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's sole member was 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.”

“Reserved powers over governance decisions: 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.”

“Monitoring and enforcement of coi policy: 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 organization's governing board or appropriate committee monitors transactions involving disclosed potential conflicts of interest, to ensure that they are reasonable and at arm's length.”

“Rebuttable presumption process: 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 31 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 treasurer; who also serve as ceo and senior vice president and cfo of the system, respectively. The process was last undertaken during the current tax year for the positions listed. The outside market study described above was also used to establish compensation for the organization's president, who is considered the top management official of the organization. Results were presented to senior executives of the system for review and approval rather than the system's compensation committee.”

“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 senior leaders of the sentara healthcare system.”

“Joint venture policy: the sentara healthcare system had a written policy requiring evaluation of its participation in joint venture arrangements with community-based physicians 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.”

“Sentara healthcare i. Sentara healthcare - your not for profit healthcare partner sentara healthcare based in norfolk, va, celebrates more than 127 years in relentless pursuit of its mission to improve health every day through innovation, compassion and community benefit. Sentara is a fully-integrated not-for-profit system with nearly 300 sites of care of which there are 12 hospitals in virginia and north carolina, including a level i trauma center with nightingale regional air ambulance and the nationally-ranked sentara heart hospital. The sentara family includes four medical groups, ambulatory campuses, post-acute care services, the physician-led sentara quality care network, the accredited sentara cancer network, the sentara college of health sciences, optima health plan members in virginia, alabama and ohio, and a team of professionals nearly 30,000 strong. Sentara proudly includes advanced imaging centers, nursing and assisted living centers, physical therapy and rehabilitation services, home health and hospice, and ground medical transportation. Sentara is strategically focused on continuous improvement in quality, safety, clinical outcomes and the patient experience and pursues key clinical goals through high-performance teams across the enterprise. Efforts are centered on providing the right care in the right setting at the right time and adding value to the communities we serve. We strive to serve all in the communities we serve through health outreach programs, education, and financial support of other not for profit organizations with similar health missions. Ii. Commitment to the community a. Sentara has provided much in the way of community benefit and charity care on an annual basis. In 2015, sentara community benefit reached $335,510,000. Sentara provided $276,309,000 in uncompensated patient care; $19,687,000 in medical education; and $39,514,000 in community programs. B. Sentara is proud of the mission-driven work of the three sentara foundations. These foundations raised money to support the clinical needs of the system and provided funding through grants and direct contributions to community organizations that have similar interests in community health needs. Sentara foundation-hampton roads funded 38 community grants in 2015 totaling $585,000; and the rmh foundation funded seven community health programs with grants totaling almost $118,000. The martha jefferson hospital foundation established a new palliative care outpatient clinic and funded two 3d mammography units within their community. All three foundations rallied around support for nursing excellence and innovation, funding 235 scholarships for registered nurses who are pursuing their bachelors of science in nursing. Sentara made a $100,000 contribution to the northeast academy of aerospace and advanced technologies (neaat) in elizabeth city, north carolina. The money is the first gift to the new charter school and will be allocated over three years. The north carolina state board of education approved the school in december 2014, and it was slated to open in august 2015 with a goal of workforce development for northeast north carolina and an aid to physician recruitment. Several years ago, sentara established the hope (helping overcome personal emergency) fund, which is an emergency financial resource for sentara employees that are experiencing catastrophic hardship or loss through no fault of their own. Sentara employees who receive aid from the hope fund have faced devastating crises such as fire, death, natural disasters, or serious personal or family illness. In 2015, the hope fund awarded $143,000 to sentara employees in crises across the system. Mti transport, llc, donated a retired ground transport ambulance to the one eleuthera foundation in the bahamas to raise awareness of breast cancer in a country with a high rate of breast cancer. Painted pink and named after a sentara employee with breast cancer, "miss vicki", the ambulance made her w”

“A. Orthopedics: sentara northern virginia medical center was home to the first stemless total shoulder replacement procedure in the dc/metro area. Orthopaedics hospital at sentara careplex was the first in hampton roads where orthopedic surgeons use navio - a robotic assisted technology for knee replacements not requiring a ct scan. A neurosurgeon at sentara princess anne hospital was the first in southern virginia beach to use the mazor robotics renaissance guidance system that allows for robotic assisted spine surgery for spine fusions and reduces the use of radiation by reducing continuous fluoroscopy during surgery. B. Neurosciences: sentara careplex hospital and sentara princess anne hospital offered a new procedure in hampton roads using spenocath - a device used in an interventional radiology procedure for migraine treatment through the nose. C. Cardiac: sentara heart hospital was the first in hampton roads to offer a procedure using the watchman device-an alternative to long-term blood thinning medication therapy for stroke risk reduction in patients with non-valvular atrial fibrillations. Vi. Expanding partnerships a. In october, 2015, sentara became an investment partner of medstreaming, a company whose data aggregation tool has long been used in sentara vascular services. Medstreaming's technology enables providers to aggregate data from multiple data sources and assimilate that data to provide diagnosis and treatment recommendations faster and more accurately. B. In 2015, sentara began working with wellpepper inc. Wellpepper is developing groundbreaking digital tools, through their proprietary intellectual property, such as a digital "app" that can help monitor migraines. Wellpepper is working with sentara to deploy the migraine app, and other apps for other conditions are on the horizon. C. Sentara continues its efforts to grow and integrate mdlive into the communities we serve; through our employees; and through members insured through optima. Mdlive delivers 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 physician or partner physician who can diagnose low-acuity illnesses, provide care and prescribe medications as appropriate. Vii. Expanding educational opportunities sentara is committed to always improving-including encouraging registered nurses (rns) to continue pursuing educational opportunities. Continuous learning will advance the care sentara nurses deliver to our patients and allow them to advance in their careers. In 2015, sentara marked further progress toward achieving our goal of 80% of sentara nurses having a bsn by 2020. In 2015 sentara has 54.2% of its nursing workforce holding a bsn or higher degree. Sentara is moving the needle on this measure and the sentara foundations are an enormous support. All sentara foundations rallied around advancing nursing education by funding 235 scholarships in 2015 for rns who are pursuing their bsn. Viii. Research: research is another way sentara is always improving. Here are a few examples of our work within the research realm: a. Sentara partnered with cupron and eos surfaces in 2013 to launch the world's largest clinical trial to test the effectiveness of copper-infused hard surfaces and linens in preventing hospital - acquired infections. Sentara expanded the use of the copper-infused linens and surfaces beyond sentara leigh hospital and a small area of sentara norfolk general hospital. Materials are now at 5 sentara hospital locations plus one sentara nursing center. This will allow us to expand the reach of the current research study that is testing the effectiveness of these materials in a clinical setting. Early results of the research are expected in 2016, which will enable sentara to chart a course for further use throughout sentara. B. Cardiac: through the sentara cardiovascular research institute, ca”

“C. Sentara martha jefferson hospital, located in charlottesville, virginia, partnered with the region 10 community services board to open the peterson health center. Region 10 community services board is part of a statewide network of 40 community services boards working to provide mental health, intellectual disability and substance use services in central virginia. The peterson health center opened in downtown charlottesville to provide preventative care, including vaccines and physicals, treatment of acute illnesses, diabetes and high blood pressure management, women's health services and geriatric medicine. First to sentara, sentara martha jefferson hospital introduced a new online tool where patients can "check-in" to the emergency room by "appointment", thus providing a far improved customer experience. This new online technology is being used for the emergency room at the sentara martha jefferson hospital and at the emergency room on the outpatient campus, sentara martha jefferson outpatient care center. Sentara martha jefferson hospital introduced 3d-mammography in 2015, which makes it possible for radiologists to see inside the breast in greater detail and detect cancers that may have otherwise been obscured. D. Hampton roads (southeastern virginia): i. Sentara broke ground on a medical office building located in chesapeake, virginia, called sentara edinburgh. Slated to open in late 2016, services include urgent care, primary care, imaging, physical therapy and a ymca. Ii. Sentara leigh hospital, located in norfolk, virginia, opened its 5-story west tower in 2015 and began construction on the final phase of its eight year on-site renovation, a two-story atrium featuring patient check-in and meeting space. Iii. Growing as a medical destination center, sentara norfolk general hospital, located in norfolk, virginia, continued to introduce and/or expand its quaternary services, totaling 17 programs. In 2015 alone, sentara norfolk general hospital cared for 30 more out of area patients than in 2014 from areas outside of hampton roads. Sentara norfolk general hospital received approval from sentara leadership to embark on a five-year, $199.4 million expansion and modernization project. The plan will add floors, wings, expand and modernize 23 operating rooms, consolidate icu beds on two new floors, expand the emergency room, create a state-of-the-art neonatal intensive care unit and add a rooftop helipad for nightingale, sentara's air ambulance, and other medical helicopters. Additionally, sentara norfolk general celebrated its 30th anniversary as a level i trauma center. Iv. Sentara virginia beach general hospital, located in virginia beach, virginia, launched sentara to home, a storefront and patient services enabling patients to go home with their medications and other post-discharge needs fulfilled prior to leaving the hospital. A transition specialist ensures that each patient has discharge follow up needs addressed. Sentara virginia beach general launched a back and neck program for spine surgery cases. This specialized program brings together a team including expert surgeons with caring and specially trained nurses, therapists and other health professionals. The goal is to provide seamless, coordinated care that reduces pain and gets patients back to their activities as soon as possible. Additionally, sentara virginia beach general hospital celebrated its 50th anniversary of providing quality care to the community. V. Sentara careplex hospital, located in hampton, virginia, filed a certificate of public need application to the commonwealth of virginia to reestablish obstetric services. Vi. Sentara obici hospital, located in suffolk, virginia, filed a certificate of public needs application for ten additional inpatient psychiatric beds and received approval in february 2016. A real breakthrough for identifying and viewing tumors near moving organs, a 4d ct is now available at sentara obici hospital. Vii. Sentara prince”

“Ii. Sentara partnered with pratt medical center to form sentara pratt medical group. With 32 providers and 7 locations in the areas of fredericksburg, stafford, king george and dahlgren, sentara now has a presence in the greater fredericksburg, virginia market. Sentara pratt medical center also brings an additional imaging center into the sentara healthcare network. Iii. Sentara medical group has a major focus on customer service. In 2015, sentara medical group deployed a shorter, online and automated phone call survey that patients would receive on the heels of their visit to a sentara medical group provider. The change more than tripled the amount of survey responses, and the data was more real-time for us to take action as necessary. X. Quality and patient safety distinctions a. Award-winning care- as always, sentara is proud and humbled by the various awards and recognitions the system received over the course of the year. Our mission is to improve health every day. To receive an award is simply an added acknowledgement of our mission - driven work. Here are a few of the 2015 awards and recognitions: i. For the 15th consecutive year, the cardiology and heart surgery program at sentara norfolk general hospital (sentara heart hospital) was listed among the top 50 heart programs in the u.s. News & world report 'best hospitals' edition and improved its ranking from 41st in 2014 to 31st in 2015. The ear, nose & throat program at sngh also made the top 50 ranking for the second consecutive year. Ii. Sentara cancer network, including seven sentara hospitals in the southeastern virginia region, was accredited by the american college of surgeons' commission of cancer. The sentara cancer network remains the only network-accredited cancer program in virginia. Iii. All sentara hospitals in hampton roads (sentara williamsburg regional medical center, sentara careplex hospital, sentara norfolk general hospital, sentara leigh hospital, sentara obici hospital, sentara virginia beach general hospital, and sentara princess anne hospital) and sentara martha jefferson hospital and sentara rmh medical center receive leapfrog's highest "a" rating for delivering safe patient care for 2015. Iv. Sentara completed the transition to dnv healthcare for accreditation at all sentara hospitals with successful surveys at sentara halifax regional hospital and sentara albemarle medical center. V. Sentara leigh hospital family maternity center received the advance for nurses 2015 best nursing team runner up status. This was one of six teams represented across the nation. Vi. Sentara martha jefferson hospital medical group practices received the ncqa certification to become patient centered medical homes. Medical homes provide patient-centered care that emphasizes care coordination and communication and works to give patients the healthcare experience they expect. Medical homes can also lead to improved quality and decreased costs. Vii. Ten sentara hospitals were recognized with the platinum award by the american college of cardiology for consistent high performance in treating heart attack patients. Viii. The intensive care unit at sentara martha jefferson hospital received the silver beacon award for excellence from the american association of critical care nurses. B. Sentara leigh hospital became the latest hospital within the sentara family to earn the nursing magnet designation from the american nurses credentialing center. Magnet speaks to a supportive working environment for nurses and superior clinical care based on strict criteria that magnet hospitals must meet. C. Sentara improved vital clinical communication with all patients by deploying the language access network across the enterprise to address communication needs for patients who are deaf or hard of hearing, blind or vision-impaired, with limited english proficiency or who cannot read. This new technology improves the patient and family experience while ensuring that all sentara sites of car”

“Sentara enterprises provides a wide range of services for recovering, disabled or chronically ill persons in need of skilled nursing, private duty nursing, rehabilitation services (i.e., physical therapy, occupational therapy and speech therapy), infusion services, or companion services. Sentara home care services also offers specialty programs in mental health, high-risk obstetrical care, high-risk newborn care, asthma, diabetes and pediatrics. In addition to home care, sentara enterprises offers a complete range of medical equipment and accessories such as hospital beds, wheelchairs, biliblankets, and diabetic supplies through its home medical equipment division. Respiratory services such as oxygen, cpaps, bipaps, nebulizers and apnea monitors are also available. Sentara enterprises also operates medical transport, a ground ambulance and wheelchair transport service. Medical transport has 126 ambulances, 5 wheelchair vans, and 1 rehab van, and provided 99,642 basic, advanced life support and wheelchair transports during 2015. All services are provided to the community regardless of race, creed, sex, national origin, handicap, age or ability to pay. The cost of uncompensated care provided by sentara enterprises to the community during 2015 was over $5.7 million.”

“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: the organization's board of directors is elected annually by sentara healthcare, the organization's 501(c)(3) sole member. The governing board of sentara healthcare is a community-based board comprised of 18 voting members, 17 of which are considered independent, as defined in the form 990 instructions.”

“Reclass of intercompany accts to equity 7,314,134. Partnership income tax > book -6,393. Pledge receivable allowance -500.”