Ochsner Community Hospitals

“1b: The Articles of Incorporation provide that no action of the Board may be resolved unless a majority of the independent directors present approve the matter. Thus, even in situations where there is not an absolute majority of independent directors in office, those independent directors in office control Ochsner Community Hospitals's activities.”

“Dr. Quinlan and Mr. Suquet have a business relationship.”

“As a subsidiary of Ochsner Health System, Ochsner Community Hospitals is subject to all compliance policies of Ochsner Health System, which includes a written Whistleblower protection policy.”

“Ochsner Community Hospitals is a wholly-owned subsidiary of Ochsner Health System, a related 501(c)(3) organization. Ochsner Community Hospitals is organized exclusively on a membership, non-stock basis. Ochsner Health System is the sole member of Ochsner Community Hospitals.”

“All directors, other than the Chief Executive Officer, shall be elected by the Member.”

“The Articles and Bylaws specify the following actions that require the affirmative vote or written consent of the Member: (1) Election of Directors other than the Chief Executive Officer (2) Amendment to the articles of incorporation of the Corporation (3) Corporate actions (4) Removal and replacement of any Director other than the Chief Executive Officer (5) Preparation or adherence to any capital or operating budget (6) Any expense, debt, or capital expenditure that exceeds the amount budgeted (7) Any action that is anticipated to reduce revenues below the amount budgeted (8) Any purchase or sale of any real property or encumbering any such property to secure a debt, if such action was not included in the budget (9) Guaranteeing the debt or obligation of any other person or entity (10) Beginning the practice of a health care service or specialty not previously engaged in by the Corporation if it was not included in the budget. (11) Causing or permitting the Corporation or any subsidiary of the Corporation to form or become the controlling member of any business entity (12) Amendment of any organizational or governing documents of any subsidiary (13) Establishment of any committee of the Board of Directors of the Corporation”

“One or more members of senior management review the return. The return is also reviewed by Ernst & Young, LLP, the company's tax advisors. The Audit and Oversight Committee, which is comprised of independent directors, is then provided the return prior to the filing date and given the opportunity to review and discuss the return with management/staff. The meeting to review the 2013 return was held on October 26, 2015. A copy of the return is then provided to each member of the Board of Directors electronically and comments are solicited from the entire Board.”

“Officers, directors, trustees, and key employees are required to complete a conflict of interest disclosure form annually, within 40 days of becoming an employee, or if a current employee has a change in business circumstances not previously disclosed. The Conflict of Interest Program Administrator reviews disclosures and determines whether action is necessary or if the disclosure needs to be reviewed by the Conflict of Interest Steering Committee. Ochsner Health System requires annual certification that the relationships disclosed during a preceding calendar year are complete and accurate. In addition, employees that do not fall within the scope of the Conflict of Interest Disclosure policy annually complete Conflict of Interest training in compliance with the Conflict of Interest policy. The Conflict of Interest Steering Committee will make mitigation recommendations, including, but not limited to, divestiture and termination of employment.”

“All CEO and officer compensation and benefits arrangements, including salary and bonus incentive plans, are reviewed and approved by the Executive and Senior Physician Compensation Committee of the Board of Directors (Compensation Committee)of Ochsner Health System. No substantive change to the compensation or benefits packages is made until Committee approval is granted in accordance with Intermediate Sanctions guidelines. The Compensation Committee is without conflicts of interest and uses an independent external consultant. Appropriate data is applied to determine the comparability of fair market value pay and all actions are appropriately documented. In order to meet the requirements of the IRS Intermediate Sanctions regulations, the Compensation Committee identified the "disqualified individuals" that are in a position to exercise substantial influence over the company's operations. These individuals are the members of the Executive Officers Committee (EOC), Regional Medical Directors, physician board members and Section Heads for key departments. For disqualified individuals, the compensation review also includes the cost of benefits such as the company portion of medical and dental benefits, malpractice insurance, payments for 401K matching and pension payments. A different review process is used for Physicians. Annually, the Corporate Integrity department reviews the salary of each employed physician. This review includes a comparison of physician salaries against national survey data for their specialty. Three surveys are used for the review: McGladrey & Pullen, the Medical Group Management Association (MGMA) and American Medical Group Association (AMGA). The Physician Compensation department provides salary data for each physician including base salary, stipends, on-call pay, etc. If it is determined that a physician's compensation is higher than the survey data, the total work Relative Value Units (RVUs) are compared to the survey data. This review is performed to ensure their pay is comparable to the work performed. Comparable benefit survey data is obtained periodically from McGladrey & Pullen. Compensation for other non-physician key employees is reviewed by senior executives who take market value research into consideration when determining compensation levels.”

“All governing documents, conflict of interest policy, and financial statements are available upon written request to the Corporate Integrity Department.”

“JOINT VENTURE PROCESS When the organization evaluates its participation in a joint venture, the transactions are handled carefully to ensure that the organization's tax-exempt status is intact with regard to the arrangement. The operations of the joint venture are carefully reviewed by management and legal counsel, and the transaction is not entered into unless it is a reflection of the organization's tax-exempt purpose. A clause is inserted into the joint venture agreement that the operations of the joint venture must be performed in a manner that will not jeopardize the organization's tax-exempt status.”

“NUMBER OF BOARD MEMBERS WHO ARE INDEPENDENT The Articles of Incorporation provide that no action of the Board may be resolved unless a majority of the independent directors present approve the matter. Thus, even in situations where there is not an absolute majority of independent directors in office, those independent directors in office control Ochsner Community Hospitals' activities.”

“ADDITIONAL COMPENSATION EXPLANATION COMPENSATION FROM RELATED ORGANIZATIONS Many of the individuals listed in Part VII and Schedule J hold positions with related 501(c)(3) organizations. For each of these individuals, the compensation listed is received from the related organization, and the compensation is for the individual's role with the related organization or the integrated health system. The amount of time shown for each as "Average Hours Per Week Devoted To Position" consists primarily of his/her time spent on his/her role with Ochsner Community Hospitals. In reality, his/her time is spent fulfilling responsibilities through roles with all entities, including related organizations, and may be more evenly distributed across the organizations in the integrated health system. The following is a list of the individuals with such circumstances, each person's title with the related organization, and the related organization that employs each individual. Aderonke Akingbola, MD; Sr. Physician; Ochsner Clinic Foundation Joseph E. Bisordi, MD; Exec VP Chief Medical Officer; Ochsner Health System Bobby C. Brannon; Executive Vice President, Director of Finance, and Treasurer; Ochsner Clinic Foundation Lisa S. Colletti; VP Nursing, OMC Hospital; Ochsner Clinic Foundation Ava Jo Collins; COO-OBMC; Ochsner Clinic Foundation Michael F. Hulefeld; EVP & COO; Ochsner Health System George Loss, M.D.; Associate Medical Director and System Chairman, Department of Surgery Chief, Multi-Organ Transplant Institute Donna Martin; CNO OBMC; Ochsner Clinic Foundation Richard Milani, M.D.; Vice Chairman, Department of Cardiology; Ochsner Clinic Foundation G. Jody Morris, M.D.; Sr. Physician; Ochsner Clinic Foundation Peter November; Sr. VP & General Counsel; Ochsner Health System Scott J. Posecai; Chief Financial Officer; Ochsner Health System Patrick J. Quinlan, M.D.; CEO OCF & International Business; Ochsner Health System Eddy Ramirez; VP Planning; Ochnser Health System Dana Smetherman, M.D.; Sr. Physician; Ochsner Health System James Tebbe, Jr., M.D.; Lead Physician; Ochsner Clinic Foundation Warner L. Thomas; President and Chief Operating Officer; Ochsner Health System Suzanne Warren; VP Nursing OBMC; Ochsner Clinic Foundation Robert Wolterman; CEO OMC JEFF HWY; Ochsner Health System”

“ADDITIONAL COMPENSATION EXPLANATION COMPENSATION OF DIRECTORS AND AVERAGE HOURS PER WEEK DEVOTED TO POSITION Those directors listed as "Board Member Sr Phys" on the Form 990 for Ochsner Clinic Foundation (EIN 72-0502505) are compensated entirely due to their role as an employee of a member of the integrated health system. The amount of time shown for those Directors listed as "Board Member Sr Phys" as "average hours per week devoted to position" on the Form 990 for Ochsner Community Hospitals (EIN 20-5297040) consists primarily of their role as an employee of Ochsner Clinic Foundation. Additional time spent on boards, committees and through fulfilling other responsibilities as a member of one or more Boards of the varied Ochsner organizations is shown as a nominal amount for Ochsner Health System and/or Ochsner Community Hospitals. As a Senior Physician Director of an integrated health system, these individuals devote time to board activities of all 501(c)(3) members of the system to varying degrees including Ochsner Health System, Ochsner Clinic Foundation and Ochsner Community Hospitals. The amount of time shown for those Directors listed as "Community Directors" for "average hours per week devoted to position" on the Form 990 for Ochsner Community Hospitals (EIN 20-5297040) includes time spent on boards, on committees and through fulfilling other responsibilities as a member of the Board of varied Ochsner organizations. As a Community Director of an integrated health system, each Community Director devotes time to all 501(c)(3) members of the system to varying degrees including Ochsner Health System, Ochsner Clinic Foundation and Ochsner Community Hospitals.”

“ADDITIONAL COMPENSATION EXPLANATION COMPENSATION OF OFFICERS AND AVERAGE HOURS PER WEEK DEVOTED TO POSITION Compensation and average hours worked for Warner Thomas, Michael Hulefeld, Scott Posecai, Bobby Brannon, and Pete November, include all time related to the Ochsner Health System, which includes Ochsner Health System (OHS, EIN 20-5296918), Ochsner Clinic Foundation (OCF, EIN 72-0502505) and Ochsner Community Hospitals (OCH, EIN 20-5297040), all related 501(c)(3) organizations. Other members of the Ochsner network are charged a portion of these amounts. The amount of time spent by each officer as "average hours per week devoted to position" on the Form 990 of the organization that directly employs the individual consists primarily of their role as an Officer of the integrated health system. Additional time spent on boards, committees and through fulfilling other responsibilities as Officer of the Ochsner organizations is shown on each Form 990. The amount of time on this return is shown as a nominal amount, but in reality the time is more evenly distributed across all entities.”

“ADDITIONAL COMPENSATION EXPLANATION KEY EMPLOYEES COMPENSATED BY RELATED ORGANIZATIONS AND AVERAGE HOURS Dr. Aderonke Akingbola was employed and compensated by Ochsner Clinic Foundation, 72-0502505, 501(c)(3), a related organization. Dr. Joseph Bisordi and Mr. Bradley Goodson were employed and compensated by Ochsner Health System, 20-5296918, 501(c)(3), a related organization. Their time is split between the related organization and Ochsner Community Hospitals, but in all other respects they meet the requirements of a Key Employee of Ochsner Community Hospitals.”

“Net assets released for capital acquisitions -21,000. Gain on Asset Purchase 424,180. Other -200.”

“The process regarding the committee responsible for the audit, review, or compilation of the organization's financial statements and selection of an independent accountant has not changed from the prior year.”