Roper Saint Francis Physicians Network

“Carolinas Healthcare System (CHS), an unrelated organization, provides management oversight services. Lorraine Lutton, RSFH President and CEO, and Bret Johnson, RSFH CFO, are employees of CHS and their compensation is paid by CareAlliance Health Services, a related organization, through a management fee to CHS.”

“The sole member of the Corporation is CareAlliance Health Services, a South Carolina nonprofit, nonstock Corporation, d/b/a Roper St. Francis Healthcare. CareAlliance Health Services is in turn governed by a Board of Directors appointed by the "founding members". Please see the response to Line 7a below. The bylaws of the Organization specify certain qualifications of the thirteen member Board of Directors. At least nine directors must have their primary residence in a community served by the system. Five directors must be physicians actively engaged in the full time practice of medicine. Five of the directors are appointed to the Board of Directors by virtue of positions held within MSSC, BSHSI and CHS (ex-officio directors). Each of the five ex-officio directors serves as a director of the Organization for so long as such person holds his or her respective elected or appointed office in his or her respective founding member organization. Directors serve three-year terms and are limited to three consecutive terms. After an absence of at least one year, directors are again eligible for appointment to the Board of Directors for two consecutive complete terms.”

“The Organization is governed by a thirteen member Board of Directors appointed by the founding members. Subject to certain nominating and governance committee approvals, six directors are appointed by the Medical Society of South Carolina (MSSC), Bon Secours Health System, Inc. (BSHSI), and one director is appointed by Carolinas Healthcare System (CHS). It is the founding members' intent that the members of the Organization's Board of Directors are appointed to such positions because they have a willingness to serve the needs of the system as a whole and not the needs of any individual founding member.”

“The following actions shall require the unanimous affirmative approval of all of the founding members: (a) to amend the Articles of Incorporation or by-laws, including without limitation, any change in the Corporation's purposes; provided, however, that, subject to the procedures and voting requirements with respect to the admission of non-founding members, Schedule 3.1 may be amended with the approval of two (2) of the founding members to reflect the admission of a non-founding member; (b) to dissolve or liquidate the Corporation and to determine the distribution of assets upon dissolution; (c) to merge or consolidate the Corporation or to sell, convey, transfer, lease, or otherwise dispose of all or substantially all of its assets; (d) to appoint the President and Chief Executive Officer of the Corporation in a manner other than that established within the by-laws; (e) to alter or amend the Corporation's ethical performance standards (defined below); or (f) to enter into any material agreement whereby a third party will: (i) become an equity owner in any joint venture with the Corporation or any system participant and will not be legally obligated to support the corporation's ethical performance standards; or (ii) manage a substantial part of the facilities, assets, or operations of the system and will not be legally obligated to comply with and support the corporation's ethical performance standards.”

“The Form 990 was prepared by an independent accounting firm with assistance and oversight by management. Reviews were then conducted by senior management before drafts were sent to each member of the organization's governing body. A transmittal letter accompanied the drafts and provided highlights of the Form 990 to the Organization's Board of Directors. After the governing body approved the Form 990 draft, a final version was filed with the Internal Revenue Service.”

“The Directors shall complete and return to the Secretary an annual statement that each of them: (a) has received a copy of the Conflict of Interest Policy; (b) has read and understands the Policy; (c) agrees to comply with this Policy; (d) understands that the Policy applies to all committees; and (e) understands that the Organization is a charitable organization and must continuously engage primarily in activities which accomplish one or more of its tax-exempt purposes.”

“An independent company, Towers Watson, provides research, advice and guidance to the Compensation Committee and senior leadership to ensure the Organization's compensation programs for executives covered by the "Intermediate Sanctions Legislation" (IRC Section 4958) are aligned with its stated philosophy: Base salaries are targeted at the 50th percentile of the established comparator market; Total cash compensation (base salary plus annual incentive payments) are targeted at the 75th percentile of the established comparator market; Total direct compensation (total cash compensation plus long term incentive payments) will not exceed the 90th percentile of the established comparator market; Benefits are targeted at market median; and In aggregate, base salary, total cash compensation, total direct compensation and benefits comprise total compensation for executives. The Compensation Committee ensures that executive total compensation is reflective of the Organization's stated compensation philosophy. The Committee, in this process, authorizes and supports an annual three step process utilizing Towers Watson's resources: 1) Salary levels, annual bonus targets/payments and long term incentive grants are compared rigorously each year with market data based on comparable positions and organizations. A. Comparable organizations are typically not-for-profit healthcare systems with similar operating revenues. Private sector employer data, when available, are also included in the analysis for "transferable skills positions". B. Historically, performance incentive payouts generally track with a normal bonus payout distribution. Incentive goals are primarily based on formally defined quantitative goals approved by the ad hoc Compensation Committee of the RSFH Board of Directors. 2) All recommended pay decisions are tested against these data and the Organization's stated compensation philosophy. 3) A formal opinion letter is prepared by Towers Watson, representing that senior executives are compensated within the reasonableness standards mandated by the IRS. A similar process is performed by Towers Watson for the CEO and CFO positions. This letter provides a "safe harbor" for the organization's "directors" relative to the reasonableness of total executive compensation consistent with IRC Section 4958.”

“Photocopies of the Form 990 are available upon request at the Organization's administrative office. In addition, recent filings of the Form 990 are available online at www.guidestar.org.”

“The Organization's audited financial statements are published annually and are available to the public at www.dacbond.com.”

“The following board members were compensated for services performed for the organization (or a related organization) not in the capacity of their positions on the board. No board member is compensated for his services as a board member. Brian Cuddy, MD was compensated for medical services rendered to the organization and a related organization. Alison Dillon, MD was compensated for medical services rendered to a related organization. John B. Holloway, Jr. was compensated by the Medical Society of South Carolina for services as Chief Executive Officer. John A. Spratt, MD was compensated for medical services rendered to the organization. Susan Datta, MD was compensated for medical services rendered to the organization. Wills C. Geils, MD was compensated for medical services rendered to a related organization.”

“The amounts reported for SL Shaw & Associates represent payments for goods and services. These amounts cannot be separated.”

“The grants expense shown on page 10 of the 990 is an allocation from the parent company, CareAlliance Health Services. All grants meeting disclosure requirements have been listed on CareAlliance Health Service's Form 990.”

“Pension and Benefit allocation from CareAlliance -2,209,172. Equity Rransfer to Related Organizations 72,055,892. Other Changes in Net Assets -547,358.”

“The process has not changed from the prior year.”