Texas Health Huguley Inc

“The members of the board of directors listed on part vii of this form 990 include the filing organization's governing board and the members of the filing organization's hospital board. The hospital board is primarily responsible for matters of the hospital involving the oversight of medical staff (including the review and approval of medical staff bylaws, and approval of appointments to and dismissals from the medical staff), care of patients, improvements to land, buildings and equipment, quality assessment and improvement programs implemented at the hospital and risk management functions.”

“Effective january 1, 2012, texas health huguley, inc. (the filing organization) entered into a management services agreement with adventist health system sunbelt healthcare corporation (ahsshc). During the current year, ahsshc served as a parent organization to 30 tax-exempt 501(c)(3) hospital organizations and a number of other health care facilities that operated in 10 states within the u.s. Ahsshc is exempt from federal income tax under internal revenue code section 501(c)(3). A 501(c)(3) subsidiary hospital organization of ahsshc, adventist health system/sunbelt, inc. (ahssi), owns a 49% member interest in the filing organization. Under the management services agreement (the agreement), ahsshc must follow the policies of the filing organization's board of directors. Managerial services provided by ahsshc included oversight and day to day management of the filing organization's hospital, including the following functions: personnel administration, including recruitment, hiring, training, promoting, directing and terminating personnel; procurement, including the acquisition of food and beverage items, supplies, devices, furniture, and medical equipment; health information management; maintenance and security; contracting for services and consulting services; financial accounting systems; development of operational and capital budgets; billing and collection of receivables and remittances of payables; patient safety and quality systems; marketing; regulatory compliance; administration - policies and procedures, including appointment of the cfo, coo, and cno. The individuals who serve as officers of the filing organization in the roles of ceo, cfo, coo, cmo, and cno are listed in part vii, section a. These individuals were compensated by and on the payroll of ahsshc for services rendered to the filing organization. Their compensation has been reported on part vii and schedule j in accordance with the instructions for part vii, section a, line 5.”

“The articles of incorporation of the filing organization provide that 51% of the membership in the filing organization shall be held by texas health resources, the sole class a member, and 49% of the membership in the filing organization shall be held by adventist health system/sunbelt, inc. (ahssi), the sole class b member. Both ahssi and thr are exempt from federal income tax under internal revenue code (irc) section 501(c)(3). There are no other classes of membership in thh.”

“The members of the board of directors (governing board) of the filing organization are appointed by thr (majority member) and ahssi (minority member). The majority member is entitled to elect three directors to the board of the filing organization and the minority member is entitled to elect two directors to the board. In addition, the membership shall appoint for the hospital a community hospital board to oversee the operations of the hospital.”

“Certain governance powers are reserved to the members of the filing organization. The governing documents of the filing organization describe those matters requiring only an affirmitive vote of the class a member (thr), those matters requiring only an affirmative vote of the class b member (ahssi) and those matters requiring a supermajority vote of the members. A supermajority vote requires an affirmative vote of not less than 52% of the outstanding membership interests. The reserved powers requiring an affirmative vote of only the class a member, thr, include the following: 1) to approve or amend managed care contracts to which the filing organization is a participating provider; 2) to approve the strategic plans of the filing organization; 3) to approve the annual operating plans and operating and capital budget of the filing organization; and 4) to approve the selection, removal and/or modification of the authority and responsibilities of lawyers, accountants and other advisors and consultants to the filing organization that are not otherwise identified in the approved annual operating budget. The reserved powers requiring an affirmative vote of only the class b member, ahssi, include the following: 1) to approve changes to the mission, vision, or values of the hospital; 2) to approve changes to religious affiliation of hospital; and 3) to approve changes to operational policies, plans, procedures that are specifically related to the hospital's religious affiliation with the seventh-day adventist church. Both thr, the majority member, and ahssi, the minority member have the reserved power to terminate the appointment of the individual holding the office of president/ceo. The following matters require a supermajority vote of the membership: 1) to amend the articles of incorporation or bylaws; 2) to change the name of the hospital; 3) to add new corporate members of the filing organization; 4) to appoint and remove the hospital board; 5) to approve distributions of cash and other property; 6) to approve the borrowing of money or otherwise committing the credit of the filing organization for corporate activities, and the voluntary prepayment or extension of debt in excess of $200,000; 7) to adopt and thereafter amend quality and/or risk management plans; 8) to approve the transfer of corporate property having a value in excess of $500,000; 9) to approve any sale, lease, transfer, merger or consolidation of the filing organization with a third party; 10) to dissolve the filing organization; 11) to approve the formation of any subsidiary of the filing organization or approve the filing organization entering into any affiliation or joint venture agreement; and 12) to approve any single capital budget item of $1,000,000 (or more).”

“The filing organization's current year form 990 was reviewed by the ceo, cfo, board finance committee chair, and board chairman prior to its filing with the irs. The review conducted by these individuals did not include the review of any supporting workpapers that were used in preparation of the current year form 990, but did include a review of the entire form 990 and all supporting schedules.”

“The conflict of interest policy of the filing organization applies to members of its board of directors and its principal officers (to be known as interested persons). In connection with any actual or possible conflicts of interest, any member of the board of directors of the filing organization or any principal officer of the filing organization (i.e. Interested persons) must disclose the existence of any financial interest with the filing organization and must be given the opportunity to disclose all material facts concerning the financial interest/arrangement to the board of directors of the filing organization or to any members of a committee with board delegated powers that is considering the proposed transaction or arrangement. Subsequent to any disclosure of any financial interest/arrangement and all material facts, and after any discussion with the relevant board member or principal officer, the remaining members of the board of directors or committee with board delegated powers shall discuss, analyze, and vote upon the potential financial interest/arrangement to determine if a conflict of interest exists. According to the filing organization's conflict of interest policy, an interested person may make a presentation to the board of directors (or committee with board delegated powers), but after such presentation, shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement that results in a conflict of interest. Each interested person, as defined under the filing organization's conflict of interest policy, shall annually sign a statement which affirms that such person has received a copy of the conflict of interests policy, has read and understands the policy, has agreed to comply with the policy, and understands that the filing organization is a charitable organization that must primarily engage in activities which accomplish one or more of its exempt purposes. The filing organization's conflict of interest policy also requires that periodic reviews shall be conducted to ensure that the filing organization operates in a manner consistent with its charitable purposes.”

“The financial statements of the filing organization, its governing documents and conflict of interest policy are not generally made available to the public as a whole.”

“For those board of director members who devote less than full-time to the filing organization (based upon the average number of hours per week shown in column (b) on page 7 of the return) the compensation amounts shown in columns (e) and (f) on page 7 were provided in conjunction with that person's responsibilities and roles in serving in an executive leadership position within thr. Physician members of the board of directors received compensation from related organizations as a result of providing various medical services to those related entities. Additionally, compensation for penny johnson, jesse sutton, and tammy ellis does not reflect services provided to afffiliates of ahsshc, which are not related to the taxpayer.”

“The amount shown in part viii, line 7c(i) of the form 990 represents an allocated share of capital gain/(loss) from a system wide, corporate administered, investment program.”

“Effective january 1, 2012, texas health huguley, inc. (the filing organization) entered into a management services agreement with adventist health system sunbelt healthcare corporation (ahsshc). Ahsshc is exempt from federal income tax under internal revenue code section 501(c)(3). A 501(c)(3) subsidiary hospital organization of ahsshc, adventist health system/sunbelt, inc. (ahssi), owns a 49% member interest in the filing organization. Ahsshc has established a shared service center to centralize the accounts payable (a/p) function for all ahsshc subsidiary organizations. The filing organization has entered "0" in part v, line 1a because the filing organization no longer issues form 1099 returns, rather, all such returns are filed by and under the name and ein of ahsshc as the payor subject to the information reporting requirements of section 6041. The facts and circumstances support a position that ahsshc, as a payor on behalf of its subsidiary organizations in a shared service environment, will have sufficient management and oversight in connection with the subsidiary organizations' payments to meet the standard set forth in treas. Reg. Section 1.6041-1(e). Ahsshc will not merely be making payments at the direction of its subsidiary organizations. Accordingly, ahsshc is considered the payor subject to the information reporting requirements of section 6041.”

“Payments to healthcare professionals: program service expenses 15,609,497. Management and general expenses 0. Fundraising expenses 0. Total expenses 15,609,497. Professional fees: program service expenses 1,563,743. Management and general expenses 0. Fundraising expenses 0. Total expenses 1,563,743. Purchased medical services: program service expenses 3,432,980. Management and general expenses 0. Fundraising expenses 0. Total expenses 3,432,980. Environmental services: program service expenses 1,336,333. Management and general expenses 0. Fundraising expenses 0. Total expenses 1,336,333. Transcription services: program service expenses 61,243. Management and general expenses 0. Fundraising expenses 0. Total expenses 61,243. Recruiting: program service expenses 497,901. Management and general expenses 0. Fundraising expenses 0. Total expenses 497,901. Lease personnel costs: program service expenses 117,415,148. Management and general expenses 0. Fundraising expenses 0. Total expenses 117,415,148. Miscellaneous purchased services: program service expenses 1,804,407. Management and general expenses 0. Fundraising expenses 0. Total expenses 1,804,407. Adventhealth management fees: program service expenses 0. Management and general expenses 4,537,889. Fundraising expenses 0. Total expenses 4,537,889. Billing & collection services: program service expenses 0. Management and general expenses 1,175,482. Fundraising expenses 0. Total expenses 1,175,482. Adventhealth shared service fee: program service expenses 0. Management and general expenses 2,554,032. Fundraising expenses 0. Total expenses 2,554,032. Lease personnel costs mgmt: program service expenses 0. Management and general expenses 1,897,023. Fundraising expenses 0. Total expenses 1,897,023.”

“The amounts shown on line 2 of part x of this return include the filing organization's interest in a central investment pool maintained by adventist health system sunbelt healthcare corporation, the filing organization's top-tier parent. The investments in the central investment pool are recorded at market value.”

“Transfer to related and affiliated entities -958,034. Restricted gifts 754,968. Other -7,500. Rounding 1.”