Children'S Hospital Ophthalmology

“A majority of Children's Hospital Ophthalmology Foundation, Inc.'s (the Foundation's) board members are physicians who are not independent from the Foundation because they are compensated by the Foundation. However, the Foundation participates in an integrated delivery system with Boston Children's Hospital (the Hospital) which does have a community board. The Foundation was organized in 2003. At that time, the board was composed entirely of physicians, a board structure that was approved by the Internal Revenue Service. The Foundation has since adjusted the board structure to make it more responsive to the Hospital by adding the Physicians Organization at Children's Hospital, Inc. (the PO) as a member. See Schedule O, Part VI, Questions 3, 6, 7b, and 12 for more details on the PO's rights.”

“The Physicians Organization at Children's Hospital, Inc. (the PO) is a Class "C" member of Children's Hospital Ophthalmology Foundation, Inc. (the Foundation). The PO is responsible for providing certain management services to the Foundation. The PO has the power to approve the independent auditor and legal counsel of the Foundation from a list of firms mutually agreed to by the PO and the Foundation. The PO also has the right to review the annual operating budget. The PO Board has the right to approve by-law changes of the Foundation. Lastly, Boston Children's Hospital has the right to review for compliance with applicable law, the general terms of and any modifications to the physician compensation and benefit plans for all physician employees of the Foundation.”

“Children's Hospital Ophthalmology Foundation, Inc. (the Foundation) has 4 classes of members. The Ophthalmologist-in-Chief shall be the sole Class "A" member. Any other member of the Foundation who has, for at least three years, been a physician-employee of the Foundation with an active medical staff appointment from Boston Children's Hospital (the Hospital) and has a faculty appointment at the rank of instructor or above in the Department of Ophthalmology at Harvard Medical School (Harvard) shall be a Class "B" member. Any other physician-employee of the Foundation with an active medical staff appointment from the Hospital and a faculty appointment at the rank of instructor or above in the Department of Ophthalmology at Harvard shall be a Class "D" member. Each Class "A", "B", and "D" member shall hold membership as long as he/she remains qualified for membership. The Physicians Organization at Children's Hospital, Inc. shall be the sole Class "C" member. The qualifications and rights of members, including voting rights, shall be as set forth from time to time in the by-laws of the Foundation.”

“According to the by-laws, the initial Trustees shall be those individuals named in the Children's Hospital Ophthalmology Foundation, Inc.'s (the Foundation's) Articles of Organization who shall serve until the first annual meeting of the members. Thereafter, the Board of Trustees shall consist of the Class "A and "B" members, each of whom shall serve ex-officio with vote. The Class "A" member is the President of the Foundation. All other officers shall be elected by the Trustees for two-year terms at the Foundation's annual meeting. All officers shall be Trustees.”

“The Physicians Organization at Children's Hospital, Inc. (the PO) is a Class "C" member of Children's Hospital Ophthalmology Foundation, Inc. (the Foundation). The PO is responsible for providing certain management services to the Foundation. The PO has the power to approve the independent auditor and legal counsel of the Foundation from a list of firms mutually agreed upon by the PO and the Foundation. The PO has the right to review the annual operating budget. The PO Board has the right to approve by-law changes of the Foundation. Lastly, Boston Children's Hospital has the right to review for compliance with applicable laws, the general terms of and any modifications to physician compensation and benefit plans for all physician employees of the Foundation. As a Class "C" member of the Foundation, the PO attends the Foundation's annual meeting.”

“The tax return is prepared with information, data, and detail provided by the President of the Foundation, the Executive Director, and the Director of Finance and is reviewed by a representative from the tax preparation firm. The full Form 990 filing is reviewed by the President of the Foundation, the Executive Director, and the Director of Finance prior to filing. It is reviewed by an officer of the corporation and/or the officer who will sign the Form 990. A representative from a tax preparation firm will present a summary of the Form 990 filing to a quorum of the Finance Committee, with Class C member or staff representative from the Physicians Organization at Children's Hospital, Inc. invited for that summary. The Form 990 that was presented to and approved by a quorum of the Finance Committee will be provided to the Foundation's Board of Directors in a subsequent Board meeting packet along with a copy of the Form 990 (with salaries redacted).”

“The Physicians Organization at Children's Hospital, Inc. (the PO) and Boston Children's Hospital administer an annual conflict of interest disclosure process to all of their member Foundations, which asks physicians (officers, top management, and highly compensated employees) and selected Foundation staff to disclose potential conflicts. A disclosure statement will be circulated annually to members of the PO. The audit committee shall determine those individuals (including medical staff members) who shall be required to complete the disclosure statement. The audit committee, at its discretion, may either: 1) refer to any or all disclosure statements to the Board of Directors; 2) appoint an ad hoc committee to review and resolve any conflict of interest issues; or 3) review and resolve any conflict of interest issues personally or through a designee(s). Any person not receiving a disclosure statement nevertheless has an affirmative obligation to disclose to the PO President, PO General Counsel, or his/her supervisor whenever he/she believes he/she has or may have a conflict of interest. Similarly, each person completing a disclosure statement has an affirmative obligation to update the statement any time circumstances change and/or he/she believes that a conflict of interest may exist. In the event a conflict of interest is found to exist, the Foundation prohibits the member from voting on any matter to which the conflict relates or otherwise influence the voting on such matter.”

“Faculty compensation must comply with the Boston Children's Hospital Physician Compensation Guidelines. These guidelines are developed in consultation with an independent external compensation consulting firm and are approved by independent Compensation Committee of Board of Children's Medical Center Corporation and Boston Children's Hospital. The guidelines set the maximum compensation limits based on a peer group analysis for the Foundations. The maximum compensation limits are based on pediatric specialty, sub-specialty, academic rank and include a productivity adjustment. Any proposed compensation that exceeds the limit must be prospectively approved by the independent Compensation Committee of the Board of the Hospital. Annual compensation for individual faculty members is set by the President of each Foundation, reviewed and approved by the Foundation in accordance with the Foundation's compensation policies and procedures. The Foundation's President's compensation is reviewed and approved annually on a prospective basis by the Boston Children's Hospital President/Chief Executive Officer. Form 990, Part VI, Section B, Line 16a: In January 2007, Children's Hospital Ophthalmology Foundation, Inc. (the Foundation) formed a for-profit limited liability company, Foundation Optical, LLC, to establish a retail optical shop located within a Boston Children's Hospital satellite location. The primary purpose of Foundation Optical, LLC is to offer eyewear needs to patients of the Foundation. The Foundation is the majority owner of Foundation Optical, LLC with a 55% ownership interest. Form 990, Part VI, Section B, Line 16b: It is the policy of Children's Hospital Ophthalmology Foundation, Inc. (the Foundation) to retain an ownership stake in any entity that is consistent with its charitable mission. Further, if the Foundation does retain an ownership stake in any appropriate entity, it will secure legal advice and language in any such operating agreements to ensure it has full authority to prevent and override any action of such entity that the Foundation may determine is inconsistent with its charitable purposes or that may jeopardize the Foundation's tax-exempt status.”

“The Foundation maintains or has access to all financial statements, conflict of interest policies, and governing documents at its main office at 300 Longwood Avenue, Boston, MA 02115. The documents are available upon request.”

“Investment in Children's Ophthalmology Management Services, LLC Net assets transfer to affiliate -13,338,454.”

“The audit process and scope have not changed from the prior year.”