Memorial Hermann Health System

“Memorial Hermann Health System has individual members.”

“The members have the authority to annually elect board members of the organization and to fill any vacancies on the board whose terms have expired.”

“The members have approval authority to approve amendments to, and repeal of the bylaws and certificate of formation, the purchase or sale of all or substantially all assets of the organization, and the merger or dissolution of the organization.”

“MEMORIAL HERMANN HEALTH SYSTEM PROVIDES A COPY OF THE FORM 990 TO ALL MEMBERS OF THE GOVERNING BODY VIA A WEBSITE SET UP SPECIFICALLY FOR BOARD MEMBERS TO ACCESS VARIOUS BOARD MEMBER DOCUMENTS. THE FORM 990 IS REVIEWED BY MEMORIAL HERMANN System Tax STAFF, SPECIFIC DEPARTMENTS INVOLVED IN RELATED SECTIONS OF THE RETURN, the Memorial Hermann System Tax Director, the Memorial Hermann vice president of finance, THE MEMORIAL HERMANN CHIEF ACCOUNTING OFFICER, and with the governing board PRIOR TO FILING Form 990.”

“Memorial Hermann Health System utilizes conflict of interest surveys and has codified its procedure in a policy. The policy is monitored by our Corporate Compliance Department through annual surveys of board members, corporate officers, management level employees, and other selected employees, physicians and vendors for all of its entities and related affiliates. In addition to responding to the survey, each recipient affirms that they have received a copy of the policy, have read and understood it, have agreed to comply with it, and understands that Memorial Hermann is a charitable organization that must engage in primarily tax-exempt purpose activities. The Corporate Compliance Department, Chief Legal Officer and the Corporate Audit Committee, consisting of independent board members, receive a report of all items disclosed. The Audit Committee Chair reports the existence of any conflicts to the Corporate Board of Directors. Memorial Hermann's conflicts of interest policy requires that Board members excuse themselves from discussions in which they have a conflict of interest. The policy also subjects Board members to disciplinary action if they are found to have violated the policy.”

“Memorial Hermann Health System has established communication channels to report problems and concerns including a telephone Helpline. Employee partners are encouraged to report problems or concerns either anonymously or in confidence via the Helpline when they deem appropriate. The Helpline establishes an avenue for employee partners or interested parties to report suspected criminal activity, and illegal or unethical conduct occurring within the organization in the event other resolution channels are ineffective or the caller wishes to remain anonymous. The Corporate Compliance Helpline is administered by an outside service in order to protect the anonymity of callers to the Helpline if they so desire to remain anonymous. All those who are employed in the Helpline operation or contracted organizations administering the Helpline are expected to act with utmost discretion and integrity in assuring that information received is acted upon in a reasonable and proper manner. MHHS has established a strict non-retaliation policy to protect, from retaliation, employee partners and others who report problems and concerns in good faith. There shall be no retaliation against a MHHS employee, independent contractor, vendor, allied health professional or medical staff member for reporting or raising a question regarding MHHS's compliance with a law or regulation. Those reporting suspected non-compliance who wish to remain anonymous may do so if they so choose. All reports of suspected non-compliance will be addressed in a confidential manner. The Corporate Compliance Officer or designee will always strive to maintain confidentiality during the compliance review and investigation process; however there may be a point where the identity of a reporter may need to be revealed where appropriate.”

“THE COMPENSATION COMMITTEE OF THE MEMORIAL HERMANN BOARD OF DIRECTORS RETAINS THE ULTIMATE DISCRETIONARY AUTHORITY OVER ALL ELEMENTS OF EXECUTIVE COMPENSATION. THE COMMITTEE IS COMPRISED OF INDIVIDUALS WHO ARE NOT EMPLOYED BY MEMORIAL HERMANN, AND HAVE NO CONFLICTING INTERESTS. THE PROCESS FOR DETERMINING COMPENSATION FOR THE ORGANIZATION'S CEO AND DISQUALIFIED PERSONS IS MODELED AFTER THE REQUIREMENTS IN IRC SECTION 4958 TO ESTABLISH THE PRESUMPTION OF REASONABLE COMPENSATION. THE COMPENSATION COMMITTEE REVIEWS AND APPROVES THE TOTAL REMUNERATION FOR THE ORGANIZATIONS DISQUALIFIED PERSONS IN ADVANCE OF BEING PAID. ON AN ANNUAL BASIS, THE COMPENSATION COMMITTEE ENGAGES AN INDEPENDENT THIRD-PARTY EXECUTIVE COMPENSATION CONSULTANT WHO USES COMPARABLE MARKET DATA FROM PUBLISHED SURVEYS AND/OR FORMS 990 OF SIMILAR ORGANIZATIONS TO PERFORM A COMPETITIVE ANALYSIS AND WRITE AN OPINION LETTER REGARDING THE COMPETITIVE POSITION OF MEMORIAL HERMANNS DISQUALIFIED PERSONS. THE COMPENSATION COMMITTEE REVIEWS THE COMPARABILITY DATA AND OPINION LETTER, AND DOCUMENTS ITS DISCUSSION AND DECISIONS IN MINUTES THAT ARE RETAINED WITH THE ORGANIZATION'S OTHER GOVERNANCE MATERIALS. THE ANALYSIS WAS LAST PERFORMED IN 2017 AND IT INCLUDED THE PRESIDENT & CEO, ALL EXECUTIVE VICE PRESIDENTS AND SENIOR VICE PRESIDENTS OF THE ORGANIZATION, AS WELL AS FAMILY MEMBERS OF DISQUALIFIED PERSONS WHO ARE EMPLOYED BY MEMORIAL HERMANN. The former CEO and President, Mr. Wolterman was provided with a retirement agreement as part of his employment. The agreement specified a payment of a percentage of Mr. Woltermans final base pay over his lifetime. The award was accrued over the life of the agreement (July 2009 to July 2016). According to the agreement, Mr. Wolterman fully vested in the benefit on his 60th birthday in July, 2016. Mr. Wolterman elected to receive his payment in the form of a lump sum upon his retirement. The amount of the lump sum was actuarially determined to be $13,738,928. This amount was paid in 2016 and is included in COLUMN B(III) AS "OTHER REPORTABLE COMPENSATION" FOR MR. WOLTERMAN.”

“The articles of incorporation, corporate bylaws, conflict of interest policy and financial statements of Memorial Hermann Health System and its affiliates are generally not made available to the public. If the inquirer provided a valid reason for desiring a copy of the documents that are related to the business interests of any of the Memorial Hermann Health System corporate entities, we would consider making these documents available.”

“Our directors can purchase medical coverage, for themselves and their eligible family members, through our networks at 100% of the premium cost.”

“2010A Bonds: Refund the Series 1997B Bonds and pay costs of issuance of the Series 2010A Bonds. Renovation, equipment, and construction of elderly care facilities at Southwest & Southeast; renovation and equipment at Greater Heights; 100,000 sq. ft expansion at the Woodlands; prior acquisition of, renovation and equipment for Pasadena; construction in inpatient/outpatient facilities, equipment and elderly care facilities at 1-10 & Eldridge and Highway 290 & FM 1960. 2013A Bonds: Bonds were issued to advance refund a portion of the Series 2004A Bonds and all of the Series 2008B bonds. Reimbursement or payment of routine capital costs incurred in connection with the construction of various improvements to and the acquisition of capital equipment for healthcare facilities of MHHS and Continuing Care and renovation of Memorial Hermann Hospital. Routine capital expenditures include the acquisition of land and additional equipment for existing hospital facilities, including, but not limited to, the upgrade of cardiac catheterization laboratories, renovation of nursing units and operating rooms, and installation and upgrade of CT scanners, MRIs, echocardiography systems and other imaging equipment at existing hospital facilities. The Bonds also financed the expansion of inpatient and outpatient facilities at Memorial Hermann Hospital including the expansion of operating rooms, women's services, imaging services and the neonatal intensive care unit at that hospital. Renovations and replacements of, additions to and equipment for Hermann including Children's, Southwest including affiliated long-term acute facility, Southeast, Greater Heights, Memorial City, The Woodlands, Katy, MHCC Hospital Spring Shadows Pines, Prevention and Recovery Center, and the initial outpatient/inpatient primary healthcare facilities at SH 288 and FM 518, Pearland, Brazoria County. 2013B Bonds: Issued to refund the Series 2008C bonds and pay costs of issuance of the 2013B Bonds. Previously financed projects: 1) the construction and renovation of Greater Heights, excluding the chapel therein; 2) the construction and renovation of the Woodlands; 3) construction and renovation of inpatient/outpatient facilities at 1-10 & Eldridge and at Highway 290 & FM 1960 including construction and equipping elderly care facilities at such sites; 4) construction and renovation at Southeast and Southwest including construction of elderly care facilities and 544 parking spaces at Southeast; 5) reimbursement/payment of capital equipment for Southwest, Southeast, Greater Heights, The Woodlands, and Facilities in 3) and 4). 2014A Bonds: The proceeds of the Bonds will finance a portion of the cost of various capital projects including the construction, expansion, renovation and replacement of, additions to, and/or the acquisition of sites and capital equipment for healthcare facilities of MHHS located or to be located in or near Houston, Texas, including substantial additions and other improvements to MHHSs Katy and Sugar Land hospitals, a new hospital in Pearland, and master plan improvements to and an expansion of MHHSs Texas Medical Center hospital and to pay costs of issuance for the Series 2014 Bonds. 2014B Bonds: The proceeds of the Bonds will finance a portion of the cost of various capital projects including the construction, expansion, renovation and replacement of, additions to, and/or the acquisition of sites and capital equipment for healthcare facilities of MHHS located or to be located in or near Houston, Texas, including substantial additions and other improvements to MHHSs Katy and Sugar Land hospitals, a new hospital in Pearland, and master plan improvements to and an expansion of MHHSs Texas Medical Center hospital and to pay costs of issuance for the Series 2014 Bonds. 2014C Bonds: The proceeds of the Bonds will finance a portion of the cost of various capital projects including the construction, expansion, renovation and replacement of, additions to, and/or the”

“2016C Bonds: Issued to refund the Series 2013C Bonds which were originally issued to redeem all of the Series 2008D-2 Bonds and pay costs of issuance of the 2013D Bonds. Original proceeds issued for renovations of, additions (including elderly care facilities) to and equipment for inpatient/outpatient facilities at Highway 290 & FM 1960, formerly owned and operated by Pasadena Hospital, inpatient/outpatient facilities at 1-10 & Eldridge Road, Spring Shadows Pines and the Wellness Center. 2016D Bonds: Issued to refund Series 2013D which were originally issued to refund Series 2008D-2 Bonds and pay costs of issuance for the Series 2013D Bonds. Original proceeds issued for renovations of, additions (including elderly care facilities) to and equipment for inpatient/outpatient facilities at Highway 290 & FM 1960, formerly owned and operated by Pasadena Hospital, inpatient/outpatient facilities at 1-10 & Eldridge Road, Spring Shadows Pines and the Wellness Center. 2016E Bonds: Issued to restructure Series 2008A-2 which were originally issued to refund the maturities of the Series 1998 Bonds and pay costs of issuance of the Series 2008A Bonds. Expansion, renovation, and equipment for Southwest, Southeast, Greater Heights, The Woodlands, Hermann, Pasadena, Memorial City, Rehabilitation Hospital, Spring Shadows Glen, Spring Shadows Pines; Construction of inpatient/outpatient facilities, equipment and elderly care facilities at 1-10 & Eldridge Road and Highway 290 & FM 1960; Construction of proposed preventative health care facility and equipment at 7701-7737 Southwest Freeway; Construction and equipment for elderly care facilities at Southwest and Southeast.”

“The Health System does not have its financial accounts separately audited nor receive audited financial statements. For the consolidated entities of the Memorial Hermann Health System and its affiliates an independent audit is conducted and audited financial statements are prepared according to GAAP by an independent accounting firm, of which the financial accounts of the Health System is a part.”

“Reclass of fund balances of affiliated companies (59,851,947) change in unfunded pension losses 39,188,000 reclass of contributions 22,343,000 change in noncontrolling interests (3,055,000) total changes in fund balances (1,375,947)”

“Memorial Hermann Health System has independent committees for audits, governance, and compensation which perform their respective functions on a consolidated basis for all corporate entities. The audit committee hires the independent accountants and oversees all audits that are conducted within all affiliated entities for financial information, grants and awards, and qualified plans.”