Mass General Brigham Incorporated and Affiliates Consolidated Financial Statements (With Consolidating Financial Information) September 30, 2020 and 2019
Total Page:16
File Type:pdf, Size:1020Kb
Mass General Brigham Incorporated and Affiliates Consolidated Financial Statements (With Consolidating Financial Information) September 30, 2020 and 2019 Mass General Brigham Incorporated and Affiliates Index September 30, 2020 and 2019 Page(s) Report of Independent Auditors ........................................................................................................... 1–2 Consolidated Financial Statements Balance Sheets ............................................................................................................................................ 3 Statements of Operations ............................................................................................................................ 4 Statements of Changes in Net Assets ......................................................................................................... 5 Statements of Cash Flows ........................................................................................................................... 6 Notes to Financial Statements ............................................................................................................... 7–49 Other Financial Information Report of Independent Auditors ............................................................................................................. 50 Consolidating Balance Sheets ............................................................................................................. 51–52 Consolidating Statements of Operations ............................................................................................. 53–54 Consolidating Statements of Changes in Net Assets .......................................................................... 55–56 Note to Supplemental Consolidating Information ...................................................................................... 57 Report of Independent Auditors To the Board of Directors of Mass General Brigham Incorporated We have audited the accompanying consolidated financial statements of Mass General Brigham Incorporated (Mass General Brigham) and its affiliates, which comprise the consolidated balance sheets as of September 30, 2020 and 2019, and the related consolidated statements of operations, of changes in net assets and of cash flows for the years then ended. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to Mass General Brigham’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Mass General Brigham’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. PricewaterhouseCoopers LLP, 101 Seaport Boulevard, Suite 500, Boston, MA 02210 T: (617) 530 5000, F: (617) 530 5001, www.pwc.com/us Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mass General Brigham Incorporated and its affiliates as of September 30, 2020 and 2019, and the results of their operations, changes in net assets and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 2 to the consolidated financial statements, Mass General Brigham Incorporated changed the manner in which it accounts for lease and net periodic pension and postretirement benefit costs in 2020. Our opinion is not modified with respect to these matters. Boston, Massachusetts December 11, 2020 2 Mass General Brigham Incorporated and Affiliates Consolidated Balance Sheets September 30, 2020 and 2019 (in thousands of dollars) 2020 2019 Assets Current assets Cash and equivalents$ 2,129,189 $ 283,807 Investments 1,142,275 2,791,502 Current portion of investments limited as to use 4,424,436 2,235,171 Patient accounts receivable, net 983,273 1,129,594 Research grants receivable, net 149,685 136,557 Other current assets 589,078 673,745 Total current assets 9,417,936 7,250,376 Investments limited as to use, less current portion 5,168,054 4,498,716 Long-term investments 2,179,220 1,997,617 Property and equipment, net 6,411,117 6,557,206 Right-of-use operating lease assets 1,139,626 - Other assets 724,410 928,458 Total assets$ 25,040,363 $ 21,232,373 Liabilities and Net Assets Current liabilities Current portion of long-term obligations $ 436,166 $ 455,165 Accounts payable and accrued expenses 1,885,784 866,107 Accrued medical claims and related expenses 84,638 57,550 Accrued employee compensation and benefits 1,219,905 932,870 Current portion of operating lease obligations 191,259 - Unexpended funds on research grants 367,858 262,017 Total current liabilities 4,185,610 2,573,709 Accrued professional liability 567,770 542,136 Accrued employee benefits 2,044,913 2,410,974 Interest rate swaps liability 662,384 510,579 Accrued other 197,986 187,060 Operating lease obligations, less current portion 797,096 - Long-term obligations, less current portion 5,964,310 5,260,196 Total liabilities 14,420,069 11,484,654 Commitments and contingencies Net assets Unrestricted 8,099,064 7,358,335 Donor restricted 2,521,230 2,389,384 Total net assets 10,620,294 9,747,719 Total liabilities and net assets$ 25,040,363 $ 21,232,373 The accompanying notes are an integral part of these consolidated financial statements. 3 Mass General Brigham Incorporated and Affiliates Consolidated Statements of Operations Years Ended September 30, 2020 and 2019 (in thousands of dollars) 2020 2019 Operating revenues Net patient service revenue$ 9,609,196 $ 10,145,150 Premium revenue 830,191 791,356 Direct academic and research revenue 1,591,241 1,594,085 Indirect academic and research revenue 469,144 463,247 Other revenue 1,558,855 957,499 Total operating revenues 14,058,627 13,951,337 Operating expenses Employee compensation and benefit expenses 7,678,213 7,212,688 Supplies and other expenses 3,594,613 3,339,331 Medical claims and related expenses 610,310 556,110 Direct academic and research expenses 1,591,241 1,594,085 Depreciation and amortization expenses 742,187 686,374 Interest expense 192,576 180,922 Total operating expenses 14,409,140 13,569,510 (Loss) income from operations (350,513) 381,827 Nonoperating gains (expenses) Income from investments 612,355 182,829 Change in fair value of interest rate swaps (151,805) (271,527) Other nonoperating (expenses) income (73,366) (123,911) Academic and research gifts, net of expenses 168,527 214,267 Non-service related pension income 58,317 102,679 Total nonoperating gains, net 614,028 104,337 Excess of revenues over expenses 263,515 486,164 Other changes in net assets Funds utilized for property and equipment 80,894 111,641 Change in funded status of defined benefit plans 376,740 (1,415,364) Other changes in net assets 19,580 2,478 Cumulative effect of accounting change - 1,100,081 Increase in unrestricted net assets$ 740,729 $ 285,000 The accompanying notes are an integral part of these consolidated financial statements. 4 Mass General Brigham Incorporated and Affiliates Consolidated Statements of Changes in Net Assets Years Ended September 30, 2020 and 2019 Donor (in thousands of dollars) Unrestricted Restricted Total Net assets at September 30, 2018 $ 7,073,335 $ 1,899,246 $ 8,972,581 Increases (decreases) Income from operations 381,827 - 381,827 Income (loss) from investments 182,829 (5,536) 177,293 Change in fair value of interest rate swaps (271,527) - (271,527) Other nonoperating (expenses) income (123,911) 379,892 255,981 Academic and research gifts, net of expenses 214,267 - 214,267 Non-service related pension income 102,679 - 102,679 Funds utilized for property and equipment 111,641 (83,281) 28,360 Change in funded status of defined benefit plans (1,415,364) - (1,415,364) Other changes in net assets 2,478 1,880 4,358 Cumulative