2013-05-13T12:22:43-05:00 2012-06-30 450250958 EIDE BAILLY LLP 4310 17TH AVE S PO BOX 2545 FARGO ND 581082545 990 2011-07-01 450308379 Hazen Memorial Hospital Association HAZE 7017482225 510 8th Avenue NE Hazen ND 58545 Darrold Bertsch 7017482225 2013-05-13 1 LISA CHAFFEE CPA P00193453 7012398500 2013-05-13 2011 2016-02-24 21:20:13Z Sakakawea Medical Center Senior Suites at Sakakawea Sakakawea Beulah Clinic Sakakawea Hazen Clinic Darrold Bertsch 510 8th Avenue NE Hazen ND 58545 10716515 0 X www.sakmedcenter.org X 1943 ND Operation of a hospital, clinic, and an elderly care facility. 9 8 174 96 0 0 197868 295214 10455372 10386024 18933 13377 14995 19314 10687168 10713929 2400 2000 0 0 5765384 5878756 0 0 0 4831338 4738843 10599122 10619599 88046 94330 6438758 6461461 2259583 1969155 4179175 4492306 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. 1 1 7093743 8157938 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 $132,663 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. 556580 835691 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 8,656 this year. 1518672 1369102 To insure the need for quality health care is met in SMC's service area, Sakakawea Medical Center began managing two rural health clinics in July 2007. One clinic is located in Beulah and one in Hazen. This provides primary health care for our patients and also space is provided in the clinics for visiting specialists. This saves the patients from having to drive up to 70 miles to receive specialty health care. The clinics are staffed with physicians and mid-level providers. A sliding fee scale charity care program is available to patients who qualify financially.In April 2012, the Sakakawea Beulah Clinic was closed due to financial concerns. 9168995 1 1 0 0 0 0 0 0 0 1 1 0 0 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 0 1 16 0 1 174 1 0 0 0 0 0 0 0 0 0 0 X 9 8 0 0 1 0 1 1 1 1 0 0 0 1 1 1 1 0 1 1 0 0 X Renae Snyder 7017482225 510 8th Avenue NE Hazen ND 58545 Christie Obenauer 2.00 X X 0 0 0 Jan Rudolph 1.50 X X 0 0 0 Beverly Huber 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 Myria Perry 1.50 X 0 0 0 Sienna Sailer 1.50 X 0 0 0 Fred Stern 1.50 X 0 0 0 Kimberly Kessler 1.50 X 0 0 0 Darrold Bertsch 40.00 X 154810 0 21307 Renae Snyder 40.00 X 61870 0 3479 Ronald Schmitz 40.00 X 205410 0 13901 Rodney Zimmerman 40.00 X 244563 0 24897 666653 0 63584 3 0 1 0 0 44950 250264 295214 Patient and Resident S 621400 10177931 10177931 Other Program Revenue 623000 132799 132799 Education 623000 52001 52001 Cafeteria 623000 23293 23293 10386024 14539 14539 11705 0 11705 11705 11705 1162 -1162 -1162 -1162 8144 1242 6902 6902 889 182 707 707 10713929 10362731 0 55984 2000 2000 263538 263538 4778173 4477280 300893 152320 36500 115820 331805 93650 238155 352920 315117 37803 782 782 31398 31398 1795330 1706364 88966 18003 73 17930 281064 135468 145596 261987 261987 42029 26590 15439 49528 15746 33782 503421 503421 103667 24470 79197 Medical Supplies 736359 736359 Bad Debt Expense 612185 612185 Food 124010 124010 Dues & Subscriptions 72958 54667 18291 106122 43108 63014 10619599 9168995 1450604 0 7762 2207 1373983 893845 1335769 1471567 299330 310286 23285 22573 8474132 6346219 2295673 2127913 497547 460044 286973 299171 318436 873855 6438758 6461461 806292 866702 1357853 1033465 95438 68988 2259583 1969155 X 3842202 4129242 286973 313064 50000 50000 4179175 4492306 6438758 6461461 X 94330 218801 X 0 1 1 X 0 X RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 62933 960 63893 61518 1415 62933 0.78260 0.21740 0 0 23092 23092 5606713 4332397 1274316 2785481 1963449 822032 58846 50373 8473 2127913 Patronage Credit Asset 544855 Estimated Third-Party Payor Settlements 329000 873855 Capital Lease Obligations 68988 68988 10713929 10619599 94330 206872 11929 218801 313131 10628118 7500 7500 10620618 93311 93311 10713929 10613975 0 10613975 5624 5624 10619599 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: 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 990T) 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 8 - Other Adjustments: Change in interest in Net assets of Sakakawea Medical Center Foundation 12,198. Change in Net assets of Hazen Memorial Hospital Auxiliary -269. Total to Schedule D, Part XI, Line 8: 11,929. Part XII, Line 2d - Other Adjustments: Eliminating Journal Entry for Grant from Auxilary to Hospital 7,500. Part XII, Line 4b - Other Adjustments: Auxiliary Revenue 13,393. Transfer from Sakakawea Medical Center Fdtn. Recorded in Net Assets for F/S 78,958. Investment Income Recorded in Fund Balance on Financial Statements 960. Part XIII, Line 4b - Other Adjustments: Auxiliary Expenses 13,124. Eliminating Journal Entry for Grant from Auxilary to Hospital -7,500. 1 1 X 1 X 125.000000000000 1 X 0 1 1 0 0 122000 122000 0.01220 292783 268615 24168 0.00240 414783 268615 146168 0.01460 13158 13158 0.00130 45375 12791 32584 0.00330 1058414 893458 164956 0.01650 755 755 0.00010 1117702 906249 211453 0.02120 1532485 1174864 357621 0.03580 0 612185 37955 3234244 3356985 -122741 X 1 0 1 1 Sakakawea Medical Center

510 8th Ave NE Hazen ND 58545

X X X X Hazen Memorial Hospital Association 1 0 1 1 125.000000000000 1 200.000000000000 1 X X 1 1 X X 1 0 1 X 1 0 3 Sakakawea Hazen Clinic

813 7th St NE Hazen ND 58545

Clinic Sakakawea Beulah Clinic

1101 3rd Ave NW Beulah ND 58523

Clinic (closed 4/26/12) 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 two rural clinics which operate at a loss. If these clinics did not offer their services in each of these communities the service would be limited in the community. The costs included in subsidized health services attributable to clinics are $1,569,342. Part I, L7 Col(f): For the purposes of calculating the percentage on Part 1, Line F, $612,185 of bad debt was backed out of total operating expenses. Part III, Line 4: Financial statement footnote describing bad debt expense: The carrying amount of patient and resident receivables is reduced by a valuation allowance that reflects management's estimate of amounts that will not be collected from patients, residents, and third-party payors. Management reviews patient and resident receivables by payor class and applies percentages to determine estimated amounts that will not be collected from third parties under contractual agreements and amounts that will not be collected from patients and residents due to bad debts. Management considers historical write off and recovery information in determining the estimated bad debt provision.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.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 $37,955. 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 CMS. 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 11h: 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. The program is available for uninsured patients as well as co-pays and deductibles for insured patients.The self-pay discount 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 13g: 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. Hazen Memorial Hospital Association Part V, Section B, Line 19d: The maximum amount charged to a patient under the financial assistance policy for emergency and medically necessary care is 80% of the gross charges. This is based on the minimum discount under the charity care policy of 20%.The hospital will review the various methods to determine amounts generally billed to ensure it is in compliance with Section 501(r). Hazen Memorial Hospital Association Part V, Section B, Line 20: The Medical Center has not determined the amount generally billed under the various proposed methods of calculation. Therefore, it is possible a patient under the financial assistance policy could have paid more than the amount generally billed. The Medical Center will review the various methods to determine amounts generally billed to ensure it is in compliance with Section 501(r). 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 is collaborating 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 two rural health clinics, one in Hazen and one in Beulah. The combined total population of the county is approximately 8,449. The average annual wage in Mercer County for 2011 was $62,578. The current unemployment rate is 5.7%. Sakakawea Medical Center's payer mix for this fiscal year included 10% uninsured patients and 6% 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 Beulah Clinic and 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; two are from Hazen, six from Beulah, and one from Stanton. The directors have various occupations including power plant manager, bank vice president, accounting supervisor, engineer, 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 26 community volunteers. Surplus funds are invested back into the facility through equipment upgrades and building improvements. Recent investments include the purchase of a polycom for our new Practical Nurse program, upgrades to our software system for implementation of the Electronic Medical Record as well as computeres and other equipment, a facility wide security system, radiology equipment, and a new sterilizer for CSR. 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. 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 0 0 0 0 0 0 0 0 0 Darrold Bertsch 154810 0 0 0 0 0 6210 0 15148 0 176168 0 0 0 Ronald Schmitz 205410 0 0 0 0 0 8264 0 14164 0 227838 0 0 0 Rodney Zimmerman 244563 0 0 0 0 0 9801 0 15148 0 269512 0 0 0 Union State Bank Bond Refinance X 663689 465884 0 1 1 Union State Bank Software X 350000 77524 0 1 1 Union State Bank New Boilers X 224235 105107 0 1 1 Union State Bank Refinance Equipment X 506000 325709 0 1 1 Union State Bank Ultrasound X 138872 59241 0 1 1 1033465 New Program Services Form 990, Part III, line 2 Sakakawea Medical Center provides the staff and facility space for the Dakota Practical Nursing Program. This is an 11 month course, offered through Bismarck State College, which enables students to complete their education locally. The first class of six students graduated in July 2012, with a 100% pass rate on their nursing boards. The second class will begin in August 2012. This is an expansion of the Medical Center's exempt purpose of providing high quality care and strengthening partnerships with providers to enhance coordination of care and improve system performance. Changes in Program Services Form 990, Part III, line 3 The Sakakawea Beulah Clinic was closed in April 2012 because of financial concerns. Providers and staff members transferred to the Sakakawea Hazen Clinic and Coal Country Community Health Center in order for the patients in our service area still have access to their providers. Form 990, Part VI, Section A, line 1 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 4 The corporate bylaws were modified to include the addition of two board members from Coal Country Community Health Center. The bylaws were also changed to include a maximum of three consecutive terms for board members. In addition, the amended bylaws no longer provide the members the ability to approve/disapprove amended bylaws. The Articles of Incorporation were amended to change the minimum number of corporate directors to nine and the maximum to fifteen. The amendment also states that amended bylaws must be approved by a two-thirds vote of the Directors present at any regular or special meeting of the Board of Directors. 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. 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. Changes in Net Assets or Fund Balances: Form 990, Part XI, line 5: Prior period adjustments: 206,872. Change in interest in Net assets of Sakakawea Medical Center Foundation 12,198. Change in Net assets of Hazen Memorial Hospital Auxiliary -269. Total to Form 990, Part XI, Line 5: 218,801. Part XI, Line 5: During 2012, the Medical Center discovered an error in accounting for patronage credit assets. The error related to the periods prior to July 1, 2010. Management corrected the error in 2012 by increasing patronage credit assets and unrestricted net assets by $206,872. This correction is reflected in fiscal year 2011 in the accompanying financial statements. The correction did not impact previously reported revenues in excess of expenses or cash flows in fiscal year 2011.