Altru Health System

“Board member, kris compton, is the mother of key employee, meghan compton.”

“There was an amendment to the bylaws in 2019 changing the number of community board members from 6 to a range of 5 - 7.”

“Historically, the return is reviewed by the board before filing, but we were unable to accomplish it this year due to timing. The return was sent to the board on the same day of the filing.”

“Conflict of interest policy is reviewed and signed off annually by all officers, directors, trustees and key employees. These forms are collected and reviewed by the secretary and internal legal counsel. Officers, directors, trustees and key employees are also advised to report should any changes happen during the year.”

“Line 15a: altru determines the top management officials' compensation by review and approval by a governing body without conflicts of interest, using comparable compensation data for functionally comparable positions at similarly situated organizations (with relevant comparables documented in an annual statement of reasonableness letter from altru's compensation consultant), and made contemporaneous documentation of the deliberations and decisions regarding the compensation arrangements. Altru has a compensation committee made up of community board members along with the president and ceo. We also work with an outside consultant which provides us with data on fair market compensation for the entire executive staff. For determining the compensation of the president and ceo, the community board members obtain the data from the consultant, have an opportunity to discuss with the consultant and have any questions answered and then their decision is shared with the non-conflicted board members for final approval. This process was used to determine the compensation for both positions of president and ceo in 2019. Line 15b: for schedule o: altru uses similar criteria to the process described in 15(a) above. The president and ceo determine the salaries for each of the executives that report to them. Altru uses an outside compensation consultant which provides data on fair market compensation for functionally comparable positions at similarly situated organizations. The president and ceo present their decisions on the executive compensation to the board, which is a governing body without conflicts of interest as to the subject matter. The board does not ratify the base compensation for the executives that report to the president and ceo (the president and ceo have final say in setting base compensation for their executive team based on the compensation data referenced above), but the board does determine the annual goals for the altru system that are used to determine (by formula) potential bonus payouts for the executive team. As shown in schedule l, board member kris compton is the mother of meghan compton, a member of the executive team (but not the president or ceo). As such, kris compton participates as a board member to approve annual goals at beginning of year and thereafter recuses herself from the decision to approve the bonus based on the system goal outcomes at end of year, due to her identified conflict. While no bonuses were actually awarded for the 2019 tax year, the process described above was followed for all executives in 2019.”

“The organizations 990 and 990-t public inspection copies are available upon request. Form 1023 is available upon request.”

“The organization's financial statements are made available to the public through published annual reports and via its web site. Governing documents and conflict of interest policy are available upon request.”

“Exclusion amount biomed services $56,052 site service fees $7,260 subtotal $63,312 pharmacy sales to employees $36,522 housing/space rentals $640,241 vending machine income $94,647 sale of scrap/other $3,470 subtotal $774,880 total exclusion amount $838,192 related or exempt function income cept revenue $134,109 hearing center $1,294,125 occupational health $716,171 vha supply co - distribution $1,521,928 purchase discounts $132,909 rebates $360,306 contract services, outreach, education $3,633,368 medical records transcript fees $136,000 affiliated other revenue $1,446,710 340b pharmacy revenue $25,033,564 dl hospitalist contract revenue $658,800 sports advantage $294,791 epic related fees- critical access $3,242,293 miscellaneous revenue $3,401,085 total related/exempt income $42,006,159”

“1. Biomed services: revenue earned through the provision of services to area health care facilities needing to keep their equipment in operation in order to provide their patients with their service. The biomed program provides small regional hospitals with a service otherwise unobtainable from anyone in the local area; it is often on a priority basis. 2. Site service fees: fees charged for providing grounds and maintenance for the area surrounding the hospital, including fees for such services as maintenance of hospital parking lot, snow shoveling, and snow removal. 3. Pharmacy sales to employees: revenue incurred in sales strictly for the convenience of employees. 4. Housing/space rentals: income incurred through the rental of space to the area health education center which is required to be on-site to work with our physicians providing health care to patients. 5. Vending machine income: income earned through the operation of vending machines in the buildings. 6. Sale of scrap: income earned through the sale of items that are not fixed assets and are of diminished use to the organization. 7. Cept revenue: revenue earned from the evaluation and treatment of adolescents through a multi-disciplinary approach including physical therapy, occupational therapy, speech pathology, and psychology. 8. Hearing center: revenue from the provision of audiological services and hearing aids to patients. 9. Occupational health: fees for providing drug screenings for regional employers. 10. Vha supply distribution: rebate received based on volume of supply purchases. 11. Purchase discounts: this figure represents cost savings on purchases from suppliers for goods used in the provision of health care services. 12. Rebates: rebates received based on volume of pharmacy purchases. 13. Contract services, outreach, education: revenues earned in the provision of community education/wellness programs, pastoral counseling services, and contracted services with regional healthcare systems to bring outreach services into their communities. 14. Medical record transcription fees: income earned through the charging of various third party payers for the photocopying of patient records. Insurance companies and payers are charged to offset the cost of copying. 15. Other revenue charged to affiliated corporations: revenue from the provision of patient services, such as psych or laboratory, to the patients of other corporations, which are affiliated to altru health system. 16. 340b pharmacy revenue: income earned from area pharmacies using the 340(b) buying contract to purchase pharmaceuticals at discounted rates. 17. Dl hospitalist contract revenue: income from altru physicians providing hospitalist services at mercy hospital, devils lake. 18. Sports advantage: exos program fees; performance training provided to area athletes and coaches 19. Epic related fees from critical access hospitals:annual fees, including one-time implementation, of area critical access hospitals using our epic vendor software for patient billing 20. Miscellaneous income: includes a return of expenses from an insurance pool. Also includes income earned through the provision of services that are operating in the hospital in nature, but have no specific cost center identifications. An example of this would be if the director of the communications department received a small token amount for filling out a survey from some health care organization.”

“Application of fasb asc topic 715 15,221,726.”

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