management’s discussion of recent financial performance ...management’s discussion of recent...

Management’s Discussion of Recent Financial Performance – Lifespan Obligated Group Quarter Ended June 30, 2018 compared to Quarter Ended June 30, 2017. The Lifespan Obligated Group (the OG) is comprised of Rhode Island Hospital (RIH), The Miriam Hospital (TMH), and Emma Pendleton Bradley Hospital (EPBH), as well as Rhode Island Hospital Foundation and The Miriam Hospital Foundation (the Foundations). Excess of revenues over expenses was $8.0 million for the quarter ended June 30, 2018 compared to an excess of revenues over expenses of $11.0 million for the quarter ended June 30, 2017. Results of Operations. For the quarter ended June 30, 2018, the OG reflected income from operations of $8.7 million compared to operating income of $7.6 million for the quarter ended June 30, 2017. Net patient service revenue increased by $22.0 million (5.1%) in the quarter ended June 30, 2018 compared to the same period in 2017. A 4.6% increase in adjusted patient days contributed $18.2 million to net patient service revenue, and rate increases, partially offset by changes in payor mix, resulted in a net increase of $5.7 million. Total uncompensated care decreased by $0.3 million. State disproportionate share revenue was lower by $0.7 million and prior period third-party adjustments were $1.5 million less in the 2018 quarter. Charity care increased by $0.4 million, but the provision for bad debts was lower by $0.7 million in the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017. Charity care amounted to $20.4 million and $20.0 million for the quarters ended June 30, 2018 and 2017, respectively. As a percentage of the OG’s gross patient service revenue, total uncompensated care, which includes the provision for bad debts as well as charity care, was 2.6% and 2.7% in the quarters ended June 30, 2018 and 2017, respectively. Total operating expenses increased by $27.2 million (5.9%) in the quarter ended June 30, 2018 compared to the same period in 2017, due primarily to compensation and benefits, which increased by $9.6 million (3.9%), purchased services, which were higher by $7.6 million (13.0%), and supplies and other expenses, which grew by $7.0 million (6.0%). 316 additional full-time equivalents (FTEs) resulted in an increase of $7.2 million in compensation and benefits. FTEs increased by 189 at RIH and by 127 at TMH due to strong volume. The increase in FTEs at RIH occurred because of higher staffing levels in nursing, pediatrics, surgical services, the emergency department, pharmacy, and the Lifespan Cancer Institute (LCI). FTE growth at TMH was also the consequence of higher staffing levels in nursing, the emergency department, the Cardiovascular Institute, and support services. Compensation also grew due to the fiscal year 2018 salary program, which included a 3.0% average pay increase for nonunion employees effective October 1, 2017. Benefit costs increased as well, principally within health insurance and pension expense. These factors, along with all other changes in compensation and benefits, resulted in an increase of $2.4 million in the quarter ended June 30, 2018 compared to the same period in 2017.

(Continued)

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Management’s Discussion of Recent Financial Performance – Lifespan Obligated Group (Continued) Purchased services increased by $7.6 million in the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017 due mainly to increases in support services purchased from Lifespan, malpractice insurance costs, and various other purchased services. Supplies and other expenses increased by $7.0 million in the quarter ended June 30, 2018 contrasted with the same period in 2017, most notably within medical/surgical supplies and drugs at RIH, which increased by $7.1 million because of general inflation and the continued growth of both the Lifespan Retail Pharmacy and the LCI. License fees increased by $2.0 million in the quarter ended June 30, 2018 compared to the same period in 2017, exacerbated by the previously noted decrease in State disproportionate share revenue of $0.7 million. Nonoperating losses amounted to $0.7 million for the quarter ended June 30, 2018 compared to nonoperating gains of $3.4 million for the same period in 2017. This change was driven by net realized losses on unrestricted investments, which amounted to $0.3 million in the 2018 quarter compared to net realized gains of $3.8 million in the 2017 quarter. Nine Months Ended June 30, 2018 compared to Nine Months Ended June 30, 2017. Excess of revenues over expenses was $22.6 million for the nine months ended June 30, 2018 compared to excess of revenues over expenses of $25.6 million for the nine months ended June 30, 2017. Results of Operations. For the nine months ended June 30, 2018, the OG reflected income from operations of $23.1 million compared to operating income of $20.5 million for the nine months ended June 30, 2017. Net patient service revenue increased by $79.0 million (6.3%) in the nine months ended June 30, 2018 compared to the same period in 2017. A 4.6% increase in adjusted patient days contributed $56.3 million to net patient service revenue, and rate increases, partially offset by changes in payor mix, resulted in a net increase of $14.9 million. Total uncompensated care decreased by $8.5 million, but State disproportionate share revenue was lower by $2.3 million. Prior period third-party adjustments were $1.6 million more in the nine months ended June 30, 2018. Charity care decreased by $4.6 million and the provision for bad debts was lower by $3.9 million in the nine months ended June 30, 2018 compared to the same period in 2017. Charity care amounted to $60.4 million and $65.0 million for the nine months ended June 30, 2018 and 2017, respectively. As a percentage of the OG’s gross patient service revenue, total uncompensated care, which includes the provision for bad debts as well as charity care, was 2.5% and 2.8% in the nine months ended June 30, 2018 and 2017, respectively.

(Continued)

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Management’s Discussion of Recent Financial Performance – Lifespan Obligated Group (Continued) Total operating expenses increased by $87.8 million (6.5%) in the nine months ended June 30, 2018 compared to the same period in 2017, due primarily to compensation and benefits, which increased by $38.8 million (5.3%), supplies and other expenses, which were higher by $27.7 million (8.4%), and purchased services, which grew by $12.5 million (7.2%). 351 additional full-time equivalents (FTEs) resulted in an increase of $23.9 million in compensation and benefits. FTEs increased by 197 at RIH, by 113 at TMH, and by 41 at EPBH. The increase in FTEs at RIH occurred because of higher staffing levels in nursing, pediatrics, surgical services, the emergency department, pharmacy, and the LCI. FTE growth at TMH was also the consequence of higher staffing levels in nursing, surgical services, the emergency department, and support services. EPBH’s FTEs increased due to volume growth in the inpatient adolescent units and the transfer of three residential homes from another Lifespan affiliate. Compensation also grew due to the fiscal year 2018 salary program, which included a 3.0% average pay increase for nonunion employees effective October 1, 2017, as well as increases in premium pay and physician fees to manage the growth in volume. Benefit costs increased as well, principally within health insurance and pension expense. These factors, along with all other changes in compensation and benefits, resulted in an increase of $14.9 million in the nine months ended June 30, 2018 compared to the same period in 2017. Supplies and other expenses increased by $27.7 million in the nine months ended June 30, 2018 contrasted with the nine months ended June 30, 2017, most notably within medical/surgical supplies and drugs, which increased by $25.1 million because of general inflation, an increase in inpatient volume, and the continued growth of both the Lifespan Retail Pharmacy and the LCI. Purchased services increased by $12.5 million in the nine months ended June 30, 2018 compared to the nine months ended June 30, 2017 due mainly to increases in support services purchased from Lifespan, malpractice insurance costs, and various other purchased services. License fees increased by $5.9 million in the nine months ended June 30, 2018 compared to the same period in 2017, exacerbated by the previously noted decrease in State disproportionate share revenue of $2.3 million. Nonoperating losses amounted to $0.6 million for the nine months ended June 30, 2018 compared to nonoperating gains of $5.1 million for the same period in 2017. This change was driven by a decrease in net realized gains on unrestricted investments, which amounted to $1.0 million in the 2018 period compared to net realized gains of $6.0 million in the 2017 period. Other nonoperating losses were $1.0 million higher in the nine months ended June 30, 2018 compared to the same period in 2017 due to demolition and abatement costs associated with buildings on the RIH campus.

(Continued)

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Management’s Discussion of Recent Financial Performance – Lifespan Obligated Group (Continued) The Master Trust Indenture requires that the OG’s Debt Service Coverage Ratio (DSCR) calculated for each fiscal year be 1.10x or higher. The DSCR, based on the previous twelve months’ results, is 3.40x for the twelve months ended June 30, 2018 compared to 3.32x for the twelve months ended June 30, 2017. Changes in Net Assets. Total net assets of the OG increased by $68.4 million in the nine months ended June 30, 2018 compared to an increase of $55.6 million for the nine months ended June 30, 2017. The provisions of Accounting Standards Codification Topic 715 require an employer to recognize in its statement of financial position an asset for a benefit plan’s overfunded status or a liability for a plan’s underfunded status, and to recognize changes in that funded status in the year in which the changes occur through changes in unrestricted net assets. The funded-status amount is measured as the difference between the fair value of plan assets and the projected benefit obligation including all actuarial gains and losses and prior service cost. Effective December 31, 2017, Lifespan amended the Lifespan Corporation Retirement Plan (the Plan) whereby certain future participation and benefit accruals under the Plan ceased for employees whose terms and conditions of employment are not covered by a collective bargaining agreement. As of that date, Lifespan remeasured the Plan’s assets and benefit obligations. Based on December 31, 2017 funded-status amounts for its portion of the Plan, the OG recorded an increase in unrestricted net assets of $27.7 million. Concurrently, Lifespan formed a new defined contribution plan, the Lifespan 401(k) Retirement Savings Plan, which includes an automatic Lifespan matching contribution equal to 6% of eligible base pay. Net realized and unrealized gains in the nine months ended June 30, 2018 totaled $21.8 million, compared with net realized and unrealized gains of $38.6 million for the nine months ended June 30, 2017, a decrease in investment performance of $16.8 million. The investment portfolio returned a gain of 3.7% in the nine months ended June 30, 2018 compared to a gain of 7.1% in the nine months ended June 30, 2017. Balance Sheet Discussion. Accounts receivable performance improved, with days of net revenue at 39 days as of June 30, 2018 compared to 40 days as of both September 30, 2017 and June 30, 2017. Volume Statistics Discussion. For the quarter and nine months ended June 30, 2018, volume levels were consistent with the same periods in 2017, with the following highlights and exceptions:

For the quarter ended June 30, 2018 compared to the same period in 2017, discharges and patient days increased by 1.1% and 0.6%, respectively, minimally impacting average length of stay. Occupancy rates increased to 90.3% in the 2018 quarter from 88.3% in the 2017 quarter. Observation days were 28.5% higher in the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017. The Medicare case mix index decreased to 1.714 from 1.775, while inpatient surgeries declined by 124 (3.2%).

(Continued)

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Management’s Discussion of Recent Financial Performance – Lifespan Obligated Group (Continued) In the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017, the OG’s clinic visits were 4,330 (4.5%) higher mainly within primary care, pediatrics, specialty, and dental service. The additional clinic visits were also attributable to the continued growth of the Cardiovascular Institute, the LCI, the Women’s Medicine Collaborative, and the Men’s Health Center. The OG’s emergency department visits decreased by 1,427 (2.6%) and ambulatory surgeries decreased by 397 (7.7%). The OG’s other outpatient ancillary volume increased in the quarter ended June 30, 2018 compared to the 2017 quarter, principally within laboratory services and diagnostic imaging. For the nine months ended June 30, 2018, discharges increased by 1.9% and patient days were 2.7% higher, resulting in an increase in average length of stay to 5.27 days for the nine months ended June 30, 2018 compared to 5.23 days for the nine months ended June 30, 2017. Occupancy rates increased to 90.4% in the 2018 period from 87.7% for the same period in 2017. Observation volume was higher by 12.9% in the nine months ended June 30, 2018 compared to the nine months ended June 30, 2017. The Medicare case mix index increased to 1.722 in the 2018 period from 1.701 in the same period in 2017. The OG’s 2018 clinic visits increased by 8,424 (3.0%) in the nine months ended June 30, 2018 compared to the same period in 2017, most notably in the Cardiovascular Institute, the LCI, the Women’s Medicine Collaborative, and the Men’s Health Center. The OG’s other outpatient ancillary volume increased in the nine months ended June, 2018 compared to the same period in 2017, primarily reflected in the continued growth within laboratory services and diagnostic imaging. The Lifespan Obligated Group provides the information in these reports in accordance with the terms of the Continuing Disclosure Agreement dated August 11, 2016, which grants discretion to the Lifespan Obligated Group to determine the details of the quarterly information that it will provide if it is based upon the unaudited consolidated financial statements of Lifespan Corporation and its Affiliates as well as those of the Lifespan Obligated Group. Accordingly, the Lifespan Obligated Group advises the recipients and users of this information that in the future it may change the level of detail, combine information, and make other changes in the format and scope of quarterly information presented.

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Assets 2018 2017 Liabilities and Net Assets 2018 2017

Current assets: Current liabilities:Cash and cash equivalents $ 94,166 $ 92,579 Accounts payable $ 67,068 $ 65,535

Accrued employee benefits and compensation 44,501 40,807 Patient accounts receivable 225,535 218,897 Other accrued expenses 106,746 88,872

Less allowance for doubtful accounts (35,224) (35,253) Revolving credit loan payable — 19,000 Current portion of long-term debt 20,338 19,602

Net patient accounts receivable 190,311 183,644 Current portion of estimated third-party payor settlements 23,092 15,286 Estimated health care benefit self-insurance costs 13,526 10,454

Other receivables 64,474 63,109 Current portion of contributions receivable, net 1,855 1,682 Total current liabilities 275,271 259,556

Total receivables 256,640 248,435 Long-term debt, net of current portion 272,262 296,338

Inventories 29,177 25,376 Estimated third-party payor settlements, net of current portion 29,138 29,138 Prepaid expenses and other current assets 4,131 3,602 Accrued pension liability 185,102 246,349

Other liabilities 10,323 14,258 Total current assets 384,114 369,992

Total liabilities 772,096 845,639 Assets limited as to use 845,674 806,729

Property and equipment, net 749,698 761,507 Net assets:Unrestricted 755,124 659,903

Other assets: Temporarily restricted 312,942 295,613 Contributions receivable, net 3,953 3,679 Permanently restricted 147,852 146,246 Other noncurrent assets 4,575 5,494

Total net assets 1,215,918 1,101,762 Total other assets 8,528 9,173

Total assets $ 1,988,014 $ 1,947,401 Total liabilities and net assets $ 1,988,014 $ 1,947,401

See accompanying notes to interim combined financial statements (unaudited).

LIFESPAN OBLIGATED GROUP

June 30, 2018 and 2017

(In thousands)

Combined Statements of Financial Position

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2018 2017 2018 2017

Unrestricted revenues and other support:Patient service revenue, net of contractual allowances $ 465,911 $ 444,622 $ 1,374,783 $ 1,299,722 Provision for bad debts (13,092) (13,822) (36,068) (39,967)

Net patient service revenue 452,819 430,800 1,338,715 1,259,755

Other revenue 16,818 9,330 41,654 31,680 Endowment earnings contributed toward community benefit 3,525 3,371 10,400 10,068 Net assets released from restrictions used for operations 4,945 4,944 14,152 13,928 Net assets released from restrictions used for research 21,170 22,531 64,086 63,160

Total unrestricted revenues and other support 499,277 470,976 1,469,007 1,378,591

Operating expenses:Compensation and benefits 258,324 248,685 773,523 734,756 Supplies and other expenses 122,278 115,321 355,422 327,745 Purchased services 65,916 58,309 185,323 172,803 Depreciation and amortization 19,486 18,298 57,721 54,380 Interest 2,174 2,319 6,672 7,114 License fees 22,412 20,432 67,237 61,297

Total operating expenses 490,590 463,364 1,445,898 1,358,095

Income from operations 8,687 7,612 23,109 20,496

Nonoperating gains and losses:Unrestricted gifts and bequests 539 547 2,093 1,640 Unrestricted income from board-designated investments 64 9 153 115 Net realized (losses) gains on board-designated investments (260) 3,793 1,018 6,040 Fundraising expenses (961) (953) (2,516) (2,428) Other nonoperating losses, net (39) (30) (1,307) (274)

Total nonoperating (losses) gains, net (657) 3,366 (559) 5,093

Excess of revenues over expenses $ 8,030 $ 10,978 $ 22,550 $ 25,589

(Continued)


Combined Statements of Operations and Changes in Net Assets

(In thousands)

June 30Nine Months EndedThird Quarter Ended

June 30

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2018 2017 2018 2017

Unrestricted net assets:Excess of revenues over expenses $ 8,030 $ 10,978 $ 22,550 $ 25,589 Other changes in unrestricted net assets:

Change in funded status of pension plan, other thannet periodic pension costs — — 27,731 —

Net change in unrealized gains on investments available for sale 1,885 797 4,339 5,767 Net assets released from restrictions used for purchase of

property and equipment 798 727 3,289 3,588 Other increases (decreases) 14 11 (37) 34

Increase in unrestricted net assets 10,727 12,513 57,872 34,978

Temporarily restricted net assets:Gifts, grants, and bequests 23,897 26,943 74,596 72,645 Income from restricted endowment and other restricted investments 734 665 1,750 2,800 Transfers from affiliates 291 293 1,118 813 Net assets released from restrictions (26,913) (28,202) (81,527) (80,676) Net realized and unrealized gains on investments 4,870 9,502 17,469 24,395 Fundraising expenses (434) (367) (1,369) (1,315) Grants to outside agencies (190) (192) (578) (575) Other decreases — (17) — (17)

Increase in temporarily restricted net assets 2,255 8,625 11,459 18,070

Permanently restricted net assets:Gifts and bequests 8 4 154 114 Net change in unrealized gains on investments held in perpetual

trusts by others (411) 638 (1,036) 2,425 Other increases — 17 — 17

(Decrease) increase in permanently restricted net assets (403) 659 (882) 2,556

Increase in net assets 12,579 21,797 68,449 55,604

Net assets, beginning of period 1,203,339 1,079,965 1,147,469 1,046,158

Net assets, end of period $ 1,215,918 $ 1,101,762 $ 1,215,918 $ 1,101,762



Combined Statements of Operations and Changes in Net Assets (Continued)

(In thousands)

June 30 June 30Third Quarter Ended Nine Months Ended

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June 30 June 30

2018 2017 2018 2017

Cash flows from operating activities:Increase in net assets $ 12,579 $ 21,797 $ 68,449 $ 55,604 Adjustments to reconcile increase in net assets to net cash

provided by operating activities:Change in funded status of pension plan, other than net

net periodic pension costs — — (27,731) — Net realized and unrealized gains on investments (6,084) (14,730) (21,790) (38,627) Temporarily restricted net asset transfers from affiliates (291) (293) (1,118) (813) Permanently restricted gifts and bequests (8) (4) (154) (114) Depreciation and amortization 19,486 18,298 57,721 54,380 Provision for estimated health care benefit self-insurance costs 28,138 27,065 83,145 79,404 Decrease in liabilities for estimated health care benefit self-insurance

costs resulting from claims paid (28,037) (27,779) (82,568) (80,804) Net increase in patient accounts receivable (4,294) (3,013) (4,296) (19,948) Increase (decrease) in accounts payable 438 2,873 (532) (4,171) Decrease in accrued employee benefits and compensation (4,503) (3,975) (5,002) (5,051) (Decrease) increase in estimated third-party payor settlements (2,378) 8,616 5,648 1,385 Increase in all other current and noncurrent assets and liabilities, net 3,452 1,119 11,761 15,348

Net cash provided by operating activities 18,498 29,974 83,533 56,593

Cash flows from investing activities:Purchase of property and equipment (12,831) (10,949) (44,767) (30,336) Purchases of assets limited as to use (186,177) (146,566) (574,528) (718,086) Proceeds from sales of assets limited as to use 191,041 144,576 585,749 722,580 Net decrease in funds held by third parties under long-term

debt agreements — — — 135 Other net (increases) decreases in assets limited as to use (5,185) 304 (13,350) (3,377)

Net cash used in investing activities (13,152) (12,635) (46,896) (29,084)

Cash flows from financing activities:Payments on revolving credit loan payable (1,000) (10,000) (1,000) (10,000) Payments on long-term debt (15,927) (18,319) (19,582) (21,914) Temporarily restricted net asset transfers from affiliates 291 293 1,118 813 Permanently restricted gifts and bequests 8 4 154 114

Net cash used in financing activities (16,628) (28,022) (19,310) (30,987)

Net (decrease) increase in cash and cash equivalents (11,282) (10,683) 17,327 (3,478)

Cash and cash equivalents, beginning of period 105,448 103,262 76,839 96,057

Cash and cash equivalents, end of period $ 94,166 $ 92,579 $ 94,166 $ 92,579


Third Quarter Ended Nine Months Ended


Combined Statements of Cash Flows

(In thousands)

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The Lifespan Obligated Group Notes to Interim Combined Financial Statements (Unaudited) (In thousands) Note 1: The interim combined financial information furnished herein is unaudited; however, in the opinion of

management, the information reflects all adjustments that are necessary to fairly state the combined financial position of Rhode Island Hospital and Affiliates (RIH), The Miriam Hospital (TMH), Emma Pendleton Bradley Hospital (EPBH) (together “the Hospitals”), and Rhode Island Hospital Foundation (RIHF) and The Miriam Hospital Foundation (TMHF) (together “the Foundations”), the combined results of their operations, and their cash flows for the interim periods indicated on the same basis as the audited financial statements of the Hospitals. All the adjustments are of a normal recurring nature. These interim combined financial statements do not include all the information and footnote disclosures required by generally accepted accounting principles. The combined financial statements include financial information of certain affiliates of RIH, which represent less than one percent (1%) of its consolidated operating revenues and are not part of the Lifespan Obligated Group (the OG).

The OG’s management presumes that users of this interim combined financial information have read or have access to the Hospitals’ audited financial statements for the preceding fiscal year, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnotes and other disclosures that would substantially duplicate the disclosures contained in the Hospitals’ most recent audited financial statements have been omitted. All significant intercompany accounts and transactions have been eliminated in the combination of the Lifespan Obligated Group financial statements.

Note 2: The composition of assets limited as to use at June 30 is set forth in the following tables:

June 30, 2018: RIH TMH EPBH RIHF TMHF OG Unrestricted (internally board- designated) $ 205,102 $ 145,345 $ 10,812 $ 5,139 $ 31,309 $ 397,707 Held by third parties under long- term debt agreements 1 — — — — 1 Temporarily restricted funds 250,587 23,729 5,208 14,370 6,599 300,493 Permanently restricted funds 40,236 — 51,175 36,006 20,056 147,473 Total $ 495,926 $ 169,074 $ 67,195 $ 55,515 $ 57,964 $ 845,674

(Continued)

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The Lifespan Obligated Group Notes to Interim Combined Financial Statements, Continued (Unaudited) (In thousands) Note 2 (Continued):

June 30, 2017: RIH TMH EPBH RIHF TMHF OG Unrestricted (internally board- designated) $ 211,365 $ 117,345 $ 11,213 $ 5,493 $ 30,581 $ 375,997 Held by third parties under long- term debt agreements 1 — — — — 1 Temporarily restricted funds 238,279 22,263 5,821 11,808 6,428 284,599 Permanently restricted funds 39,238 — 51,327 35,620 19,947 146,132 Total $ 488,883 $ 139,608 $ 68,361 $ 52,921 $ 56,956 $ 806,729

Assets limited as to use at June 30 are classified as follows:

2018 2017 Available-for-sale $ 597,254 $ 545,005 Trading 248,420 261,724 Total $ 845,674 $ 806,729

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Third Quarter Ended Nine Months EndedJune 30 June 30

2018 2017 2018 2017

Inpatient Statistics:Licensed Beds -- Adult 879 879 879 879 Licensed Beds -- Pediatrics 157 157 157 157

Total Licensed Beds 1,036 1,036 1,036 1,036

Beds in Service -- Adult 845 845 843 841 Beds in Service -- Pediatrics 157 157 157 157

Total Staffed Beds 1,002 1,002 1,000 998

Discharges:Adult 13,033 12,861 38,815 38,136 Pediatrics 1,507 1,521 4,940 4,810

Total 14,540 14,382 43,755 42,946

Patient Days:Adult 64,727 63,874 194,637 189,571 Pediatrics 11,324 11,701 36,028 35,138

Total 76,051 75,575 230,665 224,709

Observation Days:Adult 5,579 4,234 14,048 12,489 Pediatrics 710 662 2,148 1,863

Total 6,289 4,896 16,196 14,352

Total Inpatient Activity:Adult 70,306 68,108 208,685 202,060 Pediatrics 12,034 12,363 38,176 37,001

Total 82,340 80,471 246,861 239,061

Average Length of Stay:Adult 4.97 4.97 5.01 4.97Pediatrics 7.51 7.69 7.29 7.31

Total 5.23 5.25 5.27 5.23

Percent of Total Occupancy of Beds in Service:Adult 91.4% 88.6% 90.7% 88.0%Pediatrics 84.2% 86.5% 89.1% 86.3%

Total 90.3% 88.3% 90.4% 87.7%

Medicare Case Mix Index 1.714 1.775 1.722 1.701

Inpatient Surgeries 3,784 3,908 10,926 11,098

Outpatient Statistics:Emergency Department Visits 54,525 55,952 167,842 168,129 Clinic Visits 101,470 97,140 290,282 281,858 Ambulatory Surgeries 4,767 5,164 14,983 15,102


Utilization Statistics

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Management’s Discussion of Recent Financial Performance – Lifespan Corporation and Affiliates Quarter Ended June 30, 2018 compared to Quarter Ended June 30, 2017. Excess of revenues over expenses was $8.5 million for the quarter ended June 30, 2018 compared to an excess of revenues over expenses of $12.6 million for the quarter ended June 30, 2017. Results of Operations. For the quarter ended June 30, 2018, Lifespan reflected income from operations of $7.8 million compared to operating income of $6.6 million for the quarter ended June 30, 2017. Net patient service revenue increased by $30.0 million (6.1%) in the quarter ended June 30, 2018 compared to the same period in 2017, driven notably by an increase in volume, which contributed $23.7 million to net patient service revenue, while rate increases, partially offset by changes in payor mix, resulted in an increase of $8.2 million. Total uncompensated care decreased by $0.2 million, while State disproportionate share revenue was lower by $0.6 million. Prior period third-party adjustments were $1.5 million lower in the 2018 quarter. Charity care increased $0.2 million and the provision for bad debts decreased $0.4 million in the quarter ended June 30, 2018 compared to the same period in 2017. Charity care amounted to $22.5 million and $22.3 million for the quarters ended June 30, 2018 and 2017. As a percentage of Lifespan’s gross patient service revenue, total uncompensated care, which includes the provision for bad debts as well as charity care, was 2.6% and 2.7% in the quarters ended June 30, 2018 and 2017, respectively. Total operating expenses increased by $29.9 million (5.5%) in the quarter ended June 30, 2018 compared to the same period in 2017, due primarily to compensation and benefits, which increased by $12.7 million (3.8%), supplies and other expenses, which were $9.9 million higher (7.4%), and purchased services, which grew by $4.3 million (13.6%). 430 additional full-time equivalents (FTEs) resulted in an increase of $11.3 million in compensation and benefits. The increase in FTEs in the 2018 quarter is primarily attributable to increased staffing levels at both Rhode Island Hospital (RIH) and The Miriam Hospital (TMH) in support of increased volume. The June 2018 quarter in turn reflects higher levels of premium pay and physician fees because of such staffing demands. Compensation also grew due to the fiscal year 2018 salary program, which included a 3.0% across-the-board pay increase for nonunion employees effective October 1, 2017. These factors, along with all other changes in compensation and benefits, resulted in a net increase of $1.4 million in the quarter ended June 30, 2018 compared to the same period in 2017. Supplies and other expenses increased by $9.9 million in the quarter ended June 30, 2018 contrasted with the same period in 2017, most notably within medical/surgical supplies and drugs, which increased by $9.1 million because of general inflation and the continued growth of both the Lifespan Retail Pharmacy and the Lifespan Cancer Institute (LCI).

(Continued)

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Management’s Discussion of Recent Financial Performance – Lifespan Corporation and Affiliates (Continued) Purchased services increased by $4.3 million in the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017 due mainly to new outsourced dietary service programs at RIH, TMH, and Emma Pendleton Bradley Hospital, as well as various other purchased services. License fees increased by $2.1 million in the quarter ended June 30, 2018 compared to the same period in 2017, exacerbated by the previously noted decrease in State disproportionate share revenue of $0.6 million. Nonoperating gains amounted to $0.7 million for the quarter ended June 30, 2018 compared to nonoperating gains of $6.0 million for the same period in 2017. The following is a summary comparing nonoperating performance for the quarters ended June 30, 2018 and 2017, respectively: Quarters Ended June 30 2018 2017

(In thousands) Investment income, including gains and losses on board-designated investments $ 1,048 $ 6,805

Net unrestricted performance of Foundations (228) (471)

Other nonoperating losses, net (76) (332)

Total nonoperating gains, net $ 744 $ 6,002 Nine Months Ended June 30, 2018 compared to Nine Months Ended June 30, 2017. Excess of revenues over expenses was $22.7 million for the nine months ended June 30, 2018 compared to an excess of revenues over expenses of $25.7 million for the nine months ended June 30, 2017. Results of Operations. For the nine months ended June 30, 2018, Lifespan reflected income from operations of $18.2 million compared to operating income of $14.4 million for the same period in 2017. Net patient service revenue increased by $97.9 million (6.9%) in the nine months ended June 30, 2018 compared to the nine months ended June 30, 2017 driven primarily by volume increases, which contributed $69.0 million to net patient service revenue, while rate increases, partially offset by changes in payor mix, resulted in an increase of $19.8 million. Total uncompensated care decreased by $9.5 million, but State disproportionate share revenue was lower by $2.1 million. Prior period third-party adjustments were $1.7 million more in the nine months ended June 30, 2018.

(Continued)

14

Management’s Discussion of Recent Financial Performance – Lifespan Corporation and Affiliates (Continued) Charity care decreased by $4.1 million and the provision for bad debts was lower by $5.4 million in the nine months ended June 30, 2018 compared to the same period in 2017. Charity care amounted to $66.6 million and $70.7 million for the nine months ended June 30, 2018 and 2017, respectively. As a percentage of Lifespan’s gross patient service revenue, total uncompensated care, which includes the provision for bad debts as well as charity care, was 2.5% and 2.9% in the nine months ended June 30, 2018 and 2017, respectively. Total operating expenses increased by $98.5 million (6.2%) for the nine months ended June 30, 2018 compared to the same period in 2017, primarily in compensation and benefits, which increased by $53.3 million (5.4%), supplies and other expenses, which were higher by $28.7 million (7.5%), and purchased services, which grew by $7.3 million (7.9%). Compensation and benefits increased by $53.3 million in the nine months ended June 30, 2018 compared to the nine months ended June 30, 2017. FTEs grew by 450, which resulted in an increase of approximately $35.5 million, caused by the same factors which affected the results of operations in the quarter ended June 30, 2018 described above. The nine months ended June 30, 2018 also reflects higher levels of premium pay and physician fees because of increased staffing demands. Compensation also increased in the nine months ended June 30, 2018 due to the fiscal year 2018 salary program, which includes a 3.0% across-the-board pay increase for nonunion employees effective October 1, 2017. These factors, along with all other changes in compensation and benefits, resulted in a net increase of $17.8 million for the nine months ended June 30, 2018 compared to the same period in 2017. Supplies and other expenses were $28.7 million higher in the nine months ended June 30, 2018 compared to the same period in 2017, mainly within medical/surgical supplies and drugs, which increased by $26.6 million because of general inflation, an increase in inpatient volume, and the continued growth of both the Lifespan Retail Pharmacy and the LCI. Purchased services increased by $7.3 million in the 2018 period compared to the 2017 period for the same reasons noted in the quarterly discussion above. License fees increased by $6.3 million in the nine months ended June 30, 2018 compared to the same period in 2017, exacerbated by the previously noted decrease in State disproportionate share revenue of $2.1 million.

Nonoperating gains amounted to $4.5 million for the nine months ended June 30, 2018 compared to nonoperating gains of $11.3 million for the nine months ended June 30, 2017. This change was driven by a decrease in net realized gains on unrestricted investments, which amounted to $4.6 million in the 2018 period compared to net realized gains of $11.6 million in the 2017 period.

(Continued)

15

Management’s Discussion of Recent Financial Performance – Lifespan Corporation and Affiliates (Continued) Changes in Net Assets. Total net assets of Lifespan increased by $88.3 million in the nine months ended June 30, 2018 compared to an increase of $70.3 million for the nine months ended June 30, 2017. The provisions of Accounting Standards Codification Topic 715 require an employer to recognize in its statement of financial position an asset for a benefit plan’s overfunded status or a liability for a plan’s underfunded status, and to recognize changes in that funded status in the year in which the changes occur through changes in unrestricted net assets. The funded-status amount is measured as the difference between the fair value of plan assets and the projected benefit obligation including all actuarial gains and losses and prior service cost. Effective December 31, 2017, Lifespan amended the Lifespan Corporation Retirement Plan (the Plan) whereby certain future participation and benefit accruals under the Plan ceased for employees whose terms and conditions of employment are not covered by a collective bargaining agreement. As of that date, Lifespan remeasured the Plan’s assets and benefit obligations. Based on December 31, 2017 funded-status amounts for the Plan, Lifespan recorded an increase in unrestricted net assets of $37.8 million. Concurrently, Lifespan formed a new defined contribution plan, the Lifespan 401(k) Retirement Savings Plan, which includes an automatic Lifespan matching contribution equal to 6% of eligible base pay. The improvement in Lifespan’s operating performance resulted in an increase in net assets of $3.8 million. Net realized and unrealized gains in the nine months ended June 30, 2018 totaled $31.4 million, compared with net realized and unrealized gains of $53.6 million for the nine months ended June 30, 2017, a decline in investment performance of $22.2 million. The investment portfolio returned a gain of 3.7% in the nine months ended June 30, 2018 compared to a gain of 7.1% in the nine months ended June 30, 2017. Balance Sheet Discussion. Accounts receivable performance improved, with days of net revenue at 38 days as of June 30, 2018 compared to 39 days at both September 30, 2017 and June 30, 2017. Volume Statistics Discussion. For the quarter and nine months ended June 30, 2018, volume levels were consistent with the same periods in 2017, with the following highlights and exceptions: For the quarter ended June 30, 2018, discharges increased at a slightly higher rate than patient days, resulting in a decreased average length of stay to 5.19 days from 5.23 days in the June 2017 quarter. Occupancy rates in the 2018 quarter increased to 88.2% from 86.5% in the same period in 2017. Observation days were 28.3% higher in the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017. The Medicare case mix index decreased to 1.685 from 1.730, while inpatient surgeries declined by 2.0%.

(Continued)

16

Management’s Discussion of Recent Financial Performance – Lifespan Corporation and Affiliates (Continued) In the quarter ended June 30, 2018 compared to the quarter ended June 30, 2017, Lifespan’s clinic visits increased by 9,912 (6.1%) primarily due to growth within Lifespan Physician Group (LPG). Emergency department visits decreased by 1,476 (2.3%), while ambulatory surgeries decreased by 417 (6.5%). For the nine months ended June 30, 2018, discharges and patient days increased by 2.1% and 2.4%, respectively, resulting in an increase in average length of stay to 5.24 days in the nine months ended June 30, 2018 from 5.23 days for the nine months ended June 30, 2017. Occupancy rates increased to 88.5% in the 2018 period from 85.8% for the same period in 2017. Observation volume was higher by 12.3%. The Medicare case mix index increased to 1.695 in the 2018 period from 1.665 in the same period in 2017. Lifespan’s 2018 clinic visits increased by 21,353 (4.6%) compared to the nine-month period in 2017 mainly within LPG, as noted above. Emergency department visits and ambulatory surgeries decreased by 312 (0.2%) and 170 (0.9%), respectively, in the nine months ended June 30, 2018 compared to the same period in 2017. ______________________________________________________________________ The Lifespan Obligated Group provides the information in these reports in accordance with the terms of the Continuing Disclosure Agreement dated August 11, 2016 which grants discretion to the Lifespan Obligated Group to determine the details of the quarterly information that it will provide if it is based upon the unaudited consolidated financial statements of Lifespan Corporation and its Affiliates as well as those of the Lifespan Obligated Group. Accordingly, the Lifespan Obligated Group advises the recipients and users of this information that in the future it may change the level of detail, combine information, and make other changes in the format and scope of quarterly information presented.

17

LIFESPAN CORPORATION AND AFFILIATES

Consolidated Statements of Financial Position

June 30, 2018 and 2017

(In thousands)

Assets 2018 2017 Liabilities and Net Assets 2018 2017

Current assets: Current liabilities:Cash and cash equivalents $ 120,128 $ 121,002 Accounts payable $ 85,835 $ 87,911

Accrued employee benefits and compensation 74,650 70,283 Patient accounts receivable 258,821 254,296 Other accrued expenses 79,311 71,782

Less allowance for doubtful accounts (46,011) (48,883) Revolving credit loan payable — 19,000 Current portion of long-term debt 21,682 20,985

Net patient accounts receivable 212,810 205,413 Current portion of estimated third-party payorsettlements 23,516 16,585

Other receivables 67,347 65,572 Current portion of estimated malpractice andCurrent portion of contributions receivable, net 2,783 2,070 other self-insurance costs 58,399 52,092

Total receivables 282,940 273,055 Total current liabilities 343,393 338,638

Assets limited as to use 42,144 39,032 Long-term debt, net of current portion 290,666 316,053 Inventories 31,230 27,105 Estimated third-party payor settlements, net ofPrepaid expenses and other current assets 18,536 16,928 current portion 29,993 29,993

Estimated malpractice self-insurance costs, net ofTotal current assets 494,978 477,122 current portion 90,816 88,509

Accrued pension liability 228,180 306,985 Assets limited as to use 1,236,641 1,190,255 Other liabilities 53,005 50,213

Less amount required to meet current obligations (42,144) (39,032) Total liabilities 1,036,053 1,130,391

Noncurrent assets limited as to use 1,194,497 1,151,223 Net assets:

Property and equipment, net 835,402 849,463 Unrestricted 970,302 852,802 Temporarily restricted 394,036 368,349

Other assets: Permanently restricted 161,943 160,266 Contributions receivable, net 7,210 6,201 Other noncurrent assets 30,247 27,799 Total net assets 1,526,281 1,381,417

Total other assets 37,457 34,000

Total assets $ 2,562,334 $ 2,511,808 Total liabilities and net assets $ 2,562,334 $ 2,511,808

See accompanying notes to interim consolidated financial statements (unaudited).

18

2018 2017 2018 2017

Unrestricted revenues and other support:Patient service revenue, net of contractual allowances $ 533,393 $ 503,801 $ 1,569,761 $ 1,477,256 Provision for bad debts (15,547) (15,908) (42,297) (47,718)

Net patient service revenue 517,846 487,893 1,527,464 1,429,538

Other revenue 34,320 32,003 94,296 91,419 Endowment earnings contributed toward community benefit 3,775 3,621 11,150 10,818 Net assets released from restrictions used for operations 5,475 5,466 15,649 15,419 Net assets released from restrictions used for research 21,170 22,531 64,086 63,160

Total unrestricted revenues and other support 582,586 551,514 1,712,645 1,610,354

Operating expenses:Compensation and benefits 347,769 335,091 1,041,619 988,348 Supplies and other expenses 143,491 133,550 409,362 380,694 Purchased services 35,474 31,218 99,749 92,443 Depreciation and amortization 21,941 20,825 65,105 61,626 Interest 2,350 2,504 7,202 7,697 License fees 23,807 21,713 71,422 65,141

Total operating expenses 574,832 544,901 1,694,459 1,595,949

Income from operations 7,754 6,613 18,186 14,405

Nonoperating gains and losses:Unrestricted gifts and bequests 1,266 937 3,145 2,357 Unrestricted income from board-designated investments 548 343 1,797 1,410 Net realized gains on board-designated investments 500 6,462 4,647 11,613 Grants to outside agencies - - - (33) Fundraising expenses (1,494) (1,408) (3,645) (3,414) Other nonoperating losses, net (76) (332) (1,400) (617)

Total nonoperating gains, net 744 6,002 4,544 11,316

Excess of revenues over expenses $ 8,498 $ 12,615 $ 22,730 $ 25,721

(Continued)

June 30Third Quarter Ended

June 30Nine Months Ended


Consolidated Statements of Operations and Changes in Net Assets

(In thousands)

19

2018 2017 2018 2017

Unrestricted net assets:Excess of revenues over expenses $ 8,498 $ 12,615 $ 22,730 $ 25,721 Other changes in unrestricted net assets:Change in funded status of pension and other postretirement plans,

other than net periodic pension and postretirement benefit costs — — 37,810 — Net change in unrealized gains on investments available for sale 2,585 1,920 7,059 10,547 Net assets released from restrictions used for purchase of

property and equipment 1,191 747 3,715 3,676 Other increases — 7 — 1

Increase in unrestricted net assets 12,274 15,289 71,314 39,945

Temporarily restricted net assets:Gifts, grants, and bequests 27,294 27,831 80,514 79,503 Income from restricted endowment and other restricted

investments 909 822 2,168 3,437 Net assets released from restrictions (27,836) (28,744) (83,450) (82,255) Net realized and unrealized gains on investments 5,611 11,273 20,681 29,008 Fundraising expenses (434) (367) (1,375) (1,315) Grants to outside agencies (214) (216) (649) (647) Other decreases (27) (50) (58) (58)

Increase in temporarily restricted net assets 5,303 10,549 17,831 27,673

Permanently restricted net assets:Gifts and bequests 10 6 164 184 Net change in unrealized gains on investments held in perpetual

trusts by others (413) 664 (1,028) 2,469 Other increases — 16 — 16

(Decrease) increase in permanently restricted net assets (403) 686 (864) 2,669

Increase in net assets 17,174 26,524 88,281 70,287

Net assets, beginning of period 1,509,107 1,354,893 1,438,000 1,311,130

Net assets, end of period $ 1,526,281 $ 1,381,417 $ 1,526,281 $ 1,381,417





Consolidated Statements of Operations and Changes in Net Assets (Continued)

(In thousands)

20

2018 2017 2018 2017

Cash flows from operating activities:Increase in net assets $ 17,174 $ 26,524 $ 88,281 $ 70,287 Adjustments to reconcile increase in net assets to net

cash provided by operating activities:Change in funded status of pension and other postretirement plans,

other than net periodic pension and postretirement benefit costs — — (37,810) — Net realized and unrealized gains on investments (8,283) (20,333) (31,359) (53,637) Permanently restricted gifts and bequests (10) (6) (164) (184) Depreciation and amortization 21,941 20,825 65,105 61,626 Provision for estimated self-insurance costs 51,508 46,208 145,680 135,421 Decrease in liabilities for estimated self-insurance costs

resulting from claims paid (48,203) (41,105) (141,115) (120,117) Net (increase) decrease in patient accounts receivable (5,126) 1,091 (5,833) (13,930) (Decrease) increase in accounts payable (1,788) 5,909 (3,814) (1,193) Decrease in accrued employee benefits and

compensation (7,052) (5,312) (10,767) (10,746) (Decrease) increase in estimated third-party payor settlements (3,366) 8,456 4,982 864 (Decrease) increase in all other current and noncurrent assets

and liabilities, net (5,108) 2,586 5,123 9,667

Net cash provided by operating activities 11,687 44,843 78,309 78,058

Cash flows from investing activities:Purchase of property and equipment (15,719) (12,958) (51,140) (36,229) Proceeds from sale of property — 749 — 2,415 Purchases of assets limited as to use (275,560) (224,823) (868,809) (1,058,978) Proceeds from sales of assets limited as to use 276,366 219,419 876,055 1,058,617 Net decrease in funds held by third parties under long-

term debt agreements — — — 135 Other net decreases (increases) in assets limited as to use 261 (3,414) (2,814) (10,843)

Net cash used in investing activities (14,652) (21,027) (46,708) (44,883)

Cash flows from financing activities:Payments on revolving credit loan payable (1,000) (10,000) (1,000) (10,000) Payments on long-term debt (15,976) (18,365) (19,726) (23,748) Permanently restricted gifts and bequests 10 6 164 184

Net cash used in financing activities (16,966) (28,359) (20,562) (33,564)

Net (decrease) increase in cash and cash equivalents (19,931) (4,543) 11,039 (389)

Cash and cash equivalents at:Beginning of period 140,059 125,545 109,089 121,391

End of period $ 120,128 $ 121,002 $ 120,128 $ 121,002


Nine Months EndedJune 30

Third Quarter EndedJune 30


Consolidated Statements of Cash Flows

(In thousands)

21

2018 2017 2018 2017

Lifespan Corporation $ 1,752 $ 2,469 $ 4,698 $ 5,851 Rhode Island Hospital 1,541 6,185 5,211 14,151 The Miriam Hospital 6,881 757 15,539 4,380 Emma Pendleton Bradley Hospital 265 670 2,359 1,965 Newport Health Care Corporation (1,864) (2,745) (6,439) (8,433) Gateway Healthcare (841) (716) (3,297) (3,380) Lifespan Home Medical (26) (55) (31) (269) Lifespan MSO 46 48 146 140 Lifespan Physician Group - - - - Lifespan School Solutions - - - - Hospital Properties - - - -

Total Operating Income $ 7,754 $ 6,613 $ 18,186 $ 14,405


Detail of Operating Income

(In thousands)

Nine Months EndedJune 30

Third Quarter EndedJune 30

22

2018 2017 2018 2017

Lifespan Corporation $ 1,941 $ 2,512 $ 5,621 $ 5,922 Rhode Island Hospital 935 7,623 3,118 15,864 The Miriam Hospital 6,984 2,290 17,084 7,469 Emma Pendleton Bradley Hospital 252 809 2,429 2,212 Newport Health Care Corporation (923) 3 (2,433) (2,069) Gateway Healthcare (838) (973) (3,288) (3,627) Lifespan Home Medical (26) (55) (31) (269) Lifespan MSO 14 18 63 68 Foundations 159 388 167 151 Lifespan Physician Group - - - - Lifespan School Solutions - - - - Hospital Properties - - - -

Total Net Income $ 8,498 $ 12,615 $ 22,730 $ 25,721




Detail of Net Income

(In thousands)

23

Lifespan Corporation and Affiliates Notes to Interim Consolidated Financial Statements (Unaudited) (In thousands)

Note 1: The interim consolidated financial information furnished herein is unaudited; however,

in the opinion of management, the information reflects all adjustments that are necessary to fairly state the consolidated financial position of Lifespan Corporation and Affiliates (Lifespan), the results of their operations, and their cash flows for the interim periods indicated on the same basis as Lifespan’s audited consolidated financial statements. All the adjustments are of a normal recurring nature. These interim consolidated financial statements do not include all the information and footnote disclosures required by generally accepted accounting principles.

Lifespan presumes that users of this interim consolidated financial information have read or have access to Lifespan’s audited consolidated financial statements for the preceding fiscal year, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnotes and other disclosures that would substantially duplicate the disclosures contained in Lifespan’s most recent audited consolidated financial statements have been omitted.

Note 2: The composition of assets limited as to use at June 30 is set forth in the following table:

2018 2017 Funds available for self-insurance

liabilities $ 157,995 $ 155,590 Unrestricted (internally board-designated) 540,078 520,359 Held by third-parties under long-term

debt agreements 1 1 Temporarily restricted funds 377,003 354,152 Permanently restricted funds 161,564 160,153

Total 1,236,641 1,190,255

Less amount required to meet current obligations (42,144) (39,032) Noncurrent assets limited as to use $ 1,194,497 $ 1,151,223

(Continued)

24

Lifespan Corporation and Affiliates (cont’d) Notes to Interim Consolidated Financial Statements (Unaudited) (In thousands)

Assets limited as to use at June 30 are classified as follows:

2018 2017

Available-for-sale $792,092 $ 730,179 Trading 444,549 460,076

Total $ 1,236,641 $ 1,190,255

Note 2 (Continued):

Note 3: Effective December 31, 2017, Lifespan amended the Lifespan Corporation Retirement Plan (the Plan) whereby certain future participation and benefit accruals under the Plan ceased for employees whose terms and conditions of employment are not covered by a collective bargaining agreement. As of that date, Lifespan remeasured the Plan’s assets and benefit obligations. The following table sets forth the Plan’s funded status at December 31, 2017 and September 30, 2017, respectively:

December 31 September 30 2017 2017 2016 Projected benefit obligation $ (789,561) $ (808,727) Plan assets at fair value 560,607 544,339

Funded status $ (228,954) $ (264,388) FASB Accounting Standards Codification (ASC) Topic 715, Compensation-Retirement

Benefits: Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (ASC 715), requires an employer to recognize in its statement of financial position an asset for a benefit plan’s overfunded status or a liability for a benefit plan’s underfunded status, with a corresponding increase or decrease in unrestricted net assets. The funded-status amount is measured as the difference between the fair value of plan assets and the benefit obligation including all actuarial gains and losses and prior service cost. Changes in a benefit plan’s funded status are recognized through increasing or decreasing unrestricted net assets. Based on the December 31, 2017 funded-status amounts for the Plan, Lifespan has recorded an increase in unrestricted net assets of $37,810.

25

2018 2017 2018 2017

Inpatient Statistics:Licensed Beds -- Adult 1,008 1,008 1,008 1,008Licensed Beds -- Pediatrics 157 157 157 157

Total Licensed Beds 1,165 1,165 1,165 1,165

Beds in Service -- Adult 949 949 947 945Beds in Service -- Pediatrics 157 157 157 157

Total Staffed Beds 1,106 1,106 1,104 1,102

Discharges:Adult 14,296 14,125 42,601 41,771Pediatrics 1,507 1,521 4,940 4,810

Total 15,803 15,646 47,541 46,581

Patient Days:Adult 70,672 70,069 213,285 208,408Pediatrics 11,324 11,701 36,028 35,138

Total 81,996 81,770 249,313 243,546

Observation Days:Adult 6,031 4,593 15,178 13,564Pediatrics 710 662 2,148 1,863

Total 6,741 5,255 17,326 15,427

Total Inpatient Activity:Adult 76,703 74,662 228,463 221,972Pediatrics 12,034 12,363 38,176 37,001

Total 88,737 87,025 266,639 258,973

Average Length of Stay:Adult 4.94 4.96 5.01 4.99Pediatrics 7.51 7.69 7.29 7.31

Total 5.19 5.23 5.24 5.23

Percent of Total Occupancy of Beds in Service:Adult 88.8% 86.5% 88.4% 85.7%Pediatrics 84.2% 86.5% 89.1% 86.0%

Total 88.2% 86.5% 88.5% 85.8%

Medicare Case Mix Index 1.685 1.730 1.695 1.665

Inpatient Surgeries 4,090 4,173 11,873 11,925

Outpatient Statistics:Emergency Room Visits 62,674 64,150 191,514 191,826Clinic Visits 171,621 161,709 487,976 466,623Ambulatory Surgeries 6,021 6,438 18,612 18,782

Lifespan Corporation and AffiliatesConsolidated Utilization Statistics

June 30 June 30Third Quarter Ended Nine Months Ended

26

management’s discussion of recent financial performance ...management’s discussion of recent...

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