AdvocateAuroraHealth,Inc.
ConsolidatedFinancialStatementsandSupplementaryInformation
AsofandfortheYearsEndedDecember31,2023and2022
DocumentDatedasofApril22,2024
ADVOCATEAURORAHEALTH,INC.
TABLEOFCONTENTS
REPORTOFINDEPENDENTAUDITORS 2
FINANCIALINFORMATION
ConsolidatedBalanceSheets 4
ConsolidatedStatementsofOperationsandChangesinNetAssets 6
ConsolidatedStatementsofCashFlows 8
NotestoConsolidatedFinancialStatements 9
SUPPLEMENTARYINFORMATION
ReportofIndependentAuditorsonSupplementaryInformation 43
ConsolidatingBalanceSheet 44
ConsolidatingStatementofOperations 46
NotestoSupplementaryInformation 47
1
A member firm of Ernst & Young Global Limited
Ernst & Young LLP
155 North Wacker Drive
Chicago, IL 60606-1787
Tel: +
1 312 879 2000
Fax: +1 312 879 4000
ey.com
Report of Independent Auditors
The Board of Directors
Advocate Health, Inc.
Opinion
We have audited the consolidated financial statements of Advocate Aurora Health, Inc. (the
Organization), which comprise the consolidated balance sheets as of December 31, 2023 and 2022,
and the related consolidated statements of operations and changes in net assets, and cash flows for
the years then ended, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the
financial position of the Organization at December 31, 2023 and 2022, and the results of its operations
and its cash flows for the years then ended in accordance with accounting principles generally accepted
in the United States of America.
Basis for Opinion
We
conducted our audits in accordance with auditing standards generally accepted in the United States
of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are required to be
independent of the Organization and to meet our other ethical responsibilities in accordance with the
relevant ethical requirements relating to our audits. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for the
design, implementation and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free of material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is required to evaluate whether there are conditions
or events, considered in the aggregate, that raise substantial doubt about the Organization’s ability to
continue as a going concern for one year after the date that the financial statements are issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free of material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a
material misstatement when it exists. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. Misstatements are considered
material if there is a substantial likelihood that, individually or in the aggregate, they would influence the
judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
A member firm of Ernst & Young Global Limited
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Organization’s internal control. Accordingly, no such
opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the Organization’s ability to continue as a
going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.
Other information
Management is responsible for the other information. The other information comprises the Annual
Disclosure Statements but does not include the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information, and we do not express an
opinion or any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and the
financial statements, or the other information otherwise appears to be materially misstated. If, based on
the work performed, we conclude that an uncorrected material misstatement of the other information
exists, we are required to describe it in our report.
April 22, 2024
Assets
Currentassets
Cashandcashequivalents $ 857,599 $ 372,898
Assetslimitedastouse 179,288 153,557
Patientaccountsreceivable 1,906,747 1,796,499
Othercurrentassets 1,093,683 975,406
Totalcurrentassets 4,037,317 3,298,360
Assetslimitedastouse 11,863,519 11,306,120
Propertyandequipment,net 5,919,233 5,971,542
Otherassets
Goodwillandintangibleassets,net 56,938 476,564
Operatingleaseright-of-useassets 305,114 305,311
Othernoncurrentassets 815,699 520,373
Totalotherassets 1,177,751 1,302,248
Totalassets $ 22,997,820 $ 21,878,270
ADVOCATEAURORAHEALTH,INC.
CONSOLIDATEDBALANCESHEETS
(inthousands)
December31,2023 December31,2022
4
Liabilities
Currentliabilities
Long-termdebtandcommercialpaper,currentportion $ 172,759 $ 101,204
Long-termdebtsubjecttoshort-termfinancingarrangements 354,720 165,035
Operatingleaseliabilities,currentportion 69,062 73,026
Accruedsalariesandemployeebenefits 1,245,445 1,165,861
Accountspayableandotheraccruedliabilities 1,164,041 1,128,954
Third-partypayorspayables 404,496 357,177
Accruedinsuranceandclaimscosts,currentportion 237,771 204,592
Totalcurrentliabilities 3,648,294 3,195,849
Noncurrentliabilities
Long-termdebt,lesscurrentportion 2,939,221 3,255,423
Operatingleaseliabilities,lesscurrentportion 273,134 276,116
Accruedinsuranceandclaimscost,lesscurrentportion 686,643 634,468
Obligationsunderswapagreements 31,681 29,514
Othernoncurrentliabilities 1,159,793 1,039,353
Totalnoncurrentliabilities 5,090,472 5,234,874
Totalliabilities 8,738,766 8,430,723
Netassets
Withoutdonorrestrictions
Controllinginterest 13,823,021 13,037,580
Noncontrollinginterestsinsubsidiaries 191,582 171,791
Totalnetassetswithoutdonorrestrictions 14,014,603 13,209,371
Withdonorrestrictions 244,451 238,176
Totalnetassets 14,259,054 13,447,547
Totalliabilitiesandnetassets $ 22,997,820 $ 21,878,270
Seeaccompanyingnotestoconsolidatedfinancialstatements.
ADVOCATEAURORAHEALTH,INC.
CONSOLIDATEDBALANCESHEETS
(inthousands)
December31,2023 December31,2022
5
ADVOCATEAURORAHEALTH,INC.
CONSOLIDATEDSTATEMENTSOFOPERATIONSANDCHANGESINNETASSETS
(inthousands)
YearEnded
December31,2023
YearEnded
December31,2022
Revenue
Patientservicerevenue $ 12,987,089 $ 12,065,771
Capitationrevenue 1,206,918 1,197,327
Otherrevenue 1,559,047 1,281,148
Totalrevenue 15,753,054 14,544,246
Expenses
Salaries,wagesandbenefits 8,975,567 8,601,734
Suppliesanddrugs 3,063,799 2,659,287
Purchasedservicesandother 2,359,535 2,070,036
Contractedmedicalservices 542,880 518,834
Depreciationandamortization 614,084 599,923
Interest 125,568 118,319
Totalexpenses 15,681,433 14,568,133
Operatingincome(loss) 71,621 (23,887)
Nonoperatingincome(loss)
Investmentincome(loss),net 819,180 (723,225)
Othernonoperating(loss)income,net (57,951) 41,404
Totalnonoperatingincome(loss),net 761,229 (681,821)
Revenueinexcessof(lessthan)expenses 832,850 (705,708)
Lessincomeattributabletononcontrollinginterests (58,518) (45,124)
Revenueinexcessof(lessthan)expenses-attributabletocontrollinginterest
$ 774,332 $ (750,832)
(Continued)
6
ADVOCATEAURORAHEALTH,INC.
CONSOLIDATEDSTATEMENTSOFOPERATIONSANDCHANGESINNETASSETS
(inthousands)
YearEnded
December31,2023
YearEnded
December31,2022
Netassetswithoutdonorrestrictions,controllinginterest
Revenueinexcessof(lessthan)expenses-attributabletocontrollinginterest
$ 774,332 $ (750,832)
Pension-relatedchangesotherthannetperiodicpensioncosts
9,311 (133,071)
Netassetsreleasedfromrestrictionsforpurchaseofpropertyandequipment
7,319 4,159
Other,net
(5,521) 5,462
Increase(decrease)innetassetswithoutdonorrestrictions,controllinginterest
785,441 (874,282)
Netassetswithoutdonorrestrictions,noncontrollinginterests
Revenuesinexcessofexpenses
58,518 45,124
Distributionstononcontrollinginterests
(38,727) (40,773)
Increaseinnetassetswithoutdonorrestrictions,noncontrollinginterests
19,791 4,351
Netassetswithdonorrestrictions
Contributions
17,861 11,702
Investmentincome(loss),net
8,737 (8,261)
Netassetsreleasedfromrestrictionsforoperations
(13,060) (12,760)
Netassetsreleasedfromrestrictionsforpurchaseofpropertyandequipment
(7,319) (3,864)
Other,net
56 (318)
Increase(decrease)innetassetswithdonorrestrictions
6,275 (13,501)
Increase(decrease)innetassets
811,507 (883,432)
Netassetsatbeginningofperiod
13,447,547 14,330,979
Netassetsatendofperiod $ 14,259,054 $ 13,447,547
Seeaccompanyingnotestoconsolidatedfinancialstatements.
7
ADVOCATEAURORAHEALTH,INC.
CONSOLIDATEDSTATEMENTSOFCASHFLOWS
(inthousands)
YearEnded
December31,2023
YearEnded
December31,2022
Cashflowsfromoperatingactivities
Increase(decrease)innetassets $ 811,507 $ (883,432)
Adjustmentstoreconcilechangeinnetassetstonetcashprovidedbyoperating
activities:
Depreciation,amortizationandaccretion 603,847 590,030
Amortizationofoperatingleaseright-of-useassets 59,697 64,119
Lossondebtrefinancing 40 33
(Gain)lossonsaleofpropertyandequipment (212) 836
Changeinfairvalueofswapagreements 2,167 (61,703)
Pension-relatedchangesotherthannetperiodicpensioncost (9,311) 133,071
Netassetsreleasedfromrestrictionsforoperations (13,060) (12,760)
Distributiontononcontrollinginterests 37,539 46,809
Distributionsfromunconsolidatedentities 11,265 35,746
Changesinoperatingassetsandliabilities
Tradingsecurities,net (482,997) 1,423,034
Patientaccountsreceivable (110,248) 20,300
Third-partypayorsreceivablesandpayables,net (30,238) 1,745
Otherassetsandliabilities,net 206,760 (790,543)
Netcashprovidedbyoperatingactivities 1,086,756 567,285
Cashflowsfrominvestingactivities
Capitalexpenditures (521,414) (498,759)
Proceedsfromsaleofpropertyandequipment 808 3,814
(Purchases)salesofinvestmentsdesignatedasnon-trading,net (92) (303)
Investmentsinunconsolidatedentities,net (18,504) (18,569)
AcquisitionofMobileHelp,netofcashacquired — (286,133)
Other (913) (7,896)
Netcashusedininvestingactivities (540,115) (807,846)
Cashflowsfromfinancingactivities
Repaymentsoflong-termdebt,net (51,000) (46,898)
Distributiontononcontrollinginterests (37,539) (46,809)
Proceedsfromrestrictedcontributionsandincomeoninvestments 26,599 3,441
Netcashusedinfinancingactivities (61,940) (90,266)
Netincrease(decrease)incashandcashequivalents 484,701 (330,827)
Cashandcashequivalentsatbeginningofperiod 372,898 703,725
Cashandcashequivalentsatendofperiod $ 857,599 $ 372,898
Supplementaldisclosuresofnoncashinformation
Operatingleaseright-of-useassetsinexchangefornewoperatingleaseliabilities $ 59,500 $ 105,805
Seeaccompanyingnotestoconsolidatedfinancialstatements.
8
ADVOCATEAURORAHEALTH,INC.
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS
FORTHEYEARENDEDDECEMBER31,2023
(dollarsinthousands)
1. ORGANIZATIONANDBASISOFPRESENTATION
DescriptionofBusiness
AdvocateAuroraHealth,Inc.,aDelawarenonprofitcorporation(the“ParentCorporation”),ownsand
operatesprimarilynot-for-profithealthcarefacilitiesinIllinoisandWisconsin.TheParentCorporation
isthesolecorporate memberofAdvocateHealth CareNetwork,anIllinois not-for-profitcorporation
(“Advocate”)andAuroraHealthCare,Inc.,aWisconsinnonstocknot-for-profitcorporation(“Aurora”).
TheParentCorporation,Advocate,Auroraandtheircontrolledsubsidiariesarecollectivelyreferredto
hereinasthe“System.”TheSystemwasformedinfurtheranceoftheparties’commonandunifying
charitable health care mission to promote and improve the quality and expand the scope and
accessibilityofaffordablehealthcareandhealthcare-relatedservicesforthecommunitiestheyserve.
Effective December 2022, the System and Atrium Health, Inc., a North Carolina not-for-profit
corporation,("AHI")enteredintoajointoperatingagreementpursuanttowhichtheycreatedAdvocate
Health, Inc. ("Advocate Health"), a Delaware nonprofit corporation, to manage and oversee an
integrated health care delivery and academic system that will focus on meeting patients’ needs by
redefining how, when and where care is delivered. The System and AHI are the two corporate
membersofAdvocateHealth.TheSystemmaintainsitsseparatelegalexistenceandnosale,transfer
or other conveyance of assets or assumption of debt and liabilities occurred in connection with the
formationofAdvocateHealth.
TheSystemprovidesacontinuumofcarethroughits25acutecarehospitals,anintegratedchildren’s
hospital,apsychiatrichospital,primaryandspecialtyphysicianservices,outpatientcenters,physician
officebuildings,pharmacies,rehabilitationandhomehealthandhospicecareinnorthernIllinoisand
easternWisconsin.
PrinciplesofConsolidation
Included in the System’s consolidated financial statements are all of its wholly owned or controlled
subsidiaries.Allsignificantintercompanytransactionshavebeeneliminatedinconsolidation.
2. SIGNIFICANTEVENTS
ThefederalCOVID-19PublicHealthEmergencyexpiredinMay2023andmanagementdoesnotexpect
COVID-19to havea material adverseimpact onthe financial conditionof theSystem going forward.
TheSystemstillhasoutstandingapplicationsforcertainCOVID-19relatedresources,includingsupplies,
financial support, payroll tax deferrals and relief and other assistance made available through local,
stateandfederalgovernments.
TheCoronavirusAid,ReliefandEconomicSecurityAct("CARESAct")entitledeligibleemployerstoan
employeeretention taxcredit designedto encourageemployers to keepemployees ontheir payroll.
Therefundabletaxcreditislimitedto50%ofupto$10inqualifiedwagespaidtoeachemployeebyan
eligibleemployerwhosebusinesshadbeenfinanciallyimpactedbyCOVID-19.AtDecember31,2023
and December 31, 2022, $9,878 and $37,060,respectively, is included in othercurrent assets in the
accompanyingconsolidated balance sheets for theemployee retention tax credit. Therecognition of
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the COVID-19 support falls under the grant accounting guidance of accounting principles generally
acceptedintheUnitedStates.Thisguidancerequiresthatallsignificanttermsandconditionstohave
beenmetforrecognitiontooccur.
TheSystemwasawardedapproximately$76,000inFederalEmergencyManagementAgencyfundsto
reimburse the System for personal protective equipment used during the COVID-19 pandemic. The
System recognized approximately $40,000 and $36,000 for theyears ended December 31, 2023and
2022, respectively, as revenue that is included in other operating revenue within the accompanying
consolidatedstatementsofoperationsandchangesinnetassets.
OnApril1,2022,theSystempurchasedMobileHelpGroupHoldings,LLC(“MobileHelp”)for$286,133,
netofcashacquired.
On December 15, 2023, the System approved the sale of SH Corporate Company, Inc. and SHF
Acquisition Company, Inc. (collectively "Senior Helpers") and MobileHelp as they no longer fit the
strategic priorities of Advocate Health. The sale of Senior Helpers closed in March 2024 and
managementexpectstheMobileHelpsaletocloselaterin2024.AsofDecember31,2023,therelated
disposalgroupforSeniorHelpersandMobileHelpwasreclassifiedtoheldforsale.Amajorityofthe
disposal group consistsof goodwill and intangible assets,$192,323 and $161,497, respectively. The
Systemrecordedanimpairmentof$150,000relatedtotheexpectedsalethatisincludedinpurchased
servicesandotherexpensesintheaccompanyingconsolidatedstatementsofoperationsandchanges
innetassetsfortheyearendedDecember31,2023.
The following represents the classification of the disposal groups in the accompanying consolidated
balancesheetsasofDecember31,2023:
Othercurrentassets $ 50,172
Othernoncurrentassets 237,126
Othercurrentliabilities (10,905)
Othernoncurrentliabilities (25,723)
Totaldisposalgroup $ 250,670
3. SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES
UseofEstimates
The preparation of the consolidated financial statements in conformity with accounting principles
generally accepted in the United States ("GAAP") requires management to make estimates,
assumptions and judgments that affect the reported amounts of assets, liabilities and amounts
disclosedinthenotestotheconsolidatedfinancialstatementsatthedateoftheconsolidatedfinancial
statements.Estimatesalsoaffectthereportedamountsofrevenueandexpensesduringthereporting
period.Although estimatesare consideredtobe fairlystated atthetime made,actual resultscould
differmateriallyfromthoseestimates.
CashEquivalents
The System considers all highly liquid investments with a maturity of three months or less when
purchased,otherthanthoseincludedintheinvestmentportfolio,tobecashequivalents.
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Investments
TheSystemhasdesignatedsubstantiallyallitsinvestmentsastrading.Investmentsindebtandequity
securitieswithreadilydeterminablefairvaluesaremeasuredatfairvalueusingquotedmarketprices
or otherwise observable inputs. Investments in private equity limited partnerships and derivative
products (hedge funds) are reported at fair value using net asset value as a practical expedient.
Commingledfunds are carried at fair value based on otherobservable inputs. Investment income or
loss(includingrealizedgainsandlosses,interest,dividendsandunrealizedgainsandlosses)isincluded
inthenonoperatingsectionoftheaccompanyingconsolidatedstatementsofoperationsandchangesin
netassets,unlesstheincomeorlossisrestrictedbydonororlaworisrelatedtoassetsdesignatedfor
self-insuranceprograms.Investmentincomeonself-insurancetrustfundsisreportedinotherrevenue
in the accompanying consolidated statements of operations and changes in net assets. Investment
income or loss that is restricted by donor or law is reported as a change in net assets with donor
restrictions.
AssetsLimitedastoUse
AssetslimitedastouseconsistofinvestmentssetasidebytheSystemforfuturecapitalimprovements
and certain medical education andother health care programs. The System retains control of these
investmentsandmay,atitsdiscretion,subsequentlyusethemforotherpurposes.Additionally,assets
limitedastouseincludeinvestmentsheldbytrusteesorintrustunderdebtagreements,self-insurance
trusts,retirementplanassets,assetsheldinreinsurancetrustaccountsanddonor-restrictedfunds.
PatientServiceRevenueandAccountsReceivable
PatientservicerevenueisreportedattheamountthatreflectstheconsiderationtowhichtheSystem
expectsto be entitled inexchange for providingpatient care. These amountsare due frompatients,
third-partypayors(including managedcarepayors andgovernment programsandexcludes revenues
for services provided to patients under capitated arrangements) and others and include variable
consideration for retroactive revenue adjustments due to settlement of audits, reviews and
investigations.
Revenueisrecognizedasperformanceobligationsaresatisfied.Performanceobligationsareidentified
based on the nature of the services provided. Revenue associated with performance obligations
satisfied over time is recognized based on actual charges incurred in relation to total expected (or
actual)charges.Performanceobligationssatisfiedovertimerelatetopatientsreceivinginpatientacute
careservices.TheSystemmeasurestheperformanceobligationfromadmissionintothehospitaltothe
point when there are no further services required for the patient, which is generally the time of
discharge.Foroutpatientservices,theperformanceobligationissatisfiedasthepatientsimultaneously
receives and consumes the benefits provided as the services are performed. In the case of these
outpatientservices, recognition of theobligation over time yieldsthe same result asrecognizing the
obligation at a point in time. Management believes this method provides a faithful depiction of the
transferofservicesoverthetermofperformanceobligationsbasedontheinputsneededtosatisfythe
obligations.
AstheSystem'sperformanceobligationsrelatetocontractswithadurationoflessthanoneyear,the
Systemhasappliedtheoptionalexemptionprovidedintheguidance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areprimarilyrelatedtoinpatientacutecareservicesattheendof
thereportingperiod. Theperformance obligationsforthese contractsare generallycompletedwhen
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the patients are discharged, which typically occurs within days or weeks of the end of the reporting
period.
The System uses a portfolio approach to account for categories of patient contracts as a collective
groupratherthanrecognizingrevenueonanindividualcontractbasis.Theportfoliosconsistofmajor
payor classes for inpatient revenue and major payor classes and types of services provided for
outpatientrevenue.Basedonthehistoricalcollectiontrendsandotheranalyses,theSystembelieves
revenuerecognizedbyutilizingtheportfolioapproachapproximatestherevenuethatwouldhavebeen
recognizedifanindividualcontractapproachwereused.
TheSystemdeterminesthetransactionprice,whichinvolvessignificantestimatesandjudgment,based
onstandardchargesforgoodsandservicesprovided,reducedbyexplicitandimplicitpriceconcessions,
includingcontractualadjustmentsprovidedtothird-partypayors,discountsprovidedtouninsuredand
underinsured patients in accordance with policy and/or implicit price concessions based on the
historical collection experience of patient accounts. The System determines the transaction price
associated with services provided to patients who have third-party payor coverage based on
reimbursement terms per contractual agreements, discount policies and historical experience. For
uninsured patients who do notqualify for charity care,the System determinesthe transaction price
associated with services based on charges reduced by implicit price concessions. Implicit price
concessions included in the estimate of the transaction price are based on historical collection
experienceforapplicablepatientportfolios.PatientswhomeettheSystem'scriteriaforcharitycareare
providedcarewithoutcharge;suchamountsarenotreportedasrevenue.Subsequentchangestothe
estimateofthetransactionpricearegenerallyrecordedasadjustmentstopatientservicerevenuein
theperiodofthechange.
TheSystemdoesnotincursignificantincrementalcostsinobtainingcontractswithpatients.Anycosts
incurred are expensed in theperiod ofoccurrence, as theamortization period ofany asset thatthe
Systemwouldhaverecognizedisoneyearorlessinduration.
Laws and regulations governing the Medicare and Medicaid programs are complex and subject to
interpretation.Settlementswiththird-partypayorsforretroactiveadjustmentsduetoaudits,reviews
or investigations are considered variableconsideration and areincluded in thedetermination ofthe
estimated transaction pricefor providingpatient care using the most likely outcome method. These
settlements are estimated based on the terms of the payment agreements with the payor,
correspondencefromthepayorandhistoricalsettlementactivity,includinganassessmenttoensureit
isprobablethata significantreversalin theamountofcumulative revenuerecognizedwillnot occur
whentheuncertaintyassociatedwiththeretroactiveadjustmentissubsequentlyresolved.Estimated
settlementsareadjustedinfutureperiodsasnewinformationbecomesavailableorasyearsaresettled
orarenolongersubjecttosuchaudits,reviewsandinvestigations.Asaresult,thereisapossibilitythat
recordedestimateswillchangebyamaterialamount.
FortheyearsendedDecember31,2023and2022,changesintheSystem’sestimatesofimplicitprice
concessions, discounts and contractual adjustments or other reductions to expected payments for
performanceobligationsrelatedtoprioryearswerenotsignificant.
In the normal courseof business, theSystem doesreceive payments inadvance for certainservices
providedandwouldconsidertheseamountstorepresentcontractliabilities.Theamountsreceivedin
thenormalcourseofbusinessatDecember31,2023and2022werenotmaterial.
TheSystemdoesnotadjustthepromisedamountofconsiderationfrompatientsandthird-partypayors
fortheeffects ofasignificant financingcomponent,due tothe expectationthatthe periodbetween
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thetimetheserviceisprovidedtoapatientandthetimethatthepatientorathird-partypayorpays
forthatservicewillbeoneyearorless.
TheSystemhasenteredintopaymentarrangementswithpatientsthatallowforpaymentsoveraterm
inexcessofoneyear.TheSystemhasevaluatedhistoricalcollectionsinexcessofoneyearandcurrent
marketinterestratestodeterminewhetherasignificantfinancingcomponentexiststhatwouldrequire
an adjustment to the promised amount of consideration from patients and third-party payors. The
Systemhasdeterminedthattheimpactofimplicitfinancingarrangementsforpaymentagreementsin
excess of one year is insignificant to the accompanying consolidated statements of operations and
changesinnetassets.
Inventories
Inventories,consistingprimarilyofmedicalsupplies,pharmaceuticalsanddurablemedicalequipment,
arestatedatthelowerofcostornetrealizablevalue.
ReinsuranceReceivables
Reinsurance receivables are recognized in a manner consistent with the liabilities relating to the
underlyingreinsuredcontracts.
GoodwillandIntangibleAssets,Net
Goodwill of $44,096 and $267,385 and intangible assets of $12,842 and $209,179 are included in
goodwill and intangible assets, net in the accompanying consolidated balance sheets as of
December 31, 2023 and 2022, respectively. The majority of the decrease in goodwill and intangible
assetsfortheyearendedDecember31,2023isduetothereclassificationofgoodwillandintangible
assets of Senior Helpers and MobileHelp as held for sale. See additional disclosure in Note 2.
SIGNIFICANTEVENTS.TheSystemhaselectedtoamortizegoodwillusingthestraight-linemethodover
a 10-year period. Intangible assets with expected useful lives are amortized over that period.
Amortization is included in depreciation and amortization in the accompanying consolidated
statementsof operations andchanges innet assets.Amortization expensewas $55,591and $50,837
fortheyearsendedDecember31,2023and2022,respectively.
AssetImpairment
The System considers whether indicators of impairment are present and, if indicators are present,
performsthenecessaryteststodetermineifthecarryingvalueofanassetisrecoverable.Impairment
write-downsarerecognizedintheaccompanyingconsolidatedstatementsofoperationsandchangesin
netassetsasacomponentofoperatingexpenseatthetimetheimpairmentisidentified.Asdescribed
inNote 2. SIGNIFICANTEVENTS, forthe year endedDecember 31, 2023,an impairment of$150,000
relatedtotheexpectedlossonthesaleofMobileHelpwasincludedinpurchasedservicesandother
expensesintheaccompanyingconsolidatedstatementsofoperationsandchangeinnetassets.There
werenomaterialimpairmentchargesrecordedfortheyearendedDecember31,2022.
PropertyandEquipment,Net
Propertyandequipmentarereportedatcostor,ifdonated,atfairvalueatthedateofthegift.Costsof
computersoftwaredevelopedorobtainedforinternaluse,includingexternalandinternaldirectcosts
of materials and labor directly associated with internal-use software development projects, are
capitalizedduringtheapplicationdevelopmentstageandincludedinpropertyandequipment.Internal
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laborandinterestexpenseincurredduringtheperiodofconstructionofsignificantcapitalprojectsare
capitalizedasacomponentofthecostsoftheasset.
Propertyandequipmentcapitalizedunderdirectfinancingleasesarerecordedatthepresentvalueof
future lease payments, addinginitial directcosts andprepaid leasepayments, reducedby anylease
incentives.Property andequipment capitalizedunder directfinancing leasesare amortizedusing the
straight-line method over the related lease term. Amortization of property and equipment under
financingleasesisincludedintheaccompanyingconsolidatedstatementsofoperationsandchangesin
netassetsindepreciationandamortizationexpense.
Propertyandequipmentassetsaredepreciatedonthestraight-linemethodoveraperiodrangingfrom
3yearsto80years.
OperatingLeaseRight-of-useAssets
TheSystemrecordsanoperatingleaseright-of-useasset(anassetthatrepresentstheSystem'srightto
usetheleasedassetfortheleaseterm)forleasesthatdonotmeetthecriteriaasasales-typeleaseor
adirectfinancinglease.
TheSystemrecordsoperatingleaseright-of-useassetsatthepresentvalueoffutureleasepayments,
addinginitialdirectcostsandprepaidleasepayments,reducedbyanyleaseincentives.Operatinglease
right-of-use assets are amortized using the straight-line method over the related lease term.
Amortizationofoperatingleaseright-of-useassetsisincludedinpurchasedservicesandotherexpense
intheaccompanyingconsolidatedstatementsofoperationsandchangesinnetassets.
InvestmentsinUnconsolidatedEntities
Investments in unconsolidated entities are accounted for using the equity method or as an equity
securitywithoutareadilydeterminablefairvalue.TheSystemappliestheequitymethodofaccounting
forinvestmentsinunconsolidatedentitieswhen itsownershipormembershipinterestis 50%orless
andtheSystemhastheabilitytoexercisesignificantinfluenceovertheoperatingandfinancialpolicies
of the investee. The income (loss) on health-related unconsolidated entities is included in other
revenue in theaccompanying consolidatedstatements ofoperations and changes in netassets. The
income (loss) on non-health-related unconsolidated entities is included in other nonoperating (loss)
income,netintheaccompanyingconsolidatedstatementsofoperationsandchangesinnetassets.All
otherunconsolidated entities areaccounted foras anequity securitywithouta readilydeterminable
fairvalue. These unconsolidatedentities areinitially recorded atcost, tested forimpairment at least
annually and adjusted as market transactions occur that would indicate a fair value adjustment is
needed.Theincome(loss)ontheseunconsolidatedentitiesisincludedinnonoperatingincome(loss)in
theaccompanyingconsolidatedstatementsofoperationsandchangesinnetassets.
DerivativeFinancialInstruments
The System enters into transactions to manage its interest rate, credit and market risks. Derivative
financial instruments, including exchange-traded and over-the-counter derivative contracts and
interestrate swaps,are recorded aseither assetsor liabilities atfair value.Subsequent changes ina
derivative'sfairvaluearerecognizedinnonoperatingincome(loss),net.
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BondIssuanceCosts,DiscountsandPremiums
Bond issuance costs, discounts and premiums are amortized over the term of the bonds using the
effectiveinterestmethodandareincludedinlong-termdebt,lesscurrentportionintheaccompanying
consolidatedbalancesheets.
GeneralandProfessionalLiabilityRisks
Theprovisionforself-insuredgeneralandprofessionalliabilityclaimsincludesestimatesoftheultimate
costsforbothreportedclaimsandclaimsincurredbutnotreported.TheSystemmeasuresthecostof
itsunfundedobligationsundersuchprogramsbaseduponactuarialcalculationsandrecordsaliability
onadiscountedbasis.
NetAssetswithDonorRestrictions
NetassetswithdonorrestrictionsarethoseassetswhoseusebytheSystemhasbeenlimitedbydonors
toaspecifictimeperiodorpurposeorconsistofgiftswithcorpusvaluesthathavebeenrestrictedby
donorstobemaintainedinperpetuity.Netassetswithdonorrestrictionsareusedinaccordancewith
the donor's wishes primarily to purchase property and equipment, to fund medical education or to
fundhealthprograms.
Assets released from restrictions to fund purchases of property and equipment are reported as
increases to net assets without donor restrictions in the accompanying consolidated statements of
operationsandchangesinnetassets.Thoseassetsreleasedfromrestrictionforoperatingpurposesare
reported in the accompanying consolidated statements of operations and changes in net assets as
other revenue. When restricted, earnings are recorded as net assets with donor restrictions until
amountsareexpendedinaccordancewiththedonor'sspecifications.
CapitationRevenue
TheSystemhasagreementswithvariousmanagedcareorganizationsunderwhichtheSystemprovides
or arranges for medical care to members of the organizations in return for a monthly payment per
member.RevenueisearnedeachmonthasaresultoftheSystemagreeingtoprovideorarrangefor
theirmedicalcare.
OtherRevenue
OtherrevenueisrecognizedatanamountthatreflectstheconsiderationtowhichtheSystemexpects
to be entitled in exchange for providing goods and services. The amounts recognized reflect
considerationduefromcustomers,third-partypayorsandothers.Primarycategoriesofotherrevenue
includeretailpharmacyrevenue,clinicalintegrationrevenue,managedcarerisk/qualitysharedsavings
revenueandothermiscellaneousrevenue.
OtherNonoperating(Loss)Income,Net
Revenues and expenses related to the delivery of health care services are reported in operations.
IncomeandlossesthatarisefromtransactionsthatareperipheralorincidentaltotheSystem'smain
purposeareincludedinothernonoperating(loss)income,net.Othernonoperating(loss)income,net
primarily consists of fund-raising expenses, contributions to charitable organizations, income taxes,
income (loss) from non-health related unconsolidated entities, unrealized changes in fair value of
swaps and the net non-service componentsof the periodic benefitexpense of the System'spension
plans.
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RevenueinExcessof(LessThan)ExpensesandChangesinNetAssets
The accompanying consolidated statements of operations and changes in net assets includes the
revenueinexcessof(lessthan)expensesastheperformanceindicator.Changesinnetassetswithout
donorrestrictions,whichareexcludedfromrevenueinexcessof(lessthan)expenses,primarilyinclude
contributions of long-lived assets (including assets acquired using contributions, which by donor
restrictionweretobeusedforthepurposesofacquiringsuchassets),pension-relatedchangesother
thannetperiodicpensioncostsanddistributionstononcontrollinginterests.
AccountingPronouncementsAdopted
InJune2016,theFinancialAccountingStandardsBoard(“FASB”)issuedAccountingStandardsUpdate
("ASU")2016-13,FinancialInstruments-CreditLosses(Topic326).Thisguidancereplacestheincurred
loss impairment methodology with a methodology that reflects expected credit losses and requires
consideration of a broader range of reasonable and supportable information to inform credit loss
estimates.InNovember2019,theFASBissuedASU2019-10,FinancialInstruments-CreditLoss(Topic
326),DerivativesandHedging(Topic815)andLeases(Topic842),whichdeferredtheeffectivedatefor
theSystemuntilfiscalyearsbeginningafterDecember15,2022.TheSystemadoptedthisguidance
effectiveJanuary1,2023,onaprospectivebasis.Theguidancedidnothaveamaterialimpactonthe
System'saccompanyingconsolidatedfinancialstatements.
AccountingPronouncementsNotYetAdopted
In March 2020, theFASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the
Effects of Reference RateReform on Financial Reporting. This guidance providesoptional expedients
and exceptions for applying current GAAPto contracts, hedging relationships andother transactions
affectedbythetransitionfromtheuseofLondonInterbankOffered Rate(“LIBOR”)toanalternative
reference rate. In response to concerns about structural risks of interbank offered rates, and,
particularly, the risk of cessation of LIBOR, regulators in several jurisdictions around the world have
undertaken reference rate reform initiatives to identify alternative reference rates that are more
observable or transaction based and less susceptible to manipulation. This guidance provides
companiestheoptiontoeasethepotentialaccountingburdenassociatedwithtransitioningawayfrom
referenceratesthatareexpectedtobediscontinued.InJanuary2021,theFASBissuedASU2021-01,
Reference Rate Reform (Topic 848): Scope, which adds implementation guidance to ASU 2020-04 to
clarify certain optional expedients in Topic 848. In December 2022, the FASB issued ASU 2022-06,
ReferenceRateReform(Topic848):DeferraloftheSunsetDateofTopic848,whichdefersthesunset
dateofTopic848toDecember31,2024.Managementhasevaluatedtheimpactofthisguidanceand
doesnotexpectittohaveamaterialimpactontheSystem'sconsolidatedfinancialstatements.
ReclassificationsintheConsolidatedFinancialStatements
Certainreclassifications were made to the2022 consolidated financial statements to conformto the
classificationsusedin2023.Therewasnoimpactonpreviouslyreported2022netassetsorrevenues
lessthanexpenses.
4. COMMUNITYBENEFIT
TheSystemprovideshealthcareserviceswithoutchargeoratdiscountedratestopatientswhomeet
thecriteriaofitsfinancialassistancepolicies.Charitycareservicesarenotreportedaspatientservice
revenue, because payment is not anticipated while the related costs to provide the health care are
includedinoperatingexpenses.Qualifyingpatientscanreceiveupto100%discountsfromchargesand
extendedpaymentplans.TheSystem’scostofprovidingcharitycarewas$110,000and$102,000for
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theyearsendedDecember31,2023and2022,respectively,asdeterminedusingtotalcosttocharge
ratios.
In addition to the provision of charity care, the System provides significant financial support to its
communitiestosustainandimprovehealthcareservices.
Theseactivitiesinclude:
• The unreimbursed cost of providing care to patients covered by the Medicare and Medicaid
programs.
• Thecostofprovidingservicesthatarenotself-sustaining,forwhichpatientservicerevenuesare
lessthan the costs requiredto provide theservices. Such services benefituninsured and low-
incomepatients,aswellasthebroadercommunity,butarenotexpectedtobefinanciallyself-
supporting.
• Other community benefits, which include the unreimbursed costs of community benefits
programsandservicesforthegeneralcommunity,notsolelyforthosedemonstratingfinancial
need,including theunreimbursed costof medicaleducation, healtheducation, immunizations
forchildren,supportgroups,healthscreeningsandfairs.
5. REVENUEANDRECEIVABLES
Patientservicerevenue
Thecompositionofpatientservicerevenuebypayorisasfollows:
YearEndedDecember31,
2023
YearEndedDecember31,
2022
Managedcare $ 6,738,790 52% $ 6,506,440 53%
Medicare 4,197,545 32%  3,813,381 32%
Medicaid 1,668,531 13%  1,443,200 12%
Self-payandother 382,223 3%  302,750 3%
$ 12,987,089 100% $ 12,065,771 100%
Deductibles,copaymentsandcoinsuranceunderthird-partypaymentprogramswhicharethepatient's
responsibilityareincludedwithintheprimarypayorcategoryinthetableabove.
Revenuedisaggregatedbystateandservicelineisasfollows:
YearEnded
December31,2023
YearEnded
December31,2022
Illinois $ 5,920,220 $ 5,417,029
Wisconsin 7,066,869 6,648,742
Totalpatientservicerevenue $ 12,987,089 $ 12,065,771
Hospital $ 9,772,918 $ 8,910,925
Clinic 2,914,123 2,773,500
Other 300,048 381,346
Totalpatientservicerevenue $ 12,987,089 $ 12,065,771
Currently, the State of Illinois utilizes supplemental reimbursement programs to increase
reimbursementtoproviderstooffsetaportionofthecostofprovidingcaretoMedicaidandindigent
patients.TheseprogramsaredesignedwithinputfromtheCentersforMedicare&MedicaidServices
andarefundedwithacombinationofstateandfederalresources,includingassessmentsleviedonthe
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providers.Underthesesupplementalprograms,theSystemrecognizesrevenueandrelatedexpenses
intheperiodinwhichamountsareestimableandcollectionisreasonablyassured.Reimbursementand
theassessment under theseprograms arereflected inthe accompanyingconsolidatedstatementsof
operationsandchangesinnetassetsasfollows:
Classification
YearEnded
December31,2023
YearEnded
December31,2022
Reimbursement Patientservicerevenue $ 410,119 $ 331,438
Assessment Purchasedservicesandother 216,793 173,141
TheStateofWisconsinassessesafeeortaxongrosspatientservicerevenue.Therevenuesfromthis
assessment are used toincrease paymentsmade tohospitals for servicesprovided toMedicaid and
other medically indigent patients. The System’s patient service revenue reflects this increase in
payment for services to Medicaid and othermedically indigent patients and hospital taxassessment
expense reflects the fees assessed by the State. Reimbursement and the assessment under these
programsarereflectedintheaccompanyingconsolidatedstatementsofoperationsandchangesinnet
assetsasfollows:
Classification
YearEnded
December31,2023
YearEnded
December31,2022
Reimbursement Patientservicerevenue $ 120,033 $ 123,358
Assessment Purchasedservicesandother 100,668 99,010
Patientaccountsreceivable
Thecompositionofpatientaccountsreceivableissummarizedasfollows:
December31,2023 December31,2022
Managedcare $ 877,778 46% $ 913,665 51%
Medicare 475,482 25% 390,456 22%
Medicaid 164,872 9% 154,029 9%
Self-payandother 388,615 20% 338,349 18%
$ 1,906,747 100% $ 1,796,499 100%
Theself-paypatientaccountsreceivableaboveincludesamountsduefrompatientsforco-insurance,
deductibles,installmentpaymentplansandamountsduefrompatientswithoutinsurance.
6. INVESTMENTS
TheSysteminvestsinadiversifiedportfolioofinvestments,includingalternativeinvestments,suchas
realassetfunds,hedgefundsandprivateequitylimitedpartnerships,whosefairvaluewas$6,309,366
and$5,990,443atDecember31,2023and2022,respectively.Collectively,thesefundshaveliquidity
termsrangingfromdailytoannualwithnoticeperiodstypicallyrangingfrom1to90days.Certainof
these investments have redemption restrictions that may restrict redemption for up to 11 years.
However,thepotentialfortheSystemtosellitsinterestinthesefundsinasecondarymarketpriorto
theendofthefundtermdoesexistforpricesatorotherthanthecarryingvalue.
At December 31, 2023, the System had additional commitments to fund alternative investments,
includingrecallabledistributionsof$2,382,003overthenextsevenyears.
In the normal course of operations and within established investment policy guidelines, the System
may enter into various exchange-traded and over-the-counter derivative contracts for trading
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purposes, including futures, options and forward contracts. These instruments are used primarily to
maintain the System’s strategic asset allocation and hedge security price movements. These
instruments require the Systemto deposit cash or securities collateral with the broker or custodian.
Collateralprovidedwas$17,089and$7,529atDecember31,2023and2022,respectively.Thegross
notionalvalueofthe derivativesoutstandingwas$220,940 and$331,094atDecember31,2023and
2022,respectively.
Byusingderivativefinancialinstruments,theSystemexposesitselftocreditandmarketrisk.Creditrisk
isthefailureofthecounterpartytoperformunderthetermsofthederivativecontracts.Whenthefair
valueofaderivativecontractispositive,thecounterpartyowestheSystem,whichcreatescreditrisk
for the System. When the fair value of a derivative contract is negative, the System owes the
counterparty and, therefore, it does not possess credit risk. The System minimizes the credit risk in
derivative instruments by entering into transactions that may require the counterparty to post
collateralforthebenefitoftheSystembasedonthecreditratingofthecounterpartyandthefairvalue
ofthederivativecontract.Marketriskistheadverseeffectonthevalueofafinancialinstrumentthat
results from a change in the underlying reference security. The market risk associated with market
changes is managed by establishing and monitoring parameters that limit the types and degree of
marketriskthatmaybeundertaken.
Receivablesandpayablesforinvestmenttradesnotsettledarepresentedwithinothercurrentassets
andaccounts payableand otheraccrued liabilities inthe accompanyingconsolidated balancesheets.
Unsettledsalesresultedinreceivablesduefrombrokersof$61,462and$13,769atDecember31,2023
and 2022, respectively. Unsettled purchases resulted in payables due to brokers of $102,517 and
$69,023atDecember31,2023and2022,respectively.
Investment returns for assets limited as to use and cash and cash equivalents are composed of the
following:
YearEnded
December31,2023
YearEnded
December31,2022
Interestincomeanddividends $ 162,493 $ 61,893
Incomefromalternativeinvestments 260,904 327,168
Netrealized(losses)gains (22,992) 63,760
Netunrealizedgains(losses) 474,143 (1,134,151)
Total $ 874,548 $ (681,330)
Investment returns are included in the accompanying consolidated statements of operations and
changesinnetassetsasfollows:
YearEnded
December31,2023
YearEnded
December31,2022
Otherrevenue $ 46,631 $ 50,156
Investmentincome(loss),net 819,180 (723,225)
Netassetswithdonorrestrictions 8,737 (8,261)
Total $ 874,548 $ (681,330)
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The cash and cash equivalents and assets limited as to use presented within the accompanying
consolidatedbalancesheetsarecomprisedofthefollowing:
December31,2023 December31,2022
Internallydesignatedforcapitalandother $ 10,822,009 $ 10,301,972
Heldforself-insurance 508,709 564,195
Donorrestricted 106,325 98,293
Fundsheldunderretirementplans 412,776 324,928
Investmentsundersecuritieslendingprogram 13,700 16,732
Totalnoncurrentassetslimitedastouse 11,863,519 11,306,120
Cashandcashequivalents 857,599 372,898
Currentassetslimitedastouse 179,288 153,557
Totalcashandcashequivalentsandassetslimitedastouse $ 12,900,406 $ 11,832,575
Aspartofthemanagementoftheinvestmentportfolio,theSystemhasenteredintoanarrangement
wherebysecurities owned bythe Systemare loaned primarily tobrokers and investmentbanks. The
loansarearrangedthroughabank.Borrowersarerequiredtopostcollateralforsecuritiesborrowed
equal to no less than 102% ofthe value of thesecurity on a daily basis, at a minimum.The bank is
responsibleforreviewingthecreditworthinessoftheborrowers.TheSystemhasalsoenteredintoan
arrangement whereby the bank is responsible for the risk of borrower bankruptcy and default. At
December31,2023and2022,theSystemloaned$13,700and$16,732,respectively,insecuritiesand
acceptedcollateralfortheseloansintheamount$14,557and$17,402,respectively,whichrepresents
cashandgovernmentalsecurities,andareincludedinothercurrentliabilitiesandothercurrentassets
intheaccompanyingconsolidatedbalancesheets.
7. FAIRVALUE
TheSystemaccountsforcertainassetsandliabilitiesatfairvalueandcategorizesassetsandliabilities
measuredatfairvalueintheaccompanyingconsolidatedfinancialstatementsbaseduponwhetherthe
inputsusedtodeterminetheirfairvaluesareobservableorunobservable.Observableinputsareinputs
that are based on market data obtained from sources independent of the reporting entity.
Unobservableinputsare inputsthatreflect thereportingentity’s ownassumptions aboutpricingthe
assetorliability,basedonthebestinformationavailableunderthecircumstances.
Thefairvalueofallassetsandliabilitiesrecognizedordisclosedatfairvalueareclassifiedbasedonthe
lowestlevelofsignificantinputs.Assetsandliabilitiesthataremeasuredatfairvaluearedisclosedand
classifiedinoneofthethreecategories.Categoryinputsaredefinedasfollows:
Level1—Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilitiesonthereporting
date.
Level2—InputsotherthanquotedmarketpricesincludedinLevel1thatareobservablefortheasset
or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a
Level2inputmustbeobservableforsubstantiallythefulltermoftheassetorliability.
Level3—Inputsthatareunobservablefortheassetorliabilityforwhichthereislittleornomarket
data.
ThefollowingsectiondescribesthevaluationmethodologiesusedbytheSystemtomeasurefinancial
assetsandliabilitiesatfairvalue.Ingeneral,whereapplicable,theSystemusesquotedpricesinactive
marketsforidenticalassetsandliabilitiestodeterminefairvalue.Thispricingmethodologyappliesto
20
Level1 investments, such as domestic andinternational equities, exchange-traded funds and agency
securities.
Ifquotedpricesinactivemarketsforidenticalassetsandliabilitiesarenotavailabletodeterminethe
fairvalue,thenquotedpricesforsimilarassetsandliabilitiesorinputsotherthanquotedpricesthat
are observable either directly or indirectly are used. These investments are included in Level 2 and
consist primarily of corporate notes and bonds, foreign government bonds, mortgage-backed
securities, fixed-income securities, includingfixed-income governmentobligations, commercial paper
and certain agency, United States and international equities, which are not traded on an active
exchange.The fair value for theobligations under swap agreements includedin Level 2 is estimated
using industry-standard valuation models. These models project future cash flows and discount the
futureamountstoapresentvalueusingmarket-basedobservableinputs,includinginterestratecurves.
ThefairvaluesoftheobligationunderswapagreementsincludeadjustmentsrelatedtotheSystem’s
creditrisk.
InvestmentsownedbytheSystemareexposedtovariouskindsandlevelsofrisk.Equitysecuritiesand
equityfundsexpose theSystem tomarket risk,performance riskandliquidity riskfor bothdomestic
andinternationalinvestments.Marketriskistheriskassociatedwithmajormovementsoftheequity
markets. Performance risk is the risk associated with a company’s operating performance. Fixed-
incomesecuritiesandfixed-incomemutualfundsexposetheSystemtointerestraterisk,creditriskand
liquidityrisk.Asinterestrateschange,thevalueofmanyfixed-incomesecuritiesisaffected,including
thosewithfixed interestrates. Creditriskis therisk thatthe obligorofthe securitywillnot fulfillits
obligations.Liquidityriskisaffectedbythewillingnessofmarketparticipantstobuyandsellparticular
securities.Liquidity risk tends tobe higher for equitiesrelated to small capitalization companiesand
certain alternative investments. Due to the volatility in the capital markets, there is a reasonable
possibilityofsubsequentchangesinfairvalue,resultinginadditionalgainsandlossesinthenearterm.
Thecarryingvaluesofcashandcashequivalents,accountsreceivableandpayable,othercurrentassets
and accrued liabilitiesare reasonable estimates of theirfair values, due to theshort-term nature of
thesefinancialinstruments.
21
Thefairvaluesoffinancialassetsandliabilitiesmeasuredatfairvalueonarecurringbasisareas
follows:
December31,2023
QuotedPrices
inActive
Marketsfor
IdenticalAssets
(Level1)
Other
Significant
Observable
Inputs
(Level2)
Significant
Unobservable
Inputs
(Level3)
Assets
Investments
Cashandshort-terminvestments $ 1,112,802 $ 1,098,116 $ 14,686 $ —
Corporatebondsandotherdebtsecurities 719,092 — 719,092 —
UnitedStatesgovernmentbonds 652,278 — 652,278 —
Bondandotherdebtsecurityfunds 420,039 109,367 310,672 —
Non-governmentfixed-incomeobligations 31,706 — 31,706 —
Equitysecurities 819,568 804,152 15,416 —
Equityfunds 2,403,817 140,723 2,263,094 —
Fundsheldunderretirementplans 412,776 85,091 327,685 —
6,572,078 $ 2,237,449 $ 4,334,629 $ —
Investmentsatnetassetvalue
Alternativeinvestments 6,328,328
Totalinvestments $ 12,900,406
Collateralproceedsreceivedundersecuritieslending
program $ 14,557 $ 14,557
Liabilities
Obligationsunderswapagreements $ (31,681) $ (31,681)
Liabilitiesunderretirementandbenefitplans $ (412,776) $ (412,776)
Obligationstoreturncapitalundersecuritieslending
program $ (14,557) $ (14,557)
22
December31,2022
QuotedPrices
inActive
Marketsfor
IdenticalAssets
(Level1)
Other
Significant
Observable
Inputs
(Level2)
Significant
Unobservable
Inputs
(Level3)
Assets
Investments
Cashandshort-terminvestments $ 789,689 $ 540,092 $ 249,597 $ —
Corporatebondsandotherdebtsecurities 720,424 — 720,424 —
UnitedStatesgovernmentbonds 586,517 — 586,517 —
Bondandotherdebtsecurityfunds 465,762 96,219 369,543 —
Non-governmentfixed-incomeobligations 32,307 — 32,307 —
Equitysecurities 761,237 746,574 14,663 —
Equityfunds 2,143,486 121,424 2,022,062 —
Fundsheldunderretirementplans 324,928 70,275 254,653 —
5,824,350 $ 1,574,584 $ 4,249,766 $ —
Investmentsatnetassetvalue
Alternativeinvestments 6,008,225
Totalinvestments $ 11,832,575
Collateralproceedsreceivedundersecuritieslending
program $ 17,402 $ 17,402
Liabilities
Obligationsunderswapagreements $ (29,514) $ (29,514)
Othernoncurrentliabilities $ (324,928) $ (324,928)
Obligationstoreturncapitalundersecuritieslending
program $ (17,402) $ (17,402)
8. PROPERTYANDEQUIPMENT,NET
Thecomponentsofpropertyandequipment,netaresummarizedasfollows:
December31,2023 December31,2022
Landandimprovements $ 493,107 $ 479,733
Buildingsandotherimprovements 8,467,723 8,289,707
Fixedandmovableequipment 2,877,402 3,007,315
Construction-in-progress 391,764 279,791
12,229,996 12,056,546
Accumulateddepreciationandamortization (6,310,763) (6,085,004)
Propertyandequipment,net $ 5,919,233 $ 5,971,542
During2023,theSystemwroteofffullydepreciatedpropertyandequipmenttotaling$298,333.
Property and equipment, net include assets recorded as finance leases and under other financing
arrangements.SeeadditionaldisclosureinNote9.LEASES.
Depreciationexpensewas$558,493and$549,086fortheyearsendedDecember31,2023and2022,
respectively.
23
9. LEASES
The System leases office and clinical space, land and equipment. Leases with an initial term of 12
monthsorlessarenotrecordedontheconsolidatedbalancesheets.TheSystemcombinesleaseand
non-leasecomponents,exceptformedicalequipmentleases.
Thedepreciablelivesofassetsarelimitedbytheexpectedleaseterms.Mostleasesincludeoptionsto
renew.Themajorityofleasesdonotprovideanimplicitrate;therefore,theSystemhaselectedtouse
itsincrementalborrowingrate,whichistheinterestratetheSystemwouldborrowonacollateralized
basisoverasimilarterm,asthediscountrate.
Operating and finance leases are classified as follows within the accompanying consolidated balance
sheets:
Leases Classification December31,2023 December31,2022
Assets
Operating Operatingleaseright-of-useassets $ 305,114 $ 305,311
Finance Propertyandequipment,net 207,232 226,039
Totalleaseassets $ 512,346 $ 531,350
Liabilities
Current
Operating Operatingleaseliabilities,currentportion $ 69,062 $ 73,026
Finance Long-termdebtandcommercialpaper,currentportion 20,330 17,942
Noncurrent
Operating Operatingleaseliabilities,lesscurrentportion 273,134 276,116
Finance Long-termdebt,lesscurrentportion 234,016 247,979
Totalleaseliabilities $ 596,542 $ 615,063
Financeleaseassetsarerecordednetofaccumulatedamortizationof$114,889and$90,244asofDecember31,2023and2022,
respectively.
Lease costs are classified as followswithin the accompanying consolidatedstatements of operations
andchangesinnetassets:
Leasecost Classification December31,2023 December31,2022
Operatingleasecost Purchasedservicesandother $ 79,919 $ 76,869
Shorttermleasecost Purchasedservicesandother 22,230 17,187
Variableleasecost Purchasedservicesandother 37,343 37,133
Financeleasecost
Amortizationofleaseassets Depreciationandamortization 24,677 18,795
Interestonleaseliabilities Interest 18,824 18,898
Subleaseincome Otherrevenue (372) (2,140)
Netleasecost $ 182,621 $ 166,742
24
Leaseterms,discountratesandothersupplementalinformationareasfollows:
December31,2023 December31,2022
Weightedaverageremainingleaseterm(inyears)
Operating
6.0 6.0
Finance
8.7 9.6
Weightedaveragediscountrate
Operating
2.65% 2.39%
Finance
8.22% 8.17%
Cashpaidforamountsincludedinthemeasurementofleaseliabilities
Operatingcashflowsfromoperatingleases
$ 91,424 $ 81,534
Operatingcashflowsfromfinanceleases 18,824 18,898
Financingcashflowsfromfinanceleases 19,676 17,370
FuturematuritiesofleaseliabilitiesatDecember31,2023areasfollows:
OperatingLeases FinanceLeases Total
2024 $ 77,005 $ 36,555 $ 113,560
2025 70,643 38,621 109,264
2026 63,979 38,672 102,651
2027 45,539 37,958 83,497
2028 36,665 44,876 81,541
Thereafter 78,170 165,492 243,662
Futureminimumleasepayments 372,001 362,174 734,175
Lessremainingimputedinterest 29,805 107,828 137,633
Total $ 342,196 $ 254,346 $ 596,542
25
10. INTERESTINMASONICFAMILYHEALTHFOUNDATION
The System has an interest in the net assets of the Masonic Family Health Foundation ("MFHF"), an
independent organization, under the terms of an asset purchase agreement (the "Agreement").
SubstantiallyallofMFHF’snetassetsaredesignatedtosupporttheoperationsand/orcapitalneedsof
oneoftheSystem’smedicalfacilities.Additionally,90%ofMFHF’sinvestmentyield,netofexpenses,
onsubstantiallyallofMFHF’sinvestmentsisdesignatedforthesupportofoneoftheSystem’smedical
facilities. MFHF must pay the System, annually, 90% of the investment yield or an agreed-upon
percentageofthebeginningoftheyearnetassets.
TheinterestinthenetassetsofMFHFamountedto$108,041and$94,302atDecember31,2023and
2022,respectively,andispresentedwithinothernoncurrentassetsintheaccompanyingconsolidated
balance sheets. The System’s interest in the investment income (loss) isreflected in the investment
income(loss),netlineintheaccompanyingconsolidatedstatementsofoperationsandchangesinnet
assets and amounted to $17,184 and $(23,905) for the years ended December 31, 2023 and 2022,
respectively.Cashdistributionsof$4,586and$4,077werereceivedbytheSystemfromMFHFunder
termsoftheAgreementduringtheyearsendedDecember31,2023and2022,respectively.
ThesummarizedfinancialpositionandresultsofoperationsforMFHFaccountedforundertheequity
methodasofandfortheperiodsendedisoutlinedbelow:
December31,2023 December31,2022
Totalassets $ 112,048 $ 99,802
Totalliabilities 3,531 4,786
Netassets 108,517 95,016
Totalrevenue $ 18,300 $ (22,495)
Revenueinexcessof(lessthan)expenses 13,606 (28,382)
26
11. LONG-TERMDEBT
Long-termdebtconsistedofthefollowing:
December31,2023 December31,2022
Revenuebondsandrevenuerefundingbonds
Series2008A(weightedaveragerateof4.32%and4.35%during2023and2022,
respectively),principalpayableinvaryingannualinstallmentsthroughNovember2030;
interestbasedonprevailingmarketconditionsattimeofremarketing 86,385 103,810
Series2008C(weightedaveragerateof3.39%and1.22%during2023and2022,
respectively),principalpayableinvaryingannualinstallmentsthroughNovember2038;
interestbasedonprevailingmarketconditionsattimeofremarketing 272,065 272,065
Series2011B(weightedaveragerateof3.66%and1.49%during2023and2022,
respectively),principalpayableinvaryingannualinstallmentsthroughApril2051,subject
toaputprovisionthatprovidesforacumulativeseven-monthnoticeandremarketing
period;interesttiedtoamarketindexplusaspread 69,660 69,660
Series2011C(weightedaveragerateof4.95%and2.05%during2023and2022,
respectively),principalpayableinvaryingannualinstallmentsthroughApril2049,subject
toaputprovisiononSeptember3,2024;interesttiedtoamarketindexplusaspread 49,755 49,755
Series2011D(weightedaveragerateof4.95%and2.05%during2023and2022,
respectively),principalpayableinvaryingannualinstallmentsthroughApril2049,subject
toaputprovisiononSeptember3,2024;interesttiedtoamarketindexplusaspread 49,755 49,755
Series2013A,5.00%,principalpayableinvaryingannualinstallmentsthroughJune2024 7,025 13,090
Series2014,4.00%to5.00%,principalpayableinvaryingannualinstallmentsthrough
August2038 74,695 82,095
Series2015,4.13%,principalpayableinvaryingannualinstallmentsthroughMay2045 30,620 30,620
Series2015B,4.00%to5.00%,principalpayableinvaryingannualinstallmentsthrough
May2044 13,665 13,860
Series2018A,4.00%to5.00%,principalpayableinvaryingannualinstallmentsthrough
August2044 97,500 97,500
Series2018B(weightedaveragerateof5.00%during2023and2022),principalpayablein
varyingannualinstallmentsthroughAugust2054;interestbasedonprevailingmarket
conditionsattimeofremarketing 181,160 184,420
Series2018C(weightedaveragerateof4.30%and2.37%during2023and2022,
respectively),principalpayableinvaryingannualinstallmentsthroughAugust2054,
interesttiedtoamarketindexplusaspreadorprevailingmarketconditionsat
remarketing 186,845 190,300
1,119,130 1,156,930
Taxablebonds
TaxableBondSeries2018,3.83%to4.27%,principalpayableinvaryingannual
installmentsthroughAugust2048 799,510 799,510
TaxableBondSeries2019,3.39%,principalpayableinOctober2049 443,180 443,180
TaxableBondSeries2020A,2.21%to3.01%,principalpayableinvaryingannual
installmentsthroughJune2050 700,000 700,000
1,942,690 1,942,690
Financeleaseobligationsandfinancingarrangements 258,553 270,423
Commercialpaper,weightedaverageinterestrateof5.14%and1.74%during2023and
2022,respectively 50,000 50,000
TaxableTermLoan,(weightedaveragerateof2.68%during2023and2022),principal
payableinvaryingannualinstallmentsthroughSeptember2024 69,895 70,485
3,440,268 3,490,528
Netunamortizedpremiumsandunamortizedbondissuancecosts 26,432 31,134
3,466,700 3,521,662
Lessamountsclassifiedascurrent
Long-termdebtandcommercialpaper,currentportion (172,759) (101,204)
Long-termdebtsubjecttoshort-termfinancingarrangements (354,720) (165,035)
(527,479) (266,239)
$ 2,939,221 $ 3,255,423
27
Maturitiesoflong-termdebt,capitalleases,andsinking fundrequirements,assumingremarketingof
thevariableratedemandrevenuerefundingbonds,forthefiveyearsendingDecember31,2028,areas
follows:
2024 $ 122,759
2025 48,201
2026 42,840
2027 44,312
2028 444,867
The System's outstanding bonds are secured by obligations issued under the Second Amended and
RestatedMasterTrustIndenturedatedasofAugust1,2018,asthesamemaybeamendedfromtime
totime,betweenAdvocateAuroraHealth,Inc.,theotheraffiliatesidentifiedthereinastheMembersof
the Obligated Group and U.S. Bank National Association, as master trustee ("the System Master
Indenture").Underthetermsofthebondindenturesandotherarrangements,variousamountsareto
be on deposit with trustees, and certain specified payments are required for bond redemption and
interest payments. The System Master Indenture and other debt agreements, including bank
agreements,alsoplacerestrictionsontheSystemandrequiretheSystemtomaintaincertainfinancial
ratios.
The System's unsecured variable rate revenue bonds, Series 2011B of $69,660, Series 2011C of
$49,755, Series 2011D of $49,755, Series 2018B-3 of $48,560 and Series 2018C-4 of $50,350, while
subjecttoalong-termamortizationperiod,maybeputtotheSystemattheoptionofthebondholders
inconnectionwithcertainremarketingdates.Totheextentthatbondholdersmay,underthetermsof
the debt, puttheir bonds within 12 monthsafter December 31, 2023, the principal amount of such
bonds has been classified as long-term debt subject to short-term financing arrangements in the
accompanyingconsolidatedbalancesheets.Managementbelievesthelikelihoodofamaterialamount
ofbondsbeingputtotheSystemisremote.However,toaddressthispossibility,theSystemhastaken
steps to provide various sources of liquidity, including assessing alternate sources of financing,
includinglinesofcreditand/ornetassetswithoutdonorrestrictionsasasourceofself-liquidity.
The System has standby bond purchase agreements with banks to provide liquidity support for the
Series2008CBonds.IntheeventofafailedremarketingofaSeries2008CBonduponitstenderbyan
existingholderandsubjecttocompliancewiththetermsofthestandbybondpurchaseagreement,the
standbybankwouldprovidethefundsforthepurchaseofsuchtenderedbonds,andtheSystemwould
beobligatedtorepaythebankforthe fundsitprovidedforsuchbondpurchase(if suchbondisnot
subsequentlyremarketed),withthefirstinstallmentofsuchrepaymentcommencingonthedateone
yearandonedayafterthebankpurchasesthebond.AsofDecember31,2023,therewerenobank-
purchased bonds outstanding. To the extent that the standby bond purchase agreement expiration
date is within 12 months after December 31, 2023, the principal amount of such bonds would be
classifiedasacurrentobligationintheaccompanyingconsolidatedbalancesheets.Thestandbybond
purchaseagreementsexpireasfollows:$87,694inSeptember2024, $58,225inSeptember2025and
$129,456inJanuary2026.
In January 2023, $46,310 of the Series 2018B-2 Bonds were remarketed for a new long-term rate
period and will next be subject to mandatory purchase on June 24, 2026. In connection with the
remarketing, $3,260 of the Series 2018B-2 Bonds were redeemed and a loss of refinancing was
recordedintheamountof$19.
InJanuary2023,$49,065oftheSeries2018C-3Bondswereremarketedforanewlong-termrateperiod
andwillnextbesubjecttomandatorypurchaseonJune24,2026.Inconnectionwiththeremarketing,
28
$3,455 of the Series 2018C-3 Bonds were redeemed and a loss of refinancing was recorded in the
amountof$21.
AsofDecember31,2023,theSystemhasauthorizedtheissuanceofupto$1,000,000incommercial
paperaggregateprincipaloutstanding.AsofDecember31,2023,$50,000ofcommercialpapernotes
was outstanding, with maturities ranging from 5 to 43 days. As of December 31, 2022, $50,000 of
commercialpaperwasoutstanding,withmaturitiesrangingfrom9to41days.
AtDecember31,2023,theSystemhadlinesofcreditwithbanksaggregatingto$1,100,000inavailable
commitments. These lines of creditprovide for various interestrates and payment termsand as of
December31,2023expireasfollows:$150,000inAugust2024,$325,000inDecember2024,$325,000
in December 2025 and $300,000 in December 2026. These lines of credit may be used to redeem
bondedindebtedness, to pay costs relatedto such redemptions, for capitalexpenditures for general
workingcapital purposes orto provide for certainletters of credit. AtDecember31, 2023,letters of
credittotaling$70,507havebeenissuedunderoneoftheselines.AtDecember31,2023,noamounts
wereoutstandingontheselinesorlettersofcredit.
TheSystemmaintainsaninterestrateswapprogramoncertainofitsvariableratedebt,asdescribedin
Note12.INTERESTRATESWAPPROGRAM.
The System’s interest paid amount encompasses all debt agreements including revenue bonds and
revenuerefundingbonds,taxablebonds,financeleaseobligations,financingarrangementsandinterest
rateswaps.TheSystem'sinterestpaid,netofcapitalizedinterest,amountedto$132,830and$126,333
for the years ended December 31, 2023 and 2022, respectively. The System capitalized interest of
$4,526and$5,698fortheyearsendedDecember31,2023and2022,respectively.
12. INTERESTRATESWAPPROGRAM
TheSystemhasinterestrate-relatedderivativeinstrumentstomanagetheexposureofitsvariablerate
debtinstruments. Byusing derivativefinancial instrumentsto manage therisk ofchanges ininterest
rates,theSystemexposesitselftocreditriskandmarketriskasdescribedinNote6.INVESTMENTS.
At December 31, 2023, the System maintains an interest rate swap program on its Series 2008C
variable rate demand revenue bonds. These bonds expose the System to variability in interest
paymentsduetochangesininterestrates.Tolimitthevariabilityofitsinterestpaymentsandtotake
advantage of low interest rates, the System entered into various interest rate swap agreements to
managefluctuations in cashflows resulting frominterest rate risk.These swaps convertthe variable
ratecashflowexposureonthevariableratedemandrevenuebondstosyntheticallyfixedcashflows.
The notional amount under each interest rate swap agreement is reduced over the term of the
respectiveagreementtocorrespond withreductionsin theprincipaloutstandingunder variousbond
series.
The System has two swaps that are being held as a swap portfolio as the related debt is no longer
outstanding.
29
Thefollowingisasummaryoftheoutstandingpositionsundertheseinterestrateswapagreementsat
December31,2023:
BondSeries NotionalAmount MaturityDate RateReceived RatePaid
2008C-1 $ 129,900 November1,2038 61.7%ofLIBOR+26bps 3.605%
2008C-2B 58,425 November1,2038 61.7%ofLIBOR+26bps 3.605%
2008C-3A 88,000 November1,2038 61.7%ofLIBOR+26bps 3.605%
Swapportfolio 50,000 November1,2038 61.7%ofLIBOR+26bps 3.605%
Swapportfolio 23,200 February1,2038 70.0%ofLIBOR 3.314%
Theswapsarenotdesignatedashedginginstrumentsand,therefore,hedgeaccountinghasnotbeen
applied. As such, unrealized changes in fair value of the swaps are classified as other nonoperating
(loss) income, net in the accompanying consolidated statements of operations and changes in net
assets.Thenetcashsettlementpayments,representingtherealizedchangesinfairvalueoftheswaps,
are included as interest expense in the accompanying consolidated statements of operations and
changesinnetassets.
The fair value of the interest rate swap agreements was a liability of $31,681 and $29,514 as of
December31,2023and2022,respectively.Nocollateralwaspostedundertheseswapagreementsas
ofDecember31,2023and2022.
Amountsrecordedintheaccompanyingconsolidatedstatementsofoperationsandchangesinnet
assetsareasfollows:
YearEnded
December31,2023
YearEnded
December31,2022
Netcashpaymentsoninterestrateswapagreements(interestexpense) $ 572 $ 8,432
Changeinfairvalueofinterestrateswaps(othernonoperating(loss)income,net) $ (2,167) $ 61,703
The interest rate swap instruments contain provisions that require the System to maintain an
investmentgradecreditratingonitsbondsfromcertainmajorcreditrating agencies.IftheSystem's
bonds were to fall below investment grade, it would be in violation of these provisions and the
counterpartiestotheswapinstrumentscouldrequestimmediatepaymentordemandimmediateand
ongoingfullovernightcollateralizationoninterestrateswapinstrumentsinnetliabilitypositions.
13. RETIREMENTPLANS
TheSystemmaintainsvariousemployeeretirementbenefitplansavailabletoqualifyingemployeesand
retirees.
TheAdvocateHealthCareNetworkPensionPlan(“AdvocatePlan”)wasfrozeneffectiveDecember31,
2019tonewparticipantsandparticipantsceasedaccruingadditionalpensionbenefits.Thenetpension
benefit obligation of $161,376 and $174,023 at December 31, 2023 and December 31, 2022,
respectively, for the Advocate Plan is included in other noncurrent liabilities in the accompanying
consolidatedbalancesheets. Duringthe yearsendedDecember31, 2023and2022, nocontributions
weremadetotheAdvocatePlan.
TheAdvocateAuroraHealthPensionPlan(“AAHPlan”)wascreatedthroughamergeroftheCondell
Health Network RetirementPlan (frozeneffective January 1, 2008) and the Aurora Health Care,Inc.
PensionPlan(frozeneffectiveDecember31,2012).Thenetpensionbenefitobligationof$110,675and
$105,335atDecember31,2023andDecember31,2022,respectively,isincludedinothernoncurrent
30
liabilitiesintheaccompanyingconsolidatedbalancesheets.DuringtheyearsendedDecember31,2023
and2022,nocontributionsweremadetotheAAHPlan.
Asummaryofchangesintheplanassets,projectedbenefitobligationandtheresultingfundedstatus
fortheyearendedDecember31,2023isasfollows:
Advocate AAH Total
Changeinplanassets:
Planassetsatfairvalueatbeginningofperiod $ 863,209 $ 982,492 $ 1,845,701
Actualreturnonplanassets 79,100 79,473 158,573
Benefitspaid (49,414) (47,917) (97,331)
Planassetsatfairvalueatendofperiod $ 892,895 $ 1,014,048 $ 1,906,943
Changeinprojectedbenefitobligation:
Projectedbenefitobligationatbeginningofperiod $ 1,037,232 $ 1,087,827 $ 2,125,059
Interestcost 52,102 55,482 107,584
Actuarialloss 14,351 29,331 43,682
Benefitspaid (49,414) (47,917) (97,331)
Projectedbenefitobligationatendofperiod $ 1,054,271 $ 1,124,723 $ 2,178,994
Planassetslessthanprojectedbenefitobligation $ (161,376) $ (110,675) $ (272,051)
Accumulatedbenefitobligationatendofperiod $ 1,054,271 $ 1,124,723 $ 2,178,994
Asummaryofchangesintheplanassets,projectedbenefitobligationandtheresultingfundedstatus
fortheyearendedDecember31,2022isasfollows:
Advocate AAH Total
Changeinplanassets:
Planassetsatfairvalueatbeginningofperiod $ 982,077 $ 1,405,674 $ 2,387,751
Actualreturnonplanassets (55,218) (378,408) (433,626)
Benefitspaid (63,650) (44,774) (108,424)
Planassetsatfairvalueatendofperiod $ 863,209 $ 982,492 $ 1,845,701
Changeinprojectedbenefitobligation:
Projectedbenefitobligationatbeginningofperiod $ 1,057,089 $ 1,463,291 $ 2,520,380
Interestcost 39,130 43,849 82,979
Actuarialloss(gain) 4,663 (374,539) (369,876)
Benefitspaid (63,650) (44,774) (108,424)
Projectedbenefitobligationatendofperiod $ 1,037,232 $ 1,087,827 $ 2,125,059
Planassetslessthanprojectedbenefitobligation $ (174,023) $ (105,335) $ (279,358)
Accumulatedbenefitobligationatendofperiod $ 1,037,232 $ 1,087,827 $ 2,125,059
TheAAHPlanactuarialgainof$374,539fortheyearendingDecember31,2022wasprimarilydrivenby
anincreaseindiscountratesandanincreaseintheexpectedlong-termrateofreturnonplanassets.
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TheAdvocatePlanpaidlumpsumstotaling$45,541and$60,526in2023and2022,respectively.The
amount in 2022 was greater than the sum of the Advocate Plan’s service cost and interest cost,
resultinginasettlementchargeintheamountof$17,789.
Pension plan expense is included in other nonoperating (loss) income, net in the accompanying
consolidated statements of operations and changes in net assets is as follows for the year ended
December31,2023:
Advocate AAH Total
Interestcost $ 52,102 $ 55,482 $ 107,584
Expectedreturnonplanassets (52,910) (56,606) (109,516)
Amortizationof:
Actuarialloss 4,459 — 4,459
Priorservicecost — 3 3
Netpensionexpense(income) $ 3,651 $ (1,121) $ 2,530
Pension plan expense is included in other nonoperating (loss) income, net in the accompanying
consolidated statements of operations and changes in net assets is as follows for the year ended
December31,2022:
Advocate AAH Total
Interestcost 39,130 43,849 82,979
Expectedreturnonplanassets (44,909) (52,179) (97,088)
Amortizationof:
Actuarialloss 3,491 6,034 9,525
Priorservicecost — 3 3
Settlement 17,789 — 17,789
Netpensionexpense $ 15,501 $ (2,293) $ 13,208
Thecomponentsofnetperiodicbenefitcosts,otherthantheservicecostcomponent,areincludedin
othernonoperating(loss)income,netintheaccompanyingconsolidatedstatementsofoperationsand
changesinnetassets.
Thenetchangerecognizedinnetassetswithoutdonorrestrictionsasacomponentofpension-related
changesotherthannetperiodicpensioncostwasasfollowsfortheyearendedDecember31,2023:
Advocate AAH Total
Netchangerecognized $ (16,298) $ 6,462 $ (9,836)
Thenetchangerecognizedinnetassetswithoutdonorrestrictionsasacomponentofpension-related
changesotherthannetperiodicpensioncostwasasfollowsfortheyearendedDecember31,2022:
Advocate AAH Total
Netchangerecognized $ 83,510 $ 50,011 $ 133,521
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IncludedinnetassetswithoutdonorrestrictionsatDecember31,2023arethefollowingamountsthat
havenotyetbeenrecognizedinnetpensionexpense:
Advocate AAH Total
Unrecognizedpriorcredit $ — $ 91 $ 91
Unrecognizedactuarialloss 311,339 396,929 708,268
$ 311,339 $ 397,020 $ 708,359
Expectedemployeebenefitpaymentstobepaidfromthepensionplansareasfollows:
Advocate AAH Total
2024 $ 72,861 $ 58,629 $ 131,490
2025 71,605 61,737 133,342
2026 70,533 65,211 135,744
2027 70,800 67,851 138,651
2028 70,011 70,263 140,274
2029-2033 359,414 374,175 733,589
Total $ 715,224 $ 697,866 $ 1,413,090
Nocontributionsareexpectedtothepensionplansin2024.
Employercontributionsarepaidfromemployerassets.Noplanassetsareexpectedtobereturnedto
theemployer.AllbenefitspaidundertheAdvocatePlanandAAHPlan(collectivelyreferredtoasthe
"Plans")werepaidfromthePlans'assets.
The System's asset allocationand investmentstrategies are designed to earn returns on plan assets
consistent with a reasonable and prudent level of risk. Investments are diversified across classes,
economic sectors and manager style to minimize the risk of loss. The System utilizes investment
managersspecializingineachassetcategoryand,whereappropriate,providestheinvestmentmanager
with specific guidelines that include allowable and/or prohibited investment types. The System
regularlymonitorsmanagerperformanceandcompliancewithinvestmentguidelines.
TheSystem'stargetandactualpensionassetallocationsforthePlansareasfollows:
December31,2023 December31,2022
AssetCategory-AdvocatePlan Target Actual Target Actual
De-riskingportfolio 70% 68% 70% 70%
Domesticandinternationalequitysecurities 21 23 21 20
Alternativeinvestments 6 6 6 7
Cashandfixed-incomesecurities 3 3 3 3
100% 100% 100% 100%
December31,2023 December31,2022
AssetCategory-AAHPlan Target Actual Target Actual
De-riskingportfolio 85% 82% 85% 82%
Domesticandinternationalequitysecurities 12 15 12 15
Realestate 1 1 1 1
Cashandfixed-incomesecurities 2 2 2 2
100% 100% 100% 100%
The de-risking portfolio is comprised of cash and fixed-income instruments designed to hedge Plan
liabilities.
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AtDecember31,2023,theAdvocatePlanhadcommitmentstofundalternativeinvestments,including
recallabledistributionsof$14,549overthenextthreeyears.
Inthenormalcourseofoperationsandwithinestablishedinvestmentpolicyguidelines,thePlansmay
enter into various exchange-traded and over-the-counter derivative contracts for trading purposes,
includingfutures,optionsandforwardcontracts.Theseinstrumentsareusedprimarilytomaintainthe
Plans' strategic asset allocationand hedgesecurity price movements.These instrumentsrequire the
Planstodepositcashcollateralwiththebrokerorcustodian.
DerivativecontractinformationatDecember31,2023areasfollows:
Advocate AAH Total
Cashandsecuritycollateralprovided $ 17,115 $ 7,307 $ 24,422
Grossnotionalvalue $ (418,971) $ 253,937 $ (165,034)
DerivativecontractinformationatDecember31,2022areasfollows:
Advocate AAH Total
Cashandsecuritycollateralprovided $ 15,659 $ 6,819 $ 22,478
Grossnotionalvalue $ (398,544) $ 232,011 $ (166,533)
By using derivative financial instruments, the System exposes itself to credit risk and market risk as
describedinNote6.INVESTMENTS.
Fairvalue methodologies for Level 1and Level 2 are consistentwith the inputs described inNote 7.
FAIRVALUE.Realestatecommingledfunds forwhichanactivemarketexists areincludedinLevel2.
TheSystemoptedtousethenetassetvaluepershare,oritsequivalent,asapracticalexpedientforthe
fair value of the Plans’ interest in hedge funds, private equity limited partnerships and real estate
commingledfunds.Thereisinherentuncertaintyinsuchvaluationsandtheestimatedfairvaluesmay
differfromthevaluesthatwouldhavebeenusedhadareadymarketfortheseinvestmentsexisted.
Privateequitylimitedpartnershipsandrealestatecommingledfundstypicallyhavefinitelivesranging
fromfivetotenyears,attheendofwhichallinvestedcapitalisreturned.Forhedgefunds,thetypical
lockupperiodisone year,afterwhich investedcapitalcanbe redeemedona quarterlybasiswithat
least30days’butnomorethan90days’notice.ThePlans’investmentassetsareexposedtothesame
kindsandlevelsofriskasdescribedinNote7.FAIRVALUE.
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ThefollowingarethePlans’financialinstrumentsatDecember31,2023,measuredatfairvalueona
recurringbasisbythevaluationhierarchydefinedinNote7.FAIRVALUE:
Description
December31,
2023
QuotedPrices
inActive
Marketsfor
IdenticalAssets
(Level1)
Other
Significant
Observable
Inputs
(Level2)
Significant
Unobservable
Inputs
(Level3)
Cashandshort-terminvestments $ 54,958 $ 784 $ 54,174 $ —
Corporatebondsandotherdebtsecurities 828,052 — 828,052 —
UnitedStatesgovernmentobligations 545,538 — 545,538 —
Bondandotherdebtsecurityfunds 49,068 — 49,068 —
Equitysecurities 14,177 14,177 — —
Equityfunds 354,901 9,473 345,428 —
Realestatefunds 13,610 — 13,610 —
1,860,304 $ 24,434 $ 1,835,870 $ —
Investmentsatnetassetvalue
Alternativeinvestments 49,561
Totalplaninvestments 1,909,865
Accrualscarriedatcost (2,922)
Totalplanassets $ 1,906,943
ThefollowingarethePlans’financialinstrumentsatDecember31,2022,measuredatfairvalueona
recurringbasisbythevaluationhierarchydefinedinNote7.FAIRVALUE:
Description
December31,
2022
QuotedPrices
inActive
Marketsfor
IdenticalAssets
(Level1)
Other
Significant
Observable
Inputs
(Level2)
Significant
Unobservable
Inputs
(Level3)
Cashandshort-terminvestments $ 89,470 $ 1,155 $ 88,315 $ —
Corporatebondsandotherdebtsecurities 748,185 — 748,185 —
UnitedStatesgovernmentobligations 540,677 — 540,677 —
Bondandotherdebtsecurityfunds 44,071 — 44,071 —
Equitysecurities 13,393 13,393 — —
Equityfunds 335,434 9,418 326,016 —
Realestatefunds 16,407 — 16,407 —
1,787,637 $ 23,966 $ 1,763,671 $ —
Investmentsatnetassetvalue
Alternativeinvestments 59,579
Totalplaninvestments 1,847,216
Accrualscarriedatcost (1,515)
Totalplanassets $ 1,845,701
35
Assumptionsusedtodeterminebenefitobligationsareasfollows:
December31,2023 December31,2022
Discountrate-AdvocatePlan 4.99% 5.19%
Discountrate-AAHPlan 5.04% 5.23%
Assumedrateofreturnonassets-AdvocatePlan 6.30% 6.00%
Assumedrateofreturnonassets-AAHPlan 5.40% 4.50%
Interestcreditingrate-AdvocatePlan 4.13% 4.10%
Assumptionsusedtodeterminenetpensionexpenseareasfollows:
December31,2023 December31,2022
Discountrate-AdvocatePlan 5.19% 2.85%
Discountrate-AAHPlan 5.23% 3.05%
Assumedrateofreturnonassets-AdvocatePlan 6.00% 4.50%
Assumedrateofreturnonassets-AAHPlan 4.50% 3.80%
Interestcreditingrate-AdvocatePlan 4.10% 1.80%
Theassumedrateofreturnon eachofthePlan'sassetsis basedonhistoricalandprojectedrates of
returnforassetclassesinwhichtheportfolioisinvested.
The2023and2022mortalityassumptionforthePlanswastheamounts-weightedaggregateratesfrom
the Pri-2012 mortalitystudy, withwhite-collar adjustments projected generationally from 2012 with
ScaleMP-2021.
InadditiontothesePlans,theSystemsponsorsadefinedcontributionplanforitsemployees.Expense
related to the plan, which is included in salaries, wages and benefits expense in the accompanying
consolidatedstatementsofoperationsandchangesinnetassets,was$332,918and$312,816forthe
yearsendedDecember31,2023and2022,respectively.
14. NETASSETSWITHDONORRESTRICTIONS
Netassetswithdonorrestrictionsareavailableforthefollowingpurposes:
December31,2023 December31,2022
Purchasesofpropertyandequipment $ 17,171 $ 19,422
Medicaleducationandotherhealthcareprograms 227,280 218,754
$ 244,451 $ 238,176
36
15. FUNCTIONALOPERATINGEXPENSES
Operating expenses directly attributable to a specific functional area of the System are reported as
expenses of those functional areas. Expenses other than interest expense are directly allocated to
functionaldepartmentsatthetimetheyareincurred.Interestexpensethatrelatestodebtfinancingis
allocatedbasedontheuseoftherelatedfunds.Generalandadministrativeexpensesprimarilyinclude
legal, finance, marketing, purchasing and human resources. A majority of fundraising costs are
reported as other nonoperating (loss) income, net in the accompanying consolidated statements of
operationsandchangesinnetassets.
FunctionaloperatingexpensesfortheyearendedDecember31,2023areasfollows:
Healthcareservices
Generaland
administrative Consolidated
Salaries,wagesandbenefits $ 8,156,018 $ 819,549 $ 8,975,567
Suppliesanddrugs 3,009,944 53,855 3,063,799
Purchasedservicesandother 1,709,147 650,388 2,359,535
Contractedmedicalservices 542,880 — 542,880
Depreciationandamortization 574,943 39,141 614,084
Interest 125,568 — 125,568
Totaloperatingexpenses $ 14,118,500 $ 1,562,933 $ 15,681,433
FunctionaloperatingexpensesfortheyearendedDecember31,2022areasfollows:
Healthcareservices
Generaland
administrative Consolidated
Salaries,wagesandbenefits $ 7,810,612 $ 750,010 $ 8,560,622
Suppliesanddrugs 2,611,489 47,798 2,659,287
Purchasedservicesandother 1,528,218 582,930 2,111,148
Contractedmedicalservices 518,834 — 518,834
Depreciationandamortization 563,195 36,728 599,923
Interest 118,319 — 118,319
Totaloperatingexpenses $ 13,150,667 $ 1,417,466 $ 14,568,133
37
16. LIQUIDITY
The System’s financial assets available within one year of the consolidated balance sheets date for
generalexpendituresareasfollows:
December31,2023 December31,2022
Currentassets
Cashandcashequivalents $ 857,599 $ 372,898
Assetslimitedastouse 179,288 153,557
Patientaccountsreceivable 1,906,747 1,796,499
Third-partypayorsreceivables 100,958 23,400
Collateralproceedsundersecuritieslendingprogram 14,557 17,402
Totalcurrentassets 3,059,149 2,363,756
Assetslimitedastouse
Internallydesignatedforcapitalandother 10,822,009 10,301,972
Heldforself-insurance 508,709 564,195
Donorrestricted 106,325 98,293
Fundsheldunderretirementplans 412,776 324,928
Investmentsundersecuritieslendingprogram 13,700 16,732
Totalassetslimitedastouse 11,863,519 11,306,120
Totalfinancialassets $ 14,922,668 $ 13,669,876
Less
Amountsunavailableforgeneralexpenditures
Alternativeinvestments (3,536,782) (3,000,238)
Totalamountsunavailableforgeneralexpenditure (3,536,782) (3,000,238)
Amountsunavailabletomanagementwithoutapproval
Heldforself-insurance (687,997) (717,752)
Heldforemployeesunderretirementplans (412,776) (324,928)
Donorrestricted (106,325) (98,293)
Investmentsundersecuritieslendingprogram (13,700) (16,732)
Totalamountsunavailabletomanagementwithoutapproval (1,220,798) (1,157,705)
Totalfinancialassetsavailabletomanagementforgeneralexpenditurewithinoneyear $ 10,165,088 $ 9,511,933
17. COMMITMENTSANDCONTINGENCIES
FutureObligations
Aurora West Allis Medical Center has the right to operate the hospital under the terms of a lease
agreementwiththeCityofWestAllis("theCity").Inaccordancewiththeleaseagreement,theCityhas
title to all assets and any subsequent additions (with the exception of certain equipment used by
Auroraforlaboratoryservices).AuroraWestAllisMedicalCenterhasanexclusiverighttotheuseof
theassets and theobligation tomaintain and replacethem. The historicalcost to theSystemof the
leasedfacilitiesisincludedwithintheSystem’spropertyandequipment,net.Theagreementprovides
for annual payments of less than $100 in lieu of annual lease payments and includes payment
escalationseachsubsequentyear.Theleaseexpiresin2063.
The System is committed to constructing additions and renovations to its medical facilities that are
expectedto be completedin futureyears. Theestimated costof thesecommitmentsis $498,224,of
which$224,860hasbeenincurredasofDecember31,2023.
38
TheSystementeredintoagreementsforinformationtechnologyservicesprovidedbythirdparties.The
maximum amount of future payments that the System could be required to make under these
agreementsisapproximately$50,000overthenextsevenyearsandapproximately$3,000and$19,000
is included in accounts payable and other accrued liabilities and other noncurrent liabilities,
respectivelyintheaccompanyingconsolidatedbalancesheetsatDecember31,2023.TheSystemhas
also entered into various other agreements. The future commitments under these agreements are
$25,335overthenextthreeyears.
Litigation
From time to time, the System receives and responds to investigations and requests concerning
possible violations of reimbursement, false claims, anti-kickback and anti-referral statutes,
environmental regulations and other regulations of health care providers from federal and state
regulatory agencies. There can be no assurance that regulatory authorities will not challenge the
System’scompliancewiththeselawsandregulations,anditisnotpossibletodeterminetheimpact,if
any,suchclaims,orpenaltieswouldhaveontheSystem.Tofostercompliancewithapplicablelawsand
regulations, the System maintains a compliance program designed to detect and correct potential
violationsoflawsandregulationsrelatedtoitsprograms.
TheSystemalsoisinvolvedinlitigationsuchasmedicalmalpracticeandcontractualdisputes,asboth
plaintiff and defendant, and other routine labor matters, proposed class action complaints, tax
examinations,securityeventsresultinginpotentialprivacyincidents,internalcomplianceactivitiesand
regulatoryinvestigationsandexaminationsarisingintheordinarycourseofbusiness.
BasedonSystem’sassessmentoftheabovematters,theuncertaintyoflitigation,andthepreliminary
stagesofmanyofthematters,theSystemcannotestimatethereasonablepossiblelossorrangeofloss
thatmayresultfromthesematters,exceptasstatedintheconsolidatedfinancialstatements,including
this note. Managementof the System is of the opinion, however, that the resolution of these legal
actionswillnothaveamaterialeffectonthefinancialpositionoftheSystem.
TwosetsofplaintiffshavefiledseparateputativeclassactioncivillawsuitsagainsttheAdvocateAurora
Health,Inc.("AAH"),in2022and2023,allegingviolationsofFederalandStateantitrustlawarisingout
of,amongotherthings,theSystem’sarrangementswithcertainhealthplans.Themattersareinthe
discoveryandpleadingsstages,respectively.TheSystemcannotestimatethereasonablepossibleloss
orrangeoflossthatmayresultfromeitherofthesemattersandtherecanbenoassurancethatthe
resolutionofeitherofthesematterswillnothaveamaterialadverseeffectonSystem’sconsolidated
financialpositionorresultsofoperations.
18. GENERALANDPROFESSIONALLIABILITYRISKS
TheSystemisself-insuredforsubstantiallyallgeneralandprofessionalliabilityrisks.Theself-insurance
programscombinevariouslevelsofself-insuredretentionwithexcesscommercialinsurancecoverage.
Inaddition,variousumbrellainsurancepolicieshavebeenpurchasedtoprovidecoverageinexcessof
the self-insured limits. Revocable trust funds, administered by a trustee and captive insurance
companies, have been established for the self-insurance programs. Actuarial consultants have been
retainedtodeterminetheestimatedcostofclaims,aswellastodeterminetheamounttofundintothe
irrevocabletrustandcaptiveinsurancecompanies.
The System's hospitals, clinics, surgery centers, physicians and certified registered nurse anesthetist
providers that provide health care in Wisconsin are qualified health care providers that are fully
39
covered for losses in excess of statutory limits through mandatory participation in the State of
WisconsinInjuredPatientsandFamiliesCompensationFund.
The estimated cost of claims is actuarially determined based on experience, as well as other
considerations, including the nature of each claim or incident and relevant trend factors. Accrued
insuranceliabilitiesandcontributionstothetrustweredeterminedusingadiscountrateof4.00%and
3.00%asofDecember31,2023and2022,respectively.Totalaccruedinsuranceliabilitieswouldhave
been$122,143and$81,651greateratDecember31,2023and2022,respectively,hadtheseliabilities
notbeendiscounted.
19. RELATED-PARTYTRANSACTIONS
AspartoftheAdvocateHealthjointoperatingagreementasdescribedinNote1.ORGANIZATIONAND
BASISOF PRESENTATION, the System andAHI share certain expenses relatedto the management of
Advocate Health. As of December 31, 2023, the System has a receivable from Advocate Health of
$1,870includedinothercurrentassetsintheaccompanyingconsolidatedbalancesheets.
20 INCOMETAXESANDTAXSTATUS
The subsidiaries of the System are primarily tax-exempt organizations under Internal Revenue Code
Section501(c)(3)andtheirrelatedincomeisexemptfromfederalincometax.Accordingly,noincome
taxes are recorded for the majority of the income in the accompanying consolidated financial
statements for these entities. Unrelated business income is generated by certain of these entities
throughtheprovisionofservicesorotheractivitiesnotdirectlyrelatedtotheprovisionofpatientcare.
AtDecember31,2023,theSystemhad$160,318offederaland$150,532ofstatenet operatingloss
carryforwardswithunutilizedamountsofstatenetoperatinglosscarryforwardsexpiringbetween2023
and 2039. At December 31, 2022, the System had $153,352 of federal and $113,825 of state net
operatinglosscarryforwardswithunutilizedamountsofstatenetoperatinglosscarryforwardsexpiring
between 2022 and 2039. As a result of the Tax Cuts and Jobs Act of 2017, net operating losses
generatedafter2017donotexpireforfederalpurposes.Ofthe$160,318offederalnetoperatingloss
carryforwardsatDecember31,2023,$145,397wasgeneratedafter2017.
The System calculated income taxes for its taxable subsidiaries. Taxable income differs from pretax
bookincome primarilydue tocertain incomeand deductionsfor taxpurposes beingrecorded inthe
consolidated financial statements in different periods. Deferred income tax assets andliabilities are
recorded for the tax effect of these differences using enacted tax rates for the years in which the
differencesareexpectedtoreverse.
In assessing the realizability of deferred taxassets, management considers whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realizationofdeferredtaxassetsisdependentonthegenerationoffuturetaxableincomeduringthe
periodsinwhichthosetemporarydifferencesbecomedeductible.
40
TheSystemhaddeferredtaxassetsandliabilitiesasfollows:
YearEnded
December31,2023
YearEnded
December31,2022
Otherdeferredtaxassets $ 14,811 $ 30,381
Netoperatinglosscarryforwards 45,781 41,562
Valuationallowances (45,024) (40,580)
Netdeferredtaxassets 15,568 31,363
Deferredtaxliabilities (15,660) (30,748)
Netdeferredtax(liabilities)assets $ (92) $ 615
Provisions (credits) for federal and deferred income taxes are included in other nonoperating (loss)
income,netintheaccompanyingconsolidatedstatementsofoperationsandchangesinnetassetsas
follows:
YearEnded
December31,2023
YearEnded
December31,2022
Federal $ 13,270 $ (15,041)
Deferred 709 12,443
$ 13,979 $ (2,598)
21 SUBSEQUENTEVENTS
The System evaluated events and transactions subsequent to December 31, 2023 through April 22,
2024,thedateofconsolidatedfinancialstatementissuance.
In January 2024, $48,560 of the Series 2018B-3 Bonds were remarketed for a new long-term rate
period and will next be subject to mandatory purchase on June 22, 2029. In connection with the
remarketing, $4,430 of the Series 2018B-3 Bonds were redeemed and a loss on refinancing was
recordedintheamountof$25.
InJanuary2024,$50,350oftheSeries2018C-4Bondswereremarketedforanewlong-termrateperiod
andwillnextbesubjecttomandatorypurchaseonJune22,2029.Inconnectionwiththeremarketing,
$4,590 of the Series 2018C-4 Bonds were redeemed and a loss on refinancing was recorded in the
amountof$26.
****
41
SupplementaryInformation
42
A member firm of Ernst & Young Global Limited
Ernst & Young LLP
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Chicago, IL 60606-1787
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ey.com
Report of Independent Auditors on Supplementary Information
The Board of Directors
Advocate Health, Inc.
Our audits were conducted for the purpose of forming an opinion on the financial statements as a
whole. The accompanying details of consolidated balance sheets and details of consolidated
statements of operations and changes in net assets are presented for purposes of additional analysis
and are not a required part of the financial statements. Such information is the responsibility of
management and was derived from and relates directly to the underlying accounting and other records
used to prepare the financial statements. The information has been subjected to the auditing
procedures applied in the audits of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the information is fairly stated, in all material respects, in relation to the
financial statements as a whole.
April 22, 2024
ADVOCATEAURORAHEALTH,INC.
CONSOLIDATINGBALANCESHEET
December31,2023
(inthousands)
CreditGroup
Noncredit
Group Eliminations Consolidated
Assets
Currentassets
Cashandcashequivalents $ 1,226,001 $ (368,402) $ — $ 857,599
Assetslimitedastouse 166,695 12,593 — 179,288
Patientaccountsreceivable 1,691,538 235,338 (20,129) 1,906,747
Receivablefromsubsidiaries 21,111 1,380 (22,491) —
Othercurrentassets 918,895 174,788 — 1,093,683
Totalcurrentassets 4,024,240 55,697 (42,620) 4,037,317
Assetslimitedastouse 11,765,129 377,391 (279,001) 11,863,519
Notereceivablefromsubsidiaries 154,868 — (154,868) —
Propertyandequipment,net 5,539,766 379,467 — 5,919,233
Otherassets
Goodwillandintangibleassets,net 50,044 6,894 — 56,938
Investmentinsubsidiaries 822,129 — (822,129) —
Operatingleaseright-of-useassets 271,304 33,810 — 305,114
Othernoncurrentassets 514,914 300,785 — 815,699
Totalotherassets 1,658,391 341,489 (822,129) 1,177,751
Totalassets $ 23,142,394 $ 1,154,044 $ (1,298,618) $ 22,997,820
44
ADVOCATEAURORAHEALTH,INC.
CONSOLIDATINGBALANCESHEET
December31,2023
(inthousands)
CreditGroup
Noncredit
Group Eliminations Consolidated
Currentliabilities
Long-termdebtandcommercialpaper,currentportion $ 172,113 $ 646 $ — $ 172,759
Long-termdebtsubjecttoshort-termfinancingarrangements 354,720 — — 354,720
Operatingleaseliabilities,currentportion 62,064 6,998 — 69,062
Accruedsalariesandemployeebenefits 1,186,058 59,387 — 1,245,445
Accountspayableandaccruedliabilities 878,322 305,848 (20,129) 1,164,041
Third-partypayorspayables 401,737 2,759 — 404,496
Accruedinsuranceandclaimscosts,currentportion 225,178 12,593 — 237,771
Accountspayabletosubsidiaries (1,380) 23,871 (22,491) —
Totalcurrentliabilities 3,278,812 412,102 (42,620) 3,648,294
Noncurrentliabilities
Long-termdebt,lesscurrentportion 2,931,196 162,893 (154,868) 2,939,221
Operatingleaseliabilities,lesscurrentportion 244,591 28,543 — 273,134
Accruedinsuranceandclaimscost,lesscurrentportion 655,236 31,407 — 686,643
Obligationsunderswapagreements 31,681 — — 31,681
Duetosubsidiaries 279,001 — (279,001) —
Othernoncurrentliabilities 1,104,365 55,428 — 1,159,793
Totalnoncurrentliabilities 5,246,070 278,271 (433,869) 5,090,472
Totalliabilities 8,524,882 690,373 (476,489) 8,738,766
Netassets
Withoutdonorrestrictions
Controllinginterest 14,447,395 (102,878) (521,496) 13,823,021
Noncontrollinginterestsinsubsidiaries — 492,215 (300,633) 191,582
Totalnetassetswithoutdonorrestrictions 14,447,395 389,337 (822,129) 14,014,603
Withdonorrestrictions 170,117 74,334 — 244,451
Totalnetassets 14,617,512 463,671 (822,129) 14,259,054
Totalliabilitiesandnetassets $ 23,142,394 $ 1,154,044 $ (1,298,618) $ 22,997,820
45
ADVOCATEAURORAHEALTH,INC.
CONSOLIDATINGSTATEMENTOFOPERATIONS
YearEndedDecember31,2023
(inthousands)
CreditGroup
Noncredit
Group Eliminations Consolidated
Revenue
Patientservicerevenue $ 11,787,118 $ 1,537,629 $ (337,658) $ 12,987,089
Capitationrevenue 666,791 544,099 (3,972) 1,206,918
Otherrevenue 840,850 1,102,127 (383,930) 1,559,047
Totalrevenue 13,294,759 3,183,855 (725,560) 15,753,054
Expenses
Salaries,wagesandbenefits 7,997,098 993,334 (14,865) 8,975,567
Suppliesanddrugs 2,320,028 744,046 (275) 3,063,799
Purchasedservicesandother 2,059,828 573,382 (273,675) 2,359,535
Contractedmedicalservices 237,667 646,842 (341,629) 542,880
Depreciationandamortization 515,174 98,910 — 614,084
Interest 122,285 13,799 (10,516) 125,568
Totalexpenses 13,252,080 3,070,313 (640,960) 15,681,433
Operatingincome(loss) 42,679 113,542 (84,600) 71,621
Nonoperatingincome(loss)
Investmentincome,net 805,466 13,714 — 819,180
Othernonoperating(loss)income,net (300,596) 242,632 13 (57,951)
Totalnonoperatingincome,net 504,870 256,346 13 761,229
Revenueinexcessofexpenses 547,549 369,888 (84,587) 832,850
Lessincomeattributabletononcontrollinginterests — (143,105) 84,587 (58,518)
Revenueinexcessofexpenses-attributabletocontrollinginterests $ 547,549 $ 226,783 $ — $ 774,332
46
NotestoSupplementaryInformation
1.CreditGroup
The supplementary financial information for the Credit Group is in accordance with the Second
AmendedandRestatedMasterTrustIndenturedatedasofAugust1,2018betweenAdvocateAurora
Health, Inc, the other affiliates identified therein as the Members of the Obligated Group, the
Restricted Affiliates, and U.S. Bank National Association, as master trustee ("the System Master
Indenture").
2.CreditGroupMembers
TheCreditGroupiscomprisedoftheObligatedGroupincombinationwiththeRestrictedAffiliates.The
Obligated Group includes Advocate Aurora Health, Inc.; Advocate Health Care Network; Advocate
Health and Hospitals Corporation; Advocate North Side Health Network; Advocate Condell Medical
Center;AdvocateShermanHospital;AuroraHealthCare,Inc.;AuroraHealthCareMetro,Inc.;Aurora
HealthCareSouthernLakes,Inc.;AuroraHealthCareCentral,Inc.d/b/aAuroraSheboyganMemorial
MedicalCenter;AuroraMedicalCenterofWashingtonCounty,Inc.;AuroraHealthCareNorth,Inc.d/b/
aAuroraMedicalCenterManitowocCounty;AuroraMedicalCenterofOshkosh,Inc.;AuroraMedical
Group, Inc.; Aurora Medical Center Grafton LLC; and Aurora Medical Center Bay Area, Inc. The
RestrictedAffiliatesincludeAdvocateCharitableFoundation;AdvocateHomeCareProducts,Inc.;EHS
HomeHealth Care Services, Inc.; Evangelical Services Corporation, d/b/aAdvocate Network Services,
Inc.;HighTechnology,Inc.;MeridianHospice;andWestAllisMemorialHospitalInc.d/b/aAuroraWest
AllisMedicalCenter.TheCreditGroupiswithU.S.BankNationalAssociation,asmastertrustee("the
SystemMasterIndenture").
47