Community Howard Regional Health

“Related party information among officers jason farhlander and elizabeth tharp served as an officer of community health network ("chnw"). Jason fahrlander, elizabeth tharp, and john bilo are employed by chnw.”

“Management delegated chrh has delegated exclusive authority to community health network ("chnw"), a 501(c)(3) entity, acting through chnw's board of directors, in the following substantive areas: strategic planning, capital access, budgeting and allocation, audit and compliance, executive compensation, and dispute resolution. In addition, chnw must approve any modification, repeal amendment, or restatement of chrh's articles of incorporation. Finally, chnw must approve any material sale or disposition of the assets of chrh.”

“Significant changes to organizational documents chnw is the sole member of chrh. Accordingly, the bylaws were revised to no longer require 5% of members to constitute a quorum for a meeting of the members. Rather, the amended bylaws now require the presence of one or more duly authorized representatives of the member (chnw) to constitute a quorum when membership voting is required.”

“Classes of members or stockholders community health network, inc. Is the sole member of chrh. Chnw is an exempt organization pursuant to section 501(c)(3).”

“Election of members and their rights community health network, inc. As the sole member of chrh appoints a majority of the board of directors.”

“Decisions subject to approval of members the following governance items require the written approval of the member (chnw): a) amendment of organizational documents; b) the incurrence of any unbudgeted indebtedness or loans above $750,000; c) the formation of legal entities, the sale, transfer or substantial change in use of all or substantially all of the assets of chrh, or the divesture, dissolution, closure, merger, consolidation or reorganization of chrh; d) the acquisition, sale, lease, transfer or other alienation of property when such transaction is above $1,000,000, during any fiscal year; e) disposition of assets on dissolution; f) approval of the annual capital and operating budgets, plans, or forecasts approved by the board; g) the selection of the independent auditing firm either directly or through the member's audit, compliance committee, and finance committee; h) the determination of physician, president, and senior leaders compensation; i) all unbudgeted capital improvements, additions and structural changes to the property greater than the budgeted amount by $500,000 per fiscal year in the aggregate; j) strategic plans; k) the hiring and firing of the president subject to the prior opportunity for the board to review and comment, and l) the commencement or discontinuation of any line of business or healthcare services to be provided at the corporation's facilities.”

“Organization's process to review form 990 chnw has assumed responsibility for chrh's audit, compliance, finance and executive compensation matters, including specifically the preparation and review of chrh's form 990. Chnw's board of directors has delegated authority for the review of chrh's form 990 to two committees composed of independent outside directors: a) the network executive compensation committee reviewed the compensation aspects of chrh's form 990, and b) the network finance comittee reviewed the remainder of the chrh's form 990. In addition, chrh's outside accounting firm and law firm reviewed the form 990 prior to filing. Chrh and chnw utilized this process to ensure that chrh's form 990 received substantive review by directors and professionals with specific knowledge of chrh's activities and extensive financial, accounting and tax expertise.”

“Enforcement of conflicts policy chnw has assumed responsibility for chrh's audit and compliance matters. Chnw has adopted a conflict of interest policy that applies to chrh. The conflict of interest policy requires directors, officers, and key employees to submit an annual conflict of interest disclosure. The annual disclosure requires directors, officers, and key employees to disclose, in writing, any known financial interest that the individual (together with family members) has in any business entity that transacts business with chrh. In addition, directors, officers, and key employees are required to immediately disclose any possible conflict of interest that arises mid-year in relation to a proposed transaction. The conflict of interest policy requires that any individual with a conflict be recused from the decision making process, that independent directors or committee members determine that the proposed transaction is in the best interest of chrh, and the transaction must be approved by a vote of independent directors or committee members without the participation of any interested individual. The annual conflict disclosure statements are submitted to, and reviewed by, chnw's audit committee, composed of independent directors. In addition, the executive staff and general counsel of the network are responsible for monitoring any possible conflict transactions that arise and managing them to ensure that all transactions represent arms length, fair market value terms for the benefit of chrh.”

“Compensation process for top official as a member of the network, chrh is subject to the executive compensation practices and procedures of chnw, the network parent. Chnw has adopted an executive compensation and intermediate sanctions policy that applies to chrh. The purpose of the policy is to ensure that chrh's compensation arrangements with related parties are evaluated and entered at arms length and that any compensation that is paid to a related party is reasonable and reflects fair market value. This policy encourages the application of the rebuttable presumption standard of code section 4958 and the related treasury regulations by: a) excluding any interested party from the decision making process, b) requiring disinterested board or committee members to obtain and rely upon comparability data when setting the proposed compensation terms, c) requiring approval of the transaction in advance by disinterested directors or committe members, and d) requiring contemporaneous documentation (i.e. Minutes) reflecting the decision and the process by which it was made. Chnw has delegated authority regarding chrh's executive compensation to a) the network executive compensation committee, composed of independent outside directors, which is responsible for applying the terms and process of the executive compensation and intermediate sanctions policy as outlined above, and b) the network chief human resources officer who is responsible for obtaining comparative salary market data for the chief executive officer, officers, and key employees, engaging an independent compensation consultant to provide reasonable compensation analysis and/or confirm the reasonableness of compensation, and providing staff support to the network executive compensation committee. During 2022, the network executive compensation committee followed this process for all senior executive leaders. Form 990, part vi, section b, line 15b - compensation process for officers see line 15a above form 990, part vi, line 16b - joint venture procedure joint venture operating agreements involving chrh include provisions to protect chrh's tax-exempt status. Each agreement contains specific requirements related to the provision of health care services with focus on community health benefit and must follow a formal review process prior to contract execution. Chrh continually ensures that its tax-exempt status is protected by actively participating in the governance of all joint ventures.”

“Governing documents disclosure explanation a) the articles of incorporation and business entity report are on file with the indiana secretary of state and are available to the public upon request to the indiana secretary of state or free of charge on the secretary of state's website. B) as a member of the network, chrh has adopted the network conflict of interest policy. While this policy is not available to the public, the network's definition of a conflict of interest and how to report such an incident is described in the network responsibility and compliance program ("nrcp") manual which is posted on the network's website, ecommunity.com. This manual is available for the public to review. C) chrh does not have individually audited financial statements. Its financial results are included in the consolidated financial statements of chnw and affiliates. As such, there are no individual financial statements to post. Chrh does file the 990 tax return on an annual basis which is available upon request and/or available on a delayed basis on guidestar.org. D) community health network, inc. And affiliates provide any document open to public inspection upon request.”

“Part vii, section b - independent contractor disclosure compensation to fa wilhelm construction co inc includes material costs.”

“Chrh received provider relief funds of $4,192,911 in 2022 pursuant to the cares act.”

“Form 1096 was processed under the name and federal identification number of community health network, inc, the parent organization and a 501(c)(3) entity.”

“Purchased services: program service expenses 3,220,114. Management and general expenses 8,909,098. Fundraising expenses 0. Total expenses 12,129,212. Professional fees: program service expenses 227,406. Management and general expenses 3,728,305. Fundraising expenses 0. Total expenses 3,955,711. Network allocations: program service expenses 7,371,521. Management and general expenses 20,394,799. Fundraising expenses 0. Total expenses 27,766,320. Lab services: program service expenses 1,378,473. Management and general expenses 3,813,826. Fundraising expenses 0. Total expenses 5,192,299.”

“Change in equity investment 510,337. Reclassification of intercompany balances 23,362,658. Change in eliminations 5,151,515. Howard surgery center distributions -4,804,000.”