SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Basic Financial Statements and Schedules
June 30, 2023 and 2022
(With Independent Auditors’ Report Thereon)
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Table of Contents
Page(s)
Independent Auditors’ Report 1–3
Basic Financial Statements:
Statements of Net Position – June 30, 2023 and 2022 4
Statements of Revenues, Expenses, and Changes in Net Position – Years ended June 30,
2023 and 2022 5
Statements of Cash Flows – Years ended June 30, 2023 and 2022 6–7
Notes to Basic Financial Statements 8–43
Combining Schedule – Statement of Net Position June 30, 2023 44
Combining Schedule – Statement of Net Position June 30, 2022 45
Combining Schedule – Statement of Revenues, Expenses, and Changes in Net Position
Year ended June 30, 2023 46
Combining Schedule – Statement of Revenues, Expenses, and Changes in Net Position
Year ended June 30, 2022 47
Combining Schedule – Statement of Cash Flows Year ended June 30, 2023 48
Combining Schedule – Statement of Cash Flows Year ended June 30, 2022 49
Supplementary Information:
Schedule of Changes in Total OPEB Liability and Related Ratios 50
Schedule of Changes in Long-Term Debt by Individual Issue 51
Schedule of Changes in Lease Obligations 52
Roster of Management Officials and Board Members (Unaudited) 53
KPMG LLP
Triad Centre III
Suite 450
6070 Poplar Avenue
Memphis, TN 38119-3901
KPMG LLP, a Delaware limited liability partnership and a member firm of
the KPMG global organization of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee.
Independent Auditors’ Report
The Board of Directors
Shelby County Health Care Corporation:
Report on the Audit of the Financial Statements
Opinion
We have audited the basic financial statements of Shelby County Health Care Corporation (d/b/a Regional One
Health), a component of Shelby County, Tennessee, which comprise the statement of net position as of
June 30, 2023 and 2022, and the related statements of revenues, expenses and changes in net position, and
cash flows for the years then ended, and the related notes to the basic financial statements.
In our opinion, the accompanying basic financial statements present fairly, in all material respects, the net
position of the Regional One Health as of June 30, 2023 and 2022, and the changes in net position and cash
flows for the years then ended, in accordance with U.S. generally accepted accounting principles.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Our responsibilities under those standards are further
described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We
are required to be independent of the Regional One Health and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in note 1 of the basic financial statements in 2023 Regional One Health adopted
GASB Statement No. 96, Subscription Based Information Technology Arrangements. Adoption of GASB 96
requires the retrospective application of the standard to the earliest period presented in the basic financial
statements. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the basic financial statements in
accordance with U.S. generally accepted accounting principles, and for the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of basic financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the basic financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the Regional One Health’s ability to
continue as a going concern for one year after the date the financial statements are issued.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the basic financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our
opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not
2
a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards 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 basic financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
● Exercise professional judgment and maintain professional skepticism throughout the audit.
● Identify and assess the risks of material misstatement of the basic 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 basic 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 Regional One Health’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 basic financial
statements.
● Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise
substantial doubt about the Regional One Health’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.
Required Supplementary Information
U.S. generally accepted accounting principles requires that the schedule of changes in total OPEB liability and
related ratios on page 50 be presented to supplement the basic financial statements. Additionally, the State of
Tennessee Audit manual requires the schedule of changes in long-term debt by individual issue on page 51
and the schedule of changes in lease obligations on page 52 be presented to supplement the basic financial
statements. Such information is the responsibility of management and, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board or the State of Tennessee Audit
Manual whom 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 GAAS, 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 audit 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.
Management has omitted management’s discussion and analysis that accounting principles generally accepted
in the United States of America require to be represented to supplement the basic financial statements. Such
missing information, although not 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
3
financial statements in an appropriate operation, economic, or historical context. Our opinion on the basic
financial statements is not affected by this omitted information.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise Regional One Health’s basic financial statements. The Roster of Management Officials and Board
Members is presented for purposes of additional analysis and are not a required part of the basic financial
statements. Such information is the responsibility of management and has not been subjected to the auditing
procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion
or provide any assurance on it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 27, 2023 on
our consideration of Regional One Health’s 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 solely 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
the Regional One Health’s 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 Regional One
Health’s internal control over financial reporting and compliance.
Memphis, Tennessee
October 27, 2023
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Statements of Net Position
June 30, 2023 and 2022
2023 2022
Assets:
Cash and cash equivalents $ 31,265,463 45,922,921
Investments 50,328,950 37,411,306
Patient accounts receivable, net of allowances for uncollectible
accounts of $155,941,000 in 2023 and $158,878,000 in 2022 70,365,952 59,682,336
Other receivables 27,213,379 32,780,544
Other current assets 18,063,146 18,322,544
Total current assets 197,236,890 194,119,651
Restricted cash 2,325,816 14,234,348
Restricted investments 6,634,941
6,584,050
Notes receivable 19,057,900
19,057,900
Right-to-use lease asset, net 17,900,383 21,657,289
Right-to-use subscription-based information technology arrangements (SBITA) asset, net 15,065,118 18,046,813
Capital assets, net 93,250,577 94,478,593
Total assets $ 351,471,625 368,178,644
Liabilities:
Accounts payable $ 30,902,818 24,127,052
Accrued expenses and other current liabilities 58,711,145 65,776,773
Medicare advanced payments —
290,219
Current portion of accrued professional and general liability costs
1,343,000 1,648,000
Current portion of lease liability 3,405,769 4,113,681
Current portion of subscription-based information technology arrangements (SBITA) liability 5,289,535 5,407,746
Other current liabilities 30,000
3,749,660
Total current liabilities
99,682,267 105,113,131
Long-term accrued professional and general liability costs 4,606,000 4,336,000
Other postemployment benefit obligation (OPEB) 5,249,790 5,249,790
Long-term lease liability 16,501,131 18,922,570
Long-term subscription-based information technology arrangements liability 9,213,486 14,503,021
Long-term debt 46,271,864 49,625,637
Total liabilities 181,524,538 197,750,149
Net position:
Net investment in capital assets 61,322,424 61,755,632
Restricted for:
Capital assets 2,206,479
2,173,915
Indigent care 365,483 1,512,252
Education 1,170,251 1,056,047
Palliative Care Program 2,300,000 1,000,000
Unrestricted 102,582,450
102,930,649
Total net position 169,947,087 170,428,495
Total liabilities and net position $ 351,471,625 368,178,644
See accompanying notes to basic financial statements.
4
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Statements of Revenues, Expenses, and Changes in Net Position
Years ended June 30, 2023 and 2022
2023 2022
Operating revenues:
Net patient service revenue, net of contractual adjustments
(including additional incremental reimbursement from various
state agencies for participation in TennCare/Medicaid
programs of approximately $111,835,000 in 2023 and
$81,545,000 in 2022) $ 592,106,069 562,457,048
Provision for uncollectible accounts (59,647,415) (94,131,319)
Net patient service revenue 532,458,654 468,325,729
Other revenue 163,484,573 134,953,074
Total operating revenues 695,943,227 603,278,803
Operating expenses:
Salaries and benefits 266,680,027 249,409,293
Supplies 218,410,502 188,633,099
Physician and professional fees 97,057,816 87,961,254
Purchased medical services 40,841,155 39,207,144
Plant operations 32,243,421 30,399,373
Insurance 2,556,322
1,831,328
Administrative and general
55,436,171 52,770,699
Community services 4,560,802 5,169,390
Depreciation 16,218,668 14,567,335
Total operating expenses 734,004,884 669,948,915
Operating loss (38,061,657) (66,670,112)
Nonoperating revenues (expenses):
Interest expense (3,321,403) (2,852,766)
Investment income (loss) 3,693,737 (4,549,230)
Appropriations from Shelby County 36,989,681 41,008,000
CARES Act grant revenue — 2,825,150
Other 218,234
8,467,406
Total nonoperating revenues, net
37,580,249 44,898,560
Decrease in net position (481,408) (21,771,552)
Net position, beginning of year 170,428,495 192,200,047
Net position, end of year $ 169,947,087 170,428,495
See accompanying notes to basic financial statements.
5
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Statements of Cash Flows
Years ended June 30, 2023 and 2022
2023 2022
Cash flows from operating activities:
Receipts from and on behalf of patients and third-party payors $ 512,482,289 451,951,162
Other cash receipts 160,596,653 115,329,606
Payments to suppliers (396,637,525) (356,880,304)
Payments to employees and related benefits (296,192,494) (281,952,161)
Net cash used in operating activities (19,751,077) (71,551,697)
Cash flows from noncapital financing activity:
Appropriations received from Shelby County 36,989,681 41,008,000
CARES act proceeds — 2,825,150
Other
(3,715,579) 3,205,264
Net cash provided by noncapital financing activity
33,274,102 47,038,414
Cash flows from investing activities:
Purchases of investments (36,252,498) (79,600,575)
Proceeds from sale of investments 26,251,899 138,716,752
Proceeds from sale of Joint Venture 214,154 15,666,667
Note receivable from third party — (19,057,900)
Investment income proceeds 725,797 2,268,592
Net cash (used in) provided by investing activities (9,060,648) 57,993,536
Cash flows from capital and related financing activities:
Capital expenditures (14,990,651) (28,349,520)
Payments for operating leases (3,947,471) 736,905
Payments for SBITA (7,693,592) —
Interest payments (3,404,417) (1,938,582)
Proceeds from notes payable - Term Loan — 19,500,000
Proceeds from notes payable - New Market Tax Credit (NMTC)
Notes A & B — 25,807,500
Proceeds from long-term debt 3,856,372 —
Payments on long-term debt (4,848,608) (2,612,202)
Net cash (used in) provided by capital and related
financing activities (31,028,367) 13,144,101
Net (decrease) increase in cash and cash equivalents (26,565,990) 46,624,354
Cash and cash equivalents, beginning of year 60,157,269 13,532,915
Cash and cash equivalents, end of year $ 33,591,279 60,157,269
(Continued)6
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Statements of Cash Flows
Years ended June 30, 2023 and 2022
2023 2022
Reconciliation of operating loss to net cash used in operating
activities:
Operating loss $ (38,061,657) (66,670,112)
Operating activities:
Depreciation 16,218,668 14,567,335
Changes in operating assets and liabilities:
Patients accounts receivable, net (10,683,616) (834,394)
Other receivables 5,567,165 (8,675,408)
Other current assets 259,398 (4,488,868)
Accounts payable 6,775,766 1,751,786
Accrued expenses and other current liabilities 208,199 (1,514,672)
Deferred FICA payments — (3,500,242)
Accrued professional and general liability costs (35,000) (398,000)
Net postemployment benefit obligation — (1,789,122)
Net cash used in operating activities $ (19,751,077) (71,551,697)
Reconciliation of cash and cash equivalents to the statements of
net position:
Cash and cash equivalents in current assets $ 31,265,463 45,922,921
Restricted cash in total assets 2,325,816 14,234,348
Total cash and cash equivalents $ 33,591,279 60,157,269
Supplemental schedule of noncash investing and financing activities:
Net increase (decrease) in the fair value of investments $ 1,679,407 (6,620,606)
Noncash purchases of capital assets (3,856,372) —
Gain on sale of joint venture 214,154 (5,439,334)
Noncash lease transactions (2,297,150) (3,112,200)
See accompanying notes to basic financial statements.
7
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
8 (Continued)
(1) Organization and Summary of Significant Accounting Policies
Shelby County Health Care Corporation (d/b/a Regional One Health) was incorporated on June 15, 1981,
with the approval of the Board of County Commissioners of Shelby County, Tennessee (the County).
Regional One Health is a broad continuum healthcare provider that operates facilities that are owned by
the County under a long-term lease. The lease arrangement effectively provided for the transfer of title
associated with operating fixed assets and the long-term lease (for a nominal amount) of related real
property. The lease expires in 2063.
Regional One Health is a component unit of the County, as defined by Governmental Accounting
Standards Board (GASB) Statement No. 61, The Financial Reporting Entity: Omnibus – An Amendment of
GASB Statement No. 14 and No. 34. Regional One Health’s component unit relationship to the County is
principally due to financial accountability and financial benefit or burden, as defined in GASB Statement
No. 61. Regional One Health is operated by a 14-member board of directors, all of whom are appointed by
the mayor of the County and approved by the County Commission.
Regional One Health Foundation is a component unit of Regional One Health principally due to Regional
One Health’s financial accountability and financial benefit or burden for Regional One Health Foundation as
defined in GASB Statement No. 61. Regional One Health Foundation is operated by a board of directors,
all of whom are appointed by Regional One Health’s board. Regional One Health Foundation is a blended
component unit of Regional One Health because it provides services entirely to Regional One Health.
GASB Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for
State and Local Governments, requires a management’s discussion and analysis (MD&A) section providing
an analysis of Regional One Health’s overall financial position and results of operations; however, Regional
One Health has chosen to omit the MD&A from these accompanying financial statements.
The significant accounting policies used by Regional One Health in preparing and presenting its financial
statements are as follows:
(a) Presentation
The financial statements include the accounts of Regional One Health and its wholly owned
subsidiaries. Such subsidiaries include Regional One Health Foundation; Regional One Properties,
Inc.; Regional Med Extended Care Hospital, LLC; Shelby County Health Care Properties, Inc.; and
Regional One Health Investment Company, Inc. The subsidiaries are component units of Regional One
Health principally due to Regional One Health’s financial accountability and financial benefit or burden
for the subsidiaries, as defined by GASB Statement No. 61. All material intercompany accounts and
transactions have been eliminated.
(b) Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires that management make estimates and assumptions affecting the reported amounts
of assets, liabilities, revenues, and expenses, as well as disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
9 (Continued)
Items subject to estimates and assumptions include the determination of the allowances for contractual
adjustments and uncollectible accounts, reserves for professional and general liability claims, reserves
for employee healthcare claims, net postretirement benefit cost and obligation, and estimated
third-party payor settlements.
In addition, laws and regulations governing Medicare, TennCare, the state of Tennessee’s Medicaid
program providing healthcare to mostly low-income pregnant women, parents or caretakers of a minor
child, children and individuals who are elderly or have a disability, and Medicaid programs are
extremely complex and subject to interpretation. As a result, there is at least a reasonable possibility
that recorded estimates related to these programs will change by a material amount in the near term.
(c) Enterprise Fund Accounting
Regional One Health’s financial statements are prepared using the economic resources measurement
focus and accrual basis of accounting.
(d) Cash and Cash Equivalents
Regional One Health considers investments in highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
Regional One Health and its component units are subject to State of Tennessee statute, which requires
that deposits be made with financial institutions with a branch in Tennessee authorized to accept
deposits, and must be secured and collateralized by such institutions. If deposits are greater than the
federal deposit insurance corporation (FDIC) limit, the deposits must be backed by collateral with a
total minimum market value of 105% of the value of the deposits placed in the institutions, less the
amount protected by the FDIC. Collateral requirements are not applicable for financial institutions that
participate in the State of Tennessee’s collateral pool.
(e) Investments and Investment Income
Investments are carried at fair value, principally based on quoted market prices. Investment income
(including realized and unrealized gains and losses) from investments is reported as nonoperating
revenue (expense) on the accompanying statements of revenues, expenses and changes in net
position.
Regional One Health applies GASB Statement No. 72, Fair Value Measurement and Application, which
defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an
ordinary transaction between market participants. Additional disclosures are made about fair value
measurements, the level of fair value hierarchy and valuation techniques. Additional disclosures are
required regarding investments that are valued by net asset per share.
(f) Inventories
Inventories, consisting principally of medical supplies and pharmaceuticals, are stated at the lower of
cost (first-in, first-out method) or net realizable value.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
10 (Continued)
(g) Equity Investments
Equity investments consist of Regional One Health’s equity interests in investments as measured by its
ownership interest if Regional One Health has an ongoing financial interest in or ongoing financial
responsibility for the equity investee. The investments are initially recorded at cost and are
subsequently adjusted for additional contributions, distributions, undistributed earnings and losses, and
impairment losses.
(h) Capital Assets
Capital assets are recorded at cost, if purchased, or at fair value at the date of donation. Depreciation
is provided over the useful life of each class of depreciable asset using the straight-line method.
Maintenance and repairs are charged to operations. Major renewals and betterments are capitalized.
When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are
removed from the accounts and the gain or loss, if any, is included in nonoperating revenues
(expenses) in the accompanying statements of revenues, expenses, and changes in net position.
All capital assets other than land are depreciated using the following lives:
Land improvements 5 to 25 years
Buildings and improvements 10 to 40 years
Fixed equipment 5 to 25 years
Movable equipment 3 to 20 years
Software 3 to 7 years
Regional One Health applies GASB Statement No. 83, Certain Asset Retirement Obligations, which
provides accounting and financial reporting guidance for certain asset retirement obligations (ARO).
Regional One Health has no legally enforceable liabilities associated with the retirement of its tangible
capital assets that meet the definition of an ARO under the standard as of June 30, 2023 and 2022.
(i) Impairment of Capital Assets
Capital assets are reviewed for impairment when service utility has declined significantly. If such assets
are no longer used, they are reported at the lower of carrying value or fair value. If such assets will
continue to be used, the impairment loss is measured using the method that best reflects the
diminished service utility of the capital asset. No charge related to impairment matters was required
during 2023 or 2022.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
11 (Continued)
(j) Compensated Absences
Regional One Health’s employees accumulate vacation, holiday, and sick leave at varying rates,
depending upon years of continuous service and payroll classification, subject to maximum limitations.
Upon termination of employment, employees are paid all unused accrued vacation and holiday time at
regular rate of pay up to a designated maximum number of days. Since the employees’ vacation and
holiday time accumulates and vests, an accrual for this liability is included in accrued expenses and
other current liabilities in the accompanying statements of net position. An accrual is recognized for
unused sick leave expected to be paid to employees eligible to retire.
(k) Net Postemployment Benefit Obligation
Regional One Health applies GASB issued Statement No. 75, Accounting and Financial Reporting for
Postemployment Benefits Other than Pensions, which establishes standards for recognizing and
measuring liabilities, deferred outflows of resources, deferred inflows of resources, and
expense/expenditures of postemployment benefit obligations. See note 14 for additional disclosures
regarding Regional One Health’s postemployment benefit obligation.
(l) Net Position
Net position of Regional One Health is classified into the following components:
• Net investment in capital assets consists of capital assets net of accumulated depreciation, net of
the related debt.
• Restricted includes those amounts with limits on their use that are externally imposed (by creditors,
grantors, contributors, or the laws and regulations of other governments).
• Unrestricted represents remaining amounts that do not meet either of the above definitions.
When Regional One Health has both restricted and unrestricted resources available to finance a
particular program, it is Regional One Health’s policy to use restricted resources before unrestricted
resources.
Regional One Health Foundation historically, and to date, does not maintain donor-restricted
endowment funds, or any board-designated endowments. Regional One Health Foundation’s Board
has interpreted Tennessee’s State Prudent Management of Institutional Funds Act as requiring the
preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment
funds, absent explicit donor stipulations to the contrary. In all material respects, income from Regional
One Health Foundation’s donor-restricted pledges are restricted to specific donor-directed purposes,
and are therefore accounted for within restricted amounts until expended in accordance with the
donor’s wishes. Regional One Health Foundation oversees individual donor-restricted pledges to
ensure that the fair value of the original gift is preserved.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
12 (Continued)
(m) Statement of Revenues, Expenses, and Changes in Net Position
For purposes of presentation, transactions deemed by management to be ongoing, major, or central to
the provision of healthcare services, other than financing costs, are reported as operating revenues
and operating expenses. Other transactions, such as investment income, interest expense,
appropriations from Shelby County are reported as nonoperating revenues and expenses.
(n) Net Patient Service Revenue
Net patient service revenue is reported at estimated net realizable amounts from patients, third-party
payors, and others for services rendered, including estimated retroactive revenue adjustments due to
future audits, reviews, and investigations. Retroactive adjustments are considered in the recognition of
revenue on an estimated basis in the period the related services are rendered and such amounts are
adjusted in future periods as adjustments become known or as years are no longer subject to such
audits, reviews, and investigations. Changes in estimates related to prior cost reporting periods
resulted in an increase in net patient service revenue of approximately $2,450,000 in 2023 and a
decrease in net patient service revenue of approximately $880,000 in 2022.
(o) Charity Care
Regional One Health provides care to patients who meet certain criteria under its charity care policy
without charge or at amounts less than its established rates. Because Regional One Health does not
pursue collection of amounts determined to qualify as charity care, they are not reported as revenue.
When defining charity care, Regional One Health employs the Federal Poverty Guideline (FPG) to
determine the level of discount uninsured patients receive. The level by which assistance is determined
is through the scale set by the Department of Health and Human Services, which includes factors such
as residents per household and income. Regional One Health’s methodology includes all patients that
fall at or below the 150% FPG baseline. Additionally, Regional One Health’s charity care guidelines
provide for an expansive definition of charity care patients, including an upfront discount from standard
charges for uninsured patients.
(p) CARES Act and other funding
In December 2019, illnesses associated with novel coronavirus disease of 2019 (COVID-19) were
reported and the virus subsequently caused widespread and significant disruptions to daily life and
economies across geographies. The World Health Organization classified the outbreak as a pandemic.
On March 27, 2020, the CARES Act was signed into law due to the global pandemic. Under the
CARES Act, Regional One Health received $2,825,150 in 2022, from the Department of Health and
Human Services included as other nonoperating revenue in the statements of revenues, expenses, and
changes in net position. Regional One Health did not receive any funding related to COVID-19 for the
year ended June 30, 2023. The funding was used for keeping the facilities operational in order to
respond to healthcare needs regardless of whether or not the expenses were directly associated with
responding to COVID-19.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
13 (Continued)
(q) Income Taxes
Regional One Health is a not-for-profit corporation organized by the approval of the Board of County
Commissioners of the County and qualifies as a governmental entity not subject to federal income tax,
by reason of being integral parts of a state or political subdivision. Regional One Health also qualifies
as a tax-exempt entity under Internal Revenue Code (IRC) Section 501(a) as organizations described
in IRC Section 501(c)(3) (dual-tax exempt status). Therefore, related income is generally not subject to
federal or state income taxes, except for tax on income from activities unrelated to its exempt purpose,
as described in IRC Section 512(a). Thus, no provision for income taxes has been recorded in the
accompanying financial statements.
(r) Appropriations
The County has historically appropriated funds annually to Regional One Health to partially offset the
cost of medical care for indigent residents of the County. Appropriations for indigent residents from the
County were $36,989,681 and $41,008,000 for the years ended June 30, 2023 and 2022, respectively.
Included in these total appropriations was $7,500,000 for capital investment in the years ended
June 30, 2023 and 2022. Appropriations from the County are reported as nonoperating revenue in the
accompanying statements of revenues, expenses, and changes in net position.
(s) Leases
Regional One Health applies GASB issued Statement No. 87, Leases, which requires the recognition
of certain lease assets and liabilities for leases that previously were classified as operating leases and
recognized as inflows of resources or outflows of resources based on the payment provisions of the
contract. Under the statement, a lessee is required to recognize a lease liability and an intangible right-
to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of
resources
(t) Recent Accounting Pronouncements
In May 2020, the GASB issued Statement No. 96, Subscription-Based Information Technology
(SBITA), which provides guidance on accounting and financial reporting best practices for
subscription-based information technology arrangements. Under the statement, a user is required to
recognize a right-to-use subscription asset and a corresponding subscription liability. The new standard
is effective for Regional One Health beginning after June 15, 2022. Regional One Health adopted
GASB 96 effective July 1, 2022 using the modified retrospective approach. The primary effect of the
new standard was a $18,449,213 increase in the right-to-use SBITA asset and SBITA liability. See
additional discussion on the adoption of GASB Statement No. 96 in note 8.
(u) Subsequent Events
Regional One Health has evaluated subsequent events through October 27, 2023, the date on which
the financial statements were issued. No additional events were noted which warrant adjustments to, or
disclosures in, the basic financial statements and related notes.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
14 (Continued)
(2) Deposits, Investments
(a) Deposits and Investments
The composition of cash and cash equivalents is as follows:
Investments and restricted investments include amounts held by both Regional One Health and
Regional One Health Foundation.
The composition of investments and restricted investments is as follows:
2023 2022
U.S. agencies $ 8,295,161 8,459,163
U.S. treasury bills 39,662 —
Certificates of deposit 618,681 533,118
Corporate bonds 18,337,976 18,551,435
Demand deposit accounts and money market funds 11,118,724 305,826
U.S. government funds 167,511 857,159
Common stock 3,069,890 2,148,951
Bond funds 744,886 728,952
Equity funds 14,380,059 12,231,068
Accrued interest 191,341 179,684
$ 56,963,891 43,995,356
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
15 (Continued)
The fair value hierarchy of investments is as follows:
2023
Level 1 Level 2 Level 3 Total
U.S. agencies $ — 8,295,161 — 8,295,161
U.S. treasury bills — 39,662 — 39,662
Certificates of deposit — 618,681 — 618,681
Corporate bonds — 18,337,976 — 18,337,976
Demand deposits
accounts and
money market funds — 11,118,724 — 11,118,724
U.S. government funds — 167,511 — 167,511
Common stock 3,069,890 — — 3,069,890
Bond funds 744,886 — — 744,886
Equity funds 14,380,059 — — 14,380,059
Accrued interest 191,341 — — 191,341
$ 18,386,176 38,577,715 — 56,963,891
2022
Level 1 Level 2 Level 3 Total
U.S. agencies $ — 8,459,163 — 8,459,163
Certificates of deposit — 533,118 — 533,118
Corporate bonds — 18,551,435 — 18,551,435
Demand deposits
accounts and
money market funds — 305,826 — 305,826
U.S. government funds — 857,159 — 857,159
Common stock 2,148,951 — — 2,148,951
Bond funds 728,952 — — 728,952
Equity funds 12,231,068 — — 12,231,068
Accrued interest 179,684 — — 179,684
$ 15,288,655 28,706,701 — 43,995,356
At June 30, 2023, Regional One Health and Regional One Health Foundation had investments in debt
securities with the following maturities:
Less than 6 months
Fair value 6 months to 1 year 1–5 years Over 5 years
U.S. agencies $ 8,295,161 99,866 479,213 5,135,820 2,580,262
Corporate bonds 18,337,976 807,554 96,519 9,925,513 7,508,390
$ 26,633,137 907,420 575,732 15,061,333 10,088,652
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
16 (Continued)
At June 30, 2022, Regional One Health and Regional One Health Foundation had investments in debt
securities with the following maturities:
Less than 6 months
Fair value 6 months to 1 year 1–5 years Over 5 years
U.S. agencies $ 8,459,163 74,318 134,614 6,314,213 1,936,018
Corporate bonds 18,551,435 364,562 986,762 8,747,705 8,452,406
$ 27,010,598 438,880 1,121,376 15,061,918 10,388,424
Other than investments issued or explicitly guaranteed by the U.S. government, there was one
investment in IShares S&P 500 Index Fund Class G of $9,765,367 and $8,166,752 that represented
5% or more of total investments for Regional One Health as of June 30, 2023 and 2022, respectively.
There were no investments that represented 5% or more of total investments for Regional One Health
Foundation as of June 30, 2023 or June 30, 2022.
Regional One Health and Regional One Health Foundation have separate investment policies that are
included below. The summary of investments throughout the financial statements includes the
combined investment totals of Regional One Health and Regional One Health Foundation.
At June 30, 2023, Regional One Health’s and Regional One Health Foundation’s corporate bonds,
collectively, had the following credit ratings per Moody’s Investor Service:
Moody's ratings Fair value
A1 $ 2,630,091
A2 3,406,509
A3 3,497,842
Aa1 96,276
Aa2 206,633
Aa3 186,369
Aaa 1,880,522
Baa1 2,329,500
Baa2 2,532,421
Baa3 495,103
NR 1,076,710
$ 18,337,976
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
17 (Continued)
At June 30, 2022, Regional One Health’s and Regional One Health Foundation’s corporate bonds,
collectively, had the following credit ratings per Moody’s Investor Service:
Moody's ratings Fair value
A1 $ 2,421,775
A2 4,042,591
A3 3,821,359
Aa1 99,388
Aa2 212,586
Aa3 689,201
Aaa 1,823,344
Ba1 207,828
Baa1 1,818,668
Baa2 2,373,538
Baa3 788,769
BBB+ 99,553
NR 152,835
$ 18,551,435
As of June 30, 2023, Regional One Health’s investment objectives are to safeguard and preserve the
real purchasing power of the portfolio while earning investment returns that are commensurate with
Regional One Health’s risk tolerance and sufficient to meet its operational requirements.
The specific investment objectives and established asset allocation, as approved by the Finance
Committee, for the operating fund, short-term fund and the long-term reserve fund are set forth below:
Regional One Health Investment Policy
(i) Operating Fund
The operating fund shall be invested with the objective of preserving assets to cover shorter term,
ongoing programmatic and operational expenses requiring immediate liquidity for the
approximately zero (0) to six (6) months period. Operating fund assets should be highly liquid and
may be maintained in the checking account that Regional One Health uses for day-to-day
operations and may be invested in other cash equivalent investments, such as savings accounts,
money market accounts, certificates of deposit (with maturities appropriate for expected needs),
treasury bills, short-term investment funds, and other investments that have zero credit risk, zero
basis risk, zero duration risk, and zero macro risks. Capital preservation is the primary goal of the
operating fund.
Asset class Lower limit Target allocation Upper limit
Cash and cash equivalents 100 % 100 % 100 %
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
18 (Continued)
(ii) Short-Term Fund
The short-term fund shall be invested with the objective of preserving assets to cover Regional One
Health’s ongoing, programmatic and operational expenses, but requiring near-term liquidity for the
approximately six (6) to twelve (12) months period. Short-term fund assets should be highly liquid
and may be invested in similar investments as the assets in the operating fund, but with the
flexibility of adding very short duration and investment grade fixed income investments, but
minimizing credit risk, basis risk, and duration risk with zero emerging market and zero high yield
risk.
Asset class Lower limit Target allocation Upper limit
Cash and cash equivalents — % 20 % 40 %
Investment grade fixed income 60 80 100
(iii) Long-Term Reserve Fund
The long-term reserve fund shall be invested with the objective of preserving the long-term real
purchasing power of the long-term reserve fund’s assets while seeking an appropriate level of
investment return. More specifically, Regional One Health’s investment objectives and constraints
for the long-term reserve fund include preservation of purchasing power, long-term growth, time
horizon, risk tolerance, and liquidity requirements.
Asset class Lower limit Target allocation Upper limit
Investment grade government or
corporate fixed income 40 % 55 % 65 %
Non-investment grade government or
corporate fixed income — % 5 % 10 %
U.S. equity 15 % 30 % 40 %
Non U.S. equity
— % 10 % 15 %
The Board has delegated to the Finance Committee, as its liaison, the primary oversight responsibilities
of the portfolio, however, the Board still has responsibility for overseeing this Policy and any significant
modifications recommended by management and/or the Finance Committee, including major changes
in asset allocations.
Management, Regional One Health’s investment adviser (the ”Investment Adviser”), and the
investment managers (the ”Investment Managers”) are charged with implementing this Policy.
Restrictions on investments as approved by the Finance Committee are as follows:
• All purchases of securities must be for cash and there will be no leveraged purchasing or margin
transactions except for pooled investment vehicles.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
19 (Continued)
• No short sales.
• No investment will be made in direct investments in corporations with more than 25% of revenues
derived from the manufacture and sale of firearms, ammunition and ammunition magazines to the
general citizenry.
• Any investment that has the potential for generating unrelated business taxable income (UBTI)
shall require prior approval of management.
These above restrictions will not be applied to the underlying holdings of any investments in
commingled vehicles such as mutual funds or LLC structures.
The authorized investments are as follows:
1. Commercial Paper – Any commercial paper issued by a domestic corporation with a maturity of
270 or less days that carries at least the second highest rating by a recognized investor service,
preferably Moody’s Investor Service.
2. U.S. Treasury Securities – U.S. Treasury notes, bills, and bonds.
3. Bank Obligations – Any certificate of deposit (CD), time deposit, Eurodollar CDs issued by a foreign
branch of a U.S. bank, bankers’ acceptance, bank note, or letter of credit issued by a (U.S.) bank
possessing at least the second highest rating by a recognized investor services, preferably
Moody’s Investor Service. In addition, brokered CDs may be purchased from institutions,
irrespective of the institutions’ debt ratings, so long as the obligations are fully backed by the FDIC.
4. Repurchase Agreements – Any repurchase agreement purchased from one of the top 25
U.S. banks or one of the primary dealers regulated by the Federal Reserve System that is at least
102% collateralized by U.S. government obligations.
5. Money Market Funds – Any open-end money market fund regulated by the U.S. government under
Investment Company Act Rule 2a-7 and any investment fund regulated and advised by a
Registered Investment Advisor under Rule 3c-7. Such fund investment guidelines must state that
“the fund will seek to maintain a $1 per share net asset value.”
6. United States Government Obligations – Any obligation issued or backed directly by federal
agencies of the U.S. government.
7. Corporate Bonds – Obligations of U.S. and foreign corporations (including trusts and municipalities
of the U.S.) that are recognized as investment grade by a rating service, preferably Moody’s
Investor Service.
8. Bond Mutual Funds – Any publicly available investment registered under the Investment Company
Act of 1940 as an open-end mutual fund that is managing a portfolio of debt obligations
9. Equity Mutual Funds – Any publicly available investment registered under the Investment Company
Act of 1940 as an open-end mutual fund that is managing a portfolio of equity securities.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
20 (Continued)
10. Debt Buy Back – Any debt obligation backed directly by Regional One Health may be purchased so
long as it is purchased at a discount.
Guidelines
Investment Grade Fixed Income – Refers to investments that are rated BBB and above and provide a
defined, regular income stream, usually over a set term, with return of capital at the end of this term. The
target duration for the investment grade fixed income portfolio is four years with a maximum of
six years.
Noninvestment Grade Corporate Fixed Income Funds – Refers to corporate bonds held in bond funds
investments that are rated below BBB and provide a defined, regular income stream, usually over a set
term, with return of capital at the end of this term.
Parameters of Noninvestment Grade Corporate Bonds:
• Maximum 10% of the portfolio
• Maximum of 2% of the overall portfolio for Corporate Bonds rated below B.
Total Portfolio Guidelines
• Public Equities: Public equity may not comprise more than 40% of the total portfolio.
• Corporate Bonds: Investment grade corporate bonds may not represent more than 40% of the total
portfolio.
• Non-U.S. Corporate Bonds: Non-U.S. corporate bonds may not comprise more than 20% of the
total portfolio.
• United States Government Agency Obligations: No more than 25% of the total portfolio may be
invested in obligations of one federal agency.
• Repurchase Agreements: No more than 25% of the total portfolio may be invested in repurchase
agreements.
• Residential Mortgage-Backed Securities (“RMBS”): No more than 25% of the total portfolio may be
invested in RMBS.
• Multi-family Mortgage-Backed Securities (“CMBS”): No more than 25% of the total portfolio may be
invested in CMBS.
• Municipal Securities – General Obligations (“GO”) and Revenue Bonds (“RB”): No more than 30%
of the total portfolio may be invested in either Municipal GOs or Municipal RBs.
Regional One Health Foundation Investment Policy
As of June 30, 2023 and 2022, Regional One Health Foundation utilized one investment manager. This
manager is required to make investments in adherence to Regional One Health Foundation’s current
investment policy and objectives.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
21 (Continued)
Regional One Health Foundation follows an investment strategy focused on maximizing total return
(i.e., aggregate return from capital appreciation and dividend and interest income) while adhering to
certain restrictions designed to promote a conservative portfolio.
Specifically, the primary objective of Regional One Health Foundation’s investment management
strategy is to maintain an investment portfolio designed to generate a high level of current income with
above-average stability.
Guidelines for investments and cash equivalents for Regional One Health Foundation are as follows:
1. Regional One Health Foundation’s assets may be invested only in investment grade bonds rated
Baa or higher as determined by Moody’s Investors Service, or the equivalent by another
acceptable rating agency.
2. The overall market-weighted quality rating of the bond portfolio shall be no lower than A.
3. Regional One Health Foundation’s assets may be invested only in commercial paper rated P-2 (or
equivalent) or higher by Moody’s Investors Service or by another acceptable rating agency.
4. The market-weighted maturity of the base portfolio shall be no longer than 10 years.
5. Quality of the equity securities will be governed by the Federal Employee Retirement and Income
Security Act, the Tennessee guidelines for investing trust funds and the “prudent man rule.”
6. Conservative option strategies may be used, with a goal of increasing the stability of the portfolio.
Regional One Health Foundation limits investments in common stock to 40% of its investment portfolio.
The remainder of the portfolio is to be invested in fixed-income investments.
(b) Investment (loss) income comprises the following:
2023 2022
Dividend and interest income $ 1,408,640 1,275,727
Net increse (decrease) in fair value of investments 2,285,097 (5,824,957)
$ 3,693,737 (4,549,230)
(3) Business and Credit Concentrations
Regional One Health grants credit to patients, substantially all of whom are local area residents. Regional
One Health generally does not require collateral or other security in extending credit to patients; however, it
routinely obtains assignment of (or is otherwise entitled to receive) patients’ benefits payable under their
health insurance programs, plans, or policies (e.g., Medicare, Medicaid, Blue Cross, and commercial
insurance policies).
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
22 (Continued)
The mix of receivables from patients and third-party payors is as follows, before application of related
valuation allowances:
2023 2022
Patients 28 % 38 %
Commercial insurance 30 24
Medicare 19 16
Medicaid/TennCare 23 22
100 % 100 %
(4) Other Receivables
The composition of other receivables is as follows:
2023 2022
Accounts receivable from University of Tennessee Center for
Health Services $ 25,998 3,400,858
Accounts receivable from the State of Tennessee 8,462,283 7,547,201
Grants receivable 725,837 524,603
Accounts receivable from UT Regional One Physicians 1,453,974 433,536
Pharmacy receivable 3,632,150 3,770,578
Accounts receivable from correctional facilities 7,888,827 12,676,816
Other 5,024,310 4,426,952
$ 27,213,379 32,780,544
(5) Other Current Assets
The composition of other current assets is as follows:
2023 2022
Inventories
$ 10,044,354 9,874,736
Prepaid expenses 8,018,792 8,447,808
$ 18,063,146 18,322,544
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
23 (Continued)
(6) Capital Assets
Capital assets and related activity consist of the following:
Balances at Balances at
June 30, 2022 Additions Retirements Transfers June 30, 2023
Capital assets not being depreciated:
Construction in progress $ 16,034,628 14,990,652 (23,608,199) 7,417,081
Land 4,313,278 — — — 4,313,278
Total book value of capital assets
not being depreciated 20,347,906 14,990,652 — (23,608,199) 11,730,359
Capital assets being depreciated:
Land improvements 7,669,743 — — 10,220 7,679,963
Buildings and improvements 68,284,062 — — 1,864,517 70,148,579
Fixed equipment 161,214,067 — — 12,670,902 173,884,969
Movable equipment 193,460,755 — — 4,808,713 198,269,468
Software 73,065,499 — — 4,253,847 77,319,346
Total book value of capital assets
being depreciated 503,694,126 — — 23,608,199 527,302,325
Less accumulated depreciation for:
Land improvements (7,103,387) (90,681) — — (7,194,068)
Buildings and improvements (69,474,674) (590,664) — — (70,065,338)
Fixed equipment (124,987,667) (4,373,079) — — (129,360,746)
Movable equipment (170,822,814) (6,079,210) — — (176,902,024)
Software (57,174,897) (5,085,034) — — (62,259,931)
Total accumulated depreciation (429,563,439) (16,218,668) — — (445,782,107)
Capital assets being depreciated, net 74,130,687 (16,218,668) — 23,608,199 81,520,218
Capital assets, net $ 94,478,593 (1,228,016) — — 93,250,577
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
24 (Continued)
Balances at Balances at
June 30, 2021 Additions Retirements Transfers June 30, 2022
Capital assets not being depreciated:
Construction in progress $ 4,012,765 28,180,488 (169,551) (15,989,074) 16,034,628
Land 4,313,278 — — — 4,313,278
Total book value of capital assets
not being depreciated 8,326,043 28,180,488 (169,551) (15,989,074) 20,347,906
Capital assets being depreciated:
Land improvements 7,669,743 — — — 7,669,743
Buildings and improvements 67,332,164 169,032 — 782,866 68,284,062
Fixed equipment 157,011,615 — — 4,202,452 161,214,067
Movable equipment 183,701,725 — (9,980) 9,769,010 193,460,755
Software 71,830,753 — — 1,234,746 73,065,499
Total book value of capital assets
being depreciated 487,546,000 169,032 (9,980) 15,989,074 503,694,126
Less accumulated depreciation for:
Land improvements (6,983,705) (119,682) — — (7,103,387)
Buildings and improvements (68,968,132) (506,542) — — (69,474,674)
Fixed equipment (121,268,900) (3,718,767) — — (124,987,667)
Movable equipment (165,569,077) (5,256,077) 2,340 — (170,822,814)
Software (52,208,630) (4,966,267) — — (57,174,897)
Total accumulated depreciation (414,998,444) (14,567,335) 2,340 — (429,563,439)
Capital assets being depreciated, net 72,547,556 (14,398,303) (7,640) 15,989,074 74,130,687
Capital assets, net $ 80,873,599 13,782,185 (177,191) — 94,478,593
(7) Leases
Regional One Health leases equipment and office, storage, and radio tower space, the terms of which
expire in various years starting in 2024 through 2029. The FMV of the leases were measured based on
hypothetical interest rates provided by one of the hospital’s financial institutions. The hospital had lease
assets of $28,438,762 and $31,643,984 and accumulated amortization of $10,538,379 and $9,986,695 for
the years ended June 30, 2023 and 2022, respectively. The hospital recognized $4,609,351 and
$5,092,157 in lease amortization, which is included and administrative and general expense, and
$1,048,476 and $1,284,091 in interest expense on the statements of revenues, expenses and changes in
net position for the years ended June 30, 2023 and 2022, respectively.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
25 (Continued)
Lease assets are initially recorded at the initial measurement of the lease liability, plus lease payments
made at or before the commencement of the lease term, less any lease incentives received from the lessor
at or before the commencement of the lease, plus initial direct costs that are ancillary to place the asset
into service. Leases with an initial term of twelve months or less are not recorded on the combined balance
sheets. Regional One Health recognizes lease expense in the period incurred for the lease with a valuation
of $5,000 or less based on the greater of the right-of-use lease asset or liability balance. Most leases have
upfront monthly lease payment amounts, but some are made up of annual commitments and service
agreements with equipment provided at zero additional cost and the amounts are calculated by sourcing
the value of the leased equipment over the life of the agreement. Lease assets are amortized on a
straight-line basis over the shorter of the lease term or the useful life of the underlying asset and do not
have any residual values.
Lease assets and related activity consist of the following:
Balances at Balances at
June 30, 2022 Additions Retirements June 30, 2023
Right-to-use lease assets
Buildings $ 21,101,579 7,689 — 21,109,268
Equipment 10,191,184 3,019,618 (6,279,005) 6,931,797
Other 351,221 84,893 (38,419) 397,695
Right-to-use lease assets 31,643,984 3,112,200 (6,317,424) 28,438,760
Less accumulated amortization for:
Buildings (4,695,551) (2,475,509) — (7,171,060)
Equipment (5,082,428) (2,035,508) 4,027,924 (3,090,012)
Other (208,716) (98,333) 29,744 (277,305)
Total accumulated
amortization (9,986,695) (4,609,350) 4,057,668 (10,538,377)
Right-to-use lease assets, net $ 21,657,289 (1,497,150) (2,259,756) 17,900,383
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
26 (Continued)
Balances at Balances at
June 30, 2021 Additions Retirements June 30, 2022
Right-to-use lease assets
Buildings $ 19,747,288 1,354,291 — 21,101,579
Equipment 9,248,325 942,859 — 10,191,184
Other 351,221 — — 351,221
Right-to-use lease assets 29,346,834 2,297,150 — 31,643,984
Less accumulated amortization for:
Buildings (2,209,641) (2,485,910) — (4,695,551)
Equipment (2,597,535) (2,484,893) — (5,082,428)
Other (87,362) (121,354) — (208,716)
Total accumulated
amortization (4,894,538) (5,092,157) — (9,986,695)
Right-to-use lease assets, net $ 24,452,296 (2,795,007) — 21,657,289
Lease liabilities and related activity consist of the following:
Amounts due
Balances at Balances at within
June 30, 2022 Additions
Remeasurements
Deductions June 30, 2023 one year
Lease liabilities $ 23,036,251 3,112,200 32,443 (6,273,994) 19,906,900 3,405,769
Amounts due
Balances at Balances at within
June 30, 2021 Additions
Remeasurements
Deductions June 30, 2022 one year
Lease liabilities $ 25,094,350 2,297,150 — (4,355,249) 23,036,251 4,113,681
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
27 (Continued)
The following is a schedule by year of payments under the leases as of June 30, 2023:
Total to be paid Principal Interest
Year(s) ending June 30:
2024
$ 4,352,218 3,405,769 946,449
2025
3,714,642 2,942,029 772,613
2026
3,480,781 2,863,014 617,767
2027
2,871,341 2,388,243 483,098
2028
2,445,830 2,075,337 370,493
2029 – 2030 6,685,895 6,232,508 453,387
$ 23,550,707 19,906,900 3,643,807
(8) Subscription based information technology arrangements
(a) Subscription Assets
Subscription assets are initially recorded at the initial measurement of the subscription liability, plus
subscription payments made at or before the commencement of the subscription-based information
technology arrangement (SBITA) term, less any SBITA vendor incentives received from the SBITA
vendor at or before the commencement of the SBITA term, plus capitalizable initial implementation
costs. Subscription assets are amortized on a straight-line basis over the shorter of the SBITA term or
the useful life of the underlying IT asset.
Subscription assets and related activity for the years ended June 30, 2023 and 2022, were:
Balances at Balances at
June 30, 2022 Additions Retirements June 30, 2023
Subscription IT asset $ 22,363,850 2,285,846 — 24,649,696
Less accumulated amortization (4,317,037) (5,267,541) — (9,584,578)
Subscription assets, net
$ 18,046,813 (2,981,695) — 15,065,118
Balances at Balances at
July 1, 2021 Additions Retirements June 30, 2022
Subscription IT asset $ 18,449,213 3,914,637 — 22,363,850
Less accumulated amortization — (4,317,037) — (4,317,037)
Subscription assets, net
$ 18,449,213 (402,400) — 18,046,813
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
28 (Continued)
(b) Subscription Liabilities
Regional One Health has various subscription-based information technology arrangements (SBITAs),
the terms of which expire in various years through 2030. Variable payments based upon the use of the
underlying asset are not included in the subscription liability because they are not fixed in substance.
Subscription liabilities and related activity for the years ended June 30, 2023 and 2022, were:
Balances at Balances at Amounts due
June 30, June 30, within
2022 Additions Deductions 2023 one year
Subscription IT liabilities $ 19,910,767 2,285,846 (7,693,592) 14,503,021 5,289,535
Balances at Balances at Amounts due
July 1, June 30, within
2021 Additions Deductions 2022 one year
Subscription IT liabilities $ 18,449,213 3,914,637 (2,453,083) 19,910,767 5,407,746
The following is a schedule by year of payments under the subscriptions as of June 30, 2023:
Total to be paid Principal Interest
Year(s) ending June 30:
2024
$ 6,032,571 5,289,535 743,036
2025
3,283,052 2,820,388 462,664
2026
1,950,693 1,634,302 316,391
2027
1,593,313 1,363,186 230,127
2028
1,239,205 1,083,236 155,969
2029 – 2030 2,443,312 2,312,374 130,938
$ 16,542,146 14,503,021 2,039,125
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
29 (Continued)
(9) New Market Tax Credit Program and Long-Term Debt
(a) New Market Tax Credit Program
Regional One Health entered into a transaction with Truist Community Capital, LLC on December 10,
2021 to obtain financing through the New Market Tax Credit (NMTC) Program sponsored by the
Department of Treasury. The NMTC Program permits certain corporate tax payors to receive a credit
against federal income taxes for making qualified equity investments (QEI) in community development
entities. The credit provided to the investor totals 39% of the initial value of the QEI and is claimed over
a seven-year credit allowance period.
Regional One Health established ROH Investment Co., Inc. as a supporting organization to help
facilitate the NMTC transaction. Regional One Health secured a term loan with Truist Bank in the
amount of $19,500,000 and provided initial funding to ROH Investment Co., Inc. with a donation in the
amount of $19,057,900.
As part of this transaction, ROH Investment Co., Inc. and SunTrust Community Capital, LLC
contributed approximately $19,057,900 and $6,749,600, respectively, to ROH Memphis Investment
Fund, LLC, an entity created to provide funding for investments in special purposes entities called
community development entities (CDEs). ROH Investment Co., Inc. provided funding and received a
notes receivable as part of the NMTC Program, totaling $19,057,900, which is included in the
statement of net position as of June 30, 2023.
Notes receivable $ 19,057,900
The notes receivable require interest only payments of 2.00% annually on the unpaid principal balance,
which is due quarterly beginning March 10, 2022 through March 31, 2029. Beginning on June 10, 2029,
principal and interest payments will be due and will continue annually until the maturity of the notes
receivable on September 30, 2056.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
30 (Continued)
The CDE’s loaned Regional One Health, $25,807,500, made up of Notes A & B, which were
$19,057,900 and $6,749,600, respectively. Long-term debt related to the NMTC Program is
summarized as follows:
2023 2022
Note payable to CHHS Subsidiary CDE 52, LLC, interest paid
interest rate of 1.98711%, the maturity date is
December 31, 2051 $ 11,433,500 11,433,500
Note payable to CHHS Subsidiary CDE 52, LLC, interest paid
interest rate of 1.98711%, the maturity date is
December 31, 2051 4,329,000 4,329,000
Note payable to Pathway Lending CDE 1, LLC, interest paid
interest rate of 1.98711%, the maturity date is
December 31, 2051 3,956,400 3,956,400
Note payable to Pathway Lending CDE 1, LLC, interest paid
interest rate of 1.98711%, the maturity date is
December 31, 2051 1,188,600 1,188,600
Note payable to UACD Sub CDE 57, LLC, interest paid
interest rate of 1.98711%, the maturity date is
December 31, 2051 3,668,000 3,668,000
Note payable to UACD Sub CDE 57, LLC, interest paid
interest rate of 1.98711%, the maturity date is
December 31, 2051 1,232,000 1,232,000
$ 25,807,500 25,807,500
(b) Long-Term Debt
(i) Cerner EMR Financing
On January 27, 2017, Regional One Health entered into a $15,400,000 contract with Cerner
Corporation for the purpose of financing the licensing and implementation of electronic medical
record software. The payment schedule under the contract is based upon 0% interest with the first
payment made upon execution of the contract, on January 27, 2017, and semiannual payments
required starting September 30, 2017, which were converted to annual payments starting July 1,
2021 and ending July 1, 2023. The debt was secured by the software being purchased through the
contractual agreement.
(ii) Baxter Infusion Pumps
On December 11, 2017, Regional One Health entered into $1,500,000 million contract with Baxter
Healthcare Corporation for the purpose of financing the licensing, equipment, and implementation
of an infusion pump system. The payment schedule under the contract is based on 0% interest with
the first payment made after installation and training was completed and the last payment made
60 months after. The debt was secured by a purchase money security interest in the equipment.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
31 (Continued)
On September 1, 2020, Regional One Health entered into a $1,700,000 dollar contract with Baxter
Healthcare Corporation for the purpose of financing the licensing equipment and implementation of
the infusion pump system. The payment schedule under the contract is based on 0% interest with
the first payment made December 22, 2020 and last payment scheduled for August 31, 2025.
(iii) Morrison Healthcare Financing
On November 1, 2020, Regional One Health entered into a $1,570,000 contract with Morrison
Healthcare for the purpose of financing the equipment, renovations, and software necessary to
operate the cafeteria on campus. The payment schedule under the contract has two separate
notes, which are both based upon 0% interest with the first payment made at the execution of the
contract, on November 1, 2020. Note A totals $946,000 and has a total of 116 payments to be
made monthly for $9,723 for 36 months and $7,567 thereafter through June 30, 2030, with
payments due 14 days after being invoiced. Note B is listed in the contract but not directly charged
to ROH but is instead amortized over the life of the contract, the note totals $626,000 with monthly
amortization of $5,316 for 116 months through June 30, 2030. Per the agreement, should Regional
One Health or Morrison Healthcare terminate the agreement early, for any reason, all outstanding
amounts are due in full immediately.
(iv) Insightec Financing
On December 31, 2019, Regional One Health entered into a $1,950,000 contract with Insightec
Corporation for the purpose of financing an exablate neuro system. An initial payment of
$1,000,000 was made at signing with the remaining to be paid based on neuravive procedures
performed each month at $4,500 per procedure at 0% interest. The contract does not require any
specific monthly payment or minimum procedure performance but instead requires that all
payments must be made until the $1,500,000 contract has been filled and there is no final due
date. ROH has elected to estimate the amount of the payments per month as an average of the
current volume of procedures performed. The debt is secured by the equipment being purchased
through the contractual agreement.
(v) Truist Term Loan
On December 3, 2021, Regional One Health entered into a $19,500,000 term loan with Truist
Bank. The loan bears interest at 3.137% and payments are due quarterly starting March 5, 2022.
The payments are interest only until September 5, 2023, at which time the payment will include
equal principal amounts of $487,500 plus interest and continue through February 28, 2029 with a
final principal payment of $8,775,000 due on March 1, 2029. The debt is secured through
investments. Default is defined by the agreement as failure of any one of the following: meet the
debt covenants, pay principal and interest due no later than 5 days late, pay any other lenders
within their grace periods, pay within 30 days any judgement levied against the company, as well
as any of the following occurrences: Bankruptcy, transfer of control, insolvency, or material adverse
changes in financial condition. Truist may, at its discretion, apply a 4% penalty, call the debt, or
seize assets in any bank accounts held with them.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
32 (Continued)
(vi) Cerner ROSI Financing
On July 1, 2021, Regional One Health entered into a $2,598,578 contract with Cerner Corporation
for the purpose of financing the licensing and implementation of major additions to the current
electronic medical record software to allow for oncology. The payment schedule under the contract
is based upon 5.45% interest with the first payment made upon execution of the contract, on July 1,
2021, and quarterly payments required starting October 1, 2021 and ending April 1, 2025. The debt
is secured by the software being purchased through the contractual agreement. Payments from
July 1, 2021 through October 1, 2022 were treated as pre-payments on the debt as there was no
underlying asset in existence to record against it.
(vii) Masimo Americas Financing
On July 1, 2021, Regional One Health entered into a $945,158 contract with Masimo Americas for
the purpose of financing patient monitoring and pulse oximetry equipment. The payment schedule
under the contract uses an internally estimated interest rate of 5.34%. Payments are recognized
based on consumables spend for Masimo products with the contract ending on June 1, 2026.
(viii) Johnson & Johnson Financing
On June 1, 2023, Regional One Health entered into a $82,940 contract with Johnson & Johnson for
the purpose of financing ligasure equipment. The payment schedule under the contract uses an
internally estimated interest rate of 5.42%. Payments are recognized based on consumables spend
for specific Johnson & Johnson products with the contract ending on June 1, 2026.
(ix) Edwards Life Sciences Financing
On February 12, 2023, Regional One Health entered into a $220,003 contract with Edwards Life
Sciences for the purpose of financing Hemosphere cardiac equipment. The payment schedule
under the contract uses an internally estimated interest rate of 5.42%. Payments are $9,693 and
made monthly with the contract ending on January 30, 2025.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
33 (Continued)
(c) Summary of NMTC Program and Long-Term Debt
A schedule of changes in long-term debt for 2023 follows:
Balance Balance
Date of June 30, June 30, Due within
issuance 2022 Additions Retired 2023 one year
Truist Term Loan 12/3/2021 $ 19,500,000 — — 19,500,000 1,950,000
Note payable to CHHS subsidiary
CDE 52, LLC 12/10/2021 11,433,500 — — 11,433,500 —
Note payable to CHHS subsidiary
CDE 52, LLC 12/10/2021 4,329,000 — — 4,329,000 —
Note payable to Pathw ay Lending
CDE 1, LLC 12/10/2021 3,956,400 — — 3,956,400 —
Note payable to Pathw ay Lending
CDE 1, LLC 12/10/2021 1,188,600 — — 1,188,600 —
Note payable to UACD Sub
CDE 57, LLC 12/10/2021 3,668,000 — — 3,668,000 —
Note payable to UACD Sub
CDE 57, LLC 12/10/2021 1,232,000 — — 1,232,000 —
Loan payable to Cerner Corporation 1/27/2017 3,856,496 — (1,928,249) 1,928,247 1,928,248
Loan payable to Baxter Healthcare 9/1/2020 1,103,290 — (303,854) 799,436 386,724
Loan payable to Baxter Healthcare 9/10/2020 140,902 — (44,496) 96,406 44,496
Loan payable to Morrison Healthcare 11/1/2020 752,262 — (116,676) 635,586 90,798
Loan payable to Morrison Healthcare 11/1/2020 510,379 — (63,792) 446,587 63,797
Loan payable to Insightec 7/1/2020 607,500 — (148,000) 459,500 168,000
Loan payable to Cerner Corporation 7/1/2021 — 2,598,578 (1,892,779) 705,799 33,015
Loan payable to Masimo Americas 7/1/2021 — 945,158 (350,764) 594,394 187,673
Loan payable to Johnson & Johnson 6/1/2023 — 82,940 — 82,940 26,166
Loan payable to Edw ards Life Sciences
2/12/2023 — 229,696 — 229,696 135,310
$ 52,278,329 3,856,372 (4,848,610) 51,286,091 5,014,227
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
34 (Continued)
A schedule of changes in long-term debt for 2022 follows:
Balance Balance
Date of June 30, June 30, Due within
issuance 2021 Additions Retired 2022 one year
Note payable to Truist Bank 12/3/2021 $ — 19,500,000 — 19,500,000 —
Note payable to CHHS subsidiary
CDE 52, LLC 12/10/2021 — 11,433,500 — 11,433,500 —
Note payable to CHHS subsidiary
CDE 52, LLC 12/10/2021 — 4,329,000 — 4,329,000 —
Note payable to Pathw ay Lending
CDE 1, LLC 12/10/2021 — 3,956,400 — 3,956,400 —
Note payable to Pathw ay Lending
CDE 1, LLC 12/10/2021 — 1,188,600 — 1,188,600 —
Note payable to UACD Sub
CDE 57, LLC 12/10/2021 — 3,668,000 — 3,668,000 —
Note payable to UACD Sub
CDE 57, LLC 12/10/2021 — 1,232,000 — 1,232,000 —
Loan payable to Cerner Corporation 1/27/2017 5,784,744 — (1,928,248) 3,856,496 1,928,248
Loan payable to Baxter Healthcare 9/1/2020 1,408,780 — (305,490) 1,103,290 331,478
Loan payable to Baxter Healthcare 9/10/2020 185,398 — (44,496) 140,902 44,496
Loan payable to Insightec 7/1/2020 761,000 — (153,500) 607,500 168,000
Loan payable to Morrison Healthcare 11/1/2020 868,935 — (116,673) 752,262 116,673
Loan payable to Morrison Healthcare 11/1/2020 574,174 — (63,795) 510,379 63,797
$ 9,583,031 45,307,500 (2,612,202) 52,278,329 2,652,692
The aggregate annual maturities of the long-term debt at June 30, 2023 are as follows:
2024
$ 5,014,227
2025
3,667,292
2026
2,528,689
2027
2,104,595
2028
2,104,595
2029-2033
13,399,545
2034-2038
5,237,593
2039-2043
5,612,580
2044-2048
6,197,342
2049-2053
5,419,633
Total debt 51,286,091
Less current portion of debt (5,014,227)
Total long-term debt $ 46,271,864
Interest paid was approximately $1,413,000 and $602,000 for the years ended June 30, 2023 and 2022.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
35 (Continued)
(10) Accrued Expenses and Other Current Liabilities
The composition of accrued expenses and other current liabilities is as follows:
2023 2022
Due to third-party payors $ 17,721,836 23,087,374
Compensated absences 12,120,019 10,769,962
Deferred grant revenue 1,991,638 1,840,994
Accrued payroll and withholdings 13,891,447 14,144,734
Accrued employee healthcare claims 3,501,000 2,588,000
Current portion of long-term debt 5,014,227 2,652,692
Deferred appropriations revenue — 9,523,006
Other 4,470,978 1,170,011
$ 58,711,145 65,776,773
(11) Net Patient Service Revenue
Regional One Health has agreements with governmental and other third-party payors that provide for
reimbursement to Regional One Health at amounts different from its established rates. Contractual
adjustments under third-party reimbursement programs represent the difference between billings at
established rates for services and amounts reimbursed by third-party payors. A summary of the basis of
reimbursement with major third-party payors is as follows:
• Medicare – Substantially all acute care services rendered to Medicare program beneficiaries are paid
at prospectively determined rates. These rates vary according to patient classification systems that are
based on clinical, diagnostic, and other factors. Certain types of exempt services and other defined
payments related to Medicare beneficiaries are paid based on cost reimbursement or other
retroactive-determination methodologies. Regional One Health is paid for retroactively determined
items at tentative rates, with final settlement determined after submission of annual cost reports by
Regional One Health and audits thereof by Regional One Health’s fiscal intermediary.
Regional One Health’s classification of patients under the Medicare program and the appropriateness
of their admission are subject to an independent review by a peer review organization. Regional One
Health’s Medicare cost reports have been audited and settled by Regional One Health’s fiscal
intermediary through June 30, 2014. Revenue from the Medicare program accounted for approximately
22% and 29% of Regional One Health’s net patient service revenue for the years ended June 30, 2023
and 2022, respectively.
• TennCare – Under the TennCare program, patients traditionally covered by the State of Tennessee
Medicaid program and certain members of the uninsured population enroll in managed care
organizations that have contracted with the State of Tennessee to ensure healthcare coverage to their
enrollees. Regional One Health contracts with the managed care organizations to receive
reimbursement for providing services to these patients. Payment arrangements with these managed
care organizations consist primarily of prospectively determined rates per discharge, discounts from
established charges, or prospectively determined per diem rates. Revenue from the TennCare program
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
36 (Continued)
accounted for approximately 26% and 25% of Regional One Health’s net patient service revenue for
the years ended June 30, 2023 and 2022, respectively.
Regional One Health has historically received incremental reimbursement payments through its
participation in the TennCare program. Amounts received by Regional One Health under this program
were $98,523,615 and $65,987,328 in 2023 and 2022, respectively. These amounts have been
recognized as reductions in related contractual adjustments in the accompanying statements of
revenues, expenses, and changes in net position. There can be no assurance that Regional One
Health will continue to qualify for future participation in this program or that the program will not
ultimately be discontinued or materially modified. Any material reduction in such funds has a
correspondingly material adverse effect on Regional One Health’s operations.
• Arkansas Medicaid – Substantially all inpatient and outpatient services rendered to Arkansas Medicaid
program beneficiaries are paid under prospective reimbursement methodologies established by the
State of Arkansas. Certain other reimbursement items (principally inpatient nursery services and
medical education costs) are based upon cost reimbursement methodologies. Regional One Health is
reimbursed for cost reimbursable items at tentative rates, with final settlement determined after
submission of annual cost reports by Regional One Health and audits thereof by the Arkansas
Department of Health and Human Services (DHHS). Regional One Health’s Arkansas Medicaid cost
reports have been audited and settled by the Arkansas DHHS through June 30, 2014. Revenue from
the State of Arkansas Medicaid program accounted for approximately 3% and 5% of Regional One
Health’s net patient service revenue for the years ended June 30, 2023 and 2022, respectively.
Regional One Health has historically received incremental reimbursement through its participation in
the State of Arkansas Medicaid program. The net benefit for Regional One Health associated with this
program, totaling $8,723,158 and $11,115,074 for the years ended June 30, 2023 and 2022,
respectively, has been recognized as a reduction in related contractual adjustments in the
accompanying statements of revenues, expenses, and changes in net position. There can be no
assurance that Regional One Health will continue to qualify for future participation in this program or
that the program will not ultimately be discontinued or materially modified.
• Mississippi Medicaid – Inpatient and outpatient services rendered to Mississippi Medicaid program
beneficiaries are generally paid based upon prospective reimbursement methodologies established by
the State of Mississippi. Revenue from the State of Mississippi Medicaid program accounted for
approximately 2% and 4% of Regional One Health’s net patient service revenue for the years ended
June 30, 2023 and 2022, respectively.
Regional One Health has historically received incremental reimbursement through its participation in
the State of Mississippi Medicaid program. The net benefit for Regional One Health associated with this
program, totaling $4,579,096 and $4,442,403 for the years ended June 30, 2023 and 2022,
respectively, has been recognized as a reduction in related contractual adjustments in the
accompanying statements of revenues, expenses, and changes in net position. There can be no
assurance that Regional One Health will continue to qualify for future participation in this program or
that the program will not ultimately be discontinued or materially modified.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
37 (Continued)
• Other – Regional One Health has also entered into payment agreements with certain commercial
insurance carriers, health maintenance organizations, and preferred provider organizations. The
reimbursement methodologies under these agreements include prospectively determined rates per
discharge, per diem amounts, and discounts from established charges.
The composition of net patient service revenue is as follows:
2023 2022
Gross patient service revenue $ 1,787,512,350 1,734,922,649
Less provision for contractual and other adjustments 1,195,406,281 1,172,465,601
Less provision for bad debts 59,647,415 94,131,319
Net patient service revenue $ 532,458,654 468,325,729
The composition of incremental reimbursement from various state agencies for participation in
TennCare/Medicaid programs follows:
2023 2022
TennCare essential access $ 98,532,615 65,987,328
Arkansas UPL/Disproportionate share 8,723,158 11,115,074
Mississippi disproportionate share 4,579,096 4,442,403
Total payments $ 111,834,869 81,544,805
(12) Charity Care
Regional One Health maintains records to identify and monitor the level of charity care it provides. These
records include the amount of charges foregone for services and cost incurred under its charity care policy.
Charges foregone, based on established rates, were approximately $307,021,000 and $291,427,000 in
2023 and 2022, respectively. Included in the charges foregone is the upfront discount applied to all
uninsured patients of approximately $132,636,000 and $135,982,000 in 2023 and 2022, respectively, as
Regional One Health does not pursue collection on these amounts. Regional One Health’s estimated cost
of caring for charity care patients for the years ended June 30, 2023 and 2022, was approximately
$112,157,000 and $101,149,000, respectively.
(13) Retirement Plans
(a) Defined-Benefit Plan
Regional One Health contributes to the Shelby County Retirement System (the Retirement System), a
cost-sharing single-employer defined-benefit public employee retirement system established by Shelby
County, Tennessee. The Retirement System is administered by a board, the majority of whose
members are nominated by the Shelby County Mayor, subject to approval by the Shelby County Board
of Commissioners. The Retirement System issues a publicly available financial report that includes
financial statements and required supplementary information. That report may be obtained by writing to
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
38 (Continued)
the Shelby County Retirement System, Suite 950, 160 North Main, Memphis, TN 38103 or by calling
901-545-3570.
The Retirement System has been closed to new employees since 1981. The contributions and
expenditure by Regional One Health related to the defined benefit plans were approximately $10,000
and $20,000 in 2023 and 2022, respectively. The Retirement System is not considered material to the
Regional One Health financial statements and therefore certain required disclosures are omitted from
these notes.
(b) Defined-Contribution Plan
Effective October 1, 2009, Regional One Health established, under the authority of its Board of
Directors, The Regional Medical Center at Memphis 403(b) Retirement Plan, a defined-contribution
pension plan covering employees 21 years of age and older who have completed one year of service.
The plan is administered by Regional One Health. The plan provides for a 100% employer match on
employee contributions up to 4% of employee compensation. Participants are immediately vested in
their contributions plus actual earnings thereon. Participants vest 20% in the employers’ matching
contributions after two years of service, 50% after three years, 75% after four years, and 100% after
five years. Forfeitures remain in the plan for the benefit of other participants. Regional One Health
contributed approximately $4,701,000 and $4,700,000 to the 403(b) plan for the years ended June 30,
2023 and 2022, respectively. 403(b) plan participants contributed approximately $9,026,000 and
$9,200,000 to the 403(b) plan for the years ended June 30, 2023 and 2022, respectively.
Effective December 1, 2010, Regional One Health established, under the authority of its Board of
Directors, The Regional Medical Center at Memphis Nonqualified Supplemental Retirement Plan
(the Supplemental Retirement Plan). The Supplemental Retirement Plan is administered by Regional
One Health. The Supplemental Retirement Plan was formed under Section 457(f) of the IRC of 1986,
and management believes that it complies with all provisions applicable to a nonqualified deferred
compensation plan under IRC Section 409A. Supplemental Retirement Plan participants contributed
approximately $1,262,000 and $1,206,000 to the Supplemental Retirement Plan for the years ended
June 30, 2023 and 2022, respectively.
(14) Postretirement Benefit Plan
(a) General Information about the OPEB Plan
Regional Medical Center Healthcare Benefit Plan (the Plan) is a single-employer defined-benefit
healthcare plan sponsored and administered by Regional One Health. The Plan provides medical and
life insurance benefits to eligible retirees and their spouses. Regional One Health’s Board of Directors
is authorized to establish and amend all provisions. Regional One Health does not issue a publicly
available financial report that includes financial statements and required supplementary information for
the Plan. The Plan has no plan assets.
During fiscal year 2010, Regional One Health’s Board of Directors approved a plan amendment that
eliminated medical coverage for those employees who did not have 15 years of service as of
December 31, 2009 and eliminated life insurance coverage for those employees retiring January 1,
2010 or later.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
39 (Continued)
Disclosures as of and for the years ended June 30, 2023 and 2022 are made under GASB Statement
No. 75.
(b) Employees Covered by Benefit Terms
As of the respective plan measurement dates, July 1, 2023 and July 1, 2022 for the years then ended,
the following employees were covered by the benefit terms:
2023 and 2022*
Retirees 276
Active employees 68
344
* Regional One Health did not obtain an actuarial valuation of the postemployment benefit
plan, as allowed by relevant accounting literature, for the year ended June 30, 2023, so
the results reported above are related to the June 30, 2022 valuation.
(c) Total OPEB Liability
The Plan’s total OPEB liability measured at June 30, 2023 and 2022 of approximately $5,250,000 was
determined by actuarial valuations as of July 1, 2022.
(d) Actuarial Assumptions and Other Inputs
The total OPEB liability for the years ended June 30, 2023 and 2022 actuarial valuations were
determined using the following actuarial assumptions and other inputs, applied to all periods included in
the measurement, unless otherwise specified:
2023 and 2022*
Inflation
2.20 %
Discount rate
3.54 %
Healthcare cost trend rates 4.01%/3.84% per year (non-
Medicare/Medicare) in 2020
gradually decreasing to
3.7%/3.7% for 2073 and beyond
* Regional One Health did not obtain an actuarial valuation of the postemployment benefit plan,
as allowed by relevant accounting literature, for the year ended June 30, 2023, so the results
reported above are related to the June 30, 2022 valuation.
The discount rates used for the years ended June 30, 2023 and 2022 were based on the Bond Buyer
General Obligation 20-Bond Municipal Index.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
40 (Continued)
Mortality rates were based on Sex-distinct Pub-2010 and RP-2014 for annuitants and nonannuitants
with generational projection per Scales MP-2021 and MP-2019 for the years ended June 30, 2023 and
2022, respectively.
(e) Changes in the Total OPEB Liability
2023 and 2022
Activity total
OPEB liability*
Balance at beginning of fiscal year 7,038,912
Changes for the year:
Service cost 39,158
Interest 149,206
Differences between expected and actual experience (473,783)
Changes in assumptions or other inputs (1,239,865)
Benefit payments (263,838)
Net changes (1,789,122)
Balance at end of fiscal year 5,249,790
* Regional One Health did not obtain an actuarial valuation of the postemployment benefit plan,
as allowed by relevant accounting literature, for the year ended June 30, 2023, so the results
reported above are related to the June 30, 2022 valuation.
Differences between expected and actual experience relate primarily to adjustments due to updates to
the most current available healthcare expense data for the Plan. Changes in assumptions or other
inputs relate primarily to changes in employee demographics from the previous measurement date.
(f) Sensitivity of the Total OPEB Liability to Changes in the Discount Rate
The following presents the total June 30, 2023 OPEB liability of the Plan, as well as what the Plan’s
total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower
(2.54 percent) or 1 percentage point higher (4.54 percent) than the current discount rate:
1% Decrease Discount Rate 1% Increase
(2.54%) (3.54%) (4.54%)
Total OPEB liability $ 5,630,371 5,249,790 4,923,403
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
41 (Continued)
(g) Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates
The following presents the total OPEB liability of the Plan, as well as what the Plan’s total OPEB
liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point
lower or 1-percentage-point higher than the current healthcare cost trend rates:
Current
1% Decrease trend rates 1% Increase
Total OPEB liability $ 4,948,904 5,249,790 5,592,980
(h) OPEB expense
OPEB expense is reflected within salaries and benefits expense in the statement of revenues,
expenses, and changes in net position and is equal to a benefit of approximately $0 and $1,789,000 for
the years ended June 30, 2023 and 2022, respectively.
(15) Transactions with University of Tennessee Center for Health Services
Regional One Health contracts with University of Tennessee Center for Health Services (UTCHS) and
University of Tennessee Medical Group (UTMG) to provide, among other things, Regional One Health’s
house staff, professional supervision of certain ancillary departments, and professional care for indigent
patients. Regional One Health also provides its facilities as a teaching hospital for UTCHS.
Purchased medical services expenses include approximately $31,726,000 and $31,217,000 for the years
ended June 30, 2023 and 2022, respectively, for all professional and other services provided by
UTCHS/UTMG.
On October 1, 2014, Regional One Health and the University of Tennessee Health Science Center created
a jointly governed physician’s group known as UTROP. The UTROP physician group provides Regional
One Health’s professional supervision of certain ancillary departments and professional care for patients.
Under the UTROP professional services agreement, UTROP assigns all physician revenue to Regional
One Health for a fixed contracted fee based on the number of physicians needed to operate the hospital.
Regional One Health records the patient service revenue earned by these physicians as gross patient
service revenue and is at risk for the collection of these amounts. The fixed fee amount paid by Regional
One Health to UTROP during the 2023 and 2022 years was approximately $88,370,000 and $82,400,000,
respectively, and is included in physician and professional fees on the statements of revenues, expenses,
and changes in net position.
(16) Risk Management
Regional One Health has a self-insurance program for professional and general liability risks, both with
respect to claims incurred after the effective date of the program and claims incurred but not reported prior
to that date. Regional One Health has not acquired any excess coverage for its self-insurance because
Regional One Health is afforded sovereign immunity in accordance with applicable statutes. Presently,
sovereign immunity limits losses to $300,000 per claim. Regional One Health has recorded an accrual for
self-insurance losses totaling $5,949,000 and $5,984,000 at June 30, 2023 and 2022, respectively.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
42 (Continued)
Incurred losses identified through Regional One Health’s incident reporting system and incurred but not
reported losses are accrued based on estimates that incorporate Regional One Health’s current inventory
of reported claims and historical experience, as well as considerations, such as the nature of each claim or
incident, relevant trend factors, and advice from consulting actuaries.
The following is a summary of changes in Regional One Health’s self-insurance liability for professional and
general liability costs for fiscal years 2023 and 2022:
2023 2022
Balance at July 1 $ 4,336,000 4,617,000
Current portion of professional and general liability 2,156,000 1,917,000
Claims paid (543,000) (550,000)
Balance as of June 30 5,949,000 5,984,000
Less current portion (1,343,000) (1,648,000)
$ 4,606,000 4,336,000
Like many other businesses, Regional One Health is exposed to various risks of loss related to theft of,
damage to, and destruction of assets; business interruption; errors and omissions; employee injuries and
illness; and natural disasters. Commercial insurance coverage is purchased for claims arising from such
matters. Claims settled through June 30, 2023 have not exceeded this commercial coverage in any of the
three preceding years.
The following is a summary of approximate changes in Regional One Health’s self-insurance liability for
employee health coverage (included in accrued expenses and other current liabilities in the accompanying
statements of net position) for fiscal years 2023 and 2022:
2023 2022
Balance at July 1 $ 2,588,000 2,659,000
Claims reported and claims incurred but not reported 21,479,000 17,858,000
Claims paid (20,566,000) (17,929,000)
Balance at June 30 $ 3,501,000 2,588,000
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Notes to Basic Financial Statements
June 30, 2023 and 2022
43
(17) Commitments
Regional One Health has outstanding service contracts for management services, equipment maintenance,
and blood supply services. Estimated future payments under the contracts follow:
2024
$ 19,468,612
2025
14,167,267
2026
6,993,246
2027
839,501
2028
559,863
Thereafter 1,066,542
$ 43,095,031
Expense under these contracts and other contracts was approximately $18,441,000 and $13,202,000 for
the years ended June 30, 2023 and 2022, respectively.
(18) Blended Component Units
Per GASB Statement No. 80, Blending Requirements for Certain Component Units, when a component unit
is blended by the combining of financial statements within a single column of the primary government, the
notes should present condensed combining information. In the case of the combined financial statements
for the years ended June 30, 2023 and 2022, Regional One Health Corporation is the primary government
and Regional One Health Foundation; Regional One Properties; Regional Med Extended Care Hospital
LLC; Shelby County Health Care Properties, Inc.; and Regional Investment Co. are the blended component
units.
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Combining Schedule – Statement of Net Position
June 30, 2023
Shelby County Regional Med Regional One Shelby County ROH
Health Care Extended Care Health Health Care Regional One Investment
Assets Corporation Hospital LLC Foundation Properties, Inc. Properties, Inc. Company, Inc. Eliminations Combined
Assets:
Cash and cash equivalents $ 23,853,323 6,322,709 495,460 — — 593,971 — 31,265,463
Investments 50,328,950 — — — — — — 50,328,950
Patient accounts receivable, net 67,008,759 3,357,193 — — — — — 70,365,952
Other receivables 27,634,274 — 1,709,030 — — — (2,129,925) 27,213,379
Other current assets 17,745,218 317,928 — — — — — 18,063,146
Total current assets 186,570,524 9,997,830 2,204,490 — — 593,971 (2,129,925) 197,236,890
Restricted cash 2,325,816 — — — — — — 2,325,816
Restricted investments — — 6,634,941 — — — — 6,634,941
Notes receivable — — — — — 19,057,900 — 19,057,900
Right-to-use lease asset, net 17,900,383 — — — — — — 17,900,383
Right-to-use subscription-based information technology arrangements asset, net 15,065,118 — — — — — — 15,065,118
Capital assets, net 89,720,159 32,522 — — 3,497,896 — — 93,250,577
Total assets $ 311,582,000 10,030,352 8,839,431 — 3,497,896 19,651,871 (2,129,925) 351,471,625
Liabilities and Net Position
Liabilities:
Accounts payable $ 27,775,377 3,442,864 1,814,502 — — — (2,129,925) 30,902,818
Accrued expenses and other current liabilities 57,564,613 1,144,032 2,500 — — — — 58,711,145
Current portion of accrued professional and general liability costs 1,343,000 — — — — — — 1,343,000
Current portion of lease liability 3,405,769 — — — — — — 3,405,769
Current portion of subscription-based information technology arrangements liability 5,289,535 — — — — — — 5,289,535
Other current liabilities — — 30,000 — — — — 30,000
Total current liabilities 95,378,294 4,586,896 1,847,002 — — — (2,129,925) 99,682,267
Long-term accrued professional and general liability costs 4,606,000 — — — — — — 4,606,000
Other postemployment benefit obligation (OPEB) 5,249,790 — — — — — — 5,249,790
Long-term lease liability 16,501,131 — — — — — — 16,501,131
Long-term subscription-based information technology arrangements liability 9,213,486 — — — — — — 9,213,486
Long-term debt 46,219,953 51,911 — — — — — 46,271,864
Total liabilities 177,168,654 4,638,807 1,847,002 — — — (2,129,925) 181,524,538
Net position:
Net investment in capital assets 57,843,918 (19,390) — — 3,497,896 — — 61,322,424
Restricted for:
Capital assets — — 2,206,479 — — — — 2,206,479
Indigent care — — 365,483 — — — — 365,483
Education — — 1,170,251 — — — — 1,170,251
Palliative Care Program — — 2,300,000 — — — — 2,300,000
Unrestricted 76,569,428 5,410,935 950,216 — — 19,651,871 — 102,582,450
Total net position 134,413,346 5,391,545 6,992,429 — 3,497,896 19,651,871 — 169,947,087
Total liabilities and net position $ 311,582,000 10,030,352 8,839,431 — 3,497,896 19,651,871 (2,129,925) 351,471,625
See accompanying independent auditors’ report.
44
SHELBY COUNTY HEALTH CARE CORPORATIO
N
(A Component Unit of Shelby County, Tennessee)
Combining Schedule – Statement of Net Position
June 30, 2022
Shelby County Regional Med Regional One Shelby County ROH
Health Care Extended Care Health Health Care Regional One Investment
Assets Corporation Hospital LLC Foundation Properties, Inc. Properties, Inc. Company, Inc. Eliminations Combined
Assets:
Cash and cash equivalents $ 42,850,650 2,302,793 556,665 — — 212,813 — 45,922,921
Investments 37,411,306 — — — — — — 37,411,306
Patient accounts receivable, net 55,747,421 3,934,915 — — — — — 59,682,336
Other receivables 34,896,694 — 921,748 — — — (3,037,898) 32,780,544
Other current assets 17,304,444 1,018,100 — — — — — 18,322,544
Total current assets 188,210,515 7,255,808 1,478,413 — — 212,813 (3,037,898) 194,119,651
Restricted cash 14,234,348 — — — — — — 14,234,348
Restricted investments — — 6,584,050 — — — — 6,584,050
Notes receivable — — — — — 19,057,900 — 19,057,900
Right-to-use lease asset, net 21,657,289 — — — — — — 21,657,289
Right-to-use subscription-based information technology arrangements asset, net 18,046,813 — — — — — — 18,046,813
Capital assets, net 90,980,697 — — — 3,497,896 — — 94,478,593
Total assets $ 333,129,662 7,255,808 8,062,463 — 3,497,896 19,270,713 (3,037,898) 368,178,644
Liabilities and Net Position
Liabilities:
Accounts payable $ 22,922,626 2,233,525 2,008,799 — — — (3,037,898) 24,127,052
Accrued expenses and other current liabilities 64,916,563 858,105 2,105 — — — — 65,776,773
Medicare advanced payments — 290,219 — — — — — 290,219
Current portion of accrued professional and general liability costs 1,648,000 — — — — — — 1,648,000
Current portion of lease liability 4,113,681 — — — — — — 4,113,681
Current portion of subscription-based information technology arrangements liability 5,407,746 — — — — — — 5,407,746
Other current liabilities 3,544,954 204,686 20 — — — — 3,749,660
Total current liabilities 102,553,570 3,586,535 2,010,924 — — — (3,037,898) 105,113,131
Long-term accrued professional and general liability costs 4,336,000 — — — — — — 4,336,000
Other postemployment benefit obligation (OPEB) 5,249,790 — — — — — — 5,249,790
Long-term lease liability 18,922,570 — — — — — — 18,922,570
Long-term subscription-based information technology arrangements liability 14,503,021 — — — — — — 14,503,021
Long-term debt 49,529,230 96,407 — — — — — 49,625,637
Total liabilities 195,094,181 3,682,942 2,010,924 — — — (3,037,898) 197,750,149
Net position:
Net investment in capital assets 58,354,143 (96,407) — — 3,497,896 — — 61,755,632
Restricted for:
Capital assets — — 2,173,915 — — — — 2,173,915
Indigent care — — 1,512,252 — — — — 1,512,252
Education — — 1,056,047 — — — — 1,056,047
Palliative Care Program — — 1,000,000 — — — — 1,000,000
Unrestricted 79,681,338 3,669,273 309,325 — — 19,270,713 — 102,930,649
Total net position 138,035,481 3,572,866 6,051,539 — 3,497,896 19,270,713 — 170,428,495
Total liabilities and net position $ 333,129,662 7,255,808 8,062,463 — 3,497,896 19,270,713 (3,037,898) 368,178,644
See accompanying independent auditors’ report.
45
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Combining Schedule – Statement of Revenues, Expenses, and Changes in Net Position
Year ended June 30, 2023
Shelby County Regional Med Regional One Shelby County Regional One ROH
Health Care Extended Care Health Health Care Properties, Investment
Corporation Hospital LLC Foundation Properties, Inc. Inc. Company, Inc. Eliminations Combined
Operating revenues:
Net patient service revenue, net of contractual adjustments $ 574,980,904 17,125,165 — — — — — 592,106,069
Provision for uncollectible accounts (58,932,833) (714,582) — — — — — (59,647,415)
Net patient service revenue 516,048,071 16,410,583 — — — — — 532,458,654
Other revenue 159,873,414 171,131 3,440,028 — — — — 163,484,573
Total operating revenues 675,921,485 16,581,714 3,440,028 — — — — 695,943,227
Operating expenses:
Salaries and benefits 257,295,266 9,384,761 — — — — — 266,680,027
Supplies 216,439,555 1,970,947 — — — — — 218,410,502
Physician and professional fees 97,039,816 18,000 — — — — — 97,057,816
Purchased medical services 39,493,467 1,347,688 — — — — — 40,841,155
Plant operations 31,195,515 1,047,906 — — — — — 32,243,421
Insurance 2,376,894 179,428 — — — — — 2,556,322
Administrative and general 54,621,866 814,305 — — — — — 55,436,171
Community services 1,766,225 — 2,794,577 — — — — 4,560,802
Depreciation 16,218,668 — — — — — — 16,218,668
Total operating expenses 716,447,272 14,763,035 2,794,577 — — — — 734,004,884
Operating (loss) income (40,525,787) 1,818,679 645,451 — — — — (38,061,657)
Nonoperating revenues (expenses):
Interest expense (3,321,403) — — — — — — (3,321,403)
Investment income 3,017,140 — 295,439 — — 381,158 — 3,693,737
Appropriations from Shelby County 36,989,681 — — — — — — 36,989,681
Other 218,234 — — — — — — 218,234
Total nonoperating revenues, net 36,903,652 — 295,439 — — 381,158 — 37,580,249
(Decrease) increase in net position (3,622,135) 1,818,679 940,890 — — 381,158 — (481,408)
Net position, beginning of year 138,035,481 3,572,866 6,051,539 — 3,497,896 19,270,713 — 170,428,495
Net position, end of year $ 134,413,346 5,391,545 6,992,429 — 3,497,896 19,651,871 — 169,947,087
See accompanying independent auditors’ report.
46
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Combining Schedule – Statement of Revenues, Expenses, and Changes in Net Position
Year ended June 30, 2022
Shelby County Regional Med Regional One Shelby County Regional One ROH
Health Care Extended Care Health Health Care Properties, Investment
Corporation Hospital LLC Foundation Properties, Inc. Inc. Company, Inc. Eliminations Combined
Operating revenues:
Net patient service revenue, net of contractual adjustments $ 547,438,600 15,018,448 — — — — — 562,457,048
Provision for uncollectible accounts (92,781,972) (1,349,347) — — — — — (94,131,319)
Net patient service revenue 454,656,628 13,669,101 — — — — — 468,325,729
Other revenue 130,866,618 — 4,086,456 — — — — 134,953,074
Total operating revenues 585,523,246 13,669,101 4,086,456 — — — — 603,278,803
Operating expenses:
Salaries and benefits 238,729,407 10,679,886 — — — — — 249,409,293
Supplies 186,836,810 1,796,289 — — — — — 188,633,099
Physician and professional fees 87,943,254 18,000 — — — — — 87,961,254
Purchased medical services 37,835,727 1,371,417 — — — — — 39,207,144
Plant operations 29,147,255 1,252,118 — — — — — 30,399,373
Insurance 1,699,952 131,376 — — — — — 1,831,328
Administrative and general 52,094,200 676,499 — — — — — 52,770,699
Community services 20,189,211 — 4,038,079 — — — (19,057,900) 5,169,390
Depreciation 13,585,370 — — 981,965 — — — 14,567,335
Total operating expenses 668,061,186 15,925,585 4,038,079 981,965 — — (19,057,900) 669,948,915
Operating (loss) income (82,537,940) (2,256,484) 48,377 (981,965) — — 19,057,900 (66,670,112)
Nonoperating revenues (expenses):
Interest expense (2,852,766) — — — — — — (2,852,766)
Investment (loss) (4,429,123) — (332,920) — — 212,813 — (4,549,230)
Appropriations from Shelby County 41,008,000 — — — — — — 41,008,000
CARES Act grant revenue 2,706,408 118,742 — — — — — 2,825,150
Other 8,467,406 — — — — 19,057,900 (19,057,900) 8,467,406
Transfers in (out) (7,845,216) — — 7,845,216 — — — —
Total nonoperating revenues (expenses), net 37,054,709 118,742 (332,920) 7,845,216 — 19,270,713 (19,057,900) 44,898,560
(Decrease) increase in net position (45,483,231) (2,137,742) (284,543) 6,863,251 — 19,270,713 — (21,771,552)
Net position, beginning of year 183,518,712 5,710,608 6,336,082 (6,863,251) 3,497,896 — — 192,200,047
Net position, end of year $ 138,035,481 3,572,866 6,051,539 — 3,497,896 19,270,713 — 170,428,495
See accompanying independent auditors’ report.
47
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Combining Schedule – Statement of Cash Flows
Year ended June 30, 2023
Shelby County Regional Med Regional One Shelby County Regional One ROH
Health Care Extended Care Health Health Care Properties, Investment
Corporation Hospital LLC Foundation Properties, Inc. Inc. Company, Inc. Combined
Cash flows from operating activities:
Receipts from and on behalf of patients and third-party payors $ 495,493,984 16,988,305 — — — — 512,482,289
Other cash receipts 157,761,505 171,131 2,664,017 — — — 160,596,653
Payments to suppliers (389,945,562) (3,722,237) (2,969,726) — — — (396,637,525)
Payments to employees and related benefits (286,807,733) (9,384,761) — — — — (296,192,494)
Net cash (used in) provided by operating activities (23,497,806) 4,052,438 (305,709) — — — (19,751,077)
Cash flows from noncapital financing activity:
Appropriations received from Shelby County 36,989,681 — — — — — 36,989,681
Other (3,715,579) — — — — — (3,715,579)
Net cash provided by noncapital financing activity 33,274,102 — — — — — 33,274,102
Cash flows from investing activities:
Purchases of investments (35,123,043) — (1,129,455) — — — (36,252,498)
Proceeds from sale of investments 24,999,998 — 1,251,901 — — — 26,251,899
Proceeds from sale of joint venture 214,154 — — — — — 214,154
Investment income proceeds 222,581 — 122,058 — — 381,158 725,797
Net cash (used in) provided by investing activities (9,686,310) — 244,504 — — 381,158 (9,060,648)
Cash flows from capital and related financing activities:
Capital expenditures (14,958,129) (32,522) — — — — (14,990,651)
Payments for operating leases (3,947,471) — — — — — (3,947,471)
Payments for SBITA (7,693,592) — — — — — (7,693,592)
Interest payments (3,404,417) — — — — — (3,404,417)
Proceeds from long-term debt 3,856,372 — — — — — 3,856,372
Payments made on long term debt (4,848,608) — — — — — (4,848,608)
Net cash used in capital and related financing activities (30,995,845) (32,522) — — — — (31,028,367)
Net (decrease) increase in cash and cash equivalents (30,905,859) 4,019,916 (61,205) — — 381,158 (26,565,990)
Cash and cash equivalents, beginning of year 57,084,998 2,302,793 556,665 — — 212,813 60,157,269
Cash and cash equivalents, end of year $ 26,179,139 6,322,709 495,460 — — 593,971 33,591,279
See accompanying independent auditors’ report.
48
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Combining Schedule – Statement of Cash Flows
Year ended June 30, 2022
Shelby County Regional Med Regional One Shelby County Regional One ROH
Health Care Extended Care Health Health Care Properties, Investment
Corporation Hospital LLC Foundation Properties, Inc. Inc. Company, Inc. Combined
Cash flows from operating activities:
Receipts from and on behalf of patients and third-party payors $ 438,373,410 13,577,752 — — — — 451,951,162
Other cash receipts 92,112,387 — 4,159,319 — — 19,057,900 115,329,606
Payments to suppliers (347,678,946) (5,621,133) (3,580,225) — — — (356,880,304)
Payments to employees and related benefits (271,272,276) (10,679,885) — — — — (281,952,161)
Net cash (used in) provided by operating activities (88,465,425) (2,723,266) 579,094 — — 19,057,900 (71,551,697)
Cash flows from noncapital financing activity:
Appropriations received from Shelby County 41,008,000 — — — — — 41,008,000
CARES Act proceeds 2,825,150 — — — — — 2,825,150
Other 3,205,264 — — — — — 3,205,264
Net cash provided by noncapital financing activity 47,038,414 — — — — — 47,038,414
Cash flows from investing activities:
Purchases of investments (77,004,358) — (2,596,217) — — — (79,600,575)
Proceeds from sale of investments 136,693,644 — 2,023,108 — — — 138,716,752
Proceeds from sale of joint venture 15,666,667 — — — — — 15,666,667
Note receivable from third party — — — — — (19,057,900) (19,057,900)
Investment income proceeds 1,982,495 — 73,284 — — 212,813 2,268,592
Net cash provided by (used in) by investing activities 77,338,448 — (499,825) — — (18,845,087) 57,993,536
Cash flows from capital and related financing activities:
Capital expenditures (28,349,520) — — — — — (28,349,520)
Lease assets 736,905 — — — — — 736,905
— — — — — — —
Interest payments (1,938,582) — — — — — (1,938,582)
Proceeds from notes payable – Term Loan 19,500,000 — — — — — 19,500,000
Proceeds from notes payable – NMTC Notes A & B 25,807,500 — — — — — 25,807,500
Payments on long-term debt (2,612,202) — — — — — (2,612,202)
Net cash used in capital and related financing activities 13,144,101 — — — — — 13,144,101
Net increase (decrease) in cash and cash equivalents 49,055,538 (2,723,266) 79,269 — — 212,813 46,624,354
Cash and cash equivalents, beginning of year 8,029,460 5,026,059 477,396 — — — 13,532,915
Cash and cash equivalents, end of year $ 57,084,998 2,302,793 556,665 — — 212,813 60,157,269
See accompanying independent auditors’ report.
49
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Schedule of Changes in Total OPEB Liability and Related Ratios
Years ended June 30, 2023 and 2022
(Dollar amounts in thousands)
2023 and 2022* 2021 2020 2019 2018
Total OPEB liability:
Service cost $ 39,158 40,110 35,113 37,855 22,276
Interest 149,206 181,970 336,539 347,427 448,510
Differences between expected and actual experience (473,783) (1,528,829) (1,732,045) (1,772,789) (2,093,380)
Changes of assumptions or other inputs (1,239,865) 252,887 391,503 689,449 (881,752)
Benefit payments (263,838) (280,809) (541,176) (848,915) (1,259,142)
Net change in total OPEB liability (1,789,122) (1,334,671) (1,510,066) (1,546,973) (3,763,488)
Total OPEB liability – beginning 7,038,912 8,373,583 9,883,649 11,430,622 15,194,110
Total OPEB liability – ending $ 5,249,790 7,038,912 8,373,583 9,883,649 11,430,622
Covered-employee payroll $ 8,335,517 8,335,517 8,683,141 10,230,681 9,487,044
Total OPEB liability as a percentage of covered-employee payroll 63.0 % 84.4% 96.4% 96.6% 120.5%
* Regional One Health Did not obtain an actuarial valuation of the postemployment benefit plan, as allowed by GASB statement no. 96, for the year ended
June 30, 2023, so the results reported above are related to the June 30, 2022 valuation.
See accompanying independent auditors’ report.
50
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Schedule of Changes in Long-Term Debt by Individual Issue
June 30, 2023
Paid and/or
Original matured Refunded
amount Date of Last maturity Outstanding Issued during during during Outstanding Due within
Description of indebtedness of issue Interest rate issue date June 30, 2022 period period period June 30, 2023 one year
Notes payable:
Note payable to Truist Bank $ 3.14 % 12/3/2021 3/1/2029 $ 19,500,000 — — — 19,500,000 1,950,000
Note payable to CHHS subsidiary CDE 52, LLC 1.99 12/10/2021 12/31/2051 11,433,500 — — — 11,433,500 —
Note payable to CHHS subsidiary CDE 52, LLC 1.99 12/10/2021 12/31/2051 4,329,000 — — — 4,329,000 —
Note payable to Pathway Lending CDE 1, LLC 1.99 12/10/2021 12/31/2051 3,956,400 — — — 3,956,400 —
Note payable to Pathway Lending CDE 1, LLC 1.99 12/10/2021 12/31/2051 1,188,600 — — — 1,188,600 —
Note payable to UACD Sub CDE 57, LLC 1.99 12/10/2021 12/31/2051 3,668,000 — — — 3,668,000 —
Note payable to UACD Sub CDE 57, LLC 1.99 12/10/2021 12/31/2051 1,232,000 — — — 1,232,000 —
$ 45,307,500 — — — 45,307,500 1,950,000
Other loans payable:
Loan payable for product financing to Cerner Corporation $ — % 1/27/2017 7/1/2023 $ 3,856,496 — (1,928,248) — 1,928,248 1,928,248
Loan payable for product financing to Baxter Healthcare Corporation — 9/1/2020 8/31/2025 1,103,290 — (303,854) — 799,436 386,724
Loan payable for product financing to Baxter Healthcare Corporation — 9/10/2020 8/31/2025 140,902 — (44,496) — 96,406 44,496
Loan payable for product financing to Insightec — 12/31/2019 N/A 607,500 — (148,000) — 459,500 168,000
Loan payable for product financing to Morrison Healthcare — 11/1/2020 6/1/2030 752,262 — (116,673) — 635,589 90,798
Loan payable for product financing to Morrison Healthcare — 11/1/2020 6/1/2030 510,379 — (63,797) — 446,582 63,797
Loan payable for product financing to Masimo Americas 5.34 7/1/2021 6/1/2026 — 945,158 (350,764) — 594,394 187,673
Loan payable for product financing to Cerner Corporation 5.45 10/1/2022 4/1/2025 — 2,598,578 (1,892,778) — 705,800 33,015
Loan payable for product financing to Johnson & Johnson 5.42 6/1/2023 6/1/2026 — 82,940 — — 82,940 26,166
Loan payable for product financing to Edwards Life Sciences 5.42 2/12/2023 1/30/2025 — 229,696 — — 229,696 135,310
$ 6,970,829 3,856,372 (4,848,610) — 5,978,591 3,064,227
See accompanying independent auditors’ report.
51
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Schedule of Changes in Lease Obligations
June 30, 2023
Paid and/or
Original matured Refunded
amount Date of Maturity Outstanding Issued during during during Outstanding
Description of indebtedness of issue Interest rate issue date July 1, 2022 period period period June 30, 2023
Lease obligations payable:
Cantor Commercial - Building Lease $ 11,597,797 5.34 % 7/1/2020 3/31/2031 $ 10,377,235 — 856,591 — 9,520,644
Cantor Commercial - Building Lease 3,905,555 5.34 % 7/1/2020 3/31/2031 3,418,891 — 266,051 — 3,152,840
Dell Financial Services - Equipment Lease 1,725,240 5.35 % 7/1/2020 4/11/2023 493,777 — 493,777 — —
Masimo Americas - Equipment Lease 2,885,795 5.34 % 7/1/2020 6/23/2026 1,989,414 — 1,989,414 — —
West Clinic - Building Lease 1,642,027 5.34 % 3/1/2021 2/28/2026 1,258,753 — 349,061 — 909,692
Various Building Leases 1,247,616 Various Various Various 1,453,229 — 567,643 — 885,586
Various Equipment Leases 4,637,290 Various Various Various 2,544,589 309,440 1,304,474 — 1,549,555
Various Other Leases 351,221 Various Various Various 149,847 84,460 88,570 — 145,737
Cantor Commercial - Building Lease 1,354,293 2.50 % 7/1/2021 3/31/2031 1,350,516 — — — 1,350,516
Dell Financial Services - Equipment Lease 1,092,406 5.53 % 9/1/2022 7/31/2027 — 1,092,406 148,352 — 944,054
Dell Financial Services - Equipment Lease 559,267 5.42 % 9/1/2022 8/31/2027 — 559,267 85,236 — 474,031
Stryker Instruments - Equipment Lease 1,066,627 5.42 % 11/30/2022 11/29/2026 — 1,066,627 92,382 — 974,245
$ 23,036,251 3,112,200 6,241,551 — 19,906,900
See accompanying independent auditors’ report.
52
SHELBY COUNTY HEALTH CARE CORPORATION
(A Component Unit of Shelby County, Tennessee)
Roster of Management Officials and Board Members
June 30, 2023
(Unaudited)
53
Management Officials
Reginald Coopwood, M.D., President and CEO
Susan Cooper, RN, MSN, FAAN, Senior Vice President/Chief Integration Officer
Linda Hughlett, RNC, DNP, CNM, Senior Vice President and Chief Nursing Officer
William Kim, Senior Vice President/CIO
Nicole Washington, Senior Vice President/CHRO
Tammie Ritchey, CFRE, Senior Vice President and Chief Development Officer
Tish Towns, FACHE, Executive Vice President/Chief Administrative Officer
James Proctor, MBA, Senior Vice President/CFO
Imad Abdullah, ESQ, Senior Vice President/Chief Legal Counsel
Martin Croce, Senior Vice President/Chief Medical Officer
Manoucheka Thermitus, MBA, Chief Operating Officer
Renee Trammell, Senior Vice President Business Growth
Board Members
David Popwell
Kevin Bradshaw
Charlie Caswell
Carl Carter
Ronald Coleman
Reginald Milton
Timothy Fabian, M.D.
Ephie Johnson
Julia Kavanagh
Scot Lenoir
Joshua Lipman
Paul Morris
Claudette Jones Shephard, M.D.
Commissioner Van Turner
See accompanying independent auditors’ report.