Covenant Health

“The Covenant Health Board of Directors has delegated to its Finance Committee the full power and authority of the Board to receive, review, approve, authorize the filing of, address and resolve audit or review issues, and otherwise take all action required or appropriate relative to IRS Forms 990 and other applicable tax filings. The Finance Committee met in regular session in September, 2018, at which meeting executive management reviewed with the committee Form 990 and material information to be included in the form, discussed any material variations in the Form 990 as compared to those to be filed by the organization's affiliates, and answered questions of the committee regarding the Form 990. At the conclusion of review and discussion, the Finance Committee unanimously approved the Form 990.”

“Board members, officers and employees are required to adhere to rules and policies regarding conflicts of interest. Covenant Health 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 a bi-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.”

“Form 990, Part VI, Section B, Line 15a: Annual compensation for Covenant Health's President and Chief Executive Officer ("CEO"), James D. VanderSteeg, is determined by the Compensation Committee of the Covenant Health Board of Directors, ("the Committee") which is composed of independent members of the board and chaired by the chairman 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 (the "Consultant") whose services include: (1) providing pay comparisons with market comparables; (2) recommending salary ranges and annual base salary adjustments; (3) designing incentive compensation and deferred compensation components of the CEO's total compensation package; (4) reviewing benefits and perquisites; and (5) certifying as to the reasonableness of total annual compensation. The Consultant analyzes and makes recommendations with respect to the CEO's total compensation package through analysis of CEO compensation data for comparable nonprofit health systems in the United States. The systems selected for comparison are similar to Covenant Health in revenue, total assets, number of hospitals, full time employees and services provided. Covenant Health's current compensation methodology includes setting base salary around the 50th percentile of the market. Base salaries for individual executives will vary based on market conditions, performance, tenure, experience, special skills or qualifications, recruitment and retention challenges, and other relevant factors. In addition, annual incentive compensation may be awarded upon achievement of goals established by the Committee at the beginning of each fiscal year which reflect quality of care, patient safety and service excellence in addition to financial performance and other measures. Incentive opportunity levels will be positioned at or slightly above median or average levels in the market. Annual incentive opportunity ranges from 0-50% of base salary depending upon the CEO's performance. Overall, total compensation levels (all forms of cash compensation and benefits) will be positioned up to or around the 75th percentile of the market, based on individual and organizational performance. As a part of its CEO performance evaluation process, on behalf of the Committee, an independent consultant asks each member of the board of directors to submit a written evaluation of the CEO's performance using an evaluation form prepared by an independent audit firm. This information is collected, collated, and reported to the Committee by the audit firm; results are "blinded" so that individual board members are not identified. The blinded results are shared with the CEO as part of the evaluation process. Any increase in base salary, award of annual incentive, or changes in overall compensation methodology are made by the Committee after discussion with and advice of the Consultant and conditioned upon the Consultant's determination that such decisions result in total annual compensation that is reasonable and within a fair market value range. Once the annual performance evaluation is completed, the chairman meets with the CEO and shares the Committee and board's evaluation of his prior year's performance. He also informs him of the Committee's actions with respect to any annual incentive award for the prior year and any base salary adjustment for the upcoming year. The performance goals for the upcoming year are determined by executive leadership and communicated to and adopted by the board at a board meeting. The annual performance of the CEO is documented adequately and concurrently with the compensation committee's determination. Written and/or electronic records of the compensation committee include, when prepared, the date all relevant actions were taken; terms of the approved compensation; the members of the compensation committee who were present dur”

“Per its tax exempt bond provisions, Covenant Health is required to file quarterly and annual consolidated and obligated group financial statements and 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. The organization's governing documents and conflict of interest policy are not made publicly available.”

“2017 Report to the Community Covenant Health is a comprehensive, community-owned, not-for-profit health system serving 23 counties in East Tennessee. Nine acute care hospitals located in Knoxville and surrounding areas comprise the foundation of the health system. Additional outpatient and specialty care departments are located throughout the region providing diagnostic and surgery services, mental health and cancer treatments, and therapy and home health services. Over 10,000 employees and 1,500 affiliated physicians are dedicated to improving the quality of life for the more than one million patients and families served each year. Member organizations: Hospitals Claiborne Medical Center Cumberland Medical Center Fort Loudoun Medical Center Fort Sanders Regional Medical Center LeConte Medical Center Methodist Medical Center of Oak Ridge Morristown-Hamblen Healthcare System Parkwest Medical Center Peninsula Hospital, a division of Parkwest Medical Center Roane County Medical Center Outpatient and Specialty Care Covenant HomeCare and Hospice Covenant and Methodist Therapy Centers Fort Sanders West Diagnostic Center Fort Sanders West Outpatient Surgery Center Morristown Regional Diagnostic Center Patricia Neal Rehabilitation Center Peninsula Outpatient Centers Thompson Cancer Survival Centers Covenant Breast Centers Covenant Joint Centers Covenant Sleep Centers Claiborne Nursing Home Fort Sanders Sevier Nursing Home Physician Services Covenant Medical Group, Inc. Other Programs and Services Fortress Corporation Fort Sanders Health and Fitness Center Nanny's Nursery Covenant Staffing Services Tennessee Wesleyan University - Fort Sanders Nursing Foundations Fort Sanders Foundation Methodist Medical Center Foundation Morristown-Hamblen Hospital Foundation Thompson Cancer Survival Center Foundation Patient Care Summary Population of 23-County Service Area 1,427,213 (2010 Census) 2014 2015 2016 Patient Care Summary 67,235 68,193 68,320 (Excludes nursing home) Inpatient Surgeries 16,908 16,585 17,426 Outpatient Surgeries 29,644 29,265 29,480 ED Visits 317,575 328,360 327,724 Outpatient Visits 1,040,593 1,061,082 1,091,009 Physician Office Visits 499,881 548,210 580,660 Leadership Jim VanderSteeg, Covenant Health's President and CEO, remains committed to the mission of improving the quality of life through better health and a vision of being the region's premier healthcare network through clinical and service excellence. Everyone associated with the health system knows and is committed to the following Pledge of Excellence: * The patient always comes first. Our patients are the reason Covenant Health exists, and it is both a privilege and a high calling to care for them. * We are committed to excellence. Our patients and our coworkers in all areas of the organization deserve nothing less. * First and best choice - Covenant Health will strive to be the organization that our communities instinctively seek out when they need health care. We will continually work to be the best in every aspect of the care we provide. Jim VanderSteeg and the executive leadership team have stated: * We will lead courageously, being proactive in delivering excellent care and meeting the challenges of today's healthcare environment. * We will be honest in our business dealings and in our interactions with co-workers, patients,and the communities we serve. * We will use our resources wisely as we deploy medical services and technology in our local communities. * We will collaborate to create a workplace culture where people know they are valued and how they connect to the mission and vision of Covenant Health. * We will encourage innovative thinking and creative ideas from all employees in order to make Covenant Health the best it can be. Awards Several Covenant Health hospitals received top recognitions from national organizations in 2017: * Cumberland Medical Center in Crossville was named the Upper Cumberland's only "Top 100 Rural & Community Hospital" by iV”

“Achievements Covenant HomeCare has been recognized as the first home health agency in Tennessee and the third in the nation to reach Milestone 5, the highest level of a five-step Home Health Quality Improvement initiative aimed at preventing heart attack and strokes. The HHQI Cardiovascular Health Improvement initiative is an ongoing effort to reduce the incidence of heart attack and stroke among home health patients through a series of best practice interventions. It tracks data on aspirin and tobacco usage, blood pressure and cholesterol levels among home health patients with ischemic vascular disease. Covenant HomeCare offers skilled nursing, certified nursing assistants, physical therapy, speech therapy, occupational therapy and medical social services. It is the area's largest non-profit home health and hospice provider and serves more than 4,700 patients annually in 17 counties through branches in Knoxville, Oak Ridge and Morristown. Covenant HomeCare and Hospice scored 100% on CMS (Centers for Medicare and Medicaid) quality measures for patient care, including evaluation and treatment for symptoms such as pain and shortness of breath, and patients' treatment preferences related to hospice care. Stroke Care Covenant Health has the region's only stroke hospital network for delivering advanced diagnostics and treatment to halt the devastating effects of stroke. Residents in any of the 23 counties served have increased rates of survival due to a hub-and-spoke model for stroke treatment. At the hub of the network are Fort Sanders Regional Medical Center and Patricia Neal Rehabilitation Center. An emergency department physician at any of the Covenant Health hospitals can confer with colleagues and administer the clot-busting drug tPA (tissue plasminogen activator) before transporting the patient to Fort Sanders Regional. * Fort Sanders Regional Medical Center is an accredited Comprehensive Stroke Center, offering both advanced stroke treatment and the stroke rehab services of the Patricia Neal Rehabilitation Center. * Other Covenant Health member hospitals are certified as advanced primary centers for stroke care, or are preparing to be certified as "stroke ready" facilities. * Eighty-three percent of patients with stroke symptoms see an emergency physician within 15 minutes of arrival at Covenant Health hospitals, compared to a national average of 67%. * Seventy-one percent of patients who have a neurological intervention for stroke at Fort Sanders Regional do not need a wheelchair when they are discharged from the hospital. * Fort Sanders Regional Medical Center exceeds the national average of patients who are able to go directly home after stroke treatment. Cancer Care The Covenant Health breast centers offer Digital 3D mammography - also known as tomosynthesis which allows cancer to be detected much earlier. It's a newer technology and especially helpful for women with dense breast tissue because it allows a more detailed look at the breast tissue. With 6 locations across the 23 county service area, patients have access to this new technology close to home. At Covenant Health's breast center locations, patients receive their screening mammography results within 24 hours. When cancer is caught in its earliest stages, patients can undergo a shorter duration of radiation therapy. Covenant Health radiation oncology locations offer partial breast radiation which takes only five days, compared to the traditional whole breast radiation course of four to six weeks. In 2015 Covenant Health began implementing a low dose CT (LDCT) program for lung cancer screening. Now in maturity, the program led to the detection of 20 new cases of lung cancer in 2017. With this LDCT program, patients can receive treatment for earlier stages of lung cancer, improving the chance of sustainability. Cardiac Care Covenant Health's heart hospitals began collaborating in 2012 to offer Transcatheter Aortic Valve Replacement (TAVR). Much has changed in the”

“Expansion and Renovation In 2017 Parkwest Medical Center began a $99 million expansion and renovation project to accommodate both patient care improvements and growth on Parkwest's main campus in west Knoxville. Highlights of the project include: * A new patient care tower to better serve the hospital's inpatients and observation patients within specialized units. * Additional operating rooms and an expansion of surgical support space within the existing main surgery area of the hospital. * A dedicated entrance for surgical patients. * Creation of a clinical observation unit to help staff and physicians better serve medical and surgical observation patients who do not need to be admitted as inpatients. * Relocation of the helipad closer to the Emergency Care Center. The new location will allow quicker access for Covenant Health patients across the region who are airlifted to Parkwest for emergency medical care. Physician Relationships Nearly 1,500 physicians are affiliated with Covenant Health hospitals and organizations as members of the health system's medical staffs. These physicians serve in leadership positions at their respective hospitals, and several represent their organizations and communities through membership in Covenant Health's Board of Directors. Covenant Medical Group, Inc,(CMG) comprises the health system's largest group of employed physicians. CMG includes primary care and specialty physicians in more than 100 practice locations. CMG also builds and maintains partnerships with physicians through joint ventures such as surgery centers and the development of service line strategies that focus on improving the quality of patient care. Physician and hospital agendas are aligned so that the first priority is always the patient. The health system's goal is to work side by side with physicians to provide a seamless continuum of care and excellent outcomes. Preparing Future Healthcare Professionals In 2017 Covenant Health welcomed a new group of medical students as part of the health system's partnership with DeBusk College of Osteopathic Medicine at Lincoln Memorial University in Harrogate, Tennessee. It is the second year for the medical student program, which provides clinical experiences at Covenant Health hospitals for aspiring physicians and mid-level providers. Thirty-seven students took part in an orientation highlighted by a traditional "white coat ceremony" in which each student received a personalized white coat to wear during their clinical training at Covenant Health hospitals. Three of Covenant Health's member hospitals - Cumberland Medical Center, Methodist Medical Center and Morristown-Hamblen Healthcare System - serve as core rotation sites for the program. Under the direct supervision of physicians, the medical students interview and examine patients, review clinical information, make hospital rounds, participate in interdisciplinary team meetings, practice appropriate documentation and perform procedures. Covenant Health and LMU-DCOM by the numbers: * Each core rotation site (Cumberland Medical Center, Methodist Medical Center and Morristown-Hamblen Healthcare System) hosts 12 LMU-DCOM medical students for their 3rd and 4th year clinical rotations. * During the 2016-17 clinical year, additional LMU-DCOM students completed electives at seven other Covenant Health locations. * The program depends on approximately 150 physicians throughout Covenant Health who serve as preceptors (teachers). * About 160 LMU medical students have rotated through Covenant Health facilities during the past two years. Healthcare Education at Covenant Health * Covenant Health provided clinical experiences for more than 1,000 students in fall 2017. Students represented 10 colleges and medical specialty areas including nursing, pharmacy, rehabilitation and others. * Sixteen universities routinely place students at Covenant Health facilities for clinical training. * Covenant Health partners with Tennessee Wesleyan University”

“Book/Tax Diff in Income(Loss) from Partnerships/Trusts -3,935,847. Return of capital from subsidiaries 61,622,617. Capital contributed to subsidiaries -21,014,950. Change in 457(b) unrealized gain/loss 175,061. Return of capital from investment in subsidiary 1,630,279.”

“The Audit Committee of the Board of Directors annually selects the external auditors for Covenant Health. There is a joint meeting of the Finance Committee and Audit Committee of the Board of Directors where the audit of the consolidated financial statements are presented.”