2012-11-14T16:15:02-06:00 2011-12-31 990 2011-01-01 521309257 VALLEY WELLNESS CENTER VALL 5404346224 501 STONE SPRING ROAD HARRISONBURG VA 228011087 J MICHAEL BURRIS 5404346224 2012-11-14 2011 2016-02-24 21:20:13Z RMH WELLNESS CENTER J MICHAEL BURRIS 2010 HEALTH CAMPUS DR HARRISONBURG VA 22801 3033631 0 X N/A X 1990 VA TO PROVIDE PREVENTIVE HEALTH CARE AND REHABILITATION SERVICES. 11 6 168 1 0 0 0 0 2705727 2878589 -29095 0 170504 155042 2847136 3033631 0 0 0 0 1445157 1526531 0 0 0 903113 705190 2348270 2231721 498866 801910 8266517 8529154 103303 92260 8163214 8436894 X NONE 0 0 2116223 3025895 HEALTH AND WELLNESS FACILITY PROVIDING A MEDICAL BASED APPROACH TO PHYSICAL FITNESS. 10364 FAMILY SWIM - AS PART OF RMHWC MEMBERSHIP BENEFITS, WELLNESS CENTER MEMBERS MAY BRING UP TO TWO GUESTS PER ACCOUNT TO THE CENTER'S AQUATICS AREA FROM NOON-3 P.M. ON SATURDAYS AND 1-4 P.M. ON SUNDAYS. FAMILY SWIM CONTINUES TO REPRESENT THE SINGLE LARGEST SOURCE OF COMMUNITY OUTREACH IN TERMS OF STAFF TIME AND EQUIVALENT FINANCIAL VALUE. THE PROGRAM ACCOMMODATES THE NEEDS AND INTERESTS OF BOTH YOUTH AND ADULTS AND IS HEAVILY SUBSCRIBED. 872 SERVED IN 2011. 4276 DONATED INCENTIVES - PERIODICALLY RMHWC INCENTIVES WILL BE DONATED TO SUPPORT VARIOUS PHILANTHROPIC CAUSES WHOSE MISSION IS RELATED TO HEALTH IMPROVEMENT AND EDUCATION. 2483 TOURS - ELEMENTARY AND COLLEGE AGES 5-22 ARE HOSTED BY RMHWC STAFF AS PART OF FIELD TRIPS FOR VARIOUS SCHOOLS AND COMMUNITY YOUTH GROUPS. THE TOURS INCLUDE 15-20 MINUTE NUTRITION EDUCATION LECTURE, 20 MINUTE EXERCISE SESSION, TOUR OF AQUATICS AND WATER SAFETY INFORMATION AND TOUR OF CENTER. 313 PARTICIPATED IN 2011. 1351 HEALTH FAIRS AND SCREENINGS - RMHWC DISSEMINATES RELEVANT HEALTH AND WELLNESS INFORMATION AT VARIOUS OFFSITE EVENTS/LOCATIONS. ALSO INCLUDED ARE BLOOD PRESSURE, BODY COMPOSITION AND CARDIAC RISK SCREENINGS. 497 SEMINARS AND CLASSES - WELLNESS CENTER STAFF ARE OFTEN REQUESTED TO GIVE TALKS, SEMINARS, AND EXERCISE CLASSES ON VARIOUS HEALTH-RELATED TOPICS TO A VARIETY OF COMMUNITY GROUPS. 357 STRIDE INSIDE - RMHWC PROVIDES CONFERENCE ROOM SPACE, REFRESHMENTS, AND ACCESS TO THE TRACK FOR SAFE INDOOR WALKING ONE DAY PER MONTH FOR THE SENIOR ADVANTAGE STRIDE INSIDE PROGRAM. RMHWC ALSO PROVIDES SOME PROGRAMS SUCH AS EXERCISE SESSIONS AND HEALTH LECTURES SOME MONTHS. 51 SERVED IN 2011. 4688 2135551 1 0 0 0 0 0 0 0 0 0 1 0 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 1 X 0 0 1 168 1 0 0 0 0 0 0 0 0 0 0 X 11 6 1 0 1 0 1 1 1 1 1 0 0 1 1 1 1 1 1 1 1 0 X VALLEY WELLNESS CENTER 5404346224 501 STONE SPRING ROAD HARRISONBURG VA 228011087 X W CARLTON BANKS 0.20 X X 0 0 0 A JERRY BENSON 0.20 X 0 0 0 DAVID L BERND 0.20 X 0 3838264 743146 LAWRENCE D BOWERS JR 0.20 X 0 0 0 MENSEL D DEAN JR 0.20 X X 0 0 0 DOUGLAS G DRIVER 0.20 X 0 0 0 JOSEPH K FUNKHOUSER II 0.20 X 0 0 0 C WAYNE GATES MD 0.20 X 0 0 0 ANN E C HOMAN 0.20 X X 0 0 0 ALDEN L HOSTETTER MD 0.20 X 0 0 0 ELMER E KENNEL MD 0.20 X 0 0 0 HOWARD P KERN 0.20 X X 0 1612156 910858 KENNETH M KRAKAUR 0.20 X 0 1003009 184819 ALLON H LEFEVER 0.20 X 0 0 0 W NEAL MENEFEE 0.20 X 0 0 0 JAMES R MESSNER 0.20 X X 0 0 0 GEORGE W PACE 0.20 X 0 0 0 STEWART G POLLOCK MD 0.20 X 0 0 0 BARBARA B STOLTZFUS 0.20 X 0 0 0 MICHAEL R KING 0.20 X 0 336324 80969 JAMES D KRAUSS 0.20 X 0 633239 121323 P RICHARD PIERCE 0.20 X 0 248120 178018 0 7671112 2219133 0 0 1 0 0 MEMBERSHIP FEES 713940 2311319 2311319 PROGRAM FEES 713940 441742 441742 EXTERNAL MANAGEMENT SE 713940 97890 97890 OTHER FEES 713940 27638 27638 2878589 150953 150953 150953 147306 3647 MISCELLANEOUS OTHER RE 713940 4089 4089 4089 3033631 3025895 0 7736 1302316 1302316 15649 15649 108659 108659 99907 99907 3390 3390 32973 32952 21 107511 83789 23722 238916 238916 3073 3073 1779 50 1729 147277 147277 PURCHASED SERVICES 67278 61536 5742 TAXES & LICENSES 50096 50096 BAD DEBTS 20376 20376 MEDICAL SUPPLIES 20118 20118 12403 933 11470 2231721 2135551 96170 0 56368 96121 49295 60147 4054 4922 1575 10766 3923281 61658 4750018 3861623 3405207 4495575 8266517 8529154 26784 28684 76519 63576 103303 92260 X 8163214 8436894 8163214 8436894 8266517 8529154 X 801910 -528230 X X 0 1 1 X 0 X 2557768 2663215 2627892 2689828 2882678 13421381 2557768 2663215 2627892 2689828 2882678 13421381 0 0 0 13421381 178869 190809 148330 152609 150953 821570 178869 190809 148330 152609 150953 821570 15343 16052 15996 17896 65287 2751980 2870076 2792218 2860333 3033631 14308238 0.93800 0.93230 0.05740 0.06180 X 2510122 2510122 1064996 21515 1043481 335743 38763 296980 12420 1380 11040 3861623 DUE FROM ROCKINGHAM MEMORIAL HOSPITAL 4495575 4495575 1 1 0 0 0 0 0 0 0 DAVID L BERND 0 1060556 0 1541673 0 1236035 0 718589 0 24557 0 4581410 0 0 HOWARD P KERN 0 726289 0 868885 0 16982 0 888823 0 22035 0 2523014 0 0 KENNETH M KRAKAUR 0 453890 0 457834 0 91285 0 159233 0 25586 0 1187828 0 7755 MICHAEL R KING 0 252679 0 29700 0 53945 0 54859 0 26110 0 417293 0 0 JAMES D KRAUSS 0 480386 0 41400 0 111453 0 94814 0 26509 0 754562 0 0 P RICHARD PIERCE 0 71427 0 30764 0 145929 0 170141 0 7877 0 426138 0 0 PART I, LINE 3 ROCKINGHAM MEMORIAL HOSPITAL, THE 501(C)(3) SOLE MEMBER OF THE ORGANIZATION EFFECTIVE MAY 1, 2011, ESTABLISHED THE COMPENSATION OF THE ORGANIZATION'S TOP MANAGEMENT OFFICIAL THROUGH THE USE OF A COMPENSATION COMMITTEE, AN INDEPENDENT COMPENSATION CONSULTANT, FORM 990 OF OTHER ORGANIZATIONS, A WRITTEN EMPLOYMENT CONTRACT, A COMPENSATION STUDY, AND APPROVAL BY ITS BOARD OF DIRECTORS. PART I, LINES 4A-B RECEIVED SEVERANCE PAYMENT AND/OR SUPPLEMENTAL NQ RETIREMENT P. RICHARD PIERCE, VICE PRESIDENT THROUGH 4/2011, RECEIVED $128,436 IN COMPENSATION RELATED TO HIS SEPARATION FROM SERVICE. THIS AMOUNT HAS BEEN INCLUDED IN COLUMN (B)(III) OF SCHEDULE J, PART II. HOWARD KERN PARTICIPATES IN THE SENTARA SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. PARTICIPATION IN THE PLAN IS LIMITED TO SELECT INDIVIDUALS AS APPROVED BY SENTARA HEALTHCARE'S BOARD OF DIRECTOR'S COMPENSATION COMMITTEE. THE PLAN IS CURRENTLY CLOSED TO ADDITIONAL MEMBERS. VESTING OCCURS UPON THE COMPLETION OF A TWO YEAR NON-COMPETE PERIOD FOLLOWING TERMINATION AFTER EARLY RETIREMENT DATE OR UPON DEATH. EARLY RETIREMENT DATE IS WHEN THE EXECUTIVE OBTAINS AT LEAST AGE 55 AND HAS 10 YEARS OF SERVICE AND BENEFITS ARE FORFEITED IF PARTICIPANT LEAVES PRIOR TO AGE 55 WITH 10 YEARS OF SERVICE. DAVID BERND PARTICIPATES IN AN INDIVIDUAL SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. VESTING OCCURS EACH DECEMBER 31 AND THE PRESENT VALUE OF THE ADDITIONAL ACCRUAL IS DISTRIBUTED IN A TAXABLE LUMP SUM. FOR 2011, MR. BERND RECEIVED A TOTAL LUMP SUM DISTRIBUTION OF $1,192,399. THIS AMOUNT HAS BEEN REPORTED IN COLUMN(B)(III) OF SCHEDULE J, PART II. DAVID BERND AND HOWARD KERN PARTICIPATE IN THE SENTARA OPTION PLAN FOR EXECUTIVES. THIS PLAN IS UNRELATED TO "EQUITY" OF THE EMPLOYER. PARTICIPATION IS LIMITED TO SELECT INDIVIDUALS AS APPROVED BY SENTARA HEALTHCARE'S BOARD OF DIRECTOR'S COMPENSATION COMMITTEE. VESTING IS DETERMINED BY THE GOVERNING BOARD OF SENTARA HEALTHCARE AND IS SEPARATELY STATED IN EACH PARTICIPANT'S OPTION AGREEMENT. THERE WERE NO OPTIONS GRANTED AFTER 2002. DAVID BERND, HOWARD KERN, AND KENNETH KRAKAUR PARTICIPATE IN THE SENTARA CAPITAL ACCUMULATION ACCOUNT PLAN. PARTICIPATION IS LIMITED TO A SELECT GROUP OF CORPORATE EXECUTIVES AS APPROVED BY SENTARA HEALTHCARE'S BOARD OF DIRECTOR'S COMPENSATION COMMITTEE. TERMS OF THE PLAN CHANGED EFFECTIVE JANUARY 1, 2009, WHEREBY VESTING OF CONTRIBUTIONS MADE ON OR AFTER THAT DATE NOW OCCURS ON THE EARLIER OF FIVE YEARS FOR EACH YEARS' CONTRIBUTIONS OR AGE 55 WITH 10 YEARS OF SERVICE. UNDER THE OLD TERMS, VESTING OF CONTRIBUTIONS MADE PRIOR TO JANUARY 1, 2009 OCCURS ON THE EARLIEST OF ASSIGNED DISTRIBUTION DATE, DEATH, INVOLUNTARY TERMINATION WITHOUT CAUSE OR COMPLETION OF TWO-YEAR NON-COMPETE AFTER VOLUNTARY TERMINATION (REGARDLESS OF ORIGINAL ASSIGNED DISTRIBUTION DATE). DURING 2011, KENNETH KRAKAUR RECEIVED $71,345 IN VESTED DISTRIBUTIONS UNDER THE PLAN. THIS AMOUNT HAS BEEN REPORTED IN COLUMN(B)(III) OF SCHEDULE J, PART II. SENTARA HEALTHCARE OWNED A SPOUSAL SURVIVOR SPLIT-DOLLAR LIFE INSURANCE POLICY FOR KENNETH KRAKAUR. THE SPLIT DOLLAR PLAN PROVIDES FOR TRANSFER OF THE POLICY TO THE PARTICIPANT UPON CERTAIN EVENTS. AT TRANSFER (OR THE PARTICIPANT'S DEATH), THE ORGANIZATION RECOVERS THE PREMIUMS THAT IT HAS PAID. DURING 2011, THE SPOUSAL SURVIVOR SPLIT-DOLLAR LIFE INSURANCE POLICY FOR KENNETH KRAKAUR WAS SURRENDERED. THE POLICY VALUE REMAINING AFTER REDUCTION FOR CORPORATE RECOVERY OF PREMIUMS AND AFTER TAX ART AMOUNTS WAS $10,147. THIS AMOUNT WAS TREATED AS ADDITIONAL TAXABLE COMPENSATION AND HAS BEEN REPORTED IN COLUMN(B)(III) OF SCHEDULE J PART II. JAMES KRAUSS AND MIKE KING PARTICIPATE IN ROCKINGHAM MEMORIAL HOSPITAL'S SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. PARTICIPATION IS LIMITED TO THE HOSPITAL'S CEO, CMO, COO, AND CFO POSITIONS. THE PLAN IS A DEFINED CONTRIBUTION PLAN WITH ANNUAL CONTRIBUTIONS EQUAL TO A FIXED PERCENT OF TOTAL COMPENSATION. THE FIXED PERCENT IS SET AT PLAN ENTRY AND NEVER ADJUSTED REGARDLESS OF WHETHER OR NOT ASSUMPTIONS ARE REALIZED. CONTRIBUTIONS ARE MADE AT THE END OF THE PLAN YEAR TO ACTIVE EXECUTIVES (NOT PAID IF SEPARATION OF SERVICE DURING YEAR.) DURING 2011, DISTRIBUTIONS UNDER THE PLAN WERE AS FOLLOWS: JAMES KRAUSS ($95,266); MIKE KING ($44,633). THESE AMOUNTS HAVE BEEN REPORTED IN COLUMN(B)(III) OF SCHEDULE J, PART II. FORM 990, PART V, LINE 1A: FORM 1096 THE 501(C)(3) SOLE MEMBER OF THE ORGANIZATION, ROCKINGHAM MEMORIAL HOSPITAL, MAINTAINS AN AGENCY RELATIONSHIP WITH THE ORGANIZATION AND ISSUES ALL 1099S ON ITS BEHALF. THE NUMBER OF THE 1099S ATTRIBUTABLE TO THE ORGANIZATION CANNOT BE DETERMINED; AS SOME OF THE 1099S ISSUED BY THE AGENT ARE ATTRIBUTABLE TO MORE THAN ONE ENTITY, AND THERE IS NO REPORTING MECHANISM TO DETERMINE 1099'S ATTRIBUTABLE SOLELY TO THE ORGANIZATION. FORM 990, PART I LINE 5 AND PART V LINE 2A THE 501(C)(3) SOLE MEMBER OF THE ORGANIZATION, ROCKINGHAM MEMORIAL HOSPITAL, ACTS AS COMMON PAY AGENT FOR THE ORGANIZATION AND ISSUES ALL FORM W-2S ON ITS BEHALF. SINCE THE AGENT HAS NO REPORTING MECHANISM TO DETERMINE W-2S ATTRIBUTABLE SOLELY TO THE ORGANIZATION, THE NUMBER REPORTED APPROXIMATES THE NUMBER OF W-2S ISSUED BY THE AGENT ON BEHALF OF THE ORGANIZATION. FORM 990, PART VI, SECTION A, LINE 2 BUSINESS OR FAMILY RELATIONSHIP OF OFFICERS, DIRECTORS, ETC. DAVID BERND AND HOWARD KERN HAVE A BUSINESS RELATIONSHIP THROUGH COMMON OWNERSHIP OF AN ENTITY UNRELATED TO THE ORGANIZATION. THE ORGANIZATION'S OFFICERS AND DIRECTORS SERVED TOGETHER ON THE BOARDS OF OTHER TAXABLE ORGANIZATIONS WITHIN THE SENTARA HEALTHCARE SYSTEM ("THE SYSTEM"), AS WELL AS JOINT VENTURES IN WHICH THE SYSTEM HAD AN OWNERSHIP INTEREST. SEE SCHEDULE R FOR A LISTING OF SUCH ENTITIES. FORM 990, PART VI, SECTION A, LINE 4 SIGNIFICANT CHANGES MADE TO GOVERNING DOCUMENTS ON DECEMBER 6, 2010, ROCKINGHAM MEMORIAL HOSPITAL ("RMH"), A 501(C)(3) AFFILIATE, REPLACED ROCKINGHAM HEALTH CARE, INC. ("RHC") AS SOLE MEMBER OF THE ORGANIZATION. THE MEMBER CHANGE OCCURRED IN ACCORDANCE WITH AN AFFILIATION AGREEMENT AMONG RHC, RMH, AND SENTARA HEALTHCARE, A 501(C)(3) ORGANIZATION ("SENTARA"), WHEREBY SENTARA REPLACED RHC AS THE SOLE MEMBER OF RMH. AS A RESULT OF THE AFFILIATION, THE ORGANIZING AND GOVERNING DOCUMENTS OF THE ORGANIZATION WERE CHANGED IN THE FOLLOWING MANNER: ---RHC REPLACED RMH AS SOLE MEMBER OF THE ORGANIZATION. ---UPON ANY LIQUIDATION OR DISSOLUTION OF THE ORGANIZATION, ITS REMAINING ASSETS SHALL BE DISTRIBUTED TO RMH. FORM 990, PART VI, SECTION A, LINE 6 EXPLANATION OF CLASSES OF MEMBERS OR SHAREHOLDERS THE ORGANIZATION HAD ONE CLASS OF MEMBER. EFFECTIVE MAY 1, 2011, THE SOLE MEMBER WAS ROCKINGHAM MEMORIAL HOSPITAL, A VIRGINIA NONSTOCK CORPORATION DESCRIBED IN SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE. THE ORGANIZATION'S SOLE MEMBER PRIOR TO MAY 1, 2011, WAS ROCKINGHAM HEALTH CARE, INC., A VIRGINIA NONSTOCK CORPORATION DESCRIBED IN SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE. FORM 990, PART VI, SECTION A, LINE 7A HOW MEMBERS OR SHAREHOLDERS ELECT GOVERNING BODY PRIOR TO MAY 1, 2011, THE DATE OF AFFILIATION WITH THE SENTARA HEALTHCARE SYSTEM, MEMBERS OF THE GOVERNING BODY WERE ELECTED BY THE ORGANIZATION'S FORMER SOLE MEMBER, ROCKINGHAM HEALTH CARE, INC. EFFECTIVE MAY 1, 2011, ROCKINGHAM MEMORIAL HOSPITAL REPLACED ROCKINGHAM HEALTH CARE, INC. AS SOLE MEMBER OF THE ORGANIZATION AND APPOINTED MEMBERS OF THE GOVERNING BODY IN ACCORDANCE WITH THE AFFILIATION AGREEMENT. FORM 990, PART VI, SECTION A, LINE 7B DECISIONS OF GOVERNING BODY APPROVAL BY MEMBERS OR SHAREHOLDERS THE ORGANIZATION MAY NOT TAKE OR ALLOW ANY OF THE FOLLOWING GOVERNANCE ACTIONS WITHOUT THE CONSENT OF SENTARA HEALTHCARE, THE 501(C)(3) SOLE MEMBER OF ROCKINGHAM MEMORIAL HOSPITAL: APPROVAL OR ADOPTION OF ANY PLAN OF MERGER OR CONSOLIDATION, ANY SALE, LEASE, EXCHANGE, MORTGAGE, PLEDGE OR OTHER DISPOSITION OF ALL, OR SUBSTANTIALLY ALL, THE PROPERTY AND ASSETS OF THE ORGANIZATION, THE VOLUNTARY DISSOLUTION OR LIQUIDATION OF THE ORGANIZATION, REVOCATION OF AN SUCH VOLUNTARY DISSOLUTION PROCEEDINGS, OR ANY DECISION TO FILE A PETITION REQUESTING OR CONSENTING TO AN ORDER FOR RELIEF UNDER THE FEDERAL BANKRUPTCY LAWS OR SIMILAR STATE LAWS FOR THE ORGANIZATION; ELECTION OF NEW BOARD MEMBERS; OR AMENDMENT, RESTATEMENT OR REPEAL OF ANY ORGANIZING OR ENABLING DOCUMENTS OR BYLAWS. THE APPROVAL OF THE SOLE MEMBER IS ALSO REQUIRED FOR CERTAIN OPERATIONAL ACTIONS, AS OUTLINED IN THE ORGANIZATION'S BYLAWS. SUCH ACTIONS INCLUDE, BUT ARE NOT LIMITED TO, APPROVAL OF STRATEGIC PLANS AND ANNUAL OPERATING AND CAPITAL BUDGETS; TRANSACTIONS WITH INTERESTED PERSONS; CREATION OR ACQUISITION OF SUBSIDIARIES OR INTERESTS IN WHICH THE ORGANIZATION WILL BE A MEMBER; ENTRANCE INTO JOINT VENTURE OR OTHER SIMILAR ARRANGEMENTS; EMPLOYMENT MATTERS CONCERNING THE ORGANIZATION'S PRESIDENT; UNBUDGETED CAPITAL EXPENDITURES OR INDEBTEDNESS OVER SPECIFIED DOLLAR AMOUNTS; AND THE COMMENCEMENT OR SETTLEMENT OF LITIGATION. FORM 990, PART VI, SECTION B, LINE 11 THE ORGANIZATION WAS PART OF THE SENTARA HEALTHCARE SYSTEM ("THE SYSTEM"), AND AS SUCH, USED THE SYSTEM'S IN-HOUSE TAX DEPARTMENT, HEADED BY A LICENSED CERTIFIED PUBLIC ACCOUNTANT, TO BOTH PREPARE AND REVIEW ITS FORM 990. DURING THE PREPARATION AND REVIEW PROCESS, THE TAX DEPARTMENT WORKED CLOSELY WITH THE ORGANIZATION AND OTHER SYSTEM DEPARTMENTS, SUCH AS LEGAL, COMPENSATION AND BENEFITS, COMPLIANCE, FINANCE, AND MARKETING, TO ENSURE THAT A COMPLETE AND ACCURATE RETURN WAS FILED. FORM 990, PART VI, SECTION B, LINE 12C ALL MEMBERS WITH ANY CONFLICT OF INTEREST ARE MADE AWARE OF THE NEED TO EXCUSE THEMSELVES FROM PARTICIPATING IN ANY DISCUSSION OR VOTING ON ANY ISSUES WHERE THERE MAY BE A CONFLICT. OFFICERS OF THE ORGANIZATION ARE AWARE OF THEIR DUTIES AND RESPONSIBILITIES IN REGARDS TO THIS ISSUE. FORM 990, PART VI, SECTION B, LINE 15 PRESIDENT/CEO: AN INDEPENDENT COMPENSATION CONSULTING FIRM WAS RETAINED BY ROCKINGHAM MEMORIAL HOSPITAL'S BOARD OF DIRECTORS (BOD) TO COMPLETE MARKET ANALYSIS AND RECOMMEND PRESIDENT/CEO COMPENSATION CHANGES. THE BOD APPROVES ALL COMPENSATION CHANGES FOR THE PRESIDENT/CEO. OFFICERS: AN INDEPENDENT COMPENSATION CONSULTING FIRM WAS RETAINED BY ROCKINGHAM MEMORIAL HOSPITAL'S BOARD OF DIRECTORS (BOD) TO COMPLETE MARKET ANALYSIS AND RECOMMEND OFFICER AND KEY EMPLOYEE COMPENSATION CHANGES. THE BOD APPROVES ALL COMPENSATION CHANGES FOR THE OFFICERS AND KEY EMPLOYEES. VICE CHAIRMAN: THE VICE CHAIRMAN ALSO SERVES AS THE COO/PRESIDENT OF THE SENTARA HEALTHCARE SYSTEM ("SENTARA"), WHICH AFFILIATED WITH THE ORGANIZATION EFFECTIVE MAY 1, 2011. SENTARA FOLLOWED PROCESSES AND PROCEDURES SET FORTH IN ITS GOVERNING DOCUMENTS TO ENSURE COMPLIANCE WITH ITS OBLIGATIONS AS A 501(C)(3) HEALTHCARE ORGANIZATION TO PAY DISQUALIFIED PERSONS REASONABLE COMPENSATION. SUCH PROCESSES AND PROCEDURES ARE INTENDED TO ESTABLISH THE REBUTTABLE PRESUMPTION OF REASONABLENESS UNDER THE INTERNAL REVENUE CODE SECTION 4958 REGULATIONS. THE COMPENSATION PHILOSOPHY OF SENTARA IS TO BASE OVERALL COMPENSATION AND BENEFITS FOR EXECUTIVES ON MARKET COMPARABLES, ADJUSTED AS APPLIED TO EACH EXECUTIVE, TAKING INTO CONSIDERATION THE INDIVIDUAL SKILLS, EXPERIENCE, TENURE AND PERFORMANCE OF THE EXECUTIVE BEING COMPENSATED AND OVERALL PERFORMANCE OF THE ORGANIZATION. IN LINE WITH THIS PHILOSOPHY, SENTARA PERFORMED SUBSTANTIAL DUE DILIGENCE AS TO MARKET COMPARABLES. SENTARA'S COMPENSATION COMMITTEE, WHICH CONSISTS OF BOARD MEMBERS WITHOUT CONFLICTS OF INTERESTS, ENGAGED AN OUTSIDE CONSULTANT, WHO REPORTS TO THE COMPENSATION COMMITTEE, TO CONDUCT A STUDY ASSESSING THE COMPETITIVENESS OF TOTAL COMPENSATION (INCLUDING CASH COMPENSATION, BENEFITS AND PERQUISITES) OF ITS SENIOR EXECUTIVES PRIOR TO MAKING DECISIONS REGARDING ANNUAL BASE SALARY ADJUSTMENTS, APPROVING INCENTIVE AWARDS, OR CONSIDERING PROGRAMMATIC CHANGES. THE STUDY COMPARED THE COMPENSATION OF THE SENTARA'S SENIOR EXECUTIVES TO COMPENSATION DATA FROM MULTIPLE PUBLISHED SURVEY SOURCES BASED ON THE SENIOR EXECUTIVE'S FUNCTIONAL RESPONSIBILITY. IN CONDUCTING THE STUDY, THE CONSULTANT TARGETED OTHER HEALTH SYSTEMS OF SIMILAR SIZE BASED ON NET REVENUE AND COMPLEXITY. FOR HEALTH PLAN POSITIONS, HEALTH PLANS WITH SIMILAR PREMIUMS, OR MEMBERS, WERE TARGETED. THE CONSULTANT ALSO CONDUCTS A REVIEW OF SENTARA'S PERFORMANCE RELATIVE TO A GROUP OF NOT-FOR-PROFIT HEALTH SYSTEMS OF COMPARABLE SIZE AND SCOPE OF OPERATIONS EVERY TWO TO THREE YEARS. THE MOST RECENT STUDY COMPARED SENTARA'S PERFORMANCE TO 19 HEALTHCARE SYSTEMS BASED ON NET REVENUE GROWTH, OPERATING MARGIN, BOND RATING, AND QUALITATIVE PERFORMANCE MEASURES BASED ON RANKINGS FROM SDI'S NATIONAL TOP INTEGRATED HEALTH NETWORKS. OVERALL, THE CONSULTANT DETERMINED THAT SENTARA'S PAY WAS ALIGNED WITH ITS RELATIVE PERFORMANCE. THE COMPENSATION STUDY WAS PRESENTED TO SENTARA'S COMPENSATION COMMITTEE, WHICH MADE ITS COMPENSATION DECISIONS BASED ON A)ITS REVIEW AND ANALYSIS OF THE PERFORMANCE OF BOTH THE ORGANIZATION AND ITS SENIOR EXECUTIVES AND, B) A REASONABLENESS OF COMPENSATION ANALYSIS AND OPINION FROM AN EXTERNAL EXPERT IN THE COMPENSATION OF EXECUTIVES IN THE TAX-EXEMPT HEALTH CARE FIELD. THE COMMITTEE'S BASES FOR ITS DECISIONS WERE DOCUMENTED IN COMMITTEE MINUTES TAKEN DURING THE MEETING AND THEN CIRCULATED FOR REVIEW AND APPROVAL. ALL DECISIONS REGARDING COMPENSATION WERE MADE BY THE COMMITTEE, WHICH CONSISTS OF BOARD MEMBERS WITHOUT CONFLICT OF INTERESTS. FORM 990, PART VI, SECTION C, LINE 19 UPON REQUEST FORM 990, PART VII COMPENSATION OF OFFICERS, DIRECTORS, TRUSTEES, KEY EMPLOYEES, HIGHEST COMPENSATED EMPLOYEES, AND INDEPENDENT CONTRACTORS. HOURS DEVOTED TO RELATED ORGANIZATIONS W. CARLTON BANKS DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. A. JERRY BENSON DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. DAVID BERND DEVOTED AN AVERAGE OF 51 HOURS PER WEEK TO RELATED ORGANIZATIONS. LAWRENCE D. BOWERS, JR. DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. MENSEL D. DEAN, JR. DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. DOUGLAS G. DRIVER DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. JOSEPH K. FUNKHOUSER, II DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. C. WAYNE GATES, M.D. DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. ANN E. C. HOMAN DEVOTED AN AVERAGE OF 5 HOURS PER WEEK TO RELATED ORGANIZATIONS. ALDEN L. HOSTETTER, M.D. DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. ELMER E. KENNEL, M.D. DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. HOWARD P. KERN DEVOTED AN AVERAGE OF 52 HOURS PER WEEK TO RELATED ORGANIZATIONS. KENNETH M. KRAKAUR DEVOTED AN AVERAGE OF 50 HOURS PER WEEK TO RELATED ORGANIZATIONS. ALLON H. LEFEVER DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. W. NEAL MENEFEE DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. JAMES R. MESSNER DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. GEORGE W. PACE DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. STEWART G. POLLOCK, M.D. DEVOTED AN AVERAGE OF 2 HOURS PER WEEK TO RELATED ORGANIZATIONS. BARBARA STOLTZFUS DEVOTED AN AVERAGE OF 3 HOURS PER WEEK TO RELATED ORGANIZATIONS. MICHAEL R. KING DEVOTED AN AVERAGE OF 40 HOUR PER WEEK TO RELATED ORGANIZATIONS. JAMES D. KRAUSS DEVOTED AN AVERAGE OF 40 HOUR PER WEEK TO RELATED ORGANIZATIONS. P. RICHARD PIERCE DEVOTED AN AVERAGE OF 40 HOURS PER WEEK TO RELATED ORGANIZATIONS. CHANGES IN NET ASSETS OR FUND BALANCES: FORM 990, PART XI, LINE 5: ASU 2010-07 FAIR MARKET VALUE ADJUSTMENTS -528,230. TOTAL TO FORM 990, PART XI, LINE 5: -528,230. CHANGES IN AUDITED FINANCIAL STATEMENT OVERSIGHT PROCESS FORM 990, PART XII, LINE 2C: DURING THE YEAR, THE ORGANIZATION AFFILIATED WITH THE SENTARA HEALTHCARE SYSTEM, WHO ASSUMED RESPONSIBILITY FOR OVERSIGHT OF THE AUDIT OF THE FINANCIAL STATEMENTS AND SELECTED THE INDEPENDENT ACCOUNTANT. STATEMENT FILED PURSUANT TO TREASURY REGULATION SEC. 1.6038-2(J)(3): THE TAXPAYER IS A MEMBER OF THE SENTARA HEALTHCARE ("SHC") CONTROLLED GROUP. SHC, EIN 52-1271901, OWNS BAY PRIMEX INSURANCE COMPANY, LTD., A CONTROLLED FOREIGN CORPORATION. SHC FURNISHES ALL INFORMATION REQUIRED OF THE TAXPAYER BY IRC SECTION 6038 AND THE REGULATIONS THEREUNDER WITH RESPECT TO BAY PRIMEX INSURANCE COMPANY, LTD. THEREFORE, PURSUANT TO TREASURY REGULATION SEC. 1.6038-2(J)(2), THE TAXPAYER IS EXCEPTED FROM PROVIDING SUCH INFORMATION. THE REQUIRED INFORMATION IS E-FILED WITH SHC'S FORM 990 RETURN OF ORGANIZATION EXEMPT FROM INCOME TAX. IN ADDITION, TWO OTHER MEMBERS OF THE SHC CONTROLLED GROUP OWN NON-CONTROLLING INTERESTS IN VIRGINIA SOLUTIONS SPC, LTD., A CONTROLLED FOREIGN CORPORATION. ALL INFORMATION REQUIRED OF THE TAXPAYER BY IRC SECTION 6038 AND THE REGULATIONS THEREUNDER WITH RESPECT TO VIRGINIA SOLUTIONS SPC, LTD. IS FURNISHED BY MARTHA JEFFERSON HOSPITAL, EIN 54-0261840, AND ROCKINGHAM MEMORIAL HOSPITAL, EIN 54-0506331. THEREFORE, PURSUANT TO TREASURY REGULATION SEC. 1.6038-2(J)(2), THE TAXPAYER IS EXCEPTED FROM PROVIDING SUCH INFORMATION. THE REQUIRED INFORMATION IS E-FILED WITH THE ORGANIZATIONS' FORM 990 RETURNS OF ORGANIZATION EXEMPT FROM INCOME TAX. 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