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COM 0122.031 2000-2002
Stephen K Yarriashtro :4favor COUNTY OF HAY Ari DEPARTMENT OF FINANCE 25 Aupuni Straw, Room I IS • Hilo, Hawui 96720-4252 (808)961.8234 • Fax (808)961-82{8 HAWAII COUNTY NONPROFIT GRANTS (FY 2001-02) HUMAN SERVICES NONPROFIT GRANTS REVIEW COMMITTEE FISCAL YEAR ENDING: June 30, 2002 DATE OF APPLICATION: 01/30/01 GRANT APPLICATION FOR Sex Abuse Resource and Advocacy Services Harry A Takahashi Director (haQr MIS) -- Legal Name of Organization: Kapi' olani Medical Center for Women and Children Mailing Address: 1319 Punahou Street, Honolulu, Hawaii 96826 Facility/Site Address: 375 Ululani Street, Hilo, Hawaii 96720 Director/Site Manager. Martha Ah Yee Organization President: Frances A. Hallonquist Contact Person(Grant Writer): Adriana Ramelli Amount of Request for County Funds: S 58,441.00 Total Annual Budget of Organization: S 2,274,982.00 Has the applicant applied for any other fins from the County of Hawaii this fiscal year? ❑ Yes SourcdDapertmmt: ® No Agency/Program(s): ❑ Social Services ❑ Youth Programs ❑ Elderly Programs Check Categones: ❑ Culture and Arts ❑ Education ❑ Other Briefly, delle the program for which funding L being requested: Sex Abuse Resource and Advocacy Services (SARAS) 1s requesting funding from the County of Hawaii to provide 1) Crisis Intervention Services, which include: on-call coverage, crisis phone intake and crisis stabilization/crisis counseling 24 hours a day, 365 days a year; 2) Case management and legal advocacy services; and 3) Coordination with community agencies and systems advocacy on_tehalf of victims. Ct>,tv11. Na / 2 Z • 31 1. QUALIFYING STANDARDS FOR APPLICANTS An applicant must meet all of the following standards Be chartered or otherwise authorized to do business in the State for charitable purposes and exempted from the federal income tax by the Internal Revenue Service 0 Have a governing board whose members serve without compensation and have no conflict of interest between their regular occupations and the services provided ® Have bylaws or policies which describe the manner in which business is conducted, including management, audit, fiscal policies and procedures, policies on nepotism, and policies on management of potential conflict of interest. Have at least one year's experience with the service or activity for which the appropriation is sought or can otherwise demonstrate to the satisfaction of the County sufiiciem expertise to successfully carry out the service or activity Be licensed and accredited in accordance with applicable requirements of Federal, State and County laws. H. GRANT CONDITIONS The applicant agrees to comply with the following terms and conditions prior to receiving a grant award. A Comply with applicable Federal and State laws prohibiting discnmtaanoa against any person on the basis of race, color, national origin, religion, creat, sex, age, or handtcap. B Agree not to use any public funds for purposes of entertainment or perquisites. C Comply with such other requirements as the Director of Fine= may prescribe to ensure adherence by the nonprofit organtution with Federal, State, and County laws, and established standards for fiscal and program management. D Allow the Director of Finance, the committees of the council sad their staffs, and the Legislative Auditor access to records, tepotta, files. and other related documents in order that the program, taansgcment, and fiscal practices of the nonprofit organizatton may be monitored and evaluated to assure the proper and effective expenditum of public funds. III. RECORDS AND REPORTS A. The applicant shall follow generally accepted accounting procedures and practices and shall maintain boob, records, documents and other evidence which sufficiently and properly account for the expenditure of County funds. The boob, records and documents aW be subject at All resiooable tanm to inspection, reviews, or audits by the County expending agency, the Director of Finance, and the LegtaWtve Auditor, or by their representatives. B The County expending agency, Director of Finance, or County Crnmcil may request periodic written reports on the use of County funds. C The nonprofit orgwutton shall submit a final wntten report to the Legislative Auditor within sixty (60) days after June 30 of the fiscal year The report shall include an eaplananon of the public benefits derived from the awarding of the grant, a listing of other f ending sources and emoutes obtained during the giant period, and a complete accounting of all expenditures supported by County of Hawaii gent fiords {per Chapter 2, Article 25, Section 2-142(d), Hawaii County Code, amended August, 1999). -2: IV. QUARTERLY ALLOCATION Under no circumstances shall grant funds be disbursed in a lump stun payment Grant funds will be disbursed to Grantees only through a quarterly allocation process The disbursement of grant funds can be formulated on an equal quarterly apportionment basis V. GRIEVANCE PROCEDURE The applicant will adopt and maintain a grievance procedure to assure proper accounting for any concern and complaints about its program or services that may arise from its members, employees, clients or from other members of the public. VI. DISCLOSURE OF INFORMATION All information, data or other material provided to the County by virtue of this application shall be subject to the Uniform Information Practices Act (UIPA), Chapter 92F, Hawaii Revised Statutes. All such material is deemed government record and shall be open to the public and may be provided to other public and/or private funding sources VII. CONTINUED ELIGIBILITY VIII. Any applicant or recipient who withholds or omits any material fact[ or deliberately misrepresents such facts to the Couaty of Hawad chalk (l) Immediately be disqualified from consideration for Nonprofit Grant finding, ding, OR (2) be in violation of the terms of the Grog Agreement of County funds in which ase a gram agreement can be terminated by the County and the recipient or provider may be liable to reimburse all or a portion of any funds received therein. Kapi'olani Medical Center for Women and Children (Lege! Name of Otgxu=on) Kapi'olani Sex Abuse Treatment Center hembyagteatoadmmitterthe Sex Abuse Resource and Advocacy Services (Program Title) in accordance with the regulations, policies mid procedure prescribed by the Hawaii County Finance Department. Distribution of grow fimds is limited to grantees which ate in compliance with County regulations, policies and procedure The County reserves the right to withhold grant dumbutiotu at any trine the grantee is not in compliance It is the policy of the County of Hawaii and for time who do btuemsas with the County to provide equal employment opportunities to all persons regardless of race, physical disabilities, color, religion, sex, age, or national origin at mandated by the Federal Civil Rights Acts, as amended and any other federal or state laws relating to equal employment opportimti s. IX. AMENDMENTS TO THE APPLICATIONIEVALUATION The applicant assure that it will submit to the Human Services Nonprofit Grants Review Committee (HSNPGRC) for prior review and approval a written request and justificaion for any changes, additions, or deletions to any portion(,) of the grant application or a duly executed Grant Agreement of County Funds. "The applicant will cooperate and assist in any effort undertaken by the HSNPGRC to evaluate, inspect or otherwise monitor the effectiveness, feasibility, and/or coat efficiency of any and all practice, policies and procedures or activma pursuant to this application or any grant designation or allocauon received u a result of this apphcaion -3- X. AUTHORITY AND CAPACITY OF APPLICANT 'Ilse applicant certifies that it has the authonty and capacity to develop and submit this applicauon, and to fully administer the prognam(s) pursuant to this application UNSIGNED PROPOSALS WILL NOT BE ACCEPTED! Kapi'olani Medical Center for Women & Children/Sex Abuse Treatment Center -4= Date PROGRAM/SERVICE DESCRIPTION A. Overview: The Sex Abuse Resource and Advocacy Services (SARAS), a community benefit program of the Kapi'olam Medical Center for Women and Children (KMCWC), has offered island -wide direct services to victims of sexual assault and their families since October 1, 1999 The KMCWC on Oahu is a private, non-profit teaching hospital affiliated with the University of Hawaii's Schools of Medicine, Nursing and Social Work As the Regional Pennatal Center for Hawaii and the Pacific Basic, KMCWC provides tertiary care for infants, children, adolescents and women In addition, its community benefit programs provide comprehensive health education and psychosocial services to the community. The Sex Abuse Treatment Center (SATO), KMCWC, provides comprehensive services to sexual assault victims, their families, and the community on Oahu, is the Mastercontractor for statewide sexual assault funded through the Department of Health (DOH), and is the entity providing management of SARAS SARAS is requesting funding from the County of Hawaii to provide 1) Crisis Intervention Services, which include. on-call coverage, crisis phone intake and crisis stabilization/crisis counseling 24 hours a day, 365 days a year, 2) Case Management and legal advocacy services; and 3) Coordination wdh community agencies and systems advocacy on behalf of victims Immediate access to victim -centered crisis services is essential in promoting the emotional healing process of those whose lives are affected by sexual assault Such services are designed to assist victims and their significant others in coping effectively with the traumatic consequences of a sexual assault and in regaining a lost sense of power and control over their lives Supportive services, including case management and legal systems advocacy can help victims and their families with their concerns following the immediate crisis and can ensure that survivors understand their legal rights and options. Such services also facilitate a victim's entry into the criminal justice system and participation in criminal prosecution To increase the County's -awareness and support of sexual assault and the needs and concerns of victims, SARAS will serve as a resource to others, collaborating with public and private agencies and community organizations to enhance the welfare of sexual assault survivors B. Problem/Need: "Sexual violence is part of the everyday fabric of American life" (Johnson 1980 146) An estimated 120 out of every 100,000 women in the United States weretare victims of rape or attempted rape (US Bureau of Jusbce Statistics 1983) Private researchers conclude that the magnitude is far greater, with one in four women found likely to be victims of sexual assault (Russell 1984) The Hawaii State Attorney General's office found in their study that about 2 2% of women in our State, or about 9,660, said that they had been forced to have sexual intercourse in the past year. This is more than 24 times the number of forcible rapes reported in 1993 (State of Hawaii Department of the Attorney General 1994) Underreporting of rape not only diminishes the extent of the violence, but is symptomatic of societal attitudes toward the victim of sexual assault and contributes to secondary injury through avoidance of help -seeking (US Bureau of Justice Statistics 1983, Brownmiller 1975, Koss 1988) Sexual assault can lead non-victim¢ed women to change their behavior, restrict their movements, develop a distrust of men, and live under a threat of sexual violation (Koss at al 1994, Shim 1992, LaPln 1992, Warr 1985) Sexual assault is a lonely and frightening experience While no two people react to sexual assault in the same way, certain patterns of response are common This is known as rape trauma syndrome Immediately following the assault, survivors often experience a sense of disorientation and have feelings of shock, denial, shame, guilt, depression, helplessness, numbness, of being contaminated, fear, and anger. These acute reactions may last anywhere from a few days to a few weeks. More often than not, the reactions in this phase overlap with the reactions of the more long-term period of adjustment or reorganization Sexual assault comes as an unexpected intrusion in one's life and can cause disruptions at home, with loved ones, at work and in social situations Long-term consequences may include impaired self-image, unplanned pregnancy, inability to trust, social withdrawal and impaired peer relationships, suicide attempts, and the development of dissociative disorders. For adults molested as children (AMACs), the wounds from suppressed child sexual abuse often follow them into the adult years with similar consequences. These conditions can limit an individual's ability to form intimate relationships, earn a living, reach full potential, and achieve a sense of well being Target Population and Specific Needs The services of the SARAS will be available to any of the 160,046 residents and visitors (1999 de facto population) present in the County of Hawaii who have been sexually assaulted and who call in need of immediate crisis assistance, sexual assault prevention education information and/or consultation Available demographic data shows 50 2% of residents are male, 49 8% female 28 3% were under 18 years of age, 71.7% were adults (1997 resident population of 141,458) Crisis intervention counseling following a sexual assault is critical to assess medical needs the victims may have and help them deal with the intense confusion and shock reaction of the assault experience Additionally, victims need information about legal options Many technical questions anse when considering police reporting and often once the victim decides to report the incident to the police, on-going emotional support is needed to help the victim see the process through Finally, to help create an environment in which victims are believed and supported, awareness about the crime of sexual assault, its outcomes for individuals and society, and the needs and concerns of victims must be increased Providing such information and advocacy in both public and private sectors is needed Geographic Area Services will be provided in Hawaii County, which covers 4,028.2 square miles 92% of the land area is classed as rural, making it the most sparsely populated county in the State, with a 1997 de facto population density of 37 3 individuals per square mile. The SARAS office in Hilo is located at 375 Ululam Street and is open Monday through Friday, from 8 00 a m to 4 30 p m The Kona office has relocated to 75-127 Lunapule Road in Suite 12 of the Lunapule Plaza, and is open Monday through Friday, from 10 00 a m. to 4 30 p.m. C. Collaboration/Coordination: SARAS serves on Interagency Advisory Boards and Committees including the Children's Advocacy Centers and Sexual Assault Nurse Examiner/Sexual Assault Response Teams (SANE/SART) county wide Through collaboration with public egencme including the Prosecuting Attorney's Office, the Hawaii County Police Department (HPD), and Child Welfare Services of the Department of Human Services, SARAS is able to maximize and use its resources more efficiently SARAS continues to coordinate with Hawaii County Police Department and Sex Assault Nurse Examiners (SANE) / Sexual Assault Response Team (SART) on a victim service medical legal protocol to expedite activation of the team which provides crisis and medical legal services to victims of sexual assault in an efficient and standardized manner In recognizing the need to collaborate rather than duplicate services, the Sexual Assault Response Team constantly seeks to improve and evaluate this activation process in order to offer services which will meet the needs of victims, their significant others and the community -at -large Community networking and service utilization of existing community resources is an important part of SARAS Referrals that benefit the client are made to professionals within the community Trainmgs and presentations are provided to agencies and personnel in human service settings who find sexual assault survivors among their clientele Prevention education is also provided to the community at large through schools, churches and community service organizations Currently, SARAS is coordinating with the East and West Hawaii's Children's Advocacy Centers and the Kona Community Theatrical group to present the play, "No More Secrets" to 30 Big Island schools This play will be presented to third through fifth graders during the month of April 2001 to promote sexual assault awareness month Through collaboration on victim services, each community agency/participant provides their expertise on behalf of the victim, creating well-rounded and coordinated services and service delivery. By this collaboration, duplication of services are minimized or eliminated completely and the services which are offered have a greater potential to be reflective of and responsive to the needs of victims, their significant others, and the community at large D. Goals and Obiectives: Goals Recognizing the importance and need for immediate intervention when dealing with sexual victimization, the first goal of the SARAS's program is to have a 24-hour, island -wide crisis response system designed to meet the needs of sexual assault victims, their families, significant individuals and the community at large To assist sexual assault survivors in coping with the traumatic consequences of a sexual assault, the second goal of the program is to provide ongoing case management support services and legal systems advocacy to victims of sexual assault, their families, and significant individuals The third goal is to increase community awareness of the needs and concerns of sexual assault survivors Objectives / Action Steps / Timeline From July 1, 2001 through June 30, 2002 crisis intervention services including on-call coverage, crisis phone intakes, crisis stabilization/crisis counseling, and legal systems advocacy will be provided twenty-four hours per day, 365 days per year From July 1, 2001 through June 30, 2002 case management services and legal systems advocacy will be provided to victims of sexual assault, their families, and significant individuals during office hours From July 1, 2001 through June 30, 2002 SARAS staff will participate in structured community and/or government activities, meetings, coalitions and/or task force groups that seek to coordinate and improve services for sexual assault survivors, advocating for public policy and legal system reform which recognizes the needs and concerns of victims Program and Client -Centered Outcomes Crisis Intervention Services Outcomes of these services will be measured by the • Percent of victims receiving crisis counseling/crisis stabilization services who file a police report (estimate 75%) • Percent of completed client satisfaction surveys indicating service helped to better cope with the crisis situation (estimate 80%) Output will be measured by the* • Number of crisis intervention phone calls received (estimate 250) • Number of victims receiving crisis stabilization/cnsis counseling (estimate 170) • Number of victims receiving legal advocacy services (estimate 165) Case Manaaement/Lenal Advocacy Outcomes will be measured by the • Percent of completed client satisfaction surveys mdicabng service helped to understand options and rights (estimate 80%) • Percent of completed client satisfaction surveys indicating service provided helped me with my concerns (estimate 80%) Output will be measured by the* Number of victims receiving case management and legal advocacy services (estimate 140) Output will be measured by the • Percent of completed agency evaluations indicating satisfaction with SARAS's services (estimate 75%) • Record of activities E. Service Delivery: 1. Crisis Intervention Services These services will be provided twenty-four hours a day 365 days a year. A 24-hour countywide hotline number will be provided for individuals to access services. Services include crisis phone coverage, crisis phone intakes, crisis stabilization/counseling and legal advocacy a) On -Call Coverage Personnel trained in crisis intervention strategies will be available to assess and respond to crises twenty-four hours a day, 365 days a year. During offloe hours, coverage will be provided by two outreach crisis intervention specialists; one located in Hilo and the other in Kona After hours and on weekends and holidays, crisis workers will be scheduled to respond to those in need The 24-hour hotline, managed by an answering service during this time, will contact the scheduled worker and patch the crisis call through for follow up and assistance b) Crisis Phone Intakes A systematic procedure is utilized to identify and assess the caller's needs and concerns The goal of phone intakes is to establish a connection, a relationship in which the caller can explore his/her problem, sort out his/her thoughts and feelings, and arrive at an action plan The crisis phone intake may include, listening and validation of feelings, normalization of trauma symptoms and resultant feelings, assistance with problem solving including coping strategies, safety issues, information on legal options, educational information on sexual assault and related issues, referral to community resources and/or information on program services The need for an immediate forensic examination or general medical care is also determined and caller is provided with the appropriate information to access an examination Most callers desire information and assistance concerning a sexual assault experience Some callers have experienced a recent sexual assault and are seeking assistance with medical care, police reporting, and how to cope with the immediate psychological impact of the sexual assault Often fiends and/or a significant other of the victim calls seeking assistance on behalf of victims Family members who have obtained a disclosure of sexual assault or have reason to suspect something inappropriate has happened to his/her child call for assistance Crisis workers are trained to identify the immediate needs of the caller and explore the various solutions available and develop a plan of action with the caller c) Crisis Stabilization/Crisis Counseling As any individual who survives a sexual assault has been through an unforgettable crisis that has the potential of producing profound emotional consequences, it is imperative that the psychological impact of an assault is addressed during the course of the crisis contact The role of the crisis worker to this end is diverse and requires them to act in various capacities, as counselor, educator, facilitator, and advocate. A number of victims are in need of a medical-legal examination following a sexual assault This examination has two main objectives, the medical well being of the victim and the collection of forensic evidence In Hawaii County, the medical protocol guiding such exams operates within a comprehensive system of care provided by a team of professionals including the SANE, the Crisis Workers of the SARAS program and law enforcement personnel. It can also include Child Welfare Services and the victim's personal physician or therapist The roles of each professional are different, though complementary When a victim is at a hospital requesting support during the medical-legal examination, the on- call crisis worker is contacted by hospital staff or police to provide crisis counseling and emotional support The crisis worker meets the victim at the hospital and is the person who interacts with the victim, any of their significant others, the police, hospital and medical personnel, and any child protective worker and other individual involved with the survivor or concerned or responsible for their welfare The crisis workers explain the medical examination procedures, clarify misconceptions, provide information about the legal system and reassure the victim and others that the physical and emotional well being of the survivor is of the utmost importance Crisis stabilization/counseling can also be provided to victims of sexual assault in need of immediate emotional support but not appropriate for medical care. The crisis worker is available to meet with a survivor at the office location or in another safe location if preferred by the victim, to provide the supportive assistance The presence of a crisis worker may also be requested by the police or a victim to act as an advocate and support person during the police interview Prior to ending the contact with the survivor during this phase, the crisis worker will also assess the need for continuing care and support offered through case management and legal advocacy services provided by SARAS. Psychotherapeutic services is being offered by the SARAS program in Hilo and Kona on a very part time basis Priority will be given to those that have no medical insurance or those who have an extreme case in which immediate therapy is required SARAS will continue to refer those that have medical insurance to clinical providers within the Hilo and Kona communities 2. Case Management Services and Legal Advocacy To ensure that the needs of survivors continue to be met, the daytime crisis staff of the SARAS program will provide clients with ongoing support and legal advocacy services Vital to the care and treatment of the survivor is the coordination of services needed by the victim These services include on-going assessment of the client's needs, monitoring of client's adjustment and the provision of comprehensive care. Professionals, such as the therapist, school counselors, or family physician, are contacted on behalf of clients to discuss service plans, referral for services, and available community resources. Case management and collateral contacts with professionals are delivered to reduce the fragmentation and/or duplication of services Legal systems advocacy ensures that survivors understand the legal system and their role in it It seeks to ensure survivors are treated with dignity, sensitivity and respect, and that their rights are upheld, and to ensure that the services and participation within the justice system is coordinated Legal advocacy entails on-going contact by the SARAS worker with the various professionals pertinent to the client's case so that the legal status can be tracked and further needs can be identified. Advocacy services also include accompaniment to legal interviews, criminal and/or civil court hearings, Crime Victims Compensation Commission hearings, and/or regulatory/ethical hearings. Survivors are educated about the legal system and their role in legal proceedings Other services may include reporting to court in the role as the custodian of record, and consultation with legal counsel to protect client confidentiality 3. Coordination with other Community Agencies and Systems Advocacy The WAS staff will work with individuals, groups and agencies by attending meetings, community activities, coalitions and task force groups that enhance the welfare of sexual assault survivors and concentrate on the prevention of sexual assault through community coalition building, legal system reform and public policy F. Evaluation: Process used to evaluate program/services Crisis Interventions Services Crisis Phone Intakes: Every phone call that comes into the SARAS is documented on a phone report completed by the worker who responded to the call For quality assurance purposes, the Branch Administrator will review each phone report on a daily basis to any identified problem area can be addressed and rectified in a timely fashion. Phone reports completed on calls that are received after office hours will be sent to the office within 48 hours. Any situation requiring follow-up action will be called into the office by the crisis worker at the start of the following day and will be handled by the Branch Administrator Crisis Stabilization/Crisis Counseling. Every face to face contact for crisis counseling provided by the SARAS worker will be documented on a counseling/cnais stabilization report In addition, every survivor that accepts the crisis services is informed on the confidentially of client information and is requested to complete the program's consent for services which includes the consent for treatment, legal advocacy and consent to use data from client's record A satisfaction survey and postage paid (by SARAS) addressed envelope will be provided to each individual receiving services to provide an opportunity for them to comment on services they have received All documents will be maintained in files that are secured within the SARAS's offices For quality assurance purposes, the Branch Administrator will review every counseling /crisis stabilization report, monitoring for the completion of all consents as well as client satisfaction with services Case Management and Legal Advocacy To track the client's progress and to ensure the provision of quality care, every on-going contact with a client will be documented on a progress note, which is a progressive document that reflects the date, type of contact or activity provided, and a summary of the contact or activity The worker involved in the contact is responsible for the documentation and signs his/her name below the entry The satisfaction survey will include questions about whether the services clients received addressed their concerns and help them to understand their options and rights about the criminal justice system Coordination with other Community Agencies and Systems Advocacy Program files containing records of meeting minutes, correspondence, notes, and any other relevant documentation on these activities will be maintained A survey will be sent to agencies that work with the SARAS program, the Police, Prosecutors, Sex Assault Nurse Examiner program, Children's Advocacy Center and Child Welfare Services, to evaluate the effectiveness of the SARAS program relative to collaboration and coordination of client care with community resources Finally, the Director of the SATC, KMCWC will conduct a detailed monitoring of the Crisis Intervention, Case Management/Legal Advocacy and Coordination with Community Agencies and System Advocacy services and activities provided through this grant on a quarterly basis to assure compliance with program goals and objectives How this process will measure outcomes Crisis Intervention Services Counselmg/cnsis stabilization report form collects a variety of information including demographics about the victim, information about the assault, and police reporting The contents of this information in entered into a computer and will be used to report the number and percent of victims reporting to the police. The data base also stores information to report on the number of phone calls received, number of victims receiving crisis counseling and number of victims receiving legal advocacy The satisfaction survey will provide answers to questions about services, including whether they helped the survivor to better cope with their situation Case Manaoement/Leaal Advocacy Services The progress note documents contacts and activities provided on behalf of and with the client Information on the number of victims receiving case management/legal advocacy services will be collected, stored and analyzed The satisfaction survey will offer information on whether clients felt services helped them with their concerns and information about the criminal justice system Coordination with Community Aaenues and System Advocacy A review of the documentation pertaining to coalition budding, legal system reform and/or public policy as it relates to the delivery of sexual assault services will inform and instruct future efforts in this area, in terms of action needed and priorities The agency evaluation can assist the SARAS program in identifying opportunities for improvement G. Proaram Fees The SARAS program does not charge a membership fee nor are participants charged a fee for any of the services detailed in this proposal H. Viability Sexual assault effects everyone, the victim, their significant others, their employers, and the entire county in terms of community safety Victim Costs and Consequences A New Look (National Institute of Justice, Office of Justice Programs, U.S Dept. of Justice, Feb '96) reported that "rape" has the highest annual victim cost to the victim and society followed by assault, murder and drunk driving. It was also found to be the most "expensive" crime per criminal victimization when compared to other types of crimes; at $99,000 per child sexual assault and $87,000 per adult sexual assault, in 1993 dollars Applying the more conservative adult cost of sexual assault of $87,000 to the 46 rapes which were reported to police in Hawaii county in 1997 (Came in Hawaii 1997, Dept of the Attorney General), shows approximately $4 million in losses due to the effects of this crime was potentially experienced by Hawaii county and the State in 1997 As such, public as well as private investments the area of sexual assault treatment and prevention yield an exceptionally high 'rate of return.' Historically, there were three sources of funding, DOH, County of Hawaii and the Prosecutor's Once for Victims of Crimes Act (VOCA) for the agency providing comprehensive services to victims of sexual assault on the Big Island. Since SARAS inception, program funding has been reduced to two funding sources (DOH and County of Hawaii), and has necessitated the support from Kapi'olarn Medical Center for Women and Children. Attempts have been made with the Prosecutor's Office to support the SARAS services, however, there has been no commitment As a result of having to operate with only two funding sources, SARAS had to re-evaluate its service delivery without compromising the overall goals of the program. Program adjustments included reducing the number of counseling hours available for clients and referring clients to clinical providers in the community The plan to sustain the SARAS program on the Big Island is to continue with DOH support and continue to refer to clinical providers within the community. A plan to pursue discussions with the Prosecutor's Office in re-establishing a partnership are in preliminary stages. The Advisory Board of SATC is aware of the budget deficit for both SATC on Oahu and SARAS and is working on a fiscal plan for continued viability Any staff vacancies funded by DOH will be tamed over to offset some of the costs I. Budget See attached Budget tables. A. Board of Directors The Board of Trustees of Kapi'olani Medical Center for Women and Children (KMCWC) is a 11 member Board composed of physicians, business leaders and community representatives. Board education is an ongoing function of Board leadership and includes the following: - education of new Board members as to the history, mission and purpose of KMCWC and it's services and programs and current issues and trends in health caro and the care of women and children in particular. A Board education manual is used to assist the new members in their leaming. One on one educational sessions are given by the Kepi'olam Health President/CEP and the EVP/CEO of KMCWC. The Board Chair of KMCWC as well as the Chair of the Kapi'olarn Health holding company Board also acclimate new Board members to the organization and their rob as a Board member. - ongoing education of all Board members at each Board meeting through presentations on current issues and trends in our industry, issues affecting our patient populations, emerging health care needs, and new technology and service development. Educational sessions are documented in the minutes of the Board meetings special sessions for education and strategic planning are also held as needed such as the annual retreat of the medical staff and Board leadership to review Performance improvement priorities, quality initiatives and growth opportunities The President and CEO of Kapi'olam Health and the EVP/CEO of KMCWC have delegated authority by the Board to administer the services and programs of the medical center such as the SATC The role of the Board overall is to set policy and determine strategic planning for the medical center and its programs The executive leadership of the medical center appoints the Executive Director of the SATC and delegate to that individual the responsibility for the day to day operations of the SATC to include service development and care advocacy B. Past Performance The SATC, KMCWC has provided a comprehensive range of services to victims of sexual assault, their significant others and the community since 1976 In 1997, SATC became the statewide contractor for sexual assault services funded by the State Department of Health The SATC in August, 1998 was awarded a grant through the Office of The Attorney General to develop and implement statewide standards for forensic evidence collection In FY99, a total of 15,474 individuals on Oahu received services from SATC In FY00 19,461 individuals received services from SATC on Oahu. In both fiscal years, the SATC met or exceeded target outcomes for Crisis Intervention and ClmicaVLegal Advocacy/Case Management services Outcomes are measured by percent of victims police reporting to law enforcement and client satisfaction with crisis services In FY00 (10/1/99-6/30/00) 3,356 individuals received services from the SARAS program The program met or exceeded target outcomes for Crisis Intervention Services and Case Management and Legal Advocacy. Outcomes are measured by percent of victims police reporting to law enforcement and client satisfaction/impact of services. C. Financial: In regards to financial operations for current programs, there were no ma/or changes in fiscal operations. Programmatically the Waisnae Coast Comprehensive Health Center, a previous subcontractor of sex assault service provider, terminated service delivery and services on Oahu are currently provided through the SATC Any future program and financial changes are contingent on grant submission approval Organization major contracts for the FY01 (July 1 — June 30) are either ongoing, or in the review and finalization stages with external funding sources. SATC has an established 25 year history with Kapi'olam Medical Center for Women and Children As with many of our community-based programs SATC is considered an integral component of the continuum of care to our community. D. Monitorina: The SATC was monitored by personnel from the School Health Services Branch, Family Health Services Division (FHSD) of the DOH on June 20, 1997. The Maternal and Child Health Branch of FHSD is now the monitor for the Department's contract with SATC, KMCWC Contactperson is Mildred Lum, 808-733-9038. On December 17, 1999 the SATC was monitored by Nancy Ralston from the Department of the Attorney General for project 97 -WF -11. Sexual Assault Victim's Services. Contact person is Nancy A Ralston, Criminal Justice Planning Specialist; 808-586-1157 E. Alcohol. Tobacco and Drug-Free Workplace Policies and Information: It is the policy of Kapi'olam Medical Centers to be smoke free. This is in keeping with the responsibility to maintain the rights of patients, staff and visitors to a healthy and safe environment Kapi'olarn Health has established a Drug-Free Workplace policy pursuant to the mandate and requirements of the Drug Free Workplace Act of 1988 All employees of Kapt'olam are prohibited from engaging in any activity relating to the unlawful manufacture, distribution, dispensation, possession, or use of controlled substance(s) in the workplace, anywhere on company property or while outside of the workplace All new employees are given an employee handbook that addresses the policies and guidelines of the institution and includes information on smoking and a Drug Free Workplace 10 W Z V W O IM IL co W V W N uj J T Z LU m N d• d O J H W O N Z W 0 0 0 O y �•- m n m N O N 1� O N0 9` O m N n n Q •m� 9iCs0+ K C6 N C d N W o n T N E N +0 N aim 11! �Im N o'a�o oil N y ry m N m•o m �• �' %n n 1p+ P C N mi N 0 N m N r 7 7 f'• m O+ V+ O+ V' T' O+ o V m Q ar O LL d! d LL r LL• L r LL d Uig N_ LL N N LO @a CCpi m In om CoI m W) a+ mm Oi 1�1 C4 m• N p of O app w O o ♦ C. ^ pp t9 am0. 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Hallonquist��� Cernfiedby: Executive Vice President 3 CFO�r�C� PM Nara et Exema a Dinmr 747 COUNTY OF Ri41lYAn DEPARTMENT OF FINANCE 25 Auputn Sam Room 118 • Hilo, Hawaii 96720-4252 (808) 961.8234 • Fox (808) 9614248 HAWAII COUNTY NONPROFIT GRANTS (FY 2001-02) FINANCIAL QUESTIONNAIRE Please Include as an attachment an explanation for all "NO" answers to questions #I thru #I I below: Yes No ❑K ❑ 1. Has the agency operated continuously for the past three (3) years? ❑K ❑ 2. Has the agency operated with a positive cash flow for the past throe (3) years? 0 ❑ Excluding transfers to the parent 3. Does your Board of Directors approve a detailed cash flow budget before the beginning of each fiscal yen? ❑ ® 4. Do your Board meeting minutes show that quarterly financial statements are approved? Financial Statements are reported b reviewed at each Board meeting. ❑ ❑ 5. Is your equity balance at last 20'Ya of your Total Liability balance? {� ❑ 6. Is your Total Current Asset balance larger than your Total Current Liability baLoce? ® ❑ 7. Are bank teconctliahaos and accounting performed by someone other than the check signatory? 0 ❑ 8. Aro you fully insured for the agency's vehicle(s) and building(s)? ❑ ® 9. L your Workers' Compensation at last 2%ofpayroll? Kapi' olani Medical Center for Women and Children is self insured for worker's compensation. © ❑ 10. Are you current (nontdeliequent) on all payroll and payroll tax payments? ❑ n 11. Is the agency five of any pending litigation, liens or judgments? ❑ © for medical malpractice litigation 12. Within the put 12 months, has the agency applied for vendor or bank credit and was dented credit? If yes, plesse explain. At the grant applicant, I terrify that the agency has sansfactorriv responded to each of the above gtamont and explained as needed I hereby certify that thb information w true and correct to the but of my knowledge Kapi'olani Medical Center Agency: for Women and Children Phone: (8008) 9833-6000 props-edby: Donna Masuda-Kam, Director of Accounting Z&,t Prot NaMeTwe Siesta lhta Frances A. Hallonquist��� Cernfiedby: Executive Vice President 3 CFO�r�C� PM Nara et Exema a Dinmr 747 COMBINED FINANCIAL STATEMENTS Kapi'olani Health Years ended June 30, 2000 and 1999 Kapi`olani Health Combined Financial Statements Years ended June 30, 2000 and 1999 Contents Report of Independent Auditors Financial Statements CombinedBalance Sheets..................................................................................................2 Combined Statements of Unrestricted Revenue. Expenses and Other Changes in Net Assets....................................................................4 Combined Statements of Cash Flom................................................................................6 Notes to Combined Financial Statements..........................................................................8 =I ERNST &YOUNG ■ Ernst & Young LL. a Phone (808) 531.203' 2400 Nuahi Tower www ey corn 1001 Bishop Street Honolulu, Hawaii 96813-3429 Report of Independent Auditors Board of Trustees Kapi'olani Health We have audited the accompanying combined balance sheets of Kapi'olani Health as of June 30, 2000 and 1999, and the related combined statements of unrestricted revenue, expenses and other changes in net assets and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of Kapi'olani Health at June 30, 2000 and 1999, and the combined results of its operations and changes in net assets, and its cash flows for the years then ended, in conformity with generally accepted accounting principles. October 12, 2000 J94,-� It f7 LLF Ernst & Young Lv is a member of Ernst & Young International, Ltd Kapi`olani Health Combined Balance Sheets Assets Current assets: June 30 2000 1999 Cash and cash equivalents S 17,618,237 S 22,982,137 Net patient accounts receivable, less allowance for uncollectible accounts (2000- $16,508,000; 1999 - $14,603,000) 34,2539762 43,395,316 Other receivables 1,488,095 2,058,635 Inventories 2,426,804 1,659,892 Funds held by trustee under bond indenture agreement (Notes 2 and 5) 8,563,346 8,448,618 Prepaid expenses and other current assets 1,993,280 1,673,013 Total current assets 66,3439524 80,217,611 Assets whose use is limited or restricted: Designated by Board for expansion: Cash and cash equivalents Accrued interest receivable Investments (Note 1) Rental property Project funds held by trustee under bond indenture agreement (Notes 1 and 5) Restricted by donor or grantor. Cash and cash equivalents Grants and other receivables Rental property Investments (Note 2) Total assets whose use is limited or restricted Property and equipment, net (Notes 3, S and 7) Other assets: Investment in joint venture partnerships (Note 8) Deposits and other noncurrent assets Net assets from discontinued operations (Note 9) Total assets 34,946,524 5,084,272 504,760 700,050 1089240,3" 116,426,434 497A30 497.430 144,189,113 122,708,186 105,959 191489407 1,624,913 1,5149705 1,366,585 906,786 959,276 4,768,760 4,464,844 8938.658 8.415.618 15295279771 131,229,763 152,8469600 163,723,954 393879755, 1,797,226 7,6859617 7,656,636 — 2,079,415 11,0739372 11,533,277 S 38297919267 S 386,704,605 Net assets: Unrestricted June 30 160,488,483 2000 1999 Liabilities and net assets Specific purposes 6,011,049 Current liabilities: Plant replacement and expansion 132,844 Accounts payable S 14,687,252 S 19,942,213 Payroll and related liabilities 6,890,825 10,338,107 Accrued expenses 109736,084 10,216,092 Due to governmental agencies 6,897,532 2,919,174 Agency funds held for others 404,824 81,962 Current portion of long-term debt (Note S) 3,844,936 3,620,794 Total current liabilities 43,461,453 47,118,342 Accrued benefit cost (Note 4) 3,784,325 2,841,316 Long-term debt, less current portion (Note S) 154,634,346 158,454,287 Unearned income (Note 7) 1,604,885 1,604,885 Other long-term liabilities 4,4049001 4,780,671 Allowance for disposal of discontinued operations (Note 9) 1,106,636 — Net assets: Unrestricted 163,515,353 160,488,483 Temporarily restricted: Specific purposes 6,011,049 6,909,321 Plant replacement and expansion 132,844 656,258 691439893 7,565,579 Permanently restricted 49136,375 3,851,042 173,795,621 171,905,104 Total liabilities and net assets See acconwamdng notes. S 38297919267 S 386,704,605 3 Kapi`olam Health Combined Statements of Unrestricted Revenue, Expenses and Other Changes in Net Assets Unrestricted revenue Net patient service revenue Other revenues (including net assets released from restrictions for grant expenses: 2000 - S8,034,331; 1999 - $8,179,740) Total unrestricted revenue Expenses Nursing services Other professional services General services Fiscal services Administrative services Provision for uncollectible accounts Grant expenses Depreciation and amortization Interest expense Total expenses Operating income (loss) Nonoperating gains (losses) Unrestricted donations and contributions Joint venture investment income (loss) Other nonoperating gains Income (loss) on disposals Net nonoperating gains Excess (deficiency) of revenues and gains over expenses and losses from continuing operations Year ended June 30 2000 1999 S 185,821,553 $ 184,452,555 509308,711 34,488 415 236,130,264 218,940,970 499291,251 48,708,020 57,1059104 56,288,204 17,915,960 18,304,941 10,9339592 10,697,828 42,338,868 41,942,536 8,2139599 11,836,839 8,034,331 8,179,740 16,090,347 16,015,204 10,053,733 10,369,780 219,9769785 222,343,092 16,153,479 (3,402,122) 51,816 264,683 1,841,195 (278,860) 1,500 650 (975,497) 151,173 9199014 137,646 17,072,493 (3,264,476) Change in net unrealized gains and losses on other than trading securities (Note 1) (39150,422) 811,271 Change in unrestricted net assets before effects of discontinued operations 13,9229071 (2,453,205) See accompanying notes. 4 Kapi`olani Health Combined Statements of Unrestricted Revenue, Expenses and Other Changes to Net Assets (continued) (Loss) income from discontinued operations (Note 9) Estimated loss on disposal of discontinued operations (Note 9) Increase (decrease) in unrestricted net assets Temporarily restricted net asset Specific purpose: Restricted grants and contributions Net assets released from restrictions (Decrease) increase in specific purpose Year ended June 30 2000 1999 (411,250) S 1,451,920 (1094839951) 3,0269870 (1,001,285) 7,136,059 9,024,615 (8,034431) (8,179,740) (898,272) 844,875 Plant, replacement and expansion: Other changes in plant, replacement and expansion, net (5239414) 5,035 (Decrease) increase in temporarily restricted net assets (19421,686) 849,910 Permanently restricted net assets Net realized and unrealized gains on investments Increase in permanently restricted net assets Increase in net assets Net assets at beginning of year Net assets at end of year See accompanying notes. 285,333 461,693 2859333 461,693 198909517 310,318 171,905,104 171,594,786 S 17397959621 S 171,905,104 5 Kapi`olam Health Combined Statements of Cash Flows 6 Year ended June 30 2000 1999 Operating activities Change in net assets S 1,890,517 S 310,318 Adjustments to reconcile the change in net assets to net cash provided by operating activities: Depreciation and amortization 16,090,347 16,015,204 Loss (income) on disposal of equipment 9759497 (151,173) Joint venture investment (income) loss (1,8419195) 278,860 Net unrealized losses (gains) on investments, other than trading securities 3,150,422 (811,271) Decrease is restricted rental property 529490 125,459 Restricted investment income (285,333) (461,693) Changes in operating assets and liabilities: Decrease in patient accounts receivable 9,1419554 10,604,121 Decrease (increase) in other receivables 570,540 (1,344,049) Increase in inventories and other assets (1,116,160) (2,324,102) Increase in fiords held by trustee under bond indenture agreement (114,728) (882,895) Decrease (increase) in net assets from discontinued operations 2,079,415 (3,608,001) (Decrease) increase in accounts payable and accrued expenses (8,223,129) 2,389,370 Increase (decrease) in net amounts due to third - party payors 3,978,358 (1,047,853) (Decrease) increase in liability for estimated malpractice costs 40,878 27,489 Increase (decrease) in agency funds held for others 3229862 (834,987) (Decrease) increase in other long-term liabilities (3769670) 2,2I7,387 Increase in allowance for disposal of discontinued operations 1,106,636 Net cash provided by operating activities 27,442,301 20,502,184 Invesdag activities Purchase ofproperty and equipment (6,156,703) (19,182,216) Proceeds from ask of assets 459142 34,805 Sale of joint venture partnership 2509666 325,264 Assets whose use is limited: Net (increase) decrease in cash and cash equivalents (29,385,746) 1,654,132 Increase in grants and other receivables (148,120) (540,174) Net sales of investment securities 5,212,320 6,619,503 Decrease in project funds held by trustee 105,959 10,630,683 Net cash used in investing activities (3090760482) (458,003) 6 Kapi`olani Health Combined Statements of Cash Flows (continued) Financing activities Payment of long-term debt and note payable to bank Proceeds from note payable to bank Net cash used in financing activities (Decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year See accompanying notes. Year ended June 30 2000 1999 $ (2,729,719) S (10,501,693) 5,000,000 (29729,719) (5,501,693) (5,363,900) 14,542,488 22,9829137 8,439,649 $ 17,6189237 S 22,982,137 7 Kapi'olani Health Notes to Combined Financial Statements June 30,2000 1. Organization and Summary of Accounting Policies Kapi'olani Health ('%W) controls Kapi'olani Medical Center for Women and Children ("KMCWC'), Kapi'olani Medical Center at Pali Momi ("KMCPM'), Kapi'olani Health Foundation and other health care related entities located in Hawaii. KH has also organized other corporations and health care related entities to accomplish its objectives. It controls all subsidiaries through stock ownership (taxable corporations) and affiliates through board membership and management (nontaxable corporations). All interorganizational transactions and balances have been eliminated in combination. KH is a not-for-profit support organization as described in sections 501(cx3) and 509(ax3) of the Internal Revenue Code ("IRC'). KH and all other significant combined affiliates are not-for-profit corporations exempt from federal and state taxes on related income pursuant to IRC Section 501(a) and the related Hawaii Revised Statutes, respectively. The accounting principles followed by KH, its subsidiaries and affiliates, and the methods of applying those principles comply with generally accepted accounting principles and general practice within the health care industry. The significant policies are summarized below. Inventories Inventories are valued at the lower of cost (first -in, first -out method) or market. Property and Equipment Property and equipment acquisitions are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from 5 to 40 years for buildings and improvements and 3 to 20 years for equipment Equipment under capital lease obligations is amortized on the straight-line method over the shorter period of the lease term or the estimated useful life of the equipment. Such amortization is included in depreciation and amortization in the financial statements. hdmwt cost incurred on borrowed funds during the period of construction of capital • assets is capitalized as a component of the cost of acquiring those assets. 8 Kapi'olani Health Notes to Combined Financial Statements (continued) 1. Organization and Summary of Accounting Policies (continued) Property and Equipment (continued) Gifts of long-lived assets such as land, buildings, or equipment are reported as unrestricted support, and are excluded from the excess of revenues over expenses, unless explicit donor stipulations specify how the donated assets must be used Gifts of long- lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets am reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, expirations of donor restrictions are repotted when the donated or acquired long-lived assets are placed in service. Investments Investments in equity securities with readily determinable fair values and all investments in debt securities are measured at fair value in the balance sheet Investment income or loss (including realized gains and losses on investments, interest and dividends) is included in the excess of revenues and gains over expenses and losses and reported as other revenues unless the income or loss is restricted by donor or law. Unrealized gains and losses on investments are excluded from the excess of revenues and gains over expenses and losses unless the investments are trading securities. Income on investments of donor -restricted funds and endowment funds is recorded as an increase in unrestricted net assets, unless restricted by the donor. Realized gains and losses are computed using the specific identification method. KH utilizes several investment managers to diversify the investment portfolios. Investments in joint venture partnerships which are 50% or less owned are reported on the equity method of accounting which approximates KH's equity in their underlying net book values. Board -Designated Assets Board -designated assets consist of unrestricted donations and accumulated income which have been designated by the Board of Trustees for expansion. The Board can redesignate these assets at its discretion. 0 Kapi'olani Health Notes to Combined Financial Statements (continued) 1. organization and Summary of Accounting Policies (continued) Pledges Pledges (unconditional promises to give), less an allowance for uncollectible amounts, are recorded as receivables in the year made. Restricted pledges are reported as additions to the appropriate temporarily or permanently restricted net asset balance. Temporarily and Permanently Restricted Net Assets Restricted net assets consist of donations and other funds where restrictions have been unposed as to their use by the donor for specific operating purposes. Temporarily restricted net assets consist of those net assets whose use by KH has been limited by donors to a specific purpose or time period. Permanently restricted net assets consist of the principal amount of net assets whose use by donors has been restricted in perpetuity. Deferred Financing Costs Costs of issuing long-term debt have been capitalized and are being amortized over the terms of the obligations using an interest method. The amortization is included in depreciation and amortization expense. Statement of Cash Flows Highly liquid investments with a maturity of three months or less when purchased are considered cash equivalents. Net Patient Service Revenue mad Accounts Receivable Net patient service revenue is reported at the estimated net realizable amounts from patients, third -party payors, and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third -party payors. Significant concentrations of gross patient accounts receivable include the Hawaii Medical Service Association - 230/s, State of Hawaii's QUEST program - 16°/., Medicaid -19'/a, and Medicare - 19% as of June 30, 2000. 10 Kapi'olani Health Notes to Combined Financial Statements (continued) i. organization and Summary of Accounting Policies (continued) Government Reimbursement Programs KH renders services to patients under a contractual arrangement with the Medicare and Medicaid programs based primarily on a Prospective Payment System (PPS). The percentage of patient service revenue applicable to the Medicare and Medicaid progrnms, respectively, approximated 18% and 9% in fiscal year 2000 and 17% and 8% in fiscal year 1999. PPS payment rates for Medicare acute inpatient services are based on clinical, diagnostic, and other factors; and for Medicaid are based upon a per diem rate for routine services and a per discharge rate for ancillary services. Inpatient nonacute services, outpatient services and defined capital costs related to Medicare and Medicaid beneficiaries are pard based upon fee schedules or a cost reimbursement method. KH is reimbursed for these reimbursable items at an interim rate; final settlement is determined after annual cost reports submitted by KH are audited by the fiscal intermediary. Normal estimation differences between final settlements and amounts accrued in previous years are reported as current year deductions from revenues. Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. Other than the matter discussed in the last paragraph of Note 7, KH believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigation involving allegations of potential wrongdoing that would have a material impact in its financial position on June 30, 2000. while no such regulatory inquiries have been made, compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from the Medicare and Medicaid programs. In 1995, KH entered into several agreements with prepaid health plans to provide hospital services to plan members who are eligible to participate in the State of Hawaii's QUEST program. The plans committed to share any favorable or unfavorable experiences with KH under terms agreed upon by KH and the plans. Management does not expect a material impact to the combined financial statements as a result of the risk sharing provisions of the agreements. The percentage of patient service revenue applicable to the QUEST program approximated 20% and 22% in fiscal 2000 and 1999, respectively. 11 Kapi`olani Health Notes to Combined Financial Statements (continued) 1. Organization and Summary of Accounting Policies (continued) Charity Can KH will treat patients regardless of their ability to pay. An established charity care policy sets guidelines to determine which patients qualify for care given at no charge. Since KH does not pursue collection from qualified charity care patients, they are not reported as revenue. Recorded charity care provided in both 2000 and 1999 comprised less than 1% of total revenue. Revenues KH's purpose is to provide diversified health care services primarily in the State of Hawaii and secondarily in the Pacific Basin. Hence, operating revenues include those generated from direct patient care, rentals from medical office buildings, grants, fundraising activities, investing activities, and other revenues, all of which are either directly related to or used in support of the operation of KH's facilities. Conversely, unrestricted donations and disposal of equipment are reported as nonoperating gains and losses. Fair Value of Financial Instruments The carrying amounts reported in the balance sheet for cash and cash equivalents, receivables, accounts payable and accrued expenses approximate fair value due to the short-term nature of these instruments. Fair values for long-term debt are estimated using quoted market prices of similar types of borrowings. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ fiom those estimates. Kapi`olani Health Notes to Combined Financial Statements (continued) 1. Organization and Summary of Accounting Policies (continued) ReclassificatiODS Certain 1999 balances have been reclassified to conform with 2000 presentation. Functional Classification of Expenses The functional classification of expenses by major classes of program services and supporting activities are summarized as follows: 2000 1999 Acute hospital care S 144,728y42 S 147,124,086 Management and general 75,248,243 75,219,006 S 219,976,785 S 222,343,092 2. Investments Investments stated at fair value as of June 30 are as follows: Designated by Board for expamion: Equity securwes U.S. Treasury and agency obligations Deed pamrcrshtp Real eswe Corporate debt securities project foods beld by trustee under bond indenture agreement Cash sad shoat -term invabneob U.S. Treasury and agency obligations Resbiewd by donor or grantor: Cash Equity aeematies Littered partnership Real estate U.S. Treasury and agency obligations Corporate debt securities Leta current portion of project fiords held by trustee under bond indenture agreement 2000 1999 S 78257,032 S 67,845,913 6,608,608 10,676,239 2,948,938 — 5,467,881 — 14.857,940 37.904262 108,240.399 116,426,434 8,563.346 599,130 7,955,447 8,463,346 8,554,577 1,333 676 3,44805 2,808,724 29,612 — 81,810 53,178 892,242 1,181,779 315,158 420,487 4,768,760 4,464,844 8,63246 8,448,618 S 113,009,159 $ 120.997,237 13 Kapi`olani Health Notes to Combined Financial Statements (continued) 2. Investments (continued) Investment income and gains for assets limited as to use, cash equivalents, and other investments are comprised of the following for the years ended June 30, 2000 and 1999: Other revenues: Interest income Realized gains on sales of securities Other changes in unrestricted net assets: Unrealized (losses) gains on other than trading securities 3. Property and Equipment Property and equipment is summarized as follows: Land Land improvements Buildings and improvements Fixed equipment Major movable equipment Minot equipment Capitalized leases Construction in progress Less accumulated depreciation and amortization Property and equipment, net 2000 1999 S 5,214,509 $ 6,215,919 21,094,065 6,812,579 S 26,308,574 S 13,028,498 S (3,150,422) S 811,271 2000 1999 S 14,9409026 S 15,900,255 1,1839852 1,183,852 16692079436 164,557,660 1094149566 10,272,632 939953,635 88,622,638 29029,363 1,940,448 2,988,956 2,988,956 39514,191 4,851,657 2959232,025 290,318,098 (142,3859425)126 594144 $1529346,600 S 163,72 ,954 14 Kapi'olani Health Notes to Combined Financial Statements (continued) 4. Pension Plans Eligible employees of KH are covered under its noncontributory, defined -benefit pension plan. KH's plans were combined into one plan effective July 1, 1995. KH's plan coven; substantially all employees of KH and affiliates meeting minimum eligibility requirements. Benefits are based on years of service and a percentage of the employee's compensation. KH's policy is to accrue actuarially, determined net periodic pension costs and to annually contribute an amount within regulatory guidelines. The plan's funded status and amounts recognized in KH's balance sheets at June 30 are as follows: Benefit obligation Fair value of plan assets (primarily marketable equity securities) Funded status Accrued benefit cost recognized in the Combined Balanced Sheets Weighted Average Assumptions: Discount rate Expected return on plan assets Rate of compensation increase Benefit cost Employer contributions Benefits paid June 30 2000 1999 S 42,830,000 S 40,800,000 47,288,000 41,971,000 $ 4,458,000 $ 1,171,000 S 39784,325 S 2,841,316 7.75% 7.50% 8.00% 8.000/0 5.00% 5.00'/e S 2,569,000 S 1,988,000 $ 1,6269000 S 1,778,000 S 1,3589000 S 1,315,000 15 Kapi`olani Health Notes to Combined Financial Statements (continued) 5. Long -Term Debt and Note Payable to Bank Series 1996 Special Purpose Revenue Bonds (face value of $54,195,000 less unamoruzed discount of $376,583 based on effective interest rates ranging from approxin utely 4.75% to 5.60%), interest payable serm- annually at rates ranging from 4.95% to 6.25%, principal payments in varying armual amounts ranging from 5840,000 to 52,475,000 due July 2000 through 2019; 511,780,000 due July 2020, $12,520,000 due July 2021 Series 1993 Special Purpose Revenue Bonds (face value of $101,925,000 leu unamortized discount of S1,768,516 based on effective interest rates ranging from approximately 4.00% to 7.00%), interest payable semi-annually at rates ranging from 5.40% to 6.400/a, principal payments in varying arinual amounts ranging Som S1,860,000 to S3,300,000 due July 2000 through 2003; $19,780,000 due July 2004 through 2008; 526,890,000 due July 2009 through 2013; and $45,015,000 due July 2014 through 2019 Series 1991 Special Purpose Revenue Bonds, interest payable semi-annually at rates ranging from 6.900/6 to 7.00'/o, principal payments in varying annual amounts ranging from 5925,000 to $990,000 due July 2000 through 2001 Cory forward 2000 1999 S 53,818,417 S 54,605,269 100,156,484 101,831,264 11915,000 2,775,000 155,889,901 159,211,533 16 Kapi'olani Health Notes to Combined Financial Statements (continued) 5. Long -Term Debt and Note Payable to Bank (continued) Note payable with interest at 12%; principal and interest payable in monthly installments ranging from $34,367 to 555,612 through July 2003 and the balance due on August 1, 2003 with the option to extend the maturity date to August 1, 2006; collateralized by all leasehold improvements, furniture, fixtures and equipment of KH's corporate offices with a carrying value of approximately $6,096,431 Leu current portion 2000 1999 S 155,889,901 1,766,297 $ 159,211,533 1,990,130 823,084 873,418 158,479,282 162,075,081 (3,844,936) (3,620,794) S 154,634,346 S 158,454,287 The 1996, 1993, and 1991 Series Special Purpose Revenue Bonds are secured by a security interest in the gross receipts and pledged assets of the Obligated Group (KH - parent company only, KMCWC, and KMCPM) as defined in the Master Indenture. The 1993 Bonds are subject to redemption on or after July 1, 2003, at redemption prices ranging from 100•/. to 102% of the principal amount of the bonds being redeemed. Series 1993 tern bonds have mandatory sinking fund requirements effective July 1, 2004, payable in annual amounts ranging from $3,490,000 to 58,635,000. In January 1993, the Obligated Group made an advance refunding of 565,665,000 of the Series 1991 Special Purpose Revenue Bonds, by issuing Series 1993 Special Purpose Revenue Bonds and purchasing Government Obligations deposited with an escrow agent under an Escrow Agreement. The principal and interest on such Government Obligations provides sufficient funds to pay the principal and interest on the Series 1991 refunded Bonds. The outstanding principal balance on the refunded Bonds which were not included in the accompanying financial statements amounted to $65,665,000 as of both June 30, 2000 and 1999. 1fd Kapi'olani Health Notes to Combined Financial Statements (continued) 5. Long -Term Debt and Note Payable to Bank (continued) Approximately $15,800,000 of the Series 1993 bonds (net of discount and issuance costs) were issued to finance renovation of and construction at KMCWC and purchase additional equipment (the "1993 KMCWC Project') as described in the Indenture. KMCWC completed this project in August 1995. In April 1996, the Series 1996 Special Purpose Revenue Bonds of S55,000,000 were issued to assist the Obligated Group in financing or refinancing, or both, new construction and renovation and equipment purchases (the "1996 Kapi'olani Project') as described in the Indenture and Loan Agreement. KH completed this project in April 1999. As of June 30, 1999 the Obligated Group had an outstanding in -evocable standby letter of credit in the principal amount of 51,059,300, expiring July 1, 2001, to fund its Bond Reserve Fund. An annual commitment fee is payable ranging from $8,000 to $18,600 based upon the Obligated Group's long-term debt service coverage ratio. In addition, $8,563,346, included in current assets, is held by the Bond Trustee to fund current principal maturities and accrued interest payable. Long-term debt maturities for the years succeeding June 30, 1999 are: 2001 $ 3,844,936 2002 3,925,336 2003 4,273,399 2004 4,536,548 2005 4,819,930 Thereafter 137.079.133 S 158,479,282 Interest paid duffing the years ended June 30, 2000 and 1999 was approximately $10,039,901 and 510,232,738, respectively. The fair value of long-term debt as of June 30, 2000 and 1999 was approximately $158,774,034 and $171,775,070, respectively. 18 Kapi`olani Health Notes to Combined Financial Statements (continued) 5. Long -Term Debt and Note Payable to Bank (continued) KH also has available a $10,000,000 unsecured revolving ]me of credit, expiring April 16, 2001. The mterest rate on the line is a floating.rate based on the bank's base rate. KH also has available a $2,000,000 irrevocable standby letter of credit to support the obligations of KHH as a State of Hawaii QUEST provider. The letter of credit is automatically renewable annually at the discretion of the bank. 6. Leases Leases on various types of office and storage space, office equipment and furniture are classified as operating leases. Future minimum lease payments under noncancelable operating leases are as follows: Year ending June 30 2001 $ 1,660,589 2002 1,752,046 2003 1,824,247 2004 979,287 2005 949,307 Thereafter 1,090,656 Total minimum lease payments S8,256,132 Renal expense paid during the years ended June 30, 2000 and 1999 was approximately 51,951,000 and 51,728,000, respectively. 7. Commitments and Contingencies Unemployment Claims KH is self-insured for substantially all of its unemployment claims. Claims for unemployment are insignificant and expensed when incurred. 19 Kapi`olani Health Notes to Combined Financial Statements (continued) 7. Commitments and Contingencies (continued) Workers' Compensation Claims KH is self-insured for workers' compensation claims (ef ective March 1994, KMCPM began self-insuring its workers compensation claims under KH's program). In lieu of a bond, the System has an outstanding letter of credit in favor of the State of Hawaii in the principal amount of $1,000,000, as required by self-insurance regulations of the State. The letter of credit is automatically renewable annually, but not beyond February 1, 2004. Claims administration is performed by a claims adjusting company. The claims adjusting company provides KH with estimated claims payments which KH accrues as its workers' compensation expense. In the opinion of management, adequate accruals have been provided for known and incurred but not reported workers' compensation claims. Medical Malpractice Insurance KH is insured for medical malpractice claims. Generally, medical malpractice insurance policies have included a shared deductible provision, which is currently 50% of the mdemnity loss, up to a $25,000 maximum deductible per claim. Primary coverage is 51,000,000 (occurrence basis) with excess coverage of $19,000,000 for KMCWC and $9,000,000 for KMCPM (claims -made basis, with a seven year prepaid discovery period). KMS' primary coverage is $1,000,000 (occurrence basis) with excess coverage of 52,000,000 with a combined deductible of 550,000. Medical malpractice expense, including estimated accruals for amounts below the deductible provisions, totaled $2,394,000 and $2,263,000 for the years ended June 30, 2000 and 1999, respectively. Construction -In -Progress Commitments to complete operating room renovations for KMCWC totaled approximately $1,750,000 as of June 30, 2000. Estimated completion date of the renovations is December 2000. 20 Kapi'olani Health Notes to Combined Financial Statements (continued) 7. Commitments and Contingencies (continued) Debt Service Forward Delivery Agreement KH has executed a debt service forward delivery agreement with a financial institution related to the semi-annual payments on the Series 1993 Special Purpose Revenue Bonds in which it received payment in exchange for the potential interest earnings on the semi- annual payments placed in escrow prior to payment to the bond holders. The agreement represents a put option premium which is measured at fair value. If KH terminates the agreement, it will be obligated to reimburse the financial institution for its economic losses incurred as the result of the termination. Losses, if any, will be determined at the date of termination. The financial institution has the right to terminate the agreement commencing in 2004. If it elects to do so, KH would be obligated to reimburse up to a maximum of $2,650,000. Management has no present intention to terminate the agreement. Health Systems Affiliation Agreement In March 1996, KH, Wilcox Health System ("Wilcox') and The Queen's Health Systems ("QHS') entered into a Health Systems Affiliation Agreement ("Agra ment'l where KH and QHS agreed to make grants of $5,750,000 to Wilcox (53,500,000 from KH and 52,250,000 from QHS) over the next four years provided that Wilcox satisfy certain financial and operational conditions. In November 1997, the agreement was amended where KH and QHS agreed to make additional grants of 51,000,000 to Wilcox (5500,000 from KH and 5500,000 from QHS) in equal installments over the next four years beginning January 10, 1998 provided that Wilcox continues to satisfy the certain financial and operational conditions. The agreement was further amended in February 1999 to provide for a change in the timing of cash payments, but not the total amount to Wilcox. Under the amendments, KH will pay $63,079 per month through February 2002, provided that Wilcox satisfies certain financial and operational conditions. In consideration of the grant payments described above, KH received a 50% interest in the land under the Kauai Medical Group facilities from Wilcox. KH and QHS were each allowed to appoint one member to Wilcox's Board of Directors and one member to the Wilcox physician group's board of directors. 21 Kapi'olam Health Notes to Combined Financial Statements (continued) 7. Commitments and Contingencies (continued) Other During 1998, management became aware that certain billing errors had occurred in the Kapiolani Home Health Services and Kapiolani Extended Care subsidiaries. Settlement of approximately S4 million was paid in August 1999 and has been accrued as a charge in the accompanying Combined Statements of Unrestricted Revenue, Expenses and Other Changes in Net Assets for the year ended June 30, 1999. 8. Related Party Transactions A joint venture investment of KH provides laundry services to KH. Payments for services totaled $994,000 and $964,000 in 2000 and 1999, respectively. KH paid approximately $6,314,000 and $6,634,000 for laboratory services provided by a joint venture in 2000 and 1999, respectively. Payments made to Partners Health Hawai'i for management fees totaled S115,000 and 5709,000 in 2000 and 1999, respectively. Notes receivable from an affiliate totaled 5375,000 as of June 30, 1999. The notes receivable from an affiliate was zero as of Jure 30, 2000. 9. Discontinued Operations In October 1999, the Board of Directors approved management's decision to discontinue its health insurance plan business and, KH and KHH entered into a Reorganization Agreement with Hawaii Medical Services Association, ("HMSA"). Under the Agreement, effective November 1, 1999 substantially all of KHH's commercial health insurance contracts were assigned to HMSA. The assigned contracts expire at various dates through January 2001. KHH also assigned its State Health Fund contract to HMSA on July 1, 2000 which expires on June 30, 2001. KH and KHH remain contingently liable for aggregate losses on the assigned contracts. No consideration was exchanged in connection with the assignment. 22 Kapi`olani Health Notes to Combined Financial Statements (continued) 9. Discontinued Operations (continued) KHH will retain its Medicaid (QUEST) business until the QUEST contract between KHH and the State of Hawaii expires on June 30, 2002. HMSA operates the QUEST business solely for administrative purposes under a third party administration agreement. KHH continues to assume full financial responsibility for the QUEST contract. In accordance with the Reorganization Agreement, KH executed a guarantee to HMSA that KHH will maintain adequate capital levels to meet its net worth requirements pursuant to the HMO Act and to reimburse HMSA for any aggregate losses on the assigned commercial contracts and assume full financial risk for any losses incurred in relation to its QUEST contract. Accordingly, the 2000 and 1999 operating results of KHH have been segregated from continuing operations and reported as discontinued operations in the Combined Statements of Unrestricted Revenue, Expenses and Other Changes in Net Assets. Operating results from discontinued operations (July 1 to October 31, 1999), exclusive of intercompany revenue and expense transactions which are eliminated upon consolidation of KH, are as follows: Premium revenue Other operating revenue Medical claims expense General and administrative expense Operating (loam) income 2000 1999 S 26,457,512 S 63,697,381 — 1,799,389 (22,996,672) (52,971,174) (3,872,090) (11,073,676) S (411,250) S 1,451,920 Operating loss from discontinued operations for the period November 1 through June 30, 2000 is S7,983,95 I. 23 Kapi`olani Health Notes to Combined Financial Statements (continued) 9. Discontinued Operations (continued) The net assets of KHH included in the accompanying combined balance sheets consisted of the following: Cash and cash equivalents Receivables Due from affiliate (net) Other current assets property and equipment, net Other net assets Total assets of discontinued operations Accounts payable Accrued liabilities Medical claims payable Other current liabilities Other long -tens liabilities Total liabilities of discontinued operations Net assets of discontinued operations 2000 1999 S 9,293,553 1,590,963 1,106,636 $ 17,852,577 1,431,909 58,525 89,734 974,269 2,032,730 — 50,000 13,023,946 21,456,950 592,841 7,664,983 4,581,122 541,583 8,625,537 9,886,514 323,901 185,000 — 13,023,946 19,377,535 S — S 2,079,415 The cost of health care services provided or contracted for is accrued in the period in which it is provided to a member based in part on estimates, including an accrual for medical services provided but not reported to the HMO. Reinsurance premiums are included in health care costs, and reinsurance recoveries are reported as a reduction of related health care costs. The estimated loss on disposal of discontinued operations of S10,483,951 is comprised of $7,983,951 in operating losses from November 1 through June 30, 2000, approximately $2,275,000 for operational Iowa during the phase out period (net of estimated reinsurance recoveries) and severance pay of approximately 5225,000. 24 Combined Financial Statements Kapi`olani Health Years ended June 30, 1999 and 1998 Kapi `olani Health Combined Financial Statements Years ended June 30, 1999 and 1998 Contents Report of Independent Auditors ....................... Financial Statements Combined Balance Sheets .................................. Combined Statements of Operations .................. Combined Statements of Changes in Net Assets Combined Statements of Cash Flows ................. Notes to Combined Financial Statements........... ................................................1 ...................................... 2 ....................................... 4 ....................................... 5 ....................................... 6 ....................................... 8 =IERNST&YOUNG LLP Board of Trustees Kapi'olani Health • 24CO Paual-i Tower Sir Pnone 8C5 - I OCI Bishop Stree; Honolulu Hawaii 96813-3429 Report of Independent Auditors We have audited the accompanying combined balance sheets of Kapi'olani Health as of June 30, 1999 and 1998, and the related combined statements of operations, changes in net assets and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position ofKapi'olani Health at June 30, 1999 and 1998, and the combined results of its operations and changes in net assets, and its cash flows for the years then ended, in conformity with generally accepted accounting principles. October 7, 1999 except for Note 10, as to which the date is October 18, 1999 g94m.'at f f4l UP Ernst & Young LLP is a member of Ernst &Young International Ltd Kapi`olani Health Combined Balance Sheets Assets Current assets: Cash and cash equivalents Net patient accounts receivable, less allowance for doubtful accounts (1999- $14,603,000; 1998 - $11,888,000) Other receivables Inventories Funds held by trustee under bond indenture agreement June 30 1999 1998 S 40,834,714 5 15,489,629 43,395,316 53,999,437 3,490,544 5,762,048 1,659,892 1,662,519 (Notes 1 and S) 8,448,618 7,565,723 Prepaid expenses and other current assets 1,7629747 1,823,253 Total current assets 99,591,831 86,302,609 Assets whose use is limited or restricted: Designated by Board for expansion: Cash and cash equivalents 5,084,272 6,424,938 Accrued interest receivable 7009050 598,078 Investments (Note 1) 116,426,434 123,043,302 Rental property 4979430 497,430 122,708,186 130,563,748 Project funds held by trustee under bond indenture agreement (Notes 1 and 5) 105,959 10,736,642 Restricted by donor or grantor: Cash and cash equivalents 1,624,913 1,938,379 Grants and other receivables 1,366,585 826,411 Rental property 959,276 1,084,735 Investments (Note 1) 4,464,844 3,296,487 894159618 7,146,012 Total assets whose use is limited or restricted 131,229,763 148,446,402 Property and equipment, net (Notes 3, 5 and 7) 165,756,684 162,228,215 Other assets: Investment in joint venture partnerships (Note 8) 1,797,226 2,606,747 Deposits and other noncurrent assets 7,7062636 5,361,452 9,503,862 7,968,199 Total assets 540690829140 5404,945,425 2 Net assets: Unrestricted 160,488,483 161,489,768 Temporarily restricted: Specific purposes 6,909,321 6,064,446 Plant replacement and expansion 6569258 651,223 7,565,579 6,715,669 Permanently restricted 3,851,042 3,389,349 171,905,104 171,594,786 Total liabilities and net assets See accompanyfng notes. $406,0829140 $404,945,425 June 30 1999 1998 Liabilities and net assets Current liabilities: Accounts payable S 20,483,796 S 20,394,752 Payroll and related liabilities 10,643,866 11,612,453 Accrued expenses 15,837,430 12,012,813 Medical claims payable 9,886,514 10,815,807 Due to governmental agencies 5,617,614 3,967,027 Agency funds held for others 405,863 38,457 Note payable to bank — 3,000,000 Current portion of long-term debt (Note 5) 3,6209794 2,652,740 Total current liabilities 669495,877 64,494,049 Accrued benefit cost (Note 4) 2,841,316 2,631,847 Long-term debt, less current portion (Note 5) 158,454,287 162,056,574 Unearned income 1,6049885 1,535,107 Other long-term liabilities 4,780,671 2,633,062 Net assets: Unrestricted 160,488,483 161,489,768 Temporarily restricted: Specific purposes 6,909,321 6,064,446 Plant replacement and expansion 6569258 651,223 7,565,579 6,715,669 Permanently restricted 3,851,042 3,389,349 171,905,104 171,594,786 Total liabilities and net assets See accompanyfng notes. $406,0829140 $404,945,425 Kapt`olam Health Combined Statements of Cash Flows Operating activities Change in net assets Adjustments to reconcile the change in net assets to net cash provided by operating activities: Depreciation Amortization of bond discount (Income) loss on disposal of equipment Joint venture investment loss Net unrealized gams on investments, other than trading securities Decrease in restricted rental property Restricted investment income Changes in operating assets and liabilities: Decrease (increase) in patient accounts receivable Decrease (increase) in other receivables Increase in inventories and other assets Increase in funds held by trustee under bond Year ended June 30 1999 1998 $ 310,318 $ 11,625,703 16,403,011 14,583,586 76,929 113,368 (149,277) 1,894,701 278,860 440,309 (811,271) (3,558,285) 125,459 131,834 (461,693) (443,647) 10,604,121 (15,601,203) 2,271,504 (1,881,421) (2,282,051) (3,309,038) indenture agreement (882,895) (805,484) Increase in accounts payable and accrued expenses 2,917,585 9,542,746 (Decrease) increase in medical claims payable (929,293) 9,036,897 Increase (decrease) in net amounts due to third - parry payors 1,650,587 (241,921) Increase (decrease) in liability for estimated malpractice costs 27,489 (77,047) Increase (decrease) to agency funds held for others 367,406 (31,010) Increase in other long-term liabilities 21217,387 2,633,062 Net cash provided by operating activities 31,734,176 24,053,150 0 Kapi'olani Health Notes to Combined Financial Statements June 30, 1999 1. organization and Summary of Accounting Policies Kapi'olani Health ("KH'� controls Kapi'olani Medical Center for Women and Children ("KMCWC"). Kapi'olam Medical Center at Pali Mont ("KMCPM'), Kapi'olani HealthHawai'i ("KH1171, Kapi'olam Health Foundation and other health care related entities located in Hawaii. KH has also organized other corporations and health care related entities to accomplish its objectives. It controls all subsidiaries through stock ownership (taxable corporations) and affiliates through board membership and management (nontaxable corporations). All interorgamzational transactions and balances have been eliminated in combination. KH is a not-for-profit support organization as described in sections 501(c)(3) and 509(a)(3) of the Internal Revenue Code ("IRC'). KH and all other significant combined affiliates are not-for-profit corporations exempt from federal and state taxes on related income pursuant to IRC Section 501(a) and the related Hawaii Revised Statutes, respectively. The accounting principles followed by KH, its subsidiaries and affiliates, and the methods of applying those principles comply with generally accepted accounting principles and general practice within the health care industry. The significant policies are summarized below. Inventories Inventories are valued at the lower of cost (first -in, first -out method) or market. Property and Equipment Property and equipment acquisitions are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from 5 to 40 years for buildings and improvements and 3 to 20 years for equipment. Equipment under capital lease obligations is amortized on the straight-line method over the shorter period of the lease term or the estimated useful life of the equipment. Such amortization is included in depreciation and amortization in the financial statements. Interest cost incurred on borrowed funds during the period of construction of capital assets is capitalized as a component of the cost of acquiring those assets. E3 Kapi'olani Health Notes to Combined Financial Statements (continued) 1. Organization and Summary of Accounting Policies (continued) Property and Equipment (continued) Gifts of long-lived assets such as land, bwldmgs, or equipment are reported as unrestricted support, and are excluded from the excess of revenues over expenses, unless explicit donor stipulations specify how the donated assets must be used. Gifts of long- lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support Absent explicit donor stipulations about how long those long-lived assets must be maintained, expirations of donor restrictions are reported when the donated or acquired long-lived assets are placed in service. Investments Investments in equity securities with readily determinable fair values and all investments in debt securities are measured at fair value in the balance sheet. Investment income or loss (including realized gains and losses on investments, interest and dividends) is included in the excess of revenues over expenses and reported as other revenues unless the income or loss is restricted by donor or law. Unrealized gains and losses on investments are excluded from the excess of revenues over expenses unless the investments are trading securities. Income on investments of donor -restricted funds and endowment funds is recorded as an increase in unrestricted net assets, unless restricted by the donor. Realized gains and losses are computed using the specific identification method. KH utilizes several investment managers to diversify the investment portfolios. Investments in joint venture partnerships which are 501/o or less owned are reported on the equity method of accounting which approximates KH's equity in their underlying net book values. Board -Designated Assets Board -designated assets consist of assets held by trustees under indenture agreements and unrestricted donations and accumulated income which have been designated by the Board of Trustees for expansion. The Board can redesignate these assets at its discretion. 0 Kapi`olani Health Notes to Combined Financial St4tc nents (continued) 1. Organization and Summary of Accounting Pol,cies (continued) Pledges Pledges (uncondiuonal prorruses to give), less an allowance for uncollectible amounts, are recorded as receivables in the year made. Restricted pledges are reported as additions to the appropriate temporarily or permanently restricted net asset balance. Temporarily and Permanently Restricted Net Assets Restricted net assets consist of donations and other funds where restrictions have been imposed as to their use by the donor for specific operating purposes. Temporarily restricted net assets consist of those net assets whose use by KH has been limited by donors to a specific purpose or time period. Permar.,maly restricted net assets consist of the principal amount of net assets whose use by donors has been restricted in perpetuity. Deferred Financing Costs Costs of issuing long-term debt have been capitalized and are being amortized over the terms of the obligations using an interest method. The amortization is included in depreciation and amortization expense. Statement of Cash Flows Highly liquid investments with a maturity of three months or less when purchased are considered cash equivalents. Net Patient Service Revenue and Accounts Receivable Net patient service revenue is reported at the estimated net realizable amounts from patients, third -patty payors, and others for services rendered. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined. Significant concentrations of gross patient accounts receivable include the Hawaii Medical Service Association - 17%, State of Hawaii's QUEST program - 17%, Medicaid - 25%, and Medicare - 13% as of June 30, 1999. 10 Kapi'olam Health Notes to Combined Financial Statements (continued) 1. Organization and Summary of Accounting Policies (continued) Charity Care KH will treat patients regardless of their ability to pay. An established charity care policy sets guidelines to determine which patients qualify for care given at no charge. Since KH does not pursue collection from qualified charity care patients, they are not reported as revenue. Recorded charity care provided in both 1999 and 1998 comprised less than 1% of total revenue. Revenues KH's purpose is to provide diversified health care services primarily in the State of Hawaii and secondarily in the Pacific Basin. Hence, operating revenues include those generated from direct patient care, rentals from medical office buildings, grants, fundraising activities, investing activities, and other revenues, all of which are either directly related to or used in support of the operation of KH's facilities. Conversely, unrestricted donations and disposal of equipment are reported as nonoperating gains and losses. HMO Premium Revenue Premiums are billed in advance of the respective coverage period and are recorded as revenue in the month services are provided. Group contracts are generally twelve months in duration, subject to cancellation, and are subject to rating, benefit and other changes negotiated on an annual basis. HMO Medical Claims Expense KHH contracts with various health care providers for the provision of certain medical care services to its members. The cost of health care services provided or contracted for is accrued in the period in which it is provided to a member based in part on estimates, including an accrual for medical services provided but not reported to the HMO. Reinsurance premiums are included in health care costs, and reinsurance recoveries are reported as a reduction of related health care costs. 12 t` Tr__ Health Notes to Combined Financial Statements (continued) 1. organization and Summary of Accounting Policies (continued) Fair Value of Financial Instruments The carrying amounts reported in the balance sheet for cash and cash equivalents, receivables, accounts payable and accrued expenses approximate fair value due to the short-term nature of these instruments. Fair values for long-term debt are estimated using quoted market prices of similar types of borrovines. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported m the financial statements and accompanying notes. Actual results could differ from those estimates. Pension Disclosures In February 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 132, "Employers' Disclosure about Pensions and Other Postretirement Benefits" (SFAS 132). SFAS 132 revises the disclosure requirements of Statements of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions", No. 88, "Accounting for Settlements and Curtailments of Defined Benefit Pensions Plans and for Termination Benefits" and No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." SFAS 132 does not change the recognition or measurement of pension or postretirement benefit plans, but standardizes disclosure requirements for pensions and other postretirement benefits. KH adopted the provisions of SFAS 132 effective July 1, 1998. Reclassifications Certam 1998 balances have been reclassified to conform with 1999 presentation. 13 Kapt `olani Health Notes to Combined Financial Statements (continued) 1. Organization and Summary of Accounting Policies (continued) Functional Classification of Expenses The functional classification of expenses by major classes of program services and supporting activities are summarized as follows: Acute hospital care Managed care Other health care related activities Management and general 2. Investments 1999 1998 S 147,124,083 55,371,761 144,722,390 29,835,324 2,374,327 83,890402 82,862,577 S 286,3869046 S 259,794,618 Investments stated at fair value as of June 30 are as follows: Designated by Board for expansion: Equity securities U S. Treasury and agency obligations Corporate debt securities 1999 1998 S 67,845,913 S 82,859,192 109676,259 17,336,123 37,904,262 22,847,987 116,426,434 123,043,302 14 Kapr`olani Health Notes to Combined Financial Statements (continued) 2. Investments (continued) Proiect funds held by trustee under bond indenture agreement: Cash and short-term investments U.S. Treasury and agency obligations Restricted by donor or grantor: Casi, Equity securities Real estate U.S. Treasury and agency obligations Corporate debt securities Less current portion of project funds held by trustee under bond indenture agreement 1999 1998 S 599,130 $ 30,607 7,955.447 18,271,758 8,554,577 18,302,365 676 1,019 2,808,724 1,764,163 53,178 53,178 1,181,779 1,258,053 420,487 220,074 4,464,844 3,296,487 8448,618 7,565,723 S 120,997437 S 137,076,431 Investment income and gains for assets limited as to use, cash equivalents, and other investments are comprised of the following for the years ended June 30, 1999 and 1998: Income: Interest income Realized gains on sales of securities Other changes in unrestricted net assets: Unrealized gains on other than trading securities 1999 1998 S 6,215,919 S 6,774,307 6,8129579 7,227,649 S 13,028,498 $ 14,001,956 S 811,271 S 3,558,285 15 Kapt`olani Health Notes to Combined Financial Statements (continued) 3. Property and Equipment Property and equipment is summarized as follows: Land Land improvements Buildings and improvements Fixed equipment Major movable equipment Minor equipment Capitalized leases Construction in progress Less accumulated depreciation and amortization Property and equipment, net 4. Pension Plans Benefit obligation Fair value of plan assets (primarily marketable equity securities) Funded status Accrued benefit cost recognized in the Combined Balanced Sheets Weighted Average Assumptions: Discount rate Expected return on plan assets Rate of compensation increase Benefit cost Employer contributions Benefits paid 1999 1998 S 15,900,255 S 15,900,255 1,183,852 1,166,424 164,577,657 154,070,505 10,272,632 9,927,156 91,329,311 82,480,478 1,954,860 1,825,434 2,988,956 2,988,956 4.877.616 5.386.087 293,085,139 273,745,295 (127,328,455) (111,517,080) S 165,756,684 S 162,228,215 Jane 30 1999 1998 S 409800,000 $ 36,438,000 41,971,000 39,468,000 S 1,171,000 S 3,030,000 $ 2,841,316 $ 2,631,847 7.50% 7.50% 8.00% 8.00% 5.00% 5.00% S 1,988,000 $ 2,207,000 S 1,778,000 $ 2,665,000 S 1,315,000 $ 2,259,000 16 Kapi`olanl Health Notes to Combined Financia: -::Lements (continued) 5. Long -Term Debt and Note Payable to Bank Series 1996 Special Purpose Revenue Bonds (face value of 555,000,000 less unamornzed discount of $394,731 based on effective interest rates ranging from approximately 4.75% to 5.60%), interest payable semi- annually at rates ranging from 4.95% to 6.25%, pnncipal payments in varying srmual amounts ranging from $605,000 to $2,475,000 due July 1999 through 2019; $11,780,000 due July 2020, $12,520,000 due July 2021 Series 1993 Special Purpose Revenue Bonds (face value of $103,695,000 less unamorhzed discount of $1,863,736 based on effective interest rates ranging from approximately 4.009/6 to 7.00°/.), interest payable semi-annually at rates ranging from 520% to 6400/6, principal payments in varying annual amounts ranging from 51,770,000 to S3,300,000 due July 1999 through 2003, $19,780,000 due July 2008; S26,890,000 due July 2013, and 545,015,000 due July 2019 Series 1991 Special Purpose Revenue Bonds, interest payable semi-armually at rates ranging from 6.80% to 7.00%, principal payments in varying annual amounts ranging from 5860,000 to 5990,000 due July 1999 through 2001 Cary forward 1999 1998 S 54,605,269 5 54,587,120 101,831,264 103,421,045 2,775,000 3,585,000 159,211,533 161,593,165 17 Kapi'olani Health Notes to Combined Financial Statements (continued) 5. Long -Term Debt and Note Payable to Bank (continued) Cary forward Note payable with interest at 12%; principal and interest payable in monthly installments ranging from $34,367 to 555,612 through July 2003 and the balance due on August 1, 2003 with the option to extend the maturity date to August 1, 2006; collateralized by all leasehold improvements, furniture, fixtures and equipment of KH's corporate offices with a carrying value of approximately $4,294,000 *71=4 Less current portion 1999 1998 $ 159,211,533 S 161,593,165 1,990,130 2,188,982 873,418 927,167 162,075,081 164,709,314 (3,620,794) (2,652,740) S 158,454,287 S 162,056,574 The 1996, 1993, and 1991 Series Special Purpose Revenue Bonds are secured by a security interest in the gross receipts and pledged assets of the Obligated Group (KH - parent company only, KMCWC, and KMCPM) as defined in the Master Indenture. The 1993 Bonds are subject to redemption on or after July 1, 2003, at redemption prices ranging from 100% to 102% of the principal amount of the bonds being redeemed. Series 1993 term bonds have mandatory sinking fund requirements effective July 1, 2004, payable in annual amounts ranging from $3,490,000 to $8,635,000. In January 1993, the Obligated Group made an advance refunding of $65,665,000 of the Series 1991 Special Purpose Revenue Bonds, by issuing Series 1993 Special Purpose Revenue Bonds and purchasing Government Obligations deposited with an escrow agent under an Escrow Agreement. The principal and interest on such Government Obligations provides sufficient funds to pay the principal and interest on the Series 1991 refunded Bonds. The outstanding principal balance on the refunded Bonds which were not included in the accompanying financial statements amounted to $65,665,000 as of both June 30, 1999 and 1998. f.] Kapi'olani Health Notes to Combined Financial �,:_:-_ments (continued) 5. Long -Term Debt and Note Payable to Bank (continued) Approximately $15,800,000 of the Series 1993 bonds (net of discount and issuance costs) were isz_-,c. to finance renovation of and construction at KMCWC and purchase additional equipment (the "1993 KMCWC Protect') as described in the Indenture. KMCWC completed this project in August 1995. In April 1996, the Series 1996 Special Purpose Revenue Bonds of $55,000,000 were issued to assist the Obligated Group in financing or refinancing, or both, new construction and renovation and equipment purchases (the "1996 Kapi'olani Project's as described in the Indenture and Loan Agreement. KH completed this project in April 1999. As of June 30, 1999 the Obligated Group had an outstanding irrevocable standby letter of credit in the principal amount of $1,059,300, expiring July 1, 2001, to fund its Bond Reserve Fund. An annual commitment fee is payable ranging from $8,000 to $18,600 based upon the Obligated Group's long-term debt service coverage ratio. In addition, $8,448,618, included in current assets, is held by the Bond Trustee to fund current principal maturities and accrued interest payable. Long -tens debt maturities for the years succeeding June 30, 1999 are: 2000 $ 3,620,794 2001 3,824,735 2002 3,925,336 2003 4,273,399 2004 4,536,548 Thereafter 141,894,269 $162,075,081 Interest pard during the years ended bine 30, 1999 and 1998 was approximately $10,232,738 and 512,877,902, respectively. The fair value of long-term debt as of June 30, 1999 and 1998 was approximately $171,775,070 and $181,891,332, respectively. 19 Kapi'olam Health Notes to Combined Financial Statements (continued) 5. Long -Term Debt and Note Payable to Bank (continued) KH also has available a $10,000,000 unsecured revolving line of credit, expiring April 17, 2000. The interest rate on the line is a floating rate based on the bank's base rate. KH also has available a $1,000,000 irrevocable standby letter of credit to support the obligations of KHH as a State of Hawaii QUEST provider. The letter of credit is automatically renewable annually at the discretion of the bank. 6. Leases Leases on various types of office and storage space, office equipment and finniture are classified as operating leases. Future minimum lease payments under noncancelable operating leases are as follows: Year ending June 30 2000 S 1,806,332 2001 1,389,621 2002 1,399,966 2003 1,501,779 2004 948,165 Thereafter 2,025,507 Total minimum lease payments S9,071,370 Rental expense paid during the years ended June 30, 1999 and 1998 was approximately $1,728,000 and 51,939,000, respectively. 7. Commitments and Contingencies Unemployment Claims KH is self-insured for substantially all of its unemployment claims. Claims for unemployment are insignificant and expensed when incurred. 4#1 Kapi'olanr Health Notes to Combined Financial Statements (continued) 7. Commitments and Contingencies (continued) Workers' Compensation Claims KH is self-insured for workers' compensation claims (effective March 1994, KMCPM began self-insuring its workers compensation claims under KH's program). In lieu of a bond, the System has an outstanding letter of credit in favor of the State of Hawaii in the principal amount of 51,000,000, as requited by self-insurance regulations of the State. The letter of credit is automatically renewable annually, but not beyond February 1, 2000. Claims -ustration is performed by a claims adjusting company. The claims adjusting company provides KH with estimated claims payments which KH accrues as its workers' compensation expense. In the opinion of management, adequate accruals have been provided for known and incurred but not reported workers' compensation claims. Medical Malpractice Insurance KH is insured for medical malpractice claims. Generally, medical malpractice insurance policies have included a shared deductible provision, which is currently 50% of the indemnity loss, up to a 525,000 maximum deductible per claim. Primary coverage is $1,000,000 (occurrence basis) with excess coverage of S19,000,000 for KMCWC and $9,000,000 for KMCPM (claims -made basis, with a seven year prepaid discovery period). Medical malpractice expense, including estimated accruals for amounts below the deductible provisions, totaled $2,263,000 and 52,056,000 for the years ended June 30, 1999 and 1998, respectively. Debt Service Forward Delivery Agreement KH has executed a debt service forward delivery agreement with a financial institution related to the semi-annual payments on the Series 1993 Special Purpose Revenue Bonds in which it received a payment of 51,727,000 in exchange for the potential interest earnings on the semi-annual payments placed in escrow prior to payment to the bond holders. If KH terminates the agreement, it will be obligated to reimburse the financial institution for its economic losses incurred as the result of the termination. Such losses will be determined at the date of termination. The financial institution has the right to terminate the agreement commencing in 2004. If it elects to do so, KH would be obligated to reimburse it up to a maximum of 52,650,000. Management has no present intention to terminate the agreement. 21 Kapi'olani Health Notes to Combined Financial Statements (continued) 7. Commitments and Contingencies (continued) Health Systems Affiliation Agreement In March 1996, KH, Wilcox Health System ("Wilcox'l and The Queen's Health Systems ("QHS') entered into a Health Systems Affiliation Agreement ("Agreement') where KH and QHS agreed to make grants of $5,750,000 to Wilcox ($3,500,000 from KH and $2,250,000 from QHS) over the next four years provided that Wilcox satisfy certain financial and operational conditions. In November 1997, the agreement was amended where KH and QHS agreed to make additional grants of $1,000,000 to Wilcox ($500,000 from KH and $500,000 from QHS) in equal installments over the next four years beginning January 10, 1998 provided that Wilcox continues to satisfy the certain financial and operational conditions. The agreement was further amended in February 1999 to provide for a change in the tuning of cash payments, but not the total amount to Wilqox. Under the amendments, KH will pay $63,079 per month through February 2002, provided that Wilcox satisfies certain financial and operational conditions. As of June 30, 1999, KH recorded an accrual of $949,000 for its obligation under the Agreement. Additionally, KH and QHS purchased the land under the Kauai Medical Group facilities from Wilcox for $1,085,000, which is included in the grant payments and split equally between KH and QHS. KH and QHS were each allowed to appoint one member to Wilcox's Board of Directors and one member to the Wilcox physician group's board of directors. Other During 1998, management became aware that certain billing errors had occurred in the Kapiolani Home Health Services and Kapiolani Extended Care subsidiaries. Settlement of approximately $4 million was made in August 1999 and has been accrued as a charge in the accompanying statement of operations. An affiliate of KH filed an initial application for tax exemption which was denied. As of June 30, 1999, the denial was on appeal. In July 1999, the tax exemption was granted by the Internal Revenue Service subject to agreed upon changes which include the closure of Partner's Health Hawaii in which one of Kap'iolani Health's affiliates is a partner. W, Kapi'olani Health Notes to Combined Financial Statements (continued) 8. Related Party Transactions A joint venture investment of KH provides laundry services to KH. Charges for services totaled 3964,000 and $944,000 in 1999 and 1998, respectively. Premiums paid to Pacific Health Care, a 20% owned affiliate totaled $349,000 in 1998. No premiums were paid to Pacific Health Care in 1999. KH paid approximately $6,634,000 and 56,422,000 for laboratory services provided by a joint ventur_ in 1999 and 1998, respectively. Payments made to Partners Health Hawai'i for management fees totaled $709,000 and $829,000 in 1999 and 1998, respectively. Notes receivable from an affiliate totaled 5375,000 as of June 30, 1999 and 1998. 9. Restructuring Charges In view of current operating trends and future projections, KH has decided to focus on its primary lines of business, operating hospitals and operating a health plan. Accordingly, management decided to dispose of or discontinue certain operations which it deemed outside of the focus of operating KMCWC, KMCPM and KHH. Management implemented a plan to exit the Home Health/Extended Care businesses, the physicians' practice management business and the development of a new physician's office and chmc site in Leeward Oahu. This plan was approved by management and the Board of Directors in the fourth quarter of the year ended June 30, 1998. In addition, a program to increase operating efficiency and reduce expenses was approved in the fourth quarter of the year ended June 30, 1998. Costs for termination benefits, lease obligations and fixed assets related to the restructuring amounted to approximately $3,000,000 in 1998. 23 Kaprolani Health Notes to Combined Financial Statements (continued) 10. Subsequent Event - Reorganization of Health Insurance Business In October 1999, KH and KHH entered into a Reorganization Agreement with Hawaii Medical Services Association, ("HMSA'). Under the Agreement, effective November 1, 1999 substantially all of KHH's commercial health insurance contracts will be assigned to HMSA. The assigned contracts expire at various dates through January 2001, the majority expiring in mid -2000. KH and KHH remain contingently liable for aggregate losses on the assigned contracts. No consideration will be exchanged in connection with the assignment. KHH will retain its Medicaid (QUEST) business, which will be operated under a third party administration agreement with HMSA. The QUEST contract between KHH and the State of Hawaii expires June 30, 2002. KHH will continue to operate the State Health Fund contract, which expires in June 2001. Management's assessment of the costs of the reorganization through January 2001 is approximately $2.4 million, which will be accrued as a charge in the fiscal year ending June 30, 2000. 11. Impact of Year 2000 (Unaudited) General Description of the Year 2000 Issue and the Nature and Effects of the Year 2000 on Information Technology (IT) and Non-iT Systems The Year 2000 Issue is the result of computer programs being written using two digits rather than four to define the applicable year. In any of KH's computer programs, date - sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, bill for services, provide patient care, or engage in similar normal activities. KH determined that it will be required to modify or replace significant portions of its software and certain hardware so that those systems will properly utilize dates beyond December 31, 1999. KH presently believes that with modifications or replacements of existing software and certain hardware, the Year 2000 Issue has been mitigated. 24 Kapi'olani Health Notes to Combined Financial :::::t--ments (continued) 11. Impact of Year 2000 (Unaudited) (continued) General Description of the Year 2000 Issue and the Nature and Effects of the Year 2000 on Information Technology (IT) and Non -IT Systems (continued) KH's plan to resolve the Year 2000 Issue involves the following four phases: assessment, remediation, testing, and implementation. To date. KH has fully completed its assessment of all systems that could be significantly affected by the Year 2000. The completed assessment indicated that most of KH's significant information technology systems could be affec:e'. including the general ledger, patient accounting, clinical, medical records, and internal communication systems. That assessment also indicated that software and hardware (embedded chips) used in medical equipment also are at risk. In addition, KH has gathered information about the Year 2000 compliance status of its significant suppliers and subcontractors and continues to monitor their compliance. Status of Progress in Becoming Year 2000 Compliant Overall, KH is approximately 92% complete with all activities to remediate, test and implement compliant versions of its IT dependent systems, including the preparation and testing of contingency plans. Nature and Level of Importance of Third Parties and their Exposure to the Year 2000 KH is 100% complete with the identification of non -IT dependent business partners. KH has identified approximately 60 mission critical business partners whose Year 2000 compliance or non-compliance could materially impact KH's ability to operate. These range from patient care affecting clinical partners to public utilities, insurance payers, financial institutions, and providers of governmental services. KH is monitoring the efforts of these partners to achieve Year 2000 compliance which in nearly all cases, appear to be substantial. In cases where certain partners do not appear to be making substantial progress, KH has developed contingency plans so that the other party's failure to comply will not disrupt KH's operations. The process of completing and testing the contingency plans will continue through the remainder of 1999. 25 Kapi`olani Health Notes to Combined Financial Statements (continued) 11. Impact of Year 2000 (Unaudited) (continued) Costs of the Year 2000 Effort KH is utilizing both internal and external resources to reprogram, or replace, test, and implement the software and operating equipment for Year 2000 modifications and to work with mission critical business partners to assess and if necessary mitigate their compliance. The total cost of the Year 2000 project is estimated at $6,500,000 and is being funded through operating cash flows. To date, KH has incurred approximately $5,250,000 ($4,900,000 expensed and $350,000 capitalized for new systems and equipment), related to all phases of the Year 2000 project. Of the total remaining project costs, virtually all will be expensed, approximately half the remaining amount being budgeted for retention incentive to be earned in the fiscal year ending June 30, 2000. PV 1998 INCOME TAX RETURNS KAPPOLANI MEDICAL CENTER FOR WOMEN AND CHILDREN NERNST & YOUNG LLP a 2400 Pauahl Town Phom 808 531 2037 1001 Bishop 86ad Honolulu, Howell 98813 Instructions for filing KAPI'OLANI MEDICAL CENTER FOR WOMEN AND CHILDREN Form 990 with Sch. A - Exempt Under 8011c►13) for the period ended June 30, 1999 r• r r r r r r r r r a a r r r r r r r r 00 0 Signature... The original return should be dated and signed by an officer of the organization. Filing... The signed return should be filed on or before May 15, 2000 with... Internal Revenue Service Ogden, UT 84201-0027 Payment of tax... No payment of tax Is required. To document the timely filing of your tax returnls), we suggest that you obtain and retain proof of mailing. Proof of mailing can be accomplished by sending the tax raturnls) by registered or certified mall (metered by the U.S. Postal Service) or through the use of an IRS approved delivery method provided by an IRS designated private delivery service. •rarrrrrrrrrrrrrrrrrrrrr• %"000 1000 Form 990 Return of Organization Exempt From Income Tax CU 1 Contributions, gift, grants, and similar entomb neelved: STMT 1 11 Unger section 601s(t) of th Internal Rave qd• /exec t blagk tori benefit trust foUndation� or 495��a�(1) ndneae4npt or Its trust (°o �16°Q �g Department of the Tnsaury or private section to Indirect public support ...................... 111bi 3,560,676. NOW The me a CWV this MIUM to 380MV State r nKmArmmnft oponti°ost° IntemalR Service croankedon of A For the 1996 ealenda ea O tax a earl dnine 07/01 1996 and endl LB / 30 19 99 B cheokt Flene C Home of organbslfon 0 Twoloyer)dendacaenn ntwrtew Chang. d vents KAPI'OLANI MEDICAL CENTER FOR WOMEN AND 3 Membership dues and assessmsris................................ X0°1°"ma tried w CHILD N 99-0177360 nWm I" print typo• Number and street (w P 0 box 6 malt is not dalMred ts street sddraes) Roomtsuke ■ Tolephens mambo mm ace a Net rental Income or (les") (subtract One Sb from Ens 0s,)s ................ ...... . E"'&Maw malum �'om° 55 MERCHANT STREET, 24TH FLOOR 7 Other Investment Income (ascribe 1PT EME309,979, 808 535-7355 tMuV erg for weVuc- dons City or town, stale w country, and LP + 4 p awe► s ewmptlan eppnean ateIHO�O�IJLU- HI 96913 npordh G Type of organization --J� LXj Exempt under section 501(c) ( 3 ) -4 (Insert number) OR ► Lj section 4947(m)(1) nonexempt Charitable bud H (a) Is this s group return filed for sffiliates7. • , , , • .. , U Yw U No 1 If either box In H In chocked Mw; ergo fair dplt group exemption number (GEN) Is. (b) If -Yes; enter the number of affiliates for which thle return Y Oed• ► V J Accounting method Cash X Accrusl C la tab • r naw noun =rag IOean Mare a Yw x NO Other • ► K Check hoe ► If the organization's gross receipts are normally not mon than $25,000 The orgenbatldn need not file a taken with ds IRS; but If it receNed a Form 900 Package In the mall, 0 should file a return without fksneai dots Some states require a complete returIL u....• e...,.. swn_ ..A. ..A ew ara.-draeene wlrr sec mcnins laaa ern 3100.000 and fefet aasstr tsas ern 3260.000 stand of rw ,es For Paperwork Reductlon Act Notice, see page 1 of the s•(asrabe Owvuaucm F011llese (naas) tatsrerow ROF19F 1018 06/10/2000 14.30:46 V8.07.01 10076361 4 Revenue Expenses, and Changes In Net Assets or Fwd Balartces Bee Specific Instructions on 13 1 Contributions, gift, grants, and similar entomb neelved: STMT 1 11 a Direct public support ....................... to 541 043. to Indirect public support ...................... 111bi 3,560,676. 0 Government contributions (prangs) , • , .. • • .. , , , ..... 1 a 4534 708 d Total (add lines 1a through 1c) (attach schedule of eorgribama) (cash$ 8.834.424. noncroshs ) . , ......... td 8,634,424. 2 134,764,613, 2 Program service revenue Including govemnsnt few and oar tracts (from Pan VII, Ine 93) • . , • . , . • 3 3 Membership dues and assessmsris................................ 4 98,040. 4 Interest an savings and temporary cash hvo*rwds . . ...................... s 0 . . . ........... 0 Dividends, and Interval from securities .............. .. 0 ■ Gros rants ........................... •a 1 9 7 IsLace rental ;erhass ....................... Will[ a Net rental Income or (les") (subtract One Sb from Ens 0s,)s ................ ...... . a 8 31,041. 7 Other Investment Income (ascribe 1PT EME309,979, s ■ Groes amount from este Or assets Char A see MOtiw then Inventory ........... 790 0s, b Lees. Cost or other beds and SaIw NOW0 3 64.111111tl a Gain or (loss) (attach schedtaa) . ..... 3 5 R Ba -3 If Not gain or (lose) (cambia Ors ft cOkmm W and (B)) ....................... s 4.098-152, s special events and activities (olYah sdndtae) a Gross revenue (net I I - $ d contributions reported on Ors 1e), , , , , , , , , , , , , , , , , 0s, b Lw' direct expenses 011w than ftrA* G aparsas ........ 0 b a Net Income or (bee) from special ovaries (subtract 60 Ob from Ins 0s)• ............ so 110111110111duras Gross sales of Inventory, Was rand allowances ....... Oe 9 9,798, Is Less cost of goods ecd . . . . . . . ..... ..... .. os, 179 o Gross profit or (loss) from Sales of Inventory (BOW theihedia) (etrbtracl O as N)b fmm Ins is,) ..... f 9 1 11 Other revenue (from Part VII, M 103) ............................... 12 155.259,589, 12 Total revenue add lines td 3 4 S be 7 8d(k: 14 and 11 • . • • • • • • • • 13 Program services (ham 1100 44, colum (B)) ....... 14 Management and general (Som Ins44, I'M 'h (C)). ........................ 13 98,295,716, 14 0 10 10 FundnNina (ham bas 44, coknm (0)) ................ 0 21,561,410, 7 164,307,197, W 18 payments to affiliates (attach schocktia) ... . . . ....... SS�. STATJEMENT. 4.. . ................. Onim ........ 17 Total expenses add tines 10 and 44 u 18 Excess or (denck) for the year (statrad kis 17 from hs 12) ...................... Is - s 1 - 1,986,991,Y et 10 Net assets or fund belances at beginning of year (from M 73, column W) . . , 20 Other changes In net assets or furl tlaMces (ntimed exgansam) STMT. 15.... STMT. !I..20 _ 121 Nit ■ sets or fund bolonces ate ,es For Paperwork Reductlon Act Notice, see page 1 of the s•(asrabe Owvuaucm F011llese (naas) tatsrerow ROF19F 1018 06/10/2000 14.30:46 V8.07.01 10076361 4 Form 990 198 — Pim 2 t8etement of All organizations must complete column (A) Coxnra (B), (C), and (D) an ne IL, for Seddon 501(e)(3) and (4) argertuars Do not Include amawitr reported m bre ■ wit wit wit a/LL �•I JO-�I (A)TOM (a) Proprn I (c) Management (o) Fundraaeig 22 Grants and allocations (attach schedWs) (24776,573, 22 7.834.277. 7 834 277 23 specMk sesdstmm to nom"is (eneM scrodde) 27 24 BeneOte paid to or for rrarrtlers (Bosch echedu4) 24 26 Compensation of officers, directors, etc 26 NON 2e Other salaries and wages , , . , , , 28 48 775 459. 28 777 521. 19 997 938. 27 Pension pian contributions , , , , , 27 1 231 853. 728 793. 505,060, 2e Other employee benef8s . , .. . , 26 4.727.453. 2 789 197. 11938125 ' O 2e Payrol taxes .............. 29 3,875 048. 2,286,277 . 1 68 789. 30 Professional funtlrelsing fees , , , , , 30 31 Accounting fess , , , , , , , , , , , , 31 32 Legal fees . . . . . . . . ....... 32 16 042. 15,042 . 33 Supplies,,,,,,,,,,,,,,,, 3] 12 736 960. 11 811 711. 1,124,249. 34 Telephone,,,,,,,,,,,,,,, 34 399 520. 235,717 . 189 803. 36 Postage and shipping ......... 36 3e Occupancy 3e 1,239,184. 731 119. 508 065. 37 Equipment rental and maintenance, , 37 648 315. 382 608. 285,809. 3e Printing end publk•tlors , , ..... 3e 39 Trawl ................. 39 202 485. 119 488. 83,019. 40 Conferences, converdona, and rwsN ill • 40 41 Interest,,,,,,,,,,,,,,,,, 41 4 253 289. 2,509,429. 1 74 840, 42 Depreciation, d.petbneeo.(.tuaw.lir),, 42 7.795.980. 4 699 628. 3,190,352 43 Other epense(tirnin) •STMT_ B _ -s 48 991 944. 36 89 075, 13 299 889. b 43b -------------------------- e3 d-------------------------- -------------------------- �--------------- --�-..-�a-d�---- 44 .a�r+e±.�...(o mu(etN1. n l.. rows as .- -144 1142,725, 787.1 98, 295.716.14 Reporting of Joint Costs. - Did you report in column (8) (Program services) any Join costs from a combined educational campaign and fundralsbrg solir l H, n9 , , , , , , , , , , , , , • , . ► ❑ Yet ®NO If ties; .rtr 0) the aporspste amount of these joint owls e , IN) trie amount alloceW to Proprrd srdew IN , What In the organlsstian'sprtmaryes•rrgtwpo.N ►_TQ_eRO1LIQE HE�►LJti%�►RF ___-- -- I �� AN organization must describe their exempt purpose achieve, m In a der and concha manner. stet fM number (A - foratil" )and of diarrb served, publication Wind, etc DNcuaa schleverarae that we not measure is (section 501(c)(3) aha (4) N) ergs, and 411e76q(1) organisation end 4947(•)(1) nonexempt charitable touts must also enter 9s amount of grrds and allocations b oars) urate, tat opaael lir • ROUT I MCMS.? I TbL_ IiERV I CES :STATEKILI T_Z4 ---------------------------------------------- ---------------------------------------------- le ANCILLARY_SERVI ------------------ e KAP I ' OLAN 1 —MILD 1 CAIj CENTER FOR WQW11_A— CkIJIMI Q¢ AWAR__--_____ VARIOUS GRANS TO ORGAN I SAT I ON_S__ 1_N_ IHEJ OjtIJ11�1W TY—TO MM I Q,- ___ HEA_LTHCAR_€_ SOC I AE SERV I C_S_ AND _EpUCtA? I ----------- (Grants •nd allocations $ 7.834.277.1 7,834 d --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Grant@ and allocatlar e Other proaram services attach schedule Grants and albcatlanw f Todh of Proerem 8ervlee Expanses (ahoWd •Dual ane 44, column (B). ProDram sernese)• • • • ► 98 .286 lie 1 080 5OF12E 1018 05/10/2000 14:30:45 V8.07.01 10078381 5 Foimeaonaael 99-0177350 Balance Sheets (See Specific instructions on page 20.) Note: N"oro required, attached schedules and amounts within the deacnption (A) column should be for end -of -year amounts only Beginning of year End (of year 46 Cash - non -Interest-bearing .. ....................... . 46 Savings and temporary cash investments ................... . 47s Accounts receivable , , , , , , , , , , , , , , , b Less allowance for doubtful account: , , , , , 60 Accounts payable and accrued experness , , , , , , , , , , , , , , , , , , , 61 Grants payable ........................ . . 62 Deferred revenue ...................... STMT. .12... 43 Loans from officers,directors, trustees, and key employees (atlas I schedule) . 3 64a Tax-exempt bond flabildes (attach schedule) ........ STMT..18.. . b Mortgages and other notes payable (attach schedule) , , , , , , , , , , , , 66 Other liabilities (describe lo. SEE STATEMENT 14 ) 46a Pledges receivable , , , , , , , , , , , , , , , , , 1 46• b Less allowance for doubtful accounts . , , , , AIN 49 Grants receivable . . ................ ........ . 67 60 Receivables from officers, directors, tnlstees, and key employees 89 28 4 '177.323.540. (attach schedule) .............. ................. . Temporarily resold .............. ........... Sin Other notes and loans receivable (attach 1 66 schedule) 618 wb 3,851,042, , ..... , „ Less allowance for doubtful accounts , , 61 b i 62 , , , Inventories for sale or use !J 63 , , , , , , , „ , , , Prepaid expenses and deferred charges .................... , , , „ , ........ . 64 Investments - securities (attach schedule) SEE. STATEMENT. 9.... . Capital stock, cruet principal, or current Ands , , , , , , , , , , , , , , 66s Investments - land, buildings, and d 71 equipment bask , , , ,,, , , , , ,, , , , , , , 15581 53.178 b Leas accumulated depredation (attach Retained earnings, endowment, accumulated [coma, r other funds , , , , schedule) .. ... ... ........ 6611 Total net assets or fund balances (add Ines 07 through 09 OR lines 69 Investments - other (attach schedule) ., 67■ Land, buildings, and equipment basis STMT, ,1 p 67s 143 249 895 b Less accumulated depredation (aroach 188 357 039.177 329 8 0. schedule) , 67b 84 213,372 7L 66 Other assets (describe ► SEE STATEMENT /1 ) 60 Accounts payable and accrued experness , , , , , , , , , , , , , , , , , , , 61 Grants payable ........................ . . 62 Deferred revenue ...................... STMT. .12... 43 Loans from officers,directors, trustees, and key employees (atlas I schedule) . 3 64a Tax-exempt bond flabildes (attach schedule) ........ STMT..18.. . b Mortgages and other notes payable (attach schedule) , , , , , , , , , , , , 66 Other liabilities (describe lo. SEE STATEMENT 14 ) Form 990 Is available for public Inspection and, for some people, serves as the primary or sole source of Information about s particular organization. How the public perceives an organization in such cons may be determined by the Information presented on Its return Therefore, please make sure the return Is complete end accurate end fully describes, In Part III, the organization's programs and accomplehmerb asp , esioso i sae ancion tntn nRilnr9nnn fl•9n•LR VA 07 01 10078381 0 Organizations that follow $FAB117, check here Jr. U and complete linea 67 through 69 and line 73 and 74. 67 Unrestrleled ..... ............................ 181.238.944.173 89 28 4 '177.323.540. is Temporarily resold .............. ........... 3,728,740.1 1 66 Permanently reatdeted .................. ......... 3.389.349.1 3,851,042, 9 Organizations that do not follow SFAS 117, check hen ►Q and !J complete Inn 70 through 74. 0 70 Capital stock, cruet principal, or current Ands , , , , , , , , , , , , , , d 71 , , , , Pold-in or capital surplus, or lend, building, and equipment Aad , , , , , , , , w 72 Retained earnings, endowment, accumulated [coma, r other funds , , , , 73 Total net assets or fund balances (add Ines 07 through 09 OR lines 70 through 72, column (A) must equal line 19 and column (B) must equal line 21) ............... ... 188 357 039.177 329 8 0. 7a Teed liabilities and net sssetaMund balances (add lines Be and 731 ..... 48 _ 871. 828. 7L 3L .788 _ 18Z _ Form 990 Is available for public Inspection and, for some people, serves as the primary or sole source of Information about s particular organization. How the public perceives an organization in such cons may be determined by the Information presented on Its return Therefore, please make sure the return Is complete end accurate end fully describes, In Part III, the organization's programs and accomplehmerb asp , esioso i sae ancion tntn nRilnr9nnn fl•9n•LR VA 07 01 10078381 0 Reconciliation of Revenue per Audited Financial Statements with Revenue per Return (See Specific Instructions, page 2 a Total revenue, gains, and other support per audited financial statements , , Is. b Amounts included on line a but not an line 12, Form 990 (1) Net unresltzed pains on investments , , i (2) Donated services and use of facilities It (3) Recoveries of prior year grarts .. , , i (4) other ppedNl- STMT 15 i 299.000. Add amount on lines (1) through (4) ► c Line a minus line b , , , , , , , , , 10 d Amounts Included on line 12, Form 990 but not on line a: (1) Investment express, not Included on IYu eb, Form 990 , , , It (2) Other (sps ly) __STMT 1¢__i 972.24f. Add amounts on lines (1) and (2) ► e Total revenue per line 12, Form 990 Instructiaru on Daae 221 Reconcmaiwn OF expenses per Audited Financial Statamergs with Expenses per a Total expenses and losses per P) Taleand wows heals per wok Oevot ro411 audited financial statement , , , it. a b Amounts included on line a but not ------------------------------------------ S TAT on line 17, Form 990 NON (1) Donated services NONE and use of facNtllaa i (2) Prior year adjustments reported on line 20, ------------------------------------------ Form 990,,,,,1 (a) Losses reported an line 20. Form 990 i (4) Omer(spern)- - - _ STMT 17_i 299.a00. ------------------------------------------ Add amounts on Imes (1) through (4). , ► b a Line a minus line b , , , , , , , , , ► a d Amount Included on line 17, Form 990 but not on line a: (1) Investment express not Included on IYu - ------------------------------------------------------------------------------------ ns, Form 990 , , ,i (2) Other (speory) $TMT to i 21.761.410. Add amounts on Imes (1) and (2) , , ► d s Total expenses per line 17, Form 990 ------------------------------------------- (line a plus lined a oyees (List each one even N not compensated; sea (y Name wd addew P) Taleand wows heals per wok Oevot ro411 (q compenesuai (M nate said, ester (o) owasieft ■ is waaleps awn Mare a seswlee 0) EWWM socoui wd ser ailmormse ------------------------------------------ S TAT NON NON NONE ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------ - ------------------------------------------------------------------------------------ ------------------------------------------- 71 Did any oflkr, director, triwtss, or key employes receive aggregate compensation of mors sun 11100,000 flan yea organization and ail related organizations. of which more than $10,000 was prwAded by ft relalad organizations? ► ® Yes ❑ No If -Yes,* attach schedule - sea, Specific Instructions anpop 22 SEE STATEMENT 26 im "10461M SOF12E 1018 05/10/2000 14:30:46 V8.07.01 10078381 7 I Did the organization engage M any activity not previously reported to the IRS? It Yes; *Much a detailed description of each acByYly, .... 76 X 7 Were any changes made In the organizing or governing documents but not reported to the IRS? , , , , , , ,, , 77 X , ,. . , , , , , , If Yoe,' attach a conformed copy of to changes 8 a Did the organization have unrelated business gross Income of $1,000 or mora during Be year covered by this return? ... , .... 78e X b 11 Yes; has It filed a tax return on Form 990.7 for this yew? . 7111b ... ................................. . 9 Was there a liquidation, dissolution, termination, or substantial contraction during the yew? It Yes; attach a statin mert , , , , . , . , . , 79 X 'On Is the organization related (other than by association with a statewide or nationwide organization) through common membership, governing bodies, trustees, officers, etc , to any other exempt or nonexempt organization? ................. 00■ b 1f Yee; enter the name of the organization ►STMT 21 and check whether kis exempt OR nonexempt 11 • Enter the amount of political expenditures, direct or Indirect, as described in the Instructions for line 81 . . . . . . . ............................... 101,1 NONE b Did the organization film Form 1120-POL for this year? . . .. . . . . . . . t1b . . .. . . . . .. . . . .. . ............ . . 12 a Did the organization receive donated services or the we of materials, equlpnwt, or faegRles at no change or at substantially less then fair renal valise? .............................................. t2a X b If Yes,' you may indicate the value of thew theme hie Do not Include the emont as revenue In Part I or as an expense In Part It. (See Inamcfisns for reporting in Part iii) ............................................... 02b I N/A 13• Did the organization comply with the public Inspection requirements for returns and exemption applications? .. . . ... . . .. . ... sea b Did the organization comply with the disclosure requirements relating to quid pro quo contributions? ... . .. . ........... . gab 14a Did the organization sollcR any contributions or gifts MN were not tar dedueffile? 54 ........... . . .. . ............ b If Yes; did the organization Include with every solicitation an exprew ststarent that such contributions or ghee were not tax deductible? ................................................... 4 1t 501(c)(4), (5), or (B) orpenhadoar. • a Were substantially all dues nondeductible by members? ...................... tge b Did the organization make only In-house lobbying expenditures of $2,000 or Me? . . ..... . ... . . ....... . ... . ... tgb If Yes' was answered to mom 85e or 115b, do not complete BSc through 85h below unless the organisMbn received a welder for proxy tax owed for tie prior yaw. c Dues, aweserrwrb, and similar amounts from mon Men ........................ tge d Section 182(x) lobbying and political expenditures .. ....................... t{d e Aggregate nondeductible amount of section 8033(ext)(A) dues nWas................. th f Taxable amount of iobbying and political expandhures (bus 88d lase Me) ................ Joel If Does the organization sleet to pay the section 8033(x) ler on In amou In=? ............................ ti In If section 8033(e)(1)(A) dues notices ware se1d, does the organization agree to skid amp at the aat In B5f o b feaeoaq(e estimate of dues allocable to nondeductible lobbying and political expenditures for the Miming to yell ............... . gh tit 5g1(c)(7) organaalars.—Enter a Initiation rose and capital contributions rnrJum I an Jiro J2 ................................................esa NIA b Groes receipts, Included on Nim 12, for public use of dub facilies .... . . ....... . ... . . •e b N/ e7 501(c)(12) orgutte9os.—Euler a Gross Income ran members or also licken . ... . ....................... t7• b Groes Income from other sources. (Do not not amounts due or gold to ether sources against amounta dos or fecolved from timer.) .. . ... . . . . . . . . ... .. 111714 88 At any time during the year, dM the organization own a 50% or greater ante In a tosble earparalbml or partnership? N Yes; - pl Is Pert a ... ........................................... 9 as a 501k/p) ogentz Sax—Enlr: Amount of tax Imposed on the orgenizetlau dung the yew udr. section 4011 ► NONE , section 4812 ► NONE , section 4956 ► NONE b W1(c)(3) and 501(c)(4) oWnbellora—Did theorgentsNbn engage rt any seoM 4088 exoees bermdt transaction during the year? If Yes; attach a stable on exI I Q each tnrwcllon .......................... .eats a Enter. Amount of tax Imposed on the organization m ons gsm or dlequslhd personal durrg tis yew under sections 4912, 4835, and 4088 ................................................ ► NONE d Enter Amount of tax In 89c, above, reimbursed by the organization , ........................... ► NONE 90 a List the states with which a copy of tlta matem Is fled ► N / A b Number of employees employed In the pay period that Includes Merch 12, 1998 (Bons Instructions.) . . . . . . . . . . . . . . . . . . . . I tOb 1 1 367 Ili Thebooksaretncarsof ► KAPI'OLANI HEALTH Telephoneno.111-808-636-7366 Located at b- 66 MERCHANT ST. 24TH FL. HONOLULU HAWAII 23P«4 ► 90813 92 Seedon 4947(a)(1) nonezempf dm9abfe buetr Virg Form 990 H Ise of Form 1041 -Click hero . . . . . . . . ................ ► and enter the @mount of tax-exempt Interest received or accrued durino the tax veer .. . ► 19! I NONE xv 11111041 1 an anciia 1n1n n9fln/9nnn 1a -an-&% VR 57 01 10076361 B ,m Enter gross amounts unless otherwise Indicated O3 Program service revenue a SEE STATEMENT 28 Unrelated business Income (A)p) Business Amount co code Excluded bv D() Exam code section 513 513 or 514 (p) Amount (q or exempt function Ineoun 1 077 010. 133 687 80 b c d • f M•alcare/Medlcald payn.rx. . . . . . . g Fees and contracts Rom gc ernmed agercMs 04 Membership dues and assessments . . OO Immeetan.Nrer.nesngm.rye.na eamom 0O Dividends and Interest from sea dies . . 07 Net rental Income or (loss) from real estate ■ debt-financed property ....... . b not debt-financed property ...... 93 mot renal imam. a (d) can va., p aeaey . 00 Other Investment Raton ........ 100 o.lner(d)Ran.lrs....ae.re.nee«.rr 101 Net Income or (foes) from special evsrtls . 103 Gross prom or (loss) from ants of Im4enton 103 Other revenue a bPARKING 14 98,046, is 1,831 .0 1 308 18 1 4.098 162. 03 1 03 338,0071 cCAFETERIA 03 852,043 dREIMBURSEMENTS 130 C *OTHER SERVICES 03 61,449, 104 Subtotal (add column (S). (0), and (E)). • 100 Total (add Ms 104, columns (8), (D). and (E)) 1 0 T7 010 11 7 3 .............................. is, 44 7 133-817.BC 146.626.211 Lha Ns. I Explain how each activity for which income N reported N column (E) of Pan VII contrMNd bnpo frilly tothe moo. NON__ Name. a0trees, art0 empbyer IdantlNleatlart I Pereerear of I Nam. of Tedi I End•M•yesl number at corporation or partnershipt° adarra•�14 bus0ess aolNOMe ktootrr somb Please ra a n trw"'e6iri m w , r '" PHIPIMgan« thin a1Mi�) M an si kd;;Zr al'.l b� F;;W s: arry�17ti.Rs�s� (ass u Page .�,-,p•e�y ass'/�//•f / CRAAMIS k. sm Here / C /►W" I -1 //yJ / T)�Oe «v r�ssrs.rd.. F.pa.re Dole ChoakI Aspens s Paid %r/#/W emokmad P.M 1220-62-0047 Preparers FimY veins o ERNST & YOUNG LLP al P� 34-6685596 Use Only youre Ifse3anpbysd) /2400 PAILIANI TOWER. 1001 BISHOPST. and ade.SM, 4111161A1 t)LU NI 31P+410, 21111111,12 60F12E 1018 06/10/2000 14:30:46 V8.07.01 10076381 9 SCHEDULE Organization Exempt Under Section 501(c)(3) DM N, 115 (Form 990) (Except Private Foundation) and Section 501(e), 501(n, 501(k), 501(n), or Section 4947(x)(1) Nonexempptt Charitable Trust Supplementary Inforntatl13n {�(oA Department of the Tneruy See separate kutrertlmr, u COWI.778 intent Revenue serwoe ► Must be completed by the above organizations and attached to their Form 990 or 990-U Name of the OrP lids on KAP I ' OLAN I MED I CAL CENTER FOR WOMEN AND anatsyer isena5 aeerr auanbr CHILDREN 99-0177350 Compensation of the Five Highest Paid Employees Other Than Officers, Directors, and Trustees (Seeinstructionsonpagel List each one If there er% none. e "None in) Name and eddreM or aeon amployor paid nen (b) Title and weave (Q contnbwora to (e) Erpew roan $50,000 houulaper Mad* k)cernasrermn mproyee beets plane &I amount and der TaW reertbea of oetM amplq paid ow. $1) Nam and adesM of amh kdapernernl nater paid iron M $511.000 PI Type of eeNa b 01 1: a a- WAT@NSQNs_ LAS ------------------------------ 109 ALAKEA ST #1580, HONOLULU, I 96813COMTRACTINO 8,400,038, KAP_L_9JAKI_ jN.EQPJRYI9Bt-------------------- 66 MERCHANT STREET, HONOLULU HI 96813 DATA PROCESSING 3,974,873, HAWAII_RESIDENQYPROGRAII_C/0_PI(F_HAt�AIJ_ 100 A AKEA ST 100 HONOLULU, 1 96813PHYSICIAN SERVICES 2,810,248, UNL M LT7_ OE_HAWALI___ JABSOM_____________ 1960 EAST WEST RD., HONOLULU 96822 PHYSICIAN SERVICES 8 0 EMERGEILCY_ PHYS 1 C I ANS__ k.EQ I CAL_ GROUP 1 MONTGOMERY #1300, S RA C 94104PHY§ICIAN SERVIC 3 1.21& Tom ntantnr o1 others raoal v own ✓1513,000 kr ankw ve ► For Paperwork Redueeon Aot Notloe, see page 1 at the instructions ter Farm 0M ani Perm Mea rot► MteM IAM eneewe enee nerenronnat 4A on -AN Ver 017 n1 1nn7R111t1 eaMiMa A raw• eq tees 10 Statements About Activities res No 1 During the year, has the organization attempted to influence national, stab, or sal legislation, including any attempt to influence public opinion on a legislative matter or rebrsndurn7 1 x 11 'Yes; enter the total expenses paid a Incurred in connection with the kdbbykg scUvOMs V,q S Organizations that made an election under section 501(h) by filing Foran 5788 mut complete Part VI -A. Otherorganizations checking 'Yes," must complete Part VI -8 AND attach a statement giving a detailed description of the lobbying activities 2 During the year, has the organization, either directly or indirectly, engaged In any of the following acts with any of Its trustees, directors, officers, creators, key employees, or members of their families, or with any taxable + organization with which any such person Is affiliated as an officer, illrectm, trustee, majorly owner, or pnneipal beneficlany a Sale, exchange, or IssWg of proper ........................................... . bLending of money or other extension of crsdk7....................................... . e Furnishing of goods, services, or facMdm?......................................... . d Payment of compensation (or payment or reimbursement of expenses If more then $1,000)9 . . ............... . e Transfer of any pert of Is Irnoonve «ausb9........................................ . If the answer to any question Is 'Yes,' attach a detailed stabrnenl expbkig the Uarraglone 7 Does the organization maks grants for scholarships, fellowships. sWI ben, abe.? ..................... . 4a Do you have a section 403(b) annuity plan for your employees? ............................... . b Attach a statement to explain how the organization datennlnes that Individuals or organizations naeatvirg greeds Reason for Non -Private Foundation Status (See instructions on pages 2 through 4.) The « anlzatlon Is not a private foundation brace it is (Places deck only OW applicable baa.) a A church, convention of churches, or association of churches Section 170(b)(1)(A)(8. 0 A school Section 170(b)(1)(A)(I). (Also comp . Part V. paps 4.) 7 A hospital or • cooperative hospital service orgeelbn Seniors 170(b)(1)(A)on. I A Federal, stab, or local government or gownnwlY Ink. Section 170(bx1)(AXv). S A medial research organization operated In conjunction with a hospital. Section 170(bxtxll)(a). ander the hospaors nares, sly, 10 ❑andstale 10 --------------------------------------------------------------------------- An organization operated for the benefit of a college or university owned or operated by a govenmrrnlst unit. Season 170(b)(1)(A)(V4. (Aso complete the Support Schedule In Part IV-&) 11 ■ ❑ An orgentu tion that normally receives a substantial part of No support from a govia - so u k or ham the 9srnsrst Pale. Section 170(b)(1)(A)(vl) (Also complete the Support Schedule In Part r*.&) 11 b ❑ A community trust. section 170(b)(1)(A)(vo. (Ales canpI the Support Schedule In Part IV.&) 12 An organization that normally recatvr. (1) more than 33 113% of its support from contributions, rrornberdd4 look and gross receipts from ectivitlas reined to No charitable, ate., furnellorns - subject to cas lah arupllare, and (2) no more Man 33113% of its support from groes Investment Income and unrelated business bxabla a seen (loss ssctiorn 811 too ham bdebnessaa acquired by the organization after Jun 30, 1075 See ssetlm 500(x)(2). (Also complete the support Sehsdde In Pale rIAA.) 13 ❑ An organization that Is not controlled by any disqualified persons (other than foundation monpsn) and supports aparnhatlae described in (1) Ness S through 12 above, or (2) section 501(e)(4), (5), or (8), If they most the last of soction aMs)(3). (ass section 50S(r0(3) ) (a) Nome(s) of supported organtiteUon(s) I (b) Lim names from above +its 14 I An oromtrabn tom[ntrod and ooerslW to test f« outage scfch. Sadlan SOGaN41. (Ses bnbuelbm m rens 4.1 ss+118'I 1 FnC19C 1nlin nR/1nl9nn0 IA -20 -AS V8.07.01 10076381 11 (Complete only If you checked • box on fine 10, 11, r 12) use cash mewed a/accamog. NOT APP L Note: You mI user • w rwanear In mai Imam me ICQUa/ are E nw110d or :slender year lot fiscal year beginnirm In • M1997(bI 1988 a 1995 1994 • Tatsl 18 Gifts, grants, and contributions reeeived (Do not Include unusual anints See Una 28 16 Membership fees received • • • • • • 17 Groes receipts from admiesicn t, merchandise sold or services performed, or furnishing of facilities In any activity that Is not a business unrelated to the organization's charitable, 18 Grces income from interest, dividends, amounts received from pyrrwb on securities loans (section 512(@x5)), rants, royalties. and unrelated business taxable Income (lees section 511 tames) from businesses acquired by the or snizatlon after June 30 1975 • If Not Income from unrelated business activities not Included In Urn 18 ........ . 20 Tax revenuer levied for the organization's benefit and either paid to it or expended on Its behalf .................... 11 The vehue of services or facilities furnished to the organization by a governmental unit without charge Do not Include the value of smokes or facilities generally furnished to the public without charge .............. 22 Other Income Attach ■ ache". Do not Include gain or (less) from sale of capital aaaab tI Total of ling 15 through.......... . 14 Line 23 If Ent 1% of Una 23 ............... is organizations described In lbw 10 or 11: a Enter 2% of amount In column (a), Wr 24 NAT. APP!•.) CABM ► 2a b Attach a flat (which Is not open to public Inspection) showing the nems of and amount contributed by each person (other then a governmental unit or publicly supported organization) whose toed gifts for 1994 through - 1997 exceeded the amount shown In line 2fA Enter On mom of a1 mase excess amsab ................. ► 211 c Total support for section 509(@x1) test Enter Ira 24, cdurn (a). ........................ so. 266 d mn Add: Amounts from ook(a) for Wow Wo18 19 22 261b ............ ► e Public support (Una 26c minus Wit 26d tolso ...................................... ► 1260 I Public support arcerta • Ina 20e (numerator)divided Uri 26c,. ►122f t7 Orgenb utdons descr6ad on Una 12: a For amounts Included In lines 15, 18, and 17 that wrs r .Nm ham a •dlagirslllad person,' attach a flet to show the name of, and total amounts received In each yew from, each'dlequaUlled grass• Enter the sum of such amounts for each year: NOT APPLICABLE (1097) ----------------(1990) ------------------. (1998) -------------------(111x)-------------- b For any amount Included Inline 17 that was received from a nondleguaUfted person, attach a M to show to rarna of, and amass received for each yew, that was more than the larger of (1) 8u amount on line 25 for the yew or (2) 85,000. (Include In 6n Ilei organizations described In Mites 5 through 11, es wait as Indhlduale.) After computing the di'lwwla bsI the @rrhotnt rsosived and the larger amount described In (1) or (2), enter the sum of these differences (IM a cese amounts) ler each yew. (1997) ---------------- (1995) ------------------- (I M) ................... (1994) --------------- c Add Amounts from column (e) for Wes. 15 18 17 20 21 ........... ► 7 d Add* Lits 27a total and ion 27b total , ........... b. 274 e Public support (Urns 27c total minus Wit 27d tobrl) ....................... ...... ► f Total support for section 509(s)(2) test. Enter amount on Ins 23, colu n (a) . . . . . . . . . . . 10.127111 g Public support percentage (IMn 27e (numerator) divided by bos 271(dsnaminalii rD .................. ► 7 % It Unusual Grants: Fran organtsatlon desctbed n tine 10, 11, or 12 that recelved eny unusual grants durifg 1994 glrOrgh 1997, attach • Not (which Is not open to public Inspection) for each year showing the name of the mrtrbulw, the date rod anlotad of the hidand • brief description of the nature of the grant Do not Include Owns grawile In Wry 10. Yaahrdqs an pallis 4. ef2212oes 5OF12E 1018 06/10/2000 14:30:45 V8.07.01 10076381 12 SchWule A (Form 990) 190 99-0177350 Pepe 4 Private School Questionnaire (See instructions on page 4.) (To be completed ONLY by schools that checked the box on line 6 in Part M NOT APPL I CABLE No 29 Does the organization have a racially nondiscriminatory policy toward students by statement in its charter, bylaws, other governing instrument, or in a resolution of its governing body[ ......................... 30 Does the organizabon include a statement of ds racially nondiscriminatory policy toward students N Y Its brochures, catalogues, and other wntten communications with the public dealing with student admissions, programa, and scholarships? . . 31 Has the organization publicized ifs racially nondiscriminatory policy through newspaper or broadcast made dump the period of solicitation for students, or during the registrabon period if it has no solicitation program. In a way that makes the policy known to all parts of the general community it serves? ..................... If "Yds," please descnbe, d "No," please explain (t you need more space, attach a separate afatamerd.) ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- 32 Does the organization maintain the following. a Records indicabng the racial composition of the student body, faculty, and administrative stag! .......... b Records documenting that scholarships and other financial assistance are awarded on a raclei norhdscniminatary lids? ........................................................... c Copies of all catalogues, brochures, announcements, and other written communicetiens to the publc deaing with student admissions, programs, and scholanhlps? ................................. d Copies of all material used by the organhzebon or on its behalf to solicit contributions? ................ If you answered "No" to any of the above, please explain (t you need more space, attach a separate statement.) ----------------------------------------------------------------------------- ---------------------------------------------------------------------------- 33 Does the organization discriminate by race in any way with rasped to ■ Students' rights or privileges? ............................................. . b Admissions policies? .................................................... e Employment of faculty or admintsbalive shin .................................... . d Scholarships or other financial assistance? ....................................... e Educational policies? ................................................... f Use of feeitles7 ..................................................... IIIAthletic programs? ................................................... . Is Other extracurricular acdvltlw? if you answered 'Yee to any of the above, please explain. (If you need more space, attach a separab atsNmork) ----------------------------------------------------------------------------- 34a Does the organization receive any financial aid or assistance from a govemrrentaf agency? .. . b Has the organization's right to such aid ever been revoked or suspended? ....... ... . If you answered 'Yet' to either 34a or b, please explain using an attached statement 3i Does the organization certify that It has compiled with the applicable requirements of sectlom 4.01 through 4.06 •� M 9!!I. •IVll .f /.� !t7 J 11 JI 1 1 -Y /fYMI-l�-\----• _- A1A 'F77070°° GnF79F inin n9rin?9nno IA -20 -AS v8.07.01 10076381 13 Soh•du A Form 990 1 age ' 0 P6 Lobbying Expenditures by Electing Public Charities (See instructions on page 8.) Check here ► a u d the organization belongs to an affiliated group 4 -Year Averaging Period Under Section 601(11) (Some organizations that made a section 501(h) election do not have to complete all of the five columns below. See the instructions fnr lines 45 thmunh 50 nn nave 71 Limits on Lobbying Expenditures (The term "expenditures" means amounts paid or incurred) Affiliated group totals To be completed for ALL shmaq organtratlaw 36 Total lobbying expenditures to influence public opinion (grassroots lobbying) , , , 36 1997 1998 37 Total lobbying expenditures to influence a legislative body (direct lobbying) , , 37 38 Total lobbying expenditures (add lines 36 and 37) ................. 38 39 Other exempt purpose expenditures , , , , , , , , , , , , , , , , , , , , , , , 39 40 Total exempt purpose expenditures (add Innes 38 and 39) , , , , , , 40 41 Lobbying nontaxable amount Enter the amount from the following table - If the amount on line 40 1s - The lobbying nontaxable amount In - 47 Totai Nol over 5500,000 . .. . . . . . . .. .20% of the amount on lege 40 , • • , • • • • , , OnMeroob roreaehte Over 3500,000 but not war 51,000,000 . . . $100,000 plus 15% of the excess over 11500,000 dL Gramme; oeang a M Over 51,000,000 but not over 51,500,000 . , 5175,000 plus 10% of tM me" over 111,000,000 } 41 150% of Ine AIN• Wer 51,500,000 but not over 1117,000,000 $225,000 plus 5% of the axeses over N,500,000 Oraaeroote lo- W a Wer 517,000,000 . . ... . .$1,000,000 . . . . . . .. . . ... . . . 42 Grassroots nontaxable amount (enter 25% of line 41) 42 48 Subtract line 42 from lune 38 Enter -0- H line 42 Is more than line 35 47 44 Subtract One 41 from fine 38 Enter -0- If Kris 41 Is more than 11ne 38 44 4 -Year Averaging Period Under Section 601(11) (Some organizations that made a section 501(h) election do not have to complete all of the five columns below. See the instructions fnr lines 45 thmunh 50 nn nave 71 ® LODDyIng AGUVItY Dy 111101 OctN1g Public Cherltles During the year, did the orgenbelles attempt to Influence aillix , •tate or kreY laglalr95n, ndta 1 9 arrr yes No Amount attempt to Influence public opinion on a leghhtha maser or referendum, through the use at. a Volunteers ........ ..... ......... . . ..... ..... ..... .. .... . b Paid staff or management (Include compensation In expenses reported on Ines c through h.) , , a Media advertisements . ... ........................... d Mailings to members, legislators, or the pubic.. , „ , , , , , , „ , „ , , , , , , „ „ e Publications, or published or broadcast statemenis , , , , , , , , , , , , , , , , , , , , , , , , , f Grants to other orgentzations for lobbying purposes, , , , , , , , ...... ......... . g Direct contact with legislators, their stalk, govemment offidels, or a legislative body , , , , , , , h Rallies, demonstrations, seminars, convention, speeches, lectures, or cry other means , , , , I Total lobbying expenditures (add Ines a through h) , , , , , , , , , , , , , , , , , , , , , , , , , 27 - if —Yto env of the above. also attach a statement oMno a detailed deacrb8on of the lobbvkw aefhfilae xw al/5401= SOF12E 1018 08/10/2000 14:30:48 V8.07.01 10078381 14 Lobbying Expenditures During 4-Yar Averaging Period calendar yew W flood (a) (b) (e)(d) (a) w beginning In) 10-1998 1997 1998 1995 Total Lobbleq nontaxable 46 amount Lobsyktg calling amount 46 150% of Ane e 47 Totai OnMeroob roreaehte dL Gramme; oeang a M 150% of Ine AIN• Oraaeroote lo- W a ® LODDyIng AGUVItY Dy 111101 OctN1g Public Cherltles During the year, did the orgenbelles attempt to Influence aillix , •tate or kreY laglalr95n, ndta 1 9 arrr yes No Amount attempt to Influence public opinion on a leghhtha maser or referendum, through the use at. a Volunteers ........ ..... ......... . . ..... ..... ..... .. .... . b Paid staff or management (Include compensation In expenses reported on Ines c through h.) , , a Media advertisements . ... ........................... d Mailings to members, legislators, or the pubic.. , „ , , , , , , „ , „ , , , , , , „ „ e Publications, or published or broadcast statemenis , , , , , , , , , , , , , , , , , , , , , , , , , f Grants to other orgentzations for lobbying purposes, , , , , , , , ...... ......... . g Direct contact with legislators, their stalk, govemment offidels, or a legislative body , , , , , , , h Rallies, demonstrations, seminars, convention, speeches, lectures, or cry other means , , , , I Total lobbying expenditures (add Ines a through h) , , , , , , , , , , , , , , , , , , , , , , , , , 27 - if —Yto env of the above. also attach a statement oMno a detailed deacrb8on of the lobbvkw aefhfilae xw al/5401= SOF12E 1018 08/10/2000 14:30:48 V8.07.01 10078381 14 Sehadul A Form 190 — Pa a im Information Regarding Transfers To and Transactions and Relationships With Noncharkable Exempt Organizations 61 Did the reporting organization directly or indirectly engage in any of the following with any other organi otion described in section 501(c) of the Code (other then section 501(c)(3) organizations) or In section 527, relating to political organizations? a Transfers from the reporting organization to a noncharitable exempt organization of - (1) Cash ........................................................ (N) Other assets .................................................... Other transactions (0 Sales of assets to a nonchantable exempt organization , , , , , , , , , , , , , , , , , , , , , , , , , (10 Purchases of assets from a noncharitable exempt organization , , , , , , , , , , , , , , , , (N) Rental of facilities or equipment ........................................ . (hi) Reimbursement arrangements , , , , , , , , , , , , , , , , , , , ,, , , .............. (v) Loans or loan guarantees ...... ... ..... .. ...................... . (v0 Performance of services or membership or fundraising solicitation , , , , , , , , , , , , , , , , , , , , , , Sharing of facilities, equipment, mailing lists, other assets, or paid employees , , , , , , , , , , , , , , , , , , If the answer to any of the above Is 'Yes," complete the following schedule Column (b) should always showthe fair rrwlat value of the goods, other assets, or services given by the reponing organization N to orparsratla rood Was than I& mads) vdr In any (a) I (b) 1 kl 1 M 62a Is the organization directly or indirectly affiliated with, or related to, one or more tax-exempt organized" described In section 501(c) of the Code (other than section 501(c)(3)) or In section 527? , , , , , , , , , , ► ® Yes ❑ No a1Me 1 aaa (a)' (b) (a 60F12E 1016 06/10/2000 14:30:46 V8.07.01 10076381 16 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND 99-0177350 FORM 990, PART I - OTHER INVESTMENT INCOME saaxxaxaxxsassaaaxxss=xaasaaaaaaaaaiiaaiia DESCRIPTION AMOUNT ----------- ------ ENDOWMENT FUND 309,979. ------------ TOTAL 309,979 STATEMENT 3 X00° FnF19F 1019 06/10/2000 14:30:46 V8.07.01 10076381 18 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND FORM 990, PART I - PAYMENTS TO AFFILIATES aa=a==aa==s====s===ma=aaa==sm==saaaaaasaa DESCRIPTION NET EQUITY TRANSFERS TO KAPI'OLANI HEALTH (PARENT) TOTAL 99-0177360 AMOUNT 21,581,410. ------------ 21,581,410 STATEMENT 4 •spom'a" 60F12E 1019 05/10/2000 14:90:45 V8.07.01 10076381 19 KAP I'OLANI MEDICAL CENTER FOR WOMEN AND FORM 990, PART 1 - OTHER INCREASES IN FUND BALANCES =samasasmma sa==x=s=m:m=av=====sasmmsmmmmsmammsmmmum DESCRIPTION UNREALIZED GAIN ON RESTRICTED INVESTMENT TOTAL 99-0177350 AMOUNT 151,714. ------------ 151,714 mmms=====Mms STATEMENT 6 6�'Aw 50F12E 1018 05/10/2000 14:30:45 V8.O7.01 10076381 20 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND FORM 990, PART I - OTHER DECREASES IN FUND BALANCES 2iilC36lii6liiiiiiilii!l�SZClCi!!i!!!i!Y!!i!i!!i!! DESCRIPTION NET UNREALIZED LOSS ON INVESTMENTS 99-0177350 AMOUNT 2,137,705. ------------ TOTAL 2,137,705 !!!i!!i!!!!I STATEMENT 6 60AA1IAN enC4AC 4A 49 A!/1A/7AAA 4A.9A.AA V• A7 Al 1AA7R9N1 21 §: | , ■; k� B| � ■� |� E || §|' - k |■ |■ ��| � � ■ ■ ■; | ) | | §: | , ■; B| � ■� |� E || §|' � |■ |■ ��| § | KW,bm Md� W Cum for Wmm L Odie Fos 990. M D, Lie 22. Glm L As c d— Oir Dmrllm rYs hm 70.2W KJeb Sv rfuYy Far Men& of Mm Wei Atrrlm 1999 S it" 705 Hedmi A SWO 785 Tsbe Kmft .w 96731 HWS (Hep U26m=dq • Gmy SWPWQ 11,40 7676 Ksmm Ams HmW IG 9016 M"o7Dlm 1x61 M s Kbd Stet Swill 210 Hmb►w 96617 Kdd bA790swrimC NN= IA4 SA KIb HewL Is 1270 Pwdjmrl 9411.6711 Hmb % w 9917 lulus Far Hous serlm I sw 516 KmoM RL Hmbb, w 9917 Rw 9r Y Cm rw s/mw1Yp edsm Kum Fmd1YaY 7.100 CJOK51CWmmYCw HMWRM#w&@OMMR CmW 1907 L Bulla Stu Hmbb. w 9 RAAMWm Hm1Yi 7.000 225 N KmdM OWN Hmsbb.w W17 ArnimC rsaeip 7.4000 27706 Nmm Am Hmeii,w 9917 Hmudl rrdlmb AmNb" 2AM Rmmld and rands red 17D Feet9m SL 8.767 Hmbk w 90M Hm." 749" Am3dm IAds 1670 S Btemb sw113d Rem Hmbb. w 9966 COOYN RmYul ti IAO wmelperml O am 179 P=rim stool, M rr Hm"m 9606 7berls OFHeti 5A9 99IV" RL Hmide.w W17 YWCAedOer IAO 1040 Rbbi sl Hmbb. w MU Mm7bol stook sammmw Lm 1727 Deb SOW Hmebkw 9OS Sm Abs TlmmmlCmW 5Am 55 Mwd r 51731 R Hemb4 w 9017 Hww Odlim4 dor FwAWM HmoW Hews I'm Oir dmtlm <51Fm 7.195 s 57.74 SLTOXVI! 7 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND CHILDREN FEDERAL I.D. NO. 99-0177350 JUNE 30,1999 PART III - Statement of Proarem Accomolishments Kapi'olani Medical Center for Women and Children (KMCWC) provides healthcare regardless of race, creed, sex, national origin, handicap, age or ability to pay. KMCWC Is a 232 bed/90 bassinet non-profit hospital which has been designated the level III, Tertiary Care and Perinatal Center of the Pacific Basin by the State of Hawaii. Its activities as a specialty medical center Include providing for medical, health and social services for the care of the women and children of Hawai. Kapl'olam also serves as the major obstetrical, gynecological and pediatric teaching facility for the University of Hawaii John A. Bums School of Medl ckce. During the fiscal year ended June 30, 1999 KMCWC engaged in the following activities which were In the furtherance of its charitable purposes: • Provided hospital services to 17,083 patients and provided In excess of 125,600 outpatient services. Inpatient services Included labor and dellvary, neonatal ICU, pediatric ICU admissions, and patients transported to the NICU and PICU from other parts of Oahu, neighbor Islands and the Pacific Basin. • ObsteftWGynecology Fetal Diagnostic Center Genetic counseling services GYN oncology services 24 hour emergency services • Pediatrics Pediatric Open Heart Program Pediatric Outpatient Clinic Pediatric Immunology Program Surgical, medical, oncology services • Outreach Programs Sex Abuse Treatment Center Chid Prolective Services Team Teen intervention Program Healthy Moftrs Has" Sables Family Planning Services Mobile Service Therapy Team Bereavement Program • Otixw Programs Kapl'olenl Center for Women's Health Hawaii Polson Center STATEMENT 7 A ao Z < 1 W I r Nr Ih 0 N 0 Ar p0 r 0 p Or 1 0 2 u 1 0< O N h P h 00 N O f 0 1% V� 1 P N cut N z W; 0; rzr: f 0 �- I� OO000 W OOr<O�O rON 1 O O ¢W 1 ft <pn W*�►Wr I�10 1 0 z CL fA 1 . .ft 1 1 07 f� O P P N 1 W > .'O --POp W lq<OOOOpO< 1 < J 1 F- < y F< i on aolnm mw < ao e•► 1 0 F Z¢ 1ep- N n r � N N N r O O O v r p O 1� p 1 y W W I O O O N� r a PN Z p 0 I m n n N r r I 'r pA W W 1 ph 0000<090 I 10< 1 p X 00 POOOOPO OD mr I N W f 0 Z Q 0 (<(,�LU < Z I O O r W 1 y W Z < 1 W I r Nr Ih 0 N 0 Ar p0 r 0 p Or 1 0 2 u 1 0< O N h P h 00 N O f 0 1% V� 1 P N cut N W; 0; rzr: f 0 �- I� OO000 Q¢ 1 OOr<O�O rON 1 O O ¢W 1 ft <pn W*�►Wr I�10 1 0 CL fA 1 . .ft 1 1 07 f� O P P N 1 > .'O --POp W lq<OOOOpO< 1 < J 1 O O O O O O N N {7 O O O O r< N I< < y Q I mNOpOrON00<OD 000 P'!O I p r F' 1 N n r � N N N r O O O v r p O 1� p 1 0 m r r 1 I< Z O n n N r r I 'r O O r O n O O > O < y o Wgo N Z 'r r 0. O X — 0 W f 0 0 (<(,�LU N W y W LL O J (J U W to W r i O <> W Z >i O 1\D 1 W¢ ¢< u W 0 yW toWZ a F- ZW WOW J W ID. O F-XWcc >Z ZWag Z C1 2;W we -C Lu � N d Z I Z2 too W m wuZ O I O V W p W H 0 W W W 1 it ZWX Z fA¢d LL. O F I F -=F -<Q<0< W p> X p d l < a m-¢ Z F• Y Z¢ J W W O p - I WUMW< ¢<F -<y to ¢1 g¢o— ¢¢ yo wuz¢ J u I d¢ W y« 7 W SS W Z y-- W W < ¢Z O O W 1 OF-<S<WZ Oi<OWO�FXF— WO F- LL o1 VOM&OW—OLL—JG¢ 77 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND 99-0177350 FORM 990, PART IV - INVESTMENTS - SECURITIES STATEMENT 9 sapsmI0° Rnolog 101A 06/10/2000 14:30:46 V8.07.01 10076381 24 BEGINNING ENDING DESCRIPTION ----------- BOOK VALUE ---------- BOOK VALUE ---------- CORPORATE STOCKS 53,022,364. 33,415,096. CORPORATE BONDS 22,555,361. 37,748,264. GOVERNMENT AGENCIES 12,718,545. NONE US GOVERNMENT OBLIGATIONS 5,275,831. 6,707,731. PREFERRED STOCKS 5,013,874. 4,160,843. US TREASURY BILLS 2,953,079. 5,673,344. FOREIGN BONDS, NOTES & DEBENT. 512,700. NONE MONEY MARKET FUNDS 1,020. 676. INVESTMENT CASH 6,434,502. --------------- 3,891,501. --------------- TOTALS 107,488,878. 91,797,455. STATEMENT 9 sapsmI0° Rnolog 101A 06/10/2000 14:30:46 V8.07.01 10076381 24 f1 M C M M 9a� E sof 0 C M 9a� E sof 0 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND FORM 990, PART IV - OTHER ASSETS xexz x sxzz xsxx¢asx¢x¢szxo¢¢sxs�aa BEGINNING DESCRIPTION BOOK VALUE ----------- ---------- DUE FROM AFFILIATES 19,499,430. OTHER RECEIVABLES 831,893. ACCRUED INTEREST RECEIVABLE 592,478. ARTWORK 166,117. TOTALS 21,089,918. 99-0177350 ENDING BOOK VALUE 19,397,583. 1,183,334. 895,050. 166,117. 21,442,084. STATEMENT 11 'a."lm ReFi2E iota o6/10/2000 14:30:48 V8.07.01 10076381 26 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND FORM 990, PART IV - DEFERRED REVENUE T- R SC CCSS6C S S S ii DESCRIPTION DEFERRED INCOME BEGINNING BOOK VALUE 1,535,107. --------------- TOTALS 1,536,107. 99-0177350 ENDING BOOK VALUE NONE --------------- NONE SCSiiiiiiisiiii STATEMENT 12 ,M""' 60F12E 1018 05/10/2000 14:30:45 V8.07.01 10076381 27 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND FORM 990, PART IV - TAX-EXEMPT BOND LIABILITIES a a x a aaaaia DESCRIPTION BONDS PAYABLE UNAMORTIZED DISCOUNT BEGINNING BOOK VALUE 30,170,000. -336,935. --------------- TOTALS 29,833,065. xsaxxxxaaxxssaa 99-0177350 ENDING BOOK VALUE 28.645,000. -318,956. --------------- 28,326,045. aaaaaaaasaassaa STATEMENT 13 Up" "m 50F12E 1018 06/10/2000 14:30:46 V8.07.01 10076381 28 g E � $ N � M KAPI'OLANI MEDICAL CENTER FOR WOMEN AND FORM 990, PART IV - OTHER LIABILITIES x x¢xxoxaaaexaaxeaxaaazaaaaazaaazaaaas DESCRIPTION DUE TO AFFILIATES DEFERRED PENSION CREDIT DUE TO GOVERMENT AGENCIES DEBT SERVICE FORWARD AGREEMENT LEASE LOSS RESERVE AGENCY FUNDS HELD FOR OTHERS TOTALS BEGINNING BOOK VALUE 4,546,557. 2,478,671. 1,818,737. NONE 191,968. -80,877. --------------- 8,974,954. asaaszaaazzzasa 99-0177350 ENDING BOOK VALUE 5,912,749. 2,374,853. 1,867,211. 1,604,885. 193,428. 35,934. 12,008,858. ssssssaasasasss STATEMENT sap" ?Am 50F12E 1018 05/10/2000 14:30:45 V8.07.01 10076381 29 14 KAP I.OLANI MEDICAL CENTER FOR WOMEN AND FORM 990, PART IV -A - OTHER REVENUE ON BOOKS BUT NOT ON RETURN QLQQ__ i i t+ QQQQiiQiQSiiQQi6 6 iiiQii DESCRIPTION RENTAL EXPENSES REPORTED NET LOSS ON ASSET DISPOSAL COST OF INVENTORY SOLD TOTAL 99-0177360 AMOUNT 80,729. 38,393. 179,878. --------------- 299,000. Qiiiiiiiiiiiiii STATEMENT 16 won I= SOF12E 1018 06/10/2000 14:30:46 V8.07.01 10076381 30 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND FORM 990, PART IV -A - OTHER REVENUE ON RETURN BUT NOT ON BOOKS asasa�aaeaaaasa�a�eeaaaaeaa�aaeaaasaaa:aasaaaasaasaasaaaaaaaaa DESCRIPTION CONTRIBUTION INCOME -RECORDED AS EXPENSE RECOVERY ON BOOKS TRANSFERS FROM RESTRICTED FUND ENDOWMENT FUND INCOME RECORDED ON BOOKS IN RESTRICTED FUND TOTAL 99-0177350 AMOUNT 170,000. 492,262. 309,979. --------------- 972,241. saaaaaaaaaaaao STATEMENT 16 1w 5OF12F 1018 05/10/2000 14:30:45 V8.07.01 10076381 31 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND FORM 990, PART IV -8 - OTHER EXPENSES ON BOOKS BUT NOT ON RETURN mmaaxaaeaaa�xemmeemmeeosmmmxe=aaaxxmammmmmmmsmmsmmsmmmaxmamxxmm DESCRIPTION RENTAL EXPENSES REPORTED NET LOSS ON ASSET DISPOSALS COST OF INVENTORY SOLD TOTAL 99-0177350 AMOUNT 80,729. 38,393. 179,878. 299,000. mmmmmmmmmmmmmq empom,Aw 5OF12E 1016 06/10/2000 14:30:46 V8.07.01 10076381 STATEMENT 17 32 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND FORM 990, PART IV—B — OTHER EXPENSES ON RETURN BUT NOT ON BOOKS C C i C S CS�CCii-iiia iii i iiYi DESCRIPTION CONTRIBUTION INCOME REPORTED AS EXPENSE RECOVERY ON BOOKS NET EQUITY TRANSFER REPORTED AS PAYMENT TO AFFILIATE TOTAL 99-0177350 AMOUNT 170,000. 21,581,410. --------------- 21,751,410. iiYiiisiiiiiY STATEMENT 18 si"""' SOF12E 1018 05/10/2000 14:30:45 V8.07.01 10078381 33 f I 0 N IW W N Q I H z Z W W Q phi Q W 6) t I LL LL O LL i O N J — J f1 > i~ K IL iCD CD a z Ig U y 1 U 2 W 1 W < W V I z W H < I Z NO29I W p J I IL ZJ I X « I W to y Z W z OW< - } J I W I -O6 I z N m iL I z W W LL I f• W I N z O Z I N OHWI N V m 1 J H P Z I 1 W < I O y 1 Z Z I W 1 a1 1 V I W 01 F — I N W I- 0 • 1 �yi H HOI Q 9L 1 Q z O 1 < F i Z W V— tI I p~ ~WI O< p 1 m d W O z W O z W W N z z OF us W dd W z O z W z O z W O z W W W d I W V >z us Ic W IL W z O z W z O z W O z W a W 1- 6) F Wqc d W z O z W z O z W O z W a LL I.- CL c W d W z O z W O z W O z W O z W O z W O 2 W z O z W z O z W O Z V W X W W W W 1 Q V Z >a LL H 6) F W d > d a ^ z Z W a W F F y N N 1- 1<O N N N N J H P m W♦ a m o W m z O J W O O V a o o H O > O Q O -Wa WO <P Ci a a WO -a a (a I 6))-- z- It d- K- Q^_ SW— W I WW- W- S JW- p F-- W6) - W I < > < f N - J y < W < N < < S « Q I SOIt <; p- <-; 1-J; < ; O< NZ; W« �1Ji L< p I C1z< < az< S¢< N S N<;S < S W< S — z S m S < 1 •J WJ N< •< •O dme Q- < I Q< O< • S <O <J < LLS >J Q I a7 QS7 ;W .J= -= -i-j= LLO= 6O7 Q< J I- - y- J W x j J< J W< J = J < I O<0 Y2 !'-< WJ7 W -M -wo -1 u2 Y0 I F X J Q J WE= V J J J Y J J J W I Z O W O O > J z a O W r O N O z N W o 0 <Ic1 «I zcc �o� W003 OO Z I 6,10 K<S SO)L LLN ()^ NS •7N QN SO a ^ z Z W a W F F y r U N 1 U C W I < W U I x z I Wr<I =001 W Q J i IL z J 1 X < < W N (a i Z W z 1 OW<I y J I r0d1 m IL r I — z — ¢ W LL I r W z O z Orw1 IL) m I W z O z W z O z W z O z W z O z W z O z W z O z W z O z W z O z W z O z W z O z W z O z W z O z W z O z W z O z W z O z W O z 2 I IO 01 1 W W W W W W W W W m O N N tp W P No < I O O O O O O O O N I z z z z z z z z z f0 r 0 W to 1D N ti P r a r 0 W I O W Ol W a ® W P 0 W O1 W O 1 w cc LU O W 1 - ¢- r— U— J` O U 1 z — r— N— <— LU -J O— W� Or— W 1 pp N< N< < J< m IL - C - W < C N< 01 W ; « za.3c O— < xis — it I i < W < — < O < C n < S = < t Wr1 N Wx2 Qx r < x 3 rhe xx r w I LL O J U rp U 4. 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I -C Go O I Z I <m Y a - N S .4 Y w N S <w X m R N S X m S d d m N r U V1 I U ¢ W 1 < W U I S21 W r < 1 W0j1 IL z J I X < < 1 W W z O z W z O z W z O z y H I zWzl O W < I IL J La W O 1 O < N W m JL I-.- m ¢ W LL 1 m m O r WI z0z1 OrW1 U m 1 Z1 01 r l m in m to a y I O OI O b z I W I W O O 03 in O {q 1 UI z 1 OI W9I I i — 1 z r r O 1 = z 4 1 w LU LU 0 1 O Q zO1 — < r W LU cou UR 1 W a W W a i LU W J 1 7 r 6 r d r d r r W i V i U< ¢< —< 0 1 r 6 > d > d > 6 U) H W D 2 w O n rm W OI W HLU < W S S > < J z � z N < O J J � - ¢ 1 J W <m H J W 2 _ N < �7 0 q N —o 0. < O Y A LO O m A N N r m W m W O/ ¢ r - U) t <3 ¢ S ¢U0 W — J J > > J J W O ,z M N W P J < m W J m d — ¢ < IL UtS < Y 0 � O J ¢ — W In N r z W a W r r N 0 < m N m n O O r O n 0 m 10 < O N < r O O O N O W O m O W N_ LL O m U y 1 m <xz O N I O le 1 01 Wi-< 1 z z I W y 0 8 1 W 1F n I I n < I z W 0 J 1 W 1 < I eV W IL z J l 1 uj 1 z z 1 W W<< 1 1 r O W I O s m I W F y y 1 N in y Z W Z l OW<1 < 1 1 H O IL 1 N W 1 W OJ IN go IL o I m < z 1 Ir W IL 1 W < I N F W 1 N 1 m 1 z O z 1 I N m D O F W I I U m I a - I I ~ z 1 01 — I F I W n I I n < I O W 1 < I m z z 1 1 O W I O m I W d 1 N in I < 1 1 N UI IN < z 1 O 01 IC 1 m D ul a - I y o I W 1-0 1 z z < O IL1 o < 0 p O _p W « 1 y W y W R Q— Ic— z O W p 6H 4F•' < m FF 1 '� O ~ -< U< W W 1 � O 01 >IL >d IA > < O rc o IL z O H o < o y o z N W CL H O CIO W r- � U o wn Ho 1 1 O y W W a > 1 y I I- p I- < H U) 1 J O— J W p O H W I <— < W 0< 1 LU x it _ OC LU CL p 1 I- he iS N c p I <19 W - <PJ } o 0a l J O W J m z J 10 W■ < O 1 N m N N W< J W 1 -O f W W -0 W 1 O Q aIN a 1 CL 1 �. I z d 1 m N z YGWi bS IOL p 2 i Ya q* kc cc KAPI'OLANI MEDICAL CENTER FOR WOMEN AND 0 FORM 990, PART VI - NAMES OF RELATED ORGANIZATIONS sasaeseaaasaaaeaaeoasaaaasasasaaaaaa�a�saasaaasaaa EXEMPT: KAPI'OLANI HEALTH KAPI'OLANI MEDICAL CENTER AT PALI MOM[ KAPI'OLANI HEALTH FOUNDATION KAPI'OLANI HOME HEALTH SERVICES KAPI'OLANI EXTENDED CARE KAPI'OLANI MEDICAL SPECIALISTS HEALTH PLAN PARTNERS NON-EXEMPT: KAPI'OLANI SERVICE CORPORATION AND SUBSIDIARIES 99-0177350 STATEMENT 27 'op"A10m cncioc inin naiini9nnn 1a•30 -AS V8 07.01 10078381 42 r h 6 h d W1 mg . . . . . I W I CO W CCI -00 i m XU I ,<0<O to to W 2 I V 10 Na0 t7 1 0 cc 1 to pl�mNln 1 r 02 I -•mr^Iq 1 m 0 1 rtV<� I m I r 1 A WF- I rmM 10► F- V 1 mNm t N It 2 1 I I J M I I W LL I W—(7�J O K 2- <hi= h m N O 1 O I 1 I 1 z 2 1 I I 1 1 I 1 < I 1 1 A I r 1 A m N O 1 O r I r h I O 1 O Waz` I r 1 A I r 1 A I O I O I Wii<-Jowl 1 r 1 r h i I m N ,u tq>O to—W0 Waz` VW<�Oi >q OC WLL J O I Wii<-Jowl y<F=-0¢Z h i F d 1 W—(7�J O — 1 2- <hi= h Inc I —J6<C1F- F-0hj G< usafVAi 15 p I <VWax m N KAPI'OLANI MEDICAL CENTER FOR WOMEN AND 99-0177350 FORM 990, PART VIII — ACCOMPLISHMENT OF EXEMPT PURPOSES csxcxxxascaxacxacs sx=cccscacccacaxaaaaaaaasaaasaaaaaaaa EXPLANATION OF HOW EACH ACTIVITY FOR WHICH INCOME LINE IS REPORTED IN COLUMN (E) OF PART VII CONTRIBUTED NO, IMPORTANTLY TO THE ACCOMPLISHMENT OF EXEMPT PURPOSES --- ---------------------------------------------------- 93A& ROUTINE AND ANCILLARY SERVICES COMPRISE PATIENT SERVICE B,C REVENUES AND ARE USED TO PAY COSTS INCURRED IN PROVIDING HOSPITAL AND SUPPORTING HEALTH SERVICES TO THE PUBLIC. THESE REVENUES ARE PARTIALLY OFFSET BY A CONTRACTUAL ADJUSTMENT NEGOTIATED WITH THIRD PARTY PAYORS. AN ESTABLISHED CHARITY CARE POLICY SETS GUIDELINES TO DETERMINE WHICH PATIENTS QUALIFY FOR CARE GIVEN AT NO CHARGE. SERVICES PROVIDED FOR QUALIFIED CHARITY CARE PATIENTS ARE NOT REPORTED AS REVENUE. 93E MEDICAL RESIDENCY PROGRAM — REVENUES RECEIVED FROM UNIVERSITIES HELP SUPPORT THE COST OF PROVIDING RESIDENCY TRAINING TO PHYSICIANS. 93D& EDUCATION COURSES & PROGRAMS — VARIOUS HEALTH EDUCATION F CLASSES AND DIETARY COUNSELING SERVICES TO ITS PATIENTS AS PART OF THE PATIENT'S HEALTH CARE REGIMEN. 103C MISCELLANEOUS REIMBURSEMENTS — COVERS COST OF ADMINISTRATIVE SERVICES RENDERED (E.G. PROVIDING COPIES AND HOSPITAL RECORDS, ETC.), PURCHASE DISCOUNTS, ETC. STATEMENT 29 ssp� "" 5OF12E 1018 06/10/2000 14:30:45 V8.07.01 10076381 44 21 ERNST & YOUNG CLP • 2400 Psushl Town Phar. 808 $31 1037 1001 Bishop Sna, Honolulu, Howell 88813 COPY Instructions for filing KAPI'OLANI MEDICAL CENTER FOR WOMEN AND CHILDREN Form 990T - Exempt Organization Business Return for the period ended June 30, 1999 Signature... The original return should be dated and signed by an officer of the organization. Filing... The signed return should be filed on or before May 16, 2000 with... Internal Revenue Service Ogden, UT 64201-0027 Overpayment of tax... The return shows an overpayment of $11,600. of which $11,600. should be refunded to you and $NONE has been applied to your 1999 Estimated Tax. To document the timely filing of your tax return(s), we suggest that you obtain and retain proof of mailing. Proof of mailing can be accomplished by sending the tax return(@) by registered or certified mail (metered by the U.S. Postal Service) or through the use of an IRS approved delivery method provided by an IRS designated private delivery service. X.030 1000 Foran 990-T Exempt Organization Business Income Tax Return r7G 7 (and proxy tax u der section 6033(x)) FormeTrsswry For calendar year ISM er o0er tea year beginning _Q �1 D]_ _, tops, ass endb8 0 8 / 30__, 70 99 Imemal bwn.w SWvbe ► sea separate MSVWN ns, A Check bot I Named organization D InMayen bemmeation nunesa .edn..wrgee API 'OLAN I MEDICAL CENTER FOR WOMEN AND (Empbyeea tn4�wlnstnxtbefar Block D on papa s ) ■ Exempt under eaodon plea" I L DR N F I x I501(Cx 3 ) Print or Number, street and room Or suMro (Ka PO boa sea pope l of instnidkna.) 99-0177350 City or tank state, and em During the tax yew, was the corporation a subsidiary In an affiliated group or • porrdwbaidfary controlled pray? 1 a Gran nedpta erodes 7 U f r U l u . b LOU near -.d elie.-rte• c BYnca 2 Cod of goods sold (Schedule l4 es 7) .......... . 3 Groes profit (subtract Ine 2 from Ons 1c) ......... . 4a Capitol gain not Income (attach Schedule D) , , . , , . . b tiet 90n (loss) (Font 4727 Part 11, ens 161(mdt Form 4787) e Capital Iwo deduction for trials ............. . S Income (loss) from Pam -8111130 and 8 0011"8liOrs (4113011 socwnwt) I Ram incmns (SeMdcta C) .. . , ...... . 7 Unrelated debt-Rnuload him (Schedule E), , , , , , , . I Intoned, snnukles, royatles, and conte from controlled organintions (ses papa 7 of Instructions) ........ . 8 Investment Income of • section 001(c)(7), (9), or (17) organl- -1 (Schs" G) ..... ..... . 10 Exploited exempt ectMty Income (Schodris 0 ...... . 11 Advamliskq massae (schedule A ............. . 12 Other Income (tw papas lits kwtOuww _ ~ adsdi ). . (see Instructions ter Sink E on pp 81 ►1 IYM No Deductions Not Taken Elsewhere (See page 5 of the )nstrU000n0101 Iaf1aa00170 On 0e011C1110ne.) (Except for contributions deduedons must be directly connected with ft unrelated business Income. 14 isSalerlss 1 s 17 13 1s 20 21 22 23 24 29 2/ 27 28 29 30 31 32 .. Compenestlan of officers, I '-' , and iflwlee9 (Schedtds IQ ........................ and wam............................................. Repairs and minter—w.......................................... Bed debt ......................................... Interest (attach schedule) . . . . . . . . . . . . . ... . . . .. . . . . . . ............... Taxes Wall Ooaees . , , ................. Charitable contributions (tree Pape 10 of the k'MrtaI 's /lx ImeNlan rules")„ ...... Depreciation (attach Form 40M ....................... 21 • •1110 Less depredation claimed on schedule A and aleeNE tMfaa an nun ....... 224 Depletion .. ...................................... ConMbutIOM to deferred compersdton Olen ................................ Employes benefit pro9nme ........................................ Excess exempt expenses (SalNWL" 0 .................................... Excess resdershlp comb (SL,sAts-0 ....................27 ................. Other deductkow(a0edmadnAds) . , ................ SE.R. STAT.EMKI1(T A , Tdd Deduatlyds (400 Ones 14 through 29) ... ,..... .. . , .................... . Unrelated busing" taxable Income before not operating loss deduction (subtract One 29 from Ire operating lore deduction ......... ... .... . . . .. . , , .......... Not c Unrelated business taxable income before specific deduction (subtract Irte 31 from One 310) ........... .—.n-w.w. a. 14 ,0 106,707. .• 8,519. 17 7t ,• 12,810. 20 NONE N 72b NONE 23 24 20 26 28 141 353. e 329,439. 30 -6,877. 3, 38,839. 3 -44,716. 33 1.000. 34 unrelated business toxeErs 0 rc (subtmd Ike 33 from On 32). If Una 3319 grestor Oen Oe 32. ase For Pmparwork Reduction Ikea Navas, ass kobual4rs. Form 000-T (4900) sEtato Laos FnF17F 1019 06/10/2000 V8.07.01 10076381 46 36 Organizations Taxable Y Corporations (set Instructions for tax Com Idaltbrh On papa 11) Controlled group members (sections 1561 and 1563). check here 8H Instructions and a Enter your share ofthe 550,000, 325,1100, and 59,925,000 taxable Income brackets (in that order) (1)l NONE 1 (2)1 NONE J (3)L NONE b Enter organization's share of* (1) additional 5% tax (not more Ban 511,750), , . . (2) additional 3% tax (not more than 3100,000) . . . ... . . ......... . c Income tax on the amount on gra 34 , , , , , , , , , , , , , , , , , , ,,,,,,, , ,,,,,,, , , , Bpi: NON E 38 Trusts Taxable at Trust Rates see Instructions for tax com Lit tion on papa 12) Income tax on the amount on line 34 from' Tax rate schedule r Schedule D (Form 1041) , , , , , , , , , , 37 Proxy tax (aH page 13 of Instnxtlans)................................... 3e rot.l add line 37 to II 35c or 36 whicheverapplies). . .. 3e NONE Tax and Psyrrwnts See Foreign tax credit (corporations attach Form 1118, trusts attach Forth 1116), , , , , 139&1 b Other credits (se* page 13 of tit Instructions) , , , , , , , , , , 38b c General bushes credit - Check O from FIForm SOW or D Form (specify)► ______________________ 390 d Credit for prior year mWnHjm tax (attach Form 6801 or 8827) , , , , . , , , ... Sed e Total (add Was 39a through 39M ....................................... . 40 Subtract line 391 from 8na 38.. ...... ........................ . 41 Recapture toss. Cheek M from, Form 4206 Form 8011 , , , , , , , , , , , , , 42 Alternative minimum bit ........................................... . 43 Total tax (add Iltw 40, 41, and 42) ..... ................. . ......... . 44 Payments: a 1997 overpayment credited to 1998 , , , , , , , , , , , , , , ,, , 44a to 1908 estimated tax payments .... ..................... Kb 11,000. e Tex deposited with Form 7004 or Foran 2768 .................. '44c d Foreign organizations - TY paW Or withheld at source (ses Iratruc00re) , , , , , , .44d e e* k Backup withholding (srtruetlo s) ...................... 44e f Other credits and paymrb (se* khstructlim) ................... 44 48 Total Payments (add line* 44a through 441) ......... . �-+-�( . 46 Estimated tax penalty (eH page 4 of the hWh¢tlre). Clads ► (J if Form 2220 le albcad ........ 47 TY due - If line 45 Is has than the total of edea 43 and 46, order amasY orad , , , , , , , , , , , , , , , , , ► 48 Overpayment - 0 line 45 In larger than the total of One* 43 and 4e, order atreud overpaid ,, , , , ... , , , , , ► 1 At any time during the 1998 colander yew, did the organization have an Interest In or a signature or other authority over a financial account In a foreign country (such as a bank account, securities accoud, or other financial account)? If Yes; the organization may have to file Forth TD F 90-22 1. If Yee,' enter the name of the foreign country here lip _ 2 During the tax year, did the organization recent a distribution from, or rues O the grsrdw of, or transform to, a foreign trust?........................................................... If Yes; aH page 14 of tit Instructions for other tomer the , gm" No may have to Ica. 3 Enter the smourl of tax-exempt Interest reeelved or accord during the boot year ► 1 Inventory at beginning of year 2 Pucleeeo.......... . S Cost of labor......... . 4a Additional section 263A code (attach schedule) .. ... . b Other costs (attach schedule). . phmm I and Sign ' Here B Inventory at and Of yew , , , , , , , , , e 7 Cost of goods act. Bubbact We s from Ilse 5 (Enter here and on be 2. Part 1.) .. ............ 7 8 Do the rule* of section 263A (with re*pad b property produced or acquired for resale) appty b S ll/ ErP f CAU Dia 1 Tete Prspaera���� f� CX Dam Crack 19@11- '-nam o aoo• aacrany reamer Pall slpmkn / 4 sur Qom- I V%ifiJ acro ed ►n 220-62-0047 Preperars rprmraremeryo^ ERNST 6t YOUNG LLP Ell ► 34-6666696 Use Only �.m.ea' I 2400 PAUAH I TOWER. 1001 619 zed olds No 96613 +M HONOLULU, HI 6911707"WrIP19F 1n1R 06/10/2000 1&•30•&6 V8 07.01 10078381 48 rmm rrw•. nes., MU -0177719 pap 3 SCHEDULE C - RENT INCOME (FROM REAL PROPERTY AND PERSONAL PROPERTY LEASED IMTH REAL PROPERTY) (See instructions on page 15.) 1 Description of property (41 2 Rent received or accrued 3 Deductions directly connected vah de brcalr in columns 2(a) and 2(b) (ett■ch saedus) (a) From personal property (r the percentne of rant for personal property a more then 10% but not more then 50% (b) From Mal and peraarel property (a the perow" of rent for personal propMy srcsede 50% or e the nerd is based on or Income 1 1 4 Total I Tow Total deductions. Enter here and on Ins 8, Column 8 Part I. 1 Is, Total Income (Add totals of columns 2(a) and 2(b) Enter here and on linea column (& Part I 1 ► SCHEDULE E -UNRELATED DEBT- FINANCED INCOME See Instructions on a 18. 1 D*wAptbn of deoi4eeraed property 2 Gross Mlcope Ilam or 3 Deductions dirscey cor■eated w1lh a doable to allocable to debt4k ermaj straight s,ewool s,9 (b) 001sT ghwoulae property (attach ncon fiettach t % s Narrsampt oadrblad apraatlaa a Gross tram■ rspatabls (column 2 ■ column 4(c) a column 5(c)1 7 Aeosebfe deduce= (oolumn a x oah■m 4(c) a coMnn a(o)) INTraele tr awry a (e)Cclt■rn (N k)Eager awble t mnr ■rte ere h mlam (■� divided by 1 4 4 Amount at avaregs acquisition debt on or allocoble to debt4eraed property t~ ectledwilt) a Avenge agrslad bass, of or allocates to debt -ft -- progeny attach scheduha s Colurm 4 7 Groes income mpoftw a Allocable Eedtlod" divided by (column 2 s oos■m (column 0 total of octurrna column 5 1 Totri Enter here and include on line 8, column (A), Part I, page 1 Enter hers and kleNrds an line 8, colurrat (8), Part I, one 1 4 here and on Ins 7, 1 Enter here and on kw 7, n (A), Part 1, paps '11 column (B), Part 1, peso 1. Totate.........................................► (See Inatrucibm on owe 17.) 1 fearre end address d mrtaess rssanaWwtk) 2 Grow toom Com cornI, wgank0w (q a 0eeudlens IN mweaeq agsna.en assay eeaneae ser warmst beee,,(" a strelay 4 EemIs kl Urues,s,0 business I teabb oomrdss IN Taetee Mair computed lel as atoulth not seen I Wdu oosm Oil am 501(ax a ee errow h dNlesd by % 1 / % s Narrsampt oadrblad apraatlaa a Gross tram■ rspatabls (column 2 ■ column 4(c) a column 5(c)1 7 Aeosebfe deduce= (oolumn a x oah■m 4(c) a coMnn a(o)) INTraele tr awry a (e)Cclt■rn (N k)Eager awble t mnr ■rte ere h mlam (■� divided by 1 Totri Enter here and include on line 8, column (A), Part I, page 1 Enter hers and kleNrds an line 8, colurrat (8), Part I, one 1 As& snow 1 tem 60F12E 1018 06/10/2000 14:30:46 V8.07.01 10078381 47 99-0177350 Form 990.7 (19911) P%p4 SCHEDULE G - INVESTMENT INCOME OF A SECTION 501(c)(7), (9), OR (17) ORGANIZATION see Instrucuons on page 7 / 1 Description of income a Deductions 2 Amount of Inomote directly aorvwdW f Sraeldos Attach acrraas) a Total dads 0WM olid edalo (Col. J 1 2 Gtor a ENrras dirft* 2 7 Estates saw rpt epr a69s 1 Description d exploited activity un sd buslrws sxxonr connected Wlh production of or business 9 Grosal mss 9 Expenses; (column 2 msxr from act" eat attrlbutowe to 4 from trade or Totals Enter here and on rine 6, 't column (A), Pert I, page 1tline 11 - ACTIVITY INCOME_ OTHER THAN ADVER rISINn INcr7YF Enter two and an 9, caftan (e), Part 1. pope 1 SCHEDULE I - EXPLOITED EXEMPT baelMs Mae, matnretinna nn nano 171 slwnta rrom rerwaruis rte roma on a uonsonaa6sir vaso 4 Not income 1 Ado- ftp 2 Gtor a ENrras dirft* Pose) than unrelated pads 7 Estates saw rpt epr a69s 1 Description d exploited activity un sd buslrws sxxonr connected Wlh production of or business 9 Grosal mss 9 Expenses; (column 2 msxr from act" eat attrlbutowe to (colu nn a moo 00lraret a. but not from trade or unrelatatl oolurrtrt 3). If is not ureaMtl cokwn 6 mde um oak a I aso 7 baelMs bi a4aas lnN Wm, compute business Ywmw oaenrt f} mare ten 0069 6 tleough 7 1 aapabr ¢ 1 f tams rows (on" Pa n ergut f n —ts r—h—rs—e—n ron Tina 10, dd (A), Pert I, pegs 1 Enter have end an rater Mora line 10, cd (a), on *w 2e, Pert 11, Pert 1, pope 1 Wee 1 Column t 1� SCHEDULE J -ADVERTISING INCOME (See instructions on pita* 18.) slwnta rrom rerwaruis rte roma on a uonsonaa6sir vaso 1 Ado- ftp 1 Nam d 2 Crus f Direct Win or (lows) (oct 2 mtn9s eaL a), a a Grcu696m a F4Nww q reederrrp owes perbdtoll aW011an9 ad+an69thp comb income 000b (column a minus Iincomeerrr oak a I aso 7 _ columna, but not mare ten aapabr ¢ 1 f tams rows (on" Pa n ergut Mteorrta From PerlodkaIs Reported on a Separate Basis (For each Dedodicel RstedIn Part II. fill 16 Column totals, I line lPart I, pope 1ine . I I art 1,. pop 11cd 1. an 6 pop, 7 1 Name I 9 Tab I - time denied to I to Yu69bd baFrses 1000 SOF12E 1018 05/10/2000 14:30:45 V8.07.01 10076381 48 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND )RGANIZATION'S PRIMARY UNRELATED BUSINESS ACTIVITY. eea==as==aa==sss=s=saaossa=s=asasasasaaaseassasaaaa 'HARMACY SALES TO THE GENERAL PUBLIC 99-0177350 STATEMENT 1 GOMM " SOP12E 1012 05/10/2000 14:40:14 V8.07.01 10078381 49 KAPI'OLANI MEDICAL CENTER FOR WOMEN AND 99-0177350 FORM 990T - PART II - LINE 28 - TOTAL OTHER DEDUCTIONS p@CCCi!@!lCCC@C!lOCC¢CCS¢C��@C@@!!!i!!!i!!!illiiililY OVERHEAD ALLOCATION 139,800. SUPPLIES 1,282. SUBSCRIPTIONS 259. OTHER EXPENSE 12. PART II - LINE 28 - OTHER DEDUCTIONS 141,353 !!!!!!!!!! STATEMENT 2 9�1= 60F12E 1018 06/10/2000 14:30:46 V8.07.01 10076381 60 Kapi'olani Medical Center for Women and Children EIN: 99-0177350 FYE- June 30, 1999 Form 990-T, Part II, Line 20 - Charitable Contributions Carryforward from 6/96 S 6,496,420 Carryforward from 6/97 6,567,899 Carryforward from 6/98 7,271,390 Current Year contributions 7,834,277 Total Contributions available 28,169,986 Deduction allowed (]0% of AGI - $-5,877) 0 Carryforward to 6/30/00 $ 28,169,986 Form 990-T, Part 17, Line 31 - Net Operating Loa Deduction FYE 06/30/98 loss (subject to carryback) $ 38,839 Total Carryforward NOL 38,839 Loss utilized 6/30/99 0 Carryforward to 6/30/00 S e Form 4626, Line 6 - Alternative Minimum Ta: Net Operating Loss Deduction FYE 06/30/98 lose (subject to carryback) $ 38,839 Total Carryforward NOL 38,839 Loa utilized 6/30/99 0 Carryforward to 6/30/00 $ 38,839 Statement 3 CONTROLLED GROUP ELECTION STATEMENTS ELECTION TO ALLOCATE $18,000 BUSINESS ASSET EXPENSE The undersigned corporation, component members of a controlled group of corporation, as defined in Internal Revenue Code § 179(dx7), hereby consent to the apportionment plan hated below with respect to the taxable year of each corporation which includes June 30, 1999. ELECTION TO ALLOCATE $40,000 ALTERNATIVE MINIMUM TAX EXEMPTION The undersigned corporation, component members of a controlled group of corporation (within the meaning of Internal Revenue Code 11563(a)), hereby consent under IRC 1158- 1 (cX3) to the apportionment plan listed below with respect to the taxable year of each corporation which includes June 30, 1999. ELECTION TO ALLOCATE $150,000 ALTERNATIVE MINIMUM TAX EXEMPTION The undersigned corporation, component members of a controlled group of corporation (within the meaning of Internal Revenue Code §1563(a)), hereby consent under IRC 11.58-1(cx3) to the apportionment plan listed below with respect to the taxable year of each corporation which includes June 30, 1999. ELECTION TO ALLOCATE TAXABLE INCOME BRACKETS The undersigned corporation, component members of a controlled group of corporation (within the meaning of Internal Revenue Code § 1563(a)), hereby consent under IRC § 1.58-l(cx3) to the apportionment plan Bated below with respect to the taxable year of each corporation which includes Ame 30, 1999. ELECTION TO ALLOCATE ACCUMULATED EARNINGS CREDIT The undersigned corporation, component members of a controlled group of corporation (within the meaning of Internal Revenue Code 11563(a)), hereby convent under IRC §1.535-3 to the apportionment plan lidW below with respect to the taxable year of each corporation wbieh includes June 30, 1999. Company Employa Apport. of Depr. Appost. of $40,000 Apport of income over Number Business And AIL Min Ta: $150,000 AIL Min. 5100,000 bat $335,000 but Expense Exemption Tax Exemption 1 99-0318588 NOW $40,000 2150,000 2 99-0177350 $18,000 Nom None 3 99-0274038 Now None None STATEMENT OF TAX BRACKET ALLOCATION The amounts in each taxable income bracket in the tax table in IRC 111(b) have been allocated to fire following caapomtim pw=avt to 11.1563-3(a) Company Employer First 550,000 Number of Taxable Income 99-0318588 None 99-0177350 $50,000 99-0274038 None Taxable Taxable Taxable Taxable income over income over income over income ova $50,000 but $75,000 but 5100,000 bat $335,000 but not over not over not ova not ova $75,000 $100,000 $335,000 $10,000,000 None None None None $25,000 $25,000 $235,000 $9,665,000 None None Now Nm IDENTIFICATION AND SIGNATURES: Company Employer Name and Address Number 99-0318588 Kapiolam Service Corp. & Subsidiaries 55 Morebsnt Street, 246 Floor Honohdu, HI 96813 99-0177350 Kapiohmi Medical Center fa Women and Cbildrm 55 Merchant Street, 246 Floor Honolulu, HI 96813 99-02474038 Kapiolani Medical Center at Pali Mo® 55 Merchant Straet, 246 Floor Honolulu, HI 96813 Taxable Year Fad 0690/99 74.FI .. r Sipsuire and Title of Officer Ace-ess a,N reo,i ° : o.a :]:: __. ..•ia• e: :�.• 9p:>: LA•E0:76 3,Z� Internal Revenue Service FEB 1 7 1978 L-178, Code EUEOG-2: Determination Section (213) 685-4553 D kapiolani-Children's Medical Center 1319 Punahou Street Honolulu, Hawaii 96826 Purpose: Charitable Accounting Period Ending: June 30 Based on information supplied. and assuming your operations will be as stated in your application for recognition of exemption, we have determined you are exempt from Federal income tax under section 501(c)131 of the Internal Revenue Code. We have further determined you are not a private foundation within he the meaning of section 509(a) of tode. bee Use)Sau r.0 �a)(1). organization described in. section You are not liable Tor social security (FICA) taxes unless you file a waiver of exemption certificate as provided in the Federal Insurance Contributions Act. You are not liable for the taxes imposed under the Federal Unemployment Tax Act (FUTA)• Since you are not a private foundation, you are not subject to the excise taxes under Chapter 42 of the Code. However. you are not automatically exempt from other Federal excise taxes. If you have any questions about excise, employment, or other Federal taxes. please let us Know. Donors may deduct contributions to you as provided in section. 170 of the Code. Bequests, legacies, devises. transfers. or gifts to you or for your use are deductible for Federal estate and gift tax purposes if they meet the applicable provisions of sections 2055. 2106. and 2522 of the Code. If your purposes. character. or method of operation is changed. please let us know so we can consider the effect of the change on your exempt status Also, you should inform us of all cnanges in your name or address. 40.0,1 Form l—.:6 (Rev x73) .$ crw- :f :f yC_. Enos rece_V.S encn year Lre n::'SE._ly &�rE tr.P... � n Tom- are required :o file 7-= 99:.n!t_.:, o: Organization Exexp; income Tax. cy the 15:: day of the fifth month- after the en_ cf your annual accounting period. The :aw imposes a penalty of 810 a cag. up to a max3--'1a of 55.000, for failure to file a return on Lice You are no. reeuired to file Federal income tax returns unless you are subject tc the tax on unrelated business income under sectio: of the Code. If you are subject to this tax. you must file an ince=e .ax return on Form_ 990-T. In this letter we are not determining whether any of your present or proposed activities are unrelated trade or business as defined in section 513 of the Code. You need ar. employer identification number even if you have no e=loyeea. If an employer identification number was not entered on yo---.- application. a number will be assigned to you and you will be advised o: it. Please use that number on all returns you file and ir all correspondence with the Internal Revenue Service. Please keep this determination letter in your permanent records. Sincerely yours, C3Qw�n�t/1.'l' District Director cc: William A. McDonald C-1 Form L-178 (Rev 8-73, CERTIFICATE OF INSURANCE Issued By: Truck Insurance Exchange, Los Angeles, CA Named Kapiolanl Medical Cenbr for Woman and Children Insured Address 1319 Punshou Street Honolulu, Hassall 99929 1170-10" This certificate or verification of Insurance in not an Insurance policy and doss not a fond, eedw I or albr the peerage -No Ied by the poocy @fared to above. I'M obMtlteterr " arryr regWroment, torn or a A 1111on of any contract or other document wtih respect to ewttioh Yrb aatllloab or vaMbaYon of Insurances aay be boned or may penI I the Insurance allo do d by the policy Is subject to all the twee, mksio s, and conditions of gush pollay. Insured has a Single Limit as Indicated below. SINGLE LIAR lid million Fmoh Occu ranoe • Cantaairwrlve Hadtlbsee Proheeional LiaeMlh, Gaewol Limb". Soft kytry i P@Paq amom a LWl9gr • Claims Made ❑ •Modllled Oeeunanoe ❑ 'Occurrence 0 DESCMPTION OF OPERATIONSNEIICLESISPECIAL REMBIREMARKB: EWdwse of Neohhaore General and ProhesbrW LJoWgr coverage fortis pnoMelon of ser abuse resource and adveewy saMoss to the C &N* of Howell Notice of cancellation of the coverage aMwaMlcelly terminates covaoga Aller ea oolWlon this oentiScate bsoanw void and vddmd stile-' Ab ' 'm of ties Undb seed be provided upon dwaaed Effective Oeiober 1, 1999 Continues undi canceled Dab Place Los Angeles, CA OtIW County of Newall Inam" Deparbrant of Finance 2S Aupad eI k Roca 11S Hilo, Howell SIM Attn: Rory Tskshuehl, Director of Finance July 12, 2000 DATE TYPED Audsriaad Ropreaentat. we FARMERS INSURANCE GROUP OF COMPANIES KAPT OLANI MEDICAL CENTER FOR WOMEN AND CHILDREN CERTIFICATE OF RESOLUTION I, Betty K ieshiro, Assistant Secretary of KAPI'OLANI MEDICAL CENTER FOR WOMEN AND CHILDREN, a nonprofit corpomuon duly organized and existing under and by virtue of the laws of the State of Hawaii, do hereby certify that the following is a full, true and correct copy of a certain resolution adopted by the Board of Trustees of said corporation, at a meeting duly called and held at the offices of the Corporation,1319 Punahou Street, Honolulu, Hawaii, on the 2nd day of April, 1997, at which meeting a quonrm was present and acting throughout; and that said resolution has not been modified, amended or rescinded and continues in full force and effect; RESOLVED that any individual at the time holding the position of Chairmen of the Board, Vice Chairman of the Board, President, Executive Vice President, Secretary or Treasurer, be, and each of them hereby is, authorized to execute on behalf of the Corporation any bid, proposal or contract for the sale or rental of the products of the Corporation, and to execute any bond required by any such bid, proposal or contract with the United States Government or the State of Hawaii or the City and County of Honolulu, or any County or Municipal Government of said State, or any departmext or sub -division of any of them. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said KAPI'OLANI MEDICAL CENTILE FOR WOMEN AND C MDREN this 17+ day of August 2000. A CHARTER OF INCORPORATION ARTICLE I Colporste Name The name of the Corporation is KAPI.OLANI MEDICAL CENTER FOR WOMEN AND CHILDREN. a-� I � . T d. 'm , The location of the Corporation and the address of its initial office is 1319 Punahou Street, Honolulu, Hawaii 96826. Section 3.1 Pprposes The corporation is organized exclusively to operate and maintain a hospital and medical center primarily to provide comprehensive health care services and resources to women and children and to operate exclusively for charitable, educational and scierrtific purposes, within the meaning of Section 501(cx3) of the Internal Revenue Code, including for such purposes, the maldng of distributions to organizations that qualify as tax-exempt organizations under Section 501(c)(3) of the Internal Revenue Code of 1954 (or any future corresponding provisions). Section 3.2 Restrictions . No part of the assets or earnings of the Corporation shall inure to the benefit of any individual. The Corporation shall not participate in or intervene (including the publication or distribution of statements) in any political campaign on behalf of any candidate for public office. Notwithstanding any other provision of this Charter, the Corporation shall not carry on any activities not permitted to be carried on: As Adopted May 18. 1976 and amended though July 7, 1995. (r) By a corporation exempt from Federal Income Tax under Section 501(c)(3) of the Internal Revenue Code of 1954 (o- the corresponding provi- sion of any future United States Internal Revenue Law); or (ii) By a corporation, contributions to which ars deductible under Section 170(c)(2) of the Internal Revenue Code of 1954 (or the corresponding provision of any future United States Internal Revenue Law). ARTICLE IV Corporate Powers The Corporation shall have and possess all the powers permitted to nonprofit corpora- tions under the laws of the State of Hawaii. ARTICLE V Corporate Life The duration of the Corporation shall be perpetual. In Section 6.1 Board of Trustees. There shall be a Board of Trustees elected as provided in the Bylaws who shall number 20 at the formatior of the Corporation and within three yeah; thereafter shall be reduced to a number not cess than eleven nor more than seven- teen persons. The Board of Trustees shall have and may exercise all the powers of the Corpo- ration except as otherwise provided by law, this Charter or the Bylaws. Section 6.2 Officers, The officers of the Corporation shall be a chairman of the board, a president, a secretary and a treasurer. The Corporation may have such additional officers as determined in accordance with the Bylaws. The officers shall have the powers, perform the duties and be appointed in the manner set forth in the Bylaws. Any person may hold two or more offices of the Corporation unless such practice is prohibited by the Bylaws. ARTICLE VII Liability and Indemnification of Officers, Directors. Employers and Agents Section 7.1 No Liability to Corporation. No trustee, officer, employee or other agent of the Corporation and no person serving at the request of the Corporation as a trustee, officer, employee or other agent of another corporation, partnership, joint venture, trust or roWcwc QWW ofd PM 2 other enterprise and no her, or personal representative of any such person shall be liable to the Corporation for any loss or damage suffered by it on account of an action or omission by such person as a trustee, officer, employee or other agent if he/she acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of this Corporation, unless with respect to an action or suit by or in the right of the Corporation to procure a judgment in its favor such person shall have been adjudged to be liable for negligence or misconduct in the performance of his/her duty to this Corporation. Section 7.2 Infinity. (1) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he/she is or was a trustee, officer, employee or other agent of the Corporation or is or was saving at the request of the Corporation as a trustee, officer, employee or other agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him/her in connection with such action. suit or proceeding if he/she acted in good faith and in a manna he/she reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or procaedin& had no reasonable cause to believe his/her conduct was unlawfid. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself; create a presumption that the person did not act in good faith and in a meaner which he/she reasonably believed to be in or not opposed to the best interests of this Corporation or, with respect to any criminal action or proceeding, had reasonable cause to believe that his/her conduct was unlawful. (2) The Corporation shall indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a trustee, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other entity, against expenses (including attorneys' fees) actually and reasonably incurred by him/her in connection with the defense or settlement of such action or snit if he/she acted in good faith and in a manner he/she reasonably believed to be in or not opposed to the best interests of this Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his/her duty to this Corporation unless and EWCWC marc of hwrporrlm PW3 only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the ad udicatton of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. (3) To the extent that a trustee, officer, employee or other agent of the Corporation or of any division of the Corporation, or a person serving at the request of the Corporation as a trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other entity, has been successful on the merits or otherwise in defense of any action, suit or preceeding referred to in paragraphs (1) and (2) of this section, or in defense of any claim, issue or matter therein, he/she shall be indemnified against expenses (including allomeys' fees) actually and reasonably incurred by him/her in connection therewith. (4) Any indemnification under paragraphs (1) and (2) of this section (unless ordered by a court) shall be made by the Corporation only if authorized in the specific case upon a determination that indemnification of the trustee, officer, employee or agent is proper in the circumstances because he/she has met the applicable standard of conduct set forth in paragraphs (1) and (2). Such determination may be made: (i) by the Board of Trustees by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceedings; (ii) if such a quorum is not obtainable, or, even if obtainable and a quorum of disinterested directors so directs, by independent legal counsel in a written opinion to the Corporation; (iii) if a quorum of disinterested trustees so directs, by a majority vote of the members; or (iv) by the court in which such proceeding is or was pending upon application made by the Corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not such application by the agent, attorney or other person is opposed by the Corporation. (S) Expenses incurred in defending a civil or criminal action. suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Trustees in a particular case upon receipt of an undertaldng by or on behalf of the trustee, officer, employee or agent to repay such amount unless it shall ultimately be xucwc ChwW of toearporaim Pip 4 determined that he/she is entitled to be indemnified by the Corporation as authorised in this article. (6) The indemnification provided by this article shall not be deemed exclusive of any other rights to which those indemnified may be entitled and shall continue as to a person who has ceased to be a trustee, officer, employee or agent and shall inure to the benefit of the heirs and personal representatives of any such person. (7) The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a trustee, officer, employee or other agent of the Corporation or is or was serving at the request of the Corporation as a trustee, officer, employee or other agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him/her and incurred by him/her in any such capacity or arising out of his/her status as such, whether or not the Corporation would have the power to indemnify him/her against such liability under the provisions of this Article. ARTICLE VIII MemhsnhIR The sole voting member of the Corporation shall be Kapiblani Health [formerly ]mown as Kapiolani Health Care System], a Hawaii nonprofit corporation. The sole voting member of the Corporation shall have such rights and powers as are provided in the Charter of Incorporation, the Bylaws and the laws of the State of Hawaii including, without limitation of the generality of the foregoing, the exclusive power. (a) to elect the trustees of the Corporation and to remove any of the trustees of the Corporation from office; and (b) to vote on all matters where the vote of members with voting rights is required under the Charter of Incorporation, the Bylaws, or the laws of the State of Hawaii. The Corporation may provide in the Bylaws for one or more classes of supporting, life, honorary, or other non-voting members, who shall have the rights set forth in the Bylaws but who shall not be entitled to vote or to have any voice in the management of corporate affairs. KMCWc m,e of howpor.dm ry s ARTICLE IX Divisions The Corporation may provide in the Bylaws for special articles of governance for one or more divisions, such as the Auxiliary and the Medical Staff; and the Bylaws may authorize such division., to adopt their own. bylaws, rules and regulations, subject to approval of the Board of Trustees. ARTICLE X The Corporation is not organized for profit and it will not issue any stock, and no part of its assets, income, or earnings shall be distributed to its trustees or officers, except for services actually rendered to the Corporation, except that the Corporation shall be empowered to make payments and distributions in furtherance of the exempt purposes for which it was formed. ARTICLE XI Cute Liability The property of the Corporation shall alone be liable in law for the payment of the debts and liabilities of the Corporation. If the Corporation shall can to exist or shall be dissolved, all property and assets of the Corporation of every kind, after payment of its just debts, shall be distributed to Kapi'olani Health [formerly known as Kapiolani Health Care System], Kapi'olani Health Foundation [formerly known as Kapiolani Medical Center Foundation for Women and Children] or either of them, or to any other health can oration which is then affiliated with either of them, provided the recipient is then a tax-exempt organization described in Section 501(cx3) of the Internal Revenue Code of 1954 (or the corresponding provision of any future United States Internal Revenue lawn but if Kapi'olani Health [formerly known as Kapiolani Health Care System] or Kapi'olani Health Foundation [formerly known as Kapiolsni Medical Center Foundation for Women and Children] at that time is no longer such a tax-exempt organization, then the remaining assets shall be distributed, for the specific purposes of prenatal and postnatal health are for women and children, only to one or mon public agencies, organizations, corporations, trusts or foundations organized and operated exclusively for charitable, scientific, educational or literary purposes, no part of whose assets, income or earnings may be used for dividends or otherwise withdrawn or distributed to or inure to the benefit of any private shareholder or individual and the activities of which do not XMCWC OMW ofImmPm Vin PW 6 include participation or intervention (including the publication or distribution of statements) in any politicai campaign on behalf of any candidate for public office. In no event shall any distribution be made to any organization unless it qualifies as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1954 (or the corresponding provision of any future United States Internal Revenue Law) with purposes similar or related to those of the Corporation. To the extent economically and socially feasible, any such distributions shall be allocated equally between medical care for women and medical care for children; and to the extent that any restricted funds are distributed for one of such purposes, an equivalent amount of unrestricted funds shall be distributed for the other purposes, so that the total distribution shall be approximately equivalent. ARTICLE XM Bylaws The power to adopt, alter, amend or repeal the Bylaws or adopt new Bylaws shall be vested in the Board of Trustees subject to repeal or change by the action of the members. Lai - s/ - i This Charter shall be subject to amendment from time to time in the manner set forth by law, and the Corporation shall be subject to all general laws now in force or hereafter enacted with regard to corporations of this nature. ~~ZM KWcWc chic of lomparim Pap KAPI'OLANI MEDICAL CENTER FOR WOMEN AND CHILDREN I, Betty Kaneshiro, Assistant Secretary of KAPI' OLANI MEDICAL CENTER FOR WOMEN AND CHILDREN, a nonprofit corpomaon duly organized and existing under and by virtue of the laws of the State of Hawaii, do hereby certify that the Bylaws attached hereto are a full, true and correct copy of the Bylaws as amended through October 15, 1997, and that since that date said Bylaws have not been modified, amended or rescinded and continue m full force and effect IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said KAPI'OLANI MEDICAL CENTER FOR WOMEN AND CHILDREN this 7+ day of January, 2000. ARTICLE I Activities The activities of Kapi'olani Medical Center for Women and Children (the "Corporation") shall be those necessary and appropriate to accomplish the purposes of the Corporation as stated in the Charter of Incorporation of the Corporation (the "Charter"). ARTICLE 11 Membershjy and Voting Section 2.1 Voting Member. The sole voting member of the Corporation shall be Kapi'olani Health [formerly lmown as Kapiolani Health Care System], a Hawaii nonprofit corporation. Section 2.2 Sunoortinq. Life and Honorary Members. Any individual or corporation may be a supporting, life or honorary member of the Corporation by vote of the Trustees at any regular, special or annual meeting, and who pays such fees and dues as may be prescribed by the Board of Trustees, Supporting, life and honorary members shall be entitled to the privileges prescribed by the Board of Trustees but shall not be entitled to vote or to have any voice in the management of corporate affairs. ARTICLE III Meeting of Members Section 3.1 Annual Meeting. The annual meeting of the members shall be held each year at such time and place as the Board of Trustees determines for the purposes of electing trustees and transacting such other business as may come before the meeting. The voting members may dispense with the annual meeting by unanimous written consent. Section 3.2 Special Meetings. Special meetings of the members for any purpose or purposes may be held at any time upon the call of the President or any three trustees or upon the written request of the majority of the voting power of the membership of the Corporation, As Adopted May 18, 1976 wad amended through October 15, 1997. Section 3.3 Place of Meeting. The Board of Trustees may designate any place for any annual or special meeting of the members. I: no designation is made, the place of meeting shall be the principal office of the Corporation. Section 3.4 Notice of Meetings. Notice of all meetings, annual or special, stating the place, day and hour of the meeting and whether it is annual or special, and in case of a special meeting stating the purpose or purposes thereof, shall be given personally or by mail If by mail, such notice shall be postage prepaid to each member at his address as it appears on the membership roll of the Corporation at least ten days before the meeting. Section 3.5 Adjourned Meetings and Notice Thereof. Any meeting of the members, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the voting members present, but in the absence of a quoninr no other business may be transacted at any such meeting. When any members' meeting, either annual or special, is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original mating; otherwise it shall not be necessary to give any notice of an adjourned mating other than by announcement at the mating at which the adjournment is taken. Section 3.6 Voting. At all meetings of members, every voting member entitled to vote shall have the right to vote in person or by written proxy, Section 3.7 Quorum. A majority of the voting members constitutes a quorum for the transaction of business and any decision of a majority of the quorum of voting members shall be valid and binding except as otherwise specifically provided with respect to particular matters by the Charter, these Bylaws or by applicable provisions of law. ARTICLE IV Board of Trustees Section 4.1 Number and thaliiication of Trustees. There shall be not less than eleven nor more than seventeen trustees. The number of trustees for any following year shall be determined by the voting membership at the annual meeting. The President of the Corporation and the Chief of Staff shall be trustees. The remaining trustees shall be elected by the membership at the annual mating to hold office for the term elected and thereafter until their successors are duly elected and qualified, provided that additional trustees may be elected at any special meeting of the membership called for that purpose during the year to fill any unfilled positions. Section 4.2 Term of Membership. The initial tern of each Trustee shall be for a period of one year and thereafter the time dull be three years, except that shorter terms may be set so that terms of approximately one-third of the total number constituting the Board shall expire each year. The tens of each President and Chief of Staff as Trustees shall continue so long as each occupies that position. Any member of the Board may be removed Pw 2 from office upon the affirmative vote of not less than three-fourths of the Board No trustee may serve for more than three consecutive terms. Section 4.3. Schedule and Notice of Meetings. (a) Organization Meeting of Board. A meeting of the Board elected at an annual meeting of the members shall be held at the place of such annual meeting and immediately thereafter and no notice thereof shall be necessary. In the event that such meeting of the Board shall not be held, a special meeting shall be called to be held as soon as practicable thereafter. The purpose of this meeting is to elect officers of the Corporation for the coming year. (b) Regular gg. Regular meetings of the Board may be held at least quarter annually at the place and time established by the trustees and when any such meeting or meetings is established no further notice thereof shall be necessary. At regular meetings, the Board, subject to any requirements of law and of the Charter and these Bylaws, may transact any general business brought before the meeting and take any corporate action. (c) Special Meetings. Special meetings of the Board may be called at any time by the Chairman of the Board, the President or by any three trustees. (d) Notice of Meetings of the Board. Except as otherwise provided herein, the Secretary shall give notice of each meeting of the Board, either orally or in writing by mail or delivery not less than one day before the meeting unless otherwise prescribed by the Board. The failure of the Secretary to give notice or the non -receipt of notice by any trustee shall not invalidate the proceedings of any meeting of the Board at which a quorum of the trustees is present. Section 4.4 Ouorom for the Board. A majority of the Board constitutes a quorum for transaction of business. Section 4.5 Vacancies on the Board. Should a vacancy occur on the Board, the remaining member: of the Board may, by a majority vote, elect a successor to fill the vacancy to serve for the unexpired term. Section 4.6 Attendance at Meednos of the Board. If any member of the Board is absent from three consecutive meetings or four or more meetings per annum, without leave of the Board for due cause, his office may be declared vacant and his removal from the Board and from his office shall be completed when such fact is noted in the minutes of the Board by order of the Trustees. In any such case or procedure, the Board shall fill such vacancy until the next annual meeting. KMCWC Bylaws Page 3 Section 4.7 Powers of the Board. All powers and authority of the Corporation shall be vested in and be exercised by the Board except as limited by law, the Charter or these Bylaws: such powers including the following: (a) To acquire and dispose of property; (b) To elect officers and appoint agents or employees of the Corporation and to confer upon and to delegate to them by power of attorney or otherwise such power and authority as it determines, (c) To determine all matters affecting finances; to fix the salaries or compensation of the agents and employees of the Corporation, and in its discretion require security of any of them for the faithful performance of any of their duties; (d) To make rules and regulations not inconsistent with law or the Charter of Incorporation or these Bylaws for the operation of the medical center; (e) To create committees of the Board and to designate as member: such persons as it determines and to confer upon such committees such powers and authority as by resolution set forth for carrying on or exercising the powers of the Corporation; (f) To remove or suspend any officers. Any officer elected by the Trustees may be removed with or without cause by the vote of a majority of the Trustees. (g) To incur indebtedness as necessary, and as security for the payment of obligations of the Corporation, to assign, set over, transfer, mortgage, pledge or hypothecate any and all of its real, personal, or other property, and to execute or endorse in the name and on behalf of the Corporation such note or notes or other obligations as the Board deems advisable. (h) Generally, to do any lawful act necessary or proper to cavy into effect the powers and purposes of the Corporation. ARTICLE V Officers Section 5.1 Princfoal Officen. The principal officers of the Corporation shall be a Chairmen of the Board, a Vice -Chairman, a President, a Secretary and a Treasurer. The officers shall be elected amorally by the Board at the organization mating or the first meeting thereof atter the annual or special meetings of the members at which the Board is elected, and xrtcwc D*" Pw 4 shall hold office for one year and thereafter until their successors are duly elected and qualified The offices of the Secretary and Treasurer may be held by the same person. The Treasurer may be a corporation. The Chairman of the Board and any Vice Chairman or Vice Chairmen, if elected, and the President shall be Trustees. No other officer need be a Trustee Section 5.2 Chairman of the Board. The Chairman of the Board shall have general supervision over the Corporation's business and affairs and see to the proper observance and enforcement of the Charter and these Bylaws and the rules and regulations, actions and orders of the Board. The Chairman shall call such meetings of the members of the Corporation and of the Board as are herein provided for and such other meetings as shall seem proper to the Chairman. Section 5.3 Vice Chairman of the Board. The Board at any meeting, may elect one or more Vice Chairmen of the Board. In the absence or disability of the Chairman of the Board, the Vice Chairmen in order of their rank as fixed by the Board, shall preside at any meeting of the members or the Board. Section 5.4 President. The President shall have such duties and responsibilities as the Board shall prescribe from time to time. Section 5.5 Vice President. The Board at any meeting, may elect one or more Vice Presidents. In the absence or disability of the President, the Vice Presidents, in order of their rank as fixed by the Board, or if not ranked, the Vice President designated by the Board of Directors, shall perform all duties of the President, and when so acting shall have all power of, and be subject to all restrictions upon, the President; the Vice Presidents shall have such other powers and perform such other duties from time to time prescribed for them respectively by the Board or the Bylaws. Section 5.6 Secretary. The Secretary shall give the notices of all meetings of the members of the Corporation and the Board and shall keep the minutes of such meetings. The Secretary shall furnish the Treasurer with the names of all persons elected to membership in the Corporation, keep the membership roll of the Corporation. The Secretary shall perform all other duties assigned by the Board. Section 5.7 Treasurer and Assistant Trasnrer. The treasurer shall review the financial status of the Corporation and recommend fiscal policies to the President, chairman of the board and the Board of Trustees. The treasurer may be a corporation. The treasurer shall perform all other duties assigned by the chairman of the board or the Board of Trustees. The assistant treasurer or assistant treasurers, if elected, shall, in the order designated by the chairman of the board of the Board of Trustees, perform all the duties and exercise all the powers of the treasurer during the absence or disability of the treasurer or whenever the office is vacant and shall perform all the duties assigned by the chairman of the board or the Board of Trustees. Section 5.8 Subordinate Officers. The Board may appoint subordinate officers who shall hold their positions at the pleasure of the Board, and who shall have the powers and KMCWC Bylaws Pose 5 duties determined by the Board. The number and title of subordinate officers may be changed from time to time and subordinate officers may be appointed from time to time at any meeting or meetings of the Board. The authority to fix the pow.-rs and duties of subordinate officers may be delegated by the Board to any officer or officers of the Corporation. Any officer of the Corporation may also be a subordinate officer. Subordinate officers need not be Trustees. ARTICLE VI Chief Executive Otrcer The Board shall appoint a Chief Executive Officer, who need not be an officer of the Corporation. and who shall have such duties and responsibilities as the Board shall prescribe from time to time. ARTICLE VII Execndon oflnstromentr All checks and other orders for payment of money, drafts, notes, bonds, acceptances, contracts, and all other instruments shall be signed by such person or persons designated by general or special resolution of the Board, and, in the absence of any such general or special resolution applicable to any such instrument, then the instrument shall be signed by the Chairman of the Board, any Vice Chairman or the President and by the Treasurer or the Secretary. ARTICLE VIII Committees of the Board Section LI $tandtea Committees. The Corporation shall have the following standing committees: Executive, Finance, Nominating and Corporate Bylaws, and such other standing committees as the Board may authorize. The Chairman and members of the standing committees of the Board shall be appointed by the Chairman of the Board and shall serve for at least a one-year term, which may be extended by the Chairman of the Board. There shall be such special committees as may be appointed by the Chairman of the Board from time to time. At a committee meeting, a quorum shall be a majority of committee members. Activities of the committees may be recorded in minutes. Section 8.2 Executive Committee. The Executive Committee shall consist of the Chairman, the President, and at least one additional trustee appointed by the Board. The Executive Committee shall have the power to transact all regular business of the Corporation during the period between the meetings of the Board, subject to any limitations imposed by the Boatel. Section 8.3 Finance Committee. The Finance Committee shall consist of at least three Trustees, The duties of the committee include the following: PW 6 (a) Responsibility for supervising the management of all endowment and trust funds of the medical center; (b) Review of and approval of the capital and annual operating budgets of the Corporation. (c) Review of the financial feasibility of corporate projects, acts and undertakings referred to it by the Board and making recommendations thereon; (d) Review and evaluate the findings and final reports of the auditors and based thereon making recommendations to the Board concerning financial operation of, and services required by and provided to the Corporation; (e) Performing such other duties related to fiscal matters as maybe assigned to it by the Board or the Chairman. Section 8.4 Nominating Committee. The Nominating Committee shall be appointed each year by the Chairman of the Board. This committee shall be composed of at least three member: of the Board. The Nominating Committee shall have the duty of nominating at the annual meeting of the Corporation, and at other meetings when vacancies are to be filled, candidates to be elected officers and members of the Board. Section 8.5 Corporate Bylaws Committee. The Corporate Bylaws Committee shall be appointed each year by the Chairman of the Board. The Committee shall review annually the Bylaws, organization and general policies of the Corporation and shall submit to the Board a report based on its review, including any recommendations for changes. ARTICLE IX Auxiliary There shall be an auxiliary of the Corporation, to be known as the Kapiblani Medical Center for Women and Children Auxiliary. The purpose of the auxiliary shall be to assist the medical center by voluntary services, promotion of projects and solicitation of donations and funds for the benefit of the medical center. The Auxiliary shall adopt bylaws to govern its activities and such bylaws shall be submitted to the Board for approval. ARTICLE X Medical Staff Section 10.1 Organization and Bylaws. There shall be an organized medical staff that has overall responsibility for the quality of all medical care provided to patients, and for the ethical conduct and professional practices of its members as well as for accounting KMCWC Bylaws Page 7 therefor to the Board. The medical staff shall develop and adopt bylaws, rules and regulations to establish a framework for self-government and a means of accountability to the Board. These bylaws, rules and regulations shall be submitted to the Board for approval and shall contain procedures for satisfying the requirements of due process in conducting hearings and appeals. Section 10.2 Medical Executive Committee. (a) The Medical Executive Committee shall be the executive committee of the medical staff. The chairman of the Medical Executive Committee is the Chief of Staff and is an ex -officio member of the Board. (b) The Medical Executive Committee shall act in an advisory capacity to the Board when called upon, approve or disapprove the character of medical work done in the medical center, and if necessary, limit the activities of the member: of the active and visiting staff, provided no such member's activities shall be limited unless and until said member has had the privilege of appearing before and being heard by the Medical Executive Committee. (c) The Medical Executive Committee shall advise the Board and make such recommendations with respect to all grievances, complaints, suggestions and criticisms regarding medical practice and ethics that are brought to its attention. Section 10.3 AgFointments. (a) The Board shall approve, upon the advice of the Chief of Staff of the Medical Executive Committee of the medical staff, the persons entitled to Medical or Dental Staff membership as evidenced by their individual qualifications and licensed by the State of Hawaii subsequently to engage in medical practice within the medical center and the conditions and standards under which such practice shall be conducted. (b) All initial appointments to the medical staff shall be for a period of one year pursuant to formal reapplication procedures. Reappointments shall be for two years each. (c) When an appointment is not to be renewed, or when privileges have been or are proposed to be reduced, altered, suspended, or terminated, the staff member shall be afforded the opportunity of due process as outlined in the medical staff bylaws. X3dCwc air.. iW 8 Section 10.4 Physicians and Dentists Employed by the Medical Center. (a) Physicians and dentists employed by the Corporation in a purely administrative capacity with no clinical duties are subject to the regular personnel policies of the hospital and their contract or other terms of employment, and need not be members of the medical staff. (b) Physicians and dentists employed by the Corporation, either full or part-time, whose duties are medico -administrative in nature and include clinical responsibilities or functions with the medical staff involving their professional capability as physicians or dentists, must be members of the medical staff, achieving this status by the same procedure provided for other medical staff members. Medical staff membership and clinical privileges may or may not be made contingent on continued employment. (c) Termination of employment of a physician or dentist in a medico -administrative position shall be subject to review, and a hearing, if requested, by a joint conference of Board member: and representatives elected by the voting members of the medical staff. (d) When the reason for the action is determined to involve the individual's medical competence, which includes competence to supervise the professional activities of practitioners under his or her direction, the medical staff shall provide for a review of the decision, including the right to a hearing if requested by the individual, and a recommendation to the Board on the action proposed. (e) When the reason for the action is determined by the joint conference to be purely administrative in nature and does not involve the individual's medical competence, the Board shall follow its usual personnel policies, or the terms of the contract, if there be one. Section 10.5 Responsibilities of the Medical Staff The medical staff shall have the authority and responsibility to establish and maintain the following: (a) To be a member of the medical staff a doctor shall qualify for the medical privileges, and exercise the privileges granted, consistent with the requirements of these bylaws and the bylaws, rules and regulation of the medical staff. (b) The medical staff shall be organized to provide a framework for effective performance by the members of their duties and functions. The organization shall be in categories ad forth in the medical staff bylaws, which shall provide for the election of officers, executive committee and service chiefs. The service chiefs may serve for a period of two years and may be re- elected subject to the directives of the medical staff and its bylaws. KMCWC Bylaws Pale 9 (c) The medical staff shall strive to create and maintain an optimal level of professional performance by its members through the appointment procedure, delineation of medical staff privileges and the continual review and evaluation of each member's clinical activities. (d) The medical staff shall provide procedures by committee or otherwise for regular review, evaluation and monitoring of practices and functions of members for the purpose of maintaining high professional standards of care; (e) There shall be regular medical staff and departmental meetings to review the clinical work of members and to complete medical staff administrative duties; (f) The medical staff shall provide a continuing program of medical education; and the members shall submit or give evidence of participation in the program or comparable programs to the medical staff. ARTICLE XI Conflkt of Interest (a) Trustees, officers and employees shall exercise utmost good faith in all transactions involving the Corporation and its property, and they shall comply with the strictest rules of honesty and fair dealing. They shall not use their positions or information gained fivm such positions in any way to create or participate in a conflict between their interest and the interest of the Corporation. (b) No trustee, officer or employee shall act in any manner which affects the Corporation adversely. (c) No trustee, officer or employee of the corporation shall accept any favor which might influence his actions concerning the Corporation. (d) All trustees, officers and employees of the Corporation shall use their best efforts to avoid any new employment, activity, investment or other interest which would compete with or be in conflict with the interest of the Corporation and in the event any such activity, investment or other interest becomes apparent, the trustee, officer or employee shall disclose the same to the Board of Trustees of the Corporation. (e) If any trustee, officer or employee prepares to undertake any transaction for which there can be any doubt about the existence of a conflict of interest, the trustee, officer or employee shall file a written disclosure with eae 10 the Executive Committee of the Corporation before consummating the transaction. (f) The President of the Corporation shall prepare an appropriate questionnaire to ascertain if any trustee, officer or employee is involved in any transaction which may be deemed a conflict of interest with that of the Corporation Each trustee, officer and selected employee who receives a copy of the questionnaire shall complete and return it to the President. The President shall report to the Executive Committee all transactions about which there appears to be any question of a conflict of interest. The questionnaire procedure shall be performed at least annually. ARTICLE X11 Auditor The Auditor shall be elected annually by the Board. The Auditor shall audit the books and accounts of the Corporation and shall certify its findings and report thereon, in writing, to the members at least annually; and shall make other audits and reports as the Board shall determine from time to time. The Auditor may be a person, copartnership, or a corporation. No member, trustee of a corporate member, or trustee shall be eligible to serve as Auditor of the Corporation. The Auditor may be removed from office either with or without cause at any time at any meeting of the Board. ARTICLE XIII AMMUIM2= These Bylaws may be altered, amended or repealed at any meeting of the Board provided that written notice of the meeting shall be given in accordance with section 4.3(d) of these Bylaws, which notice shall state that one of the purposes of the meeting is the consideration of the amendment of these Bylaws and shall set forth the proposed amendments. NNN KMCWC Bylms Page 11 Human Resources Policy and Procedure: EMPLOYMENT OF RELATIVES Number: 6.6 Effective Date. 11/1/85 Revision Date 5/1/97 1. Purpose Reviewed: Approval Kapi'olam Health recognizes that relatives of employees may be a valuable source of recruitment for lob vacancies. However, it also recognizes employment of relatives m the same organizational entity may cause potential conflicts and create issues of favoritism and employee morale. II. Relatives Det7ued Relatives are defined as spouses, domestic partners, parents, stepparents, parents-in-law, siblings, stepsiblings, brothers -m law, sisters-in-law, children, stepchildren, children -in-law, grandparents, grandparents -m -law, aunts, uncles, nieces, nephews, first cousins, and legal guardians III. Procedure A Conditions prohibiting employment. 1. Relatives shall not be employed where the applicant would: a. Directly or indirectly supervise or be supervised by a relative b Be employed to work in the same entity, subsidiary, or division as a relative. c. Where a conflict of interest or the perception of a conflict of interest c: uld occur by the applicant working in such areas as administration, finance, matenais management, purchasing, or security 2. Relatives or members of the Leadership Team and other key members of management may not be employed with Kapi'olani Health. B. Employee relationships occurring after employment. When etcher a manage or domestic partnership between two employees occurs in one of the areas listed in A above, changes in employment will not be required. However, a mutually suitable solution shall be sought to avoid continued employment of both employees working in these areas. The two employees who become so im nl% ed (manage or domestic partnership) shall suggest the suitable solutions to the appropriate member(s) of the Executive Team, and in consultation with the Vice President of Human Resources, the solution will be documented and implemented 2. If a direct or indirect supervisory relationship occurs as a result of manage or domestic partnership, the employees so involved will deternune a plan to resolve the situation within the soonest possible time Same. This solution shall be presented to the appropriate Employment of Relatives Page 2 member(s) of the Executive Team and the Vice President of Human Resources, and, if approved, will be implemented as soon as practical. Should the solution not be acceptable to management, the group will work together until a solution is found that resolves the situation. Depending on the closeness of the supervisory relationship, management reserves the right to require that the two affected employees determine wtuch one of them will remove themselves from the work environment, either by transfer, demotion, or resignation. This is clearly the least optimal solution, and if it becomes necessary to implement such a solution, an appropriate separation package will be offered, consistent with separation packages given in layoff situations. H Policy Manual 2000\I1telauve clot