2012-05-09T13:45:30-05:00 2011-06-30 EIDE BAILLY LLP 4310 17TH AVE S PO BOX 2545 FARGO ND 581082545 990 2010-07-01 450230400 HILLSBORO MEDICAL CENTER HILL 7016363201 PO BOX 609 HILLSBORO ND 58045 Jac McTaggart 7016363201 2012-05-09 1 LISA CHAFFEE CPA 7012398500 2012-05-09 2010 2016-02-24 21:20:13Z Jac McTaggart PO BOX 609 HILLSBORO ND 58045 7625458 0 X www.hillsboromedicalcenter.com X 1946 ND To provide quality health care and living services with dignity and individualized care. 10 10 189 90 0 0 201722 396438 6478650 7095839 59779 57162 167573 76019 6907724 7625458 0 0 0 0 3636005 4008975 0 0 0 3731450 3859550 7367455 7868525 -459731 -243067 16155907 15718023 13571478 13412557 2584429 2305466 X The mission of the Hillsboro Medical Center is to provide quality health care and living services with dignity and individualized care. 0 0 7384630 7095839 The Hospital/Home provides medical care to the community and long-term care to the elderly regardless of the individuals ability to pay for the services received.Medical services offered include critical access hospital services, skilled nursing services,emergency services and ambulance services. To fulfill its mission of community service, the Medical Center provides care to patients and residents who meet certain criteria under its charity care policy without charge or at amounts less than its established rates. Because the Medical Center does not pursue collection of amounts determined to qualify for charity care, they are not reported as patient and resident service revenue.The Medical Center maintains records to identify and monitor the level of charity care it provides. These records include the amount of charges foregone for services and supplies furnished under its charity care policy and equivalent service statistics. The amounts of charges foregone, based on established rates, were $14,804 and $22,074 for the years ended June 30, 2011 and 2010.Hillsboro Medical Services also operates a skilled nursing facility. The Home provides nursing services, meals, housekeeping, laundry and activities for residents. 7384630 1 1 0 0 0 0 0 1 0 1 0 0 0 1 1 0 1 0 0 0 0 0 0 0 0 1 1 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 0 0 1 15 0 1 189 1 0 0 0 0 0 0 0 0 0 0 X 10 10 0 1 0 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 0 X Darlene Swanson 7016363211 PO Box 609 Hillsboro ND 58045 Kathy Evenson 3.00 X X 0 0 0 Curt Kaufman Through 123110 3.00 X X 0 0 0 Jeff McInnes 1.00 X X 0 0 0 Brenda Muller 1.00 X X 0 0 0 Ed Laxdal 1.00 X X 0 0 0 Steve Doeden through 123110 1.00 X X 0 0 0 Kay Malme Through 123110 1.00 X 0 0 0 Wes Ecker 1.00 X 0 0 0 Wayne Koering 1.00 X 0 0 0 Cel Baumgartner 1.00 X 0 0 0 Doug Melby 1.00 X 0 0 0 Lisa Rotvold 1.00 X 0 0 0 Joy Suda 1.00 X 0 0 0 Patricia Dirk July - Sept 40.00 X 75699 0 1444 John Reike Oct - June 40.00 X 20861 0 804 Scott Awalt starting January 2011 12.00 X 0 0 0 96560 0 2248 0 0 0 1 Sanford Health PO Box 2010 Fargo ND 58122 Various Medical Service Contracts and Ma 382870 DMS Health SDS 12-2208 PO Box 86 Minneapolis MN 55486 X-Ray Fees 123188 2 237546 151733 7159 396438 Net Patient & Resident 621300 7026419 7026419 Supporting Revenue 900099 69420 69420 7095839 57162 57162 76019 76019 76019 76019 7625458 7095839 0 133181 176568 176568 3290490 3155663 134827 51813 46169 5644 209312 207912 1400 280792 268173 12619 12195 12195 2590 2590 44696 44696 708286 698068 10218 20898 208 20690 662020 638286 23734 18418 18418 220650 213521 7129 27078 25668 1410 18052 16442 1610 703357 703357 1204893 1204893 57328 57328 Bad debts 133145 133145 Recognition 2788 918 1870 Sales tax 472 472 22684 14879 7805 7868525 7384630 483895 0 842044 1204470 1045759 1315958 27520 29715 30796 45787 16941777 5379008 12433260 11562769 1343553 1145364 432975 413960 16155907 15718023 449410 514992 117572 79914 12975000 12790000 12378 14288 3102 14016 13363 13571478 13412557 X 2584429 2305466 2584429 2305466 16155907 15718023 X -243067 -35896 X 0 1 1 X 0 X RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 0 1 14105109 3963613 10141496 2676021 1388949 1287072 160647 26446 134201 11562769 Unamortized Bond Premium 13363 13363 Part IV, Line 2b: The Medical Center holds tenant security deposits from assisted living residents. These funds are included in cash and accounts payable in the consolidated financial statements. Tenant security deposits totaled $14,288 and $12,378 at June 30, 2011 and 2010. Description of Uncertain Tax Positions Under FIN 48: Part X: Hillsboro Medical Center believes they have appropriate support for any tax positions taken affecting the annual filing requirements for Hillsboro Medical Center, and as such, does not have any uncertain tax positions that are material to the financial statements. Hillsboro Medical Center would recognize future accrued interest and penalties related to unrecognized tax liabilities in income tax expense if such interest and penalties are incurred. 1 1 X 0 0 0 1 1 0 0 15367 15367 0.00200 68949 68949 84316 68949 15367 0.00200 2725 2725 0.00040 150965 109334 41631 0.00540 153690 109334 44356 0.00580 238006 178283 59723 0.00780 0 138209 103657 1809086 1784306 24780 X 1 0 1 1 Hillsboro Medical Center

12 3rd St SE Hillsboro ND 58045

X X X X Ambulance Not Required 1 2 Hillsboro Medical Center Nursing Home

12 3rd St SE Hillsboro ND 58045

Skilled Nursing Comstock Corner

12 3rd St SE Hillsboro ND 58045

Assisted Living Part I, Line 3c: Throughout the payment and collection process, the business office staff attempt to identify to the extent possible, patients which are worthy and appropriate for charity care considerations. Those accounts to be considered for charity reductions are asked to complete a financial statement form, which provides pertinent financial information necessary to determine financial need. The charity care application asks for items such as employment information, current income, current expenses, assets owned as well as other miscellaneous items. Credit reports can be used to verify and assist in the decision process. Review of potential charity requests are performed monthly by the Business Manager and certain recommendations are forwarded to the Administrator. The Administrator makes the final decision if someone is eligible for free or discounted care. The decision for free or discounted care is strictly done on a case by case basis as the Administrator reviews information provided in the charity care application. Part I, Line 7: The cost-to-charge ratio derived from Worksheet 2 was used to determine charity care, line 7a, and subsidized health services, line 7g. Unreimbursed Medicaid on line 7b was calculated using the costing methods to prepare the cost reports. Community health improvement services, line 7e, were calculated based on actual estimated costs. Part I, L7 Col(f): The amount of bad debt expense removed from total expenses to determine the percentage was $133,145. Part II: n/a Part III, Line 4: Financial Statement Bad Debt Expense Footnote: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.Bad debt expense was converted to cost using the ratio of patient care cost to charges calculated using Worksheet 2.All discounts and payments on a patient's account are accounted for prior to determining bad debt expense. Hillsboro Medical Center reports amounts as bad debt once they are 120 days overdue and have been turned over to a collection agency. Historically, almost all of these amounts remain unpaid as the patient does not have sufficient resources and likely would qualify for the Charity Care Program. Based on this assumption, 75% of the bad debt amount is considered charity care. 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. Part VI, Line 2: The Assistant Director of Nursing and the Medical Providers at Hillsboro Medical Center assess the needs of outpatient services utilized by the community. We re-evaluate the services we provide and have added multiple needed outpatient treatments. These services enhanced patient care and provided services within our community instead of needing to travel outside the Hillsboro area for these services. We will continue to review the needs of the community and the services that we offer. Part VI, Line 3: Hillsboro Medical Center (HMC) does not post its charity care policy. During the collection process for outstanding bills, HMC informs the patients that we do have a Charity Care Policy and we will send out a financial statement form, which will provide pertinent patient financial information necessary to determine financial need. Also, HMC discusses with the patients that they could apply with the county for Medicaid assistance. The final determination for Charity Care is approved by the Administrator. Part VI, Line 4: Hillsboro Medical Center is a 16-bed acute care hospital, a 36-bed nursing facility, and a 16-unit assisted living facility located in Hillsboro, North Dakota. Hillsboro has a population of approximately 1,600. Per the 2000 census, the median income for a household in the city was $33,516 and the median income for a family was $42,357. Males had a median income of $30,607 versus $19,769 for females. The per capita income for the city was $17,976. About 6.6% of families and 9.2% of the population were below the poverty line, including 9.4% of those under age 18 and 15.0% of those age 65 or over. Approximately 15% of the city's population are Medicaid recipients. Sanford-Mayville Hospital is another hospital that serves the community in an 18 mile radius. Part VI, Line 6: The mission of the Hillsboro Medical Center is to provide quality health care and living services with dignity and individualized care. Hillsboro Medical Center provides community meetings about CPR, Advance Directives, Child Passenger Safety, Alzheimer's, etc. to promote information and well-being to people in our community. Hillsboro Medical Center also provides a room for Hospice and UND Journal Club free of charge so they can conduct their meetings for the care of people in the community and surrounding areas. The majority of the organization's governing body is comprised of individuals who reside in the primary service area. These individuals are not employees, nor contractors or family members of the organization. The organization extends medical staff privileges to qualified physicians in the community. Surplus funds, if available, are re-invested in the facility to improve patient care. Part VI, Line 7: n/a X 0 0 0 0 0 0 0 0 0 Patricia Dirk July - Sept 75699 0 0 0 0 0 0 0 1444 0 77143 0 0 0 John Reike Oct - June 20861 0 0 0 0 0 0 0 804 0 21665 0 0 0 Supplemental Information Part III Schedule J Part I Line 3 methods of establishing compensation: The CEO/Administrators (Patricia Dirk and John Rieke) were compensated by Sanford Health, an unrelated entity. Sanford Health used one or more of the methods in Part I, Question 3 to determine compensation for the CEO/Administrator. Schedule J Part II: The compensation amounts included in Part II indicate the types and amount of compensation that was paid by Sanford Health. Traill County 456002246 892846AQ9 2007-05-22 13341133 Exp of facility; new Asst Lvg and LT Care bldgs, 80% rmdl of Hospital 0 0 0 13341133 893789 658284 239850 11549210 2009 0 0 0 1 0 0 0 0 0.00000 0.00000 0.00000 0 0 0 0 0 1 0 Form 990, Part VI, Section A, line 1 The organization has an Executive Committee which has the power to transact all regular business of the organization during the interim between meetings of the Board of Directors, provided that any action taken does not conflict with the policies and expressed wishes of the Board and that the Executive Committee refers all matters of major importance to the full Board. The Executive Committee consists of the Chairperson, Vice Chairperson, Corporation CEO/Administrator, Treasurer and Secretary. The Executive Committee is chaired by the Chairperson and meets on call of the Chairperson of the Board or Corporation CEO/Administrator. Form 990, Part VI, Section A, line 3 The CEO/Administrator is employed through a management agreement with Sanford Health, an unrelated party. Form 990, Part VI, Section B, line 11 The Chief Executive Officer/Administrator will review a draft of the Form 990. During a board meeting, the Board of Directors also received, reviewed, and approved a copy of the Form 990 prior to it being filed. Form 990, Part VI, Section B, line 12c The conflict of interest policy covers the board of directors. In December, board members are asked to disclose any possible conflicts. The Chief Executive Officer/Administrator reviews the disclosures and determines if there are any conflicts. Any board member with a conflict is asked to abstain from voting on that issue. The conflict of interest for the CEO is covered by the management contract with Sanford Health. The CFO is not covered by the conflict of interest policy. Form 990, Part VI, Section B, line 15 Salary range for the CEO is determined by Sanford Health and presented to Hillsboro Medical Center board of trustees for approval. Market comparability data is used to help determine the salary range. The Hospital documents the compensation deliberation and decision for the CEO in the board minutes. Other officer's salaries are reviewed on an annual basis with comparative data. Market adjustments as well as annual increases are approved by the board. This was last completed in December of 2011. Form 990, Part VI, Section C, line 19 The governing documents, conflict of interest policy and financial statements are available upon request. Changes in Net Assets or Fund Balances: Form 990, Part XI, line 5: Net unrealized losses on investments: -35,896. Hillsboro Medical Center Foundation PO Box 609 Hillsboro ND 58045 363542187 Fundraising ND 501(c)(3) 7 Hillsboro Medical Center 1 0 0 1 0 0 0 0 0 0 0 0 1 1 1 0 1 0 0 Hillsboro Medical Center Foundation C 237546