Sentara Enterprises and Subsidiary

“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 and section 501(c)(3) tax exempt entity.”

“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 virginia non-stock corporation and the section 501(c)(3) tax exempt parent of the sentara health system.”

“Reserved powers over governance decisions: as sole member, sentara healthcare, a virginia nonstock corporation and the 501(c)(3) tax exempt parent of the sentara health system, 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 health 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. The parent of the system is sentara healthcare, a virginia nonstock corporation and 501(c)(3) tax exempt entity.”

“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 health 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 32 not-for-profit healthcare systems based on net revenue growth, operating margin, various clinical quality metrics and patient satisfaction. 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 served as president and 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 the president and ceo 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.”

“Sentara healthcare i. Sentara healthcare - your not for profit healthcare partner sentara healthcare based in norfolk, va, celebrates more than 129 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 and ohio, and a team of professionals nearly 28,000 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 of our communities 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 2017, sentara community benefit reached $364,956,000. Sentara provided $325,197,000 in net uncompensated patient care; $18,341,000 in medical education; and $21,418,000 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 supports a wide range of programs across hampton roads. In 2017, the foundation raised $1.9m and awarded 28 community grants totaling $622,000 to support its key priority areas. The martha jefferson hospital foundation in charlottesville, virginia raised over $3.5m in new gifts and commitments and focused their efforts on a high-risk breast program, a family caregiver support program and the center for clinical education. The rmh foundation raised $3.59m in new gifts and commitments and focused their efforts on a new linear accelerator for the sentara rmh hahn cancer center and the institute for nursing excellence and innovation. 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 2017, the hope fund awarded $147,000 to sentara employees in crises across the system. C. Community health initiatives sentara and optima health have long been committed to providing health and prevention services to the communities we serve through many channels including the sentara healthcare community health and prevention organization within sentara. Below are some key highlights of the efforts in our communities in 2017: - health improvement events were offered to churches, employer groups including sentara healthcare and hampton roads sanitation district, community health centers and other community locations including the pocket ekg program and the sentara living program. - sentara continued to offer progr”

“Iv. New initiatives a. Sentara continued its focus on keeping the company safe and forward thinking in the cyber world. For our security operations center, we partnered with ibm to provide us with 24/7 monitoring of cyber security threats. Utilizing watson, this service provides artificial intelligence capabilities to both detect and prioritize potential cyber security threats. B. Also in the realm of cyber security, sentara implemented two factor authentication for individuals logging into the sentara systems externally. Thus, sentara has secure remote access for all workforce members. C. Sentara established an information security student staffing program in partnership with old dominion university, regent university, thomas nelson community college, tidewater community college and the university of virginia. This allows us access to a skilled workforce with cyber security talent. D. In its third year, clinical performance improvement (clinical pi), an initiative to drive change and create rapid process improvement in targeted clinical areas, resulted in seeing positive trends towards meeting the company's ultimate goals. E. The voice of the customer model was developed to understand more from sentara customers. The model is an operational design that enables sentara to integrate the voice of the customer into all facets of business decision-making and product development. F. Addressing the opioid crisis is a major focus for sentara. Sentara medical group launched one click for providers to access the virginia prescription monitoring program (pmp) in the sentara ecare health network via a gateway program saving time for both the provider and patient and improving compliance. Providers are required to consult the virginia pmp before prescribing controlled drugs, but leaving the electronic medical record (emr) to log into the pmp adds extra steps and time to the process. Sentara careplex hospital continued a partnership with the newport news and hampton police departments to train police officers on how to administer to the life-saving, overdose-reversing narcan. Sentara rmh medical center was awarded a federal grant from the u.s. Department of health and human services office on women's health to help prevent opioid misuse in their region. V. Offering new procedures and technologies clinical breakthroughs and advancements: sentara introduced many new clinical breakthroughs and advancements that benefited the patient in many areas of care, including cardiac and reducing infections. A. Copper: i. Sentara deployed copper materials at sentara halifax regional hospital making it the final hospital in the sentara system to implement. All of our hospitals now have this infection-fighting and life-saving innovation. B. Cardiac: i. Sentara norfolk general hospital was the first in hampton roads to perform "clot-vac", which involves the removal of blood clots in the heart without open heart surgery. Ii. The ornish lifestyle medicine program expanded to allow for a second cohort with enlarged space at sentara princess anne hospital. Clinical outcomes have been positive for participants related to body weight; bmi, total cholesterol, ldl cholesterol, systolic blood pressure, hga1c and depression scores. Vi. 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 2017, sentara marked further progress toward achieving our goal of 80% of sentara nurses having a bsn by 2020. In 2017 sentara had 60.4% of its nursing workforce holding a bsn or higher degree with 16.6% of licensed rns with a contract to complete their bsn. Research: research is another way sentara is always improving. Here are a few examples of our work within the research realm: a. Cardiac: through the sentara cardiovascular research inst”

“C. Orthopedics: throughout sentara, we continually embrace the value of good clinical research and the difference it can make in patient care. Orthopedic surgeons who practice at sentara facilities continue to pursue clinical improvements through clinical trials and research, both at the local and national levels. Across the sentara regions, these surgeons are presenting their finding at national association meetings and being published in specialty trade journals. Vii. Building for the future a. Sentara northern virginia medical center (snvmc), located in woodbridge, virginia, implemented a second catheterization lab following the opening of the dedicated electrophysiology lab in the sentara heart and vascular center in 2016. Snvmc experienced an increase in pacemaker volume and diagnostic catheterization volume in 2017 compared to 2016. Electrophysiologists performed the first micra pacemaker implant at snvmc. Snvmc adopted the technology following sentara heart hospital's adoption in 2016 after fda approval. The micra pacemaker is the world's smallest pacemaker. It is implanted into the heart through a vein in the leg, thus there is no chest incision scar or bump. Snvmc increased inpatient orthopedic surgical volume in 2017 compared to 2016. Orthopedic achievements also included the introduction of the foot & ankle program and the launch of the back & neck center. B. Sentara rmh medical center (srmh), located in harrisonburg, virginia, began performing the tavr (transcatheter aortic valve replacement) procedure and conducted 24 cases in 2017 in their newly opened hybrid or. The cardiac program continues to see significant growth in open heart surgery cases, cardiac interventions and diagnostic catheterizations. Sentara rmh medical group opened a transition of care clinic, which is a collaborative effort between the hospitalist department, the medical group and hospital case management department. C. Sentara martha jefferson hospital (smjh), located in charlottesville, virginia, opened the sentara orthojoint center, which has a singular focus on the needs of orthopedic surgical patients undergoing hip or knee replacement. The center concentrates their effort on a dedicated team approach involving nurses, anesthesiologists, surgeons, physical therapists and home care. Sentara martha jefferson medical group expanded its foot print at sentara spring creek family medicine and acquired the waynesboro primary care practice. Additionally, the medical group implemented inquicker for ed patients needing primary care follow up, enabling patients to be seen sooner at the new 5th street practice. D. Hampton roads (southeastern virginia) i. Sentara princess anne hospital (spah), located in virginia beach, virginia, kicked off a $35 million master facility plan expansion and modernization project. This project will enable our care teams to treat more patients and provide an enhanced, patient-centric experience. Completion is scheduled for september 2018. Ii. Sentara virginia beach general hospital (svbgh), located in virginia beach, virginia, started offering robotic-arm assisted total knee replacement surgery. Using a virtual 3d model, the robotic system allows surgeons to create a personalized surgical plan based on each patient's unique anatomy. Additionally, svbgh began a $53 million modernization of patient care areas and infrastructure. Three icus will be consolidated into one 24 bed unit. Six operations rooms will be replaced in a newly constructed surgery wing and four other operating rooms will be renovated. Other general infrastructure will be modernized and emergency generators will be replaced. Iii. Sentara norfolk general hospital (sngh), located in norfolk, virginia, celebrated the 35th anniversary of the nightingale air ambulance. Additionally, sngh was the first in hampton roads to perform clot-vac, which involves the removal of blood clots without open heart surgery. Women's services leaders at sngh had an idea to take wi”

“E. South boston/halifax sentara halifax regional hospital (shrh), located in south boston, virginia, began offering ct lung cancer screenings to individuals who are at a higher risk of developing lung cancer enabling the earlier detection of cancer. Sentara obstetrics and gynecology opened in halifax offering comprehensive, high-quality women's healthcare options on the hospital campus. With two ob/gyn providers on board, there is more access and options for women who need these services close to home. Shrh opened an outpatient therapy program at sentara meadowview terrace nursing facility in clarksville, virginia. F. Sentara enterprises sentara home health, hospice and infusion had a strong year in terms of accreditation by the accreditation commission for health care (achc). Achc has cms deeming authority for home health, hospice, and durable medical equipment, prosthetics, orthotics and supplies and a quality management system that is iso 9001: 2015 certified. Sentara enterprises achieved achc accreditation for 7 home health legacy locations, 3 new home health providers, all 3 hospice providers, and iv infusion services. G. Sentara life care sentara life care is comprised of assisted living centers, nursing homes, mobile meals and the program for the all-inclusive care for the elderly (pace). In 2017, sentara life care opened a new care and rehabilitation residence in chesapeake, virginia. The 120 bed facility features an innovative "household" design with 20-40 residents each, and a resident-centered approach to care. Short-term rehabilitation admissions increased compared to 2016. Sentara life care implemented a medical director/pcp model in the two pace (program for the all-inclusive care for the elderly) centers. Pace is a comprehensive health care and supportive services program for frail seniors who wish to remain in their homes and community. The program is one that provides total care for participants, including comprehensive medical and rehabilitative services, in-home services and transportation. H. Sentara medical group (900+ providers in virginia and northeastern north carolina) i. Sentara medical group (smg) completed the 2017 smg strategic plan with a focus on care delivery, customer experience, provider and employee engagement and growth and innovation. Smg established a centralized nurse advice line piloted at select practices to connect patients to a triage call center for healthcare advice. This program streamlines workflows and helps patients arrange same-day care. Smg renovated 14 practices and opened 10 new practice locations. Additionally, smg continued its impressive growth in mychart enrollees (electronic medical record) by exceeding its goal of 270,000 with a total of 281,431 enrollees. Viii. 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 2017 awards and recognitions: i. For the 17th 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' ranking #24 in 2017. Diabetes and endocrinology at sentara norfolk general hospital, a specialty at eastern virginia medical school, ranked #43. Ii. Nine sentara hospitals earned highest grade of "a" for delivering safe care for patients according to the leapfrog hospital safety score. Iii. Sentara healthcare was named 1 of 52 great health systems to know according to becker's hospital review. And, sentara halifax regional hospital was ranked in the top 100 rural and community hospitals in 2017. Iv. Sentara leigh hospital was named to truven top 100 hospitals from truven health analytics and modern healthcare. B. Sentara ca”

“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. Sentara enterprises also operates medical transport, a ground ambulance and wheelchair transport service. Medical transport has 127 ambulances, 4 wheelchair vans, and provided 45,021 basic, advanced life support and wheelchair transports during 2017. 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 2017 was over $3.9 million.”

“Sentara healthcare, a virginia nonstock corporation and the 501(c)(3) tax exempt parent of the sentara health system, 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, a virginia nonstock corporation and the 501(c)(3) tax exempt parent of the sentara health system. The governing board of sentara healthcare is a community-based board comprised of 19 voting members, 18 of which are considered independent, as defined in the form 990 instructions.”

“Reclass of intercompany accts to equity 2,298,125. Partnership income tax < book 82,547. Sec 351 transfer from parent 1,504,268. Sec 351 transfer to subsidiary -1,504,268. Capital distribution to parent -13,354,198.”