2011-01-11T11:17:56-06:00 2010-06-30 EIDE BAILLY LLP 4310 17TH AVE S PO BOX 2545 FARGO ND 581082545 990 2009-07-01 450230400 HILLSBORO MEDICAL CENTER HILL 7014365755 PO BOX 609 HILLSBORO ND 58045 John Rieke 7014365755 2010-12-21 1 LISA CHAFFEE CPA 7012398500 2010-12-21 2009 2016-02-24 21:20:13Z Patricia Dirk PO BOX 609 HILLSBORO ND 58045 6907724 0 X www.hillsboromedicalcenter.com X 1946 ND To provide quality health care and living services with dignity and individualized care. 10 10 165 80 0 0 211985 201722 5733496 6478650 61006 59779 23630 167573 6030117 6907724 0 0 3271390 3636005 0 0 3016188 3731450 6287578 7367455 -257461 -459731 17446358 16155907 14390492 13571478 3055866 2584429 The mission of the Hillsboro Medical Center is to provide quality health care and living services with dignity and individualized care. 0 0 6806286 6478650 The Hospital/Home provides medical care to the community and long-term care to the elderly regardless of the individuals ability to pay for the services received.Medical services offered include critical access hospital services, skilled nursing services,emergency services and ambulance services. Charity care provided for fiscal year ended June 30, 2010, based on charges foregone was $22,074.Hillsboro Medical Services also operates a skilled nursing facility. The Home provides nursing services, meals, housekeeping, laundry and activities for residents. 6806286 1 1 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 1 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 1 33 0 1 165 1 0 0 0 0 0 0 0 0 0 10 10 1 1 1 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 0 X Darlene Swanson 7016363211 PO Box 609 Hillsboro ND 58045 Curt Kaufman 3.00 X X 0 0 0 Kathy Evenson 1.00 X X 0 0 0 Steve Doeden 1.00 X X 0 0 0 Brenda Muller 1.00 X X 0 0 0 Kay Malme 1.00 X 0 0 0 Wes Ecker 1.00 X 0 0 0 Wayne Koering 1.00 X 0 0 0 Chris McInnes 1.00 X 0 0 0 Cel Baumgartner 1.00 X 0 0 0 Jeff McInnes 1.00 X 0 0 0 Ed Laxdahl 1.00 X 0 0 0 Patricia Dirk 40.00 X 84400 0 9861 Travis Scheving 40.00 X 61405 0 6535 145805 0 16396 0 0 0 1 Nor-Son 7900 Hastings Road Baxter MN 56425 Construction 1850004 Sanford Health PO Box 2010 Fargo ND 58122 Various Medical Service Contracts and Ma 641566 DMS Health SDS 12-2208 PO Box 86 Minneapolis MN 55486 X-Ray Fees 179029 3 27073 155352 19297 201722 Net Patient & Resident 900099 6417080 6417080 Miscellaneous Revenue 900099 61570 61570 6478650 59779 59779 167573 167573 167573 167573 6907724 6478650 0 227352 166550 166550 2903689 2748402 155287 64951 61477 3474 231881 219480 12401 268934 254552 14382 37480 37480 64374 64374 11007 11007 690912 684869 6043 13060 174 12886 597483 539359 58124 29690 29690 232976 226215 6761 25084 24675 409 14351 13149 1202 673217 673217 1144784 1144784 85204 85204 Bad debts 90736 90736 Collections 5921 5921 Recognition 1919 891 1028 Sales tax 355 355 12897 9412 3485 7367455 6806286 561169 0 500517 842044 1119419 1045759 28297 27520 57501 30796 16621830 4188570 12200939 12433260 3214814 1343553 324871 432975 17446358 16155907 1079545 461788 128426 117572 13155000 12975000 12059 3102 15462 14016 14390492 13571478 X 3055866 2584429 3055866 2584429 17446358 16155907 X 0 1 1 X 0 X RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 14046561 3112265 10934296 138180 22844 115336 2437089 1053461 1383628 12433260 Unamortized Bond Premium 14016 14016 6907724 7367455 -459731 -11706 -11706 -471437 6896018 -11706 -11706 6907724 0 6907724 7367455 0 7367455 0 7367455 Part X: Description of Uncertain Tax Positions Under FIN 48: The Medical Center is organized as a North Dakota nonprofit corporation and has been recognized by the Internal Revenue Service as exempt from federal income taxes under Internal Revenue Code Section 501(c)(3). The Medical Center undergoes an annual analysis of its various tax positions, assessing the likelihood of these positions being upheld upon examination with relevant tax authorities, as defined by the accounting principles generally accepted in the United States of America. The Medical Center believes that they are compliant with all IRS tax regulations and as of June 30, 2010 has not recorded a tax liability for a tax uncertainty. The Medical Center will recognize future accrued interest and penalties related to unrecognized tax benefits in income tax expense if incurred. Under normal circumstances, the Medical Center is no longer subject to Federal and state tax examinations by tax authorities for years before 2007. 1 1 X 0 0 0 1 1 0 0 21230 21230 0.00290 82086 82086 103316 82086 21230 0.00290 1427 1427 0.00020 311149 281253 29896 0.00410 312576 281253 31323 0.00430 415892 363339 52553 0.00720 0 87265 65449 1858076 1849866 8210 X 1 1 Hillsboro Medical Center

12 3rd St SE Hillsboro ND 58045

X X X X LT Care, Assisted Living, Ambulance Part I, Line 3c: Throughout the payment and collection process, the business office staff attempt to identify to the extent possible, patients which are worthy and appropriate for charity care considerations. Those accounts to be considered for charity reductions are asked to complete a financial statement form, which provides pertinent financial information necessary to determine financial need. The charity care application asks for items such as employment information, current income, current expenses, assets owned as well as other miscellaneous items. Credit reports can be used to verify and assist in the decision process. Review of potential charity requests are performed monthly by the Business Manager and certain recommendations are forwarded to the Administrator. The administrator makes the final decision if someone is eligible for free or discounted care. The decision for free or discounted care is strictly done on a case by case basis as the administrator reviews information provided in the charity care application. Part I, Line 7: The organization used Worksheet 2 to determine the cost for Part I, Line 7, Rows a and b. The cost in Part I, line 7, Row e was determined based on the wages that were paid to individuals providing the services while on hospital time and it was also based on the cost of supplies (such as printed materials) used in the activities. The cost in Part I, line 7, row g was determined from the Medicare Cost report. Part I, Line 7f: The amount of bad debt expense removed from the denominator is $90,736. Part III, Line 4: Financial Statement Bad Debt Expense Footnote:Patient and resident receivables are uncollateralized receivables and third-party payor obligations. 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.Bad debt expense was converted to cost using the ratio of patient care cost to charges calculated using Worksheet 2.All discounts and payments on a patient's account are accounted for prior to determining bad debt expense. Hillsboro Medical Center reports amounts as bad debt once they are 120 days overdue and have been turned over to a collection agency. Historically, almost all of these amounts remain unpaid as the patient does not have sufficient resources and likely would qualify for the Charity Care Program. Based on this assumption, 75% of the bad debt amount is considered charity care. Part III, Line 8: Medicare allowable costs were obtained from the 2009 Medicare Cost Report. Part III, Line 9b: If a patient bill is unpaid after 120 days, a phone call is made to the patient. If they do not hear from the patient and there is no response to the phone call, the bill is sent to collections. The final approval for sending the account to collections is signed by the administrator. When it is appropriate, a review is done to determine if a patient might qualify for charity care. This can also be discussed when the phone call is made to the patient prior to sending the bill to collections. Part VI, Line 2: The Assistant Director of Nursing and the Medical Providers at Hillsboro Medical Center assess the needs of outpatient services utilized by the community. We re-evaluate the services we provide and have added multiple needed outpatient treatments. These services enhanced patient care and provided services within our community instead of needing to travel outside the Hillsboro area for these services. We will continue to review the needs of the community and the services that we offer. Part VI, Line 3: Hillsboro Medical Center (HMC) does not post its charity care policy. During the collection process for outstanding bills, HMC informs the patients that we do have a Charity Care Policy and we will send out a financial statement form, which will provide pertinent patient financial information necessary to determine financial need. Also, HMC discusses with the patients that they could apply with the county for Medicaid assistance. The final determination for Charity Care is approved by the administrator. Part VI, Line 4: Hillsboro has a population of approximately 1,600. Per the 2000 census, the median income for a household in the city was $33,516 and the median income for a family was $42,357. Males had a median income of $30,607 versus $19,769 for females. The per capita income for the city was $17,976. About 6.6% of families and 9.2% of the population were below the poverty line, including 9.4% of those under age 18 and 15.0% of those age 65 or over. Approximately 15% of the city's population are Medicaid recipients. Sanford-Mayville Hospital is another hospital that serves the community in an 18 mile radius. Part VI, Line 5: n/a Part VI, Line 6: The mission of the Hillsboro Medical Center is to provide quality health care and living services with dignity and individualized care. Hillsboro Medical Center provides community meetings about CPR, Advance Directives, Child Passenger Safety, Alzheimer's, etc. to promote information and well-being to people in our community. Hillsboro Medical Center also provides a room for Hospice and UND Journal Club free of charge so they can conduct their meetings for the care of people in the community and surrounding areas. The majority of the organization's governing body is comprised of individuals who reside in the primary service area. These individuals are not employees, nor contractors or family members of the organization. The organization extends medical staff privileges to qualified physicians in the community. Surplus funds, if available, are re-invested in the facility to improve patient care. Part VI, Line 7: n/a X 0 0 0 0 0 0 0 0 0 Patricia Dirk 84400 0 0 0 0 0 5099 0 5089 0 94588 0 0 0 Supplemental Information Part III Schedule J Part I Line 3 methods of establishing compensation: The CEO, Patricia Dirk, is compensated by Sanford Health an unrelated entity. The compensation amounts included in Part II for Patricia Dirk indicate the types and amount of compensation that she was paid by Sanford Health. Sanford Health used one or more of these methods in establishing her compensation. Traill County 456002246 892846AQ9 2007-05-22 13341133 Exp of facility; new Asst Lvg and LT Care bldgs, 80% rmdl of Hospital 0 0 13341133 893789 339850 12107494 2008 0 0 0 1 0 0 0 0 0 0.00000 0.00000 0.00000 0 0 0 0 0 1 0 Form 990, Part VI, Section A, line 2 Jeff McInnes and Chris McInnes had a family relationship. Form 990, Part VI, Section A, line 3 The CEO/administrator is employed through a management agreement with Sanford Health, an unrelated party. Form 990, Part VI, Section A, line 4 Candidates for the position of Chairperson, Vice-Chairperson, Secretary and Treasurer are presented to the board of trustees for a majority vote after being nominated by the Nominating Committee, rather than being nominated by the Nominating Committee. Form 990, Part VI, Section B, line 11 The chief executive officer/administrator will review a draft of the Form 990. The board reviewed the 990 prior to it being filed and approved the 990 at the December 2010 board meeting. Form 990, Part VI, Section B, line 12c The conflict of interest policy covers the board of directors. In December board members are asked to disclose any possible conflicts. The chief executive officer/administrator reviews the disclosures and determines if there are any conflicts. Any board member with a conflict is asked to abstain from voting on that issue. The conflict of interest for the CEO is covered by the management contract with Sanford Health. The CFO is not covered by the conflict of interest policy. Form 990, Part VI, Section B, line 15 Salary range for CEO is determined by Sanford Health and presented to Hillsboro Medical Center board of trustees for approval. Other officer's salaries are reviewed on an annual basis with comparative data. Market adjustments as well as annual increases are approved by the board. Form 990, Part VI, Section C, line 19 The governing documents, conflict of interest policy and financial statements are available upon request. Form 990, Part VI, line 1 The organization has an Executive Committee which has the power to transact all regular business of the organization during the interim between meetings of the Board of Directors, provided that any action taken does not conflict with the policies and expressed wishes of the Board and that the Executive Committee refers all matters of major importance to the full Board. The Executive Committee consists of the Chairperson, Vice Chairperson, Corporation CEO/Administrator, Treasurer and Secretary. The Executive Committee is chaired by the Chairperson and meets on call of the Chairperson of the Board or Corporation CEO/Administrator. Hillsboro Medical Center Foundation PO Box 609 Hillsboro ND 58045 363542187 Fundraising ND 501(c)(3) 7 N/A 0 0 1 0 0 0 0 0 0 0 0 1 1 1 0 1 0 0 Hillsboro Medical Center Foundation