Texas Health Huguley Surgery Center LLC

“The members of the Governing Boards listed on Part VII of this Form 990 include the filing organization's Governing Board and the members of the filing organization's Board of Managers. The Board of Managers is primarily responsible for the overall management and control of the filing organization. The Board of Managers exercises control over the annual operating and capital budgets, and must approve any large capital expenditures of the filing organization. The Governing Board is responsible for oversight of the conduct of the facility and has the ultimate authority and responsibility for a) the overall operations of the filing organization (Surgery Center), b) the quality of medical care provided at the Surgery Center, and c) the ethical standards of Physicians within the Surgery Center on a day-to-day basis.”

“Sean Lemon and Eddie Soler - Family Relationship”

“Effective January 1, 2012, Texas Health Huguley (THH), the sole member of Texas Health Huguley Surgery Center, LLC (the filing organization) entered into a Management Services Agreement with Adventist Health System Sunbelt Healthcare Corporation (AHSSHC). AHSSHC is the parent organization of a system of tax-exempt hospitals and other health care provider organizations that operate 48 hospitals throughout the U.S., primarily in the Southeastern portion of the U.S. AHSSHC is exempt from federal income tax under Internal Revenue Code Section 501(c)(3). Under the Management Services Agreement (the Agreement), AHSSHC must follow the policies of the filing organization's Board of Directors. Managerial services provided by AHSSHC included oversight and day to day management of the filing organization, including the following functions: Personnel administration, including recruitment, hiring, training, promoting, directing and terminating personnel; Procurement, including the acquisition of food and beverage items, supplies, devices, furniture, and medical equipment; Health Information Management; Maintenance and Security; Contracting for services and consulting services; Financial accounting systems; Development of operational and capital budgets; Billing and collection of receivables and remittances of payables; Patient safety and quality systems; Marketing; Regulatory compliance; Administration - Policies and Procedures, including appointment of the CFO, COO, and CNO. The individuals who serve as officers of the filing organization in the roles of CEO and CFO are listed in Part VII, Section A. In 2020, these individuals were compensated by and on the payroll of AHSSHC for services rendered to the filing organization.”

“Texas Health Huguley Surgery Center, LLC (the filing organization) has one member. The sole member of the filing organization is Texas Health Huguley, Inc. Texas Health Huguley, Inc. (THH) is a hospital exempt from federal income tax under IRC Section 501(c)(3). There are no other classes of membership in the filing organization.”

“The sole member of the filing organization is THH. The Board of Managers of the filing organization are apointed by THH.”

“THH, as the sole member of the filing organization, has certain authorities without the need for approval by the filing organization's Board of Managers. These authorities include the following: a) selling substantially all of the assets of the filing organization; b) liquidating or dissolving the filing organization; c) amending the Operating Agreement; d) relocation the ambulatory surgery center from its current location; and e) any proposed substantial change in the nature of the filing organization's business”

“The filing organization's current year Form 990 was reviewed by the CEO and CFO prior to its filing with the IRS. The review conducted by the CEO and CFO did not include the review of any supporting workpapers that were used in preparation of the current year Form 990, but did include a review of the entire Form 990 and all supporting schedules.”

“The Conflict of Interest Policy of the filing organization applies to members of its Governing Boards and its principal officers (to be known as Interested Persons). In connection with any actual or possible conflicts of interest, any member of the Governing Boards of the filing organization or any principal officer of the filing organization (i.e. Interested Persons) must disclose the existence of any financial interest with the filing organization and must be given the opportunity to disclose all material facts concerning the financial interest/arrangement to the Governing Boards of the filing organization or to any members of a committee with board delegated powers that is considering the proposed transaction or arrangement. Subsequent to any disclosure of any financial interest/arrangement and all material facts, and after any discussion with the relevant Board member or principal officer, the remaining members of the Governing Boards or committee with board delegated powers shall discuss, analyze, and vote upon the potential financial interest/arrangement to determine if a conflict of interest exists. According to the filing organization's Conflict of Interest Policy, an Interested Person may make a presentation to the Governing Boards (or committee with board delegated powers), but after such presentation, shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement that results in a conflict of interest. Each Interested Person, as defined under the filing organization's Conflict of Interest Policy, shall annually sign a statement which affirms that such person has received a copy of the Conflict of Interest policy, has read and understands the policy, has agreed to comply with the policy, and understands that the filing organization is a charitable organization that must primarily engage in activities which accomplish one or more of its exempt purposes. The filing organization's Conflict of Interest Policy also requires that periodic reviews shall be conducted to ensure that the filing organization operates in a manner consistent with its charitable purposes.”

“The filing organization's CEO and CFO are not compensated by the filing organization. Such individuals are compensated by Adventist Health System Sunbelt Healthare Corporation (AHSSHC), an unrelated entity disclosed in our response to Form 990, Part VI, Section A, Line 3. Please see the discussion concerning the process followed by AHSSHC in determining executive compensation in our response to Schedule J, Line 3.”

“The financial statements of the filing organization, its governing documents and Conflict of Interest Policy are not generally made available to the public as a whole.”

“For those members of Governing Boards and officers who devote less than full-time to the filing organization (based upon the average number of hours per week shown in column (B) on page 7 of the return) the compensation amounts shown in columns (E) and (F) on page 7 were provided in conjunction with that person's responsibilities and roles in serving in an executive leadership position within Texas Health Huguley, Inc. (sole member) and Texas Health Resources, Inc. (majority member of THH). Physician members of the Board of Directors received compensation from THH and a related organization as a result of providing various medical services.”

“The amount shown in Part VIII, Line 7c(i) of the Form 990 represents an allocated share of capital gain/(loss) from a system wide, corporate administered, investment program.”

“The sole member of the filing organization is Texas Health Huguley, Inc. (THH). THH is 49% owned by Adventist Health System/Sunbelt, Inc. (AHSSI). The parent corporation and sole top-tier member of AHSSI is Adventist Health System Sunbelt Healthcare Corporation (AHSSHC). AHSSHC is a Florida, not-for-profit corporation that is exempt from federal income tax under Internal Revenue Code (IRC) Section 501(c)(3). AHSSHC has established a shared service center to centralize the Accounts Payable (A/P) function for all AHSSHC subsidiary organizations. The filing organization has entered "0" in Part V, Line 1a because the filing organization does not issue Form 1099 returns, rather, all such returns are filed by and under the name and EIN of AHSSHC as the payor subject to the information reporting requirements of Section 6041. The facts and circumstances support a position that AHSSHC, as a payor on behalf of its subsidiary organizations in a shared service environment, will have sufficient management and oversight in connection with the subsidiary organizations' payments to meet the standard set forth in Treas. Reg. Section 1.6041-1(e). AHSSHC will not merely be making payments at the direction of its subsidiary organizations. Accordingly, AHSSHC is considered the payor subject to the information reporting requirements of Section 6041.”

“Pymnts to Healthcare Professionals: Program service expenses 74,213. Management and general expenses 0. Fundraising expenses 0. Total expenses 74,213. Professional Fees: Program service expenses 567,592. Management and general expenses 0. Fundraising expenses 0. Total expenses 567,592. Leased Personnel: Program service expenses 1,879,208. Management and general expenses 205,621. Fundraising expenses 0. Total expenses 2,084,829. Environmental Services: Program service expenses 154,046. Management and general expenses 0. Fundraising expenses 0. Total expenses 154,046. Transcription Services: Program service expenses 4,726. Management and general expenses 0. Fundraising expenses 0. Total expenses 4,726. Other Purchased Services: Program service expenses 52,060. Management and general expenses 0. Fundraising expenses 0. Total expenses 52,060. Billing & Collection Services: Program service expenses 0. Management and general expenses 992. Fundraising expenses 0. Total expenses 992.”

“The amount shown on line 2 of Part X of this return includes the filing organization's interest in a central investment pool maintained by Adventist Health System Sunbelt Healthcare Corporation, the filing organization's top-tier parent. The investments in the central investment pool are recorded at market value.”

“Transfer to tax-exempt member, Texas Health Huguley, Inc. -1,891,873. Distribution to sole tax-exempt member from deemed -2,954,373. liquidation upon conversion to partnership”

“For the 2020 fiscal year ending December 31, 2020, Texas Health Huguley, Inc. was subject to the Single Audit requirements, as set forth in the regulations at 2 CFR Part 200, Subpart F. As a calendar year taxpayer, the deadline to complete and submit the Single Audit Reporting Package to the Federal Audit Clearinghouse, as required under Subpart F of 2 CFR 200.501, is September 30, 2021. However, on March 19th, 2021, the Office of Management and Budget (OMB) issued Memorandum M21-20, which outlined the OMB's efforts to supplement the support in the American Rescue Plan Act of 2021 (ARP), promote public trust in the Federal Government's stewardship of taxpayer resources, and alleviate some of the administrative challenges related to the coronavirus pandemic. As part of the administrative relief included in Memorandum M21-20, the OMB provided a six-month extension of time to complete and submit the Single Audit Reporting Package. The extended reporting deadline for calendar year taxpayers is March 31, 2022.”

“Texas Health Huguley Surgery Canter, LLC, ("the filing organization") was a single member LLC under the laws of the State of Texas from its inception through December 31, 2020. The filing organization applied for and received recognition as a tax-exempt organization defined under IRC section 501(c)(3), classified as public charity under IRC section 509(a)(1) due to its status as a hospital defined in IRC section 170(b)(1)(A)(iii). Under Treas. Reg. section 301.7701-3(c)(1)(v)(A), the filing organization is considered to be an association due to its classification as a tax-exempt organization under IRC section 501(a). In 2020 the filing organization's Board of Managers authorized the sale of interests in the filing organization to other members including a related tax-exempt entity and physicians. The transfer of the membership interests was effective January 1, 2021. With the addition of other investors, the filing organization filed an election under Treas. Reg. section 301.7701-3(c) to change its entity classification to that of a partnership by timely filing Form 8832, Entity Classification Election, with the Internal Revenue Service Center located in Ogden, Utah. An association that elects to change its entity classification to that of a partnership is deemed to distribute all its assets and liabilities to its shareholders in liquidation of the association and immediately thereafter, the shareholders contribute all the distributed assets and liabilities to a newly formed partnership. Thus, for purpose of the Form 990, the filing organization has treated its 2020 return as a final return and has completed Schedule N due to the deemed liquidation. Effective January 1, 2021, LLC units were sold to investors based on an independent valuation performed by a nationally recognized valuation firm. The sale of interests in the filing organization was authorized by the Member's Board of Directors as follows: to physician investors in an amount not to exceed 35%, to Texas Health Resources (a related tax-exempt entity) in the amount of 36.45%, and the remainder of 28.55% will be retained by the filing organization. The filing organization will continue to operate in a manner that furthers charitable purposes by promoting health for a broad cross-section of the community, including, but not limited to, the provision of care to the indigent. The restated operating agreement specifically states: "The duty to operate the Company in a manner that furthers charitable purposes shall prevail over any other duty the Member may have to operate the Company for the financial benefit of the Member and shall prevail over any other issue submitted to dispute resolution pursuant to this Agreement. In the event of a conflict between operation of the Company in accordance with the community benefit standard and any duty to maximize profits of the Company for the benefit of the Members, the Company shall be operated to satisfy the community benefit standard without regard to the consequences for maximizing the profitability of the Company. No Member, committee member or officer shall be deemed to be in breach of his, her or its fiduciary duties to the Company for operating the Company in compliance with this requirement."”