2013-08-14T13:28:17-05:00 2012-09-30 366055558 GRANT THORNTON LLP 201 S COLLEGE STREET SUITE 2500 CHARLOTTE NC 28244 990 2011-10-01 560623938 The McDowell Hospital Inc MCDO 8286595196 430 Rankin Drive Marion NC 287520730 Clint Stewart 8286595196 2013-08-14 P00488037 7046323500 2011 2016-02-24 21:20:13Z Clint Stewart 430 Rankin Drive Marion NC 287520730 39075011 0 X www.McDhospital.org X 1927 NC Provide acute care inpatient, outpatient and emergency medical care. 15 10 542 102 0 0 286786 517250 43415304 38375852 156681 83585 54411 39496 43913182 39016183 0 0 0 0 21532212 20337875 0 0 0 25791542 18100091 47323754 38437966 -3410572 578217 21481602 26798255 20526438 18264874 955164 8533381 See Page 1, Part I, Line 1 0 0 31495742 38529795 During the year, McDowell Hospital has committed to promoting Health in our Community through diverse and innovative programs, designed to reach a broad-range target population and create the highest impact, with a special emphasis on the uninsured and underinsured. These programs include our Rural Dental Health Grant, opening of 2 new Rural Health Clinic's within the last year and half, the continuation of our Sports Medicine Program through our local school system, All About Women health fair event, National Cancer Survivor Day Celebration, and a quarterly magazine publication To Your Health. While not an exhaustive list, these programs provide an example of our efforts to promote healthy living within our community. 31495742 1 1 0 0 0 0 0 0 0 0 1 0 0 0 1 1 1 1 0 0 0 0 0 0 0 0 1 1 0 0 1 0 0 0 1 0 0 0 0 1 0 0 0 0 1 1 0 0 0 1 42 0 1 542 1 0 0 0 0 0 0 0 0 0 0 X 15 10 0 1 0 0 1 1 1 1 1 0 0 1 1 1 1 1 1 1 1 1 0 X Finance Department 8286595196 430 Rankin Drive Marion NC 287520730 Harold Walker 2.00 X X 0 0 0 Bobbie Young 2.00 X X 0 0 0 Jed Rankin 2.00 X X 0 0 0 Keith Holtsclaw 1.00 X 0 233378 10562 Norman Guthrie 1.00 X 0 0 0 William Evans 1.00 X 0 0 0 Mark Burton MD 1.00 X 0 0 0 John Karas 1.00 X 0 0 0 Chip Cross 1.00 X 0 0 0 George Renfro 1.00 X 0 0 0 R Marshall Dark 1.00 X 0 0 0 Robert A Morrow MD 50.00 X X 287707 0 28149 John Maher 50.00 X 0 262449 20785 George Green MD 50.00 X 326646 0 20250 Sonya Greck 50.00 X X 276800 0 0 Lynn Boggs 50.00 X X 0 0 0 Clint Stewart 50.00 X 83059 0 19094 Tommy Ginn MD 40.00 X 281326 0 23118 Andrea Moore MD 40.00 X 253297 0 19569 John Rowland MD 40.00 X 173582 0 8996 Leigh Meeks MD 40.00 X 164066 0 22073 William J Horan MD 40.00 X 276100 0 12842 Ed Hannon 50.00 X 208269 0 8917 2330852 495827 194355 15 1 1 0 JOHNSON CONTROLS INC PO Box 905240 Charlotte NC 289205240 Professional Services 770661 High Country Anesthesia 193 Valley Stran Dr Boone NC 286078890 Anesthesia Services 753775 HORIZON CSA LLC PO BOX 102289 Atlanta GA 303682289 Maintenance Services 476806 GEM CONSTRUCTORS INC 2024 Nix Creek Rd Ste A Marion NC 287529610 Construction Services 359073 MORRISON MGMT SPECIALISTS INC PO BOX 102289 Atlanta GA 303682289 Food Services 338050 22 453530 13720 50000 447430 517250 Net Patient Service Re 900099 35864034 35864034 Other Operating Revenu 900099 2471143 2471143 Cafeteria Revenue 722210 194618 194618 MRI Partnership 621990 -153943 -153943 38375852 4968 4968 81972 42476 39496 39496 39496 94969 0 16352 94969 -16352 78617 78617 39016183 38181234 0 317699 964505 260416 704089 15289749 12690492 2599257 86978 72192 14786 3033331 2517665 515666 963312 799549 163763 83443 83443 46179 46179 7793893 6624809 1169084 94064 79954 14110 261572 222336 39236 601602 481282 120320 77755 59094 18661 298128 232540 65588 1556056 1244845 311211 529606 450165 79441 Medical Supplies 3135208 2664927 470281 Pharmaceuticals 1758958 1758958 Repairs & Maintenance 975882 487273 488609 Equipment Leases 631086 631086 256659 218159 38500 38437966 31495742 6942224 0 3310 3544 564254 3332637 5344828 5967008 10126 4204 109204 85896 577195 684710 292431 292064 36413130 20558181 14127256 15854949 389542 237218 63456 336025 21481602 26798255 2291589 2534084 867059 2299955 2740000 0 141530 77129 14486260 13353706 20526438 18264874 X 882872 8464118 72292 69263 955164 8533381 21481602 26798255 X 578217 7000000 X 0 1 1 X 0 X RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 449525 449525 18697580 8473934 10223646 797651 155994 641657 15576166 11813923 3762243 892208 114330 777878 15854949 Swap Payable 235527 Note Payable to Mission Health System 11351941 Current due to other related parties 1765149 Other Liabilities 1089 13353706 39016183 38437966 578217 7000000 7000000 7578217 46058659 7042476 7042476 39016183 0 39016183 38480442 42476 42476 38437966 0 38437966 Description of Uncertain Tax Positions Under FIN 48: Part X: Income Taxes: The hospital applies the provisions of FASB ASC 740, Income Taxes, in accounting for uncertainty in income taxes. ASC 740 provides guidance on when tax positions are recognized in an entity's financial statements and how the values of these positions are determined. There is currently no impact on the Hospital's financial statements as a results of the application of ASC 740. Part XI, Line 8 - Other Adjustments: Transfer from Mission Health System 7,000,000. Part XII, Line 2d - Other Adjustments: Rental Expenses 42,476. Transfer from Mission Health System 7,000,000. Part XIII, Line 2d - Other Adjustments: Rental Expenses 42,476. 1 1 1 X 1 X 1 1 0 1 1 747716 747716 0.01950 6761239 8005711 -1244472 0.00000 7508955 8005711 -496756 0.01950 629418 629418 0.01640 13836 13836 0.00040 2069482 2069482 0.05380 12141 12141 0.00030 2724877 2724877 0.07090 10233832 8005711 2228121 0.09040 6949 6949 0.00020 6949 6949 0.00020 1 4038928 11175902 10547849 628053 X 1 1 1 McDowell MRI Medical Imaging Services 0.51000 0.00000 0.49000 1 1 The McDowell Hospital

430 Rankin Drive Marion NC 28752

X X X The McDowell Hospital Inc 1 1 1 150.000000000000 1 300.000000000000 1 X X X X X 1 1 X 1 0 1 X 1 0 11 McDowell MRI

430 Rankin Avenue Marion NC 28752

Outpatient MRI - Imaging Services McDowell Wound Care

31 East Medical Court Suite 2 Marion NC 28752

Outpatient Wound Services McDowell Orthopedics

60 Medical South Court Marion NC 28752

Outpatient Orthopedic Services McDowell Surgical Services

31 East Medical Court Suite 1 Marion NC 28752

Outpatient Surgical Services Health Plus of McDowell Hospital

472 Rankin Avenue Marion NC 28752

Primary Care Walk-in Clinic McDowellOBGYN SugarHillPrimaryCare

1633 Sugar Hill Road Marion NC 28752

Primary Care Services Family Medicine - Nebo

339 Nebo School Road Nebo NC 28761

Primary Care Services Family Medicine - Glendwood

5623 US Highway 221 S Marion NC 28752

Primary Care Services McDowell Pediatrics

387 US 70 West Marion NC 28752

Primary Care - Pediatrics McDowell Pain Clinic

136 Creek View Court Marion NC 28752

Primary Care Services McDowell Outpatient Rehab Services

348 Grace Corpening Drive Marion NC 28752

Outpatient Rehabilitation Services Part I, Line 7: McDowell used worksheets 1 through 8 provided by the IRS, using the cost to charge ratio method. For physician clinics, as described in subsidized health services, actual costs were used plus indirect costs calculated using the Medicare cost report because the cost to charge ratio did not accurately capture costs for those areas. The financials include all patient segments, including inpatient, outpatient, emergency room, private insurance, Medicaid, Medicare, uninsured, and self-pay. A cost to charge ratio was generated using the IRS Worksheet 2 and used for all community benefits reported except for subsidized services which used direct expenses plus overhead to more accurately report the costs involved. See note on subsidized health services. Part II: Recruitment of physicians in underserved areas. Part III, Line 4: McDowell Hospital does not disclose the cost of bad debt in the footnotes of the financials; however it reports the cost of bad debt as part of a report to the North Carolina Hospital Association's data initiative. The financial statements net bad debt against patient revenues to arrive at "Net Patient Revenue less Provision for bad Debts". Part III, Line 8: Per the instructions, the Medicare cost report is the basis for calculating the costs using costs related to the revenue reported. Using the full costing method, there would be a shortfall estimated at $1,594,109 which would be a benefit to the community. This shortfall is a benefit to the community based upon the fact that prices were not raised to cover the shortfall. Part III, Line 9b: Patients who qualify for financial assistance and other charity care are notified using the process described in the education of patients' eligibility in Part VI, on line 3. The McDowell Hospital, Inc. Part V, Section B, Line 11h: In addition to the factors indicated on this form, the hospital has a Catastrophic Clause included in our policy which provides an additional reduction to patients whose portion of a bill, for which they are ultimately responsible (after all other discounts have been applied), exceeds $10,000. This policy applies not only to patients who qualify under our financial assistance policy, but also includes patients whose income exceeds 300% of the federal poverty guidelines. The McDowell Hospital, Inc. Part V, Section B, Line 19d: Our policy in effect during the filing year did not specify how discounts were computed. However, in addition to discounts offered to patients qualifying under our financial assistance policy, the hospital provided additional discounts in cases of catastrophic events. See the narrative for Part V, Section B, Line 11h. Our current policy utilizes the lookback method in determining amounts generally billed to patients for emergency or other medically necessary care provided to patients under our financial assistance policy. This is computed annually and involves an averaging methodology (as provided by proposed Internal Revenue Regulations) of claims paid by both Medicare and all privately insured patients. The McDowell Hospital, Inc. Part V, Section B, Line 20: Under our old policy that was in effect during the tax year, the majority of patients who were eligible for financial assistance received a greater discount than those with insurance. Our current policy now in effect provides more specific limiations, as described in the answer to question 19. Part VI, Line 3: McDowell Hospital provides information to our patients regarding how they will be billed for patient care and about their eligibility for assistance under federal, state, or local government programs or under the organization's charity care policy in the following ways:During the registration process we verify insurance information on each patient. If there is no insurance, the patients are asked a series of questions to determine potential Medicaid eligibility. If the patient is determined to have potential eligibility the patient's account information is forwarded to our onsite DSS worker for further inquiries and possibly an appointment is scheduled to complete a Medicaid application.If the patient does not meet eligibility requirements, other options such as payment arrangements and/or financial assistance is discussed. At this time, the patient may be given a financial assistance application (Charity Care) to complete and return to the Business Office for processing. After the notifications and processes referenced above have been completed, standard debt collection policies are in effect for the portion of the bill for which the patient is responsible.In addition to going through this process verbally with our patients our internet web site includes the following information:About Your BillWe are here to help. If you have any questions or concerns about the statements you receive, please call us as soon as possible at 659-5000.InsuranceThe first step is to check with your insurance company before any inpatient or outpatient procedures to be sure that you have met their requirements, such as a referral from a primary care physician. Also be sure to ask your insurance provider about any deductibles or co-pays that may be your responsibility. McDowell Hospital will file a claim with your insurance company, but deductibles and co-pays must be paid at the time of service.UninsuredIf you do not have insurance then you must pay 'up front' at the time of the visit. However, please do not let this stop you from seeking the medical care you need. If you can't pay your bill due to lack of insurance or limited income, a Patient Representative is available to help you apply for financial assistance.Financial AssistanceOur process for determining financial assistance is kept strictly confidential and eligibility is determined on an individual basis. The steps for requesting financial assistance include:Call a Patient Representative at 659-5000Participate in a brief phone interview to determine eligibilityFinancial assistance application is mailed to you or we can schedule an appointment to discuss the application processYou will need to provide specific financial information.Decision about assistance is made once all paperwork is completeMcDowell Hospital determines eligibility for assistance by following the household income guidelines established by the U.S. Department of Health and Human Services. After we review your assistance application, we may determine that you qualify for a discount, Medicaid benefits, or other state assistance available to North Carolina residents.MedicaidIf you have Medicaid, be sure to bring your card with you each time you visit the hospital for any medical services. Medicaid may require you to be referred by your primary care doctor and they may not cover certain services. The best way to be sure is to call your case worker at the Department of Social Services.Medicare PatientsPlease be aware that we are required by law to ask certain questions about your retirement and insurance coverage every time you receive services at McDowell Hospital. We send a claim to your supplemental insurance company before submitting a bill to Medicare. You are responsible for any part of your bill that's not covered by supplemental insurance and Medicare.Contact InformationIf you have any questions, you can send them through our online form, or feel free to call 828-659-5000.If you need help outside of normal business hours, please leave a message in the business office and a patient representative will return your call. Part VI, Line 4: McDowell Hospital is the only hospital in McDowell County, providing services to a community of over 45,000 members. Our Mission is to serve the healthcare needs of our community, giving comprehensive, cost-effective quality care without regard to race, color, creed or ability to pay. We provide quality care to the community of McDowell County, including the City of Marion, as well as the surrounding communities of Old Fort, Glenwood, Little Switzerland, Nebo, Pleasant Gardens, and North Cove. The ethnic breakdown for the population served includes Caucasian, Hispanic, African American, Asian/Other. Over the year, our community has seen great economic challenges with unemployment hovering over 11%. The NC Department of Commerce ranks each county in NC based on economic well-being and assign each "Tier" designation. The 40 Most distressed counties are designated as Tier 1. McDowell County is considered a Tier 1 county. The economic situation in McDowell County has created increased demand for charitable healthcare at TMH. The uninsured and underserved residents of McDowell County are able to utilize the Hospital's Emergency Department and multiple Rural Health Clinics throughout the county to obtain Healthcare services. Part VI, Line 5: See Program Service Accomplishments on page 2 of 990. Part VI, Line 6: The McDowell Hospital is part of an affiliated health care system with the respective roles of the organization and its affiliates described bellow in promiting the health of the communities served.Mission Health System, Inc. is the parent organization for the charitable organizations of Mission Hospital, Inc.; Mission Healthcare Foundation, Inc.; Mission Medical Associates, Inc; Blue Ridge Regional Hospital, Inc.; and The McDowell Hospital, Inc.Mission Hospital, Inc. is a regional integrated health system providing superior care and service to patients and their families through a full continuum of integrated services, education, and research. It serves as a trauma center to people of Western North Carolina and the surrounding counties. Mission Medical Associates mission is to provide physician services in predominantly rural areas that are insufficiently served, thereby improving the health care of the general public. In many cases this involves recruiting and placing primary care physicians, as well as pediatric and adult specialty services close to where people live and work.Blue Ridge Regional Hospital serves as a community hospital in Mitchell, Yancey and surrounding counties.The McDowell Hospital serves as a community hospital in McDowell and the surrounding counties.Mission Healthcare Foundation, Inc. supports the mission and programs of Mission Hospital, Inc. and Mission Health System, Inc. and of other organizations that are tax exempt under the provisions of Section 501(c)(3) of the Internal Revenue Code and works to benefit the community and region served by the entities listed above. Reports Filed With States Part VI, Line 7 NC X X X X X 1 0 0 0 0 0 0 0 0 Keith Holtsclaw 0 173417 0 53859 0 6102 0 5329 0 5233 0 243940 0 0 Robert A Morrow MD 265726 0 0 0 21981 0 4442 0 23707 0 315856 0 0 0 John Maher 0 259839 0 0 0 2610 0 0 0 20785 0 283234 0 0 George Green MD 326496 0 0 0 150 0 4969 0 15281 0 346896 0 0 0 Sonya Greck 276800 0 0 0 0 0 0 0 0 0 276800 0 0 0 Tommy Ginn MD 266630 0 0 0 14696 0 3549 0 19569 0 304444 0 0 0 Andrea Moore MD 245206 0 0 0 8091 0 0 0 19569 0 272866 0 0 0 John Rowland MD 168644 0 0 0 4938 0 1625 0 7371 0 182578 0 0 0 Leigh Meeks MD 158198 0 0 0 5868 0 3256 0 18817 0 186139 0 0 0 William J Horan MD 262646 0 0 0 13454 0 0 0 12842 0 288942 0 0 0 Ed Hannon 94542 0 0 0 113727 0 8917 0 0 0 217186 0 0 0 Part I, Line 4a Ed Hannon 113,075 Andrea Moore MD Recruitment Guarantee X 27513 4204 0 1 1 4204 X Equipment 1 447430 FMV 0 0 0 Form 990, Part VI, Section A, line 3 Sonya Greck, an independent contractor, served as interim Chief Executive Officer from October 2011 through February 2012. Form 990, Part VI, Section A, line 6 Mission Health System, Inc, a 501(c)(3) is the parent company of The McDowell Hospital. It is the sole member of The McDowell Hospital. Form 990, Part VI, Section A, line 7a Mission Health System, as sole member, has sole voting control of The McDowell Hospital, Incorporated. As the sole member of the corporation, Mission shall have the following rights at all times with respect to the corporation: Approval of any amendments to the articles of incorporation or bylaws of the corporation. Approval of the mission, vision and values statements of the corporation and any amendments thereto. Election and removal of three (3) Mission members of the Board of Directors and approval of the Community Directors selected and submitted to Mission for approval by its Board of Directors. Approval of the election of the President/Chief Executive Officer, provided however, that said approval shall not be unreasonably withheld. Form 990, Part VI, Section A, line 7b Mission Health System, Inc has reserve powers related to approval of the sale, lease or other transfer of substantially all the assets of McDowell. Approval of (i) the pledge of all or substantially all of the assets of the corporation, (ii) the purchase or sale of property outside the ordinary course of business, and (iii) long-term borrowing (for a term of more than one (1) year) by the corporation above financial and other limits reasonably recommended by MISSION for the corporation's Board approval unless such borrowing is applied to pay in full all indebtedness owed by the corporation to Mission. Election and removal of three (3) Mission members of the Board of Directors and approval of the Community Directors selected and submitted to Mission for approval by its Board of Directors. Approval of the formation and governance of any new corporations, partnerships or joint ventures, above financial and other limits approved by Mission for the corporation's Board approval, in which the corporation has an interest through membership, voting stock or other equity participation. Approval of the capital and operating budgets of the corporation. Approval of the election of the President/Chief Executive Officer, provided however, that said approval shall not be unreasonably withheld. Form 990, Part VI, Section B, line 11 The organization provides data to the treasury analyst of tax services for Mission Health System, Inc. The 990 is prepared and reveiwed by management then reviewed by an independent accounting firm prior to review by The McDowell Hospital finance committee. After review by the board, and revisions for any clarifications or corrections, the full copy of the 990 is provided to the board prior to filing the 990. Form 990, Part VI, Section B, line 12c The Independent Directors will review Conflicts of Interest and Disabling Situations, consider any issues involving conflicts and make determinations as to whether a particular relationship or arrangement would disable an individual from serving as a fiduciary for the Board or would reasonably be expected to exert an influence on the individual's judgment and therefore preclude the individual from being an Independent Director. The Board may retain counsel from outside audit, legal, governance or other experts. Any determination of percent of revenue or income received by an individual or entity may be based on certifications from outside auditors of disclosures made directly by the individual to the audit firm. Procedures Upon Determination of a Conflict of Interest: The Interested Person shall not participate in any discussion or vote regarding the business relationship issue, and shall not be present in the meeting room for any part of the discussion or vote relating to the business relationship issue. The Board of Directors will discuss the business relationship but will not formally approve such business relationship unless the disinterested members of the Board have decided by majority vote that the business relationship is in the best interests of and for the benefit of McDowell, and is fair and reasonable thereto in all respects. Form 990, Part VI, Section B, line 15 Each year the Board reviews the overall philosophy and policy used to guide the determination of executive compensation. Executive compensation decisions are made within the parameters of the overall philosophy and policy approved by the Board, with support from outside executive compensation consultants to ensure compensation levels are at fair market value. The board approves contracts, compensation, and business transactions with Disqualified Persons other than executives. The Board also has the following responsibilities: Conducting a periodic review of executive compensation philosophy and policies and practices. Determining which positions are eligible for the executive compensation plan. Establishing and approving the salary parameters for the CEO, others eligible under the executive compensation plan, and employees who are Disqualified Persons. Establishing and approving the terms of all incentives, benefits or programs included in the executive compensation plan. Reviewing and approving all employment contracts for the CEO and all others eligible under the executive compensation plan, and recommending amendments or termination of these arrangements. Reviewing the performance and determining the compensation of the CEO and others defined as eligible under the executive compensation plan based on the achievement of shared and personal goals. Sole responsibility to retain qualified compensation and benefits consultants and other professional advisors as the need may arise, and to terminate their contracts. Conferring with members of management to assist the Board in performing its duties, so long as their role remains technical in nature. Form 990, Part VI, Section C, line 19 The McDowell Hospital makes its governing documents, conflict of interest policy available to the public upon request. The financial statements are attached to this form 990 or are available upon request. Changes in Net Assets or Fund Balances: Form 990, Part XI, line 5: Transfer from Mission Health System 7,000,000. Total to Form 990, Part XI, Line 5: 7,000,000. Mission Hospital Inc 509 Biltmore Avenue Asheville NC 28801 560532141 Acute Care Hospital NC 501(c)(3) Line 3 Mission Health System Inc 0 Mission Healthcare Foundation Inc 980 Hendersonville Road Asheville NC 28803 561881331 Foundation NC 501(c)(3) Line 7 Mission Health System Inc 0 Mission Health System Inc 509 Biltmore Avenue Asheville NC 28803 581450888 Parent Company/Support Services NC 501(c)(3) Line 11a, I 0 Mission Medical Associates Inc 213 Ridgefield Court Asheville NC 28806 263627231 Employed Physician Group NC 501(c)(3) Line 9 Mission Health System Inc 0 Blue Ridge Regional Hospital Post Office Box 9 Spruce Pine NC 28777 561025032 Community Hospital NC 501(c)(3) Line 3 Mission Health System Inc 0 Blue Ridge Regional Hospital Foundation PO Box 247 Spruce Pine NC 28777 582172660 Foundation NC 501(c)(3) Line 7 Mission Health System Inc 0 Imaging Realty LLP 534 Biltmore Avenue Asheville NC 28801 561907203 Medical Building NC N/A MSJHS and CCP Joint Development Company LLC 428 Biltmore Avenue Asheville NC 28801 562250464 Long Term Acute Care Hospital NC N/A McDowell MRI LLC 414 Rankin Avenue Marion NC 28752 753046378 Medical Imaging NC Related 20632 188059 0 1 0.51000 Blue Ridge DME LLC 125 Hospital Drive Spruce Pine NC 28777 263570174 Home Medical Equipment & Supplies Sales NC N/A Asheville Imaging LLP 534 Biltmore Avenue Asheville NC 28801 561907201 Outpatient Services NC N/A Horizon Health Corp 213 Ridgefield Court Asheville NC 28806 561341621 Holding Company NC N/A C Horizon Management Services 213 Ridgefield Court Asheville NC 28806 561341624 Patient Billing and Collection Services, Medical Property NC N/A C Dogwood Insurance Company Ltd The Grant Pavilion Commercial Centr CJ Captive Insurance Entity CJ N/A C 0 0 1 0 1 0 0 0 1 0 1 1 0 0 0 0 0 0 McDowell MRI I 64219 FMV McDowell MRI K 212158 FMV