Hap Eduaction and Research Services

“The officers of the hospital & healthsystem association of pennsylvania (hap) provide management and oversight to hap education & research services (hap education). Hap education is a controlled entity of hap. All salaries of hap education are paid through hap, through a common paymaster.”

“The form 990 is prepared internally. Hap education's tax advisors then review the form 990 and make any necessary changes. After the tax advisor's review, the form 990 is given to all board members for review. Once the board has reviewed, the tax advisors prepare the final form 990 and send back for signatures and filing, along with a public inspection copy.”

“A written conflict of interest policy is distributed to all board members on an annual basis and to employees bi-annually with requested disclosures. The purpose of the conflicts of interest policy (the "conflicts policy") is to protect the interest of hap education when it contemplates entering into a transaction or arrangement that might benefit a private interest of an officer or director of hap education. The conflicts policy is intended to supplement, but not replace, any applicable state laws governing conflicts of interest applicable to nonprofit corporations. In connection with any actual or possible conflicts of interest, an interested person must disclose the existence of his or her financial interest and must be given the opportunity to disclose all material facts to the directors and members of committees and board-delegated powers considering the proposed transaction or arrangement. An interested person is defined as any director, principal officer, or member of a committee with board-delegated powers who has a direct or indirect financial interest. If a person is an interested person with respect to hap education or any of the affiliates, he or she is an interested person with respect to all affiliates and hap education. After disclosure of the financial interest and all material facts, and after discussion with the interested person, he/she shall leave the board or committee meeting while the determination of a conflict of interest is disclosed and voted upon. The remaining board or committee members shall decide if a conflict of interest exists. Procedures for addressing the conflict of interest: -an interested person may make a presentation concerning the actual or potential conflict of interest at the board or committee meeting, but after such presentation, he/she shall leave the meeting during the discussion of, and vote on, the transaction or arrangement that results in the conflict of interest. -the chairperson of the board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement. -after exercising due diligence, the board or committee shall determine whether hap education can obtain a more advantageous transaction or arrangement with reasonable efforts from a person or entity that would not give rise to a conflict of interest. -if a more advantageous transaction or arrangement is not reasonably attainable under circumstances that would not avoid a conflict of interest, the board or committee shall determine by a majority vote of the disinterested directors or committee members whether the transaction or arrangement is in hap education's best interest and for its own benefit and whether the transaction is fair and reasonable to hap education and shall make its decision as to whether to enter into the transaction or arrangement in conformity with such determination. Violations of the conflicts policy: -if the board or committee has reasonable cause to believe that an interested person has failed to disclose an actual or possible conflict of interest, it shall inform the interested person of the basis for such belief and afford the interested person an opportunity to explain the alleged failure to disclosure. -if, after hearing the response of the interested person and making such further investigation, as may be warranted in the circumstances, the board or committee determines that the interested person has in fact failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.”

“In fulfillment of the compensation committee's responsibilities (comprised of hap board members), in regard to the ceo's compensation each year, the executive compensation and benefits consultants, sullivan cotter & associates, inc. (sullivan cotter) conducts a comprehensive review of ceo total compensation. To evaluate the total compensation program for the ceo (an employee of the hospital & healthsystem association of pa, no salary is charged to hap education), sullivan cotter, annually: - collects and reviews background data, including financial data and current compensation information; -compiles comprehensive data for ceos with hap's select peer group; -compares the ceo's current salary, incentive benefit and total compensation levels to peer group median levels; and -prepares, for the committee's review, a memorandum documenting findings. The process for setting other officers- and key employees' compensation is the same as above. In fulfillment of the compensation committee's responsibilities, in regard to officers- and other key employees' compensation each year, the executive compensation and benefits consultant, sullivan cotter conducts a comprehensive review of officers- and other key employees' total compensation. To evaluate the total compensation program for officers and key employees, sullivan cotter annually: -collects and reviews background data, including financial data and current compensation information; -compiles compensation data for the officers and key employees with a select peer group; -compares the officers- and key employees' current salary, incentive benefit and total compensation levels to peer group median levels; and -prepares, for the committee's review, a memorandum documenting findings. The compensation committee discusses, reviews and approves any recommendations provided by sullivan cotter. The final recommendation is approved by the board during an executive session.”

“See answer to question 15a.”

“Hap education's financial statements are available to the public by request. Hap education has a public inspection copy of its form 990 and bco findings available for inspection or a copy can be e-mailed or scanned upon request. The governing documents and the conflict of interest policy have not been made available to the public. However, if asked to see a copy, the policy or the governing documents would be made available.”