Methodist Medical Center

“Covenant Health is a large, integrated health system which files twelve Forms 990. Methodist Medical Center is one of those twelve entitites. Annually, at the September Finance Committee meeting, one of the twelve 990s is selected (a different entity each year) for distribution to each member of the Committee. Management then reviews in detail each of the Form 990 schedules and describes variances between entities, if any. The remaining eleven Forms are made available for review by any committee member. The same presentation is made to the Covenant Health Board of Directors at the October meeting. All twelve Forms 990 are then made available to all Board members for their review throughout the month of October.”

“Board members, officers and employees are required to adhere to rules and policies regarding conflicts of interest. Covenant Health, the parent company of the organization, distributes a Board-approved Code of Conduct to all employees. The Code covers among other subjects, conflicts of interest. Additionally managers are required to complete and sign an annual management certification that addresses conflicts of interest. Board members' conflicts of interests are dealt with in the corporate bylaws and Board members are required to complete and sign a conflict of interest questionnaire on an annual basis. The Integrity Compliance Office maintains records that contain conflict of interest information obtained from Board members, officers and employees. These records are available to be queried prior to engaging in business transactions. The Integrity Compliance Officer initially reviews all conflict of interest data. Based on this information, the officer determines what conflicts of interest exist at that point in time. Between times when surveys are collected Board members are expected to disclose any new conflicts that have arisen that affect pending Board decisions. As well, managers and other employees are expected to report conflicts to the Integrity Compliance Officer as they arise. Depending on the nature of the conflict and the circumstances surrounding the conflict and transaction, the Integrity Compliance Officer, Senior Leadership, or the Board of Directors may review the conflict of interest. Where appropriate these bodies may also consult legal counsel. Restrictions imposed on persons with a conflict of interest are determined on a case by case basis. For Covenant Health employees, the Integrity Compliance Officer, in conjunction with Executive Leadership determines how to appropriately handle the conflict. In any conflict involving a Board member, such member is expected to excuse himself or herself from voting on matters that give rise to the conflict.”

“Overall compensation policies for Methodist Medical Center, Covenant Health (Parent Company), and affiliates are set by the Compensation Committee of the Board of Directors ("the Committee"), which is comprised of independent members of the Board. The Committee is guided in its decision-making process by an independent, nationally-recognized executive compensation consultant experienced in advising nonprofit hospital boards. Compensation policies for Anthony Spezia and John Geppi are reported on the 2013 Form 990 of Covenant Health, EIN 62-1646734. Form 990, Part VI, Section B, Line 15b: Base salary and annual bonus opportunities for Michael Belbeck, President and Chief Administrative Officer, are set by the Covenant Health CEO or Executive Vice President-Human Resources, subject to approval of the Compensation Committee of the Covenant Health Board of Directors ("the Committee"), after review by and discussion with the executive compensation consultant ("the Consultant") to ensure that total compensation is reasonable and within a fair market value range. Salary ranges are based upon the recommendations of the Consultant made after comparison with similar jobs in similar size health systems across the nation. Bonuses are recommended by the CEO and approved by the Committee conditioned upon receipt of a written opinion from the Consultant that total compensation for the executive is reasonable and consistent with fair market value. Base salary is initially targeted at midpoint and may vary according to the individual's experience, market conditions and competition. Annual bonuses are designed to award 0-35% of base salary based upon system performance and accomplishment of certain targets established by the CEO. Base salaries and annual bonus opportunities for Julie Utterback, Vice-President of Financial Services, and Susan Harris, Vice-President and Chief Nursing Officer, are based on established targets to ensure that total compensation for each executive is reasonable and within a fair market value range. Salary ranges are based upon comparison with similar jobs in similar size health systems across the nation. Base salaries and bonuses are approved by Executive Leadership predicated upon performance, and are reasonable and consistent with fair market value. Base salaries are initially targeted at midpoint and may vary according to the individual's experience, market conditions and competition. Annual bonuses are designed to award 0-20% of base salary based upon system performance and accomplishment of certain targets established by Executive Leadership.”

“Methodist Medical Center files a Joint Annual Report containing financial information with the Tennessee Department of Health. Per its tax-exempt bond provisions, Covenant Health, the parent company of the organization, is required to file quarterly and annual consolidated and obligated group financial statements in addition to other documentation, with various bond insurers and other agencies, including the Electronic Municipal Market Access (EMMA) service of the Municipal Securities Rulemaking Board (MSRB). Any member of such a repository has access to these financial statements.”

“Methodist Medical Center (MMC) entered into a partnership agreement with Oak Ridge Healthcare Associates, LLC (ORHA) on October 15, 2010 for the purpose of developing, owning, and operating an assisted living community in Oak Ridge, TN. ORHA is the managing partner of the assisted living community, which goes by the name of Canterfield of Oak Ridge. The transaction, as well as any joint venture entered into by the hospital, is reviewed by executive management and legal counsel. Canterfield posted a loss for 2013 which is reported on the 2013 Form 990-T for Methodist Medical Center.”

“Contact addresses for officers, directors, etc. Anthony L. Spezia Covenant Health 100 Fort Sanders West Blvd. Knoxville, TN 37922 John T. Geppi, Larry Mauldin and all Directors Covenant Health 1420 Centerpoint Blvd, Bldg C Knoxville, TN 37932 All other persons listed in Part VII, Section A may be contacted at the organization's address, which is: Methodist Medical Center 990 Oak Ridge Turnpike Oak Ridge, TN 37830.”

“REPORT TO THE COMMUNITY Covenant Health was formed in 1996 with the mission to serve its communities by improving the quality of life through better health. The health system is nationally recognized as a top performer in many areas: patient care, quality performance, cost, integration, information technology, finances, ethics and innovation. Amid a challenging healthcare environment, Covenant Health has committed to these imperatives: * Serving the communities as a not-for-profit health system. * Leading in quality and service. * Outstanding governance and leadership. * An engaged work force with the right skill sets. * Being the practice environment of choice for physicians. * Reinvesting in the communities, providing programs, services, technologies and facilities that improve local healthcare services and patient care. Covenant Health has invested well over a billion dollars in its communities since 2000 - a commitment no other healthcare organization has approached. It has opened new hospitals, expanded services, and brought cutting-edge medical technology to the region. * Meeting the challenges of the healthcare environment through effective strategic planning and wise use of resources. * Providing excellent care to every patient, every time. Covenant Health's Board of Directors and its administration are challenged by a complex and changing healthcare environment. These challenges require strong collaboration and a common vision among all of Covenant Health's constituents: employees, physicians, board members, patients and the communities served by Covenant Health. Providing quality care and an excellent patient experience remain high priorities for the board, especially in a new era of reimbursement based on outcomes and patient satisfaction. Because of the focused commitment of Covenant's administration and caregivers, the health system performs well in these areas. Covenant Health is committed to maintaining its not-for-profit status while providing needed services to the communities. Despite the increasing shift of responsibilities for charity care to the hospitals, Covenant Health remains strong in delivering care that improves the quality of life at the lowest possible cost. It works closely with physicians to develop strategies for service lines and health system operations and has the financial strength to weather impending storms while investing in new technologies, people, and other opportunities as they arise. In the face of today's challenges, Covenant Health has a firm foundation on which to stand, balancing lessons learned with strengths gained from a disciplined execution of thoughtful strategies. The board has a clear vision of the importance of fulfilling the mission and is prepared to address challenges with determination, commitment, knowledge and community focus. Covenant Health Member Organizations Covenant Health Board members and administrative leaders serve their communities through strategic planning and successful operation of these member organizations: Hospitals and Other Healthcare Providers: Claiborne Medical Center (joined the system April 1, 2014) Cumberland Medical Center (joined the system February 1, 2014) Covenant Homecare and Hospice Fort Loudoun Medical Center (Fort Loudoun) Fort Sanders Perinatal Center (Perinatal Center) Fort Sanders Regional Medical Center (Fort Sanders Regional) LeConte Medical Center (LeConte) Methodist Medical Center (Methodist) Morristown-Hamblen Healthcare System (Morristown-Hamblen) Parkwest Medical Center (Parkwest) Peninsula Hospital, a Division of Parkwest Medical Center (Peninsula) Roane County Medical Center (Roane) Thompson Cancer Survival Center Thompson Oncology Group Knoxville Heart Group Outpatient and Specialty Care Departments and Joint Ventures: Hospital-based Therapy Centers Fort Sanders West Diagnostic Center Fort Sanders West Outpatient Surgery Center Morristown Regional Diagnostic Center Patricia Neal Rehabilitation Center Peninsula Outpati”

“At the Forefront of Local Behavioral Health Care and Community Collaboration Following the closure of Lakeshore Mental Health Institute in 2012, patient volumes at Peninsula, a division of Parkwest Medical Center ("Peninsula") increased significantly. Efforts are made to keep patients in the community in order to provide a better continuum of care. While mental health resources are available in other Tennessee locations, outside transfers make a seamless transition and follow-up care more difficult. Therefore the staff at Peninsula continue to work on internal process improvements to be able to care for more patients. Outpatient treatment follows a 'best practice' model of care whereby new patients get immediate appointments with a nurse, therapist, physician or nurse practitioner. If a patient misses an appointment, it is rescheduled for the same day or the next. Patients have a better chance for success in treatment when there is no lag time. As a result of this approach, outpatient "no show" rates have decreased and outpatient satisfaction rates are in the 90th percentile. Other best practices include involving families or patient support systems in treatment plans and using a computerized call-back scheduling system so that phone calls are returned promptly. Peninsula staff members take a yearly refresher in Therapeutic Crisis Intervention to help behavioral staff recognize and verbally de-escalate situations that could otherwise turn into a crisis. Peninsula also works with police officers to help them recognize symptoms of mental illness among those they encounter as part of their work. Police officers may encounter someone with mental illness as often as once every shift. Peninsula also collaborates with other area mental health organizations and primary care physicians to enhance care and resources for behavioral health patients. The goal is to help people get the mental health services they need, rather than winding up in the Emergency Department, on the streets or in prison. The state of Tennessee provided funds for medications for indigent patients, transportation assistance and other outpatient programs. United Way provided a grant to assist patients transitioning to independent living. In addition to the 155-bed inpatient psychiatric hospital in Blount County, Peninsula also has outpatient facilities in Knox, Blount, Loudon, and Sevier counties. The provision of care may include hospitalization, therapy sessions, visits with psychiatrists, medication management, intensive outpatient programs and support groups. Covenant Health Hospitals Help Families Welcome New Babies More than 6,500 babies were born in a Covenant Health hospital in 2013. The health system offers a variety of birthing options and hospital amenities to help parents and families welcome their newborns. Families come in all shapes and sizes and so do expectations and beliefs about childbirth. Some mothers prefer minimum intervention. Others are comforted that pain relief is available during labor and delivery. Some mothers decide on an obstetrician before planning for their babies. Others choose the hospital first and then choose a qualified physician who delivers at that hospital. Covenant Health hospitals work to provide excellent care and comfort while accommodating patients' preferences for room-in or nursery care after delivery. Maternity suites at Covenant hospitals are spacious, beautifully decorated and designed to maximize comfort and provide immediate access to technology. Room options include private suites equipped with bassinets for rooming in and sleeper furniture for a family member. Some hospitals also have post-partum rooms available. Depending on the hospital, patients may have access to whirlpool tubs or entertainment units. All maternity units are secured with monitored entries and exits. Additional security devices and procedures are in place to monitor babies' safety. Covenant Hospitals Recognized for Reducing Early Elective De”

“Excellence in Orthopedic Care The hospitals of Covenant Health offer comprehensive orthopedic care, including joint replacement surgery and follow-up rehabilitation services. Specialized Joint Replacement Centers are located at Parkwest, Methodist, Fort Sanders Regional and Morristown-Hamblen medical centers. The Joint Centers have teams of experienced orthopedic surgeons, nurses, clinicians and therapists who work together to provide care for hip or knee replacement patients. When patients schedule joint replacement surgery they receive personalized care and a team approach that focuses on creating positive outcomes from the surgery. Covenant Joint Center patients are prepared beforehand, guided through the process step by step, and given extraordinary care afterwards. The first step is an educational program, with an optional tour. Therapy following the surgery helps patients concentrate on developing strength in their new joints and regaining mobility. The Covenant Joint Centers' unique approach emphasizes patient education, family involvement and group support during rehabilitation. The expert team approach combined with a unique healing environment puts patients on the road to recovery faster and with fewer complications. Performing as Promised in Local Communities As a not-for-profit organization governed by a voluntary Board of Directors, Covenant Health reinvests excess revenues after expenses in improving patient care. Since 2000 Covenant Health has invested over $1 billion in facilities, technologies, programs and services. No other health system in East Tennessee in this decade has approached Covenant Health's investment in clinical and medical information technology, and new, renovated and expanded hospitals and services. Despite a challenging economic environment, Covenant Health's financial strength allows it to continue pursuing a strategy of excellence and a commitment to state-of-the-art facilities, medical technology and medical information systems. Achieving Quality Partnerships with Physicians Covenant Health collaborates with physicians to accomplish its mission of improving the quality of life through better health. Physicians partner with the health system in many ways including employment, as members of hospital medical staffs and Covenant's board of directors, in committee leadership roles, through joint ventures and in the development of service line strategies. Covenant Medical Group, Inc. (CMG) is the new name for the health system's employed physician practices. Formerly Covenant Medical Management, CMG has grown substantially over the past several years and has more than 140 physicians in more than 70 practice locations. CMG includes both primary care and specialty physicians, with significant growth among specialty physicians. Physicians often struggle with the complexity of running a medical practice in the current healthcare environment. A physician with a solo practice may struggle economically to make that practice work. Many physicians consider employment by hospitals and health systems as an effective way to continue providing medical care in their communities. Physicians who become part of CMG do so for more than just the economic aspect of practicing medicine, and often seek employment of Covenant Health for broader reasons. Physicians who become employed by Covenant Health often decide to do so based on confidence in the health system's leadership team, because of Covenant's strategic direction and performance, and because of the quality of care delivered. Other attributes that influence the decision include the health system's local governance and strong market position and relationships. Covenant Health builds and maintains partnerships with physicians through joint ventures such as surgery centers and the development of service line strategies that focus on improving quality and cost of patient care. Nearly 1500 physicians are affiliated with Covenant Health hospitals and member organ”

“Reaching Beyond Hospital Walls In addition to taking care of the patients and families who receive direct services, Covenant Health is committed to making a positive impact in the health of the surrounding community. In all the communities Covenant Health serves, local initiatives and partnerships create opportunities to interact with people of all ages and encourage healthier lifestyles. * In April 2013 approximately 7,000 people participated in the 9th anniversary of the Covenant Health Knoxville Marathon, which attracted local runners and hand cyclists, as well as competitors from throughout the U.S. and other countries. * The Covenant Health Biggest Winner Weight Loss Challenge continued as a friendly competition that encourages East Tennesseans to get off the couch and get moving for a fit and healthy lifestyle. Team members train together for five months, with the goal of crossing the finish line in Covenant Health Knoxville Marathon events. Participants challenge other East Tennesseans to start a health journey that will change their lives for the better. * Some of the funds raised through the Covenant Health Knoxville Marathon were contributed to The Patricia Neal Rehabilitation Center's Innovative Recreation Cooperative, a collaboration of groups and individuals who help disabled persons enjoy leisure and recreation activities such as water skiing and cycling. * The Covenant Kids Run attracted over 1,000 children who participated in a "marathon" of activities over a period of several weeks, culminating in a run to Neyland Stadium on the day before the Covenant Health Knoxville Marathon. * Covenant HomeCare Hospice helps children grieving the loss of a loved one through Katerpillar Kids Camp, offered with the support of Variety-The Children's Charity. The camp is staffed by health system volunteers and helps children in grades 1-12 express their feelings in a supportive environment. Each year participating children make quilt squares, which are later used to create quilts representing each camp session. In 2013, several quilts were selected for display at the Oak Ridge Children's Museum. * Covenant Health hospitals are partnering with local organizations to perform assessments of health status and to identify the primary health issues affecting our region. Once assessments are complete, the hospitals will be developing local programs and communicating availability of existing services to help address some of these health issues. Community Benefit Report One of the most tangible expressions of the charitable purpose of Covenant Health is providing care to people in need. As a not-for-profit system, Covenant Health provides medically necessary services to people with limited resources. Covenant Health actively participates in the state's TennCare program, and collaborates with other area providers to identify and support efforts to make community healthcare resources available for those in need. Summary of System Community Benefit Totals for Uncompensated Care 2013 Charity Care . . . . . . . . . . . . . . . . . . $48.5 million TennCare* . . . . . . . . . . . . . . . . . . . $40.5 million Medicare* . . . . . . . . . . . . . . . . . . . . $71.1 million Total Uncompensated Care . . . . . . . . . . . $160.1 million Each hospital in the Covenant Health system reports its specific Uncompensated Care on its Form 990. *Care which costs more to provide than reimbursements from state and national programs cover. Covenant Health provides community benefit that far exceeds the value of its tax-exempt status. 2013 Summary of Additional Community Benefit Health Professions Education Continuing education; preparation of future healthcare professionals . $1,558,904 Subsidized Health Services Clinical services provided to meet community needs despite financial loss . . . . . . . . . . . . . . . $18,815,965 Donations, Medical Missions and Community Building Funds and in-kind services donated to the community, including funds to support ch”

“Fund Balance Transfer to Covenant Health (Parent) -83,995,294. Book/Tax Difference Canterfield Schedule K-1 233,654.”

“The Finance Committee of the Board of Directors assumes responsibility for oversight of the audit of the consolidated financial statements and selection of an independent accountant.”