Providence Medical Institute

“Paul Murata, MD William Liu, MD Mary Jo Donahue, MD Brian Gee, MD Phong Nguyen, MD The above named Board Members have a business relationship with each other serving as physicians in Providence Medical Group, Inc.”

“The sole Corporate Member is Providence Health System - Southern California.”

“The powers of the Corporate Member include the provision to select the Chief Executive Officer/Executive Director/President, any Medical Directors, Chairman of the Board, Secretary and Chief Financial Officer of the corporation and any outside Management Company of the Corporation.”

“The following powers are reserved exclusively to the Corporate Member: A) To approve the philosophy, mission, values, objectives and purposes, including long range goals and strategies of the Corporation, as well as to approve any change thereto. B) To approve the Corporation's Articles of Incorporation and Bylaws, as well as to approve their amendment or rescission. C) To approve any merger, disposition of all or substantially all assets of the Corporation, consolidation, affiliation or dissolution of the Corporation. D) To approve the annual operating and capital budgets and strategic plan, as well as any expenditure in excess of 10% of the annual budget. E) To approve any funding through tax exempt bonds and any necessary Board composition modifications. F) To approve the Conflict of Interest Policy, as well as any changes thereto. G) To approve any gift of assets of real or personal property which has a value in excess of a dollar amount to be established by the Corporate Member from time to time and which is not included in the capital budget. H) To approve any contract or series of contracts in which consideration exceeds the sum of $250,000. I) To approve any indebtedness of the Corporation or any encumbrance of the Corporation's assets in any amount greater than $250,000. J) To approve the managed care contracting guidelines and any modifications thereto and approve any managed care agreements which do not meet the then current approved managed care contracting guidelines. K) To approve the Charity Care Policy and any modifications thereto.”

“The Form 990 is prepared internally by experienced staff and reviewed by the internal Director of Taxes and external tax advisors. The Board of Directors reviewed the Form 990 prior to filing with the IRS.”

“On an annual basis, each board member and management level employee must complete and submit an updated conflict of interest statement. Conflict of interest disclosures are reviewed by the System Integrity Department working in conjunction with the Department of Legal Affairs. If it is determined that an actual conflict exists, appropriate follow-up action is taken with the individual to rectify the conflict.”

“It is Providence's intention to make financial information accessible and transparent. Although the filing of Form 990 provides insight into how Providence achieves its Mission, delivers its programs and stewards its finances, deciphering the information directly from Form 990 can be challenging. The following paragraphs provide further information about the process we use to determine compensation for top management, officers and key employees. Providence has a single fiduciary Board, with responsibility for financial oversight associated with fulfillment of the Providence Mission, developing system policies, protecting the assets entrusted to the organization and overseeing the strategic and operational affairs of Providence's legal entities. Providence also maintains a network of community ministry boards with responsibility for quality of care oversight, community relations, advocacy and community needs assessments. Providence has a consistent compensation philosophy for all of its employees, including our senior executives. Salaries for senior executives are determined by the Providence Board's Human Resources Committee and approved by the full Board of Directors, none of whom is a Providence employee. The Board retains an independent consultant each year to review salaries of those in the most significant leadership roles in the organization. Part of the consultant's role is to review an extensive array of compensation surveys of large, not-for-profit health care systems in the United States. Providence is one of the larger health systems in the country, and as such, the Board benchmarks executive compensation against other large, not-for-profit health systems whose revenue is similar to that of Providence. Base salaries for Providence executives are set at the median level of the market, as identified by the independent consultant and reviewed with the Human Resources Committee. Performance incentives allow executives to earn additional compensation if they achieve specific organizational goals for furthering Providence operating commitments and strategic objectives - advancing the Providence Mission and core values, meeting benchmarks for charity care, achieving quality targets, delivering top-rated patient satisfaction, meeting employee satisfaction goals and reaching financial performance objectives. The Board of Directors conducts a thorough process to ensure performance incentives are aligned with appropriate practices for not-for-profit health care systems. The Board's process for executive compensation fully complies with IRS standards and mirrors the best practices recommended in the "Report to Congress and the Nonprofit Sector on Governance, Transparency, and Accountability" submitted to the Senate Finance Committee by the Panel on the Nonprofit Sector.”

“Public disclosure of governing documents, conflict of interest policy and 990 filings are made available to the public upon written request. The consolidated financial statements are available on our public Internet site www2.providence.org. All governing policies including the conflict of interest policy, as well as 990 filings are available to employees on the Intranet site.”

“Medical Professional Compensation: Program service expenses 34,600,283. Management and general expenses 0. Fundraising expenses 0. Total expenses 34,600,283. Medical Director Fees: Program service expenses 778,512. Management and general expenses 0. Fundraising expenses 0. Total expenses 778,512. Purchased Medical Services: Program service expenses 2,146,893. Management and general expenses 0. Fundraising expenses 0. Total expenses 2,146,893. Consulting: Program service expenses 171,375. Management and general expenses 1,895,884. Fundraising expenses 0. Total expenses 2,067,259. Other Purchased Services: Program service expenses 3,101,174. Management and general expenses 839,343. Fundraising expenses 0. Total expenses 3,940,517. Purchased SVC AR Billing: Program service expenses 0. Management and general expenses 57,450. Fundraising expenses 0. Total expenses 57,450. Collections Agency Costs: Program service expenses 0. Management and general expenses 42,626. Fundraising expenses 0. Total expenses 42,626. Purchased Services Courier: Program service expenses 43,264. Management and general expenses 0. Fundraising expenses 0. Total expenses 43,264. Purchased Services Security: Program service expenses 60,797. Management and general expenses 0. Fundraising expenses 0. Total expenses 60,797. Transcriptions Services: Program service expenses 9,261. Management and general expenses 0. Fundraising expenses 0. Total expenses 9,261. Janitorial Service: Program service expenses 247,926. Management and general expenses 0. Fundraising expenses 0. Total expenses 247,926. Printing: Program service expenses 24,337. Management and general expenses 0. Fundraising expenses 0. Total expenses 24,337. Recruitment: Program service expenses 0. Management and general expenses 43,199. Fundraising expenses 0. Total expenses 43,199.”

“System Office Capital Assessment Transfer -1,705,537. Refund Adjustment -634,885. Deferred Grant Revenue -8,000. Skokandic Assets Donation -8,470. Del Vicario Assets Donation -38,380.”

“The Providence Health & Services Audit and Compliance Committee assists the Board of Directors with the oversight of the integrity of the financial statements and reporting, the audit process and the internal financial controls and policies; compliance with ethical, legal and regulatory standards and requirements; the independence, qualifications and performance of the internal and external auditors; the investment committee; and informs the Board of Directors of critical risk areas and recommended mitigation.”

“The employees working at Providence Medical Institute are paid by Providence Health System - Southern California EIN #51-0216589. Therefore, no W-2s are issued by the reporting organization.”