Financial Disclosure

For the Three Months Ended March 31, 2019 (Unaudited)

CONTENTS:

Unaudited Consolidated Statements of Operations Page 1

Unaudited Consolidated Statements of Financial Position Page 2
Unaudited Consolidated Statements of Changes in Net Assets Page 4
Unaudited Consolidated Statements of Cash Flows Page 5
Footnotes to Unaudited Consolidated Financial Statements Page 6
Utilization Statistics Page 14
Management Discussion Page 15

Forward Looking Information:

This Report contains disclosures that contain “forward looking statements” within the meaning of the federal securities laws.
Forward looking statements include all statements that do not relate solely to historical or current fact and can be identified by
the use of words “expect”, “anticipate”, “intend”, “project”, “likely”, “may”, “might”, “estimate”, “budget” and similar words or
expressions. These forward looking statements are based on the current plans and expectations of The Mount Hospital (“MSH”)
as of the date of this report and are subject to a number of known and unknown risks and uncertainties inherent in the operation
of health care facilities, many of which are beyond MSH’s control that could significantly affect current plans and expectations and
MSH’s future financial position and results of operations. Important factors that could cause results to differ materially from those
expected by management include, but are not limited to, general, economic and business conditions, competition from other
healthcare facilities in MSH’s service area, an unfavorable pricing environment, failure to continue current cost control and pricing
strategies, inability to achieve expected efficiencies in operations or effectively control health care costs, the efforts of insurers and
others to contain health care costs, increased collections risks associated with uninsured accounts and the co-pay and deductible
portions of insured accounts, payor or insurance company financial problems or bankruptcy, delays in receiving payments as has
been periodically experienced in New York as a result of budget constraints, changes in Medicare or Medicaid reimbursement
formulas, the risk that managed care provider arrangements will not be negotiated or renewed on acceptable terms, results of
reviews of MSH’s cost reports, future divestitures or acquisitions which may have a financial impact, availability and terms of
capital to fund future expansion and ongoing capital needs, ability to obtain appropriate insurance coverage or for independent
physicians on MSH’s medical staff to obtain appropriate insurance coverage, loss experience under general and professional
liability, self-insurance programs and similar matters, new laws or regulations, the possible enactment of federal or state health
care reform, fines or penalties related to regulatory matters, changes in accounting standards and practices, the outcome of
pending and future litigation and government investigations, labor issues and the ability to attract and retain qualified
management and other personnel, including physicians, nurses and medical support personnel. Given these uncertainties,
bondholders and prospective bondholders are cautioned not to unduly rely on such forward looking statements when evaluating
the information presented in this quarterly report. MSH disclaims any obligation and makes no promise to update any such factors
or forward looking statements or to disclose any facts, events or circumstances after the date hereof that may affect the accuracy
of any forward looking statement, whether as a result of changes in underlying factors, to reflect new information, as a result of
the occurrence of events or developments or otherwise.
 The Mount Sinai Hospital
Consolidated Statements of Operations
($ in 000's)

Unaudited
For the Three Months Ended
March 31, 2019 March 31, 2018
Operating Revenue
Net Patient Service Revenue $ 695,716 $ 647,279
Investment Income and Net Realized Gains on Sale of Securities 28,557 6,729
Contributions 95 285
Other Revenue 27,755 21,716
Net Assets Released from Restrictions for Operations 11,957 11,506
Total Operating Revenue 764,080 687,515

Operating Expenses
Salaries and Wages 281,168 253,447
Employee Benefits 74,499 64,777
Supplies and Other 317,658 291,899
Depreciation 29,716 27,744
Interest and Amortization 8,009 8,986
Total Operating Expenses 711,050 646,853

Excess of Operating Revenue over Operating Expenses before Other

Items 53,030 40,662

Other Items
Net Change in Unrealized Gains and Losses on Investments and Change in
Value of Alternative Investments 25,294 (5,453)
Third Party Reimbursement Settlements 575 14,297
Excess of Revenue over Expenses 78,899 49,506

Other Changes in Net Assets without Donor Restrictions

Transfers to Affiliates (18,721) (15,520)
Net Assets Released from Restrictions for Capital Asset Acquisitions 11 7
Net Increase in Net Assets without Donor Restrictions $ 60,189 $ 33,993

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 The Mount Sinai Hospital
Consolidated Statements of Financial Position
($ in 000's)

Unaudited Audited
March 31, 2019 December 31, 2018
Assets
Current Assets:
Cash and Cash Equivalents $ 87,964 $ 110,221
Short-Term Investments 356,087 452,833
Total Cash, Cash Equivalents and Short-Term Investments 444,051 563,054
Patient Accounts Receivable, net 388,702 370,347
Professional Liabilities Insurance Recoveries Receivable 39,453 39,453
Assets Limited as to Use, current portion 51,967 33,868
Due from Related Organizations, net, current portion 306,748 200,797
Inventories 40,333 39,921
Other Current Assets 40,848 35,178
Total Current Assets 1,312,102 1,282,618

Pooled Investments 933,024 878,190

Other Investments 232,472 229,694
Assets Limited as to Use, less current portion 40,171 39,940
Beneficial Interest in Self-Insurance Trust 90,663 44,083
Other Assets 50,716 41,501
Due from Related Organizations, net, less current portion 509,925 506,594
Professional Liabilities Insurance Recoveries Receivable, less
current portion 179,732 179,732
Property, Plant and Equipment, net 1,001,679 984,751
Total Assets $ 4,350,484 $ 4,187,103

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 The Mount Sinai Hospital
Consolidated Statements of Financial Position
($ in 000's)

Unaudited Audited
March 31, 2019 December 31, 2018
Liabilities and Net Assets
Current Liabilities:
Accounts Payable and Accrued Expenses $ 202,939 $ 205,213
Accrued Salaries and Related Liabilities 165,041 114,823
Accrued Interest Payable 8,206 14,916
Accrued Construction and Capital Asset Liabilities 12,508 9,658
Current Portion of Long-Term Debt 33,380 33,380
Professional Liabilities, current portion 39,453 39,453
Other Current Liabilities 59,840 37,280
Total Current Liabilities 521,367 454,723

Long-Term Debt, Less Current Portion 838,931 841,627

Accrued Postretirement Benefits 9,831 9,831
Reserve for Self Insurance Liability 90,663 44,083
Deferred Gain on Transfer of Real Estate 27,055 27,055
Professional Liabilities, Less Estimated Current Portion 179,732 179,732
Other Liabilities 432,017 446,107
Total Liabilities 2,099,596 2,003,158

Commitments and Contingencies

Net Assets
Net Assets Without Donor Restrictions 2,049,718 1,989,529
Net Assets With Donor Restrictions 201,170 194,416
Total Net Assets 2,250,888 2,183,945

Total Liabilities and Net Assets $ 4,350,484 $ 4,187,103

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 The Mount Sinai Hospital
Consolidated Statements of Changes in Net Assets
($ in 000's)

Net Assets with Donor Restrictions

Net Assets Purpose and Total Net Assets
without Donor Time Permanent with Donor
Restrictions Restrictions Endowment Restrictions Total

Net assets at beginning of period - January 1, 2019 1,989,529 108,455 85,961 194,416 $ 2,183,945
Net increase in net assets without donor restrictions 60,189 - - - 60,189
Donor restricted contributions, net - 18,722 - 18,722 18,722
Net assets released from restrictions for operations - (11,957) - (11,957) (11,957)
Net assets released from restrictions for asset acquisition - (11) - (11) (11)
Net assets at end of period - March 31, 2019 60,189 6,754 85,961 6,754 $ 159,658

Net assets at beginning of period - January 1, 2018 $ 1,829,431 $ 104,359 $ 83,811 188,170 $ 2,017,601
Net increase in net assets without donor restrictions 33,993 - - - 33,993
Donor restricted contributions, net - 13,335 2,000 15,335 15,335
Net assets released from restrictions for operations - (11,506) - (11,506) (11,506)
Net assets released from restrictions for asset acquisition - (7) - (7) (7)
Net assets at end of period - March 31, 2018 1,863,424 104,359 83,811 188,170 $ 2,055,416

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 The Mount Sinai Hospital
Consolidated Statements of Cash Flows
($ in 000's)

Unaudited
For the Three Months Ended
March 31, 2019 March 31, 2018
Operating Activities
Change in net assets $ 66,943 $ 37,815
Adjustments to reconcile change in net assets to net cash
(used in)/provided by operating activities:
Depreciation 29,716 27,744
Amortization of deferred financing fees and bond premium/discount (51) (64)
Net change in unrealized gains and losses on investments and change
in value of alternative investments (25,294) 5,453
Net donor restricted contributions (18,722) (15,335)
Transfers to affiliates 18,721 15,520
Changes in:
Patient accounts receivable (18,355) (16,608)
Accounts payable and accrued expenses (2,274) (5,819)
Accrued salaries and related liabilities 50,218 18,025
Accrued interest payable (6,710) (239)
Due to/from related organizations (105,951) (78,429)
Other operating liabilities 25,945 1,298
Other operating assets (15,298) 18,586
Net cash (used in)/provided by operating activities (1,112) 7,947

Investing Activities:
Acquisition of property, plant and equipment, net (46,644) (36,569)
Due from related organizations for capital purposes (3,331) (20,278)
Increase in investments, net 64,428 (307,411)
(Increase)/Decrease in assets limited as to use (18,330) (16,390)
Funding of self-insurance trust (14,625) -
Transfers to affiliates (18,721) (15,520)
Net cash used in investing activities (37,223) (396,168)

Financing Activities
Principal payments on long term debt (2,644) (3,953)
Net donor-restricted contributions 18,722 15,335
Net cash provided by financing activities 16,078 11,382

Net decrease in cash and cash equivalents (22,257) (376,839)

Cash and cash equivalents at beginning of period 110,221 681,241
Cash and cash equivalents at end of period $ 87,964 $ 304,402

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 Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2019 (Unaudited)

Note A – Organization and Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of March 31, 2019 and for the three
months then ended have been prepared in accordance with U.S. generally accepted accounting principles
(except as regarding Accounting Standards Update No. 2016-02, Leases, which MSH anticipates implementing
during 2019) applied on a basis substantially consistent with that of the 2018 audited consolidated financial
statements of The Mount Sinai Hospital (“MSH”). They do not include all of the information and footnotes
required by U.S. generally accepted accounting principles for complete consolidated financial statements. In
the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included.

MSH presumes that users of this interim financial information have read or have access to MSH’s audited
consolidated financial statements and that the adequacy of additional disclosures needed for a fair
presentation may be determined in that context. MSH’s audited consolidated financial statements for the
years ended December 31, 2017 and 2016 are on file, pursuant to MSH’s continuing disclosure requirements
and the information contained therein is incorporated herein. Accordingly, footnotes and other disclosures,
including disclosures related to the composition of the investment pool and details of investments that would
substantially duplicate the disclosures contained in MSH’s most recent audited consolidated financial
statements have been omitted.

Patient volumes and net operating revenue and results are subject to seasonal and other variations caused by
a number of factors. Monthly and periodic operating results are not necessarily representative of operations
for a full year for various reasons, including levels of occupancy and other patient volumes, interest rates,
unusual or infrequent items and other seasonal fluctuations. These same considerations apply to year-to-year
comparisons.

Certain amounts in the accompanying unaudited consolidated financial statements are projections based on
amounts that are only updated annually and are therefore projected for interim financial reporting purposes.
Such amounts and estimates are subject to change and are reevaluated by MSH periodically and on an annual
basis.

On January 1, 2018, MSH adopted Accounting Standards Codification (“ASC”) 606, Revenue from Contracts
with Customers, and all of the related amendments (the “New Revenue Standard”). The New Revenue
Standard requires entities to recognize the amount of revenue it expects for the transfer of goods or services
to customers. The adoption of this standard, using a modified retrospective method, did not have a material
impact on MSH’s consolidated financial position, results of operations or cash flows as compared to what
reported amounts would have been under the prior standard.

On February 16, 2018, South Nassau Communities Hospital (“South Nassau”) and Mount Sinai Hospitals Group
(“MSHG”) signed an Affiliation Agreement, whereby MSHG became the sole corporate member and active
parent of South Nassau on October 23, 2018 (the “Closing Date”). On the Closing Date, MSHG made an initial
payment of $20 million to South Nassau and anticipates making additional payments of $20 million per year
over the next five years ($120 million in total) to South Nassau to support certain capital projects. South
Nassau will not become a Member of the Obligated Group as part of this affiliation.

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 Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2019 (Unaudited)

The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02,
Leases (Topic 842), which requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability for all
leases with terms greater than 12 months and also requires disclosures by lessees and lessors about the
amount, timing and uncertainty of cash flows arising from leases. MSH is in the process of implementing this
new accounting standard, but the Hospital has not made the necessary adjustments to its consolidated
financial statements at this time. MSH anticipates implementing the standard during 2019.

Note B – Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated
financial statements. Estimates also affect the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.

Note C – Fair Value Measurement

For assets and liabilities required to be measured at fair value, MSH measures fair value based on the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. In order to increase consistency and comparability in fair value
measurements, MSH follows a fair value hierarchy that prioritizes observable and unobservable inputs used to
measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for
identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Observable inputs that are based on inputs not quoted in active markets, but corroborated by
market data.
Level 3: Unobservable inputs are used when little or no market data is available. The fair value
hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, MSH utilizes valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs to the extent possible as well as considers nonperforming risk in its
assessment of fair value. The table below excludes investments reported using the equity method of
accounting. Fair value for Level 1 is based upon quoted market prices. Fair value for Level 2 is based on
quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in
markets that are not active and model-based valuation techniques for which all significant assumptions are
observable in the market or can be corroborated by observable market data for substantially the full term of
the assets. Inputs are obtained from various sources including market participants, dealers and brokers.

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 Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2019 (Unaudited)

Financial assets carried at fair value by MSH as of March 31, 2019 and December 31, 2018 are classified in the
tables below in one of the three categories described above (in thousands):

March 31, 2019

Level 1 Level 2 Level 3 Total
Cash and Cash Equivalents 144,575 - - 144,575

Fixed Income
U.S. Government - 260,165 - 260,165
Corporate Bonds - 111,625 - 111,625
Total 144,575 371,790 516,365

Pooled Investments - - - 952,848

Total 144,575 371,790 - 1,469,213

December 31, 2018

Level 1 Level 2 Level 3 Total
Cash and Cash Equivalents 144,150 - - 144,150

Fixed Income
U.S. Government - 334,177 - 334,177
Corporate Bonds - 136,186 - 136,186
Total 614,513

Pooled Investments - - - 900,538

Total 144,150 470,363 - 1,515,051

This table does not include other investments that are not carried at fair value (approximately $232.5 million
at March 31, 2019 and $229.7 million at December 31, 2018). Pooled investments of approximately $19.8
million and $22.3 million are included within short-term investments at March 31, 2019 and December 31,
2018, respectively.

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 Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2019 (Unaudited)

Note D – Long-Term Debt

A summary of long-term debt is as follows at March 31, 2019 ($ in ‘000’s):

Series 2010 bonds, including unamortized original issue premium of $4,906; maturing
217,853
through 2026 with interest rates varying from 1.81% to 5.00% per annum (a)
Series 2011A bonds, including unamortized original issue premium of $436; maturing
57,885
through 2041 with interest rates varying from 3.00% - 5.00% (b)
Series 2013 bonds, maturing serially through 2024 with fixed interest rate of 2.83% (c) 98,933
Series 2017 bonds, interest rates ranging from 3.83% to 3.98% (d) 382,000

Accounts receivable financing (e) 4,463

Promissory note payable and deferred interest (f) 112,880

Capital lease (g) 5,616

Deferred financing costs (7,319)

Total 872,311

As of the most recent measurement period, MSH was in compliance with all required financial covenants for
its Long-term debt.

(a) In June 2010, MSH refunded and refinanced its outstanding Series 2000 bonds that had been issued
through the Dormitory Authority of the State of New York (“DASNY”) partially at par and partially at
101%. The new bonds, Series 2010, were issued as both taxable and tax-exempt bonds ($28.5 million
par amount of taxable bonds and $331.2 million par amount of tax-exempt bonds). The bonds mature
serially through July 1, 2026.

(b) In October 2011, DASNY issued $65.4 million of tax-exempt bonds (Series 2011A) on behalf of MSH.
The bonds were issued to finance MSH’s share of the costs of construction of a cancer treatment
center in the Leon and Norma Hess Center for Science & Medicine. The bonds mature serially through
July 1, 2041.

(c) In December 2013, Build NYC Resource Corporation issued $112.0 million of tax-exempt bonds (Series
2013A and B) on behalf of MSH. The bonds were issued to finance an expansion and renovation
project at MSH’s Queens campus. The bonds were privately placed with JPMorgan Chase and TD Bank.
The bonds mature through July 1, 2024.

(d) In December 2017, MSH entered issued $382.0 million of taxable bonds for general taxable purposes.
Certain proceeds of the bonds (approximately $106.0 million) were used to repay the outstanding debt
of Beth Israel Medical Center (“BIMC”) which MSH had previously guaranteed. Funds loaned to BIMC
from MSH are recorded as a component of due from related organizations. Other proceeds of the
bonds were used to repay MSH’s $40.0 million bank loan noted in (h) below. The bonds are structured

Page | 9
 Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2019 (Unaudited)

with interest only payments until 2031 and two bullet maturities: one in 2035 and the other in 2048.
Annual sinking fund payments begin in 2031.

As security for its obligations under the Series 2010, 2011A, 2013 A and B bonds and Series 2017
bonds, MSH provided a gross revenue pledge and executed a mortgage on its patient care property.
Furthermore, MSH agreed to limitations on its ability to transfer assets, borrow additional funds as
well as other limitations. MSH agreed to maintain certain financial ratios including a debt service
coverage ratio and days cash on hand ratio and to maintain certain debt service and other reserve
funds (included in assets limited as to use).

(e) In October 2006, MSH entered into a term loan agreement with JP Morgan Chase Bank, N.A. The term
loan agreement was extended in 2013 and re-structured as a 7-year loan with 10-year amortization.
The loan was extended to expire in October 2020. Interest is fixed at 2.44%.

(f) In August 2014, MSH and the Icahn School of Medicine at Mount Sinai (“ISMMS”) entered into a
transaction pursuant to which Mount Sinai purchased a condominium interest of approximately
450,000 square feet of space located at 150 East 42nd Street to be used to consolidate corporate
services of the Mount Sinai Health System. The new space replaced existing leased and owned office
space to provide additional capacity for clinical and research activities. The condominium interest was
purchased by MSH and shortly thereafter transferred to a special-purpose, limited liability company,
formed by MSH (the “LLC”). MSH and ISMMS are obligated to guarantee, on a joint and several basis,
all of the obligations of the LLC which include note payments, operating expenses, taxes and other
carrying costs and charges, some of which expenses escalate on an annual basis. The principal amount
is $110.1 million, with monthly payments through March 2046, and interest at a rate of 8% per year,
with deferred payments until September 2015. The note is not an obligation under the Master Trust
Indenture. Loan payments and expenses are allocated to the corporate entities that use the space,
including MSH, ISMMS, BIMC, The St. Luke’s-Roosevelt Hospital Center (“SLR”), and The New York Eye
& Ear Infirmary (“NYEE”).

(g) In June 2016, MSH entered into a $9.8 million capital lease to finance the acquisition of hospital beds
for use by MSH, BIMC, SLR and NYEE. Lease term is seven years at an effective interest rate of 1.91%.

Principal payments on long-term debt subsequent to March 31, 2019 are as follows (in thousands):
2019 30,099
2020 36,109
2021 35,964
2022 37,646
2023 38,317
Thereafter 696,712
Total 874,847

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 Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2019 (Unaudited)

Note E – Accounts Receivable for Services to Patients and Net Patient Service Revenue

Effective January 1, 2018 upon the adoption of ASU 2014-09, net patient service revenue is reported at the
amount that reflects the consideration for which the Hospital expects to be entitled in exchange for providing
patient care.

The Hospital uses a portfolio approach as a practical expedient to account for categories of patient contracts as
collective groups rather than recognizing revenue on an individual contract basis. The portfolio consists of
major payor classes for inpatient revenue and outpatient revenue. Based on historical collection trends and
other analyses, the Hospital believes that revenue recognized by utilizing the portfolio approach approximates
the revenue that would have been recognized if an individual contract approach were used.

The Hospital’s initial estimate of the transaction price for services provided to patients subject to revenue
recognition is determined by reducing the total standard charges related to the patient services provided by
various elements of variable consideration, including contractual adjustments, discounts, implicit price
concessions, and other reductions to the Hospital’s standard charges. The Hospital determines the transaction
price associated with services provided to patients who have third-party payor coverage on the basis of
contractual or formula-driven rates for the services rendered (see description of third-party payor payment
programs below). The estimates for contractual allowances and discounts are based on contractual
agreements, the Hospital’s discount policies and historical experience. For uninsured and under-insured
patients who do not qualify for charity care, the Hospital determines the transaction price associated with
services rendered on the basis of charges reduced by implicit price concessions. Implicit price concessions
included in the estimate of the transaction price are based on the Hospital’s historical collection experience for
applicable patient portfolios.

Generally, the Hospital bills patients and third-party payors after the services are performed and the patient is
discharged. Net patient service revenue is recognized as performance obligations are satisfied. Performance
obligations are determined based on the nature of the services provided by the Hospital. Net patient service
revenue for performance obligations satisfied over time is recognized based on actual charges incurred in
relation to total charges. The Hospital believes that this method provides a reasonable depiction of the
transfer of services over the term of the performance obligation based on the services needed to satisfy the
obligation. Generally, performance obligations satisfied over time relate to patients receiving inpatient acute
care services or patients receiving services in the Hospital’s outpatient settings. The Hospital measures the
performance obligation from admission into the Hospital or the commencement of an outpatient service to
the point when it is no longer required to provide services to that patient, which is generally at the time of
discharge or the completion of the outpatient visit.

As substantially all of its performance obligations relate to contracts with a duration of less than one year, the
Hospital has elected to apply the optional exemption provided in ASU 2014-09 and, therefore, is not required
to disclose the aggregate amount of the transaction price allocated to performance obligations that are
unsatisfied or partially unsatisfied at the end of the reporting period. The unsatisfied or partially unsatisfied
performance obligations referred to above are primarily related to inpatient acute care services at the end of
the reporting period for patients who remain admitted at that time (in-house patients). The performance

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 Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2019 (Unaudited)

obligations for in-house patients are generally completed when the patients are discharged, which for the
majority of the Hospital’s in-house patients occurs within days or weeks after the end of the reporting period.

Subsequent changes to the estimate of the transaction price (determined on a portfolio basis when applicable)
are generally recorded as adjustments to patient service revenue in the period of the change. For the three
months ended March 31, 2019, changes in the Hospital’s estimates of implicit price concessions, discounts,
contractual adjustments or other reductions to expected payments for performance obligations satisfied in
prior years were not significant. Portfolio collection estimates are updated based on collection trends.
Subsequent changes that are determined to be the result of an adverse change in the patient’s ability to pay
(determined on a portfolio basis when applicable) are recorded as bad debt expense. Bad debt expense for
the three months ended March 31, 2019 was not significant.

The Hospital has determined that the nature, amount, timing and uncertainty of revenue and cash flows are
affected by the following factors: payors, lines of business and timing of when revenue is recognized. Tables
providing details of these factors are presented below.

Net patient service revenue disaggregated by payor for the three months ended March 31, 2019 and March
31, 2018, is as follows (in thousands):

For the Three Months Ended

March 31, 2019 March 31, 2018
Blue Cross 139,391 122,364
Commercial 41,113 34,397
Managed Care 165,815 155,917
Medicaid 25,970 28,037
Medicaid HMO 103,050 101,540
Medicare 140,633 130,663
Medicare HMO 71,866 64,790
No Fault/Workers Comp - 1,863
Self-Pay 7,878 7,708
Total 695,716 647,279

Deductibles, copayments and coinsurance under third-party payment programs which are the patient’s
responsibility are included within the respective primary payor category above.
Net patient service revenue disaggregated by lines of service for the three months ended March 31, 2019 and
March 31, 2018, is as follows (in thousands):
For the Three Months Ended
March 31, 2019 March 31, 2018
Inpatient Services 462,113 436,990
Outpatient Services 233,603 210,289
Total 695,716 647,279

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 Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2019 (Unaudited)

At March 31, 2019, patient accounts receivable, net is comprised of the following components (in thousands):
Patient receivables 356,352
Contract assets 32,350

Contract assets are related to in-house patients who were provided services during the reporting period but
were not discharged as of the reporting date and for which the Hospital does not have the right to bill.

Note F – Transfer to Affiliates

Transfers to affiliates consists of $18.7M as of March 31, 2019 ($15.5M as of March 31, 2018) for MSH’s funding
of ISMMS’s community practice plan deficits.

Note G – Subsequent Events

Generally accepted accounting principles establish standards for accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or are available to be issued. The
standards are to be applied to subsequent events not addressed in other applicable accounting principles
generally accepted in the United States. The standards set forth the period after the balance sheet date during
which management should evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, the circumstances under which an entity should recognize events or
transactions occurring after the balance sheet date in its financial statements and the disclosures an entity
should make about events or transactions that occurred after the balance sheet date.

For purposes of the accompanying interim consolidated financial statements, MSH has considered for
accounting and disclosure events that occurred through May 30, 2019.

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 Utilization Statistics for
The Mount Sinai Hospital*

Three Months Ended Three Months Ended

March 31, 2019 March 31, 2018
Discharges (excluding newborn) 15,008 14,525
Patient Days (excluding newborn) 95,006 93,538
Average Length of Stay 6.3 6.4
Average Census 1,056 1,039
ER Visits (excluding admits) 35,872 37,279
Ambulatory Surgery Visits 9,778 9,634

Three Months Ended Three Months Ended

March 31, 2019 March 31, 2018
Medicare 3,358 23% 3,325 23%
Medicaid 3,507 23% 3,404 23%
Blue Cross 1,641 11% 1,675 12%
Managed Care 5,587 37% 5,192 36%
Other Commercial 783 5% 782 5%
Self-Pay 132 1% 147 1%
Total 15,008 100% 14,525 100%

* Includes Mount Sinai Hospital Queens

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 Review of Performance
For the Three Months Ended March 31, 2019

Mount Sinai Health System

Mount Sinai Health System is an integrated health care system and academic medical center consisting of
five hospitals (the “Hospitals”): The Mount Sinai Hospital (“MSH”), Beth Israel Medical Center (“BIMC”),
The St. Luke’s-Roosevelt Hospital Center (“SLR”), The New York Eye and Ear Infirmary (“NYEE”) and South
Nassau Communities Hospital (“South Nassau”); and a School of Medicine: Icahn School of Medicine at
Mount Sinai (“ISMMS”). Mount Sinai Hospitals Group, Inc. (“MSHG”) is the member of the
Hospitals. Mount Sinai Health System (“MSHS”) is the member of MSHG, ISMMS and The Mount Sinai
Medical Center, Inc. MSH is currently the sole member of the Obligated Group. None of the other Mount
Sinai Health System entities are obligated to repay the Obligations issued under the Master Trust
Indenture. Following is an organizational chart demonstrating the corporate structure:

Mount Sinai Health System, Inc.

(Passive Parent Holding Company)

Icahn School of Medicine Mount Sinai Hospitals Group, Inc. Mount Sinai Medical
at Mount Sinai (Active Parent Holding Company) Center

The St. Luke’s- South Nassau

The Mount Sinai Beth Israel Medical The New York Eye &
Roosevelt Hospital Communities Hospital
Hospital* Center** Ear Infirmary
Center

Member of the Obligated Group

* Includes Mount Sinai campus in Queens
** Includes Beth Israel campus in Brooklyn Non-member of the Obligated Group

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The creation of Mount Sinai Health System is an integral part of MSH’s long-term vision and strategy. MSH
management believes that, in the long term, an integrated health care system is central to meeting the
requirements of a changing health care environment. The model of care is changing not just for New York
hospitals, but for all health care providers, nationwide. Accountable care organizations, bundled
payments, pay for performance and quality outcomes, shared savings programs and full risk models are
becoming a reality and increasingly displacing the current system of fee- for-service. Expanded geographic
reach, an increased patient base and access to primary care physicians will be critical components of
successful systems in the future. Mount Sinai Health System was formed to address these changing
conditions. Notwithstanding the benefits to the formation of the health system, there are risks, including
execution risk and costs of integration.

In September 2015, MSHG entered into an agreement with the New York State Department of Health to
participate in the Vital Access Provider Safety Net Program (“VAP”). As a participant in this program,
MSHG was awarded approximately $81.4 million in funding to extend over three years. As of March 31,
2018, the full VAP award has been received. MSHG was also granted a temporary Medicaid rate
enhancement also extending over three years which ended on March 31, 2018. MSHG has also agreed to
complete a full asset merger of MSH, BIMC, SLR and NYEE by no later than December 31, 2019.

In October 2018, MSHG became the sole corporate member and active parent of South Nassau. In
connection with the transaction, MSH has agreed to contribute $120 million to South Nassau over five
years to assist in the development of capital projects. For the year ended December 31, 2018, $20 million
was contributed by MSH. South Nassau did not become a Member of the Obligated Group as part of this
affiliation.

On November 27, 2018, MSH, BIMC, Montefiore Health System, and Maimonides Medical Center,
collectively the owners of Hospitals Insurance Company (“HIC”) and FOJP Service Corporation (“FOJP”),
announced their agreement to sell HIC and FOJP to The Doctors Company for $650 million, subject to
closing adjustments. The transaction is subject to regulatory approvals and is expected to close later in

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 Review of Performance
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2019. HIC has provided the hospitals and related physicians with medical malpractice insurance for 40
years. The hospitals will share in the proceeds ratably according to their ownership.

Summary of Operations
For the three months ended March 31, 2019, MSH recorded an excess of operating revenue over
operating expenses before other items of $53.0 million and a $60.2 million increase in net assets without
donor restrictions. This compares to an excess of operating revenue over operating expenses before other
items of $40.7 million and an increase in net assets without donor restrictions of $34.0 million for the
three months ended March 31, 2018. Excess of operating revenue over operating expenses before other
items for the three months ended March 31, 2019 were $12.4 million higher than the same period in the
prior year.

For the three months ended March 31, 2019, MSH recorded total operating revenue before other items
of approximately $764.1 million: 60% from inpatient services; 31% from outpatient services; and 9% from
other sources. MSH recorded $695.7 million in net patient service revenue, earned $28.6 million in
unrestricted investment income and net realized gains on sales of securities, received $0.1 million in
unrestricted philanthropic contributions, and recorded $27.8 million in other revenue and $12.0 million
in net assets released from restrictions for operations. Other revenue includes the receipt of Delivery
System Reform Incentive Payment revenue (DSRIP) and 340(b) contract pharmacy program revenue as
well as revenue from ancillary services, such as the cafeteria, parking lot and rental properties. DSRIP
revenue is offset by related expenses included in operating expenses. Net assets released from
restrictions represent donor-restricted contributions for which all donor restrictions have been satisfied
during the reporting period. Total operating revenue for the three months ended March 31, 2019
increased $76.6 million, or 11%, as compared to the three months ended March 31, 2018.

Net patient service revenue for the three months ended March 31, 2019 increased 8% as compared to
the three months ended March 31, 2018. The $48.4 million increase in net patient service revenue was a
result of a $23.5 million increase in net inpatient revenue and a $24.9 million increase in net outpatient
revenue. Inpatient discharges increased by 483 over the prior year period. Outpatient revenue increased

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 Review of Performance
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12% largely due to an increase in outpatient cancer and non-cancer infusion, and cardiology cases. The
increase in net inpatient revenue reflects an increase in complex cases and third party payments.

Length of stay at the Manhattan campus increased to 6.3 from 6.2 in the prior year period. Overall case
mix for the Manhattan campus increased by 0.03 as compared to the prior year period.

Total operating expenses for the three months ended March 31, 2019, totaled $711.1 million compared
with $646.9 million for the three months ended March 31, 2018. Expenses for the first quarter of 2019
break down as follows: 50% in salaries and benefits; 45% in supplies; 4% in depreciation and amortization
and 1% in interest expense.

Salaries and wages and benefits expense increased 12% for the three months ended March 31, 2019 as
compared to the corresponding period in 2018. Supplies expense increased 9% partly as a result of higher
costs related to increased surgical volume as well as in oncology and other, non-cancer infusion services.

Reflecting the increase in net patient service revenue, patient accounts receivable net at March 31, 2019
increased by $18.4 million since December 31, 2018, totaling 56% of net patient service revenue as
compared to 57% at year-end. Days in accounts payable decreased from 65 days at December 31, 2018
to 61 days at March 31, 2019.

During the three months ended March 31, 2019, MSH expended $46.6 million on capital acquisitions from
operations. MSH continues to provide ISMMS with liquidity in connection with ongoing projects related
to the strategic plan. The amounts provided to ISMMS are recorded as Due from related organizations on
the Consolidated Statements of Financial Position. The amounts provided to ISMMS are recorded as Due
from related organizations on the Consolidated Statements of Financial Position. The amount due to MSH
was approximately $338.7 million at March 31, 2019, an increase of $69.0 million since December 31,
2018. As a result of these cash expenditures, Cash, short-term and pooled investments decreased by
$64.2 million (4%) between December 31, 2018 and March 31, 2019.

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System Strategy and Plans for 2019

The health care environment in New York and throughout the country continues to evolve with inpatient
care increasingly reserved for high acuity cases, while lower acuity cases are cared for in an outpatient or
ambulatory setting. Further accelerating the shift from inpatient to outpatient is the move from fee-for-
service to other forms of value-based reimbursement, including shared savings, pay-for-performance and
bundled payments. As part of its efforts to address such changes, Mount Sinai Health System is
transforming its downtown campus (BIMC and NYEE) to recognize this change and has developed a
strategy to improve access and increase quality while focusing on keeping the community healthy. The
project is expected to include a new, smaller hospital with approximately 70 medical/surgical beds and a
new Emergency Department. The transition is expected to take four years. BIMC will remain open during
the transition. Mount Sinai Health System expects to make a significant investment into its downtown
strategy over the coming years with the aforementioned new hospital and Emergency Department and
by enlarging its physician network, ambulatory platform and cancer center. This investment will allow for
the future growth of the system. Mount Sinai Health System is also building a new behavioral health
center that will be a “one-stop” location for mental health, addictions, physical health, and social service
needs for the downtown community. This site will consolidate and expand the behavioral health offerings
to the community.

MSH’s management continues to focus on developing and growing top-line revenue while controlling
expenses as the best strategy to maintain progress and improvement. System integration, establishing
centers of excellence and expanding Mount Sinai Health System’s geographic footprint are key elements
of this strategy. The Mount Sinai Health System network is comprised of multiple clinical, academic and
administrative relationships throughout the greater New York metropolitan area and Florida. These
relationships allow Mount Sinai Health System to extend its health care delivery system to a large and
diverse patient population. This network includes hospitals, physician practices – both employed and
affiliated, – urgent care centers, academic affiliations, long term care facilities and ambulatory surgery
centers. The inclusion in the health system of South Nassau, a 455 bed, acute care hospital located in
Oceanside, NY, serving over 900,000 residents on the south shore of Long Island serves to further increase

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the geographic reach of the network. Mount Sinai Health System continues to focus on recruiting key
physicians in certain identified areas for growth, such as cancer, cardiac and surgical services.

MSH will continue to focus on reducing its length of stay as a way to create additional capacity while
limiting the cost of investing in new units, as well as renovating certain departments and relocating others.
MSH participates in various shared savings agreements and is a participant in a Medicare ACO. MSH is
also actively managing its Medicaid at-risk population.

MSH is projecting a net hospital operating surplus for 2019 of $175.4M.

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