2016-08-15T11:22:11-05:00 2015-09-30 440160260 BKD LLP 1201 WALNUT SUITE 1700 KANSAS CITY MO 641062246 990 2014-10-01 541190879 CARILION SERVICES INC CARI 5402245112 PO BOX 12385 ROANOKE VA 240252385 G Robert Vaughan Jr Treasurer 5402245137 2016-08-15 1 MICHAEL J ENGLE P00482834 8162216300 2014 2016-09-27 15:27:22Z Nancy Howell Agee PO BOX 12385 ROANOKE VA 240252385 255497433 0 X www.carilionclinic.org X 1982 VA Our mission is to improve the health of the communities we serve. 4 0 1660 0 7793907 -33135 50030 75000 181870549 199844460 6053084 6074884 10493183 760651 198466846 206754995 726049 0 0 0 121555729 131565398 0 0 7810 78442235 71682186 200724013 203247584 -2257167 3507411 585983937 634923314 147461879 170199987 438522058 464723327 X Our mission is to improve the health of the communities we serve. 0 0 185255832 0 192767063 See Schedule O.By providing management services and administrative functions with an emphasis on cost effectiveness, compliance, and quality, Carilion Services, Inc. (CSI) supports Carilion's mission to improve the health of the communities it serves.The organization supports the activities of Carilion Clinic, a healthcare organization in western Virginia that includes a large multi-specialty physician group, hospitals and ancillary services, focused on the goal of providing the best possible health outcome and health care experience for each patient. The principal purpose of this corporation is to generate, through subsidiaries engaged in both taxable and tax-exempt activities, funds for contribution to parent or affiliated organizations in the provision of quality health care services and to promote physical fitness and preventive medicine.CSI supports Carilion Clinic's core hospital business and related activities by providing technology; human resources; legal services; patient billing; accounting and finance; internal audit and compliance; materials management; and strategic planning services. This assisted the Clinic's hospitals in admitting 48,919 patients and providing 243,698 days of care during the year, and supporting numerous programs designed to serve the health needs of the area. Honoring its commitment to serving the health care needs of the region regardless of patient ability to pay, Carilion provided extensive uncompensated care. Stated at cost, charity, charity-eligible bad debt, and unreimbursed Medicaid costs for the year exceeded $61 million. 185255832 1 1 0 1 0 0 0 0 0 0 1 1 0 1 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 1 1 1 0 0 1 0 0 0 0 0 1 1 1 1 0 0 1 751 0 1 1660 1 1 1 0 0 0 0 0 0 0 0 0 X 4 0 0 0 1 0 1 1 1 1 1 0 0 1 1 1 1 1 1 1 1 0 VA X The Corporation Attn J Wright 5402245112 213 S Jefferson St Roanoke VA 24011 Jeanne S Armentrout Director 44.80 5.20 X 518112 0 362845 Kerri L Thornton Director 48.80 1.20 X 254453 0 184752 Nancy Howell Agee Director/President 38.00 12.00 X X 1566770 0 1858023 Donald B Halliwill Director/Asst Treasur 43.00 7.00 X X 499817 0 226399 G Robert Vaughan Jr Treasurer/SVP 44.80 5.20 X 277333 0 140269 David S Hagadorn Assistant Treasurer 49.70 0.40 X 130158 0 38914 Briggs W Andrews Secretary 43.50 6.50 X 1865000 0 275541 Lauren J Chen Assistant Secretary 19.80 30.30 X 51739 0 22622 Carolyn Chrisman SVP 50.00 X 348448 0 179446 Curtis Mills SVP 50.00 X 360876 0 165892 Melina Perdue EVP 40.00 10.00 X 458395 0 488133 Steven Arner EVP 50.00 X 514770 0 218993 Thomas Denberg EVP 50.00 X 529278 0 160400 Stephen Morgan SVP 50.00 X 399374 0 154491 R Wayne Gandee Former Officer 0.00 50.00 X 0 164040 59684 7774523 164040 4536404 124 1 1 0 Epic Systems Corporation 1979 Milky Way Verona WI 53593 Software Services 2973720 Avaya Inc 1440 Hertz Quail Spring Pkwy Oklahoma City OK 73134 Software Services 2610578 Nuance Communications Inc PO Box 7247 Philadelphia PA 19170 Software/Technology Services 1781842 Microsoft Corporation 1950 N Stemmons Fwy Suite 5010 Dallas TX 75207 Software Services 1682662 Automated Mailing Systems Inc PO Box 12246 Roanoke VA 24024 Mail Service 1126904 134 50000 25000 75000 Management Fees 561110 176245907 168452000 7793907 Carilion Patient Transportation S 621910 12300115 12300115 CRNA Services 621111 9644892 9644892 Net Patient Revenue 622110 1601776 1601776 Rent from Exempt Affiliates 531120 51770 51770 199844460 5094327 5094327 44141 0 44141 44141 44141 49489036 233959 48670442 71996 818594 161963 980557 980557 Purchase Discounts 900099 445892 445892 Health Education 900099 110390 110390 160228 160228 716510 206754995 192767063 7793907 6119025 6788218 6788218 63820 63820 96570538 94344016 2226522 9196381 9196381 12429709 11293840 1135869 6516732 6516732 714555 714555 991761 991761 596093 596093 65918 65918 140365 140365 13357365 13225681 131684 1680241 1680141 100 11976462 11879412 89240 7810 14234856 14098383 136473 8960521 5740552 3219969 878122 786606 91516 42 42 10395473 10395473 968375 60495 907880 Dues & Subscriptions 1735608 1201970 533638 Bad Debt 1538329 1538329 Education 1243406 1179181 64225 Recruitment 977080 932662 44418 1227614 1056198 171416 203247584 185255832 17983942 7810 3874 3875 197230620 211711992 1424080 1949466 1541514 1415999 697982 47397 4071086 4567214 8149079 9223776 135595001 104017120 30426269 31577881 31008866 32736882 239250138 266129263 72180429 75559569 585983937 634923314 54121916 62029377 233448 168911 5318683 5169681 2192099 85595733 102832018 147461879 170199987 X 438522058 464723327 438522058 464723327 585983937 634923314 X 3507411 -3240083 25933941 X 0 1 X 1 1 1 X X X 6 Carilion Medical Center 540506332 3 1 41022801 0 Carilion New River Valley Medical Center 540553805 3 1 17970148 0 Carilion Giles Community Hospital 540549603 3 1 1316833 0 Carilion Franklin Memorial Hospital 540480606 3 1 953392 0 Carilion Stonewall Jackson Hospital 540568001 3 1 0 0 Carilion Tazewell Community Hospital 546074580 3 1 0 0 6 61263174 0 1 0 0 0 0 0 0 1 0 0 0 0 0 0 0 1 RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 0 1 0 0 0 0 1 65141 0 1 777 65918 0 Part II-B, Line 1: A portion of dues paid to American Hospital Association and Virginia Hospital and Healthcare Association is attributable to lobbying activities. Carilion employs an individual to monitor and inform management about legislative activity regarding health care. A portion of the individual's time is spent on lobbying. 2539232 2539232 13380600 9988767 3391833 108538 89767 18771 116538635 93521095 23017540 3027996 417491 2610505 31577881 Minor Investments 54289 F Investments in Affiliates 264989069 C Investment Minority Interest 1085905 C 266129263 Interco Loan Receivable 69211256 Excess Unbrella Reinsurance 1098000 Other Long Term Assets 31000 Other Investments 856212 457(b) and 457(f) Investments 4363101 75559569 Pension Liability 75694384 BRIC Claims Payable 22774534 Deferred Compensation Payable 4363100 102832018 X Part X, Line 2: Carilion had no material unrecognized tax benefits and no adjustments to its consolidated financial statements were required as of and for the years ended September 30, 2015 and 2014. Carilion does not expect that unrecognized tax benefits will materially increase within the next 12 months. 0 1 0 0 0 0 0 1 0 Jeanne S Armentrout Director 382945 0 72187 0 62980 0 359191 0 3654 0 880957 0 0 0 Kerri L Thornton Director 212965 0 40447 0 1041 0 176904 0 7848 0 439205 0 0 0 Nancy Howell Agee Director/President 936377 0 281435 0 348958 0 1840194 0 17829 0 3424793 0 341789 0 Donald B Halliwill Director/Asst Treasur 374141 0 72188 0 53488 0 204059 0 22340 0 726216 0 0 0 G Robert Vaughan Jr Treasurer/SVP 227155 0 44697 0 5481 0 119382 0 20887 0 417602 0 0 0 David S Hagadorn Assistant Treasurer 120375 0 2500 0 7283 0 38117 0 797 0 169072 0 0 0 Briggs W Andrews Secretary 359683 0 68581 0 1436736 0 262268 0 13273 0 2140541 0 1349669 0 Carolyn Chrisman SVP 242594 0 47342 0 58512 0 155488 0 23958 0 527894 0 0 0 Curtis Mills SVP 256388 0 49763 0 54725 0 151773 0 14119 0 526768 0 41553 0 Melina Perdue EVP 379288 0 72188 0 6919 0 470677 0 17456 0 946528 0 0 0 Steven Arner EVP 375332 0 72188 0 67250 0 194725 0 24268 0 733763 0 0 0 Thomas Denberg EVP 440443 0 83438 0 5397 0 136356 0 24044 0 689678 0 0 0 Stephen Morgan SVP 330855 0 63245 0 5274 0 136946 0 17545 0 553865 0 0 0 R Wayne Gandee Former Officer 0 161440 0 0 0 2600 0 55195 0 4489 0 223724 0 0 Part I, Line 3 Executive compensation, including that of the organization's Chief Executive Officer, is reviewed annually by the Carilion Clinic Compensation Committee. This committee is made up of Board members of Carilion Clinic, a related organization, who do not have a conflict of interest with any of the executives being reviewed. This review was performed in September and October 2014. A similar review was last performed in October 2015. This review included review of a comprehensive report from an outside compensation consultant specializing in healthcare organizations for select positions and the prior year's report on all of the reviewed positions. The reports reviewed by the Committee included a detailed comparison of total compensation and each element thereof, including base salary, bonuses and other cash compensation, and benefits, including deferred and retirement benefits. Compensation was compared to a peer group of organizations similar in size and structure to the organization, which was reviewed by the Compensation Committee. Detailed minutes of the meetings of the Compensation Committee are kept and approved at the next meeting of the Committee, setting forth the deliberations and decisions regarding executive compensation. Part I, Line 4b Select members of management participate in a Pension Restoration Plan. This plan provides a benefit equal to the normal retirement benefit that would be payable to the participant were it not for the Qualified plan's legislative restrictions on compensation and payable benefits, less the actual benefits under the Qualified plan. Entitlement to benefits and consequent lump sum payment occurs upon the earliest of (i) attaining age 65 while employed by Carilion Clinic, (ii) 24 months following involuntary separation from service without reasonable cause, (iii) disability, or (iv) voluntary separation or involuntary separation with reasonable cause prior to attaining age 65 if the participant does not enter into competition with Carilion Clinic during the 24-month period following the participant's separation from service. Upon the death of the participant, the plan shall pay the participant's beneficiary according to plan terms. Select members of management participate in an Executive Flexible Benefit Plan, in which an allowance is provided to the participant for use in obtaining certain insurance benefits. The allowance is determined annually as a percentage of salary at Carilion Clinic's discretion. The amount of allowance in excess of elected benefits is credited to a capital accumulation account (CAA) with a deferred vesting date of at least two years from the first day of the plan year. The CAA shall be distributed in a lump sum upon the earliest of (i) remaining employed by Carilion until the deferred vesting date for such account; (ii)disability; (iii) 24 months following involuntary separation from service without reasonable cause, except that Carilion at its discretion may make a partial tax distribution upon separation; or (iv) 24 months following voluntary or involuntary separation from service with reasonable cause if the participant does not enter into competition with Carilion Clinic during the 24-month period following separation from service. Upon the death of the participant, the plan shall pay the participant's beneficiary according to plan terms. Select members of management participate in a Defined Contribution Supplemental Executive Retirement Plan (DC SERP) in which the employer at the discretion of Carilion Clinic's Compensation Committee makes a contribution to an account established on its books for each eligible participant. If a participant ceases to be a participant prior to the vesting date, the account shall be forfeited. A lump sum distribution shall be made upon the participant's vesting date, death, or disability. Payments during the calendar year under these plans included the following: Nancy Howell Agee $341,789 Briggs Andrews $1,349,669 Curtis Mills $41,553 Part I, Line 7 The organization pays annual bonus compensation to management based on scorecard performance. While the scorecard contains a formula as a basis for determining overall performance, senior managers have discretion to include additional elements in their assessment of managers reporting to them. In addition, for top management, the actual bonus awarded is in the discretion of the Carilion Clinic Compensation Committee, although it is based on the scorecard measures. See SchL Part V See Sch.L, Part V See Schedule L, Part V. 1 See SchL Part V See Sch.L, Part V See Schedule L, Part V. 1 See SchL Part V See Sch.L, Part V See Schedule L, Part V. 1 See SchL Part V See Sch.L, Part V See Schedule L, Part V. 1 0 0 a SchL PtV L, Pt.V L, Pt.V X 7875 215707 0 1 1 b SchL PtV L, Pt.V L, Pt.V X 8770 331821 0 1 1 c SchL PtV L, Pt.V L, Pt.V X 6200 327500 0 1 1 d SchL PtV L, Pt.V L, Pt.V X 17025 540971 0 1 1 1415999 Jessica Lemons See Part V 63820 Employee 0 Schedule L, Part I, Line 1 For many years, Carilion has had a split-dollar life insurance program for some of its key executives. Under the program, Carilion has paid the premiums, and treated the premium payments as loans to the executives. The program remained in place following enactment of the Pension Protection Act of 2006, pursuant to which IRC 4958 was amended to cause loans by IRC 509(a)(3) supporting organizations to "disqualified persons" to be treated as "excess benefit transactions." During the reporting period, participants in the program included Carilion's current Chief Executive Officer, Nancy Howell Agee, former Chief Executive Officer, Edward G. Murphy, M.D., former Chief Financial Officer, Donald E. Lorton, and then-current General Counsel, Briggs W. Andrews. Not until after the close of its 2014 taxable year did Carilion understand that one or more of the split-dollar loans made under the program constituted excess benefit transactions. Since learning of the problem, Carilion has sought the advice of counsel to determine the proper course of action to ensure that such excess benefit transactions are corrected and not repeated. Each of the excess benefit transactions with the disqualified persons named above has been corrected as of this return's filing date consistent with Treasury Regulation 53.4958-7. No organization manager that participated in the transactions knew that they were excess benefit transactions at the time. Schedule L, Part I, Line 2 (a) Nancy Howell Agee, Officer, Split-dollar life insurance premium(b) Briggs Andrews, Officer, Split-dollar life insurance premium(c) Donald E. Lorton, Former Officer, Split-dollar life insurance premium(d) Edward G. Murphy, Former Officer, Split-dollar life insurance premium Schedule L, Part IV Family member of Jeanne Armentrout, Director. Form 990, Part VI, Section A, line 4 The Bylaws were revised in their entirety to reflect recent changes in the Virginia Non-Stock Corporation Act. The number of Directors was increased from three (3) to four (4). Also, all Directors are now elected by the Sole Member; the Medical Director of Roanoke Memorial Hospital is no longer an ex officio member with vote. Form 990, Part VI, Section A, line 6 The organization has a single member. The sole member is Carilion Clinic, a charitable tax-exempt organization which serves as the parent company of the Carilion Clinic integrated health care delivery system. The sole member elects the directors of the organization and has certain other reserved powers. Form 990, Part VI, Section A, line 7a The sole member of the organization, Carilion Clinic, elects the members of the governing body of the organization periodically as terms expire. The sole member also has the right to remove directors and fill any vacancies on the board that may occur for any reason. Form 990, Part VI, Section A, line 7b The sole member of the organization, Carilion Clinic, holds reserved powers with respect to certain enumerated actions, including appointment of CEO; approval of borrowings, budgets, and strategic plans; and amendments of Articles of Incorporation and Bylaws. Approval by the Board of Directors of Carilion Clinic is required for such actions. In addition to the reserved powers, under the laws of the Commonwealth of Virginia, certain extraordinary actions require member approval, such as mergers, consolidations, liquidations, and the sale of substantially all of the assets of the organization. Form 990, Part VI, Section B, line 11 The Form 990 was prepared by Carilion's internal tax department with input from various Carilion departments as applicable, and reviewed by internal Accounting management and an outside CPA firm. All Board Members were notified via email that the final Form 990 was posted on our Board portal several days prior to filing and were encouraged to call with any questions they might have. Form 990, Part VI, Section B, line 12c Our organization monitors and reviews proposed and current transactions for conflicts of interest in a variety of ways. At the governing board level, we have board members complete an initial (upon appointment) and annual conflict of interest questionnaire to disclose actual or potential conflicts. Board members are required to update their disclosure as needed in between questionnaires. All disclosures are reviewed by the Organizational Integrity & Compliance Office and as needed escalated to the appropriate leaders/board members for further discussion/review. If a disclosure is viewed as an actual or potential conflict, an action is recommended to the Audit & Compliance Committee of the Carilion Clinic Board and is implemented as approved. Actions can include recusal in discussion/voting at board meetings, limitation/termination of the transaction, removal from board appointment or other appropriate controls. In addition, at any time, board members are encouraged to disclose any potential conflicts as they arise at a board meeting and to recuse themselves as deemed appropriate. The same process takes place as described above for key employees (upon hire and annually thereafter), including all Officers, members of the management team, physicians/mid-level practitioners, pharmacists and key supply chain buyers. After review and further discussion as needed, action may be required to manage an actual conflict or to reduce the appearance of such as approved by the Organizational Integrity & Compliance Office and other key management team members. As needed, the governing board leaders are notified of any conflicts which may impact board proceedings. Form 990, Part VI, Section B, line 15 Executive compensation is reviewed annually by the Carilion Clinic Compensation Committee. This committee is made up of Board members of Carilion Clinic who do not have a conflict of interest with any of the executives being reviewed. With respect to Carilion Clinic, the Compensation Committee reviews the compensation of the Board of Governors which includes the President and Chief Executive Officer, Executive Vice Presidents, Chief Financial Officer, Chief Medical Officer, and Chairs of the Clinical Departments. For the fiscal year covered by this return, the Compensation Committee also used the same process to review the compensation of other Disqualified Individuals, including the Hospital Vice Presidents. This review was performed in September and October 2014. A similar review was last performed in October 2015. This review included review of a comprehensive report from an outside compensation consultant specializing in healthcare organizations for select positions and the prior year's report on all of the reviewed positions. The reports reviewed by the Committee included a detailed comparison of total compensation and each element thereof, including base salary, bonuses and other cash compensation, and benefits, including deferred and retirement benefits. Compensation was compared to a peer group of organizations similar in size and structure to the organization, which list was reviewed by the Compensation Committee. Detailed minutes of the meetings of the Compensation Committee are kept and approved at the next meeting of the Committee, setting forth the deliberations and decisions regarding the compensation of these executives. In addition, the Compensation Committee annually reviews the compensation plan and philosophy for all vice presidents and senior vice presidents, as well as all employed physicians and physicians in leadership roles. Form 990, Part VI, Section C, line 19 The organization's governing documents, conflict of interest statement and financial statements are not generally available to the public, but are released from time to time upon request. The Articles of Incorporation are available from the Virginia State Corporation Commission. The consolidated audited financial statements of Carilion Clinic and of the Obligated Group are released annually to the local newspaper. Limited financial information is available on our website. Form 990, Part XI, line 9: Transfers from Affiliates 41,612,074. Pension-Related Changes -15,678,133. Blue Ridge Indemnity Company LLC 76 St Paul Street Suite 500 Burlington VT 05401 270927178 Insurance VT 13374224 33400071 Carilion Services Inc Carilion Clinic Patient Transportation LLC PO Box 12385 Roanoke VA 24025 541864693 Transportation VA 11277838 3178870 Carilion Services Inc Carilion Professional Services LLC PO Box 12385 Roanoke VA 24025 542030773 CRNAs VA 10954715 427238 Carilion Services Inc Carilion Clinic PO Box 12385 Roanoke VA 24025 541190771 Supporting organization VA 501(c)(3) Line 11a, I N/A 0 Carilion Clinic Foundation PO Box 12385 Roanoke VA 24025 541190773 Supporting organization VA 501(c)(3) Line 11b, II Carilion Clinic 1 Carilion Franklin Memorial Hospital PO Box 12385 Roanoke VA 24025 540480606 Healthcare VA 501(c)(3) Line 3 Carilion Clinic 1 Carilion Giles Community Hospital PO Box 12385 Roanoke VA 24025 540549603 Healthcare VA 501(c)(3) Line 3 Carilion Clinic 1 Carilion Medical Center PO Box 12385 Roanoke VA 24025 540506332 Healthcare VA 501(c)(3) Line 3 Carilion Clinic 1 Carilion New River Valley Medical Center PO Box 12385 Roanoke VA 24025 540553805 Healthcare VA 501(c)(3) Line 3 Carilion Clinic 1 Carilion Stonewall Jackson Hospital PO Box 12385 Roanoke VA 24025 540568001 Healthcare VA 501(c)(3) Line 3 Carilion Clinic 1 Carilion Tazewell Community Hospital PO Box 12385 Roanoke VA 24025 546074580 Healthcare VA 501(c)(3) Line 3 Carilion Clinic 1 Carilion Clinic Medicare Shared Savings Company LLC PO Box 12385 Roanoke VA 24025 455235473 Medicare HMO VA 0 0 Franklin County Ventures LLC PO Box 12385 Roanoke VA 24025 474365316 Real estate VA 0 0 Community Medical Associates LLP PO Box 12385 Roanoke VA 24025 541517662 Real estate VA 0 0 CHS Inc PO Box 12385 Roanoke VA 24025 541725732 Services VA Carilion Services Inc C 179442023 330994113 1.00000 1 Carilion Behavioral Health Inc PO Box 12385 Roanoke VA 24025 203136891 Healthcare VA CHS Inc C 1 Carilion Emergeny Services Inc PO Box 12385 Roanoke VA 24025 542033006 Healthcare VA CHS Inc C 1 SCA Credit Services Inc PO Box 12385 Roanoke VA 24025 541180398 Collection agency VA CHS Inc C 1 Carilion Healthcare Corporation PO Box 12385 Roanoke VA 24025 541586601 Healthcare VA CHS Inc C 1 MedKey Inc PO Box 12385 Roanoke VA 24025 541645357 Financing services VA CHS Inc C 1 Carilion Clinic Medicare Resources LLC PO Box 12385 Roanoke VA 24025 263729975 Medicare HMO VA Carilion Services Inc C 8036711 15355439 1.00000 1 1 0 0 1 0 0 0 0 0 0 1 1 1 0 0 0 0 1 1 CHS Inc K 252062 Market rates CHS Inc L 1098294 Cost Carilion Emergency Services L 942241 Cost SCA Credit Services Inc L 91400 Cost Carilion Healthcare Corporation L 13200238 Cost MedKey inc L 96842 Cost CHS Inc M 168501 Cost SCA Credit Services Inc M 105408 Cost CHS Inc R 26893919 Cash Carilion Clinic Medicare Resources LLC A 3360000 Market rates Carilion Clinic Medicare Resources LLC D 3360000 Cost Carilion Clinic Medicare Resources LLC L 74281 Cost Carilion Medical Center L 133048561 Cost Carilion New River Valley Medical Center L 23308100 Cost Carilion Giles Community Hospital L 4227041 Cost Carilion Franklin Memorial Hospital L 5587728 Cost Carilion Stonewall Jackson Hospital L 3580069 Cost Carilion Tazewell Community Hospital L 2118901 Cost Carilion Clinic L 765662 Cost Carilion Medical Center A 51770 Cost Carilion Medical Center K 2971865 Cost Carilion Medical Center M 1036629 Cost Carilion Clinic M 184676 Cost Carilion Clinic Foundation M 479284 Cost Carilion Clinic K 8092833 Cost Carilion Medical Center S 41022801 Cash Carilion New River Valley Medical Center S 17970148 Cash Carilion Giles Community Hospital R 1316833 Cash Carilion Franklin Memorial Hospital R 953392 Cash Carilion Clinic R 15042922 Cash