Brookville Hospital

“Members: effective january 1, 2010, penn highlands dubois (ph dubois) executed an acquisition with brookville hospital and related entities. As part of the agreement,penn highlands dubois became the sole member of brookville hospital and related entities. Ph dubois and penn highlands healthcare (phh) hold certain powers, including the approval of the election and removal of officers and directors and approval of any and all amendments to the bylaws or other organizational/governance documents. Phh shall have the following powers with respect to the election and removal of directors: prior to the end of phh's fiscal year, the phh board will meet to elect the directors, with the exception of ex-officio directors. At least sixty (60) days in advance of this meeting, ph brookville shall provide to phh's governance/nominating committee (the phh governance/nominating committee) a list of one or more candidates (the number of candidates to be determined in the phh governance/nominating committee's discretion) for each expiring director position, with the exception of any ex-officio directors. The list of candidates shall have been developed by ph brookville in consultation with this organization's board. The phh governance/nominating committee shall review each candidate in accordance with the criteria set forth in the phh bylaws, the criteria, if any, set forth in this organization's bylaws or policies for which said candidate is being considered for board service, and the policies and rules of phh, including, without limitation, the conflict of interest policy (all of which shall be referred to collectively herein as the eligibility criteria) and develop a list of one or more candidates for each open position (the number of candidates to be determined in the phh governance/nominating committee's discretion). Once the slate of candidates is nominated by the phh governance/nominating committee, the board of penn highlands brookville shall submit to the phh board for election such slate of candidates for the open board positions. The phh board may elect by a vote of the majority or refuse to elect each candidate submitted by the board of ph brookville and may not elect any candidate not submitted by the board of ph brookville and nominated by the phh governance/nominating committee. The board of phh has the power to remove such director at any time with or without cause. Subject to the approval of phh as set forth in the bylaws, the articles and the bylaws may be altered, amended, or repealed and new bylaws or articles may be adopted by the affirmative vote of a majority of the board present at a meeting at which a quorum is present. Written notice of the intent to amend the bylaws or the articles and a draft of the proposed change shall be sent to all directors, by the secretary, at least five (5) days prior to any meeting at which amendment of the bylaws or the articles is intended.”

“See schedule o line 6 explanation above.”

“See schedule o line 6 explanation above.”

“Form 990 review process: the form 990 is prepared by an independent accounting firm based on the audited financial statements and information provided by the accounting department of the organization. The draft form 990 is reviewed by the cfo and the controller. After all suggested changes from the cfo and controller are made, the updated draft form 990 is provided for review to the full board. Any questions or comments from the board are addressed before filing.”

“Monitoring compliance with the conflict of interest policy: penn highlands healthcare, inc. (phh), maintains a conflict of interest policy which applies to all subsidiaries. The conflict of interest policy applies to board members, officers, executive employees, and any other manager or supervisor exercising substantial influence over operations. Each covered person will promptly and fully disclose all material facts of every actual or potential dual interest existing at the time when he/she becomes a covered person, and annually through each phh system entity's disclosure statement, which requests disclosure of relationships, investments, and transactions that may lead to an actual conflict of interest. All completed disclosure statements will be provided to the phh governance/nominating committee. This committee, in consultation with the chairperson or vice chairperson of each phh system entity's board, shall evaluate the completed disclosure statements and determine if there are any conflicts that are so pervasive as to render any covered person ineligible for service. The chairperson of each phh system entity's board will disclose to the full board of said phh system entity all dual interests reported to him or her under the policy and will also make the disclosure statements of all covered persons available to directors at any time during the year. If a potential dual interest arises as a result of a contemplated phh system entity board (or committee) action, the chairperson of said phh system entity's board or the interested person shall, or any other director may, raise the question of the interested person's dual interest. The disinterested members of the phh system entity's board (or committee) will evaluate the disclosures and the material facts relating to the transaction, arrangement, or policy giving rise to the dual interest to determine whether they involve actual conflicts of interest and may attempt to develop alternatives to remove the conflict from the transaction, arrangement, or policy. A covered person who has a dual interest shall not be present for or shall leave any portion of a meeting at which a phh system entity's board (or committee) is voting to determine whether a conflict exists, but may be present prior to the vote to make a presentation to said board (or committee), to disclose additional facts, or to respond to questions. If a phh system entity's board (or committee determines that an actual conflict of interest exists, the interested person shall be so advised and the chairperson of a phh system entity's board or committee shall, if appropriate, appoint a disinterested person or committee or direct management to investigate alternatives to the proposed transaction or arrangement, if this has not already been done. Any interested person who has an actual conflict of interest with respect to the transaction or arrangement does not participate in and is not present for the vote regarding any such transaction or arrangement. If an individual whose company or employer has a business relationship with a phh system entity, but the individual does not have an actual conflict of interest with respect to this business relationship, the individual may nonetheless voluntarily recuse him/herself from voting on any matters related to the relationship.”

“The penn highlands healthcare (phh) executive compensation committee consults with the healthcare consulting firm, yafee & company to obtain comparable data to make recommendations to the board of directors regarding executive compensation. The penn highlands healthcare board of directors is acutely aware of the heightened public scrutiny of executive compensation and the need to consider regulatory compliance when setting executive pay. Compensation reviews are done on a continuous basis. Compensation determinations of phh employed officers are made by the phh compensation committee. Compensation determinations of certain employed officers are also reviewed and aproved by the phh compensation committee and shared with the compensation committee or board. The compensation committee of phh strive to take the steps necessary to qualify for the "rebuttable presumption of reasonableness" under federal tax law. The phh executive compensation committees are responsible for (1) determining the overall total compensation strategy for all their respective corporate officers, (2) approving all compensation and benefits decisions for corporate officers, and (3) reporting such actions to the phh board on a continuous basis. In addition, the executive compensation committees, as applicable, expressly determine the reasonableness of total compensation and benefits for all corporate officers, and assures that all officer compensation decisions are made after thorough consideration of and comparison to the market practices of other similarly situated not-for-profit healthcare executives in comparable organizations. The executive compensation committees consist of board members who do not have material financial interests that could be affected by the officer compensation decisions made by the committees. The comparability data used to assist the executive compensation committees in their compensation deliberations are compiled by an independent, national compensation consulting firm that is retained by and reports directly to the executive compensation committees. The data collected by the consultant consists of market information for executives in functionally similar positions in similarly situated not-for-profit healthcare organizations. The deliberations and decisions of the executive compensation committees are contemporaneously documented, reviewed and approved by the executive compensation committees, and provided to the board of phh, as applicable.”

“Document disclosure: the financial summary and annual report can also be reviewed in the hospital administrative offices. The governing documents and conflict of interest policy are not available to the public.”

“Director compensation: no directors receive compensation for their roles as directors. Julianne peer and tabatha jeffers receive compensation from the organization and/or related organizations for their roles as management and/or physicians.”

“Brookville hospital is a 35 bed critical access hospital that provides quality healthcare services. Outpatient services include radiology, lab and rehabilitation.”

“Organization's mission: our vision is to be the integrated health system of choice through excellent quality service and outcomes. Value statement: - quality & safety: provide a safe environment with high quality outcomes. - teamwork: foster a culture of teamwork, support, trust, and loyalty. - integrity: practice the principles of honesty, confidentiality, respect, and transparency. - person-centered: recognize those we serve as equal partners. - service: demonstrate compassion by listening, engaging, anticipating, and exceeding needs and expectations. - stewardship: commit to investing in our human and material resources while practicing fiscal responsibility. - partnership: officer services and programs through partnerships with our physicians, providers, stakeholders, and other organizations. - education: expand our emphasis on education and enhance our position as a learning organization.”

“Contract labor: program service expenses 1,435,494. Management and general expenses 124,826. Total expenses 1,560,320. Maintenance contracts: program service expenses 560,182. Management and general expenses 48,712. Total expenses 608,894. Outside services: program service expenses 489,706. Management and general expenses 42,583. Total expenses 532,289. Professional fees: program service expenses 414,968. Management and general expenses 36,084. Total expenses 451,052. Lab services: program service expenses 330,091. Management and general expenses 28,704. Total expenses 358,795. Food: program service expenses 180,795. Management and general expenses 15,721. Total expenses 196,516.”

“Intercompany transactions -5,560,669. Distributions from investments -507,877. Pension liability adjustment 214,152. Realized gain adjustment 169,270. Other changes in net assets -21,719,369.”