Pahcs II

“As of 9/1/2020, the sole member of PAHCS II is Northwestern Medical Faculty Foundation (NMFF), a related tax-exempt organization. NMFF is itself wholly controlled by Northwestern Memorial HealthCare (NMHC), which had been the prior sole corporate member of PAHCS II. NMFF, as sole corporate member of PAHCS II and through the ultimate control exercised by NMHC, has broad authority to act on behalf of the governing body. Please see the narratives for Part VI lines 6, 7a and 7b for a description of such authority.”

“Northwestern Medical Faculty Foundation (NMFF) became the sole corporate member of PAHCS II, the filing organization, during the tax year. Northwestern Memorial Heath Care (NMHC) is the parent organization and the sole corporate member of NMFF. Interested persons of the filing organization are subject to the policies and procedures of NMHC, in its role as the parent organization of the health system. Northwestern Memorial HealthCare (NMHC) has established a Board-led executive compensation review and approval process for NMHC and all affiliates. This process for determining executive compensation: (1) is designed to qualify for the rebuttable presumption of reasonableness under the federal tax law intermediate sanctions rules and otherwise complies with IRS guidelines for tax-exempt organizations; (2) is conducted by a separate subcommittee of the Board of Directors whose members are all disinterested, independent and non-paid; (3) evaluates the reasonableness of compensation annually based on compensation data gathered by external consultants from a peer group comprised of similarly situated healthcare organizations; and (4) compensation decisions and support are recorded in the compensation committee meeting minutes. In addition, a significant portion of compensation is at risk and is payable only upon achievement of substantial goals. The Board places a high priority on its ability to recruit and retain a strong leadership team to ensure we serve our mission and achieve our goals. The officers of Northwestern Memorial HealthCare also fulfill substantial officer and executive functions for NMHC's subsidiaries.”

“The parent organization of PAHCS II is now Northwestern Medical Faculty Foundation (NMFF), a related tax-exempt organization and a subsidiary of Northwestern Memorial HealthCare (NMHC), the previous corporate member and parent organization of PAHCS II and overall parent organization of the Northwestern Medicine health system. NMHC continues to provide support services throughout the health system and does so directly and indirectly through NMFF on behalf of PAHCS II. Management services provided through NMHC include financial operations and supervising the exempt operations of the organization.”

“PAHCS II filed Articles of Amendment as of 9/1/2020, replacing Northwestern Memorial HealthCare (NMCH) with Northwestern Medical Faculty Foundation (NMFF) as the sole corporate member of PAHCS II. NMHC remains the sole corporate member of NMFF and ultimately controls PAHCS II as the overall health system parent corporation.”

“The parent organization of PAHCS II is now Northwestern Medical Faculty Foundation (NMFF), a related tax-exempt organization and a subsidiary of Northwestern Memorial HealthCare (NMHC), the previous corporate member of PAHCS II. NMHC, as the ultimate member and parent organization, continues to provide support services throughout the Northwestern Medicine health system and does so directly and indirectly through NMFF on behalf of PAHCS II. Management services provided through NMHC include financial operations and supervising the exempt operations of the organization.”

“Northwestern Medical Faculty Foundation (NMFF), THE SOLE MEMBER AND PARENT ORGANIZATION OF PAHCS II, HAS THE POWER TO ELECT OR REMOVE ALL OF THE DIRECTORS OF PAHCS II. Additionally, further oversight is exercised by Northwestern Memorial HealthCare (NMHC) as the ultimate parent of the health system entities and sole corporate member of NMFF.”

“CERTAIN DECISIONS OF THE PAHCS II GOVERNING BODY ARE SUBJECT TO APPROVAL BY Northwestern Medical Faculty Foundation (NMFF), AS THE SOLE MEMBER of PAHCS II. THE MEMBER'S AUTHORITY INCLUDES THE POWER TO AMEND, ALTER, RESTATE OR REPEAL THE BYLAWS OF THE CORPORATION; TO NEGOTIATE AND EXECUTE CONTRACTS ON BEHALF OF THE CORPORATION; TO ADOPT A PLAN OF MERGER, CONSOLIDATION OR CORPORATE REORGANIZATION INVOLVING THE CORPORATION; TO ADOPT A PLAN OF DISSOLUTION OR LIQUIDATION OF THE CORPORATION AND DISTRIBUTION OF ITS ASSETS; AND, TO AMEND, ALTER, RESTATE OR REPEAL THE ARTICLES OF INCORPORATION OF THE CORPORATION. ACTIONS BY THE BOARD OF DIRECTORS REQUIRING THE APPROVAL OF THE SOLE MEMBER INCLUDE: ADOPTION OF CAPITAL AND OPERATING BUDGETS; ADOPTION AND EXECUTION OF A STRATEGIC PLAN; AND, AUTHORIZATION OF A CAPITAL EXPENDITURE IN EXCESS OF THE LIMITS ESTABLISHED BY THE SOLE MEMBER FROM TIME TO TIME. DECISIONS OF NMFF MAY ALSO BE SUBJECT TO APPROVAL BY NORTHWESTERN MEMORIAL HEALTHCARE (NMHC), AS THE SOLE CORPORATE MEMBER OF NMFF.”

“Prior to filing, a draft of the completed form 990 is reviewed by outside tax advisers and internal management. After that review is complete, the form 990 is provided to the officers and directors of the filing organization for additional review and comment.”

“Northwestern Medical Faculty Foundation (NMFF) became the sole corporate member of PAHCS II during the tax year. Northwestern Memorial Heath Care (NMHC), is the parent organization and the sole corporate member of NMFF. In accordance with this organizational structure, interested persons of both PAHCS II and NMFF, its sole member, are subject to the policies, processes and procedures of NMHC. Northwestern Memorial HealthCare (NMHC) maintains both a Conflict of Interest Policy and an Intermediate Sanctions Policy. These policies have been approved by its Board of Directors and apply to all entities, directors, officers, employees and transactions which take place within the NMHC system. The policies were written to assist board members and management with the identification of those transactions that warrant attention and consideration to ensure proper adherence to the tax laws impacting tax-exempt organizations. The conflict of interest policy requires completion of an annual certification which affirms that such person has received, read and understands the conflict of interest policy, has agreed to comply, has disclosed any matters required to be disclosed under the policy, and agrees to report any changes promptly to the Corporate Compliance & Integrity (CCI) department. Once the annual certifications are complete, the CCI department reviews the disclosures for compliance with the policy and escalates any that are of a nature that require potential further remediation to manage or eliminate the disclosed conflict.”

“The corporation's governing documents, conflict of interest policy and financial statements are available upon request. The consolidated financial statements of Northwestern Memorial HealthCare and Subsidiaries are available on the Northwestern Medicine website. The financial statements are also available from the Illinois Attorney General's office as part of its Annual Community Benefits Report and through Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board.”

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