2012-11-12T11:34:58-06:00 2011-12-31 990 2011-01-01 411768814 WESTHEALTH INC WEST 6122620660 PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 LAURIE LAFONTAINE 6122620660 2012-11-12 2011 2016-02-24 21:20:13Z X BRIAN WEINREIS PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 25408222 0 X WWW.WESTHEALTH.COM X 1994 MN WORKING TOGETHER TO PROVIDE QUALITY, CONVENIENT AND TRUSTED CARE FOR OUR PATIENTS AND THE COMMUNITY. 3 0 228 0 60296 53296 0 0 22283889 20783953 89371 93501 4182816 4529432 26556076 25406886 0 1100 0 0 9295951 9672890 0 0 0 15333961 16930362 24629912 26604352 1926164 -1197466 32635360 57846721 34500254 33996377 -1864894 23850344 X FOR 17 YEARS, WESTHEALTH HAS WELCOMED AND CARED FOR THE COMMUNITY WITH EXCEPTIONAL OUTPATIENT SERVICES DESIGNED TO FIT OUR GUESTS' BUSY LIFESTYLES, PRIMARILY PATIENTS IN THE WESTERN SUBURBS OF MINNEAPOLIS. 0 0 11360743 10461910 SAME DAY SURGERY - AT WESTHEALTH, WE PRIDE OURSELVES ON ATTENTIVE AND PERSONALIZED PATIENT CARE. OUR SURGERY DEPARTMENT PROVIDES STATE OF THE ART ANESTHESIA TECHNIQUES AND SURGICAL EQUIPMENT. IN 2011 WESTHEALTH PERFORMED 6,941 SURGERIES. 5697662 6108261 IMAGING AND WOMEN'S IMAGING - OUR REGISTERED TECHNOLOGISTS AND BOARD CERTIFIED RADIOLOGISTS ALL HAVE ADDITIONAL SPECIALTY CERTIFICATION. WESTHEALTH PERFORMS ROUTINE MAMMOGRAMS TO GENERAL X-RAY, AS WELL AS HIGH TECH IMAGING TESTS INCLUDING MRI AND CT SCANS, FLUOROSCOPY AND BONE DENSITY TESTS. IN 2011 WESTHEALTH PERFORMED 35,474 IMAGING EXAMS. 4290492 3866219 WESTHEALTH'S URGENT CARE AND EXPRESS CARE OFFER A CONVENIENT ALTERNATIVE WHEN A PATIENT IN NEED FINDS HIS OR HER MEDICAL CLINIC CLOSED OR PHYSICIAN UNAVAILABLE. WESTHEALTH TREATS PATIENTS OF ALL AGES AND A PHYSICIAN IS ALWAYS ON SITE. OUR PHYSICIANS HAVE ACCESS TO A FULL RANGE OF DIAGNOSTIC SERVICES INCLUDING LAB, X-RAY, MRI AND CT SCANS, AS WELL AS AN ON-SITE PHARMACY. IN 2011 WESTHEALTH'S URGENT CARE/EXPRESS CARE HAD 32,194 VISITS. 495546 347563 WESTHEALTH ALSO PROVIDES SOME OUTPATIENT LAB SERVICES. 495546 347563 21844443 1 0 0 0 0 0 0 0 0 0 1 1 0 0 1 1 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 0 0 0 0 1 27 0 1 228 1 1 1 0 0 0 0 0 0 0 0 0 X 3 0 0 1 1 0 1 1 1 1 1 0 0 1 1 1 1 1 1 1 1 1 1 MN X TAX SERVICES MAIL ROUTE 10890 6122620660 2925 CHICAGO AVENUE MINNEAPOLIS MN 554071321 BEN BACHE-WIIG MD 40.00 X X 0 431597 82284 BRIAN WEINREIS 40.00 X X 0 277949 76279 ROBERT WIELAND MD 40.00 X X 0 826528 255577 KATE DASS 40.00 X 75543 0 17505 KURT NEIL 40.00 X 127337 0 29359 SUSAN DURKIN 40.00 X 0 182712 35672 DARYL SCHROEDER 40.00 X 0 330127 76200 LINDA DAHLIN 40.00 X 126763 0 27130 DARLENE FLINT 40.00 X 137168 0 26357 DAVID KIEFFER 40.00 X 128686 0 24701 NANCY SCHMIDT 40.00 X 142757 0 25025 MICHAEL STADTHER 40.00 X 188298 0 32040 926552 2048913 708129 13 0 1 0 NORTH MEMORIAL HEALTH CARE 3300 OAKDALE AVENUE N ROBBINSDALE MN 55422 MANAGEMENT & PHYSICIAN SERVICES 2634924 AMERISOURCEBERGEN PO BOX 959 VALLEY FORGE PA 19482 PHARMACEUTICAL SERVICES 312956 MINNEAPOLIS RADIOLOGY 2800 CAMPUS DR SUITE 30 PLYMOUTH MN 55441 RADIOLOGY SERVICES 136680 MMIC 7650 EDINBOROUGH WAY MINNEAPOLIS MN 55435 INSURANCE 126938 CRESA PARTNERS 920 SECOND AVENUE SOUTH SUITE 900 MINNEAPOLIS MN 55402 REAL ESTATE SERVICES 102076 6 NET PATIENT SERVICES 621400 20686726 20686726 OTHER OPERATING REVENU 621400 97227 97227 20783953 94837 94837 4469136 0 4469136 4469136 4469136 1336 -1336 -1336 -1336 OTHER INCOME 533110 60296 60296 60296 25406886 20783953 60296 4562637 1100 1100 202880 202880 7598704 7082581 516123 265594 246249 19345 935272 867148 68124 670440 621606 48834 760476 760476 6138 6138 14000 14000 1701191 1208512 492679 52145 52145 860904 591996 268908 490084 490084 2814123 1100319 1713804 14103 4403 9700 15503 12666 2837 1149099 1149099 2337402 2337402 241443 241443 MEDICAL SUPPLIES 2578449 2578449 PROFESSIONAL SERVICES 2082523 2082523 SERVICE CONTRACT/EQUIPM 634580 634580 MN CARE TAX 406074 406074 772125 678293 93832 26604352 21844443 4759909 0 1511614 4348082 5999998 3331782 1221840 338620 160977 44809248 1430426 16957719 43378822 1744273 567817 5223833 4950419 530074 216211 32635360 57846721 3581835 2542420 10980168 18555251 20390000 1383000 11063957 34500254 33996377 X -1864894 23850344 -1864894 23850344 32635360 57846721 X -1197466 26912704 X X 0 1 1 X 0 X 413000 413000 42131514 994156 41137358 2264734 436270 1828464 43378822 MUTUAL FUNDS 4950419 F 4950419 CURRENT PORTION OF LTD 9215953 DUE TO AFFILIATES 1848004 11063957 DESCRIPTION OF UNCERTAIN TAX POSITIONS UNDER FIN 48: PART X: ALLINA HEALTH SYSTEM CONSOLIDATED FIN 48 (ASC740) FOOTNOTE: (AMOUNTS IN THOUSANDS) (17)TAXES THE SYSTEM HAS BEEN DETERMINED TO QUALIFY AS A TAX EXEMPT ORGANIZATION UNDER SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE. THE SYSTEM HAS ALSO BEEN DETERMINED TO BE EXEMPT FROM FEDERAL AND STATE INCOME TAX ON RELATED INCOME UNDER SECTION 501(A) OF THE INTERNAL REVENUE CODE AND MINNESOTA STATUTE SECTION 290.05, SUBDIVISION 2. CERTAIN OF THE SYSTEM'S SUBSIDIARIES AND AFFILIATES QUALIFY AS TAX EXEMPT ORGANIZATIONS, WHILE OTHERS ARE TAXABLE. THE SYSTEM AND ITS SUBSIDIARIES PAID TAXES OF $1,270 AND $1,279 IN 2011 AND 2010, RESPECTIVELY. AS OF DECEMBER 31, 2011 AND 2010, THE TAXABLE SUBSIDIARIES OF THE SYSTEMS CONTINUING OPERATIONS HAD A GROSS DEFERRED TAX ASSET OF $76,553 AND $74,064, RESPECTIVELY, RESULTING FROM NET OPERATING LOSS CARRY FORWARDS, EMPLOYEE COMPENSATION AND BENEFITS ACCRUALS, PROVISION FOR BAD DEBTS, AND LIMITATION OF CHARITABLE CONTRIBUTIONS, OFFSET BY VALUATION ALLOWANCES OF $75,746 AND $73,766, RESPECTIVELY, AND A GROSS DEFERRED TAX LIABILITY OF $806 AND $298, RESPECTIVELY, PRIMARILY ATTRIBUTABLE TO DEPRECIATION AND A CHANGE IN ACCOUNTING METHOD OF A TAXABLE SUBSIDIARY. THE VALUATION ALLOWANCE INCREASED BY $1,980 AND $2,577 DURING 2011 AND 2010, RESPECTIVELY. AS OF DECEMBER 31, 2011, THE CONTINUING OPERATIONS OF THE SYSTEM AND ITS SUBSIDIARIES HAD NET OPERATING LOSS CARRY FORWARDS OF $156,593 FOR INCOME TAX PURPOSES, WHICH EXPIRE IN VARIOUS YEARS THROUGH 2031. INCOME TAXES ARE ACCOUNTED FOR UNDER THE ASSET AND LIABILITY METHOD. DEFERRED TAX ASSETS AND LIABILITIES ARE RECOGNIZED FOR THE FUTURE TAX CONSEQUENCES ATTRIBUTABLE TO DIFFERENCES BETWEEN THE FINANCIAL STATEMENT AND TAX RETURN METHODS OF ACCOUNTING. DEFERRED TAX ASSETS AND LIABILITIES ARE MEASURED USING THE ENACTED TAX RATES EXPECTED TO APPLY TO TAXABLE INCOME IN THE YEARS IN WHICH THOSE TEMPORARY DIFFERENCES ARE EXPECTED TO BE RECOVERED OR SETTLED. THE SYSTEM HAS ANALYZED INCOME TAX POSITIONS TAKEN FOR FILING WITH THE INTERNAL REVENUE SERVICE AND ALL STATE JURISDICTIONS WHERE IT OPERATES. THE SYSTEM BELIEVES THAT INCOME TAX FILING POSITIONS WILL BE SUSTAINED UPON EXAMINATION AND DOES NOT ANTICIPATE ANY ADJUSTMENTS THAT WOULD RESULT IN A MATERIAL ADVERSE AFFECT ON THE SYSTEM'S CONSOLIDATED FINANCIAL STATEMENTS. AS OF DECEMBER 31, 2011 AND 2010, THE SYSTEM DOES NOT HAVE A LIABILITY FOR UNRECOGNIZED TAX BENEFITS. ACCORDINGLY, THE SYSTEM HAS NOT RECORDED ANY RESERVES, OR RELATED ACCRUALS FOR INTEREST AND PENALTIES FOR UNCERTAIN INCOME TAX POSITIONS. X X X X 0 1 0 0 0 1 1 0 1 1 BEN BACHE-WIIG MD 0 315232 0 88606 0 27759 0 58183 0 24102 0 513882 0 0 BRIAN WEINREIS 0 209249 0 63409 0 5291 0 52403 0 23876 0 354228 0 0 ROBERT WIELAND MD 0 423944 0 147702 0 254882 0 228202 0 27375 0 1082105 0 18700 KURT NEIL 125567 0 0 0 1770 0 11256 0 16970 0 155563 0 0 0 SUSAN DURKIN 0 152429 0 26626 0 3657 0 20776 0 14896 0 218384 0 0 DARYL SCHROEDER 0 217261 0 66402 0 46464 0 56200 0 20000 0 406327 0 0 LINDA DAHLIN 125643 0 0 0 1120 0 17172 0 9958 0 153893 0 0 0 DARLENE FLINT 134976 0 0 0 2192 0 18020 0 8337 0 163525 0 0 0 DAVID KIEFFER 128686 0 0 0 0 0 19166 0 5535 0 153387 0 0 0 NANCY SCHMIDT 140485 0 0 0 2272 0 22141 0 2885 0 167783 0 0 0 MICHAEL STADTHER 86666 0 0 0 101632 0 29564 0 2475 0 220337 0 0 0 PART I, LINE 4B BEN BACHE-WIIG - $18,967; DARYL SCHROEDER - $30,811; PART I, LINE 6 PART I, LINE 6: WESTHEALTH MANAGEMENT INCENTIVE PLAN WESTHEALTH PROVIDES AN ANNUAL INCENTIVE COMPENSATION OPPORTUNITY TO MANAGERS, DIRECTORS AND THE EXECUTIVE DIRECTOR. UNDER THIS PLAN, THE TARGET AWARD IS A PERCENTAGE OF A BOARD APPROVED INCENTIVE POOL AND REQUIRES SERVICE IN AN ELIGIBLE POSITION DURING THE YEAR. ACTUAL AWARDS CAN RANGE FROM 0% TO 100% OF THE TARGET AWARD, BASED ON WESTHEALTH'S PERFORMANCE OVER THE CALENDAR YEAR. NO AWARDS ARE PROVIDED UNLESS THRESHOLD FINANCIAL PERFORMANCE IS ACHIEVED. PARTICIPANTS WHO HAVE LEFT EMPLOYMENT PRIOR TO THE END OF THE YEAR AS A RESULT OF VOLUNTARY TERMINATION OR TERMINATION FOR POOR PERFORMANCE ARE NOT ELIGIBLE FOR AN AWARD. ALLINA MANAGEMENT INCENTIVE PLAN (MIP) ALLINA PROVIDES AN ANNUAL INCENTIVE COMPENSATION OPPORTUNITY TO MOST MANAGERS, SOME HIGH-LEVEL INDIVIDUAL CONTRIBUTORS AND EXECUTIVES. UNDER THIS PLAN, THE TARGET AWARD IS EXPRESSED AS A FUNCTION OF THE PARTICIPANT'S SALARY PAID DURING THE CALENDAR YEAR AND REQUIRES AT LEAST FOUR MONTHS OF SERVICE IN AN ELIGIBLE POSITION DURING THE YEAR. ACTUAL AWARDS CAN RANGE FROM 0% TO 150% OF THE TARGET AWARD, BASED ON ALLINA'S PERFORMANCE OVER THE CALENDAR YEAR. PERFORMANCE MEASURES INCLUDE FINANCIAL PERFORMANCE, SERVICE QUALITY, PATIENT SATISFACTION, PATIENT SAFETY AND COMMUNITY SERVICE. NO AWARDS ARE PROVIDED UNLESS THRESHOLD FINANCIAL PERFORMANCE IS ACHIEVED. PARTICIPANTS WHO HAVE LEFT EMPLOYMENT PRIOR TO THE END OF THE YEAR AS THE RESULT OF VOLUNTARY TERMINATION OR TERMINATION FOR POOR PERFORMANCE ARE NOT ELIGIBLE FOR AN AWARD. LONG-TERM INCENTIVE PLAN (LTIP) ALLINA HAS A LONG-TERM INCENTIVE PLAN THAT PROVIDES A CASH AWARD OPPORTUNITY TO A SMALL NUMBER OF TOP EXECUTIVES APPROVED FOR PARTICIPATION BY THE COMPENSATION COMMITTEE OF THE BOARD. THE AWARD OPPORTUNITY IS BASED ON ALLINA PERFORMANCE DURING OVERLAPPING THREE-YEAR CYCLES. PERFORMANCE MEASURES AND TARGETS ARE DEFINED BY THE COMMITTEE FOR EACH THREE-YEAR PERIOD AND CAN VARY FROM ONE PERIOD TO ANOTHER DEPENDING ON THE COMMITTEE'S JUDGMENT OF THE MOST IMPORTANT MEASURES OF SUCCESS. AWARDS CAN RANGE FROM 0% TO 150% OF TARGET AWARDS. PART I, LINE 8 CERTAIN AMOUNTS REPORTED ON FORM 990, PART VII WERE PAID OR ACCRUED PURSUANT TO A CONTRACT THAT WAS SUBJECT TO THE INITIAL CONTRACT EXCEPTION DESCRIBED IN REGULATION SECTION 53.4958-4(A)(3). FROM TIME TO TIME, ALLINA HEALTH SYSTEM ENTERS INTO CONTRACTUAL ARRANGEMENTS THAT MAY QUALIFY FOR THE INITIAL CONTRACT EXCEPTION BASED ON THE TERMS AND UNDERSTANDINGS OF THE CONTRACTUAL AGREEMENTS. SUPPLEMENTAL INFORMATION PART III DEFERRED COMPENSATION PLANS - TERMS AND CONDITIONS; ALLINA SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (SERP) THIS PLAN WAS AMENDED EFFECTIVE DECEMBER 31, 2008, SUCH THAT NO FUTURE BENEFITS ACCRUE FOR SERVICE AFTER THAT DATE. ELIGIBLE ALLINA EXECUTIVES PARTICIPATED IN A DEFINED CONTRIBUTION SERP. EMPLOYER CREDITS WERE MADE EACH YEAR TO THEIR SERP BALANCE ACCORDING TO THE FOLLOWING SCHEDULE: EXEC YRS OF SERVICE CONTRIBUTION % OF PENSIONABLE EARNINGS 0-5 2.75% 6-10 3.50% 11+ 4.75% EXECUTIVES WERE ALSO CREDITED AN AMOUNT EQUAL TO THE EXCESS AMOUNT THAT WOULD HAVE BEEN CREDITED TO THE PENSION ACCOUNT PLAN WERE IT NOT FOR THE QUALIFIED PLAN COMPENSATION LIMITS. DEPOSITS EARN THE INVESTMENT RATE OF RETURN EQUAL TO THE PENSION ACCOUNT PLAN CREDITING RATE AS DECLARED BY ALLINA. THE CURRENT RATE IS 4%. THE PARTICIPANT VESTS AFTER THREE YEARS OF EXECUTIVE SERVICE PROVIDED THAT IF THE PARTICIPANT TERMINATES EMPLOYMENT WITH ALLINA PRIOR TO AGE 65 FOR ANY REASON OTHER THAN ELIMINATION OF POSITION, THE PARTICIPANT MUST FULFILL THE TERMS OF A COVENANT NOT TO COMPETE BENEFITS ARE PAID AS A SINGLE LUMP-SUM AMOUNT UPON AGE 65 RETIREMENT OR JOB POSITION ELIMINATION. IN THE CASE OF OTHER VOLUNTARY TERMINATIONS, PAYMENT IS DELAYED UNTIL COMPLETION OF THE TWO-YEAR NON-COMPETE PERIOD. THE SERP IS PAYABLE FROM ALLINA'S GENERAL ASSETS. IF ALLINA BECOMES INSOLVENT, THE PARTICIPANT WILL BE AN UNSECURED CREDITOR AND WILL HAVE NO PREFERRED CLAIM TO ANY ASSETS. ALLINA EXECUTIVE RETIREMENT BENEFIT RESTORATION PLAN ELIGIBLE ALLINA EXECUTIVES PARTICIPATE IN A DEFERRED COMPENSATION RETIREMENT PLAN. EXECUTIVES ARE CREDITED AN AMOUNT EQUAL TO THE EXCESS AMOUNT THAT WOULD HAVE BEEN CREDITED TO THE ALLINA RETIREMENT SAVINGS PLAN WERE IT NOT FOR THE QUALIFIED PLAN COMPENSATION LIMITS. EMPLOYER CREDITS ARE MADE EACH YEAR TO THEIR ACCOUNT BALANCE ACCORDING TO THE FOLLOWING SCHEDULE AS OF THE END OF THE PLAN YEAR: PARTICIPANT'S YEARS OF VESTING SERVICE APPLICABLE PERCENTAGE LESS THAN 1 0% 1-5 5.0% 6-10 5.5% 11-15 6.0% 16 OR MORE 6.5% DEPOSITS EARN THE INVESTMENT RATE OF RETURN EQUAL TO THE INVESTMENT OPTIONS SELECTED BY THE PARTICIPANT WHICH ARE THE SAME OPTIONS AVAILABLE UNDER THE QUALIFIED PLAN. A PARTICIPANT WHO HAS COMPLETED AT LEAST TWO YEARS OF SERVICE BECOMES VESTED IN THE PORTION OF HIS OR HER ACCOUNT ATTRIBUTABLE TO THE ANNUAL CREDIT FOR A PARTICULAR YEAR AS OF JANUARY 15 OF THE YEAR FOLLOWING THE CALENDAR YEAR IN WHICH THE ANNUAL CREDIT IS EARNED. IN THE EVENT OF TERMINATION (OTHER THAN BECAUSE OF DEATH) PRIOR TO AGE 67, THE DISTRIBUTION DATE SHALL BE AS SOON AS ADMINISTRATIVELY POSSIBLE AFTER TERMINATION IN THE FORM OF A LUMP SUM PAYMENT. THE PLAN IS PAYABLE FROM ALLINA'S GENERAL ASSETS. IF ALLINA BECOMES INSOLVENT, THE PARTICIPANT WILL BE AN UNSECURED CREDITOR AND WILL HAVE NO PREFERRED CLAIM TO ANY ASSETS. THIS PLAN WAS EFFECTIVE JANUARY 1, 2009. ALLINA HOSPITALS AND CLINICS EXECUTIVE BENEFIT PLAN ALLINA HOSPITALS AND CLINICS PHYSICIAN BENEFIT PLAN EXECUTIVE MUTUAL FUND ACCOUNT PLAN THESE ACCOUNTS GIVE THE PARTICIPANT THE OPPORTUNITY FOR CAPITAL ACCUMULATION NOT FULLY AVAILABLE TO THEM THROUGH SOCIAL SECURITY OR THE GENERAL EMPLOYEE RETIREMENT PLANS BECAUSE OF MAXIMUMS PLACED ON COMPENSATION THAT CAN BE RECOGNIZED UNDER FEDERAL LAW FOR PURPOSES OF CONTRIBUTIONS. THEY ALSO SERVE AS AN IMPORTANT NON-COMPETE INCENTIVE TO PARTICIPANTS. PRIOR TO THE YEAR IN WHICH CONTRIBUTIONS ARE MADE, THE PARTICIPANT MUST DESIGNATE A VESTING/PAYOUT DATE CONSISTENT WITH THE CONSTRAINTS OF THE PLANS AND FEDERAL DEFERRED COMPENSATION REGULATIONS. AFTER THE CONTRIBUTIONS ARE MADE, THE PARTICIPANT HAS A ONE-TIME LIMITED OPPORTUNITY TO EXTEND THE ELECTED PAYMENT DATE FOR AT LEAST FIVE YEARS. ONCE THE VESTING/PAYOUT DATE HAS BEEN REACHED, ALLINA WILL WITHHOLD THE APPROPRIATE TAXES AND THE BALANCE WILL BE PAID TO THE PARTICIPANT ON THEIR PAYCHECK AS SOON AS ADMINISTRATIVELY FEASIBLE. IF THE PARTICIPANT TERMINATES EMPLOYMENT VOLUNTARILY BEFORE AN AMOUNT IS PAID, PAYMENT WILL BE SUBJECT TO THE PARTICIPANT'S COMPLIANCE WITH A NON-COMPETE AGREEMENT WITH ALLINA FOR TWO YEARS AFTER TERMINATION. THE PARTICIPANT MAY ELECT FROM AMONG INVESTMENT ALTERNATIVES THAT ARE SIMILAR TO THOSE AVAILABLE IN THE RETIREMENT SAVINGS PLAN. UNLIKE THE RETIREMENT SAVINGS PLAN, THE PARTICIPANT HAS THE STATUS AN UNSECURED CREDITOR OF ALLINA AND WILL NOT HAVE A PREFERRED CLAIM TO PAYMENT IN THE CASE OF THE COMPANY'S INABILITY TO PAY. HOWEVER, THE COMPANY DOES SET ASIDE ASSETS FOR ITS OBLIGATIONS BY ACTUALLY INVESTING THE PROMISED ASSETS CONSISTENT WITH PARTICIPANT ELECTIONS. EXECUTIVE SEVERANCE PLAN ALLINA PROVIDES SALARY CONTINUATION FOR EXECUTIVES WHOSE EMPLOYMENT HAS BEEN INVOLUNTARILY TERMINATED FOR REASONS OTHER THAN CAUSE OR POOR PERFORMANCE. THE LENGTH OF THE SEVERANCE PAY PERIOD IS DEFINED BY THE PLAN AND DEPENDS ON THE LEVEL OF THE EXECUTIVE POSITION. UNDER THE PLAN THE SEVERED EXECUTIVE ALSO COULD CONTINUE CERTAIN BENEFITS FOR A LIMITED PERIOD OF TIME. IN 2009 THE PLAN WAS AMENDED TO FURTHER RESTRICT SEVERANCE BENEFITS IN THE CASE THAT THE EXECUTIVE OBTAINS OTHER EMPLOYMENT DURING THE SEVERANCE PERIOD. FORM 990, PART VI, SECTION A, LINE 3 WESTHEALTH HAS A MANAGEMENT SERVICES AGREEMENT AND SERVICE LEVEL AGREEMENT WITH NORTH MEMORIAL. UNDER THESE AGREEMENTS, NORTH MEMORIAL PROVIDES PROFESSIONAL AND MANAGEMENT SERVICES TO WESTHEALTH. WESTHEALTH PAYS TO NORTH MEMORIAL A BASE FEE PLUS CONTINGENT AND INCENTIVE FEES BASED ON WESTHEALTH'S TOTAL REVENUE AND OPERATING INCOME. THE AGREEMENTS ARE RENEWED ANNUALLY. THE MANAGEMENT FEES INCURRED BY WESTHEALTH UNDER THESE AGREEMENTS WERE APPROXIMATELY $760,000 FOR THE YEAR ENDED DECEMBER 31, 2011. FORM 990, PART VI, SECTION A, LINE 4 ON JUNE 6, 2011, ALLINA HEALTH SYSTEM [EIN: 36-3261413], A 501(C)(3) ORGANIZATION, ACQUIRED THE NORTH MEMORIAL HEALTH CARE [EIN: 41-0729979] 50% OWNERSHIP STAKE IN WESTHEALTH, INC. SUCH THAT ALLINA HEALTH SYSTEM ASSUMED TOTAL CONTROL AND BECAME THE SOLE MEMBER ORGANIZATION OF WESTHEALTH, INC. [EIN: 41-1768814]. WESTHEALTH INC. IS WHOLLY OWNED AND CONTROLLED BY ALLINA HEALTH SYSTEM AS OF JUNE 6, 2011. ACCOUNTING STANDARDS CODIFICATION ["ASC"] 805 CONCERNING BUSINESS COMBINATIONS, REQUIRED ALLINA HEALTH SYSTEM TO "MARK-TO-MARKET" WESTHEALTH INC'S ASSETS AND LIABILITIES. AS SUCH, ONE-TIME ADJUSTMENTS WERE MADE ON WESTHEALTH INC'S RESPECTIVE BALANCE SHEET TO REFLECT THE MARK-TO-MARKET OF THE ASSETS AND LIABILITIES AS WELL AS THE RESULTING EFFECT TO THE CUMULATIVE FUND BALANCE. THE CUMULATIVE FUND BALANCE UP TO THE TRANSACTION WAS ALSO ELIMINATED AT THE TIME OF ACQUISITION BY ALLINA HEALTH SYSTEM IN ACCORDANCE WITH THE AFOREMENTIONED ACCOUNTING STANDARD AND GUIDANCE. SINCE THE TIME OF ACQUISITION ON JUNE 6, 2011 BY ALLINA HEALTH SYSTEM, WESTHEALTH INC. HAS CONTINUED TO OPERATE IN ACCORDANCE WITH, AND IN FURTHERANCE OF, WESTHEALTH INC'S AND ALLINA HEALTH SYSTEM'S RESPECTIVE TAX-EXEMPT PURPOSES. FORM 990, PART VI, SECTION A, LINE 6 ALLINA HEALTH SYSTEM IS THE SOLE CORPORATE MEMBER ORGANIZATION AND PARENT ORGANIZATION OF WESTHEALTH, INC. SEE SCHEDULE R FOR FURTHER DETAILS. AS THE SOLE CORPORATE MEMBER ORGANIZATION, ALLINA HEALTH SYSTEM HOLDS CERTAIN RESERVED POWERS OVER WESTHEALTH, INC. THE RESERVED POWERS ARE FULLY DECSRIBED IN WESTHEALTH'S GOVERNING DOCUMENTS AND INCLUDE SUCH POWERE AS ELECTION AND APPROVAL OF DIRECTORS, FINAL APPROVAL OF AMENDMENTS TO ARITICLES OR INCORPORATION OR BYLAWS, APPROVAL OF STRATEGIC PLANS AND CAPITAL AND OPERATING BUDGETS, APPROVAL OF PLANS OF MERGER OR CONSOLIDATION, APPROVAL OF INCURRENCE OF DEBT OR EXPENDITURES IN EXCESS OF CERTAIN AMOUNTS, AND VARIOUS OTHER RESERVED POWERS AS DESCRIBED THEREIN. FORM 990, PART VI, SECTION A, LINE 7A SEE THE NARRATIVE EXPLANATION IN SCHEDULE O RELATED TO FORM 990, PART VI, SECTION A, LINE 6. FORM 990, PART VI, SECTION A, LINE 7B MEMBERS OF THE ORGANIZATION HAVE THE RIGHT TO APPROVE THE GOVERNING BODY'S ELECTION AND REMOVAL OF MEMBERS OF THE GOVERNING BODY, AS WELL AS OTHER MATTERS THAT ARE SUBJECT TO THE APPROVAL OF MEMBERS OF THE ORGANIZATION AS THEY OCCUR. FORM 990, PART VI, SECTION B, LINE 11 THE TAX SERVICES FUNCTION OF ALLINA HEALTH SYSTEM, WESTHEALTH'S SOLE CORPORATE MEMBER AND PARENT ORGANIZATION, SUBJECTED THE FORM 990 FILING TO A RIGOROUS REVIEW PROCESS BY THE ALLINA TAX MANAGER AND TAX DIRECTOR. ALLINA'S VICE PRESIDENT OF FINANCE & TREASURY ALSO PERFORMED AN EXECUTIVE REVIEW OF THE FORM 990. AFTER THE MANAGEMENT REVIEW PROCESS DESCRIBED ABOVE WAS COMPLETED, THE FINAL FORM 990, AS ULTIMATELY FILED WITH THE INTERNAL REVENUE SERVICE [IRS], WAS PROVIDED TO EACH VOTING MEMBER OF WESTHEALTH, INC'S BOARD OF DIRECTORS. A WESTHEALTH, INC BOARD OF DIRECTORS MEETING WAS HELD ON OCTOBER 31, 2012 TO REVIEW AND DISCUSS THE FORM 990 FILING. THE WESTHEALTH, INC BOARD OF DIRECTORS VOTED ON AND APPROVED A RESOLUTION APPROVING THE FORM 990 AND THE MINNESOTA CHARITABLE TRUST ANNUAL REPORT TO BE FILED WITH THE MINNESOTA ATTORNEY GENERAL. THE BOARD OF DIRECTORS RESOLUTION ALSO DIRECTED OFFICERS TO FILE THE FORM 990 WITH THE IRS AND THE CHARITABLE TRUST ANNUAL REPORT WITH THE CHARITIES DIVISION OF THE OFFICE OF THE MINNESOTA ATTORNEY GENERAL. THE ABOVE STATED REVIEW AND APPROVAL PROCESS OCCURRED PRIOR TO FILING THE WESTHEALTH, INC FORM 990 WITH THE IRS AND MINNESOTA CHARITABLE TRUST ANNUAL REPORT WITH THE MINNESOTA ATTORNEY GENERAL. FORM 990, PART VI, SECTION B, LINE 12C EMPLOYEES MUST NOTIFY WESTHEALTH IF OUTSIDE ACTIVITIES OR PERSONAL INTERESTS INFULUENCE THE ABILITY TO MAKE OBJECTIVE DECISIONS IN THE COURSE OF EMPLOYMENT RESPONSIBILITIES. EMPLOYEES MUST OBTAIN APPROVAL BEFORE PURSUING ANY ACTIVITIES THAT MAY RAISE A CONFLICT OF INTEREST. FORM 990, PART VI, SECTION B, LINE 15 WESTHEALTH, INC.'S COMPENSATION AND BENEFITS PROGRAMS ARE VESTED IN AND ADMINISTERED IN CONJUNCTION WITH ALLINA HEALTH SYSTEM, WESTHEALTH, INC.'S SOLE MEMBER PARENT ORGANIZATION. THE COMPENSATION COMMITTEE OF THE ALLINA HEALTH SYSTEM BOARD OF DIRECTORS IS RESPONSIBLE FOR ALL COMPENSATION AND BENEFITS PROGRAM ELEMENTS FOR NON-COLLECTIVELY BARGAINED WESTHEALTH, INC AND ALLINA HEALTH SYSTEM EMPLOYEES. ALLINA HEALTH SYSTEM USES A PROCESS FOR DETERMINING COMPENSATION FOR THE ALLINA HEALTH SYSTEM CHIEF EXECUTIVE OFFICER, AND CERTAIN OTHER OFFICERS AND KEY EMPLOYEES THAT INCLUDED ALL OF THE FOLLOWING ELEMENTS: REVIEW AND APPROVAL BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS, THE MEMBERS OF WHICH ARE INDEPENDENT AND WITHOUT A CONFLICT OF INTEREST AS DEFINED IN REGULATION SECTION 53.4958-6(C)(1)(III). ENGAGEMENT OF AN INDEPENDENT COMPENSATION CONSULTANT SPECIALIZING IN EXECUTIVE COMPENSATION USE OF DATA AS TO COMPARABLE COMPENSATION FOR SIMILARLY QUALIFIED PERSONS IN FUNCTIONALLY COMPARABLE POSITIONS AT SIMILARLY SITUATED ORGANIZATIONS CONTEMPORANEOUS DOCUMENTATION, SUBSTANTIATION AND RECORDKEEPING WITH RESPECT TO DELIBERATIONS AND DECISIONS REGARDING THE COMPENSATION ARRANGEMENT THE ABOVE DESCRIBED PROCESS AND AN ASSESSMENT IS PERFORMED AT LEAST ANNUALLY FOR THE FOLLOWING ALLINA HEALTH SYSTEM POSITIONS: CHIEF EXECUTIVE OFFICER/PRESIDENT, CHIEF FINANCIAL OFFICER, CHIEF CLINICAL OFFICER, EXECUTIVE VICE PRESIDENT - ALLINA HOSPITALS, PRESIDENT - ABBOTT NORTHWESTERN HOSPITAL, PRESIDENT - UNITED HOSPITAL, PRESIDENT - MERCY HOSPITAL, PRESIDENT - UNITY HOSPITAL, EXECUTIVE VICE PRESIDENT - AMBULATORY CARE, PRESIDENT - ALLINA CLINICS, SENIOR VICE PRESIDENT - GENERAL COUNSEL, SENIOR VICE PRESIDENT - CLINICAL SERVICES LINES, SENIOR VICE PRESIDENT - CHIEF COMPLIANCE OFFICER. IN ADDITION, THE COMPENSATION COMMITTEE REVIEWS AND APPROVES ALL COMPENSATION CHANGES OF THE ALLINA HEALTH SYSTEM CHIEF EXECUTIVE OFFICER AND THE OTHER AFOREMENTIONED POSITIONS LISTED IN ADVANCE OF THE CHANGE. FORM 990, PART VI, SECTION C, LINE 19 GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND FINANCIAL STATEMENTS ARE AVAILABLE TO THE PUBLIC UPON REQUEST. CHANGES IN NET ASSETS OR FUND BALANCES: FORM 990, PART XI, LINE 5: NET UNREALIZED LOSSES ON INVESTMENTS: -280,535. ASC 805 BUSINESS COMBINATIONS MARK TO MARKET UPON ACQUISITION BY ALLINA HEA 26,395,453. FUND BALANCE ELIMINATED UPON ACQUISITION 797,786. TOTAL TO FORM 990, PART XI, LINE 5: 26,912,704. FORM 990, PART XII, LINE 2C FOLLOWING ALLINA HEALTH SYSTEM [EIN: 36-3261413] BECOMING THE SOLE MEMBER ORGANIZATION OF WESTHEALTH, INC. ON JUNE 6, 2011 AS DISCLOSED AND DESCRIBED IN SCHEDULE O, THE COMMITTEE THAT ASSUMES RESPONSIBILITY FOR OVERSIGHT OF THE INDEPENDENT AUDIT OF ITS FINANCIAL STATEMENTS AND THE SELECTION OF AN INDEPENDENT ACCOUNTANT CHANGED TO BE SOLELY VESTED IN AND WITH ALLINA HEALTH SYSTEM. WESTHEALTH, INC.'S FINANCIAL INFORMATION FOLLOWING THE JUNE 6, 2011 ACQUISITION IS REQUIRED TO BE INCLUDED AS A COMPONENT PART OF THE CONSOLIDATED AUDITED FINANCIAL STATEMENTS OF ALLINA HEALTH SYSTEM. THEREFORE, UNDER ITS RESERVE POWERS, ALLINA HEALTH SYSTEM, AS THE SOLE MEMBER ORGANIZATION, CONTROLS AND HAS RESPONSIBILITY FOR THE PROCESS AND OVERSIGHT OF THE INDEPENDENT AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS OF ALLINA HEALTH SYSTEM, INCLUDING THE SELECTION OF THE INDEPENDENT ACCOUNTING FIRM CONDUCTING THE INDEPENDENT AUDIT FOR THE YEAR ENDING DECEMBER 21, 2011. ALLINA HEALTH SYSTEM PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 363261413 HEALTHCARE SERVICES MN 501(C)(3) LINE 3 N/A 0 ALLINA MEDICAL CLINIC PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 411781624 HEALTHCARE SERVICES MN 501(C)(3) LINE 3 ALLINA HEALTH SYSTEM 0 ABBOTT NORTHWESTERN HOSPITAL FOUNDATION PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 043643816 SUPPORTING ORGANIZATION MN 501(C)(3) LINE 11A, I ALLINA HEALTH SYSTEM 0 MERCY & UNITY HOSPITALS FOUNDATION PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 300086426 SUPPORTING ORGANIZATION MN 501(C)(3) LINE 11A, I ALLINA HEALTH SYSTEM 0 PHILLIPS EYE INSTITUTE FOUNDATION PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 411613017 SUPPORTING ORGANIZATION MN 501(C)(3) LINE 11A, I ALLINA HEALTH SYSTEM 0 SISTER KENNY FOUNDATION PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 411952989 SUPPORTING ORGANIZATION MN 501(C)(3) LINE 11A, I ALLINA HEALTH SYSTEM 0 UNITED HOSPITAL FOUNDATION PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 237420998 SUPPORTING ORGANIZATION MN 501(C)(3) LINE 11A, I ALLINA HEALTH SYSTEM 0 ASPEN ASSET CORPORATION PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 411788674 HOLDING TITLE TO PROPERTY COMPANY MN 501(C)(2) ALLINA HEALTH SYSTEM 0 ASPEN MEDICAL GROUP PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 411452624 HEALTHCARE SERVICES MN 501(C)(4) ALLINA HEALTH SYSTEM 0 CENTER FOR HEALTHCARE INNOVATION FOUNDATION PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 263553868 SUPPORTING ORGANIZATION MN 501(C)(3) LINE 11A, I ALLINA HEALTH SYSTEM 0 ALLINA ASSOCIATED FOUNDATION PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 274116873 SUPPORTING ORGANIZATION MN 501(C)(3) LINE 11A, I ALLINA HEALTH SYSTEM 0 ALLINA INTEGRATED MEDICAL NETWORK PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 275129095 SUPPORTING ORGANIZATION MN 501(C)(3) LINE 11A, I ALLINA HEALTH SYSTEM 0 UNITED AND CHILDRENS AMBULATORY SURGERY CENTER ASSOCIATION 310 NORTH SMITH AVENUE ST PAUL MN 55102 411694626 SUPPORTING ORGANIZATION MN 501(C)(3) LINE 11A, I ALLINA HEALTH SYSTEM 0 MBP FACILITY LLC PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 454078371 SUPPORTING ORGANIZATION MN 501(C)(3) LINE 11A, I ALLINA HEALTH SYSTEM 0 APPLE VALLEY BUILDING ASSOCIATES LLC 14655 GALAXIE AVENUE SOUTH APPLE VALLEY MN 55124 411677072 RENTAL REAL ESTATE MN N/A SOUTHWEST SURGICAL CENTER LLC 920 EAST 28TH STREET SUITE 500 MINNEAPOLIS MN 55407 412013700 SURGICAL SERVICES MN N/A MAGNETO LEASING LLC 225 SMITH AVENUE NORTH ST PAUL MN 55102 201582501 RENTAL EQUIPMENT MN N/A WEST SUBURBAN HEALTH CAMPUS 2855 CAMPUS DRIVE PLYMOUTH MN 55441 411730888 RENTAL REAL ESTATE MN N/A ASPEN SLEEP CENTER LLC 1010 BANDANA BOULEVARD WEST ST PAUL MN 55108 261850227 HEALTHCARE SERVICES MN N/A METROPOLITAN INTEGRATED CANCER CARE LLC 16825 NORTHCHASE DR STE 1300 HOUSTON TX 77060 205068485 RADIOLOGY TX N/A GERIATRIC SERVICES OF MINNESOTA LLC 3366 OAKDALE AVE NORTH SUITE 551 ROBBINSDALE MN 55422 453357936 HEALTHCARE SERVICES MN N/A NORTHSTAR SLEEP CENTER LLC 920 EAST 28TH STREET SUITE 700 MINNEAPOLIS MN 55407 452532456 HEALTHCARE SERVICES MN N/A DISTRICT ONE CANCER CENTER LLC 200 STATE AVENUE FARIBAULT MN 55021 451258847 HEALTHCARE SERVICES MN N/A CROSBY CARDIOVASCULAR SERVICES LLC 920 EAST 28TH STREET SUITE 500 MINNEAPOLIS MN 55407 412010368 HEALTHCARE SERVICES MN N/A MOBILE IMAGING SERVICES LLC 1221 NICOLLET MALL SUITE 600 MINNEAPOLIS MN 55403 411883212 RADIOLOGY MN N/A ALLINA SPECIALTY ASSOCIATES PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 411802815 HEALTHCARE SERVICES MN N/A C HEALTHSPAN SERVICES COMPANY PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 411249999 DEBT COLLECTION MN N/A C ALLINA CLINIC HOLDINGS LTD PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 263954371 HOLDING COMPANY MN N/A C QUELLO CLINIC LTD PO BOX 43 MR 10890 MINNEAPOLIS MN 554400043 410874754 HEALTHCARE SERVICES MN N/A C ALLINA HEALTH SYSTEM TRUST 500 GRANT STREET SUITE 625 PITTSBURGH PA 15258 276712988 TRUST PA N/A T ALLINA HEALTH SYSTEM DEFINED BENEFIT MASTER TRUST 500 GRANT STREET SUITE 625 PITTSBURGH PA 15258 376520273 TRUST PA N/A T 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 0 1 CHANGE OF OWNERSHIP ON JUNE 6, 2011, ALLINA HEALTH SYSTEM [EIN: 36-3261413], A 501(C)(3) ORGANIZATION, ACQUIRED THE NORTH MEMORIAL HEALTH CARE [EIN: 41-0729979] 50% OWNERSHIP STAKE IN WESTHEALTH, INC. SUCH THAT ALLINA HEALTH SYSTEM ASSUMED TOTAL CONTROL AND BECAME THE SOLE MEMBER ORGANIZATION OF WESTHEALTH, INC. [EIN: 41-1768814]. WESTHEALTH INC. IS WHOLLY OWNED AND CONTROLLED BY ALLINA HEALTH SYSTEM AS OF JUNE 6, 2011. ACCOUNTING STANDARDS CODIFICATION ["ASC"] 805 CONCERNING BUSINESS COMBINATIONS, REQUIRED ALLINA HEALTH SYSTEM TO "MARK-TO-MARKET" WESTHEALTH INC'S ASSETS AND LIABILITIES. AS SUCH, ONE-TIME ADJUSTMENTS WERE MADE ON WESTHEALTH INC'S RESPECTIVE BALANCE SHEET TO REFLECT THE MARK-TO-MARKET OF THE ASSETS AND LIABILITIES AS WELL AS THE RESULTING EFFECT TO THE CUMULATIVE FUND BALANCE. THE CUMULATIVE FUND BALANCE UP TO THE TRANSACTION WAS ALSO ELIMINATED AT THE TIME OF ACQUISITION BY ALLINA HEALTH SYSTEM IN ACCORDANCE WITH THE AFOREMENTIONED ACCOUNTING STANDARD AND GUIDANCE. SINCE THE TIME OF ACQUISITION ON JUNE 6, 2011 BY ALLINA HEALTH SYSTEM, WESTHEALTH INC. HAS CONTINUED TO OPERATE IN ACCORDANCE WITH, AND IN FURTHERANCE OF, WESTHEALTH INC'S AND ALLINA HEALTH SYSTEM'S RESPECTIVE TAX-EXEMPT PURPOSES.