2019-11-14T06:47:41-06:00 2018-12-31 990 2018-01-01 621646734 Covenant Health COVE 8653743140 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 JOHN T GEPPI EVP/CFO 8655315421 2019-10-03 168.85.177.4 2019-11-14 07:47:20 ES P 9FAA1952C08CFF6F9E2CB5A334C8BD7C4DA173D5 9FAA1952C08CFF6F9E2CB5A334C8BD7C4DA173D5 2018 2020-01-14 16:20:31Z James D VanderSteeg 100 Ft Sanders W Blvd Knoxville TN 37922 199850259 0 X www.covenanthealth.com X 1996 TN Covenant Health is the parent organization in a community-owned health care system in East Tenn. 18 16 1266 1367 902126 175724 23075 0 118562071 127079745 65794421 66023760 160106 146761 184539673 193250266 737483 571601 0 0 71830744 73341317 0 0 328228 56494910 92522609 129063137 166435527 55476536 26814739 1562028002 1386644162 889440956 884831215 672587046 501812947 X Covenant Health supports its member hospitals and other organizations (see Schedule A) serve the community by improving the quality of life through better health, regardless of a patient's ability to pay. 0 0 155158807 571601 192098265 Covenant Health is a comprehensive, community-owned health system dedicated to improving the health of the people it serves. Established in 1996 by the consolidation of Fort Sanders Health System, Knoxville, Tennessee, and MMC HealthCare System in Oak Ridge, Covenant Health is governed by a voluntary board of directors comprised of community leaders and medical professionals. With more than 10,000 employees, affiliated physicians and volunteers, Covenant Health is the Knoxville area's largest employer and has been named by Forbes as a Best Employer four years in a row. Covenant Health includes nine acute care hospitals in East Tennessee; Methodist Medical Center of Oak Ridge, Fort Sanders Regional Medical Center and Parkwest Medical Center in Knoxville, Fort Loudoun Medical Center in Lenoir City, LeConte Medical Center in Sevierville, Morristown-Hamblen Healthcare System in Morristown, Roane Medical Center in Harriman, Claiborne Medical Center in Tazewell and Cumberland Medical Center in Crossville. It also includes Peninsula, a division of Parkwest Medical Center, a behavioral health hospital in Blount County, Tennessee. Affiliated organizations include Thompson Cancer Survival Center, Thompson Oncology Group, Fortress Corporation and Subsidiaries, Covenant HomeCare, and Fort Sanders Perinatal Center. Philanthropic organizations include Fort Sanders Foundation and the Thompson Cancer Survival Center Foundation in Knoxville, Methodist Medical Center Foundation in Oak Ridge, Dr. Robert F. Thomas Foundation in Sevierville, and Morristown-Hamblen Hospital Foundation in Morristown. Funds raised by the foundations provide services, equipment and other resources for excellence in patient care.SERVICECovenant Health's various system-level divisions operationally support and facilitate the health system's not-for-profit mission of improving the region's quality of life through better health. These divisions include information technology, business office and health information management, along with system-wide departments such as human resources, learning and leadership development, and others. Information TechnologyThe Information Technology (IT) division of Covenant Health provides all computing equipment and information management services to Covenant Health's member organizations. During calendar year 2018, IT led an electronic health record (EHR) vendor migration from McKesson to Cerner, impacting clinical applications in eight of Covenant Health's member facilities. An electronic medical record (EMR) vendor migration from NextGen to Cerner also was implemented for 85 Covenant Health physician practices. Information Technology performed a vendor migration for Covenant Health's home health information systems from McKesson to HomeCare HomeBase. Information management systems and related application support services (installations and upgrades, help desk resources) are available on a 24/7 basis. These support services span healthcare functions across core patient-care clinical systems; physician, nursing, and associated ancillary systems (lab, radiology, pharmacy, therapy), as well as supporting business functions comprising patient accounting, materials management, finance, and human resources. Covenant Health IT also provides project management support related to analyzing, understanding and implementing solutions to satisfy regulatory and quality reporting requirements.While Cerner now provides remote hosting of the core clinical applications, Covenant Health IT has primary support for clinical applications and manages a centralized data center (as well as a backup disaster recovery data center) where hardware equipment is housed. This combination of remote-hosted and on-premise infrastructure enables the delivery of computing resources for all Covenant Health clinical/business functions on a 24/7 schedule. Additionally, Covenant Health IT is responsible for management of all PC workstations (desktop, laptop, mobile and cart), all client-to-server internal and external network connectivity, and telephone services and equipment (PBX, handsets, cell phones, pagers) across the company. Key statistics for 2018 include: - In-patient admissions - 69,664 - Total orders using Cerner - 26,705,726 - Total orders managed via pharmacy - 3,541,991 orders - Accounts payable checks - 119,008 - Payroll checks/deposits - 246,389 - PCs supported - 11,296 - Total spam email messages blocked - 9,017,506 - Network access attempts blocked - 1,101,210,463 - Overall telephone usage - 31,574,529 calls - # of Help Desk tickets: 306,896 actions processedBusiness Office Knoxville Business Office Services is the Centralized Business Office (CBO) for Covenant Health, providing accounts receivable management for Fort Sanders Regional Medical Center, Parkwest Medical Center, Fort Loudoun Medical Center, LeConte Medical Center, Methodist Medical Center, Morristown-Hamblen Hospital Association and Roane Medical Center. These services include, but are not limited to, customer service, payment collection, financial posting, refund processing, and insurance billing and follow-up. During 2018, CBO submitted over 1,037,400 insurance claims totaling in excess of $4,238,372,400. Bad debt expense for 2018 was approximately 2.1% of gross revenue, with bad debt recoveries/collections in excess of $13,485,000. The CBO handled over 125,661 incoming phone calls, following-up on over 720,600 open accounts and processed over 3.14 million financial transactions. PUTTING PATIENTS FIRSTHealth Information ManagementThe central Health Information Management (HIM) department encompasses all areas of traditional medical records, including transcription, coding, release of information, a 24/7 call center, central scanning, records preparation, regulatory compliance, clinical documentation improvement, and privacy protection. Services are provided for acute care hospitals, both inpatient and outpatient; home health; physician offices; and behavioral health. The objective of HIM is to provide comprehensive services that are available to all Covenant Health hospitals and facilities on a 24/7 basis. This enables the hospitals and facilities to provide more efficient and timely service at less cost. In 2018, the HIM department transcribed 50.9 million lines, scanned over 10.8 million pages, and coded 1,855,860 records. 155158807 1 0 0 1 0 0 0 0 0 0 1 0 0 0 1 1 0 1 0 0 0 0 0 0 0 0 0 1 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 0 0 1 204 0 1 1266 1 1 1 0 0 0 0 0 0 0 0 0 1 0 X 18 16 0 0 1 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 1 1 X Amy DeLong 8653743140 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 Gerald Boyd Director 1.00 0.00 X 1237 0 0 Willard Campbell MD Director 1.00 0.00 X 0 0 0 Michael Casey MD Director 1.00 0.00 X 1572 0 0 Ronni Chandler Director 1.00 0.00 X 0 0 0 Mitchell Dickson MD Director 1.00 0.00 X 1612 0 0 James Fitzsimmons Director/Chair 1.00 0.00 X X 1081 0 0 James Gibson Director 1.00 0.00 X 1081 0 0 Eddie Mannis Former Director (through March 2018) 1.00 0.00 X 0 0 0 Timothy Matthews Director 1.00 0.00 X 1438 0 0 Larry Mauldin Director 1.00 0.00 X 1429 0 0 Joseph Metcalf MD Director 1.00 0.00 X 5925 8121 0 Linda Ogle Director 1.00 0.00 X 0 0 0 Roger Osborne Director 1.00 0.00 X 0 0 0 Cosby Stone Director 1.00 0.00 X 0 0 0 Carl Storms Director 1.00 0.00 X 1563 0 0 Richard Swanson Director 1.00 0.00 X 0 0 0 David C Verble Director 1.00 0.00 X 0 0 0 Amber Wisner Director 1.00 0.00 X 1438 0 0 James D VanderSteeg President & CEO 50.00 0.00 X X 1578890 0 192255 John T Geppi EVP/CFO 50.00 0.00 X 951309 0 27744 Anthony L Spezia CEO - Emeritus 40.00 0.00 X 606147 0 15119 Patricia A Breeding Integrity Compliance Officer 50.00 0.00 X 250217 0 19376 Barry J Lindeman Director - Internal Audit 50.00 0.00 X 104101 0 20010 Michael R Belbeck Jr EVP - Hospital Operations 50.00 0.00 X 759315 0 36146 M Douglas Campbell Jr General Counsel 50.00 0.00 X 661269 0 23624 Lucas D Johnson Sr EVP - Physician Enterprises/Amb. Serv. 35.00 15.00 X 652224 0 25628 Mark W Browne MD SVP - Chief Medical Officer 50.00 0.00 X 496013 0 33377 William M Ward SVP - Chief Information Officer 50.00 0.00 X 405916 0 35357 Debra A Welch SVP - Human Resources 50.00 0.00 X 401849 0 26792 Teresa Giles SVP - Finance 50.00 0.00 X 361342 0 33318 William C Clabough SVP - Business Development 50.00 0.00 X 357657 0 12137 Debra R Honey SVP - Chief Nursing Officer 50.00 0.00 X 285985 0 15873 Neil A Heatherly President/CAO - Parkwest Med Ctr 0.00 50.00 X 546047 0 33647 Keith N Altshuler President/CAO - Fort Sanders Reg 0.00 50.00 X 461521 0 35377 Jeremy H Biggs President/CAO - Methodist Med Ctr 0.00 50.00 X 425051 0 14835 Gordon E Lintz President/CAO - Morristown-Hamblen 0.00 50.00 X 380192 0 19723 Amanda G Halford MD VP - Care Coordination 50.00 0.00 X 362347 0 32634 Janice M McKinley Former SVP - Quality/Safety/Nursing 40.00 0.00 X 194812 0 25340 10260580 8121 678312 88 1 1 0 Morrison Mgmt Specialists Inc 400 Northridge Road Suite 600 Atlanta GA 30350 Cafeteria management & catering 20626285 OptumRx 11000 Optum Circle Eden Prairie MN 55344 Pharmacy claims services 15017896 Leidos Health Holdings Inc 705 East Main Street Westfield IN 46074 IT Consulting 6774192 Cardinal Health 7000 Cardinal Place Dublin OH 43017 Pharmacy management 3665067 G4S Secure Solutions USA Inc 1395 University Boulevard Jupiter FL 33458 Security 3574655 94 Management Fees 561000 119688516 119663520 24996 Transcription Services 900099 5915310 5097118 818192 Telephone Services 517000 700299 700299 Health Information Admin 561499 530638 530638 Other Program Services 621990 244982 244982 127079745 65672282 65672282 101603 101603 232128 173190 58938 58938 58938 2445908 0 2196033 2445908 -2196033 249875 249875 4318593 4230770 87823 87823 193250266 192098265 902126 249875 571601 571601 8635648 8046950 588698 52150807 47569506 4320876 260425 2420848 2227031 193817 5413576 4980245 433331 4720438 4347505 372933 501912 143726 358186 284000 284000 3788895 3063229 721796 3870 2154606 116811 2031547 6248 1425505 1354401 67210 3894 44908971 44908971 1491603 1204784 268460 18359 277478 239542 35034 2902 842884 496418 338087 8379 17131459 17131459 767101 362851 404250 639253 396818 242435 Unrelated Business Inco 20017 20017 Minor Equipment 15931963 15883959 26622 21382 Subscriptions 1412980 1266221 145914 845 Dues and Licenses 779475 755473 22078 1924 164507 91306 73201 166435527 155158807 10948492 328228 2000 2001 42898790 43310379 518141 623854 8449247 6740703 75445864 30103868 91376778 45341996 1358646999 1207621277 15450731 34027762 44685316 48976190 1562028002 1386644162 56120083 68173620 803870967 787348813 29449906 29308782 889440956 884831215 X 672587046 501812947 672587046 501812947 1562028002 1386644162 X 26814739 -99994132 -97594706 X 0 1 X 1 0 X X 13 Claiborne Medical Center 464420358 3 0 4961341 0 Covenant Homecare 621623114 10 0 726527 0 Cumberland Medical Center 620790132 3 0 0 0 Fort Loudoun Medical Ctr 621373691 3 0 1819134 0 Fort Sanders Perinatal Ctr 043760551 3 0 1549787 0 Fort Sanders Regional Med Ctr 620528340 3 0 39421175 0 LeConte Medical Ctr 621114867 3 0 0 0 Methodist Medical Center 620636239 3 0 11820216 0 Morristown Hamblen Healthcare System 620545814 3 0 3667167 0 Parkwest Medical Center 581897274 3 0 25451108 0 Roane County Medical Center 680673354 3 0 1981122 0 Thompson Cancer Survival Center 621250943 3 0 2446276 0 Thompson Oncology Group 621619239 3 0 7284821 0 13 101128674 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 1 Part I, Line 12(g)(IV) Covenant Health is operated or controlled in connection with all of the listed supported organizations, and its articles of organization require that it be operated to support or benefit these organizations. These organizations are referred to in the articles by group and are not named individually. All of the identified organizations are governed by a board of directors with 100% overlap of board membership. Part I, Line 12(g)(v): Covenant Health operates to serve the interests of its member hospitals and the other nonprofit health organizations named in Schedule A, Part I (the "Supported Organizations"). The organizations's activities have been discussed in detail on Schedule O in response to Form 990, Part III, Lines 4a thru 4d. Covenant Health may also pay expenses on behalf of, provide operating cash to, or make a grant to one of its Supported Organizations. See Schedule R, Part V for information about transfers to controlled organizations. Part IV, Section A, Line 1: Supported organizations are designated by class. Articles of Amendment to the Charter of Covenant Health, adopted on June 7, 2004, state that the corporation will "promote and support the interests and purposes of each of the nonprofit corporations for which the Corporation's board of directors serves as the board of directors". Part IV, Section A, Line 6: Covenant Health makes charitable contributions to organizations for community building activities as these activities seek to address many of the root causes of health problems such as poverty and homelessness. The activities supported include affordable housing, temporary help with food and shelter, initiatives to boost economic development, leadership development, education, youth mentoring, and programs for at-risk individuals. 0 1 0 1 0 0 1 62247 0 1 76569 138816 0 Part II-B, Line 1: Covenant Health government relations staff and senior leadership spend time in contact with Federal and state government officials on matters that directly impact hospitals and health care reform. Covenant Health engaged a third-party professional firm during 2018 for government relations and general strategy. Additionally, Covenant Health pays membership dues to professional organizations such as Tennessee Hospital Association and American Hospital Association. A portion of the dues is designated for lobbying activities by these organizations. 9604770 9604770 23172541 7783218 15389323 1253692 1207636 46056 23862041 21113014 2749027 17552820 17552820 45341996 Long-Term Deferred Compensation 7258928 Long-Term Reserve for Malpractice 21433574 Other Long-Term Liabilities 616280 29308782 X Part X, Line 2: Excerpt from the consolidated audited financial statements of Covenant Health (Covenant): Covenant and certain of its subsidiaries or controlled entities are exempt from income taxes pursuant to Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for income taxes on qualifying activities has been made for these entities in the accompanying consolidated financial statements. However, certain entities and operations are subject to income taxes. Covenant had no unrecognized tax benefits at December 31, 2018. As such, no interest or penalties were recognized in the consolidated financial statements related to unrecognized tax benefits. At December 31, 2018, tax returns for 2015 through 2018 are subject to examination by the Internal Revenue Service. Covenant has no uncertain tax positions that would require financial statement recognition or disclosure under GAAP at December 31, 2018. 1 American Heart Association 4708 Papermill Road Knoxville TN 37909 135613797 501(c)(3) 15000 Funds for heart disease awareness East TN Economic Development Agency 10215 Technology Drive Ste 202 Knoxville TN 37932 621158958 501(c)(3) 35000 General support Catholic Charities of East TN 119 Dameron Avenue Knoxville TN 37917 621377551 501(c)(3) 20000 General support Dogwood Arts Festival Inc 123 D Jackson Ave Knoxville TN 37902 626074113 501(c)(3) 20000 Support for the fitness activities of the Dogwood Arts Festival Boys & Girls Club of the TN Valley 967 Irwin St Knoxville TN 37917 620475743 501(c)(3) 30400 Health screenings & general support Morristown-Hamblen Hospital Foundation 1420 Centerpoint BlvdBldgC Knoxville TN 379321960 621697090 501(c)(3) 5750 Fundraisers benefiting Morristown-Hamblen Healthcare System Fort Sanders Foundation 1420 Centerpoint BlvdBldgC Knoxville TN 379321960 621748601 501(c)(3) 10000 Fundraisers benefiting Patricia Neal Rehab. Center, Peninsula, and the Hope Center Junior Achievement of East Tennessee 2135 N Charles G Sevier Blvd Clinton TN 37716 620810145 501(c)(3) 20000 General support Honor Air Knoxville 7536 Taggart Lane Knoxville TN 37938 262825063 501(c)(3) 20000 Support for flights for veterans to visit Washington, D.C. war memorials Knoxville Area Urban League 1514 E Fifth Ave Knoxville TN 37917 620797293 501(c)(3) 12000 Support to provide shoes and school supplies Knoxville Academy of Medicine Foundation 115 Suburban Road Knoxville TN 37923 621458199 501(c)(3) 11000 General supportGeneral support fundraising Robert F Thomas Foundation PO Box 4395 Sevierville TN 37864 581537582 501(c)(3) 7000 Fundraisers to benefit LeConte Medical Center Thompson Cancer Survival Center Foundation 1420 Centerpoint BlvdBldgC Knoxville TN 379321960 582130450 501(c)(3) 7000 Fundraisers to benefit Thompson Cancer Survival Center United Way of Greater Knoxville 1301 Hannah Ave Knoxville TN 37921 620475748 501(c)(3) 85000 Support for the Interfaith Health Clinic Variety Children's Charity of East TN 7132 Regal Lane Knoxville TN 37918 331025696 501(c)(3) 20000 Support of programs for special needs children Williams Creek Youth Foundation 2351 Dandridge Avenue Knoxville TN 37915 621845117 501(c)(3) 10000 General support St Mary's Legacy Clinic 805 S Northshore Drive Knoxville TN 379197551 462331706 501(c)(3) 20000 General support Random Acts of Flowers 3500 Workman Rd Ste 101B Knoxville TN 37917 263006360 501(c)(3) 6000 General support Emergency Medical Service Region II PO Box 75 Gatlinburg TN 37738 463698443 501(c)(3) 8100 General support Change Center 2013 Harriet Tubman St Knoxville TN 37919 383991050 501(c)(3) 125000 Support of Youth at Risk program 20 0 Part I, Line 2: Grant funds are provided to charitable organizations for the purpose of enhancing and promoting health care in the local community. The organization has guidelines in place to review the eligibility of grantees, and all grants require written documentation and appropriate levels of approval. When an organization is approved for a charitable contribution from Covenant Health, a letter specifying how funds must be used to support the organization's request is sent to the organization. Recipient organizations verify use of funds in one or more of the following ways: follow-up reports or newsletters, sponsor acknowledgement at a program or event or on their charity's website, itemized receipts, or year-end summaries. X X X X 1 1 X X X X X 0 1 0 0 0 0 0 0 0 James D VanderSteeg President & CEO 1023861 0 420000 0 135029 0 169408 0 22847 0 1771145 0 0 0 John T Geppi EVP/CFO 605182 0 251100 0 95027 0 10800 0 16944 0 979053 0 0 0 Anthony L Spezia CEO - Emeritus 49155 0 0 0 556992 0 10800 0 4319 0 621266 0 0 0 Patricia A Breeding Integrity Compliance Officer 170272 0 37000 0 42945 0 9495 0 9881 0 269593 0 0 0 Michael R Belbeck Jr EVP - Hospital Operations 487387 0 202500 0 69428 0 10800 0 25346 0 795461 0 0 0 M Douglas Campbell Jr General Counsel 434463 0 182250 0 44556 0 9000 0 14624 0 684893 0 0 0 Lucas D Johnson Sr EVP - Physician Enterprises/Amb. Ser 417505 0 175567 0 59152 0 10800 0 14828 0 677852 0 0 0 Mark W Browne MD SVP - Chief Medical Officer 360932 0 86534 0 48547 0 10800 0 22577 0 529390 0 0 0 William M Ward SVP - Chief Information Officer 283401 0 70557 0 51958 0 10800 0 24557 0 441273 0 0 0 Debra A Welch SVP - Human Resources 289505 0 68467 0 43877 0 10800 0 15992 0 428641 0 0 0 Teresa Giles SVP - Finance 246960 0 72000 0 42382 0 10800 0 22518 0 394660 0 0 0 William C Clabough SVP - Business Development 245731 0 70000 0 41926 0 10800 0 1337 0 369794 0 0 0 Debra R Honey SVP - Chief Nursing Officer 255175 0 10000 0 20810 0 0 0 15873 0 301858 0 0 0 Neil A Heatherly President/CAO - Parkwest Med Ctr 409171 0 102000 0 34876 0 10800 0 22847 0 579694 0 0 0 Keith N Altshuler President/CAO - Fort Sanders Reg 350654 0 65100 0 45767 0 10800 0 24577 0 496898 0 0 0 Jeremy H Biggs President/CAO - Methodist Med Ctr 300090 0 76500 0 48461 0 0 0 14835 0 439886 0 0 0 Gordon E Lintz President/CAO - Morristown-Hamblen 257257 0 62100 0 60835 0 10800 0 8923 0 399915 0 0 0 Amanda G Halford MD VP - Care Coordination 265573 0 57120 0 39654 0 10800 0 21834 0 394981 0 0 0 Janice M McKinley Former SVP - Quality/Safety/Nursing 112313 0 61370 0 21129 0 10800 0 14540 0 220152 0 0 0 Part I, Line 1a Officers and board members attending official board retreats are offered a discretionary spending allowance that may be used for incidental spending and/or companion travel. Amounts are included in taxable compensation. In addition, board members receive tax indemnification payments related to reportable compensation from the spending allowances, which are also included in taxable compensation. Tax gross-up payments related to deferred compensation and reimbursement of fees for personal services for legal and financial planning are provided to certain executives and managers. Amounts are included in taxable compensation. Part I, Line 4b Covenant Health maintains a nonqualified deferred compensation ("NQDC") plan intended to support retention of President and CEO, James D. VanderSteeg. Employer contributions of $158,608 are reported as deferred compensation on Schedule J, Part II, Column C. Contributions along with 2018 earnings of $19,018 are subject to a substantial risk of forfeiture. Amounts are combined with other compensation and considered for reasonableness. Compensation procedures are discussed in detail in Schedule O (Form 990, Part VI, Section B, Line 15a). Anthony L. Spezia retired as President and CEO in 2016 after serving Covenant Health for twenty years. Mr. Spezia was named CEO-Emeritus and continued serving the organization through early 2018 as a consultant. During 2018, Mr. Spezia received distributions from two NQDC plans resulting from contributions and associated earnings on contributions. Amounts vested in 2018 total $476,126 and are included in other reportable compensation on Schedule J, Part II, Column B(iii). A Health Educ & Housing Facil Brd of Knox Co 621220275 499527BM0 2012-12-13 161291013 See Part VI. 0 0 0 B Health Educ & Housing Facil Brd of Knox Co 621220275 2014-03-17 101740000 See Part VI. 0 0 0 C Health Educ & Housing Facil Brd of Knox Co 621220275 2014-07-30 38665750 See Part VI. 0 0 0 D Health Educ & Housing Facil Brd of Knox Co 621220275 2016-11-01 74000000 See Part VI. 0 0 0 A 37875000 161291013 1291494 159999519 2006 1 0 1 1 B 2910000 101740000 101740000 2006 1 0 1 1 C 7764000 38665750 38665750 2006 1 0 1 1 D 74000000 74000000 2006 1 0 1 1 C 0 0 1 1 0 0.00010 0.00010 0 0 1 A 0 0 1 0 1 0 0 0 1 B 0 0 1 0 1 0 0 0 1 C 0 0 1 0 1 0 0 0 1 D 0 0 1 0 1 0 0 0 1 A 1 B 1 C 1 D 1 Schedule K, Part I, Bond Issues - description of purpose: The Series 2012A and 2012B Bonds described on Line A of Part 1 were issued to refund capital appreciation bonds and capital interest bonds issued on December 12, 2002. The Series 2011A and 2011B Bonds described on Line B of Part 1 were issued for the conversion of bonds issued on March 24, 2011 which had partially refunded bonds issued on December 12, 2002. The 2014A Bonds described on Line C of Part 1 was a refinancing of Cumberland Medical Center (CMC) debt which was acquired through the acquisition of CMC on February 1, 2014. The Series 2016B Bonds described on Line D of Part 1 refunded auction rate securities issued December 12, 2002. Schedule K, Part I, Entity 2 Bond Issues - description of purpose: The Series 2016A Bonds described on Line A of Part I were issued to refund capital appreciation bonds issued December 20, 2006 and auction rate securities issued December 12, 2002. All other proceeds were designated for expansion projects at Fort Sanders Regional Medical Center and Parkwest Medical Center and for various facility and equipment improvements and additions at other facilities. Part III.5 - Private business use percentage on new projects is not yet available. The Series 2011C Second Amended & Restated Bonds issued on May 2, 2017 described on Line B of Part 1 refunded bonds issued September 15, 2011. The Series 2006B1-B3 Third Supplemental Bonds described on Line C of Part 1 were issued on August 10, 2018 and relate to the conversion of a portion of the variable rate bonds originally issued on December 20, 2006. A Health Educ & Housing Facil Brd of Knox Co 621220275 499527CH0 2016-11-10 207742114 See Part VI. 0 0 0 B Health Educ & Housing Facil Brd of Knox Co 621220275 49952MCE4 2017-05-02 135500000 See Part VI. 0 0 0 C Health Educ & Housing Facil Brd of Knox Co 621220275 2018-08-10 125000000 See Part VI. 0 0 0 A 210501542 953741 20762499 86786236 101999066 1 0 0 1 B 135500000 135500000 2013 1 0 1 1 C 125000000 125000000 2010 1 0 1 1 A 0 0 1 1 0 0 0 1 B 0 0 1 1 0 0.00010 0.00010 0 0 1 C 0 0 1 1 0 0.00010 0.00010 0 0 1 A 0 1 0 0 0 0 0 0 1 B 0 0 1 0 1 0 0 0 1 C 0 0 1 0 1 0 0 0 1 A 1 B 1 C 1 Form 990, Part III, Line 4a IMPROVING OUR COMMUNITIES' QUALITY OF LIFE THROUGH BETTER HEALTH 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. Form 990, Part VI, Section A, line 4 In 2018, the Covenant Health system-wide bylaws were amended to provide that new directors who have not previously served on the board will be elected to an initial one-year term instead of three years (the previous standard). Amendments also grant authority to the compensation committee to negotiate and approve the CEO's compensation. The bylaws were also amended to authorize the board to establish special board committees which may be terminated by resolution of the board. The chairman of the board may establish special board committees to advise executive leadership, other board committees or the full board. Committees may be composed of elected or ex-officio board members. Also in 2018, Covenant Health adopted system-wide medical staff bylaws. The bylaws created two new committees: System Quality Committee and System Credentials and Clinical Standard Committee. The System Quality Committee consists of licensed physician voting board members, other appointed voting board members, Covenant Health's CEO, and the chiefs of staff of Covenant Health system hospitals. The committee shall review quality of patient care, perform other duties assigned in the system-wide medical staff documents, receive and review proposed amendments to the medical staff documents and make recommendations to the board, initiate quality-related investigations, and act as a Quality Improvement Committee as defined under Tennessee law. The System Credentials and Clinical Standard Committee consists of licensed physician voting board members and other appointed board members. Covenant Health's VP of Hospital Operations, Chief Medical Officer, and Chief Nursing Officer shall also serve as non-voting members of the committee. The committee shall develop and implement system-wide clinical standards, perform other duties as outlined in the medical staff documents, make determinations regarding routine credentialing matters and medial staff appointments/terminations, and act as a Quality Improvement Committee as defined under Tennessee law. Other 2018 amendments to the governing documents were not considered significant. Form 990, Part VI, Section B, line 11b 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. Form 990, Part VI, Section B, line 12c 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 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 key employees. These records are available to be queried prior to engaging in business transactions. The Chief 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. 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 15 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 during debate or discussion of the matter and the vote of each member of the compensation committee; the comparability data obtained and relied upon by the compensation committee (including from whom and when obtained, as outlined above); and actions taken with respect to any compensation committee member with a conflict of interest in the matter under consideration (consistent with board conflict of interest policies). The foregoing documentation is prepared before the later of the next meeting of the compensation committee or 60 days after the meeting of the compensation committee approving the matter, and approved by the compensation committee as reasonable, accurate and complete within a reasonable time period thereafter. Form 990, Part VI, Section B, Line 15b: Base salaries and annual bonus opportunities for other officers and key employees are set by the Covenant Health Chief Executive Officer (CEO) in consultation with Senior Vice President-Human Resources, subject to approval of the Compensation Committee of the Covenant Health Board of Directors ("the Committee"), after review by and discussion with the executive compensation consultant ("the Consultant") to ensure that total compensation for each executive is reasonable and within a fair market value range. Salary ranges for each executive position are based upon the recommendations of the Consultant made after comparison with similar jobs in similar size health systems across the nation. Bonuses are recommended by the CEO and approved by the Committee conditioned upon receipt of a written opinion from the Consultant that total compensation for each Key Executive is reasonable and consistent with fair market value. Base salaries are initially targeted at midpoint and vary according to market conditions, performance, tenure, experience, special skills or qualifications, recruitment and retention challenges, and other relevant factors. Annual bonuses are designed to award 0 - 45% for the Executive Vice Presidents (EVP), and 0 - 35% for the Senior Vice Presidents (SVP) and Chief Administrative Officers (CAO) of base salary based upon system performance and accomplishment of certain targets established by the CEO. Form 990, Part VI, Section C, line 19 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. Form 990, Part XI, line 9: Capital Contribution from Subsidiaries 15,809,257. Capital Contributions to Subsidiaries -109,754,408. Book/Tax Diff in Income (Loss) from Partnerships & Trusts -4,159,974. Transfers from Non-Affiliates 510,419. Covenant Ventures LLC 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 300913192 Develop healthcare software TN -2196258 0 Covenant Health Claiborne Medical Center 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 464420358 Acute care hospital TN 501(c)(3) Line 3 Covenant Health 1 Covenant Homecare 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 621623114 Home health services TN 501(c)(3) Line 10 Covenant Health 1 Cumberland Medical Center 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 620790132 Acute care hospital TN 501(c)(3) Line 3 Covenant Health 1 Fort Loudoun Medical Center 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 621373691 Acute care hospital TN 501(c)(3) Line 3 Covenant Health 1 Fort Sanders Regional Medical Center 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 620528340 Acute care hospital TN 501(c)(3) Line 3 Covenant Health 1 Fort Sanders Foundation 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 621748601 Fundraising and patient outreach TN 501(c)(3) Line 12b, II Covenant Health 1 Fort Sanders Perinatal Center 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 043760551 High risk obstetrical services TN 501(c)(3) Line 3 Fort Sanders Regional Medical Center 1 LeConte Medical Center 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 621114867 Acute care hospital TN 501(c)(3) Line 3 Covenant Health 1 Methodist Medical Center 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 620636239 Acute care hospital TN 501(c)(3) Line 3 Covenant Health 1 Morristown-Hamblen Hospital Association 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 620545814 Acute care hospital TN 501(c)(3) Line 3 Covenant Health 1 Parkwest Medical Center 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 581897274 Acute care hospital and behavioral health services TN 501(c)(3) Line 3 Covenant Health 1 Roane County Medical Center 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 680673354 Acute care hospital TN 501(c)(3) Line 3 Covenant Health 1 Thompson Cancer Survival Center 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 621250943 Cancer support center TN 501(c)(3) Line 3 Covenant Health 1 Thompson Oncology Group 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 621619239 Oncology services TN 501(c)(3) Line 3 Thompson Cancer Survival Center 1 Thompson Cancer Survival Center Foundation 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 582130450 Fundraising and patient outreach TN 501(c)(3) Line 12b, II Covenant Health 1 Fort Sanders West OP Surgery Center LLC 1420 Centerpoint Blvd Bldg C Knoxville TN 37932 621366907 Outpatient surgery center TN Fortress Corp Related -624307 592660 0 1 0.87000 Fort Sanders West Associates 280 Fort Sanders West Blvd Ste 214 Knoxville TN 37922 621384171 Building ownership TN Fortress Corp Related -28682 361219 0 1 0.87540 KOSC Properties LLC 256 Fort Sanders West Blvd Ste 200 Knoxville TN 37922 262444076 Building ownership TN Fortress Corp Related 41538 2640817 0 1 0.25000 Knoxville Orthopaedic Surgery Center LLC 256 Fort Sanders West Blvd Ste 200 Knoxville TN 37922 262437385 Orthodopaedic surgery TN Fortress Corp Related 44687 1060413 0 1 0.25000 KOC 260 Bldg LLC 260 Fort Sanders West Blvd Knoxville TN 37922 465228440 Land and building ownership TN Fortress Corp Related 62483 1833360 0 1 0.25000 Knoxville Health Care Center LP POBox 1398 Murfreesboro TN 371331398 621019281 Rehabilitation center TN Fortress Corp Related -15259 1612775 0 1 0.25000 Fortress Corporation 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 621308885 Management company TN Covenant Health C 15096454 45367611 1.00000 1 Covenant Medical Group Inc 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 621282917 Physician practice management TN Fortress Corp C 134351972 32289485 1.00000 1 Knoxville Heart Group 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 271528941 Cardiology medical practice TN Covenant Medical Group C 10873773 1081226 1.00000 1 East TN Cardiovascular Surgery Group Inc 1420 Centerpoint Blvd Bldg C Knoxville TN 379321960 621018541 Cardiovascular surgical practice TN Covenant Medical Group C 9129645 2141598 1.00000 1 1 1 0 0 0 1 0 0 0 1 1 1 0 1 1 1 1 1 1 Fort Sanders Regional Medical Center L 29229921 FMV Fort Sanders Regional Medical Center O 68521 FMV Fort Sanders Regional Medical Center P 12822619 Cost Fort Sanders Regional Medical Center Q 183575334 Cost Fort Sanders Regional Medical Center S 166469570 Cash Parkwest Medical Center L 30922906 FMV Parkwest Medical Center P 14292050 Cost Parkwest Medical Center Q 205957396 Cost Parkwest Medical Center S 188665598 Cash Parkwest Medical Center O 69535 FMV Cumberland Medical Center L 3989613 FMV Cumberland Medical Center O 362097 FMV Cumberland Medical Center P 65410 Cost Cumberland Medical Center Q 7843231 Cost Cumberland Medical Center S 11737822 Cash Methodist Medical Center L 15864422 FMV Methodist Medical Center O 70798 FMV Methodist Medical Center P 7923773 Cost Methodist Medical Center Q 85918801 Cost Methodist Medical Center S 77624156 Cash Morristown-Hamblen Hospital Association L 9327440 FMV Morristown-Hamblen Hospital Association O 59258 FMV Morristown-Hamblen Hospital Association P 4240967 Cost Morristown-Hamblen Hospital Association Q 59780577 Cost Morristown-Hamblen Hospital Association S 54485859 Cash Roane County Medical Center L 4017943 FMV Roane County Medical Center O 58427 FMV Roane County Medical Center P 1484687 Cost Roane County Medical Center Q 34208249 Cost Roane County Medical Center S 31323908 Cash Fort Loudoun Medical Center L 3698579 FMV Fort Loudoun Medical Center O 55699 FMV Fort Loudoun Medical Center P 1414607 Cost Fort Loudoun Medical Center Q 22749822 Cost Fort Loudoun Medical Center S 20267598 Cash Claiborne Medical Center L 1624453 FMV Claiborne Medical Center O 262162 FMV Claiborne Medical Center P 707261 Cost Claiborne Medical Center Q 8422464 Cost Thompson Cancer Survival Center L 1573824 FMV Thompson Cancer Survival Center Q 2654258 Cost Thompson Cancer Survival Center S 1116063 Cash Thompson Oncology Group L 1573824 FMV Thompson Oncology Group Q 1844984 Cost Thompson Oncology Group S 2436218 Cash Covenant Homecare L 1256424 FMV Covenant Homecare K 76726 FMV Covenant Homecare Q 14159313 Cost Covenant Homecare S 12854980 Cash Fort Sanders Perinatal Center Q 10325265 Cost Fort Sanders Perinatal Center S 10325743 Cash Knoxville Heart Group L 195316 FMV Knoxville Heart Group Q 1715034 Cost Knoxville Heart Group R 1413752 Cash East TN Cardiovascular Surgical Group Q 5349827 Cost Fortress Corporation K 434646 FMV Fortress Corporation L 1007376 FMV Fortress Corporation Q 5025570 Cost Covenant Medical Group A 232128 FMV Covenant Medical Group L 12426101 FMV Covenant Medical Group Q 84478064 Cost Fort Sanders Foundation O 475753 FMV Fort Sanders West OP Surgery Center Q 1252701 Cost LeConte Medical Center L 9997670 FMV LeConte Medical Center O 82929 FMV Leconte Medical Center P 2838415 Cost LeConte Medical Center Q 87374737 Cost LeConte Medical Center S 79770096 Cash