Highmark Health

“OVERVIEW OF HIGHMARK HEALTH Highmark Health (HH) was formed to be the parent organization of a healthcare system located in Western Pennsylvania named Allegheny Health Network(AHN). AHN was formed prior to the affiliation of West Penn Alegheny Health System,Inc. (WPAHS) with Highmark Inc. (Highmark). HH is the sole member of AHN and the sole member of Highmark. AHN is the sole member of WPAHS, Jefferson Regional Medical Center (JRMC), Saint Vincent Health Center (SVHC) and Saint Vincent Health System (SVHS). HH serves as the ultimate parent of the AHN affiliates through its position as sole member of AHN. The mission of HH is to provide access to affordable high quality and accessible health care. The activities of HH include strategic, operational and administrative leadership for AHN. From a strategic standpoint, HH is focused on changing the current delivery of the care model in western Pennsylvania; HH encourages health care providers in AHN, whether hospitals or physicians, to use the most cost effective venue for care, adhere to evidence-based standards of care, and deliver superior outcomes by reducing such things as unnecessary readmissions and post-surgical infections. In sum, As the parent organization of AHN works to ensure that AHN operates in the most effective and efficient manner and provides the highest quality health care for the communities that it serves.”

“OVERVIEW OF THE ALLEGHENY HEALTH NETWORK Allegheny Health Network is a team of care givers committed to improving health and promoting wellness in its communities, one person at a time. It pledges to consistently deliver safe, compassionate quality healthcare by treating the whole person - body, mind and spirit. AHN's mission is to provide access to affordable high quality and accessible health care. It provides strategic, operational and administrative leadership for those organizations it supports. From an administrative and operational perspective, AHN is providing executive leadership and oversight to WPAHS, SVHC, SVHS and JRMC and its exempt affiliates to ensure that they continuously operate in accordance with the mission of providing high quality affordable health care. WEST PENN ALLEGHENY HEALTH SYSTEM WPAHS was organized in 2000 and is comprised of West Penn Allegheny Health System, Inc. (WPAHS, Inc.), Alle-Kiski Medical Center (AKMC), Canonsburg General Hospital (CGH), Allegheny Medical Practice Network (AMPN), Allegheny Clinic (AC), Allegheny-Singer Research Institute (ASRI), West Penn Allegheny Oncology Network (WPAON) Canonsburg General Hospital Ambulance Service, Inc. (CGH Ambulance), Alle-Kiski Medical Center Trust (AKMC Trust), Forbes Health Foundation (FHF), Suburban Health Foundation (SHF) and The Western Pennsylvania Hospital Foundation (WPHF). The goal of WPAHS is to ensure that area residents have access to a complete continuum of health care services. Through appropriate integration across WPAHS both clinically and operationally, WPAHS hospitals and physician organizations are able to remain a high quality, low-cost provider with linkages to the latest medical research and advanced technology. For the most recently completed twelve month reporting period, the total inpatient discharges were 54,370, outpatient visits were 807,733, number of employees was 12,377. Total uncompenated care and community benefits for the full year prior period was $136,348,778. SAINT VINCENT HEALTH CENTER/SAINT VINCENT HEALTH SYSTEM SVHC (DBA Saint Vincent Hospital) and SVHS are comprised of Saint Vincent Medical Education and Research Institute, Westfield Memorial Hospital,Inc., Saint Vincent Foundation for Health and Human Services, Saint Vincent Affiliated Physicians, Regional Home Health and Hospice (55.48% controlled), Regional Heart Network (76.5% controlled) and Regional Cancer Center (50% controlled). SVHC is a not-for-profit acute care hospital that provides inpatient, outpatient and emergency care services for residents of northwestern Pennsylvania and adjacent areas of New York and Ohio. Admitting physicians are primarily practitioners in the local area. Founded by the Sisters of St.Joseph in 1875, SVHC has evolved into an integrated healthcare provider. It is committed to the highest quality patient care while providing a continuum of services to meet healthcare needs. SVHS was also founded by the Sisters of St. Joseph in 1875. Their mission and values are to provide oversight and support for the charitable missions of the organizations they support. For the most recently completed twelve month reporting period, the SVHC total inpatient discharges were 14,763, outpatient visits were 179,840, number of employees was 2,015 and number of physicians on staff was 400. Total uncompenated care and community benefits for the full year prior period was $16,185,050. JEFFERSON REGIONAL MEDICAL CENTER JRMC was organized in 1973 and is located just south of the city of Pittsburgh, PA, JRMC is an integrated system of health care services and facilities that provides quality health care from emergency admissions to inpatient hospitalization and leading edge surgery to rehabilitation and home care. For the most recently completed twelve month reporting period, the total inpatient discharges were 14,055, outpatient visits were 260,655, number of employees was 2,239 and number of physicians on staff was 448. Total uncompenated care a”

“Among Highmark Health's 2014 enterprise highlights were welcoming a new chief executive officer; investing in the future of health care; driving innovation designed to improve health care and outcomes; and the continued transformation of our own organization as one of America's leading integrated delivery and financing systems. Through our many changes, we have remained firmly focused on our dedication to serving our customers. We are changing how healthcare is delivered in America, built around a centerpiece-our customers. Transformation is taking place across the Highmark Health organization. A transformation office was created in 2014 to develop a clear strategy and work with our businesses to drive change. And our companies are making investments in people and infrastructure to expand clinical capabilities and improve the customer experience. In 2014, Highmark Health companies committed significant capital investments to facilities, technology and capabilities at Allegheny Health Network. AHN Capital Investments - When AHN was created, WPAHS had a dedicated workforce and owned valuable community assets. Its assets, however, were in dire need of upgrades and enhancements due to years of deferred maintenance while WPAHS's future remained uncertain. Since the closing of the affiliation, AHN has made significant investments in these facilities to improve the quality of patient care and expand services and capabilities for the community. Many of these investments have led to no financial return but are required to sustain the system, provide the appropriate infrastructure, improve the quality and prepare it for the influx of future volume upon expiration of the Consent Decrees. Other investments that expand access and care will provide a return over the longer term. These capital investments through August 2015 have included, but are not limited to, the following: Allegheny General Hospital - Significant investments at AGH were focused on renovations and repairs and maintenance, including information technology (IT) upgrades. Additionally, older equipment was replaced with newer models. AGH is the only facility in Western Pennsylvania to house a dedicated cardiac magnetic resonance imaging (MRI) center for the evaluation of complex cardiovascular diseases. Among a number of pioneering discoveries made by the cardiac MRI team, AGH researchers were also the first to demonstrate that cardiac MRI is better than conventional diagnostics for predicting heart attacks in women. Additionally in 2014, AHN opened a state-of-the-art hybrid operating room at AGH to better equip surgical teams to perform the latest generation of complex, minimally-invasive cardiovascular procedures. The new hybrid operating suite is equipped with a robotic imaging system that gives physicians real-time 3D images of internal organs and blood vessels with unprecedented precision and clarity. Introducing new tools that facilitate less invasive procedures that can potentially be offered to sicker patients has been a critical strategy for advancing cardiovascular care. In 2014, AHN established the new AHN Institute of Cellular Therapeutics at Allegheny General Hospital (AGH) whose focus are advances in diabetes, liver disease and related disorders. AGH also opened a new Epilepsy Monitoring Unit in 2014. AGH Comprehensive Epilepsy Program is one of the busiest in the tri-state area. Forbes Hospital - Renovations and repairs and maintenance were made to improve the quality and safety of Forbes Hospital. In addition, a Level II trauma center and state-of-the-art intensive care unit was opened at Forbes Hospital to serve a population of approximately 300,000 people who reside in Pittsburgh's Eastern suburbs. This investment proved its value to the community by saving lives in area tragedies that made headlines both locally and nationally. On a day-to-day basis, the trauma center serves to fill a critical service line gap for first responders that community leaders fe”

“Highmark Health (HH) has a corporate compliance department that monitors and oversees compliance with the conflict of interest policy. The following describes the manner in which the corporate compliance department monitors and oversees compliance with the conflict of interest policy for HH: Conflict of Interest disclosure forms are completed on an annual basis by all board members, officers, any person who has authority to act on behalf of the BOD, key employees , managers and above, persons with purchasing authority including procurement department employees and committees which may influence purchasing decisions, and any other employees as designated by the Compliance Department. Upon completion of the above disclosure statement by all applicable individuals, the Integrity and Compliance Department reviews all disclosures. Those that require additional information or clarification are contacted by the Integrity and Compliance Department requesting such. Once received, all information is evaluated in consultation with the Legal Department and Senior Management as applicable to determine whether a real or potential conflict of interest exists. Those conflicts that require a mitigation plan are developed and approved in coordination with the respective responsible senior management. The senior managers are responsible for discussing the mitigation plan with the individual as needed and monitoring compliance with the mitigation plan. A final report of all board and executive level management disclosures is submitted for review to the Audit and Compliance Subcommittee of the Board, as well as by the board of directors.”

“The Highmark Health (HH) process for determining compensation for executive positions (including officers, key employees and other management positions) is covered by the HH Executive Compensation Policy. This policy was approved by the HH Board of Directors. It is the policy of HH and its Board of Directors to compensate its executives in accordance with the market and in relation to the experience, service and accomplishments of the individual both prior to and during their service with HH. The Personnel & Compensation Committee makes recommendations to the HH Board of Directors who ultimately approve the compensation for newly hired senior executives. Compensation shall include all compensation components, including without limitation, base compensation, incentive compensation, deferred compensation, fringe and other benefits, as well as the total compensation. The Board of Directors shall also approve all base compensation adjustments and all incentive compensation awards, as well as material changes to deferred compensation, fringe, or other benefits. The Personnel & Compensation Committee uses comparability data provided by an independent compensation consultant. The external consultant provides a letter of reasonability for all offers made to new executives. Each Board of Director member voting on a senior executive's compensation arrangement ensures that he or she has no conflict of interest, including that he or she (a) does not economically benefit from the proposed employment; (b) does not receive compensation subject to the approval of the proposed employee; and (c) has no material financial interest affected by the transaction. Highmark Health follows the requirement in the regulations to comply with the rebuttable presumption of the reasonableness of compensation.”

“Highmark Health (HH)does not make its governing documents available to the public. HH financial statements are on a consolidated basis which include Allegheny Health Network and Highmark Inc. The audited financial statements of HH are available upon the request and approval by the CFO of Highmark Health. HH has adopted a conflict of interest policy that is uniformly applied to all HH organizations. This policy is not made available to the public.”

“The following individuals listed in Part VII did not hold their respective positions with HH for a consecutive twelve month period. The dates of their respective service is listed below. William Winkenwerder 01-01-2014 - 05-20-2014 Jayanth Godla 01-01-2014 - 04-04-2014 Ray Carson 01-01-2014 - 09-04-2014 Maureen Cahill 01-01-2014 - 10-03-2014 James Coleman 01-01-2014 - 10-03-2014 William Winkenwerder, President and CEO of Highmark Health, terminated employment with Highmark Health on May 20, 2014. As a result of the termination, william Winkenwerder received separation compensation from Highmark Health. The terms of the total compensation package received by William Winkenwerder was the result of negotiations with William Winkenwerder that was conducted at arm's length by Highmark, Inc. prior to the creation of Highmark Health as part of the initial contract with William Winkenwerder. The total compensation package received by William Winkenwerder was approved by a Committee comprised of independent members qualified to approve such matters and without relationship or conflict with William Winkenwerder or Highmark Health outside of their duties as members of the Board of Directors and this Committee. The services of outside third parties were secured to review the reasonableness of the total separation compensation paid to William Winkenwerder. Karen Hanlon replaced Nan DeTurk as Treasurer of Highmark Health on July 29, 2015.”

“Individuals employed by one organization may be assigned to provide management for an affiliated organization. As such, many individuals play key roles or serve as officers or directors on multiple affiliated organizations. Each individual will be assigned forty hours to the organization of their actual employment at year end. If the individual is employed by one organization and appointed as an officer, director or key employee of affiliated organizations the hour allocation on Form 990, Part VII, Page 7, Column (B) takes various factors into account when attempting to assign hours in a reasonable manner. Thus, it is possible for a single individual to have hours assigned in excess of forty hours per week if all affiliated organization IRS Forms 990 is taken into account. Directors who are not employed and volunteer their services are assigned one hour of service. Several directors are compensated for services provided in the capacity of a director for a for-profit affiliated organization. These individuals serve as volunteers on the Highmark Health Board of Directors due to their experience and knowledge of the healthcare field. The actual time served for all individuals disclosed in IRS Form 990 can vary based upon the need of the organization. Independent Contractors The expenditures of Highmark Health are paid by affiliated organizations and reimbursed by Highmark Health. All Form 990s are issued by the affiliated organizations. Listed in Part VII are the five highest paid independent contractors that provided services to Highmark Health for which Highmark Health reimbursed the affiliated organizations.”

“The following is a reconciliation of the Other Changes in Net Assets of Highmark Health for Calendar Year 2014: Net Assets Equity Transfers (8,775,386) ___________ Other Changes In Net Assets (8,775,386)”