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. Prior to filing Form 990, management reviews with the committee the returns, discusses any material variations in the Form 990 as compared to those to be filed by the organization's affiliates, and answers any questions. At the conclusion of review and discussion, the Finance Committee approves 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, and requires disclosure and resolution of employee conflicts of interest. Additionally, officers, employed physicians, and highly compensated employees are required to complete and sign an annual conflict of interest disclosure statement. Board members conflicts of interests are addressed 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 Chief Compliance Officer reviews 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. Officers and other employees are expected to report conflicts to the Chief Compliance Officer as they arise. Depending on the nature of the conflict and the circumstances surrounding the conflict and transaction, the Chief Compliance Officer, senior leadership, or the board of directors may review the conflict of interest. When appropriate, these parties 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 Chief Compliance Officer in conjunction with Covenant Health Executive Leadership determines how to appropriately manage the conflict. In any conflict involving a board member, such member is expected to recuse himself or herself from voting on matters related 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.”

“In addition to the services previously mentioned, Covenant Health facilitates patient healthcare operations across the health system through a variety of support services. Examples include: - Executive leadership, strategic planning, and other planning at both system and organizational levels - Financial, management and advisory services - Third-party reporting - Integrity compliance program - Real estate management - Risk management - Internal audit - Asset and liability-related management functions - Procurement - Clinical quality improvement - Marketing and public relations - Covenant Health Call Center physician referral and information center - Rapid Access Center available 24/7 to facilitate patient transfers to Covenant Health hospitals - Human resources - Centralized management of plant engineering and construction - External reporting Other system-wide support services directly benefit patients and community members who receive care at Covenant Health's member organizations. These services enhance operational efficiency and quality of care. An example is the production of sterile packs. Covenant Health Sterile Solutions produces surgical sterile packs for distribution to Covenant Health's supported organizations. The use of custom-built sterile packs helps reduce surgical pack supply costs, reduce inventory levels, and minimize waste in keeping with the organization's green initiatives. Sterile packs also help reduce set-up time, leaving more time for treating patients, and with fewer items to open, reducing the risk of contamination. Other centralized services are provided by Covenant Health's Human Resources division. This division is responsible for system-wide programs, policies and procedures, regulatory and legal compliance, and assists with the hiring process for all system employees. Other services include standardized benefit design and administration, employee relations and retention, clinical and non-clinical skill development, and leadership development, succession and continuity. Through its Learning and Leadership Development (LLD) department, Human Resources provides both e-learning and classroom-based courses. LLD offers more than 100 clinical nursing courses from both in-house and vendor sourcing. It also manages a host of clinical training opportunities, ranging from CPR to advanced neurological and neonatal intensive care courses.”

“Cumulative effect of change in accounting principle 45,184,334. Book to tax difference in income(loss) from partnerships & trusts 2,490,247. Capital contributions from subsidiaries 41,696,353. Capital contributions to subsidiaries -77,653,150.”