Sentara Enterprises and Subsidiary

“Business or family relationship of officers, directors, etc.: david bernd and howard kern have a business relationship. The organization's officers and directors served together on the boards of other organizations within the sentara healthcare system ("the system"), as well as joint ventures in which the system had an ownership interest. See schedule r for a listing of such entities.”

“Explanation of classes of members or shareholders: the organization had one class of member, the sole member being sentara healthcare, a virginia nonstock corporation described in section 501(c)(3) of the internal revenue code.”

“How members or shareholders elect governing body: the board of directors, which served as the organization's governing body, was elected by its sole member, sentara healthcare, a 501(c)(3) organization.”

“Decisions of governing body approval by members or shareholders: as sole member, sentara healthcare is entitled to one vote on all matters and has the right to elect and remove members of the organization's governing body; approve any alteration, amendment or repeal of its governing documents; approve the annual operating and capital budget and all formal long-range plans; approve any single capital expenditure exceeding $1 million; approve all borrowing or indebtedness which in any one transaction or related series of transactions exceeds $500,000; approve any plan of merger or consolidation, any sale, lease, exchange, mortgage, pledge or other disposition of all, or substantially all, the property and assets of the organization, the voluntary dissolution of the organization, or revocation of voluntary dissolution proceedings; review the books and records, conduct audits, and approve the selection of auditors chosen to conduct audits of the organization; and approve the creation or acquisition of any subsidiary of the organization, or the creation of any other corporation of which the organization is to be a member, and to approve any dissolution or other change in any such legal relationship previously approved by sentara healthcare.”

“Form 990 review process: the organization was part of the sentara healthcare system ("the system"), and as such, used the system's in-house tax department, headed by a licensed certified public accountant, to both prepare and review its form 990. During the preparation and review process, the tax department worked closely with other system departments, such as legal, compensation and benefits, compliance, finance, and marketing, to ensure that a complete and accurate return was filed.”

“Directors, board-nominated officers, and key employees submit an annual conflict of interest questionnaire and certify to the completion and accuracy of the information disclosed. The sentara healthcare system's legal department monitors transactions involving potential conflicts of interest, to ensure that they are reasonable and at arm's length. Reports on such transactions are made to the audit and compliance committee of the board as necessary.”

“Compensation review & approval process for officers & key employees: as part of the sentara healthcare system ("the system"), the organization followed processes and procedures set forth in its governing documents to ensure compliance with its obligations as a 501(c)(3) healthcare organization to pay disqualified persons reasonable compensation. Such processes and procedures are intended to establish the rebuttable presumption of reasonableness under the internal revenue code section 4958 regulations. The compensation philosophy of the system as a whole is to base overall compensation and benefits for executives on not-for-profit market comparables, adjusted as applied to each executive, taking into consideration the individual skills, experience, tenure and performance of the executive being compensated and overall performance of the organization. In line with this philosophy, the system performed substantial due diligence as to market comparables. The system's compensation committee, which consists of system board members without conflicts of interests, engaged an outside consultant, who reports to the compensation committee, to conduct a study assessing the competitiveness of total compensation (including cash compensation, benefits and perquisites) of its senior executives prior to making decisions regarding annual base salary adjustments, approving incentive awards, or considering programmatic changes. The study compared the compensation of the system's senior executives to compensation data from multiple published survey sources based on the senior executive's functional responsibility. In conducting the study, the consultant targeted other not-for-profit health systems of similar size based on net revenue and complexity. For health plan positions, health plans with similar premiums, or members, were targeted. The consultant also conducts a review of the organization's performance relative to a group of not-for-profit health systems of comparable size and scope of operations every year. The most recent study compared sentara's performance to 29 not-for-profit healthcare systems based on net revenue growth, operating margin, bond rating, and qualitative performance measures based on rankings from sdi's national top integrated health networks. Overall, the consultant determined that sentara's pay was aligned with its relative performance. The compensation study was presented to the system's compensation committee, which made its compensation decisions based on a)its review and analysis of the performance of both the organization and its senior executives and, b) a reasonableness of compensation analysis and opinion from an external expert in the compensation of executives in the tax-exempt health care field. The committee's bases for its decisions were documented in committee minutes taken during the meeting and then circulated for review and approval. All decisions regarding compensation were made by the committee, which consists of system board members without conflict of interests. This process was used to establish compensation for the organization's chairman and president/treasurer; who also serve as ceo and senior vice president and cfo of the system, respectively. The process was last undertaken during 2013 for the positions listed.”

“Provision of governing docs, coi policy and financials to public: the consolidated financial statements for sentara healthcare and subsidiaries were made publicly available through the use of dac bond (disclosure dissemination agent) and can be found on the internet at www.dacbond.com. The organization's governing documents and conflicts of interest policy are generally not made available to the public.”

“Document retention policy: the organization had a written policy for document retention and destruction which was approved by management.”

“Joint venture policy: the sentara healthcare system had a written policy requiring evaluation of its participation in joint venture arrangements under applicable federal tax law. This policy was approved by management. The organization also took steps to safeguard the organization's exempt status with respect to such arrangements.”

“Program service accomplishments: sentara healthcare i.your not-for-profit health partner for 125 years, sentara has been committed to helping people just like you, people who want the most dedicated medical professionals helping them through every stage of life. To provide a range of quality care, we have grown slowly throughout virginia and north carolina. We have reached out to industry leaders and joined forces, and we now operate more than 100 sites of care, including 12 acute care hospitals - seven in hampton roads, one in northern virginia, two in the blue ridge region of virginia, one in southern virginia and one in north carolina. For more than a decade, modern healthcare magazine has ranked us as one of the nation's top integrated healthcare systems. Our not-for-profit system proudly includes advanced imaging centers, nursing and assisted-living centers, outpatient campuses, physical therapy and rehabilitation services, home health and hospice agency, a 3,800-provider medical staff, and four medical groups. In addition, we provide medical transport ambulances and nightingale air ambulance, and extend health insurance to 440,000 people through optima health, our award-winning health plan. Among our many strengths, we are a national leader in heart and kidney care, stroke care, and infection prevention, and we were the first in the nation to pioneer and develop the eicu, a remote monitoring system for intensive care. Our dedication to improving and increasing medical options for our patients is reinforced by our ongoing participation in national and international research. These vital medical trials help us advance toward our mission of improving health every day. In november 2013, we proudly celebrated 125 years of delivering compassionate and quality care. When we began as the retreat for the sick in 1888 in norfolk, virginia, medical providers dedicated themselves to caring for norfolk's poor, focused on meeting their immediate healthcare needs. As noted above and detailed in this report, we have grown into a multi-state, integrated healthcare system committed to still delivering that same compassionate and quality care and reaching far beyond the patients who come directly to us. We strive to serve everyone in our communities through health outreach programs, education and financial support of other not-for-profit health organizations. Ii.growing the sentara family since the beginning, sentara has reached out to nearby industry leaders and joined forces to extend healthcare to more people. In recent years, we have grown in virginia and north carolina by seeking partnerships with long-established and successful hospitals and healthcare systems who share our dedication to excellence and value. Some of our most recent additions include: a. Halifax regional hospital in the fall of 2012, halifax regional hospital signed a letter of intent to affiliate with sentara healthcare. It is an integrated system including a 192-bed hospital, three long-term care facilities, a home care and hospice facility, and a broad range of specialties and outpatient services across the south boston region, about 165 miles west of norfolk. The merger was completed july 1, 2013, which also marked halifax's 60th anniversary serving the south boston community. The system's extensive experience serving rural communities makes it particularly valuable to locals and complements sentara's commitment to personalized healthcare it is now the 11th of 12 hospitals in sentara's not-for-profit integrated health system. B. Sentara albemarle hospital, medical group and related facilities sentara healthcare and albemarle health of northeastern north carolina began a partnership march 1, 2014, after approval by the pasquotank county board of commissioners and the albemarle hospital authority board of commissioners and their two-year process of evaluating potential partners. All four entities share the goals of improving the community's access to primary care,”

“In august 2012, sentara and mdlive announced an equity partnership to deliver real-time medical consultations via telephone and online video through an established network of physicians. Patients use the mdlive virtual consult platform to consult directly with a licensed sentara or partner physician who can diagnose low-acuity illnesses, provide care, and subscribe prescriptions. In 2013, sentara employees with optima health and cigna insurance received the benefit of sentara mdlive appointments for a $15 co-pay. We saw over 2,000 sentara employees/dependents covered under optima insurance register with mdlive. That same year, 429 employees and their families made an appointment with mdlive. Sentara is working with mdlive to partner with other health systems to offer the benefits to their employees and is working to leverage the technology to pilot new models to transform care and improve lives. C. Expanding educational services continuing to grow and develop as we aim to meet the demand for well-educated healthcare experts, the sentara school of health professionals changed its name in 2009 to the sentara college of health sciences (schs). At the same time, it received approval to offer a baccalaureate degree in nursing, a requirement more hospitals are setting for its staff. Our bachelor of science in nursing program began in august 2010 with four ways to receive a degree: traditional bsn, lpn to bsn, rn to bsn and early admission for high school seniors. The college is providing a new pool of highly competent nurses: the first rn to bsn class graduated in may 2012 with seven graduates. Twenty-six students also graduated in the new, traditional bsn program, and one student graduated in the new lpn to bsn program. All students practice their skills in sentara's simulation lab a minimum of eight times, enabling them to perfect their critical-thinking skills in a safe environment. The lab, equipped with six, high-fidelity programmable mannequins who can cry, sweat, breathe rapidly and develop symptoms of cardiac arrest, is located inside schs -- a feature not found in many nursing programs -- so that it is easily accessible for both students and professors, and classroom instruction or feedback can occur immediately afterwards. We furthered our offerings with the surgical technology program at the college launching the first associate of occupational science degree with the january 2013 class. D. Researching for the future in a patient study conducted at sentara leigh hospital in 2012, nurses were empowered to give iv fluids at the earliest signs that a knee or hip joint replacement patient's blood pressure was trending downward. Before the study, a 10-step process including a physician order was required. This new protocol sped care and reduced the number of patients whose conditions worsened due to low blood pressure by 30 percent. Study findings were shared with orthopedic nurses from around the united states during the 33rd annual national association of orthopaedic nurses conference in san antonio in may 2013. In april 2012, sentara heart hospital joined the heartlight trial for the treatment of symptomatic atrial fibrillation. Using a fiber optic light, doctors look inside the beating heart of patients, testing a new device called the cardiofocus heartlight endoscopic ablation system. The system includes a balloon, small camera and laser light to precisely deliver light energy to misfiring areas of the heart and to help restore regular heart rhythm. The study reached a milestone in february 2013 when it enrolled more than half of the total study participants. In a 10-month, 2012 study, sentara physicians worked with the eastern virginia medical school strelitz diabetes center to develop alerts in the sentara ecare health network, our electronic medical record system, when a change occurs in a diabetic patient's condition. The alerts offer guidance about the appropriate care for each situation. During the study period, pat”

“E. Sentara leigh towers work began in december 2011 on a multi-phase, three-year project to build a new sentara leigh hospital on the site of the current one. Sentara opened the new east tower in november 2013. Along with our planned west tower, it replaces three 1970s-era wings at the norfolk, virginia hospital. The towers feature state-of-the-art patient rooms with private bathrooms, no-step showers and overnight accommodations for families. The project also includes a 48-bed orthopedic and rehabilitation center on the first floor and employs part of the outside garden space for walking exercises on different grades and surfaces, making it a true healing garden. The towers project will continue as our staff maintains excellent, uninterrupted patient care during the phased construction. F. Sentara hospice house in march 2013, sentara opened sentara hospice house, an 8,311 square-foot facility to provide care for up to 12 people and their families. Previously, with only five live-in hospices in virginia and none in hampton roads, patients were not often able to choose this care. Now they can. G. Rockingham memorial hospital (rmh) women's center construction began on the rmh funkhouser women's center in june 2012 and was completed june 2013. The 15,000 square foot center houses women's imaging, including advanced breast imaging/mammography and bone density screening, rmh breast care, the image recovery center and rmh heart check for men and women and a surgeon's office. H. Rockingham memorial hospital (rmh) outpatient orthopedics & advanced imaging center rmh gained approval for the new center in july 2012. The new facility will be an orthopedic and sports medicine destination including advanced imaging, rmh orthopedics and sports medicine, rehabilitation therapy, a sports performance arena and an interventional suite for pain management and special procedures. The center is scheduled to be completed in late 2015. I. Martha jefferson outpatient care center a new outpatient care center opened in the fall of 2012, with a free-standing 24-hour ed and imaging, laboratory services and a primary care practice. The ed shortens travel time for ems providers, and the facility as a whole helps cut travel time for patients in the northern counties of virginia. V. Sentara quality & patient safety distinctions a. Measuring quality healthcare since our health system's earliest years, we have believed the community deserves healthcare that is measurably better. Sentara's goal is to be accredited by respected national organizations and to achieve top 10 percent performance wherever benchmarks exist. We are proud of the work we have done so far toward this goal, as it has been recognized in many ways: 1. Top 100 integrated healthcare network sentara has consistently ranked among the nation's top integrated healthcare networks as published in modern healthcare's fact-based ranking. The only healthcare system in the country to be among the nation's top 10 for all 15 years of the survey, sentara landed at number one in 2001, 2010 and 2011. The study, published annually, highlights the top 100 integrated health care networks across the nation as selected by sdi, a health information company. 2. Using technology to improve care sentara healthcare was been named one of the nation's most wired health systems in the 2013 and 2012 most wired survey and benchmarking study. Hospitals & health networks polled about 1,570 hospitals. The survey assesses hospitals and health systems' meaningful use of electronic media technology in four areas infrastructure, business and administrative management, clinical quality and safety, and care continuum. 3. Award-wining cardiac and nephrology care sentara heart hospital/sentara norfolk general hospital is a comprehensive network of providers, facilities and services working together to ensure the highest level of care. Sentara norfolk general hospital has been ranked the number one hospital in virginia and hampton roa”

“7. Award for supporting breastfeeding four sentara hospitals in hampton roads and six program champions received business investment in babies (bib) awards in 2012 from the business case for breastfeeding program administered through cinch, the coalition for infant and child health at eastern virginia medical school. Sentara was among the employers cited for creating a supportive environment for nursing mothers to pump breast milk during the workday by providing time, private space, and written policies. Hospitals included sentara norfolk general, sentara leigh, sentara virginia beach general, and sentara princess anne. 8. Five-star rankings, silver achievement, and excellence in action awards for nursing centers in 2013, for the third year in a row, two sentara nursing centers received a five star overall ranking in u.s. News & world report's annual best nursing homes survey. Best nursing homes recognizes top-rated homes in the united states. Of more than 15,500 homes rated, sentara nursing center windmere, virginia beach and nursing center portsmouth were among fewer than one in eight that received a five-star overall rating in all four quarters. Sentara nursing center barco, north carolina received five stars in 2012 and 2013 as well. Sentara nursing center-currituck received a 2012 silver-achievement in quality award from the american healthcare association and national center for assisted living. The competitive awards follow criteria in the baldrige performance excellence program and mark measurable progress in quality improvements in long term care. B. Patient safety our focus goes beyond the basics of making healthcare safe for our patients. Sentara has built a strong "culture of safety" to reduce medical errors by modeling successful programs from the nuclear power and aviation industries. This culture of safety promotes behaviors that result in safe, reliable and effective care. The foundation of this culture is a strong accountability to perform regimented behaviors that reduce medical errors. Our staff uses guidelines known as "behavior based expectations" or bbe's to ensure the highest standard of care. The goal is to make these tools and techniques a habit. For our dedication, we have received numerous awards for patient safety and quality of care standards. 1. The leapfrog hospital survey the leapfrog hospital recognition program (lhrp) honors hospitals that demonstrate excellence or improvement in patient safety, quality, and resource utilization. In 2012, the leapfrog group developed the hospital safety score, grading more than 2,600 of the nation's hospitals on patient safety. In virginia, 58 hospitals were named in the report, and seven sentara hospitals achieved the highest grade of a for delivering safe care to patients. In 2013, leapfrog recognized sentara norfolk general hospital with an a rating. 2. Infection prevention prevention of health care-associated infections is a national concern, and sentara continually strives to reduce these cases. All of our hospitals have been working diligently to reduce the occurrence of ventilator-associated pneumonia (vap), which can develop in patients who have been on mechanical ventilation for 48 hours or more. In 2013, sentara williamsburg regional medical center marked nine consecutive years with zero cases of vap, which no other hospital in the country can claim. The department of health and human services and the critical care societies collaborative have recognized williamsburg for outstanding achievement and leadership in the elimination of vap. Voluntary hospitals of america (vha), a voluntary national organization focused on health care financial performance through clinical excellence and supply chain management, "blueprinted" the practices at sentara williamsburg regional medical center as a model for hospitals across the country. 3. Improving patient safety through technology sentara healthcare provides the sentara ecare health network. The clinical syste”

“In november 2012, sentara partnered with the free foundation to open a virginia beach facility. The non-profit collects, refurbishes, sterilizes, and distributes used durable medical equipment to those who cannot afford it. The sentara health foundation supported the free set-up and donated space. C. In support of community health initiatives 1. Sentara community health and prevention as part of sentara's commitment to preventive health measures, we sponsor and host special community initiatives that are designed to educate the community about health. Our campaigns have included: -national drug take back day -drive-thru flu shots -women's day health fair -webinars for weight loss surgery -paint facebook pink to raise awareness for breast health -text outreach to pregnant women -eating for life, an award-winning nutrition and healthy eating program -know your numbers, a cardiovascular risk reduction and health improvement program -walk-about with healthy edge, a walking program that encourages walking for cardiovascular health -get off your butt: stay smokeless for life, a smoking cessation program -healthy heart program, a cardiovascular disease reduction program -sentara living, a comprehensive wellness program for seniors -sentara's mobile mammography unit visits numerous work sites every year to encourage wellness. -camp lighthouse, a grief camp for kids ages 5-16 who have experienced the death of a loved one -don't sit on colon cancer healthy eating and screening campaign and 5k -prostate cancer education and free screenings -mobile er tents at virginia beach rock 'n' roll half marathon -a new blog for women of childbearing age with information and support for mothers and mothers-to-be -courage f.u.n, a project to combat childhood obesity through soccer training and weight management education -lung cancer screening education for smokers 55 and older who have smoked a pack a day for over 30 years 2. Tobacco-free environments hospitals see the effects of tobacco every day in heart disease, respiratory ailments, and cancers. In response, sentara has implemented our tobacco-free environment (tfe) campaign. No one is allowed to smoke, chew or dip anywhere on campus, not even in cars. The goal is not just to avoid the aesthetic and health issues of second-hand smoke, but to put sentara's mission into practice by helping staff, patients, and visitors quit this habit. As of 2011, all of our facilities adopted the tobacco free environment initiatives. We have earned the american cancer society "excellence in the workplace tobacco control" award for our efforts. Vii. Optima health plan a. Improving health operating with the same mission in mind -- to improve health every day --is our health plan, optima health. With more than 25 years of health insurance experience, optima health provides health plan coverage to more than 440,000 members throughout the state. Our quality provider network features more than 15,000 providers including specialists, primary care physicians, and hospitals. B. Supporting the community optima health provides more than insurance for our communities; we reach out through health screenings, events, education materials, and immunizations. Our highlights in 2013 included: -health improvement event participation numbers increased from the previous year (in 2012 there were 43,263 participants compared to 43,351 participants in 2013.) these events were offered to churches, employer groups including community health centers and other community locations. -eating for life, walkabout with healthy edge, healthy heart, meditation, tai chi and yoga, our cardiovascular disease risk reduction programs, collectively increased in distribution by 9 percent over 2012. -flu patrol administered a total of 10,583 immunizations. 8,573 were given to optima health insured employers in virginia. This number surpassed our goal of 8,000. -preventive birthday card reminders for preventive health screenings delivered messages to 255,94”

“The 501(c)(3) sole member of the organization, sentara healthcare, maintains an agency relationship with the organization and issues all 1099s on its behalf. The number reported is a best estimate of the 1099s attributable to the organization. The exact number cannot be determined; as some of the 1099s issued by the agent are attributable to more than one entity, and there is no reporting mechanism to determine 1099's attributable solely to the organization.”

“Governing body independence: board members are elected annually by the organization's 501(c)(3) sole member, sentara healthcare. The governing board of sentara healthcare is a community-based board comprised of 16 voting members, 12 of which are considered independent, as defined in the form 990 instructions.”

“Reclass of intercompany balances to equity 25,116,201. Partnership income tax < book 350,643. Net asset transfers from affiliates -35,391. Transfer of property to subsidiary -29,100,000.”