Rockford Health System

“The Executive Committee consists of seven individuals, each of whom shall have a vote, including: the RHS CEO, the chairman, vice-chairman, immediate past chairman, treasurer, and 2 additional directors of the board. At least one member of the Executive Committee shall be a physician. The Executive Committee shall in all instances be comprised of at least 51% community members. In the event that one or more of the aforementioned voting members of the Executive Committee is unable to serve in such capacity, then the chairman of the corporation shall designate a replacement from among the board members. The Executive Committee Shall meet as needed. The executive committee shall review reports from the RHS CEO regarding the performance of executives of the corporation and affiliated corporations, monitor the performance of the RHS CEO of the corporation against annual objectives, and determine the compensation level of the RHS CEO. In addition, when the board of directors is not in session, the executive committee shall have all the powers, duties, responsibilities and authority of the board, except as prohibited by law.”

“MERCYROCKFORD HEALTH SYSTEM (MRHS) IS THE SOLE CORPORATE MEMBER OF ROCKFORD HEALTH SYSTEM (RHS). The following actions of RHS must be approved by a majority vote of MRHS's board of directors: (i) Initiation or approval of any sale or other disposition of assets by RHS or its Affiliate having a book or market value exceeding $500,000;provided, however, the Member shall initiate or approve any sale, transfer or other disposition of assets having a current value in excess of $10,000,000 only after obtaining Advice and Input; (ii) Initiation or approval of the formation of a new Affiliate, or an equity investment by RHS or an Affiliate in any unrelated person; (iii) Approval of the annual consolidated operating and capital budgets of RHS and its Affiliates, which shall be consistent with the strategic plans and strategic capital plans of the System; (iv) Initiation or approval of unbudgeted or out-of-budget expenditures by RHS or one or more Affiliates that exceed $500,000 as either a single item or a series of related items; (v) Initiation or approval of capital expenditures by RHS or one or more Affiliates exceeding $1,500,000; (vi) Approval of local banking relationship of RHS or the Affiliates and RHS's or any Affiliate's engagement of independent auditors; (vii) Initiation or approval of loans or other incurrence of debt by RHS or one or more Affiliates exceeding $500,000; (viii) Approval of any action that could impair the tax-exempt status of RHS or any Affiliate, after obtaining Advice and Input.”

“See narrative for part vi, line 6”

“See narrative for part vi, line 6”

“The data was gathered by the accounting staff with input from the executive staff. The data was reviewed and the Form 990 prepared by the RHS staff. Once the Form 990 was completed, it was reviewed by an independent accounting firm and the organization's CFO.”

“By written policy, RHS sends out, on an annual basis, the corporate Conflict and Duality of Interest policy to all Board members, corporate officers and other key individuals (those having responsibility and authority to make final decisions regarding the acquisition of products or services). Each recipient is required to complete a Financial Interest Disclosure Statement, which is submitted to the Vice President, Legal Services/General Counsel for review. With respect to physicians and managers who are key individuals, any potential conflict of interest is reviewed with the appropriate executive staff member for follow up with the disclosing party in order to review the matter in more detail. This includes emphasizing that the disclosing party is not permitted to participate in any negotiations for the purchase of any products or services where the conflict is deemed material, or authorize the subsequent purchase of related goods and services. The disclosing party is also required to identify each and every instance of a potential conflict as they may arise in the ordinary course of business. A similar process is followed for the Board of Directors, except that any potential conflict is reviewed by the Board's Governance Committee. Board members may comment on transactions where there is a potential conflict, but cannot vote on the related matter and may be required to leave any meeting where the potential conflict is reviewed by the Board or where the Board takes action to either approve or not approve the proposed transaction. A board member also has a continuing duty to report any conflicts as they may arise in the ordinary course of business. In the event that a potential conflict of interest is reported or discovered outside the established process, appropriate review and action would be taken. This process was last completed in 2015. The RHS Conflict of Interest Policy is available upon request.”

“Compensation for the top management official is governed by the RHS Board of Directors, and overseen by the Executive Committee. The RHS Board has established a total compensation philosophy that directs the compensation practices for all executives. This Board has established a Compensation Committee to establish and review all executive compensation annually based on the established philosophy. An external executive compensation firm provides consulting on RHS salary ranges and compensation philosophy. The appropriate peer group for compensation comparison purposes is other not-for-profit healthcare systems similar in size and complexity. RHS generally conducts an analysis of total compensation every three years but may choose to vary from this schedule as determined by the Compensation Committee. This process is documented, and was last completed in 2015.”

“Compensation for other officers and key employees is governed by the RHS Board of Directors. The RHS Board has established a total compensation philosophy that directs the compensation practices for all executives. This Board has established a Compensation Committee to establish and review all executive compensation annually based on the established philosophy. An external executive compensation firm provides consulting on RHS salary ranges and compensation philosophy. The appropriate peer group for compensation comparison purposes is other not-for-profit healthcare systems similar in size and complexity. RHS generally conducts an analysis of total compensation every three years but may choose to vary from this schedule as determined by the Compensation Committee. This process is documented, and was last completed in 2015.”

“Financial statements are available through the Illinois Attorney General's Office. Governing documents are available by request from Board Secretary. The conflict of interest policy is not published but is available upon request.”

“Part I of the Form 990, line 5 reports 360 total employees of Rockford Health System. Total salaries and other compensation reported on the Form 990, Part I, line 15 is $1,339,860. The average compensation for Rockford Health System is higher than this data presents; the salaries and benefits reported do not include the salaries and benefits that were allocated to Rockford Memorial Hospital, Rockford Memorial Development Foundation, Visiting Nurses Association of the Rockford Area, and Rockford Health Physicians, four related entities of which Rockford Health System is the sole corporate member.”

“The Rockford Health System entity was merged into Mercy Health Corporation effective 12/31/15. RHS's assets and liabilities were transferred to Rockford Memorial Hospital prior to that merger.”

“CONSULTING FEES - Total Expense: 909256, Program Service Expense: 909256, Management and General Expenses: , Fundraising Expenses: ;”

“Net transfers to affiliated organizations - -6059594;”