Spectrum Health System

“The organization is organized on a non-stock directorship basis with no members.”

“The organization is organized on a non-stock directorship basis with no members.”

“Bhsh system amended its bylaws to create a compensation committee of the bhsh system board.”

“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 (including the Chief Financial Officer, Chief Legal Officer and Corporate Controller) and shared with the members of the Finance and Audit Committee and Board of Directors. 4. The Organization's Chief Financial Officer reviews comments or questions received from members of the Board of Directors, if any, to address or to incorporate, as appropriate, into the return prior to filing.”

“BOARD OF DIRECTORS 1. Conflicts of interest must be disclosed, VIA AN ANNUAL ELECTRONIC DISCLOSURE PROCESS and verbally at each board and board committee meeting as part of the "declaration of conflict of interest" prior to discussion of any agenda items. 2. A person having a financial interest in a proposed transaction or arrangement may make a presentation at a meeting of the board or committee which is considering that transaction or arrangement, but after that presentation he/she shall leave the meeting before discussion and voting on that proposed transaction or arrangement. The person having the financial interest shall not be counted in determining whether a quorum is present. 3. The chairperson of the board or the committee chair shall, if appropriate, appoint a disinterested person or committee (including outside advisors) to investigate alternatives to the proposed transaction or arrangement, and to advise whether the proposed transaction or arrangement is in the organization's best interest. 4. The board or committee shall exercise due diligence to determine whether the organization can, with reasonable efforts, obtain a more advantageous transaction or arrangement that would not give rise to a conflict of interest. 5. If a more advantageous transaction or arrangement is not reasonably attainable under circumstances that would not give rise to a conflict of interest, the board or committee shall determine by a majority vote of the disinterested directors and members whether the proposed transaction or arrangement is in the organization's best interest and for its own benefit and whether the transaction is fair and reasonable to the organization, and shall make its decision as to whether to enter into the transaction or arrangement in conformity with such determination. 6. The minutes of the meetings of the board and all of the organization's committees shall set forth: a) The names of the persons who disclosed a financial interest in a proposed transaction or arrangement involving the organization or any of its subsidiaries and the nature of the financial interest; and b) The names of the persons who were present for discussions and votes relating to such transaction or arrangement, including any discussion of alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with that matter. The votes of individual members need not be recorded unless otherwise directed by the Board of Directors or committee. 7. There is an ongoing requirement that members of the board and board committees update their annual disclosure questionnaire at any point during his/her tenure on the board of directors when a new potential conflict of interest arises. MANAGEMENT 1. Upon acceptance of an employment offer, each member of management (directors and above) complete a conflict-of-interest disclosure questionnaire. A copy of the member of management's disclosure questionnaire is sent to the organization's System Compliance Department . A copy of the member of management's disclosure is reviewed by the organization's Compliance Operations Analyst and escalated to the appropriate Executive Leadership Team, if necessary. 2. Annually, each member of management (directors and above) completes an annual conflict of interest disclosure questionnaire electronically. If there is an affirmative disclosure, the questionnaire is reviewed by the appropriate Executive Leadership Team. 3. There is an ongoing requirement to update the disclosure questionnaire when a new potential conflict of interest arises. Updated disclosures follow the same process as initial disclosures described above. 4. The conflicts of interest committee, in consultation with executive management, determines how reported conflicts should be managed . Management of a conflict may take a variety of different forms from implementation of a management plan to requiring that the member of management cease the activity creating the conflict o”

“The BHSH System Board of Directors (through its Compensation Committee) uses the following process for determining compensation of the top management officials, other officers, and key employees at BHSH System. Labor market data reflecting comparable organizations and jobs (prepared by independent firms) are relied upon in setting compensation levels. Competitive assessment reports are provided to the Compensation Committee in advance of meetings. The competitive assessment report is prepared by a nationally known independent executive compensation firm. For CY 2021 (1/1/21-12/31/21), the following surveys, prepared by independent firms, were the primary sources referenced to obtain market data for the review: Aon: 2020 Total Compensation Measurement Survey: Financial Services Survey * BDO: 2020 USA Health Insurance Plans Survey * Integrated Healthcare Strategies: 2020 National Healthcare Leadership Compensation Survey * Mercer: 2020 IHN Healthcare Compensation Survey * Mercer: 2020 IHN Health Plan Compensation Survey * Sullivan Cotter Associates: 2020 Manager and Executive Compensation in Hospitals and Health Systems Survey In addition, three general industry surveys were referenced: * Aon: 2020 Total Compensation Measurement Survey: General Industry * Mercer: 2020 US Executive Remuneration Suite * Willis Towers Watson: 2020 Executive Compensation Survey In addition to the above data sources, the Compensation Committee approved the creation of a custom peer group of high performing integrated health systems to ensure robust data and a relevant comparator universe. The peer group organizations are approved by the Compensation Committee and consists of healthcare systems similar in revenue size, market competitors, high performers, financially stable as indicated by bond rating and that follow a similar strategy (multi-site systems, health plans). Data for the peer group organizations is compiled by the independent executive compensation firm. Compensation adjustments are approved by Compensation Committee members, consistent with the Spectrum Health compensation philosophy described below. Minutes of Committee discussions and decisions are prepared to memorialize Compensation Committee decisions based upon the above data. Cash compensation data relied upon by the Compensation Committee is national and reflects the compensation paid to executives in comparable jobs in comparably-sized health care and / or health insurance organizations. Spectrum Health recruits nationally for its executives. Benefits data reflect national health care / health insurance market practices. This process is intended to assist Spectrum Health in qualifying for the rebuttable presumption of reasonableness (Intermediate Sanctions Regulations) and complying with the potential Spectrum Health Excess Benefit Transaction Policy for those individuals in the group who are disqualified persons. The opinion submitted from the third party independent consulting firm is in accordance with the provisions of Treasury Regulations Section 53.4958-6(c)(2) and is also intended to satisfy the professional advice requirement of Treasury Regulations Section 53.4958-1(d)(4)(iii).”

“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 https://www.spectrumhealth.org/about-us/value-and-transparency within subsection "Value and Transparency" located under subsection "Quality & Safety".”

“THE COMPENSATION REPORTED FOR EMPLOYEES OF THE ORGANIZATION IS NOT FOR SERVICES IN THEIR CAPACITY AS MEMBERS OF THE BOARD OF DIRECTORS BUT FOR SERVICES AS EMPLOYEES OF THE Health System. CERTAIN DIRECTORS WERE PAID REASONABLE COMPENSATION FOR THEIR SERVICES AS MEMBERS OF THE BOARD. EMPLOYEES WITH COMPENSATION REPORTED IN PART VII WORK A COMBINED AVERAGE OF 50 HOURS PER WEEK FOR THE Health System.”

“Based on external opinion by Sullivan Cotter and Associates, Inc., BHSH System compensates board members in a manner that is reasonable in relation to market data. Board of directors compensation is continually reviewed to confirm compensation falls within reasonable limits. Any compensation amount is treated as taxable to the board member and is reported and provided to them on Form 1099.”

“OTHER OPERATING INCOME - Total Revenue: 935934, Related or Exempt Function Revenue: 9574, Unrelated Business Revenue: 924140, Revenue Excluded from Tax Under Sections 512, 513, or 514: 2220;”

“Valuation allowance - -10596548; minimum pension liability - 18681508; funds transfer from supported organizations - xxx-xx-xxxx; other activity - 727587;”