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ST. TAMMANY PARISH HOSPITAL SERVICE DISTRICT NO. 1 d/b/a ST. TAMMANY PARISH HOSPITAL Financial Report December 31, 2013 LAPORTE CPA. & BUSINESS ADVISORS

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  • ST. TAMMANY PARISH HOSPITAL SERVICE DISTRICT NO. 1 d/b/a

    ST. TAMMANY PARISH HOSPITAL Financial Report

    December 31, 2013

    LAPORTE CPA. & BUSINESS ADVISORS

  • Contents

    Management's Discussion and Analysis i - viii

    Independent Auditor's Report 1 -3

    Basic Financial Statements

    Statements of Net Position - St. Tammany Parish Hospital 4 - 5

    Statements of Financial Position - St. Tammany Hospital Foundation 6

    Statements of Revenues, Expenses and Changes in Net Position - St. Tammany Parish Hospital 7

    Statements of Activities - St. Tammany Hospital Foundation 8 - 9

    Statements of Cash Flows - St. Tammany Parish Hospital 10-11

    Statements of Cash Flows-St. Tammany Hospital Foundation 12

    Notes to Financial Statements 13 - 42

    Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 43 - 44

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Management's Discussion and Analysis

    This section of St. Tammany Parish Hospital Service District No. 1's annual financial report presents background information and our analysis of the Hospital's financial performance during the fiscal year that ended on December 31, 2013. Please read it in conjunction with the financial statements in this report.

    Overview of the Financial Statements

    The financial statements contain the accounts of St. Tammany Parish Hospital Service District No. 1 of St. Tammany Parish, Louisiana (a nonprofit corporation organized by the St. Tammany Parish Police Jury under provisions of Chapter 10 of Title 46 of the Louisiana Revised Statutes of 1950). The governing authority of St. Tammany Parish Hospital Service District No. 1 (the Hospital) is the St. Tammany Parish Hospital Board of Commissioners. The St. Tammany Parish Council appoints members of the Hospital's Board of Commissioners.

    In accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, The St. Tammany Hospital Foundation (Foundation) is presented as a discretely presented component unit on separate pages of the Hospital's financial statements to emphasize that it is legally separate from the Hospital. The Foundation is a not-for-profit organization supporting the Hospital through fund raising. The Foundation is not included in the following Management's Discussion and Analysis section, but is included in greater detail in the financial statements and footnotes. In addition, St. Tammany Medical Services (STMS), Practice Management Consultants (PMC), St. Tammany Quality Network (STQN), St. Tammany Hospital Foundation (STHF) and St. Tammany Physician Network (STRN) are presented as blended entity component units whose financial activity is included with the activities of the Hospital.

    This annual report consists of three components - the Management's Discussion and Analysis of Financial Condition and Operating Results (this section), the Independent Auditor's Report and the Financial Statements. The Financial Statements of St. Tammany Parish Hospital report the financial position of the Hospital and the results of its operations and its cash flows. The financial statements are prepared on the accrual basis of accounting. These statements offer short-term and long-term financial information about the Hospital's activities.

    The Statements of Net Position include all of the Hospital's assets and liabilities and provides information about the nature and amounts of investments in resources (assets) and the obligations to the Hospital's creditors (liabilities) for both the current year and the prior year. It also provides the basis for evaluating the capital structure of the Hospital, and assessing the liquidity and financial flexibility of the Hospital.

    All of the current year's revenues and expenses are accounted for in the Statements of Revenues, Expenses, and Changes in Fund Net Position. This statement measures the performance of the Hospital's operations over the past two years and can be used to determine whether the Hospital has been able to recover all of its costs through its patient service revenue and other revenue sources.

    The primary purpose of the Statements of Cash Flows is to provide information about the Hospital's cash from operations, investing, and financing activities. The cash flow statements outline where the cash comes from, what the cash is used for and the change in the cash balance during the reporting period.

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Management's Discussion and Analysis

    The annual report also includes Notes to the Financial Statements that are essential to gain a full understanding of the data provided in the Financial Statements. The Notes to the Financial Statements can be found immediately following the basic financial statements in this report.

    Financial Highlights

    The Hospital's change in net position was approximately $15.5 million in 2013 and $13.3 million in 2012. Net Position showed an increase of 8.1% in 2013 and 7.0%, in 2012.

    The assets of the Hospital exceeded liabilities at the close of the 2013 fiscal year by $205.7 million. Of that amount, $146.9 million (unrestricted net position) was available to meet ongoing obligations to the Hospital District's patients and creditors, and $51.1 million was invested in capital assets, net of related debt.

    The assets of the Hospital exceeded liabilities at the close of the 2012 fiscal year by $190.1 million. Of that amount, $139.0 million (unrestricted net position) was available to meet ongoing obligations to the Hospital District's patients and creditors, and $47.3 million was invested in capital assets, net of related debt.

    In 2013, net patient service revenue increased by $8.2 million, or 3.8%, from 2012. In 2012, net patient service revenue increased by $1.2 million, or 0.6%, from 2011. Operating expenses increased by $5.0 million, or 2.4%, in 2013, and $4.0 million, or 2.0%, in 2012. Other revenue (including non-operating revenue) decreased by $.2 million from 2012 to 2013 and increased by $2.8 million from 2011 to 2012. In total, the Hospital experienced an increase in net position of $2.2 million, as compared to the fiscal year 2012 operations.

    Financial Analvsis of the Hospital

    The Statements of Net Position and the Statements of Revenues, Expenses, and Changes in Fund Net Position report information about the Hospital's activities. These two statements report the net position of the Hospital and changes in them. Increases or improvements, as well as decreases or declines in the net position, are indicators of the financial state of the Hospital. Other non-financial factors that should also be considered include changes in economic conditions, population growth (including uninsured and working poor) and new or changed government legislation.

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Management's Discussion and Analysis

    Net Assets

    A summary of the Hospital's Statements of Net Position is presented in the following table:

    Table 1: Condensed Statements of Net Position

    December 31, 2013 2012 2011

    (Dollars in Thousands) Assets:

    Current and other assets $ 212,807 $ 196,337 $ 159,814 Capital assets 97,184 98,473 99,125

    Total assets 309,991 294,810 258,939 Deferred outflows of rescources 956 1,036 1,131

    Total assets and deferred outflows $ 310,947 $ 295.846 $ 260.070

    Liabilities: Long-term debt outstanding $ 71,540 $ 76,730 $ 54,910 Other liabilities 32,700 27,931 27,283

    Total liabilities 104,240 104,661 82,193 Net Position:

    Invested in capital assets, net of related debt 51,065 47,351 45,951

    Restricted 8,694 4,820 6,208 Unrestricted 146,948 139,014 125,718

    Total net position 206,707 191,185 177,877 Total liabilities and net position $ 310,947 $ 295,846 $ 260,070

    III

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Management's Discussion and Analysis

    Summary of Revenues, Expenses, and Changes in Fund Net Position

    The following table presents a summary version of the Hospital's historical revenues and expenses for the years ended December 31, 2013, 2012, and 2011:

    Table 2: Condensed Statements of Revenues, Expenses, and Changes in Fund Net Position

    Years Ended December 31, 2013 2012 2011

    Revenue Net patient service revenue net of provision for

    bad debts of $28,284 in 2013, $19,970 in 2012, and $21,593 in 2011

    Other operating revenue

    (Dollars in Thousands)

    $ 225,195 $ 217,331 $ 216,087 10,530 7,935 7,047

    Total operating revenue 235,725 225,266 223,134

    Expenses Maintenance and operation expenses Depreciation and amortization

    205,612 11,113

    199,995 11,199

    196,946 10,448

    Total operating expenses 216,725 211,194 207,394

    Operating net income 19,000 14,072 15,740

    Investment income and gains and losses Interest expense Loss on disposal of capital assets Other non-operating revenues (expenses)

    (1,520) (2,130)

    1,645 (2,273)

    (112) (165)

    3,814 (2,736)

    Excess of revenues over expenses before capital contributions 15,350 13,167 16,818

    Capital contributions 172 141 129

    Increase in net assets 15,522 13,308 16,947

    Total net position - beginning of year 191,185 177,877 160,930

    Total net position - end of year $206,707 $191,185 $177,877

    IV

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Management's Discussion and Analysis

    The information below summarizes the Hospital's basic Statements of Revenues, Expenses, and Changes in Fund Net Position for 2013 and 2012:

    Operating Revenue

    During fiscal year 2013 and 2012, the Hospital derived approximately 95.9% and 96.5%, respectively, of its total operating revenues from Net Patient Service Revenues. Net Patient Service Revenues include revenues from the Medicare and Medicaid programs, patients, or their third-party carriers who pay for care in the Hospital's facilities.

    The following table represents the relative percentage of gross charges billed for patient services by payor for the fiscal years ended December 31, 2013 and 2012:

    December 31, 2013 2012

    Medicare 34% 33% Medicaid 8% 8% Managed Care and commercial insurance 54% 55% Self-Pay 4% 4%

    Total gross charges 100% 100%

    Operating and Financial Performance

    The highlights of the Hospital's Statements of Revenues, Expenses, and Changes in Fund Net Position from 2012 to 2013 include:

    • During 2013, the Hospital had patient days and admissions of 47,893 and 10,362, respectively. During 2012, the Hospital had patient days and admissions of 49,463 and 11,237, respectively. This is a decrease in patient days of 3.2% and 7.8% in admissions from fiscal year 2012.

    • Observation patient volume increased by 272 patients or 8.3% over 2012. Net "Bedded Patients" {inpatient plus observation) went from 14,532 in 2012 to 13,929 in 2013 or a "Bedded Patient" decrease of 603 admissions.

    • Outpatient visits (including Home Health, Hospice and Physicians) were 273,507. This is an increase of 5.4% from prior year.

    • Emergency room visits were 1,936, an increase of 5.2% from fiscal year 2012.

    • Net patient service revenue increased $8.2 million, or 3.8%, in 2013.

    • Employee compensation increased $3.3 million, an increase of 2.9%.

    • Supplies and other professional services increased approximately 2.1%.

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Management's Discussion and Analysis

    The following summarizes the Hospital's Statements of Revenues, Expenses, and Changes in Fund Net Position from 2011 to 2012:

    • During 2012, the Hospital had patient days and admissions of 49,463 and 11,237, respectively. During 2011, the Hospital had patient days and admissions of 50,211 and 11,552, respectively. This is a decrease in patient days of 3.2% and 2.6% in admissions from fiscal year 2011.

    • Observation patient volume decreased by 140 patients or 4.1% over 2011. Net "Bedded Patients" (inpatient plus observation) went from 14,687 in 2011 to 14,490 in 2012 or a "Bedded Patient" growth of 197 admissions.

    • Outpatient visits (including Home Health, Hospice and Physicians) were 249,652. This is an increase of 2.3% from prior year.

    • Emergency room visits were 34,307, an increase of 2.5% from fiscal year 2011.

    • Net patient service revenue increased $12.1 million, or 5.9%, in 2012.

    • Employee compensation increased $4.2 million or 3.9% to reflect merit increases driven by market adjustments for professional staff and to address the competitive nursing market and rising health insurance costs.

    • Supplies and other professional services increased approximately 9.0%, which was materially related to rising costs in drugs.

    2013 Budget to Actual Comparison (in Thousands)

    In comparing actual results of operations versus budgeted 2013 results, the following is noted:

    Revenues: Net patient service revenue net of provision for

    bad debts of $20,389 budget and $28,284 actual Other operating revenue

    Total revenues

    Operating expenses: Salaries, wages, and benefits Supplies and other Professional and contractual services Depreciation and amortization

    Total operating expenses

    Non-operating income/(expenses), net

    Excess of revenues over expenses

    For the Years Ended December 31, Favorable

    Budget 2013

    Actual 2013

    (Unfavorable) Variance

    $ 219,521 4,755

    $ 225,195 10,530

    $ 5,674 5,775

    224,276 235,725 11,449

    114,237 75,273 15,031 10,971

    115,522 73,824 16,266 11,113

    (1,285) 1,449

    (1,235) (142)

    215,512 216,725 (1,213)

    (189) (3,650) (3,461)

    $ 8.575 $ 15.350 $ 6.775

    VI

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Management's Discussion and Analysis

    The Hospital's Cash Flows

    Changes in the Hospitai's cash flows as illustrated in the Statements of Cash Flows appearing on page 10 are generally consistent with changes in operating gains and non-operating revenues and expenses, as discussed earlier. Overall cash and cash equivalents increased in 2013.

    Capital Assets

    The table below details the changes in the Hospital's capital assets during the year ended December 31, 2013:

    Capital Assets (in Thousands)

    December 31, Dollar Percent 2013 2012 Change Change

    Land and improvements $ 8,496 $ 8,684 $ (188) -2% Buildings 105,143 103,887 1,256 1% Equipment 103,870 96,376 7,494 8% Construction in progress 2,765 3,892 (1,127) -29%

    Subtotal 220,274 212,839 7,435 3%

    Less: accumulated depreciation and amortization (123,090) (114,366) (8,724) 8%

    Property, plant and equipment, net $ 97,184 $ 98,473 $ (1.289) -1%

    • Net Property, Plant, and Equipment decreased by approximately $1.3 million during 2013. Expenditures of $3.5 million are related to expansion and enhancement projects of the physical buildings. Expenditures of $11.3 million are related to replacement of routine equipment and enhancement of information systems.

    • Net Property, Plant, and Equipment increased by approximately $.6 million during 2012. Expenditures of $2.5 million are related to expansion and enhancement projects of the physical buildings. Expenditures of $8.9 million are related to replacement of routine equipment and enhancement of information systems.

    Projected Capital Expenditures for FY 2014

    The Hospital projects spending $16.7 million on capital projects during FY 2014. This amount is expected to be financed from operations, with exception to $7.5 million. These funds are related to the Hospital's Emergency room expansion and will be funded from the bond issue entered into at the end of 2012.

    VII

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Management's Discussion and Analysis

    Debt Administration

    2013 Long-Term Debt

    At year-end, the Hospital had $66 million in long-term debt. Total long-term debt represents 63.7% of the Hospital's total liabilities as of year-end.

    2012 Long-Term Debt

    At year-end, the Hospital had $71.5 million in long-term debt. Total long-term debt represents 68.4% of the Hospital's total liabilities as of year-end. During 2012, the Hospital incurred $24.8 million of additional debt to fund an expansion of the Emergency Room.

    Economic Factors and Next Year's Budget

    The Hospital's Board and Management considered many factors when setting the fiscal year 2014 budget. Of primary importance in setting the 2014 budget is the status of the economy, which takes into account market forces and environmental factors such as:

    Medicare reimbursement changes and reductions Medicaid reductions Increased number of uninsured and working poor Workforce shortages Cost of supplies Cost of drugs Increased competition in the marketplace

    Contacting the Hospital Financial Manager

    This financial report is designed to provide our citizens, customers, and creditors with a general overview of the Hospital's finances. If you have any questions about this report or need additional financial information, please contact the Chief Financial Officer, St. Tammany Parish Hospital, 1202 8. Tyler Street, Covington, LA 70433.

    VIM

  • '^TAPORTE LaPorte, APAC 111 Veterans Blvd. I Suite 600 CP*.« BUSINESS Aovisofls Metairic, LA 70005

    504.835.5522 I Fax 504.835.5535 LaPorte.com

    Independent Auditor's Report

    To the Board of Commissioners St. Tammany Parish Hospital Service District No. 1 St. Tammany Parish, Louisiana

    Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities and the discretely presented component unit of St. Tammany Parish Hospital Service District No. 1 of St. Tammany Parish, Louisiana (St. Tammany Parish Hospital) as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise St. Tammany Parish Hospital's basic financial statements as listed in the table of contents. We have also audited the accompanying financial statements of the business-type activities of St. Tammany Parish Hospital Service District No.1 of St. Tammany Parish, Louisiana (St. Tammany Parish Hospital) as of and for the year ended December 31, 2012, and the related notes to the financial statements, which collectively comprise St. Tammany Parish Hospital's basic financial statements as listed in the table of contents.

    Management's Responsibility for the Financiai Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are fee from material misstatement, whether due to fraud or error.

    Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.

    An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

    NEW ORLEANS HOUSTON BATON ROUGE COVINGTON

    An Independently Owned Member, McGladrey Alliance Tlie McGladrey Alliance is a pfemier affiliaticxi of independent accounting and consuiSng firms. The McGladrey Alliance member firms maintan their name, autonomy aid independence and are responsible for their own client fee arrangements, delivery of services end maintenance of client relationsnips.

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

    Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of St. Tammany Parish Hospital as of December 31, 2013 and 2012, and the changes in its financial position and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

    Other Matters

    Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information on pages i through viii be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

    Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 24,2014, on our consideration of St. Tammany Parish Hospital's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audits.

    Other Information As stated in Note 1 to the financial statements, management of St. Tammany Parish Hospital determined in 2013, during their annual evaluation of potential component units, that the St. Tammany Parish Hospital Foundation met the criteria under Governmental Accounting Standards Board Statement No. 39 for inclusion as a discretely presented component unit and has been included as such in the basic financial statements as of and for the years ended December 31, 2013 and 2012. Our opinions on the basic financial statements are not modified for this matter.

  • The financial statements of St. Tammany Parish Hospital Foundation, as of and for the year ended December 31, 2012, were reviewed by us and our report thereon, dated April 19, 2013, stated that, based on our review, we were not aware of any material modifications that should be made to those financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. However, a review is substantially less in scope than an audit and does not provide a basis for the expression of an opinion on the financial statements.

    A Professional Accounting Corporation

    Metairie, l_A March 24, 2014

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Statements of Net Position December 31, 2013 and 2012 (In Thousands)

    2013 2012 Assets and deferred outflows of resources Current assets:

    Cash and cash equivalents $ 69,056 $ 44,570 Investments 63,006 64,754 Noncurrent cash and investments required for

    current liabilities 6,370 6,144 Patient accounts receivable, net of allowance for

    doubtful accounts of $23,122 in 2013 and $22,951 in 2012 25,725 31,408

    Inventories 5,360 4,906 Prepaid expenses and other receivables 3,135 3,572

    Total current assets 172,652 155,354

    Noncurrent cash and investments: Held by trustee under Construction Fund 20,557 21,180 Held by trustee under bond indenture 3,906 3,392 Held by trustee under bond ordinances 7,994 7,994 Designated by board for capital improvements.

    and facility enhancements 10,500 11,297 Designated by board for Community ER Services 1,042 1,038 Held by others for professional and other liability

    claims 700 700 44,699 45,601

    Less: noncurrent cash and investments required for current liabilities (6,370) (6,144)

    Total noncurrent cash and investments 38,329 39,457

    Capital assets: Land and improvements 8,496 8,684 Buildings 105,143 103,887 Equipment 103,870 96,376 Construction in progress 2,765 3,892 Less: accumulated depreciation and amortization (123,090) (114,366)

    Total capital assets, net 97,184 98,473

    Other assets 1,826 1,526

    Total assets 309,991 294,810

    Deferred outflows of resources Loss on advance refunding, net of accumulated

    amortization of $1,235 and $1,155, respectively 956 1,036

    Total assets and deferred outflows of resources $ 310,947 $ 295,846

    See notes to financial statements.

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Statements of Net Position (Continued) December 31, 2013 and 2012 (in Thousands)

    Liabiiities and net position 2013 2012

    (Restated) Current iiabiiities:

    Accounts payable and accrued expenses Accrued employee compensation Accrued vacation Settlements due to Medicare and Medicaid

    intermediaries Amounts due within one year on long-term debt

    $ 10,481 8,885 4,076

    6,229 5,605

    $ 7,450 8,501 3,895

    5,117 5,190

    Total current iiabiiities 35,276 30,153

    Accrued professional iiabiiity claims 2,523 2,625

    Other long-term iiabiiities 506 343

    Long-term debt, net of current maturities 65,935 71,540

    Total iiabiiities 104,240 104,661

    Net position: Net investment in capital assets Restricted for debt service Unrestricted

    51,065 8,694

    146,948

    47,351 4,820

    139,014 Total net position 206,707 191,185

    Total iiabiiities and net position $ 310,947 $ 295,846

    See notes to financial statements.

  • St. Tammany Hospital Foundation Statements of Financial Position December 31, 2013 and 2012

    2013 Audited

    2012 Reviewed

    Assets Cash and Cash Equivalents $ 3,665,606 $ 3,017,988 Certificates of Deposit 1,018,585 1,017,131 Restricted Cash - Donor Endowment Funds 201,440 192,475 interest Receivable 573 876 Pledges Receivable, Net of Allowance of $11,335 and

    $59,360, as of December 31, 2013 and 2012, Respectively 744,218 309,591 Other Receivable 392 113 Marketable Securities 104,165 97,183 interest in Charitable Remainder Trust 199,161 202,087 Other Assets 191,100 243,990

    Total Assets $ 6.125.240 $ 5,081,434

    Liabilities and Net Assets Liabilities

    Annuities Payable $ 80,043 $ 71,417

    Total Liabilities 80,043 71,417

    Net Assets Unrestricted

    Undesignated 145,914 250,077 Board Designated-Endowment 2,009,708 1,923,086

    Temporarily Restricted 3,688,135 2,644,379 Permanently Restricted 201,440 192,475

    Total Net Assets 6,045,197 5,010,017

    Total Liabilities and Net Assets $ 6,125,240 $ 5,081,434

    See notes to financial statements.

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Statements of Revenues, Expenses and Changes in Net Position Years Ended December 31, 2013 and 2012 (in Thousands)

    2013 2012

    Operating revenues: Net patient service revenue, net of provision for

    bad debts of $28,284 in 2013 and $19,970 in 2012

    Other revenue $ 225,195

    10,530 $ 217,331

    7,935 Total operating revenues 235,725 225,266

    Operating expenses: Salaries, wages and benefits Supplies and other Professional and contractual services Depreciation and amortization

    115,522 73,824 16,266 11,113

    111,750 73,139 15,106 11,199

    Total operating expenses 216,725 211,194

    income from operations 19,000 14,072

    Non-operating revenues (expenses): Investment income and gains and losses Interest expense Loss on disposal of capital assets Other non-operating revenues (expenses)

    (1,520) (2,130)

    1,645 (2,273)

    (112) (165)

    Total non-operating revenues (expenses) (3,650) (905)

    Excess of revenues over expenses before capital contributions

    Capital contributions 15,350

    172 13,167

    141

    Change in net position 15,522 13,308

    Net position: Beginning of year, as previously reported 191,185 178,661

    Cumulative effect of change from adoption of Accounting principle (784)

    Net position, beginning of year as restated 191,185 177,877

    Ending $ 206,707 $ 191,185

    See notes to financial statements.

  • St. Tammany Hospital Foundation Statement of Activities For the Year Ended December 31, 2013

    Unrestricted Temporarily Permanently Restricted Restricted

    A udited

    Total

    Revenues, Gains and Other Support Contributions Uncollectible Pledge Provision Interest and Dividends Investment Gains and Losses, Net Change in Value of

    Split-Interest Agreements Net Asset Reclassification Net Assets Released from Restrictions

    $ 48,442 (55,063)

    8,711 52,811

    (891) (564)

    679,828

    $ 1,727,015

    (3,995) 564

    (679,828)

    $ 8,965 $ 1,784,422 (55,063)

    8,711 52,811

    (4,886)

    Total Revenues, Gains and Other Support 733,274 1,043,756 8,965 1,785,995

    Expenses Program Services

    Contributions Awarded/Distributed 750,815 750,815

    Total Expenses 750,815 750,815

    Change in Net/tesets (17,541) 1,043,756 8,965 1,035,180

    Net /tesets. Beginning of Year 2,173,163 2,644,379 192,475 5,010,017

    Net tesets. End of Year $ 2,155,622 $ 3,688,135 $ 201,440 $ 6,045,197

    See notes to financial statements.

  • St. Tammany Hospital Foundation Statement of Activities For the Year Ended December 31, 2012

    Temporarily Permanently Unrestricted Restricted Restricted

    Reviewed Total

    Revenues, Gains and Other Support Contributions Uncollectible Pledge Provision Interest and Dividends Investment Gains and Losses, Net Change in Value of

    Split-Interest Agreements Net Asset Reclassification Net Assets Released from Restrictions

    $ 42,048 (52,545) 12,186

    7,233

    (830) (48)

    617,890

    $1,104,013

    12,577 48

    (617,890)

    $ 3,567 $ 1,149,628 (52,545) 12,186 7,233

    11,747

    Total Revenues, Gains and Other Support 625,934 498,748 3,567 1,128,249

    Expenses Program Services

    Contributions Awarded/Distributed 618,222 618,222

    Total Expenses 618,222 618,222

    Change in Net Assets 7,712 498,748 3,567 510,027

    Net Assets, Beginning of Year 2,165,451 2,145,631 188,908 4,499,990

    Net Assets, End of Year $2,173,163 $2,644,379 $ 192,475 $5,010,017

    See notes to financial statements.

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Statements of Cash Flows Years Ended December 31, 2013 and 2012 (In Thousands)

    2013 2012

    (Restated) Cash flows from operating activities:

    Cash received from patient seivices Cash paid to or on behalf of employees Cash paid for supplies and seivices

    Net cash provided by operating activities

    Cash flows from capital and related financing activities: Capital contributions Purchase of capital assets Proceeds from the sale of capital assets Principal payments on long-term debt Debt proceeds Interest payments

    Net cash (used in) provided by capital and related financing activities

    Cash flows from investing activities: Proceeds from sale and maturities of investments

    and noncurrent cash equivalents Purchases of investments and noncurrent cash equivalents Investment interest received

    Net cash provided by (used in) investing activities

    Increase in cash and cash equivalents

    241,595 (114,456) (87,504) 39,634

    172 (9,526)

    859 (5,189)

    (2.051)

    (15,735)

    19,113 (21,763)

    3,237 587

    226,946 (111,124) (89,945) 25,877

    141 (10,660)

    (3,200) 24,850 n,463)

    9,668

    39,008 (49,466)

    1,826 (8,632)

    24,486 26,913

    Cash and cash equivalents: Beginning Ending

    44,570 $ 69,056

    17,657 44,570

    See notes to financial statements.

    10

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Statements of Cash Flows (Continued) (In Thousands) Years Ended December 31, 2013 and 2012

    2013 2012 (Restated)

    Reconciliation of income from operations to net cash provided by operating activities Income from operations $ 19,000 $ 14,072

    Adjustments to reconcile income from operations to net cash provided by operating activities

    Provision for bad debts Depreciation and amortization Gain on sale of capital assets Changes in operating assets and liabilities:

    Patient accounts receivable Inventories, prepaid expenses and other receivables Other assets Accounts payable and accrued expenses Accrued employee compensation and vacation Net settlements due to Medicare and Medicaid

    intermediaries Other long-term liabilities Other Accrued professional liability claims

    Net cash provided by operating activities

    28,284 19,970 11,113 11,199 (425) -

    (22,801) (18,464) (80) (419) (300) (249) 2,905 (1,257) 585 626

    1,112 174 183 134 - (165)

    (102) 256 $ 39,834 $ 25,877

    See notes to financial statements.

    11

  • St. Tammany Hospital Foundation Statement of Cash Flows For the Years Ended December 31, 2013 and 2012

    2013 Audited

    2012 Reviewed

    Cash Flows from Operating Activities Changes in Net Assets Adjustments to Reconcile Changes in Net Assets to Net Cash

    Provided by Operating Activities

    $ 1,035,180 $ 510,027

    Provision for Uncollectible Pledges 55,063 52 ,545 Unrealized and Realized Gains, Net (12,771) (7 ,233) Stock Donation (136,691) (16 ,143) interest Reinvested (4,211) (1 ,787) Gain on Sale of Land (35,688) -

    (increase) Decrease in: Pledge Receivables (489,690) 337 interest Receivable 303 5 ,516 Other Receivable (279) 47 Assets Held in Charitable Remainder Trusts 2,926 (13 ,701)

    increase in: Change in Present Value of Gift Annuities 16,378 1 ,883

    Net Cash Provided by Operating Activities 430,520 531 ,491

    Cash Flows from Investing Activities Proceeds from Sale of Investments 146,691 27 ,702 Proceeds from Sale of Other Assets 88,578 -Net increase in Certificates of Deposit (1,454) (5 ,679)

    Net Cash Provided by Investing Activities 233,815 22 ,023

    Cash Flows from Financing Activities Beneficiary Distributions for Gift Annuities (7,752) (7 ,752) Increase in Cash Restricted for Donor Endowment Funds (8,965) (3 ,567)

    Net Cash Used In Financing Activities (16,717) (11 ,319)

    Net Increase In Cash and Cash Equivalents 647,618 542 ,195

    Cash and Cash Equivalents, Beginning of Year 3,017,988 2,475 ,793

    Cash and Cash Equivalents, End of Year $ 3,665,606 $ 3,017 ,988

    See notes to financial statements.

    12

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 1. Organization and Significant Accounting Policies

    Nature of Business:

    St. Tammany Parish Hospital (the Hospital) is owned and operated by St. Tammany Parish Hospital Service District No. 1 of St. Tammany Parish, Louisiana (a nonprofit corporation organized by the St. Tammany Parish Police Jury under provisions of Chapter 10 of Title 46 of the Louisiana Revised Statutes of 1950). The Hospital is exempt from federal income taxes under Section 115 of the Internal Revenue Code. The governing authority of St. Tammany Parish Hospital Service District No. 1 (the District) is the St. Tammany Parish Hospital Board of Commissioners. The St. Tammany Parish Council appoints members of the Hospital's Board of Commissioners.

    The Hospital and its blended component units provide primary and secondary health care services through the operation of an acute care hospital, clinics and other comprehensive health care programs. Patients are primarily from St. Tammany Parish.

    The consolidated financial statements of the District include the Hospital and the following blended component units: St. Tammany Medical Services (STMS), Practice Management Consultants (PMC), St. Tammany Quality Network (STQN), St. Tammany Hospital Foundation (STHF) and St. Tammany Physician Network (STRN). STMS, PMC and STPN are corporations, which are wholly owned by the Hospital. STMS, PMC and STPN are not exempt from federal taxation. No income taxes were paid or owed for the years ended December 31, 2013 and 2012, by STMS, PMC or STPN.

    Practice Management Consultants (PMC) was formed in 2010 to provide a variety of management services to physicians. As of December 31, 2013, activity by PMC was not a material part of hospital operations.

    Effective January 10, 2013, St. Tammany Quality Network, L.L.C. was formed. The Operating Agreement of the L.L.C. provides that: (i) the Company was formed to clinically integrate with the Hospital to provide quality, cost effective healthcare to the area and community that the Company and the Hospital serve; (ii) the Hospital has joined the L.L.C. as a Class B member; and, (iii) the Hospital's capital contribution is $50,000; however, the Hospital is obligated to fund all costs associated with starting up the Company.

    St. Tammany Parish Hospital Foundation (the Foundation) is a legally separate, tax exempt, discretely presented component unit of the District. The Foundation was formed to, among other things, sustain the healing work of the physicians and staff of St. Tammany Parish Hospital. The Board of the Foundation is self-perpetuating and consists primarily of citizens of St. Tammany Parish. Although the Hospital does not control the timing or amount of receipts from the Foundation, the majority of resources, or income thereon, which the Foundation holds are contributed to the Hospital. Because these resources held by the Foundation have historically been for the benefit of the Hospital and these resources have grown in significance, the Foundation is considered a component unit of the District and is discretely presented in the these financial statements. Individual financial statements can be obtained from the Foundation's office at 1202 South Tyler Street Covington, LA 70433. See Note 13 for further details.

    13

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 1. Organization and Significant Accounting Policies

    In years prior to 2013 the Foundation's resources were not deemed significant to those of the District and the Foundation was not considered a component unit. However, upon the reevaluation in 2013, the 2012 net assets and activities of the Foundation have been included in these financial statements for comparative purposes.

    Significant Accounting Policies:

    Basis of Presentation: Basis of presentation: The financial statements include all funds of the above mentioned entities. The Hospital does not have any other component units, agencies or organizations for which it is financially accountable under criteria set forth by the Governmental Accounting Standards Board (GASB), other than the Foundation which is discretely presented in these financial statements.

    The Foundation reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.

    The Foundation's contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions.

    Accounting Standards: The Hospital follows Governmental Accounting Standards Board (GASB) statement No. 62, Codification of Accounting and Financiai Reporting Guidance Contained in Pre-November 30, 1989 Financiai Accounting Standards Board (FASB) and American institute of Certified Pubiic Accountants (AiCPA) Pronouncements. GASB No. 62 incorporates into GASB's authoritative literature certain accounting and financial reporting guidance that is included in the following pronouncements issued on or before November 30, 1989, which does not conflict with or contradict GASB pronouncements: FASB Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins of the AICPA Committee on Accounting Procedure.

    Significant New Pronouncements adopted In 2012, the Hospital adopted GASB No. 63, Financiai Reporting of Deferred Outfiows of Resources, Deferred inflows of Resources, and Net Position. This statement specifies where deferred outflows of resources and deferred inflows of resources, as well as assets and liabilities, should be displayed. It also specifies that net assets will no longer be displayed, replacing that categorization with the term net position. The effect to the Hospital's financial statements was such that its balance sheet was re-titled statement of net position, and that any reference to net assets is now replaced with the term net position.

    14

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 1. Organization and Significant Accounting Policies (Continued)

    In 2013, the Hospital adopted GASB Statement No. 61, The Financial Reporting Entity: Omnibus - an amendment of GASB Statements No. 14 and No. 34 (Issued November 2010). This statement modifies certain requirements for inclusion of component units in the financial reporting entity, amends the criteria for reporting component units as if they were part of the primary government (that is, blending) in certain circumstances and clarifies the reporting of equity interests in legally separate organizations. The adoption of this statement has not had an affect on the financial statements.

    In 2013, the Hospital adopted the provisions of GASB No. 65 Items Previously Recorded as Assets and Liabilities. This statement reclassifies certain items that were previously reported as assets and liabilities as deferred outflows of resources, deferred inflows of resources, or current period outflows and inflows. As a result of adoption of GASB 65 the Hospital derecognized bond issuance costs previously capitalized in the period incurred through the adjustment of previously reported net position as of December 31, 2011. Additionally the unamortized loss on advance refunding of debt has been reclassified from a reduction in the outstanding long term debt on the statement of net position (contra-liability) to a deferred outflow of resources. See note 16.

    The Foundation is a private nonprofit organization that reports under Financial Accounting Standards Board (FASB) standards, including FASB Accounting Standards Codification 958, Not-for-Profit Entities. As such, certain revenue recognition criteria and presentation feature modifications are different from GASB revenue recognition criteria and presentation features. No modifications have been made to the Foundation's financial information in the Hospital's financial reporting entity for these differences.

    Accounting Estimates: The preparation of 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 financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period.

    Actual results could differ from those estimates. Due to uncertainties inherent in the estimation and assumption process, it is at least reasonably possible that changes in estimates and assumptions in the near term would be material to the financial statements. Estimates that are particularly susceptible to significant changes in the near term and which require significant judgments by management include the allowances for doubtful accounts and contractual adjustments, third-party payor settlements, liabilities for self-insurance, and the depreciable lives of property and equipment.

    Cash and Cash Equivalents: Cash and cash equivalents include investments in highly liquid debt instruments and money market accounts with an original maturity of three months or less when purchased and exclude amounts whose use is limited by board designation or under bond requirements.

    15

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 1. Organization and Significant Accounting Policies (Continued)

    Inventories: Inventories are valued at the most recent invoice price. This method approximates the lower of cost (first-in, first-out method) or market.

    Investments: Investments include investments in certificates of deposit, U.S. Government and federal agency securities and external investment pools and are stated at fair market value. Interest, dividends, and gains and losses, both realized and unrealized, on investments are included in non-operating revenue when earned. During 2013, the net decrease in fair value of the Hospital's investments, included in investment income was $3.4 million. During 2012, the net decrease in fair value of the Hospital's investments, included in investment income was $647,000.

    Real Estate Held: Investment property is comprised of land donated to the Foundation. These assets are recorded at fair market value at the time of the donation.

    Capital Assets: The Hospital's capitalization policy requires the recordation at acquisition cost (or fair value at the date of donation, if donated) of individual long-lived assets in excess of $500. The policy provides for depreciation using the straight-line method in amounts sufficient to amortize the cost of its assets over their estimated useful lives. Estimated useful lives for buildings are 15 to 40 years, and 3 to 25 years for equipment. Assets held under capital lease obligations are recorded at the present value of the minimum lease payments and are included in equipment. Amortization of leased assets is included in the Statements of Revenue, Expenses, and Changes in Net Assets as Depreciation and amortization expense.

    Net Position: In accordance with Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as amended, net position is classified into three components - net investment in capital assets, restricted; and unrestricted. These classifications are defined as follows:

    Net investment in Capital Assets This component of net position consists of the historical cost of capital assets, including any restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowing that are attributable to the acquisition, construction, or improvement of those assets plus deferred outflows of resources less deferred inflows of resources related to those assets.

    Restricted This component of net position consists of assets that have constraints that are externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.

    16

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 1. Organization and Significant Accounting Policies (Continued)

    Unrestricted All other net position is reported in this category.

    Operating Revenues and Expenses: The Hospital's Statements of Revenues, Expenses and Changes in Fund Net Position distinguish between operating and non-operating revenues and expenses. Operating revenues result from exchange transactions associated with providing health care services - the Hospital's principal activity. Non-exchange revenues, including grants and contributions received for purposes other than capital asset acquisition, are reported as non-operating revenues. Operating expenses are all expenses incurred to provide health care services, other than financing costs.

    Incentive Revenue - Electronic Health Records: The electronic health records incentive program, enacted as part of the American Recovery and Reinvestment Act of 2009, provides for incentive payments under both the Medicare and Medicaid programs to eligible health care entities that demonstrate meaningful use of certified electronic health records (EHR) technology. Payments under both the Medicare and Medicaid programs will be contingent upon the Hospital initially attesting to being a meaningful user of EHR technology and then continuing to meet escalating criteria, including other specific requirements that are applicable, for consecutive reporting periods. The final amount for any payment year is determined based upon an audit by the fiscal intermediary. As of December 31, 2013, the Hospital has initially attested to Phase 1 of their being a meaningful user of EHR technology. As a result of this attestation, the Hospital received $2,400,000 of payments which are included in Other revenue on the Statements of Revenues, Expenses, and Changes in Fund Net Position.

    Statements of Revenues. Expenses, and Changes in Net Position: All revenues and expenses directly related to the delivery of health care services are included in operating revenues and expenses in the Statements of Revenues, Expenses and Changes in Net Position, respectively. Non-operating revenues and expenses consist of those revenues and expenses that are related to financing and investing types of activities and result from non-exchange transactions or investment income.

    Net Patient Service Revenue and Related Receivables: Net patient service revenue and the related accounts receivable are reported at the estimated net realizable amounts from patients, third-party payors, and others for services rendered. The Hospital provides care to patients even though they may lack adequate insurance or may be covered under contractual arrangements that do not pay full charges. As a result, the Hospital is exposed to certain credit risk. The Hospital manages such risk by regularly reviewing its accounts and contracts, and by providing appropriate allowances.

    Patient Receivables: Patient receivables, where a third-party payor is responsible for paying the amount, are carried at a net amount determined by the original charge for the services provided, less an estimate made for contractual adjustments or discounts provided to third-party payors.

    17

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 1. Organization and Significant Accounting Policies (Continued)

    Patient receivables due directly from the patients, net of any third-party payor responsibility, are carried at the original charge for the service provided less an estimated allowance for doubtful accounts. Management determines the allowance for doubtful accounts by identifying troubled accounts and by historical experience applied to an aging of accounts. The Hospital does not charge interest on patient receivables. Patient receivables are written off as bad debt expense when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense when received. Provision for bad debts was approximately $28,284,000 and $19,970,000 for the years ended December 31, 2013 and 2012, respectively.

    Medicare and Medicaid Reimbursement Programs: The Hospital is reimbursed under the Medicare Prospective Payment System (PPS) for acute care inpatient services provided to Medicare beneficiaries and is paid a predetermined amount for these services based, for the most part, on the MS-Diagnosis Related Group (MS-DRG) assigned to the patient.

    During 2013, the State outsourced part of the Medicaid program to third parties. The Hospital entered into contracts with the various Managed Medicaid providers. These contracts reimburse the Hospital using the same methodology of the State run program. In all cases the Hospital is paid a prospective per diem rate for Medicaid and Managed Medicaid inpatients. The per diem rate is based on a peer grouping methodology, which assigns a per diem rate to each hospital in the peer group.

    Home health services rendered to Medicare beneficiaries are reimbursed under a per-episode prospective payment system. Outpatient services rendered to Medicare beneficiaries are reimbursed by the Outpatient Prospective Payment System (OPPS), which establishes a number of Ambulatory Payment Classifications (APC) for outpatient procedures in which the Hospital is paid a predetermined amount per procedure.

    Medicaid outpatient services are reimbursed based on cost reimbursement and fee schedule limitations. The cost-based rates are subject to retroactive adjustments. Both Medicare and Medicaid outpatient clinical lab and Medicaid ambulatory surgery services are reimbursed based upon the respective fee schedules.

    Retroactive cost settlements based upon annual cost reports are estimated for those programs subject to retroactive settlement and recorded in the financial statements. Final determination of retroactive cost settlements to be received under the Medicare and Medicaid regulations is subject to review by program representatives. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in a future period as final settlements are determined or determinable. Adjustments to estimated settlements resulted in an increase to net patient service revenue of $1,134,000 and $852,000, in 2013 and 2012, respectively.

    18

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 1. Organization and Significant Accounting Policies (Continued)

    Grants and Contributions: From time to time, the Hospital receives grants from the State of Louisiana, as well as contributions from individuals and private organizations. Revenues from grants and contributions (including contributions of capital assets) are recognized when all eligibility requirements, including time requirements, are met. Grants and contributions may be restricted for either specific operating purposes or for capital purposes. Grants unrestricted as to their use or that are restricted to a specific operating purpose are reported as non-operating revenues. Amounts restricted to capital acquisitions are reported as Capital contributions on the Statement of Revenues, Expenses, and Changes in Net Position.

    The Foundation reports contributed support as unrestricted or restricted depending on the existence of donor stipulations that limit the use of the support.

    Foundation contributions that are restricted by the donors are reported as increases in unrestricted net assets if the restrictions expire in the reporting period in which the contributions are recognized. All other donor restricted contributions are reported as increases in temporarily or permanently restricted net assets, depending on the nature of the restrictions.

    When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

    Donated Assets: Donated marketable securities and other noncash donations are recorded as contributions at their fair values at the date of donation.

    Restricted Resources: When the Hospital has both restricted and unrestricted resources available to finance a particular program, it is the Hospital's policy to use restricted resources before unrestricted resources.

    Charitv Care: The Hospital provides care to patients who meet certain criteria under its charity care policy without charge or at amounts less than its established rates. Because the Hospital does not pursue collection of amounts determined to qualify as charity care, they are not reported as revenue. The Hospital maintains records to identify and monitor the level of charity care it provides to all of its qualifying patients. These records include the amount of charges foregone for services and supplies furnished under its charity care policy. The Hospital provided charity care of approximately $6,141,000 and $5,476,000, for the years ended December 31, 2013 and 2012, respectively, based upon charges foregone using established rates.

    19

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 1. Organization and Significant Accounting Policies (Continued)

    Deferred Outflow of Resources - Unamortized Loss on Advance Refunding: In prior years, the Hospital incurred losses in connection with the advance refundings of the Hospital's revenue bonds which have been deferred and are being amortized over the life of the refunded bond issue. Accumulated amortization on this deferred loss was approximately $1,235,000 and $1,155,000, at December 31, 2013 and 2012, respectively, and is included in Interest expense on the Statement of Revenues, Expenses, and Changes in Fund Net Position.

    Emplovee Health and Workers' Compensation Insurance: The Hospital is self-insured for hospitalization and workers' compensation claims. Estimated amounts for claims incurred but not reported are calculated based on claims experience and, together with unpaid claims, are included in Accrued employee compensation and Accounts payable and Accrued expenses, respectively, on the Statements of Net Position.

    Note 2. Deposits and Investments

    Hospital Louisiana statutes require that all of the Hospital's deposits be protected by insurance or collateral. The market value of collateral pledged must equal, at least,100% of the deposits not covered by insurance. As of December 31, 2013 and 2012, the Hospital's bank balances (including cash, money market accounts and certificates of deposit) were entirely insured or collateralized by investments held by the Hospital's third-party agent in the Hospital's name.

    The Hospital's investments generally are reported at fair value, as discussed in Note 1.

    At December 31, 2013 and 2012, the Hospital had the following investments and maturities, all of which were held in the Hospital's name by a custodial bank or trust that is an agent of the Hospital.

    December 31, 2013

    Investment Type

    Investment Maturities (in Years) Carrying Less Than Amount 1 1-5 >5

    (amounts in thousands)

    Federal Farm Credit Bureau $ 18,991 $ - $ 13,194 $ 5,797 Federal Home Loan Bank 9,635 3,081 1,951 4,603 Federal Home Loan Mortgage Corporation 6,998 - 5,957 1,041 Federal National Mortgage Association 27,801 1,002 13,317 13,482

    Government National Mortgage Association 582 - 470 112 Federal Agricultural Mortgage Corporation 2,961 - - 2,961 Other Taxable Bonds 3,646 258 2,685 703

    Total $ 70,614 $ 4,341 $ 37,574 $ 28,699

    20

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 2. Deposits and Investments (Continued)

    December 31, 2012

    Investment Type Carrying Amount

    Investment Maturities (in Years) Less Than

    1 1 -5 >5

    Federal Farm Credit Bureau Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal Agricultural Mortgage Corporation Federal National Mortgage Association

    Total

    22,906 11,233 10,039 25,373 3,496

    (amounts in thousands)

    2,036 9,595 4,230 4,021

    11,114

    13,311 4,967 6,018

    14,259 3,496

    $ 73,047 $ 2,036 $ 28,960 $ 42,051

    Credit Risk: The Hospital may invest idle funds as authorized by Louisiana Statutes, as follows:

    a. Direct United States Treasury obligations, the principal and interest of which are fully guaranteed by the government of the United States.

    b. United States government agency obligations, the principal and interest of which are fully guaranteed by the government of the United States, or United States government obligations.

    c. Time certificates of deposit of state banks organized under the laws of Louisiana and national banks having their principal office in the State of Louisiana.

    d. Mutual or trust funds, which are registered with the Securities and Exchange Commission under the Securities Act of 1933, and the Investment Act of 1940, and which have underlying investments consisting solely of and limited to securities of the United States government or its agencies.

    As of December 31, 2013, the Hospital's investments were rated AAA by Standard and Poor's and Fitch Ratings and AA+ by Moody's Investor Services with the exception of the Hospital's investments in Federal Agricultural Mortgage Corporation (FAMCA) securities which are unrated.

    Concentration of Credit Risk: The Hospital places no limit on the amount it may invest in any one issuer. Issuers comprising 5 percent or more of the Hospital's investments at December 31, 2013 and 2012, were as follows:

    Issuer 2013 2012 Federal Farm Credit Bureau 27% 31% Federal Home Loan Bank 14% 15% Federal Home Loan Mortgage Corporation 10% 14% Federal National Mortgage Association 39% 35% Federal Agricultural Mortgage Corporation 4% 5%

    21

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 2. Deposits and Investments (Continued)

    The fair values of deposits and investments included in the Hospital's Statements of Net Position as of December 31, 2013 and 2012, are as follows:

    2013 2012 Carrying amount

    Deposits Investments

    Included in the following captions

    Current assets: Cash and cash equivalents Investments Noncurrent cash and investments required for current liabilities

    Noncurrent cash and investments: Under bond indenture held by Trustee Under bond indenture held by Trustee Under bond ordinances held by Trustee By board for capital improvements, and facility enhancements

    By board for Community ER Services By others for professional and other liability claims

    Less: amount required for current liabilities

    $ 103,255 $ 78,874 73,506 76,051

    $ 176,761 $ 154,925

    $ 69,056 $ 44,570 63,006 64,754

    6,370 6,144

    20,557 21,180 3,906 3,392 7,994 7,994

    10,500 11,297 1,042 1,038

    700 700 (6,370) (6,144)

    $ 176,761 $ 154,925

    Noncurrent cash and investments, as indicated above, include amounts with limitations and internal designations concerning their expenditure.

    22

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 2. Deposits and Investments (Continued)

    The terms of the Hospitai's revenue bonds require funds to be maintained on deposit in certain accounts with the Trustee. In connection with the issuance of the Series 2011 Hospital Revenue and Refunding Bonds and the Series 2012 Revenue Bonds, the Hospital established a Debt Service Reserve Fund for the purpose of making payments of principal and interest on the bonds if funds available for payment of principal and interest were insufficient. The funds held by the Trustee in this account are subject to a prior lien in favor of the owners of the bonds.

    The Hospital is required to maintain a $575,000 certificate of deposit held by the Workers' Compensation Fund as collateral against its self-insured portion of workers' compensation claims. The Hospital is also required to maintain a $125,000 certificate of deposit held by the State Treasurer's Office on behalf of the Louisiana Patients' Compensation Fund as collateral against any self-insured portion of professional liability claims.

    Of the approximate $147,655,000 and $139,014,000, of unrestricted net assets at December 31, 2013 and 2012, respectively, $10,500,000 and 11,297,000, respectively, have been designated by the Hospital's board of commissioners for capital improvements and facility enhancements. The designated funds are reflected as a component of noncurrent cash and investments on the Statements of Net Position, and remain under the board of commissioners, which may at its discretion later use the funds for other purposes.

    Interest income and gains and losses, combined, were approximately a net loss of $1,520,000 and a net gain of $1,645,000, for 2013 and 2012, respectively. Fluctuation in investment income is related to recording changes in investment income, related to market valuation as of December 31

    Foundation The Foundation invests principally in certificates of deposits and other instruments reported as cash equivalents. Investments consist of mutual fund investments, fixed income securities and stock which are presented in the financial statements at fair value based on quoted prices in active markets. Market risk could occur and is dependent on the future changes in market prices of the various investments held.

    Financial instruments that potentially expose the Foundation to concentrations of credit and market risk consist primarily of cash equivalents and investments. Cash equivalents are maintained at high-quality financial institutions and credit exposure is limited at any one institution. The Foundation has not experienced any losses on its cash investments. Except for the investment in a non-publicly traded company, the Foundation's investments do not represent significant concentrations of market risk inasmuch as the Foundation's investment portfolio is adequately diversified among issuers, industries, and geographic regions.

    The Foundation's split-interest agreements at December 31, 2013 and 2012, include a charitable remainder trust, and seven charitable gift annuities. The charitable remainder trust is held by a third party trustee. The donors of the charitable gift annuities contributed those assets directly to the Foundation.

    23

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 2. Deposits and Investments (Continued)

    The charitable remainder trust provides for the payment of distributions of all income earned by the trust's investments to designated income beneficiaries over the life of those beneficiaries. At the end of the trust's term, 50% the remaining assets will be available for the Foundation's use with the remaining 50% due to an unrelated organization. The portion of the trust attributable to the present value of the future benefits to be received by the Foundation is recorded as a temporarily restricted contribution in the Statement of Activities in the period the trust is established. An asset representing the Foundation's interest in the charitable remainder trust has been recognized at the present value of the expected future cash flow payments.

    Changes in fair market value of the charitable remainder trust are reflected as changes in net assets in the Foundation's statements of activities. The present value of the Foundation's estimated 50% interest in the trust's remainder totals $199,161 and $202,087, as of December 31, 2013 and 2012, respectively, and is calculated using applicable mortality tables and an estimated discount rate of 2.0% and 1.2%, respectively. All amounts are considered to be long-term since the dates of the distribution of the trusts are uncertain. No allowance for uncollectible receivables has been recorded. Management deems all contributions of the trust to be fully collectible.

    During 2013, an additional gift annuity agreement was created for a total of eight. Under each of these agreements, the Foundation accepted a donation and, in return, agreed to pay a fixed amount per year until the annuitant's death. The annual payments are expected to be approximately $8,872 during the coming year. The original donations totaling $135,574 and $115,574 are included in cash and cash equivalents as of December 31,2013 and 2012, respectively. The present value of estimated future payments, based on life expectancies, of $80,043 and $71,417, as of December 31, 2013 and 2012, respectively, are included in annuities payable in the Foundation's statement of financial position.

    Note 3. Third-Party Payor Arrangements

    The Hospital participates in the Medicare and Medicaid programs as a provider of medical services to program beneficiaries. During the years ended December 31, 2013 and 2012, approximately 29% and 30%, respectively, of the Hospital's net patient service charges were furnished to Medicare and Medicaid program beneficiaries. Revenue derived from the Medicare program is subject to audit and adjustment by the fiscal intermediary and must be accepted by the United States Department of Human Services before settlement amounts become final. Revenue derived from the Medicaid program is subject to audit and adjustment by the fiscal intermediary and must be accepted by the Department of Health and Hospitals of the State of Louisiana before those settlement amounts become final. Estimated settlements for Medicare through December 31, 2010, have been reviewed by program representatives. Estimated settlements for Medicaid have been reviewed through December 31, 2009.

    24

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 3. Third-Party Payor Arrangements (Continued)

    The Hospital has also entered into payment agreements with certain commercial insurance carriers, health maintenance organizations, and preferred provider organizations. Inpatient and outpatient services rendered to managed care subscribers are reimbursed at prospectively determined rates per discharge, discounts from established changes, and prospectively determined daily rates.

    Note 4. Capital Assets

    A summary of changes in the Hospital's capital assets during 2013, is as follows (in thousands):

    December 31, 2012 Additions

    T ransfers and December 31

    Disposals 2013 Capital assets, not being depreciated:

    Land Construction in progress

    $ 5,148 3,892

    $ - : 3,446

    $ (378) : (4,573)

    5 4,770 2,765

    Total capital assets not being depreciated 9,040 3,446 (4,951) 7,535

    Capital assets, being depreciated: Land improvements Buildings and improvements Equipment

    3,536 103,887 96,376 6,754

    190 1,256

    740

    3,726 105,143 103,870

    Total capital assets being depreciated 203,799 6,754 2,186 212,739

    Less: total accumulated depreciation (114,366) (11,113) 2,389 (123,090)

    Total capital assets, being depreciated, net 89,433 (4,359) 4,575 89,649

    Organization capital assets, net $ 98,473 $ (913) $ (376) : 5 97,184

    Depreciation expense reported during the fiscal year ended December 31, 2013 and 2012, was approximately $11,113,000 and $11,199,000 (exclusive of amortization expense), respectively.

    25

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 4. Capital Assets (Continued)

    A summary of changes in the Hospital's capital assets during 2012, is as follows (in thousands):

    December 31, 2011 Additions

    Transfers and December 31

    Disposals 2012 Capital assets, not being depreciated:

    Land Construction in progress

    $ 5,148 1,705

    $ 4,586

    $ (2,399)

    $ 5,148 3,892

    Total capital assets not being depreciated 6,853 4,586 (2,399) 9,040

    Capital assets, being depreciated: Land improvements Buildings and improvements Equipment

    3,773 103,054 90,104

    9 6

    6,058

    (246) 827 214

    3,536 103,887 96,376

    Total capital assets being depreciated 196,931 6,073 795 203,799

    Less: total accumulated depreciation (104,659) (11,199) 1,492 (114,366)

    Total capital assets, being depreciated, net 92,272 (5,126) 2,287 89,433

    Organization capital assets, net $ 99.125 $ (540) $ (112) $ 98.473

    26

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 5. Long-Term Debt

    The details and balances of long-term debt at December 31, 2013 and 2012, are presented below:

    Hospital Revenue and Refunding Bonds, Series 2011,

    2013 2012 (In Thousands)

    46,690 $ 51,880

    Hospital Revenue Bonds, Series 2012, Less: amounts due within one year

    Total long-term debt

    24,850 (5,605)

    $ 65,935 $

    24,850 (5,190)

    71,540

    Hospital Revenue and Refunding Bonds. Series 2011: On November 1, 2011, the Hospital issued $55,080,000 of tax-exempt Hospital Revenue and Refunding Bonds, Series 2011 (Series 2011), with an interest rate ranging from 2% to 4.5% to advance refund $46,925,000 of outstanding 1998 Series Hospital Revenue and Refunding Bonds with interest rates ranging from 4.25% to 5.0%, and to pay off approximately $6,980,000 of Hospital indebtedness with an average interest rate of 3.5%. The net proceeds were used to purchase U.S. government securities which were deposited into an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1998 Series bonds. As a result, the 1998 Series bonds are considered to be defeased and the liability for those bonds has been removed from the Hospital's Statement of Net Position. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $268,000, which is reported in the accompanying financial statements as a deduction from bonds payable, and is being amortized to operations through the year 2021.

    In total, the advance refunding reduces the Hospital's total debt service payments over the next 17 years by approximately $13,070,000, while providing an economic gain (difference between the present values of the old and new debt service payments) of approximately $1,665,000.

    At December 31, 2013, and 2012, the principal outstanding on the Series 2011 bonds was $46,690,000 and $51,880,000, respectively. This Series has a final maturity scheduled for July 1, 2021.

    27

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 5. Long-Term Debt (Continued)

    Hospital Revenue Bonds. Series 2012: On December 11, 2012, the Hospital issued $24,850,000 of tax-exempt Hospital Revenue Bonds, Series 2012 (Series 2012), for the purpose of financing the cost of acquisition and construction of capital improvements and equipment, including, but not limited to funding an expansion to the emergency department, funding a deposit into a debt service reserve fund, and paying the costs of issuance of the Series 2012 bonds, with an interest rate of 2.70%. The bonds will be used to finance the cost of acquisition and construction of capital projects and equipment at the Hospital, including, but not limited to, funding an expansion to the emergency department, paying the cost of issuance of the bonds and funding a deposit to the debt service reserve fund.

    The Series 2012 bonds mature, unless sooner paid, on July 1, 2024, and shall bear interest at the rate of 2.7% per annum. The bonds are secured by the debt service reserve fund that the Hospital must maintain. At December 31, 2013, the principal balance of these outstanding bonds was $24,850,000.

    In connection with both the Series 2012 and Series 2011 issuances of bonds, the Hospital is required to maintain a debt service coverage ratio of 110%, together with debt service reserve requirements, both of which are defined in the Trust Indenture. As of December 31, 2013, the Hospital was in compliance with the provisions of the Trust Indenture.

    A summary of changes in long-term debt during 2013 and 2012, is as follows (in thousands):

    December 31, December 31, Due Within 2012 Borrowings Payments 2013 One Year

    Hospital Revenue Refunding Bonds, Series 2011 $ 51,880 $ $ (5,190) $ 46,690 $ 5,290

    Hospital Revenue Bonds, Series 2012 24,850

    $ 76,730 $

    24,850 315

    $ (5,190) $ 71,540 $ 5,605

    December 31, December 31, Due Within 2011 Borrowings Payments 2012 One Year

    Hospital Revenue Refunding Bonds, Series 2011

    Hospital Revenue Bonds, Series 2012

    $ 55,080 $

    24,850

    $ (3,200) $ 51,880 $ 5,190

    24,850

    55,080 $ 24,850 $ (3,200) $ 76,730 $ 5,190

    28

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 5. Long-Term Debt (Continued)

    Principal and interest payments due on long-term debt over the next five years and thereafter are as follows (in thousands):

    December 31. Principal Interest

    2014 $ 5,605 $ 2,161 2015 5,755 2,008 2016 5,890 1,874 2017 6,045 1,718 2018 6,220 1,543 2019-2023 34,465 4,353 2024 7,560 204

    $ 71,540 $ 13,861

    A summary of interest cost and investment income on borrowed funds held by the Trustee under the Hospital Revenue and Refunding Bonds during the years ended 2013 and 2012, follows (in thousands):

    2013 2012 Interest cost:

    Charged to non-operating expenses

    Investment income: Credited to non-operating income

    $ 2,130 $ 2,237

    $ 2,130 $ 2,237

    $ (1,520) $ 1,645

    $ (1,520) $ 1,645

    Note 6. Commitments

    The Hospital is a party to multiple operating leases for equipment and property utilized in its operations. Total rental expense incurred for all operating leases and rentals was $5,628,000 and $5,295,000, for the years ended December 31, 2013 and 2012, respectively.

    29

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 6. Commitments (Continued)

    The future minimum lease payments at December 31, 2013, for non-cancelable operating leases are as follows (in thousands):

    2014 $ 4,894 2015 4,447 2016 4,098 2017 3,944 2018 3,429

    Total $ 20,812

    Note 7. Compensated Absences

    Employees of the Hospital are entitled to paid time off depending on their length of service and other factors. Accrued compensated absences included as accrued vacation on the Hospital's Statements of Net Position were $4,076,000 and $3,895,000, as of December 31, 2013 and 2012, respectively.

    Note 8. Employee Benefit Plans

    The Hospital has a noncontributory defined contribution plan (the Plan) that covers substantially all of its employees. The Plan allows for employees age 21 or older with one year of service (defined as 1,000 hours of service in any one year) to participate. For participants enrolled in the Plan prior to December 31, 2012, the Plan Agreement requires contributions to the Plan equal to 6% of the aggregate compensation. For any participants enrolled beginning on January 1, 2013 the Plan Agreement was amended using a graduated scale, from -0-% to 6%, of matching contributions based on years of service. Participating employees with five or more years of service become 100% vested in their account balance. Employees terminating their employment prior to five years forfeit their account balance.

    Total payroll and covered payroll for all Hospital employees during the year ended December 31, 2013, totaled approximately $87,911,000 and $73,679,000 respectively. Total payroll and covered payroll for all Hospital employees during the year ended December 31, 2012, totaled approximately $85,199,000 and $72,387,000, respectively. Contributions during 2013 and 2012 required by the Plan document were approximately $4,743,000 and $4,688,000, respectively, which represents approximately 6.4% of covered payroll. Required contributions paid by the Hospital net of application of forfeiture of non-vested accounts were approximately $4,447,000 and $4,429,000, respectively, during the years ended December 31, 2013 and 2012.

    Pension expense included in salaries, wages and benefits related to the Plan described above approximated $4,434,000 and $4,543,000, for the years ended December 31, 2013 and 2012, respectively.

    30

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 8. Employee Benefit Plans (Continued)

    The Hospital provides a Community Emergency Services Plan (CESP) to certain independent contractor physicians. The purpose of the CESP is to assist the Hospital in attracting and retaining highly qualified individuals to provide services to the Hospital under the Hospital's Community Emergency Services Program. The CESP is a deferred compensation plan taxed under Code section 457(f) and provides independent contractor physician compensation on a deferred basis for providing emergency department call coverage. The Hospital contributed approximately $1,178,000 and $1,191,000, to the CESP during 2013 and 2012, respectively.

    The Hospital has deferred compensation plans for its senior executive staff. During the years ended December 31, 2013 and 2012, the Hospital recognized an expense of approximately $143,000 and $135,000, respectively, in relation to these plans. A corresponding liability of approximately $506,000 and $344,000 is included in the Statements of Net Position at December 31, 2013 and 2012, respectively. These compensation arrangements have been established with a goal of executive retention.

    Note 9. Foundation Net Assets

    Unrestricted - board designated net assets is attributable to board established (designated) funds that are detailed in Note 10.

    Temporarily Restricted - Temporarily restricted net assets consist of the following as of December 31, 2013 and 2012:

    2013 2012 Restricted for Life of Income Beneficiaries:

    Charitable Remainder Trust Interest $ 199,161 $ 202,087 Permanent Endowment Income Earned - -

    Total Time Restrictions 199,161 202,087

    Purpose Restrictions: Pediatrics 1,986,962 772,707 Parenting 310,476 306,632 Community Wellness 164,943 230,859 Miscellaneous Directed Gifts 144,498 214,783 Cancer Care 111,049 189,859 Hospice 219,153 171,223 STPH Employee Benevolent Fund 156,259 166,271 Facility and Technology Expansion 128,014 128,262 Healing Arts 122,811 120,076 Oncology 59,517 77,758 Education 53,682 49,273 Building Expansion Initiative 8,173 7,325 Employee Education 8,566 6,365 Breast Center 14,871 899

    Total Purpose Restrictions 3,488,974 2,442,292

    Total Temporarily Restricted Net Assets $ 3,688,135 3 2,644,379

    31

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 9. Foundation Net Assets (Continued)

    Foundation net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by the expiration of time during the year ended December 31, 2013 and 2012, as follows:

    2013 2012 Net Assets Released from Restrictions:

    Mary Bird Perkins $ 290,870 $ 118,484 Parenting 110,234 127,133 Community Wellness 86,190 87,068 Miscellaneous Directed Gifts 52,578 79,323 STRH Employee Benevolent Fund 41,645 29,010 Facility and Technology Expansion 22,324 40,096 Oncology 20,451 23,388 Healing Arts 16,274 50,014 Education 13,191 7,681 Pediatrics 11,738 42,123 Breast Center 9,752 -Hospice 4,581 8,620 Employee Education - 4,950

    Total Net Assets Released from Restrictions $ 679,828 $ 617,890

    Permanently restricted net assets consisted of donor restricted endowment funds totaling $201,440 and $192,475, as of December 31, 2013 and 2012, respectively.

    Note 10. Foundation Endowment Composition

    The State of Louisiana enacted the Uniform Prudent Management of Institutional Funds Act (UPMIFA) effective August 15, 2010, the provisions of which apply to endowment funds existing on or established after that date. The Board of Directors has determined that the Foundation's permanently restricted net assets meet the definition of endowment funds under UPMIFA. The Foundation's endowment includes donor-restricted funds. As required by U.S. generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions.

    32

  • St. Tammany Parish Hospital Service District No. 1 (d/b/a St. Tammany Parish Hospital)

    Notes to Financial Statements

    Note 10. Foundation Endowment Composition (Continued)

    The Foundation has interpreted the State of Louisiana's UPMIFA as requiring the preservation of the fair value of the original gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent e