2015-05-14T09:19:11-05:00 2014-06-30 390859910 BAKER TILLY VIRCHOW KRAUSE 1650 MARKET STREET SUITE 4500 PHILADELPHIA PA 19103 990 2013-07-01 251778658 PINNACLE HEALTH SYSTEM PINN 7172318245 409 SOUTH SECOND STREET PO BOX 8700 HARRISBURG PA 171058700 WILLIAM H PUGH CFO 7172318245 2015-05-13 1 JULIUS GREEN CPA JD P00350393 7178467000 2013 2016-02-25 16:41:14Z WILLIAM H PUGH 409 SOUTH SECOND STREET PO BOX 8700 HARRISBURG PA 171058700 164517343 0 X WWW.PINNACLEHEALTH.ORG X 1995 PA PROVIDE MANAGEMENT AND CONSULTATIVE SERVICES TO AFFILIATED TAX-EXEMPT ENTITIES. 22 17 370 112 0 0 0 0 23673638 75048128 4552994 6255394 502605 1201080 28729237 82504602 15184 0 0 0 14988564 46233385 0 0 0 10687002 31065090 25690750 77298475 3038487 5206127 234469771 223340970 5750911 9110188 228718860 214230782 X PINNACLE HEALTH SYSTEM IS ENGAGED IN AND CONDUCTS CHARITABLE, EDUCATIONAL, AND SCIENTIFIC ACTIVITIES THROUGH THE SUPPORT AND BENEFIT OF PINNACLE HEALTH FOUNDATION, AND PROVIDES MANAGEMENT AND CONSULTATIVE SERVICES TO AFFILIATED ENTITIES THAT QUALIFY FOR FEDERAL INCOME TAX EXEMPTION UNDER CODE SECTION 501(C)(3). 0 0 60297848 0 75048128 PINNACLE HEALTH SYSTEM IS DEDICATED TO THE HEALTH AND WELL-BEING OF THE PEOPLE WE SERVE AND MAKES A CONCERTED EFFORT TO ESTABLISH ENDURING BONDS BETWEEN THE HEALTH SYSTEM AND THE COMMUNITY. PINNACLE HEALTH SYSTEM OFFERS AN ARRAY OF COMMUNITY SERVICES AND PROGRAMS TO IMPROVE HEALTH AWARENESS AMONG COMMUNITY GROUPS AND ORGANIZATIONS, PROVIDES OPTIMAL AND TIMELY CARE AND TREATMENT FOR TARGET POPULATIONS AND ADDRESSES DIVERSE COMMUNITY NEEDS. PINNACLE HEALTH PROVIDES VARIOUS TRAINING PROGRAMS AND TRACKS AND EVALUATES THE IMPACT OF ITS SERVICES AND PROGRAMS ON THE OVERALL HEALTH OF THE COMMUNITY. 60297848 1 0 0 1 0 0 0 0 0 0 1 1 0 1 0 1 0 1 0 1 1 0 0 0 0 0 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 0 0 1 1 1 0 0 1 X 527 0 1 370 1 0 1 BD 0 0 0 0 0 0 0 0 0 X 22 17 0 0 1 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 1 1 PA X WILLIAM H PUGH CFO 7172318245 409 SOUTH SECOND STREET HARRISBURG PA 17104 GEORGE F GRODE CHAIRMAN 0.90 0.90 X X 0 0 0 FELIX GUTIERREZ MD DIRECTOR 0.30 39.70 X 0 514313 53622 M RICHARD KLEIMAN DIRECTOR 0.30 0.30 X 0 0 0 DEBORAH S MILLER DIRECTOR 0.60 0.60 X 0 0 0 DENNIS WALSH DIRECTOR 0.40 0.40 X 0 0 0 BONY R DAWOOD DIRECTOR 0.70 0.70 X 0 0 0 STEVEN C KUSIC DIRECTOR 0.80 0.80 X 0 0 0 KENNETH OKEN MD DIRECTOR 0.70 0.70 X 0 75000 0 MICHAEL L FERNANDEZ MD DIRECTOR 0.20 0.20 X 0 0 0 JOHN C HICKEY DIRECTOR 0.60 0.60 X 0 0 0 CAROLYN KREAMER PHD DIRECTOR 0.30 0.50 X 0 0 0 MICHAEL A YOUNG PRESIDENT & CEO 26.10 13.90 X X 1238747 0 25574 CLARENCE ASBURY VICE-CHAIR 0.80 0.80 X X 0 0 0 JOHN CAVANAUGH PHD DIRECTOR 0.30 0.30 X 0 0 0 KEVIN KELLY MD DIRECTOR 0.60 39.40 X 0 241289 23335 ROGER LEVIN MD DIRECTOR 0.70 0.70 X 0 0 0 TINA NIXON DIRECTOR 0.30 0.30 X 0 0 0 CYNTHIA TOLSMA DIRECTOR 0.80 1.10 X 0 0 0 E GERALD WOODWARD MD DIRECTOR 0.30 0.30 X 0 0 0 BARRY KAIN DIRECTOR 0.10 0.30 X 0 0 0 DANIEL KAMBIC DIRECTOR/DIR., MED. EDUCATION 39.70 0.30 X 110008 0 25739 MICHAEL MURCHIE DIRECTOR 0.50 0.50 X 0 0 0 WILLIAM H PUGH TREASURER/SR VP CORP FIN./CFO 11.40 28.60 X 749963 0 23090 CHRISTOPHER P MARKLEY ESQ SEC'Y/SR VP STAT SVCS/GEN COUNSEL 8.80 31.20 X 476014 0 29949 PHILIP GUARNESCHELLI SR VICE PRESIDENT/COO 8.00 32.00 X 758047 0 34618 NANCY HAMMONDS ASSISTANT TREASURER 1.00 39.00 X 226790 0 40988 JOHN DELORENZO ASSISTANT SECRETARY 2.00 38.00 X 154859 0 17869 DANA KELLIS MD SR VP MEDICAL AFFAIRS 8.00 32.00 X 358341 0 24417 NIRMAL JOSHI MD SR VP, MEDICAL AFFAIRS 32.00 8.00 X 624881 0 34617 STEVEN ROTH VP INFO SVCS/CIO 40.00 X 353736 0 33830 GEORGE BEAUREGARD SENIOR VP AND CHIEF CLINICAL OFFICER 40.00 X 744907 0 23090 MARK BARABAS SENIOR VP OF OPERATIONS, WS HOSPITAL 40.00 X 591035 0 14486 6387328 830602 405224 33 0 1 0 KENDRA BAIR ZACHARY CALEY & NAVITSKY 2040 LINGLESTOWN RD SUITE 203 HARRISBURG PA 17110 LITIGATION EXPENSE 2000000 CAMBRIDGE MANAGEMENT GROUP INC 79 HILLSIDE TERRACE BELMONT MA 02478 HEALTHCARE POPULATION HEALTH MGMT CONSUL 616650 TRISTAN RADIOLOGY SPECIALISTS PC 4520 UNION DEPOSIT ROAD HARRISBURG PA 17111 MANAGEMENT FEES 529671 TIMOTHY CROWLEY 42 CANDY HILL LANE SUDBURY MA 01776 OPERATIONAL CONSULTING 406798 STUDER GROUP 913 GULF BREEZE PARKWAY GULF BRIDGE FL 32561 HEALTHCARE LEADERSHIP CONSULTING 405215 20 MANAGEMENT & SUPPORT 624100 75048128 75048128 75048128 4327720 4327720 83940415 82012741 1927674 1927674 1927674 CREDIT CARD REBATES 900099 594770 594770 MSO CONTRACT INCOME 900099 239374 239374 HEALTH GAIN INC CHOLESTERAL SVC 900099 101465 101465 265471 265471 1201080 82504602 75048128 0 7456474 2951515 2193803 757712 23917597 17938198 5979399 4131666 2479000 1652666 13293872 7976323 5317549 1938735 1454051 484684 695024 695024 408219 408219 368718 368718 112345 112345 742558 742558 6343652 5861899 481753 3082808 3082808 4011966 4011966 1764845 1764845 1541687 1541687 238649 238649 714530 714530 938173 938173 9154625 9154625 DUES AND SUBSCRIPTIONS 932258 932258 OTHER EXPENSES 15033 15033 77298475 60297848 17000627 0 350 150 27734904 15004027 169856 200000 284702 926508 3758570 10985409 8663872 333501 2321537 135765070 136902086 16753175 20625814 7103713 -10904849 45652550 55179077 234469771 223340970 5750911 9110188 5750911 9110188 X 228718860 214230782 228718860 214230782 234469771 223340970 X 5206127 7700861 -27395066 X 0 1 X 1 0 X X X 0 0 0 PINNACLE HEALTH HOSPITALS 251778644 3 0 0 PINNACLE HEALTH MEDICAL SERVICES 251709054 3 0 0 COMMUNITY LIFE TEAM 231890444 9 0 0 3 0 FORM 990, SCH A, PART I, LINE 1H, COLUMN (IV) - IS THE ORGANIZATION LISTED THE GOVERNING DOCUMENTS OF PINNACLE HEALTH SYSTEM DO NOT SPECIFICALLY NAME THE ORGANIZATIONS TO WHICH SUPPORT IS PROVIDED; HOWEVER, IT DOES MEET THE REQUIREMENTS OF SECTION 509(A)-4(D)(2)(I) BY DESIGNATING ITS PUBLICLY SUPPORTED ORGANIZATIONS TO BE ANY OTHER ORGANIZATION AFFILIATED WITH THE CORPORATION WHICH QUALIFIES AS AN EXEMPT ORGANIZATION UNDER SECTIONS 501(C)(3), 509(A)(1), OR 509(A)(2). FORM 990, SCHEDULE A, PART I, LINE 1H, COLUMN (VII) - AMOUNT OF SUPPORT: PINNACLE HEALTH SYSTEM DOES NOT PROVIDE MONETARY SUPPORT TO ITS SUPPORTING ORGANIZATIONS, EXCEPT THOSE AMOUNTS SPECIFICALLY PROVIDED. SUPPORT IS PROVIDED IN THE FORM OF MANAGEMENT AND CONSULTATIVE SERVICES TO ITS AFFILIATED ORGANIZATIONS. X 112345 112345 112345 112345 77186130 848214373 77298475 848326718 1000000 1000000 250000 250000 0 0 0 0 1000000 1000000 1000000 1000000 4000000 6000000 194538 142553 128333 112345 577769 250000 250000 250000 250000 1000000 1500000 63808 26485 37323 4946752 4033472 913280 5974849 4603915 1370934 2321537 INVESTMENT IN UNITED HEALTH RISK, LTD. 12674316 C INVESTMENT IN UNITED CENTRAL PA RECIPROCAL RISK RETENTION GROUP 7893836 C INVESTMENT IN JC BLAIR 57662 C 20625814 DUE FROM RELATED PARTIES 55079079 SUSPENSE ACCOUNT PAYROLL -2 C2 SOLUTIONS ADVANCE 100000 55179077 X 62067839 7700861 -27395066 -19694205 81762044 742558 742558 82504602 76555917 0 76555917 742558 742558 77298475 PART X, LINE 2: THE PINNACLE HEALTH SYSTEM EVALUATES UNCERTAIN TAX POSITIONS USING A TWO-STEP APPROACH FOR RECOGNIZING AND MEASURING TAX BENEFITS TAKEN OR EXPECTED TO BE TAKEN IN AN UNRELATED BUSINESS ACTIVITY TAX RETURN AND DISCLOSURES REGARDING UNCERTAINTIES IN TAX POSITIONS. NO ADJUSTMENTS TO THE CONSOLIDATED FINANCIAL STATEMENTS WERE REQUIRED AS A RESULT OF THIS EVALUATION. PART XI, LINE 2D - OTHER ADJUSTMENTS: EQUITY METHOD INCOME - INSURANCE SUB FILING FORM 1120-PC (EIN#13-4224033) 1,785,162. EQUITY METHOD INCOME - FOREIGN SUB FILING FORM 5471 518,798. EQUITY METHOD INCOME - PINNACLE HEALTH CARDIOVASCULAR INSTITUTE -16,898,296. EQUITY METHOD INCOME - PINNACLE HEALTH VENTURES -921,884. EQUITY METHOD INCOME - PINNACLE HEALTH MEDICAL GROUP -699,598. INTERCOMPANY TRANSFERS -8,114,913. EQUITY METHOD INCOME - RHACO -3,064,335. CENTRAL AMERICA AND THE CARIBBEAN - 1 1 INSURANCE COVERAGE N/A 2373272 1 1 0 0 1 1 2373272 0 2373272 0 0 1 0 0 0 PART I, LINE 3: INSURANCE PREMIUMS PAID BASED ON CLAIMS EXPERIENCE X X 1 1 X X X X 0 1 0 0 0 0 0 1 0 FELIX GUTIERREZ MD DIRECTOR 0 398423 0 100787 0 15103 0 26400 0 27222 0 567935 0 0 MICHAEL A YOUNG PRESIDENT & CEO 729377 0 361078 0 148292 0 12750 0 12824 0 1264321 0 0 0 KEVIN KELLY MD DIRECTOR 0 142501 0 21493 0 77295 0 14719 0 8616 0 264624 0 0 WILLIAM H PUGH TREASURER/SR VP CORP FIN./CFO 487274 0 190935 0 71754 0 15200 0 7890 0 773053 0 0 0 CHRISTOPHER P MARKLEY ESQ SEC'Y/SR VP STAT SVCS/GEN COUNSEL 306071 0 112249 0 57694 0 15200 0 14749 0 505963 0 0 0 PHILIP GUARNESCHELLI SR VICE PRESIDENT/COO 458225 0 171873 0 127949 0 15300 0 19318 0 792665 0 0 0 NANCY HAMMONDS ASSISTANT TREASURER 157488 0 51358 0 17944 0 24950 0 16038 0 267778 0 0 0 JOHN DELORENZO ASSISTANT SECRETARY 142077 0 12782 0 0 0 602 0 17267 0 172728 0 0 0 DANA KELLIS MD SR VP MEDICAL AFFAIRS 350309 0 0 0 8032 0 5100 0 19317 0 382758 0 0 0 NIRMAL JOSHI MD SR VP, MEDICAL AFFAIRS 423255 0 148802 0 52824 0 15300 0 19317 0 659498 0 0 0 STEVEN ROTH VP INFO SVCS/CIO 244272 0 79698 0 29766 0 14512 0 19318 0 387566 0 0 0 GEORGE BEAUREGARD SENIOR VP AND CHIEF CLINICAL OFFICER 486857 0 203418 0 54632 0 15200 0 7890 0 767997 0 0 0 MARK BARABAS SENIOR VP OF OPERATIONS, WS HOSPITAL 350248 0 236593 0 4194 0 438 0 14048 0 605521 0 0 0 PART I, LINE 1A THE ORGANIZATION PAYS FOR THE CEO'S CLUB DUES, WHICH ARE REPORTABLE AS TAXABLE COMPENSATION FOR THE CEO. THE CEO'S SPOUSE ACCOMPANIED THE CEO ON INFREQUENT TRIPS WHERE THE PRESENCE OF THE SPOUSE WAS EXPECTED. RELATED COSTS WERE MINIMAL AND WERE NOT INCLUDED IN THE CEO'S COMPENSATION. PART I, LINE 1B THERE IS A WRITTEN POLICY REGARDING THE PAYMENT OF CLUB DUES, HOWEVER, THERE IS NO WRITTEN POLICY REGARDING COMPANION TRAVEL. THE INFREQUENCY OF THE TRAVEL AND THE DE MINIMIS COSTS ASSOCIATED WITH THE ACTIVITY WERE DEEMED NOT TO RISE TO THE LEVEL WHERE A WRITTEN POLICY WAS CONSIDERED NECESSARY. PART I, LINE 4B DR. FELIX GUTIERREZ IS A MEMBER OF THE BOARD OF DIRECTORS AND IS EMPLOYED AS A CARDIOLOGIST IN A RELATED ENTITY. HE WAS COVERED BY A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN CALENDAR YEAR 2013 AT A TOTAL COST OF $16,200. MICHAEL YOUNG PARTICIPATES IN A SPLIT INTEREST LIFE INSURANCE POLICY WHEREBY THE ORGANIZATION PAYS THE PREMIUMS AND MR. YOUNG REPORTS THE PREMIUMS AS OTHER REPORTABLE COMPENSATION. UPON MR. YOUNG'S DEATH, THE ORGANIZATION WILL RECOVER ITS PREMIUMS BEFORE ANY PROCEEDS ARE RELEASED TO THE BENEFICIARIES. PART I, LINE 7 THE COMPENSATION COMMITTEE OF THE BOARD WITH ASSISTANCE FROM AN INDEPENDENT OUTSIDE ADVISOR ESTABLISHES A COMPENSATION PHILOSOPHY TO COMPENSATE LEADERS OF THE ORGANIZATION AT THE MARKET MEDIAN WITH AN INCENTIVE OPPORTUNITY TO REACH THE 75TH PERCENTILE OF THE MARKET FOR THEIR POSITION. THE INCENTIVE OPPORTUNITY IS DIVIDED BETWEEN PERSONAL GOALS AND SYSTEM LEVEL GOALS. ALL GOALS ARE MEASURABLE AND ARE DESIGNED TO IMPROVE QUALITY OF CARE, PATIENT SAFETY, PATIENT EXPERIENCE, AND MANAGEMENT OF RESOURCES. PERFORMANCE IS REWARDED AT THREE LEVELS; THRESHOLD (IMPROVEMENT OVER THE BASELINE), TARGET (SIGNIFICANT IMPROVEMENT OVER THE PRIOR YEAR) AND OPTIMUM (STRETCH). MICHAEL A YOUNG PRESIDENT SPLIT DOLLAR INSURANCE PREMIUM ARRANGEMENT X 200000 284702 0 1 1 284702 DR CHRISTIAN CAICEDO BOARD MEMBER/EMPLOYEE AND OWNER OF CS SOLUTIONS, INC. 100000 PINNACLE HEALTH ENTERED INTO A LOAN AGREEMENT WITH C2 SOLUTIONS, INC., A BUSINESS WHOLLY-OWNED BY DR. CHRISTIAN CAICEDO, A BOARD MEMBER AND EMPLOYEE. PINNACLE HEALTH INTENDS TO USE C2 SOLUTIONS, INC. FOR MEDICAL TRANSCIPTION AND ADVANCED FUNDS INTENDED TO BE USED FOR START-UP COSTS AND STAFF TRAINING. THE TRANSACTION WAS MADE AT ARMS-LENGTH. 0 FORM 990, PART V, LINE 1: PINNACLE HEALTH SYSTEM, THE PARENT COMPANY, IS THE COMMON REPORTING AGENT FOR THE GROUP OF RELATED TAX-EXEMPT ORGANIZATIONS AND FILES ALL 1099 FORMS FOR THE FOLLOWING: COMMUNITY LIFE TEAM, PINNACLE HEALTH FOUNDATION, PINNACLE HEALTH HOSPITALS, AND PINNACLE HEALTH MEDICAL SERVICES. FORM 990, PART VI, SECTION A, LINE 4 THE BYLAWS WERE AMENDED TO REFLECT THE DECISION TO HAVE THE PRESIDENT-ELECT OF THE MEDICAL STAFF SERVE A ONE-YEAR TERM PRECEDING HIS OR HER PRESIDENCY AND TO HAVE THE MOST RECENT PRESIDENT OF THE MEDICAL STAFF CONTINUE ON THE BOARD FOR A ONE YEAR TERM FOLLOWING HIS OR HER PRESIDENCY. THE BYLAWS AMENDMENT ALSO REFLECTED A CHANGE TO ACCEPT A PHYSICIAN MEMBER OF THE BOARD OF PINNACLE HEALTH MEDICAL SERVICES/MEDICAL GROUP IF THE CHAIRMAN OF PINNACLE HEALTH MEDICAL SERVICES/MEDICAL GROUP IS NOT A PHYSICIAN. FORM 990, PART VI, SECTION B, LINE 11 THE AUTHORITY AND RESPONSIBILITY FOR REVIEW OF THE FORM 990 FOR PINNACLE HEALTH SYSTEM AND ASSOCIATED SUBSIDIARIES IS DELEGATED TO THE FINANCE AND AUDIT COMMITTEE OF THE SYSTEM BOARD. IN ORDER TO ACCOMPLISH THIS, ALL MEMBERS OF THE FINANCE AND AUDIT COMMITTEE ARE PROVIDED WITH A REASONABLE OPPORTUNITY TO REVIEW AND COMMENT TO EXECUTIVE LEADERSHIP ON THE IRS FORMS 990 OF THE PINNACLE HEALTH SYSTEM AND ITS SUBSIDIARIES, INCLUDING PINNACLE HEALTH HOSPITALS, PINNACLE HEALTH MEDICAL SERVICES, PINNACLE HEALTH FOUNDATION, AND COMMUNITY LIFE TEAM BEFORE THE RETURNS ARE FILED WITH THE INTERNAL REVENUE SERVICE. IN ADDITION, EACH MEMBER OF THE RESPECTIVE BOARDS OF DIRECTORS WILL BE GIVEN ACCESS TO VIEW HIS OR HER ENTITY'S INDIVIDUAL FORM 990 VIA A SHARED, PASSWORD-PROTECTED WEBSITE. FORM 990, PART VI, SECTION B, LINE 12C IN THE PERFORMANCE OF THEIR DUTIES TO PINNACLE HEALTH SYSTEM AND SUBSIDIARIES (COLLECTIVELY REFERRED TO AS "PHS"), COVERED PERSONS SHALL SEEK TO ACT IN THE BEST INTERESTS OF PHS, AND SHALL EXERCISE GOOD FAITH, LOYALTY, DILIGENCE AND HONESTY. A COVERED PERSON IS ANY INDIVIDUAL WHO SERVES IN A FIDUCIARY CAPACITY TO, OR WHO HAS LEGAL AUTHORITY TO REPRESENT OR OBLIGATE, THE PINNACLE HEALTH SYSTEM OR ANY OF ITS AFFILIATED ORGANIZATIONS INCLUDING, BUT NOT LIMITED TO, DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS. COVERED PERSONS ALSO INCLUDE A) IMMEDIATE FAMILIES (SPOUSES, CHILDREN, SIBLINGS, PARENTS, OR SPOUSE'S PARENTS), B) ANY ORGANIZATION IN WHICH THEY OR THEIR IMMEDIATE FAMILIES DIRECTLY OR INDIRECTLY I) HAVE A MATERIAL FINANCIAL OR BENEFICIAL INTEREST, OR II) SERVE AS A DIRECTOR, OFFICER, EMPLOYEE, AGENT, ATTORNEY OR SIMILAR CAPACITY. A COVERED PERSON SHALL DISCLOSE ANY BUSINESS OR PERSONAL INTERESTS OR RELATIONSHIPS WHICH MAY BE IN CONFLICT WITH THE INTEREST OF PHS, INCLUDING, BUT NOT LIMITED TO (A) ENGAGING IN OR SEEKING TO BE ENGAGED IN (I) THE DELIVERY OF HEALTH CARE SERVICES OR (II) THE DELIVERY OF GOODS OR SERVICES TO PHS, OR (B) ANY TRANSACTION OR ARRANGEMENT WITH PHS WHICH WOULD RESULT IN BENEFIT TO COVERED PERSONS. THE GOVERNANCE COMMITTEE OF THE PHS BOARD REVIEWS ALL CONFLICT OF INTEREST STATEMENTS AND DETERMINES WHETHER EACH DIRECTOR ON THE BOARD IS INDEPENDENT. COVERED PERSONS WHO ARE DIRECTORS MUST COMPLY WITH THE PINNACLE HEALTH SYSTEM GUIDELINES FOR DETERMINING DIRECTOR INDEPENDENCE AND APPLYING DIRECTOR INDEPENDENCE REQUIREMENTS. COVERED PERSONS WITH A CONFLICT OF INTEREST SHALL NOT VOTE ON THE MATTER, AND THE PHS BOARD OR COMMITTEE MUST APPROVE, AUTHORIZE, OR RATIFY THE TRANSACTION OR ARRANGEMENT BY A MAJORITY VOTE OF THE NON-INTERESTED DIRECTORS OR COMMITTEE MEMBERS PRESENT AT A MEETING THAT HAS A QUORUM. VIOLATIONS OF THIS STATEMENT OF POLICY MAY SUBJECT COVERED PERSONS TO APPROPRIATE SANCTIONS, INCLUDING REMOVAL FROM THEIR POSITIONS WITH PHS. FORM 990, PART VI, SECTION B, LINE 15 THE COMPENSATION COMMITTEE OF THE PINNACLE HEALTH SYSTEM ("PHS") BOARD OF DIRECTORS HAS THE AUTHORITY TO DEVELOP AND MAINTAIN EXECUTIVE AND PHYSICIAN COMPENSATION TO BE APPROVED BY THE PINNACLE HEALTH SYSTEM BOARD. THE COMPENSATION COMMITTEE WILL FOLLOW A DILIGENT PROCESS THAT MEETS REGULATORY REQUIREMENTS FOR A REBUTTABLE PRESUMPTION OF REASONABLENESS AND PROMOTES EFFECTIVE GOVERNANCE OF EXECUTIVE COMPENSATION, CONSISTENT WITH THE PHS COMPENSATION PHILOSOPHY. 1. FOLLOW A PROCESS THAT ESTABLISHES AND MAINTAINS A REBUTTABLE PRESUMPTION OF REASONABLENESS FOR ALL EXECUTIVES AND PHYSICIANS POTENTIALLY SUBJECT TO INTERMEDIATE SANCTIONS. 2. PREPARE MINUTES FOR EACH MEETING TO RECORD THE TERMS OF THE COMMITTEE'S DECISIONS AND THE PROCESS FOLLOWED IN REACHING THOSE DECISIONS. THESE MINUTES MUST INCLUDE INDICATIONS THAT THE COMMITTEE IS FOLLOWING GOOD PRACTICES IN DEALING WITH CONFLICTS OF INTEREST AND IN OBTAINING AND RELYING ON APPROPRIATE COMPARABILITY DATA ON TOTAL COMPENSATION. 3. SELECT AND DIRECTLY ENGAGE AND SUPERVISE ANY CONSULTANT HIRED BY PHS TO ADVISE THE COMMITTEE ON EXECUTIVE AND PHYSICIAN COMPENSATION. 4. PERIODICALLY EVALUATE THE APPROPRIATENESS OF THIS CHARTER AND THE EFFECTIVENESS OF THE PROCESS THE COMMITTEE USES IN GOVERNING EXECUTIVE AND PHYSICIAN COMPENSATION AND REPORT THIS EVALUATION TO THE BOARD. 5. PROVIDE THE BOARD WITH AN ANNUAL REPORT ON THE COMMITTEE'S ACTIONS. 6. MONITOR CHANGES IN LAWS AND REGULATIONS PERTAINING TO EXECUTIVE COMPENSATION AND BENEFITS TO SEE THAT PHS COMPLIES WITH THEM. 7. SEEK OUTSIDE REVIEW OF COMMITTEE OPERATIONS TO ENSURE COMPLIANCE WITH THE IRS REBUTTABLE PRESUMPTION OF REASONABLENESS. 8. REVIEW ACTUAL EXECUTIVE COMPENSATION AND BENEFITS PROVIDED TO CONFIRM CONSISTENCY WITH COMPENSATION AND BENEFITS APPROVED BY THE COMMITTEE. FORM 990, PART VI, SECTION C, LINE 19 THE ORGANIZATION MAKES ITS GOVERNING DOCUMENTS AND CONFLICT OF INTEREST POLICY AVAILABLE FOR PUBLIC INSPECTION UPON REQUEST. THE ORGANIZATION INCLUDES A COPY OF ITS FINANCIAL STATEMENTS WITH THE STATE REGISTRATION FILED WITH THE PENNSYLVANIA DEPARTMENT OF STATE, BUREAU OF CHARITABLE ORGANIZATIONS. THESE DOCUMENTS ARE A MATTER OF PUBLIC RECORD AND CAN BE VIEWED AT THE BUREAU OFFICE. FORM 990, PART XI, LINE 9: EQUITY METHOD INCOME - INSURANCE SUB FILING FORM 1120-PC (EIN#13-4224033) 1,785,162. EQUITY METHOD INCOME - UNITED HEALTH RISK LTD 518,798. EQUITY METHOD INCOME - PINNACLE HEALTH CARDIOVASCULAR INSTITUTE -16,898,296. EQUITY METHOD INCOME - PINNACLE HEALTH VENTURES INC. -921,884. EQUITY METHOD INCOME - PINNACLE HEALTH MEDICAL GROUP -699,598. INTERCOMPANY TRANSFERS -8,114,913. EXPENSE REIMBURSEMENT FROM PINNACLE HEALTH FOUNDATION EQUITY METHOD INCOME - RHACO -3,064,335. FORM 990, PART V, LINE 2 IN JULY 2013 SEVERAL MANAGEMENT AND SUPPORT DEPARTMENTS WERE MOVED FROM PINNACLE HEALTH HOSPITAL TO PINNACLE HEALTH SYSTEM AS IT WAS DETERMINED THESE DEPARTMENTS WERE PROVIDING INCREASING SUPPORT FOR NON-HOSPITAL RELATED ENTITIES AND THUS MORE APPROPRIATELY SHOULD BE ACCOUNTED FOR UNDER THE SYSTEM. THESE DEPARTMENTS ARE THEN ALLOCATED TO RELATED SUPPORTED ENTITIES THROUGH AN INTERCOMPANY ALLOCATION. THIS TRANSFER IS THE PRIMARY DRIVER OF SIGNIFICANT REVENUE AND EXPENSE INCREASES OF THE SYSTEM. PINNACLE HEALTH MEDICAL SERVICES 409 SOUTH SECOND STREET PO BOX 8700 HARRISBURG PA 171058700 251709054 PHYSICIAN SERVICES PA 501(C)(3) LINE 11B, II PINNACLE HEALTH SYSTEM 1 PINNACLE HEALTH HOSPITALS 409 SOUTH SECOND STREET PO BOX 8700 HARRISBURG PA 171058700 251778644 INPATIENT AND OUTPATIENT HEALTHCARE SERVICES PA 501(C)(3) LINE 3 PINNACLE HEALTH SYSTEM 1 PINNACLE HEALTH FOUNDATION 409 SOUTH SECOND STREET PO BOX 8700 HARRISBURG PA 171058700 222691718 INVESTMENT AND FUNDRAISING ACTIVITIES FOR RELATED TAX-EXEMPT ORGANIZATIONS PA 501(C)(3) LINE 11B, II PINNACLE HEALTH SYSTEM 1 COMMUNITY LIFE TEAM 409 SOUTH SECOND STREET PO BOX 8700 HARRISBURG PA 171058700 231890444 MEDICAL TRANSPORT SERVICES PA 501(C)(3) LINE 9 PINNACLE HEALTH SYSTEM 1 WEST SHORE SURGERY CENTER LTD 409 SOUTH SECOND STREET PO BOX 8700 HARRISBURG PA 171058700 251821415 SURGICAL CARE - MEDICAL SERVICES PA N/A RIVER HEALTH ACO LLC 409 SOUTH SECOND STREET PO BOX 8700 HARRISBURG PA 171058700 462567488 MEDICAL SERVICES PA N/A UNITED CENTRAL PA RISK RETENTION GROUP 76 ST PAUL ST SUITE 500 BURLINGTON VT 054014477 134224033 CAPTIVE INSURANCE VT N/A C 321877 15002718 1.00000 1 UNITED HEALTH RISK LTD PO BOX 2450 HAMILTON HM JX BD CAPTIVE INSURANCE BD N/A C 1400614 15450274 1.00000 1 PINNACLE HEALTH CARDIOVASCULAR INSTITUTE PO BOX 8700 HARRISBURG PA 17105 320321362 PHYSICIAN SERVICES PA PINNACLE HEALTH SYSTEM C -17430485 13636326 1.00000 1 PINNACLE HEALTH MEDICAL GROUP PO BOX 8700 HARRISBURG PA 17105 800771040 PHYSICIAN SERVICES PA PINNACLE HEALTH SYSTEM C -792914 1.00000 1 PINNACLE HEALTH VENTURES INC PO BOX 8700 HARRISBURG PA 17105 611677624 HOLDING COMPANY PA PINNACLE HEALTH SYSTEM C 29455631 1.00000 1 PINNACLE HEALTH IMAGING INC PO BOX 8700 HARRISBURG PA 17105 231718571 IMAGING SERVICES PA PINNACLE HEALTH VENTURES INC C 120927 31304870 1.00000 1 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 PINNACLE HEALTH HOSPITALS R 440821 COST PINNACLE HEALTH IMAGING R 15477814 COST PINNACLE HEALTH CARDIOVASCULAR INSTITUTE R 23516555 COST PINNACLE HEALTH MEDICAL GROUP S 7641569 COST COMMUNITY LIFE TEAM S 1570915 COST PINNACLE HEALTH MEDICAL SERVICES S 10253159 COST PINNACLE HEALTH CARDIOVASCULAR INSTITUTE S 15965133 COST PINNACLE HEALTH MEDICAL GROUP S 2476111 COST PINNACLE HEALTH IMAGING S 14812262 COST PART V, LINE 2 PINNACLE HEALTH SYSTEM CANNOT SEPARATELY STATE AMOUNTS FOR EACH TRANSACTION IDENTIFIED WITH A RELATED ORGANIZATION. ITS ACCOUNTING SYSTEM NETS ALL TRANSACTIONS INTO A SINGLE AMOUNT, WHICH IS REPORTED AS A GIFT, GRANT AND/OR CAPITAL CONTRIBUTION TO OR FROM RELATED ORGANIZATIONS. PINNACLE HEALTH SYSTEM 409 S SECOND STREET PO BOX 8700 HARRISBURG PA 17105 251778658 X 0 112345 112345 77186130 77298475 1000000 250000 0 0 0 PINNACLE HEALTH HOSPITALS 409 S SECOND STREET PO BOX 8700 HARRISBURG PA 17105 251778644 0 0 0 664376412 664376412 1000000 250000 0 0 0 PINNACLE HEALTH MEDICAL SERVICES 409 S SECOND STREET PO BOX 8700 HARRISBURG PA 17105 251709054 0 0 0 97604379 97604379 1000000 250000 0 0 0 PINNACLE HEALTH FOUNDATION 409 S SECOND STREET PO BOX 8700 HARRISBURG PA 17105 222691718 0 0 0 1216604 1216604 196660 49165 0 0 0 COMMUNITY LIFE TEAM 409 S SECOND STREET PO BOX 8700 HARRISBURG PA 17105 231890444 0 0 0 7830848 7830848 541542 135386 0 0 0