4A (Expenses $ 315885977 including grants of $ 0) (Revenue $ 404294180)
MERCY HEALTH SYSTEM, INC. EXTENDS THE HEALING MINISTRY OF JESUS BY IMPROVING THE HEALTH OF OUR COMMUNITIES WITH EMPHASIS ON PEOPLE WHO ARE POOR AND UNDER-SERVED. MERCY HEALTH SYSTEM ACCOMPLISHES THIS BY DEMONSTRATING BEHAVIORS REFLECTING OUR CORE VALUES OF COMPASSION, EXCELLENCE, HUMAN DIGNITY, JUSTICE, SACREDNESS OF LIFE AND SERVICE.

Community benefit report prepared by related organization Schedule H, Part I, Line 6a
CATHOLIC HEALTH PARTNERS

Bad Debt Expense excluded from financial assistance calculation Schedule H, Part I, Line 7, column(f)
24,778,978

Costing Methodology used to calculate financial assistance Schedule H, Part I, Line 7
COST OF FINANCIAL ASSISTANCE WAS CALCULATED WITH A COST TO CHARGE RATIO USING WORKSHEET 2. THE COST RELATED TO MEDICAID PATIENTS WAS DETERMINED USING THE HOSPITAL COST ACCOUNTING SYSTEM AND INCLUDED BOTH INPATIENTS AND OUTPATIENTS FOR TRADITIONAL MEDICAID AND MEDICAID MANAGED CARE PLANS. FOR SUBSIDIZED SERVICES THE HOSPITAL'S COST ACCOUNTING SYSTEM IS USED TO DETERMINE COST RELATED TO THE SPECIFIC SERVICE EXCLUDING TRADITIONAL MEDICAID AND MEDICAID MANAGED CARE PATIENTS. COSTS FOR FINANCIAL ASSISTANCE AND BAD DEBT ACCOUNTS ARE DEDUCTED USING A RATIO OF COST TO CHARGE SPECIFIC TO THAT SUBSIDIZED SERVICE. COSTS FOR OTHER PROGRAMS REFLECT THE DIRECT AND INDIRECT COSTS OF PROVIDING THOSE PROGRAMS.

Community Building Activities Schedule H, Part II
MHS ADVOCATES FOR IMPROVING ACCESS TO HEALTH SERVICES FOR ALL RESIDENTS OF THE COMMUNITY, ESPECIALLY FOR THE POOR AND UNDERSERVED. THE HOSPITAL PROVIDES COMMUNITY SUPPORT BY ASSISTING IN DISASTER PREPAREDNESS. PREPARING FOR DISASTERS IS AN IMPORTANT ROLE FOR THE HOSPITAL TO ASSURE THE SAFETY AND HEALTH OF COMMUNITY RESIDENTS IN THE EVENT OF A NATURAL DISASTER, INDUSTRIAL ACCIDENT OR OTHER LARGE SCALE EMERGENCY. THE HOSPITAL ENSURES ACCESS TO HEALTH SERVICES BY RECRUITING AND PROVIDING TRANSITIONAL SUPPORT TO PHYSICIANS TO ATTRACT THEM TO THE COMMUNITY FOR SPECIALTIES WHERE THERE IS A DEMONSTRATED NEED. AN APPROPRIATE SUPPLY OF PHYSICIANS IS NECESSARY TO ENSURE THAT RESIDENTS HAVE ACCESS TO ADEQUATE AND TIMELY DIAGNOSIS AND TREATMENT FOR ALL HEALTH CONDITIONS. A ROBUST ECONOMY POSITIVELY IMPACTS RESIDENTS BY INCREASING THE NUMBER OF RESIDENTS COVERED BY HEALTH INSURANCE AND IMPROVING THE CAPACITY OF THE COMMUNITY TO SUPPORT HEALTH SERVICES. MHS SUPPORTS A ROBUST ECONOMY IN THE COMMUNITY BY SUPPORTING LOCAL CHAMBERS OF COMMERCE. LEVERAGING RESOURCES WITHIN THE COMMUNITY PROVIDES MORE EFFECTIVE SOLUTIONS AND REDUCES DUPLICATION OF SERVICES. THE HOSPITAL WORKS COOPERATIVELY WITH SEVERAL ORGANIZATIONS AND OTHER HOSPITALS TO ADDRESS COMMUNITY ISSUES WHICH NEGATIVELY IMPACT THE HEALTH OF THE COMMUNITY. REGIONALLY, MERCY HEALTH PARTNERS CREATED AN OUTREACH PROGRAM TO OFFER ASSISTANCE WITH ECONOMIC DEVELOPMENT TO THE SEVEN MOST ECONOMICALLY CHALLENGED COUNTIES WITHIN OUR SERVICE AREA. AS PARTICULAR NEEDS ARE IDENTIFIED, SOURCES WITHIN OUR ORGANIZATION ASSIST COMMUNITY LEADERS IN SUCH AREAS AS LEADERSHIP DEVELOPMENT AND STRATEGIC PLANNING. WE TAKE WHAT, AT LEAST IN OUR SERVICE AREA, IS A UNIQUE APPROACH TO CARRYING OUT OUR MISSION TO EXTEND THE HEALING MINISTRY OF JESUS WITH A SPECIAL EMPHASIS ON THOSE WHO ARE POOR AND UNDERSERVED.

Bad debt expense - financial statement footnote Schedule H, Part III, Line 4
THE ORGANIZATION'S AUDITED FINANCIAL STATEMENTS DO NOT CONTAIN A FOOTNOTE THAT DESCRIBES BAD DEBT EXPENSE. BAD DEBT IS CLASSIFIED AS AN OPERATING EXPENSE. THIS TREATMENT IS CONSISTENT WITH THE HFMA PRINCIPLES AND PRACTICES BOARD STATEMENT NO. 15 AND WITH THE AICPA AUDIT AND ACCOUNTING GUIDE FOR HEALTH CARE ORGANIZATIONS. AN AGGREGATE COST TO CHARGE RATIO WAS USED TO PROVIDE BAD DEBT AT COST FOR PART III, LINE 2. PATIENTS WHO MIGHT BE ELIGIBLE FOR FINANCIAL ASSISTANCE BUT ARE UNKNOWN TO US ARE WRITTEN OFF TO BAD DEBT AND THEREFORE NOT INCLUDED IN FINANCIAL ASSISTANCE. THE HOSPITAL'S FINANCIAL ASSISTANCE POLICY DOES NOT PERMIT THE COST OF PATIENTS WHO ARE UNCOOPERATIVE OR UNABLE TO BE LOCATED TO BE RECLASSIFIED FROM FINANCIAL ASSISTANCE TO BAD DEBT. THE HOSPITAL'S FINANCIAL ASSISTANCE POLICY REQUIRES AN APPLICATION AND SUPPORTING DOCUMENTATION. THEREFORE, ZERO DOLLARS ARE BEING REPORTED ON PART III, LINE 3 AS AMOUNTS INCLUDED IN BAD DEBT THAT COULD BE ATTRIBUTABLE TO PATIENTS ELIGIBLE UNDER THE HOSPITAL'S FINANCIAL ASSISTANCE POLICY.

Community benefit & methodology for determining medicare costs Schedule H, Part III, Line 8
MEDICARE SHORTFALL IS NOT TREATED AS A COMMUNITY BENEFIT. THE HOSPITAL'S COST ACCOUNTING SYSTEM WAS USED TO DETERMINE THE MEDICARE AMOUNTS IN PART III.

Collection practices for patients eligible for financial assistance Schedule H, Part III, Line 9b
PATIENTS KNOWN TO QUALIFY FOR CHARITY CARE OR FINANCIAL ASSISTANCE ARE NOT SENT TO A COLLECTION AGENCY. THE ORGANIZATION REPEATEDLY OFFERS PATIENTS ACCESS TO FINANCIAL HELP DURING THEIR HOSPITAL STAY AND AFTER, AS WELL AS WITH EACH BILLING NOTICE. BILLS ARE SENT TO A COLLECTION AGENCY AS A LAST RESORT AND ONLY: WHEN PATIENTS HAVE THE ABILITY TO PAY SOME PORTION OF THEIR HEALTHCARE EXPENSES BUT REFUSE TO DO SO; WHEN PATIENTS REFUSE TO WORK WITH THE ORGANIZATION TO DETERMINE IF THEY QUALIFY FOR FREE OR DISCOUNTED CARE VIA FEDERAL, STATE, LOCAL OR HOSPITAL ASSISTANCE PROGRAMS; WHEN THE ORGANIZATION IS UNABLE TO LOCATE THE PATIENT OR PERSON RESPONSIBLE FOR THE BILL.

Needs assessment. Schedule H, Part VI, Line 2
LEVERAGING REGIONAL AND CORPORATE RESOURCES AS A MHP AND CHP MEMBER HOSPITAL AND IN PARTNERSHIP WITH MEMBER FACILITIES, MERCY HEALTH SYSTEM, INC. (MHS) ASSESSES AND CONTINUALLY RESPONDS TO CHANGING COMMUNITY NEEDS THROUGH THE SERVICES OFFERED. MHS INCORPORATES PLANNING FOR COMMUNITY BENEFITS AS PART OF ITS ANNUAL BUSINESS AND STRATEGIC PLANNING PROCESSES. THE HOSPITAL RECOGNIZES THE HEALTH OF THE COMMUNITY IS INFLUENCED BY SOCIAL, ECONOMIC, AND ENVIRONMENTAL FACTORS, NOT JUST BY DISEASE AND ILLNESS. OUR COMMUNITY BENEFIT INCLUDES BOTH QUALITATIVE AND QUANTITATIVE DATA; DEMOGRAPHICS INCLUDING RACE, AGE, AND ETHNICITY; SOCIOECONOMIC DATA INCLUDING INCOME, EDUCATION, AND HEALTH INSURANCE RATES; PRIMARY CARE AND CHRONIC DISEASE NEEDS OF UNINSURED PERSONS; AND DATA ON HEALTH DISPARITIES IN HEALTH OUTCOMES AMONG MINORITY GROUPS. MHS HAS A DEDICATED STAFF TO ASSIST IN THE COMMUNITY BENEFIT EFFORT. THE HOSPITAL'S COMMUNITY BENEFITS COMMITTEE MEETS BI-MONTHLY TO PROVIDE OVERSIGHT TO THE ORGANIZATION'S COMMUNITY BENEFITS PROGRAM. MHS WORKS CLOSELY WITH HEALTH AND HUMAN SERVICE ORGANIZATIONS IN THE AREA, PARTNERING WITH SOME TO PROVIDE SERVICES AND TO AVOID DUPLICATION. A VARIETY OF DATA SOURCES ARE REVIEWED AND UTILIZED TO PLAN COMMUNITY HEALTH BENEFIT ACTIVITIES. THE DATA INCLUDES OTHER LOCAL ORGANIZATIONS NEEDS ASSESSMENTS, SUCH AS UNITED WAY, EAST TENNESSEE REGIONAL HEALTH DEPARTMENT, LOCAL HEALTH DEPARTMENTS, STATE HEALTH STATISTICS, AND REQUESTS FROM ORGANIZATIONS THAT SERVE THE LOCAL COMMUNITY.

Patient education of eligibility for assistance. Schedule H, Part VI, Line 3
MERCY HEALTH SYSTEM (MHS) POSTS ITS CHARITY CARE POLICY, OR A SUMMARY THEREOF, AND FINANCIAL ASSISTANCE CONTACT INFORMATION IN ADMISSIONS AREAS, EMERGENCY DEPARTMENTS AND OTHER AREAS OF THE ORGANIZATION'S FACILITIES IN WHICH ELIGIBLE PATIENTS ARE LIKELY TO BE PRESENT. MHS PROVIDES A COPY OF THE POLICY, OR A SUMMARY THEREOF, AND FINANCIAL ASSISTANCE CONTACT INFORMATION TO PATIENTS AS PART OF THE INTAKE PROCESS AND WITH DISCHARGE MATERIALS. ADDITIONALLY, A COPY OF THE POLICY OR A SUMMARY ALONG WITH FINANCIAL ASSISTANCE CONTACT INFORMATION IS INCLUDED IN PATIENT BILLS. MHS DISCUSSES WITH THE PATIENT THE AVAILABILITY OF VARIOUS GOVERNMENT BENEFITS, SUCH AS MEDICAID OR STATE PROGRAMS, AND ASSISTS THE PATIENT WITH QUALIFICATION FOR SUCH PROGRAMS, WHERE APPLICABLE. THE HOSPITAL ELIGIBILITY LINK PROGRAM (HELP) IS A FREE REFERRAL SERVICE PROVIDED BY MHS. THE PURPOSE OF HELP IS TO ASSIST PATIENTS IN OBTAINING MEDICAL BENEFITS THROUGH FEDERAL, STATE, AND HOSPITAL PROGRAMS. HELP REPRESENTATIVES WILL PROVIDE THE FOLLOWING SERVICES AT NO COST TO THE PATIENT: * EXPLORE ELIGIBILITY UNDER PUBLIC ASSISTANCE PROGRAMS * FILE APPLICATIONS ON PATIENT'S BEHALF * SCHEDULE AND ATTEND APPOINTMENTS * PROVIDE TRANSPORTATION WHEN NECESSARY * PROVIDE MEDICAL DOCUMENTATION TO SOCIAL SECURITY ADMINISTRATION FOR DISABILITY CLAIMS. THROUGH HELP, PATIENTS AND THEIR COUNSELORS LOOK AT WHAT OPTIONS ARE AVAILABLE. MHS UNDERSTANDS THAT NOT EVERYONE CAN PAY FOR HEALTHCARE SERVICES. HELP IS HERE TO OFFER OPTIONS AND ASSISTANCE FOR THOSE WHO ARE UNINSURED OR UNDERINSURED. HELP IS AN EXTENSION OF MHS'S MISSION TO IMPROVE THE HEALTH OF OUR COMMUNITY WITH EMPHASIS ON THE POOR AND UNDERSERVED. MEETING THE NEEDS OF THOSE WITH LIMITED RESOURCES HAS ALWAYS BEEN THE HEART OF OUR MISSION. IN 2010, HELP MANAGED 19,249 PATIENT REFERRALS. MHS IS PROUD TO MAKE OUR FINANCIAL ASSISTANCE INFORMATION AVAILABLE TO THE PUBLIC THROUGH OUR WEBSITE, WHICH CAN BE FOUND AT WWW.MERCY.COM.

Community information. Schedule H, Part VI, Line 4
THE HOSPITAL SERVES KNOX AND SURROUNDING COUNTIES. THE POPULATION OF MHS'S PRIMARY SERVICE AREA IS APPROXIMATELY 699,247. OUR COMMUNITY IS CHANGING AND WE ALSO SERVE A GROWING UNINSURED AND UNDERINSURED POPULATION. THERE ARE 5 HOSPITALS IN KNOX COUNTY AND ALL 5 ARE NON-FOR-PROFIT HOSPITALS. PART OF THE HOSPITAL'S PRIMARY SERVICE AREA HAS BEEN FEDERALLY DESIGNATED AS A MEDICALLY UNDERSERVED AREA OR POPULATION. THE DEMOGRAPHIC AREA SERVED BY MHS HAS 15% OF RESIDENTS IN HOUSEHOLDS BELOW THE FEDERAL POVERTY GUIDELINES, AND 15% OF FAMILIES ARE ON MEDICAID OR OTHER ASSISTANCE. IN THE COMMUNITY SERVED BY THE HOSPITAL CANCER AND HEART DISEASE ARE THE MAJOR HEALTH PROBLEMS AND/OR LEADING CAUSES OF DEATH. EACH OF THESE IS PREVENTABLE THROUGH PROPER CARE AND MAINTAINING CONTROL OF THE ILLNESS/DISEASE AS WELL AS LEADING HEALTHIER LIVES. THE SMOKING RATE IS 22% OF THE POPULATION, AND ADULT OBESITY IS 28%. THE HOSPITAL WORKS CLOSELY WITH LOCAL COMMUNITY AGENCIES AND HEALTH DEPARTMENTS TO ADDRESS THESE PROBLEMS AND MINIMIZE THE EFFECTS ON THOSE WHO SUFFER. IN 2010, THE HOSPITAL HAD 26,670 ADMISSIONS, 355,797 OUTPATIENT VISITS, AND 96,136 EMERGENCY ROOM VISITS.

Promotion of community health Schedule H, Part VI, Line 5
THE HOSPITAL OPERATES AN EMERGENCY ROOM OPEN TO ALL REGARDLESS OF ABILITY TO PAY. IN ADDITION TO PROVIDING EMERGENCY SERVICES, MHS ALSO PROVIDES MINOR EMERGENCY AND URGENT CARE SERVICES TO ALL REGARDLESS OF ABILITY TO PAY. THE HOSPITAL OPERATES PSYCHIATRIC, NEONATAL ICU, RENAL DIALYSIS, NEWBORN NURSERY, WOUND CARE, AND CARDIAC REHAB DEPARTMENTS. MHS HAS AN OPEN MEDICAL STAFF WITH PRIVILEGES AVAILABLE TO ALL QUALIFIED PHYSICIANS IN THE AREA. THE MAJORITY OF THE GOVERNING BODY CONSISTS OF INDEPENDENT PERSONS REPRESENTATIVE OF THE COMMUNITY SERVED BY THE HOSPITAL. THE HOSPITAL PROGRAMS AND SERVICES SUPPORT THE FREE MEDICAL CLINIC OF AMERICA, PEOPLES CLINIC, THE VOLUNTEER MINISTRY CENTER, KNOXVILLE ARE PROJECT ACCESS, HOPE RESOURCE CENTER AND THE INTERFAITH HEALTH CLINIC. THESE ARE FREE AND/OR SLIDING SCALE PROVIDERS WHO SERVE THE WORKING POOR/UNDERINSURED AND UNINSURED. THE HOSPITAL PARTICIPATES IN MEDICAID, MEDICARE, CHAMPUS, AND/OR OTHER GOVERNMENT-SPONSORED HEALTH CARE PROGRAMS. IN ADDITION TO OUR PARTICIPATION IN THESE PROGRAMS, MHS ABSORBED MORE THAN $18,164,006 IN UNREIMBURSED MEDICARE COSTS DURING 2010.

Affiliated health care system Schedule H, Part VI, Line 6
MERCY HEALTH SYSTEM (MHS) IS A MEMBER OF THE MERCY HEALTH PARTNERS-TENNESSEE REGION AND AFFILIATED WITH MERCY MEDICAL CENTER WEST, ST. MARY'S MEDICAL CENTER OF CAMPBELL COUNTY, ST. MARY'S JEFFERSON MEMORIAL HOSPITAL, ST. MARY'S MEDICAL CENTER OF SCOTT COUNTY, AND BAPTIST HOSPITAL OF COCKE COUNTY. ALL ARE TENNESSEE NON-PROFIT CORPORATIONS. MHS IS AN ACUTE CARE HOSPITAL WITH APPROXIMATELY 946 LICENSED BEDS. TENNESSEE REGION COMMUNITY BENEFIT FOR 2010 PER THE AUDIT FOOTNOTE IS AS FOLLOWS: TOTAL 2010 COMMUNITY BENEFIT: $42.2 MILLION BENEFITS TO THE BROADER COMMUNITY: $6 MILLION UNREIMBURSED CARE FOR THOSE WHO ARE POOR AND QUALIFY FOR MEDICAID: $14.5 MILLION COST OF CARE FOR THOSE WHO COULD NOT AFFORD TO PAY: $18.6 MILLION SUPPORT FOR OTHER PROGRAMS FOR THOSE WHO ARE POOR: $3.1 MILLION COMMUNITY BENEFIT AS PERCENT OF TOTAL EXPENSE: 6.7 PERCENT MHS IS A MEMBER OF CATHOLIC HEALTH PARTNERS (CHP). CHP IS THE CONTINUATION OF THE HEALTH MINISTRY STARTED MORE THAN 150 YEARS AGO BY OUR CO-SPONSORING CONGREGATIONS: THE SISTERS OF MERCY, REGIONAL COMMUNITY OF CINCINNATI (OH); THE MID-ATLANTIC COMMUNITY, MERION STATION, PA; THE SISTERS OF HUMILITY OF MARY; THE FRANCISCAN SISTERS OF THE POOR; AND COVENANT HEALTH SYSTEMS. OUR SYSTEM OF REGIONAL HEALTH CARE PROVIDERS SERVES LOCAL HEALTH NEEDS IN COMMUNITIES IN OHIO, KENTUCKY, PENNSYLVANIA AND TENNESSEE. CHP IS FOCUSED ON IMPROVING THE HEALTH OF COMMUNITIES WE SERVE BY PROVIDING INTEGRATED HEALTH SERVICES THROUGH FACILITIES THAT INCLUDE ACUTE CARE HOSPITALS, LONG-TERM CARE RESIDENCES, HOUSING SITES FOR THE ELDERLY, HOME HEALTH AGENCIES, HOSPICE PROGRAMS, OUTREACH SERVICES AND WELLNESS CENTERS. OUR HOSPITALS INCLUDE FIVE CRITICAL ACCESS FACILITIES OFFERING ESSENTIAL HEALTH SERVICES THAT WOULD OTHERWISE NOT EXIST IN THOSE COMMUNITIES. WE CARE FOR EVERYONE WHO COMES TO US, REGARDLESS OF THEIR ABILITY TO PAY. AS WE HAVE DONE FOR DECADES, WE PROVIDE EXTENSIVE SERVICES TO THE BROADER COMMUNITY, WITH EMPHASIS ON SERVICES FOR PERSONS WHO ARE POOR AND UNDER-SERVED. CHP'S HOME OFFICE PROVIDES SERVICES AND SUPPORT TO THE ENTIRE SYSTEM, INCLUDING BUT NOT LIMITED TO: PROVIDING GOVERNANCE, MANAGEMENT OVERSIGHT, STRATEGIC LEADERSHIP, FOCUSING RESOURCES TO ASSURE THE HEALING MISSION, PROVIDING ACCESS TO LOWER COST DEBT FINANCING TO SUPPORT OPERATIONS, IMPROVING CLINICAL OUTCOMES AND REDUCING OPERATING COSTS. SYSTEM-WIDE COMMUNITY BENEFIT FOR 2010 PER THE AUDIT FOOTNOTE IS AS FOLLOWS: TOTAL 2010 COMMUNITY BENEFIT: $365.1 MILLION BENEFITS TO THE BROADER COMMUNITY: $77.1 MILLION UNREIMBURSED CARE FOR THOSE WHO ARE POOR AND QUALIFY FOR MEDICAID: $131.7 MILLION COST OF CARE FOR THOSE WHO COULD NOT AFFORD TO PAY: $123.1 MILLION SUPPORT FOR OTHER PROGRAMS FOR THOSE WHO ARE POOR: $33.1 MILLION COMMUNITY BENEFIT AS PERCENT OF TOTAL EXPENSE: 8.5 PERCENT

FPG FOR PROVIDING DISCOUNTED CARE TO LOW INCOME INDIVIDUALS SCHEDULE H, PART I, LINE 3B
A FPG SLIDING SCALE IS USED TO DETERMINE ELIGIBILITY FOR PROVIDING DISCOUNTED CARE TO LOW INCOME INDIVIDUALS.