Verity Health System of California Inc

“During the June 30, 2016 fiscal year, the organization amended its mission and exempt purpose in its Articles of Incorporation to reflect language indicative of the Health Systems change from religious corporations to public benefit corporations under the California Nonprofit Corporation Law. The organization made similar changes to its bylaws, as well as the following additional changes: (1) changes to the composition of its Board of Directors, including mandating that no more than twenty percent of the members of the Board of Directors should have any financial relationship with BlueMountain Capital Management, LLC (which infused VHS with financing in exchange for an option to acquire the assets VHS), or Integrity Healthcare, LLC (its wholly owned subsidiary); (2) provided that VHS, as the sole corporate member of the organization, has the authority to appoint and remove the Chairperson and President & CEO of the organization and its direct subsidiaries; (3) provided that VHS has the authority to dissolve the organizations Audit Committee and direct its responsibilities to the audit committee of VHS; (4) included restrictions on transactions with interested directors; (5) provided that Directors may receive reasonable compensation fixed by VHS; and (6) provided that members of the Audit committee may receive compensation not to exceed the compensation paid to Directors, but may not be employees of the organization or have a material financial interest in entities doing business with the organization.”

“O'Connor Hospital ("OCH") has one member, Verity Health System of California, Inc. (formerly known as Daughters of Charity Health System through December 14, 2015), a California nonprofit corporation.”

“The organization's sole member, Verity Health System of California, Inc. ("VHS") has the power to fix the number and appoint and remove the Trustees of O'Connor Hospital ("OCH").”

“As the sole member of OCH, VHS has the power to take or approve the following actions as it relates to SFMC: (1) approve or change the mission, role, and purpose of this organization; (2) amend the Bylaws and Articles of Incorporation (or authorize the Board of Trustee to do so); (3) approve the formation, merger, dissolution, consolidation, divestiture, closure, change in corporate membership or control and reorganization of each direct Affiliate of this Corporation; (4) fix the number and appoint and remove the Trustees of this Corporation; (5) appoint and remove the Chairperson of the Board and President and Chief Executive Officer of this Corporation and of each direct Affiliate or Subsidiary of this Corporation; (6) approve the merger, consolidation, reorganization, dissolution, or disposition of assets of this Corporation or any direct Affiliate of this Corporation; (7) approve the acquisition, sale, lease, mortgage, transfer or other alienation of real or personal property of this Corporation; (8) approve the capital and operating budgets; (9) approve the incurrence of debt or guaranties; (10) establish policy concerning quality of care and services for the Corporation; (11) establish policy and procedures concerning finance and resources; (12) establish criteria for the long-range financial and strategic plans of the Corporation; (13) establish an internal auditing program and approve any material element of the internal auditing program; (14) approve capital expenditures; (15) approve the transfer of funds, by gift or loan, between this Corporation and one or more other Affiliates of Verity health System; (16) approve any other action by this Corporation or for any Affiliate controlled by this Corporation that has been established by resolution of the Corporate Member as requiring its approval, including, but not limited to, any approvals of authority necessary to ensure compliance with any credit agreement, master indenture or loan agreement to which this Corporation is a party.”

“The organizations independent tax preparers and finance staff work together to gather the required information necessary to complete the Form 990. The initial draft Form 990 is reviewed by the organizations finance and legal department. After the Form 990 is reviewed, recommended changes are discussed and a final Form 990 is prepared. Prior to filing with the Internal Revenue Service, the final version Form 990 is distributed to the organizations Board of Directors for review.”

“VHS has a Conflict of Interest Policy that covers VHS and all of its affiliates. The policy provides for a systematic and ongoing method of requiring individuals who have decision making responsibilities to disclose and address potential and actual conflicts of interest. Covered individuals are required to complete an annual statement disclosing any conflicts of interest and have a duty to update the disclosure for any potential conflicts of interest that arise during the year. The President & CEOs of the individual hospitals within the health system report the conflict of interest findings and resolutions to their respective Board of Directors. This policy is reviewed annually for compliance by VHSs Corporate Responsibility Officer.”

“The VHS compensation programs cover VHS and all of its affiliated hospitals. The President & CEO of each hospital is employed by VHS; as such, Form 990, Part VI, Section B, Line 15a has been answered "no" as mandated by the Form 990 instructions. The VHS compensation programs are designed to recruit, retain, and motivate qualified executives. The programs are designed for positions that have a significant impact on the high-level strategic and policy direction of VHS and its affiliated hospitals. All of the hospital President & CEOs are paid directly by VHS and covered by the VHS compensation programs. Market data analyses are made of comparable organizations within the industry and within the region. Total compensation is established for all executive positiions to target similar total compensation of comparable organization's market compensation. Base pay is established for all executive positions to target the median range of comparable organization market compensation. VHS utilized a Benefits committee to review compensation and benefits. The VHS Board of Directors reviews and approves compensation recommended by the Benefits Committee, and documents its conclusion that the proposed compensation is reasonable. In evaluating and finalizing its determination of base pay and total compensation for comparable positions at comparable organizations in comparable markets, VHS utilizes available market data analyses which includes independent compensation consultants, Form 990s of other organizations, written employment contracts, compensation surveys or studies, and recommendations from the Benefits Committee and approval by the VHS Board of Directors.”

“The audited financial statements are made available to the public upon request. The Articles of Incorporation, Bylaws, and Conflict of Interest Policy are not made available to the public.”

“The other changes in net assets or fund balance consists of a change in the funded status of pension plans of ($7,886,000) and a net transfer of medical office buildings to Verity Health System of California, Inc., a related organization, of $470,437.”