JOHN MUIR HEALTH AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 2015 and 2014
(With Independent Auditors’ Report Thereon)
JOHN MUIR HEALTH AND SUBSIDIARIES
Table of Contents
Page(s)
Independent Auditors’ Report
1–2
Consolidated Financial Statements:
Balance Sheets
3–4
Statements of Operations and Changes in Net Assets
5–6
Statements of Cash Flows
Notes to Consolidated Financial Statements
7
8–36
Additional Consolidating Schedules
Consolidating Schedule – Balance Sheet Information
37–38
Consolidating Schedule – Operations and Changes in Net Assets Information
39–41
KPMG LLP
Suite 1400
55 Second Street
San Francisco, CA 94105
Independent Auditors’ Report
The Board of Directors
John Muir Health and Subsidiaries:
We have audited the accompanying consolidated financial statements of John Muir Health and its
subsidiaries, which comprise the consolidated balance sheets as of December 31, 2015 and 2014, and the
related consolidated statements of operations and changes in net assets, and cash flows for the years then
ended, and the related notes to the consolidated financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with U.S. generally accepted accounting principles; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of John Muir Health and its subsidiaries as of December 31, 2015 and 2014, and the
results of their operations and their cash flows for the years then ended, in accordance with U.S. generally
accepted accounting principles.
KPMG LLP is a Delaware limited liability partnership,
the U.S. member firm of KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Other Matters
Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as
a whole. The additional consolidating schedules listed in the table of contents are presented for purposes of
additional analysis and are not a required part of the consolidated financial statements. Such information is
the responsibility of management and was derived from and relates directly to the underlying accounting and
other records used to prepare the consolidated financial statements. The information has been subjected to
the auditing procedures applied in the audit of the consolidated financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting and
other records used to prepare the consolidated financial statements or to the consolidated financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in the
United States of America. In our opinion, the information is fairly stated in all material respects in relation
to the consolidated financial statements as a whole.
San Francisco, California
April 29, 2016
2
JOHN MUIR HEALTH AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2015 and 2014
(In thousands)
Assets
2015
Current assets:
Cash and cash equivalents
Receivables for patient services – less allowance for uncollectible
accounts of $47,486 and $51,989 for 2015 and 2014, respectively
Receivables from government agencies
Other receivables
Supply inventories
Assets limited as to use
Prepaid expenses and deposits
$
Total current assets
Assets limited as to use:
Board-designated assets
For workers’ compensation benefits
Investments related to restricted net assets
Pledges receivable
Total assets limited as to use – net of current portion
Property and equipment – net
Other assets:
Real estate held for future use – at cost
Intangible assets and deferred financing costs – net
Ownership interests in health-related ventures
Other
Total other assets
Total assets
$
3
2014
114,348 67,493 217,076 — 34,798 8,016 2,353 21,457 243,799 8,482 44,849 8,064 6,569 25,873 398,048 405,129 1,038,210 — 21,544 4,369 976,542 34,953 18,810 3,081 1,064,123 1,033,386 1,014,860 1,028,075 5,903 4,758 127,821 26,778 5,903 5,516 126,659 28,882 165,260 166,960 2,642,291 2,633,550 (Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2015 and 2014
(In thousands)
Liabilities and Net Assets
Current liabilities:
Current maturities of long-term debt
Current maturities of financing obligation
Accounts payable
Payables to government agencies
Accrued liabilities:
Payroll and payroll taxes
Vacation and other compensation
Employee medical benefit claims and workers’ compensation
benefits
Interest
Other
$
Total current liabilities
Long-term debt – less current maturities
Other long-term liabilities:
Workers’ compensation benefits
Professional and general liability
Pension benefits
Postretirement medical benefits
Financing obligation – less current maturities
Asset retirement obligations
Other
Total other long-term liabilities
Total liabilities
Net assets:
Unrestricted
Temporarily restricted
Permanently restricted
Total net assets – attributable to John Muir Health
Unrestricted – attributable to noncontrolling interest
Total net assets
Total liabilities and net assets
$
See accompanying notes to consolidated financial statements.
4
2015
2014
11,446 800 103,530 857 27,548 725 123,215 14,116 38,305 36,712 40,988 35,009 15,680 6,703 15,929 16,328 6,916 8,974 229,962 273,819 577,842 588,216 59,473 6,581 99,638 56,395 42,249 15,397 26,423 60,288 7,324 71,132 53,552 43,279 14,949 28,118 306,156 278,642 1,113,960 1,140,677 1,500,319 17,887 8,026 1,468,918 15,445 6,446 1,526,232 1,490,809 2,099 2,064 1,528,331 1,492,873 2,642,291 2,633,550 JOHN MUIR HEALTH AND SUBSIDIARIES
Consolidated Statements of Operations and Changes in Net Assets
Years ended December 31, 2015 and 2014
(In thousands)
2015
Operating revenue:
Net patient service revenue (net of contractual allowances and
discounts)
Provision for uncollectible accounts
$
2014
1,457,083 (47,693) 1,314,432 (44,764) 1,409,390 1,269,668 104,151 45,301 106,947 47,207 8,845 66,760 1,567,687 1,490,582 603,397 156,650 140,226 156,866 234,782 5,520 33,253 82,148 21,421 58,123 562,286 163,405 116,936 140,765 248,462 6,669 29,638 75,416 22,723 56,596 1,492,386 1,422,896 Excess of revenue over expenses
75,301 67,686 Less excess of revenue over expenses – attributable to
noncontrolling interest
1,120 798 74,181 66,888 Net patient service revenue less provision for
uncollectible accounts
Premium revenue
Other operating revenue
Net investment income – including realized gains and losses on
investments
Total operating revenue
Operating expenses:
Salaries and wages
Employee benefits
Medical fees
Supplies
Purchased services
Insurance
Utilities and rent
Depreciation and amortization
Interest – net
Other
Total operating expenses
Excess of revenue over expenses – attributable to
John Muir Health
5
$
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Consolidated Statements of Operations and Changes in Net Assets
Years ended December 31, 2015 and 2014
(In thousands)
Unrestricted
Net assets – December 31, 2013
$
Excess of revenue over expenses
Change in unamortized loss and prior
service costs related to pension
and postretirement benefit plans
Net change in unrealized gains
and losses on investments
Restricted contributions and
investment income
Loss from discontinued operations –
Muir Lab
Distributions
Net assets released from restrictions:
To other operating revenue for
operating expenditures
For the purchase of property
and equipment
Other
Increase in net assets
Net assets – December 31, 2014
Excess of revenue over expenses
Change in unamortized loss and prior
service costs related to pension
and postretirement benefit plans
Net change in unrealized gains
and losses on investments
Restricted contributions and
investment income
Distributions
Net assets released from restrictions:
To other operating revenue for
operating expenditures
For the purchase of property
and equipment
Other
Increase in net assets
Net assets – December 31, 2015
$
John Muir Health
Temporarily
Permanently
restricted
restricted
Total
Noncontrolling
interest
unrestricted
Total
1,463,678 13,673 4,768 1,482,119 1,574 1,483,693 66,888 — — 66,888 798 67,686 (41,318) — — (41,318) — (41,318) (20,850) 177 — (20,673) — (20,673) — 6,537 1,678 8,215 — 8,215 (3,982) — — — — — (3,982) — — (308) (3,982) (308) — (834) — (834) — (834) 4,108 394 (4,108) — — — — 394 — — — 394 5,240 1,772 1,678 8,690 490 9,180 1,468,918 15,445 6,446 1,490,809 2,064 1,492,873 74,181 — — 74,181 1,120 75,301 (25,185) — — (25,185) — (25,185) (23,175) (691) — (23,866) — (23,866) — — 10,053 — 1,580 — 11,633 — — (1,085) 11,633 (1,085) — (3,016) — (3,016) — (3,016) 3,886 1,694 (3,886) (18) — — — 1,676 — — — 1,676 31,401 2,442 1,580 35,423 35 35,458 1,500,319 17,887 8,026 1,526,232 2,099 1,528,331 See accompanying notes to consolidated financial statements.
6
JOHN MUIR HEALTH AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 2015 and 2014
(In thousands)
2015
Cash flows from operating activities:
Increase in net assets
Adjustments to reconcile increase in net assets to net cash provided by operating activities:
Realized and net change in unrealized gains and losses on investments
Restricted contributions and investment income received
Change in unamortized net loss and prior service costs related to pension and
postretirement benefit plans
Provision for uncollectible accounts
Loss on disposal of property and equipment
Depreciation and amortization
Equity in earnings of health-related ventures
Amortization of premium on bond issuances – net
Changes in assets and liabilities:
Receivables for patient services
Other receivables and other assets
Supply inventories, prepaid expenses, and deposits
Accounts payable
Receivables from and payables to government agencies
Accrued liabilities
Other liabilities
$
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of investments
Proceeds from sales of investments
Purchases of property and equipment including construction in progress
Proceeds from sales of property and equipment
Investment in health-related ventures
Distributions from health-related ventures
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issuance of long-term debt
Repayment of long-term debt
Proceeds received from restricted contributions and restricted investment income
Additions to intangibles and deferred financing costs
Payment of principal portion related to financing obligation
Proceeds from tenant improvement allowance related to the financing obligation
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents – beginning of year
2014
35,458 9,180 26,191 (11,633) (33,165) (8,215) 25,185 47,693 46 82,148 (2,399) (205) 41,318 44,764 89 75,416 (9,803) (122) (20,970) 12,212 4,464 (18,430) (4,777) 5,114 2,681 (67,412) (19,794) (8,265) 33,290 1,469 (1,649) 1,387 182,778 58,488 (376,606) 325,182 (68,857) 74 (3,250) 4,487 (288,578) 232,586 (90,001) 21 (10,833) — (118,970) (156,805) 214 (27,488) 11,633 (587) (725) — 17 (15,222) 8,215 (390) (651) 2,791 (16,953) (5,240) 46,855 (103,557) 67,493 171,050 Cash and cash equivalents – end of year
$
114,348 67,493 Supplemental disclosure of cash flow information – interest paid – net of capitalized interest
$
21,640 23,089 Supplemental disclosures of noncash investing activities:
Decrease in accrued purchases of property and equipment
Acquisition property and equipment through capital lease
$
(1,255) 1,003 (7,005) — See accompanying notes to consolidated financial statements.
7
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(1)
Organization
John Muir Health and subsidiaries (the Health System) is a healthcare delivery system in Contra Costa
County, California. The Health System includes John Muir Health (the Corporation), various California
nonprofit public benefit corporations for which the Corporation is the sole corporate sponsor and certain
joint ventures in which the Corporation participates.
The Corporation is a California nonprofit public benefit corporation, exempt from federal and state income
taxes. The Corporation includes the following activities:
John Muir Medical Center – Walnut Creek and Concord Campuses – John Muir Medical Center – Walnut
Creek (JMMC – Walnut Creek) is a 554 licensed-bed general acute care facility located in Walnut Creek,
California. John Muir Medical Center – Concord (JMMC – Concord) is a 245 licensed-bed general acute
care facility located in Concord, California. JMMC – Walnut Creek and JMMC – Concord provide a
comprehensive array of inpatient and outpatient healthcare services.
The Corporation constitutes an Obligated Group used to access capital markets. The Obligated Group is
liable for the long-term debt outstanding under the Obligated Group’s Master Trust Indenture.
The Corporation is the sole corporate member of several California nonprofit public benefit corporations and
participates in joint ventures, all of which provide certain types of healthcare services. The following is a
brief description of Corporation’s subsidiaries and other activities through which it provides healthcare
services outside the Obligated Group:
John Muir Physician Network – The John Muir Physician Network (the Physician Network) is a nonprofit
public benefit corporation that provides healthcare, charitable, research, and educational services to its
community. The Physician Network coordinates and integrates the provision of hospital, physician, and
ancillary healthcare services to enrollees of certain health maintenance organizations (HMOs). The Physician
Network has entered into long-term contracts with a primary care medical group (the Group) and a physician
independent practice association (IPA) to provide physician services. Costs incurred under these long-term
contracts are included in medical fees for the Group and purchased services for the IPA in the consolidated
statements of operations and changes in net assets.
The Group’s physicians provide primary care services at the clinics and urgent care centers owned by the
Physician Network and certain hospitalist services at both JMMC – Walnut Creek and JMMC – Concord.
The fee-for-service revenue of these practices is reflected as revenue of the Physician Network under the
terms of the professional services agreement between the Physician Network and the Group and is included
in net patient revenue in the accompanying consolidated statements of operations and changes in net assets.
The current professional services agreement between the Physician Network and the Group continues
through 2026.
Certain primary care and specialty services for managed care enrollees are provided by the IPA. The
Physician Network provides management services to the IPA. Revenue for providing these management
services is reported as other operating revenue in the consolidated statements of operations and changes in
net assets. The current agreement between the Physician Network and the IPA continues until June 30, 2017.
8
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
John Muir Behavioral Health – The Corporation is the sole corporate member of John Muir Behavioral
Health (the Behavioral Health Center), which is a nonprofit public benefit corporation that owns and operates
a freestanding acute care psychiatric facility and residential care facility.
Other Activities – The Corporation is the sole corporate member of John Muir Health Foundation (the
Foundation), which raises funds and otherwise supports programs and activities of the Corporation. The
Corporation is also the sole corporate member of the Community Health Fund (CHF). CHF receives a
minimum of $1 million annually from the Corporation that is used to make grants to local agencies to further
the health of the community.
The Corporation holds, directly or indirectly, an ownership interest in a number of partnerships and limited
liability companies that provide outpatient surgery, imaging, and occupational health services as either a
majority or minority owner. The Corporation holds a 49% ownership interest in San Ramon Regional
Medical Center, which provides a comprehensive array of inpatient and outpatient healthcare services and is
further disclosed in note 7.
At December 31, 2015, approximately 19% of John Muir Health’s total labor force was covered under
collective bargaining agreements. Of those collective bargaining agreements in effect on December 31, 2015,
agreements covering approximately 8% of John Muir Health’s workforce were scheduled to expire within
one year.
(2)
Summary of Significant Accounting Policies
(a)
Consolidation
The accompanying consolidated financial statements include the accounts of the Health System. All
significant intercompany transactions and balances have been eliminated in consolidation.
(b)
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the reported amounts of revenue
and expenses during the reporting period. Key estimates include contractual allowances, allowances
for uncollectible accounts, workers’ compensation benefits and professional liabilities, pension and
postretirement benefit liabilities, and estimated third-party payor settlements. Actual results could
differ materially from those estimates.
(c)
Cash and Cash Equivalents
Cash and cash equivalents consist primarily of cash, time deposits, certificates of deposit, and
government securities that when acquired had original or remaining maturities of three months or less.
Financial instruments that potentially subject the Health System to concentrations of credit risk include
cash, investments, and marketable securities. Generally, the Health System places its cash in banks
that are federally insured in limited amounts. However, in the normal course of business, balances may
exceed the Federal Deposit Insurance Corporation’s insurance. The balances in excess of insurance
9
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
limits at December 31, 2015 and 2014, including cash and cash equivalents classified within assets
limited as to use and board-designated assets, were $134,588,000 and $89,918,000, respectively.
(d)
Receivables for Patient Services
The Health System has agreements with third-party payors that provide for payments at amounts
different from each hospital’s established rates. Patient accounts receivable are reported at the net
realizable amount from patients, third-party payors, and others for services rendered. The Health
System provides care to patients even though they may lack adequate insurance or may participate in
programs with negotiated or regulated amounts.
Accounts receivable are reduced by allowances for contractually obligated deductions and for
uncollectible accounts. Allowances are calculated based on recent historical trends for every
payor-source category. Management regularly reviews data about these major payor sources of
revenue in evaluating the sufficiency of the allowance for uncollectible accounts. The difference
between the standard rates and the amounts actually collected on patient accounts is charged off against
these contractual allowances and allowances for uncollectible accounts. The allowance for
uncollectible accounts decreased due to a decrease in self pay patients as a result of the Affordable
Care Act.
(e)
Supply Inventories
Supply inventories are stated at the lower of cost, determined on the first-in, first-out basis, or market
value.
(f)
Assets Limited as to Use
The Health System’s board of directors has a policy of funding depreciation, to the extent that funds
are available, to be used for future replacement of property and equipment. These assets, along with
assets set aside for payment of certain employee benefits, restricted donations, and restricted
contribution receivable are classified as assets limited as to use. Assets designated by the board of
directors remain discretionary and may subsequently be used for other purposes. Amounts required to
meet current liabilities of the Health System have been recorded as current assets in the accompanying
consolidated balance sheets at December 31, 2015 and 2014.
(g)
Investments
Investments in equity securities with readily determinable fair values and all investments in debt
securities, designated as available for sale, are measured at fair value and classified as assets limited
as to use. Investment income or loss (including realized gains and losses on investments, interest, and
dividends) is included in excess of revenue over expenses unless the income or loss is restricted by
donor or law. Unrealized gains and losses on investments in marketable equity and debt securities are
excluded from excess of revenue over expenses, but are included in the determination of changes in
net assets.
10
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The Health System periodically evaluates investments in equity and debt securities to determine
whether declines in fair value below amortized cost are other-than-temporary. New information and
the passage of time can change those judgments. The Health System revises impairment judgments
when new information becomes known. If any of these investments experience a decline in value that
is determined to be other-than-temporary, based on analysis of relevant factors, the Health System
records a realized loss in net investment income for unrestricted assets and in the appropriate net asset
category for restricted assets in the consolidated statements of operations and changes in net assets.
The Health System also invests in alternative investments through limited partnerships. Alternative
investments comprise commingled funds, hedge funds, and private equity funds. The Health System
receives a proportionate share of investment gains and losses of the partnerships. These alternative
investment vehicles invest in domestic and foreign fixed-income and equity securities; venture capital;
leveraged buyout; mezzanine debt; and distressed debt.
The Health System accounts for its ownership interests in these alternative investments under the
equity method, under which the value is based on the net asset value (NAV). NAV approximates fair
value and is determined using investment valuation provided by the external managers and fund
managers or the general managers. Realized and unrealized gains and losses on alternative investments
are included in the excess of revenue over expenses.
(h)
Property and Equipment – Net
Property and equipment acquisitions are recorded at cost, if purchased, and at fair market value at the
date of donation, if donated. Depreciation is provided over the estimated useful life of each class of
depreciable asset and is calculated using the straight-line method. The range of estimated useful lives
by classification is as follows:
Land improvements
Buildings and building improvements
Equipment
Software
2–25 years
5–40 years
3–25 years
3–10 years
Property and equipment under capital leases is amortized using the straight-line method over the
shorter period of the lease term or the estimated useful life of the asset.
The Health System reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment
loss is recognized when the sum of the undiscounted future net cash flows expected to result from the
use of the asset and its eventual disposal is less than its carrying amount. In addition to consideration
of impairment due to events or changes in circumstances described above, management regularly
evaluates the remaining useful lives of its long-lived assets. If estimates are revised, the carrying value
of affected assets is depreciated or amortized over the remaining lives. No impairment losses have
been identified as a result of these reviews for the years ended December 31, 2015 and 2014.
11
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(i)
Capitalized Interest
Interest expense incurred during construction of long-lived assets is capitalized as a component of the
cost of acquiring those assets. Interest components include the following (in thousands):
2015
Total interest expense
Capitalized interest expense
Interest expense – net
(j)
2014
$
21,801
(380)
22,723
—
$
21,421
22,723
Fair Value of Financial Instruments
The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents,
receivables for patient services, accounts payable, accrued liabilities, amounts receivable from and
payable to governmental agencies, and asset retirement obligations approximate fair value.
(k)
Temporarily and Permanently Restricted Net Assets
Temporarily restricted net assets are those whose use by the Health System has been limited by donors
to a specific time period and/or purpose. Permanently restricted net assets have been restricted by
donors to be maintained by the Health System in perpetuity. Temporarily restricted net assets as of
December 31, 2015 and 2014 are composed primarily of the value of charitable trusts for which the
Foundation has been named remainder man, and other contributions restricted by donor stipulation for
equipment acquisitions and programs. Permanently restricted net assets as of December 31, 2015 and
2014 are composed of endowments.
(l)
Ownership Interest in Other Entities
When the ownership interest in other entities is more than 50% or the Health System has the ability to
control the investee, the activities are consolidated and the portion of the excess of revenue over
expenses attributable to a noncontrolling interest is recorded as a separate component within the
consolidated statements of operations and changes in net assets. When the Health System has the
ability to exercise significant influence over operating and financing policies of the investee, or when
ownership interest is at least 20% but no more than 50%, it is accounted for under the equity method.
The proportionate share of equity in net income of these unconsolidated affiliates is reported in other
operating revenue in the consolidated statements of operations and changes in net assets. Activities,
other than alternative investments, with less than 20% ownership are carried at cost.
(m)
Medical Benefits
The Health System is self-insured for its employee medical benefits. An actuarially determined
liability for payment of incurred and unpaid claims is included in accrued liabilities – employee
medical benefit claims and workers’ compensation benefits.
12
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(n)
Workers’ Compensation
John Muir Health is designated by the State of California as a self-insured workers’ compensation
employer. An excess workers’ compensation insurance policy has been maintained with a self-insured
retention of $1,000,000 since September 2013 with other retention levels in earlier years. The excess
workers’ compensation insurance provides statutory limits and a $2,000,000 limit for employer
liability above the applicable self-insured retention.
As of December 31, 2015 and 2014, $5,320,000 and $5,484,000, respectively, has been accrued and
is classified as a component of accrued liabilities – employee medical benefit claims and workers’
compensation. As of December 31, 2015 and 2014, $59,473,000 and $60,288,000, respectively, has
been accrued and is classified as other long-term liabilities – workers’ compensation benefits.
As of December 31, 2015 and 2014, related to the gross workers’ compensation liability balances
noted above the Health System has recorded insurance recoverables of $16,265,000 and $19,186,000,
respectively, which are classified as components of other assets.
(o)
Professional Liability and General Liability
John Muir Health maintains coverage for professional liability and general liability exposures. This
coverage is provided under one contract with the coverage for professional liability written on a
claims-made basis and general liability written on an occurrence basis. John Muir Health was
responsible for a maximum deductible of $5,000 indemnity payment per claim until July 1, 2008,
$25,000 indemnity and expense per claim thereafter, and any legal liability in excess of the
$40,000,000 coverage contract limits through June 2013 and in excess of the $50,000,000 coverage
contract limits effective July 2013. The claims-made coverage contract requires claims to occur and
be reported within the applicable retroactive and contract period dates. If the claims-made coverage
contract is not renewed or replaced with equivalent coverage or insurance, claims that occur during its
term and are reported after it has termed will become self-insured losses.
As of December 31, 2015 and 2014, actuarial estimates of self-insured losses of $6,273,000 and
$7,014,000, respectively, for current and prior insurance policies and coverage contracts have been
accrued, in addition to a deductible of $308,000 and $310,000, respectively, and are classified as
components of other long-term liabilities – professional and general liability.
As of December 31, 2015 and 2014, related to the gross professional and general liability balance
noted above the Health System has recorded insurance recoverables of $2,193,000 and $2,368,000,
respectively, which are classified as components of other assets.
13
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(p)
Net Patient Service Revenue
The composition of consolidated net patient service revenue by major payor group is as follows:
2015
Contracted rate payors
Medicare
Medi-Cal
Commercial insurance, self-pay, and other payors
Total
2014
57%
27
10
6
54%
29
6
11
100%
100%
The Health System has agreements with third-party payors that provide for payment to the Health
System using various methodologies. Payment arrangements include prospectively determined rates
per discharge, per diem payments, discounted charges, and reimbursed costs. Net patient service
revenue is reported at the estimated net realizable amounts from patients, third-party payors, and others
for services rendered, including estimated settlements under agreements with third-party payors.
Settlements with third-party payors are accrued on an estimated basis in the period-related services are
rendered and adjusted in future periods as additional information is derived and final settlements are
determined.
Laws and regulations governing Medicare and Medicaid programs are extremely complex and subject
to interpretation. As a result, there is at least a possibility that recorded estimates associated with the
programs will change.
For Medicare beneficiaries, JMMC – Walnut Creek and JMMC – Concord are paid a stipulated amount
per discharge for each inpatient relative to their principal diagnosis. The Behavioral Health Center is
paid for inpatient services on a blend of a stipulated amount per discharge for each inpatient relative
to their principal diagnosis and a cost-based formula. Payments for all outpatient services are based on
a stipulated amount per service.
For Medi-Cal beneficiaries, JMMC – Walnut Creek and JMMC – Concord are paid based on the
California Medical Assistance Corporation per diem. Outpatient services are paid based on a fee
schedule.
Contracted services are paid on a percentage of charge, per diem, or per discharge basis.
For uninsured patients that do not qualify for charity care, the Health System recognizes revenue on
the basis of its standard rates for services provided (or on the basis of discounted rates, if negotiated
or provided by policy). On the basis of historical experience, a significant portion of the Health
System’s uninsured patients will be unable or unwilling to pay for the services provided. Thus, the
Health System records a significant provision for uncollectible accounts related to uninsured patients
in the period the services are provided after consideration of the self-pay discount.
Cost reports filed under the Medicare and Medi-Cal programs are subject to audit. The estimated
amounts due to or from the Medicare and Medi-Cal programs are reviewed and adjusted periodically
based on all relevant information as it becomes available. Differences between final settlements and
14
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
amounts accrued in previous years are reported as adjustments to the current year’s net revenue. In
2015 and 2014, net patient service revenue includes $11,271,000 and $13,096,000, respectively,
related to the prior years’ cost reports.
(q)
Premium Revenue
The Health System has capitated agreements with various managed care plans to provide physician
services to both Commercial and Medicare risk enrollees. Under these agreements, the Health System
receives monthly premiums based on the number of enrollees. Premium revenue is recognized in the
month the enrollees are entitled to service. In 2015, two HMOs accounted for 39% and 20% of
premium revenue. In 2014, two HMOs accounted for 34% and 23% of premium revenue.
(r)
Charity Care and Community Service
Healthcare services are provided free of charge or at reduced rates to individuals who meet certain
financial criteria. Because the Health System does not pursue collection of amounts determined to
qualify as charity care, they are not reported as revenue. In order to qualify for this program, the
individual is required to provide certain information to the organization; or the organization, using
publicly available data, determines that an individual qualifies. To the extent that this information is
not provided, the deduction is reflected as a component of the provision for uncollectible accounts. In
2015 and 2014, the cost of these services was $8,907,000 and $18,618,000, respectively, calculated
using the cost-to-charge method.
(s)
Contributions
Cash and other assets received from donations are reported at fair value at the date of their receipt.
These donations are reported as either temporarily or permanently restricted net assets if they are
received with donor stipulations that limit the use of the donated assets. When a donor restriction
expires, that is, when a stipulated time restriction ends or the purpose restriction is accomplished,
temporarily restricted net assets are reclassified as unrestricted net assets and reported in the
consolidated statements of operations and change in net assets as net assets released from restrictions.
Unconditional promises to give that are expected to be collected within one year are recorded at net
realizable value. Unconditional promises to give that are expected to be collected in future years are
recorded at the present value of their estimated future cash flows. The discounts on those amounts are
computed using risk-free interest rates applicable to the years in which the payments are received.
Amortization of the discounts is included as a component of temporarily restricted net assets if the
promises to give have donor-imposed restrictions that have not yet been met or other operating revenue
for unrestricted promises to give. Conditional promises to give are not recorded until the conditions
are substantially met.
(t)
Income Taxes
The Health System is a nonprofit public benefit corporation and has been recognized as exempt from
federal income taxation pursuant to Section 501(c)(3) of the Internal Revenue Code as an organization
described in Section 501(a)(1) of the Internal Revenue Code. However, the Health System is subject
to income taxes on any net income that is derived from a trade or business and not in furtherance of
the purposes for which it was granted exemption. No income tax provision has been recorded as the
15
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
net income, if any, from any unrelated trade or business, in the opinion of management, is not material
to the financial statements taken as a whole.
The Health System recognizes the effect of income tax positions only if those positions are more likely
than not of being sustained. Recognized income tax positions are measured using the largest amount
that exceeds a 50% probability of being realized. Changes in recognition or measurement are reflected
in the period in which the change in estimate occurs.
(u)
Excess of Revenue over Expenses
The consolidated statements of operations and changes in net assets include excess of revenue over
expenses. Changes in unrestricted net assets, which are excluded from excess of revenue over
expenses, consistent with industry practice, include the change in unamortized loss and prior service
costs related to pension and postretirement benefit plans, change in unrealized gains and losses on
investments, restricted contributions and the investment income (loss), contributions of long-lived
assets (including assets acquired using contributions, which by donor restriction were to be used for
the purposes of acquiring such assets), and gain or loss from discontinued operations. Within the
consolidated financial statements, management considers the excess of revenue over expenses to be
the Health System’s performance indicator.
(v)
Reclassifications
Certain reclassifications have been made in these financial statements to conform 2014 information to
the 2015 presentation.
(w)
Recently Issued Accounting Standards
During 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) No. 2013-06, Not-for-Profit Entities (Topic 958) Services Received from Personnel of an
Affiliate (a consensus of the FASB Emerging Issues Task Force). This guidance was adopted by the
Health System in 2015, and the addition of this accounting standard did not have a significant effect
on the consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers
(Topic 606). The ASU will replace most existing revenue recognition guidance in U.S. generally
accepted accounting principles when it becomes effective. The new standard is effective for the Health
System on January 1, 2018, as amended by ASU No. 2015-14, Revenue from Contracts with
Customers (Topic 606). Early application is permitted but not earlier than the original effective date
of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect
transition method. Management is evaluating the effect that the standard will have on its financial
statements and related disclosures.
In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30).
The amendments in this update require that debt issuance costs related to a recognized debt liability
be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability,
consistent with debt discounts. The new standard is effective for the Health System on January 1, 2016.
Early application is permitted. The standard requires the application of the retrospective transition
16
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
method. Management has evaluated this accounting standard and it is not expected to have a significant
effect on the consolidated financial statements and related disclosures.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall
(Subtopic 825-10). The standard requires entities to measure equity investments that are not accounted
for under the equity method or do not result in consolidation to be recorded at fair value and recognize
any changes in fair value to net income. Investments that qualify for a practicability exception would
not require a change in accounting. The disclosure of fair value of investments held at amortized cost
will no longer be required. The new standard is effective for the Health System on January 1, 2019.
Early application is permitted but not earlier than January 1, 2018. The standard requires the use of the
cumulative effect transition method, except for equity securities without readily determinable fair
values, for which the standard requires the application of the prospective transition method. The impact
of adoption will result in the change in fair value of available for sale equity securities being reflected
in net income and a reduction in the fair value disclosures for certain securities carried at amortized
cost.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), aimed at making leasing
activities more transparent and comparable. The new standard requires substantially all leases,
including operating leases, be recognized by lessees on their balance sheet as a right-of-use asset and
corresponding lease liability. ASU No. 2016-02 is effective for annual periods beginning after
December 15, 2018, and early adoption permitted. Management is evaluating the effect that the
standard will have on its financial statements and related disclosures.
(3)
Assets Limited as to Use
The composition of assets limited as to use as of December 31, 2015 and 2014 is as follows (in thousands):
Cash and cash equivalents
Government debt securities
Equity securities
Mutual funds
Commingled funds
Hedge funds
Private equity
Pledges receivable
Interest receivable
$
Total
Current portion necessary to meet current obligations
Total
$
17
2015
2014
25,494
—
339,904
386,620
146,600
100,151
62,647
4,369
691
27,502
33,963
340,398
326,637
159,496
94,511
53,682
3,081
685
1,066,476
1,039,955
(2,353)
(6,569)
1,064,123
1,033,386
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Net investment income for the years ended December 31, 2015 and 2014 comprises the following (in
thousands):
2015
Interest income
Dividends
Net realized gains on sales of securities and
other-than-temporary impairment
Changes in fair value of alternative investments
$
Total
Less management fees
Net investment income
$
2014
267
15,782
109
16,642
4,811
(7,136)
52,235
1,603
13,724
70,589
(4,879)
(3,829)
8,845
66,760
The Health System held a total of 494 securities as of December 31, 2015. The Health System held 159
investments in a continuous loss position of less than one year with a fair market value of $263,216,000 and
an unrealized loss position of $20,085,000 as of December 31, 2015. The Health System held five
investments in a continuous loss position of more than one year with a fair market value of $132,604,000
and unrealized loss position of $27,433,000 as of December 31, 2015. The fair value of these investments
has declined due to a number of reasons, including changes in interest rate, changes in economic conditions,
and changes in market outlook, among others. The Health System recognized an other-than-temporary
impairment loss of $42,707,000 in net investment income in 2015 related to 160 of its securities, which the
Health System continued to hold as of December 31, 2015. The Health System has the intent and ability to
hold the other securities in a continuous loss position until their values recover and believes the remaining
unrealized losses to be temporary.
The Health System held a total of 557 securities as of December 31, 2014. The Health System held 98
investments in a continuous loss position of less than one year with a fair market value of $169,110,000 and
an unrealized loss position of $12,287,000 as of December 31, 2014. The Health System held one investment
in a continuous loss position of more than one year with a fair market value of $7,427,000 and unrealized
loss position of $3,530,000 as of December 31, 2014. The fair value of these investments has declined due
to a number of reasons, including changes in interest rate, changes in economic conditions, and changes in
market outlook, among others. The Health System recognized an other-than-temporary loss of $7,525,000
in net investment income in 2014 related to 95 of its securities, which the Health System continued to hold
as of December 31, 2014. As of December 31, 2014, the Health System had the intent and ability to hold the
other securities in a continuous loss position until their values recover and believed the remaining unrealized
losses to be temporary.
18
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(4)
Fair Value of Financial Assets
Assets recorded at fair value in the consolidated balance sheets are categorized based upon the level of
judgment associated with the inputs used to measure their fair value. Investments measured and reported at
fair value are classified in one of the following categories:
Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets,
quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than
quoted prices that are observable for the asset or liability
Level 3 – Pricing inputs are generally unobservable for the asset or liability; these inputs reflect the reporting
entity’s own assumptions about the assumptions that market participants would use in pricing the asset or
liability
In certain instances, fair value is estimated using quoted market prices obtained from external pricing
services. In obtaining such data from the pricing services, the Health System has evaluated the methodologies
used to develop the estimates of fair value in order to assess whether such valuations are representative of
fair value. For alternative investments such as commingled funds, hedge funds, and private equity, the Heath
System’s equity method accounting is based primarily on NAV as reported by the investment manager.
The following is a description of the valuation methodologies and inputs used to measure fair value for major
categories of investments.
(a)
Fixed Income
Debt securities are generally valued using quoted prices of securities with similar characteristics.
Fixed-income securities are generally classified in Level 2 of the fair value hierarchy.
(b)
Equity Securities
Equities (including common and preferred shares, domestic listed and foreign listed, and mutual funds)
are generally valued at the closing price reported on the major market on which the individual
securities are traded at the measurement date. As all equity securities held by the Health System are
publicly traded in active markets, the securities are classified within Level 1 of the fair value hierarchy.
(c)
Commingled Funds
Commingled funds are accounted for under the equity method. These funds are generally classified
within Level 2 of the fair value hierarchy.
19
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(d)
Hedge and Private Equity Funds
The valuation of limited partnership interests in hedge and private equity funds may require significant
management judgment. The NAV reported by the asset manager is adjusted when management
determines that NAV is not representative of fair value. In making such an assessment, a variety of
factors are reviewed by management, including, but not limited to, the timeliness of NAV as reported
by the asset manager and changes in general economic and market conditions subsequent to the last
NAV reported by the asset manager. Depending on availability of observable inputs, these investment
funds are classified within either Level 2 or Level 3 of the fair value hierarchy.
The following tables summarize fair value measurement by level at December 31, 2015 and 2014 for
financial assets measured at fair value on a recurring basis and certain assets accounted for under the
equity method (in thousands):
Level 1
Assets:
Cash and cash equivalents
—
—
139,842
72,653
61,397
62,136
91,095
3,479
16,368
20,486
—
—
—
—
—
—
—
—
—
—
—
—
—
—
72,653
61,397
62,136
91,095
3,479
16,368
20,486
12,290
—
—
12,290
339,904
—
—
339,904
$
386,620
—
—
—
—
146,600
49,980
—
—
—
50,171
62,647
386,620
146,600
100,151
62,647
$
866,366
196,580
112,818
1,175,764
Subtotal – equity
securities
Total
Total
139,842
$
Equity securities:
Information technology
Healthcare
Financial
Consumer
Energy
Materials
Industrials
Telecommunications
and utilities
Mutual funds
Commingled funds
Hedge funds
Private equity
Fair values as of December 31, 2015
Level 2
Level 3
20
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Level 1
Assets:
Cash and cash equivalents
Government debt securities
$
Equity securities:
Information technology
Healthcare
Financial
Consumer
Energy
Materials
Industrials
Telecommunications
and utilities
Subtotal – equity
securities
Mutual funds
Commingled funds
Hedge funds
Private equity
Total
$
Fair values as of December 31, 2014
Level 2
Level 3
Total
94,995
—
—
33,963
—
—
94,995
33,963
72,541
46,834
54,777
83,193
18,933
10,362
34,229
—
—
—
—
—
—
—
—
—
—
—
—
—
—
72,541
46,834
54,777
83,193
18,933
10,362
34,229
19,529
—
—
19,529
340,398
—
—
340,398
326,637
—
—
—
—
159,496
57,093
—
—
—
37,418
53,682
326,637
159,496
94,511
53,682
762,030
250,552
91,100
1,103,682
The following table presents a reconciliation of the beginning and ending balances of fair value
measurements using significant unobservable inputs (Level 3) (in thousands):
2015
Balance at beginning of year
Total net realized gains included in net investment income
Total gains attributable to the change in unrealized
gains or losses relating to assets still held at year end
Purchases and settlements:
Purchases
Settlements
$
Balance at end of year
$
2014
91,100
4,409
69,611
2,707
667
4,126
27,178
(10,536)
22,026
(7,370)
112,818
91,100
During the years ended December 31, 2015 and 2014, there were no significant transfers between
assets with quoted prices in active markets for identical assets (Level 1) and assets with observable
inputs other than quoted prices in active markets (Level 2).
21
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The Health System’s alternative investments are accounted for under the equity method, whereby their
value is based on NAV per share or its equivalent. The attributes relating to the nature and risk of such
financial assets as of December 31, 2015 are as follows (in thousands):
Fair value
Level 2:
Commingled funds (a)
Multistrategy hedge funds (b)
$
Total Level 2
Level 3:
Multistrategy hedge funds (b)
Private equity – buyout (c)
Private equity – distressed debt (c)
Private equity – fund of funds (c)
Private equity – real estate (c)
Total Level 3
Total
$
Unfunded
commitments
146,600
49,980
—
—
196,580
—
50,171
16,413
1,141
35,615
9,478
—
10,145
498
18,431
3,828
112,818
32,902
309,398
32,902
(a)
This class includes investments in commingled funds that invest primarily in U.S. companies
experiencing significant corporate change. This class is redeemable monthly with a notice period
of 10 days.
(b)
This class includes investments in hedge funds that pursue diversification of both domestic and
foreign fixed-income and equity securities through multiple investment strategies. The primary
objective for these funds is to maximize returns while limiting volatility by allocating capital to
external portfolio managers for expertise in one or more investment strategies, which may
include, but are not limited to long/short equity, credit driven, event driven, relative value, and
global asset allocation. A redemption limitation has been imposed for investments representing
approximately 6% of the value of this class and no redemptions are currently permitted (these
funds have lock ups available for redemption in November 2016). The remaining 94% of the
value of this class is available for redemption monthly, quarterly, or annually with notice periods
of 30–90 days.
(c)
This class includes private equity funds that specialize in providing capital to a variety of
investment groups, including but not limited to venture capital, leveraged buyout, mezzanine
debt, and distressed debt. There is no provision for redemptions during the life of these funds.
22
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(5)
Concentration of Credit Risk
The Health System grants credit without collateral to its patients, most of whom are local residents and are
covered by governmental healthcare financing programs or insured under third-party payor agreements. The
mix of receivables from patients and third-party payors as of December 31, 2015 and 2014 is as follows:
2015
Contracted rate payors
Medicare
Commercial insurance, self-pay, and other payors
Medi-Cal
Total
(6)
2014
60%
26
8
6
58%
26
9
7
100%
100%
Property and Equipment – Net
Property and equipment as of December 31, 2015 and 2014 consist of the following amounts (in thousands):
Land
Land improvements
Buildings and building improvements
Equipment
$
Total
Accumulated depreciation
Subtotal
Construction in progress
Property and equipment – net
$
2015
2014
41,738
75,472
936,882
697,819
41,738
75,472
916,032
646,528
1,751,911
1,679,770
(759,232)
(682,351)
992,679
997,419
22,181
30,656
1,014,860
1,028,075
Depreciation expense of $81,700,000 and $75,122,000 for the years ended December 31, 2015 and 2014,
respectively, has been recorded in depreciation and amortization expense in the accompanying consolidated
statements of operations and changes in net assets.
(7)
Ownership Interests in Health-Related Ventures
The Corporation has four ownership interests, as further described below, that are accounted for under the
equity method and are classified in the accompanying balance sheet as ownership interests in health-related
ventures:

The Corporation and Tenet Healthcare Corporation (Tenet) participate in a joint venture to operate
San Ramon Regional Medical Center (SRRMC) whereby the Corporation holds a 49% interest in
SRRMC.
23
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014

The Corporation and Tenet participate in a joint venture to develop and expand physician and
outpatient services in the Tri-Valley area and nearby communities in Northern California (the Network
Joint Venture). The Corporation’s ownership interest in the Network Joint Venture is 49%. The
Corporation has committed to fund $20,000,000 for capital projects and operations relating to the
Network Joint Venture over a five-year period through 2018. As of December 31, 2015, the
Corporation’s unfunded commitment was $8,946,000.

The Corporation and the University of California, on behalf of its San Francisco Campus (UCSF
Medical Center), entered into a Limited Liability Company Agreement in March 2015 to work
collaboratively to expand and integrate healthcare services in support of a Bay Area wide delivery
network for health plans and employers (Bay Health). The Corporation and UCSF equally participate
in the ownership and operation of Bay Health with individual membership interests of 50%. The
Corporation has committed to fund $5,000,000 for capital projects and operations relating to Bay
Health. As of December 31, 2015, the Corporation’s unfunded commitment was $4,000,000. On
January 29, 2016, the Corporation invested an additional $4,000,000 in this entity.

The Corporation and UCSF Medical Center have invested in a collaborative effort to form a regional
healthcare network known as Bay Area Accountable Care Network (Bay Area Network). Establishing
a Bay Area wide network will provide patients from throughout the Bay Area and Northern California
with a competitively priced option to access, close to where they live or work, many of the most trusted
and respected hospitals, health systems, and physician organizations. As of December 31, 2015, Bay
Area Network is authorized to issue 10,000,000 common shares, of which 900,000 for total
consideration of $4,500,000 are issued and outstanding, with the Corporation and UCSF having equal
individual membership interests of 50%. The Corporation has committed to fund $15,000,000 for
capital projects and operations relating to the Bay Area Network. As of December 31, 2015, the
Corporation’s unfunded commitment was $12,750,000. On January 29, 2016, the Corporation
invested an additional $1,500,000 in this entity.
The following table summarizes the financial position and results of operations for significant health-related
ventures discussed above as of and for the years ended December 31, 2015 and 2014:
SRRMC
Total assets
Total liabilities
Total members’ equity
Total revenue, net
Excess of revenue over expenses
Investment at December 31 recorded in
ownership interests in health-related ventures
Earnings recorded in other operating
revenue
$
2015
2014
147,879
20,923
126,956
158,971
20,135
139,036
20,232
118,804
155,460
21,044
121,732
116,269
9,866
10,467
For the remaining health-related ventures discussed above, the Corporation’s aggregate investment balances
recorded in ownership interests in health-related ventures as of December 31, 2015 and 2014 are $6,089,000
24
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
and $10,390,000, respectively, and aggregate losses recorded in other operating revenue for the years ended
December 31, 2015 and 2014 are $7,467,000 and $664,000, respectively.
(8)
Long-Term Debt
Long-term debt as of December 31, 2015 and 2014 is summarized below (in thousands):
2015
Series 2005A California Statewide Communities Development
Authority Refunding Revenue Bonds – net of unamortized
premium of $165
Series 2006A California Statewide Communities Development
Authority Revenue Bonds – net of unamortized premium of
$1,795, payable from 2017 through 2036, with fixed interest
rates ranging from 4.625% to 5.0%
Series 2008A California Statewide Communities
Development Authority Variable Rate Revenue Bonds,
payable from 2026 through 2036, with interest at variable
rates that ranged from 0.01% to 0.12% during 2015
Series 2008C California Statewide Communities Development
Authority Variable Rate Revenue Bonds, payable in 2027
with interest at variable rates that ranged from 0.01% to
0.13% during 2015
Series 2009A California Statewide Communities Development
Authority Revenue Bonds – net of unamortized discount of
$1,127, payable through 2039, with fixed interest
rates ranging from 3.375% to 5.125%
Series 2012A and 2012B Tax-exempt California Statewide
Communities Development Authority fixed rate bonds in
private placement with JP Morgan Chase, payable through
2022 and from 2026 through 2036, respectively,
with fixed interest rates of 2.01% and 2.02%, respectively
Series 2013 Term Loan payable in amounts through 2023
with a fixed interest rate of 2.90%
Other
$
Total
Current maturities
Total
$
2014
—
16,550
201,795
201,923
50,600
50,600
44,500
44,500
92,438
94,525
78,175
82,050
117,941
3,839
120,690
4,926
589,288
615,764
(11,446)
(27,548)
577,842
588,216
The bonds may be redeemable (some requiring a redemption premium) prior to the stated maturities. During
2015, the Health System fully redeemed, at par, the outstanding Series 2005A Series bonds.
The Series 2008A and Series 2008C bond indentures allow bondholders to tender bonds to the Health
System. The Health System maintains letters of credit to provide interim financing to the Health System if
an event occurs that requires a liquidity draw.
25
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The letter of credit supporting the Series 2008A bonds expires in July 2016. Amortization on outstanding
draws under the letter of credit commences on the earlier of 367 days after the advance is made or the
termination date of the letter of credit. Equal quarterly installments, along with accrued interest, are then due
through two years after the advance, or when a substitute letter of credit or other liquidity facility is put in
place, or if the bonds are converted. Additionally, amounts become due in the event of default. The 2008A
bonds are classified as long-term because the terms of the Health System’s bond indenture would require
draws under the letters of credit prior to its expiration if it is not renewed prior to July 2016.
The letter of credit supporting the Series 2008C Bonds expires in July 2017. Amortization on outstanding
draws under the letter of credit commences on the earlier of 367 days after the advance is made or the
termination date of the letter of credit. Letter of credit draws are to be repaid in eight quarterly installments
beginning 367 days after the credit draw. Additionally, amounts become due in the event of default.
Scheduled principal repayments, including sinking fund requirements, on long-term debt are as follows (in
thousands):
2016
2017
2018
2019
2020
Thereafter
$
Total payments
11,446
14,210
13,938
14,099
12,874
522,053
588,620
Less original issue discount
Plus original issue premium
(1,127)
1,795
Total principal payable
$
589,288
Assuming a liquidity draw, scheduled principal repayments under letters of credit supporting the
Series 2008A and Series 2008C bonds, as of December 31, 2015 are as follows: $6,325,000 in 2017,
$30,863,000 in 2018, $41,225,000 in 2019, and $16,687,000 in 2020.
The bonds are secured by the operating revenue of the Obligated Group members under the Master Trust
Indenture of the Obligated Group. The Master Trust Indenture of the Obligated Group includes, among other
things limitations on additional indebtedness, liens on property, restrictions on the disposition or transfer of
assets, and the maintenance of certain cash balances, historical debt service coverage ratio, and other
financial ratios. Management believes that the Health System is in compliance with the financial covenants
contained in the Master Trust Indenture as of December 31, 2015.
The Health System maintains a $50,000,000 line of credit with a bank that expires on May 27, 2016. There
were no borrowings under the line of credit in 2015 and 2014.
26
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(9)
Retirement Plans
Certain employees of the Health System are covered by a noncontributory defined-benefit pension plan. This
plan covers substantially all eligible employees except those whose retirement benefits are provided under
union sponsored plans.
Benefits are based on years of service and the employee’s compensation. Contributions to the plans are based
on actuarially determined amounts sufficient to meet the benefits to be paid to plan participants.
In addition to providing retirement benefits, the Health System provides healthcare benefits for certain retired
employees. Eligible employees who have 10 years of service and retire at age 55 or older qualify for these
benefits. Contributions to the plans are based on actuarially determined amounts sufficient to meet the
benefits to be paid to plan participants.
The following table summarizes plan activities for the years ended December 31, 2015 and 2014 and the
funded status recognized as a noncurrent liability in the consolidated balance sheets (in thousands):
2015
Pension
benefits
Change in benefit obligation:
Benefit obligation – beginning
of year
Service cost
Interest cost
Amendments
Actuarial loss (gain)
Settlements
Benefits and administrative
expense paid
$
Benefit obligation – end of year
Change in plan assets:
Fair value of plan assets –
beginning of year
Actual return on plan assets
Employer contribution
Settlements
Benefits and administrative
expense paid
Fair value of plan assets – end
of year
Funded status
Pension
benefits
Post
retirement
benefits
465,239
31,123
18,538
833
(6,241)
—
53,552
2,403
2,058
—
1,208
—
434,305
26,872
19,966
843
39,926
(51,192)
47,039
2,094
2,146
—
4,873
—
(35,105)
(2,826)
(5,481)
(2,600)
474,387
56,395
465,239
53,552
394,107
(7,453)
23,200
—
—
—
2,826
—
398,019
19,761
33,000
(51,192)
—
—
2,600
—
(35,105)
(2,826)
(5,481)
(2,600)
374,749
$
2014
Post
retirement
benefits
(99,638)
27
—
(56,395)
394,107
(71,132)
—
(53,552)
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The accumulated benefit obligation for the defined-benefit pension plan was $457,901,000 and $448,245,000
as of December 31, 2015 and 2014, respectively.
The following tables present the net loss and prior service costs recognized in unrestricted net assets for the
Health System’s defined-benefit pension plan and postretirement benefit plan (in thousands):
December 31, 2015
Post
Pension
retirement
benefits
benefits
Net loss
Prior service costs
$
106,764
4,056
8,141
672
December 31, 2014
Post
Pension
retirement
benefits
benefits
Net loss
Prior service costs
$
82,311
4,025
7,054
1,058
The following table presents the estimated net loss and estimated prior service costs of the Health System’s
significant retirement-related benefit plans that will be amortized from unrestricted net assets into net
periodic costs (income) and recorded in the consolidated statements of operations and changes in net assets
in 2016 (in thousands):
Pension
benefits
Net loss
Prior service costs
$
28
5,617
818
Post
retirement
benefits
180
386
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Weighted average assumptions used to determine net periodic benefit costs and benefit obligations as of and
for the years ended December 31, 2015 and 2014 are as follows:
2015
Pension
benefits
Weighted average assumptions
used to determine net periodic
benefit costs for the year
ended December 31:
Discount rate
Expected return of plan assets
Rate of compensation increase
Weighted average assumptions
used to determine benefit
obligations as of December 31:
Discount rate
Rate of compensation increase
2014
Post
retirement
benefits
Post
retirement
benefits
Pension
benefits
4.10%
6.75
3.00
3.95%
—
—
4.90%
6.75
3.00
4.70%
—
—
4.45%
3.00
4.30%
—
4.10%
3.00
3.95%
—
Postretirement medical benefits were measured assuming a 7.25% annual rate of increase in the per capita
cost of covered healthcare benefits for the years ended December 31, 2015 and 2014. The rate was assumed
to decrease each year to 4.75% for 2025 and remain at that level thereafter.
The amounts recognized in the net periodic benefit costs included the following (in thousands):
Pension
benefits
Components of net periodic
benefit costs:
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service
cost
Recognized net actuarial loss
$
Net periodic benefit
costs
Settlements
Total benefit
cost
$
2015
Postretirement
benefits
Pension
benefits
2014
Postretirement
benefits
31,123
18,538
(26,404)
2,403
2,058
—
26,872
19,966
(26,292)
2,094
2,146
—
803
3,163
386
120
1,248
146
385
—
27,223
4,967
21,940
4,625
—
—
9,074
—
27,223
4,967
31,014
4,625
29
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
One factor in determining pension expense is the assumption for the expected long-term rate of return on
plan assets. Various factors are considered in the development of this assumption, including past market
performance, the relationship between fixed maturity securities and equity securities, interest rates, and the
asset allocation.
For postretirement medical benefits, at December 31, 2015, the impact of a +1% and -1% change in assumed
healthcare cost trend rates on the total service and interest cost components is $460,000 and $(383,000),
respectively.
Plan assets for the defined-benefit pension plan are allocated across a diversified mix of fixed maturity
securities and equity securities in various sectors and levels of capitalization to maximize the long-term
return for a prudent level of risk. As of the measurement date, the targeted and actual asset allocation by
asset category is as follows:
Target
allocation
Equity securities:
Domestic equities
International equities
Fixed maturity securities
Real estate
Other
Total
Actual allocation
2015
2014
35%
17
27
3
18
36%
23
23
—
18
37%
23
22
—
18
100%
100%
100%
The long-term rate of return is the product of the expected returns of the various assets classes at the target
allocation noted above. The expected returns of the asset classes are based on historical experience with a
margin for future expectations.
30
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The fair values of the Health System’s pension plan assets at December 31, 2015 and 2014 by asset class are
as follows (see note 4 for description of level classifications) (in thousands):
2015
Level 1
Cash and cash equivalents
$
Equity securities:
Information technology
Healthcare
Financial
Consumer
Energy
Materials
Industrials
Telecommunications and utilities
Subtotal – equity
securities
Mutual funds
Commingled funds
Hedge funds
Private equity
Total
$
Level 2
Level 3
Total
5,759
—
—
5,759
20,921
14,790
20,529
46,287
1,158
5,601
7,789
7,870
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
20,921
14,790
20,529
46,287
1,158
5,601
7,789
7,870
124,945
—
—
124,945
138,430
—
—
—
—
39,933
33,254
—
—
—
15,085
17,343
138,430
39,933
48,339
17,343
269,134
73,187
32,428
374,749
2014
Level 1
Cash and cash equivalents
$
Equity securities:
Information technology
Healthcare
Financial
Consumer
Energy
Materials
Industrials
Telecommunications and utilities
Subtotal – equity
securities
Mutual funds
Commingled funds
Hedge funds
Private equity
Total
$
Level 2
Level 3
Total
4,747
—
—
4,747
26,787
11,396
17,645
46,219
7,579
4,015
14,275
7,952
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
26,787
11,396
17,645
46,219
7,579
4,015
14,275
7,952
135,868
—
—
135,868
140,349
—
—
—
—
48,139
38,210
—
—
—
11,296
15,498
140,349
48,139
49,506
15,498
280,964
86,349
26,794
394,107
31
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
The following tables present a reconciliation of the beginning and ending balances of fair value
measurements using significant unobservable inputs (Level 3) (in thousands):
2015
Hedge funds
Private equity
Total
Balance at beginning of year
Actual return on plan assets
Purchases, sales, and settlements (net)
$
15,498
290
1,555
11,296
(236)
4,025
26,794
54
5,580
Balance at end of year
$
17,343
15,085
32,428
2014
Hedge funds
Private equity
Total
Balance at beginning of year
Actual return on plan assets
Purchases, sales, and settlements (net)
$
11,384
1,156
2,958
9,402
1,894
—
20,786
3,050
2,958
Balance at end of year
$
15,498
11,296
26,794
The Health System’s policy is to recognize transfers into and transfers out of Level 3 as of the end of the
year. During the years ended December 31, 2015 and 2014, there were no significant transfers to or from
assets with significant unobservable inputs (Level 3).
The funding strategy is to fund an amount at least equal to the minimum required funding as required by the
Employee Retirement Income Security Act of 1974 with consideration of factors such as the minimum
pensions liability requirement. Discretionary contributions may also be made. For the years ended
December 31, 2015 and 2014, contributions totaling $23,200,000 and $33,000,000, respectively, were made
to the pension plan. For the years ended December 31, 2015 and 2014, contributions totaling $2,826,000 and
$2,600,000, respectively, were made to the postretirement benefits plan.
The estimated future payments for pension benefits and postretirement benefits are as follows (in thousands):
Pension
benefits
2016
2017
2018
2019
2020
2021–2025
Total
32
Post
retirement
benefits
$
28,612
31,202
33,900
36,323
39,506
219,567
3,124
3,540
3,667
3,838
3,999
21,819
$
389,110
39,987
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
In addition to the pension benefits discussed above, certain other retirement benefits exist. These amounts
are included in the pension liability in the consolidated balance sheets as of December 31, 2015 and 2014.
The Health System also makes contributions to the union pension plans of two employee groups at JMMC
– Concord, which are defined-benefit pension multiemployer plans. The Health System’s participation in
these plans for the year ended December 31, 2015 is outlined in the table below. The most recent Pension
Protection Act zone status is based on information that the Health System received from the plan and is
certified by each plan’s actuary. Among other factors, plans in the red zone are generally less than 65%
funded, and plans in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented”
column indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either
pending or has been implemented. The last column lists the expiration dates of the collective bargaining
agreements to which the plans are subject. There have been no significant changes that affect the
comparability of 2015 and 2014 contributions and the Health System has not provided more than 5% of the
total contributions for these plans:
Pension fund
S.E.I.U. National
Industry
IUOE Stationary
Engineers Local 39
EIN/
pension plan
number
Pension protection act
zone status
As of January 1
2015
2014
FIP/RP
status
pending/
implemented
Contributions (in thousands)
2016
(expected)
2015
2014
52-6148540/001
Red
Red
Implemented
Not available
94-6118939/001
Green
Green
No
Not available
$
Surcharge
imposed
(during
2015)
Collective
bargaining
agreement
expiration
date
2,760
1,886
Yes
4/15/2017
342
338
No
12/31/2017
The risk of participating in a multiemployer plan is different from single-employer plans in the following
aspects: (a) assets contributed to the multiemployer plan by one employer may be used to provide benefits
to employees of other participating employers; (b) if a participating employer stops contributing to the plan,
the unfunded obligations of the plan may be borne by the remaining participating employers; and (c) if the
Health System chooses to stop participating in the multiemployer plan, the Health System may be required
to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
A tax deferred annuity plan and defined-contribution retirement plan are also offered to certain employees.
Employer contributions to these plans included in employee benefits expense during 2015 and 2014 were
approximately $9,608,000 and $8,998,000, respectively.
(10) Financing Obligation
The Health System leases space in an office building which is used for medical and administrative offices.
The Health System arranged for significant construction activities to prepare the building for its intended
use. Based on relevant accounting guidance, the Health System is considered the accounting owner of the
office building. Because this transaction does not qualify for sale-leaseback accounting, it is treated as a
financing transaction. Accordingly, a financing obligation of $43,049,000 and $44,004,000 is recorded as of
December 31, 2015 and 2014, respectively. The financing obligation associated with this transaction will not
result in cash payments in excess of amounts paid under the related lease payments.
33
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Future payments related to this financing obligation are as follows (in thousands):
2016
2017
2018
2019
2020
Thereafter
Total payments
$
2,312
2,369
2,437
2,501
2,565
26,103
$
38,287
(11) Lease Commitments
The Health System leases certain office space and equipment under noncancelable operating leases expiring
at various dates through 2038. In addition, the Health System subleases certain office space to subtenants
under noncancelable operating leases expiring at various dates through 2022. Total rent expense, net of
sublease income, was approximately $14,526,000 and $14,396,000 for the years ended December 31, 2015
and 2014, respectively.
Net future minimum lease payments under operating leases as of December 31, 2015 are as follows (in
thousands):
Operating
subleasing
income
Operating
leases
2016
2017
2018
2019
2020
Thereafter
Total
Net operating
lease
payments
$
14,417
13,708
13,388
12,128
11,083
39,765
1,972
1,091
963
522
403
1,553
12,445
12,617
12,425
11,606
10,680
38,212
$
104,489
6,504
97,985
(12) Functional Expenses
Expenses related to providing general healthcare services to residents within the Health System’s geographic
location are as follows (in thousands):
2015
2014
Healthcare services and programs
General and administrative
Fund-raising
$
1,367,235
124,643
508
1,291,567
130,883
446
Total
$
1,492,386
1,422,896
34
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
(13) Contingencies
(a)
Litigation
The Health System is a defendant in various actions arising from its healthcare service and related
activities. Management assesses the probable outcome of unresolved litigation and records contingent
liabilities reflecting estimated liability exposure.
(b)
Laws and Regulations
The healthcare industry is subject to numerous laws and regulations of federal, state, and local
governments. These laws and regulations include, but are not necessarily limited to, matters such as
licensure, accreditation, government healthcare program participation requirements, payments for
patient services, and Medicare and Medicaid fraud and abuse. Violations of these laws and regulations
could result in expulsion from government healthcare programs together with the imposition of
significant fines and penalties, as well as significant repayments for patient services previously billed.
Management believes that the Health System is in material compliance with fraud and abuse and other
applicable government laws and regulations. Compliance with such laws and regulations can be
subject to future government review and interpretation as well as regulatory actions unknown or
unasserted at this time.
The Health System periodically receives notices from governmental agencies, such as the Department
of Justice or Office of Inspector General of the U.S. Department of Health and Human Services,
requesting information regarding billing, payment, or other reimbursement matters. The healthcare
industry in general is experiencing an increase in these activities as the federal government increases
enforcement resources and institutes new programs designed to identify areas of potential
reimbursement irregularities. Based on the information received to date from the government, the
Health System does not presently have information indicating that these investigations or their
resolution will have a material adverse effect on the Health System. Nevertheless, investigations of
this type and scope could lead to civil and/or criminal charges and material penalties or settlements.
Consequently, there can be no assurance that the resolution of these matters will not adversely affect
the financial condition or operations of the Health System.
(14) Provider Fee Program
In September 2011, the State of California enacted legislation that provides supplemental Medi-Cal
payments to certain hospitals, which is funded by a quality assurance fee paid by participating hospitals and
matching federal funds (the Provider Fee Program). In October 2013, the Governor of California signed
legislation extending a Provider Fee Program from January 2014 through December 2016 (with a framework
to renew the program for at least three additional years beyond 2016). In December 2014, Centers for
Medicare and Medicaid Services approved the fee-for-service portion of the program for the 2014–2016
period.
35
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2015 and 2014
Under the 2014–2016 Provider Fee Program, quality assurance fees assessed to and recorded by JMMC –
Walnut Creek and JMMC – Concord were $39,262,000 and $34,386,000 for the for the years ended
December 31, 2015 and 2014, respectively. Such amounts are reported as other operating expenses in the
consolidated statements of operations and changes in net assets. The total quality assurance fees recorded in
accounts payable in the consolidated balance sheets as of December 31, 2015 and 2014 were $10,165,000
and $34,386,000, respectively.
Under the 2014–2016 Provider Fee Program, supplemental payments recognized by JMMC – Walnut Creek
and JMMC – Concord were $22,944,000 and $20,147,000 for the years ended December 31, 2015 and 2014,
respectively. Such amounts are reported as net patient service revenue in the consolidated statements of
operations and changes in net assets. The total supplemental payments recorded in other receivables in the
consolidated balance sheets as of December 31, 2015 and 2014 were $10,165,000 and $20,147,000,
respectively.
In conjunction with the Provider Fee Program, the California Hospital Association (CHA) created a private
program, the California Health Foundation and Trust (CHFT), to pool and redistribute funds from hospitals
subject to the Provider Fee Program. During 2015 and 2014, JMMC – Walnut Creek and JMMC – Concord
recognized net patient service revenue of $16,317,000 and $15,035,000, respectively, related to amounts
received from this program. The related amounts recorded in other receivables in the consolidated balance
sheets as of December 31, 2015 and 2014 were $3,863,000 and $14,689,000, respectively.
(15) Subsequent Events
The Health System has evaluated subsequent events from the balance sheet date through April 29, 2016,
which is the date that the consolidated financial statements were available to be issued, and concluded there
were no other events or transactions during this period, other than those described in these notes, that required
recognition or disclosure in these consolidated financial statements.
36
JOHN MUIR HEALTH AND SUBSIDIARIES
Consolidating Schedule – Balance Sheet Information
December 31, 2015
(In thousands)
Obligated
Group
Assets
Current assets:
Cash and cash equivalents
Receivables for patient services – less allowance
for uncollectible accounts of $47,486
Receivables from affiliates
Other receivables
Supply inventories
Assets limited as to use
Prepaid expenses and deposits
$
Total current assets
Assets limited as to use:
Board-designated assets
Investments related to restricted net assets
Pledges receivable
Total assets limited as to use – net of
current portion
John Muir
Physician
Network
John Muir
Behavioral
Health
Community
Health
Fund
John Muir
Health
Foundation
Other HealthRelated
Ventures
Eliminations
Consolidated
89,574 7,513 407 104 8,856 7,894 — 114,348 200,312 5,511 31,912 7,066 2,353 18,083 7,447 918 1,197 — — 2,658 4,557 — 8 71 — 192 — 1,001 — — — — — — 1,259 — — — 5,293 — 168 879 — 524 (533) (7,430) 254 — — — 217,076 — 34,798 8,016 2,353 21,457 354,811 19,733 5,235 1,105 10,115 14,758 (7,709) 398,048 1,038,210 1,148 — — — — — — — — — — — 20,396 4,369 — — — — — — 1,038,210 21,544 4,369 1,039,358 — — — 24,765 — — 1,064,123 Property and equipment – net
911,835 97,313 1,218 — — 4,494 — 1,014,860 Other assets:
Real estate held for future use – at cost
Intangible assets and deferred financing costs – net
Ownership interests in health-related venture
Other
5,903 4,758 127,821 38,544 — — — 1,519 — — — — — — — — — — — — — 2,913 — 5 — (2,913) — (13,290) 5,903 4,758 127,821 26,778 Total other assets
Total assets
$
177,026 1,519 — — — 2,918 (16,203) 165,260 2,483,030 118,565 6,453 1,105 34,880 22,170 (23,912) 2,642,291 37
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Consolidating Schedule – Balance Sheet Information
December 31, 2015
(In thousands)
Obligated
Group
Liabilities and Net Assets
Current liabilities:
Current maturities of long-term debt
Current maturities of financing obligation
Accounts payable
Accounts payable to affiliates
Payables to government agencies
Accrued liabilities:
Payroll and payroll taxes
Vacation and other compensation
Employee medical benefit claims and workers’
compensation benefits
Interest
Other
$
Total current liabilities
Long-term debt – less current maturities
Other long-term liabilities:
Workers’ compensation benefits
Professional and general liability
Pension benefits
Postretirement medical benefits
Financing obligation – less current maturities
Asset retirement obligations
Other
Total other long-term liabilities
Total liabilities
Net assets:
Unrestricted
Temporarily restricted
Permanently restricted
Total net assets – attributable to
Health System
Unrestricted – attributable to noncontrolling interest
Total net assets
Total liabilities and net assets
$
John Muir
Physician
Network
John Muir
Behavioral
Health
Community
Health
Fund
John Muir
Health
Foundation
Other HealthRelated
Ventures
Eliminations
Consolidated
11,382 — 91,233 3,043 931 — 800 10,029 — — — — 1,161 — (74) — — — — — — — 46 4,386 — 64 — 1,110 — — — — (49) (7,429) — 11,446 800 103,530 — 857 34,744 34,146 1,653 1,659 920 907 — — — — 988 — — — 38,305 36,712 14,674 6,703 9,766 706 — 3,472 300 — 253 — — — — — — — — 2,669 — — (231) 15,680 6,703 15,929 206,622 18,319 3,467 — 4,432 4,831 (7,709) 229,962 577,708 — — — — 134 — 577,842 59,473 6,581 99,638 56,395 — 15,397 22,243 — — — — 42,249 — 2,459 — — — — — — — — — — — — — — — — — — — — — — — — — — — 1,721 — — — — — — — 59,473 6,581 99,638 56,395 42,249 15,397 26,423 259,727 44,708 — — — 1,721 — 306,156 1,044,057 63,027 3,467 — 4,432 6,686 (7,709) 1,113,960 1,437,650 1,323 — 55,538 — — 2,986 — — 1,105 — — 5,858 16,564 8,026 15,484 — — (18,302) — — 1,500,319 17,887 8,026 1,438,973 55,538 2,986 1,105 30,448 15,484 (18,302) 1,526,232 — — — — — — 2,099 2,099 1,438,973 55,538 2,986 1,105 30,448 15,484 (16,203) 1,528,331 2,483,030 118,565 6,453 1,105 34,880 22,170 (23,912) 2,642,291 See accompanying independent auditors’ report.
38
JOHN MUIR HEALTH AND SUBSIDIARIES
Consolidating Schedule – Operations and Changes in Net Assets Information
Year ended December 31, 2015
(In thousands)
Obligated
Group
Operating revenue:
Net patient service revenue (net of contractual
allowances and discounts)
Provision for uncollectible accounts
$
Net patient service revenue less provision
for uncollectible accounts
Premium revenue
Other operating revenue
Net investment income – including realized gains
and losses on investment
Total operating revenue
Operating expenses:
Salaries and wages
Employee benefits
Medical fees
Supplies
Purchased services
Insurance
Utilities and rent
Depreciation and amortization
Interest – net
Health System assessment
Other
Total operating expenses
Excess (deficit) of revenue over expenses
Less excess of revenue over expenses – attributable
to noncontrolling interest
Excess (deficit) of revenue over expense
– attributable to Health System
$
1,290,751 (44,900) John Muir
Physician
Network
John Muir
Behavioral
Health
88,375 (1,761) 36,369 (1,032) 1,245,851 86,614 35,337 4,443 36,441 96,783 70,128 — 291 Community
Health
Fund
— — John Muir
Health
Foundation
Other HealthRelated
Ventures
Eliminations
Consolidated
— — 41,705 — (117) — 1,457,083 (47,693) — — 41,705 (117) 1,409,390 — 1,463 — 1,066 2,925 22 — (64,110) 104,151 45,301 8,797 — — — 48 — — 8,845 1,295,532 253,525 35,628 1,463 1,114 44,652 (64,227) 1,567,687 538,535 139,073 59,835 140,355 145,509 5,216 25,544 74,854 20,103 (22,964) 62,288 37,250 11,161 84,495 9,063 105,886 — 7,864 6,116 1,309 18,471 368 19,183 5,582 1,927 1,384 2,449 — 1,553 134 — 4,493 242 182 51 — 5 90 — 5 — — — 1,097 1,925 631 — 162 634 — 8 — — — 1,013 6,322 1,198 258 5,897 14,570 304 3,182 1,044 9 — 3,332 — (1,046) (6,289) — (34,356) — (4,903) — — — (10,217) 603,397 156,650 140,226 156,866 234,782 5,520 33,253 82,148 21,421 — 58,123 1,188,348 281,983 36,947 1,430 4,373 36,116 (56,811) 1,492,386 107,184 (28,458) (1,319) 33 (3,259) 8,536 (7,416) 75,301 — — — — — — 1,120 1,120 107,184 (28,458) (1,319) 33 (3,259) 8,536 (8,536) 74,181 39
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Consolidating Schedule – Operations and Changes in Net Assets Information
Year ended December 31, 2015
(In thousands)
Obligated Group
Temporarily
Unrestricted
restricted
Excess (deficit) of revenue over expenses
Change in unamortized loss and prior service costs
related to pension and postretirement benefit plans
Net change in unrealized gains and losses on
investments
Restricted contributions and investment income
Capital transactions among affiliates
Distributions
Net assets released from restrictions:
To other operating revenue for operating
expenditures
For the purchase of property, plant, and equipment
Other
$
Increase in net assets
Net assets – December 31, 2014
Net assets – December 31, 2015
$
John Muir
Physician
Network
unrestricted
John Muir
Behavioral
Health
unrestricted
Community
Health
Fund
unrestricted
John Muir Health Foundation
Temporarily
Permanently
Unrestricted
restricted
restricted
107,184 — (28,458) (1,319) 33 (3,259) — — (25,185) — — — — — — — (23,175) — (41,392) — — 425 — — — — 37,140 — — — (201) — — — — — — — 4,453 — (691) 9,628 — — — 1,580 — — — 3,886 2,589 (71) (825) (18) — — — — — — — — — — — (225) (2,945) (3,061) — — — — 23,907 (489) 8,682 (1,520) 33 969 2,931 1,580 1,413,743 1,812 46,856 4,506 1,072 4,889 13,633 6,446 1,437,650 1,323 55,538 2,986 1,105 5,858 16,564 8,026 40
(Continued)
JOHN MUIR HEALTH AND SUBSIDIARIES
Consolidating Schedule – Operations and Changes in Net Assets Information
Year ended December 31, 2015
(In thousands)
Other
Health-related
ventures
unrestricted
Excess (deficit) of revenue over expenses
Change in unamortized loss and prior service costs
related to pension and postretirement benefit plans
Net change in unrealized gains and losses on
investments
Restricted contributions and investment income
Adjustment to net assets from affiliation
Distributions
Net assets released from restrictions:
To other operating revenue for operating expenditures
For the purchase of property, plant, and equipment
Other
$
Increase in net assets
Net assets – December 31, 2014
Net assets – December 31, 2015
$
Consolidated
Health
Noncontrolling
system
interest
Eliminations unrestricted
Unrestricted
Health system
Temporarily
restricted
Permanently
restricted
Noncontrolling
interest
unrestricted
Total
8,536 (8,536) 1,120 74,181 — — 1,120 75,301 — — — (25,185) — — — (25,185) — — — — — — — — — — — (1,085) (23,175) — — — (691) 10,053 — — — 1,580 — — — — — (1,085) (23,866) 11,633 — (1,085) — — (8,237) — — 7,567 — — — — 3,886 1,694 (3,016) (3,886) (18) — — — — — — (3,016) — 1,676 299 (969) 35 31,401 2,442 1,580 35 35,458 15,185 (17,333) 2,064 1,468,918 15,445 6,446 2,064 1,492,873 15,484 (18,302) 2,099 1,500,319 17,887 8,026 2,099 1,528,331 See accompanying independent auditors’ report.
41