2013-05-13T19:26:07-05:00 2012-06-30 ERNST & YOUNG US LLP 401 CONGRESS AVENUE SUITE 1800 AUSTIN TX 78701 990 2011-07-01 752743883 COVENANT MEDICAL GROUP % MARK STEWART COVE 8067259800 3420 22ND PLACE LUBBOCK TX 794101314 JEANNA ADLER 2013-05-13 5124789881 2011 2016-02-24 21:20:13Z STEVE MCCAMY 3420 22ND PLACE LUBBOCK TX 794101314 94731075 false X WWW.COVMEDGROUP.ORG X 1997 TX SEE SCHEDULE O 17 0 792 0 0 0 0 92532435 94722277 31571 8798 0 0 92564006 94731075 0 0 0 0 90997942 93170796 0 0 0 22187717 26764635 113185659 119935431 -20621653 -25204356 32900572 29164572 58531854 80000210 -25631282 -50835638 X SEE SCHEDULE O false false 111180680 0 94722277 SEE SCHEDULE O 111180680 true false false false false false false false false false true false false true true true false true false false true false false false false false false false false true false false false true false false false false false false false false false true true false false false true 46 0 true 792 true false false false false false false false false false false X 17 0 false false false false true true true true true false false true true true true true true false true false X MARK STEWART 8067254639 3420 22ND PLACE LUBBOCK TX 79410 X KERRY HENDERSHOT MD 50.0 X X 469231 0 31800 DONALD QUICK MD 50.0 X X 652933 0 32271 DAVID GRAY DO 47.0 X X 368091 0 29169 BILL ATKINSON MD 50.0 X 740689 0 22879 CHARLES BARTON MD 50.0 X 481087 0 20482 BID COOPER MD 50.0 X 362101 0 24422 SUSAN HAEFNER MD 50.0 X 335785 0 14588 PIYUSH MITTAL MD 48.0 X 466945 0 14888 NILESH PATEL MD 50.0 X 371476 0 30844 IKECHUKWU UMEZURIKE MD 48.0 X 475051 0 21561 PAUL WALTER MD 48.0 X X 752496 0 32498 JOHN ZIAS MD 50.0 X 856601 0 27515 CATHERINE RONAGHAN MD 50.0 X 651359 0 27616 MICHAEL OWEN MD 50.0 X 447761 0 22559 DAVID BLANN MD 50.0 X 600825 0 19633 FREDERICK HENSAL MD 50.0 X 559533 0 20799 LAURA BAKER MD 50.0 X 0 0 0 KATIE HENDLEY MD 50.0 X 65447 0 6677 STEVE MCCAMY 45.0 X 0 680606 33969 KRISTEN KOTHMANN 50.0 X 0 255862 39117 MARK STEWART 50.0 X 182597 0 27816 JUAN KURDI MD 50.0 X 2068396 0 6862 JASON BRADLEY MD 50.0 X 1284596 0 27323 DARRELL FRANKS MD 50.0 X 1080675 0 16707 RICHARD RANNE MD 50.0 X 1042875 0 20850 WILLIAM SPRINGER MD 50.0 X 1016731 0 19113 15333281 936468 591958 166 false true false MEDICUS HOSPITALISTS 7 INDUSTRIAL WAY UNIT 5 SALEM NH 03079 MEDICAL SERVICES 1529521 MEDICUS EMERGENCY MEDICINE LLC 7 INDUSTRIAL WAY UNIT 5 SALEM NH 03079 MEDICAL SERVICES 817407 MARK GITTINGS DO 3571 FAR WEST BLVD AUSTIN TX 78731 MEDICAL SERVICES 370620 JAMES WILLIAMS DO 1400 CARROLLTON AVE BALTIMORE MD 21204 MEDICAL SERVICES 280160 JAMES GOEN 10601 SALEM AVE LUBBOCK TX 79424 MEDICAL SERVICES 141800 5 0 NET PATIENT SERVICES 621110 71792347 71792347 SVCS PROVIDED TO EXEMPT AFFILIATES 561110 20646116 20646116 OTHER OPERATING REVENUE 900099 2283814 2283814 94722277 8798 8798 0 0 0 0 0 0 0 94731075 94722277 8798 0 0 0 0 8847600 8657408 190192 0 68283735 65345517 2938218 2276721 2043588 233133 10177845 9327287 850558 3584895 3229517 355378 347748 71421 276327 12184 12184 0 0 0 0 10356038 9744475 611563 117857 117857 867084 698766 168318 836099 747763 88336 0 5774910 5344876 430034 81456 68926 12530 0 67768 17760 50008 0 0 406659 1924 404735 1701393 1701393 MEDICAL SUPPLIES 5426315 5426315 ALL OTHER EXPENSES 769124 455137 313987 119935431 111180680 8754751 0 472715 807833 2018172 1157382 0 0 12550311 8702169 36440 153003 0 0 678622 318397 0 0 46277 49921 12629373 11796121 1239911 833252 0 0 0 0 0 0 0 0 15858124 17142615 32900572 29164572 8509947 6060215 0 0 0 0 0 0 0 0 0 0 0 0 0 0 50021907 73939995 58531854 80000210 X -25631282 -50835638 0 0 0 0 -25631282 -50835638 32900572 29164572 -25204356 X X false true true X false X 12629373 11796121 833252 833252 PHYSICIAN RETIREMENT 457(B) 14019954 PHYSICIAN RETIREMENT 457(F) 1691139 PHYSICIAN DEFERRED COMP. 1431522 17142615 0 DUE TO AFFILIATES 56797380 DUE TO PHYSICIANS - 457(F) & 457(B) 15711093 DUE TO PHYSICIANS DEFERRED COMP. 1431522 73939995 CONSOLIDATED AUDIT FOOTNOTE FOR FIN 48 (ASC 740) SCHEDULE D, PART X, LINE 2 ACCOUNTING STANDARDS CODIFICATION (ASC) 740, INCOME TAXES, CLARIFIES THE ACCOUNTING FOR INCOME TAXES BY PRESCRIBING A MINIMUM RECOGNITION THRESHOLD THAT A TAX POSITION IS REQUIRED TO MEET BEFORE BEING RECOGNIZED IN THE FINANCIAL STATEMENTS. ASC 740 ALSO PROVIDES GUIDANCE ON DERECOGNITION, MEASUREMENT, CLASSIFICATION, INTEREST AND PENALTIES, DISCLOSURE, AND TRANSITION. THE GUIDANCE IS APPLICABLE TO PASS-THROUGH ENTITIES AND TAX-EXEMPT ORGANIZATIONS. NO SIGNIFICANT TAX LIABILITY FOR TAX BENEFITS, INTEREST OR PENALTIES WAS ACCRUED AT JUNE 30, 2012 OR 2011. Central America and the Caribbean Program Services CAPTIVE INSURANCE 65262 65262 65262 true false false false false false METHOD OF ACCOUNTING SCHEDULE F, Part I, LINE 3, COLUMN (F) THE AMOUNT IN COLUMN (F) WAS DETERMINED USING THE ACCRUAL METHOD OF ACCOUNTING. X true false false true false false false false false true false KERRY HENDERSHOT MD 430590 0 33244 0 5397 0 10000 0 21800 0 501031 0 0 0 DONALD QUICK MD 642582 0 3937 0 6414 0 10000 0 22271 0 685204 0 0 0 DAVID GRAY DO 348335 0 14615 0 5141 0 10000 0 19169 0 397260 0 0 0 BILL ATKINSON MD 637829 0 93612 0 9248 0 10000 0 12879 0 763568 0 0 0 CHARLES BARTON MD 446605 0 6343 0 28139 0 1667 0 18815 0 501569 0 0 0 BID COOPER MD 326503 0 30993 0 4605 0 10000 0 14422 0 386523 0 0 0 SUSAN HAEFNER MD 325396 0 3500 0 6889 0 8000 0 6588 0 350373 0 0 0 PIYUSH MITTAL MD 298446 0 159245 0 9254 0 8000 0 6888 0 481833 0 0 0 NILESH PATEL MD 305277 0 57512 0 8687 0 10000 0 20844 0 402320 0 0 0 IKECHUKWU UMEZURIKE MD 351670 0 118130 0 5251 0 0 0 21561 0 496612 0 0 0 PAUL WALTER MD 679772 0 65338 0 7386 0 8000 0 24498 0 784994 0 0 0 JOHN ZIAS MD 799505 0 50622 0 6474 0 8000 0 19515 0 884116 0 0 0 CATHERINE RONAGHAN MD 640987 0 3958 0 6414 0 8000 0 19616 0 678975 0 0 0 MICHAEL OWEN MD 374881 0 65210 0 7670 0 10000 0 12559 0 470320 0 0 0 DAVID BLANN MD 553053 0 41358 0 6414 0 8000 0 11633 0 620458 0 0 0 FREDERICK HENSAL MD 549435 0 3684 0 6414 0 8000 0 12799 0 580332 0 0 0 STEVE MCCAMY 0 315698 0 271896 0 93012 0 9800 0 24169 0 714575 0 0 KRISTEN KOTHMANN 0 156111 0 58737 0 41014 0 17548 0 21569 0 294979 0 0 MARK STEWART 112954 0 44678 0 24965 0 6615 0 21201 0 210413 0 0 0 JUAN KURDI MD 960378 0 1099042 0 8976 0 0 0 6862 0 2075258 0 0 0 JASON BRADLEY MD 909028 0 365283 0 10285 0 8000 0 19323 0 1311919 0 0 0 DARRELL FRANKS MD 1014166 0 60294 0 6215 0 10000 0 6707 0 1097382 0 0 0 RICHARD RANNE MD 1011461 0 0 0 31414 0 8000 0 12850 0 1063725 0 0 0 WILLIAM SPRINGER MD 820893 0 189424 0 6414 0 0 0 19113 0 1035844 0 0 0 SUPPLEMENTAL COMPENSATION INFORMATION SCHEDULE J, PART I, LINE 1A EXECUTIVES RECEIVE A PERCENTAGE OF BASE COMPENSATION FOR DISCRETIONARY SPENDING. THESE AMOUNTS ARE INCLUDED IN OTHER REPORTABLE COMPENSATION. FORM 990, SCHEDULE J, PART I, LINE 3 THE ORGANIZATION'S CHIEF EXECUTIVE OFFICER IS PAID BY ITS TAX EXEMPT PARENT, COVENANT HEALTH SYSTEM, AND IS DISCLOSED AS A PERSON PAID BY A RELATED ORGANIZATION. FORM 990, SCHEDULE J, PART I, LINE 4B EXECUTIVES COULD PARTICIPATE IN A NON-QUALIFIED DEFERRED COMPENSATION PLAN UNDER INTERNAL REVENUE CODE 457(F). THE PLAN WAS FROZEN EFFECTIVE 12-31-07 AFTER WHICH TIME NO FURTHER CONTRIBUTIONS WERE PERMITTED TO THE PLAN. THIS PLAN WILL CEASE TO EXIST ONCE ALL BENEFITS HAVE BEEN DISTRIBUTED IN ACCORDANCE WITH THE PROVISIONS OF THE PLAN. FORM 990, SCHEDULE J, PART I, LINE 7 A PORTION OF THE EXECUTIVE'S SALARY IS PLACED "AT-RISK" AND IS NOT AWARDED UNLESS SPECIFIC STRATEGIC OBJECTIVE TARGETS ARE MET OR EXCEEDED. THE AT-RISK EXECUTIVE PLAN IS DESIGNED TO MOTIVATE AND REWARD EXECUTIVES FOR TEAM PERFORMANCE THAT SUPPORTS THE STRATEGIC GOALS AND SUCCESSFUL PERFORMANCE OF ST. JOSEPH HEALTH SYSTEM. AT-RISK PAY IS AWARDED TO ASSISTANT VICE PRESIDENTS, VICE PRESIDENTS, SENIOR VICE PRESIDENTS, EXECUTIVE VICE PRESIDENTS, AND THE CHIEF EXECUTIVE OFFICER BASED ON ACHIEVING OR SURPASSING SPECIFIC GOALS THAT ARE PREDETERMINED BY THE BOARD OF TRUSTEES PRIOR TO THE BEGINNING OF THE FISCAL YEAR. THE GOALS INCLUDE OUR STRATEGIC OBJECTIVES OF PERFECT CARE, SACRED ENCOUNTERS, AND HEALTHIEST COMMUNITIES AS WELL AS FISCAL STEWARDSHIP. EACH OF THESE FACTORS IS TAKEN INTO CONSIDERATION WHEN DETERMINING THE PERCENTAGE OF AT-RISK PAY. COVENANT MEDICAL GROUP (CMG) HAS A PAY FOR PERFORMANCE PROGRAM BASED ON OBTAINING RESULTS FOR SPECIFIC QUALITY METRICS. EACH PHYSICIAN IS MEASURED AGAINST THEIR ANNUAL PERFORMANCE REGARDING CLINICAL METRICS TIED TO THEIR SPECIALTY. A SCORECARD IS GENERATED FOR EACH PHYSICIAN THAT MEETS CMG'S ANNUAL ADMINISTRATIVE CRITERIA. THE PHYSICIANS ARE THEN ELIGIBLE TO RECEIVE A DISBURSEMENT GENERATED BY CMG'S SHARED SAVINGS CONTRACTS. EACH PHYSICIAN SCORECARD CONTAINS INDIVIDUAL, SPECIALTY, AND AGGREGATE QUALITY PERFORMANCE MEASURES WHERE A MONETARY PAYOUT IS ESTABLISHED BASED ON OBTAINING THE GOAL SET FOR EACH INDIVIDUAL MEASURE. FOR EXAMPLE: AN INTERNAL MEDICINE PHYSICIAN COULD HAVE A POTENTIAL MAXIMUM OF $10,000 AND HAS A SCORECARD WITH 10 METRICS EQUALLY WEIGHTED AT $1,000 EACH. IF THE PHYSICIAN ONLY REACHES THE GOAL ESTABLISHED FOR 7 OF THE 10 METRICS; THE PHYSICIAN WILL RECEIVE A PAYMENT FOR $7,000. KERRY HENDERSHOT MD RETENTION BONUS X 60000 61286 false true true KATIE HENDLEY EDUCATION STIPEND X 52000 38966 false true true RICHARD RANNE MD TAIL COVERAGE X 70000 52751 false true true 153003 ORGANIZATION'S MISSION FORM 990, PART I, LINE 1 & PART III, LINE 1 AS A MEMBER OF THE ST. JOSEPH HEALTH SYSTEM (SJHS), COVENANT MEDICAL GROUP IS COMMITTED TO EXTENDING THE HEALING MINISTRY OF JESUS IN THE TRADITION OF THE SISTERS OF ST. JOSEPH OF ORANGE BY CONTINUALLY IMPROVING THE HEALTH AND QUALITY OF LIFE OF PEOPLE IN THE COMMUNITIES WE SERVE. OUR MISSION IS REALIZED THROUGH THE DELIVERY OF QUALITY IN-PATIENT AND OUT-PATIENT SERVICES, AND FOCUSED COMMUNITY INITIATIVES AND PROGRAMS THAT ARE DEDICATED TO IMPROVING THE LIVES OF ALL WE SERVE. PROGRAM SERVICE ACCOMPLISHMENTS FORM 990, PART III, LINE 4 GROUNDED IN OUR COMMITMENT TO COMMUNITY AS A MEMBER OF THE ST. JOSEPH HEALTH SYSTEM (SJHS), COVENANT MEDICAL GROUP IS COMMITTED TO EXTENDING THE HEALING MINISTRY OF JESUS IN THE TRADITION OF THE SISTERS OF ST. JOSEPH OF ORANGE. THAT MISSION HAS GUIDED OUR CATHOLIC HEALTHCARE MINISTRY SINCE THE OPENING OF OUR FIRST HOSPITAL IN EUREKA, CALIFORNIA NEARLY 100 YEARS AGO. BUT THE ROOTS OF COVENANT MEDICAL GROUP AND THE LESSONS TO SERVE OUR DEAR NEIGHBORS DATE BACK TO THE YEAR 1650 WHEN THE SISTERS FIRST CONGREGATION WAS FORMED IN LE PUY, FRANCE. SINCE THAT TIME, THE PEOPLE OF OUR ORGANIZATION CONTINUE TO ASSESS THE NEEDS OF THE COMMUNITIES WE SERVE, BUILD COLLABORATIVE PARTNERSHIPS WITH LOCAL RESIDENTS, BUSINESS AND COMMUNITY NOT-FOR-PROFITS, AND TOGETHER THROUGH THOSE PARTNERSHIPS, MEET COMMUNITY NEEDS. THE HEALTH SYSTEM IS ORGANIZED INTO THREE REGIONS--NORTHERN CALIFORNIA, SOUTHERN CALIFORNIA, AND WEST TEXAS/EASTERN NEW MEXICO - AND CONSISTS OF 14 ACUTE CARE HOSPITALS, AS WELL AS HOME HEALTH AGENCIES, HOSPICE CARE, OUT-PATIENT SERVICES, SKILLED NURSING FACILITIES, COMMUNITY CLINICS, AND PHYSICIAN ORGANIZATIONS. WHO WE ARE AND WHAT WE DO COVENANT MEDICAL GROUP "CARING FOR THE PEOPLE OF OUR REGION" OUR REGION: COVENANT MEDICAL GROUP IS HEADQUARTERED IN LUBBOCK, TEXAS, THE SITE OF THE SOUTHWEST'S PREEMINENT MEDICAL CENTER BETWEEN THE DALLAS / FORT WORTH METROPLEX AND PHOENIX. WITH A COUNTY POPULATION OF 250,000 AND SERVING AN AREA OF 1.2 MILLION PEOPLE IN THE REGION, LUBBOCK HAS MANY OF THE AMENITIES OF A LARGER METROPOLITAN AREA, INTERNATIONAL AIRPORT, GREAT SHOPPING AND RESTAURANTS, AND EXCELLENT PUBLIC AND PRIVATE SCHOOLS, YET RETAINING A WONDERFUL "SMALL-TOWN" ATMOSPHERE. OUR HEALTH SYSTEM'S REGIONAL CLINICS ARE LOCATED THROUGHOUT WEST TEXAS AND EASTERN NEW MEXICO. OUR REGIONAL CLINIC NETWORK CONTAINS SEVERAL OPERATIONALLY DIFFERENT MODELS. SOME ARE DIRECTLY OWNED AND OPERATED BY CMG; SOME ARE RURAL HEALTH CLINICS IN WHICH CMG SUPPLIES ITS EMPLOYED PHYSICIANS TO WORK FOR A RURAL HOSPITAL-OWNED FACILITY; SOME ARE RURAL HEALTH CLINICS IN WHICH THE PHYSICIANS ARE INDEPENDENT CONTRACTORS; AND SOME ARE SATELLITE CLINIC SITES TO WHICH CMG SUBSPECIALISTS TRAVEL A FEW TIMES PER MONTH. THESE REGIONAL CLINICS ARE INTEGRAL TO THE PROVISION OF PRIMARY CARE SERVICES TO THEIR LOCAL COMMUNITIES, AND ALSO SEND SUBSTANTIAL NUMBERS OF PATIENTS TO LUBBOCK FOR TERTIARY CARE THAT IS NOT AVAILABLE LOCALLY. COVENANT MEDICAL GROUP IS A NON-PROFIT, TAX-EXEMPT MEDICAL FOUNDATION THAT IS CERTIFIED UNDER TEXAS LAW TO EMPLOY PHYSICIANS AND PRACTICE MEDICINE. IT IS OWNED BY COVENANT HEALTH SYSTEM, BUT IS SELF-GOVERNING IN MOST ASPECTS, OTHER THAN FISCAL MATTERS. THERE IS A BOARD OF 17 PHYSICIANS WHO PROVIDE THE OVERSIGHT OF THE GROUP'S STRATEGIC PLANNING, POLICY DEVELOPMENT, RECRUITMENT AND CREDENTIALING, QUALITY IMPROVEMENT TASKS, RESEARCH, AND MEDICAL EDUCATION ACTIVITIES. ALL OF THE BOARD MEMBERS ARE ACTIVELY PRACTICING WITHIN CMG. THIS SELF-GOVERNING ASPECT OF CMG TENDS TO MAKE IT QUITE PHYSICIAN-FRIENDLY IN ITS POLICY DEVELOPMENT AND PLANNING IN THAT THE BOARD MEMBERS ARE IMMEDIATELY PERSONALLY IMPACTED IN THEIR OWN PRACTICE BY THEIR BOARD DECISIONS. FOR MORE INFORMATION ON COVENANT MEDICAL GROUP GO TO: WWW.COVMEDGROUP.ORG FOR MORE INFORMATION ON THE ST. JOSEPH HEALTH SYSTEM GO TO: WWW.STJOE.ORG INDEPENDENT BOARD MEMBERS FORM 990,PART VI, LINE 1B COVENANT MEDICAL GROUP HAS NO INDEPENDENT BOARD MEMBERS BECAUSE ALL BOARD MEMBERS ARE REQUIRED TO BE ACTIVE PHYSICIANS WITH LOYALTIES TO COVENANT HEALTH SYSTEM, THE TAX-EXEMPT PARENT. DESCRIPTION OF CLASSES OF MEMBERS OR STOCKHOLDERS FORM 990, PART VI, LINE 6 COVENANT HEALTH SYSTEM IS THE SOLE CORPORATE MEMBER OF COVENANT MEDICAL GROUP. DESCRIPTION OF CLASSES OF PERSONS AND THE NATURE OF THEIR RIGHTS FORM 990, PART VI, LINE 7A COVENANT MEDICAL GROUP HAS A TIERED GOVERNANCE IN WHICH THE CORPORATE MEMBERS RESERVE THE RIGHT TO APPOINT TRUSTEES TO THE COVENANT MEDICAL GROUP BOARD. ALL TRUSTEE APPOINTMENTS THAT COME FROM THE COVENANT MEDICAL GROUP BOARD AS NOMINATIONS AND MUST BE APPROVED BY THE COVENANT HEALTH SYSTEM, AS THE CORPORATE MEMBER, ST. JOSEPH HEALTH SYSTEM, AS THE TAX-EXEMPT PARENT OF COVENANT HEALTH SYSTEM, AND THE ST. JOSEPH HEALTH MINISTRY, AS THE ORGANIZATIONAL SPONSOR. DECISIONS REQUIRING APPROVAL FORM 990, PART VI, LINE 7B THE RESERVED RIGHTS IN OUR TIERED GOVERNANCE STRUCTURE CONTEMPLATE APPROVAL BY THE COVENANT HEALTH SYSTEM MEMBER OF FINANCING, BUDGETS, UNBUDGETED EXPENDITURES OF DEFINED AMOUNTS, STRATEGIC PLAN, APPOINTMENT OF AUDITORS, CREATION OR INVESTMENT IN A LEGALLY RECOGNIZED ENTITY, JOINT VENTURES, PURPOSES, SALE OR DISPOSITION OF REAL PROPERTY, MERGER OR SALE OF SUBSTANTIALLY ALL ASSETS, APPOINTMENT AND REMOVAL OF TRUSTEES, ADOPTION OR AMENDMENT OF ARTICLES OR BYLAWS. PROCESS USED BY MANAGMENT AND/OR GOVERNING BODY TO REVIEW 990 FORM 990, PART VI, LINE 11B THE FORM 990 IS PREPARED BY THE FINANCE DEPARTMENT BASED ON INFORMATION RECEIVED FROM VARIOUS DEPARTMENTS OF THE ORGANIZATION AS APPLICABLE. THE FORM 990 IS THEN REVIEWED BY AN OFFICER OF THE ORGANIZATION. A COPY OF THE FORM 990 FILING IS THEN DISTRIBUTED TO ALL VOTING MEMBERS OF THE BOARD FOR THE APRIL 2013 MEETING. DURING THE FINANCE COMMITTEE MEETING, MANAGEMENT PRESENTED AND DISCUSSED CERTAIN DISCLOSURES AND INFORMATION INCLUDED IN THE FORM 990. THE FINANCE COMMITTEE CHAIR THEN PROVIDES A SUMMARY AT THE FULL BOARD MEETING. DESCRIPTION OF PROCESS TO MONITOR TRANSACTIONS FOR CONFLICTS OF INTEREST FORM 990, PART VI, LINE 12C OFFICERS, TRUSTEES, AND KEY EMPLOYEES ARE REQUIRED TO DISCLOSE ANNUALLY ON THE CONFLICT OF INTEREST DISCLOSURE FORM THE EXISTENCE AND NATURE OF ANY ACTUAL, APPARENT, OR POTENTIAL CONFLICT OF INTEREST HE/SHE MAY HAVE. ADDITIONALLY, DISCLOSURES SHALL BE MADE PROMPTLY ANYTIME AN ACTUAL, APPARENT OR POTENTIAL CONFLICT OF INTEREST ARISES AND BEFORE THE CONSUMMATION OF ANY CONTRACT, TRANSACTION OR ARRANGEMENT THAT IS THE SUBJECT OF THE POTENTIAL CONFLICT OF INTEREST. WHEN A CONFLICT OF INTEREST IS IDENTIFIED, SUCH CONFLICT IS DISCLOSED TO THE CONFLICTS & COMPENSATION COMMITTEE. IF THE CONFLICT INVOLVES A MEMBER OF THAT COMMITTEE, THE REMAINING COMMITTEE MEMBERS WILL REVIEW THE MATTER AND DETERMINE WHETHER A CONFLICT OF INTEREST EXISTS. THE OFFICER, TRUSTEE, OR KEY EMPLOYEE MAY NOT BE PRESENT DURING ANY MEETING IN WHICH THE COMMITTEE CONDUCTS IS EVALUATION, EXCEPT TO ANSWER QUESTIONS AS MAY BE NECESSARY. ONCE ALL NECESSARY INFORMATION HAS BEEN OBTAINED, THE COMMITTEE CONDUCTS ITS EVALUATION AND FORWARDS ITS FINDINGS AND RECOMMENDATIONS TO THE SJHS CHIEF COMPLIANCE OFFICER. IF THE COMMITTEE DETERMINES AN UNRESOLVED CONFLICT OF INTEREST EXISTS, THE COMMITTEE WILL EVALUATE AND RECOMMEND CONFLICT MITIGATION STRATEGIES. THE SJHS CHIEF COMPLIANCE OFFICER IN CONSULTATION WITH SJHS GENERAL COUNSEL WILL REVIEW THE COMMITTEE FINDINGS, RECOMMENDATIONS, AND MITIGATION STRATEGIES AND PRESENT RECOMMENDATIONS TO THE BOARD FOR DISCUSSION AND VOTE. PROCESS USED TO DETERMINE COMPENSATION FORM 990, PART V1, LINES 15A AND 15B THE ORGANIZATION'S CHIEF EXECUTIVE OFFICER IS PAID BY ITS TAX EXEMPT PARENT, COVENANT HEALTH SYSTEM, AND IS DISCLOSED AS A PERSON PAID BY A RELATED ORGANIZATION. THE EXECUTIVE COMPENSATION PROCESS AT ST. JOSEPH HEALTH SYSTEM IS ADMINISTERED BY A COMMITTEE OF INDEPENDENT TRUSTEES. THEY FOLLOW A BOARD-APPROVED CHARTER AND OVERALL EXECUTIVE COMPENSATION PHILOSOPHY. THE CHARTER EMPOWERS THE SJHS BOARD WORK LIFE COMMITTEE TO ADMINISTER THE EXECUTIVE COMPENSATION PROGRAM AND PROCESS ON BEHALF OF THE FULL BOARD OF TRUSTEES OF SJHS. OVERALL, THE PHILOSOPHY IS INTENDED TO REWARD A BROAD SPECTRUM OF HIGH ORGANIZATIONAL AND INDIVIDUAL PERFORMANCE EXPECTATIONS, AS WELL AS THE RETENTION OF KEY MANAGEMENT TALENT. THE SJHS EXECUTIVE COMPENSATION PHILOSOPHY DEFINES THE MARKET FOR ADMINISTERING COMPENSATION AS A COMPARABLE SET OF NOT-FOR-PROFIT HEALTH CARE DELIVERY SYSTEMS. SJHS PROVIDES COMPENSATION TO ITS SENIOR EXECUTIVES IN THE FORM OF BASE SALARY, AN ANNUAL INCENTIVE PROGRAM, AND BENEFITS. TO FULFILL THEIR RESPONSIBILITY, THE COMMITTEE REGULARLY REVIEWS INFORMATION FROM MULTIPLE SOURCES OF MARKET DATA. THEY USE THIS INFORMATION TO SUPPORT THEIR DECISIONS REGARDING ONGOING EFFECTIVENESS AND ADMINISTRATION OF THE PROGRAM. THE WORK LIFE COMMITTEE IS COMPRISED OF SEVERAL INDEPENDENT MEMBERS OF THE BOARD. THE MEET AT LEAST 3 TIMES A YEAR AND MAKE ALL CRITICAL DECISIONS IN EXECUTIVE SESSION. THESE DECISIONS ARE DOCUMENTED IN DETAILED MINUTES AND APPROVED IN SUBSEQUENT MEETINGS. THE COMMITTEE IS EMPOWER TO ENGAGE OUTSIDE COUNSEL AND CONSULTING SUPPORT AS NEEDED. THE WORK LIFE COMMITTEE PERFORMED ITS LAST COMPENSATION REVIEW FOR ASSISTANT VICE PRESIDENTS, VICE PRESIDENTS, SENIOR VICE PRESIDENTS, EXECUTIVE VICE PRESIDENTS, AND THE CHIEF EXECUTIVE OFFICER IN JUNE 2012. AVAIL OF GOV DOCS, CONFLICT OF INTEREST POLICY, & FIN STMTS TO GEN PUBLIC FORM 990, PART VI, LINE 19 THE ORGANIZATION MAKES ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY AND FINANCIAL STATEMENTS AVAILABLE TO THE PUBLIC UPON REQUEST. THE SJHS COMMUNITY BENEFIT REPORTS, FINANCIAL REPORTS, AND PHILANTHROPY REPORTS ARE ALSO AVAILABLE ON THE SJHS INTERNET SITE. SUPPLEMENTAL COMPENSATION INFORMATION FORM 990 PART VII THE BOARD MEMBERS LISTED IN FORM 990, PART VII THAT RECEIVED COMPENSATION FROM COVENANT MEDICAL GROUP WERE PAID FOR MEDICAL SERVICES PROVIDED TO THE ORGANIZATION, NOT FOR BOARD MEMBER SERVICES. HOURS DEVOTED TO RELATED ORGANIZATIONS FORM 990, PART VII CERTAIN EXECUTIVES AND BOARD MEMBERS OF THIS ORGANIZATION ALSO DEVOTED TIME TO OTHER ENTITIES RELATED TO THE FILING ORGANIZATION. THE HOURS DEVOTED TO THE RELATED ORGANIZATIONS ARE NOT GENERALLY TRACKED BY THE ENTITY. OVERSIGHT OR SELECTION PROCESS FORM 990, PART XII, QUESTION 2C THE ST. JOSEPH HEALTH SYSTEM BOARD APPROVES THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND SELECTION OF THE INDEPENDENT ACCOUNTANT. 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