Monadnock Community Hospital

“The sole Member of MCH shall be GraniteOne Health, a New Hampshire voluntary corporation that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code.”

“GraniteOne Health shall elect the elected members of MCH's Board of Trustees who are nominated as set forth in Article II of MCH's governing documents. GraniteOne Health shall also have the powers reserved to it as described in the following narrative for Form 990, Part VI, Line 7b. Vacancies on the Board of Elected Trustees occurring prior to the end of any Elected trustee's term shall be elected by GraniteOne Health from nominations by either vote of the Board at a meeting of the Board, for which notice has been given of the nomination process, or by GraniteOne Health if the vacancy is from the group of Elected Trustees nominated by GraniteOne Health.”

“The following actions initiated by MCH shall require GraniteOne Health's approval: a. Adoption of the annual capital and operating budgets, provided that the expenditure of any of the cash reserves, board-designated reserves, surplus assets and other assets held by MCH on the Affiliation Date and recorded on MCH's financial statements as unrestricted assets, as well as certain parcels of real estate not required for the operation of MCH (the "Pre-Affiliation Assets") contemplated by such budgets and proposed in accordance with those powers reserved to MCH, will not be subject to the approval of GraniteOne; b. Approval of any strategic plans or material nonclinical programming and marketing plans, including material modifications thereof; c. Authorization of debt incurred, assumed, or guaranteed by the hospital in excess of Five Hundred Thousand Dollars ($500,000.00), other than as provided for in any approval annual capital or operating budget; d. Authorization of any material acquisition, disposition, formation, organization or investment by MCH of or in any other corporation, partnership, limited liability company, other entity or joint venture, other than an acquisition funded with Pre- Affiliation Assets proposed in accordance with those powers reserved to MCH will not be subject to the approval of GraniteOne; e. Authorization of the sale, disposition, mortgage, or encumbrance of any assets dedicated to the operations of MCH involving assets of Five Hundred Thousand Dollars ($500,000.00) or more, with the exception of real estate identified prior to the Affiliation; f. Authorization of MCH to enter into any merger, consolidation or joint venture; or to sell or dispose of substantially all of the assets of MCH or any of its respective subsidiaries; or to create or acquire any subsidiary organization; g. Authorization of MCH to institute any bankruptcy, insolvency or reorganization proceedings for itself or any subsidiary; h. Authorization of a capital investment by MCH or any of its subsidiaries in any individual entity or project in the form of cash or either tangible or intangible property in excess of Five Hundred Thousand Dollars ($500,000.00), except as provided in any approved annual capital or operating budget or to the extended funded by the Restricted Assets or the Pre-Affiliation Assets; i. Authorization to develop, implement or terminate clinical programs and clinical procedures by MCH or its subsidiaries; j. The amendment of the Articles of Agreement or Bylaws of MCH or its subsidiaries to the extent that it would (a) impact the Reserved Powers; or (b) reasonably be expected to have a material strategic, competitive or financial impact on the System or any of its members; and k. The MCH Board of Trustees' appointment or reappointment of the MCH CEO and the determination of the CEO's compensation.”

“The Hospital's Form 990 is prepared with assistance by an independent public accounting firm. A draft of the Form 990 is initially reviewed in detail by key finance employees. Thereafter, the final draft is made available to the full board prior to filing with the IRS.”

“On an annual basis, the Organization provides all administrators/directors/managers, Board Members, and medical staff members with the conflict of interest policy. Said individuals are required to complete a new conflict of interest disclosure on an annual basis. Any conflicts of interest noted are reviewed by the Chair of the Board, in conjunction with the Corporate Compliance Officer. If the conflict of interest appears to meet the policy definitions requiring full Board review, the Chair of the Board takes this to the full Board meeting, and it is discussed, and appropriate action is taken (in compliance with state and federal requirements). The conflict of interest statement requires signatories to inform the Hospital of any conflict of interest that occurs at any time throughout the year. If a conflict of interest arises during the year, it is reviewed by the Compliance Officer, and if necessary, is taken to the Board Chair/Board. The Compliance Officer confers with legal counsel with regard to conflicts of interest, if there is any question regarding the potential conflict.”

“The Organization has a written executive compensation policy and procedure. Under this policy, the Compensation Committee, comprised of delegated representatives of the Board of Trustees, has the power and responsibility to determine the Hospital's approach to executive compensation and review the performance of the CEO. The Compensation Committee has the responsibility to set, monitor and review the base salary of the CEO. The Committee maintains minutes of sessions and final recommendations and determinations in accordance with the Board of Trustee guidelines. Annually, market data is reviewed by the Committee to determine the appropriate salary for the Hospital's CEO based upon identified standards. At the end of the time period, the Committee reviews to what extent stated goals were met and recommends an amount for the variable pay award to be approved by the full board.”

“Monadnock Community Hospital files audited financial statements annually with the New Hampshire Attorney General's Charitable Trust Unit and informs the Director of Charitable Trusts of pecuniary benefit transactions that have occurred between MCH and a board member or officer. Notices of such transactions of $5,000 or more are also published in the local newspaper in accordance with NH RSA 7:19-A, II(D). Current copies of the bylaws, conflict of interest policy and Form 990 are on file with the Charitable Trust Unit. The Hospital also makes its governing documents, conflict of interest policy, and financial statements available to the public upon request.”

“The 2017 compensation reported for Dr. Cooley, Dr. Kriebel, Dr. McNamara, and Dr. Migotsky was paid by Monadnock Community Hospital for their services as physicians. No part of their compensation was remuneration for their services as an ex-officio voting members of MCH's Board of Trustees.”

“Change in fair value of interest rate swap agreements 816,425.”

“The Audit Committee oversees the audit process for Monadnock Hospital. The audit process for the financial statements did not change from the prior year. Independent accountants performed the audit for the fiscal years ended 9/30/17 and 9/30/18.”

“On December 30, 2016, Monadnock Community Hospital became affiliated with Catholic Medical Center (CMC), a 330-bed acute care hospital in Manchester, New Hampshire, and Huggins Hospital (HH), a 25-bed critical access hospital in Wolfeboro, New Hampshire, through the formation of a common parent, GraniteOne Health (GraniteOne). GraniteOne is a New Hampshire voluntary corporation that is recognized as being a Section 501(c)(3) tax-exempt and "supporting organization" within the meaning of Section 509(a)(3) of the Internal Revenue Code of 1986, as amended (the Code). GraniteOne serves as the sole member of the Hospital and HH and co-member of CMC, along with CMC Healthcare System, Inc. GraniteOne is governed by a thirteen member Board of Trustees appointed by each of the respective hospitals within the GraniteOne system. The GraniteOne Board of Trustees governs the GraniteOne system through the existence and execution of reserved powers to approve certain actions by the Boards of Trustees of each of the hospitals. Through GraniteOne, this more integrated healthcare system enhances the affiliated hospitals' ability to coordinate the delivery of patient care, implement best practices, eliminate inefficiences and collaborate on regional planning. These efforts strengthen the hospitals' ability to meet the healthcare needs of their respective communities and provide for a more seamless patient experience across the continuum of care. The Hospital has engaged in various transactions with GraniteOne and CMC. The Hospital recognized revenue from these related parties of approximately $340,000 for the year ended September 30, 2018 and $215,000 from the date of affiliation, December 30, 2016, through September 30, 2017, which is reflected within other revenue in the accompanying statements of operations. The Hospital also incurred expenses to these related parties of approximately $3.1 million for the year ended September 30, 2018 and $2.2 million from the date of affiliation, December 30, 2016 through September 30, 2017, which is reflected within operating expenses in the accompanying statements of operations. The effect of these transactions resulted in a net amount due to related parties of approximately $187,000 and $437,000 as of September 30, 2018 and 2017, respectively, which is reflected within accounts payable and accrued expenses in the accompanying balance sheets.”