appropriation. The funding for the state appropriation is included in the
GeneralAppropriationAct,whichisapprovedbytheHouseandSenateoftheState
Legislature and signed by the governor before going into effect. Total funds
appropriated for 2013 include $5,883,900 in the General Fund. Included in the
General Fund is $664,400 of Out‐of‐County Indigent funds, which are reported in
netpatientservicerevenue.TheGeneralFundisdesignatedasanonrevertingfund,
per House Bill2, Section4. Sub‐section J. Higher Education. Other State Funds are
definedasnonrevertinginHouseBill2,Section2,Sub‐sectionIDefinitions.
CapitalAppropriation.Thefundingforthecapitalappropriationincluded$100,000
for the purchase and installation of equipment for the burn care center and
$477,000 for the purchase and installation of medical equipment at the Hospital.
This funding made by the State Legislature is included in House Bill 191, Section
25.3and4from2012forUNMHospital’sfiscalyearendingin2013.Therewereno
capitalappropriationsmadebytheStateLegislatureforUNMHospitalsin2011or
2012fortheHospital’sfiscalyearendingin2012.
34
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
Classification.Certain2012amountshavebeenreclassifiedtoconformtothe2013
presentation.
NOTE3. CASH,CASHEQUIVALENTSANDINVESTMENTS
CashandCashEquivalents
Deposits. The Hospital’s deposits are held in demand accounts and repurchase
agreements with afinancialinstitution. State statutesrequire financial institutions
topledgequalifyingcollateraltotheHospitaltocoveratleast50%oftheuninsured
deposits;however,theHospitalrequiresmorecollateralasitconsidersprudent.All
collateralisheldinthird‐partysafekeeping.
The carrying amounts of the Hospital’s deposits with financial institutions at
June30,2013and2012are$102,650,474and$88,524,765,respectively.
TheStateofNewMexicorequiresthatsecuritiesunderlyingrepurchaseagreements
haveamarketvalueofatleast102%ofthecostoftherepurchaseagreement.The
market value of the securities underlying the repurchase agreements was at or
above the required level during the year ended June30, 2012, and there were no
repurchaseagreementsasofJune30,2013.
Bankbalancesare100%categorizedinfullasfollows:
2013
2012
AmountinsuredbytheFederalDeposit
InsuranceCorporation(FDIC)
$
250,000
250,000
Amountcollateralizedwithsecuritiesheld
intheHospital'sname
117,629,420 102,912,464
Othercash
16,819
16,863
$ 117,896,239 103,179,327
Interest‐bearingdepositaccountsaresubjecttoFDIC’sstandarddepositinsurance
amount of $250,000. Cash in excess of FDIC insurance is collateralized at June30,
2013 and 2012 by U.S.government agency securities held by the financial
institutionintheHospital’sname.
35
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE3. CASH,CASHEQUIVALENTSANDINVESTMENTS(CONTINUED)
CustodialCreditRisk‐Deposits.Custodialcreditriskistheriskthatintheeventofa
bank failure, the Hospital’s deposits may not be returned to it. The Hospital has a
custodialriskpolicyfordepositsthatrequirescollateralinanamountgreaterthan
or equal to 50% of the deposit not insured by the FDIC. A greater amount of
collateral is required when the Hospital determines it is prudent. As of June30,
2013 and 2012, the Hospital’s bank deposits were not exposed to custodial credit
risk.
MarketableSecurities
Interest Rate Risk – Debt Investments. Interest rate risk is the risk that changes in
interest rates will adversely affect the fair value of an investment. Currently, the
Hospitaldoesnothaveaspecificpolicytolimititsexposuretointerestraterisk.
A summary of the marketable securities and their respective maturities and their
exposuretointerestrateriskisasfollows:
Fairvalue
Itemsnotsubjecttointerestraterisk:
Moneymarketdeposits
$
Itemssubjecttointerestraterisk:
Moneymarketfunds
U.S.Treasurynotes
U.S.government
agencyobligations:
FHLB
FHLMC
FNMA
Totalitemssubjectto
interestraterisk
Totalmarketable
securities
$
1–5years
3,596
3,596
—
1,706,795
9,958,468
1,706,795
2,206,361
—
7,752,107
1,075,981
4,936,004
16,458,311
—
1,382,931
3,575,436
1,075,981
3,553,073
12,882,875
34,135,559
8,871,523
25,264,036
34,139,155
8,875,119
25,264,036
June30,2013
Less
than1year
36
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
Fairvalue
Moneymarketdeposits
$
Moneymarketfunds
U.S.Treasurynotes
U.S.government
agencyobligations:
FHLMC
FNMA
Totalitemssubjectto
interestraterisk
Totalmarketable
securities
$
June30,2012
Less
than1year
1–5years
3,794
3,794
—
2,696,006
12,643,827
2,696,006
4,010,835
—
8,632,992
6,125,895
12,608,872
1,179,342
2,083,242
4,946,553
10,525,630
34,074,600
9,969,425
24,105,175
34,078,394
9,973,219
24,105,175
CustodialCreditRisk–DebtInvestments–Foraninvestment,custodialcreditriskis
theriskthat,intheeventofthefailureofthecounterparty,theHospitalwillnotbe
abletorecoverthevalueofitsinvestmentsorcollateralthatisinthepossessionof
anoutsideparty.Marketablesecuritiesof$32,428,764and$31,378,594at2013and
2012,respectively,areinsured,registered,andheldbythecounterparty’sagentin
theHospital’sname.
The Hospital’s custodial risk policy for investments in U.S.Treasury securities and
U.S.government agency obligations is in accordance with Chapter6, Article10,
Section10 of the NMSA, 1978. An outside consulting firm makes investment
decisions,andtheinvestmentsareheldinsafekeepingbyafinancialinstitution.
Credit Risk – Debt Investments – Credit risk is the risk that an issuer or other
counterparty to an investment will not fulfill their obligations. The Hospital is
requiredtodisclosecreditratingsofitsdebtinvestmentsinordertoassesscredit
risk.U.S.obligations,investmentsexplicitlyguaranteedbytheU.S.government,and
nondebt investments are excluded from this requirement. Currently, the Hospital
has a policy that restricts short‐term investments to specific investment ratings
issued by nationally recognized statistical rating organizations. The policy states
that cash equivalent reserves shall consist of interest‐bearing or discount
instrumentsoftheU.S.governmentoragenciesthereof.
37
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
A summary of the marketable securities at June30, 2013 and 2012 and their
exposuretocreditriskisasfollows:
2013
Rating
Itemsnotsubjecttocreditrisk:
U.S.Treasurysecurities:
Treasurynotes
Itemssubjecttocreditrisk:
Moneymarketdeposits
Moneymarketfunds
U.S.governmentagency
obligations:
FHLB
FHLMC
FNMA
N/A
FairValue
$
Rating
FairValue
9,958,468
N/A
Notrated
Notrated
3,596
1,706,795
Notrated
Notrated
3,794
2,696,006
Fitch–AAA
Fitch–AAA
Fitch–AAA
1,075,981
4,936,004
16,458,311
Fitch–AAA
Fitch–AAA
6,125,895
12,608,872
Totalitemssubject
tocreditrisk
Totalmarketable
securities
2012
$
24,180,687
$
34,139,155
12,643,827
21,434,567
$
34,078,394
ConcentrationofCreditRisk–Investments–Concentrationofcreditriskistheriskof
lossattributedtoinvestmentsinasingleissuer.Investmentsinanyoneissuerthat
represent 5% or more of all total investments are considered to be exposed to
concentrated credit risk and are required to be disclosed. Investments issued or
explicitly guaranteed by the U.S.government and investments in mutual funds,
external investment pools, and other pooled investments are excluded from this
requirement.
For long‐term investments, the Hospital has a policy to limit its exposure to
concentrated risk. It states the portfolio will be constructed and maintained to
provide prudent diversification with regard to concentration of holdings in
individualissues,corporationsorindustries.
TheHospital’sexposuretoconcentratedcreditriskisasfollows:$4,936,004,which
is invested in Federal Home Loan Mortgage Corporation (FHLMC) securities and
equates to 14.5% of marketable securities held at June30, 2013. An additional
$16,458,311 is invested in Federal National Mortgage Association (FNMA)
securities,whichequatesto48.2%ofmarketablesecuritiesheldasofJune30,2013.
38
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
Short‐TermInvestments
InterestRateRisk–DebtInvestments–Interestrateriskistheriskthatchangesin
interest rates will adversely affect the fair value of an investment. Currently, the
Hospitaldoesnothaveaspecificpolicytolimititsexposuretointerestraterisk.
Asummaryoftheshort‐terminvestmentsandtheirrespectivematuritiesandtheir
June30,2013
Lessthan
FairValue
1Year
Moneymarketdeposits
$
Moneymarketfund
U.S.governmentagencyobligations:
FHLMC
FNMA
Totalitemssubjecttointerestraterisk
Totalshort‐terminvestments
$
1,044,680
2,278,159
2,278,159
2,122,405
3,184,167
2,122,405
3,184,167
7,584,731
7,584,731
8,629,411
8,629,411 June30,2012
Lessthan
FairValue
1Year
Moneymarketdeposits
$
Moneymarketfund
U.S.governmentagencyobligations:
FNMA
Totalitemssubjecttointerestraterisk
Totalshort‐terminvestments
1,044,680
$
383,734
383,734
2,834,449
2,834,449
5,306,541
5,306,541
8,140,990
8,140,990
8,524,724
8,524,724
Thefairvaluesofshort‐termU.S.TreasuryandU.S.governmentagencyobligations
are based on acquisition cost, provided there is no significant impairment due to
creditstandingoftheissuer.
39
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
CustodialCreditRisk–DebtInvestments–Foraninvestment,custodialcreditriskis
theriskthat,intheeventofthefailureofthecounterparty,theHospitalwillnotbe
able to recover the value of its investments or collateral securities that are in the
possession of an outside party. At June30, 2013 and 2012, the short‐term
investments of $5,306,572 and $5,306,541, respectively, in U.S.government
obligations were insured, registered, and held by the counterparty’s agent in the
Hospital’sname.
The Hospital’s custodial risk policy for the bond proceeds conforms to the Trust
Indenture,andtheTrusteeholdstheinvestmentsinsafekeeping.
Credit Risk – Debt Investments – Credit risk is the risk that an issuer or other
counterparty to an investment will not fulfill their obligations. The Hospital is
requiredtodisclosecreditratingsofitsdebtinvestmentsinordertoassesscredit
risk.U.S.obligations,investmentsexplicitlyguaranteedbytheU.S.government,and
nondebt investments are excluded from this requirement. Currently, the Hospital
has a policy that restricts short‐term investments to specific investment ratings
issued by nationally recognized statistical rating organizations. The policy states
that cash equivalent reserves shall consist of interest‐bearing or discount
instrumentsoftheU.S.governmentoragenciesthereof.
A summary of the short‐term investments at June30, 2013 and 2012 and their
exposuretocreditriskisasfollows:
2013
FairValue
Rating
U.S.Treasurynotes
N/A
$
—
Rating
2012
FairValue
— $
—
Moneymarketdeposits
Moneymarketfund
Notrated
Notrated
1,044,680
2,278,159
Notrated
Notrated
383,734
2,834,449
U.S.governmentagency
obligations:
FNMA
FHLMC
Fitch–AAA
Fitch–AAA
3,184,167
2,122,405
Fitch–AAA
Fitch–AAA
5,306,541
—
Totalitemssubject
tocreditrisk
Totalshort‐term
investments
8,629,411
$
8,629,411
8,524,724
$
8,524,724
40
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
Thefairvaluesofshort‐termU.S.TreasuryandU.S.governmentagencyobligations
are based on acquisition cost, provided there is no significant impairment due to
creditstandingoftheissuer.
Long‐TermInvestments
Interest Rate Risk – Debt Investments ‐ Currently, the Hospital does not have a
specificpolicytolimititsexposuretointerestraterisk.
Asummaryofthelong‐terminvestmentsandtheirrespectivematuritiesandtheir
June30,2013
Lessthan
FairValue
1Year
Costandequitymethodinvestments*
Moneymarketdeposits
Moneymarketfund
Repurchaseagreements
$
Itemssubjecttointerestraterisk
Totallong‐terminvestments
$
19,098,191
—
—
—
18,854,664
13,425,294
18,854,663
13,425,294
32,279,958
32,279,957
51,378,149
32,279,957
June30,2012
Lessthan
FairValue
1Year
Moneymarketdeposits
Moneymarketfund
$
Itemssubjecttointerestraterisk
Totallong‐terminvestments
$
41
17,657,104
135
—
135
16,529,232
13,430,719
16,529,232
13,430,719
29,959,951
29,959,951
47,617,190
29,960,086
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
CustodialCreditRisk–DebtInvestments–AsofJune30,2013and2012,theHospital
heldnoU.S.governmentobligationsforlong‐terminvestmentpurposes.
The Hospital’s custodial risk policy for the bond proceeds conforms to the Trust
Indenture,andtheTrusteeholdstheinvestmentsinsafekeeping.
TheStateofNewMexicorequiresthatsecuritiesunderlyingrepurchaseagreements
haveamarketvalueofatleast102%ofthecostoftherepurchaseagreement.The
market value of the securities underlying the repurchase agreements was at or
abovetherequiredlevelduringtheyearsendedJune30,2013and2012.
The repurchase agreement for the Reserve Account was $13,425,294 and
$13,430,719 at June30, 2013 and 2012, respectively. This is an American
International Group (AIG) Matched Funding Corporation agreement collateralized
bytwelveagencysecuritiesheldbytheTrusteeintheHospital’sname.AsofJuly31,
2013,themarketvalueoftherepurchaseagreementwas$898,000inexcessofthe
investmentprincipalresultinginasecurityratioof106.7%collateralization.
CreditRisk–DebtInvestments–TheHospitalisrequiredtodisclosecreditratingsof
its debt investments in order to assess credit risk. U.S.obligations, investments
explicitly guaranteed by the U.S.government, and nondebt investments are
excluded from this requirement. Currently, the Hospital has a policy that restricts
long‐term investments to specific investment ratings issued by nationally
recognized statistical rating organizations. The policy states that cash equivalent
reserves shall consist of interest‐bearing or discount instruments of the
U.S.governmentoragenciesthereof.
42
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
A summary of the investments at June30, 2013 and 2012 and their exposure to
creditriskisasfollows:
Rating
Moneymarketdeposits
Moneymarketfund
N/A
2013
FairValue
$
Notrated
Notrated
Moody's–Baa1
Totalitemssubject
tocreditrisk
Totallong‐term
investments
$
19,098,191
Rating
N/A
2012
FairValue
$
17,657,104
—
Notrated
18,854,664
Notrated
13,425,294 Moody's–Baa1
135
16,529,232
13,430,719
32,279,958
29,960,086
51,378,149
$
47,617,190
* CostandequitymethodinvestmentsnotedareinvestmentsinTriWest(recordedat
cost)andTRLandTLSC(recordedusingtheequitymethodofaccounting).
The fair values of U.S.Treasury and U.S.government mortgage‐backed securities
investmentsarebasedonquotedmarketprices.
43
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE4. CONCENTRATIONOFRISK
The Hospital receives payment for services rendered to patients under payment
arrangements with payors, which include: (i) Medicare and Medicaid, (ii) other
third‐party payors including commercial carriers and health maintenance
organizations, and (iii) others. The following summarizes patient accounts
receivable and the percentage of gross accounts receivable from all payors as of
June30:
2013
MedicareandMedicaid
Otherthird‐partypayors
Others
$
Totalpatient
accountsreceivable
236,812,020
Lessallowancefor
uncollectibleaccountsand
contractualadjustments
Patientaccounts
receivable,net
110,430,126
78,818,863
47,563,031
2012
47% $
33
20
100%
(168,550,133)
$
68,261,887
120,668,799
82,924,057
37,792,133
50%
34
16
241,384,989
100%
(170,062,955)
$
71,322,034
NOTE5. ESTIMATEDTHIRD‐PARTYPAYORSETTLEMENTS
The Hospital is reimbursed by the Medicare and Medicaid programs on a
prospectivepaymentbasisforhospitalservices,withcertainitemsreimbursedatan
interim rate with final settlement determined after submission of annual cost
reports by the Hospital (Note11). The annual cost reports are subject to audit by
theMedicareAdministrativeContractorandtheMedicaidauditagent.Costreports
through 2010 have been final settled for the Medicaid programs. Cost reports
through 2009 have been final settled for the Medicare program. Retroactively
calculated contractual adjustments arising under reimbursement agreements with
third‐party payors are accrued on an estimated basis in the period the related
services are rendered and adjusted in future periods as final settlements are
determined.
44
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE6. ASSETSLIMITEDASTOUSE
ThefollowingsummarizesassetslimitedastouseasofJune30:
2013
Current:
Heldbytrusteefordebtservice
Noncurrent:
Heldbytrusteeformortgagereservefund
Heldbytrusteefordebtservicereserve
Heldbytrusteeforcollateral
Heldbytrusteeforredemptionfund
HeldbyUNMHospitalBoardofTrustees
$
2012
8,629,411
8,524,724
14,941,334
13,513,150
3,823,469
2,005
19,098,191
$ 60,007,560
12,616,931
13,513,150
3,828,000
2,005
17,657,104
56,141,914
Assets limited as to use are classified in the accompanying statements of net
positionascurrentandnoncurrentassets.CurrentassetsarerestrictedbytheFHA
forcurrentdebtserviceuse.ThenoncurrentassetsaredesignatedbytheFHAand
theHospitalBoardofTrusteesforfutureusesubjecttoapprovalbytherespective
parties.
AsofJune30,2013,$4.0millionofthe$8.6millionbalanceintheheldbytrusteefor
debt service account represents the bond interest payment due July1, 2013.As of
June30,2012,$4.1millionofthe$8.5millionbalanceintheheldbytrusteefordebt
serviceaccountrepresentsthebondinterestpaymentdueJuly1,2012.
The Hospital has established a “Mortgage Reserve Fund” in accordance with the
requirements and conditions of the FHA Regulatory Agreement. Notwithstanding
anyotherprovisionintheRegulatoryAgreement,theMortgageReserveFundmay
beusedbyHUDiftheHospitalisunabletomakeamortgagenotepaymentonthe
duedate.TheHospitalisrequiredtomakecontributionstothefundbasedonthe
MortgageReserveFundschedule.
TheHospitalhasestablisheda“DebtServiceReserveFund”(consistsofnoncurrent
assets held by trustee for debt service reserve and held by trustee for collateral
accounts)andhasagreedtomaintainthisfundforaslongasanyofthebondsare
outstanding. The amount of the Debt Service Reserve Fund is $17.3million and is
closelyrelatedtothetotalannualobligationunderthebondrepaymentschedulefor
thefiscalyears2013through2028.
45
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE6. ASSETSLIMITEDASTOUSE(CONTINUED)
Assets Limited as to Use by Board of Trustees – In 1997, the Hospital contributed
$2,612,500toTriWest,anorganizationformedtoadministerhealthcarebenefitsto
militaryretireesanddependentsofactivedutypersonnelintheCHAMPUS/TriCare
CentralRegion,inexchangefor2,613sharesofcommonstock,whichrepresentsan
approximate 10.8% ownership of TriWest as of June 30, 2013. The investment in
TriWestisaccountedforusingthecostmethod.
TheHospitalhasanaffiliationagreementwithPresbyterianHealthcareServicesfor
theoperationofaconsolidatedclinicallaboratory(TriCore)tooptimizethequality,
performance, and delivery of routine and specialized clinical laboratory tests for
patientsthroughouttheStateofNewMexicoinacost‐effectiveandtimelymanner.
TheHospitalcontributed$3,999,965incashandequipmentduring1998relatedto
the affiliation agreement, titled TriCore. During 2004, TriCore reorganized its
businessactivitiesintotwoentities:TriCorewhosebusinessconsistsoflaboratory
testing services for nonmembers; and TLSC, which organized solely to perform
laboratory services, on a centralized basis, for its members, the Hospital, and
PresbyterianHealthcareServices.TLSCisatax‐exempt,cooperativehospitalservice
organizationunderSection501(e)oftheInternalRevenueCodeof1986.
UNM, through the Hospital, has a 50% interest in TriCore totaling approximately
$9,613,000and$8,172,000atJune30,2013and2012,respectively,whichisbeing
accountedforusingtheequitymethod.
The Hospital has a 50% interest in TLSC totaling approximately $6,873,000 and
$6,873,000atJune30,2013and2012,respectively.Approximately38%ofthenet
earnings of TLSC in fiscal year 2012 was recorded as a reduction to laboratory
expense. This is based on the estimated ratio of the Hospital’s volume of total
laboratory services provided by TLSC to its members. The remaining 12% was
accounted for as equity earnings under the equity method. There were no net
earningsofTLSCinfiscalyear2013.TheHospitalrecordedlaboratoryexpensesof
approximately$28,000,000in2013andapproximately$27,600,000.
46
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE7. CAPITALASSETS
ThemajorclassesofcapitalassetsatJune30andrelatedactivityfortheyearthen
endedisasfollows:
YearEndedJune30,2013
Beginning
Balance
Additions
Transfers
Retirements
Ending
Balance
$1,747,245
9,462,680
11,209,925
‐
5,583,516
5,583,516
‐
(11,372,149)
(11,372,149)
‐
287,325
287,325
1,747,245
3,961,372
5,708,617
11,345,246
7,077
29,323
‐
11,381,646
167,403,273
152,380,444
15,386,603
196,099,993
‐
24,552
‐
10,374,053
1,535,042
4,283,054
90,903
5,420,800
‐
(287,325)
(12,600)
(1,520,604)
168,938,315
156,400,725
15,464,906
210,374,242
542,615,559
10,405,682
11,359,122
(1,820,529)
562,559,834
(5,262,995)
(862,230)
‐
‐
(6,125,225)
(68,597,905)
(55,507,552)
(10,069,175)
(144,030,121)
(5,356,446)
(9,046,277)
(580,127)
(15,913,530)
‐
‐
‐
(60,968)
‐
1,439
10,080
1,695,247
(73,954,351)
(64,552,390)
(10,639,222)
(158,309,372)
(283,467,748)
(31,758,610)
(60,968)
1,706,766
(313,580,560)
259,147,811
(21,352,928)
11,298,154
(113,763)
248,979,274
UNMHospitalCapitalAssets
notbeingdepreciated
11,209,925
5,583,516
(11,372,149)
287,325
5,708,617
UNMHospitaltotalcostofcapitalassets
553,825,484
15,989,198
(13,027)
(1,533,204)
568,268,451
LessAccumulatedDepreciation
(283,467,748)
(31,758,610)
(60,968)
1,706,766
(313,580,560)
UNMHospitalcapitalassets,net
$270,357,736
(15,769,412)
(73,995)
173,562
254,687,891
notbeingdepreciated:
Land
ConstructioninProgress
UNMHospitaldepreciable
capitalassets:
LandImprovements
Buildingandbuilding
improvements
BuildingServiceEquipment
FixedEquipment
MajorMoveableEquipment
Totaldepreciable
capitalassets
LessAccumulated
depreciationfor:
LandImprovements
Buildingandbuilding
improvements
FixedEquipment
TotalAccumulated
depreciation
UNMHospital
depreciablecapitalassets,net
47
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE7. CAPITALASSETS(CONTINUED)
Beginning
Balance
Additions
Transfers
Retirements
$1,747,245
10,080,171
11,827,416
‐
9,457,912
9,457,912
‐
(10,075,403)
(10,075,403)
‐
‐
1,747,245
9,462,680
11,209,925
11,198,093
23,367
123,786
‐
11,345,246
166,159,694
145,974,304
15,288,399
208,908,842
‐
144,009
‐
9,026,127
1,243,579
6,262,131
98,204
2,392,336
‐
‐
‐
(24,227,312)
167,403,273
152,380,444
15,386,603
196,099,993
547,529,332
9,193,503
10,120,036
(24,227,312)
542,615,559
(4,380,808)
(882,187)
‐
‐
(5,262,995)
(63,046,822)
(46,764,856)
(9,422,686)
(149,710,724)
(5,547,392)
(8,736,760)
(646,489)
(18,419,716)
(3,691)
(5,936)
‐
(5,516)
‐
‐
‐
24,105,835
(68,597,905)
(55,507,552)
(10,069,175)
(144,030,121)
(273,325,896)
(34,232,544)
(15,143)
24,105,835
(283,467,748)
UNMHospital
depreciablecapitalassets,net
274,203,436
(25,039,041)
10,104,893
(121,477)
259,147,811
notbeingdepreciated
11,827,416
9,457,912
(10,075,403)
‐
11,209,925
UNMHospitaltotalcostofcapitalasset 559,356,748
18,651,415
44,633
(24,227,312)
553,825,484
LessAccumulatedDepreciation
(273,325,896)
(34,232,544)
(15,143)
24,105,835
(283,467,748)
UNMHospitalcapitalassets,net
$286,030,852
(15,581,129)
29,490
(121,477)
270,357,736
notbeingdepreciated:
Land
ConstructioninProgress
UNMHospitaldepreciable
capitalassets:
LandImprovements
Buildingandbuilding
improvements
FixedEquipment
Totaldepreciable
capitalassets
LessAccumulated
depreciationfor:
LandImprovements
Buildingandbuilding
improvements
FixedEquipment
TotalAccumulated
depreciation
Ending
Balance
48
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE8. COMPENSATEDABSENCES
Qualified hospital employees are entitled to accrue sick leave and annual leave
basedontheirFull‐TimeEquivalent(FTE)status.
SickLeave.Full‐timeemployeesaccruefourhoursofsickleaveeachtwo‐weekpay
period(13daysperannum)uptoamaximumof1,040hourstobeusedformajor
andminorsickleave.Sevenofthesedaysareaccumulatedintoaminorsickleave
bank. Part‐time employees who are at least 0.5FTE earn sick leave on a prorated
basiseachpayperiod.AtJune30ofeachyear,employeeshavetheopportunityto
exchangeforannualleave,majorsickleaveorcashallhoursaccumulatedinexcess
of 24hours on an hour‐for‐hour basis. At termination, only employees who retire
from the Hospital and qualify under the Hospital’s policy or estates of employees
whodieastheresultofacompensableoccupationalillnessorinjuryareeligiblefor
paymentofunusedaccumulatedhours.AccruedsickleaveasofJune30,2013and
2012of$2,904,000and$2,836,000,respectively,iscomputedbymultiplyingeach
employee’scurrenthourlyratebythenumberofhoursaccrued.
Major and minor sick leave balances earned by the consolidated employees under
the UNM plan were transferred to the Hospital. Under the UNM plan, only
employees hired prior to July1, 1984 were eligible to accrue major sick leave.
Eligibleemployeesaccruedsickleaveeachpayperiodatanhourlyrate,whichwas
basedontheirdateofhireandemploymentstatus.
TheexcessminorsickleavehourscarriedoverfromUNMwereconvertedtocashin
December2000,atarateequalto50%oftheemployee’shourlywage,multipliedby
thenumberofhoursconverted.Uponretirement,allminorhoursinexcessof600
are paid at a rate equal to 50% of the employee’s hourly wage multiplied by the
numberofhoursinexcessof600unusedsickleavehoursbasedonFTEstatus,not
toexceed440hoursofsuchsickleave.
Immediately upon retirement or death, a consolidated employee is entitled to
receivecashpaymentforunusedmajorsickleavehoursinexcessof1,040atarate
equalto28.5%oftheemployee’shourlywagemultipliedbythenumberofhoursin
excess of 1,040 major sick leave hours based on FTE status. Partial hours are
roundedtothenearestfullhour.
49
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE8. COMPENSATEDABSENCES(CONTINUED)
Annual Leave. Full‐time employees accrue annual leave based on their length of
employmentuptoamaximumof480hours.Part‐timeemployeeswhoareatleast
0.5FTE earn annual leave on a prorated basis each pay period. At June30 of each
year, employees have the opportunity to exchange for cash up to 80annual leave
hoursaccumulatedinexcessof240hours.Attermination,employeesareeligiblefor
payment of unused accumulated hours, not to exceed 480 hours. Accrued annual
leaveasofJune30,2013and2012ofapproximately$15,377,000and$14,836,000,
respectively,iscomputedbymultiplyingeachemployee’scurrenthourlyratebythe
numberofhoursaccrued.
Upon retirement, death, or involuntary termination, a consolidated employee is
entitledtoreceivecashpaymentforannualleaveearnedpriortoconsolidationup
toamaximumof252hoursatarateequalto50%oftheemployee’shourlywage.
Uponvoluntarytermination,amaximumof168hoursispaidoutatarateequalto
50%oftheemployee’shourlywage.
DuringtheyearsendedJune30,2013and2012,thefollowingchangesoccurredin
accruedcompensatedabsences:
Balance
July1,2012
$
18,062,439
Balance
July1,2011
$
16,380,408
Increase
Decrease
22,871,116
Increase
(22,261,363)
Decrease
30,041,954
(28,359,923)
Balance
June30,2013
18,672,192
Balance
June30,2012
18,062,439
Thebalancesaboveincludeannualleaveandsickleave,disclosedabove,inaddition
to compensatorytimeand holiday, totalingapproximately $392,000 and $391,000
in fiscal years 2013 and 2012, respectively. The portion of accrued compensated
absences due after one year is not material and, therefore, is not presented
separately.
50
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE9. OTHERACCRUEDLIABILITIES
AtJune30,otheraccruedliabilitiesconsistedofthefollowing:
2013
SCIProgramincurredbutnotreported(IBNR)
Deferredrent
Other
2012
$
1,526,262
—
92,346
816,852
—
96,689
$
1,618,608
913,541
NOTE10. BONDSPAYABLE
OnOctober14,2004,UNMBoardofRegentsissuedFHAinsuredHospitalMortgage
Revenue Bonds (University of New Mexico Hospital Project), Series2004 in the
aggregateprincipalamountof$192,250,000.Interestonthebondsrangesfrom2%
to 5% and is payable semi‐annually on each January1 and July1, commencing
January1,2005.TheSeries2004bondswereissuedforthepurposeoffinancingthe
construction, equipping, and furnishing of the CHCCP, which provides care to
patients requiring trauma, children’s and women’s services, funding the Debt
ServiceReserveFund,andpayingcostsofissuanceassociatedwiththebonds.
Inconjunctionwiththisconstructionproject,theU.S.HUD,underSection242CFDA
No.14.128,issuedaloanguaranteeforthemortgageamountof$183,399,000.
ThebondsarelimitedobligationsoftheUNMBoardofRegents,andhaveaclaimfor
paymentsolelyfrom:(1)thetrustrevenuespursuanttoTrustIndenture,datedasof
November1,2004byandbetweentheUNMBoardofRegentsandWellsFargoBank
National Association, as trustee, including without limitation, payments or
prepayments to be made on the Mortgage Note (theSeries2004 Note);
(2)payments made under the Mortgage and Series2004 Note; (3)in the event of
defaultbytheUNMBoardofRegentsundertheSeries2004NoteortheMortgage
andtheassignmentthereoftoFHA,fromproceedsofthemortgageinsurancepaid
by the HUD, acting by and through the FHA under Section242 of TitleII of the
National Housing Act; (4)moneys and investments held by the Trustee under the
TrustIndenture;and(5)undercertaincircumstances,proceedsfrominsuranceand
condemnationawardsandsalesconsummatedunderthreatofcondemnation.
51
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE10. BONDSPAYABLE(CONTINUED)
Interestexpenseassociatedwiththebondspayablewasapproximately$7,770,000
and $7,959,000, net of amortization of bond premium totaling approximately
$315,000 and $329,000 for the years ended June30, 2013 and 2012, respectively.
Interest income earned from the investment of the bond proceeds was
approximately$797,000and$812,000fortheyearsendedJune30,2013and2012,
respectively.
Bondspayableactivityconsistsofthefollowing:
AsofJune30,2013
Beginning
Balance
Additions
Deductions
Ending
Balance
Amounts
dueWithin
OneYear
FHAInsuredHospitalMortgage
Revenue:
BondsSeries2004
$
Bondpremium
169,645,000
1,545,367
—
—
(4,985,000)
(314,955)
164,660,000
1,230,412
5,240,000
—
$
171,190,367
—
(5,299,955)
165,890,412
5,240,000
Ending
Balance
Amounts
dueWithin
OneYear
AsofJune30,2012
Beginning
Balance
Additions
Deductions
FHAInsuredHospitalMortgage
Revenue:
BondsSeries2004
$
Bondpremium
174,435,000
1,873,925
—
—
(4,790,000)
(328,558)
169,645,000
1,545,367
4,985,000
—
$
176,308,925
—
(5,118,558)
171,190,367
4,985,000
PerSection5.02oftherelatedTrustIndenture,thethreebondsinthe2004Series
maturingonJuly1,2030,2031,and2032aresubjecttosinkingfundredemptionin
part prior to maturity. Excess funds in the debt service account and investment
incomereceivedcanbeusedforbondsinkingfundredemption.
Per Section5.01(B) of the related Trust Indenture, excess funds in the investment
incomeaccountcanbeusedforaspecialmandatoryredemption.
52
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE10. BONDSPAYABLE(CONTINUED)
Futuredebtservice(notincludingsinkingfundredemptions)asofJune30,2013for
thebondsfollows:
YearsendingJune30,
Interest
Total
Principal
2014
$
5,240,000
7,871,938
13,111,938
2015
5,495,000
7,617,650
13,112,650
2016
5,770,000
7,332,650
13,102,650
2017
6,065,000
7,033,150
13,098,150
2018
6,370,000
6,718,525
13,088,525
2019‐2023
37,045,000
28,284,500
65,329,500
2024‐2028
47,435,000
17,858,784
65,293,784
2029‐2033
51,240,000
7,696,138
58,936,138
$ 164,660,000
90,413,335
255,073,335
On November15, 2004, the Hospital established a mortgage reserve fund in
accordancewiththerequirementsandconditionsoftheFHARegulatoryAgreement.
FutureMortgageReserveFundcontributionsaresummarizedasfollows:
YearendingJune30,
2014
$
2,420,313
2015
2,518,921
2016
2,621,545
2017
2,728,351
$
10,289,130
Fiscalyear2017isscheduledtobethefinalyearofrequiredcontributions,atwhich
timethemortgagereservefundwillbefullyfunded.
53
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE11. NETPATIENTSERVICEREVENUES
ThemajorityoftheHospital’srevenueisgeneratedthroughagreementswiththird‐
party payors that provide for reimbursement to the Hospital at amounts different
from its established charges. Approximately 41% and 40% of the Hospital’s gross
patientrevenueforthefiscalyearsendedJune30,2013and2012,respectively,was
derived from the Medicare and Medicaid programs, the continuation of which are
dependent upon governmental policies. Laws and regulations governing the
Medicare and Medicaid programs are extremely complex and subject to
interpretation. As a result, there is at least a reasonable possibility that recorded
revenue estimates could change as a result of regulatory review. Contractual
adjustments under third‐party reimbursement programs represent the difference
between the Hospital’s billings at established charges for services and amounts
reimbursedbythird‐partypayors.Asummaryofthebasisofreimbursementfrom
majorthird‐partypayorsfollows:
Medicare – Inpatient acute care services rendered to Medicare program
beneficiaries are paid at prospectively determined rates per discharge. These
Medical Severity Diagnosis Related Group (MS‐DRG) rates vary according to a
patientclassificationsystemthatisbasedonclinical,diagnostic,andotherfactors.
Most Medicare outpatient services are prospectively paid through Medicare’s
Outpatient Prospective Payment system (OPPS). Services excluded from the OPPS
and paid under separate fee schedules include: clinical lab, certain rehabilitation
services,durablemedicalequipment,renaldialysistreatments,ambulanceservices,
andprofessionalfeesofphysiciansandnonphysicianpractitioners.
Medicaid–InpatientacutecareservicesrenderedtoMedicaidFee‐for‐Service(FFS)
program beneficiaries are paid at prospectively determined rates per discharge
based upon the MS‐DRG system. These ratesvaryaccording to clinical factorsand
patient diagnosis. The Hospital is eligible for and receives additional Medicaid
reimbursement (UPL) for the gap between the Medicaid reimbursement per
discharge and the Medicare reimbursement per discharge. The Hospitals recorded
UPL for the fiscal years ended June30, 2013 and 2012 in the amounts of
approximately $45.5 million and $40.5 million, respectively. During 2013, the
hospital entered into an agreement with the State of New Mexico to fund an
intergovernmentaltransfer(IGT)intheamountof$4.7millioninordertoreceive
the full amount of available UPL funding. The $45.5 million is net of the IGT. For
outpatients, beginning November 1, 2011, payments are made based upon an
OutpatientProspectivePaymentSystem(OPPS).Priortothat,paymentsweremade
54
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE11. NETPATIENTSERVICEREVENUES(CONTINUED)
at an interim rate that was then settled through the cost report by the State
Medicaidagency.
Inaddition,theHospitalhasreimbursementagreementswithcertainManagedCare
Organizations (MCOs) that have contracted with the State of New Mexico SALUD!
program to administer services to enrolled Medicaid beneficiaries. The basis for
reimbursement under these agreements includes prospectively determined rates
(MS‐DRG) or per diem for inpatient services, and as of November 1, 2011,
prospectively determined payments for outpatient services. Prior to that time, a
percentageofchargewasusedforoutpatientservices,exceptforlabandradiology,
forwhichpaymentswerebaseduponpredeterminedfeeschedules.
TheHospitalenteredintoareimbursementagreementfortheSCIprogramduring
fiscalyear2007.ThisprogramispartoftheNewMexicoSCIMedicaidplan,funded
in part by the State of New Mexico HSD. Funding is modeled after a capitated
paymentprogram.FundsareremittedtotheHospitalonaper‐member‐per‐month
basisforallstate‐approvedmembers.TheHospital’sfundingundertheSCIprogram
for the fiscal years ended June30, 2013 and 2012 was $39.7 million and
$39.1million,respectively,andisincludedinnetpatientservicerevenue.
Other–TheHospitalhasalsoenteredintoreimbursementagreementswithcertain
commercial insurance carriers, health maintenance organizations, and preferred
provider organizations. The basis for reimbursement under these agreements
includes prospectively determined rates‐per‐discharge,discounts from established
charges,andprospectivelydeterminedperdiemrates.
AsummaryofnetpatientrevenuesfollowsfortheyearsendedJune30:
2013
Chargesatestablishedrates
Charitycare
Contractualadjustments
Provisionfordoubtfulaccounts
Netpatientrevenues
55
2012
$ 1,512,049,380
(270,234,717)
(510,045,362)
(102,205,099)
1,425,371,069
(263,114,525)
(446,442,868)
(98,082,895)
$ 629,564,202
617,730,781
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE11. NETPATIENTSERVICEREVENUES(CONTINUED)
Currentyearestimates,settlementsofprior‐yearcostreports,andchangesinprior‐
year estimates resulted in net increases to net patient service revenue of
approximately $5,905,000 and $5,415,000 for the years ended June30, 2013 and
2012,respectively.DuringthefiscalyearendedJune30,2013,$2,435,000liability
for Medicare and $267,000 receivable for Medicaid, wereaccrued asestimates for
the fiscal year 2013 cost report. During the fiscal year ended June30, 2012,
$3,293,000 liability for Medicare and $483,000 receivable for Medicaid, were
accrued as estimates for the fiscal year 2012 cost report. UNM Hospital’s cost
reports are typically filed by November30. Management believes these estimates
are appropriate. Laws and regulations governing the Medicare and Medicaid
programsareextremelycomplexandsubjecttointerpretation.Asaresult,thereis
at least a reasonable possibility that recorded estimates will change by a material
amountinthenearterm.Estimatesarecontinuallymonitoredandreviewed,andas
settlements are made or more information is available to improve estimates,
differencesarereflectedincurrentoperations.Duringfiscalyear2013,thehospital
receivedaggregatesettlementsof$2,698,000fromTri‐Care,andU.S.PublicHealth
Serviceswhichareincludedinthetotalsabove.
NOTE12. CHARITYCARE
The Hospital maintains records to identify and monitor the level of charity care it
provides. These records include the amount of charges foregone for services and
supplies furnished under its charity care policy. The following information
measuresthelevelofcharitycareprovidedduringtheyearsendedJune30:
Chargesforegone,basedonestablishedrates
Estimatedcostsandexpensesincurredtoprovidecharitycare
Equivalentpercentageofcharitycarechargesforegone
tototalgrossrevenue
56
$
2013
2012
270,234,717
130,793,603
263,114,525
129,452,346
18%
18%
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE13. MALPRACTICEINSURANCE
AsapartofUNM,theHospitalenjoyssovereignimmunityfromsuitfortortliability
except as waived by the New Mexico legislature. In this connection, under the
NewMexico Tort Claims Act (NMTCA), the New Mexico Legislature waived the
State’s and the Hospital’s sovereign immunity for claims arising out of negligence
outoftheoperationoftheHospital,thetreatmentoftheHospital’spatients,andthe
healthcareservicesprovidedbyHospitalemployees.Inaddition,theNMTCAlimits,
asanintegralpartofthiswaiverofsovereignimmunity,theamountofdamagesthat
can be assessed against the Hospital on any tort claim including medical
malpractice,professionalorgeneralliabilityclaims.
The NMTCA provides that total liability for all claims that arise out of a single
occurrence shall not exceed $700,000 set forth as follows: (a)$200,000 for real
property; (b) up to $300,000 for past and future medical and medically related
expenses;and(c)upto$400,000forpastandfuturenoneconomiclosses(suchas
painandsuffering)incurredortobeincurredbytheclaimant.Whilethelanguageof
the NMTCA does not expressly provide for third party claims such as loss of
consortium, the New Mexico appellate court decisions have allowed claimants to
seekconsortium.Asaresult,iflossofconsortiumclaimsispresented,thoseclaims
cannotexceed$350,000intheaggregate.Thus,ifaclaimpresentsbothdirectclaims
and third party claims, the maximum exposure of the Public Liability Fund, and
therefore UNM Hospitals, cannot exceed $1,050,000. The NMTCA prohibits the
awardofpunitiveorexemplarydamagesagainsttheHospital.
The NMTCA requires the State Risk Management Division (RMD) to provide
coveragetotheHospitalforthosetortswheretheLegislaturehaswaivedtheState’s
sovereign immunity up to the damages limits of the NMTCA, as described above,
plusthecostincurredindefendinganyclaimsand/orlawsuits(includingattorney’s
fees and expenses), with no deductible and with no self‐insured retention by the
Hospital.Asaresultoftheforegoing,theHospitalisfullycoveredforclaimsand/or
lawsuits relating to medical malpractice or professional liability occurring at the
Hospital.
57
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE14. RELATED‐PARTYTRANSACTIONS
The Hospital provides professional services, referral services, and office space to
UNM and other entities associated with UNM. The Hospital billed the following
amounts, included as an expense reduction in the accompanying statements of
revenues, expenses, and changes in net position, for services rendered during the
yearsendedJune30:
2013
UNMMG
UNMHealthSciencesCenter
SRMC
UNMCancerCenter
2012
$
3,734,585
1,050,571
776,725
14,733
1,692,157
1,268,893
297,526
9,178
$
5,576,614
3,267,754
TheHospitalreimbursesUNMandotherentitiesassociatedwithUNM,forthecost
of utilities and the salaries of various medical and administrative personnel
incurredonbehalfoftheHospital.TheHospitalincurredexpenses,includedintotal
expensesintheaccompanyingstatementsofrevenues,expenses,andchangesinnet
position,relatedtothefollowingentitiesduringtheyearsendedJune30:
2013
UNMHealthSciencesCenter
UNM
UNMMG
SRMC
$ 109,536,255
15,489,539
2,718,673
836,082
$ 128,580,549
2012
114,453,085
12,981,641
1,469,341
—
128,904,067
NOTE15. BENEFITPLANS
The Hospital has a defined contribution plan covering eligible employees, which
providesretirementbenefits.ThenameoftheplanisUNMHospitalTaxSheltered
AnnuityPlan,formerlyknownastheUniversityofNewMexicoHospital/Bernalillo
MedicalCenterTaxShelteredAnnuityPlan.TheHospitalcontributeseither5.5%or
7.5%ofanemployee’ssalarytotheplan,dependingonemploymentlevel.Theplan
wasestablishedbytheUNMHospitalBoardofTrusteesandcanbeamendedatits
discretion. The plan is administered by the Hospital’s Human Resources
Department.
58
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE15. BENEFITPLANS(CONTINUED)
The expense for the defined contribution plan was $11,263,000, $11,747,000 and
$9,761,000 in fiscal years 2013, 2012 and 2011, respectively. Total employee
contributions under this plan were $12,939,000, $13,513,000 and $12,630,000 in
fiscal years 2013, 2012 and 2011, respectively. In 2012, a Roth 403b defined
contributionplanoptionwasadded.Totalemployeecontributionswere$383,000
and$5,000infiscalyears2013and2012,respectively.
TheHospitalalsohasadeferredcompensationplan,calledtheUNMHospital457(b)
DeferredCompensationPlan,whichprovidesemployeeswithadditionalretirement
savings plan. The Hospital does not contribute to this plan. Employees can make
voluntarycontributionstothisplan.TheplanwasestablishedbytheUNMHospital
BoardofTrusteesandcanbeamendedatitsdiscretion.Theplanisadministeredby
theHospital’sHumanResourcesDepartment.
Therewasnoexpenseforthedeferredcompensationplanin2013,2012and2011,
respectively, as the Hospital does not contribute to this plan. Total employee
contributionsunderthisplanwere$2,247,000,$2,146,000and$2,055,000in2013,
2012and2011,respectively.
In addition, the Hospital has a 401(a) defined contribution plan, called the
UNMHospital401(a) Plan, which was established for the purpose of providing
retirementbenefitsforeligibleparticipantsandtheirbeneficiaries.The401(a)plan
allowsfortax‐deferredemployercontributionsonapercentage‐of‐salarybasis.The
planwasestablishedbytheUNMHospitalBoardofTrusteesandcanbeamendedat
its discretion. All assets of the plan are held in a trust fund, are not considered
hospitalassets,andareunderthedirectionofaPlanAdministrator.
Theexpenseforthe401(a)definedcontributionplanwas$360,000,$344,000and
$285,000 in fiscal years 2013, 2012 and 2011, respectively. Only the Hospital
contributestothisplan.
The Hospital also has a defined benefit plan that covers all employees who were
membersoftheclericalandserviceworkercollectivebargainingunitasofJune30,
1977andhadcompletedayearofservicepriortoJune30,1977.Theplanprovides
monthlypensionbenefitsbasedonservicebeforeJuly1,1977.Thenameoftheplan
is University of New Mexico/BCMC Retirement Plan B. There are currently
119participantsincludedinthisplan.Actuarialpensiondataforthisplanmaybe
59
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE15. BENEFITPLANS(CONTINUED)
obtained by writing to UNM Hospital’s Human Resources Department, P.O. Box
80600,Albuquerque,NM87198‐0600.
Asmallportion(approximately35)oftheHospital’sfull‐timeemployeesparticipate
in a public employee retirement system authorized under the Educational
Retirement Act (Chapter22, Article11, NMSA1978). The Educational Retirement
Board (ERB) is the administrator of the plan, which is a cost‐sharing multiple‐
employer defined benefit retirement plan. The plan provides for retirement
benefits,disabilitybenefits,survivorbenefits,andcost‐of‐livingadjustmentstoplan
members (certified teachers and other employees of state public school districts,
collegesanduniversities)andbeneficiaries.ERBissuesaseparate,publiclyavailable
financial report that includes financial statements and required supplementary
information for the plan. That report may be obtained by writing to the ERB,
P.O.Box26129,SantaFe,NM87502.ThereportisalsoavailableonERB’sWebsite
atwww.nmerb.org.
FundingPolicy.PlanmembersofthepublicERBwhoseannualsalaryis$20,000or
lessarerequiredbystatutetocontribute7.9%oftheirgrosssalary.Planmembers
whose annual salary is over $20,000 are required to make the following
contributionstothePlan:9.40%oftheirgrosssalaryinfiscalyear2013;10.1%of
theirgrosssalaryinfiscalyear2014;and10.7%oftheirgrosssalaryinfiscalyear
2015 and thereafter. In fiscal year 2013, theHospital was required to contribute
12.4%ofthegrosscoveredsalaryforemployeeswhoseannualsalaryis$20,000or
less, and 10.9% of the gross covered salary for employees whose annual salary is
more than $20,000. In the future, the Hospital will contribute the following
percentages of the gross covered salary of employees: 13.15% of gross covered
salary in fiscal year 2014; and 13.9% of gross covered salary in fiscal year 2015.
ThecontributionrequirementsofplanmembersandtheHospitalareestablishedin
State statute under Chapter 22, Article 11, NMSA 1978. The requirements may be
amendedbyactsofthelegislature.TheHospital’scontributionstoERBforthefiscal
years ending June 30, 2013, 2012 and 2011, were $160,000, $157,000, and
$182,000, respectively, which equal the amount of the required contributions for
eachfiscalyear.
60
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE16. OTHERPOSTEMPLOYMENTBENEFITPLAN
Plan Description. The Hospital and the Center employees and retirees participate
underthesamebenefitplanadministeredbytheHospital.TheHospitaladministers
a single employer defined benefit postemployment benefit plan that offers
postemployment healthcare coverage to eligible retirees and their dependents.
Eligibleretiredemployeesareofferedcombinedmedical/prescriptiondrugbenefits
through the Hospital’s self‐insured health plan administered by BCBSNM. Eligible
retired employees are also offered dental insurance through the Hospital’s self‐
insured dental plan insurance. The authority to establish and amend benefit
provisions to the benefit policy is recommended by the Human Resource
AdministratorandapprovedbytheChiefExecutiveOfficer.
Beginning July 1, 2009, the actuarial valuations are prepared biennially for the
HospitalasallowedforunderGASBStatementNo.45.
Employees are eligible to retire from the Hospital and receive these post‐
employmentbenefitswhen:

Theemployeereachestheminimumageoffifty(50);

Theemployeehasatleastfiveyearsofcontinuousemployment;and

Theemployeehasacombinedageplusyearofservicesumofatleastseventy
(70)(hiredatepriortoJuly1,2009),seventy‐five(75)(hiredateafterJuly1,
2009)andeighty(80)(hiredateafterJuly1,2011).
At the date of valuation, July1, 2012, there were a total of 37 Hospital and four
Center retirees receiving benefits, 532 active employees fully eligible to receive
benefits,and4,690activeemployeescurrentlynotfullyeligibletoreceivebenefits.
Funding Policy. The contribution requirements of the plan members and the
Hospital are established, and may be amended by recommendation of the Human
Resource Administrator and approval by the Chief Executive Officer. The retired
employeesthatelecttoparticipateinthepostemploymentbenefitplanarerequired
to make contributions in the form of monthly premiums based on current rates
established under the health and dental plans. For the medical and dental plans,
therearebothimplicitandexplicitsubsidiesprovidedbytheHospital.Theexplicit
subsidy is for employees that retire with sick and annual leave (compensated
absence) accruals. The Hospital subsidizes for the retiree only, the current
“employeeonly”premiumamountforthehealthanddentalplansfortheperiodof
61
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE16. OTHERPOSTEMPLOYMENTBENEFITPLAN(CONTINUED)
the length of leave (compensated absence) accrual. The implicit subsidy arises
because the retiree pays a contribution that is based on a combined active and
retiree claim experience. If the retirees were to pay based solely on retiree claim
experience,theywouldbepayingahigheramountastypicallyretireesincurhigher
claims.This“discount”iscalledtheimplicitsubsidy.
Theapplicablemonthlyretireecontributionratesareprovidedinthetablesbelow:
Retiree(coverageextension/
compensatedabsenceaccrualperiod)
Standard
Extended
Delta
Network
Network
Dental
Ratetier:
Retireeonly
Retiree+Spouse/DP
Retiree+Children
Retiree+family
$
0.00
273.00
130.00
299.50
369.50
1,029.00
683.00
1,093.00
30.68
65.65
—
97.68
Retiree(aftercoverageextension)
Standard
Extended
Delta
Network
Network
Dental
650.00
1,332.00
975.00
1,390.00
1,573.00
3,222.00
2,357.00
3,382.00
30.68
65.68
—
97.68
TheHospitaldoesnotuseatrustfundtoadministerthefinancingandpaymentof
benefits.Instead,theHospitalfundstheplanonapay‐as‐you‐gobasis.Thepay‐as‐
you‐goexpenseisthenetexpectedcostofprovidingretireebenefits.Thisexpense
includes all expected claims and related expenses and is offset by the retiree
contribution.Expectedmonthlyclaimcostsweredevelopedfromacombinationof
historicalclaimexperienceandmanualclaimcostdevelopedusingarepresentative
database. Nonclaim expenses are based on the current amounts charged to
employees. The Hospital’s and Center’s pay‐as‐you‐go expense for the period of
July1,2012toJune30,2013isapproximately$110,000.Thepay‐as‐you‐goexpense
includes the medical and dental claims, administration expenses, and implicit
subsidyandisnetofanyretireecontributions.
Actuarial Methods and Assumptions. Actuarial calculations reflect a long‐term
perspective and employ methods and assumptions that are designed to reduce
short‐termvolatilityinactuarialaccruedliabilities(AALs)andtheactuarialvalueof
assets. The actuarial method used is the Unit Credit method, as the Unit Credit
method provides a logical correlation between accruing and expensing of retirees’
benefits.
62
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
A 4.5% annual discount rate was used assuming the Hospital will fund the
postemployment benefit on a pay‐as‐you‐go basis. For an unfunded plan, the
investmentreturnassumptionisbasedontheexpectedreturnonemployerassets
thatgenerallyconsistofshort‐termliquidinvestments.
TheJuly1,2012actuarialvaluationconsidersanannualhealthcarecosttrendona
select(9%)andultimate(5%)basis.Selectratesarereduced0.5%eachyearuntil
reaching the ultimate trend. The unfunded AAL is amortized over the maximum
acceptable period of 30years. It is calculated assuming a level percentage of
projectedpayroll,witha1.5%perannumsalaryincrease.
Annual retirement probabilities and the rate of withdrawal for reasons otherthan
deathandretirementhavebeendeterminedbasedontheNewMexicoEducational
RetirementBoard(“NMERB”)ActuarialValuationasofJune30,2012.Itisassumed
that 30% of future pre‐retirees participate in the Hospital’s postretirement health
planandthatnonecontinuecoverageonceattainingMedicareeligibility.
The following changes in assumptions have occurred since the valuation date of
July1, 2009. These assumptions include both the Hospital and the Center as
reportedatthevaluationdateofJuly1,2011.Thepriorvaluationswerebasedupon
the NMERB assumptions, however, when comparing the actual number of
retirementstotheexpectedretirementsitwasfoundthathospitalemployeesdonot
retireasearlyastheNMERBassumptionswouldsuggest.TheNMERBwasadjusted
to reflect the Hospital’s experience rate. The impact of this adjustment was a
reductionof$2.8millionintheAAL.AnotherfactorimpactingthereductioninAAL
wasthatthepercapitaclaimcostdidnotincreaseasmuchasexpected,thuscausing
aslowerrateofincreaseinretireecontributionsresultinginanetreductioninAAL
ofapproximately$950,000.FinalkeyfactorsloweringtheAALarethevaluationof
the explicit subsidy and updated demographic information. The Hospital provides
two months of subsidy rather than one year as assumed in the valuation dated
July1,2009.ThesefactorsreducedtheAALbyanother$800,000.
Annual OPEB Cost and Net OPEB Obligation. The annual OPEB cost (expense) is
calculated based on the annual required contribution of the employer (ARC), an
amount actuarially determined in accordance with the parameters of
GASBStatement No.45. The ARC represents a level of funding that, if paid on an
ongoing basis, is projected to cover normal cost each year and amortize any
unfundedactuarialliabilities(UAALs)overa30‐yearperiod.
63
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
The Hospital’s postemployment benefit plan includes employees from the Center.
TheOPEBcostandnetOPEBobligation(NOO)werecalculatedandallocatedtoeach
reporting entity based on the Hospital’s and Center’s employee data as of July1,
2012. The allocation is as follows: the Hospital – 92% and theCenter – 8%. The
OPEB cost and NOO information presented below are the Hospital’s calculated
portion.
The NOO is the cumulative difference between the ARC and the employer’s
contribution to the plan. The Hospital’s NOO as of July1, 2012 is equal to
$5,248,805,whichwasdeterminedbasedontheapplicableFTEof the entityas of
June30,2012.
Theplanisfundedonapay‐as‐you‐gobasis;theNOOfollowsasofJune30:
2013
Unfunded
NOO–beginningofyear
2012
Unfunded
$ 4,820,059
ARC
InterestonprioryearNOO
AdjustmenttoARC
6,236,730
560,000
220,858
(242,112)
1,571,462
363,552
(398,058)
538,746
1,536,956
(110,000)
(277,511)
IncreaseinNOO
428,746
1,259,445
Adjustmentto2011estimate
‐
(2,676,116)
AnnualOPEBcost
Employercontributions
NOO–endofyear
$ 5,248,805
4,820,059
TheannualOPEBcost,thepercentageofannualOPEBcostcontributedtotheplan,
andtheNOOforfiscalyearsendedJune30,2013and2012areasfollows:
Annual
OPEB
Cost
FiscalYearEnded
June30,2013
June30,2012
$
538,746
1,536,956
64
Percentageof
AnnualOPEB
Cost
Contributed
20.0%
18.0%
NetOPEB
Obligation
$
5,248,805
4,820,059
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
FundingStatusandProgress.AsofJuly1,2012,themostrecentactuarialvaluation
date, the plan was not funded. The plan’s actuarial accrued liability (AAL,
thepresent value of all future expected postretirement medical payments and
administrative cost, which are attributable to past service) is $3,713,000 and the
actuarialvalueofassetswas$0,resultinginanunfundedactuarialaccruedliability
(UAAL)of$3,713,000.TheUAALisapplicabletoallreportingentitiesbasedonthe
percentagenotedabove.
UnitCredit
Method
UnfundedPlan
June30,2013
AAL
Actuarialvalueofplanassets
UAAL
Fundedratio(actuarialvalueofplan
assets/AAL)
Coveredpayroll(activeplanmembers)
UAALasapercentageofcoveredpayroll
$
3,713,000
—
3,713,000
0%
240,498,000
1.5%
Theprojectionoffuturebenefitpaymentsforanongoingplaninvolvesestimatesof
thevalueofreportedamountsandassumptionsabouttheprobabilityofoccurrence
of events far into the future. Examples include assumptions about future
employment, current and future retirees and their dependents, mortality, and
healthcarecosttrends.Amountsdeterminedregardingthefundedstatusoftheplan
andtheARCsoftheemployeraresubjecttocontinualrevisionasactualresultsare
comparedwithpastexpectationsandnewestimatesaremadeaboutthefuture.The
scheduleoffundingprogress(Schedule4),presentedasRSIfollowingthenotesto
thefinancialstatement,presentsinformationabouttheactuarialvalueofplanassets
relativetotheAALsforbenefits.
NOTE17. COMMITMENTSANDCONTINGENCIES
Lease Commitments. The Hospital is committed under various leases for building
and office space and data processing equipment. Rental expenses on operating
leases and other nonlease equipment amounted to $8,795,000 in 2013 and
$8,569,000in2012.
65
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE17. COMMITMENTSANDCONTINGENCIES(CONTINUED)
The Hospital has entered into an MOU with UNM to lease the medical facility
referred to as the Ambulatory Care Center and usage of the related parking
structure through fiscal year 2019. The Hospital pays semiannual installments of
approximately$969,000underthisMOU.
Futureminimumleasecommitmentsforoperatingleasesfortheyearssubsequent
to June30, 2013, under noncancelable operating leases and memorandums of
understanding,areasfollows:
Amount
YearsendingJune30,
2014
2015
2016
2017
2018
2019‐2023
2024‐2028
2029‐2033
2034‐2038
$
4,382,052
4,088,908
3,761,949
3,718,726
3,748,439
5,559,386
4,365,081
4,375,990
2,216,887
$
36,217,418
Contingencies. The Hospital is currently a party to various claims and legal
proceedings.TheHospitalmakesprovisionsforaliabilitywhenitisbothprobable
that a liability has been incurred and the amount of the loss can be reasonably
estimated.TheHospitalbelievesithasadequateprovisionsforpotentialliabilityin
litigation matters. The Hospital reviews these provisions on a periodic basis and
adjusts these provisions to reflect the impact of negotiations, settlements, rulings,
adviceoflegalcounsel,andotherinformationandeventspertainingtoaparticular
case. Based on the information that is currently available to the Hospital, the
Hospitalbelievesthattheultimateoutcomeoflitigationmatters,individuallyandin
aggregate, will not have a material adverse effect on its results of operations or
financialposition.However,litigationisinherentlyunpredictable.
66
UNMHOSPITAL
CLINICALOPERATIONS
June30,2013and2012
NOTE18. CAPITALINITIATIVES
In fiscal year 2012, the Hospital and the UNM HSC entered into an MOU for a
seventh year, to collaborate on strategic capital projects. Per the agreement, the
Hospital recorded a nonoperating expense of approximately $20.2 million to
provide for the development of clinical facilities pursuant to the agreement. All
capitalfacilitiesareownedbyUNMHSCforusebytheHospital.Infiscalyear2013,
therewasnostrategiccapitalMOUorpayment.Capitalprojectdisbursementsfrom
capitalinitiativesfundsheldbyUNMHSCin2013and2012andtheendingbalances
foreachyeararereflectedinthetablebelow.
July1
Beginning
Balance
Capital
UNMH
Project
Contributions Disbursements
toFund
FromFund
June30
Ending
Balance
FiscalYear2012
$ 67,295,769 20,194,800 (6,813,654) 80,676,915
FiscalYear2013
$ 80,676,915‐0‐ (5,663,502) 75,013,413
NOTE19. RISKSANDUNCERTAINTIES
TheHospital’sinvestmentsareexposedtovariousrisks,suchasinterestrate,credit,
and overall market volatility risks. Due to the level of risk associated with certain
investments, it is at least reasonably possible that changes in the values of
investments will occur in the near term and that such changes could materially
affecttheamountsreportedinthestatementsofnetposition.
67
Schedule1
UNMHOSPITAL
CLINICALOPERATIONS
COMPARISONOFBUDGETEDANDACTUALREVENUESANDEXPENSES
Operatingrevenues:
Netpatientservice
Otheroperatingrevenue
Operatingexpenses
Operatingloss
Nonoperatingrevenuesandotherrevenues,net
Increaseinnetassets
NoteA:
Budget
(Original)
Budget
(Final)
Actual
Budget
Variance
$ 623,443,771
12,511,545
635,955,316
(717,809,572)
(81,854,256) 81,878,183
$ 23,927
617,731,722
7,908,160
625,639,882
(719,962,100)
(94,322,218)
93,409,955
(912,263)
629,564,202
8,489,374
638,053,576
(726,361,454)
(88,307,878)
94,298,871
5,990,993
11,832,480
581,214
12,413,694
(6,399,354)
6,014,340
888,916
6,903,256
TheHospitalpreparesabudgetforeachfiscalyear,usingtheaccrualbasisofaccounting,whichissubjectto
approvalbytheBoardofTrusteesandtheUNMBoardofRegents.TheamountbudgetedfortheHospital’s
operationsisincludedintheUNMbudgetandsubmittedtotheNewMexicoCommissiononHigherEducationfor
approval.Allrevisionstotheapprovedbudgetmustbeapprovedbythepartiesincludedintheoriginalbudget
process.ThebudgetiscontrolledatthemajoradministrativefunctionalareawhichisreportedattheUNMlevel.
Thereisnocarryoverofbudgetedamountsfromoneyeartothenext.
68
Schedule2
UNMHOSPITAL
CLINICALOPERATIONS
PLEDGEDCOLLATERALBYBANKS
BankBalance
PledgedCollateral
Typeof
Security
CUSIP
Maturity
Fundsondeposit:
Demanddeposits
FDICinsurance
Totaluninsuredpublicfunds
50%collateralrequirementper
Section6‐10‐17NMSA
Bankof
America
Albuquerque,
NewMexico
USBank
Albuquerque,
NewMexico
Total
$ 117,879,420
(250,000)
$ 117,629,420
16,819
(16,819)
‐
117,896,239
(266,819)
117,629,420
$ 58,814,710
‐
58,814,710
FairMarketValueofSecuritiesinSafekeeping
Pledgedcollateral*
FHLMC
FHLMC
GoldPC
GoldPC
GoldPC
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
FNMA
GNMA
GNMA
3128NGR31
3128QLQQ7
31294KNX9
31294KSF3
3132GRHL8
3138E6VE3
3138EGG24
3138EGJZ8
3138EGRE6
3138MQTB9
31391WVD0
31391Y3N5
31391YX44
31402HRL7
31402XNG7
31404AQY3
31404LV64
31404LV80
31404LX39
31405FH39
31405FHP0
31405FHQ8
31405FHW5
31405MA64
31410GZC0
31415VYB5
31416BL63
31416BL71
31416WZ39
31417AR50
31419AX69
31419GB94
36202FAW6
3620C4V80
8/1/2035
12/1/2035
2/1/2018
7/1/2018
2/1/2042
2/1/2042
4/1/2041
10/1/2038
5/1/2040
12/1/2042
1/1/2018
2/1/2018
12/1/2027
7/1/2018
9/1/2018
10/1/2028
6/1/2028
6/1/2033
10/1/2028
1/1/2033
6/1/2033
6/1/2033
10/1/2033
7/1/2034
3/1/2037
101/2035
2/1/2038
9/1/2037
10/1/2040
12/1/2041
12/1/2040
10/1/2040
8/20/2039
10/15/2040
Totalpledgedcollateral
(Excess)ofpledgedcollateral
overtherequiredamount
1,988
1,004,717
7,564
7,073
2,151,421
30,620,442
9,609
11,423,486
4,068,147
5,385,960
400,724
154,111
2,447
134
2,035
178
76
3,320,671
206,697
454,017
1,065,487
1,698,436
1,684,820
53,737
2,363,458
1,005,807
3,088,223
35,972
2,241,166
23,288,811
20,816,377
15,536,675
2,230,985
794
134,332,244
$ (75,517,534)
* Pledged collateral is held in safekeeping by the Bank of New York Mellon.
69
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
1,988
1,004,717
7,564
7,073
2,151,421
30,620,442
9,609
11,423,486
4,068,147
5,385,960
400,724
154,111
2,447
134
2,035
178
76
3,320,671
206,697
454,017
1,065,487
1,698,436
1,684,820
53,737
2,363,458
1,005,807
3,088,223
35,972
2,241,166
23,288,811
20,816,377
15,536,675
2,230,985
794
134,332,245
‐
(75,517,535)
Schedule3
UNMHOSPITAL
CLINICALOPERATIONS
SCHEDULEOFINDIVIDUALDEPOSITANDINVESTMENTACCOUNTS
NameofBank/Broker
UNMHospitalcash:
BankofAmerica:
Operating
ConsolidatedAutomatedOvernight
Investment
FirstCommunityBank:
UNMHospitalChangeCampaign
PettyCash
TotalUNMHospitalcash
UNMHospitalshort‐terminvestments:
MorganStanleySmithBarney
WellsFargo
WellsFargo
WellsFargo
WellsFargo
TotalUNMHospitalshort‐term
investments
UNMHospitallong‐terminvestments:
WellsFargo
WellsFargo
WellsFargo
InvestmentinTriWest
InvestmentinTriCoreReferenceLab(TRL)
InvestmentinTLSC
TotalUNMHospitallong‐term
investments
Balance
perBank
Statement
AccountType
Checking
$ 117,879,420
102,601,650
‐
‐
16,819
‐
$ 117,896,239
16,819
32,005
102,650,474
3,596
‐
1,706,795
2,278,159
9,958,468
16,458,312
3,184,167
4,936,004
2,122,405
1,075,981
3,596
1,044,680
1,706,795
2,278,159
9,958,468
16,458,312
3,184,167
4,936,004
2,122,405
1,075,981
41,723,886
42,768,566
$ ‐
18,854,664
13,425,294
2,612,500
9,612,996
6,872,695
‐
18,854,664
13,425,294
2,612,500
9,612,996
6,872,695
$
51,378,149
Repurchaseagreement
Checking
Cashonhand
Moneymarketdeposits
Moneymarketdeposits
Moneymarketfunds
Moneymarketfunds
U.S.Treasurynotes
FNMA
FNMA
FHLMC
FHLMC
FHLB
$
Moneymarketdeposits
Moneymarketfunds
Collateralizedrepurchaseagreement
Equitysecurities
Equitysecurities
Equitysecurities
70
Reconciled
Balanceper
Financial
Statement
51,378,149
Schedule4
UNMHOSPITAL
CLINICALOPERATIONS
POSTEMPLOYMENTBENEFITSOTHERTHANPENSIONSSCHEDULEOFFUNDINGPROGRESS
(Unaudited)
Actuarial
accrued
Actuarial
liability
Unfunded
AAL
valueof
(AAL)–Unit
Actuarial
assets
CreditMethod
(UAAL)
Fundedratio
valuationdate
(a)
(b)
(b‐a)
(a/b)
July1,2012
—
3,713,000
3,713,000
—
$
July1,2011
—
3,748,000
3,748,000
—
$
July1,2009
—
18,899,000
18,899,000
—
$
July1,2008
—
5,305,000
5,305,000
—
$
July1,2007
—
3,830,640
3,830,640
—
$
NoteB:
TheaboveAALandcoveredpayrollbalancesrepresentsUNMHospitalportionoftheplan.
Seeaccompanyingindependentauditors’report.
71
Covered
payroll
(c)
240,498,000
219,171,000
213,671,000
227,182,000
194,842,000
UAALas
apercentage
ofcovered
payroll
((b‐a)/c)
1.5%
1.7%
8.8%
2.3%
2.0%
REPORTOFINDEPENDENTAUDITORSONINTERNALCONTROLOVER
FINANCIALREPORTINGANDONCOMPLIANCEANDOTHERMATTERSBASEDON
ANAUDITOFFINANCIALSTATEMENTSPERFORMEDINACCORDANCEWITH
GOVERNMENTAUDITINGSTANDARDS
BoardofTrusteesand
Wehaveaudited,inaccordancewiththeauditingstandardsgenerallyacceptedinthe
UnitedStatesofAmericaandthestandardsapplicabletofinancialauditscontainedin
Government Auditing Standards issued by the Comptroller General of the
UnitedStates,thefinancialstatementsofUNMHospital(the“Hospital”)asofandfor
theyearendedJune30,2013andtherelatednotestothefinancialstatements,which
collectively comprise the Hospital’s basic financial statements and the budget
comparison presented as supplementary information, for the year ended June 30,
2013,andhaveissuedourreportthereondatedOctober18,2013.
InternalControlOverFinancialReporting
Inplanningandperformingourauditofthefinancialstatements,weconsideredthe
Hospital’sinternalcontroloverfinancialreporting(internalcontrol)todeterminethe
audit procedures that are appropriate in the circumstances for the purpose of
expressing our opinions on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of the Hospital’s internal control.
Accordingly, we do not express an opinion on the effectiveness of the Hospital’s
internalcontrol.
Adeficiencyininternalcontrolexistswhenthedesignoroperationofacontroldoes
not allow management or employees, in the normal course of performing their
assignedfunctions,toprevent,ordetectandcorrect,misstatementsonatimelybasis.
A material weakness is a deficiency, or a combination of deficiencies, in internal
controlsuchthatthereisareasonablepossibilitythatamaterialmisstatementofthe
72
BoardofTrusteesand
entity's financial statements will not be prevented, or detected and corrected, on a
timelybasis.Asignificantdeficiencyisadeficiency,oracombinationofdeficiencies,in
internalcontrolthatislessseverethanamaterialweakness,yetimportantenoughto
meritattentionbythosechargedwithgovernance.
Our consideration of internal control was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in
internalcontrolthatmightbematerialweaknessesorsignificantdeficiencies.Given
these limitations, during our audit we did not identify any deficiencies in internal
control that we consider to be material weaknesses. However, material weaknesses
mayexistthathavenotbeenidentified.
ComplianceandOtherMatters
As part of obtaining reasonable assurance about whether the Hospital’s financial
statementsarefreefrommaterialmisstatement,weperformedtestsofitscompliance
with certain provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on
compliancewiththoseprovisionswasnotanobjectiveofourauditand,accordingly,
wedonotexpresssuchanopinion.Theresultsofourtestsdisclosednoinstancesof
noncomplianceorothermattersthatarerequiredtobereportedunderGovernment
AuditingStandards.
PurposeofthisReport
The purpose of this report is solely to describe the scope of our testing of internal
controlandcomplianceandtheresultsofthattesting,andnottoprovideanopinion
ontheeffectivenessoftheentity’sinternalcontroloroncompliance.Thisreportisan
integral part of an audit performed in accordance with Government Auditing
Standards in considering the entity’s internal control and compliance. Accordingly,
thiscommunicationisnotsuitableforanyotherpurpose.
Albuquerque,NewMexico
October18,2013
73
UNMHOSPITAL
CLINICALOPERATIONS
SUMMARYSCHEDULEOFPRIORYEARAUDITFINDINGS
PriorYearAuditFinding:
2012–01–Purchasing,authorizationandapprovals
ThefindinghasbeenresolvedasofJune30,2013.
2012–02–Kronossignoffwithoutreviewoftimesheetsandedits
ThefindinghasbeenresolvedasofJune30,2013.
74
UNMHOSPITAL
CLINICALOPERATIONS
SCHEDULEOFFINDINGSANDRESPONSES
Therearenocurrentyearfindings.
75
UNMHOSPITAL
CLINICALOPERATIONS
EXITCONFERENCE
TheHospital’smanagementpreparedthefinancialstatementsandisresponsiblefor
thecontents.
An exit conference was conducted on November 8, 2013 with a member of the
Finance and Audit Committee of the Board of Trustees and a member of the
Hospital’s management. During this meeting, the contents of this report were
discussed.
EllaWatt
ChiefFinancialOfficer
MichelleCoons
Chair,FinanceandAuditCommittee
BrandonFryar
EngagementPartner,MossAdamsLLP
76

unm hospital university of new mexico health sciences center

Transcription

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