Professional Documents
Culture Documents
NYU Winthrop Q3 2019
NYU Winthrop Q3 2019
NYU Winthrop Q3 2019
QUARTERLY REPORT
For the third quarter ended May 31, 2019
Concerning
Contact Person:
Palmira M. Cataliotti
Sr. Vice President/CFO
Telephone: 516-663-2311
NYU Winthrop Hospital and Subsidiaries
2. Liquidity
For the nine Months ended May 31, 2019 and May 31, 2018
Management's Discussion of Recent Operations and Financial Position of NYU Winthrop Hospital and
Subsidiaries ("NYU Winthrop")
Operations
For the nine months ended May 31, 2019 NYU Winthrop's operating gain was $148.5 million, a 11.1%
operating margin compared to $29.4 million and a 2.4% operating margin for the comparable prior year
period. The increase is primarily attributable to increased revenue discussed further below. Operating
revenue was $1.3 billion; 95% from patient revenue and 5% from other sources. Included in other sources
is $35.6 million as a result of revenue received from the demutualization of NYU Winthrop's former
insurance program, MLMIC.
The following chart represents results for the nine months ended May 31, 2019 and May 31, 2018,
respectively.
$140.0 11.0% I
$120.0 9.0%
7.0%
$100.0
5.0%
$80.0
3.0%
$60.0
1.0%
$40.0 -1.0%
$20.0 -3.0%
$29.4
~ ~-~
Nine Months Ended 5/31/18 Nine Months Ended 5/31/19
Net patient service revenue totaled $1.3 billion for the nine months ended May 31, 2019, 49% from
inpatient operations and 51% from outpatient operations. For the comparable prior year period, net
patient service revenue totaled $1.2 billion, 48% from inpatient operations and 52% from outpatient
operations. Management attributes net patient service revenue growth primarily to increases in volume
and increased patient acuity.
Volume
70,000
61,211 62,455
60,000
50,000
40,000
10,000
0
Inpatient Discharges Emergency Room Visits Infusion/ Chemotherapy Radiation Therapy
Case Mix
2.5
1.98
1.91
2.0
1.52 1.58
1.5 1.33 1.32 1.34
1.22
1.0
0.5
Operating expenses were $1.2 billion for the nine months ended May 31, 2019, the same as for the period
ended May 31, 2018. Salaries and Benefits were $606.2 million for the nine months ended May 31, 2019,
compared to $714.7 million for the nine months ended May 31, 2018. Management attributes the
decrease to the transfer of employed practice physicians to the NYU School of Medicine Faculty Group
Practice (the "FGP") effective January 1, 2019. Support for a portion of the physician salary costs is
included in the FGP subsidy line item on the statement of activities. Supplies and other expenses were
$401.8 million for the nine months ended May 31, 2019, compared to $360.0 million for the nine months
ended May 31, 2018. This increase correlates to an overall increase in volume. In addition, operating
expenses for the nine months ended May 31, 2019 include corporate allocations from the NYU Langone
Health System (the "System") in the amount of $32.7 million.
ii
The following non-operating gains and losses were recorded for the six months ended May 31, 2019:
The following other changes in unrestricted net assets, after an excess of revenue and gains over expenses
and losses of $148.8 million, were recorded for the nine months ended May 31, 2019, resulting in a $25.7
million increase in unrestricted net assets:
• ($103.8) million pension related changes other than net periodic benefit cost primarily
attributable to the decline in the pension benefit obligation discount rate
• ($20.4) million in equity transfer to the NYU School of Medicine as startup costs of the employed
physicians that moved to the FGP in January 1, 2019
• $1.0 million in contributions for capital assets acquisitions
• $0.1 million in net assets released from restrictions for capital purposes
Financial Position
As of May 31, 2019, cash and investments totaled $375.0 million, an increase of $111.7 million as
compared to August 31, 2018. Cash increased by $113.7 million offset partly by a decrease in investments
of $2.0 million. Days' cash on hand increased to 89 days, as compared to 62 in August 31, 2018.
Management attributes the improvement primarily to an increase in operating margin, $35.6 million
received from the MLMIC demutualization payout and an improvement in overall cash management.
The following chart represents the total unrestricted cash and investments, in thousands, included in the
days' cash on hand calculations at May 31, 2019 and August 31, 2018.
As of May 31, 2019, the defined benefit plan projected benefit obligation ("PBO") was at 68% funded
status, with a remaining gap of $292.5 million. On an accrued benefit obligation ("ABO") basis, the plan
is 72% funded with a remaining gap of $239.6 million. Comparatively, as of August 31, 2018, the PBO was
iii
at a 75% funding level with a remaining gap of $202 million; on an ABO basis, the plan was at a 80%
funding level with a remaining gap of $154 million. Management attributes the decline in funded
percentages due to the decline in the discount rate.
For the nine months ended May 31, 2019, NYU Winthrop experienced volume and case mix growth across
multiple service lines, as shown in the graphs on page ii. Average length of stay at May 31, 2019 decreased
to 4.82 as compared to 4.89 for the prior comparable period. The Medicare case mix index adjusted
length of stay improved to 2.71 for the nine months ended May 31, 2019 as compared to 2.80 for the
prior comparable period.
Current Activities
On April 1, 2017, the System became the sole member of Winthrop-University Hospital Association and
Winthrop-University Hospital Association's corporate name was changed to "NYU Winthrop Hospital"
("NYU Winthrop"). The System is not a member of the NYU Winthrop Obligated Group. The System
committed to expend at least $100 million through a subordinated, non-interest bearing loan to NYU
Winthrop to improve the operations of NYU Winthrop and its affiliates and realize cost efficiencies.
Pursuant to the terms of the Affiliation Agreement, in the second phase of the affiliation, which was
originally scheduled to occur no later than April 1, 2022, NYU Winthrop will merge with and into NYU
Langone Hospitals ("NYULH"), an affiliate hospital ofthe System, and the loan will be forgiven. Until NYU
Winthrop merges with and into NYULH, none of the System, NYULH or any of their affiliates will have any
obligation with respect to the NYU Winthrop Obligated Group's outstanding debt.
On November 13, 2018 the NYU Winthrop board voted to accelerate the planned merger with and into to
NYULH on or about August 2019, and the NYULH and Health System Boards approved such action on
November 26, 2018. Upon completion of the merger, the loans will be forgiven. Regulatory approval for
the merger has been obtained, and the merger is expected to be implemented on or about August 1,
2019. Once the merger is completed, all of the assets and all of the liabilities of NYU Winthrop will become
assets and liabilities of NYULH.
NYU Winthrop and NYULH entered into two loans, in September 2017 and October 2017, in the amounts
of $48.1 million and $45.0 million, respectively. The loans are primarily for information technology ("IT")
integration and Epic implementation in addition to equipment purchases and various renovations. As of
May 31, 2019, $86.3 million is outstanding. The terms of these loans allow for forgiveness of debt upon
the planned full asset merger.
iv
Epic Ambulatory Implementation
NYU Winthrop has embarked on a network integration strategy supported by enhanced clinical and
financial information technology systems. A portion of the common platform is facilitated by Epic, a
shared ambulatory IT platform that will include technology designated to support clinical, quality and
financial improvement. The Epic Ambulatory implementation occurred in fiscal year 2018 and included
over 120 locations, affecting approximately 187,000 patients in the NYU Winthrop ambulatory network,
600 employed providers and 1,900 support staff and other users. It is anticipated that Epic will be installed
across the NYU Winthrop enterprise by October 2019.
PeopleSoft Implementation
NYU Winthrop implemented the PeopleSoft Financials IT system on September 1, 2018. PeopleSoft
Financials is an Enterprise Resource Planning tool that is used to initiate and manage most of the activities
that are performed in the Finance and Supply Chain areas across NYULH. The Winthrop PeopleSoft
Financials Integration Project encompassed all activities that were necessary to bring the NYU Winthrop
organization into closer coordination with the NYULH's PeopleSoft Financials. Work began in May 2017
with organizational and project planning activities and concluded with the "go-live" event on September
1, 2018.
NYU Winthrop received final approval in August 2018 from the New York State Department of Health to
merge the Lutheran Certified Home Health Agency ("Lutheran CHHA") into the NYU Winthrop Certified
Home Health Agency ("NYU Winthrop CHHA"). Historically, NYULH did not have internal home health
care capabilities. The service was provided primarily by the Visiting Nurse Service of New York. As a result
of the relationship between the Lutheran CHHA and the NYU Winthrop CHHA, NYULH will have the ability
to provide home health services. The merger of the CHHAs will offer patient care covering the five
boroughs of New York City and Nassau and Suffolk counties.
Joint Commission
In March 2019, NYU Winthrop Hospital received the Joint Commission' s Gold Seal for Inpatient Diabetes
Care, making the hospital the only academic medical center in New York State to receive this
recognition. In addition, the hospital recently received the Gold Seal of the Joint Commission for
Perinatal Care.
Newsday ranking
Following a survey of employees on Long Island by Newsday. Newsday named NYU Winthrop Hospital
one of the top places to work in the fall of 2018. In addition, NYU Winthrop Hospital was recognized as
hospital of the year by Long Island Business News.
V
U.S. News & World Report rankings
NYU Winthrop Hospital was named one of the " Best Regional Hospitals" in the New York Metro Area for
2018-2019 by U.S. News & World Report. NYU Winthrop ranked #6 in New York and #8 in the entire New
York Metro area. In addition, NYU Winthrop was recognized for 11 high performing types of care, which
include seven high performing specialties and four procedures and conditions of common care.
NYU Winthrop was also named to U.S. News & World Report's 2018-2019 "Best Children's Hospitals"
rankings for demonstrating excellence in the specialty of pediatric diabetes and endocrinology.
Healthgrades ranking
NYU Winthrop Hospital was named a " Distinguished Hospital for Clinical Excellence" by Healthgrades for
2018, placing the Hospital in the top 5% of hospitals nationwide for the fourth consecutive year.
vi
NYU Winthrop Hospital and Subsidiaries
Utilization & Payor Mix
Nine Months Ended May 31, 2019 and May 31, 2018
-1-
NYU Winthrop Hospital and Subsidiaries
Liquidity
(1) Cash and cash equivalents includes any outstanding amounts under lines of credit.
(2) Calculated using twelve months ended February 28, 2019 and August 31, 2018.
(3) Net days cash on hand excludes any outstanding amounts under lines of credit.
-2-
NYU WINTHROP HOSPITAL AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
-3-
NYU WINTHROP HOSPITAL AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ACTIVITIES
-4-
NYU WINTHROP HOSPITAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
- 5-
NYU WINTHROP HOSPITAL AND SUBSIDIARIES CONSOLIDATED CASH FLOW
-6-
NYU Winthrop Hospital and Subsidiaries
May31,2019
NYU Winthrop presumes that users of this interim financial information have read or have access
to the Winthrop's audited financial statements and that the adequacy of additional disclosure
needed for a fair presentation may be determined in that context. The Financial Statements of
Winthrop for the fiscal year ended August 31 , 2018 are on file at www.emma.msrb.org.
Accordingly, footnotes and other disclosures that would substantially duplicate the disclosures
contained in the Winthrop's most recent audited financial statements have been omitted.
Patient volumes and net operating revenues are subject to seasonal variations caused by a
number of factors, including, but not necessarily limited to, seasonal cycles of illness, climate and
weather conditions, vacation patterns of both hospital patients and admitting physicians and other
factors relating to the timing of elective hospital procedures. Quarterly operating results are not
necessarily representative of operations for a full year for various reasons, including levels of
occupancy and other patient volumes, interest rates, unusual or non-recurring items and other
seasonal fluctuations. These same considerations apply to all year-to-year comparisons.
(b) Organization
NYU Winthrop, located in Mineola, New York, is a not-for-profit, acute care teaching hospital that
provides a full range of inpatient and outpatients services to the community. NYU Langone Health
System ("NYUHS") is the sole corporate member of NYU Winthrop and the entities listed below.
The accompanying consolidated financial statements include the accounts of NYU Winthrop and
its wholly owned, for-profit and not-for-profit subsidiaries, and affiliated professional corporations:
Winthrop-University Hospital Services Corp. ("WUHSC") (formerly known as Nassau Hospital
Office Corporation), Winthrop Clinical Partners, Inc. ("WCPI") and various faculty, community and
hospital-based physician services.
For purposes of disclosure within these consolidated financial statements, the consolidated
entities listed above are collectively referred to as NYU Winthrop unless explicitly referred to as
the Hospital entity only.
-7-
NYU Winthrop Hospital and Subsidiaries
May 31 , 2019
Amounts due from or due to the entities of the Hospital, WUHSC, WCPI or the others
consolidated entities as of May 31, 2019, as well as the transactions between those entities
recorded during the year then ended have been eliminated in consolidation. Amounts due from or
to NYU Winthrop and NYUHS (or other nonconsolidated NYU affiliates) are included as due to
affiliates on the consolidated balance sheet as of May 31, 2019 and August 31 , 2018 and
transactions between those entities for the nine months ended May 31 , 2019 are included in
operating revenue or operating expense in the consolidated statement of operations.
Management annually reviews its tax positions and has determined that there are no material
uncertain tax positions that require recognition in the consolidated financial statements.
-8-
NYU Winthrop Hospital and Subsidiaries
May 31 , 2019
In February 2016, the FASS issued ASU 2016-02, Leases. Under the new guidance, lessees will
be required to recognize the following for all leases (with the exception of leases with a term of
twelve months or less) at the commencement date: (a) a lease liability, which is a lessee's
obligation to make lease payments arising from a lease, measured on a discounted basis; and (b}
a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use
of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely
unchanged. The guidance requires a modified retrospective transition approach for leases
existing at, or entered into after, the beginning of the earliest comparative period presented in the
financial statements. The modified retrospective approach would not require any transition
accounting for leases that expire before the earliest comparative period presented. A full
retrospective transition approach is not permitted. This guidance will be effective for NYU
Winthrop beginning in fiscal year 2020. Early application is permitted. NYU Winthrop is currently
assessing the impact this standard will have on its consolidated financial statements in future
years.
In August 2016, the FASS issued ASU 2016-14, Presentation of Financial Statements for Not for
Profit Entities. This standard marks the completion of the first phase of a larger project aimed at
improving not for profit financial reporting. Under the new guidance, net asset reporting will be
streamlined and clarified. The existing three category classification of net assets (i.e.,
unrestricted, temporarily restricted, and permanently restricted) will be replaced with a simplified
model that combines temporarily restricted and permanently restricted into a single category
called "net assets with donor restrictions". There will be new requirements to reporting expenses
and additional disclosures to highlight restrictions on the use of resources that make otherwise
liquid assets unavailable for meeting near term financia l requirements. The standard is effective
for NYU Winthrop beginning in fiscal year 2019 with early adoption permitted. In the year of
application, not for profit entities are required to disclose the nature of any reclassifications or
restatements resulting from the adoption and their effect, if any, on the change in the net asset
classes for each year presented. The requirements must be applied retrospectively; however,
entities can elect not to provide certain comparative disclosures in the year of adoption. NYU
Winthrop has implemented the standard retrospectively in fiscal year 2019 and concluded that
there will be no opening net asset impact.
-9-
NYU Winthrop Hospital and Subsidiaries
May 31 , 2019
(2) Contingencies
NYU Winthrop has been named as defendant in legal actions involving alleged professional
liability, regulatory compliance, and other claims arising from the normal conduct of their affairs,
certain of which seek damages in unstated amounts or in amounts in excess of applicable
insurance limits. It is the opinion of the NYU Winthrop's management, based on a review of the
aforementioned claims by defense attorneys, that insurance coverage and self insurance
reserves are adequate and that the final disposition of such claims will not have a material
adverse effect on the NYU Winthrop's consolidated balance sheet, results of operations, or
liquidity. In addition, there are known, and possibly unknown, incidents occurring through May
31, 2019 that may result in the assertion of additional claims. In management's opinion, any
liability that may arise from settlement of such claims will be settled either within insurance
coverage or self insured liability estimates or otherwise will not have any material adverse effect
on the NYU Winthrop's consolidated balance sheet, results of operations, or liquidity.
- 10 -