2011-05-13T16:33:23-05:00 2010-06-30 Deloitte Tax LLP 50 South Sixth Street Suite 2800 Minneapolis MN 55402 990 2009-07-01 450359785 MeritCare Health Enterpises Inc MERI 7012342000 PO Box 2010 Fargo ND 58122 Lisa M Carlson 7012344811 2011-05-13 1 6123974000 2011-05-13 2009 2016-02-24 21:20:13Z Kelby K Krabbenhoft 1305 W 18th Street Sioux Falls SD 57117 12783103 0 X WWW.sanfordhealth.org X 1980 ND Dedicated to the work of Health and Healing. 15 10 53 0 550930 41230 0 11746017 12783103 0 0 11746017 12783103 0 0 1482320 1599652 0 0 9028157 9876049 10510477 11475701 1235540 1307402 3337074 2668430 875405 400871 2461669 2267559 The mission of Sanford "Dedicated to the Work of Health and Healing" and the vision "Improving the Human Condition Through Exceptional Care, Innovation and Discovery", is the constant force that drives the organization's plans, decisions and actions. 0 0 11475701 12232173 As part of the Sanford delivery system, MeritCare Health Enterprises supports the other affiliates through the operation of pharmacies for the benefit of patients and employees of Sanford Medical Center Fargo and Sanford Clinic North. The provision of these items to patients aids in the overall promotion of health in the community. 11475701 0 0 0 0 0 0 0 0 0 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 1 0 1 3 0 1 53 1 1 1 0 0 0 0 0 0 15 10 1 0 1 0 1 1 1 1 1 0 0 0 1 1 1 1 1 1 0 0 X Doug Okland 7012342000 PO Box 2010 Fargo ND 58122 X Kelby Krabbenhoft 60.00 X X 0 1123846 748719 Roger Gilbertson MD 60.00 X X 0 1004743 989160 Ronald Moquist 0.50 X X 0 0 0 Lauris Molbert 0.50 X X 0 0 0 Barbara Stork 0.50 X X 0 0 0 David Beito 0.50 X X 0 0 0 Ellen-Earle Chaffee PhD 0.50 X X 0 0 0 Judy Green 0.50 X X 0 0 0 Terry Baloun 0.50 X 0 0 0 Michael Olson MD 60.00 X 0 561750 53780 Pamela Anderson 0.50 X 0 0 0 Terrence Grimm MD 60.00 X 0 607209 41089 Barry Martin 0.50 X 0 0 0 John Jambois 0.50 X 0 0 0 James Entenman 0.50 X 0 0 0 John Vander Woude Jr MD 60.00 X 0 2134556 29404 Jerome Feder 0.50 X X 0 0 0 Mark Paulson MD 60.00 X 0 225981 43832 Ann Christenson 0.50 X 0 0 0 Brent Teiken 0.50 X 0 0 0 Don Morton 0.50 X 0 0 0 David Wilcox MD 60.00 X 0 226474 46961 Jack Reynolds PhD 0.50 X 0 0 0 Kushal Handa MD 60.00 X 0 561777 46657 Roxanne Newman MD 60.00 X 0 1177119 39121 Anton Treuer PhD 0.50 X 0 0 0 Lisa Carlson 60.00 X 0 294054 49603 Douglas Okland 60.00 X 0 162372 37287 Linda O'Halloran 60.00 X 0 258830 5116 Michael Gibbs 60.00 X 0 259344 13836 Robert Biberdorf 60.00 X 0 152478 26091 Harrison Storandt 60.00 X 107736 0 22190 LeAnn Ness 60.00 X 101333 0 12224 Mark Plencher 60.00 X 114440 0 13875 Tammie Dohman 60.00 X 123568 0 9124 Roger Lee 60.00 X 0 141381 24886 Bruce Pitts MD 60.00 X 0 439889 49257 Rhonda Ketterling MD 60.00 X 0 304532 45498 Douglas Vang 60.00 X 0 285002 48657 Paul Richard 60.00 X 0 286282 49603 Gregory Post MD 60.00 X 0 560576 50257 Evelyn Quigley 60.00 X 0 176638 40857 Jeffrey Hoss 60.00 X 0 255549 50245 447077 11200382 2587329 4 1 1 0 0 Pharmacy Sales 446110 12851012 12300082 550930 East Ottertail Pharmac 446110 -67909 -67909 12783103 12783103 12232173 550930 0 1098911 1098911 132745 132745 276838 276838 91158 91158 25294 25294 1199 1199 132033 132033 82034 82034 6192 6192 300 300 11910 11910 Medical Supplies 9575272 9575272 Bad Debt 41596 41596 Miscellaneous Expenses 219 219 11475701 11475701 0 0 27455 17279 1289043 968565 953989 1232031 391 276175 219385 68894 56790 498783 393374 498910 0 3337074 2668430 403115 400871 472290 0 875405 400871 X 2461669 2267559 2461669 2267559 3337074 2668430 X 0 1 1 X 0 276175 219385 56790 56790 Investment in East Ottertail Pharmacy 393374 F 393374 Part X: Description of Uncertain Tax Positions Under FIN 48: Certain controlled organizations are subject to income taxes. Deferred income tax assets and liabilities are recognized for the differences between the financial and income tax reporting basis of assets and liabilities based on enacted tax rates and laws. A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination. The deferred income tax provision or benefit generally reflects the net change in deferred income tax assets and liabilities during the year. The current income tax provision reflects the tax consequences of revenues and expenses currently taxable or deductible on various income tax returns for the year reported. MeritCare Health Enterprises, Inc had no tax liability at June 30, 2010; some related party organizations report accrued and deferred taxaes payable at June 30, 2010. 1 1 1 0 0 0 1 0 0 Kelby Krabbenhoft 0 746924 0 0 0 376922 0 730587 0 18132 0 1872565 0 79234 Roger Gilbertson MD 0 567216 0 0 0 437527 0 973515 0 15645 0 1993903 0 48624 Michael Olson MD 0 535584 0 1456 0 24710 0 39748 0 14032 0 615530 0 15838 Terrence Grimm MD 0 497424 0 108201 0 1584 0 32720 0 8369 0 648298 0 0 John Vander Woude Jr MD 0 1038461 0 0 0 1096095 0 7350 0 22054 0 2163960 0 920379 Mark Paulson MD 0 180376 0 45053 0 552 0 28836 0 14996 0 269813 0 0 David Wilcox MD 0 194330 0 31592 0 552 0 29078 0 17883 0 273435 0 0 Kushal Handa MD 0 527834 0 33583 0 360 0 32720 0 13937 0 608434 0 0 Roxanne Newman MD 0 1128886 0 47873 0 360 0 32720 0 6401 0 1216240 0 0 Lisa Carlson 0 292197 0 0 0 1857 0 32720 0 16883 0 343657 0 0 Douglas Okland 0 147132 0 15000 0 240 0 20112 0 17175 0 199659 0 0 Linda O'Halloran 0 257798 0 0 0 1032 0 0 0 5116 0 263946 0 0 Michael Gibbs 0 256916 0 0 0 2428 0 0 0 13836 0 273180 0 0 Robert Biberdorf 0 143728 0 0 0 8750 0 20126 0 5965 0 178569 0 0 Roger Lee 0 134513 0 0 0 6868 0 18469 0 6417 0 166267 0 0 Bruce Pitts MD 0 434319 0 0 0 5570 0 32720 0 16537 0 489146 0 0 Rhonda Ketterling MD 0 304532 0 0 0 0 0 32720 0 12778 0 350030 0 0 Douglas Vang 0 281769 0 0 0 3233 0 32720 0 15937 0 333659 0 0 Paul Richard 0 285250 0 0 0 1032 0 32720 0 16883 0 335885 0 0 Gregory Post MD 0 556692 0 0 0 3884 0 32720 0 17537 0 610833 0 0 Evelyn Quigley 0 170489 0 0 0 6149 0 25112 0 15745 0 217495 0 0 Jeffrey Hoss 0 253328 0 0 0 2221 0 32720 0 17525 0 305794 0 0 Part I, Line 1a On Part I, Questions Regarding Compensation, Sanford checked several of the items as provided to listed persons: First Class or Charter Travel - Charter travel for business purposes is provided for individuals as needed and as cost appropriate. These costs are not included in the W-2's of the individuals as they meet the business purpose of Sanford. Travel for Companions - Limited travel for companions is required for an annual meeting. These costs are not included in the W-2's of the individuals as they meet the business purpose of Sanford. Tax Indemnification and gross-up payments - Compensation may be grossed up to include appropriate tax amounts in certain circumstances. Health or social club dues or initiation fees - All Sanford employees are eligible for discounted wellness memberships, a portion of these discounts and other club dues are taxed as fringe benefits. Personal services - Individuals may have benefits which include tax preparation or planning, this benefit is included in income and taxed. Part I, Line 3: The Sanford Board of Trustees directly engages a nationally recognized independent compensation consulting firm to annually review the total compensation of arrangements of the officers of the organization, and to report findings and recommendations to the Sanford Board of Trustees for deliberation and action. The most recent study was completed in 2010. Part I, Line 4a Part I, Line 4a: To be in compliance with the IRS regulatory environment, listed individuals compensation includes a one-time payment of deferred compensation; this compensation was earned over multiple periods, and should be treated as earned over that length of time in exchange for services provided. These amounts were already reported in previous years as compensation. Distributions were paid to the following individuals: Kelby Krabbenhoft $79,234 Michael Olson, MD $15,838 Dr. Roger Gilbertson was President and CEO of MeritCare Health System. MeritCare and Sanford Health merged on November 2, 2009 at which time Dr. Gilbertson retired. Upon retirement Dr. Gilbertson received a separation payment of $1,000,920 of which $48,624 was paid during the calendar year and $952,295 was accrued to be paid monthly through November 1, 2011. The payment was consistent with the President's Employment Agreement effective January 1, 2007. Part I, Line 4b/Schedule J, Part II, Column C: In addition to employer contributions to pension plans, amounts representing increases and decreases in actuarial value (actuarial value factors include age, tenure and salary) of defined contribution and defined benefit SERP Plans are included in Column C. Participants and changes in values include: Kelby Krabbenhoft $706,194 Roger Gilbertson, MD $ 94,324 Part I, Line 4c: Several listed individuals received payment distributions from a benefit plan that falls within the definition of an "equity based" compensation plan. These amounts were deferred over multiple year periods, and were included in compensation in those periods. Distributions were paid to: John Vander Woude, MD $920,379 Part I, Line 6 Sanford physicians are compensated based on the professional services they perform within the clinic in which they provide care. Generally, the model is revenues less expenses. Physicians listed that were paid on this model include: Michael Olson, MD Supplemental Information Part III Compensation reported on Schedule J includes: (B)(i) Base compensation - salaries are based on the experience and performance of each executive and bench-marked using independent compensation survey information. (B)(ii) - Bonus & incentive compensation - as part of executive compensation, individuals may be eligible for incentive performance compensation, however if the organization does not make its financial budget, the Executive does not receive an incentive payment regardless of performance. (B)(iii) Other Reportable Compensation - generally includes taxable executive benefits. It also includes the one-time payout of previously deferred compensation (which was also reported as compensation in the earned period). To be in compliance with the IRS regulatory environment, listed individuals compensation includes a one-time payment of deferred compensation; this compensation was earned over multiple periods, and should be treated as earned over that length of time in exchange for services provided. (C) Deferred Compensation includes employer contributions to pension plans and the increase (or decrease) in the actuarial value (actuarial value factors include age, tenure and salary) of the benefit plans. (D) Nontaxable Benefits generally includes health insurance premiums. Supplemental Information Part III The Sanford Board of Trustees is comprised of 15 members, including nine volunteer community members, five physicians and the CEO. Compensation paid to any trustee is for full-time professional responsibilities as physicians or administrators of the organization. Supplemental Information Part III A memo regarding executive compensation, written by the Chairman of the Sanford Board of Trustees, is on file and available upon request. Supplemental Information Part III The total compensation paid to Kelby Krabbenhoft of $1,123,846 is comprised of Base salary of $746,924, the one-time payment of previously deferred compensation of $79,234 (see also explanation above) and Other Taxable Earning of $297,688. Form 990, Part VI, Section A, line 2 Pamela Anderson, Trustee, and Lisa Carlson, CFO, have a business relationship. Board members also serve on the boards of Sanford and/or related entities. Form 990, Part VI, Section A, line 4 Sanford North is the sole shareholder of MeritCare Health Enterprises, Inc. The Board of Directors of MeritCare Health Enterprises, Inc. consist of the Board of Governors of Sanford Clinic North. The officers are the President of Sanford Clinic North, the CMO of Sanford Clinic North and the officers of the Sanford Clinic North Board of Governors. Form 990, Part VI, Section A, line 6 Sanford North is the sole shareholder of the organization. Form 990, Part VI, Section A, line 7a Board members are members of the Board of Governors of Sanford Clinic North. Form 990, Part VI, Section A, line 7b Sanford North, as sole shareholder, reviews the actions of MeritCare Health Enterprises, Inc. Form 990, Part VI, Section B, line 11 The Form 990 is prepared internally by the finance department and reviewed by executive management, including both the System CEO and CFO. An external accounting firm reviews the return prior to filing and presents return highlights and key disclosures to the Board of Trustees at the meeting immediately following the return filing date. After the return is filed, a complete copy is made available to the current trustees. Form 990, Part VI, Section B, line 12c The annual Conflict of Interest disclosure process is managed by the Chief Compliance Officer (CCO). The CCO is responsible for assuring that all completed forms are returned in a timely and complete manner. Conflict of Interest questionnaires are sent to Sanford Trustees, members of the governing boards for subsidiary entities, officers, and key employees. The disclosures are summarized for review by the executive committee of the Board of Trustees, pursuant to policy. This review allows: 1) The Board to acquire an awareness of financial relationships of board members and key management employees and can invoke the recusal process on a case-by-case basis when potential conflicts are implicated in Board decisions and deliberations, and, 2) Gives the Board the opportunity to seek additional information and clarification about disclosures to determine potential conflicts of interest and how to manage such. Form 990, Part VI, Section B, line 15a The Sanford Board of Trustees directly engages a nationally recognized independent compensation consulting firm to annually review the total compensation arrangements of the officers and operating unit executives of the organization, including the CEO, and to report the findings and recommendations to them for deliberation and action. The deliberations and actions are recorded in the minutes of the Sanford Board of Trustees. The most recent study was completed in 2010. Form 990, Part VI, Section C, line 19 Although the organization does not maintain a website where the public can access these documents, it would respond individually to any requests or inquiries from the public for these documents. Form 990, Part VII Board members of Sanford provide services to Sanford subsidiaries. Hours reported for each individual reflect the time spent on work related to either the filing organization or related organization. Sanford Board of Trustees has ultimate governance responsibilities for each entity within the Sanford system. In addition, a Board of Directors is established for each entity, which has specific delegated responsibilities from the Board of Trustees related to the oversight of day to day operations of that entity. Form 990, Schedule R, Part V Costing Method for Related Party Transactions Occupancy charges from Sanford Medical Center Fargo are recorded at cost. Sanford North PO Box 2010 Fargo ND 58122 450385890 Supporting Organization ND 501(c)(3) 11-II Sanford Sanford Clinic North PO Box 2010 Fargo ND 58122 911770748 Clinical Services ND 501(c)(3) 9 Sanford North MeritCare Minnesota 1720 South Highway 59 Thief River Falls MN 56701 261530302 Promotion of health MN 501(c)(3) 3 Sanford North Sanford Medical Center Fargo PO Box 2010 Fargo ND 58122 450226909 Hospital ND 501(c)(3) 3 Sanford North Sanford Health Foundation North PO Box 2010 Fargo ND 58122 450398104 Supporting Organization ND 501(c)(3) 7 Sanford North Sanford Health Network North PO Box 2010 Fargo ND 58122 450409348 Hospitals / Clinics ND 501(c)(3) 11-II Sanford North FM Ambulance Service 2215 18th St South Fargo ND 58103 450344371 Emergency Medical Transport Services ND 501(c)(4) Sanford North Sanford Medical Center Thief River Falls 120 Labree Ave S Thief River Falls MN 56701 410709579 Hospital MN 501(c)(3) 3 Sanford North Sanford Medical Center Mayville 42 6th Ave SE Mayville ND 58257 450228899 Hospital ND 501(c)(3) 3 Sanford North Sanford Medical Center Wheaton 401 12th St N Wheaton MN 56296 272042143 Hospitals / Clinics MN 501(c)(3) 3 Sanford North Agassiz Assurance Company 100 Bank Street No 610 Burlington VT 05401 743121855 Malpractice Insurance VT 501(c)(3) 11-II Sanford North Sanford Health 1305 W 18th St PO Box 5039 Sioux Falls SD 571175039 311527032 Supporting Organization SD 501(c)(3) 11-III Sanford Sanford USD Medical Center 1305 W 18th St PO Box 5039 Sioux Falls SD 571175039 460227855 Hospital SD 501(c)(3) 3 Sanford Health Sanford Clinic 1305 W 18th St PO Box 5039 Sioux Falls SD 571175039 460447693 Clinics SD 501(c)(3) 3 Sanford Health Sanford Health Network 1305 W 18th St PO Box 5039 Sioux Falls SD 571175039 460388596 Hospitals / Clinics SD 501(c)(3) 11-I Sanford Health Sanford Home Health 1305 W 18th St PO Box 5039 Sioux Falls SD 571175039 460282134 Home Health Services SD 501(c)(3) 9 Sanford Health Sanford Health Foundation 1305 W 18th St PO Box 5039 Sioux Falls SD 571175039 363297853 Supporting Organization SD 501(c)(3) 11-I Sanford Health Sanford Research USD 1305 W 18th St PO Box 5039 Sioux Falls SD 571175039 460450378 Research SD 501(c)(3) 4 Sanford Health Sanford World Clinics 1305 W 18th St PO Box 5039 Sioux Falls SD 571175039 262707628 Healthcare SD 501(c)(3) 3 Sanford Health Sanford 801 N Broadway Drive Fargo ND 58122 271218956 Supporting Organization ND 501(c)(3) 11-II SHM-MeritCare 801 N Broadway Drive Fargo ND 58122 271213717 Supporting Organization ND 501(c)(3) 11-II SHM-Sanford 1305 W 18th St PO Box 5039 Sioux Falls SD 571175039 271213769 Supporting Organization SD 501(c)(3) 11-II National Student Housing - South Dakota LLC 100 S Phillips Ave Sioux Falls SD 57104 202129839 Investment SD Sandford Health Related 0 0 RAC Rentals LLC 100 S Phillips Ave Sioux Falls SD 57104 261961077 Investment SD Sandford Health Related 0 0 Healthcare Environmental Services Inc 1420 40th St NW Fargo ND 58102 450336598 Laundry & Incineration Services ND Sanford North C Heart Partners at Sanford 1305 West 18th St Sioux Falls SD 57117 460449572 Healthcare SD Sanford Health C Sanford Home Medical Equipment Inc 2710 West 12th St N Sioux Falls SD 571043701 460388597 Healthcare Equipment SD Sanford Health C Sanford Health Plan 300 Cherapa Place 201 Sioux Falls SD 57103 911842494 Insurance SD Sanford Health C Sanford Health Plan of Minnesota 300 Cherapa Place 201 Sioux Falls SD 57103 460445852 Insurance MN Sanford Health C 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 Sanford Medical Center Fargo M 82000