NEW YORK CITY HEALTH AND HOSPITALS CORPORATION (A ...

NEW YORK CITY HEALTH AND HOSPITALS CORPORATION (A Component Unit of The City of New York)

Financial Statements June 30, 2017 and 2016 (With Independent Auditors' Reports Thereon)

NEW YORK CITY HEALTH AND HOSPITALS CORPORATION (A Component Unit of The City of New York)

Table of Contents

Independent Auditors' Report Management's Discussion and Analysis (Unaudited) Financial Statements:

Statements of Net Position

Statements of Revenue, Expenses, and Changes in Net Position

Statements of Cash Flows

Notes to Financial Statements

Required supplemental information:

Schedule of NYC Health + Hospitals' Contributions (Unaudited) Schedule of NYC Health + Hospitals' Proportionate Share of the Net Pension Liability

(Unaudited)

Schedule of NYC Health + Hospitals' Changes in Total OPEB Liability and Related Ratios (Unaudited)

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

Page(s) 1?2

3?13

14 15 16?17 18?67

68 69 70

71-72

KPMG LLP 345 Park Avenue New York, NY 10154-0102

Independent Auditors' Report

The Board of Directors New York City Health and Hospitals Corporation:

Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities and the discretely presented component unit of New York City Health and Hospitals Corporation (NYC Health + Hospitals), a component unit of The City of New York, as of and for the years ended June 30, 2017 and 2016, and the related notes to the financial statements, which collectively comprise the NYC Health + Hospitals' basic financial statements for the years then ended as listed in the table of contents.

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

Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. The financial statements as of and for the years ended June 30, 2017 and 2016 of MetroPlus Health Plan, Inc., a discretely presented component unit, and HHC Insurance Company, Inc., a blended component unit, were not audited in accordance with Government Auditing Standards.

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

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

KPMG LLP is a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and the discretely presented component unit of NYC Health + Hospitals as of June 30, 2017 and 2016, and the respective changes in financial position, and where applicable, cash flows thereof for the years then ended, in accordance with U.S. generally accepted accounting principles.

Emphasis of Matter

As discussed in note 1 to the financial statements, in 2017, NYC Health + Hospitals adopted Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Our opinions are not modified with respect to this matter.

Other Matters Required Supplementary Information U.S. generally accepted accounting principles require that the management's discussion and analysis on pages 3 through 13 and the schedule of NYC Health + Hospitals' contributions, the schedule of NYC Health + Hospitals' proportionate share of the net pension liability, and the schedule of NYC Health + Hospitals' Changes in total OPEB liability and related ratios on pages 68, 69 and 70, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audits of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 25, 2017 on our consideration of NYC Health + Hospitals' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of NYC Health + Hospitals' internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering NYC Health + Hospitals' internal control over financial reporting and compliance.

October 25, 2017

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NEW YORK CITY HEALTH AND HOSPITALS CORPORATION (A Component Unit of The City of New York)

Management's Discussion and Analysis (Unaudited) June 30, 2017 and 2016 Financial Analysis

Summary of Statements of Net Position June 30, 2017, 2016, and 2015 (In thousands)

Assets: Current assets Capital assets, net Other assets

Total assets

Deferred outflows of resources: Net differences between projected and actual earnings on pension plan investments and other changes, net Unamortized refunding cost

Liabilities: Current liabilities Long-term debt, net of current installments Other noncurrent liabilities Pension, net of current portion Postemployment benefits obligation, other than pension, net of current portion

Total liabilities

Deferred inflows of resources: Net differences between projected and actual earnings on pension plan investments Net differences between expected and actual experience and changes in actuarial assumptions in postemployment benefits obligation, other than pension

Net position: Net investment in capital assets Restricted Unrestricted

Total net deficit position

2017 Business-type Activities ? HHC

$

2,233,423

3,395,964

151,480

5,780,867

13,794 10,537

2,444,027 776,783 340,600

2,514,409

4,622,435 10,698,254

--

684,300

2,553,374 153,319

(8,284,049)

$

(5,577,356)

2016 Business-type Activities ? HHC (As adjusted)

2,506,602 3,401,861

162,777 6,071,240

480,191 12,785

2,637,985 868,626 296,811

3,031,476

5,037,778 11,872,676

--

35,951

2,514,112 154,926

(8,013,449) (5,344,411)

2015 Business-type Activities ? HHC (As adjusted)

2,485,085 3,432,430

118,444 6,035,959

-- 15,349

2,945,003 882,848 296,811

2,334,651

4,735,487 11,194,800

258,287

--

2,521,077 149,231

(8,072,087) (5,401,779)

See accompanying notes to management's discussion and analysis.

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