Hospital Balance Sheet

Management’s Discussion and Analysis and Basic Financial Statements
Hospital Service District No. 1 of the Parish of Tangipahoa,

State of Louisiana (d/b/a North Oaks Medical Center)
Years ended June 30, 2003 and 2002 with Report of Independent Auditors
Management’s Discussion and Analysis and

Basic Financial Statements
Years ended June 30, 2003 and 2002
Contents
Management’s Discussion and Analysis ............................................................................. i
Report of Independent Auditors ..........................................................................................1
Basic Financial Statements
Balance Sheets .....................................................................................................................3

Statements of Revenue, Expenses, and Changes in Net Assets...........................................5
Statements of Cash Flows....................................................................................................6
Notes to Basic Financial Statements....................................................................................8
Management’s Discussion and Analysis
This section of the Hospital’s annual financial report presents background information
and management’s analysis of the Hospital’s financial performance during the fiscal year
that ended on June 30, 2003. Please read it in conjunction with the financial statements in
this report.
Financial Highlights
• The Hospital’s total assets decreased by approximately $3,836,000, or

approximately 2.1%, primarily the net effect of the use of the Hospital’s resources
to satisfy current obligations. Cash generated by operating activities plus cash
provided by investing activities was used to increase capital assets and reduce
total liabilities.
• During the year, the Hospital’s total operating revenues increased approximately
$11,853,000, or 9%, to $137,608,000 from the prior year while expenses
increased $11,696,000, or 10%, to $133,677,000. The Hospital had income from
operations of $3,931,000, which is approximately 3% of total operating revenue.
This compares to the prior fiscal year’s income from operations of approximately
$3,774,000 or 3% of operating revenue.
• The Hospital received approximately $1,977,000 and $384,600 in 2003 and 2002,
respectively, in intergovernmental transfer funds that were offset against
Medicaid contractual adjustments resulting in an increase in net patient service
revenue.
• During the fiscal year, the Hospital made capital investments for a total of
approximately $11,027,000. The following is a list of significant items:
2003
Capital Investments Cost
Upgrade computer infrastructure $ 690,508

Fourth floor projects (including construction costs,
purchase of beds and equipment, architectural fees,
and other costs) 3,660,274
Anesthesia machines and monitors 444,100
PACS System 1,749,927
Chemistry Analyzer 377,275
Outpatient Diagnostic Center 1,445,516
i
Management’s Discussion and Analysis (continued)
The source of the funding for these projects was derived from operations and assets
whose use is limited by bond indenture.
Required Financial Statements
The basic financial statements of the Hospital report information about the Hospital using
Governmental Accounting Standards Board (GASB) accounting principles. These
statements offer short-term and long-term financial information about its activities. The
balance sheets include all of the Hospital’s assets and liabilities and provide information
about the nature and amounts of investments in resources (assets) and the obligations to
Hospital creditors (liabilities). It also provides the basis for computing rate of return,
evaluating the capital structure of the Hospital, and assessing the liquidity and financial
flexibility of the Hospital. All of the current year’s revenues and expenses are accounted
for in the statements of revenue, expenses, and changes in net assets. This statement
measures improvements in the Hospital’s operations over the past years and can be used
to determine whether the Hospital has been able to recover all of its costs through its
patient service revenue and other revenue sources. The final required financial statement
is the statement of cash flows. The primary purpose of this statement is to provide
information about the Hospital’s cash from operations, investing, and financing activities,
and to provide answers to questions such as where did cash come from, what was cash
used for, and what was the change in cash balance during the reporting period.
Financial Analysis of the Hospital
The balance sheets and the statements of revenue, expenses, and changes in net assets
report information about the Hospital’s activities. These two statements report the net
assets of the Hospital and changes in them. Increases or decreases in the Hospital’s net
assets are one indicator of whether its financial health is improving or deteriorating.
However, other nonfinancial factors, such as changes in the health care industry, changes
in Medicare and Medicaid regulations, and changes in managed care contracting, should
also be considered.
ii
Net Assets
A summary of the Hospital’s balance sheets are presented in Table 1 below:
TABLE 1
Condensed Balance Sheets
June 30 Dollar Percent

2003 2002 Change Change
Total current assets $ 39,048,567 $ 41,067,849 $ (2,019,282) (5)%

Capital assets – net 81,701,787 80,007,616 1,694,171 2
Other assets, including board-
designated investments 61,074,528 64,585,045 (3,510,517) (5)
Total assets $ 181,824,882 $ 185,660,510 $ (3,835,628) (2)
Current liabilities $ 19,239,732 $ 27,893,004 $ (8,653,272) (31)

Long-term debt outstanding and
other long-term liabilities 55,744,901 56,664,722 (919,821) (2)
Total liabilities 74,984,633 84,557,726 (9,573,093) (11)
Net assets:
Invested in capital assets, net
of related debt 27,229,911 24,185,956 3,043,955 13
Restricted net assets 6,741,359 6,745,520 (4,161) (–)
Unrestricted net assets 72,868,979 70,171,308 2,697,671 (4)
Total liabilities and net assets $ 181,824,882 $ 185,660,510 $ (3,835,628) (2)
As can be seen in Table 1, total assets decreased by approximately $3,836,000 to

$181,825,000 in fiscal year 2003, from approximately $185,661,000 in fiscal year 2002.
The change in total net assets results due to a reduction of total liabilities and the use of
operating cash to fund capital expenditures.
iii
Summary of Revenue, Expenses, and Changes in Net Assets
The following table presents a summary of the Hospital’s historical revenues and
expenses for each of the fiscal years ended June 30, 2003 and 2002.
TABLE 2
Condensed Statements of Revenue, Expenses, and
Changes in Net Assets
Year ended June 30 Dollar Percent

Revenue:
Net patient service revenue $ 135,174,144 $ 123,449,207 $ 11,724,937 9%
Other 2,433,455 2,305,890 127,565 6
Total operating revenue 137,607,599 125,755,097 11,852,502 9
Expenses:
Salaries and employee benefits 83,355,005 75,559,824 7,795,181 10
Supplies, contract services,
equipment, and fees 30,197,246 26,699,873 3,497,373 13
Other operating expenses 7,308,230 6,688,988 619,242 9
Depreciation 9,240,647 9,335,282 (94,635) (1)
Interest 3,575,952 3,697,009 (121,057) (3)
Total operating expenses 133,677,080 121,980,976 11,696,104 10
Operating income 3,930,519 3,774,121 156,398 4

Investment income 1,806,577 3,336,055 (1,529,478) (46)
Excess of revenue and investment
income over expenses 5,737,096 7,110,176 (1,373,080) (19)
Increase in restricted net assets 369 627 (258) (41)
Net assets – beginning of year 101,102,784 93,991,981 7,110,803 8
Net assets – end of year $ 106,840,249 $ 101,102,784 $ 5,737,465 6
iv
Sources of Revenue
Operating Revenue
During fiscal year 2003, the Hospital derived the majority, or approximately 98%, of its
total revenue from patient service revenue. Patient service revenue includes revenue from
the Medicare and Medicaid programs and patients, or their third-party payors.
Reimbursement for the Medicare and Medicaid programs and the third-party payors is
based upon established contracts. The difference between the covered charges and the
established contract is recognized as a contractual allowance. Other revenue includes
cafeteria sales, gift shop sales, rental income, and other miscellaneous services.
Table 3 presents the relative percentages of gross charges billed for patient services by
payor for the fiscal years ended June 30, 2003 and 2002.
TABLE 3
Payor Mix by Percentage
Year ended June 30

2003 2002
Managed care 20% 20%
Medicare 47 47
Medicare HMO 1 1
Medicaid 22 19
Commercial insurance 6 7
Self-pay and other 4 6
Total patient revenues 100% 100%
v
Other Revenue
Other revenue includes cafeteria sales, rental income, and other miscellaneous services.
TABLE 4
Other Revenue
Year ended June 30

2003 2002
Cafeteria $ 917,522 $ 829,494

Day care 505,591 489,190
Gift shop 334,003 334,917
Rental income 459,425 459,488
X-ray school income 135,025 122,310
Miscellaneous 81,889 70,491
$ 2,433,455 $ 2,305,890
Investment Income
The Hospital holds designated and restricted funds that are invested primarily in money
market funds and securities issued by the U.S. Treasury and other federal agencies. These
investments earned $1,806,600 during fiscal year 2003.
Operating and Financial Performance
The following summarizes the Hospital’s statements of revenue, expenses, and changes
in net assets between 2003 and 2002:
Overall activity at the Hospital, as measured by patient discharges, improved 3.81% to

13,935 discharges in 2003 from 13,423 discharges in 2002. Patient days increased 3.4%
over prior year from 72,461 in 2002 to 74,926 in 2003. As a result, the average length of
stay for all patients (excluding newborns) decreased to 5.67 days in 2003 from 5.75 days
in 2002.
vi
TABLE 5
Patient and Hospital Statistical Data
Year ended June 30

2003 2002
Admissions:
Adult and pediatric 11,420 10,778
Newborn and NICU 1,367 1,491
Extended care unit 325 402
Psychiatric care 286 287
CMR services 587 528
Patient days:
Adult and pediatric 54,942 50,255
Medicare (included in adult and pediatric) 30,171 27,038
Medicaid (included in adult and pediatric) 11,611 10,044
Newborn and NICU 5,871 6,000
Extended care unit 4,269 5,197
Psychiatric care 4,032 3,799
CMR services 5,812 7,210
Operating room patients 8,487 8,310
Outpatient registrations 68,320 67,012
Emergency room visits 70,170 65,616
Average daily census:
Adult and pediatric 151 138
Extended care unit 12 14
Psychiatric care 11 10
CMR services 16 20
Average length of stay (excluding newborn):
All patients 5.67 5.75
Medicare patients 6.20 6.00
Medicaid patients 3.80 3.70
Extended care unit 12.70 12.80
Psychiatric care 14.10 13.30
CMR services 10.00 13.50
Percentage of total patient days:
Medicare 58.99% 59.92%
Medicaid 19.99% 18.47%
Home health visits 9,909 12,011
Family medicine clinic 18,952 17,248
Full-time equivalents (FTEs) 1,689 1,606
vii
Increases in net patient service revenue primarily were due to volume increases as
depicted on the proceeding page, Table 5, Patient and Hospital Statistical Data. While
gross patient revenue increased $49,931,000, or 17.5%, from prior year due to increased
volume and rate increases, net patient service revenue only increased $11,725,000 due to
increases in contractual allowances.
Allowances increased over prior year as described in the table below:
TABLE 6
Allowance Summary
Year ended June 30

2003 2002
Allowances:
Provision for bad debts $ 13,283,408 $ 12,242,968
Other adjustments 5,275,725 3,002,245
Blue Cross, Louisiana State Employees Group
benefits, and other contractual allowances 31,450,475 27,484,814
Medicaid contractual allowances 47,802,590 39,259,470
Medicare contractual allowances 102,787,697 80,404,373
$ 200,599,895 $ 162,393,870
As a result of increase in revenues, days in accounts receivable increased from 57.7 days
to 63.6 days. Excluded from net patient service revenue are charges forgone for patient
services falling under the Hospital’s charity care policy. Based on established rates, gross
charges of $4,106,900 were forgone during 2003, compared to $1,405,300 in 2002, or a
192% increase from the prior fiscal year. During 2002, the Hospital adopted a new
charity care policy whereby only patients meeting specific criteria were classified as
charity care.
Salary expenses increased $7,111,600, or 11.24%, to $70,376,500 in 2003 from

$63,264,900 in 2002. As a percentage of net patient service revenue, salary expense was
approximately 47.41% and 46.62% for the fiscal years ended June 30, 2003 and 2002,
respectively.
Employee benefit expense increased $683,500, or 5.56%, from prior year. Employee
benefit expense represented 18.44% and 19.43% of salary expenses in the current and
prior fiscal years, respectively.
viii
Supplies expense increased $2,468,300, or 14.05%, from prior year. As a percentage of

net patient service revenue, supplies expense increased to approximately 13.49% from
12.95% for the fiscal years ended June 30, 2003 and 2002, respectively. This increase
was primarily due to cost increases of medical supplies.
Contract services, equipment, and fees increased $1,029,100, or 11.27%, from prior year.
This increase was primarily a result of the costs associated with the termination of the
Hospital’s management contract.
Other operating expenses increased approximately $618,900 from prior year, which
represents 5% of operating revenue, consistent with the prior year percentage.
Depreciation and interest expense remained relatively flat compared to the prior year.
Total operating expenses increased by $11,695,700 for the year ended June 30, 2003 for
the reasons discussed above.
Investment income consists of interest earnings on funds designated by the board of

commissioners and funds held by trustee under bond resolution. The net unrealized gain
on market adjustments is also included in this amount. Investment income decreased
from the prior year due to use of funds for capital expenditures.
Capital Assets
During fiscal year 2002, the Hospital invested $11,027,000 in a broad range of capital
assets included in Table 7 below.
TABLE 7
Capital Assets
June 30 Dollar Percent

Land $ 4,119,404 $ 4,119,404 $ – –%

Building and equipment 161,930,059 148,695,358 13,234,701 9
Subtotal 166,049,463 152,814,762 13,234,701 9
Less accumulated
depreciation 86,749,918 78,917,436 7,832,482 10
Construction in progress 2,402,242 6,110,290 (3,708,048) (61)
Net property, plant, and
equipment $ 81,701,787 $ 80,007,616 $ 1,694,171 2
ix
Net property, plant, and equipment has increased as the Hospital has enhanced existing
facilities, equipment, and is in the process of building new space to accommodate
inpatient services.
In Table 8, the Hospital’s fiscal year 2004 capital budget projects spending up to
$17,780,800 for capital projects. These projects will be financed from operations. More
information about the Hospital’s capital assets is presented in the notes to the basic
financial statements.
TABLE 8
Fiscal Year 2004 Capital Budget
Equipment purchases $ 5,293,100

Hospital renovations 648,500
Outpatient diagnostic center 8,842,300
Aquatic center 800,000
Prior year approved items 2,196,900
Total $ 17,780,800
Long-Term Debt (Excluding Capital Leases)
At year end, the Hospital had $54,860,000 in short-term and long-term debt. The debt
amount is shown net in the balance sheet of the unamortized bond discount of $590,000.
Total debt has decreased by $1,310,000 in fiscal year 2003, which was the amount of
principal payments on outstanding debt for the fiscal year. More detailed information
about the Hospital’s long-term liabilities is presented in the notes to basic financial
statements. No new long-term debt was incurred in the current year. Total debt
outstanding represents approximately 30.27% of the Hospital’s total assets at June 30,
2003.
The Hospital issued bonds subsequent to June 30, 2003. In July, $70,000,000 of Hospital
Revenue and Refunding bonds were sold, and in August, an additional $20,000,000 of
bonds were sold. The net proceeds of these sales will be used to fund additions,
renovations, and improvements to the Hospital’s facilities. Additionally, approximately
$47,500,000 of the Series 1994 bonds were advance refunded.
Contacting the Hospital’s Financial Manager
This financial report is designed to provide our citizens, customers, and creditors with a
general overview of the Hospital’s finances and to demonstrate the Hospital’s
accountability for the money it receives. If you have questions about this report or need
additional financial information, contact Hospital administration.
x
!@# r Ernst & Young LLP
3900 One Shell Square
r Phone: (504) 581-4200
Fax: (504) 596-4233
701 Poydras Street www.ey.com
New Orleans
Louisiana 70139-9869
Report of Independent Auditors
The Board of Commissioners

Hospital Service District No. 1 of the
Parish of Tangipahoa, State of Louisiana
(d/b/a North Oaks Medical Center)
We have audited the accompanying balance sheets of Hospital Service District No. 1 of
the Parish of Tangipahoa, State of Louisiana as of June 30, 2003 and 2002, and the
related statements of revenue, expenses, and changes in net assets, and cash flows for the
years then ended. These financial statements are the responsibility of the Hospital’s
management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the
United States and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of the Hospital at June 30, 2003 and 2002, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States.
Management’s discussion and analysis on pages i through xi is not a required part of the
basic financial statements but is supplementary information required by the
Governmental Accounting Standards Board. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of
measurement and presentation of the supplementary information. However, we did not
audit the information and express no opinion on it.
A Member Practice of Ernst & Young Global 1

In accordance with Government Auditing Standards, we have also issued our report as of
and for the period ended June 30, 2003 on our consideration of the Hospital’s internal
control over financial reporting and our tests of its compliance with certain provisions of
laws, regulations, contracts, and grants. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.
September 26, 2003
2
Balance Sheets
June 30
2003 2002
Assets
Current assets:
Cash and cash equivalents $ 3,792,319 $ 5,535,489
Short-term investments 700,000 3,800,000
Patient accounts receivable, net of estimated
uncollectibles of $8,091,000 in 2003 and
$8,772,000 in 2002 28,657,844 26,462,009
Current portion of assets whose use is limited 1,978,441 1,977,804
Inventories 2,185,332 1,503,230
Prepaid expenses and other current assets 1,734,631 1,789,317
Total current assets 39,048,567 41,067,849
Assets whose use is limited:

Under bond indenture agreement held by trustee 6,722,885 6,727,415
By board for plant and equipment additions and
replacements 50,237,631 53,924,558
By board for self-insurance claims 1,492,076 1,723,054
58,452,592 62,375,027
Less current portion of assets whose use is limited 1,978,441 1,977,804
Noncurrent assets whose use is limited 56,474,151 60,397,223
Property, plant, and equipment:

Land 4,119,404 4,119,404
Buildings and equipment 161,930,060 148,695,358
Construction in progress 2,402,241 6,110,290
168,451,705 158,925,052
Less accumulated depreciation 86,749,918 78,917,436
Property, plant, and equipment, net 81,701,787 80,007,616
Unamortized debt issuance costs, net 1,405,048 1,472,758

Note receivable 446,489 467,651
Deferred compensation plan investments 2,748,840 2,247,413
Total assets $ 181,824,882 $ 185,660,510
3
June 30
2003 2002
Liabilities and net assets
Current liabilities:
Accounts payable $ 5,893,783 $ 8,697,894
Accrued salaries and payroll-related costs 5,755,111 5,189,196
Accrued interest payable 1,401,826 1,431,028
Accrued self-insurance claims 3,168,464 4,136,995
Estimated third-party payer settlements – Medicare and
Medicaid 1,544,733 7,033,540
Current portion of capital lease obligations 100,815 94,351
Current portion of long-term debt 1,375,000 1,310,000
Total current liabilities 19,239,732 27,893,004
Capital lease obligations, excluding current portion 99,033 191,722

Long-term debt, net of unamortized bond discount of
$590,000 in 2003 and $634,000 in 2002, excluding
current portion 52,897,028 54,225,587
Deferred compensation plan obligations 2,748,840 2,247,413
Total liabilities 74,984,633 84,557,726
Net assets:
Invested in capital assets, net of related debt 27,229,911 24,185,956
Restricted net assets 6,741,359 6,745,520
Unrestricted net assets 72,868,979 70,171,308
Total net assets 106,840,249 101,102,784
Total liabilities and net assets $ 181,824,882 $ 185,660,510
See accompanying notes.
4
Statements of Revenue, Expenses, and Changes in Net Assets
Year ended June 30

2003 2002
Revenue:
Net patient service revenue $ 135,174,144 $ 123,449,207
Other 2,433,455 2,305,890
Total operating revenue 137,607,599 125,755,097
Expenses:
Salaries 70,376,537 63,264,861
Employee benefits 12,978,468 12,294,963
Supplies 20,033,865 17,565,567
Contract services, equipment, and fees 10,163,381 9,134,306
Other operating expenses 7,308,230 6,688,988
Depreciation 9,240,647 9,335,282
Interest 3,575,952 3,697,009
Total operating expenses 133,677,080 121,980,976
Operating revenue in excess of operating expenses 3,930,519 3,774,121

Investment income 1,806,577 3,336,055
Excess of revenue and investment income over
expenses 5,737,096 7,110,176
Increase in restricted net assets 369 627

Net assets – beginning of year 101,102,784 93,991,981
Net assets – end of year $ 106,840,249 $ 101,102,784
5
Statements of Cash Flows
Year ended June 30

2003 2002
Operating activities
Revenue collected $ 129,922,957 $ 122,289,298
Cash payments to employees and for employee-related costs (83,355,005) (74,796,039)
Cash payments for supplies, services, and other operating
expenses (41,390,790) (30,011,868)
Cash payments for nonoperating expenses – 117,980
Net cash provided by operating activities 5,177,162 17,599,371
Capital and related financing activities

Purchases of property, plant, and equipment (11,027,328) (11,814,595)
Proceeds from disposals of assets 124,752 163,627
Principal payments on long-term debt incurred for capital
purposes (1,310,000) (1,240,000)
Principal payments on capital lease obligations (86,225) (1,080,030)
Interest payments on long-term debt and capital lease
obligations (3,450,903) (3,564,952)
Increase in restricted net assets for guild fund 369 627
Net cash used in capital and related financing activities (15,749,335) (17,535,323)
Investing activities
Investment income 1,806,568 3,336,055
Change in short-term investments 3,100,000 (2,500,000)
(Increase) decrease in assets whose use is limited:
Under bond indenture agreement 4,530 307,837
By board for plant and equipment 3,686,927 (2,234,230)
By board for self-insurance claims 230,978 (64,512)
Net cash provided by (used in) investing activities 8,829,003 (1,154,850)
Net change in cash (1,743,170) (1,090,802)

Cash and cash equivalents at beginning of year 5,535,489 6,626,291
Cash and cash equivalents at end of year $ 3,792,319 $ 5,535,489
6
Statements of Cash Flows (continued)
Year ended June 30

2003 2002
Reconciliation of income from operations to net cash provided

by operating activities
Operating revenue in excess of operating expenses $ 3,930,519 $ 3,774,121
Adjustments to reconcile operating revenue in excess of operating
expenses to net cash provided by operating activities:
Depreciation 9,240,647 9,335,282
Net (gain) loss on disposals of assets (32,242) 97,952
Interest expense on long-term debt and capital lease
obligations 3,575,952 3,697,009
Changes in operating assets and liabilities:
Patient accounts receivable (2,195,835) (4,000,167)
Inventories, prepaid expenses, and other current assets (646,354) (442,461)
Estimated third-party payer settlements (5,488,807) 514,657
Accounts payable, accrued salaries, and payroll-related costs,
and other accrued expenses (3,206,718) 4,622,978
Net cash provided by operating activities $ 5,177,162 $ 17,599,371
7
Notes to Basic Financial Statements
June 30, 2003
1. Organization and Significant Accounting Policies
Organization
Hospital Service District No. 1 of the Parish of Tangipahoa, State of Louisiana (the
Hospital or the District) is a nonprofit public corporation organized under powers granted
to parish police juries or councils by Chapter 10, Title 46 of the Louisiana Revised
Statutes of 1950, as amended. The District is a political subdivision of the State of
Louisiana. All corporate powers are vested in the board of commissioners appointed by
the Tangipahoa Parish Council. The District owns and operates North Oaks Medical
Center, a 263-bed acute-care hospital, and North Oaks Rehabilitation Hospital, a 45-bed
hospital which provides rehabilitation and skilled nursing services. The Hospitals are
located on two campuses in the city of Hammond, Louisiana. As a political subdivision
of the State of Louisiana, the Hospital is exempt from federal income taxes under Section
115 of the Internal Revenue Code and from state income taxes.
Basis of Accounting
The Hospital reports in accordance with accounting principles generally accepted in the
United States as specified by the American Institute of Certified Public Accountants’
Audits of Providers of Health Care Services and, as a governmental entity, also provides
reports in accordance with accounting principles promulgated by the Governmental
Accounting Standards Board (GASB).
The Hospital uses the accrual basis of accounting for proprietary funds. Under GASB
Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other
Governmental Activities That Use Proprietary Fund Accounting, the Hospital has elected
not to apply Financial Accounting Standards Board pronouncements issued after Novem-
ber 30, 1989.
Net Assets
The Hospital’s net assets are classified into three components — invested in capital
assets, net of related debt; restricted; and unrestricted. These classifications are defined as
follows:
8
Notes to Basic Financial Statements (continued)
1. Organization and Significant Accounting Policies (continued)
• Invested in capital assets, net of related debt — This component of net assets
consists of capital assets, including restricted capital assets, net of accumulated
depreciation, and reduced by the outstanding balances of any bonds, mortgages,
notes, or other borrowings that are attributable to the acquisition, construction, or
improvement of those assets.
• Restricted — This component of net assets consists of constraints placed on net

asset use through external constraints imposed by creditors (such as through debt
covenants), grantors, contributors, or laws or regulations of other governments or
constraints imposed by law through constitutional provisions or enabling
legislation.
• Unrestricted — This component of net assets consists of net assets that do not
meet the definition of “restricted” or “invested in capital assets, net of related
debt.”
Cash and Cash Equivalents
Cash and cash equivalents include investments in highly liquid instruments with an
original maturity of three months or less, excluding amounts whose use is limited by
board designation or other arrangements under trust agreements.
Investments
All investments are stated at fair market value. Changes in the difference between the
cost and the fair market value of the investments are included in investment income.
Investment income is reported as nonoperating income.
Inventories
Inventories are valued at the latest invoice price which approximates market.
9
Property, Plant, and Equipment
The Hospital records all property, plant, and equipment acquisitions at cost except for
assets donated to the Hospital. Donated assets are recorded at appraised value at the date
of donation. The Hospital provides for depreciation of its plant and equipment using the
straight-line method based on the estimated useful lives of the assets as suggested by the
American Hospital Association. Equipment recorded under capital lease obligations is
included in buildings and equipment and the associated amortization of these assets is
included in depreciation expense.
Debt Issuance Costs
The Hospital defers costs incurred in connection with the issuance of the bonds and
amortizes such costs using the effective interest method over the life of the bond issue.
The amortization is included in interest expense.
Self-Insurance Claims
Accrued self-insurance claims represent the Hospital’s best estimate of incurred but
unpaid expenses for professional liability, workers’ compensation, and employee health
claims.
Statement of Revenue, Expenses, and Changes in Net Assets
For purposes of display, transactions deemed by management to be ongoing, major, or

central to the provision of health care services are included in operating revenue or
expenses. All peripheral transactions are reported as a component of nonoperating
income.
10
Net Patient Service Revenue and Related Receivables
The Hospital has entered into agreements with third-party payers, including government
programs, health insurance companies, and managed care health plans, under which the
Hospital is paid based upon established charges, the cost of providing services,
predetermined rates per diagnosis, fixed per diem rates, or discounts from established
charges.
Net patient service revenue is reported at the estimated amounts realizable from patients,
third-party payers, and others for services rendered. Settlements under reimbursement
agreements with third-party payers are estimated and recorded in the period the related
services are rendered and are adjusted in future periods as final settlements are
determined. The Hospital provides care to patients even though they are covered by
contractual payment arrangements that do not pay full charges or may lack adequate
insurance. As a result, the Hospital is exposed to certain credit risks. The Hospital
manages such risks by regularly reviewing its accounts and contracts and by providing
appropriate allowances.
Medicare and Medicaid Reimbursement
The Hospital is reimbursed under the Medicare Prospective Payment System (PPS)
which reimburses the Hospital a predetermined amount for Medicare inpatient acute
services rendered based, for the most part, on the Diagnosis Related Group (DRG)
assigned to the patient. Reimbursement is based on Resource Utilization Group (RUG)
categories for skilled nursing facilities and Tax Equity & Fiscal Responsibility Act of
1982 (TEFRA) target amounts for rehabilitation and geriatric psychiatric inpatient
services. Medicaid inpatient services are paid on a prospective per diem basis.
Medicare bad debts, and Medicaid outpatient services were reimbursed on a tentative
basis during the year, which is subject to a retroactive payment adjustment determined in
accordance with appropriate Medicare or Medicaid program regulations. Retroactive cost
settlements are accrued on an estimated basis in the period the related services are
rendered and adjusted as necessary in future periods as final settlements are determined.
11
The Hospital is reimbursed for Medicare outpatient services under the Ambulatory
Payment Classification (APC) based on fixed rates per outpatient procedure and is
reimbursed for home health services under the Prospective Payment System (PPS) based
on episodes of care adjusted by a case mix adjuster and the applicable geographic wage
index.
Use of Estimates
The preparation of financial statements requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Reclassifications
The prior year financial statements have been reclassified to conform to their current year
presentation.
2. Cash and Investments
The Hospital’s cash and investments are categorized below to give an indication of the
level of risk assumed at June 30, 2003 and 2002. Category (1) includes investments that
are insured or registered for which the securities are held by the Hospital or its agent in
the Hospital’s name. Category (2) includes uninsured or unregistered investments for
which the securities are held by the counterparty’s trust department or agent in the
Hospital’s name. Category (3) includes uninsured or unregistered investments for which
the securities are held by the counterparty or by its trust department or agent, but not in
the Hospital’s name. Category (2) investments are invested primarily in money market
funds that invest in U.S. Government securities. Balances at June 30 were as follows:
12
2. Cash and Investments (continued)
Credit Risk Category Carrying

(1) (2) (3) Amount
2003
Securities type:
Mutual funds and U.S. backed
government obligations $ – $ 9,128,299 $ – $ 9,128,299
Cash and cash equivalents,
certificates of deposit, and
accrued interest receivable 53,816,612 – – 53,816,612
$53,816,612 $ 9,128,299 $ – $62,944,911
2002
Securities type:
Mutual funds and U.S. backed
government obligations $ – $ 6,103,168 $ – $ 6,103,168
Cash and cash equivalents,
certificates of deposit, and
accrued interest receivable 65,607,348 – – 65,607,348
$65,607,348 $ 6,103,168 $ – $71,710,516
Louisiana statutes authorize the Hospital to invest in obligations of the U.S. Treasury and
other federal agencies, time deposits with state banks and national banks having their
principal offices in the State of Louisiana, guaranteed investment contracts issued by
highly rated financial institutions, and certain investments with qualifying mutual or trust
fund institutions. During the years ended June 30, 2003 and 2002, the Hospital invested
primarily in money market funds and securities issued by the U.S. Treasury and other
federal agencies. The Hospital’s investments in U.S. Government obligations are
investments held by the Hospital or its agent in the Hospital’s name.
Trustee-held investments consist primarily of funds invested through a trustee in

qualifying investments as specified in the applicable revenue bond resolution. The 1994
Bond Agreement requires the Hospital to maintain a Debt Service Reserve Fund at
specified levels, which is to be used by the trustee to fund payments of principal and
interest to the bondholders (see Note 4).
13
3. Concentration of Credit Risk
The Hospital grants credit without collateral to its patients, most of whom are local
residents and who are insured under third-party payer agreements. The mix of receivables
from patients and third-party payers at June 30, 2003 and 2002 was as follows:
2003 2002
Medicare 65 3% 2%
Medicare 19 20
Medicaid 10 7
Managed care payers 23 22
Other third-party payers 13 24
Patients 32 25
100% 100%
4. Assets Whose Use Is Limited
The terms of the Hospital’s 1994 Revenue Bonds (see Note 9) require funds to be
maintained on deposit in certain accounts with the trustee. The funds on deposit in the
accounts are required to be invested by the trustee in accordance with the terms of the
related Bond Resolution. As of June 30, 2003 and 2002, the funds were deposited as
follows:
2003 2002
Bond debt service accounts $ 1,978,441 $ 1,977,805
Reserve accounts 4,744,444 4,749,610
$ 6,722,885 $ 6,727,415
The Hospital’s board of commissioners has designated Hospital funds to be used for
future plant and equipment additions, separate and apart from the expansion program (see
Note 15), and to fund self-insurance claims. These funds, included in assets whose use is
limited, were invested in certificates of deposit, U.S. Government obligations, and money
market funds at June 30, 2003 and 2002.
14
5. Note Receivable
The Hospital entered into an agreement with the Cancer, Radiation, and Research
Foundation (the Foundation) for the purpose of constructing a facility that provides
radiation oncology treatments on an outpatient basis. Under the terms of the agreement,
the Hospital loaned funds to the Foundation to construct the facility on the Hospital
campus. The note receivable is payable over 30 years and bears an annual interest rate of
5.5%. The Hospital holds a mortgage on the facility (excluding equipment, furniture, and
fixtures) to collateralize the note receivable. In addition, the Hospital agreed to lease the
land upon which the facility is located to the Foundation for a nominal annual rental fee.
The initial lease term is for 30 years with 3 successive 10-year renewal options.
6. Property, Plant, and Equipment
The Hospital’s investment in property, plant, and equipment consisted of the following as
of June 30, 2003:
Beginning Ending
Balance Additions Retirements Transfers Balance
(In Thousands)
Land and land improvements $ 4,119 $ – $ – $ – $ 4,119

Buildings and fixed equipment 97,385 405 – 7,220 105,010
Equipment 51,310 5,314 1,499 1,795 56,920
Construction in progress 6,110 5,308 – (9,015) 2,403
158,924 11,027 1,499 – 168,452
Less accumulated depreciation 78,917 9,242 1,409 – 86,750
Property, plant, and equipment, net $ 80,007 $ 1,785 $ 90 $ – $ 81,702
15
7. Employee Retirement Plan
The Hospital has a defined contribution plan which covers all full-time employees who
elect to participate after they have met certain eligibility requirements. Under the plan,
the Hospital is required to contribute a specified percentage of eligible employees’
salaries based on years of service. Participants may contribute up to the maximum level
allowed by the Internal Revenue Code or 25% of gross salary, whichever is less. The
participants vest immediately in all participant contributions and vest 100% over a five-
year cliff vesting schedule in all Hospital contributions. The retirement benefits received
by the participants will depend upon the accumulated value of their accounts at
distribution upon termination, attaining age 59½, severe financial hardship, or death.
Retirement expense, included in employee benefit expense, was approximately

$1,161,400 in 2003 and $1,048,000 in 2002, representing the required contributions in
both years.
The Hospital also sponsors two deferred compensation plans covering substantially all
employees. These plans were established under Section 457 of the Internal Revenue
Code. The Hospital reports the plan assets and a corresponding liability in the
accompanying financial statements. Accordingly, the Hospital has recorded an asset and
a corresponding liability of $2,748,800 and $2,247,400 for the fair market value of the
plans’ combined assets as of June 30, 2003 and 2002, respectively.
8. Risk Management
The Hospital participates in the State of Louisiana Patient Compensation Fund (the
Fund). The Fund provides malpractice coverage to the Hospital for claims in excess of
$100,000 up to $500,000. According to current state law, medical malpractice liability
(exclusive of future medical care awards) is limited to $500,000 per occurrence. Hospital
management has no reason to believe that the Hospital will be prevented from continuing
its participation in the Fund.
16
8. Risk Management (continued)
The Hospital is involved in litigation arising in the ordinary course of business. Claims
alleging general and malpractice liability have been asserted against the Hospital and are
currently in various states of litigation. The Hospital has accrued $1,149,000 and
$1,512,500 as of June 30, 2003 and 2002, respectively, for the estimated loss and
litigation expenses related to general and professional liability claims for which the
Hospital is self-insured. Claims have been filed alleging damages in excess of the amount
accrued for estimated malpractice costs. It is the opinion of management that estimated
malpractice costs accrued are adequate to provide for probable losses resulting from
pending or threatened litigation. Additional claims may be asserted against the Hospital
arising from services provided to patients. The Hospital is unable to determine the
ultimate cost of the resolution of such potential claims; however, an accrual has been
made based on estimates for these claims.
The Hospital has commercial insurance which provides coverage for workers’
compensation and employee health claims in excess of certain self-insured limits. The
Hospital had accrued $2,019,000 and $2,624,500 at June 30, 2003 and 2002, respectively,
for such claims.
The following table summarizes the changes in the self-insurance liability:
Current Year
Beginning of Claims and Balance
Year Ended Fiscal Year Changes in Claim at Fiscal
June 30 Liability Estimates Payments Year End
2003 $ 4,137,000 $ 5,658,000 $ 6,627,000 $ 3,168,000

2002 $ 3,982,000 $ 7,559,000 $ 7,404,000 $ 4,137,000
17
9. Long-Term Debt
The Hospital’s long-term debt as of June 30, 2003 and 2002 consisted of bonds payable
as follows:
2003 2002
Hospital Revenue Bonds, Series 1994 $ 54,860,000 $ 56,170,000

Less unamortized bond discount 587,972 634,413
54,272,028 55,535,587
Less current portion 1,375,000 1,310,000
$ 52,897,028 $ 54,225,587
Only July 5, 1994, the District issued $61,535,000 of Hospital Revenue Bonds, Series
1994 (the Series 1994 Bonds). The Series 1994 Bonds originally consisted of
$16,190,000 of serial bonds and $45,345,000 of term bonds. The serial bonds mature
annually in amounts ranging from $1,375,000 in 2004 to $1,815,000 in 2009 and bear
interest at rates ranging from 3.80% to 5.95%. The term bonds consist of $10,855,000
due February 1, 2014 bearing interest at 6.125% and $34,490,000 due February 1, 2024
bearing interest at 6.40%. Portions of the 1994 bonds were refunded in 2003 (see
Note 15). Payments of the scheduled principal and interest on the 1994 Revenue Bonds
are insured by AMBAC Indemnity Corporation. Under the terms of the Bond Indenture,
the Hospital is required to maintain, among other provisions, a certain debt service
coverage ratio and minimum level of days cash on hand. The Hospital was in compliance
with these provisions of the Bond Indenture at June 30, 2003.
18
9. Long-Term Debt (continued)
The debt service requirements at June 30, 2003 were as follows:
Principal Interest
2004 $ 1,375,000 $ 3,364,381

2005 1,455,000 3,289,444
2006 1,535,000 3,208,691
2007 1,620,000 3,121,964
2008 – 2012 9,655,000 14,058,630
2013 – 2017 12,985,000 10,721,983
2018 – 2022 17,570,000 6,131,626
2023 – 2024 8,665,000 820,625
Total $ 54,860,000 $ 44,717,344
The market value of the outstanding bonds was approximately $57,953,900 at June 30,
2003.
10. Capital Lease Obligations
The Hospital has entered into capital lease obligations for certain equipment. Future
minimum lease payments, by year, under the capital lease obligation consisted of the
following at June 30, 2003:
2004 $ 111,998
2005 93,329
Total minimum lease payments 205,327
Less amount representing imputed interest 5,479
Present value of net minimum lease payments (including
$100,815 classified as current) $ 199,848
The cost of leased assets included in capital assets totaled $480,500 and related
accumulated amortization was $254,500. The related equipment collateralizes the capital
lease obligations.
19
10. Capital Lease Obligations (continued)
The Hospital has entered into various cancelable operating leases for equipment.
Operating lease expense was approximately $527,100 and $360,200 for the years ended
June 30, 2003 and 2002, respectively.
11. Health Insurance Program Reimbursement
The Hospital participates in the Medicare and Medicaid programs as a provider of

medical services to program beneficiaries. During the years ended June 30, 2003 and
2002, approximately 70% and 67%, respectively, of the Hospital’s gross patient revenue
was derived from Medicare and Medicaid program beneficiaries.
Medicare and Medicaid settlements have been determined following the principles of
reimbursement applicable to each program and have been recorded in the accounts of the
Hospital. Estimated settlements for the years through June 30, 1999 for Medicare and
June 30, 1997 for Medicaid have been audited or reviewed by program representatives.
No significant differences are anticipated between the estimated settlements recorded and
the final settlements expected to be determined by program representatives.
During the years ended June 30, 2003 and 2002, the Hospital recorded $2,659,200 and
$2,700,000, respectively, as increases to net patient service revenue as a result of final
settlements of prior year cost reports.
12. Charity Care
The Hospital provides care to patients who meet certain criteria under its charity care
policy without charge or at amounts less than its established rates. Because the Hospital
does not pursue collection of amounts determined to qualify as charity care, such
amounts are not recorded as revenue. The Hospital maintains records to identify and
monitor the level of charity care it provides. These records reflect the amount of charges
foregone, ($4,106,900 in 2003 and $1,405,300 in 2002), for services and supplies
furnished under its charity care policy.
20
13. Governmental Regulations
The health care industry is subject to numerous laws and regulations of federal, state, and
local governments. These laws and regulations include, but are not necessarily limited to,
matters such as licensure, accreditation, government health care program participation
requirements, reimbursement for patient services, and Medicare and Medicaid fraud and
abuse. Government activity has increased with respect to investigations and allegations
concerning possible violations of fraud and abuse statutes and regulations by health care
providers in recent years. Violations of these laws and regulations could result in
expulsion from government health care programs together with the imposition of
significant fines and penalties, as well as significant repayments for patient services
previously billed. Management believes that the Hospital is in compliance with fraud and
abuse as well as other applicable government laws and regulations. Compliance with
such laws and regulations can be subject to future government review and interpretation
as well as regulatory actions unknown or unasserted at this time.
14. Commitments
The Hospital has various commitments totaling approximately $11,839,300 at June 30,
2003. These commitments include renovation of the main building’s fourth floor, various
computer system upgrades, and various capital equipment purchases.
15. Subsequent Events
The Hospital issued bonds subsequent to June 30, 2003. In July, $70,000,000 of Hospital
Revenue and Refunding Bonds were sold and, in August, an additional $20,000,000 of
bonds were sold. The net proceeds of these sales will be used to fund additions,
renovations, and improvement to the Hospital’s facilities, exclusive of the commitments
described in Note 14. Additionally, approximately $47,500,000 of the Series 1994 bonds
were advance refunded.
21
r Phone: (504) 581-4200
Fax: (504) 596-4233
New Orleans
Report on Compliance and on Internal Control Over Financial

Reporting Based on an Audit of the Financial Statements
in Accordance with Government Auditing Standards

Hospital Service District No. 1 of the Parish of
Tangipahoa, State of Louisiana
We have audited the financial statements of Hospital Service District No. 1 of the Parish
of Tangipahoa, State of Louisiana, (d/b/a North Oaks Medical Center) (the Hospital) as
of and for the year ended June 30, 2003, and have issued our report thereon dated
September 26, 2003. We conducted our audit in accordance with auditing standards
generally accepted in the United States and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the
United States.
Compliance
As part of obtaining reasonable assurance about whether the Hospital’s financial

statements are free of material misstatement, we performed tests of its compliance with
certain provisions of laws, regulations, and contracts, noncompliance with which could
have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective
of our audit and, accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance that are required to be reported under
Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Hospital’s internal control over
financial reporting in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and not to provide assurance on the
internal control over financial reporting. Our consideration of internal control over
financial reporting would not necessarily disclose all matters of the internal control over
financial reporting that might be material weaknesses. A material weakness is a condition
in which the design or operation of one or more of the internal control components does
not reduce to a relatively low level the risk that misstatements in amounts that would be
material in relation to the financial statements being audited may occur and not be
A Member Practice of Ernst & Young Global

detected within a timely period by employees in the normal course of performing their
assigned functions. We noted no matters involving the internal control over financial
reporting and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the board of commissioners,
management, and the Office of Legislative Auditor, State of Louisiana, and is not
intended to be and should not be used by anyone other than these specified parties.
However, this report is a matter of public record and its distribution is not limited.
September 26, 2003
2
r Phone: (504) 581-4200
Fax: (504) 596-4233
New Orleans
Independent Auditors’ Report on

Compliance with Revenue Bond Provisions

We have audited, in accordance with auditing standards generally accepted in the United
States, the balance sheet of Hospital Service District No. 1 of the Parish of Tangipahoa,
State of Louisiana (d/b/a North Oaks Medical Center) (the Hospital) as of June 30, 2003,
and the related statements of revenue, expenses, and changes in net assets and cash flows
for the year then ended, and have issued our report thereon dated September 26, 2003.
We conducted our audit in accordance with auditing standards generally accepted in the
United States and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States.
In connection with our audit, nothing came to our attention that caused us to believe that
the Hospital failed to comply with the terms, covenants, provisions, or conditions of
Sections 208, 401, 402, 501, 504 through 507, 512, 601, 602, 711, 718, 802(a), 802(b),
and 1301 of the Composite Bond Resolution relating to the $13,000,000 Hospital
Revenue Bonds (Series 1990) and the $61,535,000 Hospital Revenue Bonds (Series
1994) reflecting the provisions of Resolutions adopted by Hospital Service District No. 1
of the Parish of Tangipahoa, State of Louisiana, on July 17, 1990, November 28, 1990,
May 18, 1994, and June 22, 1994, insofar as they relate to accounting matters. However,
our audit was not directed primarily toward obtaining knowledge of such noncompliance.
management, the bond trustee, and the Office of Legislative Auditor, State of Louisiana,
and is not intended to be and should not be used by anyone other than these specified
parties. However, this report is a matter of public record and its distribution is not limited.
September 26, 2003

r Phone: (504) 581-4200
Fax: (504) 596-4233
New Orleans
Independent Accountants’ Review Report

on Schedule of Debt Service Coverage Ratio,
Cash on Hand, and Average Daily Expense

We have reviewed the accompanying Schedule of Debt Service Coverage Ratio, Cash on
Hand, and Average Daily Expense for the year ended June 30, 2003, of Hospital Service
District No. 1 of the Parish of Tangipahoa, State of Louisiana (d/b/a North Oaks Medical
Center) (the Hospital), in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public Accountants. All
information included in this schedule is the representation of the management of the
Hospital.
A review is substantially less in scope than an audit in accordance with auditing standards
generally accepted in the United States, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
The Schedule of Debt Service Coverage Ratio, Cash on Hand, and Average Daily
Expense is prescribed by Sections 501, 711(e), and 718 of the Composite Bond
Resolution relating to the $13,000,000 Hospital Revenue Bonds (Series 1990) and the
$61,535,000 Hospital Revenue Bonds (Series 1994) reflecting the provisions of
resolutions adopted by Hospital Service District No. 1 of the Parish of Tangipahoa, State
of Louisiana, on July 17, 1990, November 28, 1990, May 18, 1994, and June 22, 1994.
Based on our review, we are not aware of any material modifications that should be made
to the accompanying Schedule of Debt Service Coverage Ratio, Cash on Hand, and
Average Daily Expense in order for them to be in conformity with the prescribed method
described in Note 1.
management, the bond trustee, and the Office of Legislative Auditor, State of Louisiana,
and is not intended to be and should not be used by anyone other than these specified
parties. However, this report is a matter of public record and its distribution is not limited.
September 26, 2003

Hospital Service District No. 1
of the Parish of Tangipahoa, State of Louisiana
Schedule of Debt Service Coverage Ratio,

Year ended June 30, 2003
Debt service coverage ratio:

Net income available for debt service:
Excess of revenue over expenses $ 5,737,456
Add:
Depreciation 9,240,647
Interest expense 3,575,952
Net income available for debt service $ 18,554,055
Maximum annual debt service $ 4,744,466
Debt service coverage ratio 3.91
Minimum required debt service coverage ratio per Section 501 1.20
Cash on hand:
Cash on hand* $ 56,222,026
Average daily expense:

Operating expenses $ 133,676,711
Less:
Depreciation 9,240,647
Provision for bad debts 13,283,408
$ 111,152,656
Average daily expense (based on 365 days) $ 304,528
Days cash on hand 185
Minimum required days cash on hand per Section 718 45
*Cash on hand, as defined per the Bond Resolution, includes unrestricted cash and
marketable securities (including board-designated funds but excluding the proceeds of
any indebtedness) as of the last day of the fiscal year.
See accountants’ review report and accompanying note.

Hospital Service District No. 1
of the Parish of Tangipahoa, State of Louisiana
Note to Schedule of Debt Service Coverage Ratio,

Year ended June 30, 2003
1. Basis of Presentation
The computation in the Schedule of Debt Service Coverage Ratio, Cash on Hand, and
Average Daily Expense is prescribed by Sections 501, 711(e), and 718 of the Composite
Bond Resolution relating to the $13,000,000 Hospital Revenue Bonds (Series 1990) and
the $61,535,000 Hospital Revenue Bonds (Series 1994) reflecting the provisions of
Resolutions adopted by Hospital Service District No. 1 of the Parish of Tangipahoa, State
of Louisiana, on July 17, 1990, November 28, 1990, May 18, 1994, and June 22, 1994.
See accountants’ review report.

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Management’s Discussion and Analysis and Basic Financial Statements

Hospital Service District No. 1 of the Parish of Tangipahoa,

Management’s Discussion and Analysis and

Years ended June 30, 2003 and 2002

Management’s Discussion and Analysis ............................................................................. i

Report of Independent Auditors ..........................................................................................1

Basic Financial Statements

Balance Sheets .....................................................................................................................3

Management’s Discussion and Analysis

• The Hospital’s total assets decreased by approximately $3,836,000, or

Upgrade computer infrastructure $ 690,508

Management’s Discussion and Analysis (continued)

Required Financial Statements

Financial Analysis of the Hospital

Management’s Discussion and Analysis (continued)

A summary of the Hospital’s balance sheets are presented in Table 1 below:

June 30 Dollar Percent

Total current assets $ 39,048,567 $ 41,067,849 $ (2,019,282) (5)%

Current liabilities $ 19,239,732 $ 27,893,004 $ (8,653,272) (31)

As can be seen in Table 1, total assets decreased by approximately $3,836,000 to

Management’s Discussion and Analysis (continued)

Summary of Revenue, Expenses, and Changes in Net Assets

Year ended June 30 Dollar Percent

Operating income 3,930,519 3,774,121 156,398 4

Management’s Discussion and Analysis (continued)

Year ended June 30

Management’s Discussion and Analysis (continued)

Year ended June 30

Cafeteria $ 917,522 $ 829,494

Operating and Financial Performance

Overall activity at the Hospital, as measured by patient discharges, improved 3.81% to

Management’s Discussion and Analysis (continued)

Year ended June 30

Management’s Discussion and Analysis (continued)

Allowances increased over prior year as described in the table below:

Year ended June 30

Salary expenses increased $7,111,600, or 11.24%, to $70,376,500 in 2003 from

Management’s Discussion and Analysis (continued)

Supplies expense increased $2,468,300, or 14.05%, from prior year. As a percentage of

Investment income consists of interest earnings on funds designated by the board of

June 30 Dollar Percent

Land $ 4,119,404 $ 4,119,404 $ – –%

Management’s Discussion and Analysis (continued)

Equipment purchases $ 5,293,100

Contacting the Hospital’s Financial Manager

Report of Independent Auditors

The Board of Commissioners

A Member Practice of Ernst & Young Global 1

September 26, 2003

Assets whose use is limited:

Property, plant, and equipment:

Unamortized debt issuance costs, net 1,405,048 1,472,758

Capital lease obligations, excluding current portion 99,033 191,722

Total liabilities and net assets $ 181,824,882 $ 185,660,510

See accompanying notes.

Statements of Revenue, Expenses, and Changes in Net Assets

Year ended June 30