2011-05-16T06:45:03-05:00 2010-06-30 Eide Bailly LLP 5601 Green Valley Drive Ste 700 Minneapolis MN 554371145 990 2009-07-01 460224743 Avera McKennan AVER 6053228000 1325 S Cliff Ave PO Box 5045 Sioux Falls SD 571175045 Dr David Kapaska 6053228000 2011-05-12 1 Kim Hunwardsen CPA 9529446166 2009 2016-02-24 21:20:13Z X Dr David Kapaska 1325 S Cliff Ave PO Box 5045 Sioux Falls SD 571175045 603717161 0 0928 X www.averamckennan.org X 1911 SD Promotion of Health 19 12 5868 1068 6403753 1006160 2453417 3451139 555191084 596067216 1957267 553875 2462019 2763167 562063787 602835397 3041319 3322297 0 304921829 311726810 113548 54527 756846 238441318 256769316 546518014 571872950 15545773 30962447 655503598 696072011 323845827 333428534 331657771 362643477 Avera is a health ministry rooted in the Gospel. Our mission is to make a positive impact in the lives and health of persons and communities by providing quality services guided by Christian values. 1 0 264679831 3253880 390519455 Avera McKennan Hospital & University Health CenterAvera McKennan promotes the health of the community by providing a variety of charitable health care services. Avera McKennan operates under the tenets of the Roman Catholic Church and in accordance with the philosophy and values established for Avera Health, a sponsored ministry of the Benedictine and Presentation Sisters.(continued on page 1 of Schedule O)Major service lines include oncology, surgery, orthopedics, obstetrics, pediatrics, neonatology, emergency and trauma, critical care including eICU, radiology and diagnostic imaging, psychiatry, pulmonary, neurology, cardiology and gastroenterology. Transplant services include solid organ (kidney and pancreas) and bone marrow transplant.The following are specific exempt purpose achievements for Avera McKennan Hospital:Charity and uncompensated care: Avera McKennan provides necessary medical services (diagnostic and treatment) for whomever comes to us for care, regardless of their ability to pay. In fiscal year 2010, services provided to those who are unable to pay totaled $25,618,000 based on charges foregone. Eligibility for discounted or free services under the charity care policy is based on income levels. Generally, individuals earning income of up to 400% of the Federal Policy Income Guidelines are eligible for varying levels of discounts, including full discounts for certain income levels. Application for coverage under the program may be obtained at any Avera McKennan patient registration area or by calling Avera McKennan Patient Financial Services.Accessibility to health care: Avera McKennan makes medical care accessible to the entire community it serves. In 2010 Avera McKennan had 19,567 hospital discharges, 103,551 patient days and 194,947 outpatient visits. Avera McKennan is a verified Level II trauma center and was the first such Center in the State of South Dakota. Avera McKennan's Emergency Department is staffed 24 hours a day with board-certified emergency specialists and provides emergency care regardless of ability to pay. Avera McKennan had 24,528 Emergency Department visits in FY 2010. Operating both Fixed Wing and Helicopter medical air transports, Avera McKennan's flight teams cover a large geographic area providing state-of-the-art air transport services and access to critical care, with 1,247 flights in the past year.Health Care Clinic: In 1992, Avera McKennan established a Health Care Clinic to provide free care for people who are uninsured or underinsured in the community. The clinic is managed by a Registered Nurse and staffed by Registered Nurses, two midlevel providers, medical residents and volunteer health care providers. The goal of the clinic is to prevent or treat patients' medical conditions before they become catastrophic. The clinic averages 620 visits per month, providing preventative care, diagnosis and treatment of illnesses and injuries, medication assistance and assistance in obtaining specialist care for patients with complex cases. The clinic also serves to train physicians, nurses and other health care students. It provides a free evening clinic one evening per month, staffed by medical students under supervision of physicians. Avera McKennan is the only health care organization to provide free services such as this in the state of South Dakota. The clinic had 7,465 visits in fiscal year 2010.Residency/Health Professions Training and Internships: In 2010, Avera McKennan had 80 medical school residents in training in Internal Medicine, Family Practice, Psychiatry and Transitional Residency Programs offered in partnership with the University of South Dakota School of Medicine. Over 1,200 students in nursing, pharmacy, physician assistant programs, radiology and respiratory therapy also completed rotations at Avera McKennan. Avera McKennan has many joint agreements with institutions of higher education for both clinical and educational programming. In non-clinical areas, Avera McKennan offered 40 unpaid internships in 2010 in the areas of marketing, human resources, foundation, network operations and process excellence, working with approximately 18 institutions of higher education.Community Education: Avera McKennan is a regional leader in offering educational programs for a variety of learners, leaders and employees. Utilizing advanced technology, many of these programs are provided electronically throughout the tri-state area. Educational sessions are offered to medical staff, employees, health care professionals, students at all levels and the general public. Utilizing Avera McKennan's Education Center, a broad cross-section of classes involving diverse audiences are provided as a community service each year.-To Be Well free education events were held on topics including orthopedics, cancer, diabetes, weight loss/healthy eating, multiple sclerosis, anxiety and acupuncture. A total of 55 seminars enrolled 382 participants.-Forums: The Avera Behavioral Health Center offers free Friday Forums, in which school counselors and therapists are invited to presentations on children's mental health topics such as anxiety disorder, disruptive behavior, medication, coping with grief and bullying. These sessions, held nine times each year, are attended in person by approximately 50. Throughout 2010, videos of these presentations were viewed 656 times online.-Women's & Children's Services: Avera McKennan's Women's & Children's Services offers a number of parenting and community education opportunities, for free or at a minimal cost. In fiscal year 2010, 209 childbirth education classes were held with 1,152 attendees. A total of 48 parent and family education classes were held with 408 attendees. A total of 189 car seats were issued through Project 8, South Dakota Governor's child seat program with training on their correct use. Free burn education was provided to 525 students during presentations in schools.-Daycare training: Free of charge, Avera McKennan offers four in-service training sessions per month to daycare providers through the YWCA, with a total of 38 scheduled annually, and additional sessions for requested topics. Medical Research: As a research institution, Avera McKennan draws physicians who are committed to seeking new treatments and preventive measures. The Avera Research Institute is currently conducting basic research to add to the body of medical knowledge in the areas of kidney disease linked to obesity, kidney filtration and growth, and neuroscience research in regard to stress and addiction. The Avera Research Institute also continues ongoing applied research in the area of developing a novel photochemical tissue bonding technology that has ophthalmologic and dermatological applications. In the state of South Dakota's only genetics lab, Avera McKennan is studying genetic precursors of mental health conditions, which has wide application in both the clinical and research arenas. The Avera Research Institute in 2010 participated in 79 clinical trials, involving cancer, Alzheimer's disease, ulcerative colitis, rheumatoid arthritis, and more. In fiscal year 2010, Avera McKennan operated the Avera Research Institute at a loss of $1,996,000.Support groups: Avera McKennan offers approximately 10 free support groups. They range in topic from cancer to liver disease, diabetes, bone marrow transplant, stroke and grief and loss. The organization provides free meeting space as well as speakers and leaders. Information and Assistance: Avera McKennan operates a 24-hour Medical Call Center, through which patients have access to the Ask-A-Nurse program. Patients can call a toll-free number and talk personally with a Registered Nurse to ask health questions or receive general health information. In 2010, the Medical Call Center handled 67,196 calls. Avera McKennan's web site also provides an extensive health library that consumers can access free of charge.Interpreter service: Avera McKennan employs two full-time Spanish interpreters in-house, and their services are offered to patients free of charge. In addition, in cooperation with external agencies, Avera McKennan is able to handle over 150 different languages and dialects. Avera McKennan contracts for an inbound call-in service for Spanish speaking individuals. This is available at the main hospital switchboard, as well as Avera McGreevy Clinic and Avera Women's Clinic. All the above services are provided at no cost to the patient.(continued on page 14 of Schedule O) 31683887 7306 42586521 Rural Critical Access HospitalsAvera McKennan owns or leases rural Critical Access Hospitals in Flandreau, Gregory, Dell Rapids, Milbank and Miller (Hand County), S.D. As such, they operate as a department of Avera McKennan. The hospitals in Flandreau, Gregory and Hand County serve medically underserved counties. In addition to the following exempt purpose achievements, rural hospitals participate in many of the above as part of Avera McKennan.Among services offered by rural hospitals are radiology and imaging, colonoscopy and endoscopy, therapy and rehabilitation, 24-hour emergency care, chemotherapy, orthopedics, cardiovascular testing and care, obstetrics, surgery, and dialysis.Charity and uncompensated care: As part of Avera McKennan, these facilities provide necessary medical services (diagnostic and treatment) for whomever comes to us for care, regardless of their ability to pay. In fiscal year 2010, charity and uncompensated care provided by rural hospitals based on charges foregone totaled $440,000.Accessibility to health care: Avera McKennan regional hospitals make medical care accessible to the entire community they serve regardless of a patient's ability to pay. In 2010 rural hospitals had 2,050 discharges, 8,361 patient days and 59,868 outpatient visits. Each of the hospitals provides 24-hour emergency care with eEmergency services through Avera McKennan. eICU services are also available at these hospitals, providing access to critical care medicine near home and lessening the need for transport. There is no additional billing to patients. Telemedicine consults are also offered at rural locations in a number of medical specialties. 157235080 60133 132980577 ClinicsAvera McKennan provides clinical care, secondary and primary, in 67 owned/joint venture clinics in South Dakota, northwest Iowa, southwest Minnesota and northeastern Nebraska. In addition to the following exempt purpose achievements, clinics participate in many of the above as part of Avera McKennan. Clinic visits in 2010 totaled 895,906.Clinics provide primary care and urgent care, and among specialties are cardiology; dermatology; endocrinology; gastroenterology; hematology; hepatology; infectious disease; internal medicine; neonatology; nephrology; neurology and neurosurgery; OB/GYN; oncology; ophthalmology; orthopedics; pain management; pediatrics; psychiatry; pulmonology; sports medicine; surgery; and vascular services.Charity and uncompensated care: As part of Avera McKennan, clinics provide necessary medical services (diagnostic and treatment) for whoever comes to us for care, regardless of their ability to pay. In fiscal year 2010, charity and uncompensated care provided by clinics based on charges foregone totaled $1,282,000.Accessibility to health care: In addition to regular clinic hours, Avera McGreevy Clinic provides Urgent Care, seeing patients on a walk-in basis at two locations during the evening hours on weekdays, and throughout the daytime hours on Saturdays and Sundays. This provides greater accessibility without having to rely on emergency room care. In addition, through our Curaquick clinics, Avera offers convenient, affordable clinic care in local HyVee pharmacies. In 2010, Avera donated approximately 100 Curaquick Avera cards, good for one free visit, to students of Sioux Falls Catholic Schools and YWCA daycare, each valued at $59.Health Screenings: Avera McKennan clinics offered two free health screenings in 2010 including a skin cancer screening in cooperation with the another local hospital and pharmacy, serving 139 persons; and a men's health screening, providing free cholesterol, blood sugar, blood pressure and body-mass index scoring, serving 103 men. 26803654 978 24712103 Avera McKennan also provides Long-term care, Home Medical Equipment & Other Retail, Home Infusion, Research, Fitness Center, Regional Lab, and Mobile Services. 26803654 978 24712103 480402452 1 1 0 1 0 0 0 1 1 1 0 1 0 0 0 0 0 1 0 0 1 1 1 1 0 0 0 1 0 1 1 1 0 0 0 0 0 1 1 0 0 1 408 0 1 5868 1 1 1 0 0 0 0 0 0 0 0 19 12 1 0 0 0 1 1 1 1 1 0 0 1 1 1 1 1 1 0 1 1 0 X Julie Norton 6053228000 1325 S Cliff Ave Sioux Falls SD 571175045 Rob Everist 2.00 X X 0 0 0 Tom Dempster 2.00 X X 0 0 0 James Wiederrich 2.00 X 0 0 0 Sister Candyce Chrystal 2.00 X 0 0 0 Cathy Clark 2.00 X 0 0 0 Michael Bender 2.00 X 0 0 0 Sister Janice Klein 2.00 X 0 0 0 Gene Jones Jr 2.00 X 0 0 0 Mitchell Johnson DO 2.00 X 0 0 0 John Griffin MD 2.00 X 0 0 0 Sister Kathryn Easley 2.00 X 0 0 0 Kim Pederson MD 40.00 X 306360 0 33003 Sister Joan Reichelt 2.00 X 0 0 0 Dave Rozenboom 2.00 X 0 0 0 Dave Strand MD 2.00 X 0 0 0 Brad Thaemert MD 2.00 X 0 0 0 Fred Thurman 2.00 X 0 0 0 David Fleck 2.00 X 0 0 0 Fredrick W Slunecka 40.00 X X 0 608919 26966 Julie N Norton 40.00 X 348892 0 39639 Judy Blauwet 40.00 X 478016 0 31220 David Flicek 40.00 X 420486 0 34798 Steve Petersen 40.00 X 166229 0 30050 Patricia Jagoe 40.00 X 173648 0 28068 Michael Puumala MD 40.00 X 1109146 0 34698 Kelly McCaul MD 40.00 X 1136264 0 24990 Brian Knutson MD 40.00 X 1301709 0 37698 Daniel Tynan MD 40.00 X 1326914 0 35449 Leonard Gutnik MD 40.00 X 1073487 0 30471 7841151 608919 387050 431 0 1 0 Sioux Falls Construction PO Box 2728 Sioux Falls SD 571012728 Construction 36090785 Avera Health 3900 West Avera Drive Sioux Falls SD 57108 Shared Services 17222315 Sanford School of Medicine 1400 W 22nd St 120 Sioux Falls SD 571051505 Physician Services 2557334 Medical X-Ray Center 1417 S Minnesota Ave Sioux Falls SD 571051505 Radiology Services 2141129 Associated Regional & University Patholo PO Box 27964 Salt Lake City UT 84127 Lab Testing 1896516 84 641599 2343203 466337 3451139 Net Patient Service Re 622110 558747862 558747862 Other patient and clin 621500 28980560 23853369 5127191 Interest in Foundation 900099 1873936 1873936 Program rent 900099 1549099 1549099 Income from subsidiari 423000 1241562 1120387 121175 3674197 3654003 20194 596067216 573561 573561 1052182 715033 337149 337149 337149 137738 9307 166731 137738 -157424 -19686 -19686 Interest income 900099 1290825 1290825 Commercial testing 621500 1095676 1095676 Management Services 541610 39517 39517 2426018 602835397 590798656 6403753 2181849 3238347 3238347 83950 83950 1682810 696413 986397 184130 184130 248366340 225346952 22681661 337727 15766608 13924655 1816805 25148 29742225 26129684 3564116 48425 15984697 13779657 2182558 22482 174637 174637 48239 48239 25404 3991 21413 54527 54527 69143330 38864414 30271588 7328 3061364 350355 2699433 11576 9112563 4248413 4690811 173339 6249954 609052 5640902 17125515 11571035 5502344 52136 2270886 1859804 401956 9126 1567795 1382823 184356 616 5372450 5132401 240049 23851706 17889198 5958428 4080 998238 998238 Medical supplies 88793343 88330613 457040 5690 Bad debt 19440529 19423813 16716 Equipment lease and ren 4898360 4275346 623014 Licenses and permits 1176909 1078297 98612 UBI tax 142663 142663 3315431 683571 2627214 4646 571872950 480402452 90713652 756846 22000015 24167419 3842192 3781641 81274812 80278346 108333 58333 3557714 3496249 9029375 11076812 4068834 5172280 573524584 257617882 275226435 315906702 73769899 55378107 121725789 152452866 5839322 5104920 28171593 26488947 26889285 12709389 655503598 696072011 54627636 65243074 330502 2156365 218633178 215394148 13962739 9188968 9759990 9305204 26531782 32140775 323845827 333428534 X 323069202 353311977 6691235 7350458 1897334 1981042 331657771 362643477 655503598 696072011 X 0 1 1 X 1 1 X RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 0 1 0 0 0 1 51741 1 23281 0 0 75022 0 Part II-B, Line 1i: Explanation of Other Lobbying Activities: Part II-B Line 1f and 1g: Avera McKennan participates through various hospital organizations to promote legislation that would result in strengthening health care delivery systems on a national, regional, and local level. In addition, Avera McKennan representatives have provided information to the legislators regarding the purpose of the Medicare Chronic Care Practice Research Network (MCCPRN) and promoted their support for financing of MCCPRN. In addition, MCCPRN requested authorization by the legislators to request the network be initiated and run through CMS within the Innovation Center. Avera McKennan also provided information to legislators for legislative processes such as development of the above directed bill through legislative council. Another employee of McKennan testified twice, both via phone, regarding a change in the licensing law for social workers. 1 9612 101456 99434 11634 1 1897334 83708 1981042 2160515 -263181 1897334 1.00000 0 1 1 5856199 17995249 23851448 1542926 283931783 122923015 162551694 178559497 130061097 48498400 85638930 4633770 81005160 315906702 Assets Limited as to Use - Avera Pooled Investments 125103164 F Avera Home Medical Equipment 3802287 C Interest in Avera Health Foundation 7264057 F Investments in affiliated companies 11721787 C Midwest Regional Imaging 4561571 C 152452866 Other Liabilities 1781569 Due to other Organizations 1925398 Amounts held in trust 788535 Market value of interest swap 8679458 Capital lease obligation 133605 Estimated third-party payor settlements 13033700 Due to affilate 5798510 32140775 602835397 571872950 30962447 3340042 -3316783 23259 30985706 612675488 3340042 9050947 12390989 600284499 2550898 2550898 602835397 581661597 11155814 11155814 570505783 1367167 1367167 571872950 Part IV, Line 1b: The organization holds funds in trust on behalf of its residents. Many small dollar transactions flow in and out of this account. The account is managed by the nursing home staff. The state has strict guidelines on how these accounts are managed. Part IV, Line 2b: Through July 1, 2009, Avera McKennan sponsored a nonqualified retirement deferred compensation plan ("Plan") under which physicians and key management executives could elect deferred vesting dates. Due to the changes made by Congress affecting nonqualified deferred compensation benefit plans under Section 409A of the Internal Revenue Code, significant regulatory changes and requirements were imposed by IRS rules. However, the Internal Revenue Service granted a transition rule to assist in adjusting to the new rules. Under this rule, one option was that employers could discontinue the Plan, but the individual participants would be required to receive all the benefit plan balances. This option was adopted by Avera McKennan and consequently in July 2009 the Plan deferral was discontinued and all accrued benefits were distributed in August 2010 to the individual participants. Participants however were required to pay income tax on the distribution in 2009. This deferred compensation plan was established in 1996. The distribution from the plan therefore represents contributions up to 14 years plus any investment gains that have accrued on those balances over the years represented. Part V, Line 4: Description of Intended Use of Endowment Funds: The organization's endowment consists of a portion of their interest in the net assets of Avera Health Foundation. The Avera Health Foundation includes endowment funds which have been established for a variety of purposes. As required by generally accepted accounting principles, net assets associated with endowment funds, including funds designated by the Board of Directors to function as endowments (if any), are classified and reported based on the existence or absence of donor-imposed restrictions. The Organization's permanently restricted endowment funds are donor restricted. The Organization currently does not have any board designated endowment funds. Part X: Description of Uncertain Tax Positions Under FIN 48: Avera McKennan has implemented FASB ASC 740-10 (formerly Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes). Avera McKennan undergoes an annual analysis of its various tax positions, assessing the likelihood of those positions being upheld upon examination with relevant tax authorities, as defined by ASC 740-10. Avera McKennan is subject to income taxes on income from certain unrelated business activities. Part XI, Line 8 - Other Adjustments: Book/Tax adjustments on partnerships: -489139. Equity Transfers, net: -2136931. Change in fair value of interest rate swap: -2111045. Income from grantor trust not included on financial statements: 1420332. Part XII, Line 2d - Other Adjustments: Revenues of consolidated subsidiaries consolidated for financial statements: 12909899. Occupancy expenses included in nonoperating income on financial statements: -1367167. Change in fair value of interest rate swap: -2111045. Reclass of accumulated losses on interest rate swaps on financial statements: -380740. Part XII, Line 4b - Other Adjustments: Change in investment in Avera Health Fdtn recorded in fund balance on f/s: 1728006. Minority interest share of gains from subsidiaries: 924071. Net income from subsidiaries eliminated on financial statements: 1298459. Management fees included in expenses on financial statements: 246588. Book/tax adjustments on partnerships: 489139. Rental expense included in revenues on financial statements: -715033. Income from grantor trust not included on financial statements: -1420332. Part XIII, Line 2d - Other Adjustments: Expenses of consolidated subsidiaries consolidated for financial statements: 10687369. Management fees included in revenue for tax return: -246588. Rental expense included in expenses for tax return: 715033. Part XIII, Line 4b - Other Adjustments: Occupancy expenses included in nonoperating income on financial statements: 1367167. X X 1 Bentz Whaley Flessner Consulting services 0 0 9027 -9027 Theodore R Muenster Consulting services 0 0 45500 -45500 54527 -54527 1 1 X 1 X 1 X 1 1 0 1 1 9312929 0 9312929 0.01690 48165432 37931236 10234196 0.01850 1589132 1237078 352054 0.00060 59067493 39168314 19899179 0.03600 2495811 248754 2247057 0.00410 6568325 1555668 5012657 0.00910 50997236 42547204 8450032 0.01530 3725978 192000 3533978 0.00640 1363984 0 1363984 0.00250 65151334 44543626 20607708 0.03740 124218827 83711940 40506887 0.07340 97226 0 97226 0.00020 248630 0 248630 0.00050 345856 345856 0.00070 1 10066360 0 113967063 100940188 13026875 X 1 1 Avera McKennan

1325 S Cliff Ave Sioux Falls SD 57117

X X X X X X Avera Dells Area Health Center

909 N Iowa Avenue Dell Rapids SD 57022

X X X X Avera Flandreau Medical Center

214 N Prairie Flandreau SD 57028

X X X X Avera Hand County Memorial Hospital

300 W 5th St Miller SD 57362

X X X X Avera Milbank Area Hospital

901 Virgil Ave Milbank SD 57252

X X X X Avera Gregory Healthcare Center

400 Park Ave Gregory SD 57533

X X X X Avera Prince of Peace

4500 Prince of Peace Pl Sioux Falls SD 57103

Nursing Home Avera Prince of Peace Retirement Center

4500 Prince of Peace Pl Sioux Falls SD 57103

Assisted Living Avera Rosebud Country Care Center

400 Park Ave Gregory SD 57533

Nursing Home Heart Hospital of South Dakota LLC

10720 Sikes Place Suite 300 Charlotte NC 28277

X X X 1/3 owner in joint venture Part I, Line 3c: A combination of income and assets test is utilized to determine eligibility for free or discounted care. Points are assigned based on income as a percentage of FPG and net assets owned with points deducted for ongoing medical expenses such as drugs. Patients with the fewest points receive the largest discount. 0-1 points receive 100% discount on bills while remaining discounts range from 10-90% depending on point totals and dollar amount of charges. Part I, Line 6a: Part 1, line 6A: Our community benefit report is contained in a report prepared by Avera Health, a related organization. It is available through the website and requested mailing, and is filed with the Catholic Health Association. Part I, Line 7: A combination of costing methodology was used to calculate the amounts reported in the table. A cost accounting system was used to calculate Medicaid and Means-tested Government Program expenses and shortfalls and Subsidized Health Services for our tertiary medical center. A cost to charge ratio derived from Worksheet 2, Ratio of Patient Care Cost-to-Charges was used to calculate charity care at cost for all entities and Medicaid and Means-tested Government Program expenses and shortfalls and Subsidized Health Services for any operations outside of the tertiary medical center. For all other amounts, costs and revenues as reflected by the general ledger system were used. Part I, Line 7g: Physician clinic costs for behavioral health services and transplant services are included in subsidized health services. Revenues of $8,348,425 and costs of $11,666,779 were included for a net community benefit of $3,318,354. Outside of the Veterans Administration hospital, we are the sole provider of hospital behavioral health services to the community, of which the clinics are an integral part of these services. Our facility is also the principal provider of transplant services throughout our service area and the clinics are a crucial component of successful pre and post transplant care. Part I, Line 7f: Bad debt expense of $19,440,529 is included on Form 990, Part IX, line 25, column (A) but excluded for purposes of calculating this percentage. Part III, Line 4: Costing methodology used to report bad debt expense (at cost) was a cost to charge ratio as outlined in Worksheet 2 Ratio of Patient Care Costs to Charges.Bad debt expense is reported net of discounts and contractual allowances. A payment on an account previously written off reduces bad debt expense in the current year.Note from Financial Statement:Patient and resident receivables are uncollateralized patient, resident and third-party payor obligations. Unpaid patient and resident receivables, excluding amounts due from third-party payors, with invoice dates over 90 days old have interest assessed at 1 percent per month. These interest charges are recognized as income when charged. Payments of patient and resident receivables are allocated to the specific claims identified on the remittance advice or, if unspecified, are applied to the earliest unpaid claim.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. Management also reviews accounts to determine if classification as charity care is appropriate.Part III, Lines 5, 6, and 7: The Medicare revenues received (line 5), allowable costs (line 6), and the resulting surplus (line 7) does not include a significant portion of the organization's expenses. These lines require use of the Medicare Cost Report as prepared by the required guidelines which disallows numerous costs of hospitals, particularly if they are part of an integrated system such as Avera McKennan. In these cases the entity must file a home office cost report which "steps down" overhead to non-cost report entities disproportionately to actual allowable share and essentially removing the costs from the hospital's cost report entirely. Examples of a portion of these overhead costs would be finance, business office, information technology, human resources and administration. Examples of non-cost report entities operated by Avera McKennan include clinics, home medical equipment stores, mobile imaging services, long-term care facilities, and other health care related businesses. There are also costs completely disallowed by cost report rules such as bad debt expense, Hospitalists care, marketing, CRNA's, and interest expense. Schedule H instructions also require the exclusion of $1,430,252 of Medicare losses because they are included in Schedule H, Part 1, Line 7g. Including the Medicare percentage of disallowed costs, entities which don't file a cost report but nevertheless care for Medicare patients, and the impact of the home office cost report, the Medicare shortfall is $22,649,208 as opposed to a surplus of $13,026,875. Part III, Line 8: Avera McKennan follows the CHA guidelines in reporting community benefits and therefore any Medicare shortfall (as calculated including our non-cost report entities) is excluded from our community benefit report. However, Medicare is the organization's largest payer and patients with Medicare coverage are accepted regardless of whether or not a surplus or deficit is realized from providing the services. This basis therefore means providing Medicare services promotes access to healthcare services which is a key advantage for our community.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 III, Line 9b: If the patient qualifies for the organization's financial assistance policy for low-income, uninsured patients and is cooperating with the organization with regard to efforts to settle an outstanding bill within a reasonable time period, the organization or it's agent shall not send, nor suggest that it will send, the unpaid bill to any outside agency if doing so may negatively impact a patient's credit. At such time as the organization sends the uncollected account to an outside collection agency, the amount referred to the agency shall reflect the reduced-payment level for which the patient was eligible under the organization's financial assistance policy for low-income uninsured patients. Any extended payment plans offered by a hospital in settling the outstanding bills of low income, uninsured patients who qualify for financial assistance shall be interest-free so long as the repayment schedule is met. Part V: The organization also has the following types of facilities other than those required to be licensed as healthcare facilities in the state of South Dakota:1 Behavioral Health Center1 Fitness Center1 Occupational Health Clinic33 Specialty Care clinics1 Senior apartments14 Home Medical Equipment facilities45 Primary care clinics1 Outpatient Diagnostic Imaging Center1 Free Clinic Part VI, Line 2: Community needs assessment occurs at various points in the system. Through annual strategic planning sessions, community leaders are brought in to update and educate Avera McKennan board members and administrative council on the successes, challenges, and service gaps in the community. Examples include school district officials, state health department, and community health organizations. Leaders also serve on boards of various community organizations which seek to address the health and well-being of area citizens. Local governing boards at outlying facilities, who are members of the community, discuss and help direct resources to areas of targeted needs as well. Part VI, Line 3: Notices are posted in English and Spanish in a visible manner in locations where there is a high volume of inpatient or outpatient admitting/registration, such as emergency departments, billing offices, admitting offices, and outpatient service settings as well as the organization website. Posted notices state that the organization has a financial assistance policy for low-income uninsured patients who may not be able to pay their bill and that this policy provides for charity care and reduced-payment for healthcare services. There is also identification of a contact phone number that a patient can call to obtain more information about the financial assistance policy and about how to apply for such assistance. Additionally, admitting staff distributes a brochure designed to help patients understand how we bill patients and provides summary information on financial assistance if you are unable to pay. Patient Advocates work with uninsured patients in our main tertiary facility to enroll them in applicable social programs and identify charity eligibility, eligibility and enrollment for county, state or federal risk pools, and eligibility for modified Medicare or Medicaid programs. Part VI, Line 4: Avera McKennan's service area is a largely rural population. Services are provided through a health care network of 115 locations covering 54 communities in four states. The main tertiary facility is located in a population center of over 155,000 served by another non-profit hospital of similar size, Veterans Administration hospital, a hospital dedicated to diagnosis and treatment of heart disease, and a hospital for children with special health care needs. Outside of this population center, most of the communities served have less than 4,000 residents. The primary service area includes four counties covering approximately 2,600 square miles and contains seven federally designated medically underserved areas. The 2007 U.S. Census Bureau data estimates 8% of residents in the primary service area are at or below the poverty level. Our secondary setvice area covers an additional 17 counties in South Dakota, Iowa and Minnesota with an estimated total population of 226,000 based on U.S. Census Bureau projections for 2009. Part VI, Line 5: The organization actively works to promote community building endeavors. There are numerous leaders serving on community boards throughout our service area. The organization supports several economic development organizations in its service area through donations. Additionally, the organization's workforce development program works with universities, technical schools, and local high schools to address healthcare worker shortfalls in the community. Through partnering with these organizations, Avera McKennan provides speakers, work experience for students, shadowing, career fairs and informational literature to encourage students to consider a career in healthcare and stay in the community. Part VI, Line 6: Avera McKennan is a verified Level II trauma center and operates an Emergency Center staffed 24 hours a day with board-certified emergency specialists and provides emergency care regardless of ability to pay. In addition, the facility operates both Fixed Wing and Helicopter medical air transports covering a large geographic area providing access to critical care.Through an integrated network of clinic providers the organization provides nonemergency services to the communities it serves. It makes these services accessible to the community through participation in government programs such as Medicare and Medicaid.Avera McKennan owns or leases five rural Critical Access Hospitals which provide a broad variety of inpatient and outpatient services and 24-hour emergency rooms. Telemedicine consults are also offered at rural locations in a number of medical specialties.Both in the tertiary medical center and in rural facilities, eICU technology offers constant, around-the-clock monitoring and interventions in the intensive care units from a remote care team in addition to the care they receive from their bedside team. The service is provided on a contract basis to hospitals so there is no additional charge to the patient. This enables critically ill patients to receive the highest quality care, close to home, with the support of family and friends.Avera McKennan has medical school residents in training in Internal Medicine, Family Practice, Psychiatry and Transitional Residency Programs offered in partnership with the University of South Dakota Sanford School of Medicine. Over 1,200 students in nursing, pharmacy, physician assistant programs, radiology and respiratory therapy also complete rotations at Avera McKennan. Avera McKennan has many joint agreements with institutions of higher education for both clinical and educational programming. In non-clinical areas, Avera McKennan offers unpaid internships in the areas of marketing, human resources, foundation, network operations and process excellence, working with approximately 18 institutions of higher education.Through the Avera Research Institute, physicians conduct basic research to add to the body of medical knowledge in the areas such as kidney disease and neuroscience research in regard to stress and addiction; participates in clinical trials for a variety of diseases; studies genetic precursors of mental health conditions; and also continues ongoing applied research in the area of developing a novel photochemical tissue bonding technology that has ophthalmologic and dermatological applications. Avera McKennan is also studying genetic precursors of mental health conditions which has applications in both clinical and research areas.Avera McKennan is a regional leader in offering educational programs for a variety of learners, leaders and employees. Utilizing advanced technology, many of these programs are provided electronically throughout the tri-state area. Educational sessions are offered to medical staff, employees, health care professionals, students at all levels and the general public.Avera McKennan operates a 24-hour Medical Call Center, through which patients have access to the Ask-A-Nurse program. Patients can call a toll-free number and talk personally with a Registered Nurse to ask health questions or receive general health information. Avera McKennan's web site also provides an extensive health library that consumers can access free of charge. Avera McKennan operates a health care clinic to provide free care to uninsured or underinsured people in the community. The clinic provides preventative care, diagnosis and treatment of illness and injuries, medication assistance and assistance in obtaining specialist care. The clinic also serves to train physicians, nurses and healthcare students.Surplus funds are reinvested in facilities to improve patient care.Medical staff privileges are extended to all qualified physicians in the community. The Avera McKennan Board of Trustees is principally comprised of community members from the primary service area. Members come from a variety of backgrounds ranging from private industry and banking to healthcare. Part VI, Line 7: The communities in which the Avera system operates all have unique health and community benefit needs and in keeping with the Catholic Healthcare Association guidelines each Hospital strives to meet its community's identified needs. The Avera Central Office advocates for all on community benefit-related matters of state, regional, and national importance. 1 SIOUX FALLS CATHOLIC SCHOOLS 3100 W 41st Street Sioux Falls SD 57105 510145184 501(c)(3) 602850 Donation RONALD MCDONALD HOUSE 2001 S Norton Sioux Falls SD 57105 460371152 501(c)(3) 197395 Donation USD FOUNDATION 1100 N Dakota Vermillion SD 57069 466018891 501(c)(3) 196000 Donation FORWARD SIOUX FALLS PO Box 907 Sioux Falls SD 57101 460396647 74000 Donation SIOUX EMPIRE UNITED WAY 1000 N West Ave 120 Sioux Falls SD 57104 460233701 501(c)(3) 73500 Donation SOUTH DAKOTA STATE UNIVERSITY PO Box 2218 Brookings SD 57007 460273801 501(c)(3) 1076712 Donation CATHOLIC DIOCESE 523 N Duluth Ave Sioux Falls SD 57104 466000424 501(c)(3) 60334 Donation YWCA 300 W 11th Street Sioux Falls SD 57104 460234998 501(c)(3) 50000 Donation FACE IT SIOUX FALLS PO Box 5127 Sioux Falls SD 57117 943472044 501(c)(3) 50000 Donation RIVER OF HOPE PO Box 1597 Sioux Falls SD 57101 263130719 501(c)(3) 50000 Donation WASHINGTON PAVILION PO Box 984 Sioux Falls SD 57101 460435791 501(c)(3) 44505 Donation HARRISBURG ACTIVITIES FOUNDATION PO Box 479 Harrisburg SD 57032 061749081 501(c)(3) 40000 Donation AMERICAN CANCER SOCIETY 4904 S Technopolis Drive Sioux Falls SD 57106 131788491 501(c)(3) 32350 Donation TWELVE STEP LIVING CORPORATION 2601 S Minnesota Ave Ste 105-378 Sioux Falls SD 57105 200293050 501(c)(3) 30000 Donation SOUTH DAKOTA SYMPHONY 315 N Main Ave Suite 204 Sioux Falls SD 571046078 466017026 501(c)(3) 21000 Donation NATIONAL KIDNEY FOUNDATION 1100 E 21st Street Avera Doctors Plaza 2 Ste 210 Sioux Falls SD 57105 460448030 501(c)(3) 20550 Donation SIOUX EMPIRE ARTS COUNCIL 309 E Falls Parks Drive Sioux Falls SD 57104 460354287 501(c)(3) 20000 Donation SIOUX FALLS JAZZ & BLUES SOCIETY 123 S Main Ave Suite 204 Sioux Falls SD 571046430 460418356 501(c)(3) 15000 Donation DAKOTA STATE UNIVERSITY 800 N Washington Avenue Madison SD 570421799 237299995 501(c)(3) 13261 Donation JUNIOR ACHIEVEMENT OF SOUTH DAKOTA 1000 N West Ave Suite 110 Sioux Falls SD 57104 460306352 501(c)(3) 11225 Donation NORTHWEST IOWA COMMUNITY COLLEGE 603 W Park Street Sheldon IA 51201 421275893 501(c)(3) 10500 Donation DAKOTABILITIES 3600 S Duluth Ave Sioux Falls SD 57105 460306216 501(c)(3) 10000 Donation THERAPEUTIC HEALING INSTITUTE 122 W 19th Street Sioux Falls SD 57105 043807841 501(c)(3) 10000 Donation WORTHINGTON YMCA 211 11th St Worthington MN 56187 416007596 501(c)(3) 9600 Donation SOUTH DAKOTA HUMANITIES COUNCIL 1215 Trail Ridge Rd Brookings SD 57006 460316222 501(c)(3) 9000 Donation NAMI OF SOUTH DAKOTA PO Box 88808 Sioux Falls SD 57109 363593027 501(c)(3) 7600 Donation SOUTH DAKOTA ACHIEVE 4100 S Western Ave Sioux Falls SD 57105 237072116 501(c)(3) 7500 Donation DOWNTOWN SIOUX FALLS INC 230 S Phillips Ave Suite 102 Sioux Falls SD 571046708 363627217 501(c)(4) 7500 Donation PRESENTATION SISTERS 1500 N 2nd St Aberdeen SD 57401 460253283 501(c)(3) 7500 Donation HELPLINE CENTER 1000 N West Ave Ste 310 Sioux Falls SD 57104 237424387 501(c)(3) 6400 Donation SOUTH DAKOTA CHAMBER OF COMMERCE PO Box 190 Pierre SD 57501 460141180 501(c)(6) 14076 Donation FURNITURE MISSION OF SOUTH DAKOTA 209 N Nesmith Sioux Falls SD 57104 810584500 501(c)(3) 6000 Donation SALES & MARKETING EXECUTIVES PO Box 90310 Sioux Falls SD 57109 466012934 501(c)(6) 5800 Donation SIOUX FALLS AREA CASA PO Box 1901 Sioux Falls SD 57101 460430647 501(c)(3) 5400 Donation AMERICAN DIABETES ASSOCIATION 1701 N Beauregard Street Alexandria VA 22311 131623888 501(c)(3) 5000 Donation CHILDRENS CARE FOUNDATION 2501 W 26th Street Sioux Falls SD 57105 460233030 501(c)(3) 5000 Donation SOUTHEASTERN BEHAVIORAL HEALTH 2000 S Summit Ave Sioux Falls SD 57105 460232306 501(c)(3) 5000 Donation FAMILY VISITATION CENTER 311 E 14th St Sioux Falls SD 57104 263654937 501(c)(3) 5000 Donation SIOUX EMPIRE HOMELESS COALITION 521 N Main Ave Suite 201 Sioux Falls SD 571045965 460448734 501(c)(3) 5000 Donation ST MARY CHURCH 812 N State Ave Dell Rapids SD 57022 466003662 501(c)(3) 5000 Donation South Dakota Chorale 300 S Minnesota Ave Sioux Falls SD 57104 460225435 501(c)(3) 5000 Donation 37 4 Scholarships 18 83950 Procedure for Monitoring Grants in the U.S.: Part I, Line 2: Schedule I, Part I, Line 2: The governing board and management develop programs which enhance the charitable mission of the organization. Disbursement for grants or assistance for these programs are made in accordance with prescribed procedures and are subject to conditions established by the organization's governing board and management, which are designed to ensure that individuals and organizations receiving grants or assistance are adequately investigated to ensure that they are qualified recipients. 0 1 0 0 0 0 0 0 0 Kim Pederson MD 304723 0 0 0 1637 0 19091 0 13912 0 339363 0 0 0 Fredrick W Slunecka 0 595304 0 0 0 13615 0 12187 0 16092 0 637198 0 0 Julie N Norton 245497 0 0 0 103395 0 19091 0 20548 0 388531 0 26571 0 Judy Blauwet 240138 0 0 0 237878 0 14191 0 17029 0 509236 0 36221 0 David Flicek 362660 0 0 0 57826 0 14191 0 20607 0 455284 0 41691 0 Steve Petersen 164829 0 0 0 1400 0 10441 0 19608 0 196278 0 0 0 Patricia Jagoe 172862 0 0 0 786 0 12462 0 15607 0 201717 0 0 0 Michael Puumala MD 1039240 0 0 0 69906 0 19091 0 15607 0 1143844 0 43500 0 Kelly McCaul MD 913319 0 0 0 222945 0 19091 0 5899 0 1161254 0 72500 0 Brian Knutson MD 935538 0 0 0 366171 0 19091 0 18607 0 1339407 0 65842 0 Daniel Tynan MD 1255615 0 0 0 71299 0 19091 0 16358 0 1362363 0 43500 0 Leonard Gutnik MD 698799 0 0 0 374688 0 14191 0 16280 0 1103958 0 0 0 Supplemental Information Part III Schedule J, Part I Line 3: The President & CEO's compensation is paid by a related organization, Avera Health. Avera McKennan relied on the related organization for determining the compensation for the President & CEO using the methods described in Part I, Line 3. Schedule J, Part I Line 4b: Julie Norton - $102,510 Judy Blauwet - $233,542 David Flicek - $55,777 Michael Puumala, MD - $64,997 Brian Knutson, MD - $363,391 Leonard Gutnik, MD - $366,945 Daniel Tynan, MD - $66,063 Kelly McCaul, MD - $219,784 Through July 1, 2009, Avera McKennan sponsored a nonqualified retirement deferred compensation plan ("Plan") under which physicians and key management executives could elect deferred vesting dates. Due to the changes made by Congress affecting nonqualified deferred compensation benefit plans under Section 409A of the Internal Revenue Code, significant regulatory changes and requirements were imposed by IRS rules. However, the Internal Revenue Service granted a transition rule to assist in adjusting to the new rules. Under this rule, one option was that employers could discontinue the Plan, but the individual participants would be required to receive all the benefit plan balances. This option was adopted by Avera McKennan and consequently in July 2009 the Plan deferral was discontinued and all accrued benefits were distributed in August 2010 to the individual participants. Participants however were required to pay income tax on the distribution in 2009. This deferred compensation plan was established in 1996. The distribution from the plan therefore represents contributions up to 14 years plus any investment gains that have accrued on those balances over the years represented. Michael Puumala physician recruitment X 100000 31250 0 1 1 Daniel Tynan physician recruitment X 100000 27083 0 1 1 58333 Michael Bender Board Member 208716 property lease 0 Surgical Institute of SD Entity controlled by two Board Members 879154 trauma contract and acute surgical services contract 0 Victoria Petersen Family of Key Employee 34817 employee compensation 0 Agnes Klein Family of Board Member 35843 employee compensation 0 Alexander Petersen Family of Key Employee 21003 employee compensation 0 James Hartung Family of Key Employee 80310 employee compensation 0 Sioux Falls Construction Co Board member is an officer of the entity 34991289 Construction 0 Form 990, Part III, line 2 New Program Services In August of 2009 a surgicalist program was added. In July of 2009 Avera McKennan added urogynecology. In July of 2009 Avera Health, a related organization, received funds from the Helmsley Grant to provide eCARE. Avera harnesses the latest interactive video and computer technology to extend specialty care to rural locations through eServices, also known as telemedicine. This includes Avera eICU CARE, eConsult, eEmergency, ePharmacy and eStroke. The start-up of these services were funded by grants and support from Avera Health, as these programs are not revenue producing at this time. With the exception of eConsult in which patients can have a physician consult via telemedicine, participating hospitals pay a contract fee, and patients are not billed additionally for these services. Patients benefit from having additional specialty care for their case. eServices also allow patients to remain in their home community rather than travel to a larger city for care. Form 990, Part VI, Section A, line 2 Gene Jones, Jr. and Fred Thurman - business relationship Dave Strand, MD and Brad Thaemert, MD - business relationship Tom Dempster, Fred Slunecka, and Fred Thurman - business relationship Form 990, Part VI, Section A, line 6 The sole member of the organization is Avera Health, a nonprofit corporation organized and existing under the laws of the state of South Dakota and exempt under 501(c)(3) of the Internal Revenue Code of 1986, as amended. Form 990, Part VI, Section A, line 7a Avera Health, as the sole member, has the power to appoint and remove, with or without cause, members of the board of directors. Form 990, Part VI, Section A, line 7b Avera Health has the following rights as the Member. 1) To approve the adoption, amendment or repeal of the statements of philosophy, mission and values of Corporation; 2) To initiate the adoption, amendment or repeal of any provision of the Articles of Incorporation or Bylaws of Corporation, and to give final approval of any such action with respect thereto; 3) To approve and act upon the alienation of real property and precious artifacts under the canonical stewardship of the Sisters of the Presentation of the Blessed Virgin Mary of Aberdeen, South Dakota ("Presentation Sisters") or the Benedictine Sisters of Sacred Heart Monastery ("Benedictine Sisters"), pursuant to the policies established by the Member; 4) To approve any plan of merger, consolidation or dissolution of the Corporation, or the divestiture of a sponsored work or ministry associated with the Corporation; 5) To approve the creation of new sponsored works or ministries to be conducted by or under the authority of the Corporation; 6) To appoint and remove, with or without cause, the Board of Directors of the Corporation. 7) To appoint and/or remove, with or without cause, the President and Chief Executive Officer of the Corporation. 8) To approve operating/capital budgets and strategic plans of the Corporation. 9) To approve expenditures outside of operating and capital budgets exceeding defined thresholds according to policy which may be adopted from time to time by the Member. 10) To approve acquisitions, sales and leases, according to policy which may be adopted from time to time by the Member. 11) To establish and maintain employee benefit programs. 12) To establish and maintain insurance programs. 13) To approve major community fund drives. 14) To approve the appointment of auditors. 15) To adopt policies designed to effectuate the reserved powers of the Member. Form 990, Part VI, Section B, line 11 Form 990 is reviewed by the CEO, CFO and Director of Financial Reporting. After the initial review, a draft is provided to the finance committee for their review. The return is provided to the full board prior to filing. Form 990, Part VI, Section B, line 12c The Conflict of Interest Policy covers Board members, officers, and key employees. At each board meeting, a request is made for all Board members to disclose any potential conflict of interest pertaining to any item listed on the agenda or pertaining to any potential item that could be discussed during the course of the meeting. The Declaration of Conflict of Interest is recorded in the meeting minutes. The Board makes a determination of whether there is a conflict of interest and if so, implements the procedure for evaluating the issue or transaction involved. The board member or officer with the conflict must refrain from voting. A statement of conflict of interest disclosure is made on an annual basis by officers and directors. The information is maintained in a database and a report is provided to the Board. Form 990, Part VI, Section B, line 15b The CEO is compensated by Avera Health System. Annually the Compensation Committee of Avera Health, which is comprised of six (6) System Members appointed by the Religious Orders, meets with an independent consultant regarding fair market value of officers and key employees. The Compensation Committee approves all salaries based on comparable data and documents the basis for their decision in meeting minutes. The CFO and key employees are compensated by Avera McKennan. Annually, the Compensation Committee of Avera McKennan, which is comprised of board members, meets to review compensation of executives and physicians. Avera McKennan compares its compensation plan to other healthcare organizations similar in size and complexity to Avera McKennan on a national basis to ensure compensation is comparable. Avera McKennan utilizes multiple salary surveys and an independent compensation consultant to provide a market analysis for each executive's suggested pay or pay range. Individual salaries reflect related education and experience, as well as the scope of the duties to assure amounts paid are reasonable. Form 990, Part VI, Section C, line 19 The organization's governing documents, conflict of interest policy, and financial statements are not made available to the general public. Schedule G, Part I, Line 2b, Column (v) Explanation of Fundraising Payments Bentz Whaley Flessner assisted with a feasibility study, consulted for the cancer capital campaign and other foundation functions. Theodore Muenster assisted in reorganizing the foundation department, developed job descriptions, policies and procedures and was involved in some specific in-person solicitations. Form 990, Part III Continuation of Statement of Exempt Purpose Achievements - Line 4a Prenatal and delivery care: Because early and regular prenatal care is important to prevent premature birth, Avera McKennan collaborates in a community effort to provide obstetrics care for women who do not qualify for Medicaid, but cannot afford health insurance. The program offers prenatal care, and hospital labor and delivery for a low fee of $950. Women receive care whether they can cover any or all of the fee. Care is provided primarily by first-year family practice residents, supervised by experienced physicians. Through this program in 2010, Avera McKennan assisted with 79 births and provided 759 prenatal and post-partum visits. Avera Family Wellness: This program combines positive activities like violin lessons with family coaching at no charge for children in early childhood programs in the Sioux Falls School District. The goal is to prevent or lessen the effects of behavioral health conditions on children and families by fostering a positive environment. In the 2009-10 school year, 141 students were served, and 183 are being served in the 2010-11 school year. The Walsh Family Village: This hospitality house complex adjacent to the Avera McKennan campus provides a home away from home for patients and their families who come for care at Avera McKennan from outside of Sioux Falls. The project was funded by donations and is operated by Avera McKennan. Ten guest rooms are available. Avera McKennan also donates use of a building in the complex for a Ronald McDonald House for families of pediatric patients. If they can afford it, guests are charged a low fee of $46.50 per night. If they cannot afford the expense, the cost of the room is waived. Employees regularly donate non-perishable food items to stock a food pantry for guests. In 2010, the Walsh Family Village served 7,378 guests, staying in 3,669 nightly rooms. Support of Indian Reservations: In 2010, Avera McKennan delivered three truckloads of excess medical equipment, furniture, clothing and supplies to Indian reservations in South Dakota. With truck rental and fuel expense, each trip cost approximately $1,000 in addition to the donations. Community Connections: Avera McKennan reaches out to people and communities throughout eastern South Dakota, southwestern Minnesota and northwest Iowa through Home Town Connections. Providing a critical feedback link to local referring doctors, this program completes the communications links necessary to keep local health care providers current on the treatment of their patients at Avera McKennan. Community Benefits: Avera McKennan provides additional community benefits including: support of youth programs; homeless programs; community arts programming; health prevention; awareness and education about cancer, heart disease and other conditions; and support of the Sioux Empire United Way and other services in the region. Donations toward these efforts totaled $1,766,000 in 2010. Preschool vision and hearing screening: Avera McKennan provided free screening for 341 preschool children in fiscal year 2010. Form 990, Part VI, Question 16 There is no written policy or procedure since in the event of any such proposed transaction the board or a committee with delegated authority reviews all materials, valuations and operational aspects for any proposed transaction. Such transaction would be evaluated in accordance with the exempt status of the organization and its applicable purposes. Any transaction also would be approved by the board and the member. Form 990, Schedule R, Part V, Line 2, Column c The amounts reported in column c are reported based on a review of general ledger activity in intercompany accounts, and review of equity accounts for contributions and distributions. Form 990, Part X, Line 20 The issue price includes the filing organization's share of the entire bond issue, which was issued to Avera Health on behalf of the Avera Obligated Group. The Avera Obligated Group consists of Avera McKennan, Avera St. Luke's, Avera Queen of Peace, and Avera Sacred Heart. In accordance with IRS Instructions, information related to the tax exempt bond reporting is being reported on Avera Health's tax return (EIN 46-0422673). Avera Health Foundation 3900 West Avera Drive STE 300 Sioux Falls SD 57108 460367530 grant making SD 501(c)(3) 7 N/A Avera St Anthony's Hospital 300 N 2nd Street ONeill NE 68763 470463911 healthcare services NE 501(c)(3) 3 N/A Avera Holy Family 826 North 8th Street Estherville IA 51334 420680370 healthcare services IA 501(c)(3) 3 N/A Avera Holy Family Foundation 826 North 8th Street Estherville IA 51334 421317452 fundraising IA 501(c)(3) 9 N/A St Benedict Hospital Inc 401 West Glynn Drive Parkston SD 57366 460226738 healthcare services SD 501(c)(3) 3 N/A St Benedict Health Center Foundation West Glynn Drive PO Box B Parkston SD 57366 460458725 support health related services SD 501(c)(3) 11a N/A Avera Health 3900 West Avera Drive STE 300 Sioux Falls SD 57108 460422673 promotion of health SD 501(c)(3) 9 N/A Avera Queen of Peace Fifth and Foster Mitchell SD 57301 460224604 healthcare services SD 501(c)(3) 3 N/A Sacred Heart Health Services 501 Summit Street Yankton SD 57078 460225483 healthcare services SD 501(c)(3) 3 N/A Sacred Heart Rural Health Clinics 501 Summit Street Yankton SD 57078 460423930 clinic services SD 501(c)(3) 3 N/A Health Management Services 501 Summit Street Yankton SD 57078 460399291 adult daycare and homemaking services SD 501(c)(3) 9 N/A Avera Education and Staffing Solutions 1000 W 4th Street Suite 9 Yankton SD 57078 460337013 healthcare education SD 501(c)(3) 9 N/A Benedictine Health Foundation 1017 West Fifth Street Yankton SD 57078 460370373 support for organizations providing health care services SD 501(c)(3) 11b N/A Avera St Luke's 305 South State Street Aberdeen SD 57401 460224598 healthcare services SD 501(c)(3) 3 N/A Avera Workers' Compensation Trust 3900 West Avera Drive Sioux Falls SD 57108 460407148 economical coverage of workers' compensation claims SD 501(c)(3) 11b N/A Avera Marshall 300 S Bruce Street Marshall MN 56258 410919153 healthcare services MN 501(c)(3) 3 N/A Avera Marshall Foundation 300 South Bruce Street Marshall MN 56258 411784801 fundraising MN 501(c)(3) 7 N/A Avera Home Medical Equipment LLC 1325 S Cliff Ave PO Box 5045 Sioux Falls SD 57117 460488198 medical services - home medical equipment SD N/A related 378675 4613420 0 78164 1 Midwest Regional Imaging Services LLC 1325 S Cliff Ave PO Box 5045 Sioux Falls SD 57117 470874983 health care - medical imaging SD N/A related 863778 5324816 0 1 Mersco Medical of Pierre LLC 329 E Dakota Pierre SD 57501 460444002 medical services - home medical equipment SD N/A related 71414 242582 0 20194 1 Avera Home Medical Equipment of Floyd Valley Hospital LLC 714 Lincoln St NE Lemars IA 51031 820582350 medical services - home medical equipment IA Avera Home Medical Equipment LLC related 11529 87962 0 3239 1 Avera Home Medical Equipment of Estherville LLC PO Box 5045 Sioux Falls SD 57117 201686097 medical services - home medical equipment SD Avera Home Medical Equipment LLC related 17481 145696 0 5155 1 Avera Home Medical Equipment of Sioux Center LLC 38 19th St SW Sioux Center IA 51250 753203100 medical services - home medical equipment IA Avera Home Medical Equipment LLC related 30262 103239 0 9821 1 Avera Home Medical Equipment of Marshall LLC 1104 East College Drive Marshall MN 56258 205271924 medical services - home medical equipment MN Avera Home Medical Equipment LLC related 81204 293619 0 24796 1 Q&M Properties LLC 525 North Foster Mitchell SD 57301 731652049 medical clinic building SD N/A Surgical Associates Endoscopy Clinic LLC 310 S Pennsylvania St Aberdeen SD 57401 460461429 surgical associates SD N/A Avera Home Medical Equipment of Spencer Hospital LLC 2400 S Minnesota Avenue 102 Sioux Falls SD 57117 800619999 medical services - home medical equipment SD Avera Home Medical Equipment LLC related 30502 0 1 Marshall Medical Services LLC 300 S Bruce St Marshall MN 56258 208874448 Medical Services MN N/A Accounts Management Inc 5132 S Cliff Ave Suite 101 Sioux Falls SD 57108 460373021 collection agency SD N/A C Avera Health Plans Inc 3900 West Avera Drive Suite 101 Sioux Falls SD 57108 460451539 health financing and health plan administration SD N/A C Avera Property Insurance Inc 610 W 23rd St Ste 1 PO Box 38 Yankton SD 57078 460463155 insurance SD N/A C Avera Pace Inc 3900 West Avera Drive Sioux Falls SD 57108 460341869 healthcare services SD N/A C Valley Health Services 501 Summit Street Yankton SD 57078 460357149 Medical Equipment SD N/A C Northern Dakota Health Company 305 S State Street Aberdeen SD 57401 460385179 Clinics SD N/A C 1 1 1 1 0 0 0 0 0 0 1 1 0 0 0 0 1 1 Avera Home Medical Equipment LLC A 290746 Midwest Regional Imaging Services LLC K 115324 Avera Home Medical Equipment LLC K 131301 Midwest Regional Imaging Services LLC Q 262677 Avera Home Medical Equipment LLC Q 4237214 Midwest Regional Imaging Services LLC R 497286 Avera Home Medical Equipment LLC R 4395473 Midwest Regional Imaging Services LLC B 3039942 Midwest Regional Imaging Services LLC C 385560 Avera Home Medical Equipment LLC C 1305285