Somerset Medical Center

“Effective with the close of business on may 31, 2014, the medical center was statutorily merged into robert wood johnson university hospital, an internal revenue code 501(c)(3) tax-exempt teaching hospital.”

“Somerset health care corporation ("shcc") is the sole member of this organization. Shcc has the right to elect the members of this organization's board of trustees and has certain reserved powers as defined in this organization's bylaws.”

“The organization's federal form 990 was provided to each member of its governing body prior to filing with the internal revenue service ("irs"). The organization's board of trustees has delegated to its advisory committee the responsibility to oversee and coordinate the federal form 990 preparation, review and filing process. As part of the tax return preparation process the organization hired a professional cpa firm with experience and expertise in both healthcare and not-for-profit tax return preparation, to prepare the federal form 990. The cpa firm's tax professionals worked closely with the organization's finance personnel and various other individuals of the organization to obtain the information needed in order to prepare a complete and accurate tax return. The cpa firm prepared a draft federal form 990 and furnished it to the organization's finance personnel and other individuals for their review. The organization's finance personnel and other individuals reviewed the draft federal form 990 and discussed questions and comments with the cpa firm. Revisions were made to the draft federal form 990 where necessary and a final draft was furnished by the cpa firm to the organization's finance personnel and various other individuals for final review and approval prior to providing it to each voting member of its governing body and filing with the irs.”

“The organization regularly monitors and enforces compliance with its conflict of interest policy. Annually all members of the board of trustees, officers, senior management and other key personnel are required to review the existing conflict of interest policy and complete a questionnaire. The completed questionnaires are returned to the organization's vice president of regulatory affairs/chief compliance officer for review. Thereafter the vice president of regulatory affairs/chief compliance officer prepares a summary of the completed questionnaires which contains information disclosed on an individual by individual basis. This summary is then provided to the organization's president/chief executive officer for review. Thereafter, the president/chief executive officer of the organization presents this summary to somerset medical center's audit and compliance committee of the board of trustees for its review and discussion.”

“During the short period january 1, 2014 through its statutory merger into robert wood johnson university hospital on may 31, 2014, the organization's board of trustees had an executive compensation committee ("committee"). The committee has adopted a written executive compensation philosophy which it follows when it reviews of the compensation and benefits of the organization's senior management, including the president/chief executive officer. The committee reviews the "total compensation" of the individuals which is intended to include both current and deferred compensation and all employee benefits, both qualified and non-qualified. The committee's review is done on at least an annual basis and ensures that the "total compensation" of senior management of the organization is reasonable. In 2008, the executive compensation committee was a recommending body to the board of trustees. The recommendations of the executive compensation committee were submitted for full approval by the board of trustees. The actions taken by the committee enable the organization to receive the rebuttable presumption of reasonableness for purposes of internal revenue code section 4958 with respect to the total compensation of certain members of the senior management team, including the president/chief executive officer, chief operating officer and chief financial officer. The three factors which must be satisfied in order to receive the rebuttable presumption of reasonableness are the following: 1. The compensation arrangement is approved in advance by an "authorized body" of the applicable tax-exempt organization which is composed entirely of individuals who do not have a "conflict of interest" with respect to the compensation arrangement; 2. The authorized body obtained and relied upon "appropriate data as to comparability" prior to making its determination; and 3. The authorized body "adequately documented the basis for its determination" concurrently with making that determination. The committee is comprised of members of the board of trustees each of who are independent and are free from any conflicts of interest. The committee relied upon appropriate comparable data; specifically the committee obtained a written compensation study from an independent firm which specializes in the reviewing of hospital and healthcare system executive compensation and benefits. The peer group of employers to be considered in measuring the competitiveness of the executive compensation program necessary to recruit and retain top executive talent consists of major teaching hospitals in the northeast region of the united states. The committee adequately documented its basis for its determination through the timely preparation of written minutes of the compensation committee meetings during which the executive compensation and benefits was reviewed and subsequently approved. The actions outlined above with respect to the committee and the establishment of the rebuttable presumption of reasonableness only applies to certain senior management personnel, including but not limited to the president/chief executive officer. The compensation and benefits of the other individuals contained in this form 990 is reviewed annually by the president/chief executive officer and senior staff with assistance from the organization's human resources department in conjunction with the individual's job performance during the year and is based upon other objective factors designed to ensure that reasonable and fair market value compensation is paid by the organization. Other objective factors include market survey data for comparable positions, individual goals and objectives, personnel reviews, evaluations, self-evaluations and performance feedback meetings.”

“The organization has issued tax-exempt bonds to finance various capital improvement projects, renovations and equipment. In conjunction with the issuance of these tax-exempt bonds, the organization's financial statements were included with the tax-exempt bond prospectus which was made available to the general public for review. The organization's filed certificate of incorporation and any amendments can be obtained and reviewed through the state of new jersey department of treasury.”

“Part vii and schedule j reflect certain board members and officers receiving compensation and benefits from this organization. Please note this remuneration was for services rendered as full-time employees of the organization and not for services rendered as a voting member or officer of this organization's board of trustees.”

“This organization is AN AFFILIATE WITHIN A TAX-EXEMPT INTEGRATED HEALTHCARE DELIVERY SYSTEM ("SYSTEM"). THE SYSTEM INCLUDES BOTH FOR-PROFIT AND NOT FOR-PROFIT ORGANIZATIONS. CERTAIN BOARD OF TRUSTEE MEMBERS, OFFICERS AND/OR DIRECTORS LISTED ON CORE FORM, PART VII AND SCHEDULE J OF THIS FORM 990 MAY HOLD SIMILAR POSITIONS WITH BOTH THIS ORGANIZATION AND OTHER AFFILIATES WITHIN THE SYSTEM. THE HOURS SHOWN ON THIS FORM 990, FOR BOARD MEMBERS WHO RECEIVE NO COMPENSATION FOR SERVICES RENDERED IN A NON-BOARD CAPACITY, REPRESENT THE ESTIMATED HOURS DEVOTED PER WEEK FOR THIS ORGANIZATION. TO THE EXTENT THESE INDIVIDUALS SERVE AS A MEMBER OF THE BOARD OF TRUSTEES OF OTHER RELATED ORGANIZATIONS IN THE SYSTEM, THEIR RESPECTIVE HOURS PER WEEK PER ORGANIZATION ARE APPROXIMATELY THE SAME AS THE HOURS REFLECTED ON PART VII OF THIS FORM 990. THE HOURS REFLECTED ON PART VII OF THIS FORM 990, FOR BOARD MEMBERS WHO RECEIVE COMPENSATION FOR SERVICES RENDERED IN A NON-BOARD CAPACITY AND PAID OFFICERS, REFLECT TOTAL HOURS WORKED PER WEEK ON BEHALF OF THE SYSTEM; NOT SOLELY THIS ORGANIZATION.”

“Somerset medical center ("smc") is an acute care general medical and surgical hospital. Smc is recognized by the irs as an internal revenue code section 501(c)(3) tax-exempt organization. Pursuant to its charitable purposes, smc provides medically necessary healthcare services to all individuals in a non-discriminatory manner regardless of race, color, creed, sex, national origin, religion or ability to pay. Moreover, smc operates consistently with the following criteria outlined in irs revenue ruling 69-545: 1. Smc provides medically necessary healthcare services to all individuals regardless of ability to pay, including charity care, self- pay, medicare and medicaid patients. 2. Smc operates an active emergency department for all persons; which is open 24 hours a day, 7 days a week, 365 days per year. 3. Smc maintains an open medical staff, with privileges available to all qualified physicians. 4. Control of smc rests with its board of trustees, which is comprised of independent civic leaders, and other prominent members of the community. 5. Surplus funds are used to improve the quality of patient care, expand and renovate facilities and advance medical care; programs and activities. The operations of smc, as shown through the factors outlined above and other information contained herein, clearly demonstrate that the use and control of smc is for the benefit of the public and that no part of the income or net earnings of the organization inures to the benefit of any private individual nor is any private interest being served other than incidentally. Background ========== smc is a nationally accredited 355-bed acute care and teaching hospital providing comprehensive emergency, medical/surgical and rehabilitative services to central new jersey residents. It is nationally recognized as a magnet hospital for nursing excellence. As somerset county's only acute care hospital, somerset medical center has a far-reaching impact on the county's quality of life, touching the lives of residents of all ages and racial and economic backgrounds. Each year, more than 250,000 people turn to the medical center for care, ranging from emergency, cardiac and cancer care to surgical, maternity and rehabilitation services. Care is provided regardless of patients' ability to pay. Each year, the medical center provides approximately $74.2 million in charity care (at gross charges). For more than a century, smc has been deeply rooted in the health of the community. Its extraordinary, far-reaching commitment to keeping people well and enhancing their quality of life has been a grounding and guiding force - embracing the cornerstone of its mission while inspiring new dimensions of care for area families. Smc has proudly evolved into a centerpiece of somerset county and its surrounding communities. Over the years, it has expanded beyond the realm of healing and toward a broader role of advocating wellness and empowering individuals to live healthier lifestyles. This multi-faceted approach reflects a dramatic shift in modern medicine, recognizing that the most powerful pathway to good health is through disease prevention rather than cure. And that adding life to your years is just as important as adding years to your life. With that in mind, smc has complemented its leading edge clinical services with an array of community-based, health promotion initiatives. These outreach and collaborative programs address the region's greatest medical priorities while supporting all aspects of physical, mental and spiritual well-being. Community education, screenings & outreach ========================================== smc's community focus is anchored by a vast assortment of seminars, fitness programs, support groups and screenings that guide area residents to healthier, safer living. The community health department sponsors an extensive calendar of events, including classes on nutrition, exercise, disease management, depression and a variety of other health topics.”

“Tobacco quit center ================== smc's tobacco dependency treatment program enlists a comprehensive approach to help patients kick the smoking habit safely and successfully. In fact, 73 percent of smokers who set a quit date and completed treatment at the quit center were tobacco free at their six-month follow-up. The program includes an evaluation, counseling and, when needed, pharmacotherapy to help deal with nicotine withdrawal symptoms. It also addresses issues that can accompany tobacco dependency, such as depression, eating disorders, fears of weight gain, anxiety, spousal problems and work-related stress. Treatments are tailored to each patient's needs and can be coupled with one-on-one education and motivational techniques. Somerset medical center's commitment to the community is integrated into every area of programming. This commitment is seen clearly in the activities and projects that are planned to meet identified health needs, to form partnerships to meet these needs and to improve the health and quality of life of those that we serve. Emergency medical services ========================== somerset medical center has provided advanced life support services to somerset county since 1982. Somerset medical center's three mobile intensive care units respond to over 7,500 requests for service annually. Through a shared services agreement with neighboring communities, somerset medical center also provides primary ambulance coverage for manville and raritan, backup ambulance coverage for south bound brook and bridgewater. In addition, the medical center provides daytime ambulance coverage for bedminster and far hills and daytime coverage for south plainfield and staffs two county-wide units available to respond anywhere in somerset county to supplement coverage by volunteer rescue squads. In 2007, the medical center began offering a non-emergency ambulance transport service to transport discharged patients between the medical center and nursing homes, assisted living facilities, rehabilitation centers and other healthcare facilities. In 2009, somerset medical center's emergency medical services (ems) department became one of the first in new jersey to begin administering therapeutic hypothermia - one of the most promising new advances in the treatment of cardiac arrest patients - before patients even arrive at the hospital. This procedure has been shown to increase survival rates and minimize brain damage in patients resuscitated after a cardiac arrest. The sooner therapeutic hypothermia is administered, the more likely the patient will be able to preserve brain function. In order to support local rescue squads with the addition of trained volunteers, the medical center's ems department developed an emergency medical technician training program for high school students in partnership with somerset county board of chosen freeholders, somerset county vocational & technical high school, somerset county ems chief officers association, raritan valley community college and volunteer first aid squads in somerset county. The class is the only one of its kind in the state affiliated with a hospital. Students, who complete the 16-week class, earn six college credits transferable to raritan valley community college. Many of the graduates of the class now serve on volunteer rescue squads. The medical center's emergency medical services department also provides a comprehensive range of training programs year-round for area rescue squad members and community residents, including cpr and first aid classes. Gateway to health information ============================= as part of its commitment to wellness education, smc maintains an extensive collection of health information resources available to all members of the community. The hospital campus houses a comprehensive medical library with the latest medical reference texts and periodicals, as well as internet access to a worldwide medical information network. The facility is open t”

“Expenses incurred in providing various other medically necessary healthcare services to all individuals in a non-discriminatory manner regardless of race, color, creed, sex, national origin, religion or ability to pay. Please refer to the organization's community benefit statement included in schedule o.”

“Other changes in fund balance include: - loss on defeasement of long-term debt - ($3,847,132); - pension liability adjustment - ($5,120,418); - fund balance transfer of somerset health care corporation; a related internal revenue code 501(c)(3) tax-exempt organization - ($990,772); - net change in interest in net assets of somerset medical center foundation, inc.; a related internal revenue code section 501(c)(3) tax-exempt organization - ($212,323); and - statutory merger into robert wood johnson university hospital; an internal revenue code 501(c)(3) tax-exempt teaching hospital - ($31,577,509).”

“An independent cpa firm audited the financial statements of the taxpayer for the short period ended may 31, 2014 and year ended december 31, 2013; respectively, and issued a certified opinion on those audited financial statements. An unqualified opinion was issued by the independent cpa firm each year. The taxpayer's audit and compliance committee of its board of trustees assumes responsibility for oversight of the audit of its financial statements and the selection of an independent auditor.”