Pennock Hospital

“The taxpayer affiliated with spectrum health system during the tax year and the taxpayer's governing documents were significantly amended to substitute spectrum health system as the sole member of the taxpayer. As a result of this affiliation, the taxpayer's board was expanded to include up to sixteen members, two of which must be appointed by spectrum health system. The taxpayer's bylaws were amended to reflect the delegation of certain of the parent corporation's reserved powers regarding management and governance to spectrum health hospitals d/b/a spectrum health hospital group ("shhg"), the board of which oversees all of the hospital operations of spectrum health. Shhg has the right to appoint the president of the taxpayer. Approval limits for the amount of capital expenditures or loans to unrelated entities were increased for the taxpayer's president and board of directors and an approval limit was added for the shhg president, finance committee and board of directors. Amendments to the taxpayer's bylaws must be adopted by shhg.”

“Spectrum health system (ein 38-3382353), a michigan nonprofit corporation, is the sole member of the organization.”

“The sole member (see form 990, part vi, line 6) of the organization appoints all members of the board of directors.”

“The sole member of the organization (see form 990, part vi, line 6) has retained certain reserved powers in the organization exclusively, which shall not be deemed authorized unless and until approved by the sole member of organization: - election and/or removal of the members of the organization's board of directors and the organization's chair of the board; - approval of all organization's (or an entity directly or indirectly controlled by the organization ("subsidiary") capital expenditures in excess of the amount specified in the authority matrix, adopted by the sole member of organization and as amended by the sole member of organization from time to time ("authority matrix amount"); - approval of all borrowing by the organization or a subsidiary for capital or operating purposes, and all guarantees of indebtedness, including any operating lease in an amount greater than one million dollars ($1,000,000) during\ the initial lease term, not including renewals and/or extensions; - approval of all loans in excess of the authority matrix amount by the organization or a subsidiary to persons or entities other than the sole member of organization or an entity controlled by the sole member of organization; - the creation of any entity controlled, directly or indirectly, by the organization; and - the organization's or any subsidiary's investments of cash and/or reserves, whether on an individual basis or as part of a pooled investment strategy. In addition to the reserved powers retained exclusively by the sole member of organization above, the sole member of organization has delegated certain reserved powers in organization regarding management and governance to spectrum health hospitals d/b/a spectrum health hospital group ("shhg"), the board of which oversees all of the hospital operations of the sole member of organization. The sole member of organization also retains the unilateral authority to exercise any of the reserved powers below. The actions listed below may be unilaterally caused and or taken by shhg, within its sole and exclusive power and discretion and shall not be deemed authorized unless and until approved by shhg: - hiring, discharge, and evaluation of the organization's president and/or ceo as delegated by the sole member of organization's board of directors to the sole member of organization's chief executive officer (or designee) or shhg's president; - the adoption of the annual operating and capital budgets of the organization, and any amendments to such budgets in excess of the authority matrix amount; - the adoption of the organization's strategic plans; - the adoption of amendments to the articles of incorporation or bylaws of the organization; - merger or consolidation of the organization or a subsidiary, any other change in control, ownership percentages or capital structure of the organization or a subsidiary; - sale or transfer of more than ten percent (10%) of the assets of the organization or a subsidiary to any person or entity not controlled by the sole member of organization; - dissolution of the organization; - the selection and retention of auditors for the organization or a subsidiary; and - any other approval for which the sole member of organization's approval is required by law.”

“A copy of the form 990 is provided to the board of directors prior to filing. The review process for this form 990 is as follows: 1. Preparation of the return is supervised and reviewed by the organization's corporate tax manager. 2. A second review is performed by an external cpa firm with expertise in tax-exempt return preparation. 3. The return is reviewed by the organization's finance and legal departments and shared with the board of directors. 4. The organization's corporate controller reviews comments or questions received by members of the board of directors, if any, to address or to incorporate, as appropriate, into the return prior to filing.”

“Annual conflict of interest statements are completed by board members. Members are responsible for full disclosure of potential conflicts which are documented in the minutes. Any individual with a conflict of interest must abstain from voting on any relevant items.”

“Pennock uses salary surveys along with hiring a consulting company in assisting with setting wages for the officers and key employees. The compensation committee is comprised of three board members to review compensation and advise the full board of salaries, raises, and benefits. The most recent year this process was undertaken was fiscal year 2015. All discussions from the compensation committee are documented in minutes.”

“See explanation provided for form 990, part vi, line 15a.”

“The organization's articles of incorporation have been provided to the state of michigan and are available to the public on the state's website. The organization's bylaws and internal policies are generally not made available to the public. The overall system consolidated financial statements are provided at www.spectrumhealth.org in the section titled "about us".”

“Pennock Hospital Integrated with Spectrum Health and was included in the Consolidated Independent Audited Financial Statements for the period of May 1, 2015 - June 30, 2015. The activity covering October 1, 2014 - April 30, 2015 is not included in the consolidated audited financial statements.”

“Contracted Services - Total Expense: 6877548, Program Service Expense: 4116346, Management and General Expenses: 2761202, Fundraising Expenses: ; Medical Services - Total Expense: 65520, Program Service Expense: 55692, Management and General Expenses: 9828, Fundraising Expenses: ; Public Relations - Total Expense: 29700, Program Service Expense: 14850, Management and General Expenses: 14850, Fundraising Expenses: ; Collections - Total Expense: 237820, Program Service Expense: , Management and General Expenses: 237820, Fundraising Expenses: ;”

“Equity Classification Adjustments - 2381898; Valuation Adjustment - Integration into Spectrum Health - -9452675; Integration Adjustment - -380335;”

“Pennock Hospital Integrated with Spectrum Health and was included in the Consolidated Independent Audited Financial Statements for the period of May 1, 2015 - June 30, 2015. The activity covering October 1, 2014 - April 30, 2015 is not included in the consolidated audited financial statements.”