2014-02-05T11:11:43-06:00 2013-06-30 450250958 EIDE BAILLY LLP 4310 17TH AVE S PO BOX 2545 FARGO ND 581082545 990 2012-07-01 450308379 Hazen Memorial Hospital Association HAZE 7017482225 510 8th Avenue NE Hazen ND 58545 Darrold Bertsch 7017482225 2014-02-03 1 LISA CHAFFEE CPA P00193453 7012398500 2014-02-03 2012 2015-11-30 17:44:51Z Sakakawea Medical Center Darrold Bertsch 510 8th Avenue NE Hazen ND 58545 11354239 0 X www.sakmedcenter.org X 1943 ND Operation of a hospital, clinic, and an elderly care facility. 11 10 166 95 0 0 295214 237672 10386024 11068985 13377 19403 19314 26737 10713929 11352797 2000 2000 0 0 5878756 5928198 0 0 0 4738843 4728377 10619599 10658575 94330 694222 6461461 7179795 1969155 1910110 4492306 5269685 X Provide high quality care that is measured and continuously improved. Provide individualized care that exceeds expectations of those we serve. Strengthen partnerships with providers to enhance coordination of care and improve system performance. Be a steward of resources. Commit to service excellence. Be a vital contributor to our area communities. Recognize the value of each employee and provide opportunities for personal growth and development that complement the needs of the organization. 0 0 7134312 2000 9033111 Sakakawea Medical Center (SMC) is a 25 bed critical care access hospital providing services in the following areas - acute care, surgery, intermediate and skilled swing bed, emergency room with trauma level IV certification, home health, and hospice. Services provided by the ancillary departments include physical therapy, occupational therapy, radiology, digital mammography, bone density, ultrasound, CT, nuclear med, MRI, laboratory, respiratory therapy, cardiac rehab, EKG, EEG, sleep studies, and thallium stress tests. Based on charges foregone Sakakawea Medical Center provided $91,043 in charity care. Also available to all self-pay patients, regardless of financial status, is a 30% discount policy for timely payments. SMC is a participating provider for Medicare, Medicaid, Blue Cross Blue Shield and other insurances.Sakakawea Medical Center reaches out to the communities in the service area through programs such as Senior Day Out, grief support groups, smoking cessation classes, occupational health, free blood pressure checks, a Christmas giving tree project, and health career presentations to high schools. Wellness screenings are provided to area schools and businesses. SMC provides community education programs on requested topics free of charge. It is important for Sakakawea Medical Center to serve our communities by providing all of their health care needs. 757227 969949 Senior Suites is a basic care facility that was completed in April 1997, it is adjacent to Sakakawea Medical Center. Senior Suites can accommodate 34 residents with single or double rooms. It features a licensed beauty shop, activity room, spacious commons areas and an enclosed nurse's station. The rooms are set up like suites, hence the name "Senior Suites." the facility is available to those in the senior population that requires a minimal amount of supervision, but do not require 24 hour services. The residents are provided with assistance for daily living and medication administration. Resident care census days totaled 9,418 this year. 1248291 1042870 To insure the need for quality health care is met in SMC's service area, Sakakawea Medical Center began managing a rural health clinic in July 2007. The clinic is located directly across the street from the hospital. This provides primary health care for our patients and also space is provided in the clinic for visiting specialists. This saves the patients from having to drive up to 70 miles to receive specialty health care. The clinic is staffed with physicians and mid-level providers. A sliding fee scale charity care program is available to patients who qualify financially. 9139830 1 1 0 0 0 0 0 0 0 1 1 0 1 1 1 1 1 0 0 0 0 0 0 0 0 0 1 1 0 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 13 0 1 166 1 0 0 0 0 0 0 0 0 0 0 X 11 10 0 0 0 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 0 0 X Renae Snyder 7017482225 510 8th Avenue NE Hazen ND 58545 Christie Obenauer 2.00 X X 0 0 0 Fred Stern 1.50 X X 0 0 0 Myria Perry 1.50 X X 0 0 0 Lorina Kuschel 1.50 X 0 0 0 Don Lyn Erickson 1.50 X 0 0 0 Mark Gerde 1.50 X 0 0 0 Robin Richter 1.50 X 0 0 0 Sienna Sailer 1.50 X 0 0 0 Beverly Huber 1.50 X 0 0 0 Kimberly Kessler 1.50 X 0 0 0 Todd Lindquist 1.50 X 0 0 0 Darrold Bertsch 40.00 X 190467 0 23492 Renae Snyder 40.00 X 64083 0 3581 Ronald Schmitz 40.00 X 198419 0 13407 Rodney Zimmerman 40.00 X 246222 0 24973 699191 0 65453 3 0 1 1 0 26422 211250 237672 Patient and Resident Services 621400 10749197 10749197 Other Program Revenue 623000 246727 246727 Education 623000 50006 50006 Cafeteria 623000 23055 23055 11068985 11203 11203 19882 0 19882 19882 19882 8200 0 8200 8200 8200 7428 1116 6312 6312 869 326 543 543 11352797 11045930 0 69195 X 2000 2000 264788 264788 4786860 4482036 304824 154509 39621 114888 371883 97753 274130 350158 314700 35458 8100 8100 22678 22678 41479 41479 1505559 1443465 62094 19072 136 18936 257552 106038 151514 383065 383065 41135 28393 12742 35917 12638 23279 486678 486678 88816 19200 69616 Bad Debt Expense 839771 839771 Medical Supplies 682234 682234 Food 127503 127503 Dues & Subscriptions 56174 32655 23519 132644 41944 90700 10658575 9139830 1518745 0 2207 4417 893845 2206796 1471567 1514503 310286 305899 22573 30709 8548870 6824126 2127913 1724744 460044 466254 299171 383892 873855 542581 6461461 7179795 866702 955281 223169 1033465 690004 68988 41656 1969155 1910110 X 4129242 4820810 313064 398875 50000 50000 4492306 5269685 6461461 7179795 X 694222 83157 X 0 1 X 1 0 X RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 63893 1090 64983 62933 960 63893 61518 1415 62933 0.00000 0.76940 0.23060 0 0 23092 23092 5614510 4491639 1122871 2852422 2278832 573590 58846 53655 5191 1724744 Interest in Net Assets of Sakakawea Medical Center Foundation 383892 F 383892 Patronage Credit Asset 542581 542581 Capital Lease Obligations 41656 41656 X 10591605 -749050 -749050 11340655 12142 12142 11352797 9814226 7442 7442 9806784 851791 851791 10658575 Description of Intended Use of Endowment Funds: Part V, Line 4: The Medical Center's policy is to maintain sufficient financial stability for the operations of Medical Center. Interest income is to be transferred to the temporarily restricted endowment funds until the Board determines how the funds are to be used. In establishing this policy, the Medical Center considered the long-term expected return on its endowments. The spending policy states that distributions of earnings can be made if the Board of Directors deems it prudent to do so taking into account certain statutory factors included in the UPMIFA. Distributions may be made at least annually, but do not need to be done. Description of Uncertain Tax Positions Under FIN 48: Part X, Line 2: The Medical Center is organized as a North Dakota nonprofit corporation and has been recognized by the Internal Revenue Service (IRS) as exempt from federal income taxes under Internal Revenue Code Section 501(c)(3). The Medical Center is annually required to file a Return of Organization Exempt from Income Tax (Form 990) with the IRS. In addition, the Medical Center is subject to income tax on any net income that is derived from business activities that are unrelated to its exempt purpose. The Medical Center has determined it is not subject to unrelated business income tax and has not filed an Exempt Organization Business Income Tax Return (Form 990-T) with the IRS. The Medical Center believes that it has appropriate support for any tax positions taken affecting its annual filing requirements, and as such, does not have any uncertain tax positions that are material to the financial statements. The Medical Center would recognize future accrued interest and penalties related to unrecognized tax benefits and liabilities in income tax expense if such interest and penalties are incurred. Part XI, Line 2d - Other Adjustments: Provision for Bad Debts -839,771. Change in Interest in Net Assets of Sakakawea Medical Center Foundation 84,721. Eliminating Journal Entry for Grant from Auxiliary to Hospital 6,000. Part XI, Line 4b - Other Adjustments: Auxiliary Revenue 13,584. Fundraising Expense Reported in Revenue -1,116. Gaming Expense Reported in Revenue -326. Part XII, Line 2d - Other Adjustments: Eliminating Journal Entry for Grant from Auxiliary to Hospital 6,000. Fundraising Expense Reported in Revenue 1,116. Gaming Expense Reported in Revenue 326. Part XII, Line 4b - Other Adjustments: Auxiliary Expenses 12,020. Provision for Bad Debts 839,771. 1 1 X 1 X 125.000000000000 1 X 0 1 0 0 62000 62000 0.00630 158906 146262 12644 0.00130 220906 146262 74644 0.00760 18554 180 18374 0.00190 53831 21470 32361 0.00330 1309569 1018908 290661 0.02960 685 685 0.00010 1382639 1040558 342081 0.03490 1603545 1186820 416725 0.04250 6 9592 9592 0.00100 6 9592 9592 0.00100 0 839771 52066 3306731 3330704 -23973 X 1 0 1 1 Sakakawea Medical Center

510 8th Ave NE Hazen ND 58545

X X X X Hazen Memorial Hospital Association 1 1 X X X X X X X X X 12 1 1 1 X X X X X 1 0 1 1 125.000000000000 1 200.000000000000 1 X X X 1 1 X X 1 0 X X X 1 X 0 0 2 Sakakawea Hazen Clinic

813 7th St NE Hazen ND 58545

Clinic Senior Suites at Sakakawea

813 7th St NE Hazen ND 58545

Basic Care Facility Part I, Line 3c: Sakakawea Medical Center offers two separate programs for discounted care. The self pay discount policy is available for uninsured patients regardless of income. A discount of 30% is allowed if regular monthly payments are remitted in a specified time frame. This program cannot be combined with the Charity Care program.The charity care program provides discounted care to patients based on family income according to FPG guidelines. The sliding fee scale allows discounts from 20% to 100% of charges. The program is available for uninsured patients as well as co-pays and deductibles for insured patients. Part I, Line 7: Charity care is based on the total direct and indirect costs related to providing services to patients and based on average ratios of cost to charges. Unreimbursed Medicaid was converted to cost using the cost-to-charge ratio derived from the relevant cost center on the Medicare cost report. Community health improvement services, health professionals education and contributions reflect actual expenses recorded to the general ledger. Subsidized health services costs were calculated based on information from the Medicare cost report. Part I, Line 7g: Hazen Memorial Hospital Association operates a rural clinic which operates at a loss. The costs included in subsidized health services attributable to clinics are $1,162,939. Part I, L7 Col(f): For the purposes of calculating the percentage on Part 1, Line F, $839,771 of bad debt was backed out of total operating expenses. Part II: The CEO is involved in five boards that promote the health of the communities: NDHA, NDRHA, AHEC, CHAD, and TASC . The director of patient care serves on the Bismarck State College Advisory Committee for the nursing program. Part III, Line 4: The footnote to the Organization's financial statements can be found on page 9 of the attached audited financial statements.Part III, Line 2:Payments and discounts are posted to patient bills. Any remaining balances are billed to the patient through monthly statements. If no payments are received from the patient at the end of the fourth month, the account is turned over to a collection agency and the balance on the account is written off as a bad debt. The bad debt expense is shown on the monthly financial statements.Part III, Line 3:There are most likely some patients in bad debt who would qualify for charity care, but they have not completed the application and remitted the required payment. Based on the poverty level of the service area, 6.2%, the estimated amount of bad debt expense that is attributable to patients eligible under the organization's financial assistance policy would be approximately $52,066. Part III, Line 8: 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 Centers for Medicare & Medicaid Services. The costs themselves are a community benefit as the community would not receive these services if we did not provide them. Part III, Line 9b: If a patient has applied for charity care previously, an application is sent with the monthly statement. Once determined the patient is eligible, the charity care discount portion is written off. The remaining patient portion then falls under the same collection practices of all other accounts. Our policy requires a new charity care application every six months. Hazen Memorial Hospital Association Part V, Section B, Line 3: A community survey, focus group, providers and individual interviews. Hazen Memorial Hospital Association Part V, Section B, Line 4: Also included was a Federal Qualified Health Clinic, a long-term care facility and Public Health. Hazen Memorial Hospital Association Part V, Section B, Line 5c: The Community Needs Assessment is located on the facilities website url Sakmedcenter.org. Hazen Memorial Hospital Association Part V, Section B, Line 12h: Sakakawea Medical Center offers two separate programs for discounted care. The self-pay discount policy is available for uninsured patients regardless of income. A discount of 30% is allowed if regular monthly payments are remitted in a specified time frame. The charity care program provides discounted care to patients based on family income according to FPG guidelines. The sliding fee scale allows discounts from 20% to 100% of charges. Charges are discounted by 27% before the sliding fee scale is applied (for uninsured applicants only.) The program is available for uninsured patients as well as co-pays and deductibles for insured patients.The self-pay discounts program cannot be combined with the charity care program. However, the Hospital counsels all self-pay individuals to determine if their potential charity care discount would result in a better discount if they apply for charity care. The patients that use the self-pay discount are typically the patients that do not want to submit their financial information or patients that would not qualify under the charity care policy. Hazen Memorial Hospital Association Part V, Section B, Line 14g: In addition to the full FAP being available upon request, information referencing the FAP is provided in summary format on the clinic's website, attached to the billing invoices, as well as posted in the admissions office, emergency rooms and waiting rooms. Part VI, Line 2: Sakakawea Medical Center consults with local physicians to identify community healthcare needs. The SMC staff participates in local and regional organizations and activities including Chamber of Commerce and economic development boards. The CEO routinely attends city council and county commission meetings to solicit input and engage in dialogue relating to healthcare needs and services.Sakakawea Medical Center has collaborated with other local providers to conduct a community health needs assessment which will inventory service delivery assets, identify needs and create a foundation for undertaking strategic initiatives. Part VI, Line 3: Charity care information is sent with the monthly statements to all uninsured patients as well as patients that are not making adequate monthly payments. Approximately 100 notices are sent out per month with the statements. Inpatients and surgical patients are informed at time of admission about charity care. A social worker visits with all self pay inpatients to inform them about the charity care, Medicaid (state program), and self pay discount policies. Brochures have been printed that describe our charity care and discount policies. The brochures are available in waiting rooms, ER, the clinics and admitting offices. Part VI, Line 4: Hazen Memorial Hospital Association serves the communities in Mercer County and the surrounding area, including the towns of Hazen, Beulah, Stanton, Zap, Golden Valley, Center and Pick City. Sakakawea Medical Center, located in Hazen, is the only hospital in the county. The nearest hospital is located more than 60 miles away. Attached to the hospital is Senior Suites, a basic care facility. The Association manages one rural health clinic in Hazen. The combined total population of the county is approximately 8,486. The average annual wage in Mercer County for 2012 was $58,344. The current unemployment rate is 4.3%. Sakakawea Medical Center's payer mix for this fiscal year included 10% uninsured patients and 4% Medicaid patients. All patients presenting to the facility are cared for regardless of their ability to pay. Part VI, Line 5: As a critical access hospital, Sakakawea Medical Center provides a variety of health and wellness services to our service area. The organization subsidizes primary care services provided at the Sakakawea Hazen Clinic, ensuring that primary care is available in the local communities. SMC also subsidizes home health services to ensure those residents who are homebound have the health care they need. The emergency room is staffed 24 hours a day and is available to all regardless of ability to pay. The Board of Directors is comprised of county-wide volunteers; three are from Hazen, seven from Beulah, and one from Stanton. The directors have various occupations including power plant manager, bank vice president, accounting supervisor, engineer, chiropractor, and business owner. The directors are not employed by SMC nor are they family members of employees.Medical privileges are extended to all physicians in the county.Sakakawea Medical Center's Hospice staff is assisted by 70 volunteers from the area communities. The staff at Senior Suites, the basic care facility, is served by 25 community volunteers. Surplus funds are invested back into the facility through equipment upgrades and building improvements. Recent investments include the purchase of a portable x-ray machine, microscopes for the lab, patient beds, and a computer server. In addition, more continuing education is being offered to the staff by means of webinars and workshops. An employee assistance program is available for staff and family members which provides free confidential assessments, counseling, or referral services by trained professionals.Sakakawea Medical Center is investing in the future of healthcare professionals by implementing a nursing program. We are partnering with other health care providers in the county, a community health center and a nursing home, to offer Interactive Video Network (IVN) classes in our facility. Hands-on skill work and clinicals are taught by registered nurses employed by our organization. Upon completion of an 11 month program, students will receive a certificate in practical nursing. An additional 9 month program enables the students to receive an Associate Degree in Nursing and become eligible to test for their registered nurse license. Sakakawea Medical Center also supports state universities and high schools by offering rural medical experiences to area students. Throughout the year, students are provided with practice opportunities in nursing, lab, PT or the emergency room. X X X X X 0 0 0 0 0 0 0 0 0 Darrold Bertsch 166414 0 24053 0 0 0 7655 0 15884 0 214006 0 0 0 Ronald Schmitz 198419 0 0 0 0 0 7656 0 5797 0 211872 0 0 0 Rodney Zimmerman 246222 0 0 0 0 0 9586 0 15434 0 271242 0 0 0 Supplemental Information Part III For the month of June 2013, Darrold was compensated by Coal Country Community Health Center, an unrelated organization, for his services as CEO. Darrold's compensation for that month was $8,100. Union State Bank Bond Refinance X 663689 408254 0 1 1 Union State Bank New Boilers X 224235 39779 0 1 1 Union State Bank Refinance Equipment X 506000 241971 0 1 1 690004 Form 990, Part VI, Section A, line 1 There were 11 board of directors at fiscal year end, but the board president only votes to break a tie. The Executive Committee shall consist of the President, Vice President and Secretary/Treasurer of the Board. The CEO of the corporation shall serve without voting powers. The Executive Committee shall have the power to transact all business of the corporation during the interim between meetings of the Board of Directors, provided that any action so taken shall not conflict with the policies and express wishes of the Board of Directors, and that it shall refer all matters of major importance to the full Board of Directors. This committee shall meet as required. In the current fiscal year, the Executive Committee did not meet to make any decisions on behalf of the full governing board. Form 990, Part VI, Section A, line 6 Any person, firm, association, or corporation interested in the activities of this organization, and residing in the service area, may become a member thereof, provided that he has first made a contribution to the association at some time. Each member has one voting right. Form 990, Part VI, Section A, line 7a The members elect the Board of Directors on an annual basis. Form 990, Part VI, Section A, line 7b The members must also approve/disapprove the dissolution of the organization or the merger or consolidation of the organization with another corporation. Form 990, Part VI, Section A, line 8b All items discussed at committee meetings are brought to the full board for recommendations for board action. The organization did not have any committees that acted on behalf of the board. Form 990, Part VI, Section B, line 11 Upon receipt of the draft Form 990, a copy will be forwarded to the board members for their review and comment. Form 990, Part VI, Section B, line 12c The Board of Directors is covered by the conflict of interest policy. Only one conflict has been disclosed this fiscal year by a member of the Board of Directors. The director who has acknowledged the conflict of interest is excused from the board meeting whenever there is discussion about the relevant issue. Form 990, Part VI, Section B, line 15a For purposes of determining both the CEO and the CFO's compensation packages at Sakakawea Medical Center, a variety of resources are used. The Organization takes into consideration what is appropriate compensation for those respective positions, based on their market. The Organization uses salary surveys from the North Dakota Hospital Association and also refers to the public 990 information from similar sized hospitals in North Dakota. The Board of Directors evaluates the CEO annually and uses the above information for determining compensation. The CFO is evaluated by the CEO annually and the compensation is based on the above information. In June 2013, the CEO was paid by an unrelated organization that used comparability data to review and determine his compensation. Form 990, Part VI, Section C, line 19 The Organization's governing documents, conflict of interest policy, and financial statements are available if specifically requested. Other Fees Form 990, Part IX, line 11g Medical Purchased Services: Program service expenses 1,442,765. Management and general expenses 0. Fundraising expenses 0. Total expenses 1,442,765. Other Purchased Services: Program service expenses 700. Management and general expenses 62,094. Fundraising expenses 0. Total expenses 62,794. Changes in Net Assets or Fund Balances: Form 990, Part XI, line 9: Change in interest in Net assets of Sakakawea Medical Center Foundation 84,721. Change in Net assets of Hazen Memorial Hospital Auxiliary -1,564.