UNAUDITED - Henry Ford Health System

UNAUDITED
Consolidated Financial Statements
for the Six Months Ended June 30, 2003 and 2002
Supplemental Schedules, Including Obligated Group,
for the Six Months Ended June 30, 2003
Statistical Information
for the Six Months Ended June 30, 2003

UNAUDITED
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2003 AND 2002 (In Thousands)
JUNE JUNE JUNE JUNE
ASSETS 2003 2002 LIABILITIES AND NET ASSETS 2003 2002
CURRENT ASSETS:
CURRENT LIABILITIES:
Cash and cash equivalents $270,286 $174,696 Accounts payable $73,172 $100,698
Patient care receivables 78,802 166,346 Due to third-party payors 37,480 25,799
Health care premium receivables 16,668 35,890 Medical services liability 102,161 125,423
Securities lending collateral 18,142 27,747 Other liabilities and accrued expenses 136,866 87,726
Other current assets 32,410 36,679 Securities lending collateral 18,142 27,747
Current portion of assets limited as to use 59,879 37,471 Current portion of long-term obligations 7,364 12,461
Current portion of malpractice and general
liability 48,100 37,009
Total current assets 476,187 478,829
Total current liabilities 423,285 416,863
LONG-TERM INVESTMENTS 127,862 127,215 MALPRACTICE AND GENERAL LIABILITY 171,495 180,398
ASSETS LIMITED AS TO USE 691,559 678,443 DEFERRED COMPENSATION, POSTRETIREMENT
AND OTHER LIABILITIES 361,444 230,434
JOINT VENTURE INVESTMENTS 70,423 60,387
LONG-TERM OBLIGATIONS 344,405 338,482
OTHER ASSETS 50,416 46,416
Total liabilities 1,300,629 1,166,177
PROPERTY, PLANT AND EQUIPMENT 598,472 616,437
NET ASSETS:
Unrestricted 604,731 728,378
Temporarily restricted 52,958 54,160
Permanently restricted 56,601 59,012
Total net assets 714,290 841,550
TOTAL $2,014,919 $2,007,727 TOTAL $2,014,919 $2,007,727

UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
AND CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, 2003 AND 2002 (In Thousands)
JUNE
JUNE
2003 2002
UNRESTRICTED REVENUE:
Net patient service revenue $519,367 $495,185
Health care premiums 666,213 639,192
Investment income 20,083 11,252
Other 66,034 69,672
Total unrestricted revenue 1,271,697 1,215,301
EXPENSES:
Salaries, wages and employee benefits 448,327 425,376
Healthcare provider expense 431,461 416,378
Supplies 120,320 120,341
Depreciation and amortization 43,425 43,607
General and other administrative 40,640 42,930
Other contracted services 59,138 59,224
Provision for uncompensated services 55,535 46,969
Malpractice 28,247 25,322
Plant operations 11,395 12,569
Interest expense 9,672 9,737
Repairs and maintenance 12,345 11,742
Rent 7,067 8,726
Total expenses 1,267,572 1,222,921
EXCESS / (DEFICIENCY) OF REVENUE OVER EXPENSES
BEFORE UNUSUAL ITEM 4,125 (7,620)
UNUSUAL ITEM:
Loss on refinancing 3,456 0
Total unusual item 3,456 0
EXCESS / (DEFICIENCY) OF REVENUE OVER EXPENSES $669 ($7,620)
(Continued)

UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
AND CHANGES IN NET ASSETS (Continued)
SIX MONTHS ENDED JUNE 30, 2003 AND 2002 (In Thousands)
JUNE
JUNE
2,003 2,002
UNRESTRICTED NET ASSETS:
Excess / (Deficiency) of revenue over expenses $669 ($7,620)
Discontinued operations (3,094) (1,069)
Change in net unrealized loss on investments and interest rate swaps 19,372 (18,349)
Net assets released from restrictions for capital 2,400 2,760
Additional minimum pension liability adjustment 405 0
Increase / (Decrease) in unrestricted net assets 19,752 (24,278)
TEMPORARILY RESTRICTED NET ASSETS:
Income on restricted investments 554 140
Contributions and grants 12,559 11,608
Change in net unrealized loss on investments 2,136 (4,266)
Net assets released from restrictions for operations (12,048) (13,656)
Net assets released from restrictions for capital (2,400) (2,760)
Increase / (Decrease) in temporarily restricted net assets 801 (8,934)
PERMANENTLY RESTRICTED NET ASSETS:
Income (Loss) on restricted investments (1,327) (3,008)
Contributions 514 538
Increase (Decrease) in permanently restricted net assets (813) (2,470)
TOTAL DECREASE IN NET ASSETS 19,740 (35,682)
TOTAL NET ASSETS AT BEGINNING OF YEAR 694,550 877,232
TOTAL NET ASSETS AT END OF PERIOD $714,290 $841,550
(Concluded)

UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2003 AND 2002 (In Thousands)
JUNE
JUNE
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Increase / (Decrease) in net assets $19,740 ($35,682)
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization 43,425 43,607
Additional minimum pension liability (405) 0
Gain on sale of asset (121) (19)
Loss on restricted investments 773 2,868
Restricted contributions (13,073) (12,146)
Net unrealized (income) / loss on investments (21,508) 22,615
Change in assets and liabilities:
Patient and health care premium receivables 18,700 (35,201)
Other current assets 2,228 7,785
Accounts payable (2,731) 8,006
Other liabilities (19,722) (74,487)
Due to/from third-party payors 53,313 47,776
Medical services liability 2,329 20,586
Malpractice and general liability 9,364 5,452
Net cash provided by operating activities 92,312 1,160
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property (37,076) (27,098)
Change in long-term investments (4,454) (4,143)
Change in assets limited as to use (37,496) 4,932
Change in joint venture investments (6,104) (4,015)
Change in other assets 2,736 918
Net cash used in investing activities (82,394) (29,406)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term obligations 112,285 0
Refinancing of long-term obligations (98,965) 0
Payments on line of credit 0 (4,581)
Payments of long-term obligations (22) (22)
Loss on restricted investments (773) (2,868)
Restricted contributions 13,073 12,146
Net cash provided by financing activities 25,598 4,675
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 35,516 (23,571)
CASH AND CASH EQUIVALENTS AT JANUARY 1 234,770 198,267
CASH AND CASH EQUIVALENTS AT JUNE 30 $270,286 $174,696

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2003 AND 2002
1. ORGANIZATION AND STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The Organization - Henry Ford Health System (the “Corporation”), and its affiliates
(collectively known as the “System”), constitute a comprehensive health care system, offering
health care to the people of Southeastern Michigan. The System provides medical, surgical,
psychiatric, and rehabilitative services in an inpatient and outpatient setting, conducts research
activities, and engages in the education and training of residents, nurses, and technicians. The
System includes one of the nation’s largest physician group practices and health maintenance
organizations.
The Corporation is a Michigan not-for-profit corporation, which operates Henry Ford Hospital
and is the parent and sole shareholder of Downriver Center for Oncology, Henry Ford Wyandotte
Hospital (“Wyandotte”), Health Alliance Plan (“HAP”), Detroit Osteopathic Hospital
Corporation d.b.a. Horizon Health System (“Horizon”), Fairlane Health Services Corporation
(“Fairlane”), Alliance Health and Life Company (“Alliance”), Henry Ford Continuing Care
Corporation, Onika Insurance Company Ltd. (“Onika”), Centrum Insurance Company Limited
(“Centrum”), and the Fund for Henry Ford Hospital (the “Fund”).
In March 2001, HAP and an unrelated entity acquired SelectCare, Inc. under a joint Purchase
Agreement. Under the terms of the Purchase Agreement, HAP purchased the health maintenance
organization operations of SelectCare, Inc. (herein referred to as "SelectCare HMO") for an
initial purchase price of $37,627,000. The non-health maintenance organization operations were
purchased by the unrelated entity. This transaction, which has been accounted for as a purchase,
resulted in a $34,859,000 allocation of the initial purchase price to goodwill.
These amounts, the purchase price and goodwill allocation, will change as certain contingencies
in the purchase agreement are finalized by the end of 2003. The operations of SelectCare HMO
have been included in the consolidated financial statements from the date of purchase.
Basis of Presentation - The unaudited consolidated financial statements include the accounts of
the System members as described above. The accounting and reporting policies of the System
conform to accounting principles generally accepted in the United States of America (“generally
accepted accounting principles”). All significant intercompany transactions have been
eliminated. The preparation of unaudited consolidated financial statements in conformity with
generally accepted accounting principles requires that management make estimates and
assumptions that affect the reported amounts. Actual results could differ from those estimates.
Patient Services - The System grants equal access for health care services to all members of its
community regardless of financial status. Net patient service revenue is reported at the estimated
net realizable amounts from patients, third-party payors, public programs, or others. It is the
System’s policy to bill for, and pursue collection of, all services rendered. At the point in time
that a charge is believed to be uncollectible, the related receivable is written off. Annual
provisions are made for estimated uncompensated services. Estimates of retroactive adjustments
under reimbursement agreements with third-party payors are accrued in the period the related
services are rendered and adjusted in future periods as final settlements are received.

Contributions - Unrestricted contributions are included in the statements of operations and
changes in net assets when received. Gifts of cash and other assets are reported as restricted
contributions if they are received with donor stipulations that limit the use of the assets. When
the restrictions expire or the purpose of the restriction is accomplished, temporarily restricted
assets are reclassified to unrestricted net assets and reported in the statement of operations and
changes in net assets as other revenue.
Performance Indicator - The statements of operations and changes in net assets includes the
excess / (deficiency) of revenues over expenses. Changes in unrestricted net assets, which are
excluded from the excess / (deficiency) of revenues over expenses, consistent with industry
practice, include changes in unrealized gains and losses on investments and, contributions of
long-lived assets (including assets acquired using contributions which by donor restriction were
to be used for the purposes of acquiring such assets), the additional minimum pension liability
and discontinued operations.
Cash and Cash Equivalents – Cash and cash equivalents consist of cash and highly-liquid shortterm
investments with an original maturity of 90 days or less. Cash equivalents are stated at fair
value which approximates cost.
Securities Lending - The Corporation enters into secured lending transactions and recognizes the
collateral received and the corresponding liability to return the collateral in accordance with the
provision of Statement of Financial Accounting Standards (“SFAS”) No. 140.
Investments and Assets Limited as to Use – Investments are stated at fair value and are
considered available for sale. Net realized gains and losses on sales of securities are computed
on the specific identification method. Declines in value judged to be other than temporary are
included in investment and other income.
Other Current Assets - Other current assets include inventories, which are stated at the lower of
cost (first-in, first-out) or market.
Other Assets – Other assets also include intangibles, unamortized bond issue costs and discounts,
and goodwill which are reported net of accumulated amortization. Bond issuance costs are
amortized using the effective interest method over the term of the issue, and goodwill is
amortized on a straight-line basis over the expected period of benefit, which ranges from 5 to 20
years.
Assets Limited as to Use – Assets limited as to use are reported at their estimated fair value and
include resources for which the Board of Trustees of the System have designated specific future
uses, donor-restricted funds which arise through specific contributions to the System, the Fund
for Henry Ford Hospital, and funds held by the State under the bond indenture agreements. The
dollar amount of these assets, which are to be used to satisfy current liabilities, has been
classified as a current asset.
Property, Plant and Equipment – Property, plant and equipment are recorded at cost or fair
market value at the date of acquisition. Depreciation is provided on the straight-line method over
the estimated useful lives of the assets. Estimated useful lives used in computing depreciation
are generally 10 years for land improvements, 25 to 40 years for buildings and building
improvements, and 3 to 10 years for equipment.

Expenditures for maintenance and repairs are charged against operations. Expenditures for
betterment and major renewals that extend the useful life of an asset are capitalized and
depreciated.
Impairment - The System periodically evaluates the carrying value of its assets for impairment.
This evaluation is based principally on the projected, undiscounted cash flows generated by the
related assets.
Medical Services Liability – Medical services liability consists of unpaid medical claims and
other obligations resulting from the provision of health care services. It includes medical service
claims reported as of the balance sheet date and estimates, based upon historical claims
experience, for claims incurred but not reported.
Other Operating Income – Other operating income consists of assets released from restrictions,
income from grants, gift shop and cafeteria sales, parking garage fees, and other miscellaneous
sources.
Fair Value of Financial Instruments – Fair value of financial instruments has been determined
using available information and appropriate valuation methodologies. The fair value of assets is
based on quoted market prices, dealer quotes and prices obtained from independent sources. The
fair value of liabilities is based on discounted cash flows analysis, using interest rates currently
available for the issuance of debt with similar terms and remaining maturities. Considerable
judgment is required in certain circumstances to develop the estimates of fair value and they may
not be indicative of the amounts which could be realized in a current market exchange.
Derivative Financial Instruments – The System periodically utilizes various financial
instruments (e.g., options, caps and swaps) to hedge interest rate and other exposures. The
System’s policies generally prohibit trading in derivative financial instruments on a speculative
or leveraged basis.
Tax Status - The System, except for Fairlane, SelectCare, Inc., Onika, Alliance, and Centrum
consists of entities described under Internal Revenue Service Code Section 501(c)(3) and, as
such, are exempt from federal income taxes under Code Section 501(a), and do not have private
foundation status under Code Section 509(a)(1) or 509(a)(3). Fairlane, SelectCare, Inc. and
Alliance are taxable entities and their taxes are not significant to the consolidated entity. The
System’s wholly owned insurance captives (Onika and Centrum) are in the Cayman Islands and
are currently not subject to income taxes.
Reclassifications have been made to the 2002 consolidated financial statements to conform to the
classifications used in 2003.

2. ASSETS LIMITED AS TO USE
Assets limited as to use were comprised of the following at June 30 (in thousands):
JUNE
JUNE
2003 2002
Unrestricted assets limited as to use:
Fund for Henry Ford Hospital $241,707 $256,504
Funds designated for malpractice and general liability 211,121 199,735
Funds designated for hospital expansion 87,787 71,078
Funds designated for deferred compensation 44,142 55,626
Funds held by State under bond indenture agreement 11,626 3,003
Funds board designated for research and education 45,496 16,796
Total unrestricted assets limited as to use 641,879 602,742
Temporarily restricted assets:
Grant and pledge funds 49,880 53,904
Grants and pledges receivable 3,078 256
Total temporarily restricted assets 52,958 54,160
Permanently restricted assets 56,601 59,012
Total assets limited as to use 751,438 715,914
Less requirements for current liabilities 59,879 37,471
Noncurrent assets limited as to use $691,559 $678,443

3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment was comprised of the following at June 30 (in thousands):
JUNE
JUNE
2003 2002
Land and improvements $31,833 $38,880
Building and improvements 621,100 612,996
Equipment 491,536 506,281
Construction-in-progress 35,424 26,588
Total 1,179,893 1,184,745
Less accumulated depreciation 581,421 568,308
Property, plant and equipment $598,472 $616,437

4. LONG-TERM OBLIGATIONS
Long-term obligations were comprised of the following at June 30 (in thousands):
JUNE
JUNE
2003 2002
Henry Ford Health System Obligated Group:
Revenue and refunding bonds Series 1999A, maturing $60,050 $60,050
serially through 2025, interest rates of 4.9% to 6%,
redeemable beginning in 2003
Revenue and refunding bonds Series 1995A, maturing 163,625 168,765
serially through 2025, interest rates of 4.7% to 5.25%,
redeemable beginning in 2006
Revenue and refunding bonds Series 1992A, maturing 15,000 117,000
serially through 2017, interest rates of 5.6% to 6.0%,
redeemable beginning in 2002
Revenue bonds Series 1991A, maturing serially through 2011, 0 4,275
interest rate of 6.75%, redeemable beginning in 2001
Revenue refunding bonds Series 2003A, maturing serially through 2017, 112,285 0
interest rate of 3% to 5.625, redeemable beginning in 2004
Other obligations (interest rate from 9% to 12%) 809 853
Total 351,769 350,943
Less current portion 7,364 12,461
Total long-term obligations $344,405 $338,482

UNAUDITED
Supplemental Schedules, Including Obligated Group,
for the Six Months Ended June 30, 2003

UNAUDITED
CONSOLIDATING BALANCE SHEET INFORMATION
AS OF JUNE 30, 2003 (In Thousands)
(TOTAL SYSTEM)
Henry
The
Ford
Fund
Health Fairlane Alliance Onika Centrum for Henry Ford
System Health Health Select Insurance Insurance Operating Henry Health
Obligated Services & Life Care Company Company Entities Ford System
ASSETS Group Corporation Company Corporation Ltd. Ltd. Eliminations Consolidated Hospital Eliminations Consolidated
CURRENT ASSETS:
Cash and cash equivalents $226,869 $819 $24,662 $17,943 $270,293 ($7) $270,286
Patient care receivables 78,802 78,802 78,802
Health care premium receivables 15,636 1,032 16,668 16,668
Securities lending collateral 18,142 18,142 18,142
Other current assets 29,284 138 2,102 3 889 32,416 (6) 32,410
Current portion of assets limited as to use 59,725 154 59,879 59,879
Total current assets 428,458 819 25,832 20,045 0 157 889 476,200 (13) 0 476,187
LONG-TERM INVESTMENTS 127,862 127,862 127,862
ASSETS LIMITED AS TO USE 462,336 301 500 91,011 (89,423) 464,725 242,394 (15,560) 691,559
JOINT VENTURE INVESTMENTS 70,423 70,423 70,423
OTHER ASSETS 112,619 (62,203) 50,416 47,052 (47,052) 50,416
PROPERTY, PLANT, AND EQUIPMENT 598,422 50 598,472 598,472
TOTAL $1,800,120 $869 $26,133 $20,545 $91,011 $157 ($150,737) $1,788,098 $289,433 ($62,612) $2,014,919

UNAUDITED
CONSOLIDATING BALANCE SHEET INFORMATION
AS OF JUNE 30, 2003 (In Thousands)
(TOTAL SYSTEM)
Henry
The
Ford
Fund
Health Fairlane Alliance Onika Centrum for Henry Ford
System Health Health Select Insurance Insurance Operating Henry Health
Obligated Services & Life Care Company Company Entities Ford System
LIABILITIES AND NET ASSETS Group Corporation Company Corporation Ltd. Ltd. Eliminations Consolidated Hospital Eliminations Consolidated
CURRENT LIABILITIES:
Accounts payable $72,867 $150 $118 $37 $73,172 $73,172
Due to third-party payors 37,480 37,480 37,480
Medical services liability 86,805 10,401 4,955 102,161 102,161
Other liabilities and accrued expenses 122,289 (109) 2,552 8,929 1,350 (245) 134,766 17,660 (15,560) 136,866
Securities lending collateral 18,142 18,142 18,142
Current portion of long-term obligations 7,364 7,364 7,364
Current portion of malpractice and general
liability 48,100 48,100 48,100
Total current liabilities 393,047 (109) 13,103 13,884 1,468 37 (245) 421,185 17,660 (15,560) 423,285
MALPRACTICE AND GENERAL LIABILITY 170,361 89,423 (88,289) 171,495 171,495
DEFERRED COMPENSATION, POSTRETIREMENT
AND OTHER LIABILITIES 361,444 361,444 361,444
LONG-TERM OBLIGATIONS 391,457 391,457 (47,052) 344,405
0
Total liabilities 1,316,309 (109) 13,103 13,884 90,891 37 (88,534) 1,345,581 17,660 (62,612) 1,300,629
NET ASSETS:
Unrestricted 374,252 978 13,030 6,661 120 120 (62,203) 332,958 271,773 604,731
Temporarily restricted 52,958 52,958 52,958
Permanently restricted 56,601 56,601 56,601
Total net assets 483,811 978 13,030 6,661 120 120 (62,203) 442,517 271,773 0 714,290
TOTAL $1,800,120 $869 $26,133 $20,545 $91,011 $157 ($150,737) $1,788,098 $289,433 ($62,612) $2,014,919

UNAUDITED
CONSOLIDATING STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS - UNRESTRICTED INFORMATION
SIX MONTHS ENDED JUNE 30, 2003 (In Thousands)
(TOTAL SYSTEM)
Henry
The
Ford Alliance Fund Henry
Health Fairlane Health Onika Centrum for Ford
System Health & Select Insurance Insurance Operating Henry Health
Obligated Services Life Care Company Company Entities Ford System
Group Corporation Company Corporation Ltd. Ltd. Eliminations Consolidated Hospital Eliminations Consolidated
UNRESTRICTED REVENUE:
Net patient service revenue $519,367 $519,367 $519,367
Health care premiums 640,254 25,959 666,213 666,213
Investment income 18,489 5 147 3,343 224 (3,343) 18,865 2,554 (1,336) 20,083
Other 72,707 27 (161) 161 72,734 (6,700) 66,034
Total unrestricted revenue 1,250,817 32 26,106 0 3,182 224 (3,182) 1,277,179 2,554 (8,036) 1,271,697
EXPENSES:
Salaries, wages and employee benefits 448,327 448,327 448,327
Healthcare provider expense 409,019 22,442 431,461 431,461
Supplies 120,320 120,320 120,320
Depreciation and amortization 43,425 43,425 43,425
General and other administrative 38,667 1,970 338 3 (338) 40,640 6,700 (6,700) 40,640
Other contracted services 58,733 4 58,737 401 59,138
Provision for uncompensated services 55,535 55,535 55,535
Malpractice 28,008 2,844 221 (2,844) 28,229 18 28,247
Plant operations 11,395 11,395 11,395
Interest expense 11,008 11,008 (1,336) 9,672
Repairs and maintenance 12,345 12,345 12,345
Rent 7,067 7,067 7,067
Total expenses 1,243,849 4 24,412 0 3,182 224 (3,182) 1,268,489 7,119 (8,036) 1,267,572
EXCESS / (DEFICIENCY) OF REVENUE OVER EXPENSES
BEFORE UNUSUAL ITEM 6,968 28 1,694 0 0 0 0 8,690 (4,565) 0 4,125
UNUSUAL ITEM:
Loss on refinancing 3,456 3,456 3,456
EXCESS / (DEFICIENCY) OF REVENUE OVER EXPENSES 3,512 28 1,694 0 0 0 0 5,234 (4,565) 0 669
Discontinued operations (3,094) (3,094) (3,094)
Change in net unrealized loss on investments and interest rate swaps 2,939 (4) (1) 2,934 16,438 19,372
Net assets released from restrictions for capital 2,400 2,400 2,400
Additional minimum liability adjustment 405 405 405
INCREASE / (DECREASE) IN
UNRESTRICTED NET ASSETS $6,162 $24 $1,693 $0 $0 $0 $0 $7,879 $11,873 $0 $19,752

UNAUDITED
Statistical Information
for the Six Months Ended June 30, 2003

UNAUDITED
STATISTICAL INFORMATION
SIX MONTHS ENDED JUNE 30, 2003
DELIVERY NETWORK - THIRD PARTY PAYORS
(Page A-12 of the Series 2003A Official Statement)
Managed Care Payors (primarily HAP) 38%
Medicare 33%
Blue Cross 14%
Medicaid 5%
Other Payors 10%
Total 100%
HMO MEMBERSHIP
(Page A-14 of the Series 2003A Official Statement)
Total HAP HMO Membership 538,272
OUTPATIENT FACILITY VISITS
(Page A-16 of the Series 2003A Official Statement)
HFHS 1,068,162
Wyandotte 80,761
DOHC - BiCounty 44,681
Total 1,193,604
UTILIZATION STATISTICS
(Page A-17 of the Series 2003A Official Statement)
Admissions
HFHS 19,564
Wyandotte 8,828
DOHC - BiCounty 3,402
Total 31,794
Patient Days (excluding newborns)
HFHS 109,739
Wyandotte 46,028
DOHC - BiCounty 18,540
Total 174,307