4A (Expenses $ 934969952 including grants of $ 1100400) (Revenue $ 1105486519)
See Attachment 1.

Part I, Line 3C
Kaleida Health (Kaleida) has developed, implemented and communicates its Financial Assistance (Charity Care) policy, which assists low income, uninsured or underinsured individuals who lack the financial resources to pay for medical services rendered. Levels of discounts are awarded based upon income and asset verification and in accordance with the Federal Poverty Guidelines as published annually by the U.S. Department of Health and Human Services. Individuals are notified during admissions and registration of Kaleida's Charity Care program. After review of income and assets, an individual may be approved for free care (100% discount) or a discount level of 50, 60, 75, or 90%, for medically necessary inpatient, outpatient, emergency room or nursing home services rendered at a Kaleida facility, as follows: Less than 200% of Federal Poverty Guideline is awarded 100% discount 200% - 249% of Federal Poverty Guideline is awarded 90% discount 250% - 299% of Federal Poverty Guideline is awarded 75% discount 300% - 349% of Federal Poverty Guideline is awarded 60% discount 350% - 400% of Federal Poverty Guideline is awarded 50% discount The applicant for free or reduce price care is contacted by a facilitated enroller for financial screening and enrollment in a government-funded program, if eligible, while in the hospital if inpatient or shortly after their visit.

PART I, LINE 7
The amounts reported in the table under Part 1, Line 7 were determined using the Health System's Decision Support software program and revenue and expenses from the general ledger. The overall revenue and expenses included in the decision support software program were reconciled to the general ledger which reconciles to the audited financial statements. The decision support software program allocates direct costs to each patient account based on the resources used by that patient within the specific cost center. Indirect costs are allocated using similar stepdown methodology used by CMS in the Institutional Cost Report.

Part I, Line 7G
There are no costs attributable to a physician clinic included in Subsidized Health Services.

Part I, Line 7, Column (F)
Total Bad Debt expense subtracted from total expenses in the determination of calculating the percentage of Total Expense is $21,302,447.

Part II, Community Building Activities
Kaleida Health is actively engaged in protecting our community through emergency preparedness. Kaleida Health has taken the lead with community and international partners to increase the Western New York region's level of readiness for any crisis that may occur, including organizing and conducting internal and external emergency drills. Community partners include local law enforcement and fire departments, the United States Postal Service, Erie County Department of Health, Niagara County Department of Health, Erie County Hazmat Organization, local universities and the International Joint Commission [for Emergency Response] involving Erie County, Niagara County and the Niagara Province of Ontario, Canada, among other organizations. Kaleida Health's Emergency Management Department provides leadership training and programmatic services for other healthcare organizations throughout the region. The Department assisted with creation of a Regional Mutual-Aid Agreement between 26 healthcare organizations in Western New York. The Mutual-Aid Agreement makes it possible for the healthcare organizations to share resources with one another during a disaster. Kaleida Health's emergency management activities promote the health of the communities we serve by ensuring that citizens, businesses and non-profit organizations are well prepared for all hazards. Kaleida Health conducts physician workforce planning and actively recruits physicians to medical shortage/underserved areas. A medical staff development plan is established based on community need in our service area. Community need is based on the total number of physicians providing medial services to the area, not only those physicians that staff our hospitals.

Part III, Line 2 and 3
Costing Methodology Used in Determining the Amounts Reported on Lines 2 and 3 of Part III and the Rationale for Including a Portion of Bad Debt Amounts as Community Benefit Bad Debt Expense is recorded using the valuation method as outlined in Healthcare Financial Management Association Statement 15, which requires bad debt expense to be recorded at the amount that the payer is expected to pay. In order to report the costs associated with bad debt expense, the reported bad debt expense needs to be adjusted so that the amount expected to be paid reflects gross charges, prior to the application of an RCC. Kaleida Health adjusts bad debt expense prior to the application of an RCC so that the reported bad debt expense at cost, on Part III, line 2 of IRS Form 990, Schedule H reflects the true cost of the bad debts. The organization has a Charity Care Policy, and any write-offs as a result of this policy are recorded as Charity Care Allowances and are a reduction of the New Patient Revenue. Individuals who may quality for Charity Care assistance under the policy, but do not volunteer to complete the application process would not be granted Charity Care assistance. KALEIDA ALSO USES A PRESUMPTIVE CHARITY CARE PROCESS, WHICH HAS determined that 27% of self-pay bad debt expense in 2012 would have been eligible for charity care assistance. Therefore, we believe that the level of charity care included in bad debt expense to be approximately $1,007,757. We estimated this amount by using the 2012 calculated presumptive eligibility percentage on bad debt write-off's amounts over $500 (27%), and applied this percentage to those bad debt write-off's amounts under $500, to determine the bad debt write-off's that would have been eligible, if they were scored using the presumptive eligibility process. Bad debt is not included as community benefit.

Part III, Line 4 Charity Care and Bad Debt Expense Footnote
Kaleida provides care to patients who meet certain criteria under its charity care policies without charge or at amounts less than their established rates. Because Kaleida does not anticipate collection of amounts determined to qualify as charity care, they are not reported as revenue. Kaleida grants credit without collateral to patients, most of whom are local residents and are insured under third-party arrangements. Additions to the estimated allowance for doubtful accounts are made by means of the provision for bad debts. Accounts written off as uncollectible are deducted from the allowance and subsequent recoveries are added. The amount of the provision for bad debts is based upon management's assessment of historical and expected net collections, business and economic conditions, trends in federal and state governmental healthcare coverage, and other collection indicators. The provision of bad debts primarily relates to patients without insurance and to those that are underinsured or without the necessary resources to pay coinsurance and deductible balances.

Part III, Line 8
There are no Medicare shortfalls included in the calculation of community benefit. Costing methodology used to determine the Medicare allowable costs reported in the Medicare Cost Report, as reflected in Part III, line 6: Kaleida Health used the filed, but unaudited 2012 CMS Medicare Cost Report to determine the amounts reported on these lines.

Part III, Line 9B
Only after patient's liability has been determined following processing of applications for government assistance, charity care, and/or insurance carrier remittance will the patient statement be mailed for payment recovery. Kaleida Health has implemented a pre-collection process for accounts with an insurance balance of zero, a positive patient balance greater than $4.99, and a first bill date older than 60 days but not previously paid in full by the patient (excluding accounts for patients that have submitted a completed application for Charity Care, Medicaid, Family Health Plus or Child Health Plus, and an eligibility determination is pending). When the financial assistance policies and options are reviewed with the patient or at the time that a patient expresses a financial concern, the patient will be offered the opportunity to apply for charity care. Once the patient submits the completed charity care application, the account is placed on hold and all collection activities are suspended until an eligibility determination is made. If the patient is eligible for charity care, then the patient is notified of the level of charity care awarded. If 100% charity care is awarded, then no bill is sent to the patient. If less than 100% charity care is awarded, then the patient will receive a bill pursuant to the private pay collection policy.

Part V, Section B
All of the Hospital Facilities of Kaleida Health share the same financial assistance policies. As such, the additional information provided for Part V, Section B, lines 14g, 16e, 18e, and 20D applies each of the hospital facilities listed. Part V, Line 14G Financial Aid Information Included on Bill and Statements Information that explains how qualified patients can access financial assistance through the hospital are included on bills and statements to patients. Application materials include a notice to patients that once they submit a completed application and documentation, they may disregard any bills until the Hospital has rendered a written decision on the application. The Hospital may not forward accounts to collection while and application is pending.

Part V, Line 16E
Upon verification of employment wages will be garnished.

Part V, Line 18E
Notification through Kaleida Health website and brochures.

Part V, Line 20D
The amounts billed are calculated using the Medicare rate, Medicaid rate or highest volume commercial payor rate.

Community Health Needs Assessment Process
Kaleida Health assesses the health of the communities we serve through a variety of means, including but not limited to consideration of the following community health needs assessments: * Kaleida Health: Community and Provider Health Care Assessment (January 2008): Kaleida sponsored and published a population-based, cross- sectional house-to-house community health needs assessment of 2,000 heads of households in medically underserved City of Buffalo neighborhoods. Of these households, 1,658 community residents participated in the survey. The purpose was to gather data from community residents on health care, provide information on how health care may be improved to best serve the community's needs, and identify what works well and what does not in the local health care environment for these residents, from their perspective. Additional data was gathered from community-based primary care providers to identify opportunities for collaboration on disease prevention for patients under their care. * Erie County Department of Health's Community Health Assessment (March 2010): Includes demographic and health status information for the population, including disease prevalence, incidence, health resources and service utilization, profiles of community resources, behavioral risk factors, unmet need for services, local health priorities, and opportunities for action in Erie County. * Niagara County Department of Health's Community Health Assessment (September 2009): Includes demographics, description of populations at risk, disease prevalence, incidence, access to care, problems and issues in the community, local health priorities, accomplishments and opportunities for action in Niagara County. * Project CODA: Creating Options for Dignified Aging in Erie and Niagara Counties (June 2009): A locally driven elderly-centered strategy based upon in-depth research on the demographics and specific needs and wants of elders, caregivers and service providers. The assessment provides an overview of the existing long-term care system in Erie and Niagara counties, forecasts the future of long-term care, and identifies models to project future economic and demographic trends, likely shifts in public policies and projections of future changes in consumer preferences and demand for aging services. * Western New York Health Care Safety-Net Assessment (February 2008): An assessment of access, consumer experience and health information technology. The assessment offers a description of the primary care safety-net in the region, assesses access and the safety-net's overall capacity and strength, assesses consumer's experience with their primary care, and determines the information technology capacity of the primary care safety net. * Reaching for Excellence: Community Vision and Voices for WNY Health Care (July 2009): A community health assessment that incorporates the perspective of the community and users of the health care system in current health care strategy development. More than 1700 Western New Yorkers were engaged in a series of community conversations about what consumers want for the future of health care in the region. The conversations resulted in 5 health care priorities, reflecting the top concerns of the region across race, ethnicity, age, income and geography. Secondary level quantitative data include local surveys, U.S. census, U.S. Department of Health and Human Services' Community Health Status Indicators Report for NY (including Erie and Niagara Counties), among other assessments. Kaleida's team uses data from community health assessments, such as those above, to shape strategy for prioritizing its efforts and identifying areas of focus for the community benefit interventions. Many of the interventions adopted by Kaleida Health focus on populations with Disproportionate Unmet Health Needs (DUHN), including the elderly, low-income individuals and families, children and youth, and persons with special needs. The goals selected for each intervention are in support of local collaborative planning efforts when possible, and engage the breadth of Kaleida's community benefit programs.

Patient Education of Eligibility for Assistance
Kaleida Health informs individuals of available free or reduced price services at the time of registration into the inpatient, outpatient, emergency department, and long-term care facility. Posters informing the patient/family of assistance are available throughout the Kaleida locations. Brochures and pamphlets informing the community are widely distributed in the community at health fairs, churches, schools and other public locations. Information regarding the availability of financial assistance is also available through Kaleida's website. Kaleida Health offers assistance to individuals in our community for accessing affordable health care, including: * NY Health Exchange Navigation: Assists with navigating, selecting, and applying for enrollment in NY health exchange offerings. Dedicated and state-trained staff assist individuals in person or via the phone. In addition to offering in-person appointments at Kaleida Health sites, Kaleida Health will open a community-based location in late 2013. * Centers for Medicaid & Medicare Services (CMS): Kaleida Health staff facilitate enrollment with a targeted focus on children up to the age of 21 enrolled in Buffalo Public Schools and throughout Western New York. * Facilitated Enrollment: Assists eligible individuals with health insurance enrollment by offering education and application assistance for Medicaid, Child Health Plus, Family Health Plus, Prenatal Care Assistance Program, and State Aid for Children with Special Needs. A dedicated telephone number is available and information is published in pamphlets at Kaleida sites and at various locations throughout the community. * Financial Assistance Program: As described above, the Kaleida Financial Assistance Program offers free or reduced-prices for patients treated at Kaleida Health hospitals, outpatient, emergency room, or long-term care facilities. Discounts are awarded based upon income and asset verification.

Community Information
Headquartered in the City of Buffalo, Erie County, New York, Kaleida Health serves a region diverse in character. The eight counties of Western New York State, including Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Orleans, Niagara and Wyoming, range from rural areas and small towns to denser metropolitan cities. Within the primary service area of Erie and Niagara counties, there is a combined population of approximately 1.5 million people. There are also several federally designated Medically Underserved Areas, Medically Underserved Populations, and Health Professional Shortage Areas in the service area. Demographic Information - Erie County Erie County is the largest metropolitan county in upstate New York. It is home to three cities, 16 villages, 25 towns, and two Native American Indian reservations. While the majority of the population lives within the cities and surrounding communities, there is a significant rural population that resides outside the first and second ring suburban areas. According to the adjusted 2010 U.S. Census, the population of Erie County, including the City of Buffalo, is 919,086. The City of Buffalo is the largest city in the region and the second largest city in New York State. Buffalo, which serves as the County seat, has a population of 259,384 and is ranked the third poorest city in the nation. The population of Erie County has been declining over the past decade. In the year 2000, the population of Erie County was 950,265. This represents a decrease of more than 3% population in over 10 years. According to the adjusted 2010 U.S. Census for 2012, 5.3% of the Erie County population are under the age of 5, 21% are under age 18, and 16.1% are age 65 and over. Compared to state and national age distributions, Erie County has a slightly lower percentage of young people and a higher percentage of people age 65 and older. However, the City of Buffalo population distribution is quite different from Erie County. In Buffalo, 23.6% of residents are under age 18 and 11.4% are age 65 and over. In Erie County, 51.8% of the population is female and 48.2% male. This distribution is similar to that of New York State. In the City of Buffalo there is a high percentage of females at 52.1% and lower percentage of males, 47.9%. For race, 80.9% of the Erie County population is non-Hispanic Whites, 13.8% non-Hispanic African-Americans, 4.8% Hispanic, 0.7% Native Americans, and 2.8% Asian/Pacific Islanders. As per the 2005 - 2009 American Community Survey, the City of Buffalo has a much higher percentage of African Americans (39.8%) and Hispanics (8.3%) than the county. And, according to the latest U.S. Census, the percentage of Hispanics increased so that the population is broken down as 50.4% Whites, 38.6% African-American, 10.5% Hispanic, 0.8% Native Americans, and 3.2% Asian/Pacific Islanders. Buffalo is home to a large immigrant and refugee population where there are 28 ethnicities and a minimum of 31 languages and dialects spoken. Lackawanna, New York, located just south of the City of Buffalo, is home to a large Arabian community, many of whom do not speak English as their first language. That corresponds with the fact that 14.2%, which increased from 13.7% last year, of homes in the City of Buffalo and close to 10% of the Erie County population speak a language other than English. The median household income in Erie County is $48,805, and the per capita income is $27,366. The median earnings for male full-time workers is $50,062. The median earnings for female full-time workers is $37,639. Compared to last year's median of $46,807 for males and $36,858 for female workers, males increased at a rate greater than females. For all families in Erie County, 10.5% are below the federal poverty level. For families with children under 18 years of age, 17.9% are below the federal poverty level, and families with children under 5 years of age, 22.5% are below the federal poverty level. The likelihood of families living below the poverty level is compounded for female headed families that do not have a husband present. Of the 13.7% percent of families in Erie County that have a female head of household with no husband present, 30.4% are below the poverty level. For those families with children under 18 years of age, 41.6% are below the poverty level and 53% of these families with children under age 5 are below the poverty level. In the City of Buffalo, according to the 2010 U.S. Census, where poverty is more prevalent, the median household income is $30,230, which is almost $20,000 less than the County as a whole; and the per capita income in Buffalo is $20,072. In comparison, the median household income nationally is $52,762, and $56,951 for New York State. In the City of Buffalo, 29.9% of residents are living below the federal poverty level. For families with children under 18 years of age, 38.5% are below the federal poverty level, and families with children under 5 years of age, 43.1% are below the federal poverty level. The likelihood of families living below the poverty level is compounded for female headed families that do not have a husband present. Of the 22.9% percent of families in Buffalo that have a female head of household with no husband present, 42.5% are below the poverty level. For those families with children under 18 years of age, 51.3% are below the poverty level and 57.3% of these families with children under age 5 are below the poverty level. In addition, according to the 2010 U.S. Census, almost 8% of Erie County residents and 10.7% of Buffalo residents still do not have health insurance. Of those residents who do have coverage, 34.3% and 48% respectively have public coverage. As for education, of those over 25 years of age, in Erie County 88.8% of adults graduated from high school and 40.8% earned college degrees; however, 11.1% did not complete high school. For the City of Buffalo, 19% did not complete high school, and only 31.2% earned college degrees. Demographic Information - Niagara County Niagara County is located just north of Erie County. Niagara County consists of 26 cities, towns and villages along with the Tuscarora Indian Reservation, which is located approximately in the middle of the county. The City of Niagara Falls is the most populated city in Niagara County, followed by North Tonawanda. According to the adjusted 2010 U.S. Census, Niagara County has a total population of 215,124, which has been declining in recent years even down from the 2010 census of 216,469. Niagara County demographics show the distribution of residents to be 88.8% White, 7% African-American, 1.1% Native American, and 0.9% Asian/Pacific Islander. The median household income for Niagara County is $46,599. English is the primary language for almost 94% of Niagara County residents. Niagara Falls is the largest city in Niagara County with 50,570 residents. The population of the City of Niagara Falls is 73.3% White, 21.8% African-American, 1.7% Native American, 2.6% Hispanic, and 1.1% Asian/Pacific Islander. The median income in Niagara Falls is $32,617. Families in the city who have children under 18 total 24.3%. There are also 19.4% of female headed households where with no husband, and of those 11% have children. As for education, of those over 25 years of age, 85.5% of adults graduated from high school and 24% earned college degrees; however, 14.5% did not complete high school. Compared to Niagara County as a whole where only 11.1% did not complete high school and 32.7% have earned a college degree. The poverty rates in Niagara Falls indicate that an overall 16.3% of residents live in poverty. Within this group, 25.8% of related children under age 18 and 32.5% of female headed households live below the federal poverty level. North Tonawanda is the second largest city in Niagara County with a total population of 31,626. The population is 97% Caucasian, 1.1% African-American, 1.3% Hispanic, and 1.2% Asian/Pacific Islander. The median income in North Tonawanda is $46,203.

Organization and affiliates role in promoting community health
Kaleida Health's mission is to advance the health of the community. Kaleida Health's vision is to be the regional health care system providing exceptional quality services, with a commitment to education and research, accessible to all. The organization's values illustrate how these goals are achieved: Accountability: We take personal responsibility for delivering results. Patient-Centered: We put patients and families first. Integrity: We demonstrate honesty in everything we do. Excellence: As a team, we pursue exceptional performance with passion. To carry out the mission, much of Kaleida Health's community benefit work is focused on the needs of low income, medically underserved populations. Kaleida Health representatives actively engage in various community health collaborations with local health departments, state health department and local not-for-profit health and human service agencies. Poverty trends, community health research and local community health needs are reviewed on a regular basis while planning services and programs. Responsive to community priorities, program development and services fill identified gaps or supplement existing programs. Most Kaleida Health community health outreach programs are offered in partnership with other community organizations or government agencies in order to leverage resources and meet the community's needs. This includes education and active participation in health events with targeted audiences. Information regarding the availability of community health programs, assistance with health insurance enrollment and financial assistance for medical care received at Kaleida Health hospitals, emergency departments, outpatient clinics or long-term care facilities is disseminated to the public in the Community Benefit and triennial Community Services Plan and available on the Kaleida Health website or in print form upon request. The Visiting Nursing Association of Western New York, Inc., Kaleida Health's home care affiliate, also works to promote the health of the community. This includes educating chronic care patients on self-management and personal care in areas such as rehabilitation services, nutrition education and therapy, infection control, falls risk assessment and intervention, and health education related to improved lifestyle choices for individuals and families in their homes and the community. Community-based prevention programs, such as one of the area's largest annual community influenza immunization program, also are offered through the Visiting Nursing Association.

Kaleida Health Board of Directors
Kaleida Health maintains community control over the corporation through its self-perpetuating, 14 member governing Board of Directors. The Board of Directors, the majority of whom reside in Western New York, is comprised of community leaders from the faith, business and industry, and healthcare sectors, including physicians who are on the medical staff. Each Director serves a three-year term and is not an employee, independent contractor, or family member of Kaleida Health.

State in which the organization files a community benefit report
New York State