2011-11-11T16:55:45-06:00 2010-12-31 EIDE BAILLY LLP 401N 31ST ST SUITE 1120 PO BOX 7112 BILLINGS MT 591037112 990 2010-01-01 810232121 BOZEMAN DEACONESS HEALTH SERVICES BOZE 4065855000 915 HIGHLAND BOULEVARD BOZEMAN MT 59715 GORDON DAVIDSON 4065855000 2011-11-08 1 STEVE MARKOVICH 4068962400 2010 2016-03-07 17:11:31Z JOHN NORDWICK 915 HIGHLAND BOULEVARD BOZEMAN MT 59715 203429339 0 X WWW.BOZEMANDEACONESS.ORG X 1911 MT TO IMPROVE COMMUNITY HEALTH AND QUALITY OF LIFE FOR RESIDENTS AND VISITORS OF THE BOZEMAN, MT AREA. 11 10 1577 214 2974273 -328956 4169523 589263 156533927 167836517 380856 4150938 -1001700 -328130 160082606 172248588 122598 628328 0 0 66897050 71680409 0 0 0 81877844 85825379 148897492 158134116 11185114 14114472 277866382 276617016 85491758 68712966 192374624 207904050 X TO IMPROVE COMMUNITY HEALTH AND QUALITY OF LIFE. 0 1 32976166 29778518 BOZEMAN DEACONESS HEALTH GROUP IS OUR DEPARTMENT THAT PROVIDES PHYSICIAN SERVICES TO OUTPATIENTS. THE NUMBER OF MEDICARE AND MEDICAID PATIENTS SEEN IN 2010 INCREASED FROM 2009 BY 12%. REVENUE FOR THESE PATIENTS AND UNINSURED PATIENTS TOTALED 53% OF ALL CLINIC REVENUE. TOTAL OPERATING REVENUES WERE $29,778,518 WITH ASSOCIATED OPERATING EXPENSES OF $32,976,166. THE LOSS OF $3,197,647 IS REFLECTIVE OF OUR COMMITMENT TO PROVIDE ACCESS TO ALL PATIENTS REGARDLESS OF THEIR ABILITY TO PAY. 17863844 29509218 BOZEMAN DEACONESS SURGICAL SERVICES STRIVES TO OFFER A WIDE ARRAY OF SURGICAL OPTIONS USING STATE OF THE ART TECHNOLOGY. OF THE 5,086 INPATIENT AND OUTPATIENT SURGERIES, ABOUT ONE THIRD WERE MEDICARE AND MEDICAID PATIENTS, WHICH COMPRISED 39% ($17,063,817) OF TOTAL REVENUE FROM THESE SERVICES ($44,185,983). OVER HALF OF THE MEDICARE/MEDICAID REVENUES ($9,593,173) WERE UNREIMBURSED AND WRITTEN OFF, ALONG WITH ANOTHER $5,083,592 FROM OTHER PAYORS. OUR OPERATING ROOOM ALSO RECORDED $12,696,074 IN OPERATING EXPENSES PLUS ANOTHER $5,167,770 OF INDIRECT OVERHEAD. 6919373 7986743 THE EMERGENCY ROOM AT BOZEMAN DEACONESS HOSPITAL IS ONE OF THE BUSIEST DEPARTMENTS IN OUR ORGANIZATION, WITH JUST UNDER 23,000 VISITS IN 2010. APPROXIMATELY 32% OF THESE VISITS WERE FROM MEDICARE AND MEDICAID PATIENTS, COMPRISING $4,081,537 OF THE $14,306,472 OF THE GROSS REVENUE. OVER HALF OF THE MEDICARE/MEDICAID REVENUE IS UNREIMBURSED (56%) AND WRITTEN OFF, ALONG WITH ALMOST 40% OF THE REMAINING REVENUE (TOTAL WRITE-OFFS OF $6,319,729). DIRECT AND INDIRECT EXPENSES INCURRED IN SUPPORTING THESE EMERGENCY OPERATIONS ACCUMULATED TO $6,919,373. 74178713 628328 97586997 BOZEMAN DEACONESS HEALTH SERVICES OPERATES AN 86 BED HOSPITAL FACILITY (HOSPITAL), ALONG WITH A 43 UNIT ASSISTED LIVING HOME AND A 115 UNIT INDEPENDENT LIVING HOME (HILLCREST SENIOR LIVING OR HSL). ALL PATIENT AND RESIDENT SERVICE REVENUE IS USED TO PROVIDE HEALTH CARE SERVICES, HEALTH CARE PROMOTION, AND HEALTH CARE EDUCATION TO BOZEMAN AND THE SURROUNDING COMMUNITIES. 74178713 628328 97586997 131938096 1 1 0 1 0 0 0 0 0 1 1 1 1 1 1 0 1 0 0 0 0 0 0 0 0 1 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 1 145 0 1 1577 1 1 1 0 0 0 0 0 0 0 0 0 X 11 10 0 0 0 0 0 0 1 1 1 0 0 1 1 1 1 1 1 1 1 1 1 X GORDON DAVIDSON 4065851036 915 HIGHLAND BLVD BOZEMAN MT 59715 MARY POHL 1.00 X X 0 0 0 TERRY CUNNINGHAM 1.00 X X 0 0 0 JULIE JACKSON 1.00 X X 0 0 0 JOHN MURDOCH 1.00 X X 0 0 0 DAVID DICKENSHEETS 1.00 X X 0 0 0 JANET COLOMBO 1.00 X X 0 0 0 KIRK MILLER 1.00 X 0 0 0 TOM MILLESON 1.00 X 0 0 0 DR JOHN ROBBINS 50.00 X 140916 0 24157 REV DAVE MCCONNELL 1.00 X 0 0 0 BRIAN BROWN 1.00 X 0 0 0 JAYNEE GROSETH 1.00 X 0 0 0 JOHN NORDWICK 50.00 X 390301 0 36574 STAN MOSER 50.00 X 33398 0 933 GORDON DAVIDSON 50.00 X 263213 0 35309 ELIZABETH LEWIS 50.00 X 245715 0 40890 CHERYL RIDGELY 50.00 X 182171 0 32341 ANNE CASTILLO MD 50.00 X 676992 0 15789 JACK HENSOLD MD 50.00 X 545041 0 30252 J BRUCE ROBERTSON MD 50.00 X 407608 0 33037 TIM JOHNSON MD 50.00 X 359121 0 34420 PEPPER HENYON MD 50.00 X 319732 0 33951 3564208 0 317653 321 0 1 0 ABSAROKA EMERGENCY PHYSICIANS 1184 N 15TH STREET SUITE 1 BOZEMAN MT 59715 ER PHYSICIANS FEE 3154200 ARBOR MEDIC PO BOX 10305 BOZEMAN MT 59715 LANDSCAPING/LAWN/SNOW REMOVAL 987887 MC BUILDERS JV 1203 S CHURCH BOZEMAN MT 59715 CONSTRUCTION 725935 PERSNICKETY DRY CLEANERS 2020 W BABCOCK BOZEMAN MT 59715 LAUNDRY 629343 MAYO COLLABORATIVE SERVICES PO BOX 9146 MINNEAPOLIS MN 554809146 REFERENCE LAB 614572 32 589263 589263 NET PATIENT SERVICE RE 622110 149552345 149552345 NET RESIDENT REVENUE 623000 5632191 5632191 INCOME FROM SUBSIDIARI 900099 4240161 4240161 PHARMACY REVENUE 446110 3296612 612797 2683815 INTEREST IN FOUNDATION 900099 2244245 2244245 2870963 2579737 291226 167836517 2358125 2358125 1491164 1819294 -328130 -328130 -328130 24162681 6991589 23070907 6290550 1091774 701039 1792813 -768 1793581 172248588 164861476 2974273 3823576 628328 628328 1134634 165654 968980 57644086 48763714 8880372 2651424 2251744 399680 5884618 4922746 961872 4365647 3621647 744000 170710 170710 64500 64500 28285 28285 296622 296622 12247665 6499485 5748180 818211 30235 787976 3033366 2375513 657853 1632567 497393 1135174 364953 190458 174495 247026 130696 116330 2720715 2720715 13046672 13046672 2383182 786434 1596748 MEDICAL SUPPLIES 30440995 30395750 45245 PROVISION FOR BAD DEBTS 10762806 10762806 EQUIPMENT RENT & MAINTE 5852402 3824108 2028294 TAXES & LICENSES 1325927 163178 1162749 DUES & SUBSCRIPTIONS 378709 160820 217889 10066 10066 158134116 131938096 26196020 0 17321904 32758275 22357943 19695581 393600 4576504 4955740 1329478 1555426 205298345 91885168 116700102 113413177 59110499 46045379 17530792 18168044 16161676 16338434 8813248 8721359 13964236 14572001 277866382 276617016 14571481 16032568 883657 795670 55419753 31766186 3239409 8005388 11377458 12113154 85491758 68712966 X 184727649 197960821 6063573 8352216 1583402 1591013 192374624 207904050 277866382 276617016 X 14114472 1414954 X 0 1 1 X 0 X RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 0 1 0 0 0 1 2225 1 0 0 1 26000 28225 0 EXPLANATION OF OTHER LOBBYING ACTIVITIES: PART II-B, LINE 1I: HIRED CONSULTANT TO PROVIDE LOBBYING SERVICES IN CONNECTION WITH GOVERNMENTAL AFFAIRS REPRESENTATION TO ENSURE HOSPITAL, COMMUNITY, AND EMPLOYEE INTERESTS AND NEEDS ARE REPRESENTED. 7104648 2493939 9598587 129562271 54325578 75236693 66137487 37559590 28577897 113413177 SHORT TERM INVESTMENTS - CDS 15471193 F ALTERNATIVE INVESTMENTS 2696851 F 18168044 INVESTMENT IN LIMITED LIABILITY COMPANIES 16338434 C 16338434 DEFERRED FINANCING COSTS, NET 598461 ACCRUED INT RECEIVABLE & OTHER RECEIVABLES 1725593 INTEREST IN NET ASSETS OF FOUNDATION 11940446 DUE FROM AFFILIATES 73654 OTHER ASSETS 233847 14572001 DEPOSITS 12033154 ESTIMATED THIRD-PARTY PAYOR SETTLEMENTS 80000 12113154 DESCRIPTION OF UNCERTAIN TAX POSITIONS UNDER FIN 48: PART X: THE ORGANIZATION HAS ADOPTED THE PROVISIONS OF ACCOUNTING STANDARDS CODIFICATION TOPIC ASC 740-10, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES, AND AS OF DECEMBER 31, 2010 AND 2009, THE UNRECOGNIZED TAX BENEFIT ACCRUAL WAS ZERO. THE ORGANIZATION WILL RECOGNIZE FUTURE ACCRUED INTEREST AND PENALTIES RELATED TO UNRECOGNIZED TAX BENEFITS IN INCOME TAX EXPENSE, IF INCURRED. THE ORGANIZATION IS NO LONGER SUBJECT TO FEDERAL OR STATE TAX EXAMINATIONS BY TAX AUTHORITIES FOR YEARS BEFORE 2007. 1 1 X 1 X 1 X 1 1 1 0 1 1 5309311 523960 4785351 0.03050 8572781 6135577 2437204 0.01560 288852 419275 -130423 0.00000 14170944 7078812 7092132 0.04610 638912 191886 447026 0.00290 189201 0 189201 0.00120 26723644 19140026 7583618 0.04840 0 0 448178 0 448178 0.00290 27999935 19331912 8668023 0.05540 42170879 26410724 15760155 0.10150 9253 9253 0.00010 101 101 0.00000 9354 9354 0.00010 0 6033583 622847 29047855 31870366 -2822511 X 1 0 1 1 BOZEMAN DEACONESS HOSPITAL

915 HIGHLAND BLVD BOZEMAN MT 59107

X X X NOT REQUIRED 1 6 DEACONESS INTERCITY IMAGING LLC

915 HIGHLAND BLVD BOZEMAN MT 59715

OUTPATIENT IMAGING CENTER ROCKY MOUNTAIN SURGERY CENTER LLC

1450 ELLIS ST SUITE 101 BOZEMAN MT 59715

OUTPATIENT SURGICAL CENTER BOZEMAN DIALYSIS CENTER

931 HIGHLAND BLVD SUITE 3105 BOZEMAN MT 59715

OUTPATIENT DIALYSIS CENTER HILLCREST SENIOR LIVING

1201 HIGHLAND BLVD BOZEMAN MT 59715

INDEPENDENT AND ASSISTED LIVING FACILITY HOSPICE OF SOUTHWEST MONTANA LLC

1600 ELLIS STREET SUITE 3A BOZEMAN MT 59715

HOSPICE SERVICES FAMILY DOCTORS URGENT CARE LLC

120 N 18TH AVENUE BOZEMAN MT 59715

OUTPATIENT HEALTH CARE PART I, LINE 3C: ANY INDIVIDUAL AND THEIR DEPENDENTS WHO ARE AT 150% OF THE FEDERAL POVERTY INCOME LEVEL OR BELOW WILL BE ELIGIBLE TO RECEIVE A 100% WRITE-OFF OF THE SELF-PAY PORTION OF INCURRED CHARGES, UPON COMPLETION OF AN APPLICATION. ANY UNINSURED INDIVIDUAL WITH INCOME UNDER 250% OF THE FEDERAL POVERTY GUIDELINES (FPG) WILL BE ELIGIBLE TO RECEIVE A DISCOUNT FROM CHARGES BASED ON CERTAIN GUIDELINES. COMPLETION OF THE FINANCIAL ASSISTANCE APPLICATION AND PROOF OF MEDICAID DENIAL WILL BE REQUIRED. IN SOME CASES, FULL OR PARTIAL ASSISTANCE MAY BE PROVIDED TO INSURED INDIVIDUALS WITH GROSS FAMILY INCOMES ABOVE 250% OF THE FPG ADJUSTED FOR FAMILY SIZE. CATASTROPHIC FINANCIAL ASSISTANCE IS AVAILABLE TO INDIVIDUALS WHO HAVE A LARGE BALANCE REMAINING AFTER ALL THIRD PARTY PAYMENTS HAVE BEEN TAKEN INTO ACCOUNT. THE BALANCE UNDER CONSIDERATION IS THAT AMOUNT WHICH IS DEEMED TO BE THE PATIENT'S FINANCIAL RESPONSIBILITY. IF SUCH RESPONSIBILITY IS GREATER THAN 50% OF THE FAMILY'S ANNUAL HOUSEHOLD INCOME, THE EXCESS AMOUNT WILL BE TREATED AS CATASTROPHIC FINANCIAL ASSISTANCE AND WRITTEN OFF OF THE PATIENT'S ACCOUNT. THIS ASSISTANCE IS AVAILABLE WITHOUT RESPECT TO THE FPG, BUT THEY MUST FOLLOW THE SAME PROCESS AS ALL OTHER PATIENTS SEEKING FINANCIAL ASSISTANCE BASED UPON FPG. ASSET TESTS ARE NOT USED FOR DETERMINING ANY LEVEL OF FINANCIAL ASSISTANCE. ALL DECISIONS REGARDING FINANCIAL ASSISTANCE ARE IN THE SOLE DISCRETION OF BDH. PRIOR TO RECEIVING SERVICES, BDH WILL MAKE AN EFFORT TO NOTIFY THE PATIENT REGARDING THEIR ELIGIBILITY FOR FINANCIAL ASSISTANCE. PART I, LINE 7: THE COST TO CHARGE RATIO FROM WORKSHEET 2 WAS USED TO OBTAIN THE COSTS RELATED TO CHARITY CARE, MEDICAID, AND OTHER MEANS-TESTED PROGRAMS. ALL OTHER BENEFITS WERE CALCULATED USING OUR INTERNAL COSTING SYSTEM. THIS SYSTEM ASSIGNS ALL DIRECT EXPENSES TO SEPARATE COST CENTERS (DEPARTMENTS) AND ACCOUNTS. INDIRECT COSTS ARE THEN ALLOCATED TO APPLICABLE DEPARTMENTS BASED ON APPROPRIATE STATISTICS. FOR EXAMPLE, ENGINEERING AND ENVIRONMENTAL SERVICES WOULD BE ALLOCATED BASED ON SQUARE FOOTAGE WHEREAS INFORMATION SYSTEMS AND BENEFITS ARE ALLOCATED BASED ON AN ACCUMULATED COST PERCENTAGE AS DETERMINED BY THE MEDICARE COST REPORT. OUR INTERNAL SYSTEM DOES RECORD PATIENT REVENUES BASED ON TYPE (INPATIENT VS. OUTPATIENT VS. EMERGENCY) AND PAYOR (MEDICID, MEDICARE, COMMERCIAL, SELF-PAY, ETC.). RELATED COSTS ARE THEN DETERMINED BASED ON THE PRO-RATED SHARE AS A PERCENTAGE OF THE TOTAL. FOR EXAMPLE, IF MEDICAID COMPRISES 7% OF A DEPARTMENTS REVENUE, MEDICAID EXPENSES ARE CALCULATED AT 7% OF THE TOTAL AS WELL. PART I, LINE 7G: AMOUNT OF COST ATTRIBUTABLE TO A PHYSICIAN CLINIC IS $24,544,748. ALL COSTS ASSOCIATED WITH A PROVIDER-BASED CLINIC OPERATIONAL DEPARTMENT WERE CONSIDERED PART OF THIS TOTAL. PART I, L7 COL(F): THE AMOUNT OF BAD DEBT EXPENSE REMOVED FROM THE DENOMINATOR IS $11,249,782. PART II: BOZEMAN DEACONESS HEALTH SERVICES PROVIDED LEADERSHIP DEVELOPMENT TO ASPIRING HEALTHCARE PROFESSIONALS THROUGH THE JUNIOR ACHIEVEMENT PROGRAM. BDHS EMPLOYEES SPOKE WITH HIGH SCHOOL STUDENTS ABOUT A CAREER AS A NURSE AND PROVIDED THEM WITH REAL LIFE EXAMPLES OF WHAT THE PROFESSION ENTAILS. THESE ACTIVITIES PROMOTE HEALTHCARE BECAUSE THE INDIVIDUALS ARE DIRECTED TOWARD LEARNING ABOUT HEALTH CARE PROFESSIONS AND WILL HOPEFULLY ENCOURAGE FUTURE INTEREST IN THESE TYPES OF POSITIONS THAT PROMOTE HEALTHCARE.ONE OF OUR ADMINISTRATORS PARTICIPATED IN ECONOMIC AND BUSINESS DEVELOPMENT THROUGH INVOLVEMENT IN SEVERAL ADVISORY BOARDS AND TASK FORCE PROJECTS AND INITIATIVES. THE INVOLVEMENT IN THESE COMMUNITY INITIATIVES PROVIDES AWARENESS OF HEALTH ISSUES AND EDUCATION ON HOW TO ACCESS HEALTH SERVICES. PART III, LINE 4: THE ORGANIZATION USES WORKSHEET 2 TO CALCULATE BAD DEBT EXPENSE AT COST. BAD DEBT IS REPORTED BASED UPON ACTUAL BAD DEBT EXPENSE NET OF DISCOUNTS AND CONTRACTUAL ADJUSTMENTS, LESS RECOVERIES.IN DETERMINING THE AMOUNT OF BAD DEBT ATTRIBUTABLE TO PATIENTS ELIGIBLE UNDER OUR CHARITY CARE POLICY, WE OBTAINED STATISTICAL INFORMATION DIRECTLY FROM OUR CREDIT AGENCIES. FROM THIS INFORMATION WE WERE ABLE TO CALCULATE AN AVERAGE PERCENTAGE (10.5%) OF ACCOUNTS TURNED OVER FOR COLLECTIONS THAT WOULD HAVE BEEN SUBSEQUENTLY DEEMED UNCOLLECTIBLE OR RETURNED FOR CHARITY. THE ORGANIZATION USES WORKSHEET 2 TO CALCULATE BAD DEBT EXPENSE AT COST. THIS PERCENTAGE WAS APPLIED TO BAD DEBT EXPENSE AT COST TO DETERMINE THE ESTIMATE. NONE OF THE BAD DEBT IS INCLUDED AS COMMUNITY BENEFIT.NOTE IN AUDITED FINANCIAL STATEMENTS:THE CARRYING AMOUNT OF PATIENT AND RESIDENT RECEIVABLES IS REDUCED BY A VALUATION ALLOWANCE THAT REFLECTS MANAGEMENTS BEST ESTIMATE OF AMOUNTS THAT WILL NOT BE COLLECTED FROM PATIENTS, RESIDENTS AND THIRD-PARTY PAYORS. MANAGEMENT REVIEWS PATIENT AND RESIDENT RECEIVABLES BY PAYOR CLASS AND APPLIES PERCENTAGES TO DETERMINE ESTIMATED AMOUNTS THAT WILL NOT BE COLLECTED FROM THIRD PARTIES UNDER CONTRACTUAL AGREEMENTS AND AMOUNTS THAT WILL NOT BE COLLECTED FROM PATIENTS AND RESIDENTS DUE TO BAD DEBTS. MANAGEMENT CONSIDERS HISTORICAL WRITE OFF AND RECOVERY INFORMATION IN DETERMINING THE ESTIMATED BAD DEBT PROVISION. PART III, LINE 8: THE ENTIRE AMOUNT OF SHORTFALL SHOULD BE CONSIDERED A COMMUNITY BENEFIT.THE MEDICARE SHORTFALL REPRESENTS A COST ABSORBED BY THE HOSPITAL AS A RESULT OF PROVIDING CARE TO MEDICARE PATIENTS. THE CONTRACT DRIVING THIS LOSS IS A NONDISCRETIONARY CONTRACT, AS IS PROVIDING THE SERVICES TO THIS POPULATION OF INDIVIDUALS. THE COST OF PROVIDING THIS BENEFIT TO THE COMMUNITY SHOULD BE REPORTABLE AS SUCH. MEDICARE ALLOWABLE COSTS OF CARE ARE BASED ON THE MEDICARE COST REPORT. THE MEDICARE COST REPORT IS COMPLETED BASED ON THE RULES AND REGULATIONS SET FORTH BY CMS.FOR THE JOINT VENTURES, NET MEDICARE REVENUE WAS USED AS THE REVENUE RECEIVED, AND THAT % OF TOTAL REVENUES WAS APPLIED AGAINST OPERATING EXPENSES TO DETERMINE RELATED COSTS. THE JOINT VENTURE PORTION OF THE SHORTFALL IS $972,737. PART III, LINE 9B: THE COLLECTION POLICY DOES NOT SPECIFICALLY ADDRESS THE COLLECTION PRACTICES TO BE FOLLOWED FOR PATIENTS WHO ARE KNOWN TO QUALIFY FOR CHARITY CARE OR FINANCIAL ASSISTANCE. PART VI, LINE 6B: THE ORGANIZATION'S COMMUNITY BENEFIT REPORTED CAN BE FOUND ON ITS WEBSITE AT WWW.BOZEMANDEACONESS.ORG. PART VI, LINE 2: BOZEMAN DEACONESS CONDUCTS A HEALTH CARE NEEDS ASSESSMENT ONCE EVERY TWO YEARS, WITH THE MOST RECENT BEING COMPLETED IN 2009. THE PRELIMINARY STEPS TO PERFORMING THIS ASSESSMENT INVOLVE GATHERING INFORMATION ABOUT THE CONSUMER AND THE COMMUNITY ASSETS. THIS INCLUDES ECONOMIC AND DEMOGRAPHIC PROFILES, BIRTH AND DEATH CHARACTERISTICS, DISEASE INCIDENCE AND PREVALENCE, HEALTH STATUS AND BEHAVIORS, HEALTH CARE UTILIZATION, SOCIAL AND COMMUNITY ISSUES, AND SCHOOL AND STUDENT POPULATION CHARACTERISTICS. WE ALSO REVIEW LOCAL ASSOCIATIONS, LOCAL INSTITUTIONS AND THEIR RESOURCES, COMMUNITY HEALTH RESOURCES, AND PHYSICAL ASSETS OF THE COMMUNITY. USING THIS DATA, WE DETERMINE THE SCOPE OF THE ASSESSMENT AND ISSUES TO BE ADDRESSED. SURVEY QUESTIONS ARE THEN DEVELOPED AND THE SURVEY IS ADMINISTERED TO TWO POPULATIONS: A GENERAL HOUSEHOLD MAIL SURVEY (RANDOM SAMPLE OF 2,550 GALLATIN COUNTY HOUSEHOLDS) AND A SELF-SELECTED 'CONVENIENCE' SURVEY (SURVEYS LEFT AND COLLECTED AT SELECTED LOCATIONS.) UPON RECEIVING THE RESULTS, SENIOR ADMINISTRATION AND THE BOARD DEVELOP PRIORITIES AND SET FORTH A COURSE OF ACTION. PART VI, LINE 3: BOZEMAN DEACONESS HOSPITAL IS DEEPLY COMMITTED TO PROVIDING FINANCIAL ASSISTANCE TO PATIENTS NEEDING, BUT UNABLE TO AFFORD, MEDICALLY NECESSARY HEALTH CARE SERVICES. BDH POSTS NOTICE OF ITS FINANCIAL ASSISTANCE POLICY IN ALL ADMITTING AREAS, AS WELL AS ON THE WEBSITE. AT THE EARLIEST FEASIBLE TIME, BDH WILL ATTEMPT TO DETERMINE WHETHER A PATIENT HAS THIRD PARTY COVERAGE FOR ANY PART OF THE HOSPITAL SERVICES PROVIDED. IF A PATIENT DOES NOT HAVE THIRD PARTY COVERAGE, A PATIENT ADVOCATE FROM THE MASH PROGRAM WILL SCREEN ALL INPATIENT CASES AND ANY OUTPATIENT CASES EXCEEDING $1,000 IN TOTAL CHARGES TO DETERMINE IF THE PATIENT QUALIFIES FOR THIRD PARTY FUNDING. IF NOT, THE PATIENT ADVOCATE WILL EXPLAIN THE FINANCIAL ASSISTANCE POLICY AND GIVE THE PATIENT AN APPLICATION IF DESIRED. IN CIRCUMSTANCES WHERE PAYMENT IN FULL WILL CAUSE FINANCIAL HARDSHIP THAT WILL SIGNIFICANTLY HARM THE PATIENT OR PATIENT'S FAMILY, THE APPLICANT MAY BE ASKED TO VISIT WITH CONSUMER CREDIT COUNSELING SERVICES TO FURTHER REVIEW THEIR FINANCIAL SITUATIONS. UPON REQUEST, PATIENTS MAY BE ASKED TO COMPLETE AN APPLICATION FOR MEDICAID PARTICIPATION OR FOR COVERAGE BY OTHER GOVERNMENTAL PAYMENT PROGRAMS. PATIENT BILLS ALSO CONTAIN BILLING INFORMATION EXPLAINING FINANCIAL OPTIONS AND PROVIDE CONTACT INFORMATION TO THE APPROPRIATE RESOURCES. PART VI, LINE 4: OUR 'COMMUNITY' IS DEFINED AS GALLATIN, PARK AND MADISON COUNTIES. CONSIDERED A RURAL AREA, POPULATIONS FROM THE 2010 US CENSUS WERE 89,513, 15,636, AND 7,691, RESPECTIVELY. THE ESTIMATED MEDIAN HOUSEHOLD INCOMES (BASED ON 2009) WERE $47,065, $39,525, AND $41,345, RESPECTIVELY. THE AVERAGE HOUSEHOLD SIZE IS: GALLATIN: 2.6, PARK 2.2, AND MADISON 2.11. THE ESTIMATED % OF PERSONS BELOW POVERTY LEVEL ARE: GALLATIN 13.4%, PARK 13.3%, AND MADISON 11.6%. THE 2010 FEDERAL POVERTY GUIDELINE FOR A FAMILY OF 2 IS $14,750. THE ESTIMATED % OF HOURSEHOLDS (BASED ON 2009) WITH INCOME LESS THAN $15,000 WERE: GALLATIN 9.44%, PARK 14.31%, AND MADISON 12.79. THE % OF POPULATION WITH HEALTHCARE COSTS COVERED BY A GOVERNMENT PAYOR WERE: GALLATIN - MEDICARE 10%, MEDICAID 5%, AND CHIP 1%; PARK - MEDICARE 17%, MEDICAID 8%, AND CHIP 2%; AND MADISON - MEDICARE 19%, MEDICAID 5%, AND CHIP 2%. THE % OF POPULATION UNDER 65 YEARS OLD WITHOUT HEALTH INSURANCE BY COUNTY IS: GALLATIN 24%, PARK 21%, AND MADISON 29%. BOZEMAN DEACONESS HOSPITAL IS THE ONLY LOCAL HOSPITAL IN THESE 3 COUNTIES, WHILE THERE IS 1 CRITICAL ACCESS HOSPITAL IN PARK COUNTY AND 2 IN MADISON COUNTY. FOR GALLATIN COUNTY, THE TOWNS OF MANHATTAN, THREE FORKS AND WEST YELLOWSTONE ARE DESIGNATED AS HAVING A SHORTAGE OF PRIMARY MEDICAL CARE. THE LOW INCOME POPULATION CENSUS TRACTS 6 AND 11 ARE DESIGNATED AS MEDICALLY UNDERSERVED AREA/POPULATION (MUA/P) FOR PARK COUNTY, PARK CLINIC AND COMMUNITY HEALTH PARTNERS HAVE A SHORTAGE IN PRIMARY MEDICAL CARE. ALL OF PARK COUNTY IS CONSIDERED A MEDICALLY UNDERSERVED AREA. IN MADISON COUNTY, THE TOWNS OF HARRISON, MADISON VALLEY, AND VIGINIA CITY AS WELL AS MADISON VALLEY CLINIC, TWIN BRIDGES AND LOW INCOME POPULATION HAVE A SHORTAGE IN PRIMARY MEDICAL CARE PROFESSIONALS. THE TOWN OF SHERIDAN IS DESIGNATED AS MUA/P. PART VI, LINE 6: AS A SOLE COMMUNITY HOSPITAL, BOZEMAN DEACONESS HEALTH SERVICES IS COMMITTED TO PROVIDING QUALITY CARE AND PROMOTING HEALTH TO THE VERY COMMUNITY THAT SUPPORTS US. OUR GOVERNING BODY IS REPRESENTED BY INDIVIDUALS OF OUR COMMUNITY, WITH ALL BUT ONE BEING INDEPENDENT TO OUR ORGANIZATION. TO ENSURE IMMEDIATE ACCESS TO CARE, BDHS HAS AN OPEN MEDICAL STAFF AND REQUIRES EACH MEDICAL STAFF MEMBER TO CARE FOR ANYONE PRESENTING A NEED FOR CARE IN THE EMERGENCY DEPARTMENT. WE ALSO DEVOTE A SIGNIFICANT AMOUNT OF SURPLUS FUNDS TO MAINTAINING A HIGH LEVEL OF PATIENT CARE THROUGH QUALITY INITIATIVES AND TECHNOLOGY INVESTMENTS. BDHS GIVES BACK TO ITS COMMUNITY THROUGH COMMUNITY BENEFIT OPPORTUNITIES, WHICH AT OVER $15.7 MILLION COMPRISED 10.15% OF OUR TOTAL OPERATING EXPENSES (EXCLUDING BAD DEBT) IN 2010.VARIOUS EMPLOYEES, PHYSICIANS, ADMINISTRATORS, AND BOARD MEMBERS OF THE HOSPITAL ARE ACTIVELY INVOLVED IN VOLUNTEER ROLES INCLUDING COMMUNITY BOARD POSITIONS IN NUMEROUS OTHER ACTIVITIES, GROUPS, AND ORGANIZATIONS THAT ACTIVELY PROMOTE THE HEALTH OF THE COMMUNITY. PART VI, LINE 7: BOZEMAN DEACONESS HEALTH SERVICES OWNS A MAJORITY INTEREST IN ADVANCED MEDICAL IMAGING, ROCKY MOUNTAIN SURGERY CENTER, AND BOZEMAN DIALYSIS CENTER. ALL THREE OF THESE ORGANIZATIONS HOLD SIMILAR POLICIES REGARDING PROVIDING CARE TO ALL MEMBERS OF THE COMMUNITY AND OFFERING FINANCIAL ASSISTANCE AS DETERMINED BY ABILITY TO PAY. 1 GREATER GALLATIN UNITED WAY 945 TECHNOLOGY BLVD 101F BOZEMAN MT 59718 810384820 501(C)(3) 50000 SUPPORT COMMUNITY HEALTH PROGRAMS WITHIN OUR SERVICE AREA THE WELLNESS COMMUNITY 102 S 11TH AVE BOZEMAN MT 59715 810542266 501(C)(3) 45348 SUPPORT COMMUNITY HEALTH PROGRAMS WITHIN OUR SERVICE AREA WESTERN MONTANA MENTAL HEALTH CENTER BLDG T-9 FORT MISSOULA RD MISSOULA MT 59804 810307814 501(C)(3) 200000 SUPPORT COMMUNITY HEALTH CRISIS PROGRAMS WITHIN OUR SERVICE AREA BOZEMAN DEACONESS FOUNDATION 931 HIGHLAND BLVD SUITE 3200 BOZEMAN MT 59715 811407943 501(C)(3) 325000 FUND ENDOWMENTS 4 0 PROCEDURE FOR MONITORING GRANTS IN THE U.S.: PART I, LINE 2: SCHEDULE I, PART I, LINE 2: RECIPIENTS OF GRANTS AND ASSISTANCE PREPARE INFORMATIONAL REPORTS SUBSTANTIATING THE USE OF THE FUNDS THAT WERE EARMARKED TO SUPPORT COMMUNITY HEALTH PROGRAMS. INVOLVEMENT OF BOZEMAN DEACONESS HEALTH SERVICES STAFF AND/OR ADMINISTRATION AS VOLUNTEERS IN THE ACTIVITIES BEING SUPPORTED ALSO ENSURES PROPER USAGE OF FUNDS. X 1 1 X X X 0 0 0 0 0 1 0 1 0 DR JOHN ROBBINS 125857 0 0 0 15059 0 9883 0 14854 0 165653 0 0 0 JOHN NORDWICK 319845 0 60552 0 9904 0 22580 0 16294 0 429175 0 0 0 GORDON DAVIDSON 204602 0 31158 0 27453 0 22655 0 15001 0 300869 0 0 0 ELIZABETH LEWIS 197726 0 30334 0 17655 0 22552 0 20685 0 288952 0 0 0 CHERYL RIDGELY 149808 0 31673 0 690 0 19798 0 14466 0 216435 0 0 0 ANNE CASTILLO MD 631018 0 0 0 45974 0 14700 0 1089 0 692781 0 0 0 JACK HENSOLD MD 517399 0 0 0 27642 0 14700 0 16641 0 576382 0 0 0 J BRUCE ROBERTSON MD 365283 0 13712 0 28613 0 14700 0 19426 0 441734 0 0 0 TIM JOHNSON MD 329468 0 13766 0 15887 0 14700 0 20786 0 394607 0 0 0 PEPPER HENYON MD 295425 0 0 0 24307 0 10248 0 24623 0 354603 0 0 0 PART I, LINE 1A PER JOHN NORDWICK'S CONTRACT, HE IS REIMBURSED FOR TWO BUSINESS TRIPS PER YEAR WHERE HIS WIFE ACCOMPANIES HIM. THESE ARE REPORTED AS TAXABLE COMPENSATION. PART I, LINE 6 A PHYSICIAN LISTED IN PART VII, SECTION A, RECEIVES INCENTIVE COMPENSATION BASED ON ACTUAL RELATIVE VALUE UNIT'S (RVU'S) PRODUCED IN EXCESS OF TARGETS. THE TOTAL OF THE INCENTIVE IS CALCULATED BY TAKING THE EXCESS RVU'S TIMES A RVU CONVERTER. THE RVU CONVERTER IS BASED UPON NET EARNINGS FROM SERVICES PROVIDED BY THE PHYSICIAN. PART I, LINE 7 THE BOARD ESTABLISHES GOALS EACH YEAR AND IF MET, THERE IS COMPENSATION TIED TO THEM. ALL SUCH COMPENSATION IS REVIEWED BY THE INDEPENDENT COMPENSATION SPECIALISTS. INCENTIVE COMPENSATION IS DETERMINED BY ACHIEVING FINANCIAL PERFORMANCE IN EXCESS OF BUDGETED PERFORMANCE, AND ACHIEVING PRE-DETERMINDED GOALS DEALING WITH PATIENT QUALITY, PATIENT SATISFACTION AND EMPLOYEE SATISFACTION. THIS APPLIES TO ALL SENIOR ADMINISTRATION AND ALL PHYSICIANS (WITH ONE EXCEPTION DESCRIBED IN SCHEDULE J, PART I LINE 6A) THAT RECEIVE COMPENSATION AND INCLUDES INCENTIVE COMPENSATION REFLECTED IN PART II, COLUMN B(II). MONTANA FACILITY FINANCE AUTHORITY 810302402 61204JAA2 2004-03-01 12695000 TO FUND NEW MEDICAL OFFICE BUILDING IV ADDITION TO BOZEMAN DEACONESS CAMPUS. 0 0 0 MONTANA FACILITY FINANCE AUTHORITY 810302402 612043CE7 2005-09-01 28545000 TO FUND WING ADDITION OF HILLCREST AND DEFEASE HILLCREST CONSTRUCTION BONDS. 0 0 0 MONTANA FACILITY FINANCE AUTHORITY 364615155 61204EAH8 2010-04-22 6645000 REFINANCING OF 1998 BOND DEBT 0 0 0 12591558 835776 4518540 251831 6985411 2005 1 0 1 1 28001371 408114 18606636 459960 8526661 2006 0 1 1 1 6645000 6512100 132900 2010 1 0 1 1 0 0 0 0 0.00000 0.00000 0.00000 1 0 0 0 0 0.00000 0.00000 0.00000 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 CHANGES IN PROGRAM SERVICES FORM 990, PART III, LINE 3 BOZEMAN DEACONESS HEALTH SERVICES (BDHS) SOLD ITS HOSPICE LINE OF BUSINESS IN APRIL 2010. SUBSEQUENTLY, BDHS INVESTED IN A JOINT VENTURE BECOMING A 50% MEMBER IN HOSPICE OF SOUTHWEST MONTANA, LLC. FORM 990, PART VI, SECTION A, LINE 7B CHANGING THE ARTICLES OF INCORPORATION IN RELATIONSHIP TO THE PROCESS OF SELECTING BOARD MEMBERSHIP MUST BE APPROVED BY THE YELLOWSTONE CONFERENCE OF THE UNITED METHODIST CHURCH. FORM 990, PART VI, SECTION B, LINE 11 THE FINANCE COMMITTEE WILL REVIEW FORM 990 IN DETAIL AND WILL MAKE A RECOMMENDATION TO THE FULL BOARD FOR APPROVAL BEFORE FILING OF THE FORM 990. THE CFO REVIEWS THE FORM 990 AT A HIGHER LEVEL WITH THE BOARD BEFORE APPROVAL IS GRANTED. FORM 990, PART VI, SECTION B, LINE 12C IN-HOUSE COUNSEL IDENTIFIES POTENTIAL CONFLICTS FROM ANNUAL DISCLOSURES AND INFORMS THE BOARD CHAIR. THE BOARD CHAIR DISCUSSES THE CONFLICT AND DECIDES WHETHER THE CONFLICT IS OF SUCH A NATURE TO EXCLUDE THE CONFLICTED PARTY FROM DISCUSSION AND/OR VOTE. THIS POLICY COVERS ALL BOARD MEMBERS, OFFICERS, SENIOR ADMINISTRATION, AND KEY EMPLOYEES. FORM 990, PART VI, SECTION B, LINE 15 THE EXECUTIVE COMMITTEE RECEIVES A FORMAL PRESENTATION BY AN INDEPENDENT COMPENSATION CONSULTANT (AS SELECTED BY THE BOARD) QUALIFIED TO PERFORM COMPENSATION REVIEWS INCLUDING USAGE OF COMPARABILITY DATA. THIS PERSON PRESENTS RECOMMENDATIONS TO THE COMPENSATION COMMITTEE OF THE BOARD. THE COMPENSATION COMMITTEE MAKES RECOMMENDATIONS TO THE FULL BOARD ON AN ANNUAL BASIS FOR OFFICERS AND SENIOR ADMINISTRATION. THIS ANNUAL PROCESS WAS PERFORMED DURING 2010. FORM 990, PART VI, SECTION C, LINE 19 GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND ALL TAX RELATED INFORMATION REQUIRED TO BE AVAILABLE FOR PUBLIC INSPECTION ARE AVAILABLE VIA WALK-IN, TELEPHONE CALL, E-MAIL, AND/OR MAIL-IN REQUEST. THE AUDITED FINANCIAL STATEMENTS ARE REQUIRED TO BE PROVIDED TO THE MUNICIPAL SECURITIES RULEMAKING BOARD, WHICH IS OUR TAX-EXEMPT BONDS TRUSTEE, VIA AN ON-LINE, CENTRAL FILING LOCATION CALLED ELECTRONIC MUNICIPAL MARKET ACCESS (EMMA). THE FINANCIAL STATEMENTS CAN BE OBTAINED BY THE GENERAL PUBLIC AT THE EMMA WEBSITE. PER BOARD POLICY, THE FINANCIAL STATEMENTS ARE NOT MADE AVAILABLE TO THE GENERAL PUBLIC UPON SPECIFIC REQUEST TO BOZEMAN DEACONESS HEALTH SERVICES. CHANGES IN NET ASSETS OR FUND BALANCES: FORM 990, PART XI, LINE 5: NET UNREALIZED GAINS ON INVESTMENTS: 2,252,454. TRANSFERS TO RELATED PARTIES -837,500. TOTAL TO FORM 990, PART XI, LINE 5: 1,414,954. LISTING OF ALL CUSIP#'S ASSOCIATED WITH BOND ISSUANCE SCHEDULE K, PART I, BOND A, CUSIP#'S FOR SERIES 2004 BOND $ 1,255,000 61204J AA 2 1,275,000 61204J AB 0 1,300,000 61204J AC 8 1,335,000 61204J AD 6 240,000 61204J AE 4 245,000 61204J AF 1 255,000 61204J AG 9 260,000 61204J AH 7 270,000 61204J AJ 3 280,000 61204J AK 0 290,000 61204J AL 8 305,000 61204J AM 6 315,000 61204J AN 4 330,000 61204J AP 9 340,000 61204J AQ 7 1,955,000 61204J AV 6 2,445,000 61204J AW 4 LISTING OF ALL CUSIP#'S ASSOCIATED WITH BOND ISSUANCE SCHEDULE K, PART I, BOND B, CUSIP#'S FOR SERIES 2005 BOND $ 455,000 612043 CE7 655,000 612043 CF4 675,000 612043 CG2 700,000 612043 CH0 730,000 612043 CJ6 755,000 612043 CK3 785,000 612043 CL1 820,000 612043 CM9 845,000 612043 CN7 885,000 612043 CP2 920,000 612043 CQ0 960,000 612043 CR8 1,000,000 612043 CS6 1,040,000 612043 CT4 1,085,000 612043 CU1 1,125,000 612043 CV9 1,175,000 612043 CW7 1,220,000 612043 CX5 1,270,000 612043 CY3 1,325,000 612043 CZ0 7,555,000 612043 DA4 2,565,000 612043 DB2 HILLCREST SENIOR LIVING LIMITED LIABILITY COMPANY 1201 HIGHLAND BLVD BOZEMAN MT 59715 810232121 ASSISTED LIVING HOME MT 6554531 38528538 N/A BOZEMAN DEACONESS FOUNDATION 931 HIGHLAND BLVD SUITE 3200 BOZEMAN MT 59715 841407943 RAISE FUNDS TO SUPPORT BOZEMAN DEACONESS HEALTH SERVICES MT 501(C)(3) 7 N/A 1 DEACONESS INTERCITY IMAGING LLC 915 HIGHLAND BLVD BOZEMAN MT 59715 810666871 HEALTHCARE - IMAGING SERVICES MT N/A RELATED 1775324 2925078 0 1 0.77500 ROCKY MOUNTAIN SURGICAL CENTER LLC 1450 ELLIS ST STE 101 BOZEMAN MT 59715 364462300 HEALTHCARE - SURGICAL SERVICES MT N/A RELATED 2632999 2828614 1 0 0.56960 BOZEMAN DIALYSIS CENTER PO BOX 37000 BILLINGS MT 59107 810519879 HEALTHCARE - DIALYSIS SERVICES MT N/A RELATED -28541 -108385 0 1 0.60000 BOZEMAN DEACONESS REAL ESTATE DEVELOPMENT CORP PO BOX 10490 BOZEMAN MT 59719 205496567 SALE OF REAL ESTATE PROPERTY AND RESIDENCES TO SENIORS MT N/A C 70614 9168200 1.00000 1 1 1 1 0 0 1 0 1 1 1 1 1 1 1 1 1 1 DEACONESS INTERCITY IMAGING LLC I 290664 GENERAL LEDGER AND CORP. RECORDS DEACONESS INTERCITY IMAGING LLC K 131988 GENERAL LEDGER AND CORP. RECORDS DEACONESS INTERCITY IMAGING LLC P 1992509 GENERAL LEDGER AND CORP. RECORDS DEACONESS INTERCITY IMAGING LLC R 2016550 GENERAL LEDGER AND CORP. RECORDS BOZEMAN DEACONESS REAL ESTATE DEVELOPMENT CORP J 55725 GENERAL LEDGER AND CORP. RECORDS BOZEMAN DEACONESS REAL ESTATE DEVELOPMENT CORP P 65347 GENERAL LEDGER AND CORP. RECORDS BOZEMAN DEACONESS FOUNDATION B 325000 GENERAL LEDGER AND CORP. RECORDS BOZEMAN DEACONESS FOUNDATION C 589263 GENERAL LEDGER AND CORP. RECORDS BOZEMAN DEACONESS FOUNDATION K 54936 GENERAL LEDGER AND CORP. RECORDS BOZEMAN DEACONESS FOUNDATION Q 837500 GENERAL LEDGER AND CORP. RECORDS ROCKY MOUNTAIN SURGICAL CENTER LLC R 2322040 GENERAL LEDGER AND CORP. RECORDS