Carilion Services Inc.

“Nancy Howell Agee, Jeanne Armentrout, Carolyn Chrisman, Nicholas Conte, David Hagadorn, Donald Halliwill, Lauren Schantz, Kerri Thornton, and G. Robert Vaughan, Jr. - Business relationship”

“The organization has a single member. The sole member is Carilion Clinic, a charitable tax-exempt organization which serves as the parent company of the Carilion Clinic integrated health care delivery system. The sole member elects the directors of the organization and has certain other reserved powers.”

“The sole member of the organization, Carilion Clinic, elects the members of the governing body of the organization periodically as terms expire. The sole member also has the right to remove directors and fill any vacancies on the Board that may occur for any reason.”

“The sole member of the organization, Carilion Clinic, holds reserved powers with respect to certain enumerated actions, including appointment of CEO; approval of borrowings, budgets, and strategic plans; and amendments of Articles of Incorporation and Bylaws. Approval by the Board of Directors of Carilion Clinic is required for such actions. In addition to the reserved powers, under the laws of the Commonwealth of Virginia, certain extraordinary actions require member approval, such as mergers, consolidations, liquidations, and the sale of substantially all of the assets of the organization. See also Schedule O disclosure for Form 990, Part VI, Section A, Line 7a.”

“The filing organization has no committees.”

“The Form 990 was prepared by Carilion's internal Tax Department with input from various Carilion departments, as applicable, and reviewed by internal Accounting management. Several days prior to filing, all Board Members were notified via email of its availability on Carilion's Board portal, which is the mechanism used to disseminate meeting materials to the directors, and directors were encouraged to call with any questions they might have.”

“Our organization monitors and reviews proposed and current transactions for conflicts of interest in a variety of ways. At the governing board level, we have board members complete an initial (upon appointment) and annual conflict of interest questionnaire to disclose actual or potential conflicts. Board members are required to update their disclosure as needed in between questionnaires. All disclosures are reviewed by the Organizational Integrity & Compliance Office and as needed escalated to the appropriate leaders/board members for further discussion/review. If a disclosure is viewed as an actual or potential conflict, an action is recommended to the Compliance Committee of the Carilion Clinic Board and implemented as approved. Actions can include recusal in discussion/voting at board meetings, limitation/termination of the transaction, removal from board appointment or other appropriate controls. In addition, at any time, board members are encouraged to disclose any potential conflicts as they arise at a board meeting and to recuse themselves as deemed appropriate. The same process takes place as described above for key employees (upon hire and annually thereafter), including all Officers, members of the management team, physicians/mid-level practitioners, pharmacists and key supply chain buyers. After review and further discussion as needed, action may be required to manage an actual conflict or to reduce the appearance of such as approved by Organizational Integrity & Compliance Office and other key management team members. As needed, the governing board leaders are notified of any conflicts which may impact board proceedings.”

“The organization has a single member, Carilion Clinic, a charitable tax-exempt organization which serves as the parent company of the Carilion Clinic integrated health care delivery system. Executive compensation is reviewed annually by the Carilion Clinic Board of Directors Compensation Committee. This Committee is made up of Board Members of Carilion Clinic who do not have a conflict of interest with any of the executives being reviewed. With respect to Carilion Clinic, the Compensation Committee reviews the compensation of the Board of Governors annually, which includes the President and Chief Executive Officer, the Executive Vice Presidents (Chief Financial Officer, Chief Medical Officer, Chief Operating Officer, Chief Administrative Officer and Chief Legal Officer), and select Senior Vice Presidents who are the physician Chairs of the Clinical Departments. For the fiscal year covered by this return, the Compensation Committee also used the same process to review the compensation of other Disqualified Individuals, including the Hospital Vice Presidents. In addition, the Compensation Committee annually reviews the compensation philosophy for all executive leaders, which includes Vice Presidents, Senior Vice Presidents, Executive Vice Presidents, and the CEO, as well as the compensation philosophy for employed physicians. Some officers of the organization who are not compensated in their capacity as an officer but rather in their role as employee in a position not mentioned above are not subject to Committee review. This review included review of a comprehensive report from an independent, outside compensation consultant specializing in healthcare organizations for select positions and the prior year's report on all of the reviewed positions. The reports reviewed by the Committee included a detailed comparison of total compensation and each element thereof, including base salary, bonus, 'at-risk' and other cash compensation, and benefits, including deferred and retirement benefits. Compensation was compared to both a national and regional peer group of organizations similar in size and structure to the organization, which list was reviewed by the Compensation Committee. The Compensation Committee maintained detailed minutes of its meetings, setting forth the deliberations and decisions of the Committee regarding the compensation of these executives.”

“See response to line 15A”

“The organization's governing documents, conflict of interest statement, and financial statements are released from time to time during the tax year upon request. The Articles of Incorporation are available from the Virginia State Corporation Commission. Limited financial information is available on our website.”

“Research - Total Revenue: 2000, Related or Exempt Function Revenue: 2000, Unrelated Business Revenue: , Revenue Excluded from Tax Under Sections 512, 513, or 514: ;”

“Other Revenue - Total Revenue: 622771, Related or Exempt Function Revenue: 622771, Unrelated Business Revenue: , Revenue Excluded from Tax Under Sections 512, 513, or 514: ;”

“Carilion Services Inc., (CSI), provides management services and administrative functions for Carilion Clinic to enhance our core hospital and system business services for cost-effectiveness, compliance, and quality. CSI provides oversight for information technology, human resources, legal services, patient billing, accounting and finance, internal audit, privacy and compliance, materials management, marketing & communications, community development and outreach, market planning and development and overall wellness services. These measures assisted the Clinic's hospitals in admitting 50,182 patients and providing 242,904 days of care during the year and supporting numerous programs designed to serve the health needs of the area. Honoring its commitment to serving the health care needs of the region regardless of patient ability to pay, Carilion Clinic's hospitals collectively provided extensive uncompensated care. Stated at cost, charity and unreimbursed Medicaid costs for the year exceeded $44.9 million.”

“Management has evaluated their income tax positions under the guidance included in ASC 740. Based on their review, management has not identified any material uncertain tax positions to be recorded or disclosed in the financial statements.”

“Physician/Professional/Staffing Services - Total Expense: 3244606, Program Service Expense: 3244606, Management and General Expenses: , Fundraising Expenses: ; Billing & Collection Services - Total Expense: 637521, Program Service Expense: 637521, Management and General Expenses: , Fundraising Expenses: ; Other Purchased Services - Total Expense: 2140393, Program Service Expense: 2108850, Management and General Expenses: 31543, Fundraising Expenses: ; Contract Fees/Consulting - Total Expense: 24014795, Program Service Expense: 22630847, Management and General Expenses: 1383948, Fundraising Expenses: ; Repairs and Maintenance - Total Expense: 5646496, Program Service Expense: 5621527, Management and General Expenses: 24969, Fundraising Expenses: ;”

“Pension-related changes other than net periodic pension costs - -51144563; Transfers to/from Affiliates - Net - 56618013;”