EL CAMINO HOSPITAL BOARD AMENDED AGENDA OF THE REGULAR BOARD MEETING Wednesday, October 9, 2013 5:30 p.m. Location: El Camino Hospital, Conference Rooms E, F & G (ground floor) 2500 Grant Road Mountain View, California

MISSION: To be an innovative, publicly accountable and locally controlled comprehensive healthcare organization which cares for the sick, relieves suffering, and provides quality, cost competitive services to improve the health and well-being of our community. AGENDA ITEM PRESENTED BY

1. CALL TO ORDER Neal Cohen, MD 5:30 – 5:31 p.m. Board Chair

2. ROLL CALL Neal Cohen, MD 5:31 Board Chair

3. POTENTIAL CONFLICT OF Neal Cohen, MD 5:31 – 5:32 INTEREST DISCLOSURES Board Chair

4. BOARD RECOGNITION Mick Zdeblick, COO public motion required Resolution 2013-8 comment 5:32 – 5:37 The Board will recognize individual(s) who enhance the experience of the Hospital’s patients and the community. ATTACHMENT 4

5. PUBLIC COMMUNICATION Neal Cohen, MD 5:37 – 5:42 A. Oral Comments Board Chair This opportunity is provided for persons in the audience to make a brief statement, not to exceed 3 minutes on issues or concerns not covered by the agenda. B. Written Correspondence

6. CONSENT CALENDAR ITEMS: Neal Cohen, MD public motion required Any Board Member may pull an item for Board Chair comment 5:42 – 5:47 discussion before a motion is made.

Approval: a. Minutes of the Special Hospital Board Meeting – September 11, 2013 b. ECH Foundation Board Member Appt. c. Revisions to HR Policy 5.02 403(b) Retirement Plan

A copy of the agenda for the Regular Meeting will be posted and distributed at least seventy-two (72) hours prior to the meeting. In observance of the Americans with Disabilities Act, please notify us at 650-988-7504 prior to the meeting so that we may provide the agenda in alternative formats or make disability-related modifications and accommodations.

Agenda: El Camino Hospital Board Regular Board Meeting October 9, 2013 Page 2

AGENDA ITEM PRESENTED BY d. Consulting Agreement for Obstetrical Hospitalist Program Committee Updates e. Finance Committee (Dennis Chiu, Chair) f. Investment Committee (John Zoglin, Chair) Reviewed and Recommended for Approval by the Finance Committee g. July 2013 Financials h. IGT Transfer i. Medical Director, Palliative Care j. Medical Director of Quality and Patient Safety k. Increase in Stipend for On-Call Panel for STEMI Myocardial Infarction (MV) l. Medical Director, Vascular Surgery m. Human Resources/IT Agreement Reviewed and Recommended for Approval by the Quality, Patience Care, and Patience Experience Committee n. Physics Quality Assurance – General Program o. Physics Quality Assurance For Trilogy / Liniac p. Physics Quality Assurance - Measurement of Equipment q. Physics Quality Assurance - Eclipse Treatment Planning System r. Physics Quality Assurance - Systemic Clinical Review of Medical Records s. Physics Quality Assurance - Cyberknife Program t. Physics Quality Assurance for High Dose Rate (HDR) Brachytherapy Quality Management Program (QMP) u. High Dose Rate (HDR) Operating and Safety Procedures v. Emergency Response Procedures for Nulcetron HDR-IR-192 If the Source Fails to Return to the Safe w. High Dose Rate (HDR) Calibration Procedures x. High Dose Rate (HDR) Inventory of Sealed Sources y. High Dose Rate (HDR) Transportation of Sealed Sources z. Radiation Safety Training Procedures aa. Quality Assurance Responsibilities for Oversight of Physics in Radiation Oncology Agenda: El Camino Hospital Board Regular Board Meeting October 9, 2013 Page 3

AGENDA ITEM PRESENTED BY bb. Temperature and Humidity in the OR and MV Interventional Services Policy Reviewed and Recommended for Approval by the Executive Compensation Committee cc. Revised Executive Compensation Committee Charter Reviewed and Recommended for Approval by the Corporate Compliance/Privacy and Internal Audit Committee dd. Annual 403(b) Retirement Plan Audit ee. Participant Cash Balance Plan Audit Reviewed and Recommended for Approval by the Medical Staff ff. Medical Staff Report Acceptance: gg. Finance Committee Minutes – July 30, 2013 hh. Quality Committee Minutes – July 22, 2013 ii. Executive Compensation Committee Minutes – May 16, 2013 jj. Corporate Compliance Committee Minutes – June 11, 2013 kk. Auxiliary Report ll. Foundation Report ATTACHMENT 6

7. INFECTION CONTROL (ZERO Carol Kemper, MD information PREVENTABLE HARM) Medical Director, 5:47 – 5:57 ATTACHMENT 7 Infection Control

8. AUGUST 2013 FINANCIALS Ned Borgstrom, public motion required ATTACHMENT 8 Interim Chief comment 5:57 – 6:07 Financial Officer

9. FY 2013 CONSOLIDATED Brian Connor, Moss public motion required FINANCIALS AUDIT Adams comment 6:07 – 6:17 ATTACHMENT 9

10. CEO REPORT Tomi Ryba, information ATTACHMENT 10 President and CEO 6:17 – 6:22

11. ADJOURN TO CLOSED SESSION 6:22

12. POTENTIAL CONFLICT OF Neal Cohen, MD 6:22 – 6:23 INTEREST DISCLOSURES Board Chair

13. CONSENT CALENDAR Neal Cohen, MD motion required Any Board Member may pull an item for Board Chair 6:23 – 6:25 Agenda: El Camino Hospital Board Regular Board Meeting October 9, 2013 Page 4

AGENDA ITEM PRESENTED BY discussion before a motion is made.

Approval of: - Minutes of the Closed Session of the Special Board Meeting (September 11, 2012), Gov’t Code Section 54957.2 - Summary of Compliance Program Activity FY 2013, Gov’t Code Section 54957.2 Acceptance of: - Meeting Minutes of the Closed Session of the Finance Committee (July 30, 2013), Quality Committee (July 22, 2013), Executive Compensation (May 16, 2013), and Corporate Compliance (June 11, 2013), Govt. Code Section 54957.2

14. Report of Medical Staff Quality Assurance Vivien D’Andrea, MD motion required Committee, Health and Safety Code Chief of Staff MV 6:25 – 6:30 Section 32155 Karen Pike, MD - Deliberations concerning reports on Chief of Staff LG Medical Staff quality assurance matters - Medical Staff Report

15. Health and Safety Code Section 32106(b) Tomi Ryba, information for a report involving health care facility President and CEO 6:30 – 7:00 trade secrets. Eric Pifer, MD - IT Case for Change Chief Medical Officer

16. Health and Safety Code Section 32106(b) Tomi Ryba, information for a report involving health care facility President and CEO 7:00 – 7:30 trade secrets. - Los Gatos Market Approach

17. Health and Safety Code Section 32106(b) Tomi Ryba, information for a report involving health care facility President and CEO 7:30 – 7:35 trade secrets. - CEO Report

18. Report involving Gov’t Code Sections Nandini Tandon, PhD information 54957.6 for report and discussion on Chair, Executive 7:35 – 7:40 personnel matters Compensation - FY 2014 Executive Base Pay Committee

19. Report involving Gov’t Code Sections 54957 Tomi Ryba, possible motion for report and discussion on personnel President and CEO 7:40 – 7:45 matters - FY 2013 Organizational Goals Performance Plan Incentive Score Agenda: El Camino Hospital Board Regular Board Meeting October 9, 2013 Page 5

AGENDA ITEM PRESENTED BY

20. Report involving Gov’t Code Sections 54957 Nandini Tandon, PhD possible motion for report and discussion on personnel Chair, Executive 7:45 – 7:55 matters Compensation - FY 2013 Executives’ Individual Committee Performance Incentive Plan Scores

21. Report involving Gov’t Code Sections Nandini Tandon, PhD information 54957.6 for report and discussion on Chair, Executive 7:55 – 8:00 personnel matters Compensation - FY 2013 Executive Performance Payout Committee Amount

22. Report involving Gov’t Code Sections Tomi Ryba, information 54957.6 for report and discussion on President and CEO 8:00 – 8:10 personnel matters and Health and Safety Nandini Tandon, PhD Code Section 32106(b) for a report Chair, Executive involving health care facility trade secrets Compensation - FY 2014 Organizational Goals Committee Mick Zdeblick, COO

23. Report involving Gov’t Code Sections 54957 Nandini Tandon, PhD information and 54957.6 for report and discussion on Chair, Executive 8:10 – 8:20 personnel matters Compensation - FY 2014 CEO Base Pay Committee

24. Report involving Gov’t Code Sections 54957 Nandini Tandon, PhD possible motion for report and discussion on personnel Chair, Executive 8:20 – 8:30 matters Compensation - FY 2013 CEO Performance Incentive Committee Plan Scores

25. Report involving Gov’t Code Sections Nandini Tandon, PhD information 54957.6 for report and discussion on Chair, Executive 8:30 – 8:35 personnel matters Compensation - FY 2013 Performance Payout Amount Committee

26. Health and Safety Code Section 32106(b) for Neal Cohen, MD information a report involving health care facility trade Board Chair 8:35 – 8:45 secrets - Board Strategy Approach

27. Report involving Govt. Code Section Neal Cohen, MD information 54957 for discussion and report on Board Chair 8:45 – 9:05 personnel performance matters - Executive Session

28. Adjourn to Open Session Neal Cohen, MD 9:05 – 9:06 Board Chair

Agenda: El Camino Hospital Board Regular Board Meeting October 9, 2013 Page 6

AGENDA ITEM PRESENTED BY

29. RECONVENE OPEN SESSION Neal Cohen, MD 9:06 – 9:07 Board Chair To report any required disclosures regarding permissible actions taken during Closed Session.

30. FY 2014 EXECUTIVE BASE PAY Nandini Tandon, PhD public possible motion Chair, Executive comment 9:07 – 9:10 Compensation Committee

31. FY 2014 CEO BASE PAY Nandini Tandon, PhD public possible motion Chair, Executive comment 9:10 – 9:13 Compensation Committee

32. FY 2013 EXECUTIVE Nandini Tandon, PhD public possible motion PERFORMANCE PAYOUT Chair, Executive comment 9:13 – 9:16 AMOUNTS Compensation Committee

33. FY 2013 CEO PERFORMANCE Nandini Tandon, PhD public possible motion PAYOUT AMOUNT Chair, Executive comment 9:16 – 9:19 Compensation Committee

34. FY 2014 ORGANIZATIONAL GOALS Tomi Ryba, public possible motion President and CEO comment 9:19 – 9:22

35. IT CASE FOR CHANGE Tomi Ryba, public possible motion President and CEO comment 9:22 – 9:25

36. LOS GATOS MARKET APPROACH Tomi Ryba, public possible motion President and CEO comment 9:25 – 9:28

37. ADJOURNMENT Neal Cohen, MD 9:29 p.m. Board Chair

Next Hospital Board Meeting: - November 13, 2013 - December 2013 – CANCELLED - January 2014 – TBD

Separator Page

Att 4 - Board Recognition Resolution.pdf

RESOLUTION 2013 - 8 RESOLUTION OF THE BOARD OF DIRECTORS OF EL CAMINO HOSPITAL REGARDING RECOGNITION OF SERVICE TO THE COMMUNITY

WHEREAS, the Board of Directors of El Camino Hospital values and wishes to recognize on an ongoing basis the contribution of individuals who enhance the experience of the hospital’s patients, their families, the community and the staff, as well as individuals who in their efforts exemplify El Camino Hospital’s mission and values. WHEREAS, the Board wishes to honor and acknowledge the Los Gatos multidisciplinary team for the diligent work that resulted in Disease Specific Certification from the Joint Commission for the Hip and Knee Replacement Program, as well as the Spine Fusion Program. Certification by the Joint Commission signifies an organization’s commitment to better outcomes for patients. Because of the persistence and collaborative team approach, El Camino Hospital has demonstrated that our Los Gatos campus now meets these critical elements of performance to treat patients with a wide range of unique orthopedic needs. This achievement took more than a year to complete. Pam Coye served as Program Coordinator, leading the team in pursuit of Joint Commission Certification for the three programs. The dedication of the nursing team at the El Camino Hospital Los Gatos Orthopedic Pavilion resulted in a survey without any recommendations. The surveyor specifically commented that this team was, “very connected, eager to share with one another, collaborative, and had strong physician engagement.” Your focus and attention to detail in your work throughout this process is commendable, and will benefit the community we serve. WHEREAS, the Board would like to commend this orthopedic team whose shared vision and commitment enabled the team not only to accomplish this milestone, but also excel in all the standards of care required by this accreditation. A full and comprehensive survey yielded a great enterprise accomplishment of Joint Commission Disease Specific Certification for El Camino Hospital Los Gatos. NOW THEREFORE BE IT RESOLVED that the Board does formally and unanimously pay tribute to:

Alyshia Abraham Pamela Coye Jodi Ridgway Gregory Belcher, MD Pepe Greenlee Elizabeth Silverman Judith Bolker Cynthia Harmer Rosalie Smith Jeffrey Coe, MD Lorna Koep Debbie Smyth Jeri Connolly Martin Lesica Pat Wolfram Judy Moreno

FOR THEIR COMMITMENT AND DEDICATION TO ENHANCING THE ORTHOPEDIC OFFERINGS TO THE PATIENTS WE SERVE. IN WITNESS THEREOF, I have here unto set my hand this 10TH DAY OF OCTOBER, 2013. EL CAMINO HOSPITAL BOARD OF DIRECTORS: Dennis Chiu, JD Jeffrey Davis, MD Nandini Tandon, PhD Neal Cohen, MD Julia Miller Tomi Ryba Patricia Einarson, MD David Reeder John Zoglin

PATRICIA A. EINARSON, MD SECRETARY/TREASURER, EL CAMINO HOSPITAL BOARD OF DIRECTORS Separator Page

Att 6a - Open Minutes Hospital Board 9.11.13.docx Draft: Board of Directors Consideration

Minutes of the Special Meeting Board of Directors of El Camino Hospital Wednesday, September 11, 2013

The Open Session meeting of the Board of Directors of El Camino Hospital (the “Board”) was called to order by Chair Neal Cohen, at 5:30 p.m. on Wednesday, September 11, 2013, Conference Rooms E, F and G, at El Camino Hospital, 2500 Grant Road, Mountain View, California.

1. Call to Order. Roll call was taken. Board members present were Neal Cohen, MD; Dennis Chiu; Patricia Einarson, MD; Julia Miller; David Reeder, Tomi Ryba, Nandini Tandon and John Zoglin. Jeffrey Davis, MD was absent.

2. Potential Conflict of Interests Disclosures. Chair Cohen asked if any Board member or anyone in the audience believes that a Board member may have a conflict of interest on any of the items on the agenda. No conflict of interest was reported.

3. Board Recognition. Director Chiu made a motion, seconded by Director Tandon and approved by a vote of eight Directors in favor, one absent (Davis) to approve Board Resolution 2013-7. Pat Wolfram RN, VP Los Gatos, presented the Board Resolution to the multidisciplinary team that achieved Primary Stroke Center Joint Commission Certification for the Los Gatos site.

4. Public Communication. Mr. Geoffrey Mangers spoke regarding his concerns regarding various hospital services and practices including lithotripsy and billing.

5. Consent Calendar. Chair Cohen asked if anyone wished to remove any items from the consent calendar. Director Ryba requested that item “h” (Geriatric Psychiatry Medical Director) be removed and deferred to a later meeting. Director Einarson requested that items a, g, h, j, n, and o be removed from the consent calendar, and made the other following requests: (1) that the record reflect that she ended her participation in the meeting on July 10, 2013 because she had been participating overnight from Prague, (2) that, going forward, the Medical Director documents refer to “he or she” rather than just “he,” (3) that the Moody’s Report that had been provided to the Board previously be corrected to reflect that the Investment Committee is a Board Advisory Committee and not a subcommittee of the Finance Committee and (4) that future updates to the investment policies also reflect that the hospital will divest itself of investments in fossil fuel companies. She also expressed concerns about the additional duties for the Chief Medical Officer contemplated by items “g” “h” and “j”.

Action: A motion was made by Director Miller and seconded by Director Chiu, and adopted by a vote of eight Directors in favor, one member absent (Davis) to approve the following items on the consent calendar: Minutes of the Meeting of July 10, 2013, FY 2013 Community Benefit Report, Quality, Patient Care and Patient Experience Committee Update, May 2013 Financials, June 2013

2013 06 17 Open_MO_rev

Draft: Subject to Board of Directors Minutes: Special Meeting of the Board September 11, 2013 Consideration Page 2 Financials, Simplee Agreement, Travel Policy, Medical Director - Wellness and Associated On-Call Panel, On-Call Panel - Plastic Surgery, Medical Director - Transcatheter Aortic Valve Replacement, Surgical Robot Purchase, Medical Staff Report; and to accept the following items on the consent calendar: Minutes of the Finance Committee (May 28, 2013), Minutes of the Governance Committee (July 2, 2013), Minutes of the Investment Committee (May 13, 2013), Minutes of the Quality Committee (June 17, 2013), Auxiliary Report, and Foundation Report.

Item 5g ( Medical Director - Digestive Health) and item 5j (Medical Director - Information Technology) – Director Ryba informed the Board that, in light of the CMO’s additional duties, management will be bringing a proposal to the Board in October to expand a current position which will be called Director of Quality that will help offset some of the CMO’s duties and requested that the Board approve items g and j. Eric Pifer, MD, CMO reported that the Medical Directorship contemplated by item 5j, in particular is intended to relieve him of some duties.

Action: Director Einarson made a motion, seconded by Director Miller, and adopted by a vote of eight Directors in favor, one absent (Davis) to approve items 5g and 5j subject to receiving additional information regarding the proposed Director of Quality at the October Board meeting.

Item 5n Revised Cash Balance Investment Policy and Item 5o Revised Surplus Cash Investment Policy – Director Zoglin noted that the Investment Committee and its Advisors could review the fossil fuel investment issue.

Action: Director Chiu made a motion, seconded by Director Einarson and adopted by a vote of eight Directors in favor, one absent (Davis) to approve items 5n and 5o with the recommendation that the investment committee consider divesting from investments in fossil fuel companies.

6. Discussion Items.

A. Quality Update: Preventable Harm – Infection Control and Antimicrobial Stewardship – Dr. Pifer gave an overview of the ECH preventable harm program, described the patient safety goal of having zero preventable harm to patients within three years, and explained the complexities of achieving this goal. He reported that there are four main categories of focus: medication errors that result in a need for drug intervention or transfer to a higher level of care, falls with harm, stage III and IV hospital acquired pressure ulcers, and hospital onset infections. He also provided detailed definitions of each area of focus. Chair Cohen asked for additional explanation regarding the definition of medication errors and suggested that the definition be reviewed to consider including medication errors that necessitate forms of treatment other than drug intervention. Chair Cohen also pointed out that there are some new definitions of ventilator-associated

Draft: Subject to Board of Directors Minutes: Special Meeting of the Board September 11, 2013 Consideration Page 3 pneumonia and central line associated blood stream infections, and that the hospital should consider updating its definitions as those definitions become clearer. Dr. Pifer agreed these were good points for consideration. Dan Shin, MD, reported that 50% of antibiotic use in the U.S. is unnecessary or inappropriate, and is a cause of Clostridium Difficile Infections (“C.Diff.”). C.Diff. infections are associated with morbidity, mortality, increased length of stay, and increased cost of care. The antibiotic stewardship program began at the hospital in July 2009. The focus of the program is on the antibiotics that are most used and “abused” with a goal of decreasing the use each year. The program has been successful with decreases between 8% and 50%. He explained that there have been increases and decreases in C.Diff rate at both Mountain View and Los Gatos. He noted that there is not a linear relationship between antibiotic use and the C.Diff rate, because hand washing is also a factor. Dr. Shin highlighted the 13 relatively new initiatives the hospital is engaging in to advance the program. Dr. Shin reported that there are three vaccine trials for C.Diff. and he has not seen any preliminary data on the trials yet. He also explained the difference between hospital onset (tested positive > 72 hours after admission) vs. community onset (tested positive within 72 hours of admission)

B. Governance Committee Report. Director Miller reported on the recommendations of the Governance Committee.

i. Chair and Vice Chair in Committees.

Action: Director Miller made a motion, seconded by Director Tandon and adopted by a vote of seven Directors in favor, one opposed (Einarson) and one absent (Davis) that the vice chair position as recommended by the Governance Committee will be a Board member and that the chair of each Board advisory committee may appoint a vice chair of such committee from among the Board members serving on that particular committee.

Action: Director Miller made a motion, seconded by Director Tandon and adopted by a vote of seven Directors in favor, one opposed (Einarson) and one absent (Davis) that the Board Advisory Committee Charters continue to require that the Chair of each committee shall be a Board member.

Prior to the vote, but following the motion, Director Einarson commented that the expertise of the “community” committee members should be considered on a case by case basis when making chair and vice chair appointments. The Directors also discussed other pros and cons of community members serving as chairs and vice chairs of committees.

Draft: Subject to Board of Directors Minutes: Special Meeting of the Board September 11, 2013 Consideration Page 4 ii. Agenda Format.

Director Miller then gave a brief overview of the changes to the agenda format as recommended. Director Zoglin questioned lines 1 and 2 in the memo in the Board materials on this topic. Director Miller explained that it would be up to each chair how to handle those two agenda items, depending on whether legal counsel and the Board Liaison would be present at committee meetings. Director Reeder also pointed out that it was the Governance Committee’s recommendation that staff devise a solution for the tabs that did not require creating custom tabs.

Action: Director Miller made a motion seconded by Director Chiu and adopted by a vote of six Directors in favor to approve, two opposed (Zoglin and Einarson), and one absent (Davis) to adopt the new agenda format as recommended by the Governance Committee.

iii. Considerations for Closed Session Minutes.

Action: Director Miller made a motion, seconded by Director Tandon and adopted by a vote of eight Directors in favor, one absent (Davis) to continue with the current practice of keeping abbreviated closed session minutes.

Prior to the vote, but following the motion, there was some discussion regarding the term abbreviated and whether that was or was not the current practice. Mitchell Olejko of Buchalter, Nemer advised the Board that the Board closed session minutes are recorded in an abbreviated fashion, but some of the committee minutes have been lengthier and it would be appropriate for them to be similar to current Board closed session minutes.

iv. Considerations for Executive Sessions in Committees.

Director Miller asked if there were any questions prior to a motion. Director Reeder commented that his recollection was that there was not a recommendation from the Governance Committee; that there were two different motions made and both failed. Director Miller commented that there were two motions made, the first passed and the second was a tie. Director Tandon agreed with Director Miller’s recollection.

Action: Director Miller made a motion, seconded by Director Chiu and approved by a vote of seven Directors in favor, one opposed (Reeder) and one absent (Davis) that Board Advisory Committees may place executive sessions on their agendas at the discretion of the Chair of the Committee.

Prior to the vote, but following the motion, the Directors discussed the pros and cons for holding executive sessions in committees and Mitchell Olejko of

Draft: Subject to Board of Directors Minutes: Special Meeting of the Board September 11, 2013 Consideration Page 5 Buchalter, Nemer explained the legal implications, including compliance with the Brown Act, involved.

v. Appointment of an Ad Hoc Committee. – Director Miller explained the purpose of the proposed Ad Hoc Committee and asked Director Zoglin if he would be willing to serve on the Ad Hoc committee. Director Zoglin agreed to serve. Director Reeder asked Mr. Olejko if Board approval is required. Mr. Olejko explained that this was an appropriate way of handling the appointment of the Ad Hoc Committee to an advisory committee but that it might make sense for the Governance Committee and the Board to look at amending the charters to enable the committees to appoint their own Ad Hoc committees for ease of work.

Action: Director Miller made a motion, seconded by Director Ryba and adopted by a vote of eight Directors in favor, one absent (Davis) that the Board approve the Governance Committee’s recommendation that it appoint an Ad Hoc Committee for the purpose of succession planning for Board and Board Advisory Committee members.

C. Annual Board Meeting – Dark (Non-Meeting) Months. The Board members discussed the cadence of the various committees and whether the proposal should apply to only the Board or to the Board and the Committees. There was also some discussion regarding the challenges of completing the work of the fiscal year with no Board meeting in July.

Action: Director Einarson made a motion, seconded by Director Tandon and adopted by a vote of six Directors in favor, two Directors opposed (Reeder and Zoglin), one absent (Davis) to change the Board and Committees’ dark months to December and July.

D. CEO Report. Director Ryba thanked Dr. Pifer and Dr. Shin for the Quality presentation. She reported that the IPECH (Independent Physicians of El Camino Hospital) Board has been reconstituted and she thanked Dr. Pifer and Scott Farr for leading that effort. She also reported that the Senior Health Center has received Level III Designation from NCQA, and that the 2013 Community Benefit Report is now available.

E. Board Comments. Director Einarson asked what kind of metrics the hospital is using for measuring success of the Patient Advisory Committee and the Senior Health Center and noted that she would like to have more in-depth information on those topics. Director Ryba noted that Dr. Pifer will bring back information to the Board regarding the Senior Health Center prior to expansion into Campbell.

Director Zoglin commented that he would like to see the corporate goals measurement period refined, and would like to understand the rationalization for all of

Draft: Subject to Board of Directors Minutes: Special Meeting of the Board September 11, 2013 Consideration Page 6 the Medical Directorships and see more on trends. Director Ryba agreed to bring information to the Board on both of those topics.

VII. Adjourn to Closed Session. A motion was made by Director Chiu, seconded by Director Miller and approved by a vote of eight Directors in favor, one absent (Davis) to adjourn the Open Session to Closed Session at 6:50 p.m. pursuant to Gov’t Code Section 54957.2 for approval of the Minutes of the Closed Session of the Regular Board Meeting (July 10, 2013); acceptance of the Closed Session Minutes of the Finance Committee (May 28, 2013), Closed Session Minutes of the Governance Committee (July 2, 2013), and Closed Session Minutes of the Quality Committee (June 17, 2013); pursuant to Health and Safety Code Section 32155 for deliberations concerning reports on Medical Staff quality assurance matters and Medical Staff Report; pursuant to Health and Safety Code Section 32106 (b) for a report involving health care facility trade secrets for development of new services and programs: IT Case for Change; pursuant to Health and Safety Code Section 32106 (b) for a report involving health care facility trade secrets for development of new services and programs: FY 2013 Organizational Goal Achievement; pursuant to Govt. Code Sections 54957 and 54957.6 for discussion and a report on personnel matters: Foundation President Base Pay; pursuant to Govt. Code Sections 54957 and 54957.6 for discussion and a report on personnel matters: Employee Recognition Bonus; pursuant to Govt. Code Section 54956.9(d)(1) for a conference with legal counsel, pending or threatened litigation: Tamara v. El Camino Hospital, et. al.; pursuant to Health and Safety Code Section 32106 (b) for a report involving health care facility trade secrets for development of new services and programs: Continuum of Care Update; pursuant to Health and Safety Code Section 32106 (b) for a report involving health care facility trade secrets for development of new services and programs, pursuant to Health and Safety Code Section 32155 for deliberations concerning reports on Medical Staff quality assurance matters and pursuant to Govt. Code Sections 54957 for discussion and report on personnel matters: CEO Report; and pursuant to Govt. Code Section 54957 for discussion and a report on personnel matters: Executive Session.

The Board completed its Closed Session at 10:16 p.m.

VII. Reconvene Open Session. Director Ryba made a motion, seconded by Director Chiu and approved by a vote of eight members in favor, one absent (Davis) to reconvene Open Session at 10:16 p.m. The following actions were taken in Closed Session: The Board reviewed and approved the Consent Calendar Closed Session items as follows: The minutes of the Closed Session of the Regular Board Meeting (July 10, 2013) were approved and the Closed Session Minutes of the Finance Committee (May 28, 2013), the Closed Session Minutes of the Governance Committee (July 2, 2013), and the Closed Session Minutes of the Quality Committee (June 17, 2013) were accepted by a vote of eight Directors in favor, one absent (Davis). The Board also approved the Medical Staff Report and Credentials and Privileges Report by a vote of eight Directors in favor, one absent (Davis).

Draft: Subject to Board of Directors Minutes: Special Meeting of the Board September 11, 2013 Consideration Page 7 IX. Foundation President Base Pay. Staff confirmed that documents reflecting the staff proposal for Foundation President Base Pay were available for the public.

Action: Director Miller made a motion seconded by Director Tandon and adopted by a vote of eight Directors in favor, one absent (Davis) to approve the recommendation of staff regarding Foundation President Base Pay Amount.

X. Service Animal Policy. Director Miller made a motion, seconded by Director Chiu and adopted by a vote of eight Directors in favor, one absent (Davis) to approve the Service Animal Policy as amended by moving the reference to patients to an earlier place in the policy.

XI. IT Case for Change. The Board members discussed whether the Board should approve moving forward with Epic in light of the fact that the Directors had requested significant additional information from staff.

Director Einarson made a motion seconded by Director Tandon that the Board accept the recommendation of the ECH leadership staff to begin moving forward with Epic, with the stipulation that the questions that the Board asked be answered. Directors Einarson, Tandon, Ryba and Miller voted in favor of the motion, Directors Cohen, Chiu, Reeder and Zoglin voted against the motion. Director Davis was not present. The motion failed.

No action was taken.

XII. Adjournment. Director Chiu made a motion, seconded by Director Tandon and approved by a vote of eight members in favor, one absent (Davis) to adjourn the meeting. There being no further business, the meeting was adjourned at 10:20 p.m.

Attest as to the approval of the foregoing minutes by the Board of Directors of El Camino Hospital:

______Neal Cohen, MD Patricia A. Einarson, MD Chair, ECH Board of Directors ECH Board Secretary

Separator Page

Att 6b - Munjal Shah Bio (2).docx

Munjal Shah

Home:

12364 Priscilla Lane, Los Altos Hills, CA 94022

Charles River Ventures office:

2882 Sand Hill Road, Suite 106, Menlo Park, CA 94025

Munjal Shah, 40, is a serial entrepreneur with a passion for building great companies and innovation. He is currently an Entrepreneur in Residence at Charles River Ventures (CRV) where he is focused on creating and investing on technology companies that can have a real impact on people’s lives. Prior to CRV, he headed the Product Search team at Google. Prior to Google, he was co-founder and CEO of two eCommerce companies, Like.com (sold to Google) and Andale (sold to Vendio / Alibaba). Munjal started his career in artificial intelligence, writing software for Agouron Pharmaceuticals that predicted the efficacy of anti-HIV drugs.

BusinessWeek declared Munjal one of the Top 10 up and coming CEOs in 2001. Munjal has been quoted of hundreds of magazines including the Wall Street Journal, the New York Times, and Business 2.0. Munjal has won a Demo God award for the launch of Riya (like.com) in 2006. Munjal sits on the advisory board of a number of very early stage startups including: Yousendit, Auyptima (sold to Oracle), Pubmatic, and MesmoTV. Munjal is also an investor and/or advisor to a number of Internet companies including Meebo (sold to Google), Aupytma (sold to Oracle), MesmoTV (sold to GSN), Kabam, TaskRabbit, Pubmatic, RocketFuel, Counsyl, Refresh.io, InterAxon, NuRep, Amara Health, Concept.io, and SpotOn.

Currently, Munjal is busy working around his new passion: Consumer attitudes toward health. He recently conducted a 12,500+ nationwide survey of consumer attitudes on various health issues and reviewed almost 200+ medical journal articles to help validate some of the findings.

Munjal received his Masters in Computer Science from Stanford University and his Bachelors in Computer Science from the University of California, San Diego. Separator Page

Att 6c - Revisions to HR Policy 5.02 403(b) Retirement Plan.pdf

Administration

TO: Hospital Board of Directors, El Camino Hospital

FROM: Kathryn Fisk, interim Chief Human Resources Officer Julie Johnston, Director Compensation and Benefits and 403(b) Retirement Plan Administrator

SUBJECT: Proposed Revision to 403(b) Retirement Plan HR Policy 5.02

BOARD ACTION: Motion Required

Executive Summary:  To update the policy based on the match enhancement approved by the Board on 11/14/12 (Resolution 2012-15)  Change has been reflected in plan documents and was effective with the January 1, 2013 plan year  Proposed policy revisions have been reviewed by retirement plan consultants and members of the Retirement Plan Administrative Committee

For Consideration:  The policy is a Human Resources policy that describes eligibility and plan design  The policy is referenced by employees

Next Steps:  Policy will be updated in the ECH Toolbox

KF/jj Separator Page

Att 6c.2 - 403(b) Policy Revision092613.doc

HUMAN RESOURCES POLICIES AND PROCEDURES

5.02 403(b) Retirement Plan

A. Coverage:

Eligible El Camino Hospital employees. If there is a conflict between the Hospital policy and the applicable MOU, the MOU will prevail.

B. Reviewed/Revised:

9/11/94, 5/1/98, 3/14/01 (formerly numbered 5.06), 11/17/03, 12/13/06, 03/09, 10/12/11, 10/13

C. Policy Summary:

Employees may elect to defer income through the 403(b) plan offered through El Camino Hospital. Effective January 1, 1995, all Hospital employees who participate in the 403(b) Retirement plan, who also have completed one year of service, have worked at least 1,000 hours in the applicable calendar year, and are active employees at the end of the calendar year may be eligible for El Camino Hospital matching contributions as further defined in the policy.

The 403(b) Retirement plan offered through the Hospital is subject to certain requirements under the Employee Retirement Income Security Act of 1974 (ERISA) and IRS Section 403(b).

The 403(b) plan offered through the Hospital is also governed by a Plan Document. In the event of a conflict between the language of this policy and the language of the Plan Document, the Plan Document will prevail. Copies of a summary of the Plan Document (the Summary Plan Document) are continuously available on Employee Self Service. Employees may request a written copy from the Human Resources Department.

El Camino Hospital retains the right to make changes to the benefits that it offers to employees.

D. Eligibility for Participation

1. Employees may elect to participate in the 403(b) Retirement plan offered through the Hospital at any time. New hires after February 1, 2009 whose work status is 0.5 or greater will be automatically enrolled in the 403(b) plan following a 30-day “opt out” period. If a new hire does not enroll the Hospital will automatically deduct 1.0% of the employees pay and deposit it into the 403(b) plan for new hires/rehires.

Human Resources Policies and Procedures 5.02 403(b) Plan Page 2

2. Employee and employer contributions will be deposited into the employee’s 403(b) account with Fidelity Investments. Employees need to contact Fidelity directly regarding enrollment, amount of contribution, investment choices, loans, transfer/rollovers, beneficiary updates, and distributions.

E. Employee Contribution

1. Employees may contribute up to 100% of their wages up to the maximum dollar amount allowed by law.

2. Employees need to contact Fidelity Investments directly regarding stopping, starting, or changing contribution amounts. Employees may change, cancel or reinstate deductions at any time.

F. Hospital Matching Contribution

1. Eligibility for Hospital Matching Contribution

Effective January 1, 1995, all eligible Hospital employees, who have elected to participate in the 403(b) Retirement Plan, who have completed one year of service, who have worked at least 1,000 pension hours in the applicable calendar year, and who are active employees at the end of the calendar year, may be eligible for the Hospital matching contribution Which will be deposited into their 403(b) account by March 31, of the following calendar year.

Bargaining Unit employees who elected to participate in the El Camino Hospital Cash Balance Plan’s defined benefit formula as part of previously negotiated arrangements, are not eligible to receive the Hospital Matching Contribution.

Bargaining unit employees who participate in a multi-employer pension plan are not eligible for the hospital matching contribution, but may defer salary into the plan.

2. Amount of Matching Contribution

The Hospital will match 100% of the first 4% of compensation that the eligible employee contributes if the employee has one or more years of

Human Resources Policies and Procedures 5.02 403(b) Plan Page 3

benefit service. The match is 5% for 15 – 19 years of benefit service and 6% for 20 or more years of benefit service.

Starting with the 2009 plan year, the matching contribution will be deposited into the employee’s 403(b) account at Fidelity Investments. Compensation and other information must be verified for all employees following the end of the plan year prior to depositing matching funds. Employer matching contributions for SEIU represented employees hired after December 31, 2011 are vested 100% after three (3) plan years.

3. Vesting

Employees are immediately 100% vested in their contributions to the 403(b) Retirement Plan, as well as any employer matching contributions and any earnings on them if hired before January 1, 2011.

Employer matching contributions for PRN and hospital represented employees hired after December 31, 2010 are vested 100% after 3 plan benefit years (work 1,000 hours each calendar plan year).

Matching contributions for SEIU-UHW represented employees hired after December 31, 2011 are vested 100% after 3 benefit years (work 1,000 hours each plan year).

G. Plan Provisions

1. Loans - Active employees may take a loan from the 403(b) Retirement plan as defined under the plan document. All loans after February 1, 2009 will be repaid through payroll deduction during employment at El Camino Hospital.

2. Hardship Withdrawals - It is possible to obtain a hardship distribution from the 403(b) Retirement plan. The reason for the hardship must be documented andocumented an "immediate and heavy" financial burden demonstrated.

3. Termination of Employment employees may withdraw, transfer, or rollover balance following termination of employment.

Human Resources Policies and Procedures 5.02 403(b) Plan Page 4

4. Death - Upon the death of the participating employee, the full account balance is payable to her/his designated beneficiary.

5. Disability - Upon becoming disabled, under the appropriate conditions and subject to applicable legal definitions, the full account balance may be distributed.

Date: October 9, 2013

To: El Camino Hospital Board of Directors

Subject: Consulting Agreement for Obstetrical Hospitalist Program

1. Recommendation: We request that the Board approve delegating the authority to negotiate this consulting agreement to the CEO. Due to time constraints and the relatively low cost of this arrangement, management requests that the Board approve the arrangement although it has not been reviewed by the Finance Committee.

2. Problem/Opportunity Definition: In the spring of 2009, a team from the American College of Obstetrics & Gynecology (ACOG) surveyed the Women’s Hospital and recommended that ECH seriously consider adding the services of one or more obstetrical hospitalists to improve patient safety and outcomes in the labor and delivery units. In the view of most physician members of that department as well as the Chief Medical Officer, the Executive Director of the Women’s Hospital and the two Co-Medical Directors of Obstetrics, it is prudent for the hospital to finally implement that program. A practicing obstetrician who is very knowledgeable about obstetrical best practices, obstetrical hospitalist programs and practice circumstances at ECH has been identified as a suitable expert to assist with planning a hospitalist program for the department.

An obstetrical hospitalist is an obstetrician who is deployed to remain present in or immediately available to the labor and delivery suites of the department for the purpose of monitoring mothers in labor and, when necessary because a mother’s obstetrician is not able to be present at the time of delivery, performing the delivery. This high level of care can be critical for patient safety at the worst of times and important to patient satisfaction even when things go smoothly.

3. Authority: According to Administrative Policies and Procedures 17.00, Section I, Board approval is required for all new physician medical directorships, consulting agreements, and new on-call panels (but not the individual contracts).

4. Process Description: The consultant will provide an independent assessment of the hospital’s alternatives for providing obstetrical hospitalist professional services at the Mountain View campus, including facilitation of the fact finding and consensus building processes by its departmental physicians

5. Alternative Solution which Includes Cost Benefit/SWOT Analysis: The alternative of continuing to disregard the recommendation of ACOG has been followed for the past four years, and in the opinion of key physician members of the department and nursing supervisors, the patient safety questions remain serious with no reason to anticipate improvement. Physician relations in the department include competitive circumstances that make consensual solutions difficult unless guidance and encouragement from an outside, persuasive expert is employed. The alternative of appointing a committee of physicians from within the department to work toward an acceptable solution has been considered, but it’s odds of success are considered minimal; furthermore, those physicians would have to be paid in order to participate, and the total expenditure would greatly exceed the cost of the expert that is proposed.

6. Concurrence for Recommendation: This proposed consulting arrangement is supported by the Chief Medical Officer, the Executive Director of the Women’s Hospital, and both co-medical directors of the department.

7. Outcome Measures and Deadlines: The anticipated outcome will be the creation of a panel of obstetrical hospitalists who will augment the current hospitalist that is deployed by the Palo Alto Medical Foundation solely for the support of its obstetricians. The consulting project will be allotted forty hours of consulting time and extend over approximately two months.

8. Legal Review: Legal counsel will review the final agreement prior to execution.

9. Compliance Review: Compliance will review and approve the proposed agreement and compensation. A compensation of $350/hour is proposed as being within fair market limits for similar services and the minimum the expert is willing to accept.

10. Financial Review: Upon execution of the Agreement, the total number of hours per month is estimated to be 40 and the amount is not to exceed $14,500.

Separator Page

Att 6e - Finance Committee Update 10 9 13.ppt Finance Committee Update to the ECH Hospital Board Dennis Chiu October 9, 2013 NOTE: Update on key activities should be additive to the information that is provided in the minutes. Primary focus should be progress report on goals, providing information on the topics that consumes most of the committee’s time, key actions that Summary of Key Activities warrant highlighting and future events/activities that may require board approval and/or new non- routine items that can be reported in Open Session.

Date of last update to Board June 12, 2013

Date of last committee meeting September 24, 2013

Date of next committee meeting November 26, 2013 Progress against Goals: Review of Prior Projects: Los Gatos IT Project Post-Activation Review Completed On July 24, 2013 Remaining Committee Goals Paced For 3rd and 4th Quarters of Fiscal Year 2013

Other key accomplishments: Review of Annual Audit Oversight of IT Case for Change Oversight of Proposed Medical Directorships Important future activities:

Creation of Multi-Year Capital Spending Plan

Monitoring of Service Line Performance

2 Investment Committee Update to the ECH Hospital Board John Zoglin October 9, 2013 Summary of Key Activities

Date of last update to Board June 12, 2013

Date of last committee meeting August 12, 2013

Date of next committee meeting November 11, 2013 Progress against Goals: Voted to Recommend that the Board revise the Hospital’s Cash Balance Policy and Cash Surplus Policy to prohibit the purchase of securities of companies who engage in the manufacture of firearms that are illegal for sale to or possession by civilians in the State of California. Recommendation approved by the Board on September 11, 2013. Reviewed the performance of the Committee’s investment advisors investment manager recommendations and asset allocations.

Other key accomplishments: Approaching full funding of the allocation to the hedge fund as guided by the Board.

Ongoing work with the investment advisors to refine the dashboard to optimize committee time spent.

Important future activities:

Review the Hospital’s 403(b) Charter and 403(b) Fee Policy.

Consider further revising the Hospital’s Cash Balance Policy and Cash Surplus Policy to limit or eliminate investments in fossil fuels.

2 Separator Page

Att 6g - MRK_Board and Finance Committee FY14 Period 1 UPDATED Sep 18 2013.pptx

Summary of Financial Operations

Fiscal Year 2014 – Period 1 7/1/2013 to 7/31/2013 EL CAMINO HOSPITAL (Excludes Controlled Affiliates) EXECUTIVE FINANCIAL SUMMARY Period Ending July 31, 2013 YTD STATEMENT OF REVENUE AND EXPENSES ($000s) BALANCE SHEET ($000s) Actual Budget Var F(U) July 31, 2013 Jul 31, 2012 Gross Revenue $201,253 $198,229 $3,024 Cash and Investments 580,031 470,180 Deductions from Revenue (142,382) (139,585) (2,797) Non Cash Current Assets 144,668 136,124 Net Patient Revenue 58,871 58,644 227 Property, Plant & Equipment (Net) 630,831 654,719 Other Operating Revenue 1,225 1,372 (146) Other Assets 36,875 37,491 Total Operating Revenue 60,096 60,016 81 Total Assets 1,392,406 1,298,514

Salaries & Wages 31,898 31,875 (23) Current Liabilities 95,603 89,878 Supplies 7,933 8,594 661 Long-Term Debt 230,416 235,242 Fees & Purchased Services 6,670 6,419 (251) Fund Balance/Capital Accounts 1,066,386 973,394 Other Operating Expense 2,685 2,851 166 Total Liabilities & Equity 1,392,406 1,298,514 Total Non Capital Operating Expense 49,186 49,738 552 KEY ECH STATISTICS - YTD

OPERATING EBITDA 10,911 10,278 633 Balance Sheet Actual Target (1) Debt Service Coverage Ratio (MADS) 8.4 1.2 Interest, Depreciation & Amortization 4,654 4,948 295 Debt to Capitalization 13.7% 37.5% Days of Cash 361 278 NET OPERATING SURPLUS 6,257 5,330 927 Net AR Days 47.7 49.7

Non Operating Income 10,994 1,660 9,333 Other Actual Budget Acute Discharges 1,542 1,541 TOTAL NET SURPLUS 17,251 6,990 10,261 Acute Average Daily Census 221 218 Deliveries 450 405 Yield Percent (NPR / Gross Revenue) 29.3% 29.6% -0.3% Emergency Department Visits 4,908 4,469 EBITDA Margin 18.2% 17.1% 1.0% Surgical Cases 920 852 Operating Margin 10.4% 8.9% 1.5% Full Time Equivalent Employees 2,360 2,369 Total Margin 28.7% 11.6% 17.1% Worked Hrs/CMI Adjusted Discharge 93.01 97.41 (1) For Debt Service Coverage Ratio and Debt to Capitalization, Target represents Bond Convenants For Days Cash and Net AR Days, Target represents S&P A+ Rated Hospital Medians

2 (1) Hospital entity only, excludes controlled affiliates Management Commentary(1)

Net Days in AR Case Mix Index Adjusted Discharges Operating Income ($000S)

54 Current & Prior Fiscal Year Current & Prior Fiscal Year 4,400 12,000 52 4,200 10,000 50 4,000 8,000 48 3,800 6,000 46 3,600 4,000 44 3,400

42 3,200 2,000

40 3,000 0 PY A S O N D J F M A M J CY A S O N D J F M A M J PY A S O N D J F M A M J CY A S O N D J F M A M J PY A S O N D J F M A M J CY A S O N D J F M A M J

Actual Target Actual Budget Actual Budget

Budget is represented by solid lines; Bars represent acutal results

Net Days in AR Net days in A/R, while still favorable to goal, increased for the second month, coming in at 47.7 days for the first period of the new fiscal year. Net outstanding receivables increased $1.6 million in July. For the most recent 12-month period, A/R days averaged 49.0 or 1 day favorable to the 50-day target.

CMI Adjusted Discharges Although Case Mix was 1% below budget in July and discharges were 0.4% short, outpatient activity that was 8% above budget more than offset the shortfall resulting in CMI Adjusted Discharges which were 3% favorable to budget.

Operating Margin Although July’s gross charges were $3.2 million favorable to budget, an unfavorable payer mix provided a $2.8 million unfavorable variance in revenue deductions. In addition, other operating revenues were $146 thousand unfavorable to budget. Expenses were well-controlled, coming in 1.5% favorable to budget, in spite of the increased gross charges. Consequently, hospital operations were $927 thousand or 17% favorable to budget. Very strong investment performance in July provided a $9.3m favorable budget variance in non-operating income and total income which was $10.3 million favorable to budget.

3 (1) Hospital entity only, excludes controlled affiliates Key Hospital Indicators(1)

Statistic FYE 2011 FYE 2012 FYE 2013 FYTD 2014 Target (2) +/- Operating Margin 7.9% 10.5% 9.9% 10.4% 8.9%

EBITDA Margin 16.6% 19.4% 17.8% 18.2% 17.1%

Days of Cash 250 321 350 361 278

Debt Service Coverage Ratio (MADS) 7.5 7.2 7.9 8.4 5.1

Debt to Capitalization 17.1% 15.8% 14.0% 13.7% 26.8%

Net AR Days 48.6 48.1 48.3 47.7 49.7

(1) Hospital Only - Excludes Affiliates (2) Target source: FYTD Budget for Operating Margin and EBITDA Margin Target source: S&P 2012 A+ Rated Hospital Medians for all others *Prior Year numbers represent full year

4 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital Financial Metrics Trend (1)

1.1% P Favorable to Budget r o f I t _ L o s s

8 Days Favorable to B Budget A L Represents _ cash of $580 million S H E E T

5 (1) Hospital entity only, excludes controlled affiliates (1) ECH Operating Margin

Run rate is booked operating income adjusted for material non-recurring transactions

6 (1) Hospital entity only, excludes controlled affiliates ECH Volume Statistics (1)

MOUNTAIN VIEW Month of Jul, 2013 Year to Date Prior Year Act Bud Var% Act Bud Var% Act Var% Discharges (2) 1,235 1,270 -2.7% 1,235 1,270 -2.7% 1,275 -3.1% ADC (2) 173 179 -3.4% 173 179 -3.4% 173 -0.2% Deliveries 386 343 12.4% 386 343 12.4% 423 -8.7% ED Visits 3,787 3,545 6.8% 3,787 3,545 6.8% 3,460 9.5% Surgical Cases 556 536 3.7% 556 536 3.7% 482 15.4%

LOS GATOS Month of Jul, 2013 Year to Date Prior Year Act Bud Var Act Bud Var Act Var% Discharges (2) 307 272 13.0% 307 272 13.0% 304 1.0% ADC (2) 48 39 23.3% 48 39 23.3% 41 18.5% Deliveries 64 61 4.4% 64 61 4.4% 64 0.0% ED Visits 1,121 924 21.3% 1,121 924 21.3% 983 14.0% Surgical Cases 364 316 15.2% 364 316 15.2% 367 -0.8%

ECH Month of Jul, 2013 Year to Date Prior Year Act Bud Var Act Bud Var Act Var% Discharges (2) 1,542 1,541 0.0% 1,542 1,541 0.0% 1,579 -2.3% ADC (2) 221 218 1.4% 221 218 1.4% 214 3.4% Deliveries 450 405 11.2% 450 405 11.2% 487 -7.6% ED Visits 4,908 4,469 9.8% 4,908 4,469 9.8% 4,443 10.5% Surgical Cases 920 852 7.9% 920 852 7.9% 849 8.4%

(1) Hospital entity only, excludes controlled affiliates (2) Excludes normal newborns (MS-DRG 795) 7 El Camino Hospital Volume Trends Prior and Current Fiscal Years

Discharges,Discharges, Excl Normal Excl Normal Newborns Newborns ADC, Excl Normal Newborns Deliveries

1,800 300 600 1,600 250 500 1,400 1,200 Both 200 Both 400 Both 1,000 MV MV MV 150 300 800 LG LG LG 600 100 200 400 50 100 200 0 0 0 PY A S O N D J F M A M J CY A S O N D J F M A M J PY A S O N D J F M A M J CY A S O N D J F M A M J PY A S O N D J F M A M J CY A S O N D J F M A M J

Psych Discharges (MV ED Visits Surgical Cases Rehab Discharges (LG)

6,000 1,200 100 90 5,000 1,000 80 70 4,000 Both 800 Both 60 MV MV MV 3,000 600 50 LG LG LG 40 400 2,000 30 20 1,000 200 10 0 0 0 PY A S O N D J F M A M J CY A S O N D J F M A M J PY A S O N D J F M A M J CY A S O N D J F M A M J PY A S O N D J F M A M J CY A S O N D J F M A M J

8 APPENDIX

9 Summary of Financial Results (1) $ in Thousands

Period 1 - Month Period 1 - FYTD Actual Budget Variance Actual Budget Variance El Camino Hospital Income (Loss) from Operations Mountain View 4,450 4,482 (33) 4,450 4,482 (33) Los Gatos 1,808 848 960 1,808 848 960 Sub Total - El Camino Hospital, excl. Afflilates 6,257 5,330 927 6,257 5,330 927 Operating Margin % 10.4% 8.9% 10.4% 8.9% El Camino Hospital Non Operating Income Investments ** 10,815 2,012 8,803 10,815 2,012 8,803 Swap Adjustments 499 0 499 499 0 499 Community Benefit (180) 0 (180) (180) 0 (180) Other (141) (351) 211 (141) (351) 211 Sub Total - Non Operating Income 10,994 1,660 9,333 10,994 1,660 9,333 El Camino Hospital Net Income (Loss) 17,251 6,990 10,261 17,251 6,990 10,261 ECH Net Margin % 28.7% 11.6% 28.7% 11.6% Net Income Hospital Affiliates 741 234 508 741 234 508

Total Net Income Hospital & Affiliates 17,992 7,224 10,769 17,992 7,224 10,769

1 10 (1) Hospital entity only, excludes controlled affiliates Worked Hours per CMI Adjusted Discharge (1)

11 (1) Hospital entity only, excludes controlled affiliates Supply Cost per CMI Adjusted Discharges (1)

YTD: 11.5% under budget YTD: 8.9% under budget Mountain View Los Gatos

11

12 (1) Hospital entity only, excludes controlled affiliates (1) Mountain View LOS & CMI Trend

• Medicare: Due to DRG reimbursement, financial results usually improve with decreased LOS and increased CMI • Non-Medicare: Reimbursement varies; financial results usually improve when both LOS & CMI increase

(1) Hospital entity only, excludes controlled affiliates All data excludes normal newborns (MS-DRG=795), Medicare data excludes Medicare HMOs and PPOs 13 (1) Los Gatos LOS & CMI Trend

• Medicare: Due to DRG reimbursement, financial results usually improve with decreased LOS and increased CMI • Non-Medicare: Reimbursement varies; financial results usually improve when both LOS & CMI increase

(1) Hospital entity only, excludes controlled affiliates All data excludes normal newborns (MS-DRG=795), Medicare data excludes Medicare HMOs and PPOs 14 El Camino Hospital (1) Results from Operations vs. Prior Year 1 month ending 7/31/2013

Variance $000s FY 2014 FY 2013 Fav (Unfav) Var% OPERATING REVENUE: Gross Revenue 201,253 198,881 2,372 1.2% Deductions (142,382) (143,288) 906 0.6% Net Patient Revenue 58,871 55,593 3,278 5.9% Other Operating Revenue 1,225 1,398 (173) -12.4% Total Operating Revenue 60,096 56,991 3,105 5.4%

OPERATING EXPENSE: Salaries & Wages 31,898 28,302 (3,596) -12.7% Supplies 7,933 9,412 1,479 15.7% Fees & Purchased Services 6,670 7,034 364 5.2% Other Operating Expense 7,339 6,356 (983) -15.5% Total Operating Expense 53,839 51,104 (2,736) -5.4% Net Operating Income/(Loss) 6,257 5,888 369 6.3% Non Operating Income 10,994 3,430 7,564 220.5% Net Income(Loss) 17,251 9,318 7,933 85.1%

Collection Rate 29.3% 28.0% 1.3% Operating Margin 10.4% 10.3% 0.1% Net Margin 28.7% 16.3% 12.4%

15 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital – Mountain View (1) Results from Operations vs. Prior Year 1 month ending 7/31/2013

Variance $000s FY 2014 FY 2013 Fav (Unfav) Var% OPERATING REVENUE: Gross Revenue 159,794 154,859 4,934 3.2% Deductions (112,547) (110,865) (1,682) -1.5% Net Patient Revenue 47,246 43,994 3,252 7.4% Other Operating Revenue 1,189 1,327 (138) -10.4% Total Operating Revenue 48,435 45,320 3,115 6.9%

OPERATING EXPENSE: Salaries & Wages 26,504 23,429 (3,075) -13.1% Supplies 6,289 6,744 455 6.7% Fees & Purchased Services 5,404 5,911 506 8.6% Other Operating Expense 5,788 4,800 (988) -20.6% Total Operating Expense 43,985 40,884 (3,101) -7.6% Net Operating Income/(Loss) 4,450 4,436 13 0.3% Non Operating Income 10,994 3,430 7,564 220.5% Net Income(Loss) 15,443 7,866 7,577 96.3%

Collection Rate 29.6% 28.4% 1.2% Operating Margin 9.2% 9.8% -0.6% Net Margin 31.9% 17.4% 14.5%

16 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital – Los Gatos1 (1) Results from Operations vs. Prior Year 1 months ending 7/31/2013

Variance $000s FY 2014 FY 2013 Fav (Unfav) Var% OPERATING REVENUE: Gross Revenue 41,460 44,022 (2,563) -5.8% Deductions (29,835) (32,423) 2,588 -8.0% Net Patient Revenue 11,625 11,599 26 0.2% Other Operating Revenue 37 72 (35) -49.1% Total Operating Revenue 11,661 11,671 (10) -0.1%

OPERATING EXPENSE: Salaries & Wages 5,394 4,873 (521) -10.7% Supplies 1,644 2,668 1,024 38.4% Fees & Purchased Services 1,265 1,123 (142) -12.7% Other Operating Expense 1,551 1,556 5 0.3% Total Operating Expense 9,854 10,220 366 3.6% Net Operating Income/(Loss) 1,808 1,452 356 24.5% Non Operating Income 0 0 0 0.0% Net Income(Loss) 1,808 1,452 356 24.5%

Collection Rate 28.0% 26.3% 1.7% Operating Margin 15.5% 12.4% 3.1% Net Margin 15.5% 12.4% 3.1%

17 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital (1) Results from Operations vs. Budget 1 month ending 7/31/2013

Variance $000s FY 2014 Budget 2014 Fav (Unfav) Var% OPERATING REVENUE: Gross Revenue 201,253 198,229 3,024 1.5% Deductions (142,382) (139,585) (2,797) -2.0% Net Patient Revenue 58,871 58,644 227 0.4% Other Operating Revenue 1,225 1,372 (146) -10.7% Total Operating Revenue 60,096 60,016 81 0.1%

OPERATING EXPENSE: Salaries & Wages 31,898 31,875 (23) -0.1% Supplies 7,933 8,594 661 7.7% Fees & Purchased Services 6,670 6,419 (251) -3.9% Other Operating Expense 7,339 7,799 460 5.9% Total Operating Expense 53,839 54,686 847 1.5% Net Operating Income/(Loss) 6,257 5,330 927 17.4% Non Operating Income 10,994 1,660 9,333 562.1% Net Income(Loss) 17,251 6,990 10,261 146.8%

Collection Rate 29.3% 29.6% -0.3% Operating Margin 10.4% 8.9% 1.5% Net Margin 28.7% 11.6% 17.1% 1

18 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital – Mountain View (1) Results from Operations vs. Budget 1 month ending 7/31/2013

Variance $000s FY 2014 Budget 2014 Fav (Unfav) Var% OPERATING REVENUE: Gross Revenue 159,794 161,617 (1,823) -1.1% Deductions (112,547) (113,368) 821 -0.7% Net Patient Revenue 47,246 48,249 (1,002) -2.1% Other Operating Revenue 1,189 1,327 (138) -10.4% Total Operating Revenue 48,435 49,576 (1,141) -2.3%

OPERATING EXPENSE: Salaries & Wages 26,504 26,862 358 1.3% Supplies 6,289 6,807 518 7.6% Fees & Purchased Services 5,404 5,173 (232) -4.5% Other Operating Expense 5,788 6,252 464 7.4% Total Operating Expense 43,985 45,093 1,108 2.5% Net Operating Income/(Loss) 4,450 4,482 (33) -0.7% Non Operating Income 10,994 1,660 9,333 562.1% Net Income(Loss) 15,443 6,143 9,301 151.4%

Collection Rate 29.6% 29.9% -0.3% Operating Margin 9.2% 9.0% 0.1% Net Margin 31.9% 12.4% 19.5%

19 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital – Los Gatos (1) Results from Operations vs. Budget 1 month ending 7/31/2013

Variance $000s FY 2014 Budget 2014 Fav (Unfav) Var% OPERATING REVENUE: Gross Revenue 41,460 36,612 4,847 13.2% Deductions (29,835) (26,217) (3,617) -13.8% Net Patient Revenue 11,625 10,395 1,230 11.8% Other Operating Revenue 37 45 (8) -18.4% Total Operating Revenue 11,661 10,440 1,221 11.7%

OPERATING EXPENSE: Salaries & Wages 5,394 5,013 (381) -7.6% Supplies 1,644 1,787 143 8.0% Fees & Purchased Services 1,265 1,246 (19) -1.5% Other Operating Expense 1,551 1,547 (4) -0.3% Total Operating Expense 9,854 9,592 (261) -2.7% Net Operating Income/(Loss) 1,808 848 960 113.3% Non Operating Income 0 0 0 n/a Net Income(Loss) 1,808 848 960 113.3%

Collection Rate 28.0% 28.4% -0.4% Operating Margin 15.5% 8.1% 7.4% Net Margin 15.5% 8.1% 7.4%

20 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital (1) Balance Sheet ($ Thousands)

ASSETS LIABILITIES AND FUND BALANCE Period Ending Jul 31 Period Ending Jul 31 CURRENT ASSETS FY 2014 FY 2013 CURRENT LIABILITIES FY 2014 FY 2013 Cash 59,687 43,885 Accounts Payable 21,595 16,948 Short Term Investments 134,016 156,393 Salaries and Related Liabilities 16,461 17,270 Patient Accounts Receivable, NET 87,235 89,267 Accrued PTO 18,609 16,437 Other Accounts and Notes Receivable 3,294 3,344 Worker's Comp Reserve 2,383 2,300 Intercompany Receivables 996 1,281 Third Party Settlements 21,117 19,682 Inventories and Prepaids 53,142 42,231 Intercompany Payables 235 236 Total Current Assets 338,370 336,401 Malpractice Reserves 2,002 2,318 Bonds Payable - Current 3,000 2,850 BOARD DESIGNATED ASSETS Bond Interest Payable 4,387 4,501 Plant & Equipment Fund 83,689 59,511 Other Liabilities 5,814 7,337 Operational Reserve Fund 100,196 100,989 Total Current Liabilities 95,603 89,878 Community Benefit Fund - 4,926 Workers Compensation Reserve Fund 26,221 20,585 Postretirement Health/Life Reserve Fund 15,629 14,927 LONG TERM LIABILITIES PTO Liability Fund 18,609 16,437 Post Retirement Benefits 15,629 14,927 Malpractice Reserve Fund 2,002 2,318 Worker's Comp Reserve 23,838 18,285 Catastrophic Reserves Fund 15,246 12,101 Other L/T Obligation (Asbestos) 3,320 3,216 Total Board Designated Assets 261,592 231,795 Other L/T Liabilities (IT/Medl Leases) - 2,806 Bond Payable 187,629 196,008 FUNDS HELD BY TRUSTEE 9,385 9,385 Total Long Term Liabilities 230,416 235,242

LONG TERM INVESTMENTS 124,737 38,108 FUND BALANCE/CAPITAL ACCOUNTS INVESTMENTS IN AFFILIATES 22,837 23,274 Unrestricted 804,760 741,595 Board Designated 261,592 231,795 PROPERTY AND EQUIPMENT Restricted 34 4 Fixed Assets at Cost 1,011,754 1,003,166 Total Fund Bal & Capital Accts 1,066,386 973,394 Less: Accumulated Depreciation (391,533) (353,520) Construction in Progress 10,611 5,073 TOTAL LIABILITIES AND FUND BALANCE 1,392,406 1,298,514 Property, Plant & Equipment - Net 630,831 654,719

DEFERRED COSTS/BOND ISSUE COSTS 4,647 4,828 RESTRICTED ASSETS - CASH 7 4 1 TOTAL ASSETS 1,392,406 1,298,514

21 (1) Hospital entity only, excludes controlled affiliates Separator Page

Att 6h - 10 Step NDPH-IGT Program.docx

Administration

Date: October 9, 2013 To: El Camino Hospital - Board of Directors From: Ned Borgstrom, Interim Chief Financial Officer Re: NDPH Inter-Governmental Transfer ("NDPH-IGT") Authorization

Recommendation: At its September 24, 2013 meeting, the Finance Committee voted to recommend that the Board authorize management to participate in the Nondesignated Public Hospital Inter-Governmental Transfer Program (“NDPH-IGT”) for Program Years 2012-13 and 2013-14 and approve the transfer of funds necessary to participate in the program (with notification to the Board of the amount to be transferred at least 5 days prior to the transfer of funds) provided that neither the State of California or the Federal Government make any substantial changes to the formula for return of the transferred funds. Participation in the program requires management to transfer funds from the Hospital to the District, as bona fide donations, in amounts adequate to fully offset the amounts the District will need to transfer to the State in order for El Camino Hospital to participate in the NDPH- IGT. The program allows the State to receive additional federal funding for Medi-Cal, which is then provided to the hospital. In 2012, two transfers were necessary, and the amount received by the hospital was approximately twice the amount paid by the District. On September 17, 2013, the State notified us that the amount of the transfer obligation for Program Year 2012- 13 is $2,390,548.00 due on September 30, 2013. On September 23, 2013, the State granted the hospital an extension until November 4, 2013. The hospital will receive back approximately twice the amount transferred less an administrative fee of 9%. Problem / Opportunity Definition: In April of 2011, the legislature approved AB 113, which allows the State to receive increased Medicaid (Medi-Cal) dollars for inter-governmental transfers to the State. The program remained operational in 2011 and 2012 but was not utilized in 2013. On September 11, 2013, the hospital’s former Chief Financial Officer received an e- mail communication from the State Department of Health Care Services notifying us that the hospital would be included on the Program Year 2012-13 NDPH-IGT eligibility list. The letter gave the hospital two days to respond as to whether we would participate. We responded affirmatively as, although there was not time to gain appropriate authorization from the Board, their letter stated, “If you do not submit the letter by the date specified, the offer will be considered declined.” Authority: The Signature Authority Policy requires that any expenditure in excess of $500 thousand must be approved by the Board. Page 2 of 2 Ten-Step Approval Process October 9, 2013

Process Description: On September 11, 2013, the State provided notification that the program was operational for Program year 2012-13. Based on prior communications with the State, we would expect return payments to the hospital to occur two to three months after the payment is made by the District. Also, based on communications with the State, we anticipate receiving a notice of eligibility for NDPH-IGT Program Year 2013-14 in January 2014. We will seek approval of the District Board to make the transfer to the State at their October 29, 2013 meeting. Alternative Solutions: We could choose not to participate and to forgo the additional funding. Concurrence for Recommendation: Participation in the NDPH-IGT program is supported by prior experience, by the CEO and by the Interim CFO. Outcome Measures / Deadlines: While deadlines have not yet been provided by the State, the outcome measure will be the additional Medi-Cal funding received by the hospital. Legal Review: None required; no material change is being made. Compliance Review: None required; no material change is being made. Financial Review: The Interim Chief Financial Officer is initiating this request based on the hospital’s prior experience in participating with the NDPH-IGT program. Separator Page

Att 6i - 10 Step Palliative Care Closed Sept24 2013.docx

Date: October 9, 2013

To: El Camino Hospital Board of Directors

Subject: Restructured Medical Directorship for Palliative Care

1. Recommendation: We request that the Board approve delegating the authority to negotiate this medical director agreement to the CEO. At its September 24, 2013 meeting, the Finance Committee reviewed this proposal and voted to recommend that the Board approve it.

2. Problem Definition: According to the Hospital’s mission statement, it is “To be an innovative, publicly accountable and locally controlled comprehensive healthcare organization which cares for the sick, relieves suffering, and provides quality, cost competitive services to improve the health and well-being of our community.”

A core goal in the Hospital’s mission statement stated above is the relief of suffering. The goal of palliation, in the medical context, is to relieve or lessen the symptoms of an illness, especially discomfort, pain and anxiety, when curing the disease is not a short-term option. While the concepts are related in some ways, palliative care is not the same as hospice care.

3. Authority: According to Administrative Policies and Procedures 51.00, Board approval is required for all new physician agreements.

4. Process Description: Approval is requested for negotiation and execution of a new full-time Palliative Care Medical Directorship provided through the Professional Services agreement currently in place with Silicon Valley Primary Care, P.C. The Medical Director of Palliative Care will oversee programs of palliative care, end of life care and pain management. This agreement has not been negotiated yet but will take the form of an annual compensation agreement based on fair-market value for this service.

5. Alternative Solution which Includes Cost Benefit/SWOT Analysis: While continuing the current program is an option, the part-time commitment of one or more physicians has not delivered the comprehensive changes in patient care nor the physician acceptance that should be expected. This important position can best be implemented through the leadership of an experienced palliative care physician who understands at a personal level the psycho-social issues that are unique to end- of-life care and pain management and who will excel with educational programs surrounding these complex issues in our patient community.

6. Concurrence for Recommendation: The Chief Medical Officer, the Cancer Center and the Chief Nursing Officer are requesting these changes to this Directorship.

7. Outcome Measures and Deadlines: A performance metric for the palliative care program will continue to be the rate of physician referral of patients to the Program. Specific educational and screening programs related to palliative care needs and pain management have not yet been identified, but when they are, performance metrics will be identified and followed. The Transitions Team and the Cancer Center will also monitor the use of these programs for utilization and value.

8. Legal Review: Legal counsel will review the final agreement prior to execution.

9. Compliance Review: Compliance will review and approve the proposed agreement and compensation prior to execution.

10. Financial Review: Compensation will be constrained to fair market value limits. The 2013 survey of fair market value employed by the Hospital shows a 75th percentile level of $235,000 annual total cash compensation plus support for malpractice and market-based benefits. With full-time work for the director, the amount not to exceed is $300,000 per year.

Physician Specialty: Palliative Care Date: 9-12-2013 Year 1 Proforma for Tim Lockyer, MD YEAR 1 Total Year Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 1 Statistics

Office Visits / Month - PCMH 0 0 10 15 20 30 35 35 40 40 45 50 320 Office Visits / Month - Inpatient 20 30 40 50 60 70 80 90 100 105 110 115 870 Revenue Net Revenue/Office Visit - PCMH 50 50 50 50 50 50 50 50 50 50 50 50 Net Revenue/Office Visit - Inpatient 90 90 90 90 90 90 90 90 90 90 90 90

Receipts/Office Visit - PCMH 0 0 500 750 1,000 1,500 1,750 1,750 2,000 2,000 11,250 Receipts/Office Visit - Inpatient 1,800 2,700 3,600 4,500 5,400 6,300 7,200 8,100 9,000 9,450 58,050 Revenue collections 1,800 2,700 4,100 5,250 6,400 7,800 8,950 9,850 11,000 11,450 69,300 Total Revenue 0 0 1,800 2,700 4,100 5,250 6,400 7,800 8,950 9,850 11,000 11,450 69,300

Expenses Physician Compensation 19,600 19,600 19,600 19,600 19,600 19,600 19,600 19,600 19,600 19,600 19,600 19,600 235,200 Malpractice Insurance 2,000 2,000 2,000 2,000 8,000 Rent 0 0 0 0 0 0 0 0 0 0 0 0 0 Billing Fees at 10% of collections 180 270 410 525 640 780 895 985 1,100 1,145 6,930 Cell Phone, Pager, Answering Svc 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Office/Medical Supplies 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Dues 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Transcription 100 100 100 200 200 200 200 200 200 200 200 200 2,100 Marketing 2,500 2,500 2,500 7,500 Staff (NP) 0 0 0 0 0 0 0 0 0 0 0 0 0 Other Staff 0 0 0 0 0 0 0 0 0 0 0 0 0 Employee taxes (30% of salary) 0 0 0 0 0 0 0 0 0 0 0 0 0 MD Benefits 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 48,000 Miscellaneous 150 150 150 150 150 150 150 150 150 150 150 150 1,800 CME 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Relocation 0 Total Expenses 29,350 27,350 27,530 27,220 25,360 25,475 27,590 25,730 25,845 27,935 26,050 26,095 321,530

Estimated Net Expense to ECH Yr1 $29,350 $27,350 $25,730 $24,520 $21,260 $20,225 $21,190 $17,930 $16,895 $18,085 $15,050 $14,645 $252,230

Estimated Net Expense to ECH Yr2 $14,645 $175,740

EXHIBIT – Fair Market Compensation Data

Separator Page

Att 6j - 10 Step Senior Medical Director Quality and Patient Safety Closed Sept24 2013 fn.docx

Date: October 9, 2013

To: El Camino Hospital Board of Directors

Subject: Senior Medical Directorship for Quality and Patient Safety

1. Recommendation: We request that the Board approve delegating the authority to negotiate this medical director agreement to the CEO. At its September 24, 2013 meeting, the Finance Committee reviewed this proposal and voted to recommend that the Board approve it.

2. Problem Definition. The Hospital is undergoing a transformation from a provider of acute care services to a provider that participates in an interconnected continuum and manages more of the patient experience. To effectively make this transition, it is essential to create effective partnerships and build programs that span the continuum of care. However, to expand the scope of activities, it is necessary to delegate some critical inpatient oversight activities to a physician Senior Director who can focus on these programs and provide the expertise needed to make them more efficient and effective.

Activities will include the following:

 Quality Assurance: The Senior Director (SD) will provide the duties of a Quality Assurance Director for the Mountain View campus. As such, he will review QRR reports and assess the need to forward such reports to the Medical Staff for peer review.  Lean Process Improvement/PaCT: The SD will organize physician efforts for value-stream mapping and “Kaizen” activities. He will participate directly in key events, use his leadership over hospital-based physician groups and generally coach and promote Lean. In addition, the SD will play a key role in the Hospital’s PaCT Improvement Team and will periodically report on physician activities and involvement in PaCT quality improvement activities.  Utilization Review: The SD will co-chair the enterprise-wide Utilization Review Committee along with the Medical Director for the El Camino Hospital Los Gatos campus.  Transitions in Care: The SD will chair the Readmissions Program meetings and assist with case review and follow-up. The SD will oversee the team and develop new models for care transitions.

 Clinical Documentation Improvement: The SD will be responsible for a team of two (2) Clinical Documentation Improvement Specialists. The SD will lead physician-related efforts to convert to ICD 10 and improve documentation to best reflect severity of illness.  Hospital Medicine: The Directors of the ICU, ER and Hospitalist teams will report to the SD who will be responsible for convening these three (3) groups at the Mountain View Campus to discuss throughput, management of critical patient issues and an overall team approach to care. The SD will partner with the Chief Medical Officer and Medical Director for El Camino, Los Gatos to develop enterprise-wide models for hospital-based medicine.  Palliative Care: The SD will be responsible for direct oversight for the Hospital’s Palliative Care program. This Program is being developed now and will involve a nurse practitioner, full-time physician and an outpatient continuity practice. The SD will be responsible for setting forward the metrics and managing the goals.

3. Authority: According to Administrative Policies and Procedures 51.00, Board approval is required for all new physician agreements.

4. Process Description: Approval is requested for negotiation and execution of a new agreement for a Senior Medical Director of Quality and Patient Safety. This agreement has not been negotiated yet, but will take the form of an independent contractor agreement based on fair market value for this service.

5. Alternative Solution which Includes Cost Benefit/SWOT Analysis: The Hospital can continue with its current staffing model and can contract with a part- time medical director to fulfill the current role provided by Dr. Richard Gilman when he retires. However, under this model, the Hospital will continue to struggle with bandwidth challenges when pursuing continuum and strategic efforts.

6. Concurrence for Recommendation: An organizational chart incorporating this proposal has been discussed twice with the Management Team, resulting in a general consensus to proceed.

7. Outcome Measures and Deadlines: If this request is approved, interviews with local candidates can proceed immediately, and the new role could potentially be assumed by January of 2014. If internal or local candidates are not found acceptable, a nationwide search can be conducted with a possible candidate in place by spring 2014.

8. Legal Review: Legal counsel will review the final agreement prior to execution.

9. Compliance Review: Compliance will review and approve the proposed agreement and compensation prior to execution.

10. Financial Review: Compensation will be constrained to fair market value limits. A review by the HR Department indicated that a full-time position would likely require compensation in the $400,000 per year range. Although initially it may be easier to find a suitable candidate by deploying a part-time position, it would be prudent to maintain a not-to-exceed annual cost of $400,000 that can support a full time person.

Administration

Date: October 8 , 2013 To: El Camino Hospital Board of Directors From: Eric Pifer, MD, Chief Medical Officer Re: Increase in Stipend for On-Call Panel for STEMI Myocardial Infarction – ECH Mountain View Campus

1. Recommendation: We request that the Board delegate the authority to the CEO to execute the on-call agreements required according to the terms described below. At its May 28, 2013 meeting, the Finance Committee reviewed this proposal and voted to recommend that the Board approve it.

2. Problem Definition: One of the most dramatic developments in cardiovascular care in recent times has been the ability of cardiologists to eliminate or mitigate the damage to heart muscle caused by an obstructed coronary vessel (a ST segment myocardial infarction or STEMI). However, this miraculous preservation of viable muscle requires a very rapid intervention with a catheter that dilates the vessel and frequently includes the placement of a wire stent that props the vessel open. The target time from the time the patient enters the door of the emergency department to the time of the catheter placement in the target artery is sixty minutes or less. The ECH STEMI on-call panel routinely meets this sixty minute limit and often is even faster.

The availability requirements for this response team are very challenging for the physicians, and the ECH payment rate has historically been below fair market value without complaint. More recently, however, the leader of the panel has indicated a need to increase the rate to maintain the team intact.

3. Authority: According to Administrative Policies and Procedures 51.00, Board approval is required for all new physician agreements and those with an increase in cost above 10%.

4. Process Description: Approval is requested for an increase in the daily stipend equivalent to approximately the 65th percentile of the fair market value for this community.

1

5. Alternative Solution which Includes Cost Benefit/SWOT Analysis: There are no alternatives to meet this essential service. Medical staff bylaws do not force physicians to provide 24/7 coverage of the ED without compensation.

6. Concurrence for Recommendation: The Chief Medical Officer and ED physicians are requesting this physician service.

7. Outcome Measures and Deadlines: The use of this service is monitored by the Catheterization Laboratory and the Heart and Vascular Institute as to utilization and value.

8. Legal Review: Legal counsel prepared the standard agreement template which is still in use.

9. Compliance Review: Compliance will review and approve the proposed agreement and compensation.

10. Financial Review: Compensation will be constrained to fair market value limits.

2

Separator Page

Att 6l - 10 Step Medical Director Vascular Surgery Closed Sept24 2013 fn.docx

Date: October 9, 2013

To: El Camino Hospital Board of Directors

Subject: Restructured Medical Directorship for Vascular Surgery

1. Recommendation: We request that the Board approve delegating the authority to negotiate this medical director agreement to the CEO. At its September 24, 2013 meeting, the Finance Committee reviewed this proposal and voted to recommend that the Board approve it.

2. Problem Definition: The Hospital’s Heart and Vascular Institute (HVI) has for many years supported a Medical Director of Vascular Surgery, focused on surgical treatment of vascular disease that is localized outside of the chest. For a period of three years, the HVI supported two parallel directorships, one provided by Stanford and the other provided by PAMF. Additionally, it has recently obtained Board approval to support a Medical Directorship of Transcatheter Aortic Valve Replacement (TAVR) focused on the non-surgical treatment of aortic valve disease of the heart.

HVI leadership is redefining its development of programs for vascular disease and is completing the selection process for a new medical directorship that will encompass both surgical and non-surgical approaches to vascular disease outside the chest. This new program will be led by a restructured Medical Directorship of Vascular Surgery that will be incremental in scope and approach.

3. Authority: According to Administrative Policies and Procedures 51.00, Board approval is required for all new physician agreements.

4. Process Description: Approval is requested for negotiation and execution of a new agreement for a Vascular Surgery Medical Director. This agreement has not been negotiated yet but will take the form of an independent contractor agreement based on the fair market value for this service.

5. Alternative Solution which Includes Cost Benefit/SWOT Analysis: The Hospital terminated its most recent Vascular Surgery Medical Directorship effective July 1, 2013. While resumption of that Directorship is an option, past experience has exposed the shortcomings of this program which does not accommodate the rapid technological advances that require careful balancing of the risks and benefits of open surgical versus catheter-based treatments of non-cardiac vascular disease. In the future, outstanding programs will enable and promote pretreatment assessments of alternative approaches and even hybrid approaches that will challenge traditional methodologies and facilitate collaborative team approaches.

6. Concurrence for Recommendation: The Chief Medical Officer, the Chief Operations Officer and the Heart and Vascular Institute are requesting these changes to this directorship.

7. Outcome Measures and Deadlines: For the first one to two years, a performance metric for the vascular surgery program will be the successful implementation of a comprehensive vascular registry program. Conditioned upon successful implementation of and professional commitment to the registry, and based upon specific recommendations from a professional advisory body, the second phase will begin and include programmatic vision development and pretreatment discussion of appropriate approaches to disease management. When phase two is mature, the third phase of high levels of performance on cost and quality metrics will be initiated.

8. Legal Review: Legal counsel will review the final agreement prior to execution.

9. Compliance Review: Compliance will review and approve the proposed agreement and compensation prior to execution.

10. Financial Review: Compensation will be constrained to fair market value limits. The 2013 survey of fair market value employed by the Hospital shows a 75th percentile compensation level of $250 per hour for surgical subspecialties such as vascular surgery, and the estimated level of time commitment for phase one is up to 35 hours per month. Thus, through the end of FY2015, the not-to-exceed annual cost is $105,000. Subsequent increases in program scope that exceed more than10% will be brought to the Finance Committee and Board according to Board Policies.

Separator Page

Att 6m - Human Resources_IT Agreement.pdf

Date: October 9, 2013

To: El Camino Hospital Board of Directors

From: Kathryn Fisk, Interim Chief Human Resource Officer Greg Walton, Chief Information Officer

Subject: Human Resource Process Improvement Upgrades

Recommendation: At its September 24, 2013 meeting, the Finance Committee voted to recommend that the Board approve the Human Resources Process Improvement Charter including approval for the expenditure of the expected $1.1 million five-year costs as detailed in the Charter, and authorize staff to execute the necessary documents to proceed.

Problem Definition: The volume of position descriptions and the lack of an effective document management system prevent position descriptions from being widely available to employees or managers. The process of reviewing employee performance involves manual completion of forms, duplication of work effort and generation of large amounts of paper which must then be filed and maintained manually. Please see the Charter document for more detailed information.

Authority: The request from the senior leadership team exceeds the spending authority of the CEO. The FY 2013-2014 Capital account ID 14-86502 is for $750,000.

Process Description: A multi-disciplinary team from Human Resources, Information Technology, and Finance developed a Project Charter to address the matters such as process improvement, implementation, cost, benefits, measures, and timing.

Alternative Solution Which Includes Cost Benefits/SWOT Analysis: The Human Resources FY14 projects include several individual sub-projects that will greatly improve work flow within the Human Resources Department and will increase efficiencies hospital wide. Maintaining the status quo continues the intensively manual labor processes as they currently have while lowering the ability to provide quality data in a timely manner to the internal customers of the organization.

Concurrence for Recommendation: Leaders in Information Technology, Senior Leadership, and Leaders in the Human Resources Division have endorsed this project.

Outcome Measures/Deadlines: 1) Enable the alignment of employee goals across the enterprise to support the achievement of overall organization objectives. 2) Improve the efficiency and effectiveness of performance reviews with online tracking, routing and electronic signature. 3) Implement a clearly defined organizational structure within a system that provides consistent and maintainable position descriptions, performance reviews, management reports, and system interface. 4) Implement an electronic document management system that replaces cumbersome paperwork processes with indexed and retrievable employee records. Legal Review: N/A Compliance Review: N/A Financial Review: The Charter has been reviewed and approved by the CFO and Controller. The FY2014 Capital Budget includes $750 thousand funding for this project and it has now been determined that much of the project cost will be operational. The estimated Capital Expense for FY 2014 is $116,000, and the estimated Operational Expense in FY 2014 is $408,286, totaling $524,286.

The Performance Management system annual subscription and support is $143,186, which totals $573,144 for future years 2 through 5. The combined 5 year total for the project is expected to be $1,097,430, including licensing, implementation and ongoing support.

Tomi Ryba, CEO Kathryn Fisk, Interim CHRO Greg Walton, CIO

______

Separator Page

Att 6m.2 - document #2 HR IT.docx Project Charter

General Information

Project Title: Human Resources FY 2014 Projects

Capital ID: 14-86502

Sponsors: Kathryn Fisk, Greg Walton

Prepared by: Tamara Stafford, Dave Zucker, Farzin Mirzaagha

Project Stakeholders

Position Name/Title Phone Project Sponsor Kathryn Fisk – Interim CHRO 7226 Project Coordinator Tamara Stafford – Director of Education 7783 IT Sponsor Greg Walton, CIO 7300 Business Applications Lead Dave Zucker, Dir. IS Business Applications 7065 Project Manager Farzin Mirzaagha, Project Manager 8326

Executive Summary

The Human Resources FY2014 Projects include several individual sub-projects that will greatly improve work flow within the Human Resources Department and will increase efficiencies hospital wide. The major efforts in this project are the following: Performance and Goals Management: El Camino Hospital currently has manual processes for documenting performance evaluations, individual performance goals and other performance related information. Each Competency-Based Job Description/Performance Evaluation detailing the duties of a specific position is a separate electronic document making wide-scale updates tedious, time-consuming and inefficient. This sub-project will replace the manual system and processes with the Success Factors cloud- based performance and goals management solution that will decrease the manual work of managers and HR staff through automation allowing more time for delivering meaningful reviews, alignment of goals and calibration of performance across the enterprise. Position Management: A clearly defined and well-documented organizational structure is essential in order to support Talent Management, Time and Attendance, Staffing and Scheduling, Payroll, HR Document Management and several other applications. This sub-project will use the PeopleSoft HRMS system to define positions with clear reporting responsibilities. The result of this work will form the basis of the hospital’s official organizational structure. Document Management: Currently most Human Resources records are stored on paper in file folders and cabinets. This process is inefficient when it comes to document retrieval, replications or distribution. The Redwood Report2Web system, which is currently used to store and distribute accounting reports, is being considered for the software solution. One other more HR-focuses product is being reviewed, and a final decision has not yet been made. In this sub-project, El Camino will choose and implement a document imaging system that allows employee records to be scanned or electronically fed to the application where they are indexed and stored for distribution and retrieval. Project Charter

Project Purpose

Problem/Definition: The volume of position descriptions and the lack of an effective document management system prevent position descriptions from being widely available to employees or managers. The process of reviewing employee performance involves manual completion of forms, duplication of work effort and generation of a large amount of paper which must then be filed and maintained manually.

Purpose: The purpose of this project is to provide electronic tools that will increase the efficiency, effectiveness and documentation of performance and goals management. In addition, it will enable the enterprise to more easily change work processes related to talent and performance management going forward.

Project Goals

1) Enable the alignment of employee goals across the enterprise to support the achievement of overall organization objectives. 2) Improve the efficiency and effectiveness of performance reviews with online tracking, routing and electronic signature. 3) Implement a clearly defined organizational structure with consistent and maintainable position descriptions. 4) Implement an electronic document management system that replaces cumbersome paperwork processes with indexed and retrievable employee records.

Project Overview

Project Scope:

 Implementation of the Success Factors Performance and Goals management solutions across the enterprise. Future projects may include the related Compensation Management, Succession Planning and Recruiting modules.  Configuration of Position Management and the hospital’s organizational structure within the existing PeopleSoft HR System as a foundation for Performance Management work flow.  Implementation of an HR Document Management system, using Redwood Report2Web, or other similar software, so that paper records are replaced by document scanning, electronic feeds and online retrieval of employee records.

Project Charter

Project Requirements/Deliverables

Performance and Goals Management System 1. Role Based Permissions 2. Employee Profile Management 3. Employee Goal Management 4. Performance Management 5. Job Profile Builder

Position Management System 1. Maximum of one employee assigned to each position. 2. One solid-line reporting relationship per position. 3. Maximum of one dotted-line reporting relationship per position. 4. Organizational structure that can be exported or replicated to other systems. 5. Addition of contracted interim managers to PeopleSoft HR and E-Time systems.

Document Management 1. Scanning and indexing of Documents to Employee Folders. 2. Completely paperless employee record for all active employees. 3. Consistent and standardized retrieval of electronic documents.

Project Management Milestones and Deliverables

Milestones – Position Management Dates Position Management Planning and Design Weeks 1 thru 2 Position Cleanup and Test Case Validation Weeks 2 thru 3 Configuration of Solid Line Reporting Structure Weeks 3 thru 7 Publish Organizational Structure Week 8 Activate Position Management in Production Week 8

Milestones – Document Management Dates Design Folder Structure Weeks 1 thru 2 Install and Configure Document Scanning Weeks 2 thru 3 Install and Configure Electronic Interfaces Weeks 3 thru 7 Scan Active Employee Folders Weeks 8 thru 16 Activate Document Management in Production Weeks 8 thru 16

Milestones – Performance and Goals Management Dates Build and Connect to Success Factors System Weeks 1 thru 4 Design and Plan El Camino Work Flow Weeks 4 thru 8 Configure and Test Role-Based Permissions Weeks 8 thru 10 Configure and Test Employee Profile Management Weeks 10 thru 14 Configure and Test Employee Goals Management Weeks 15 thru 18 Configure and Test Performance Management Weeks 19 thru 22 Configure and Test Job Profile Builder Weeks 23 thru 24 Activate Success Factors in Production Weeks 25 thru 26 Project Charter

Costs/Budget

One Time Capital Costs (Charged to Capital ID# 14-86502) Amount Aasonn Success Factors Implementation Services $66,000 Implement New or Upgrade Existing Document Imaging System $ 50,000 TOTAL CAPITAL EXPENSE (Year One) $ 116,000 Current Fiscal Year Operational Expense Amount Success Factors Performance and Goal Management Solution Subscription $130,260 Success Factors Premium Plus Support $13,026 Aasonn Travel and Living Expenses $ 15,000 Document Imaging Scanning Services (Estimate) $ 250,000 TOTAL OPERATIONAL EXPENSE (Year One) $ 408,286 Future Fiscal Year Operational Expense Amount Success Factors Subscription Costs (Total of Years 2 thru 5) $ 521,040 Success Factors Premium Plus Support (Total of Years 2 thru 5) $52,104 TOTAL FUTURE OPERATIONAL EXPENSE (Years Two thru Five) $573,144

Note: FY 2014 Budget was designated as Capital Expense, however much of this project cost appears to be Operational Expense.

Project Organization

The Success Factors system implementation will be managed by the Aasonn Project Manager. The other sub-projects will be managed by hospital IS resources.

Executive Steering Committee

Executive Stakeholders

Information ECH Project Aason Systems Manager Project Manager Management

Department POC

IT Project 3rd Party Department Vendor Member Vendors Resources Resources

Project Team

Project Charter

Executive Steering Committee (ESC) Members

Kathryn Fisk – Interim Chief Human Resources Officer Greg Walton – Chief Information Officer Tamara Stafford – Director of Education Lynn Worsham – Director of Workforce Planning and Recruitment Julie Johnston – Director of Compensation and Benefits Sandra Speer – Director of Employee and Labor Relations Dave Zucker – Director of IS Business Applications Farzin Mirzaagha – IS Project Manager

Personnel & Other Resources

Resources Description HR Project Team HRIS Analyst, HR Analysts, Education Coordinator, E-Time FSA, Comp Analyst IS Business Application Team Business Analysts, DBA IS Technical Team Network Engineer, Server Engineer, Desktop Support ECH Department Heads Managers and Directors – All Hospital Departments

Roles, Responsibilities and Time Commitments

Stakeholder Name Roles & Responsibilities Estimated Title Hours CHRO Kathryn Fisk Project sponsor, Ensure 10 Step process is 20 hours completed and project approved. Ensure that per month financial and administrative related prerequisites are planned for and addressed. Work with other hospital executives to ensure that appropriate resources are allocated. CIO Greg Walton Ensure 10 Step process is completed and project 10 hours approved. Ensure SOWs are signed by ECH. per month Works with other hospital executives to ensure appropriate resources are allocated. Director of Tamara Provide HR leadership in the Performance and 16 hours Education Stafford Goals sub-project. Ensures HR and stakeholders per month have been identified and that all training and communication requirements are met. Ensures any changes to policies and procedures have been completed. Director of Lynn Provide HR leadership in the Position 16 hours Workforce Worsham Management sub-project and ensure that per month Planning and appropriate HR resources participate in other Recruitment sub-projects. Attend monthly steering committee meetings. Project Charter

Director of Sandra Speer Provide HR leadership in the Document 16 hours Employee and Management sub-project. Work with other per month Labor Relations directors to ensure that appropriate resources are allocated and performing duties as required. Escalate project issues to the CIO as needed. Director of Julie Johnston Provide HR leadership in the Performance and 16 hours Compensation Goals sub-project. Work with other directors to per month and Benefits ensure that appropriate resources are allocated and performing duties as required. Escalate project issues to the CIO as needed. Director IS Dave Zucker Ensure all appropriate stakeholders have been 8 hours Business identified. Provide IS Department oversight for per month Applications overall progress of the project. Work with other directors to ensure that appropriate resources are allocated and performing duties as required. Escalate project issues to the CIO as needed. IS Project Farzin Hands on management of the project. Create and 40 hours Manager Mirzaagha maintain project plan and ensure plan is up to per month date. Ensure timeline goals are met. Ensure that HR and vendor resources are engaged as required. Work with IS to ensure resources are available and working to project plan. IS Technical James Assign appropriate desktop and hardware 2 hours Services Brummett resources to the project. Ensure that projects per month Director related to server, network or laptop configuration is complete. HR Project Jenny Devitt, Assign appropriate desktop and hardware 20 hours Team Members Emelie Perry resources to the project. Ensure that projects per month, Comp Analyst related to server, network or laptop configuration each (TBD) is complete. Creates Job descriptions and profiles for dept managers and directors to review and approve. IS Business Rob Bennett, Perform technical work in PeopleSoft HRIS, 12 hours Applications Freddie Alejo, Healthcare Source Position Management and the per month, Team Iling Siano Document Management system as needed. each Support the implementation of the project. IS Technical Victor Aranda, Assign appropriate desktop and hardware 8 hours Team Victor Naval resources to the project. Ensure that projects per month, related to server, network or laptop configuration each is complete. PeopleSoft Tom Gitto Advise on Position Management, Organizational 16 hours Consultant Structure and other PeopleSoft configuration as for 2 – 3 needed to achieve project goals. months ECH Department Standardize employee Job Descriptions and assist 8 hours Department Managers and with job profile information gathering and entry per month, Heads Directors to Success Factors. each

Project Charter

Project User Acceptance Criteria

 Position Management configuration is complete, covering all hospital positions.  The PeopleSoft organizational structure is acceptable for Performance Management.  Employee Performance and Goal Management features successfully implemented.  The Performance and Goal Management system work flow replaces manual processes.  The paper-based Job Descriptions are replaced by the online Job Profile.  The Document Management system has been successfully configured as designed.  A standardized work flow for scanning and indexing employee records is established and documented.

Assumptions

1. Remote access to the Performance and Goals Management system will be available to end users. 2. The Document Management sub-project can be done at any time or pace, depending on the availability of resources. 3. Other hospital projects will compete for resources and may at times take priority. 4. Estimated hours for HR staff and management are an average and may become less as the project implementation matures.

Constraints

1. Position Management configuration should be completed before starting the Performance Management sub-project. 2. Performance Management system activation is desired by 6/1/2014, before the start of the new Fiscal Year.

Project Risks & Mitigation Tactics

Risks Mitigation Unable to implement Position Increase resources to expedite Position Management, Management prior to Success Factors or build Success Factors organizational structure kickoff. manually, using agreed-upon standard. Existing Redwood Report2Web Work with the vendor to enhance capability, or look for Document Management technology at El a new product, which may impact the schedule. Camino is not sufficient. Success Factors Performance and Goals Work directly with Success Factors if necessary to Management implementation is delayed. achieve essential functionality by target date.

Project Charter

Executive Council Project Charter Acceptance and Approval

Date:

Approval Signatures

Position/Title Signature/Printed Name Date Interim Chief Human Resources Officer Kathryn Fisk Chief Information Officer Greg Walton

Appendices

Separator Page

Att 6n - Policies Memo and 6.02 RadOnc - QA General Program 7-10-13.pdf

DATE: October 9, 2013

TO: El Camino Hospital Board of Directors

FROM: Elizabeth Pepe Greenlee, DHA, RN, Director of Accreditation and Regulatory Compliance, Quality/Risk Manager

SUBJECT: New Policies for Approval

BOARD ACTION: Motion Required

Policies:

 Radiation Oncology Department Policies and Procedures The Hospital Radiation Oncology Department recently contracted with a new Physics group. The 14 policies listed below are new and were developed to support the work flow of the new Physics group and ensure accuracy of treatment delivery, equipment, and safety of patients.

These documents will reside in the Imaging Services manual and the policy owner is Judy D’Eliscu.

 6.02 Physics Quality Assurance - General Program  6.03 Physics Quality Assurance For Trilogy / Liniac  6.04 Physics Quality Assurance - Measurement of Equipment  6.05 Physics Quality Assurance - Eclipse Treatment Planning System  6.06 Physics Quality Assurance - Systemic Clinical Review of Medical Records  6.07 Physics Quality Assurance - Cyberknife Program  6.08 Physics Quality Assurance for High Dose Rate (HDR) Brachytherapy Quality Management Program (QMP)  6.09 High Dose Rate (HDR) Operating and Safety Procedures  6.10 Emergency Response Procedures for Nulcetron HDR-IR-192 If the Source Fails to Return to the Safe 1

 6.11 High Dose Rate (HDR) Calibration Procedures  6.12 High Dose Rate (HDR) Inventory of Sealed Sources  6.13 High Dose Rate (HDR) Transportation of Sealed Sources  6.14 Radiation Safety Training Procedures  6.15 Quality Assurance Responsibilities for Oversight of Physics in Radiation Oncology

 Temperature and Humidity in the Operating Room and MV Interventional Services This is a new policy/ procedure to ensure compliance with AORN standards for temperature and humidity. It was identified that while the Hospital had a practice in place for monitoring the temperature and humidity in these procedural areas, there was nothing in writing regarding the process for what to do if there were issues when these items were out of range.

This document will reside in the Nursing Services manual and the policy owners are Mary Rivera, Cindy Harmer, and Ken King

Next Steps: The El Camino Hospital Board needs to review and approve these policies at its October 9, 2013 meeting.

2

Separator Page

Att 6n - 6.02 RadOnc - QA General Program 7-10- 13.docx

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT – POLICIES AND PROCEDURES

6.02 PHYSICS QUALITY ASSURANCE - GENERAL PROGRAM

A. Coverage: Radiation Oncology

B. Reviewed/Revised: June 2013

C. Policy Summary: Quality Assurance Program These audits serve to provide proper management oversight as required by regulatory authorities The QA program has clinical, physical, and administrative components, thus its successful implementation requires the teamwork of all personnel. The QA program shall cover the quality of all aspects of patient care services (such as taking patient data, making appointments, diagnosis, treatment planning, treatment, and follow-up), products (e.g., customized beam blocks, immobilization devices), equipment used (accelerators, simulators), and the records of all aspects of diagnosis, planning, treatment, and follow- up. The responsibilities for performing various tests are divided among physicists and therapists. The medical director and clinical manager are responsible for assuring that the process is implemented and documented. State and federal regulations require that certain QA (e.g., checks and measurements described in the spot-check procedures) be reviewed by a physicist within a specified time interval. The clinical manager will provide a report on QA activities to the medical director on a quarterly basis, at a minimum. The medical director will review this report to assure compliance with written policies.

D. Policy and Procedure:

1. Procedure:

a. Chief physicist takes the lead in the process of overseeing the Quality Assurance and Radiation Safety measure in the department. b. Each member of the team has competencies related to their role in the QA process. c. Quality Assurance and Radiation Safety Audits may be performed periodically by the appropriate qualified staff, including the Chief Radiation Expert. d. Additionally, a comprehensive review of radiation oncology’s entire QA and Radiation Safety Program is conducted at intervals not to exceed twelve months depending on state and federal agencies. e. A mailed thermoluminescent dosimeter (TLD) service is used to verify that the treatment unit calibration is consistent throughout the company and within national standards.

Cancer Center Policies & Procedures 6.02 Physics QA – General Program Page 2 of 2

E. Approvals:

1. A physicist must review (i.e., sign and date) all daily, weekly, and monthly QA tests, checks, or measurements that are not performed by the physicist on the respective QA forms. 2. This review shall be done on a weekly basis to ensure the QA has been performed as required. 3. QA checks and the performance of patient dose calculations/checks by the physicist must be documented by signing and dating the Quality Assurance Checklist form on a weekly frequency.

4. It is a violation of regulatory requirements if the results of certain QA tests described in the facility’s spot-check procedures (i.e., daily, weekly, and monthly machine checks) are not reviewed (i.e., signed and dated) by a physicist within 7 days if the measurements were not performed by a physicist.

Approved By:

Robert Sinha Radiation Oncology Medical Director 6/28/13

Judy D’Eliscu Radiation Oncology Clinical Manager 6/28/13

Radiation Safety Committee 7/10/13 Separator Page

Att 6o - 6.03 RadOnc - Trilogy Linac 7-10-13.docx

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT – POLICIES AND PROCEDURES

6.03 PHYSICS QUALITY ASSURANCE FOR TRILOGY/LINIAC

A. Coverage: Radiation Oncology contracted Physicists and Radiation Therapists

B. Reviewed/Revised: June 2013

C. Policy Summary: Quality Assurance of Trilogy Linear Accelerator All radiation therapy machines must be calibrated and monitored to ensure appropriate performance as mandated by state and federal regulatory agencies to ensure safe and correct patient treatments.

QA of radiation therapy equipment is primarily an ongoing evaluation of functional performance characteristics. These characteristics ultimately influence the geometrical and dosimetric accuracy of the applied dose to the patients. The functional performance of radiotherapy equipment can change suddenly due to electronic malfunction, component failure or mechanical breakdown, or can change slowly due to deterioration and aging of the components. Therefore, two essential requirements emerge: The goal of these procedures is to assure that the performance characteristics, defined by physical parameters and established during commissioning of the equipment, demonstrate no serious deviations. Additionally, these procedures shall ensure the radiation safety of both the patient and the worker when operating therapy equipment. The overall responsibility for a machine QA program is assigned to the physicist. However, a QA program for radiation therapy equipment is very much a team effort, and the responsibilities of performing various tasks are divided among physicists, and therapists. It is very important that test procedures are well documented for all units under the QA program. The results of initial baseline testing (commissioning) and future periodic testing must be recorded and dated. Records documenting the frequency of performance and the results of QA tests are important, both in retrospective analysis of trends, and in documenting current status. Additionally, numerous QA tests are required to be documented by regulatory authorities.

D. Policy and Procedure:

1. PROCEDURE: QA measurements shall be performed periodically on all therapy equipment, including the dosimetry and other QA measurement devices themselves; and there shall be regular preventive maintenance monitoring and correction of the performance of the therapy machines and measurement equipment.

Cancer Center Policies & Procedures Physics Quality Assurance for Trilogy/Liniac Page 2 of 2

2. Test Frequency:

a. Performance tests are distributed among daily, monthly, and annual tests.B. Daily tests include those, which could seriously affect patient positioning or patient and worker safety. b. Monthly tests include more refined testing of parameters, which will have a lower likelihood of changing over a month. c. A comprehensive test is performed on an annual basis.

3. Tolerance Values:

a. The tolerance values for radiological, geometrical, and mechanical parameters are based on the TG-40. b. If a parameter either exceeds the tolerance value parameters may need to be adjusted to correct the problem and appropriate individuals, including the medical director, need to be notified to correct the problem.

4. Linear Accelerator QA:

a. Daily: Therapist The therapists are required to perform a number of daily machine checks before treating patients. b. Monthly: Physics The Physicist is responsible for a number of monthly checks. c. Annual: Physicist The physicist is responsible for performing a comprehensive annual review.

E. Attachments: None

F. Approval: Committee and Board

Approved By:

Robert Sinha Radiation Oncology Medical Director 6/28/13

Judy D’Eliscu Radiation Oncology Clinical Manager 6/28/13

Radiation Safety Committee 7/10/13

Separator Page

Att 6p - 6.04 RadOnc - Measurement of Equipment 7-1- 13.docx

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT – POLICIES AND PROCEDURES

6.04 PHYSICS QUALITY ASSURANCE - MEASUREMENT OF EQUIPMENT

A. Coverage:

B. Reviewed/Revised: June 2013

C. Policy Summary: All radiation therapy machines must be calibrated and monitored to ensure appropriate performance as mandated by state and federal regulatory agencies to ensure safe and correct patient treatments.

D. Policy and Procedure:

1. PROCEDURE: Policy and procedure; various types of electronic equipment and software applications are used in the quality measurement of each machine. There is calibration and spot check technology utilized in the maintenance and checking of this equipment.

2. Chamber and Electrometer System:

a. Calibration:

1. The physicist is responsible for ensuring the timely calibration of the electrometer and ion chambers. 2. The electrometer and ion chambers must be sent to an Accredited Dosimetry Calibration Laboratory at intervals not to exceed 24 months or after any servicing that may affect its calibration. 3. When sending out the electrometer and chamber for calibration, ensure that another electrometer and chamber are available within the department during the time the electrometer and chamber are gone.

b. Constancy Check: 1. The chamber and electrometer system must be checked for constancy by the physicist or dosimetrist at intervals not to exceed 12 months.

3. Survey Meter: a. Calibration: 1. The physicist is responsible for ensuring the timely calibration of all survey meters. Survey meters must be sent to an Accredited Dosimetry Calibration Laboratory or equivalent at intervals not to exceed 12 months or after any servicing that may affect its calibration.

Cancer Center Policies and Procedures Physics Quality Assurance - Measurement of Equipment Page 2 of 2

2. When sending out the meter for calibration, ensure that another meter is available within the department during the time the electrometer and chamber are gone.

4. Barometer/Thermometer: a. The physicist is responsible for inter-comparing thermometers with each other and with a certified thermometer at intervals not to exceed 12 months. b. The physicist is responsible for inter-comparing the barometer with a mercury system at intervals not to exceed 12 months.

5. General: a. Source-to-film distance (SFD) standardization A standard SFD (140 cm) is used whenever possible in order to minimize the chance for error. Arc Software Check Map Software Check Water Phantom

E. Attachments: None

F. Approvals:

Robert Sinha Radiation Oncology Medical Director 6/28/13

Judy D’Eliscu Radiation Oncology Clinical Manager 6/28/13

Radiation Safety Committee 7/10/13

Separator Page

Att 6q - 6.05 RadOnc - Eclipse Treatment Planning System 7-10-13.docx

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT – POLICIES AND PROCEDURES

6.05 PHYSICS QUALITY ASSURANCE – ECLIPSE TREATMENT PLANNING SYSTEM

A. Coverage: Radiation Oncology

B. Reviewed and Revised: June 2013

C. Policy Summary: QA TREATMENT PLANNING COMPUTER SYSTEM Software for Varian Trilogy Varian Accelerator To ensure the treatment-planning computer is calculating the appropriate beams and doses for patient treatment. A phantom is used to approximate the body of a person that is being treated. The computer software shall be commissioned for each treatment machine, energy, and modality at the time of purchase of the software with accuracy verified annually and every time a software upgrade is installed.

D. Policy and Procedure 1. PROCEDURE:

a. Program Documentation The physicist and dosimetrist is responsible for ensuring that the program d d documentation is complete and readily available in the following categories b. Beam Data Library 1) The beam data shall be acquired by a qualified radiation oncology physicist using a water tank with an automated dose acquisition system. 2) The standard generated beam data (% depth doses, output factors, scatter factors, tissue phantom ratios and combinations of these) shall be kept in digital form and/or in a beam data or dosimetry notebook for use in hand calculations and for comparisons. c. Operating Instructions and Data I/0 The complete operating instructions, including procedures for entering individual patient data and machine parameters into the system in order to carry out a treatment plan, are contained in the Treatment Planning System technical manuals.

2. Test Procedures: a. Initial User Test Procedures The computer software shall be commissioned for each treatment machine, energy, and modality at the time of purchase of the software with accuracy verified annually and every time a software upgrade is installed.

Cancer Center Policies and Procedures Physics Quality Assurance – Eclipse Treatment Planning System Page 2 of 2

b. Acceptance Testing 1) All digitizers on the planning system will be checked by entry of a standard outline, plotting the outline and comparing the plot to the original. 2) The CT phantom will be scanned and the CT numbers will be measured and used for entering relative electron density curves and comparisons. 3) The computer calculated dose distributions for a selected set of conditions in standard phantoms are compared to measured dose distributions for equivalent phantoms. 4) The dose at selected points in phantom shall be independently calculated by hand. 5) The calculated dose distributions for a selected set of summation conditions in standard phantoms will be made to be compared to the distributions calculated for the annual quality control test of the treatment planning system. 6) A standard irregular field will be calculated for the initial test and results compared for the annual tests. c. Tests after Program Modification/Upgrade 1) QA tests must be performed on the treatment planning system after program modification/upgrade. 2) The physics staff will decide if program modifications are small enough to allow only limited testing. 3) The limited tests will use a reference set of QA treatment plans and the results will be compared to the initial acceptance test results. d. Ongoing Tests 1) Monthly QA a) On a Monthly basis the physics staff must verify that the data and applications files have not changed. b) Results will be compared with results from the initial test and/or previous monthly tests. c) The monthly QA procedures and results are located in the Treatment Planning System QA binder. 2) Annual Verification a) The physics staff is responsible for performing the yearly check of the treatment planning system. b) The calculated dose distributions for a selected set of treatment conditions in standard phantoms will be compared to the results of the initial acceptance testing or the prior year’s data. c) The yearly QA procedures are located in the Treatment Planning System QA binder.

Cancer Center Policies and Procedures Physics Quality Assurance – Eclipse Treatment Planning System Page 3 of 3

E. Attachments: None

F. Approvals:

Robert Sinha Radiation Oncology Medical Director 6/28/13

Judy D’Eliscu Radiation Oncology Clinical Manager 6/28/13

Radiation Safety Committee 7/10/13

Separator Page

Att 6r - 6.06 RadOnc - Systematic Clinical Review of Med Rec 7-10-13.docx

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT – POLICIES AND PROCEDURES

6.06 PHYSICS QUALITY ASSURANCE - SYSTEMATIC CLINICAL REVIEW OF MEDICAL RECORDS

A. Coverage:

B. Reviewed/Revised: June 2013

C. Policy Summary: The QA of clinical aspects includes monitoring of the documentation in the treatment plan, the electronic medical record and the chart rounds. Multidisciplinary as well as a intradepartmental patient conference to discuss and plan the patient treatment the current status on treatment plan, side effects, problems, changes in treatment plan, social and nutrition needs. Clinical aspects are defined as chart review and film review, and can be combined into one conference called chart rounds. Chart rounds will be conducted on a weekly basis. In addition, charts must be checked by physics and by therapists on a weekly basis. The detailed protocol for chart checking is discussed below. The radiation oncologist, physicist or and therapist should each review the chart before the fifth fraction following the start of each new treatment field or field modification, on a weekly basis, and at the completion of treatment.

D. Policy and Procedure:

1. PROCEDURE

a. Basic Components of a Chart Review

1. The patient chart consists of the following components

2. Patient Information and History: Patient identification, such as the patient’s name, ID number, and photograph. Pertinent clinical information, such as the initial physical evaluation of patient (consultation note), diagnosis of disease, stage of disease, history and physical, pathology report, diagnostic imaging reports, diagnostic laboratory reports, outside correspondence and other medical information.

3. Treatment Delivery: All of the parameters related to the treatment received by the patient are included in this section.

Cancer Center Policies and Procedures Physics Quality Assurance – Systematic Clinical Review of Medical Records Page 2 of 10

4. Treatment Plan: A prescription page, The simulation fields and setup instructions, MU calculations, isodose plans, TLD diode results, and special physics consultations (e.g., non-routine field abutment, dose to critical organs, etc.). signed and witnessed consent form must be in this section.

5. Treatment Field Definitions: The treatment field definitions must include detailed descriptions of patient setup position, location of treatment field relative to external patient anatomy, special treatment devices, beam modifiers, etc a photograph of the patient in the setup position. All relevant treatment field parameters (e.g., gantry angle, collimator angle, etc.) including diagrams of each treatment portal and photographs of the field marking on the patient must be documented in this section.

6. Daily Treatment Record: a. The daily record documenting the daily and cumulative doses to all prescription, critical organ, and anatomical reference points must also be included in the chart.

b. This record also includes a daily record documenting treatment aids (e.g., compensating filter, wedge) and portal and verification films, and the chronology of treatment changes and remarks.

7. Clinical Data

a. This section contains all of the clinical information gathered from the patient during the treatment process. This includes the clinical assessment during treatment (OTV notes) and the periodic weight, blood count, etc. with the dose to date. This section also contains the completion note containing: treatment summary and follow-up, summary of clinical problem, summary of treatment delivery, summary of patient’s tolerance to treatment, summary of tumor response, and follow up plan.

Cancer Center Policies and Procedures Physics Quality Assurance – Systematic Clinical Review of Medical Records Page 3 of 10

b. Overview of Chart Checking

1. The radiation oncologist, physicist or and therapist should each review the chart before the fifth fraction following the start of each new treatment field or field modification, on a weekly basis, and at the completion of treatment.

2. The review should be signed and dated by the reviewer.

3. All unintended deviations shall be documented. The unintended deviations should be promptly corrected and discussed with the appropriate staff and radiation oncologist (if applicable).

4. The document should also include corrective action(s) and suggestions for avoiding errors of this type in the future.

5. All unintended deviations must be reviewed and evaluated by the Quality Assurance Committee.

6. The committee must determine whether the error was simply an isolated mistake or whether it reflects a programmatic problem or weakness in the policies and procedures.

7. The committee should make recommendations as needed.

c. Chart Check Protocol

1. Review of New or Modified Treatment Field

a. The first task of the chart reviewer if to identify any changes in the treatment (e.g., change in field size, dose per fraction, etc.)or new treatment fields since the previous weekly chart review.

b. The recurrent chart checking theme is to verify that all parameters are consistent from written prescription to treatment plan to simulator sheet to dose calculation to ACCESS treatment field definitions to the daily treatment record.

c. The chart reviewer should check the paper chart, and record and verify system and search for:

1) new written prescriptions,

Cancer Center Policies and Procedures Physics Quality Assurance – Systematic Clinical Review of Medical Records Page 4 of 10

2) new fields or field parameter modifications (field size, gantry angle, etc.) indicated on, for example, the simulator/setup sheet, 3) an indication of modified fields on the computer treatment planning printouts or hand calculation work sheets, isodose distributions, etc., 4) MU changes under a particular field indicated in the daily record, 5) simulator and/or portal films and prints (Photos) of the field markings to identify new fields or field modifications. 6) an indication of a change in, for example, a “changes or remarks” section of the treatment chart.

d. The chart reviewer should be especially alert to the parameters listed below; a discrepancy in any of these would cause a serious error in dose delivery:

1) wedge orientation or wedge angle, 2) source surface distance (SSD) vs. source axis distance (SAD), 3) interfield separation (e.g., using separation instead of depth for monitor unit calculations), 4) number of fields per fraction, 5) treatment unit, energy, and modality, 6) dose prescription

d. Written Prescription

1. The written prescription for each site and field in the paper chart or EMR, should be reviewed to determine whether: a. written prescription has been signed and dated by the radiation oncologist. a. all written prescription changes have been signed and dated by the radiation oncologist. c. all treatment techniques are indicated (AP/PA, arc rotation, etc.). d. treatment machine, mode, and energy are identified. e. prescription (treatment) points or isodose levels are defined and conform to departmental guidelines for prescribed technique and modality.

f. written prescription indicates the daily dose, total dose, and fractionation scheme. g. all beam modifying devices are identified (wedges, bolus, blocks).

Cancer Center Policies and Procedures Physics Quality Assurance – Systematic Clinical Review of Medical Records Page 5 of 10

h. there is a treatment plan narrative contained in each chart which is consistent with the written prescription on the dose prescription page. i. written prescription dose is “reasonable” (this is a filter for gross errors such as prescribing 15,000 cGy instead of 1500 cGy). j. previously treated fields (discontinued) are clearly indicated in chart, and hidden in (EMR). k. dose would overlap with the current treatment volume. If so:

1)simulator films should be reviewed to locate such potential overlap, 2) past isodose distributions should be reviewed to locate such potential overlap and obtain the maximum cumulative dose in the overlap region. 3) separation between adjacent fields should be calculated. 4) cumulative dose to all standard points defined by department policy (e.g., dose maximum, critical organ doses, etc.) has been calculated.

l. Cumulative dose to any other special points has been calculated. m. in-vivo measurements have been requested, where appropriate.

e. Simulator Instructions

1. The simulator/setup page should be reviewed for each field in the paper chart and (EMR) to determine whether the following information is accurately and clearly indicated a. all physical beam parameters (e.g., SSD, gantry angle, collimator angle, field size, table vertical, electron applicator size), b. source surface distance or isocentric treatment technique, c. patient treatment position, d. patient support and immobilization devices, e. patient separation. f. reviewer should also evaluate whether the patient separation for the treatment and site is “reasonable” (e.g., a separation of 7.5 cm for a lateral brain is not reasonable and should alert the reviewer that something is wrong).

f. Isodose Distributions, Special Dose Calculations and Measurements

Cancer Center Policies and Procedures Physics Quality Assurance – Systematic Clinical Review of Medical Records Page 6 of 10

1. The reviewer should determine in the paper chart or EMR, as applicable, whether: a. an isodose distribution was calculated as requested or specified by department policy. b. special calculations were performed as requested or specified by department policy (e.g., specific dose calculations, irregular fields, special equivalent square calculations, etc.). c. patient data and beam parameters used for isodose calculations, irregular field dose or point dose calculations are consistent with those specified in the simulator/setup section of the chart. For such calculations the reviewer should evaluate whether:

d. the beam weight for each field agrees with the MU calculation for that particular field. e. hot spots, critical organ doses, are consistent between the calculation sheet (isodose distribution) and the treatment record, and that all parameters used in the calculation reflect those stated in the simulator/setup section (e.g., field size, gantry angles, wedge number, blocking, bolus, etc.). f. contours used for calculating isodose distributions are consistent with the separation and depth indicated in the simulator/setup sheet and used for the MU calculation. g. algorithm used for each calculation is appropriate to the modality and particular geometry of the treatment technique.

g. MU Calculation

1. The reviewer should determine in the paper chart or EMR, as applicable, whether a. The daily dose calculated for each field is consistent with the total dose and fractionation scheme for that site according to the written prescription and treatment plan. b. All beam and patient parameters used for the calculation are consistent with those listed on the simulator/setup sheet and treatment plan. Special care should be given to: wedge type (if any), SSD vs. SAD treatment, patient separation, and treatment machine (modality, energy). c. Beam weighting (dose per fraction for the particular field) is consistent with the treatment plan (isodose distribution). d. MU calculations have been reviewed. If not, they should be checked immediately.

Cancer Center Policies and Procedures Physics Quality Assurance – Systematic Clinical Review of Medical Records Page 7 of 10

e. All factors and parameters used for the calculation of MU are correct according to the data tables (e.g., PDD, TMR, field size factor, tray transmission factor, wedge transmission factor, etc.). f. Beam blocking is extensive, and if so, whether appropriate equivalent square (or equivalent) calculations have been made. g. Patient separation varies significantly within the treatment area, and if so, whether the separation used for the calculation corresponds to the separation at the actual clinical point of interest. h. Significant areas of high dose (hot spots) have been calculated and documented in the chart. i. For a multi-field treatment, the MU setting indicated on the daily record for a particular field corresponds to the correct MU calculation for that particular field. j. Special dose modifying devices have been used (to be ascertained by review of daily treatment record, isodose distributions, or simulator/setup sheet). Such devices include tissue compensators, special trays, transmission blocks, and occasionally a customized patient support system. If so, the reviewer should check that dose calculations have been appropriately modified. k. In the case of electron beam treatments, special block cutouts were used, and whether treatment is at extended SSD, and whether appropriate measurements (or tabulated data) were used to account for these special cases.

h. Special Dosimetry Measurements

1. The physicist will determine whether the summary reports of special dosimetry measurements (e.g., TLDs, diodes, electron cutout measurements, etc.) are fully documented in the chart and lie within expected limits.

i. Daily Treatment Record

Cancer Center Policies and Procedures Physics Quality Assurance – Systematic Clinical Review of Medical Records Page 8 of 10

1. The reviewer should determine in the paper chart or EMR, as applicable, whether a. The Monitoring Units settings indicated for each field are consistent with both the calculation work sheet and the data in the simulator/setup parameters sheet. b. Correct treatment machine, modality, and beam energy are used for each field and correctly indicated on the daily record. c. Each field treated has been signed after treatment by the therapist. d. There is definitive documentation in the treatment record (using codes, abbreviations, etc.) that the planned modifying devices (blocks, wedges, bolus, compensators, etc.) are being used. e. Cumulative total dose for each site has been correctly recorded, taking into consideration the appropriate contributions from each field in the treatment plan. f. Cumulative doses to the special calculation points (points of interest), critical organs, etc. have been correctly recorded.

j. Verification of Treatment Parameters 1. The reviewer must determine whether the printed “Patient Treatment Fields” have been initialed and dated by the therapist on the first day of treatment (before engaging the treatment machine), indicating agreement between the treatment field parameters in the paper chart and EMR.

k. Weekly Chart Review 1. As part of the weekly chart review, the reviewer should determine for each patient whether any new fields have been created or any previously treated fields modified. This can be ascertained using the methods described in the previous section. All modified and new treatment fields should be carefully reviewed in the paper chart and EMR as described in the previous section.

l. Review of Previous Fields 1. For each patient, the reviewer should determine in the paper chart or EMR

a. date of the previous weekly chart review b. whether the interval between chart reviews has been appropriate according to departmental policy. c. whether the chart and the calculations have been reviewed by more than one physicist. If not, every effort should be made

Cancer Center Policies and Procedures Physics Quality Assurance – Systematic Clinical Review of Medical Records Page 9 of 10

to have a “second pair of eyes” review the chart at least once during the course of therapy. d. whether the monitor unit calculations and data entry have been reviewed by a person other than the one who performed the original calculation and data input.

m. Cumulative Dose 1. The chart reviewer should determine in the paper chart or (EMR) whether:

a. all doses have been correctly summed since the previous chart review. This should include the dose to the written prescription site and all additional sites such as critical organs, dose to dmax, etc. b. total dose to the written prescription point will reach the total prescribed dose prior to the next weekly chart review (if so, a note to the therapist should be written in the chart noting the last treatment). c. total dose to the written prescription point (and critical structures) exceeds the prescribed value.

n. Review at Completion of Treatment 1. As a final review before the chart is placed in a file, the following items must be checked in the paper chart and EMR, within one week of completion of treatment:

a. prescribed dose delivered, b. chart properly documented according to department policy, c. treatment summary included.

o. Film Review: 1. Initial Portal Imaging

a. The purpose of portal images is twofold: to verify that the radiation field isocenter (or other reference point) is correctly registered with respect to the patients anatomy, and that the aperture (blocks) has been properly produced and registered with respect to the radiation field isocenter. Portal films must be obtained for all treatment field at the time of treatment. Where oblique or non-coplanar fields are used, orthogonal films imaging the isocenter should be obtained, in addition to images of the treatment fields.

2. Ongoing Portal and Verification Images

Cancer Center Policies and Procedures Physics Quality Assurance – Systematic Clinical Review of Medical Records Page 10 of 10

b. Portal or verification films of all fields must be obtained at least once per week, or more often for special cases. These must be reviewed by the radiation oncologist in a timely manner.

3. Film Review Conference/Chart Rounds

c. Weekly treatment film review conferences will be attended by the entire planning team and the nursing staff. Inconsistencies between actual and intended treatment (e.g., between simulation images and portal images) may be more easily identified when different observers from different disciplines review the films. When a discrepancy is identified, it may be possible to determine its cause (e.g., a block cutting error, a patient positioning error, etc.) The action needed to correct the discrepancy can be discussed and directly communicated to the appropriate staff member. Written notes of the recommended corrective actions and patients reviewed, should be maintained in a file. Treatment plans and graphical dose distributions should be reviewed. It is useful to discuss the rationale for the current approach and alternate techniques, field arrangements, patient positioning, etc.

E. Attachments – None

F. Approval

Robert Sinha Radiation Oncology Medical Director 6/28/13

Judy D’Eliscu Radiation Oncology Clinical Manager 6/28/13

Radiation Safety Committee 7/10/13

Separator Page

Att 6s - 6.07 RadOnc - CyberKnife Program 6 18 13 (6 07).doc

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT POLICY AND PROCEDURES

6.07 PHYSICS QA – CYBER KNIFE PROGRAM

A. Coverage: El Camino Hospital Physician, Physicist, and Radiation Therapists

B. Reviewed/Revised: June 2013

C. Policy Summary: It is the policy at El Camino Radiation Oncology Center to provide safe operation and control of radiation producing devices.

D. Policy and Procedure:

1. PROCEDURE:

a. Definitions: 1) Authorized User - A board-certified Radiation Oncologist who meets the qualifications as defined by the medical staff office policy.

2) Radiation Safety Officer: An individual who has a knowledge of and the authority and responsibility to apply appropriate radiation protection rules, standards, and practices, who must be specifically authorized on a radioactive material license, and who is the primary contact with the agency. The roles and the responsibilities of the position are defined in Radiation Oncology policy 2.05.

3) Radiation Safety Committee: A committee to advise the administration an all matters relating to the procurement, preparation, use, storage, and disposal of radioisotopes and/or radiation producing devices that are used for the diagnosis or treatment of disease. The duties and responsibilities of the RSC are defined by Ca Code Title 17. b. Quality Assurance Frequency: 1) Daily: a) System Status Check (attachment 1) b) Linac Output Constancy Check (attachment 2) c) Safety Interlock Check (attachment 3) 2) Monthly: a) Beam Parameters Check (attachment 4) b) Robot Mastering Check (visual) (attachment 5) c) Visual Targeting Check (attachment 6) d) Imaging Alignment (Image iso-post with treatment software) (attachment 7) Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 2 of 33

e) Beam Energy (TPR20 10 or PDD20 10) (attachment 8) f) Film Phantom Targeting Test (or 2 month interval) (attachment 9) g) Axum™ positioning accuracy (attachment 10) 3) Quarterly: a) Target Locating System Tracking Test (or after significant change due to maintenance or repair). b) Linac Laser Mechanical alignment check (Accuray PM procedure) (attachment 11) c) Linac Laser/Radiation Field alignment check (Accuray PM procedure) (attachment 12) 4) Annually: a) Full Calibration Report including Beam Commissioning Spot Checks as defined in California Code of Regulations, Title 17, Section 30312 b) Treatment Planning System Tests c) Beam Calibration Check d) Safety Systems Tests e) Robot Mastering (electronic) c. Instrumentation: 5) Equipment Included with CyberKnife a) Ion chamber holder “Birdcage” PN 010181 b) Anthropomorphic head phantom PN 20417 c) Ball-cube film cassette (with fiducials) PN 019364 d) Gafchromic film MD-22 (pre-notched) PN 019366 6) Commissioning Equipment supplied by user a) 3D Scanning Water Phantom System (Scanditronix/Wellhöfer) b) 0.6cc Farmer ion chamber c) micro ion chamber or Solid State Detector (water proof) d) Survey Meter Victoreen 450P (or equiv.) 7) Periodic Quality Assurance Equipment a) Radiochromic film ISP Gafchromic MD-22 (Accuray P/N 017895 or MD-22 pre- notched by Accuray (P/N 019366) b) Dedicated 0.6cc Farmer chamber with 6MV buildup cap c) Small Water Phantom OR Solid Water for TG51 calibration Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 3 of 33

d) Electrometer e) Thermometer f) Barometer g) Vidar Film Scanner Scanner h) Film analysis software ImageJ - http://rsb.info.nih.gov/ij/

Approved By:

Robert Sinha Radiation Oncology Medical Director 6/28/13

Judy D’Eliscu Radiation Oncology Clinical Manager 6/28/13

Radiation Safety Committee 7/10/13

Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 4 of 33

(Attachment 1) Certain Parameters should be checked daily to make sure that the CyberKnife is running well and to monitor any operating parameter drift. It is recommended that the parameters in Table 1 be checked on a daily basis and the values recorded and saved. This data is extremely useful to Accuracy Field Service when diagnosing problems.

Parameter Location Acceptable Range SF6 Pressure (psi) J-Box ≥ 30 psi Water Pressure (psi) Chiller side 80 ± 5 psi Water Temperature (°C) Chiller front panel 19 ± 2 °C Water Flow Rate (gpm) Chiller flow meter ≥ 0.6 gpm Steering Coil 1 (amps) MCC Front Panel No drift Steering Coil 2 (amps) MCC Front Panel No drift Steering Coil 3 (amps) Inside MCC No drift Steering Coil 4 (amps) Inside MCC No drift Magnetron Heater (VAC) Modulator 9.5 ± 0.2 Gun Heater (VAC) Modulator 5.8 ± 0.2 Ion Pump (μA) MCC Front Panel N/A Magnetron Tuner MCC Front Panel or SGI N/A Dose Rate (R/min) MCC Front Panel or SGI ≥ 300 R/min Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 5 of 33

Physics Mode (use one or the ≥ 400 R/min other, do not alternate) Express version Humidity globally 30% - 80%

Table 1. CyberKnife operating parameters ParameteTable1.TTr Location Acceptable Range The acceptable range for the parameters above are somewhat machine dependant and our particular machine may be set up differently. If any of the parameters above drift substantially from their expected values, contact Accuracy Field Service.

(Attachment 2) Linac Output Constancy Check/Calibration 1) The CyberKnife uses ion chambers that are vented to atmosphere. So, changes in atmospheric pressure and x-ray head temperature can affect output. It is recommended that the output be checked at least daily. If the environment where the CyberKnife is installed changes dramatically throughout a day, you may have to check more often. 2) It is also recommended that a dedicated Farmer chamber be used for this check. This is to ensure that the chamber is set up the same way each time. At the time of the initial beam calibration, attach a Farmer chamber to the “birdcage” chamber holder.  Insert the 60mm secondary collimator.  Screw the “birdcage” onto the CyberKnife collimator.  Connect the Farmer chamber to the “birdcage” so that the center of the chamber is aligned with the front pointing laser.  Put a 6 MV buildup cap on the chamber.  Attach the triax cable to the chamber.  Take note of the temperature and pressure inside the treatment room.  Turn on the electrometer and verify the correct bias voltage  Login to the CKS workstation and proceed to the Physics Module.  Warm-up the linac by giving at least 5000 monitor units  Take several chamber readings of 100 monitor units Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 6 of 33

 Average the readings and calculate the output using the temperature and pressure readings and the adjustment factor from the last calibration.  Adjust the Calibration Factors to attain 1.00 MU/cGy (within 1%).  Confirm the calibration by taking one or two more readings and recalculating output.  Press the Save Calibration Factors Button to save the adjustments for treatment.  Turn off the electrometer and remove the birdcage from the collimator.

(Attachment 3) Safety Interlock Check It is important to check that some of the most important safety interlocks on a daily basis. At a minimum, it is recommended that the door interlock and the operator panel E-stop button be checked daily.  In the Physics Module, run 100 monitor units.  While the beam is on, open the treatment room door. The radiation should stop and a red E-stop banner should appear on the SGI screen describing the error.  Close the door, recover from the error, and continue to run the radiation.  Again, while the beam is on, press the operator panel E-stop mushroom switch.  Once again, you should notice that the radiation stops and an error message is displayed on the SGI screen.  This process can be repeated to check other interlocks if desired.

(Attachment 4) Beam Parameters Check It is important to monitor a few beam characteristics on a monthly basis. It is recommended that beam symmetry, flatness, and penumbra be monitored monthly. Use the following procedure:  Set up a piece of Ready-Pack film similarly to the above procedure. However, place the film under 5cm of buildup that is setup to 80cm SSD.  Install the 40mm collimator. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 7 of 33

 Expose the film with an appropriate amount of monitor units so as to not cause saturation.  Develop the film.  Analyze the film flatness. It should be less than 18% in both orthogonal directions.  Analyze the beam symmetry using the TG 45 method (comparing profile heights at 80% of the beam width to each other).  Analyze the penumbra. The 80% - 20% penumbra should be less than 4.5mm in both directions.  Note: Equivalent methods such as water phantom scanning may be used.

 Beam energy should also be checked, for example by means of TPR20/10 or PDD20/10 ratio.

(Attachment 5) Robot Mastering Check Move the robot to the perch position, and verify that all six witness marks on the robot arm line up. Since the Kuka robot has no witness marks it is necessary to mark each axis with a permanent pen to use as a reference alignment.

(Attachment 6) Visual Targeting Check (v3.2.0 and later) (Optional) This is a quick visual check to see that all subsystems are working properly. This test is sometimes referred to as the BB test. Because this test is qualitative it is most useful for the early stages of targeting alignment, usually during acceptance and commissioning. It is included here as an optional test also useful for demonstrations of CyberKnife capability.  Be sure that the linac laser is properly aligned. Use procedure 7.3.4.  Power-on the system.  Place a small metal BB on the headrest and line it up close to isocenter using the wall lasers. A 2mm Beekley Y-spot works very nicely for this purpose.  Create a new plan (from any CT set of which phantom CTs have been loaded).  Select a body/fiducial treatment.  Locate one fiducial at its default location.  Select single center and locate the center to be at the default location (robot coordinates 0,0,0). Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 8 of 33

 Calculate and Save the plan.  Create phantom DRRs.  Select simulation and advance to the patient alignment interface and align the BB close to (0,0,0). Note: it will be necessary to turn the x-ray technique way down since there is no phantom material around the fiducial.  Go to the imaging parameters interface and select the BB test mode.  Follow the prompts on the screen and teach pendant to advance through the BB test.  (Kuka) On the teach pendant, sim node will advance to the next node and pause there.  Sim all will go through all the nodes in the path, pausing briefly at each node.  The linac laser should consistently hit the BB at its center from all non-dummy nodes.

(Attachment 7) Imaging Alignment (Optional) It is sometimes advisable to check the imaging system mechanical alignment. This is especially important if there has been an earthquake or other significant perturbation of the camera stands or ceiling mounted x-ray sources. To do so, use the following procedure:  Attach the isopost to the camera stand.  Exit the treatment room and close the door.  Turn the Key on the ESCC to Service.  On the ESCC, bypass all the interlocks except the door switch and E stop buttons,  On the TLSPC, start the TlsController Software  Turn on the imaging system and set the mode to “fiducial”  Take an image.  You may have to adjust the X-ray parameters so that you get a good image of the isocrystal.  Verify that the isocrystal is at the center pixel ± 2 pixels.  Close the TlS Controller program.  Un-bypass the ESCC interlocks.  Remove the isopost  Alternately an image of the isopost can be acquired using the treatment delivery system. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 9 of 33

 With isopost installed, acquire image, use zoom to 400%, center cross-hairs and snapshot image. Confirm that isocrystal is with 1 mm of center of cross-hairs.

(Attachment 8) Film Targeting Test  This test, often referred to as the “end-to-end test” is designed to show that CyberKnife, as a system, is highly accurate. That is, we show that the system, which integrates treatment planning, robot, image processing, linac, and the safety subsystem, performs as a whole with a high degree of accuracy.  See the appendices at the end of this document for details on how to perform this test.

(Attachment 9)  Axum™ position accuracy checks This test is designed to show that the Axum treatment couch calibration is still within specifications for rotations and translations. Use the following procedure to check table calibration:  Press the “Home” button on the hand controller while pressing the enable switches. Continue to hold the button until the table has stopped moving.  Using a digital level, check the Head U/D and Roll L/R angles and confirm that they are 0° ± 0.3°.  Inspect the right side of the couch to ensure that the couch has fully retracted and the movement stop limit switch has been engaged on the vertical bar, see Figure 1.

Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 10 of 33

Figure 1. Axum Inferior Movement Stop Limit Switch  On the forward portion of the vertical lift, confirm that the interrupter blade is positioned between the two arms of the sensor, see Figure 2. The top of the blade may not be flush with the top of the black sensor

Figure 2. Axum Posterior Movement Stop Limit Switch

 For left/right travel, use a tape measure or other measuring device to check that the center of the vertical lift is positioned to within 5 mm of the center of the couch base. It may be convenient to Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 11 of 33

make a mark on the base of the couch that matches up with one of the retractable covers and just check that the mark continues to line up with the cover.  If any position is out of specification, manually move the axis approximately five cm for a translation or approximately 3° for a rotation and then press the Home switch again until motion stops. Recheck to see if the position is in specification. If the position is still out of specification, contact Accuray.

(Attachment 10) Quarterly Quality Assurance 1. Perform all Daily and Monthly Checks as well as the checks listed below.  TLS Tracking 2. The TLS subsystem is responsible for measuring and reporting patient motion.  Obtain a CT of a phantom.  Create a plan.  Make DRR’s  Make a Prescription.  Place a phantom on the treatment table.  Advance through the Treatment menus to the patient alignment interface.  Re-align the phantom to get the couch offsets close to zero.  Using the couch digital readouts, move the phantom to several different positions in all three translational axes.  At each position, take an image and compare the TLS estimate to the actual couch offset.  The RMS of all the errors should be no more than 2mm. Remember to subtract the “zero-position” offsets from the data.

(Attachment 11) Linac Laser Mechanical alignment check The CyberKnife uses a point laser that is coincident with the radiation field as a QA tool. The laser is reflected off an adjustable mirror. The alignment must be checked periodically. Use the following procedure to check the mechanical alignment:  Install the laser secondary collimator.  Move the robot so that the collimator is approximately 40cm from a flat surface (floor or  table). Place a piece of paper on the surface.  Allow the collimator to rotate by releasing the stop pin and hold. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 12 of 33

 Rotate the collimator housing through its full range and mark the furthest extent of the  laser as it walks across the paper.  It should walk no more than 1mm. Although this is a subjective test, the next section  describes a more quantitative technique.

(Attachment 12) Linac Laser/Radiation Field alignment check Once the mechanical alignment is verified (above), it is important to verify that the laser is indeed coincident with the radiation field. Use for example the following procedure:  Install the laser secondary collimator.  Place a sheet of Ready-Pack diagnostic film on a flat surface.  With a mirror, adjust the robot trajectory so it is perpendicular with the film by reflecting the laser back to the hole in the collimator.  Using the front pointer, adjust the SAD to 80cm.  Remove the front pointer and install the 60mm collimator.  Expose the film with the appropriate number of monitor units so as to not saturate the film. For XV film, Use about 25 monitor units (without buildup).  Using a sharp pin, poke a hole in the film where the laser hits. This must be done very carefully so as to not shift the film inside the envelope.  Develop the film and measure the location of pin hole with respect to the radiation field.  This can be done using the software tool ImageJ  This should not differ more than 2mm from the center of the radiation field.

(Attachment 13) Annual Quality Assurance 1. Full Calibration including Beam Commissioning Spot Checks  Accuracy recommends performing the full beam data analysis on an annual basis to make sure nothing has drifted. Spot check TPR, Profile, and output factor data as necessary. See the first section of this document for beam data collection procedures. 2. Treatment Planning System Tests  Accuracy recommends performing selected items from the system acceptance tests on an annual basis to make sure that nothing has changed. 3. TPS Display Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 13 of 33

 This test will verify that the CT image is displayed correctly in TPS. In addition to performing this test annually, this test should be performed anytime a new CT machine is commissioned.  Place a distinguishing metal pin or BB on the side of a phantom.  Record the relative anatomical position of the pin. (e.g., Left, Anterior, Superior)  Obtain a CT  Import the CT into the CyberKnife System and display the CT in TPS.  Verify that pin appears in the appropriate place on the displayed CT. 4. TPS Distance Measurement  This test will verify that TPS correctly interprets the geometrical distances from the CT. In addition to performing this test annually, this test should be performed anytime a new CT machine is commissioned.  Obtain a CT of a phantom with pins or BBs distributed in three dimensions.  Import the CT into the CyberKnife System and display the CT in TPS.  Measure the distances between the pins on the phantom and also on the displayed images using the TPS ruler (or use the displayed coordinates).  Verify that the distances do not differ more than 1mm or one pixel. 5. TPS calculations  This test verifies the accuracy of calculating dose due to a single beam based on the beam central axis properties.  Open and display a block phantom CT.  Display an axial slice that has a flat surface in the CT at the top of the window.  Create a tumor of 1 vertex at 15mm depth.  Select SINGLE CENTER and choose a collimator size, for example 60.  Adjust the center of the sphere to coincide with the tumor vertex, recording its coordinates in the robot coordinate system.  Change files tmt_node.dat, path1.dt.good, and error_list.dat in the directory /accuray/tmp/tmp_robot_data to add a beam whose coordinates are vertically above the center and at a distance that is equal to the SAD when the PDD was collected.  Select SINGLE CENTER DOSE ASSIGNMENT and NEXT.  Assign some cGy to the isocenter dose, and select NEXT.  Choose FINETUNE menu and turn off all the beams except the one that was added. Select this beam and, in the ACTION OPTIONS list, SET BEAM CGY to 100 cGy.  Select CALCULATE. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 14 of 33

 Verify from file /accuray/tmp/tmp_tps/plan_file that depth is 15 mm and the SAD is correct. If not, adjust the center of the sphere and the beam, and repeat the previous steps.  Record dose values (using the point-dose method) at various depths, for example 15, 100, 200 mm, along the beam axis, this can be conveniently done by placing more vertices of the tumor at the specified depths.  Record, similarly, dose values at various Off-Center locations, for example at 25, 50, 75 percent of the collimator size, at a certain depth.  Using the commissioned beam data, do hand calculations to verify the above  measurements. The accuracy should be within 1%. 6. Beam Calibration Check Using an established protocol (AAPM: TG51), check the calibration of the beam and calculate a cross calibration factor for the birdcage chamber. Usually, either solid water or a small water phantom is used for this. The 60mm collimator is usually used for calibration, so a standard 0.6cc calibrated ion chamber can be used. 1. Target Locating System Tracking Test a) The TLS subsystem is responsible for measuring and reporting patient motion.  Obtain a CT of a phantom.  Create a plan.  Make DRR’s  Make a Prescription.  Place a phantom on the treatment table.  Advance through the Treatment menus to the patient alignment interface.  Re-align the phantom to get the couch offsets close to zero.  Using the couch digital readouts, move the phantom to several different positions in all three translational axes.  At each position, take an image and compare the TLS estimate to the actual couch offset.  The RMS of all the errors should be no more than 2mm. Remember to subtract the “zero-position” offsets from the data. 7. Safety Systems Checks a) On an annual basis, test the following safety interlocks:  All the EPO buttons  All the EMO (Estop) buttons  Door Interlock  Pause button on SGI display Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 15 of 33

 SF6 pressure interlock  Water Flow Interlock  A spot check of the PDP model and interlock  For more details on any of the above tests, see the Acceptance Test Procedures. 8. Robot a) On Kuka robots perform mastering check. b) On all Robots perform Search2 calibration.

Draft

Testing Procedures

Phantom Targeting Test Procedure using 4-piece “Ball-Cube”

1. Purpose. The end-to-end test is designed to show that the CyberKnife® II system, which integrate treatment planning, robot, image processing, linac, and the safety subsystem can deliver radiation so that the centroid of the planned dose distribution matches the centroid of the actual delivered dose distribution within the desired error. This procedure shows how to perform the end-to-end test using either the standard 2.5 inch “ball-cube” accessory (Accuray part # 019364) or the mini 1.25 inch “ball-cube” accessory loaded with radiochromic film. Since the procedure for using the standard and mini ball-cubes are similar, we present the procedure for standard ball-cube and note where there are differences for the mini ball-cube. Due to the importance of the images in this document we recommend that it be reproduced in color. 2. Scope. This procedure is intended for Medical Physicists, Radiation Technologists and Accuray personnel. A CyberKnife® II treatment procedure involves scanning a patient for a CT, importing the patient’s CT into CyberKnife® II, identifying the treatment target, designing a treatment plan, generating DRRs, and delivering the plan. The end-to-end test mimics this entire treatment process by including all these steps. During installation commissioning of CyberKnife® II the end-to-end test should be Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 16 of 33

performed for each treatment modality available at that site. These can include: 6-D Skull Tracking and a 3-D Skull Tracking mode. An anthropomorphic head phantom with film cube inside should be used for skull tracking. Consult Accuray before using a Sheila phantom for skull tracking tests. Film analysis can be performed either “visually” using just a ruler and graph paper or “digitally” using a transparency scanner and the Accuray film analysis software “End to end test tool”. Visual film analysis can be performed in minutes and gives accuracy of about 1 mm. Digital analysis takes about 15 minutes and has accuracy of 0.3 mm. This Appendix does not include digital film analysis. However, digital film analysis using the “End to end test tool” is described in the “End-to-End Automation Tool Product Manual”. 3. Materials 3.1. Phantoms. 3.1.1. The anthropomorphic head phantom, shown in Figure 4 can be used for both 6-D and 3-D skull tracking modes. A neck attachment is available which allows placement of a miniature film cassette anterior of the C7 vertebra. The advantage of the anthropomorphic head is that it demonstrates the ability to track a humanlike skull.

Figure 4. Accuray anthropomorphic head phantom with cavity for holding ball-cube. 3.1.2. Standard ball-cube targeting tool (Accuray part # 019364) shown in Figure 5. This tool is made of four pieces which connect together using threaded nylon rods and nuts. A 31.75 mm diameter acrylic ball is placed in the center of the cube. The standard ball-cube is placed in the cranium cavity of the head phantom. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 17 of 33

Figure 5. Standard ball-cube and pre-cut Gafchromic film connected together along slots. 3.1.3. Mini ball-cube targeting tool (Accuray part # 020833) shown in Figure 6. This tool is made of four pieces which connect together using nylon locator pins. A 19 mm diameter acrylic ball is placed in the center of the cube. The mini ball-cube can be placed in the neck phantom and using the spacer accessory it can be placed in the head phantom.

Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 18 of 33

Figure 6. Lower right: Mini ball-cube with Gafchromic film connected together along slots. Upper left: spacer block to allow the mini ball-cube to be used in the standard 2.5 inch phantom cavities. • Lower Right: Mini ball-cube with Gafchromic film connected together along slots. • Upper left: spacer block to allow the mini ball-cube to be used in the standard 2.5 inch (63.5 mm) phantom cavities. 3.1.4. Neck Phantom Accessory. The standard (CIRS Type) head phantom can be fitted with a neck attachment (Accuray part # 021090, includes phantom) which replaces the standard base plate. The Neck Accessory allows the mini-ball-cube to be placed just inferior to the C7 vertebra (Figure 7).

base cover plate Figure 7. Neck phantom Accessory. 3.2. Radiochromic film. Accuray recommends either Gafchromic MD-22 (Accuray part #019366) precut film, Gafchromic MD-22 pre-notched (Accuray part #017895) or Gafchromic MD-55 (Accuray part #014921), which comes in 5 inch square sheets. The larger MD-55 films must be cut down to 2.5 inch square pieces with corners removed. Unless the pre-notched film is used, slots must be cut along the center line of the film as shown in Figure 8 so the films can be placed together in the film cube. 3.3. Optical transparency scanner (required for digital film analysis). One option is to use a 16-bit (or 48-bit color) scanner with the ability to generate consistent and accurate density and position measurements. One example is the Epson Expression 1680 Professional - E1680-PRO. When using a photography scanner, one must be careful to perform regular calibration since these scanners do not guarantee spatial accuracy. A preferred option is to use a medical imaging scanner such as the Vidar VXR-12 or VXR-16. To use the Vidar scanner, the small pieces of radiochromic film must be placed in clear plastic pockets or taped to blank x-ray films or clear plastic sheets. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 19 of 33

axial film sagittal film Figure 8. Pre-cut pieces of exposed (30 Gy, 30 mm collimator) Gafchromic film, slotted to fit together. Here the reference edges were superior (one dot), Anterior (two dots) and left (three dots). 4. Procedure to use Ball-Cube to test CyberKnife® II accuracy 4.1. Cut a slot on each film. The slot can be cut by marking a line on the film with a permanent marker and then cutting around the line with scissors. The best way to locate the line on the film is to trace it from a template. Figure 9 shows the dimensions and location of the slot. The cutting line should extend along the center of the film about 2 mm past the center of the film. Prenotched films (Accuray P/N 019366) have a smaller slot since they use a more precise cutting process.

Figure 9. Sample film cutting template for standard 2.5 inch film, not to scale. Mini films should becut with slot length of 0.65 +/- 0.01 inch and the same slot width. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 20 of 33

4.2. Load film cube with two pieces of film as shown in Figure 10.

Standard Mini Figure 10. How to load film into “four-piece ball-cube”. 4.3. Be sure that the axial film is aligned precisely with the anterior and left edges of the film cube. Be sure that the sagittal film is aligned with the anterior and superior edges of the film cube. Label the film reference edges with a permanent marker.

Standard Mini Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 21 of 33

Figure 11. To determine if the film is aligned with the reference edges, view the cube surface at an angle and look for the light blue edge of the film. If you can see the film edge as a uniform line, even at small angles, then the film is aligned with the edge of the cube. 4.4. One way to align the films with the edge of the cube is to first install the films in the cube without tightening the nuts. Next, tap the reference edges of the film cube on a hard flat surface so the films slide to these edges. Sometimes the film gets stuck and it is necessary to push the film from the opposite side using a piece of paper or a business card. 4.5. To determine if the films are aligned with the edges of the assembled film cube, look at the reference edges from about a 45 degree angle with respect to the surface. The edge of the unexposed film should appear as a black line. If the film is below the surface the line will not appear. If it is sticking out too far you can see it sticking out and you can also feel it with your fingers. (This may take some practice.) Figure 11 shows what a loaded ball-cube looks like when the film is properly aligned with the reference edges.

Figure 12. Insertion of the mini-ball cube into the neck phantom. The standard ball-cube is not compatible with the neck phantom. 4.6. Load the ball-cube into the phantom. It is important that the reference edges of the film cube are labeled corresponding to the labels on the films. Make sure that the cube is properly oriented within the phantom. Figure 13 shows the proper orientation of the film cube in the phantom. 4.7. If performing neck QA use the neck phantom accessory (021090). Figure 12 shows how to insert the mini-ball-cube in the neck phantom. 4.7.1. The edge marked superior should be at the superior edge of the phantom, etc. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 22 of 33

Figure 13. Proper orientation of the film cube. The anterior face of the film cube is engraved with marking to show its proper orientation in the phantom. When placed in the phantom the writing should face forward (anterior). The other directions are labeled in this photo. The mini ball-cube is unlabeled, before using it place the cube in the orientation shown and label at least the anterior, left and superior faces. 4.7.2. Generate a CT scan of the phantom containing a film cube loaded with film. To minimize measurement error due to localization, use 1.5 mm slice thickness or less, and use prospective axial slices. Follow the appropriate Accuray procedure for CT scanning. One procedure is given in the CyberKnife® II User’s Guide. 4.7.3. Load the CT for “patient”. CyberKnife® II treatment software allows CTs to be loaded as PATIENT or PHANTOM. We recommend using PATIENT so you will test the TREATMENT mode instead of the SIMULATION mode. 4.7.4. ENTER TPS and OPEN the CT. We should emphasize that CT move should be adjusted to make proper DRR images. The spaces at the anterior and superior edges of DRR should be between 10 and 15 mm. 4.7.5. Move the CT center to achieve a space of 5-10 mm on the anterior and superior edges of the phantom. Too much or too little space may lead to unstable tracking. 4.7.6. Use 3-path treatment to achieve the best accuracy, for example, when performing a CyberKnife calibration (deltaman) adjustment. The dose distribution from 3-path treatments is better than for single path and this improves the targeting accuracy. 4.7.7. Set axial, sagittal and coronal view to the center of the ball and zoom in as much as possible while including the whole ball. 4.7.8. Use the Ball-cube test tool from the hidden TPS hidden menu to plan the treatment to the ball target. Refer to Appendix 2 for details on planning the treatment. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 23 of 33

4.7.9. Generate DRRs for the treatment and prescribe treatment. 4.7.10. Deliver the treatment plan using the CyberKnife® II TREATMENT mode. (We do not recommend using SIMULATION mode for these routine phantom tests). Check DRR images. Be sure space at anterior and superior is 10 – 15 mm. Also the imaging technique (kV, mA, ms) should be adjusted to make the live images and DRR images look similar. Alternately, adjust image technique to make brightness and gradient gains within the range 0.9 to 1.1. 4.7.11. After the treatment is completed remove the ball-cube and the phantom. Always confirm the ball-cube was loaded properly into the phantom. 4.7.12. Remove the film from the film cube. Always confirm that the film was loaded properly into the ball-cube. 4.7.13. Check that the film is labeled properly. Remember to keep the film away from fluorescent lights and the sun as much as possible. Exposure to these will darken the film over several hours. The film is less sensitive to incandescent lights. 4.7.14. Locate the center of the exposure on each piece of film. The center of the axial film dose is measured with respect to the left and anterior edges. The center of the sagittal film dose is measured with respect to the anterior and superior edges. The center can be measured by laying the film over a cross drawn on graph paper and centering the dose spot on the cross. Figure 14 shows a method using two crosses that keeps the slot from interfering with the film alignment. The film axes are aligned with the rotated cross but the film is positioned so that the exposure is centered on the vertical cross. Using two crosses keeps the film slot away from the axes used to position the film. To measure the dose centroid: 4.7.14.1. Center the exposed circle on the vertical cross (+). 4.7.14.2. Mark the positions of the two reference edges of the film on the rotated cross (X), see Figure 14. 4.7.14.3. Remove the film and measure the distance from the center of the cross to the reference edge-marks. 4.7.14.4. This visual technique alone is not recommended for setting the targeting offset (Delta_man) during CyberKnife® II commissioning. Better accuracy can be achieved using the “digital” method outlined below. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 24 of 33

Figure 14. Example of visual film analysis for standard 2.5” Gafchromic film. Reference edge marks shown in red. 4.7.15. Alternately, the film can be scanned in a calibrated optical scanner. It is important to check the distance calibration of the scanner by scanning a precise ruler in both horizontal and vertical orientation and calculating the true pixels/inch. It is good practice to also perform visual analysis as described above and compare the results as a check. Refer to the “End-to-End Automation Tool Product Manual” for details of how to analyze the film. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 25 of 33

Appendix 2: Using the TPS Ball-Cube Tool. 1. Purpose. The end-to-end test is designed to show that the CyberKnife® II system, which integrates treatment planning, robot, image processing, linac, and the safety subsystem can deliver radiation so that the centroid of the planned dose distribution matches the centroid of the actual delivered dose distribution within the specified error. This procedure shows how to plan the end-to-end test. Since the procedure for using the standard and mini ball-cube is almost the same we present one procedure and note where there are differences for the mini ball-cube. Due to the importance of the images in this document we recommend that it be reproduced in color. 2. Scope. This procedure is intended for Medical Physicists and Accuray personnel. Treatment planning can be performed using the multi-isocenter feature of the planning system; this however can be time consuming. To facilitate this process Accuray developed a TPS tool which automates the major steps in creating a treatment plan aimed at the ball-cube ball. This procedure demonstrates how to use this tool. 3. Materials. DATA. Creating a treatment plan requires a CT scan of the test phantom containing a ball- cube loaded with film. The CT must be acquired using the standard Accuray protocol. The preferred CT step size is 1 to 1.5 mm; however 2 mm step size scans have achieved sub-mm accuracy. 4. Procedure for planning a ball-cube test. 4.1. Acquire a CT scan of the Accuray head phantom containing a ball-cube loaded with film, and load this CT into CyberKnife. 4.2. Open a treatment plan with this phantom. 4.3. First use the “Move CT” tool (Figure 15) to get the proper space around the phantom DRRs (Figure 16). Accuray recommends 0 to 1 cm space on the anterior and superior edges of the phantom. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 26 of 33

F Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 27 of 33

Figure 15. The “Move CT Center” tool must be used to set the correct position of the CT center.

Figure 16. When the CT center is set properly, the gap at the anterior and superior edge of the phantom should be 0-1 cm. 4.4. Next, open the “Ball-cube setup test tool” from the TPS hidden menu. 4.5. The “Delineate Ball” window will pop-up (Figure 17). This window allows the user to control the auto-contouring process. This window allows window and level adjustment for the contouring routine. In most cases the default values (20 and 1025) will create a contour close to the edge of the ball. If the contour is consistently inside or outside the edge of the ball then these values should be adjusted. 4.6. The window instructs the user to “outline the volume of the ball phantom, find a slice in which the ball is solid and select it toward the edge (Figure 17)”. It is best to first zoom in on the ball in all three TPS windows: axial, sagittal and coronal (Figure 18). Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 28 of 33

Figure 17. The “Delineate Ball window” allows the user to control the automatic contouring of the target ball.

Figure 18. It is helpful to zoom in on the target ball before starting the auto-contouring process. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 29 of 33

4.7. To start the auto-contouring process, simply click the pointer (mouse) inside the ball on the axial view. It is important not to click outside the ball or in the film slot as this may cause an error forcing termination of the planning system. Figure 19 shows an autocontoured ball.

Figure 19. Auto-contouring of the target ball. This example shows a vertical red line at the superior edge of the sagittal image. This indicates an unwanted region has been included in the contour. 4.8. The contouring process is not perfect. It will sometimes add small extraneous regions or create regions that are shifted off the axis of the circle. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 30 of 33

Figure 20. Example of unwanted contour generated by auto-contouring routine. The unwanted contour can be detected by vertical red line on sagittal view. 4.9. Remove the extraneous contour by deleting the contouring in the effected CT slice (Figure 20). Before you edit automatically drawn contours turn off Auto Draw option. 4.10. If the contour on a single slice is offset, this contour should be re-drawn manually after turning off the auto draw feature. Use the control drag tool to draw a circle that matches the ball. Although this problem is most apparent in the axial view, it is also visible in the sagittal view as a posterior bump in the contour of that slice (Figure 21). Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 31 of 33

Figure 21. Example of error in auto contouring target ball. 4.11. Once the ball is delineated correctly, push the “Continue” button on the Delineate Ball window (Figure 17). The next window to appear is the “Center Dose on Ball” window (Figure 22).

Figure 22. “Center Dose on Ball” window showing parameters for skull tracking. Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 32 of 33

4.12. The “Collimator” and “Percent Dose to Align” settings are determined by the type of treatment and size of the target. Table 1 gives guidelines on how to set these values. Enter the proper values in the “Center Dose on Ball” window. Treatment Target Sphere Collimator Approx. Isodose Skull 800 Standard 31.75 mm 30 mm 70% Skull 650 Standard 31.75 mm 35 mm 70% Skull 800 Mini 19 mm 15 mm 50% Skull 800 Mini 19 mm 20 mm 80% Table 1. Recommended collimator size and isodose line for Ball-cube test tool. 4.13. Next enter the value of Maximum MU. A value of 35 MU is usually appropriate. The goal is to get 40 – 50 beams. After entering Maximum MU click “Solve for Dose”. If the calculation is successful the software will report the number of beams after about 30 seconds. It will take several minutes to complete the dose calculation. 4.14. Delete all but three contours (double click appropriate color in lower right corner of axial image to bring up contour window). Set these contours to be the desired contour plus one 10% higher and one 10% lower. Turn off the ROI and the yellow circle for each window using the buttons at the base of each window. This makes the contours easier to identify. If these contours are non-concentric this indicates a possible mistake in the previous steps. The contours shown in Figure 23are typical for this test.

Radiation Oncology Department Procedures Quality assurance responsibilities – Cyber Knife Page 33 of 33

Figure 23. Example of dose distribution achieved using ball-cube test tool. It is important that contours above and below the planned contour are concentric. Significant differences in contour spacing indicate increased measurement error. 4.15. The treatment plan is ready for treatment, save the plan and exit TPS. Always use at least five different tests to calculate changes to the CyberKnife targeting offset (deltaman).

Separator Page

Att 6t - 6.08 RadOnc - (HDR) Brachytherapy QDM 7-10- 13.doc

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT POLICIES AND PROCEDURES

6.08 PHYSICS QUALITY ASSURANCE FOR HIGH DOSE RATE (HDR) BRACHYTHERAPY QUALITY MANAGEMENT PROGRAM (QMP)

A. Coverage: Radiation Oncology and contracted physics staff

B. Reviewed/Revised: June, 2013

C. Policy Summary: It is the policy at El Camino Hospital Radiation Oncology to provide safe operation and control of radioactive materials used with the high-dose-rate (HDR) Brachytherapy afterloader and to provide proper response to emergency and abnormal situations. This procedure is applicable to the Quality Management Program for the Iridium- 192 sealed sources for the HDR afterloader.

D. Policy and Procedure:

PROCEDURE:

a. Definitions:

1. Authorized User: physician licensed by the California State Board of Medical Examiners who meets the applicable requirements of CA Code Title 17 on the facility Radioactive Materials License. 2. Misadministration: A brachytherapy radiation dose: a. Involving the wrong individual, wrong radioisotope, or wrong treatment site; b. Involving a sealed source that is leaking; c. When, for a temporary implant, one or more seeds are not removed upon completion of the procedure; or d. When the calculated administered dose differs from the prescribed dose by more than 20 percent from the prescribed dose. 3. Recordable Event: The administration of: a. A radiopharmaceutical or radiation without a written directive where a written directive is required; b. A radiopharmaceutical or radiation where a written directive is required without daily recording of each administered radiopharmaceutical dosage or radiation dose in the appropriate record; c. A brachytherapy radiation dose when the calculated administered dose differs from the prescribed dose by more than 10 percent of the prescribed dose.

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 3 of 7

4. Radiation Safety Officer: An individual who has a knowledge of and the authority and responsibility to apply appropriate radiation protection rules, standards, and practices, who must be specifically authorized on a radioactive material license, and who is the primary contact with the agency. The roles and the responsibilities of the position are defined in CA Code Title 17. 5. Radiation Safety Committee: A committee to advise the administration an all matters relating to the procurement, preparation, use, storage, and disposal of radioisotopes and/or radiation producing devices that are used for the diagnosis or treatment of disease. The duties and responsibilities of the Radiation Safety Committee are defined by CA Code Title 17.

b. Quality Management Items: Prescriptions: 1) No HDR brachytherapy treatment shall be administered without a dated and signed or initialed written directive from an individual named on the ECH Radioactive Material license as an authorized user of the specific radioactive material prescribed. 2) Except where a delay to provide a written directive would jeopardize the patient’s health (see below), a written directive must be prepared prior to administration of any brachytherapy radiation dose. a) An oral directive is acceptable when a delay to provide a written directive would jeopardize the patient’s health because of the emergent nature of the patient’s condition. The information contained in the oral directive must be documented immediately in the patient’s record and a written directive prepared within 24 hours of the oral directive. b) An oral revision to an existing written directive is acceptable when a delay to provide a written revision to an existing written directive would jeopardize the patient’s health. The oral revision must be documented and the authorized user must sign a revised written directive within 48 hours of the oral revision. c) A written directive, which changes an existing written directive, can be made for any diagnostic or therapeutic procedure if the revision is dated and signed by an authorized user prior to the administration of the next brachytherapy dose.

Patient Treatment (HDR): 1) Before administering a brachytherapy treatment, the radiation therapist(s) shall verify by patient identity by the patient’s name in the computer for patient’s records: birth date, the name on the patient’s ID, or a photograph of the patient’s face. This verification is documented on the Microselectron Patient QA Checklist. 2) Before administering an HDR brachytherapy dose, the radiation therapist(s) administering the dose shall assure that the specific details of treatment delivery are in accordance with the written prescription of the authorized Radiation Oncologist. The Therapist must verify that the isotope, treatment site, and total dose are in agreement with the written prescription and plan of treatment prior to each treatment.

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 4 of 7

3) Therapists, Physicians, and Physicists must clarify all orders when there is a question or uncertainty about the plan of treatment.

Treatment Planning: 1) Prior to administration of an HDR treatment, CT simulation will be completed for use in treatment planning and source position verification. 2) Prior to treatment, an authorized user shall approve a plan of treatment that provides sufficient information and direction to meet the objectives of the written prescription. For brachytherapy procedures, a graphical plan will be produced prior to treatment which identifies the isotope used in the calculation and shows the intended source position(s), activities, and dwell times. The plan will indicate the absorbed dose calculated at the reference point (or surface) specified in the prescription. 3) Dose calculations shall be independently checked prior to the administration of the prescribed brachytherapy dose. a) The authorized user has a period of two days in which to perform the checks of dose calculations would jeopardize the patient’s health or the patient’s condition. b) An authorized user or a qualified person under the supervision of an authorized user (e.g. radiation therapy physicist, oncology physician, dosimetrist, or radiation therapist), who did not make the original calculations, shall check the dose calculations. c) This calculation must be performed and compared with the computer calculated total dwell time prior to each treatment. Agreement shall be within the tolerance established by the radiation oncology physicist. d) Additionally, the computer-generated dose calculations should be checked to verify that correct input data for the patient were used in the calculations (e.g. source strengths and positions). e) Computer-generated dose calculations for input into the HDR unit should be checked to verify correct transfer of data from the computer (e.g. channel numbers, source positions, and treatment times). f) The performance of these checks (and others as specified by the radiation oncology physicist) shall be documented in the quality assurance form, along with the initials of the person performing the check.

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 5 of 7

Post Treatment: 1) After the administration of the brachytherapy treatment, an authorized user shall date, sign or initial a written record of the calculated administered dose in the patient’s chart or other appropriate record. 2) The auditable form will be retained for at least three years, each written prescription and a record of each administered dose where a written prescription is required. 3) After the administration of an HDR treatment, an authorized user or a person acting under the supervision of an authorized user records the calculated administered dose, the total dwell time, the treatment site, and the date of treatment, along with the initials of the individual making the record. 4) The authorized user dictates and signs or initials a treatment summary, which includes the calculated administered dose per fraction and the calculated total administered dose.

c. Supervision: 1) Because ECHRO permits the receipt, possession, use and transfer of radioactive materials and the operation of radiation-producing machines by an individual under the supervision of an authorized user, ECHRO will instruct the supervised staff in principles of radiation safety appropriate to that individual’s use of radioactive material and x-ray machines. 2) All employees in Radiation Oncology shall attend annual training in radiation safety and machine safety (on-site) and emergency procedure. Documentation of such training will be retained in employee file. 3) ECHRO requires the authorized user to be immediately available to communicate with the supervised individuals. 4) A Radiation Oncologist is always available for consultation in the Radiation Oncology office during working hours. 5) ECHRO requires the authorized user to be able to be physically present and available to the supervised individual within one (1) hour. Radiation Oncologists will be physically present and available within one (1) hour of notification of a clinical need that requires his/her presence. When a specific physician is out of town, that physician will make arrangements for a backup authorized user to respond. 6) ECHRO requires that only those individuals specifically designated by the authorized user be permitted to administer radionuclides or radiation to patients. Each Radiation Oncologist named as an authorized user in the ECHRO license has the right to specify which individuals they will permit to administer radiotherapy to patients under their care.

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 6 of 7

d. Review of the Quality Management Program: 1) The Radiation Safety Committee, through the Radiation Safety Officer, shall perform a periodic review of the brachytherapy QM program. 2) To verify compliance with all aspects of the quality management program the review shall include: a) An evaluation of a representative sample of patient administrations within the review p events within the review period, b) All recordable period, c) All misadministrations within the review period. 3) The review shall be conducted at intervals not to exceed twelve (12) months. 4) A record of each review shall be maintained for inspection by the State of California in auditable form for three (3) years and shall include evaluations and finding of the review. a) The number of patient cases sampled will include a representative number of patient administrations from the past twelve (12) months (or since the last review) 1) The number of patient cases to be sampled will be based on the principles of statistical acceptance sampling and should represent each treatment modality performed at the institution. The method outlined in Subpart C – Quality Control Sampling Procedures in US NRC 10 CFR 32.110 will be followed, with a lot tolerance percent defective of 5% or less. 2) The cases will be selected randomly

LOT TOLERANCE PERCENT DEFECTIVE (PERCENT ERROR) 5.0% Lot Size Sample Size Acceptance Number 1 to 30 ALL 0 31 to 50 30 0 51 to 100 37 0 101 to 200 40 0 201 to 300 43 0 301 to 400 44 0

Table 1. Sampling Criteria.

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 7 of 7

h. In each case, an evaluation will check for the following items: 1) A valid and complete written directive was present prior to treatment. The lack of a valid and complete written directive is unacceptable. 2) There is documentation of patient identification by more than one means prior to administering treatment. The lack of documentation is unacceptable. 3) There is documentation of patient pretreatment, treatment, and post treatment checks, i.e. patient survey, room survey, source check, positioning check, etc. The lack of documentation is unacceptable. 4) Agreement between what was administered versus what was prescribed in the written directive. Disagreement between what was prescribed and what was delivered is unacceptable.

i. The number of “unacceptable discoveries” that are allowed for each sample size and lot tolerance percent defective will be derived from the acceptance sampling tables. j. For each case reviewed, the Committee will identify deviations from the written directive, the cause of each deviation, and the action required to prevent recurrence.

1) The actions may include new or revised policies, new or revised procedures, additional training, or increased supervisory review of work. 2) Corrective actions for deficient conditions will be implemented within a reasonable time after identification of the deficiency.

k. The QM program’s policies and procedures shall be reviewed after each annual review to determine whether the program is still effective or to identify actions to make the program more effective.

E. Approval by:

Robert Sinha Radiation Oncology Medical Director 6/28/13

Judy D’Eliscu Radiation Oncology Clinical Manager 6/28/13

Radiation Safety Committee 7/10/13

Separator Page

Att 6u - 6.09 RadOnc - (HDR) Operation and Safety Procedures 7-10-13.doc

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT POLICIES AND PROCEDURES

6.09 HIGH DOSE RATE (HDR) OPERATING & SAFETY PROCEDURES

A. Coverage: All Radiation Oncology/Medical Physics personnel

B. Reviewed/Revised: June, 2013

C. Policy Summary: It is the policy at ECH Radiation Oncology to provide safe operation and control of radioactive materials used the high- dose-rate (HDR) brachytherapy afterloader and to provide proper response to emergency and abnormal situations.

D. Policy and Procedure:

1. System security: a. The system is secured from unauthorized use by removal of the keys when not in use. b. The treatment console area is a restricted area within the radiation oncology department accessible to authorized personnel only. c. The device containing the sealed source is secured within the treatment room with a cable to prevent operation beyond the designated treatment area or removal from the facility. d. Only authorized licensed personnel shall install, maintain, adjust, or repair the HDR device involving shielding or source-drive related components or install, replace, relocate, or remove a sealed source. e. The source manufacturer will have a Radioactive Materials License for source exchanges and will perform all source exchanges at intervals not to exceed six months.

Radiation Oncology Procedures Physics Quality Assurance High Dose Rate (HDR) Operating and Safety Procedures Page 2 of 6

2. Leak testing and Inventory: Sources are exchanged at less than six months. Vendor provided documentation is reviewed at the time of source installation for compliance and acceptability. All sources removed at the time of exchange are packaged by the vendor and returned to the vendor.

3. Personnel exposure: Personnel radiation exposure is monitored by a NVLAP accredited radiation badge provider. All personnel shall wear a whole body badge and a ring badges as appropriate. The badges will be exchanged on a quarterly basis. The quarterly radiation monitoring device report will be reviewed by the Radiation Safety Officer upon its arrival and sent for employee review.

4. Patient Monitoring: a. An authorized user and a licensed medical physicist with a specialty in therapeutic radiological physics shall be physically present during all patient treatments involving the HDR. b. Only a patient receiving treatment is allowed in the treatment room while the source is exposed. c. The patient shall be monitored both visually and aurally during treatment through CCTV (with backup) and intercom systems. If visual or aural communication is lost, HDR procedures will be stopped until corrective action has been performed. d. Entry into the treatment room after completion of treatment is restricted until reduction of radiation levels to ambient has been verified through use of a portable radiation survey meter. The authorized physicist, or someone under direct supervision of the authorized physicist, shall survey patients with an appropriate portable survey instrument after the treatment has been completed and prior to being released. The survey will be documented on the microselectron patient QA Checklist form.

5. System Operation: a. Access to the treatment room is controlled by a door with an interlock that prevents exposure of the source while the door is open, initiates retraction of the source if the door is opened during treatment, and

Radiation Oncology Procedures Physics Quality Assurance High Dose Rate (HDR) Operating and Safety Procedures Page 3 of 6

requires a reset after the door is closed if the interlock was activated. b. An A/B selector switch is incorporated in the interlock mechanisms to prevent dual operation of the HDR and any other radiation-producing device. c. The control console indicator and independent radiation monitor indicator is located at the entrance to the treatment room to provide a clear warning that the source is “on” or “off”. d. System operation is restricted to properly trained and licensed Radiation Therapists (RT’s), authorized users, licensed medical physicists with a specialty in therapeutic radiological physics, and authorized service personnel. 6. Written Procedures: Emergency response procedures shall be developed, implemented, and available in written form at the treatment console for situations where the sealed source cannot be retracted into the shielded position by normal operation. Should the source fail to return to the safe, the unit is equipped with a manual crank for returning the source to the safe. An Emergency kit will be available near the HDR unit containing the following: 1 Wire rope and cable cutter 1 barrier tape 1 digital stopwatch 1 long handle tongs 1 12" forceps 1 Instructions to deal with each treatment procedure

a. A storage pig to hold the source in any extracted configuration shall be maintained in the treatment room for temporary storage of the source in the extreme case that the source cannot be returned to the safe. b. Written procedures are provided to all operational staff for securing the system. Documentation will be maintained that they have read and understood the procedures, license, and applicable state regulations. c. In the event of a malfunction of the therapy unit or safety equipment, HDR procedures will be stopped until the malfunction is corrected. If the malfunction results in unplanned exposure of a patient or other person, the RSO and/or California Bureau of Radiation Control will be notified. 7. Postings: a. Information will be posted at the treatment console specifying the location of the emergency response procedures manual, and the names,

Radiation Oncology Procedures Physics Quality Assurance High Dose Rate (HDR) Operating and Safety Procedures Page 4 of 6

addresses, and telephone numbers of authorized users, licensed medical physicist, and RSO. b. Signs indicating “Caution – High Radiation Area” and “Caution – Radioactive Materials” will be posted outside the treatment room. An additional radioactive materials sign will be posted on the HDR unit. 8. Calibration, Maintenance, and Repair: a. Full calibration measurements and surveys of adjacent restricted and unrestricted areas shall be performed on the HDR afterloader by the authorized licensed medical physicists with a specialty in therapeutic radiological physics before first medical use, following replacement of the sealed source, and following repair of the unit that involves the sealed source or components related to the exposure assembly. b. A licensed vendor will calibrate survey meters annually. c. Full calibration measurements shall be performed at least as often as the minimum manufacturer’s specifications and recommendations and include output measurement of the source strength to within 5% using a well chamber and electrometer calibrated within the previous two years by an ADCL. Certificates will be kept on file for review. d. Source positioning will be verified to within 1 mm. e. Source retraction with backup battery power will be verified by switching off normal power. f. Length of transfer tubes will be measured for consistency. g. Timer accuracy will be verified at typically short and long dwell times to assure linearity using an independent timer. h. Source travel time error will be measured using a two-position two- dwell time comparison method. i. Lengths of all non-rigid applicators will be verified at the time of full calibration or within six months prior to use. 9. Spot Checks: a. Periodic spot checks will be performed at the beginning of each treatment day and after source exchange. The spot checks shall include verification of electrical interlocks, exposure indicator lights, viewing and intercom systems, emergency response equipment, radiation monitors, timer accuracy, clock date and time, source position and indicators to within 1 mm, condition of the transfer tubes, and sealed source strength.

Radiation Oncology Procedures Physics Quality Assurance High Dose Rate (HDR) Operating and Safety Procedures Page 5 of 6

b. Output shall be correct to within 1% of physical decay strength. c. If a system malfunction is found, the system shall be locked in the off position until corrective action is performed. d. The microselectron daily QA and Daily Patient QA Checklist form will be used to document the spot checks.

10. Treatment Times: Treatment time calculations will be independently verified using a separate method of calculation.

11. Training and Supervision: a. Device specific system operation and emergency procedures training shall be conducted initially before the first treatment and at least annually for all operators, authorized users, and licensed medical physicists. b. Emergency response drills shall be conducted before first use and at least annually. c. Records shall be kept of all training including a list of topics covered, date of instruction or drill, names of participants, and name of instructor. d. All operators without previous HDR experience of at least 10 cases will complete device specific system operation and emergency procedures and participate in 10 cases under supervision of a trained operator. Training will be conducted by a manufacturer’s rep, authorized user, competent service technician, or trained licensed medical physicist with a specialty in therapeutic radiological physics. e. All system operation for patient procedures will be performed under the supervision of an authorized user and a licensed medical physicist with a specialty in therapeutic radiological physics. The licensed medical physicist will verify that established procedures are being followed. f. All other system operation will be restricted to trained personnel and will be evaluated at least annually by the RSO, authorized user, or licensed medical physicist with a specialty in therapeutic radiological physics. Ancillary personnel will be included in training regarding hazardous materials and indications of radiation monitor warning

Radiation Oncology Procedures Physics Quality Assurance High Dose Rate (HDR) Operating and Safety Procedures Page 6 of 6

signals.

E. Attachments: None

F. Approval:

Robert Sinha Radiation Oncology Medical Director 6/28/13

Judy D’Eliscu Radiation Oncology Clinical Manager 6/28/13

Radiation Safety Committee 7/10/13

Separator Page

Att 6v - 6.10 RadOnc - (HDR) - Ir-192 7-10-13.doc

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT POLICIES AND PROCEDURES

6.10 EMERGENCY RESPONSE PROCEDURES FOR NUCLETRON HDR – IR – 192 IF THE SOURCE FAILS TO RETURN TO THE SAFE

A. Coverage: Radiation Oncology and contracted physics staff

B. Reviewed/Reviewed: June, 2013

C. Policy Summary: This policy details the emergency procedure to manually return a source to the safe in the event of an equipment malfunction.

D. Policy & Procedure: 1. Should a system malfunction occur which affects source travel, the retract mechanism will automatically attempt to place the active source wire in the safe and parked position within 30 seconds. If retraction has not occurred after 50 seconds, the message ‘manual retract’ will be indicated on the console box and the console indicates emergency procedures are required. 2. It should be noted that operation of the Manual Retract Handle will only be effective in the following case: a. The machine has failed to park the active wire and the message ‘Retract failure, possible emergency. Check source status.’ is displayed. b. AND the manual retract handle is NOT turning. 3. In this case of a retract failure, users should follow the following procedures: a. This procedure should be followed if the hand wheel in not turning, radiation is present and a retract failure is indicated. 1) Enter the treatment room (Physicist) with a portable survey meter and personal dosimeter. 2) Turn the hand wheel in the direction of the arrow through at least 8 revolutions, or until the independent radiation monitor no longer detects radiation. If after at least 8 revolutions of hand wheel radiation is still detected by the room monitor or portable survey meter, continue with procedure b. outlined below. b. This procedure should be followed if the hand wheel is turning, radiation is present and a retract failure is indicated OR no retract failure is indicated and the hand wheel is not turning. Radiation Oncology Procedures Emergency Response Procedures For Nucleotron HDR – Ir – 192 If the Source Fails to Return to the Safe Page 2 of 4

1) Enter the treatment room (Physicist) with a portable survey meter and personal dosimeter. 2) If an end of the wire is visually detectable in a catheter, grasp the source in the catheter with the long handled forceps. Cut the catheter above and below the source and place the removed section in the ‘pig’. 3) If the end of the wire cannot be seen or radiation is still present, if possible, all applicators/catheters should be removed from the patient (Physician) without disconnection at any point. Care should be taken in this procedure to use forceps wherever possible, and maintain the maximum distance from the patient and the HDR afterloader. Following removal, if possible, the catheters/Applicators should be placed in a shielded container. c. In all cases above, 1) Remove the patient from the immediate area. 2) Survey the patient, and if safe to do so, evacuate the patient from the room. 3) A suitably qualified person must ensure that the applicator is shielded. 4) If unable to properly shield the source, leave the room. Close the door. Mark it NO ENTRY with radiation warning tape. 5) Notify all emergency contacts immediately.

4. Since ECH Radiation Oncology will be expected to report estimated exposure to staff and patient as a result of the incident, keep track of all exposure times and dose rates involved to produce a reasonable estimate of exposure to all concerned.

5. Emergency source recovery equipment consists of long hemostats and cable cutters. They will be kept on the HDR storage pig. The lead storage pig will be kept next to the HDR

6. Retain the treatment data printout and contact the following: a. Contracted Physicist: Tel: 650-940-7280 b. RSO: Ramesh Gopi, MD Tel: 650-940-7280 c. Physicians: Bob Sinha, MD Tel: 650-940-7280 d. Service: Nucleotron Tel: 800-234-2249 e. California Bureau of Radiation Control Tel: 916-327-5106 Radiation Oncology Procedures Emergency Response Procedures For Nucleotron HDR – Ir – 192 If the Source Fails to Return to the Safe Page 3 of 4

7. Note: Each licensee who makes a report required by CA Code Title 17 shall submit a written follow-up report within 30 days of the initial report. Written reports prepared as required by other regulations may be submitted to fulfill this requirement if the reports contain all of the necessary information. The reports must include the following: a. A description of the event, including the probable cause and the manufacturer and model number of any equipment that failed or malfunctioned; b. The exact location of the event; c. The isotopes, quantities, and chemical and physical form of the licensed material involved; d. Date and time of the event; e. Corrective actions taken or planned and the results of any evaluations or assessments; and f. The extent of exposure of individuals to radiation or to radioactive materials without identification of the individuals by name.

E. Attachments: None

F. Approvals:

Approved By:

Robert Sinha Radiation Oncology Medical Director 6/28/13

Judy D’Eliscu Radiation Oncology Clinical Manager 6/28/13

Radiation Safety Committee 7/10/13 Radiation

Raidation

Radiation Oncology Procedures Emergency Response Procedures For Nucleotron HDR – Ir – 192 If the Source Fails to Return to the Safe Page 4 of 4

Separator Page

Att 6w - 6.11 RadOnc - (HDR) Calibration Procedures 7- 10-13.doc

EL CAMINO HOSPITAL DEPARTMENT AND PROCEDURES

6.11 HIGH DOSE RATE (HDR) CALIBRATION PROCEDURES

A. Coverage: All Radiation Oncology/Medical Physics personnel

B. Reviewed/Revised: June 2013

C. Policy Summary: It is the policy at ECH Radiation Oncology to provide safe operation and control of radioactive materials used with the high-dose-rate (HDR) brachytherapy afterloader and to provide proper response to emergency and abnormal situations. This procedure is applicable to calibration of Iridium-192 sealed sources for the HDR afterloader.

1. Definitions: a. Authorized User: A physician licensed by the California State Board of Medical Examiners who meets the applicable requirements of CA Code Title 17 specified on the facility Radioactive Materials License. b. Radiation Safety Officer: An individual who has a knowledge of and the authority and responsibility to apply appropriate radiation protection rules, standards, and practices, who must be specifically authorized on a radioactive material license, and who is the primary contact with the agency. The roles and the responsibilities of the position are defined in CA Code Title 17. c. Radiation Safety Committee: A committee to advise the administration an all matters relating to the procurement, preparation, use, storage, and disposal of radioisotopes and/or radiation producing devices that are used for the diagnosis or treatment of disease. The duties and responsibilities of the RSC are defined by CA Code Title 17.

D. Policy and Procedure:

1. Procedure: a. Calibration Frequency: 1) The HDR source must be calibrated immediately after installation and prior to the treatment of any patients. 2) Full calibration measurements and surveys of adjacent restricted and unrestricted areas shall be performed on the HDR afterloader by the authorized licensed medical physicists with a specialty in therapeutic radiological physics before first medical use, following replacement of the sealed source, and following repair of the unit that involves the sealed source or components related to the exposure assembly.

2. Instrumentation: a. Well Chamber: 1) Standard Imaging HDR 1000 Plus well-type ion chamber, 2) Sun Nuclear Well Chamber

b. Electrometer: 1) Max-4000

c. Portable Survey Meter: 1) Fluke Victoreen 451P-RYR

d. Instruments used in calibration of the HDR unit must be calibrated, or cross calibrated with units calibrated by an Accredited Dosimetry Calibration Laboratory (ADCL) within the 24 months prior to the HDR calibration. The usual ADCL is at the University of Wisconsin.

e. Portable survey meters must be calibrated annually by a licensed vendor.

3. Full Calibration Tests: a. Source activity will be verified within  5 %. b. Source positioning will be verified to within 1 mm. c. Source retraction with backup battery power will be verified by switching off normal power. d. Length of transfer tubes will be measured for consistency. e. Timer accuracy will be verified at typically short and long dwell times to assure linearity using an independent timer. f. Source travel time error will be measured using a two-position two-dwell time comparison method. g. Lengths of all non-rigid applicators will be verified at the time of full calibration or within six months prior to use.

4. Source Activity Calibration Guidelines: a. Place the well chamber on the ‘tennis racket’ of the linear accelerator couch. This minimizes in-scatter from surrounding objects and allows use of a room scatter factor P room of 1.000. Place the HDR insert in the well chamber. Place a thermometer next to the chamber.

b. Connect the well chamber to the electrometer using the triax BNC connector, passing through the wall to the HDR control console. Set the electrometer to +100% bias. Verify that the bias voltage is at least 300 V DC. Set the electrometer to measure nA. c. Connect a Nucleotron quick connect to a 100 cm afterloading catheter. Place the tip of the catheter in the well chamber insert, push to make sure the tip is at the bottom, and tighten the insert. Verify the catheter is held firmly. Connect to channel 1 of the HDR indexer. d. Allow 15 minutes for the ion chamber to equilibrate to room temperature. Record the temperature of the ion chamber (oC); record the atmospheric pressure (mmHg).

1) Calculate PTP = [(273.15 + T) x 760}/(295.15*P). e. Exit the room and prepare the HDR console for exposures. f. It is necessary to find the “sweet spot” of the ion chamber. This is about 5 cm from the bottom of the chamber. Program an exposure from 99 to 91 cm, stepping the source in 0.5 cm steps and using a dwell time of 10 sec at each location. Record the nA at each dwell position. g. Find the position of the peak reading and make a second exposure with 0.2 cm steps centered on the peak position. Record the peak nA reading from this exposure as I100. h. Switch the bias to + 150, allow a few minutes to equilibrate, and repeat the exposure. Record the nA reading at the same position that was located in the previous exposure. Record this reading as I50.

i. Calculate Aion = 4/3 – 1/3 * (I100/I50). Calculate Pion = 1/Aion. 2 -1 j. Calculate Sk (air-kerma strength) in units of cGy m h with the formula:

k. Sk = I100 * Pelec * P T-P * Pion * Proom * N(Sk)

l. Where Pelec is the electrometer calibration factor (dimensionless) and N(Sk) is the air kerma strength calibration factor for the ion chamber (Gy m2 h-1 A-1). 2 - 1) Convert the Sk reading to curies (Ci) by multiplying by 2.4789 Ci/cGym h 1). This value should be less than 10.

m. Decay the activity for the source calibration certificate (T1/2 = 73.83 d) and compare to the measured activity. Calculate the difference. If the discrepancy is greater than 5.0%, contact the manufacture immediately. Do not give any patient treatments until the discrepancy is resolved. n. Following calibration, input the activity of the new source into the planning system and afterloader control console.

5. Source Positioning Verification Guidelines: a. Following calibration, a source should be verified. b. Remove the catheter from the well chamber. Tape the end to a ready-pack type V film.

c. Program an exposure at a series of dwell points starting at 99 cm and spaced at 3.0 cm. Use times of 16, 8, 4, 2, 1, 0.5, and 0.3 sec. d. Develop the film and examine to verify exposure uniformity. Purpose: This policy provides guidelines for the safe operation and emergency procedures for brachytherapy with the high-dose-rate afterloader.

6. Linearity Guidelines: a. Following activity calibration, the linearity of the HDR unit must be checked. The standard is  1.0% b. Set the electrometer to record nC. Remember to set the bias back to +100%. c. Make exposures at the “sweet spot” position for times of 15, 30, 60, 90, and 120 sec. Make two exposures for each time, average, and record as Q15, Q30, etc.

d. Calculate Q60ss1 = Q90 – Q30 and Q60ss2 = Q120 – Q60. Average these to get Q60ss.

e. Calculate t = 60 * (Q60 – Q60ss)/Q60ss. This is the source transit time error. Expect a value between 0.3 to 0.6 sec. Tracking this value may be helpful in diagnosing a problem. f. Set up a table to check linearity. Column 1 is time, column 2 is Q, column 3 is Q/(t + t) in nC/sec, column 4 is the column 3 value relative to 60 sec. g. Average column 4 and find the deviation for each exposure time. Expected values are 0.9900 – 1.0000.

7. Spot Checks: a. Periodic spot checks will be performed at the beginning of each treatment day and after source exchange. The spot checks shall include verification of electrical interlocks, exposure indicator lights, viewing and intercom systems, emergency response equipment, radiation monitors, timer accuracy, clock date and time, source position and indicators to within 1 mm, condition of the transfer tubes, and sealed source strength. b. Output shall be correct to within 1% of physical decay strength. c. If a system malfunction is found, the system shall be locked in the off position until corrective action is performed. d. The Microselectron daily QA checklist and the microselectron patient QA checklist will be used to document the spot checks.

E. ATTACHMENTS: NONE

F. APPROVALS:

ROBERT SINHA RADIATION ONCOLOGY MEDICAL DIRECTOR 6/28/13

JUDY D’ELISCU RADIATION ONCOLOGY CLINICAL MANAGER 6/28/13

RADIATION SAFETY COMMITTEE 7/10/13

RA

Separator Page

Att 6x - 6.12 RadOnc - (HDR) Inventory of Sealed Sources 7-10-13.doc

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT AND PROCEDURES

6.12 HIGH DOSE RATE (HDR) INVENTORY OF SEALED SOURCES

A. Coverage: All Radiation Oncology/Medical Physics personnel

B. Reviewed/Revised: June 2013

C. Policy Summary: It is the policy at El Camino Hospital Radiation Oncology to provide safe operation and control of radioactive materials.

D. Policy and Procedure:

1. Procedure: a. An inventory of sealed sources, other than brachytherapy will be performed, every six months and records will be maintained, for three years for inspection. The inventory record will contain the following information:

1) Model number of each sealed source. 2) Serial number of each sealed source if one has been assigned. 3) Identify of each sealed source radionuclide. 4) Estimated activity of each sealed sources. 5) Location of each sealed source. 6) Date of the inventory 7) Signature of the Radiation Safety Officer

b. The attached inventory form will be used to satisfy the requirements of the regulations or we will use an equivalent for that contains the above listed information.

c. Quarterly Inventory:

1) The three-month inventory for brachytherapy sealed sources will be performed as required by Title 17, California Administrative Code. An inventory form for brachytherapy sealed sources or an equivalent form that contains the above listed information will be used.

Radiation Oncology Department Procedures Quality assurance responsibilities for Inventories of Sealed Sources Page 2 of 2

E. Attachments None

F. Approvals:

ROBERT SINHA RADIATION ONCOLOGY MEDICAL DIRECTOR 6/28/13

JUDY D’ELISCU RADIATION ONCOLOGY CLINICAL MANAGER 6/28/13

RADIATION SAFETY COMMITTEE 7/10/13

Separator Page

Att 6y - 6.13 RadOnc - (HDR) Transport of Sealed Sources 7-10-13.doc

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT POLICY AND PROCEDURES

6.13 HIGH DOSE RATE (HDR) TRANSPORTATION OF SEALED SOURCES

A. Coverage: Radiation Oncology and contracted physicists

B. Reviewed/Revised: June, 2013

C. Policy Summary: It is the policy at ECH Radiation Oncology to provide safe operation and control of radioactive materials used with the high-dose-rate (HDR) brachythearapy afterloader and to provide proper response to emergency and abnormal situations. This procedure is applicable to shipping and receiving of Iridium-192 sealed sources for the HDR after-loader.

D. Policy and Procedure: 1. Ordering and Receiving HDR Sources. a) HDR sources are shipped quarterly as part of the maintenance agreement for the HDR afterloader by the HDR vendor. b) The HDR vendor sends a notification when the source is shipped. c) Upon receipt of the HDR source, the package is received and surveyed by trained physics personnel and placed in the radioactive material storage area. A copy of the shipping papers is retained. d) The package will be surveyed within 3 hours of receipt and results are recorded on the HDR Ir-192 source log kept at the treatment console.

2. Opening HDR Source Containers. HDR source containers are only to be opened by certified HDR vendor service engineers at the time of source exchange. 3. Source Exchange. The manufacturer will perform all source exchanges. 4. Preparing for Shipment. It is the manufacturer’s policy that HDR sources are only prepared for shipment by the manufacturer’s service engineer at the time of the source exchange. 5. Copies of the return shipment documentation are retained. 6. All sealed sources will be disposed of by return to the manufacturer. It is our policy to return each source immediately after source change.

Radiation Oncology Department Procedures Quality Assurance Responsibilities – High Dose Rate (HDR) Transportation of Sealed Services Page 2 of 2

E. Attachments: None

F. Approvals:

Approved By:

Robert Sinha Radiation Oncology Medical Director 6/28/13

Judy D’Eliscu Radiation Oncology Clinical Manager 6/28/13

Radiation Safety Committee 7/10/13

Separator Page

Att 6z - 6.14 RadOnc - (HDR) Staff Training Procedures 7-10-13.doc EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT POLICIES AND PROCEDURES

6.14 RADIATION SAFETY TRAINING PROCEDURES

A. Coverage: Radiation Oncology and appropriate El Camino Hospital staff

B. Reviewed/Revised: June, 2013

C. Policy Summary: It is the policy at El Camino Hospital Radiation Oncology to provide safe operation and control of radioactive materials.

D. Policy and Procedure:

1. PROCEDURE:

a. Radioactive materials procedures involving the use of sources for brachytherapy, CA Code Title 17, will be performed at El Camino Hospital Mountain View and Los Gatos. b. General Radiation Training Program. 1) All individuals who in the course of employment are likely to receive an occupational dose in excess of 100 millirem (1mSv) in a year will be: 2) Informed about the storage, transfer, or use of sources of radiation in the facility; 3) Instructed in the health protection problems associated with exposure to radiation and the precautions or procedures to minimize such exposures, and the purposes and functions of protective devices employed; 4) Instructed in and observed to the extent applicable the provisions of these regulations and licenses for the protection of personnel from exposures to radiation; 5) Instructed of their responsibility to report promptly to the radiation safety officer (RSO) any condition that may cause a violation of the facility’s license or any unnecessary exposure to radiation; 6) Instructed in the appropriate response in the event of any unusual occurrence that may involve exposure to radiation; and 7) Advised of the radiation exposure reports that workers are furnished pursuant to section CA Code Title 17. Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 2 of 2

c. All authorized users, medical physicists, radiation therapists, dosimetrists and nursing personnel as applicable will receive the training as described above. In addition the following categories of personnel will be trained:

Security Ancillary Housekeeping Others ______

d. The method of training will include the following:

Lectures Videos Self-study Demonstrations Other

Healthstream ______

E. Attachments: None

F. Approvals: ROBERT SINHA RADIATION ONCOLOGY MEDICAL DIRECTOR 6/28/13

JUDY D’ELISCU RADIATION ONCOLOGY CLINICAL MANAGER 6/28/13

RADIATION SAFETY COMMITTEE 7/10/13

Separator Page

Att 6aa - 6.15 RadOnc - QA Responsibilities 7-10-13.doc

EL CAMINO HOSPITAL RADIATION ONCOLOGY DEPARTMENT PROCEDURES

6.15 QUALITY ASSURANCE RESPONSIBILITIES FOR OVERSITE OF PHYSICS IN RADIATION ONCOLOGY

A. Coverage: Radiation Oncology Physicists (contracted) and Radiation Therapists

B. Reviewed/Revised: New May, 2013

C. Policy Summary: This policy insures that patient safety guidelines and timely maintenance of all Radiation Therapy equipment is documented, maintained and reported to all appropriate committees/channels.

D. Policy and Procedure: Physics practices in all hospitals are bound by State and Federal requirements. Clinical oversite of the Radiation Oncology Department is held by the Medical Director of Radiation Oncology. While it is the responsibility of the chief physicist to oversee the quality assurance and radiation safety process in the Radiation Oncology department, oversite for mandatory quality assurance reports and equipment used to insure the accuracy of treatment delivery will be the responsibility of the Radiation Oncology manager.

1. PROCEDURE: The following QA requirements, as outlined in detail in the State and Federal Requirements, and accompanying reporting requirements are summarized below:

a. HDR: Radiation Therapist HDR treatment QA MicroSelectron Daily QA checklist MicroSelectron Patient QA checklist MicroSelectron Monthly QA checklist MicroSelectron Source Change QA Checklist Monthly QA and calibration report (computer print-out) Quarterly source change documentation (computer print-out)

b. Trilogy™ Linear Accelerator: Monthly check by physics will include calibration and a review of the therapist’s daily checks. An annual report for the accelerator will be due every June.

c. CT simulator: Morning warm-up of the CT scanner will be done and documented by the therapists with daily, monthly and quarterly oversight by contracted Physicist.

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 2 of 12

d. CyberKnife: Daily morning QA (physics checks)will be done by the Radiation Therapist and kept in the CyberKnife log book located at the treatment console. Monthly checks are done by physicist. Annual report will be due each June.

2. All equipment used to insure accuracy of treatment delivery will be serviced at the appropriate date.

3. A schedule of due dates for all reports and equipment used to insure the accuracy of treatment delivery will be maintained and compliance will be checked monthly by the manager of the radiation oncology department.

4. Quarterly and annual reports will be generated and sent to the Radiation Safety Committee for review two weeks prior to each scheduled quarterly meeting. A member of the contracted Physics team in Radiation Oncology will attend all Radiation Safety meetings.

5. The Radiation Oncology Cancer Center Review and Radiation Protection Survey will be generated yearly at the end of the fiscal year by the contracted physicist. An annual summary of the HDR program will be included in this report. It will be reviewed by the Cancer Center Executive Director, Radiation Oncology Medical Director, the department manager and the Radiation Safety Committee. After review it will be sent to MEC for approval.

6. Clinical Engineering will have oversight for any machine issues. Refer to Radiation Oncology Policy 6.06. All service reports for each machine are kept in the service report binder located at the appropriate machine console.

7. Remote access for physicists related to dosimetry and treatment planning procedures will be given to appropriate personnel through the IT and IS department and will comply with all ECH IT and IS policies and procedures related to HIPAA and network access. All security documents and BAA agreement will be signed prior to access.

E. Attachments:

State and Federal Regulations www.cdph.ca.gov search Title 17 and 22 a. Radiation Therapist HDR treatment QA b. MicroSelectron Daily QA checklist c. MicroSelectron Patient QA checklist d. MicroSelectron Monthly QA checklist e. MicroSelectron Source Change QA checklist f. Schedule of Due dates for reports equipment maintenance

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 3 of 12

F. Approvals:

a. Radiation Oncology Department b. Radiation Safety Committee c. Patient Care Management Council d. Medical Executive Committee e. Board of Directors

Approved by:

Robert Sinha Radiation Oncology Medical Director 6/28/13

Judy D’Eliscu Radiation Oncology Clinical Manager 6/28/13

Radiation Safety Committee 7/10/13

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 4 of 12 Patient Name:______Attachment A MR #:______

RADIATION THERAPIST

HDR TREATMENT QA CHECKLIST

Rx is completed and signed by doctor.

HDR Plan is signed by doctor and the physicist

Verify patient ID on printed plan with control console.

Daily QA reviewed/signed by physicist.

Verify treatment dose matches on plan, Rx, and console.

Step Size – 5mm

Verify Dwell time matches Console and plan.

Verify catheter lengths match plan and console.

Verify HDR source activity.

Doctor and physicist are present and have checked patient set-up and plan.

Date

FinishTime

Initials

If any of these verifications fail, DO NOT TREAT until the parameters have been reviewed by physicist.

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 5 of 12

Attachment B

El Camino Hospital Radiation Oncology microSelectron Daily QA Checklist

Date:______

Radiation Area Monitor (PrimAlert) Pass______Fail______

TV Monitor Functioning and Focused on Patient Pass______Fail______

IN USE Light Above door Pass______Fail______

Intercom Pass______Fail______

All Interlocks Pass______Fail______

Interrupt Pass______Fail______

Treatment Console Indicators and Status Lamps Pass______Fail______

Self-Test Passes Pass______Fail______

Verify Computer-Decayed Activity Pass______Fail______

Source Position Check Ruler 1300 mm, 1400 mm, 1500 mm Pass______Fail______

Survey Meter Operational Pass______Fail______

Emergency Kit Complete and in Place Pass______Fail______

In the event of an Interlock System failure, the HDR unit and treatment console shall be locked in the OFF position until such time that the Interlock System has been repaired.

Test by (print)______Signature______

File in HDR binder. Keep for three years

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 6 of 12

Attachment C El Camino Hospital Radiation Oncology microSelectron Patient QA Checklist

Patient Name ______MR Number ______

Treatment Date ______Treatment Time ______

Type of Treatment ______Fraction Number ______

Physician Present ______Physicist Present ______

ID Verified by two methods (circle): Picture Name SSN Birthdate

Before Procedure:

Review plan at treatment unit and compare times/dwell positions: Physicist_____ MD_____

Written Directive Complete ______Lock Brake ______

Emergency Kit Ready ______Two Stop Watches ______

Open Retractor Cover ______Badges ______

Condition of Applicators Checked ______Daily QA Done ______

Physician Approved Localization ______

Pre-Treatment Survey (mR/hour) – Fluke Model 451P-RYR, SN 4055 calibrated: ______

Room ______Patient ______Unit ______Time ______By______

Record Treatment Time (seconds) Catheter connection checked by two people _____ Yes First Dwell: Plan ______Total: Plan ______

Reading ______Reading ______

Room Vacated ______

Post-Treatment Survey (mR/hour) – Fluke Model 451P-RYR, SN 4055 calibrated: ______

Room ______Patient ______Unit ______Time ______By______

______Room Monitor indicates source is safe ______Disconnect catheters prior to moving HDR unit. After treatment make a copy of physics. File original in patient’s chart.

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 7 of 12

Attachment D (see below)

Attachment D EL CAMINO HOSPITAL RADIATION ONCOLOGY microSelectron Monthly QA Checklist

Year ______JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC

Calibration Expect Result +/- 5%

10 secs Timer Accuracy 60 secs and Linearity

120 secs

Position Check Using Film (record location in mm)

Initials

Date Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 9 of 12

Attachment E EL CAMINO HOSPITAL RADIATION ONCOLOGY

microSelectron Source Change QA Checklist

Date

Initials

Survey max = 3 mR/hour @ 20 cm

Source Travel

Time Error

Positioning Check +/- 1 mm.

Have Nucletron adjust, if needed.

File in HDR Binder. Keep for 3 years.

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 10 of 12 Attachment F SCHEDULE OF DUE DATES FOR QA AND EQUIPMENT

Machine Daily Monthly Quarterly Annually

- Therapist Treatment QA - MicroSelectron Monthly - MicroSelectron Source - QA Report QA Checklist Change QA Checklist HDR included in the - MicroSelectron Daily QA Annual Cancer Center/ HDR Checklist - QA and Calibration Radiation Oncology Report Review and Radiation - MicroSelectron Patient Protection Survey QA Checklist - Source Change (due end of fiscal year) Documentation

- Machine QA Morning Warm-Up - Physics QA Monthly - PMI (scheduled by - Annual Report in Mosaiq (by therapist) Checks and review of vendor and therapist) (due in June/end of Linear - Second Check (by physics) therapist’s daily QA and fiscal year)

Accelerator: - Patient QA including treatment chart checks (done Trilogy plan in Mosaiq (by therapist) weekly)

- Physical QA for all treatments printed and put in chart for all IMRT and RapicArc plans (by physics)

- Daily Machine QA Morning - Physics Chart Checks - PMI (scheduled by - Annual Report Warm-Up in logbook by console and QA vendor and therapist) (due in June/end of (by therapist) fiscal year)

CyberKnife - Second Check (by physics)

- Patient QA kept in patient’s chart (by therapist)

- All New Plans QA (Physics)

- Morning Warm-Up (by therapist) - Physics oversite and - Physics oversite - Preventative Maintenance CT Scan Monthly QA (scheduled by vendor - QA and Clinical Engineering) - Annual Report

Radiation Oncology Department Procedures Quality assurance responsibilities for oversight of physics in radiation oncology Page 11 of 12

Due annually Cancer Center/Radiation Oncology Review and Radiation Protection Survey (June/end of fiscal year)

Due for recalibration Fluke Victoreen Survey Meter 451 P- RYR - Model #4055 annually (May)

Due for recalibration Electrometer and Ion Chamber - new 5/2013 annually (May)

Due for recalibration Barometer and Thermometer (2) – new in 5/2013 annually (May)

Welhoffer Water Phantom Due annually (January)

Separator Page

Att 6bb - PolProc_Temp Humidity.doc EL CAMINO HOSPITAL

POLICY/PROCEDURE: TEMPERATURE AND HUMIDITY IN PROCEDURAL AREAS, MONITORING OF (OPERATING ROOM, INTERVENTIONAL RADIOLOGY, LABOR & DELIVERY, INTERVENTIONAL SERVICES- MV) OUTCOMES: 1. The departments where procedures are performed will be within the set range for temperature and humidity as outlined in the AORN standards of recommended practice. 2. The chain of command will be initiated so appropriate measures are taken to ensure patient safety.

SUPPORTIVE DATA: 1. The temperature and humidity must be within a certain range to avoid condensation from forming on sterile items 2. Infection risk increases in environments which are outside the prescribed temperature and humidity ranges. 3. Fire hazard risk increases in environments which are outside the prescribed range.

CONTENT: 1. The temperature of the procedural areas should be monitored and recorded daily using a log or electronic documentation of the heating, ventilation and air conditioning (HVAC) system. The recommended temperature range in an operating room is between 68° F and 73° F (20° C to 23° C). If the temperature becomes out of range, the chain of command will be initiated within the department. The decision will be made whether to continue to perform procedures, or cancel & reschedule cases until proper range is re-established. This will be done in collaboration with O.R., Labor & Delivery, Interventional Radiology or Interventional Services management, Chief Nursing Officer, Infection Control, and Facility staff. 2. The humidity of the procedural areas should be monitored and recorded daily using a log or electronic documentation of the heating, ventilation and air conditioning (HVAC) system. The recommended humidity range in a procedural room is between 20% to 60%. If the humidity becomes out of range, the chain of command will be initiated with the procedural area. The decision will be made whether to continue to perform procedures, or cancel and reschedule cases until proper range is re-established. This will be done in collaboration with O.R., Labor & Delivery, Interventional Radiology or Interventional Services management, Chief Nursing Officer, Infection Control, and Facility staff.

REFERENCES: 1. Recommended practices for sterilization. In: Perioperative Standards and Recommended Practices. Denver, CO: AORN, Inc; 2012:e1-e36. 2. Per addendum d to ANSI/ASHRAE/ASHE Standard 170-2008, an acceptable range for humidity in an operating room is between 20% to 60%.

C:\utilities\distiller\temp\1DODD_QVDV6F- 6038C7B9C0A80BAB4F2421DBA78890BC.doc\\san01\Department\OR\OR Document\ZZZZZZ OR POLICIES, PROCEDURES AND PROTOCOLS--DONT NOT ALTER WITHOUT APPROVAL\PolProc_Temp & Humidity.doc © El Camino Hospital Policy/Procedure: Diode, Green Light or Holmium Laser Page 2 of 2 3. Recommended practices for sterilization. In: Perioperative Standards and Recommended Practices. Denver, CO: AORN, Inc; 2012:e1-e36 4. ANSI/ASHRAE/ASHE Addendum d to Standard 170-2008: Ventilation of Health Care Facilities. 2010. www.ashrae.org/File%20Library/docLib/Public/20100714_ad170_2008_d.pdf. Accessed November 30, 2012.

AUTHOR: M. Rivera, RN 7/13

APPROVAL: O.R. Committee MV, LG, 7/13 REVIEW/REVISION:

DISTRIBUTION: OR, Labor & Delivery, Interventional Radiology, Interventional Services- MV, Infection Control, Facilities

\\San01\policies & procedures\Clinical Procedures Committee\PolProc_Diode or Holmium Laser.doc © El Camino Hospital

Separator Page

Att 6cc - Revised Executive Compensation Committee Charter.pdf

Administration

DATE: ECH Board of Directors Meeting October 9, 2013

TO: ECH Board of Directors

FROM: Nandini Tandon, Chair Executive Compensation Committee

SUBJECT: Proposed Changes to Executive Compensation Committee Charter

BOARD ACTION: Possible Motion

Possible Motion: To approve the Draft Revised Charter as recommended by the ECH Executive Compensation Committee.

Executive Summary:

 All current members of the Executive Compensation Committee were reappointed to serve by the Board on July 10, 2013.  Hospital Board members Dennis Chiu, JD and Jeffrey Davis, MD expressed an interest in joining the Committee.  The Board appointed the two new members as alternate Committee members and instructed legal counsel to prepare a revised Charter for the Committee’s review.  No more than four Hospital directors may attend any Committee meeting.  Under the revised Charter, alternates will have full voting rights at each meeting they attend. They will be expected to review the agenda, materials, and minutes for all Committee meetings, whether in attendance or not.  At its September 19, 2013 meeting, the Committee reviewed three alternate revisions and voted to recommend the attached version.

For Consideration:

 The Board may choose to approve the Draft Revised Charter at its October 9, 2013 meeting, enabling at least one of the alternates to attend the November 21, 2013 Executive Compensation Committee meeting.

 Since the Governance Committee meeting schedule did not permit review of the ECC Draft Revised Charter prior to the October 9, 2013 Board meeting, the Board may choose to send the Draft Revised Charter to the Governance Committee for its November 5, 2013 meeting, with Board approval planned for January 2014. This approach will delay the attendance of the alternates until the March 2014 ECC meeting.

Separator Page

Att 6cc.2 - Draft Revised Executive Compensation Committee Charter 9 24 13.doc

Executive Compensation Committee Charter (Draft Revision)

Purpose The purpose of the Executive Compensation Committee (“Compensation Committee”) is to assist the El Camino Hospital (ECH) Hospital Board of Directors (“Board”) in its responsibilities related to the Hospital’s executive compensation philosophy and policies. The Compensation Committee shall advise the Board to meet all applicable legal and regulatory requirements as it relates to executive compensation.

Authority All governing authority for ECH resides with the Hospital Board except that which may be lawfully delegated to a specific Board committee. The Committee will report to the full Board at the next scheduled meeting any action or recommendation taken within the Committee’s authority. In addition, the Committee has the authority to select, recommend engagement of, and supervise any consultant hired by the Board to advise the Board or Committee on executive compensation issues.

Membership The Executive Compensation Committee shall be comprised of two (2) or more Hospital Board members. The Committee may also include 2-4 external (non-director) members with knowledge of executive compensation practices, executive leadership or corporate human resource management. The Hospital Board may designate up to two Hospital Board members to serve as alternate Committee members. Alternate Committee members shall serve as full members of the Committee when their attendance is permitted. If there are two alternates, meeting attendance will rotate with assignments made by the Committee Chair upon appointment or reappointment. If an alternate or Hospital Board member is unable to attend any Committee meeting, the unassigned alternate Committee member may attend any Committee meeting so long as the number of Hospital Board members in attendance is less than five. . Compensation consultants may be retained as appropriate and participate as directed.

. The Chair of the Committee shall be a Hospital Board director.

. All members of the Committee must be independent directors with no conflict of interest regarding compensation or benefits for the executives whose compensation is reviewed and recommended by the Committee. Should there be a potential conflict, the determination regarding independence shall follow the criteria approved by the Board and as per the Independent Director Policy.

Page 1 of 4

Staff Support and Participation The CHRO shall serve as the primary staff support to the Committee and is responsible for drafting the committee meeting agenda for the Committee Chair’s consideration. The CEO, and other staff members as appropriate, may serve as a non-voting liaison to the Committee and may attend meetings at the discretion of the Committee Chair. These individuals shall be recused when the Committee is reviewing his/her compensation.

General Responsibilities The Committee is responsible for recommending to the full Board policies, processes and procedures related to executive compensation philosophy, operating performance against standards, and succession planning.

Specific Duties The specific duties of the Executive Compensation Committee include the following:

A. Executive Compensation . Develop a compensation philosophy that clearly explains the guiding principles on which executive pay decisions are based. Recommend the philosophy for approval by the Board.

. Develop executive compensation policies to be approved by the Board.

. Review and maintain an executive compensation and benefit program consistent with the executive compensation policies, which have been approved by the Board. Recommend any material changes in the program for approval by the Board.

. Review the CEO’s salary range, performance incentive program, benefits, perquisites, and contractual terms. Recommend to the Board any salary changes and/or any performance incentive payouts based on the Committee’s evaluation of the CEO’s performance.

. Review the CEO’s recommendations regarding salary and performance incentive payouts for the upcoming year for the executives whose compensation is subject to review by the Committee based on the CEO and Committee’s evaluation of the executive’s performance. Recommend to the Board any salary changes and/or any performance incentive payouts based on the Committee and CEO’s evaluation of the executive’s performance.

. Periodically evaluate the executive compensation program, including the charter, policies, and philosophy on which it is based, to assess its effectiveness in meeting the Hospital’s needs for recruiting, retaining, developing, and motivating qualified leaders.

. Periodically review the total value, cost and reasonableness of severance and benefits for executives.

Page 2 of 4

. Periodically review business travel and entertainment expenses to determine whether any such expenses should be treated as additional compensation for executives.

. Annually review and present for Board acceptance the letter of rebuttable presumption of reasonableness.

. Review market analysis and recommendation of the Committee’s independent executive compensation consultant.

. Establish salary ranges for each executive and recommend placement in the range for the CEO and those executives eligible for the plan to the Board.

B. Performance Goals and Evaluation . Review and provide input into the CEO’s recommendations regarding annual organization goals and measures used in the Executive Performance Incentive Plan. Recommend organizational performance incentive goals for approval by the Board.

. Provide input into establishing the CEO’s annual individual performance incentive goals to execute the Hospital’s strategic plan. Recommend the CEO’s individual annual goals and measures for approval by the Board.

. Provide input into establishing the executive team’s annual performance incentive goals to execute the Hospital’s strategic plan. Recommend the annual goals and measures for approval by the Board.

. Develop the CEO evaluation process in collaboration with the CEO.

. Conduct an annual appraisal of the CEO’s performance with input from the Board.

C. Executive Succession and Development . Review annually the CEO’s own succession plan, including a leadership and professional development plan based on the previous year’s performance evaluation.

. Review annually the CEO’s succession plan for the executive team members, which shall include the process by which potential executives are identified and developed.

Committee Effectiveness The Committee is responsible for establishing its annual goals, objectives and workplan in alignment with the Board and Hospital’s strategic goals. The Committee shall be focused on continuous improvement with regard to its processes, procedures, materials, and meetings, and other functions to enhance its contribution to the full Board.

Meetings and Minutes The Committee shall meet at least once per quarter. The Committee Chair shall determine the frequency of meetings based on the Committee’s annual goals and work plan. Minutes shall be

Page 3 of 4

kept by the assigned staff and shall be delivered to all members of the Committee when the agenda for the subsequent meeting is delivered. The approved minutes shall be forwarded to the Board for review and approval.

Meetings and actions of all committees of the Board shall be governed by, and held and taken in accordance with, the provisions of Article VI of the Bylaws, concerning meetings and actions of directors. Special meetings of committees may also be called by resolution of the Board and the Committee Chair. Notice of any special meetings of the Committee requires a 24 hour notice.

Appointment and Terms The Board shall appoint the members of the Committee. In accord with the nomination/selection and reappointment process established by the Board, the Governance Committee shall recommend to the Board the appointment or reappointment of external (non-director) members to serve on the Committee. The Committee membership term is for one year, renewable annually.

Page 4 of 4

Separator Page

Att 6dd - Annual 403(b) Retirement Plan Audit.pdf

El Camino Hospital District

Report of Independent Auditors 2011 Benefit Plan Audits September 2013

Bertha Minnihan Employee Benefit Plan Services Partner (415) 956-1500

MOSS ADAMS LLP | 1 EL CAMINO HOSPITAL CASH BALANCE PLAN

• Limited Scope Opinion o Investments and activity certified by plan custodian . Wells Fargo

• Significant Accounting Estimates o Actuarial assumptions o Fair value of investments – significant changes in 2012 o Net appreciation in the fair value of investment

MOSS ADAMS LLP | 2

EL CAMINO HOSPITAL 403(B) TAX DEFERRED ANNUITY PLAN

• Limited Scope Opinion o Investments and activity certified by plan custodians . Fidelity . VALIC . Lincoln

• Significant Accounting Estimates o Fair value of investments o Net appreciation in the fair value of investment

MOSS ADAMS LLP | 3

COMMUNICATIONS WITH THOSE CHARGED WITH GOVERNANCE

• No known or likely misstatements identified

• No significant difficulties encountered in performing the audit

• No disagreements with management regarding accounting, reporting, or auditing matters

• Management and staff were cooperative and helpful throughout the engagement

MOSS ADAMS LLP | 4

Questions?

MOSS ADAMS LLP | 5 Separator Page

Att 6dd.2 - Draft 403(b) Financial Statements.pdf

Report of Independent Auditors and Financial Statements with Supplementary Information El Camino Hospital 403(b) Retirement Plan December 31, 2012 and 2011

CONTENTS

PAGE

REPORT OF INDEPENDENT AUDITORS ...... 1

FINANCIAL STATEMENTS

Statements of net assets available for benefits ...... 2

Statement of changes in net assets available for benefits ...... 3

Notes to financial statements ...... 4

SUPPLEMENTARY INFORMATION REQUIRED BY THE DEPARTMENT OF LABOR

Schedule H, line 4(i) - schedule of assets (held at end of year) ...... 10

REPORT OF INDEPENDENT AUDITORS

To the Trustees El Camino Hospital 403(b) Retirement Plan

We were engaged to audit the accompanying financial statements of El Camino Hospital 403(b) Retirement Plan (the Plan), which comprise the statements of net assets available for benefits as of December 31, 2012 and 2011, and the related statement of changes in net assets available for benefits for the year ended December 31, 2012, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on conducting the audit in accordance with auditing standards generally accepted in the United States of America. Because of the matter described in the Basis for Disclaimer of Opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Basis for Disclaimer of Opinion

As permitted by 29 CFR 2520.103-8 of the Department of Labor's (DOL’s) Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 (ERISA), the plan administrator instructed us not to perform, and we did not perform, any auditing procedures with respect to the information summarized in Note 8, which was certified by Fidelity Management Trust Company, Lincoln National Life Insurance Company, and The Variable Annuity Life Insurance Company, custodians of the Plan, except for comparing such information with the related information included in the financial statements. We have been informed by the plan administrator that the custodians hold the Plan's investment assets and execute investment transactions. The plan administrator has obtained a certification from the custodians as of December 31, 2012 and 2011, and for the year ended December 31, 2012, that the information provided to the plan administrator by the custodians is complete and accurate.

Disclaimer of Opinion

Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on these financial statements.

Other Matter

The supplemental schedule of schedule H, line 4(i) – schedule of assets (held at end of year) as of or for the year ended December 31, 2012, is required by the DOL's Rules and Regulations for Reporting and Disclosure under ERISA and is presented for the purpose of additional analysis and is not a required part of the financial statements. Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we do not express an opinion on this supplementary information.

Page 1

Report on Form and Content in Compliance with DOL Rules and Regulations

The form and content of the information included in the financial statements and supplementary information, other than that derived from the information certified by the custodians, have been audited by us in accordance with auditing standards generally accepted in the United States of America and, in our opinion, are presented in compliance with the DOL’s Rules and Regulations for Reporting and Disclosure under ERISA.

Santa Rosa, California Date

FINANCIAL STATEMENTS

______

EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, 2012 and 2011

2012 2011 ASSETS Participant-directed investments $ 210,148,777 $ 171,029,559 Employer match receivable 6,797,208 6,530,892 Notes receivable from participants 3,459,096 2,572,585

NET ASSETS AVAILABLE FOR BENEFITS $ 220,405,081 $ 180,133,036

See accompanying notes. Page 2 EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS Year Ended December 31, 2012

ADDITIONS TO NET ASSETS ATTRIBUTED TO Investment income Net appreciation in fair value of participant-directed investments $ 14,576,591 Dividends and interest 5,534,338 20,110,929 Contributions Participant deferrals 19,724,469 Employer match contributions 6,797,208 Rollover contributions 3,018,451 29,540,128 Total additions 49,651,057 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO Benefits paid to participants 9,329,582 Deemed distributions 14,882 Corrective distributions 3,415 Administrative and investment expenses 31,133 Total deductions 9,379,012 CHANGE IN NET ASSETS 40,272,045 NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 180,133,036 NET ASSETS AVAILABLE FOR BENEFITS, end of year $ 220,405,081

See accompanying notes. Page 3 EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF PLAN

The following description of the El Camino Hospital 403(b) Retirement Plan (the Plan) provides only general information. Participants should refer to the plan agreement, as amended, for a more complete description of plan provisions.

General – The Plan is a 403(b) defined contribution retirement plan covering all employees of El Camino Hospital (the Hospital) and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Hospital is the Plan’s sponsor and serves as plan administrator.

Eligibility – All full-time, part-time, and per-diem employees of the Hospital are eligible to participate in the Plan upon date of hire.

Contributions – Participants may elect to contribute up to the legal limit on a before-tax basis. Employer matching contributions are made for eligible employees based on a percentage of a participant’s eligible compensation. Employer matching contributions range from 4% to 6% and are determined based on years of service. Contributions are subject to regulatory limitations.

Participant accounts – Each participant’s account is credited with the participant’s and employer’s contributions and allocations of plan earnings, and charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. Participants may direct the investment of their account balances into various investment options offered by the Plan. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Vesting – Participants are fully vested in their salary deferrals and employer matching contributions, plus actual earnings thereon.

Notes receivable from participants – Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. The maximum loan term is five years unless the loan term qualifies as a home loan, in which case the term of the loan is not to exceed fifteen years.

Loans are secured by the balance of the participant’s account and bear fixed, reasonable rates of interest, as determined by the custodians. Principal and interest are paid ratably through payroll deductions or paid directly by the participant to the custodians through monthly ACH transactions. As of December 31, 2012, the rates of interest on outstanding loans with Fidelity Management Trust Company (Fidelity) ranged from 4.25% to 7.5%, with various maturities through October 2027. The loans with Fidelity are considered assets of the Plan and totaled $3,459,096 and $2,572,586 as of December 31, 2012 and 2011, respectively.

The Plan also allows plan loans which are loans made directly between the participant and Lincoln National Life Insurance Company (Lincoln) and are collateralized by the participant’s account. When taking a plan loan, the collateralized plan assets are moved to the Fixed Account until the loan is paid down. Participants are charged an interest rate of 7%, of which 4.5% is credited to participant accounts and 2.5% is paid to Lincoln as a loan administration fee. The total collateral included in the Plan assets was approximately $221,000 and $354,000 as of December 31, 2012 2012 and 2011, respectively.

As of December 31, 2012, the rates of interest on outstanding loans with The Variable Annuity Life Insurance Company (VALIC) ranged from 3% to 4.50%, with various maturities through November 2018. Participant balances in the amount of loans outstanding are used as collateral on the loans. These funds are restricted with respect to withdrawals and transfers while the loan is outstanding. The loans themselves are not reported assets of the Plan. The total collateral included in plan assets was approximately $45,000 and $262,000 as of December 31, 2012 and 2011, respectively.

Payment of benefits – On termination of service due to death, disability, or retirement, a participant may elect to receive either a lump-sum amount equal to the value of the participant’s account balance, or annual installments over a period of time. For termination of service for other reasons, a participant may receive the value of the vested interest in their account as a lump-sum distribution.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting – The financial statements of the Plan are prepared under the accrual method of accounting.

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from those estimates.

Page 4 EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS

Recent accounting pronouncements - In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. ASU No. 2011-04 requires disclosure of valuation techniques for Level 2 and Level 3 measurements and for Level 3 measurements requires disclosure of valuation processes used by the reporting entity and quantitative information about significant unobservable inputs. ASU No. 2011-04 removes the requirement for nonpublic companies to disclose information about transfers between Level 1 and Level 2 of the fair value hierarchy. The Plan adopted the new disclosure requirements effective January 1, 2012.

Investment valuation and income recognition – Investments are stated at fair value as certified by Fidelity, Lincoln, and VALIC. If available, quoted market prices are used to value investments.

Management determines the Plan’s valuation policies utilizing information provided by the investment advisors, custodians, and insurance company. Fair value is the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. See Note 4 for discussion of fair value measurements.

Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Interest income is recorded on the accrual basis. The net appreciation in fair value of participant-directed investments consists of both the realized gains or losses and unrealized appreciation or depreciation of those investments.

Payment of benefits – Benefits are recorded when paid.

Expenses – Administrative expenses related to operating and maintaining the Plan are paid by the Hospital. Certain investment and transaction fees are paid by participants in the Plan.

Subsequent events – The administrator of the Plan evaluated subsequent events for recognition and disclosure through ______, the date the financial statements were available to be issued. Management concluded that no material subsequent events occurred since December 31, 2012, that required recognition or disclosure in the financial statements.

Reclassification – Certain amounts from the prior year statement of net assets available for benefits have been reclassified, in order to conform to the current year presentation.

NOTE 3 - INVESTMENT

Investments representing 5% or more of net assets available for benefits consisted of the following as of December 31:

2012 2011 Principal Financial 403(b) Fixed Account $ 23,734,395 $ 20,772,140 Fidelity Freedom 2020 16,943,743 12,999,384 Spartan 500 Index 12,362,649 less than 5% Fidelity Freedom 2030 11,310,355 less than 5% Fidelity Freedom 2015 11,107,062 less than 5%

During 2012, the Plan’s investments (including gains and losses on investments purchased and sold, as well as held during the year) appreciated in fair value as follows:

Registered investment companies $ 13,472,388 Pooled separate accounts 960,231 Guaranteed investment contracts 143,972 Net appreciation in fair value of investments $ 14,576,591

NOTE 4 - FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). Page 5 EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS

The three levels of inputs used to establish fair value are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.

Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Following are descriptions of the valuation methodologies used for assets measured at fair value:

Shares of registered investment company funds are valued using the net asset value (NAV) of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in an active market or is calculated based on a compilation of primarily observable market information and is classified within level 1 of the valuation hierarchy.

Pooled separate accounts are valued using the NAV of the fund. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of units outstanding. The NAV of a pooled separate account is calculated based on a compilation of primarily observable market information. The number of units of the fund that are outstanding on the calculation date is derived from observable purchase and redemption activity in the fund. Accordingly, the unit value for a collective investment fund is classified within level 2 of the valuation hierarchy.

The Plan invests in the Principal Financial 403(b) Fixed Account, which is a stable value fund annuity contract issued by Principal Life Insurance Company. The investment’s objective is to provide a high quality investment option, earnings stability and liquidity, while offering a guarantee of principal and interest. The Principal Financial 403(b) Fixed Account is backed by the general account of Principal Life Insurance Company, which consists of a diversified general account portfolio of public and private securities, commercial and residential mortgages, and U.S. agency securities. Guarantees are subject to the claims-paying ability of the issuing insurance company. Accordingly, the Principal Financial 403(b) Fixed Account is classified within level 2 of the valuation hierarchy.

The Plan invests in the Lincoln Financial Fixed Account, which is a guaranteed investment annuity contract. The Lincoln Financial Fixed Account is valued at fair value by using discounted cash-flow calculations based on interest rates currently offered on similar contracts with maturities that are consistent with those remaining for the contracts being valued. Funds under the guaranteed investment contract that have been allocated and applied to purchase annuities (that is, Lincoln is obligated to pay the related benefits) are excluded from the Plan’s assets. As of December 31, 2012 and 2011, the remaining guaranteed interest and similar contracts carrying value approximated fair value.

The Plan invests in the VALIC Fixed Account Plus, which is a guaranteed investment annuity contract and generally invests in long- term investments. The current interest rate is established on a portfolio basis with the same rate applicable to all amounts on deposit for the period such current rate is in effect. Funds under the guaranteed investment contract that have been allocated and applied to purchase annuities (that is, VALIC is obligated to pay the related benefits) are excluded from the Plan’s assets. As of December 31, 2012 and 2011, the remaining guaranteed interest and similar contracts carrying value approximated fair value.

Page 6 EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS

The following sets forth, by level within the fair value hierarchy, the Plan’s assets at fair value at December 31:

2012 Level 1 Level 2 Level 3 Total Registered investment companies Balanced funds $ 10,241,889 $ - $ - $ 10,241,889 Blended funds 105,812,153 - - 105,812,153 Bonds 13,405,682 - - 13,405,682 Equity funds 700,845 - - 700,845 Growth and income funds 20,128,359 - - 20,128,359 International funds 2,413,686 - - 2,413,686 Money market funds 10,339,037 - - 10,339,037 Other 11,563,045 45,318 - 11,608,363 174,604,696 45,318 - 174,650,014 Pooled separate accounts Balanced funds - 1,504,652 - 1,504,652 Blended funds - 3,876,359 - 3,876,359 Bonds - 836,090 - 836,090 Growth and income funds - 1,751,334 - 1,751,334 Money market funds - 20,135 - 20,135 Other - 114,845 - 114,845 - 8,103,415 - 8,103,415 Guaranteed investment contracts - 23,735,427 3,659,921 27,395,348 $ 174,604,696 $ 31,884,160 $ 3,659,921 $ 210,148,777

2011 Level 1 Level 2 Level 3 Total Registered investment companies Balanced funds $ 8,685,077 $ - $ - $ 8,685,077 Blended funds 78,508,126 - - 78,508,126 Bonds 11,566,758 - - 11,566,758 Equity funds 719,243 - - 719,243 Growth and income funds 16,852,529 - - 16,852,529 International funds 2,265,718 - - 2,265,718 Money market funds 8,709,144 - - 8,709,144 Other 9,046,134 261,887 - 9,308,021 136,352,729 261,887 - 136,614,616 Pooled separate accounts Balanced funds - 1,585,504 - 1,585,504 Blended funds - 3,790,783 - 3,790,783 Bonds - 855,811 - 855,811 Growth and income funds - 1,695,764 - 1,695,764 Money market funds - 20,349 - 20,349 Other - 122,820 - 122,820 - 8,071,031 - 8,071,031 Guaranteed investment contracts - 22,215,849 4,128,063 26,343,912 $ 136,352,729 $ 30,548,767 $ 4,128,063 $ 171,029,559

Page 7 EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS

The following table discloses the summary of changes in the fair value of the Plan’s level 3 investment assets at December 31, 2012:

Guaranteed Investment Contracts Balance, beginning of year $ 4,128,063 Interest credited 143,972 Purchases 12,115 Settlements (602,806) Other (21,423) Balance, end of year $ 3,659,921

NOTE 5 - GUARANTEED INVESTMENT CONTRACTS

The Plan’s guaranteed annuity contracts are fully benefit-responsive and presented at estimated fair value on the statements of net assets available for benefits. The accounts are credited with earnings on the underlying investments and charged for participant withdrawals. The guaranteed annuity contract issuer is contractually obligated to repay the principal and a specified interest that is guaranteed to the Plan. Contract value as reported to the Plan by Fidelity, Lincoln, and VALIC represents contributions made under the contract, plus earnings, less participant withdrawals. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. Management has determined that the estimated fair value of the Plan’s investment contracts as of December 31, 2012 and 2011, materially approximates contract value. Accordingly, the statements of net assets available for benefits reflect no adjustment for the difference between net assets at fair value and net assets available for benefits.

There are no reserves against contract value for credit risk or the contract issuer or otherwise. Crediting rates on the investment contracts are based on a formula agreed upon with the issuer. Interest rates are reviewed on an annual basis for resetting.

Certain events, such as the premature termination of the contract by the Plan or the termination of the Plan, may limit the Plan’s ability to transact at contract value with the issuer. The plan administrator does not believe that the occurrence of such events, which would also limit the Plan’s ability to transact at contract value with participants, is probable.

Average yields and crediting interest rates estimated for each of the custodians for the years ended December 31, 2012 and 2011, were as follows:

2012 2011 Fidelity Guaranteed Investment Contracts Average yield 2.41% 2.97% Crediting interest rate 2.38% 2.94% Lincoln Guaranteed Investment Contracts Average yield 3.70% 3.62% Crediting interest rate 3.62% 3.54% VALIC Guaranteed Investment Contracts Average yield 4.16% 2.60% Crediting interest rate 4.16% 2.60%

NOTE 6 - TAX STATUS

The plan administrator believes the Plan meets the qualification requirements under Section 403(b), is tax exempt under provisions of the Internal Revenue Code (the Code), and is designed and currently being operated in compliance with the applicable requirements of the Code.

Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The plan administrator has analyzed the tax positions taken by the Plan and has concluded that as of December 31, 2012, there were no uncertain positions taken or expected to be taken that would require recognition of a

Page 8 EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS

liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

NOTE 7 - RISKS AND UNCERTAINTIES

The Plan invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, market volatility, and credit risks. It is reasonably possible, given the level of risk associated with investment securities, that changes in the near term could materially affect a participant’s account balance and the amounts reported in the financial statements.

NOTE 8 - INFORMATION CERTIFIED BY THE CUSTODIANS

The plan administrator has elected the method of compliance permitted by 29 CFR 2520.103-8 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under ERISA. Accordingly, Fidelity, Lincoln, and VALIC, custodians of the Plan, have certified to the completeness and accuracy of:

• participant-directed investments and loans to participants reflected in the accompanying statement of net assets available for benefits as of December 31, 2012 and 2011; • net appreciation in fair value of participant-directed investments and dividends and interest reflected in the accompanying statement of changes in net assets available for benefits for the year ended December 31, 2012; and • investments reflected on the supplemental schedule of assets (held at end of year)

NOTE 9 - PARTY-IN-INTEREST TRANSACTIONS

Plan investments include shares of registered investment company funds managed by Fidelity, Lincoln, and VALIC. As these are custodians of the Plan, transactions with these entities qualify as exempt party-in-interest transactions.

NOTE 10 - PLAN TERMINATION

Although it has not expressed any intention to do so, the Hospital has the right to terminate the Plan and discontinue its contributions at any time.

Page 9

SUPPLEMENTAL SCHEDULE

REQUIRED BY THE DEPARTMENT OF LABOR

______

EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012

Plan sponsor: El Camino Hospital Employer identification number: 94-3167314 Plan number: 002 Schedule H, Line 4(i)

(a) (b) (c) (d) (e) Description of investment including Identity of issue, borrower, maturity date, rate of interest, Current lessor, or similar party collateral, par, or maturity value Cost value

* Principal Fixed Account Principal Financial 403(b) Guaranteed investment contract ** $ 23,734,395 * Fidelity Freedom 2020 Registered investment company ** 16,943,743 Spartan 500 Index Registered investment company ** 12,362,649 * Fidelity Freedom 2030 Registered investment company ** 11,310,355 * Fidelity Freedom 2015 Registered investment company ** 11,107,062 J.P. Morgan Core Bond Select Registered investment company ** 10,217,092 Fidelity Freedom 2025 Registered investment company ** 9,721,035 * AF Growth Fund of America R4 Registered investment company ** 8,597,362 * Fidelity Retire Money Market Registered investment company ** 8,553,141 * Fidelity Freedom 2040 Registered investment company ** 7,244,871 * Fidelity Freedom 2035 Registered investment company ** 7,180,702 * AF Europac Growth R4 Registered investment company ** 5,783,489 Fidelity Freedom 2010 Registered investment company ** 5,654,473 Large Cap Value I Registered investment company ** 3,668,633 * Fidelity Contrafund Registered investment company ** 3,660,973 * Fixed Account Guaranteed investment contract ** 3,659,921 * Fidelity Freedom 2045 Registered investment company ** 3,614,286 * Spartan Extended Market Index Registered investment company ** 3,518,603 Artisan Mid Cap Val Registered investment company ** 3,492,077 Allianz NFJ Sm Cap Val I Registered investment company ** 2,488,724 * C&S Investment Reality Shares Registered investment company ** 2,292,121 * Fidelity Freedom 2050 Registered investment company ** 2,257,245 * Vanguard Small Cap index Registered investment company ** 1,925,755 Fidelity Freedom Income Registered investment company ** 1,856,193 * Fidelity Blue Chip Growth Registered investment company ** 1,563,571 * Baron Asset fund Registered investment company ** 1,421,379 * Fidelity VIP Contrafund Pooled separate account ** 1,389,355 * Fidelity Magellan Fund Registered investment company ** 1,282,069 * Fidelity Growth Company Registered investment company ** 1,191,042 * Brokerage Link Fidelity Fund Registered investment company ** 1,048,101 * Delaware VIP SMID Cap Growth Pooled separate account ** 1,010,749 * Fidelity Asset Manager 0.5 Registered investment company ** 991,121 * American Funds Growth Registered investment company ** 966,532 Fidelity OTC Portfolio Registered investment company ** 963,471 Fidelity Asset Manager 0.7 Registered investment company ** 926,322 Fidelity Low Price Stock Fund Registered investment company ** 921,944 LVIP Delaware Growth & Income Pooled separate account ** 905,492 * Fidelity Cash Reserve Registered investment company ** 858,784 * American Funds International Registered investment company ** 853,863 Fidelity Balanced Registered investment company ** 826,518

Page 10 EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012

(a) (b) (c) (d) (e) Description of investment including Identity of issue, borrower, maturity date, rate of interest, Current lessor, or similar party collateral, par, or maturity value Cost value

* Brokerage Link Cash Registered investment company ** 786,270 * Hartford Small Co HLS Fund IA Registered investment company ** 749,558 * Fidelity Ginnie Mae Registered investment company ** 666,001 * LVIP Delaware Special Opportunities Pooled separate account ** 637,488 * Fidelity Money Market Registered investment company ** 635,281 * Brokerage Link External Fund Registered investment company ** 570,858 * Fidelity Growth & Income Registered investment company ** 568,824 * LVIP Del Foundation Conservative Alloc. Pooled separate account ** 551,208 * Fidelity Retire Govt Money Market Registered investment company ** 524,466 * Fidelity Investment Grade Bond Registered investment company ** 520,105 * LVIP Wells Fargo Intrinsic Value Pooled separate account ** 475,217 * Fidelity Puritan Registered investment company ** 463,219 * LVIP Delaware Bond Pooled separate account ** 454,563 * Fidelity Diversified International Registered investment company ** 421,346 * Fidelity Equity Income Registered investment company ** 413,565 Fidelity Money Market Registered investment company ** 388,182 Delaware VIP Diversified Income Pooled separate account ** 356,122 * Fidelity Select Biotechnology Fund Registered investment company ** 353,378 * American Funds Growth-Income Registered investment company ** 331,078 LVIP Delaware Social Awareness Pooled separate account ** 319,301 * Fidelity Freedom 2005 Registered investment company ** 309,156 * Fidelity Freedom 2000 Registered investment company ** 303,793 * Spartan Total Market Index Registered investment company ** 296,755 * Delaware VIP Small Cap Value Pooled separate account ** 291,850 * Fidelity U.S. Bond Index Registered investment company ** 277,200 * Fidelity Leveraged Company Stock Fund Registered investment company ** 276,332 * Fidelity International Discovery Registered investment company ** 263,636 * Fidelity Overseas Registered investment company ** 249,522 * LVIP SSGA Emerging Markets 100 Pooled separate account ** 230,401 * Fidelity Capital & Income Registered investment company ** 222,736 * Fidelity Mid Cap Stock Registered investment company ** 209,162 Fidelity Select Software Registered investment company ** 207,887 * PIMCO Vit Total Return Portfolio Registered investment company ** 207,509 * Fidelity Asset Manager 0.2 Registered investment company ** 204,185 * Fidelity Value Registered investment company ** 197,077 * Fidelity Asset Manager 0.85 Registered investment company ** 195,633 Fidelity Disciplined Equity Registered investment company ** 194,845 * Fidelity U.S. Government Money Market Registered investment company ** 189,497 * Fidelity Canada Registered investment company ** 188,658 * Fidelity Emerging Asia Registered investment company ** 187,824 * Delaware VIP REIT Pooled separate account ** 185,829 * LVIP Baron Growth Opportunities Pooled separate account ** 185,618 * Delaware VIP Value Pooled separate account ** 181,500

Page 11 EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012

(a) (b) (c) (d) (e) Description of investment including Identity of issue, borrower, maturity date, rate of interest, Current lessor, or similar party collateral, par, or maturity value Cost value

* Fidelity Export & Multinational Registered investment company ** 178,357 * Fidelity EQ Div Income Registered investment company ** 172,921 * Fidelity Strategic Income Registered investment company ** 171,743 Fidelity Telecom & Utilities Registered investment company ** 171,050 Spartan International Index Registered investment company ** 163,690 * Fidelity Independence Registered investment company ** 151,923 * Fidelity Small Cap Stock Registered investment company ** 146,285 * Fidelity New Markets Income Registered investment company ** 145,270 Fidelity Four-in-One Index Registered investment company ** 142,200 * Fidelity Inflation Protected Bond Registered investment company ** 140,252 * Fidelity Latin America Registered investment company ** 135,732 * Fidelity Total Bond Registered investment company ** 132,825 * Fidelity Fifty Registered investment company ** 132,577 * LVIP Wilshire Moderate Profile Pooled separate account ** 132,202 * Fidelity Worldwide Registered investment company ** 129,143 * Fidelity Government Income Registered investment company ** 121,505 * Fidelity Real Estate Investment Registered investment company ** 119,552 * LVIP Mondrain International Value Pooled separate account ** 116,821 * Fidelity Select Energy Registered investment company ** 116,462 * LVIP Wilshire Moderately Aggressive Profile Pooled separate account ** 114,845 * LVIP T.Rowe Price Structured Mid-Cap Growth Pooled separate account ** 112,717 MFS Utilities Registered investment company ** 108,667 DWS Equity 500 Index VIP Pooled separate account ** 107,800 * Fidelity U.S. Government Reserves Registered investment company ** 107,505 * Fidelity Europe Capital Appreciation Registered investment company ** 103,643 * Fidelity Select Natural Resources Registered investment company ** 101,199 * LVIP Del Foundation Aggressive Alloc. Pooled separate account ** 100,933 * Fidelity Mid Cap Growth Registered investment company ** 92,081 * Fidelity Large Cap Value Registered investment company ** 90,016 * Fidelity Select Healthcare Registered investment company ** 89,356 Fidelity International Small Cap Registered investment company ** 86,399 * Fidelity Small Cap Value Registered investment company ** 84,682 * Fidelity China Region Registered investment company ** 84,468 * Fidelity Cap Appreciation Registered investment company ** 82,263 * Fidelity Small Cap Growth Registered investment company ** 80,876 * Fidelity Short Term Bond Registered investment company ** 80,044 * Fidelity Registered investment company ** 71,497 * Fidelity Emerging Markets Registered investment company ** 70,875 * Fidelity Small Cap Independence Registered investment company ** 70,268 * Fidelity Select Gold Registered investment company ** 70,083 * Fidelity Growth Discovery Registered investment company ** 69,774 * Fidelity Nordic Registered investment company ** 69,728 * Fidelity Select Med Eq & Sys Registered investment company ** 69,365 * Fidelity New Millennium Registered investment company ** 69,173

Page 12 EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012

(a) (b) (c) (d) (e) Description of investment including Identity of issue, borrower, maturity date, rate of interest, Current lessor, or similar party collateral, par, or maturity value Cost value

* Fidelity Strategic Real Return Registered investment company ** 67,223 * Fidelity Select Technology Registered investment company ** 63,569 * Fidelity International Capital Appreciation Registered investment company ** 61,705 * LVIP Janus Capital Appreciation Pooled separate account ** 61,533 * Fidelity Intermediate Bond Registered investment company ** 61,300 * Neuberger Berman Mid Cap Growth Registered investment company ** 60,321 * Fidelity Trend Registered investment company ** 59,997 Fidelity U.S. Treasury Money Market Registered investment company ** 57,648 * Fidelity Intermediate Government Income Registered investment company ** 56,561 * Fidelity Select Computers Registered investment company ** 54,992 * Fidelity Pacific Basin Registered investment company ** 52,740 * Fidelity Dividend Growth Registered investment company ** 52,393 * Fidelity Select Electronics Registered investment company ** 51,923 * Fidelity High Income Registered investment company ** 51,338 * LVIP Cohen & Steers Global REIT Pooled separate account ** 46,592 * Fidelity Select Defense Registered investment company ** 44,796 * Loan Collateral Fund Registered investment company ** 41,583 * Alliance Bernstein Growth & Income Registered investment company ** 41,396 * Fidelity Select Energy Services Registered investment company ** 39,918 * Fidelity Growth Strategies Registered investment company ** 38,404 * Fidelity Europe Registered investment company ** 37,982 * LVIP Vanguard International Equity ETF Pooled separate account ** 36,122 * Fidelity Select Communication Equipment Registered investment company ** 35,156 American Funds Global Growth Registered investment company ** 34,441 Spartan Long-Term TR Index Investment Registered investment company ** 31,805 * Fidelity Select Consumer Staples Registered investment company ** 30,757 * Fidelity Select Telecommunications Registered investment company ** 28,776 * Fidelity Convertible Securities Registered investment company ** 25,664 Fidelity Select Natural Gas Registered investment company ** 23,576 * Fidelity NASDAQ Composite Index Registered investment company ** 22,729 * Fidelity Select Chemicals Registered investment company ** 22,109 * LVIP SSGA Global Tactical Allocation Pooled separate account ** 21,048 * Fidelity Mid Cap Value Registered investment company ** 20,381 * LVIP Money Market Pooled separate account ** 20,135 * Fidelity Select Wireless Registered investment company ** 19,887 * Fidelity Select Environmental Registered investment company ** 18,891 * LVIP Global Income Pooled separate account ** 18,705 * Fidelity Value Discovery Registered investment company ** 16,644 * American Century Inflation Protection Registered investment company ** 16,308 * Fidelity Ultra-Short Bond Fund Registered investment company ** 15,096 * Fidelity Blue Chip Value Registered investment company ** 14,710 * Fidelity International Small Cap Opportunities Registered investment company ** 14,596 * Fidelity Stock Sell All Cap Registered investment company ** 14,255 * Fidelity Select Leisure Registered investment company ** 14,243

Page 13 EL CAMINO HOSPITAL 403(b) RETIREMENT PLAN

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012 * Fidelity Strategic Dividend & Income Registered investment company ** 13,662 * Blackrock Global Allocation Registered investment company ** 13,484 Spartan International TR Index Investment Registered investment company ** 11,302 * LVIP SSGA S&P 500 Index Pooled separate account ** 11,238 LVIP SSGA Small-cap Index Pooled separate account ** 10,222 * Fidelity Select Pharmaceuticals Registered investment company ** 10,128 * Fidelity Large Cap Value Enhanced Index Registered investment company ** 9,633 Fidelity Global Balanced Registered investment company ** 9,333 * Fidelity Small Cap Enhanced Index Registered investment company ** 8,835 * Fidelity Select Medical Deliver Registered investment company ** 8,296 * Fidelity Select Brokerage Registered investment company ** 8,001 * Fidelity Value Strategies Registered investment company ** 7,913 * Fidelity Real Estate Income Registered investment company ** 7,504 * Fidelity International Value Registered investment company ** 7,430 * DWS Small Cap Index VIP Pooled separate account ** 6,863 * Fidelity Mega Cap Stock Registered investment company ** 6,838 * Delaware VIP High Yield Pooled separate account ** 6,700 * Fidelity Large Cap Growth Registered investment company ** 6,559 * Fidelity Select Utilities Registered investment company ** 4,977 Spartan Short-Term TR Index Investment Registered investment company ** 4,811 * Fidelity Intl Real Estate Registered investment company ** 4,691 * Fidelity VIP Growth Pooled separate account ** 4,246 * Loan Escrow Fund Registered investment company ** 3,735 * Fidelity Japan Smaller Companies Registered investment company ** 3,589 * Fidelity Select Insurance Registered investment company ** 3,118 * Fidelity Asset Manager .60 Registered investment company ** 3,004 * Fidelity Select Financial Registered investment company ** 2,645 * Fidelity Large Cap Stock Registered investment company ** 2,394 * Fidelity Floating Rate High Income Registered investment company ** 2,222 * Fidelity Focused Stock Registered investment company ** 2,127 * Fidelity Japan Registered investment company ** 1,894 * Alliance Bernstein Global Thematic Growth Registered investment company ** 1,774 * Fidelity Mortgage Securities Registered investment company ** 1,738 * Principal Fixed Account Other Receivables Guaranteed investment contract ** 1,008 * Fidelity Select Banking Registered investment company ** 125 * Fidelity Small Cap Discovery Registered investment company ** 96 * Fidelity Institutional Shares International Govt Registered investment company ** 56 * Principal Fixed Account Accrued Income Guaranteed investment contract ** 23 210,148,777 * Participant loans Interest rates range from 4.25% - 7.5% maturing through October 2027 3,459,096 $ 213,607,873

* Indicates party-in-interest. ** Information is not required as investments are participant directed.

Page 14 Separator Page

Att 6dd.3 - El Camino Hospital 403 (b) Retirement Plan SAS Letter Draft.pdf

Communication to Those Charged with Governance

El Camino Hospital 403(b) Retirement Plan

December 31, 2012

Communications with Those Charged with Governance in accordance with AU‐C 260 (AU 380)

To the Retirement Plan Administrative Committee El Camino Hospital 403(b) Retirement Plan

We have completed a Department of Labor (DOL) limited scope audit of the financial statements and supplementary information of El Camino Hospital 403(b) Retirement Plan (the Plan) as of and for the year ended December 31, 2012. As permitted by 29 CFR 2520.103‐8 of the DOL’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 (ERISA), the plan administrator instructed us not to perform, and we did not perform, any auditing procedures with respect to the information summarized in Note 8 to those financial statements. Because of the significance of the information that we did not audit, we are unable to, and have not, expressed an opinion on those financial statements and supplementary information taken as a whole. Professional standards require that we provide you with the following information related to our audit.

OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA

As part of our audit, we considered the internal control of the Plan except that we did not, as part of the scope limitation discussed in the first paragraph, include a consideration of internal control relating to the information summarized in Note 8 to those financial statements. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

Our responsibility is to plan and perform the audit in accordance with auditing standards generally accepted in the United States of America and to design the audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we considered the Plan’s internal control solely for the purposes of determining our audit procedures and not to provide assurance concerning such internal control.

We are also responsible for communicating significant matters related to the financial statement audit that, in our professional judgment, are relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

You should understand that our audit is not specifically designed for and should not be relied upon to disclose matters affecting plan qualifications or compliance with the ERISA and Internal Revenue Code requirements. If during the audit we become aware of any instances of any such

1

matters or ways in which management practices can be improved, we will communicate them to you.

OTHER INFORMATION IN DOCUMENTS CONTAINING AUDITED FINANCIAL STATEMENTS

The AICPA’s Audit and Accounting Guide for Employee Benefit Plans requires that, before an auditor’s report on the Plan’s financial statements can be included with a filed Form 5500 (including any related schedules), the auditor must review the Form 5500 and consider whether there are any material inconsistencies between the other information in the form and the audited financial statements (including the required supplementary information) or any material misstatement of fact.

Our responsibility for other information in the Form 5500 does not extend beyond the financial information identified in our report. We do not have an obligation to perform any procedures to corroborate other information contained in the form, except as described above. However, we have read the information contained in the Form 5500 and nothing came to our attention that caused us to believe that such information or its manner of presentation is materially inconsistent with the information as it is presented in the financial statements.

PLANNED SCOPE AND TIMING OF THE AUDIT

We performed the audit according to the planned scope and timing previously communicated to you in in the engagement letter dated January 3, 2013, and subsequent planning discussions.

SIGNIFICANT AUDIT FINDINGS AND ISSUES

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Plan are described in Note 2 to the financial statements.

The Plan has adopted ASU No. 2011‐04, Fair Value Measurement (Topic 820) ‐ Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The guidance requires disclosure of valuation techniques for Level 2 and Level 3 measurements and for Level 3 measurements requires disclosure of valuation processes used by the reporting entity and quantitative information about significant unobservable inputs. ASU No. 2011‐04 removes the requirement for nonpublic companies to disclose information about transfers between Level 1 and Level 2 of the fair value hierarchy. This was adopted effective January 1, 2012.

There were no changes in the application of existing accounting policies during the year. We noted no transactions entered into by the Plan during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred.

2

Significant Accounting Estimates

Accounting estimates may be an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates may be particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected.

We did not note any significant accounting estimates in the financial statements. Significant accounting estimates are not commonly inherent in a defined contribution plan with investments that are readily marketable.

Financial Statement Disclosures The disclosures in the financial statements are consistent, clear and understandable. Certain financial statement disclosures may be particularly sensitive because of their significance to financial statement users.

We did not note any disclosures in the financial statements which we consider sensitive to potential users.

Significant Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements Professional standards require us to accumulate all factual and judgmental misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management.

We did not note any factual or judgmental misstatements in the course of the engagement.

Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations We have requested certain representations from management that are included in the management representation letter dated [Date of Management Representation Letter].

Management Consultation with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Plan’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our

3

professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Significant Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Plan’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

This information is intended solely for the use of the Retirement Plan Administrative Committee and management of the Plan and is not intended to be and should not be used by anyone other than these specified parties.

Santa Rosa, California Date

4 Separator Page

Att 6ee - Participant Cash Balance Plan Audit.pdf

Report of Independent Auditors and Financial Statements with Supplementary Information El Camino Hospital Cash Balance Plan December 31, 2012 and 2011

CONTENTS

PAGE

REPORT OF INDEPENDENT AUDITORS ...... 1

FINANCIAL STATEMENTS

Statements of net assets available for benefits ...... 2

Statements of changes in net assets available for benefits ...... 3

Notes to financial statements ...... 4

SUPPLEMENTARY INFORMATION REQUIRED BY THE DEPARTMENT OF LABOR

Schedule H, line 4(i) - schedule of assets (held at end of year) ...... 10

Schedule H, line 4(j) - schedule of reportable transactions ...... 17

REPORT OF INDEPENDENT AUDITORS

To the Trustees El Camino Hospital Cash Balance Plan

Report on the Financial Statements

We were engaged to audit the accompanying financial statements of El Camino Hospital Cash Balance Plan (the Plan), which comprise the statements of net assets available for benefits as of December 31, 2012 and 2011, and the related statements of changes in net assets available for benefits for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on conducting the audit in accordance with auditing standards generally accepted in the United States of America. Because of the matters described in the Basis for Disclaimer of Opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Basis for Disclaimer of Opinion

As permitted by 29 CFR 2520.103-8 of the Department of Labor's (DOL’s) Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 (ERISA), the plan administrator instructed us not to perform, and we did not perform, any auditing procedures with respect to the information summarized in Note 7, which was certified by Wells Fargo Bank, NA (Wells Fargo), the custodian of the Plan, except for comparing such information with the related information included in the financial statements. We have been informed by the plan administrator that the custodian holds the Plan's investment assets and executes investment transactions. The plan administrator has obtained a certification from the custodian as of December 31, 2012 and 2011, and for the year ended December 31, 2012, that the information provided to the plan administrator by the custodian is complete and accurate.

Disclaimer of Opinion

Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on these financial statements.

Other Matter

Page 1

The schedule H, line 4(i) – schedule of assets (held at year end) and schedule H, line 4(j) – schedule of reportable transactions as of and for the year ended December 31, 2012, are required by the DOL's Rules and Regulations for Reporting and Disclosure under ERISA and are presented for the purpose of additional analysis and are not a required part of the financial statements. Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we do not express an opinion on this supplementary information.

Report on Form and Content in Compliance with DOL Rules and Regulations

The form and content of the information included in the financial statements and supplementary information, other than that derived from the information certified by the custodian, have been audited by us in accordance with auditing standards generally accepted in the United States of America and, in our opinion, are presented in compliance with the DOL’s Rules and Regulations for Reporting and Disclosure under ERISA.

Santa Rosa, California September __, 2013

FINANCIAL STATEMENTS

______

EL CAMINO HOSPITAL CASH BALANCE PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, 2012 and 2011

2012 2011 ASSETS Investments Wells Fargo Short-Term Investment Fund $ 3,674,601 $ 5,676,746 U.S. government securities 11,090,752 2,992,292 Mortgage/asset-backed securities - 17,599,253 Municipal bond - 2,503,080 Other fixed income securities 171,138 553,239 Pooled, common & collective trusts 21,295,219 - Mutual funds 109,478,538 - Corporate bonds 7,743,233 17,092,122 Common stock 15,324,468 85,371,918 168,777,949 131,788,650 Employer contributions receivable 5,666,486 14,410,929 Net pending trades (88,376) (1,515,811) Interest and dividends receivable 79,210 671,799 NET ASSETS AVAILABLE FOR BENEFITS $ 174,435,269 $ 145,355,567

See accompanying notes. Page 2 EL CAMINO HOSPITAL CASH BALANCE PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS Years Ended December 31, 2012 and 2011

2012 2011 CHANGES IN NET ASSETS ATTRIBUTED TO Employer contributions $ 14,005,102 $ 19,810,929 Interest 1,308,307 2,255,017 Dividends 2,944,240 1,771,085 Other income 295,741 3,522 Net appreciation (depreciation) in fair value of investments 18,552,515 (4,621,771) Benefits paid to participants (8,024,086) (7,117,736) Administrative expenses (2,117) (2,073) CHANGE IN NET ASSETS 29,079,702 12,098,973 NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 145,355,567 133,256,594 NET ASSETS AVAILABLE FOR BENEFITS, end of year $ 174,435,269 $ 145,355,567

See accompanying notes. Page 3 EL CAMINO HOSPITAL CASH BALANCE PLAN NOTES TO FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF PLAN

The following description of the El Camino Hospital Cash Balance Plan (the Plan) provides only general information. Participants should refer to the plan agreement, as amended, for a more complete description of plan provisions.

General – The Plan was originally adopted as a defined benefit plan and was amended and restated in its entirety to a cash-balance formula effective January 1, 1995. Effective January 1, 2009, the Plan was restated and amended. The Plan is administered by the sponsor, El Camino Hospital (the Hospital), and plan assets are held by the custodian of the Plan, Wells Fargo Bank, N.A. (Wells Fargo). The Plan is a noncontributory defined benefit plan intended to qualify under Section 401(a) of the Internal Revenue Code (IRC).

The Plan maintains “participant account balances” equal to a participant’s account balance established as of January 1, 1995, upon the conversion to the cash-balance formula, plus subsequent contribution credits and interest credits related to the participant’s accumulated cash balance, participant match contribution credits, and participant match interest credits.

Contribution credits of 5% of eligible compensation for the year are credited to a participant’s account as of the last day of the plan year. Each year, interest credits related to a participant’s cash balance are credited to the participant’s account in an amount that is equal to a percentage of a participant’s account balance at the beginning of the plan year. The percentage rate used is the annual rate of return on 10-year Treasury Securities in effect for the third month (October) immediately preceding the first day of the applicable plan year. The rates credited were 2.15% and 2.54% for the years beginning January 1, 2012 and 2011.

Eligibility – Hospital employees are eligible to participate on the first day of the month succeeding the later of the date on which they complete one year of service, defined as working 12 months for a minimum of 1,000 hours, and they reach age 21.

Funding policy – The amount of employer contributions is determined based on actuarial valuations and recommendations as to the amounts required to fund benefits. Contributions are made by the Hospital based on the results of the actuarial recommendations. The Hospital intends to make contributions in amounts not less than the minimum required by the funding standards of the Employee Retirement Income Security Act of 1974 (ERISA), and are required to keep the Plan qualified under Section 401(a) of the IRC. Participants are not permitted to contribute to the Plan.

Vesting – Participants are fully vested with their third year of service.

Payment of benefits – Monthly benefit payments, based upon a formula described in the plan document, commence within 30 days of the normal retirement date, early retirement date, or deferred retirement date. A participant may elect to defer retirement past the normal retirement age, which will result in benefits greater than 100%, based on a published scale. The eligibility requirement for early retirement is age 55. Early retirement benefits are calculated by multiplying the accrued benefit as of the early retirement date by a percentage defined in the plan document.

On termination of service, a participant may elect to receive either a lump-sum amount equal to the value of the participant’s account balance or annuity payments based upon formulas described in the plan document.

Death benefits – The Plan provides death benefits in the form of a qualified pre-retirement survivor annuity for life equal to the annuity that would have been payable to the spouse if the participant had retired on the day preceding the participant’s death. At the option of the beneficiary, the benefit may be paid in a lump sum.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting – The financial statements of the Plan are prepared under the accrual method of accounting.

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein; disclosure of contingent assets and liabilities; and the actuarial present value of accumulated plan benefits, at the date of the financial statements. Actual results could differ from those estimates.

Page 4 EL CAMINO HOSPITAL CASH BALANCE PLAN NOTES TO FINANCIAL STATEMENTS

Recent accounting pronouncements – In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. ASU No. 2011-04 requires disclosure of valuation techniques for Level 2 and Level 3 measurements and for Level 3 measurements requires disclosure of valuation processes used by the reporting entity and quantitative information about significant unobservable inputs. ASU No. 2011-04 removes the requirement for nonpublic companies to disclose information about transfers between Level 1 and Level 2 of the fair value hierarchy. The plan adopted the new disclosure requirements effective January 1, 2012.

Investment valuation and income recognition – The Plan’s investments are stated at fair value, as certified by the Plan’s custodian, based generally on quoted market prices. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. The net appreciation or depreciation in fair value of investments consists of both the realized gains or losses and unrealized appreciation (depreciation) of those investments.

Payment of benefits – Benefits are recorded when paid.

Expenses – Administrative fees, such as custodian, actuarial, and certain other administrative expenses, may be paid by the Plan or the Hospital.

Subsequent events – The Plan has evaluated subsequent events through September __, 2013, which is the date the financial statements were available to be issued.

NOTE 3 - ACTUARIAL PRESENT VALUE OF ACCUMULATED PLAN BENEFITS

Actuarial present value of accumulated plan benefits is those estimated future periodic payments, including lump-sum distributions that are attributable under the Plan’s provisions for services rendered by employees to the valuation date. Accumulated plan benefits include benefits expected to be paid to: (a) retired or terminated employees or their beneficiaries; and (b) present employees or their beneficiaries.

Buck Consultants, consulting actuaries, estimates the actuarial present value of accumulated plan benefits. This is the amount that results from applying actuarial assumptions to adjust the accumulated plan benefits earned by the participants to reflect the time value of money through discounts for interest, and the probability of payment by means of decrements, such as for death, withdrawal, or retirement, between the valuation date and the expected date of payment.

The actuarial present value of accumulated plan benefits as of January 1, the beginning of each plan year, was as follows:

2012 2011 Vested benefits Participants currently receiving payments $ 28,145,331 $ 25,687,941 Other participants 119,527,383 102,242,674 Total vested benefits 147,672,714 127,930,615 Nonvested benefits 3,564,364 4,184,331 $ 151,237,078 $ 132,114,946

Page 5 EL CAMINO HOSPITAL CASH BALANCE PLAN NOTES TO FINANCIAL STATEMENTS

The change in actuarial present value of accumulated plan benefits from the prior year was as follows:

Actuarial present value of accumulated plan benefits at January 1, 2011 $ 132,114,946 Increase (decrease) during the year attributable to Benefits accumulated 5,852,221 Assumption changes 11,384,508 Interest 9,003,139 Benefits paid (7,117,736) Actuarial present value of accumulated plan benefits at January 1, 2012 $ 151,237,078

The significant actuarial assumptions underlying the actuarial valuation as of January 1, 2012 and 2011:

Discount rates 6% (2012) and 7% (2011) Mortality basis The IRS applicable 2012 Mortality Table is the RP-2000 mortality table for annuitants and non-annuitants with projections from the valuation date Retirement Normal retirement age is 65

NOTE 4 - FAIR VALUE MEASUREMENTS

The Plan classified its investments based upon an established fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not considered to be active or financial instruments without quoted market prices, but for which all significant inputs are observable, either directly or indirectly; and

Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Following is a description of the valuation methodologies used for assets measured at fair value:

Shares of registered investment company funds are valued using the net asset value (NAV) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in an active market and is classified within Level 1 of the valuation hierarchy.

U.S. Government securities, other fixed income securities, corporate bonds and common and preferred stocks are valued at the closing price reported on the major market on which the individual securities are traded. Common and preferred stock are generally classified within Level 1 of the valuation hierarchy.

Units held in pooled, common/collective trusts are valued using the NAV of the fund. The NAV of a collective investment fund is calculated based on a compilation of primarily observable market information. The number of units of the fund that are outstanding on the calculation date is derived from observable purchase and redemption activity in the fund. Accordingly, the unit value for a collective investment fund is classified within Level 2 of the valuation hierarchy. As of December 31, 2012 and 2011, the contracts carrying value approximated fair value.

Page 6 EL CAMINO HOSPITAL CASH BALANCE PLAN NOTES TO FINANCIAL STATEMENTS

The following sets forth, by level within the fair value hierarchy, the Plan’s assets at fair value at December 31, 2012:

2012 Level 1 Level 2 Level 3 Total

Wells Fargo Short-Term Investment Fund $ 3,674,601 $ - $ - $ 3,674,601 U.S. government securities - 11,090,752 - 11,090,752 Other fixed income securities - 171,138 - 171,138 Pooled, common & collective trusts - 21,295,219 - 21,295,219 Mutual funds Bond 21,132,256 21,132,256 International 32,148,597 32,148,597 Growth 11,896,579 11,896,579 Fixed Income 21,260,991 21,260,991 Stock 23,040,115 23,040,115 Corporate bonds Financial institutions 3,826,136 - - 3,826,136 Healthcare 502,784 - - 502,784 Industrials/materials 526,564 - - 526,564 Information technology 929,638 - - 929,638 Manufacturing/retail 1,514,733 - - 1,514,733 Telecommunications 443,378 - - 443,378 Common stock Common stock 1,452,831 1,452,831 Consumer discretionary 940,872 940,872 Consumer staples 555,693 555,693 Energy 1,504,717 - - 1,504,717 Financial institutions 3,057,766 - - 3,057,766 Healthcare 3,110,835 - - 3,110,835 Industrials/materials 1,779,941 - - 1,779,941 Information technology 2,082,421 - - 2,082,421 Other 88,987 - - 88,987 Telecommunications 610,155 - - 610,155 Utilities 140,250 140,250 $ 136,220,840 $ 32,557,109 $ - $ 168,777,949

Page 7 EL CAMINO HOSPITAL CASH BALANCE PLAN NOTES TO FINANCIAL STATEMENTS

The following sets forth, by level within the fair value hierarchy, the Plan’s assets at fair value at December 31, 2012:

2011 Level 1 Level 2 Level 3 Total

Wells Fargo Short-Term Investment Fund $ 5,676,746 $ - $ - $ 5,676,746 U.S. government securities - 2,992,292 - 2,992,292 Mortgage/asset-backed securities - 17,599,254 - 17,599,254 Municipal bonds - 2,503,080 - 2,503,080 Other fixed income securities - 245,731 - 245,731 Corporate bonds - Automotive/industrial - 1,314,082 - 1,314,082 Financial institutions - 6,137,925 - 6,137,925 Healthcare - 2,189,672 - 2,189,672 Information technology - 316,875 - 316,875 Manufacturing/retail - 2,187,938 - 2,187,938 Telecommunications - 3,834,547 - 3,834,547 Unknown (GMAC LLC) - 1,111,083 - 1,111,083 Preferred/convertible securities 307,508 - - 307,508 Common stock Energy 4,936,745 - - 4,936,745 Financial institutions 17,078,639 - - 17,078,639 Healthcare 17,881,310 - - 17,881,310 Industrials/materials 7,763,589 - - 7,763,589 Information technology 15,029,085 - - 15,029,085 Manufacturing/retail 20,098,273 - - 20,098,273 Telecommunications 2,584,276 - - 2,584,276

$ 91,356,171 $ 40,432,479 $ - $ 131,788,650

NOTE 5 - INVESTMENT

Investments representing 5% or more of net assets available for benefits consisted of the following at December 31, 2012

2012

Vanguard Institutional Index Fund $ 23,040,115 Dodge & Cox Income Fund 21,260,991 Metropolitan West Total Return Bond Fund Class I 21,132,256 Harbor International Fund Class Institutional 16,194,338 Dreyfus Premier International Stock Fund Class I 15,954,260 Touchstone Sands Capital Institutional Growth Fund 11,896,579

There were no investments that individually represented 5% of more of the Plan’s net assets available for benefits as of December 31, 2011.

Page 8 EL CAMINO HOSPITAL CASH BALANCE PLAN NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2012 and 2011, the Plan’s investments, including investments purchased, sold, and held during the year, appreciated (depreciated) in fair value, as follows:

2012 2011 U.S. government securities $ 923 $ 4,665 Mortgage/asset-backed securities (799,319) (37,936) Municipal bond (348,281) 289,971 Other fixed income securities (14,958) (33,697) Corporate bonds (411,694) (157,910) Preferred/convertible securities 26,550 (7,897) Common stock 17,738,413 (4,678,967) Mutual funds 2,093,112 - Pooled common/collective trusts 267,769 - Net appreciation (depreciation) in fair value of investments $ 18,552,515 $ (4,621,771)

NOTE 6 - TAX STATUS

The Internal Revenue Service (IRS) issued a determination letter dated August 19, 2011, that stated that the Plan and related trust were designed in accordance with applicable sections of the IRC. Although the Plan has been amended and restated since receiving the determination letter, the plan administrator believes the Plan is designed, and is currently being operated, in compliance with the applicable requirements of the IRC.

Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2012, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

NOTE 7 - INFORMATION CERTIFIED BY THE CUSTODIAN

The plan administrator has elected the method of compliance permitted by 29 CFR 2520.103-8 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under ERISA. Accordingly, Wells Fargo, the custodian of the Plan, has certified to the completeness and accuracy of:

• investments, interest, and dividends receivable, and net pending trades reflected on the accompanying statements of net assets available for benefits as of December 31, 2012 and 2011;

• net appreciation (depreciation) in fair value of investments, dividends, other income, and interest reflected on the accompanying statements of changes in net assets available for benefits for the years ended December 31, 2012 and 2011;

• investments reflected on the supplemental schedule of assets (held at end of year); and

• investments reflected on the supplemental schedule of reportable transactions.

Page 9 EL CAMINO HOSPITAL CASH BALANCE PLAN NOTES TO FINANCIAL STATEMENTS

NOTE 8 - RISKS AND UNCERTAINTIES

The Plan provides for investment in various investment securities that are exposed to various risks, such as interest rate, market volatility, and credit risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term, and such changes could materially affect the amounts reported in the statements of net assets available for benefits.

Plan contributions are made, and the actuarial present value of accumulated plan benefits is reported, based on certain assumptions pertaining to interest rates, inflation rates, and employee demographics, all of which are subject to change. Due to uncertainties inherent in the estimations and assumptions process, it is at least reasonably possible that changes in these estimates and assumptions in the near term would be material to the financial statements.

NOTE 9 - PARTY-IN-INTEREST TRANSACTIONS

Plan investments include shares of registered investment company funds, corporate bonds, and common stock managed by Wells Fargo. As Wells Fargo is the custodian of the Plan, transactions with this entity qualifies as exempt party-in-interest transactions.

NOTE 10 - PLAN TERMINATION

Although it has not expressed any intention to do so, the Hospital has the right to discontinue its contributions at any time and to terminate the Plan, subject to the provisions set forth in ERISA.

In the event the Plan is terminated, the net assets will be allocated for payment of plan benefits to the participants in order of priority determined in accordance with ERISA, applicable regulations thereunder, and the plan document.

Certain benefits are insured by the Pension Benefit Guaranty Corporation (PBGC), if the Plan terminates. Generally, the PBGC guarantees most vested normal age retirement benefits, early retirement benefits, and certain disability and survivor’s pensions. However, the PBGC does not guarantee all types of benefits, and the amount of benefit protection is subject to certain limitations. Vested benefits are guaranteed at the level in effect on the date of the Plan’s termination, subject to a statutory ceiling on the amount of an individual’s monthly benefit.

Whether all participants receive their benefits, should the Plan be terminated at some future time, will depend on the sufficiency, at the time, of the net assets to provide those benefits, the priority of those benefits to be paid, and the level and type of benefits guaranteed by the PBGC at that time. Some benefits may be fully or partially provided for by the then-existing assets and the PBGC guaranty, while other benefits may not be provided at all.

Page 10

SUPPLEMENTAL SCHEDULES

REQUIRED BY THE DEPARTMENT OF LABOR

______

EL CAMINO HOSPITAL CASH BALANCE PLAN SCHEDULE H, LINE 4(i) – SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012

Employer identification number: 94-3167314 Plan number: 001 Schedule H, Line 4(i)

(a) (b) (c) (d) (e) Identity of issue, borrower, Description of investment including maturity date, Current lessor, or similar party rate of interest, collateral, par, or maturity value Cost value

* WELLS FARGO SHORT-TERM INVESTMENT FUND N Cash Equivalent $ 3,674,601 $ 3,674,601 EXTERNAL COMMINGLED FUND-PENDING Pooled, common & collective trust investments; 8,400,000share 8,400,000 8,400,000 LIGHTHOUSE DIVERSIFIED FUND LIMITED CLASS A Pooled, common & collective trust investments; 4,877 shares 8,400,000 8,490,050 WELLINGTON CIF SMALL CAP VALUE Pooled, common & collective trust investments; 98,154 shares 4,227,449 4,405,169 US TREASURY NOTE US Government; Maturity Date: 02/15/2015; 0.250%; Shares: 1,185,000 1,184,239 1,184,443 US TREASURY NOTE US Government; Maturity Date: 03/31/2014; 0.250%; Shares: 895,000 894,757 895,421 US TREASURY NOTE US Government; Maturity Date: 06/30/2014; 0.250%; Shares: 5,345,000 5,344,089 5,347,085 US TREASURY NOTE US Government; Maturity Date: 10/15/2013; 1.250%; Shares: 1,030,000 341,051 340,877 US TREASURY NOTE US Government; Maturity Date: 08/31/2013; 2.125%; Shares: 1,240,000 1,056,634 1,055,029 US TREASURY NOTE US Government; Maturity Date: 11/30/2013; 0.500%; Shares: 340,000 1,285,157 1,283,983 US TREASURY NOTE US Government; Maturity Date: 06/30/2013; 2.625%; Shares: 950,000 985,477 983,915 AIR PRODUCTS & CHEMICALS Corporate Bond; Maturity Date: 08/02/2016; 2.000%; Shares: 100,000 103,956 103,881 AMERICAN EXPRESS CREDIT Corporate Bond; Maturity Date: 06/15/2015; 1.750%; Shares: 225,000 230,024 229,711 AMERICAN INTL GROUP Corporate Bond; Maturity Date: 09/15/2014; 4.250%; Shares: 100,000 99,448 105,340 ANHEUSER-BUSCH INBEV WOR Corporate Bond; Maturity Date: 07/15/2015; 0.800%; Shares: 200,000 200,790 200,524 AT&T CORP Corporate Bond; Maturity Date: 12/1/2015; 8.000%; Shares: 225,000 254,918 254,992 BANK OF AMERICA CORP Corporate Bond; Maturity Date: 07/01/2020; 5.625%; Shares: 60,000 59,785 71,138 BANK OF NOVA SCOTIA Corporate Bond; Maturity Date: 10/09/2015; 0.750%; Shares: 200,000 200,124 198,904 BOSTON PROPERTIES LIMITED Corporate Bond; Maturity Date: 04/15/2015; 5.265%; Shares: 175,000 180,059 192,174 CAPITAL ONE FINANCIAL CORP Corporate Bond; Maturity Date: 03/23/2015; 2.150%; Shares: 150,000 153,489 153,111 CATERPILLAR INC Corporate Bond; Maturity Date: 06/26/2015; 0.950%; Shares: 200,000 201,514 201,670 CITIGROUP INC Corporate Bond; Maturity Date: 05/19/2015; 4.750%; Shares: 175,000 189,424 188,657 COMCAST CORP Corporate Bond; Maturity Date: 02/15/2018; 5.875%; Shares: 75,000 78,919 90,379 COSTCO WHOLESALE CORP Corporate Bond; Maturity Date: 12/07/2015; 0.650%; Shares: 255,000 254,697 255,140 COX COMMUNICATIONS INC NEW Corporate Bond; Maturity Date: 12/15/2014; 5.450%; Shares: 21,000 20,954 22,902 COX COMMUNICATIONS INC Corporate Bond; Maturity Date: 10/01/2015; 5.500%; Shares: 400,000 394,151 449,168 EXPORT-IMPORT BK KOREA Corporate Bond; Maturity Date: 01/11/2017; 4.000%; Shares: 250,000 249,518 271,085 FEDEX CORP Corporate Bond; Maturity Date: 01/15/2014; 7.375%; Shares: 50,000 50,000 53,429 FREEPORT-MCMORAN C&G Corporate Bond; Maturity Date: 02/13/2012; 1.400%; Shares: 95,000 95,856 94,800

Page 10 EL CAMINO HOSPITAL CASH BALANCE PLAN SCHEDULE H, LINE 4(i) – SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012

(a) (b) (c) (d) (e) Identity of issue, borrower, Description of investment including maturity date, Current lessor, or similar party rate of interest, collateral, par, or maturity value Cost value

GENERAL ELEC CAP CORP Corporate Bond; Maturity Date: 07/02/2015; 1.625%; Shares: 385,000 391,245 391,387 GILEAD SCIENCES INC Corporate Bond; Maturity Date: 12/01/2014; 2.400%; Shares: 185,000 190,618 190,777 GOLDMAN SACHS GROUP INC Corporate Bond; Maturity Date: 05/03/2015; 3.300%; Shares: 150,000 156,380 156,339 HSBC USA INC Corporate Bond; Maturity Date: 02/13/2015; 2.375%; Shares: 150,000 154,350 154,294 IBM CORP Corporate Bond; Maturity Date: 02/06/2015; 0.550%; Shares: 215,000 214,897 215,041 JOHN DEERE CAPITAL CORP Corporate Bond; Maturity Date: 04/17/2015; 0.875%; Shares: 175,000 175,842 175,770 JPMPRGAN CHASE & CO Corporate Bond; Maturity Date: 03/01/2016; 3.450%; Shares: 185,000 196,971 196,472 NBCUNIVERSAL MEDIA LLC Corporate Bond; Maturity Date: 04/01/2014; 2.100%; Shares: 185,000 188,559 188,385 NORDSTROM INC Corporate Bond; Maturity Date: 06/01/2014; 6.750%; Shares: 75,000 74,726 81,359 PETROBRAS INTL FIN CO Corporate Bond; Maturity Date: 02/06/2015; 2.875%; Shares: 75,000 77,054 76,957 PROVIDENT COMPANIES INC Corporate Bond; Maturity Date: 07/15/2018; 7.000%; Shares: 50,000 52,190 59,381 RABOBANK NEDERLAND Corporate Bond; Maturity Date: 10/13/2015; 2.125%; Shares: 275,000 284,061 283,828 ROYAL BK OF CANADA Corporate Bond; Maturity Date: 03/13/2015; 1.150%; Shares: 185,000 186,887 187,007 ROYAL BK OF SCOTLAND PLC Corporate Bond; Maturity Date: 03/16/2016; 4.375%; Shares: 100,000 99,805 108,201 SOUTHERN CO Corporate Bond; Maturity Date: 09/15/2015; 2.375%; Shares: 185,000 193,416 192,661 ST PAUL TRAVELERS Corporate Bond; Maturity Date: 12/01/2015; 5.500%; Shares: 75,000 70,837 84,888 TARGET CORP Corporate Bond; Maturity Date: 07/18/2014; 1.125%; Shares: 150,000 151,595 151,460 TELEFONICA EMISIONES SAU Corporate Bond; Maturity Date: 04/26/2013; 2.582%; Shares: 200,000 201,204 200,700 TEVA PHARMA FIN IV LLC Corporate Bond; Maturity Date: 11/10/2014; 1.700%; Shares: 200,000 204,244 204,604 TEXAS GAS TRANSMISSION Corporate Bond; Maturity Date: 06/01/2015; 4.600%; Shares: 125,000 135,364 135,221 TOYOTA MOTOR CREDIT CORP Corporate Bond; Maturity Date: 02/17/2015; 1.000%; Shares: 175,000 176,353 176,174 UNITED TECHNOLOGIES CORP Corporate Bond; Maturity Date: 06/01/2015; 1.200%; Shares: 150,000 152,430 152,148 WELLPOINT INC Corporate Bond; Maturity Date: 01/15/2016; 5.250%; Shares: 375,000 369,068 417,896 * WELLS FARGO & COMPANY Corporate Bond; Maturity Date: 02/13/2015; 1.250%; Shares: 185,000 186,610 186,735 * WELLS FARGO COMPANY Corporate Bond; Maturity Date: 12/11/2017; 5.625%; Shares: 200,000 199,168 238,540 ABBVIE INC Private Placement; Shares: 170,000; 1.200%; 11/06/2015 169,886 171,136 KAUPTHING BK TRANCHE Private Placement; Shares: 275,000; 7.125%; 05/19/2016 196,000 3 ALLOT COMMUNICATIONS LTD. Common Stock; Shares: 1,340 31,330 23,879 BP PLC - ADR Common Stock; Shares: 4,000 167,080 166,560 CARNIVAL CORP Common Stock; Shares: 6,800 262,888 250,036 DIAGEO PLC - ADR Common Stock; Shares: 3,300 376,266 384,714 INTERXION HOLDING NV Common Stock; Shares: 1,457 32,479 34,618 NOVADAQ TECHNOLOGIES Common Stock; Shares: 3,733 41,441 33,149 RADWARE LTD Common Stock; Shares: 1,080 34,863 35,640 SANOFI-AVENTIS Common Stock; Shares: 5,600 204,931 265,328

Page 11 EL CAMINO HOSPITAL CASH BALANCE PLAN SCHEDULE H, LINE 4(i) – SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012

(a) (b) (c) (d) (e) Identity of issue, borrower, Description of investment including maturity date, Current lessor, or similar party rate of interest, collateral, par, or maturity value Cost value

VODAFONE GROPU PLC NEW Common Stock; Shares: 8,500 177,844 214,115 WESTPORT INNOVATIONS INC Common Stock; Shares: 1,677 49,179 44,793 NANOSPHERE INC Common Stock; Shares: 15,313 47,005 44,101 ASTRONICS CORP COM Common Stock; Shares: 1,161 26,412 26,564 CHART INDUSTRIES INC Common Stock; Shares: 588 42,134 39,213 ECHO GLOBAL LOGISTICS, INC Common Stock; Shares: 2,911 47,729 52,311 EMERSON ELECTRIC CO Common Stock; Shares: 5,200 249,392 275,392 FLOW INTL CORP Common Stock; Shares: 12,558 42,663 43,953 HERITAGE-CRYSTAL CLEAN INC Common Stock; Shares: 2,166 37,696 32,512 HONEYWELL INTERNATIONAL INC Common Stock; Shares: 4,700 288,721 298,309 ILLINOIS TOOL WORKS INC Common Stock; Shares: 5,500 332,585 334,455 L-3 COMMUNICATIONS CORP COM Common Stock; Shares: 1,900 140,201 145,578 MANITEX INTERNATIONAL INC Common Stock; Shares: 3,597 24,314 25,683 RAYTHEON CO Common Stock; Shares: 6,000 334,440 345,360 RUSH ENTERPRISES INC Common Stock; Shares: 1,697 30,978 35,077 TEAM, INC. COMMON STOCK Common Stock; Shares: 809 26,356 30,774 TITAN MACHINERY INC Common Stock; Shares: 2,051 44,602 50,660 BLACK DIAMOND INC Common Stock; Shares: 4,155 39,542 34,071 FUEL SYSTEMS SOLUTIONS INC Common Stock; Shares: 1,850 30,921 27,215 GANNETT INC Common Stock; Shares: 3,900 65,676 70,239 GENTHERM INC. Common Stock; Shares: 3,256 37,837 43,305 GENUINE PARTS CO Common Stock; Shares: 3,000 182,640 190,740 KOHLS CORP Common Stock; Shares: 3,100 160,051 133,238 MORGANS HOTEL GROUP CO Common Stock; Shares: 5,197 33,626 28,791 RESTORATION HARDWARE HOLDINGS Common Stock; Shares: 943 30,600 31,807 SHUTTERFLY INC Common Stock; Shares: 1,887 54,953 56,365 STAMPS COM INC Common Stock; Shares: 1,089 27,886 27,443 STANLEY BLACK & DECKER,INC. Common Stock; Shares: 3,100 211,885 229,307 STEVEN MADDEN LTD Common Stock; Shares: 1,617 69,242 68,351 FRESH MARKET INC/THE Common Stock; Shares: 851 48,586 40,925 WAL MART STORES INC Common Stock; Shares: 2,500 129,078 170,575 WALGREEN CO Common Stock; Shares: 9,300 328,569 344,193 CARRIZO OIL & GAS INC Common Stock; Shares: 1,483 39,839 31,024 CHEVRON CORP Common Stock; Shares: 1,900 125,343 205,466

Page 12 EL CAMINO HOSPITAL CASH BALANCE PLAN SCHEDULE H, LINE 4(i) – SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012

(a) (b) (c) (d) (e) Identity of issue, borrower, Description of investment including maturity date, Current lessor, or similar party rate of interest, collateral, par, or maturity value Cost value

CONOCOPHILLIPS Common Stock; Shares: 4,600 262,936 266,754 ION GEOPHYSICAL CORP Common Stock; Shares: 6,953 46,951 45,264 MARATHON OIL CORP Common Stock; Shares: 9,900 298,980 303,534 NORTHERN OIL AND GAS INC Common Stock; Shares: 2,914 44,727 49,013 OCCIDENTAL PETE CORP Common Stock; Shares: 3,500 172,267 268,135 PHILLIPS 66 Common Stock; Shares: 2,300 103,569 122,130 REX ENERGY CORP Common Stock; Shares: 3,700 47,929 48,174 SANCHEZ ENERGY CORP Common Stock; Shares: 2,654 48,112 47,772 SYNERGY RESOURCES CORP Common Stock; Shares: 9,468 38,910 51,033 TRIANGLE PETROLEUM CORP Common Stock; Shares: 11,088 71,072 66,417 AMERICAN EXPRESS CO Common Stock; Shares: 6,300 349,272 362,124 BANK OF AMERICA CORP Common Stock; Shares: 17,900 163,410 207,819 BOFI HOLDING INC Common Stock; Shares: 1,667 45,602 46,361 CAPITAL ONE FINANCIAL CORP Common Stock; Shares: 4,200 151,585 243,306 CITIGROUP, INC. Common Stock; Shares: 4,900 183,309 193,844 EVERBANK FINANCIAL CORP Common Stock; Shares: 1,377 20,311 20,531 GREENHILL & CO INC Common Stock; Shares: 781 37,718 40,604 JPMORGAN CHASE & CO Common Stock; Shares: 7,100 261,431 312,181 PINNACLE FINL PARTNERS INC Common Stock; Shares: 2,466 48,667 46,459 PNC FINANCIAL SERVICES GROUP Common Stock; Shares: 3,800 224,017 221,578 PRIMORIS SERVIES CORPORATION Common Stock; Shares: 3,552 48,089 53,420 SLM CORP Common Stock; Shares: 13,400 235,036 229,542 STATE STREET CORP Common Stock; Shares: 6,800 303,892 319,668 TEXAS CAP BANCSHARES INC Common Stock; Shares: 823 38,161 36,887 TRAVELERS COMPANIES, INC Common Stock; Shares: 4,600 331,752 330,372 WELLS FARGO & CO Common Stock; Shares: 11,500 388,929 393,070 BRIGHTCOVE INC Common Stock; Shares: 3,487 41,662 31,522 COMMVAULT SYSTEMS INC Common Stock; Shares: 906 48,541 63,114 COMPUTER TASK GROUP INC Common Stock; Shares: 2,528 46,244 46,085 ENVESTNET INC Common Stock; Shares: 3,445 47,457 48,058 EXACTTARGET INC Common Stock; Shares: 2,083 47,667 41,660 E2OPEN INC Common Stock; Shares: 2,654 43,319 37,581 FARO TECHNOLOGIES INC Common Stock; Shares: 952 38,261 33,967 FLUIDIGM CORP Common Stock; Shares:3,323 51,088 47,552

Page 13 EL CAMINO HOSPITAL CASH BALANCE PLAN SCHEDULE H, LINE 4(i) – SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012

(a) (b) (c) (d) (e) Identity of issue, borrower, Description of investment including maturity date, Current lessor, or similar party rate of interest, collateral, par, or maturity value Cost value

GUIDEWIRE SOFTWARE INC Common Stock; Shares: 1,833 54,681 54,477 HEWLETT PACKARD CO Common Stock; Shares: 6,900 187,790 98,325 ICG GROUP INC Common Stock; Shares: 3,420 37,131 39,091 IMPERVA INC Common Stock; Shares: 1,493 46,152 47,074 INCONTACT INC Common Stock; Shares: 10,619 62,344 55,006 INFOBLOX INC Common Stock; Shares: 1,634 28,607 29,363 INPHI CORP Common Stock; Shares: 4,479 38,833 42,909 INTEL CORP Common Stock; Shares: 10,500 227,745 216,510 INTERACTIVE INTELLIGENCE GROUP INC Common Stock; Shares: 1,407 44,742 47,191 INTERNATIONAL BUSINESS MACHS CORP Common Stock; Shares: 500 95,800 95,775 LIVEPERSON INC Common Stock; Shares: 2,569 39,649 33,757 LOGMEIN INC Common Stock; Shares: 1,550 37,780 34,736 MAXLINEAR INC Common Stock; Shares: 6,297 37,836 31,611 MICROSOFT CORP Common Stock; Shares: 10,200 271,068 272,439 MONOLITHIC PWR SYS INC Common Stock; Shares: 2,070 39,161 46,120 PROCERA NETWORKS, INC. Common Stock; Shares: 2,396 55,428 44,446 PROOFPOINT INC Common Stock; Shares: 3,874 51,122 47,689 QLIK TECHNOLOGIES INC Common Stock; Shares: 1,329 26,294 28,866 QUALYS INC Common Stock; Shares: 1,689 24,045 24,980 SAPIENT CORP COM Common Stock; Shares: 3,811 39,039 40,244 SEMTECH CORP COM Common Stock; Shares: 1,526 37,986 44,178 SHORETEL INC Common Stock; Shares: 9,121 41,603 38,673 SPS COMMERCE INC Common Stock; Shares: 653 24,644 24,337 SYNCHRONOSS TECHNOLOGIES INC Common Stock; Shares: 2,169 44,470 45,744 TANGOE INC Common Stock; Shares: 3,310 41,701 39,290 TEXAS INSTRUMENTS INC Common Stock; Shares: 6,800 191,284 210,052 ENTERGY CORP NEW COM Common Stock; Shares: 2,200 154,924 140,250 ACCURAY INC Common Stock; Shares: 8,518 57,431 54,771 ALIGN TECHNOLOGY INC Common Stock; Shares: 1,908 50,346 52,947 BAXTER INTL INC Common Stock; Shares: 6,000 368,520 399,960 CEPHEID Common Stock; Shares: 1,362 42,195 46,117 CERUS CORP COM Common Stock; Shares: 13,024 41,213 41,156 CONCEPTUS INC Common Stock; Shares: 2,622 49,220 55,062 DEXCOM INC Common Stock; Shares: 3,757 50,460 51,058

Page 14 EL CAMINO HOSPITAL CASH BALANCE PLAN SCHEDULE H, LINE 4(i) – SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012

(a) (b) (c) (d) (e) Identity of issue, borrower, Description of investment including maturity date, Current lessor, or similar party rate of interest, collateral, par, or maturity value Cost value

ENDOLOGIX INC Common Stock; Shares: 3,982 54,877 56,704 GREENWAY MEDICAL TECHNOLOGIES Common Stock; Shares: 2,666 44,125 40,950 HEALTHSTREAM INC Common Stock; Shares: 2,091 51,445 50,832 INSULET CORP Common Stock; Shares: 2,129 45,118 45,177 JOHNSON & JOHNSON Common Stock; Shares: 3,900 277,446 273,390 MEDIDATA SOLUTIONS INC Common Stock; Shares: 2,262 86,332 88,625 MEDTRONIC INC Common Stock; Shares: 8,500 319,499 348,670 MYRIAD GENETICS INC COM Common Stock; Shares: 1,768 46,390 48,178 NEOGEN CORP Common Stock; Shares: 1,160 48,989 52,571 NEOGENOMICS INC Common Stock; Shares: 7,104 20,891 17,618 ORASURE TECHNOLOGIES INC Common Stock; Shares: 6,582 56,400 47,259 PFIZER INC Common Stock; Shares: 15,500 275,303 388,729 PHOTOMEDEX INC Common Stock; Shares: 3,266 43,582 47,454 QUIDEL CORP Common Stock; Shares: 3,615 63,831 67,492 SOLTA MEDICAL INC Common Stock; Shares: 17,967 52,985 47,972 SPECTRANETICS CORP Common Stock; Shares: 2,138 30,872 31,578 STAAR SURGICAL CO COM NEW PAR Common Stock; Shares: 7,225 45,669 44,073 SYNERGETICS USA INC Common Stock; Shares: 8,069 34,766 38,731 TEARLAB CORP Common Stock; Shares: 8,191 35,894 33,583 UNITEDHEALTH GROUP INC Common Stock; Shares: 7,200 404,712 390,528 UROPLASTY INC Common Stock; Shares: 8,420 29,420 27,365 VOCERA COMMUNICATIONS INC Common Stock; Shares:1,332 36,157 33,433 WELLPOINT INC Common Stock; Shares: 3,100 192,913 188,852 ARUBA NETWORKS INC Common Stock; Shares: 1,845 33,572 38,265 AT & T INC Common Stock; Shares: 7,700 265,650 259,567 COGENT COMMUNICATIONS GROUP INC Common Stock; Shares: 1,332 27,637 30,156 VERIZON COMMUNICATIONS Common Stock; Shares: 5,700 252,225 246,639 8X8 INC Common Stock; Shares: 4,814 32,945 35,527 CHUY S HOLDINGS INC Common Stock; Shares: 1,319 30,462 29,466 FRANCESCA S HOLDINGS CORP Common Stock; Shares: 1,212 35,784 31,427 IGNITE RESTAURANT GROUP INC Common Stock; Shares: 2,161 29,186 28,093 DODGE & COX INCOME FD COM Mutual Fund; Shares: 1,533,982.052 21,382,335 21,260,991 DREYFUS PREMIER INTERNATIONAL STOCK FUND CLASS I Mutual Fund; Shares: 1,100,293.759 15,358,919 15,954,260 HARBOR INTERNATIONAL FUND CLASS INSTITUTIONAL Mutual Fund; Shares: 260,694.423 15,420,962 16,194,338

Page 15 EL CAMINO HOSPITAL CASH BALANCE PLAN SCHEDULE H, LINE 4(i) – SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2012

(a) (b) (c) (d) (e) Identity of issue, borrower, Description of investment including maturity date, Current lessor, or similar party rate of interest, collateral, par, or maturity value Cost value

METROPOLITAN WEST TOTAL RETURN BOND FUND CLASS I Mutual Fund; Shares: 1,940,519.402 21,475,238 21,132,256 TOUCHSTONE SANDS CAPITAL INST GROWTH Mutual Fund; Shares: 694,893.621 11,734,347 11,896,579 VANGUARD INSTITUTIONAL INDEX FUND Mutual Fund; Shares: 176,525.548 22,860,565 23,040,115

$ 166,580,203 $ 168,777,949

* Indicates party-in-interest

Page 16 EL CAMINO HOSPITAL CASH BALANCE PLAN SCHEDULE H, LINE 4(j) - SCHEDULE OF REPORTABLE TRANSACTIONS December 31, 2012

Employer identification number: 94-3167314 Plan number: 001 Schedule H, Line 4(j)

(a) (b) (c) (d) (e) (h) (i) Current value Identity of Purchase Selling Cost of of asset on Net gain party involved Description of assets price price asset transaction date or (loss) Category (iii) - series of transactions in excess of 5% of plan assets * Wells Fargo Bank Short-Term Investment Fund Series of cash sweep purchases $ 152,750,783 $ - $ 152,750,783 $ 152,750,783 $ - Series of cash sweep sales - 154,752,929 154,752,929 154,752,929 -

U.S. Treasury Note Series of cash sweep purchases 10,523,209 - 10,523,209 10,523,209 -

* Indicates party-in-interest

Page 17 Separator Page

Att 6ee.2 - El Camino Cash Balance SAS letter Draft.pdf

Communication to Those Charged with Governance

El Camino Hospital Cash Balance Plan

December 31, 2012

Communications with Those Charged with Governance in accordance with AU‐C 260 (AU 380)

To the Retirement Plan Administrative Committee El Camino Hospital Cash Balance Plan

We have completed a Department of Labor (DOL) limited scope audit of the financial statements and supplementary information of El Camino Hospital Cash Balance Plan (the Plan) as of and for the year ended December 31, 2012. As permitted by 29 CFR 2520.103‐8 of the DOL’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 (ERISA), the plan administrator instructed us not to perform, and we did not perform, any auditing procedures with respect to the information summarized in Note 7 to those financial statements. Because of the significance of the information that we did not audit, we are unable to, and have not, expressed an opinion on those financial statements and supplementary information taken as a whole. Professional standards require that we provide you with the following information related to our audit.

OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA

As part of our audit, we considered the internal control of the Plan except that we did not, as part of the scope limitation discussed in the first paragraph, include a consideration of internal control relating to the information summarized in Note 7 to those financial statements. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

Our responsibility is to plan and perform the audit in accordance with auditing standards generally accepted in the United States of America and to design the audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we considered the Plan’s internal control solely for the purposes of determining our audit procedures and not to provide assurance concerning such internal control.

We are also responsible for communicating significant matters related to the financial statement audit that, in our professional judgment, are relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

You should understand that our audit is not specifically designed for and should not be relied upon to disclose matters affecting plan qualifications or compliance with the ERISA and Internal Revenue Code requirements. If during the audit we become aware of any instances of any such

1

matters or ways in which management practices can be improved, we will communicate them to you.

OTHER INFORMATION IN DOCUMENTS CONTAINING AUDITED FINANCIAL STATEMENTS

The AICPA’s Audit and Accounting Guide for Employee Benefit Plans requires that, before an auditor’s report on the Plan’s financial statements can be included with a filed Form 5500 (including any related schedules), the auditor must review the Form 5500 and consider whether there are any material inconsistencies between the other information in the form and the audited financial statements (including the required supplementary information) or any material misstatement of fact.

Our responsibility for other information in the Form 5500 does not extend beyond the financial information identified in our report. We do not have an obligation to perform any procedures to corroborate other information contained in the form, except as described above. However, we have read the information contained in the Form 5500 and nothing came to our attention that caused us to believe that such information or its manner of presentation is materially inconsistent with the information as it is presented in the financial statements.

PLANNED SCOPE AND TIMING OF THE AUDIT

We performed the audit according to the planned scope and timing previously communicated to you in in the engagement letter dated January 3, 2013, and subsequent planning discussions.

SIGNIFICANT AUDIT FINDINGS AND ISSUES

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Plan are described in Note 2 to the financial statements.

The Plan has adopted ASU No. 2011‐04, Fair Value Measurement (Topic 820) ‐ Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The guidance requires disclosure of valuation techniques for Level 2 and Level 3 measurements and for Level 3 measurements requires disclosure of valuation processes used by the reporting entity and quantitative information about significant unobservable inputs. ASU No. 2011‐04 removes the requirement for nonpublic companies to disclose information about transfers between Level 1 and Level 2 of the fair value hierarchy. This was adopted effective January 1, 2012.

There were no changes in the application of existing accounting policies during the year. We noted no transactions entered into by the Plan during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred.

2

Significant Accounting Estimates

Accounting estimates may be an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates may be particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected.

We did not note any significant accounting estimates in the financial statements. Significant accounting estimates are not commonly inherent in a defined contribution plan with investments that are readily marketable.

Financial Statement Disclosures The disclosures in the financial statements are consistent, clear and understandable. Certain financial statement disclosures may be particularly sensitive because of their significance to financial statement users.

We did not note any disclosures in the financial statements which we consider sensitive to potential users.

Significant Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements Professional standards require us to accumulate all factual and judgmental misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management.

We did not note any factual or judgmental misstatements in the course of the engagement.

Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations We have requested certain representations from management that are included in the management representation letter dated [Date of Management Representation Letter].

Management Consultation with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Plan’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our

3

professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Significant Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Plan’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

This information is intended solely for the use of the Retirement Plan Administrative Committee and management of the Plan and is not intended to be and should not be used by anyone other than these specified parties.

Santa Rosa, California Date

4 Separator Page

Att 6ff - Board Open Session 10-09-13.pdf

Board of Directors Open Session – October 9, 2013

To: El Camino Hospital Board of Directors

From: Vivien D’Andrea, MD, FACP, Chief of Staff MV Karen Pike, MD, Chief of Staff LG

Date: September 26, 2013

RE: REPORT FROM THE MEDICAL STAFF EXECUTIVE COMMITTEE

This report is based upon the Medical Staff Executive Committee meeting of September 26, 2013.

Patient Care Policy/Procedures (Summaries pp. 1-4)  New Policies (Attached) o Outpatient Case Manager (pp. 5-8) o Release of Surgical Specimens, explants, or other hardware to patients (pp. 9-12) – Placenta and foreskin are not covered under this policy, they are included in a different policy, that will be noted in this policy. o Consent- Release of Surgical Specimen (p. 13) o Authorization to Release Explanted Hardware and Prostheses (pp. 14-15) o L&D Sponge and Sharps Counts in a Vaginal Delivery (pp. 16-17) o CCU/eICU Policy (pp. 18-26) o Anticoagulation Clinic Protocol and Appendix F (pp. 27-28) o EMTALA Refusal of Medical Screening Examination (pp. 29-31)

 Policies with Major Revisions (Attached – see summary of changes, pp. 1-4) o Stroke/ TIA Patient Management in ED (pp. 32-39) o Medication Management - Use of Fentanyl Transdermal Patch (pp. 40-42) o Organ, Tissue, And Cornea Donation (pp. 43-54)

 Policies with Minor Revisions (See summary pp. 1-4)

 Policies with Routine Review, No Revisions (See summary pp. 1-4)

Separator Page

Att 6gg - FC 7-30-13 APPROVED Open Minutes.docx

EL CAMINO HOSPITAL FINANCE COMMITTEE OF THE BOARD Tuesday, July 30, 2013

MINUTES

The Finance Committee of the Board of Directors of El Camino Hospital (the “Hospital”) was called to order by Mr. Dennis Chiu, Chairman, at 5:30 pm on Tuesday, July 30, 2013 in Conference Room A, Ground Floor, El Camino Hospital, Mountain View.

OPEN SESSION

ROLL CALL was taken. Members in attendance were Mr. Dennis Chiu, Mr. John Zoglin, and Mr. Richard Juelis. Absent members were Mr. Bill Hobbs and Ms. Nandini Tandon.

PUBLIC COMMUNICATIONS: As no member of the public was in attendance, there was no public comment.

CONFLICT OF INTEREST DISCLOSURES: Mr. Chiu asked if any Committee member may have a conflict of interest on any of the items on the agenda. No conflict was stated.

CONSENT CALENDAR: Mr. Chiu asked if anyone had any items they wanted removed from the consent calendar. Mr. Zoglin had requested that the May 28, 2013 minutes be pulled from the consent calendar for a separate vote as he was not in attendance at the May 28, 2013 meeting. A motion was made by Mr. Zoglin, seconded by Mr. Juelis, and approved by three members in favor, none opposed, to approve the following items on the consent calendar: May 2013 Financials; Simplee Agreement and Travel Policy.

MAY 28 MINUTES: A motion was made by Mr. Juelis, seconded by Mr. Chiu, approved by two members in favor, one member abstained, and none opposed, to approve the May 28, 2013 minutes.

LOS GATOS VOIP PROJECT POST ACTIVATION REVIEW: Mr. Greg Walton, Chief Information Officer, updated the Committee on the Los Gatos Voice Over Internet Protocol (VOIP) implementation, a project initiated in FY2012 to replace an unsupported and isolated phone switch. This has been accomplished, coming in at approximately $100,000 under budget. Information Systems and Los Gatos leadership and staff are satisfied with the outcome.

IT CASE FOR CHANGE: Mr. Greg Walton presented a historical summary of the IT Planning, Contracting and Case for Change project. Dr. Michael Podlone, Chair of Medical Standards IT Committee, was in attendance to answer questions. Mr. Walton updated the Committee on the IT Case for Change project and stated that McKesson has announced that our revenue cycle software, STAR, is no longer being developed. Mr. Walton stated that while staff has been examining the Case for Change for many months and has narrowed its scope to considering four options, this development has accelerated our sense of concern. He stated that the two vendors still being considered for EMR and revenue cycle solutions are Epic and Allscripts, and that the four options under consideration are: 1) Epic EMR and revenue cycle, with a Sutter implementation; 2) Epic EMR and revenue cycle with a retail (Epic) implementation; 3) Allscripts EMR and revenue cycle; and 4) Epic revenue cycle with an Allscripts EMR. He noted that the Allscripts revenue cycle solution is a new product which is currently being rolled out, and also noted that Epic just recently came forward with a proposal that would allow ECH to install only the revenue cycle solution, so that option 4 is a relatively new development.

Dr. Neal Cohen commented that the Sutter physicians and Palo Alto Medical Clinic physicians use Epic all the time and these physicians would support the use of Epic at El Camino Hospital. The community

El Camino Hospital Finance Committee of the Board July 30, 2013 P a g e | 2 physicians do not use Epic. Site visits were made with Mills and Stanford Hospital and those who visited were impressed with their in-hospital versions of Epic.

Mr. Walton stated that management is nearing the last portion of the fact gathering stage of the process. A team is scheduled to visit the Epic headquarters in Wisconsin and Allscripts headquarters in Georgia. A proposal from Sutter has not been received but is expected this month. After the August site visits, Mr. Walton will be providing updates to the committee.

Mr. King commented that the Allscripts revenue cycle product is so new that it is not yet up and running in a hospital, although several installations are underway and are expected to be live in November. He noted that because cash flow depends on the revenue cycle module operating properly, it is imperative that we know not only that the product works, but that it works well.

Dr. Neal Cohen commented that although Epic is a great tool, critically important is that it is set up in a way that helps this institution and that it is integrated with the way the physicians practice, both at the hospital and in their offices. All EMRs, including Epic, is difficult to learn and the transition is incredibly difficult. It is critical that clinicians are on site and that we have the support that we need from Epic to handle the transition. He stated that the approach we are taking is the right one, to be sure the right questions are asked about interfaces and also the ability of the vendors to support the clinicians during the implementation.

ADJOURN TO CLOSED SESSION: Upon motion duly made by Mr. Zoglin, seconded by Mr. Juelis, and approved by the members of the Finance Committee, the Open Session Finance Committee meeting was adjourned to Closed Session at 6:15pm. pursuant to Gov’t Code Section 54957.6.

CLOSED SESSION

The Committee completed its business of the Closed Session at 7:10 pm.

RECONVENE OPEN SESSION:

The Committee reconvened Open Session at 7:10 pm.

CLOSED SESSION REPORTS: Mr. Chiu reported that no action was taken in Closed Session.

Mr. Zoglin encouraged staff to ensure that all physician contracts include measurable goals and that metrics are aligned with strategy before presenting requests to the Board for approval. He also stated that he would like to see a calculation of return and payback period, when possible, on capital projects. Mr. King noted that the policies governing how contracts are approved are currently being re-examined and he expects a proposed revision of those policies to be brought to the committee in the near future.

MEDICAL DIRECTOR DIGESTIVE HEALTH: A motion was made by Mr. Juelis, seconded by Mr. Zoglin, and approved by three members in favor, none opposed, that the Board of Directors authorize management to negotiate an agreement for the Medical Director of Digestive Health.

SURGICAL ROBOT SYSTEM: A motion was made by Mr. Zoglin, seconded by Mr. Juelis, and approved by three members in favor, none opposed, that the Board of Directors authorize the purchase of a fourth robot system at a cost not to exceed $2 million.

MEDICAL DIRECTOR, GERIATRIC PSYCHIATRY: A motion was made by Mr. Juelis, seconded by Mr. Zoglin, and approved by three members in favor, none opposed, that the Board of Directors authorize management to negotiate an agreement for the Medical Director of Geriatric Psychiatry.

El Camino Hospital Finance Committee of the Board July 30, 2013 P a g e | 3

MEDICAL DIRECTOR, WELLNESS: A motion was made by Mr. Zoglin, seconded by Mr. Juelis, and approved by three members in favor, none opposed, to authorize management to negotiate an agreement for the Medical Director of Wellness.

MEDICAL DIRECTOR, INFORMATION TECHNOLOGY: A motion was made by Mr. Zoglin, seconded by Mr. Juelis, and approved by three members in favor, none opposed, to authorize management to negotiate an agreement for the Medical Director of Information Technology.

ED ON-CALL PANEL FOR PLASTIC SURGERY: A motion was made by Mr. Juelis, seconded by Mr. Zoglin, and approved by three members in favor, none opposed, to authorize management to negotiate an agreement for the ED On Call Panel for Plastic Surgery.

MEDICAL DIRECTOR, TRANSCATHETER AORTIC VALVE REPLACEMENT (TAVR): A motion was made by Mr. Zoglin, seconded by Mr. Juelis, and approved by three members in favor, none opposed, to authorize management to negotiate an agreement for the Medical Director of TAVR.

PRELIMINARY SUMMARY OF FINANCIAL OPERATIONS: Mr. Michael King, Chief Financial Officer, presented the preliminary June Financials. He noted that since the statements were printed, additional entries had increased operating expenses by approximately $300 thousand and increased net revenues by approximately $900 thousand, providing a bottom line which is $600 above what is shown in the report. Mr. King reported that management was investigating whether any adjustments might be necessary as a result of how the hospital records paid time off. Mr. King noted that A/R days came in just slightly better than target, volume numbers were above target in most areas, and that obstetrical volumes were significantly greater than budgeted. He also noted that the run rate is just slightly greater than budgeted. He stated that investments showed a loss in period 12, caused by increasing interest rates that reduced the value of our bond holdings, combined with a drop in the stock market. A motion was made by Mr. Juelis, seconded by Mr. Zoglin, and approved by three members in favor, none opposed to approve the June preliminary financials.

At this time, Mr. Chiu shared an email from committee member Mr. Bill Hobbs who was not available to attend the Finance Committee meeting. In summary, Mr. Hobbs stated we need to ensure that we have control of all our costs and be more productive every year, and that given a commitment to better control employee expenses, he would vote to approve all the proposals presented in the package.

Discussion followed, during which Mr. King expressed that the union agreement and the decision to bring the Allscripts employees onto the payroll were two decisions which significantly impacted actual payroll expenses. He also noted that when comparing ECH Medicare margins with other California hospitals’ Medicare margins, we are in the bottom quartile, which suggests that ECH has room to work on expense management. Mr. Juelis suggested the variance could best be understood by building a “bridge” between the years, as was done in the budget process. Mr. Chiu suggested that we search for other channels of revenue for Los Gatos to keep it viable with PAMF and Stanford moving that way adding to competition. Mr. Chiu is concerned productivity will decrease with IT Case for Change moving forward and moving to a new system. Dr. Cohen stated that when they implemented Epic, on the ambulatory side they declined to 50% to 75% of normal volume, and that while a couple of practices returned to 100% within 45 days, for others it took three months. Inpatient volume didn’t change except to reduce the OR schedule for a couple of weeks.

Mr. Jeulis would like to see a quick comment on how the budget is looking for the year and would like to re-review the capital budget at a future meeting. Mr. Zoglin suggested that perhaps the Executive Compensation Committee should consider whether it would be more appropriate to use the run rate margin rather than operating margin, that the dashboard should contain data that is actionable, and that

El Camino Hospital Finance Committee of the Board July 30, 2013 P a g e | 4 indicators provided to the board should help them quickly understand why margins are at variance from projections.

FINANCE COMMITTEE GOALS: Mr. King presented the 2014 Finance Committee goals with recommended changes from the Governance Committee for the Finance Committee to consider. Mr. Chiu stated that the original intent of Goal #2 was changed, he would like the Executive team to branch out and search for revenue enhancement. Mr. Zoglin explained that the Governance Committee thought this was getting into strategic plans and that the Finance Committee is to review strategic initiatives, not drive strategic initiatives. As it is currently stated, it appears the Finance Committee is going beyond the charter of the Committee. The Committee is to evaluate the finances and address what the financial ramifications are. Mr. Chiu would like to continue talking about the change to the goal and bring the discussion to the BOD, he prefers not to leave revenue enhancement off any committee. He would like to have a revenue enhancement discussion with the board and talk about what the Committee’s role is.

Mr. King provided information on the sequencing of activities necessary to accomplish the committee’s goals, which explained why most goals are scheduled for third and fourth quarter. It was suggested that some things be moved up and that Education be ongoing. Mr. King suggested that because the financial statements are reviewed at the Finance Committee, it might be appropriate to reallocate some of the Board agenda time from covering financial performance to education of the board on financial topics.

Mr. Juelis suggested that the committee could begin reviewing important pieces of the long range capital plan. Mr. King suggested that we start with the facility master plan and agreed to ask the VP of Administrative Services, Ken King, to provide the committee with an update at the next meeting, if possible.

Mr. Chiu stated he will postpone the motion for approving the Finance Committee Goals and requested Mr. King to redraft the goals. After redrafting the FY2014 Goals, Mr. King will send the revised version to committee members and request individual comments (via bcc), and will synthesize those comments for the next scheduled Finance Committee meeting.

PACING PLAN: Mr. King presented the FY2014 Pacing Plan for discussion. No changes were made to the Placing Plan.

ADDITIONAL COMMENTS: Mr. King suggested reordering the Finance Committee agenda to place all contracts in the consent calendar, and if any member has questions or would like more detail, the item will be pulled for discussion and the presenter will be notified to attend the meeting. Members were asked to notify Mr. King or Lily Wong in advance to pull an item off of the consent calendar. Mr. King will communicate this information to the Finance Committee members who are not in attendance at today’s meeting.

ADJOURNMENT: There being no further business, the meeting adjourned at 8:10pm.

NEXT MEETING: September 24, 2013, Ground Floor Meeting Room A.

Dennis Chiu Patricia A. Einarson, MD, Secretary Chair, Finance Committee El Camino Hospital Board of Directors

Separator Page

Att 6hh - BQC Open Minutes 7.22.13.docx DRAFT

Minutes of the Open Session Quality, Patient Care and Patient Experience Committee Of El Camino Hospital Monday July 22, 2013

The Open Session meeting of the Quality, Patient Care and Patient Experience Committee of El Camino Hospital (the “Committee”) was called to order by Chair David Reeder, at 5:40 p.m. on Monday, July 22, 2013, Conference Rooms E&F, at El Camino Hospital, 2500 Grant Road, Mountain View, California.

1. Call to Order. Roll call was taken. Committee members present were David Reeder; Katherine Anderson; Jeffrey Davis, MD; Patricia Einarson, MD; Lisa Freeman; and Robert Pinsker, MD.

2. Potential Conflict of Interests Disclosures. Committee Chair Reeder asked if any Committee member or anyone in the audience believes that a Committee member may have a conflict of interest on any of the items on the agenda. No conflict of interest was reported.

3. Consent Calendar. The Committee reviewed the items on the Consent Calendar.

Action: Dr. Einarson asked that the Proposal for Absent Members be removed from the consent calendar for discussion.

A motion was made by Dr. Davis and seconded by Ms. Freeman, and adopted by a vote of six Committee members in favor to approve the following items on the Consent Calendar: Minutes of June 17, 2013 Committee meeting and Save the Date October 23, 2013 and April 23, 2014.

Dr. Einarson (1) requested and received clarification that the Proposal for Absent Members was meant to be applicable to all committee members, not only Board members, (2) requested that section 1 be amended to provide that the Committee Chair be copied on email requests to the management team for additional information and on responses to those requests, and (3) that members notify both Dr. Pifer and the Committee Chair at least one week in advance if they will be absent from a meeting. A motion was made by Dr. Davis and seconded by Ms. Anderson and adopted by a vote of six Committee members in favor to approve the proposal for Absent Committee Members with the amendments proposed by Dr. Einarson.

Member R. Cary Hill, MD joined the meeting at 5:47 pm.

Minutes: Quality Patient Care and Patient Experience Committee July 22, 2013 Page 2

4. Informational and Possible Motion Items

A. Patient Story

Dr. Pifer commented that the goal of this portion of the agenda is to bring a patient story that ties in with a key topic of the meeting to the attention of the committee members. The committee members discussed the actions taken by staff in response to the situation presented in the story. Ms. Reinking informed the committee that nursing staff, student nursing instructors, and environmental services were all engaged in reviewing the situation and developing processes to insure better service and embed preventing situations like these from occurring in staff training. Ms. Reinking also reported that this patient will now be part of the Patient Advisory Council.

The committee members discussed incorporating service orientation into hiring practices and the need to get physicians, not just nursing staff, involved in providing good service. Ms. Reinking noted that the Hospital is looking at hiring practices and that RN’s have incentives around service built into the collective bargaining agreement this year. Dr. Hill asked the committee to consider whether the Hospital has the right procedures and processes in place that allow the “right people” to spend adequate face to face time with the patients and function well.

No action was taken.

B. Accomplishment of Current Goals

Dr. Pifer commented that as reflected in the materials, all of the Committee’s goals for FY 2013 were complete. No objection was stated.

No action was taken.

C. Review Corporate Scorecard

Dr. Pifer introduced the topic by asking the members to consider whether the Corporate Scorecard reflects the correct metrics and whether management is doing enough to demonstrate to the committee that they are doing the right things to improve the metrics. Dr. Pifer pointed out the areas in which the Hospital is doing well and the areas that still require improvement.

The members discussed whether the metric goals for FY 2014 should be complete now, as opposed to waiting until September when all FY 2013 data is in.

Following discussion, the Committee members identified four metrics they would like to drill down on at upcoming meetings: Readmissions, C. Difficile Infections, the Mortality

Minutes: Quality Patient Care and Patient Experience Committee July 22, 2013 Page 3

Index, and Achieving and Maintaining Zero Stage 3 and 4 Hospital Acquired Pressure Ulcers. Chair Reeder asked Dr. Pifer to be prepared to address C. Difficile infections and Readmissions with visual presentations at the next Committee meeting. The members also discussed benchmarking C. Difficile incidence against other hospitals and the difficulty of doing that when different facilities employ different methods of assessing their incidence rates. The members also discussed how to engage skilled nursing facilities in preventing C. Difficile infections.

The members also discussed the need for both the Committee and the Hospital to focus on defining “what is quality” in addition to attending to the measures reflected on the Corporate Scorecard, and to get the staff on the patient care units engaged in contributing to that definition.

No action was taken.

D. Reconsideration of FY 2014 Committee Goals

Chair Reeder noted that the Governance Committee’s recommended change to Goal #1 was appropriate, but that Goals #3 and #6 should remain as stated. The committee members discussed the Governance Committee’s recommendations and expressed views similar to those views expressed by Chair Reeder, who indicated he would report back to the Governance Committee.

No action was taken.

E. Communication with ECH Board from the Quality Committee

The Committee members discussed the various methods that Board members have of receiving information regarding what the Quality Committee is doing. Chair Reeder reported that the Board members have access to committee materials through the Board portal and to updates and Committee minutes in the Board meeting packet. The members suggested there be a 15- 20 minute live presentation at Board meetings that includes visuals to be used as a lead in to discussing how Quality is affecting strategic priorities. The members discussed the importance of and methods for educating Board members who are not connected to the clinical environment.

No action was taken.

F. Quality Summary and Quality Council Minutes

Dr. Pifer noted that he had asked these items to come off the consent calendar so that the Committee would have a fuller opportunity to discuss them and to understand how the Medical Staff is taking time to participate in Quality activities. He gave an overview of

Minutes: Quality Patient Care and Patient Experience Committee July 22, 2013 Page 4

each topic on the Quality Summary, and pointed out that the organization did not reach its readmissions goal in Q4 FY 2013, but did meet the overall FY 2013 goal for that metric.

No action was taken.

5. Adjourn to Closed Session. A motion was made by Dr. Davis, seconded by Ms. Anderson, and approved by a vote of seven members in favor, to adjourn the Open Session to Closed Session at 7:12 p.m. pursuant to Gov’t Code Section 54957.2 for approval of the minutes of the Closed Session (June 17, 2013); and pursuant to Health and Safety Code Section 32106 (b) for reports involving health care facility trade secrets for development of new services and programs: Update on CMS Survey and Pacing Plan.

Closed Session:

The Committee completed its business of the Closed Session at 7:25 p.m.

6. Reconvene Open Session. The Committee reconvened Open Session at 7:25 p.m.

Closed Session Report. Chair Reeder reported on the following action taken in Closed Session, which is required to be reported in Open Session:

Consent Calendar:

The Committee reviewed and approved the Consent Calendar Closed Session items as follows: Approval of the minutes of the Closed Session of the Regular Committee Meeting (June 17, 2013) by a vote of seven members in favor.

7. Closing Comments Summary.

Topics around ICD-10 Training and Continuity of Care to get agendized in a future meeting. Chair Reeder commented he will be out of town and will be calling in for the October meeting. Chair Reeder noted that he would like to hear more about the LEAN program.

8. Call Out of Deliverables.

Dr. Pifer indicated he would be prepared with a drill down on C. Difficile Infections and Readmissions at the September meeting and on Risk Adjusted Mortality at a future meeting.

Minutes: Quality Patient Care and Patient Experience Committee July 22, 2013 Page 5

9. Adjournment

There being no further business, the meeting was adjourned at 7:29 p.m.

______

David Reeder Patricia A. Einarson, MD Chair, ECH Quality, Patient Care ECH Board Secretary And Patient Experience Committee

Separator Page

Att 6ii - ECC Minutes open 051613.doc

EL CAMINO HOSPITAL BOARD OF DIRECTORS Executive Compensation Committee Meeting – May 16, 2013

MINUTES

The Executive Compensation Committee Meeting of the Board of Directors of El Camino Hospital (the “Hospital”) was called to order by Nandini Tandon, Committee Chairperson, at 4:40 p.m. on Thursday, May 16, 2013 in the Conference Room B, Ground Floor, El Camino Hospital, 2500 Grant Road, Mountain View, California.

Roll call was taken. The Committee Members present were Directors Nandini Tandon, David Reeder and Julia Miller and Members Teri Eyre, Jing Liao, Bob Miller, and Prasad Setty.

POTENTIAL CONFLICT OF INTEREST DISCLOSURES Director Tandon asked if any Committee member or anyone in the audience believes that a Committee member may have a conflict of interest on any of the items on the agenda. No conflict was stated.

CONSENT CALENDAR MINUTES OF MARCH 21, 2012 UPDATE ON SUCCESSION PLANNING/LEADERSHIP DEVELOPMENT Action: Upon motion duly made by Director Reeder and seconded by Director J. Miller, the Committee approved the minutes from the Committee meeting of March 21, 2012 and accepted the update with all members in favor.

ADJOURN TO CLOSED SESSION Upon motion duly made by Director Reeder, seconded by Member B. Miller, and approved by a vote of all Members in favor, the Open Session of the meeting was adjourned to Closed Session at 4:48 p.m. pursuant to the Gov’t Code Section 54957.2 for approval of closed session minutes and Gov’t Code Sections 54957 and 54957.6 for discussion and reports on Executive Compensation Analysis, Executive Salary Ranges, Executive Base Salaries, CEO Compensation Analysis Report, CEO Salary Range, CEO Compensation, Proposed Organizational, CEO and executive individual goals, Committee’s Governance Effectiveness in Achieving its Strategy, and FY 14 Committee Goals and Pacing Plan.

CLOSED SESSION The Committee completed the Closed Session at 7:14 p.m.

RECONVENE OPEN SESSION The Compensation Committee Meeting reconvened to Open Session at 7:15 p.m.

CLOSED SESSION REPORTS: Director Tandon reported that the Committee approved the March 21, 2013 closed session minutes and FY 14 Base Salary Ranges for the executive team. In addition, the Committee determined recommendations they will make to the Board for approval including FY 14 executive base salaries, FY 14 CEO compensation, FY 14 performance incentive organizational and individual goals, and FY 14 Committee goals.

Minutes: El Camino Hospital Board of Directors Executive Compensation Committee Meeting of May 16, 2013

COMMITTEE CHARTER The Committee reviewed the Charter and suggested that the Board consider adding effective date, names of members, and signature to Charters.

Action: Upon motion duly made by Director J. Miller and seconded by Member B. Miller, the Committee recommended no changes to the Charter.

There being no further business, the meeting was adjourned at 7:20 p.m.

Attest as to the approval of the foregoing minutes by the Board of Directors of El Camino Hospital:

______Nandini Tandon, Chair Patricia A. Einarson, MD, MBA Executive Compensation Committee Secretary/Treasurer ECH Board of Directors

Separator Page

Att 6jj - CC Open Session Minutes - 6_11_2013.docx

Draft: Subject to Compliance Committee and Board of Directors Consideration

EL CAMINO HOSPITAL BOARD of DIRECTORS CORPORATE COMPLIANCE/PRIVACY and INTERNAL AUDIT COMMITTEE Meeting – June 11, 2013

MINUTES

The Meeting of the Compliance/Privacy and Internal Audit Committee of the Board of Directors of El Camino Hospital (the “Committee”) was called to order by Chair David Reeder at 4:05 p.m. on Tuesday, June 11, 2013, Conference Room E at El Camino Hospital.

I. CALL TO ORDER

Roll call was taken. Committee members David Reeder, Wesley Alles, Dennis Chiu, Ramy Houssaini, Sharon Anolik Shakked and Christine Sublett were present.

II. POTENTIAL CONFLICT OF INTEREST DISCLOSURES

Director Reeder asked if any Committee member had a conflict of interest. None was reported.

III. CONSENT CALENDAR

Director Reeder asked if there were any consent calendar items, changes or corrections to the minutes of April 9, 2013. There were no changes proposed. A motion to approve the consent calendar was made by Committee member Chiu and seconded by Committee member Sublett and approved by a vote of six Committee members in favor to approve the minutes of the meeting of April 9, 2013.

IV. INFORMATIONAL ITEM

A. Review Revisions to Committee Charter

Committee member Sublett suggested adding a provision to address IT security oversight to the Committee Charter, commenting that there is currently no reference to this in the Charter. Diane Wigglesworth asked if such a provision would first need to go to the Governance Committee, and it was determined that it would not.

Committee member Ramy questioned the use of the word “ensure” on page 3 of the Charter in reference to the committees advisory role for Enterprise Risk Management reporting and the Compliance Committee suggested substituting the word “oversee”. Ms. Wigglesworth indicated she would incorporate the changes and submit the revised charter to the Governance Committee for approval.

A motion was made by Committee member Shakked, seconded by Committee member Houssaini, and adopted by a vote of six Committee members to accept the charter as amended with a provision addressing information security to the Charter.

BN 13425146v2 Minutes: El Camino Hospital Board of Directors Corporate Draft: Subject to Compliance Compliance/Privacy and Internal Audit Committee Meeting of June 11, 2013 Committee and Board of Directors Consideration

B. Review FY: 14 Internal Audit Risk Assessment and Audit Plan

Alex Robison, from protiviti, briefly reviewed the internal audit risk assessment performed which resulted in recommendations for a FY: 2014 audit plan. His presentation materials included a map depicting the 25 highest rated risks based on survey results and feedback from staff interviews.

Tomi Ryba stated that she is aware that ECH may have about 5% of all patients medical records erroneously duplicated in the system when one patient is associated with more than one medical record number, and is surprised that we don’t have a maintenance program to address this. Mike King responded that we do not yet have a fully integrated EMR, and clean-up will need to be done. Ms. Ryba commented that the map depicts “a lot of activity for FY 2014”.

Ms. Wigglesworth indicated that she will take comments from the Executive Team and come back with a revised audit plan for committee approval.

Committee member Chiu asked why IT disaster recovery was not a priority. It was pointed out that a comprehensive Business Continuity/Disaster Recovery audit was completed in 2011 and management had developed a five year action plan regarding the audit findings. Chair Reeder suggested presenting a look-back of completed audits compared to past risk maps for the committees review. Ms. Wigglesworth indicated that at the next meeting she will present information regarding historical audits completed to ensure that past efforts are not duplicated with the proposed FY14 audits.

C. Enterprise Risk Management and Policy Oversight

Ms. Wigglesworth handed out for review a potential Enterprise Risk Dashboard indicating that her goal is not to create a dashboard with a lot of metrics but to capture key organizational risks that will identify business and strategic risks. At the next meeting she will present a more refined dashboard, for committee feedback. Committee members Chiu and Sublett agreed to send Ms. Wigglesworth their ideas on other metrics should be included.

Committee member Ramy suggested traceability between metric indicators and performance. Ms. Wigglesworth she is in the process of validating the current review and approval process for administrative policies. It was recommend regarding policy oversight that Ms. Wigglesworth bring back a summary of the current state to address “what is the process?” and “what are we required to review?”

D. Corporate Compliance Scorecard

Ms. Wigglesworth reviewed the corporate compliance scorecard. She noted that the Committee remains on track, meeting key performance indicators in all areas with the exception of new managers receiving additional compliance training within 90 days of start date, which is currently tracking at 90% of goal. Committee members suggested to Ms. Wigglesworth some additional modifications and changes to the scorecard to be considered for the next fiscal year.

-2- BN 13425146v2 Minutes: El Camino Hospital Board of Directors Corporate Draft: Subject to Compliance Compliance/Privacy and Internal Audit Committee Meeting of June 11, 2013 Committee and Board of Directors Consideration

V. ADJOURN TO CLOSED SESSION Upon motion duly made by Committee member Sublett, seconded by Committee member Chiu, and approved by a vote of six Committee members in favor, none opposed, the Open Session of the meeting was adjourned to Closed Session at 4:45 p.m. pursuant to Gov’t Code Section 54957.2 to consider and approve the Consent Calendar (the Closed Session minutes of April 9, 2013), and pursuant to Gov’t Code Section 54956.9(d)(2) for two conferences with legal counsel, and pursuant to Health and Safety Code Section 32106(b) for one conference with legal counsel.

VI. CLOSED SESSION The Committee completed its business of the Closed Session at 6:06 p.m.

VII. RECONVENE OPEN SESSION The Committee reconvened to Open Session at 6:06 p.m.

PUBLIC COMMUNICATION

There were no comments.

VIII. CLOSED SESSION REPORTS Reeder reported that the closed session minutes of the April 9, 2013 meeting were approved by a vote of six Committee members in favor.

IX. CLOSING COMMENTS.

There being no further business, the meeting was adjourned at 6:07pm.

David Reeder Chair, ECH Compliance/Privacy and Internal Audit Committee

Attest as to the approval of the foregoing minutes by the Corporate Compliance/Privacy and Internal Audit Committee and by the El Camino Hospital Board of Directors.

David Reeder ECH Board Secretary

-3- BN 13425146v2 Separator Page

Att 6kk - Auxiliary Report.pdf El Camino Hospital Auxiliary

Activity Report to the Hospital Board Meeting of October 9, 2013

Strategic Partnership — Roll Out of Two Jointly Developed Projects The Auxiliary’s Activity Report for the September Hospital Board Meeting highlighted the Auxiliary’s strategic partnership with hospital staff to help improve the patient and visitor experience, and to help the hospital attain their Triple-Aim Goals for Quality, Service and Affordability. A key element of that partnership is work of the Volunteer Service Task Force, which is an ongoing joint effort of the Auxiliary and nursing staff managements. In September two projects devised by the Task Force were rolled out by Auxiliary volunteers: (1) an Amenities Cart which ; the cart is

; and (2) an ED Recovery Kit containing a few items of personal hygiene, which is provided to patients in the Emergency Department, who stay in the ED more than a short while awaiting transfer to another center in the hospital. Additional patient-oriented projects are in the works.

Respectfully submitted by Charles Hebel Separator Page

Att 6kk.2 - ECHA membership report to ECH BOD - Oct 2013.pdf El Camino Hospital Auxiliary Membership Report to the Hospital Board Meeting of October 9, 2013

Combined Data as of August 31, 2013 for Mountain View and Los Gatos Campuses

Membership Data: Senior Members Active Members 524 Dues Paid Inactive 127 (Includes Associates & Patrons) Leave of Absence 19 Subtotal 670

------Resigned in Month 17 Deceased in Month 2

------

Junior Members Active Members 227 Dues Paid Inactive 2 Leave of Absence 1 Subtotal 230

------

Total Active Members 751

Total Membership 900

COMBINED AUXILIARY HOURS FROM INCEPTION (to August 31, 2013): 5,328,138 Separator Page

Att 6ll - October 2013 Foundation Report to Hospital Board.docx

Date: September 25, 2013 To: El Camino Hospital Board of Directors From: Claudia Coleman, Chair, El Camino Hospital Foundation Board of Directors Ron Mirenda, Interim President, El Camino Hospital Foundation Re: Report on Foundation Activities

El Camino Heritage Golf Tournament

Foundation staff is putting in place final plans for the 18th annual El Camino Heritage Golf Tournament, which will be held at Ruby Hill golf course in Pleasanton on Monday, October 21, 2013. Nestled in the hills of Livermore Valley wine country, Ruby Hill is a beautiful private club that opens to non-members only three times per year. Non-golfers who wish to join in the fun can compete in a friendly afternoon bocce ball tournament or enjoy a private wine tasting, luncheon and organic production garden tour at Wente Vineyards, the oldest continuously operated family-owned winery in the country. All participants will join together at the end of the day for a celebration dinner and live auction. To date, 110 golfers plan to join the festivities and more are signing up every day. Proceeds will benefit the Norma Melchor Heart & Vascular Institute.

Employee Giving Campaign

The Foundation’s 2014 employee giving campaign will kick off on October 29 at the employee benefits fair. The theme is “moving all in one rhythm,” a nod to the World Cup soccer tournament that will be held in Brazil next year. Contribution forms will be enclosed in paychecks on October 19 and November 2 and will also be available online in the Toolbox. Foundation staff and campaign committee members will man a signup booth outside the cafeteria at lunchtime throughout the two-week campaign. All employees who participate will receive a lanyard, badge reel and pin. Those who donate $50 or more will receive raffle tickets for the chance to win some fabulous prizes. Departments that reach high levels of participation will receive pizza parties. Employees can restrict their gift to a particular campus and/or program or can donate where the need is greatest on the campus of their choice. The emphasis is on participation rather than the amount of the gift.

In 2013, 741 employees committed $149,180.78 to the employee giving campaign. Our goal for the 2014 campaign is a 10% increase in participation and donations.

Sapphire Soirée

The Foundation hosted a private stewardship reception at the home of Katie and Dr. Greg Morganroth on September 10 for guests who have contributed matching gifts to the gala challenge over the past three years. The 60 attendees heard a brief hospital update from CEO Tomi Ryba and were gratefully acknowledged by Drs. Shyamali Singhal, Shane Dormady and Robert Sinha, who reiterated the importance of philanthropy to the Cancer Center’s program. Foundation Board Chair Claudia Coleman announced the $250,000 Taft challenge gift to appreciative applause.

Sapphire Soirée 2014, a benefit for the Cancer Center, will be held on May 31, 2014 at the Menlo Circus Club. Proceeds will be used to develop a formal survivorship program, which will be required in order for the Cancer Center to maintain its accreditation after 2015.

More Upcoming Events

Foundation staff is working on the following other upcoming events, all designed to strengthen the culture of philanthropy in the community and in the hospital:

Hope to Health Los Gatos Breast Health Awareness Luncheon – October 15 Men’s Health Locker Room Chat – November 6 Leadership Dinner – November 7 Legacy Society Luncheon – November 13 Los Gatos Salon – November 19 Norma’s Literary Luncheon – February 6

Friends of El Camino Hospital

The Foundation will officially change the name of its donor concierge program from Friends of the Foundation to Friends of El Camino Hospital. Since its inception in 2012, the program has touched 994 patients through cards, hospital visits, amenity gifts, and personal assistance.

In fiscal year 2013, 109 grateful patients and family members contributed $15,858 to the Foundation through its Circle of Caring program. Concierge Mary Dybdahl personally recognized 159 honorees with presentations of pins and certificates on the floors, in department meetings and during the daily huddle.

Partners in Philanthropy

Following its successful Medical Philanthropy Workshop for physicians in May 2013, the Foundation is planning three more in fiscal year 2014. The first will take place on November 14. The Partners in Philanthropy program is being expanded to include nurses and potentially other health care providers. Interim Chief Nursing Officer Cheryl Reinking has become the fourth program co-chair.

Allocations

At the September 19 meeting of the El Camino Hospital Foundation Board of Directors, the following allocations were approved:  Healing Arts Program - $101,000 to cover the remaining costs for FY 2014  Maternal Child Health – 54 new sleep chairs - $141,000  Pharmacy Technician for Medication Reconciliation in the emergency department - $88,000  Men’s Health Center – 2 Morcellator devices for benign prostatic hyperplasia - $73,282.80  Prostate Imaging – 3 Tesla high field strength MRI for the accurate diagnosis of early prostate cancers - $187,500

Foundation Staff Update

New Foundation President Jodi Barnard’s first day of work at El Camino Hospital Foundation will be September 30. Interim President Ron Mirenda will remain on board for the first two weeks of October to help ensure a smooth transition.

Separator Page

Att 7 - Board Presentation Sept 2013 - Dr. Carol Kemper.ppt Infection Control Annual Report

October 9, 2013

Carol A. Kemper, MD Medical Director Infection Control

1 ECH Infection Prevention and Management Program

Susan Bukunt RN, MPA, CPHQ Senior Director of Clinical Quality & Patient Safety

Catherine Nalesnik RN, BSN, CIC Carol A. Kemper, MD FACP Manager, Infection Control Medical Director, Infection Control

Liesel Short, RN, BSN, COHN-s Delfina Payer Epidemiology Coordinator Administrative Assistant

Alicia Antonio, RN, MSN Epidemiology Coordinator

2

ECH Infection Prevention and Management – 2012-2013 • Central components of the program: - Maintain compliance with regulatory requirements and Infection Control (IC) guidelines - Ensure prompt identification, management, and isolation of persons with particular infections - Provide physician and staff infection control education and training - Improve patient safety and reduce the risk of staff exposure

• January 2013 TJC Survey highly complimentary of the program

3 ECH Infection Prevention and Management – The Broad Picture of IC – 2012- 2013 • Coordination with employee health, risk management, EVS, laboratory, and pharmacy • Maintain current policies and procedures • Educational programs to promote IC practices • Active disease surveillance at both campuses - Daily surveillance of MRSA, C diff, Multi-Drug Resistant Organisms (MDRO), MTb, & other communicable diseases - Active Surveillance of Surgical Site Infections (SSI), Central Line-Associated Blood Stream Infection (CLA-BSI), Catheter related BSIs, Catheter-Associated UTI (CA-UTI) - Evaluation & segregation of persons at risk - Specialized response to outbreaks • Provide input into facility design, risk assessment of construction projects, permits • Emergency preparedness

4 ECH Infection Prevention and Management – Committees with IC Support – 2012 -2013

• Sterile Processing Multidisciplinary Taskforce - Identified more than 200 items requiring attention • CA-UTI Reduction Task Force • NICU/Infection Prevention Working Group 2013 - Reducing central line infections (BSI) in neonates • Dialysis Collaborative 2012 - Reducing BSI at all 3 dialysis centers • Patient hygiene task force 2012 - Promote daily baths of patients - Soapy wash clothes offered to patients with meals

5 ECH Infection Prevention and Management Program 2012 Hand Hygiene Campaign a Success • Sustained improvement in rates of hand cleansing and compliance with personal protective equipment • 2012 Observed Hand Cleansing 92% at room entry and 91% at room exit (Mt. View) • HCAHP Surveys: Confirmed that 88% of patients “strongly agreed” and 1% “strongly disagreed” when asked whether staff were washing their hands entering/exiting rooms

6 ECH Infection Prevention and Management Program Current Highlights (Mt View data shown)

• Central line insertion bundle compliance 99% (goal >95%)

• Central line-associated blood stream infections (CLA-BSI) - 2012 CCU BSI rate: 0 infections/1000 line days (< benchmark of 1.5/1000 line days & below 2010 & 2011 rates) - 2012 Non-CCU BSI rate: 0.22/1000 line days (also below benchmark & the same as 2011) - 2012 Dialysis BSI rate: - varies from 0.5/1000 line days at Oak to 2.6/1000 days at Evergreen - (all slightly above benchmark)

7

ECH Infection Prevention and Management Program Current Infection Control Challenges • 2012 Mountain View hospital-onset (HO) C. difficile : - 8.63 cases /10,000 patient days (above goal of 8.20/10,000 patient days) - 2010 and 2011 rates = 12.85 and 9.60, respectively • 2012 Los Gatos hospital-onset (HO) C. difficile: - 7.68vcases/ 10,000 patient days (below goal) • Daily monitoring of cases • Continued focus on staff hand washing, personal protective equipment (PPE), & patient hygiene • Continue to work with EVS to upgrade services • Begin surveillance of high risk admissions this fall for C difficile and other resistant organisms in stools

8 ECH Infection Prevention and Management Program: Surgical Site Infections (SSI) • Maintain SSI rates below benchmark for targeted surgical procedures -For example, 2012 Enterprise-wide rates: • Knee arthroplasty (2/472 cases = 0.4/100 cases) • Hip arthroplasty (3/370 cases = 0.81/100 cases) • Laminectomy (1/336 = 0.3/100 cases); fusions (0/420 cases), and refusions (0/25 cases)

• Active surveillance of SSIs • Beginning July 2011, track post-operative infections for 29 surgical procedures for the National Health and Safety Network (NHSN) • Post-discharge surveillance for all 29 surgical procedures • In FY2013, a total of 13 SSIs for 6,069 procedures were identified

9

Targeted Surgeries: SSI cases Trends 2010 – 2013 5

4 FY 2010 SSI 3 FY 2011 SSI FY 2012 SSI FY 2013 SSI 2

1

0 Hip Knee Lami SSI Goal: SIR < 1.0 Standardized Infection Ratio (SIR)

• SIR > 1.0: more HAI’s were observed than predicted • SIR < 1.0: fewer HAI’s were observed than predicted SIR definition: 1. In Hospital-Acquired Infections (HAI’s) data analysis, the SIR compares the actual number of HAI’s reported with the baseline U.S. experience (NHSN aggregate data are used as the standard population), adjusting for several risk factors that have been found to be significantly associated with differences in infection incidence. 2. SIR adjust for patients of varying risk within each facility

June 2011: NHSN reporting required for 29 surgical procedures (deep incisional/ organ space) (Abdominal, Appendix, Bile, Cardiac, Colon, C-section, FX, Fusion, Gastric, Gallbladder, Hip, Hysterectomy, Knee, Laminectomy, Kidney, Ovarian, Pacemaker, Rectal, Small Bowel, Spine, Spleen, Thoracic)

July – Dec 2012 NHSN Standardized Infection Ratio (SIR) Report (Total 4 infections/ 3,332 surgical procedures) Procedure Date Cases Inf SIRExp SIR LAM 2012H2 148 1 1.729 0.578 XLAP 2012H2 205 1 2.711 0.369 HYST 2012H2 168 1 3.569 0.28 COLO 2012H2 96 1 5.525 0.181 AAA 2012H2 5 0 0.214 0 APPY 2012H2 181 0 1.074 0 BILI 2012H2 21 0 3.182 0 CARD 2012H2 98 0 1.01 0 CBGB 2012H2 6 0 0.12 0 CBGC 2012H2 1 0 0.015 0 CHOL 2012H2 237 0 1.349 0 CRAN 2012H2 1 0 0.011 0 CSEC 2012H2 768 0 11.839 0 FUSN 2012H2 63 0 0.583 0 FX 2012H2 122 0 2.948 0 GAST 2012H2 129 0 2.278 0 HPRO 2012H2 148 0 2.3 0 KPRO 2012H2 122 0 1.624 0 NEPH 2012H2 19 0 0.291 0 OVRY 2012H2 322 0 1.691 0 PACE 2012H2 91 0 0.346 0 REC 2012H2 32 0 1.371 0 RFUSN 2012H2 5 0 0.127 0 SB 2012H2 44 0 3.003 0 SPLE 2012H2 5 0 0.117 0 THOR 2012H2 85 0 0.566 0 VHYS 2012H2 110 0 0.586 0 Jan- June 2013 NHSN Standarized Infection Ratio (SIR) Report (Total 9 infections/2,837 surgical procedures)

Procedure Date Cases Inf SIRExp SIR LAM 2013H1 134 2 1.603 1.248 KPRO 2013H1 121 1 1.725 0.58 HPRO 2013H1 118 1 1.806 0.554 XLAP 2013H1 182 1 2.332 0.429 GAST 2013H1 125 1 2.378 0.421 HYST 2013H1 195 1 4.577 0.218 SB 2013H1 75 1 5.17 0.193 PACE 2013H1 91 1 0.346 0 APPY 2013H1 166 0 1.042 0 BILI 2013H1 27 0 3.946 0 CARD 2013H1 75 0 0.749 0 CBGB 2013H1 11 0 0.197 0 CBGC 2013H1 13 0 0.2 0 CHOL 2013H1 213 0 1.388 0 COLO 2013H1 88 0 5.102 0 CSEC 2013H1 599 0 7.814 0 FUSN 2013H1 47 0 0.517 0 FX 2013H1 128 0 2.814 0 NEPH 2013H1 23 0 0.275 0 OVRY 2013H1 236 0 1.433 0 REC 2013H1 16 0 0.638 0 RFUSN 2013H1 5 0 0.136 0 SPLE 2013H1 10 0 0.233 0 THOR 2013H1 56 0 0.331 0 VHYS 2013H1 83 0 0.419 0 ECH Infection Prevention and Surveillance: 2014 Future Challenges

• Emergence of highly virulent strain of C difficile - 027 toxigenic C difficile spreading across the U.S. • M. tuberculosis - No ECH exposures in 2012 (5 exposures in 2011 resulting in screening of 295 employees) -Nov-Dec. 2012, two cases of highly contagious 4- DRUG RESISTANT TB required hospitalization for weeks at ECH • Increase in MDRO in the community -Outbreak of broadly-resistant Acinetobacter baumanii at SCVMC (thousands $ to control and 2 deaths) -ESBL-containing E coli bacteremia and meningitis resulted in death of newborn at ECH October 2012 • New CRE and NDM (carbapenemase- and New Delhi metallo-b-lactamase-producing Enterobacteriaceae) • Broadly resistant, including resistance to imipenem

14

Separator Page

Att 8 - MRK_Board and Finance Committee FY14 Period 2 REVISED Final.pptx

Summary of Financial Operations

Fiscal Year 2014 – Period 2 7/1/2013 to 8/31/2013 2 (1) Hospital entity only, excludes controlled affiliates Management Commentary(1)

Net Days in AR Case Mix Index Adjusted Discharges Operating Income ($000S)

54 Current & Prior Fiscal Year Current & Prior Fiscal Year 4,400 12,000 52 4,200 10,000 50 4,000 8,000 48 3,800 6,000 46 3,600 4,000 44 3,400

42 3,200 2,000

40 3,000 0 PY A S O N D J F M A M J CY A S O N D J F M A M J PY A S O N D J F M A M J CY A S O N D J F M A M J PY A S O N D J F M A M J CY A S O N D J F M A M J

Actual Target Actual Budget Actual Budget

Budget is represented by solid lines; Bars represent acutal results

Net Days in AR Net outstanding receivables decreased by $620 thousand between July and August, but this was more than offset by net revenues which were $2.1 million lower in August. Consequently, net days in A/R are still favorable to goal, but increased to 48.8 days. For the most recent 12-month period, A/R days averaged 48.9 days or 1.1 day favorable to the 50-day target.

CMI Adjusted Discharges Although Case Mix in August was 4% below budget and discharges were 5% short, these unfavorable variances were largely offset by outpatient revenues which exceeded budget by 9.5%, resulting in CMI Adjusted Discharges which were just slightly (0.9%) unfavorable to budget. Fiscal year to date CMI Adjusted Discharges are 1.4% favorable to budget.

Operating Margin July’s gross charges were $6.7 million unfavorable to budget, all but $1.1 million of which was offset at the total revenue line by favorable payer mix, by a favorable shift towards outpatient utilization, and by $1.5 million higher than expected recoveries on accounts previously reserved as uncollectible. Expenses were $950 thousand favorable to budget, resulting in hospital operations which were $150 thousand unfavorable to budget. After investment performance in July’s that was $9.3m favorable to budget, August results were $6.2 million unfavorable. YTD results are 93% favorable to budget.

3 (1) Hospital entity only, excludes controlled affiliates 4 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital Financial Metrics Trend (1)

0.2% P Favorable to Budget r o f I t _ L o s s

2 Days Favorable to B Budget A L Represents _ cash of $577 million S H E E T

5 (1) Hospital entity only, excludes controlled affiliates (1) ECH Operating Margin

Run rate is booked operating income adjusted for material non-recurring transactions

6 (1) Hospital entity only, excludes controlled affiliates ECH Volume Statistics (1)

(1) Hospital entity only, excludes controlled affiliates (2) Excludes normal newborns (MS-DRG 795) 7 El Camino Hospital Volume Trends Prior and Current Fiscal Years

8 APPENDIX

9 Summary of Financial Results $ in Thousands

Period 2 - Month Period 2 - FYTD Actual Budget Variance Actual Budget Variance El Camino Hospital Income (Loss) from Operations Mountain View 3,507 3,068 440 7,957 7,550 407 Los Gatos 543 1,137 (594) 2,351 1,985 366 Sub Total - El Camino Hospital, excl. Afflilates 4,051 4,205 (154) 10,308 9,535 773 Operating Margin % 7.0% 7.1% 8.7% 8.0% El Camino Hospital Non Operating Income Investments ** (4,667) 2,016 (6,683) 6,148 4,028 2,120 Swap Adjustments 405 0 405 904 0 904 Community Benefit (330) 0 (330) (510) 0 (510) Other 2 (352) 354 (139) (703) 564 Sub Total - Non Operating Income (4,591) 1,664 (6,255) 6,403 3,325 3,078 El Camino Hospital Net Income (Loss) (540) 5,869 (6,409) 16,711 12,859 3,852 ECH Net Margin % -0.9% 9.9% 14.1% 10.8% Net Income Hospital Affiliates (189) 198 (386) 553 431 121

Total Net Income Hospital & Affiliates (729) 6,067 (6,796) 17,264 13,291 3,973

10 Worked Hours per CMI Adjusted Discharge (1)

Actual Budget 110

100

90

80

70

P8 P6 P2 P3 P4 P5 P6 P7 P9 P2 P3 P4 P5 P7 P8 P9

P10 P11 P12 P10 P11 P12

FY14 FY13

11 (1) Hospital entity only, excludes controlled affiliates Supply Cost per CMI Adjusted Discharges (1)

YTD: -6.0% under budget YTD: -4.4% under budget Mountain View Los Gatos

11

12 (1) Hospital entity only, excludes controlled affiliates (1) Mountain View LOS & CMI Trend

• Medicare: Due to DRG reimbursement, financial results usually improve with decreased LOS and increased CMI • Non-Medicare: Reimbursement varies; financial results usually improve when both LOS & CMI increase

(1) Hospital entity only, excludes controlled affiliates All data excludes normal newborns (MS-DRG=795), Medicare data excludes Medicare HMOs and PPOs 13 (1) Los Gatos LOS & CMI Trend

• Medicare: Due to DRG reimbursement, financial results usually improve with decreased LOS and increased CMI • Non-Medicare: Reimbursement varies; financial results usually improve when both LOS & CMI increase

(1) Hospital entity only, excludes controlled affiliates All data excludes normal newborns (MS-DRG=795), Medicare data excludes Medicare HMOs and PPOs 14 El Camino Hospital (1) Results from Operations vs. Prior Year 2 months ending 8/31/2013

15 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital – Mountain View (1) Results from Operations vs. Prior Year 2 months ending 8/31/2013

16 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital – Los Gatos1 (1) Results from Operations vs. Prior Year 2 months ending 8/31/2013

17 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital (1) Results from Operations vs. Budget 2 months ending 8/31/2013

1

18 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital – Mountain View (1) Results from Operations vs. Budget 2 months ending 8/31/2013

19 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital – Los Gatos (1) Results from Operations vs. Budget 2 months ending 8/31/2013

20 (1) Hospital entity only, excludes controlled affiliates El Camino Hospital (1) Balance Sheet ($ Thousands)

1

21 (1) Hospital entity only, excludes controlled affiliates 22 23 Separator Page

Att 9 - FY 2013 Consolidated Financials Audit.pdf El Camino Healthcare District Report of Independent Auditors

Brian Conner National Practice Leader – Hospitals Health Care Services Partner Joelle Pulver Health Care Services Senior Manager (415) 956-1500

0 AUDIT OBJECTIVES • Opinion on whether the consolidated financial statements of the District, Hospital, Foundation, and CONCERN are fairly and reasonably stated in accordance with generally accepted accounting principals o District-only financial statements are reported in the accompanying supplementary information consolidating schedules. Based on the District’s control of the Hospital, Foundation, and CONCERN, consolidated reporting is required. • Required under bond and California State requirements

1 REPORT OF INDEPENDENT AUDITORS

Unmodified Opinion Consolidated financial statements are fairly presented in accordance with generally accepted accounting principles.

2 2013 AUDIT TIMELINE

April April June August September September October October 2013 2013 2013 2013 2013 2013 2013 2013

Control Initial Planning Effectiveness Presentations & Scoping on Site Testing and to Hospital & System District Documentation Present Draft Boards Consolidated Financial Control Design and Statements to Implementation Management Walkthroughs Consolidated Audit Year-End Presentations to Financial Fieldwork Audit & Finance Statements Committees Issuance

3 STATEMENTS OF NET POSITION

4 ASSET COMPOSITION (IN MILLIONS)

2011 = $1,276 $800 2012 = $1,356 691 671 2013 = $1,449 $700 630 647 $600 523 $500 431 $400

$300

$200 88 88 84 $100 82 72 74

$0 Cash / Investment Patient A/R, Net Capital Assets, Net Other Assets

5 KEY PROCEDURES – ASSETS • Cash and Cash Equivalents o Confirmed significant balances with financial institutions o Tested significant account reconciliations o Reviewed disclosures and restrictions of balances • Investments o Confirmed significant balances with financial institutions o Verified valuation with third-parties as of year-end o Reviewed disclosures on fair value measurements

6 KEY PROCEDURES – ASSETS (CONT.) • Alternative Investments o Confirmed significant balances with investment managers o Verified valuation through net asset value provided by investment managers o Analyzed net asset values based on benchmark performance of relevant stock market indexes o Reviewed disclosures on fair value measurements

7 KEY PROCEDURES – ASSETS (CONT.) • Capital Assets, Net o Performed roll forward of capital asset balances o Tested significant additions and retirements o Reviewed new or revised capital and operating leases related to capital assets o Analyzed depreciation expense based on useful lives by capital asset categories

8 KEY PROCEDURES – ASSETS (CONT.) • Other Assets o Performed roll forward of investments in affiliates; and tested significant additions, distributions, and fair value adjustments o Tested accounting for transactions with Surgery Center during the current year o Reviewed actuarial assumptions by management and analysis performed by Buck Consultants for pension plan

9 LIABILITIES AND NET POSITION (IN MILLIONS)

980 $1,000 878 805 $800

$600

378 371 $400 329

142 $200 100 98

$0 2011 2012 2013

Current Liabilities Long-Term Liabilities Net Position

10 KEY PROCEDURES – LIABILITIES • Accounts Payable and Accrued Liabilities o Performed search for unrecorded liabilities o Reviewed accruals for payroll, PTO, and incentive bonuses o Reviewed third-party settlement roll forward, and tested significant settlements and additional accruals o Evaluated Recovery Audit Contractor (RAC) accrual methodology o Evaluated insurance refund liability accrual methodology

11 KEY PROCEDURES – LIABILITIES (CONT.) • Long-term Liabilities o Confirmed outstanding balances with financial institutions o Reviewed debt disclosures and debt covenant computations o Reviewed actuarial assumptions by management and analysis performed by Buck Consultants for post-retirement medical benefit liabilities o Reviewed actuarial assumptions by management and analysis performed by Garland Actuarial for workers compensation and professional liabilities

12 KEY PROCEDURES – NET POSITION • Net Position o Reviewed disclosures and restrictions of balances

13

PATIENT SERVICE ACCOUNTS RECEIVABLE

Dollars (in millions) % Net Revenues

$100 $82 $88 $88 15.0% $90 13.5% 13.7% $80 14.0% $70 12.8% 13.0% $60 $50 12.0% $40 11.0% $30 10.0% $20 2011 2012 2013 2011 2012 2013

14 KEY PROCEDURES • Patient Accounts Receivable, Net o Analyzed balance at year-end, as compared to cash receipts subsequent to year-end o Analyzed accounts receivable (A/R) turnover, financial class, and aging period; compared to prior years and current year developments o Performed cut-off testing over A/R and revenue o Evaluated appropriateness of contractual and bad debt allowance methodologies o Performed look back review of prior year’s allowances to determine historical reliability of allowances methodologies o Review credit balances in A/R at year-end

15 KEY PROCEDURES (CONT.) • Allowances for Contractual and Bad Debt o Evaluated appropriateness of contractual and bad debt allowance methodologies o Performed look back review of prior year’s allowances to determine historical reliability of allowances methodologies

16 OPERATIONS

17 INCOME STATEMENTS (IN THOUSANDS) YEAR-TO-YEAR COMPARISON

Total Operating Revenues

June 30, 2013 June 30, 2012 $713,110 $658,411 Salaries, Wages, and 15% 14% Benefits

Supplies

52% 14% Professional Fees and 13% Purchased Services 50% Depreciation and Amortization

7% 8% Other Expenses

4% 5% Operating Income 9% 9%

18 THE AUDITOR’S COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE • Significant accounting policies • Accounting estimates are reasonable • No material weaknesses identified • No audit adjustments • No issues discussed prior to our retention as auditors • No disagreement with management • Internal control related matters - AU-C Sec 265

19 NEW ACCOUNTING PRONOUNCEMENTS • GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, effective for financial statements for periods beginning after December 15, 2012. • GASB Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27, effective for financial statements for periods beginning after June 15, 2014. • GASB Statement No. 69, Government Combinations and Disposals of Government Operations, effective for financial statements for periods beginning after December 15, 2013.

20 QUESTIONS?

21 Separator Page

Att 9b- ECHC District - 6-13 FS - Draft 9-13-13.pdf DRAFT 9-30-13

Report of Independent Auditors and Consolidated Financial Statements with Supplementary Information El Camino Healthcare District

June 30, 2013 and 2012

CONTENTS

PAGE

MANAGEMENT’S DISCUSSION AND ANALYSIS ...... 1

REPORT OF INDEPENDENT AUDITORS ...... 14

CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

Statements of net position ...... 17

Statements of revenues, expenses, and changes in net position ...... 18

Statements of cash flows ...... 19

Notes to financial statements ...... 20

SUPPLEMENTARY INFORMATION AS OF AND FOR THE YEAR ENDED JUNE 30, 2013

Consolidating statement of net position ...... 41

Consolidating statement of revenues, expenses, and changes in net position ...... 43

Supplemental pension and postretirement benefit information ...... 44

Supplemental schedule of community benefit (unaudited) ...... 45

MANAGEMENT’S DISCUSSION AND ANALYSIS

______

EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

During fiscal year 2013 El Camino Hospital District changed its name to become more transparent in the public eye, to El Camino Healthcare District (the “District”), to make a sharper distinction between the taxpayer‐funded District and the operations of El Camino Hospital (the “Hospital”) and its subsidiaries.

The District is comprised of six (6) entities: the District, the Hospital, El Camino Hospital Foundation (the “Foundation”), CONCERN: Employee Assistance Program (“CONCERN”), El Camino Surgery Center (“ECSC”), and Silicon Valley Medical Development, LLC (“SVMD”).

Effective May 2013, the Surgery Center, operated by ECSC, was sold to a third party, the El Camino Ambulatory Surgery Center (“ECASC”). ECSC contributed certain medical equipment, furnishings, fixtures, inventories, and other tangible personal property in exchange for a seven and one half (7.5%) interest in ECASC. ECSC has also provided a working capital line of credit in a principal amount of $750,000 represented by a Promissory Note with a term of 39 months.

The Hospital acquired the real estate and certain other assets of the 143‐bed Community Hospital of Los Gatos (“Los Gatos”) in April 2009, closed it for 90 days, and re‐opened it on July 12, 2009. The Los Gatos “sister hospital campus” operates under the tax identification number, state healthcare license number, and the various provider numbers of the Hospital.

Overview of the Consolidated Financial Statements

This annual report consists of the consolidated financial statements and notes to those statements. These statements are organized to present the District as a whole, including all the entities it controls. Financial information for each separate entity is shown in the supplemental schedules on the last pages of the report. In accordance with the Governmental Accounting Standards Board (“GASB”) Codification Section 2200, Comprehensive Annual Financial Report, the District presents comparative financial highlights for the fiscal years ended June 30, 2013, 2012, and 2011. This discussion and analysis should be read in conjunction with the consolidated financial statements in this report.

The consolidated statements of net position, the consolidated statements of revenues, expenses, and changes in net position, and consolidated statements of cash flows provide an indication of the District’s financial health. The consolidated statements of net position include all the District’s assets and liabilities, using the accrual basis of accounting. The consolidated statements of revenues, expenses, and changes in net position report all of the revenues and expenses during the time periods indicated. The consolidated statements of cash flows report the cash provided by the operating activities, as well as other cash sources such as investment income and cash payments for capital additions and improvements.

Consolidated Financial Highlights

Year Ended June 30, 2013

 The increase in net position for 2013 was $102.6 million over fiscal year 2012. Net operating income contributed $64.8 million. Non‐operating added another $37.9 million, primarily driven by realized investment income and an unrealized gain this year on an interest rate swap.

 Total assets increased by $92.6 million over fiscal year 2012, which was mostly in the increase of total surplus cash and investments.

Year Ended June 30, 2012

 The increase in net position for 2012 was $72.1 million over fiscal year 2011. Net operating income contributed $59.7 million. Non‐operating income contributed another $12.4 million, primarily driven by net investment income, including realized and unrealized gains on investments.

Page 1 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

 The increase in operating income between fiscal years 2011 and 2012 was $14.1 million. This was primarily due to growth in patient volumes at the Los Gatos campus and growth at both campuses in procedural volumes. Continued staff efficiencies and a reduction in operating costs due to the one‐time significant consulting project – Accelerated Continuous Excellence (“ACE”) ‐ started at the end of fiscal year 2010.

 Total assets increased by $79.8 million over fiscal year 2011. Total surplus cash and investments increased by $91.8 million over fiscal year 2011, primarily driven by significant net income, and continued reduction in capital expenditures.

 Current liabilities decreased by $41.6 million in the current fiscal year over 2011. Primarily, this was due to the outstanding $50 million 2009 Series Revenue Bond that, during the current fiscal year, had its Letter of Credit extended to April 2017, causing the debt to again be classified as a long‐term liability.

Summary of Assets, Liabilities and Net Position As of June 30, 2013, 2012 and 2011

(In Thousands)

2013 2012 2011 Assets: Current assets $ 379,513 $ 379,838 $ 306,128 Board designated and restricted funds, net of current portion 343,632 236,763 212,669 Funds held by trustee, net of current portion 14,866 13,495 13,090 Capital assets, net 647,036 670,711 691,178 Other assets 63,573 55,230 53,196 Total assets$ 1,448,620 $ 1,356,037 $ 1,276,261

Liabilities: Current liabilities$ 97,619 $ 100,252 $ 141,821 Bonds payable, net of current portion 321,986 326,578 280,728 Other long‐term liabilities 48,955 51,768 48,361 Total liabilities$ 468,560 $ 478,598 $ 470,910

Net position: Unrestricted and invested in capital assets, net $ 972,978 $ 870,562 $ 795,539 Restricted by donors ‐ charity and other 5,297 4,820 5,250 Restricted ‐ endowments 1,785 2,057 4,562 Total net position$ 980,060 $ 877,439 $ 805,351 Total liabilities and net position $ 1,448,620 $ 1,356,037 $ 1,276,261 Operating cash equivalents & short‐term investments $ 256,841 $ 263,762 $ 196,034 Board designated & restricted funds 355,035 240,795 218,812 Total available cash & investments $ 611,876 $ 504,557 $ 414,846

Page 2 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

Investments

The consolidated District maintains sufficient cash balances to pay daily operational expenses and all short term liabilities. In late fiscal year 2012, the Hospital (exclusive of the District) went through a RFP process to select an Investment Consultant to assist the Hospital and its subsidiaries in managing it Surplus Cash (and Cash Balance Plan) assets. At the end of 2012 the Investment Consultant was retained and both the investment policies for Surplus Cash and Cash Balance Plan were updated and approved by the Hospital Board of Directors. The policies allow for greater diversification in the investment portfolios balance the need for liquidity with a long‐term investment focus in order to improve investment returns and the organization’s financial strength. Beginning early in fiscal year 2013, an Investment Subcommittee of the Finance Committee was formed to perform the following responsibilities, among others: monitor performance of investment managers, monitor allocations across investment styles and investment managers, review compliance with the policies, and make recommendations for revisions to the policies. Throughout fiscal year 2013, the number of money managers expanded from two money managers for Surplus Cash to appropriately seventeen managers. Also, in an effort to reduce costs, the Custodian Bank was consolidated to Wells Fargo Bank, which had been the custodian for the Cash Balance Plan.

Capital Assets

In fiscal year 2013, the Los Gatos campus had three major construction projects approved, including $6.7 million to perform seismic upgrades, $7 million for infrastructure, such as replacement of boilers/chillers, HVAC controls, conference room upgrades, finishes, fixtures and furnishings upgrades in the CCU, Mother‐Baby unit, and Medical/Surgical units; and $3.1 million for phase 2 of an Imaging Equipment replacement.

At the Mountain View campus, a $19 million project was approved to build out a 16,000 square foot area of the new hospital that will allow for the relocation of the Data Center, the Morgue and Autopsy functions and the Clean and Soiled Linen functions that currently exist in the old main hospital. Still in progress is the $4.5 million Women’s Hospital Labor and Delivery expansion and upgrade. At fiscal yearend, the initial design and development costs for a renovation of the Behavioral Health building were written off, as a total replacement building project was brought forward for an authorized $3 million for design and scope costs in June 2013.

During 2013, an infant security system was installed at the Mountain View campus. A number of sophisticated information technology software systems were added in fiscal 2013: a Knowledge Enterprise System, a business intelligence system to be used by the newly formed Performance Improvement department; a project that utilizes a technology called Virtual Desktop Infrastructure or VDI which takes applications and user data and centralizes the users’ desktops in the data center where it can be easily managed, modified, and refreshed; all through software; and a system that integrates medical systems and information systems in to the clinical and electronic medical record system to increase timeliness of data entry, accuracy and efficiency to assist with the new IDC‐9 requirements set forth by the Federal Government.

Page 3 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

Revenues and Expenses

The following table displays revenues and expenses for 2013, 2012, and 2011:

Revenues & Expenses Years Ended June 30, 22013, 201 and 2011 (In Thousands) 2013 2012 2011 Operating revenues: Net patient service revenue $ 691,545 $ 636,820 $ 603,625 Other revenue 21,565 21,591 19,015 Total operating revenues $ 713,110 $ 658,411 $ 622,640

Operating expenses: Salaries, wages & benefits $ 373,480 $ 330,472 $ 307,707 Professional fees and purchased services 90,649 93,324 101,386 Supplies 103,603 94,196 88,761 Depreciation and amortization 48,357 49,593 49,942 Rent and utilities 13,937 13,925 13,029 Interest 7,757 7,374 7,374 Other 10,571 9,870 8,903 Total operating expenses $ 648,354 $ 598,754 $ 577,102

Operating income $ 64,756 $ 59,657 $ 45,538

Nonoperating revenue (expense) items: General Obligation bond interest expense (4,787) (4,828) (4,897) Intergovernmental transfer expense ‐ (3,349) ‐ Investment income, net 26,943 18,346 23,544 Property tax revenues 18,264 16,420 15,793 Restricted gifts, grants and other 4,432 3,432 8,003 Unrealized gain (loss) on interest rate swap 4,061 (5,781) 1,364 Other, net (11,048) (11,423) (5,686) Minority interest in subsidiary earnings ‐ (386) (386) Total nonoperating revenues and expenses $ 37,865 $ 12,431 $ 37,735

Increase in net position $ 102,621 $ 72,088 $ 83,273

Total net position, beginning of year $ 877,439 $ 805,351 $ 722,078 Total net position, end of year $ 980,060 $ 877,439 $ 805,351

Page 4 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

Fiscal Year 2013 Consolidated Financial Analysis

Net Patient Services Revenues

Net patient services revenue in fiscal year 2013 increased by $54.7 million or 8.6% over fiscal year 2012. This increase was due to changes in payor reimbursement arrangements, increases in surgical volumes, and increased patient activity in Maternity and Intensive Care Nursery at both campuses. Also during fiscal year 2013, the Hospital experienced an increase in cost report settlements.

Specialty 2013 Days 2012 Days % Change Medical/Surgical 57,274 55,992 2.3% Maternity 13,600 11,632 16.9% Pediatrics 72 334 ‐78.4% NICU 5,936 4,946 20.0% Psychiatry 7,789 7,429 4.8% Normal newborn 11,850 10,469 13.2% Total 96,521 90,802 6.3%

Specialty 2013 LOS 2012 LOS % Change Medical/Surgical 4.6 4.6 0.0% Maternity 2.6 2.6 0.0% Pediatrics 1.7 3.5 ‐51.4% NICU 10.3 9.8 5.1% Psychiatry 9.2 8.3 10.8% Normal newborn 2.4 2.4 0.0% Total 4.0 4.0 0.0%

The overall case mix index, which is an indicator of patient acuity, was 1.43 in fiscal year 2013, compared to 1.44 in fiscal year 2012.

Operating Expenses

2012 Other 2013 Other $80,622 $80,762 12% 13% Professional & Professional & Purchased Purchased Services Services $90,649 $93,324 14% Salaries & 16% Salaries & Benefits Benefits $330,472 $373,480 55% Supplies 58% Supplies $103,603 $94,196 16% 16%

Page 5 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

Los Gatos

As discussed in prior year MD&A’s, the Los Gatos campus of El Camino Hospital occurred in fiscal year 2010, with the July 2009 opening of the newly acquired hospital in the Los Gatos/Campbell area. For the fiscal year 2013 it had an operating income of $13.8 million, which included a charge for overhead from the Mountain View campus of $10.5 million.

Salaries and Wages

It is to be noted that the District as a stand‐alone entity has no employees. All employees are at the Hospital and its related corporations.

Total salaries and wages (including employee benefits) increased by $43 million in fiscal year 2013 over 2012, which is 57.6% of total operating expenses compared to 55.2% in fiscal year 2012. Salaries and wages (exclusive of employee benefits) increased by $25.4 million over fiscal year 2012. RN payroll salaries increased by $15.2 million in fiscal year 2013 compared to 2012. Approximately $5.5M of this increase was due to the average wage increase of 6.8% granted PRN (Professional Resource of Nurses – the RN’s bargaining unit) implemented in April and June 2012 that carried forward for the entire fiscal year 2013. On March 31, 2013, PRN was granted another 2% increase, and will receive 2% increases every six months over the next 18 months. With a RN turnover rate of 6.2%, the Hospital is below the Northern California rate holding at 8.8%, as published by the California Hospital Association (“CHA”). In 2013, the Hospital added 126 FTE’s (“Full Time Equivalents”), of which 96 FTE’s were in nursing and clinical departments.

Effective beginning the fourth quarter of fiscal year 2013, the employees of the Hospital’s previously outsourced IT and Health Information Management services departments became employees of the Hospital, which caused a salaries and benefits expense of $2.9 million over the prior fiscal year.

Employees represented by SEIU United Healthcare Workers (“SEIU – UHW”) negotiated a new contract with the Hospital, after reaching an impasse in labor negotiations, the Hospital Board approved implementation of the “Last, Best and Final Offer” to the SEIU‐UHW on October 11, 2011. The new contract was ratified and approved by the Hospital Board on October 10, 2012 and extends through June 2015. Employees of SEIU‐UHW received a 3% increase at the July 2012 contract start date.

The Hospital’s Stationary Engineers – Local 39 per their current contract were provided a 4% increase effective November 11, 2012.

Hospital‐represented, non‐management staff were granted a 3% salary and wage increase effective July 5, 2012. Within the management staff, certain managers received market‐based salary adjustments effective August 5, 2012.

Senior executive staff received market‐based adjustments effective August 5, 2012 that averaged 2.7% in the aggregate.

Employee Benefits

Aggregate employee benefits, including accrued Paid Time Off (“PTO”) and Extended Sick Leave increased by $17.6 million.

Page 6 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

Significant increases were as follows:

 Healthcare expense increased by $5.2 million this fiscal year over 2012. This was attributable to the Hospital reverting back to covering 100% of the premium for the healthcare and dental coverage that became effective January 2013. Employees had previously contributed 10% of these costs. Also adding to the increase were the overall monthly premium increases and the increase in the number of covered employees.

 Accrued Paid Time Off increased by $3.9 million driven by salary and wage increases, flat dollar differentials being paid for RN’s on evening and night shifts and while on extended sick leave, and the overall FTE increase. Effective January 2013 the maximum accrual “bank” was increased from 350 hours to 400 hours for PRN, SEIU‐UHW, and hospital represented staff.

 Workers Compensation costs increased by $3.5 million primarily due to the need to increase actuarial reserves and that the on‐going claim payments grew over the prior year.

 Employer Social Security and Medicare taxes increased by $1.7 million in fiscal year 2013 driven by the increase in the Social Security wage threshold, salary and wage increases, and additional FTE’s.

 403B Employer Match expense increased this year over prior year by $1.2 million due to increased participation and the return to an enhancement match of 5% and 6% for employees with longevity of 15 years and 20 years respectively.

Professional and Purchased Services

Total professional fees and purchased services decreased by $2.7 million over the prior fiscal year.

Effective beginning the fourth quarter of fiscal year 2013, the employees of our previously outsourced IT and Health Information Management Services became employees of the Hospital, which caused a decrease of $4.3 million in purchased services during the last quarter of fiscal 2013. Offsetting most of this $4.3 million were increases for physician medical and directorship fees, management fees for the Inpatient Rehab at Los Gatos due to increased activity, maintenance services for the facilities, and outside agency services for managers in the critical care, sterile processing and dialysis departments.

Supplies

Total supplies increased by $9.4 million in fiscal year 2013 over 2012. Significant areas of increase were in the surgeries at both campuses, especially the Orthopedic Spine program at Los Gatos, interventional radiology procedures, pharmaceutical supplies, and facility building maintenance supplies. Continued increases for minor equipment (primarily medical) due to changes made to the threshold for capitalization of equipment from the previous $1,000 to $2,500 at the end of fiscal year 2012.

Depreciation and Amortization

Depreciation expense this fiscal year decreased over the prior year by $1.2 million, primarily attributable due to medical equipment in the Surgery and Imaging departments and certain major software becoming fully depreciated during the current fiscal year.

Rent and Utilities

The .1% increase experienced in the current fiscal year is immaterial.

Page 7 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

Interest Expense

Interest expense is primarily a result of the 2007 and 2009 bond debt, with minor amounts on the current capitalized equipment that are entering their final year.

Other Expense

The increase of $0.7 million over the prior fiscal year was principally in the areas of community sponsorships and forgiveness on loans granted certain recruited physicians that are needed within the communities of the Hospital and remained in their practices.

Change in Net Unrealized Gains and Losses on Investments

For fiscal year 2013, the Hospital had seventeen money managers with different investment objectives for the Hospital’s surplus cash investments. Total net unrealized gains/losses are reported in the consolidated financial statements during this fiscal year.

The change in net unrealized gains and losses for fiscal year 2013 was a Year over Year (YOY) positive change of $0.1 million. The net unrealized gain in 2013 was a result of strong equity market returns as the S&P 500 Index was up 20.6% for the twelve months ended June 30, 2013. The combination of equities and mutual funds unrealized gains was the main driver of the increase. Mutual fund investments are primarily comprised of equity securities.

Fixed income securities experienced a net unrealized loss of $0.9 million in 2013, whereas, equities contributed $0.3 million in net unrealized gains in 2012. The Barclays Capital Aggregate Index returned 7.5% for the twelve months ended June 30, 2012.

Economic Factors and Next Year’s Budget

The Board approved the fiscal year 2014 budget at their June 2013 meeting. The District is budgeting net income of $83.2 million in fiscal year 2014. Volumes are expected to increase by 1% due to expansion of the Orthopedic & Spine service lines, as well as a new neuro‐interventional program. Increases in reimbursement are budgeted to be below the rate of expense inflation. Additionally, the organization continues to improve patient satisfaction levels and quality and expects to incur increased costs as it invests in strategic initiatives continuum of care initiatives.

Fiscal Year 2012 Consolidated Financial Analysis

Net Patient Services Revenues

Net patient services revenue in fiscal year 2012 increased by $33.2 million or 5.5% over fiscal year 2011. This increase was due to changes in payor reimbursement arrangements, increases in surgical volume and emergency department visits at the Mountain View campus, increases in admissions at the Los Gatos campus, and Intergovernmental Transfer (“IGT”) payments from the state Medi‐Cal program for uncompensated care.

Page 8 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

Inpatient Business Activity

Specialty 2012 Days 2011 Days % Change Medical/Surgical 55,992 57,125 ‐2.0% Maternity 11,632 12,118 ‐4.0% Pediatrics 334 204 63.7% NICU 4,946 4,936 0.2% Psychiatry 7,429 7,375 0.7% Normal newborn 10,469 10,990 ‐4.7% Total 90,802 92,748 ‐2.1%

Specialty 2012 LOS 2011 LOS % Change Medical/Surgical 4.6 4.5 2.2% Maternity 2.6 2.6 0.0% Pediatrics 3.5 2.0 75.0% NICU 9.8 9.9 ‐1.0% Psychiatry 8.3 7.6 9.2% Normal newborn 2.4 2.4 0.0% Total 4.0 4.1 ‐2.4%

The overall case mix index, which is an indicator of patient acuity, was 1.44 in fiscal year 2012, compared to 1.17 in fiscal year 2011.

Operating Expenses

2011 Other 2012 Ot her $80,762 $79,248 13% 14%

Professional & Professional & Purchased Purchased Services Ser vices $93,324 $101,386 Salaries & Benefits 16% Salaries & 18% Benefits $307,707 $330,472 53% 55%

Supplies Supplies $94,196 $88,761 16% 15%

Los Gatos

As discussed in the fiscal year 2011 Management Discussion and Analysis, there was the addition of the Los Gatos campus of El Camino Hospital, which opened in July 2009. For fiscal year 2012, the Los Gatos campus generated an operating income of $17.3 million over the fiscal year 2011 operating income of $12.3 million for a $5.0 million increase. The Los Gatos campus is charged costs of overhead from the Mountain View campus in the amount of $8.5 million and $9.0 million in the respective years.

Page 9 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

Salaries and Wages

It is to be noted that the District as a stand‐alone entity has no employees. All employees are at the Hospital and its related corporations.

Total salaries and wages (including employee benefits) increased by $22.8 million in fiscal year 2012 over 2011, which is 55.2% of total operating expenses compared to 53.3% in fiscal year 2011. Salaries and wages (exclusive of employee benefits) increased by $9.6 million over fiscal year 2011. Effective the end of April and the beginning of June 2012, the bargaining unit for nurses (PRN – Professional Resources of Nurses) received salary increases and market adjustments for certain clinical positions that increased the average wage rate by 6.8%. This increase restored competitive wages allowing the District to hire experienced RN’s. With a RN turnover rate of 7.3%, the District is below the Northern California turnover rate of 8.8% as published by the California Hospital Association (“CHA”). In 2012, the District added approximately 60 FTE’s (“Full Time Equivalents”), mostly in the patient services areas.

Employees represented by SEIU United Healthcare Workers had their 4‐year contract expire in July 2011. Contract negotiations continued throughout the summer into early fall with no agreement being reached. Thus, in October 2011, the Hospital implemented its Last, Best, Final offer approved by the Board, which granted no wage increase in the fiscal year, with the exception of 123 employees in 13 job classifications receiving increases of 4‐16% effective in December 2011 for market adjustments. An additional 22 employees received increases of 1.6‐5% with implementation of a career ladder for Respiratory Therapy employees in April 2012. Other changes in implementing the Hospital’s Last, Best, Final offer was a change to healthcare benefits, which has employees contribute 10% of the healthcare premiums for the basic coverage that was previously covered at 100% by the Hospital.

The Hospital’s Stationary Engineers – Local 39 per their current contract were provided a 4% increases effective November 13, 2011.

Hospital‐represented, non‐management staff were granted a 3% salary and wage increase effective June 23, 2012. Management staff had sixteen (16) managers that received market‐based salary adjustments effective August 7, 2011.

Senior executive staff received market‐based adjustments effective August 7, 2011, that averaged 3.4% in the aggregate.

Employee Benefits

Aggregate employee benefits, including accrued Paid Time Off (“PTO”) increased by $13.3 million in fiscal year 2012 over 2011.

Significant increases were as follows:

 Pension retirement (Cash Balance Plan) expense increased this year over prior year by $4.5 million, due to second year in a row of lowering the discount rate (from 8% in fiscal year 2010 to 7% in fiscal year 2011) to 6% for the current fiscal year. Management also reduced the amortization period of the NPO (Net Pension Obligation) to seven (7) years from ten (10) years in the 2011 fiscal year, which was down from thirty (30) years in fiscal year 2010.

 Workers compensation actuarial reserves stabilized to a normal expensing amount in fiscal year 2012, after a couple of years of credits to expense in the overall needed reserves that occurred in fiscal years 2011 and 2010. Thus, given the swing between these two (2) fiscal years, this actuarial amount increased $4.1 million in 2012 over 2011.

Page 10 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

 In recognition of the Hospital’s strong financial performance in fiscal year 2012, as well as improvements in patient satisfaction and quality care the Board approved an overall “Employee Recognition Award” to nearly all employees. This expected cost, along with the anticipated increase for incentive pay provided senior management, directors, and managers given their individual performance evaluations and goals, contributed to an approximate $2.3 million increase over fiscal year 2011.

 Accrued PTO expense increased by $1.8 million over fiscal year 2011. While some of this increase would be attributable to wage and salary increases during 2012, a significant portion was due to returning to an accrual method based on an employee’s status, and not straight productive hours worked, that excluded PTO being taken for PRN and the Hospital represented employee base, that was in effect the last six months of fiscal year 2011.

Professional and Purchased Services

Total professional fees and services decreased by $8 million in fiscal year 2012 over 2011. The significant item that caused the decrease in the amount of $17 million was that in the prior fiscal year 2011 there were payments made to a consulting firm that had assisted the Hospital in implementing its Accelerated Continuous Excellence (“ACE”) initiative that started in fiscal year 2010 and continued into 2011 with final payments made to the consulting firm in the fiscal year. This initiative made significant and measurable operational improvements in the revenue cycle and cost reductions. The Hospital subsequently incorporated these multiple improvements into its operations to lead to significant income from operations in fiscal years 2011 and again in 2012.

Significant increases to professional and purchased services occurred in the following areas:

 An increase of $2.3 million occurred in repair and maintenance to the facilities at both the Mountain View and Los Gatos campuses. At the Mountain View campus, these included the Behavioral Health Services in the old tower, window treatments, and added wall protection in the New Main Hospital where significant wear and tear had already occurred. Additionally, there were maintenance projects, such as parking resurfacing and building joint sealant upgrades, which are done every four to five years. At the Los Gatos campus, the Hospital had to address several elements of deferred maintenance of the buildings causing additional upgrades and major repairs to occur.

 An increase of $2.3 million over fiscal year 2011 was in the areas strategic planning development for the recently Board‐approved Hospital Strategic Plan for the next three to five years, legal expense for general corporate issues and for union contract negotiations, and recruitment consulting for top executive positions during the year.

 An increase of $1 million over fiscal year 2012 occurred at the Los Gatos campus for the outside purchased services to operate its inpatient physical rehabilitation services that were fully operational in the current fiscal year.

Supplies

Total supplies increased by $5.4 million in fiscal year 2012 over 2011. Two (2) major areas of the increase were:

 The threshold for capitalization of equipment was changed from the previous $1,000 to $2,500 at the end of the year. Thus, management expensed previously capitalized equipment that had a cost of less than $2,500 and still had a remaining book value, which caused a one‐time expense of approximately $2.4 million.

 Significant growth in the Ortho‐Spine program at the Los Gatos campus caused a $2.1 million increase in surgery supplies for the program.

Page 11 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

Depreciation and Amortization

The expense for depreciation and amortization decreased by $0.3 million, principally attributable to assets becoming fully depreciated during the current fiscal year.

Interest

Interest expense that is primarily for the 2007 and 2009 bond debt for the Replacement Hospital at the Mountain View campus was essentially unchanged.

Rent and Utilities

The increase in fiscal year 2012 over 2011 was $0.9 million, primarily driven by the opening of the Senior Health Center, providing convenient outpatient services for seniors, at a location near the Mountain View campus, and increases in electric costs at both campuses.

Other Expenses

This expense increased by $0.9 million in fiscal year 2012 over the prior 2011. Property insurance expense increased in the current year due to increases in rates and property values. Employee relocation expense increased in the current fiscal year as a few vacant senior management positions were filled. The District increased its participation in community sponsorships of local events.

Change in Net Unrealized Gains and Losses on Investments

For fiscal year 2012, the Hospital had two money managers with different investment objectives for the Hospital’s surplus cash investments. Total net unrealized gains/losses in stocks and bonds are reported in the District’s consolidated financial statements during this fiscal year.

Barrow, Hanley, Mewhinney & Strauss (BHMS)

Stock investments change to net unrealized gains during fiscal 2012 resulted in a Year over Year (YOY) negative change of $1.4 million. Significant gains were realized from sales during the fiscal year resulting in a lower amount of unrealized gains at the end of the fiscal year despite the S&P 500 being up 3.2% on a price basis for the twelve months ended June 30, 2012.

Intermediate bond investments change to net unrealized gains during fiscal 2012 resulted in a YOY positive change of $1.9 million. Rates declined moving prices and therefore unrealized gains were higher. For example, the rate on the Treasury five year note was 1.76% at June 30, 2011, compared to 0.72% at June 30, 2012.

Short maturity bond investments change to net unrealized losses during fiscal 2012 resulted in a YOY negative change of $0.7 million. The bond investment change primarily represents bonds purchased at premiums that must decline to par value as they approach maturity.

Page 12 EL CAMINO HEALTHCARE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS For the Years Ended June 30, 2013, 2012 and 2011

Wells Capital Management (“WCM”)

Bond investments managed by WCM reflected an increase in the amount of unrealized gains during the period. The change from the prior year was a net gain of $4.4 million. The bond investment change represents a 5.8% increase in market value. During the period, there were no contributions or withdrawals made to the portfolio. Intermediate U.S. Treasury yields declined significantly during the period falling 100 to 165 basis points across the curve. This decline in rates drove bond prices higher and resulted in the portfolio having an increase in unrealized capital gains.

As of the end of the fiscal year, the cost of the Hospital’s investments in the WCM Fund were $78.8 million, including reinvestment of income, with the market value of $89.3 million, which represents an unrealized gain of 13.3% of the market value.

Page 13

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors El Camino Healthcare District

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of El Camino Healthcare District, (the “District”) which comprise the consolidated statements of net position as of June 30, 2013 and 2012, and the related statements of revenues, expenses, and changes in net position, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our audit opinion.

Page 14

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of El Camino Healthcare District as of June 30, 2013 and 2012, and the consolidated changes in financial position and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

The accompanying Management’s Discussion and Analysis on pages 1 through 13, and the accompanying supplemental pension and postretirement benefit information on page 44, are not required parts of the consolidated financial statements but are supplementary information required by the Governmental Accounting Standards Board who considers them to be an essential part of financial reporting for placing the consolidated financial statements in an appropriate operational economic, or historical context. This supplementary information is the responsibility of El Camino Healthcare District’s management. We have applied certain limited procedures in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the consolidated financial statements, and other knowledge we obtained during our audit of the consolidated financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements that collectively comprise the El Camino Healthcare District's consolidated financial statements. The accompanying consolidating statement of net position and consolidating statement of revenues, expenses, and changes in net position, on pages 41 to 43, are presented for purposes of additional analysis and are not a required part of the consolidated financial statements. Such information is the responsibility of El Camino Healthcare District's management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.

Page 15

Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements that collectively comprise the El Camino Healthcare District’s consolidated financial statements. The accompanying supplemental schedule of community benefit on page 45 is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. This supplementary information is the responsibility of El Camino Healthcare District’s management. Such information has not been subjected to the auditing procedures applied in the audit of the consolidated financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

San Francisco, California October 9, 2013

Page 16

CONSOLIDATED FINANCIAL STATEMENTS

______

EL CAMINO HOSPITAL DISTRICT CONSOLIDATED STATEMENTS OF NET POSITION June 30, 2013 and 2012 (In Thousands)

2013 2012 ASSETS Current assets Cash and cash equivalents $ 51,259 $ 42,334 Short‐term investments 205,582 221,428 Current portion of board designated, restricted funds and trusteed assets 14,136 9,653 Patient accounts receivable, net of allowances for doubtful accounts of $9,313 and $9,473 in 2013 and 2012, respectively 88,362 87,528 Prepaid expenses and other current assets 20,101 18,787 Notes receivable, current 73 108 Total current assets 379,513 379,838 Non‐current cash and investments Board‐designated funds 343,574 236,707 Restricted funds 58 56 Funds held by trustee 14,866 13,495 358,498 250,258 Capital assets, net 647,036 670,711 Pledges receivable, net 1,651 2,747 Prepaid pension asset 32,868 27,527 Investments in health care affiliates 22,999 18,660 Other assets 6,055 6,296 Total assets$ 1,448,620 $ 1,356,037

LIABILITIES AND NET POSITION Current liabilities Current portion capital lease obligations$ 4,961 $ 5,100 Accounts payable and accrued expenses 17,403 19,442 Salaries, wages, and related liabilities 38,439 39,484 Other current liabilities 11,107 13,609 Estimated third‐party payor settlements 21,117 18,467 Current portion of bonds payable 4,592 4,150 Total current liabilities 97,619 100,252 Capital lease obligations, net of current portion ‐ 4,952 Bonds payable, net of current portion 321,986 326,578 Other long‐term obligations 10,005 13,953 Workers' compensation, net of current portion 23,409 18,031 Postretirement medical benefits, net of current portion 15,541 14,832 Total liabilities 468,560 478,598 Net position Invested in capital assets, net of related debt 335,114 343,694 Restricted ‐ expendable 5,297 4,820 Restricted ‐ nonexpendable 1,785 2,057 Unrestricted 637,864 526,868 Total net position 980,060 877,439 Total liabilities and net position$ 1,448,620 $ 1,356,037

See accompanying notes. Page 17 EL CAMINO HEALTHCARE DISTRICT CONSOLIDATED STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION Years Ended June 30, 2013 and 2012 (In Thousands)

2013 2012 OPERATING REVENUES Net patient service revenue (net of provision for $ 691,545 $ 636,820 bad debts of $14,623 and $14,747 in 2013 and 2012, respectively) Other revenue 21,565 21,591 Total operating revenues 713,110 658,411 OPERATING EXPENSES Salaries, wages, and benefits 373,480 330,472 Professional fees and purchased services 90,649 93,324 Supplies 103,603 94,196 Depreciation and amortization 48,357 49,593 Rent and utilities 13,937 13,925 Other 18,328 17,244 Total operating expenses 648,354 598,754 Income from operations 64,756 59,657 NONOPERATING REVENUES (EXPENSES) Investment income, net 26,943 18,346 Property tax revenue Designated to support community benefit programs 6,514 5,902 Designated to support capital expenditures 4,483 3,610 Levied for debt service 7,267 6,908 General Obligation bond interest expense (4,787) (4,828) Intergovernmental transfer expense ‐ (3,349) Restricted gifts, grants and bequests, and other 4,432 3,432 Unrealized gain (loss) on interest rate swaps 4,061 (5,781) Other, net (11,048) (11,809) Total nonoperating revenues (expenses) 37,865 12,431 Increase in net position 102,621 72,088 TOTAL NET POSITION, beginning of year 877,439 805,351 TOTAL NET POSITION, end of year $ 980,060 $ 877,439

See accompanying notes. Page 18 EL CAMINO HEALTHCARE DISTRICT CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended June 30, 2013 and 2012 (In Thousands)

2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from and on behalf of patients $ 693,361 $ 635,449 Other cash receipts 21,565 21,591 Cash payments to employees (368,438) (328,100) Cash payments to suppliers (241,698) (220,872) Net cash from operating activities 104,790 108,068 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Property taxes 10,997 9,512 Restricted contributions and investment income 5,528 4,441 Transfers from restricted funds and other (2) (2) Net cash from noncapital financing activities 16,523 13,951 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of property, plant, and equipment (24,682) (29,126) Payments on capital leases obligations (5,091) (5,801) Payments on bonds payable (4,150) (4,610) Interest paid on General Obligation bond debt (4,787) (4,828) Tax revenue related to general obligation bonds 7,267 6,908 Net cash used for capital and related financing activities (31,443) (37,457) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investments (1,339,447) (458,743) Sales of investments 1,243,943 366,490 Investment income 15,895 6,537 Decrease in notes receivable 35 1,905 Change in funds held by trustee, net (1,371) (405) Net cash used for investing activities (80,945) (84,216) Net increase in cash and cash equivalents 8,925 346 CASH AND CASH EQUIVALENTS at beginning of year 42,334 41,988 CASH AND CASH EQUIVALENTS at end of year $ 51,259 $ 42,334 RECONCILIATION OF INCOME FROM OPERATIONS TO NET CASH FROM OPERATING ACTIVITIES Income from operations$ 64,756 $ 59,657 Adjustments to reconcile operating income to net cash from operating activities Depreciation and amortization 48,357 49,593 Provision for bad debts 14,623 14,747 Changes in assets and liabilities Patient accounts receivable, net (12,807) (16,118) Prepaid expenses and other current assets (10,753) (4,138) Current liabilities, excluding current portion capital lease obligations (5,586) 1,463 Other long‐term obligations 5,491 2,567 Postretirement medical benefits 709 297 Net cash from operating activities $ 104,790 $ 108,068

See accompanying notes. Page 19 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization – During fiscal year 2013 El Camino Hospital District changed its name to El Camino Healthcare District (the “District”), to make a sharper distinction between the taxpayer‐funded District and the operations of El Camino Hospital (the “Hospital”) and its related corporations.

The District includes the following component units which are included as blended component units of the District’s consolidated financial statements: the Hospital, El Camino Hospital Foundation (the “Foundation”), CONCERN: Employee Assistance Program (“CONCERN”), El Camino Surgery Center, LLC (“ECSC”), and Silicon Valley Medical Development, LLC (“SVMD”).

The District is organized as a political subdivision of the State of California and was created for the purpose of operating an acute care hospital and providing management services to certain related corporations. The District is the sole member of the Hospital, and the Hospital is the sole corporate member of the Foundation and CONCERN. As sole member, the District (with respect to the Hospital) and the Hospital (with respect to the Foundation and CONCERN) have certain powers, such as the appointment and removal of the boards of directors and approval of changes to the articles of incorporation and bylaws. As of June 30, 2012, the Hospital owned 99.9% of ECSC and a physician owned the remaining 0.1%. In May 2013, the Hospital purchased the remaining 0.1% from the physician. As of June 30, 2013, the Hospital owns 100% of ECSC.

The purpose of CONCERN is to provide and operate a specialized healthcare service plan for various business organizations nationwide; CONCERN has a limited Knox‐Keene license from the Department of Corporations of the State of California.

SVMD was formed in September 2008 as a Limited Liability Corporation (“LLC”), a wholly owned subsidiary of the Hospital focused on the expansion of the clinical enterprise outside of the Hospital through various business ventures and physician alignment initiatives that improve access for the Hospital’s current patients and new, underserved members of the community, extend healthcare into people’s homes through the applications of electronic connectivity and assist independent physicians in clinical integration with the Hospital, among other initiatives.

All significant inter‐entity accounts and transactions have been eliminated in the consolidated financial statements.

Accounting standards – Pursuant to Government Accounting Standard Board (“GASB”) Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre‐November 30, 1989 Financial Accounting Standards Board (“FASB”) and American Institute of Certified Public Accountants (“AICPA”) Pronouncements, the District’s proprietary fund accounting and financial reporting practices are based on all applicable GASB pronouncements as well as codified pronouncements issued on or before November 30, 1989.

The District utilizes the proprietary fund method of accounting whereby revenues and expenses are recognized on the accrual basis and consolidated financial statements are prepared using the economic resources measurement focus.

Use of estimates – The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents – Cash and cash equivalents include deposits with financial institutions, and investments in highly liquid debt instruments with an original maturity of three months or less. In addition, in 2013 and 2012, cash and cash equivalents include repurchase agreements, which consist of highly liquid obligations of U.S. governmental agencies. Cash and cash equivalents exclude amounts whose use is limited by board designation or by legal restriction.

Page 20 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investments – Investments consist primarily of highly liquid debt instruments and other short‐term interest‐bearing certificates of deposit, U.S. Treasury bills, U.S. government obligations, hedge funds, hedge fund of funds, and corporate debt, excluding amounts whose use is limited by board designation or other arrangements under trust agreements.

Board‐designated and restricted funds include assets set aside by the board for future capital improvements and other operational reserves, over which the board retains control and may at its discretion use for other purposes; assets set aside for qualified capital outlay projects in compliance with state law; and assets restricted by donors or grantors.

Investment income, realized gains and losses, and unrealized gains and losses on investments are reflected as nonoperating revenue or expense.

Deferred financing costs – Financing costs incurred with the issuance of bonds are amortized over the term of the bonds using a method that approximates the effective interest rate method, included in prepaid expenses and other current assets. Amortization of these costs is included in interest expense.

Bond assets held in trust – According to the terms of both indenture agreements (General Obligation and Revenue Bonds), these amounts are held by the bond trustee and paying agent and are maintained and managed by the trustee and are invested in short‐term cash equivalents. These assets are available for the settlement of future current bond obligations.

Capital assets – Capital asset acquisitions are recorded at cost. Donated property is recorded at its fair market value on the date of donation. All purchases over $2,500 are capitalized. Equipment under capital lease is amortized on the straight‐line basis over the shorter of the lease term or the estimated useful life of the equipment. Leasehold improvements are amortized using the straight‐line method over the shorter of the lease term or the estimated useful life of the related assets. Depreciation is computed using the straight‐line method over the estimated useful lives of the assets as follows:

Land improvements 16 years Buildings and fixtures 25 – 47 years Equipment 3 – 16 years

The District evaluates prominent events or changes in circumstances affecting capital assets to determine whether impairment of a capital asset has occurred. Impairment losses on capital assets are measured using the method that best reflects the diminished service utility of the capital asset.

Costs of borrowing – Except for capital assets acquired through gifts, contributions or capital grants, interest cost on borrowed funds during the period of construction of capital assets is capitalized as a component of the cost of acquiring those assets.

Investments in health care related affiliates – The Hospital holds an interest in Pathways Home Health & Hospice and Pathways Private Duty (formerly Pathways Continuous Care), which are reported on the equity method of accounting.

Risk management – The Hospital is exposed to various risks of loss from torts; theft of, damage to, and destruction of assets; business interruption; errors and omissions; employee injuries and illnesses; natural disasters; and employee health, dental, and accident benefits. Commercial insurance coverage is purchased for claims arising from such matters. Settled claims have not exceeded this commercial coverage in any of the three preceding years.

Page 21 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Self‐insurance plans – The Hospital maintains professional liability insurance on a claims‐made basis, with liability limits of $30,000,000 in aggregate, and which is subject to a $50,000 deductible. Additionally, the Hospital is self‐ insured for workers’ compensation benefits. The Hospital purchases a Workers’ Compensation Excess Policy that insures claims greater than $1,000,000 with a limit of $10,000,000 and a $1,000,000 deductible. Actuarial estimates of uninsured losses for professional liability and workers’ compensation have been accrued as liabilities in the accompanying consolidated financial statements.

The following is a summary of changes in workers’ compensation liabilities for the years ended June 30 (in thousands): Beginning Balance Increases Decreases Ending Balance 2013 $ 20,331 $ 9,198 $ 3,820 $ 25,709

Beginning Balance Increases Decreases Ending Balance 2012 $ 17,872 $ 5,343 $ 2,884 $ 20,331

Interest rate swap agreements – During the fiscal year ended June 30, 2007, the Hospital entered into derivative instruments in the form of three swap agreements to hedge variable interest rate exposure. During the fiscal year ended June 30, 2008, the underlying variable rate debt was refunded for fixed rate debt, leaving the Hospital with speculative derivative instruments that largely offset the variable rate debt issued in 2009. Two of these swaps were terminated in the fiscal year ended June 30, 2010. Refer to Note 9 for a full description of the interest rate swap agreements.

Net position – Net position of the District are classified as invested in capital assets, restricted–expendable, restricted‐nonexpendable, and unrestricted net position.

Invested in capital assets, net of related debt – Invested in capital assets of $335,114,000 and $343,694,000 at June 30, 2013 and 2012, respectively, represent investments in all capital assets (building and building improvements, furniture and fixtures, and information and technology equipment), net of depreciation less any debt issued to finance those capital assets.

Restricted ‐ expendable – The restricted expendable net position is restricted through external constraints imposed by creditors (such as through debt covenants), grantors, contributors, laws or regulations of other governments, or constraints imposed by law through constitutional provisions or enabling legislation and includes assets in self‐insurance trust funds, revenue bond reserve fund assets, and net position restricted to use by donors.

Restricted ‐ nonexpendable ‐ The restricted non‐expendable net position is equal to the principal portion of permanent endowments.

Unrestricted net position – Unrestricted net position consists of net position that does not meet the definition of invested in capital assets, net of related debt, or restricted.

Statements of revenues, expenses, and changes in net position – For purposes of display, transactions deemed by management to be ongoing, major, or central to the provisions of healthcare services are reported as revenues and expenses. Peripheral or incidental transactions are reported as gains and losses. These peripheral activities include investment income, property tax revenue, gifts, grants and bequests, change in net unrealized gains and losses on investments in marketable securities, unrealized losses on interest rate swaps and are reported as nonoperating. Investments in the Pathways Home Health & Hospice and Pathways Private Duty are accounted for under the equity method. The Hospital’s share of the operating income of these entities is included as other, net in the consolidated financial statements.

Page 22 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net patient service revenue and patient 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. 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. At June 30, 2013 and 2012, the Hospital provided allowances for losses on amounts receivable directly from patients totaling $13,204,000 and $12,542,000, respectively. The distribution of net patient accounts receivable by payor at June 30, 2013 and 2012, is as follows:

June 30, 2013 2012 Medicare 21% 19% Medi‐Cal 3% 4% Commercial and other 74% 76% Self pay 2% 1% 100% 100%

Uncollectible accounts – The Hospital provides care to patients without requiring collateral or other security. Patient charges not covered by a third‐party payor are billed directly to the patient if it is determined that the patient has the ability to pay. A provision for uncollectible accounts is recognized based on management’s estimate of amounts that ultimately may be uncollectible.

Charity care – The Hospital provides care to patients who meet certain criteria under its charity care policy without charge or at amounts less than its established rates. Because the Hospital does not pursue collection of amounts determined to qualify as charity care, they are not reported as revenue. The amount of estimated costs for services and supplies furnished under the Hospital’s charity care policy aggregated approximately $2,417,000 and $3,154,000 in 2013 and 2012, respectively.

Property tax revenue – The District received approximately 18% in 2013 and 23% in 2012 of its total increase in net position from property taxes. These funds were designated as follows: June 30, 2013 2012 Designated to support community benefit programs $ 6,514,000 $ 5,902,000 Designated to support Hospital Replacement Project $ 4,483,000 $ 3,610,000 Levied for debt service $ 7,267,000 $ 6,908,000

Property taxes are levied by the County on the District’s behalf on January 1 and are intended to finance the District’s activities of the same calendar year. Amounts levied are based on assessed property values as of the preceding July 1. Property taxes are considered delinquent on the day following each payment due date. Property taxes are recorded as nonoperating revenue by the District when they are earned.

Grants and contributions – From time to time, the District receives grants as well as contributions from individuals and private organizations. Revenues from grants and contributions are recognized when all eligibility requirements, including time requirements are met. Grants and contributions may be restricted for either specific operating purposes or for capital purposes. Amounts that are unrestricted or that are restricted to a specific operating purpose are reported as nonoperating revenues.

Page 23 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income taxes – The District operates under the purview of the Internal Revenue Code, Section 115, and corresponding California Revenue and Taxation Code provisions. As such, it is not subject to state or federal taxes on income. CONCERN has also been granted tax‐exempt status. However, income from the unrelated business activities of the Hospital and the Foundation is subject to income taxes. ECSC and SVMD are limited liability companies and are treated as pass‐through entities for federal income tax purposes. Accordingly, no recognition has been given to federal income taxes in the accompanying consolidated financial statements.

Reclassifications – Certain amounts in the 2012 notes to the consolidated financial statements have been reclassified to conform to the 2013 presentation.

New accounting pronouncements – The GASB issued GASB Statement No. 61, The Financial Reporting Entity: Omnibus (“GASB No. 61”), which is effective for financial statements for periods beginning after June 15, 2012. GASB No. 61 modifies certain requirements for inclusion of component units in the financial reporting entity and amends the criteria for reporting component units as if they were part of the primary government (that is, blending) in certain circumstances. It also clarifies the reporting of equity interests in legally separate organizations. It requires a primary government to report its equity interest in a component unit as an asset. The District has adopted this statement for the fiscal year ended June 30, 2013, and it did not have a significant effect on the consolidated financial statements.

The GASB issued GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position (“GASB No. 63”), which is effective for financial statements for periods beginning after December 15, 2011. The requirements of GASB No. 63 will improve financial reporting by standardizing the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government’s net position. It alleviates uncertainty about reporting those financial statement elements by providing guidance where none previously existed. Amounts that are required to be reported as deferred outflows of resources should be reported in a statement of financial position in a separate section following assets. Similarly, amounts that are required to be reported as deferred inflows of resources should be reported in a separate section following liabilities. The statement of net position should report all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position. Net position represents the difference between all other elements in a statement of financial position and should be displayed in three components – net investment in capital assets; restricted (distinguishing between major categories of restrictions); and unrestricted. The District has adopted this statement for the fiscal year ended June 30, 2013, and it did not have a significant effect on the consolidated financial statements.

The GASB also issued GASB Statement No. 65, Items Previously Reported as Assets and Liabilities (“GASB No. 65”), which is effective for financial statements for periods beginning after December 15, 2012. GASB No. 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. It also provides other financial reporting guidance related to the impact of the financial statement elements deferred outflows of resources and deferred inflows of resources, such as changes in the determination of the major fund calculations and limiting the use of the term deferred in financial statement presentations. The District is currently evaluating the impact of the adoption of GASB No. 65 for the fiscal year ending June 30, 2014.

Page 24 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The GASB also issued GASB Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27 (“GASB No. 68”), which is effective for financial statements for periods beginning after June 15, 2014. GASB No. 68 replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. The requirements of Statements 27 and 50 remain applicable for pensions that are not covered by the scope of this Statement. It establishes standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense/expenditures. For defined benefit pensions, this Statement identifies the methods and assumptions that should be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about pensions also are addressed. The District is currently evaluating the impact of the adoption of GASB No. 68 for the fiscal year ending June 30, 2015.

The GASB also issued GASB Statement No. 69, Government Combinations and Disposals of Government Operations (“GASB No. 69”), which is effective for financial statements for periods beginning after December 15, 2013. GASB No. 69 requires the use of carrying values to measure the assets and liabilities in a government merger. Conversely, government acquisitions are transactions in which a government acquires another entity, or its operations, in exchange for significant consideration. This Statement requires measurements of assets acquired and liabilities assumed generally to be based upon their acquisition values. It also provides guidance for transfers of operations that do not constitute entire legally separate entities and in which no significant consideration is exchanged. It defines the term operations for purposes of determining the applicability of this Statement and requires the use of carrying values to measure the assets and liabilities in a transfer of operations, and provides accounting and financial reporting guidance for disposals of government operations that have been transferred or sold. The District is currently evaluating the impact of the adoption of GASB No. 69 for the fiscal year ending June 30, 2015.

NOTE 2 – OPERATING REVENUES

The following table reflects the percentage of net patient revenues by major payor group for the years ended June 30:

2013 2012 Medicare 25% 24% Commercial and other 73% 74% Medi‐cal 2% 2% 100% 100%

The Hospital has agreements with third‐party payors that provide for payments to the Hospital at amounts different from its established rates. Payment arrangements include prospectively determined rates per discharge, reimbursed costs, discounted charges, fee schedules, prepaid payments per member, and per diem payments or a combination of these methods. Net patient service revenue is reported at the estimated net realizable amounts from patients, third‐ party payors, and others for services rendered, including estimated settlements under reimbursement agreements with third‐party payors.

Page 25 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inpatient acute care services rendered to Medicare program beneficiaries are paid at prospectively determined rates per discharge. These rates vary according to a patient classification system based on clinical, diagnostic, and other factors. Inpatient services are paid at prospectively determined rates per discharge. Payments for outpatient services are based on a stipulated amount per procedure. The District is reimbursed for cost reimbursable items at a tentative rate, with final settlements determined after submission of annual cost reports by the District and audits thereof by the Medicare fiscal intermediary. The effect of updating prior year estimates for Medicare and other liabilities was to increase 2013 and 2012 net operating income by $2,650,000 and $7,992,000, respectively. The Hospital’s cost reports have been audited by the Medicare fiscal intermediary through June 30, 2007.

Medi‐Cal and contracted rate payors are paid on a percentage of charges, per diem, per discharge, fee schedule, or a combination of these methods.

Laws and regulations governing the Medicare and Medi‐Cal programs are complex and are subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change in the near term.

Included in other revenue are amounts from investments in health‐related activities, rental income, cafeteria, and other nonpatient care revenue.

NOTE 3 – CASH DEPOSITS

At June 30, 2013 and 2012, District cash deposits had carrying amounts of $51,259,000 and $42,334,000, respectively, and bank balances of $55,780,000 and $47,116,000, respectively. All of these funds were held in cash deposits, which are collateralized with the California Government Code (“CGC”), except for $250,000 per account that is federally insured by the Federal Deposit Insurance Corporation (“FDIC”).

The District participates in a cash management program provided by its primary depository institution that allows cash in District concentration accounts to be swept daily and invested overnight in reverse repurchase agreements that are not exposed to custodial credit risk because the underlying securities are held by the buyer‐lender. At June 30, 2013 and 2012, balances in repurchase agreements had bank balances of $54,474,000 and $44,958,000, respectively, and are included in the carrying amounts above.

Page 26 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 – BOARD‐DESIGNATED, RESTRICTED FUNDS AND INVESTMENTS

Board‐designated funds, restricted funds, and short‐term investments, collectively, as of June 30, 2013 and 2012, comprised the following (in thousands):

Amortized Gross Unrealized Carrying Costs Gains Losses Value 2013 Cash and cash equivalents$ 19,008 $ ‐ $ ‐ $ 19,008 Mutual funds 174,400 9,368 ‐ 183,768 Equities 31,373 8,113 (1,430) 38,056 Fixed income securities 320,706 4,469 (5,390) 319,785 $ 545,487 $ 21,950 $ (6,820) $ 560,617 2012 Cash and cash equivalents$ 9,534 $ ‐ $ ‐ $ 9,534 Mutual funds 325 ‐ ‐ 325 Equities 54,118 7,420 (7,066) 54,472 Fixed income securities 383,536 15,854 (1,173) 398,217 $ 447,513 $ 23,274 $ (8,239) $ 462,548

At June 30, 2013, investment balances and average maturities were as follows:

Fair Value Investment Maturities (in years) Investment Type (in thousands) Less than 11 to 56 to 10 More than 10 Short‐term money market$ 19,008 $ 19,008 $ ‐ $ ‐ $ ‐ Mutual funds 183,768 183,768 ‐ ‐ ‐ Government and agencies 89,036 19,045 64,881 4,239 871 Corporate bonds 120,584 7,091 82,296 20,959 10,238 Domestic fixed income 100,351 ‐ 17,074 9,914 73,363 Foreign fixed income 9,814 ‐ 5,789 2,686 1,339 522,561 $ 228,912 $ 170,040 $ 37,798 $ 85,811 Equities 38,056 Total fair value$ 560,617

At June 30, 2012, investment balances and average maturities were as follows:

Fair Value Investment Maturities (in years) Investment Type (in thousands) Less than 11 to 56 to 10 More than 10 Short‐term money market$ 9,534 $ 9,534 $ ‐ $ ‐ $ ‐ Mutual funds 325 325 ‐ ‐ ‐ Government and agencies 109,871 3,382 82,964 23,525 ‐ Corporate bonds 189,229 13,526 160,696 15,007 ‐ Domestic fixed income 89,511 ‐ 89,511 ‐ ‐ Foreign fixed income 9,606 ‐ 5,332 4,274 ‐ 408,076 $ 26,767 $ 338,503 $ 42,806 $ ‐ Equities 54,472 Total fair value$ 462,548

Interest rate risk – Through its investment policies, the District manages its exposure to fair value losses arising from increasing interest rates by limiting duration of fixed income securities in its portfolio to no more than 30% of designated benchmark.

Page 27 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Credit risk – District investment policies require fixed income investments to have a minimum of 85% of a money manager’s assets in investment grade assets. The investment policy requires investment managers maintain an average of A‐ or higher ratings as issued by a nationally recognized rating organization. Additionally, the investment policy requires no more than 5% of a money manager’s portfolio at the time of purchase shall be invested in the securities of any one issuer, with the exception of a United States government agency, agency MBS or other Sovereign issues rated AAA or Aaa.

Foreign currency risk – The District’s investment policy permits it to invest up to 30% of total investment in foreign currency denominated investments.

Alternative investments risk – The District’s alternative investments include ownership interest in a wide variety of partnership and fund structures that may be domestic or offshore. Generally, there is little or no regulation of these investments by the Securities and Exchange Commission or U.S. state attorneys general. These investments employ a wide variety of strategies including absolute return, hedge, venture capital, private equity and other strategies. Investments in this category may employ leverage to enhance the investment return. The District’s holdings can include financial assets such as marketable securities, non‐marketable securities, derivatives, and synthetic and structured instruments; real assets; tangible and intangible assets; and other funds and partnerships. Generally these investments do not have a ready market. Interest in these investments may not be traded without approval of the general partner or fund management.

Alternative investments are subject to all of the risks described previously relating to equities and fixed income instruments. In addition, alternative strategies and their underlying assets and rights are subject to a broad array of economic and market vagaries that can limit or erode value. The underlying assets may not be held by a custodian either because they cannot be, or because the entity has chosen not to hold them in this form. Valuation determined by the investment manager, who has a conflict of interest in that he or she is compensated for performance are considered and reviewed by the District’s Investment Committee and the Board of Directors. Real assets may be subject to physical damage from a variety of means, loss from natural causes, theft of assets, lawsuits involving rights and other loss and damage including mortgage foreclosure risk. These risks may not be insured or insurable. Tangible assets are subject to loss from theft and other criminal actions and from naturals. Intangible assets are subject to legal challenge and other possible impairment.

The carrying amount of deposits and investments are included in the District’s consolidated statements of net position as follows (in thousands): 2013 2012 Included in the following consolidated statement of net position captions: Short‐term investments $ 205,582 $ 221,428 Current portion board designated, restricted funds and trusteed assets 11,403 4,032 Board designated, less current portion 343,574 237,032 Restricted funds, less current portion 58 56 $ 560,617 $ 462,548

Page 28 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – CAPITAL ASSETS

Capital assets activity for the year ended June 30, 2013, is as follows (in thousands):

Balance Balance June 30, 2012 Increases Decreases June 30, 2013 Capital assets not being depreciated Land $ 39,627 $ ‐ $ ‐ $ 39,627 Construction in progress 6,074 9,261 4,109 11,226 45,701 9,261 4,109 50,853 Capital assets being depreciated Land improvement 11,283 ‐ ‐ 11,283 Buildings 710,601 3,304 367 713,538 Property under capital leases 26,122 ‐ ‐ 26,122 Capital equipment 235,066 21,378 17,855 238,589 983,072 24,682 18,222 989,532 Less accumulated depreciation for Land improvement 4,908 786 ‐ 5,694 Buildings 180,346 19,962 ‐ 200,308 Property under capital leases 16,398 6,161 ‐ 22,559 Capital equipment 156,410 21,448 13,070 164,788 358,062 48,357 13,070 393,349 Total capital assets being depreciated, net 625,010 (23,675) 5,152 596,183 Total capital assets, net $ 670,711 $ (14,414) $ 9,261 $ 647,036

Page 29 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Capital assets activity for the year ended June 30, 2012, is as follows (in thousands):

Balance Balance June 30, 2011 Increases Decreases June 30, 2012 Capital assets not being depreciated Land $ 33,937 $ 5,690 $ ‐ $ 39,627 Construction in progress 4,520 8,690 7,136 6,074 38,457 14,380 7,136 45,701 Capital assets being depreciated Land improvement 11,277 6 ‐ 11,283 Buildings 703,329 7,575 303 710,601 Property under capital leases 26,122 ‐ ‐ 26,122 Capital equipment 227,218 20,688 12,840 235,066 967,946 28,269 13,143 983,072 Less accumulated depreciation for Land improvement 4,116 795 3 4,908 Buildings 160,486 19,860 ‐ 180,346 Property under capital leases 10,237 6,161 ‐ 16,398 Capital equipment 140,386 22,839 6,815 156,410 315,225 49,655 6,818 358,062 Total capital assets being depreciated, net 652,721 (21,386) 6,325 625,010 Total capital assets, net $ 691,178 $ (7,006) $ 13,461 $ 670,711

Construction contracts of approximately $58,487,000 exist for the construction of various projects including upgrading the Los Gatos campus, Los Gatos seismic upgrades, and the Women’s Hospital at the Mountain View campus. At June 30, 2013, the remaining commitment on these contracts approximated $42,175,000.

NOTE 6 – EMPLOYEE BENEFIT PLANS

The Hospital sponsors a cash‐balance pension plan (the “Plan”), which has been in effect since January 1, 1995. The Plan covers employees who are 21 years of age and have completed one year of credited service. Participants are entitled to a lump‐sum distribution or monthly benefits at age 65 based on a predetermined formula that considers years of service and compensation. Effective July 1, 1999, employer Plan benefits are calculated as 5% of a participant’s annual plan compensation, and the annual interest is an indexed rate based on the return on ten‐year U.S. treasury securities. Participants are fully vested in their account balances after five pension years.

Certain retired and terminated employees and certain participants covered by a collective bargaining agreement continue to participate under provisions of a defined‐benefit retirement plan in effect prior to January 1, 1995. Any costs and liabilities related to this plan are included below.

Page 30 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the net pension obligation (“NPO”) or prepaid pension asset for the Hospital’s cash‐ balance pension plan (in thousands): End of Beginning Year NPO/ of Year (Prepaid NPO/(Prepaid Annual Actual Increase Pension Pension Pension Contribution (Decrease) Asset) Fiscal Year Asset) (a) Cost (b) (c) in NPO (b‐c) ((a)+c‐b)) 2011$ (27,310) $ 7,871 $ 4,800 $ 3,071 $ (24,239) 2012$ (24,239) $ 12,367 $ 15,654 $ (3,287) $ (27,526) 2013$ (27,526) $ 12,665 $ 18,005 $ (5,340) $ (32,866)

The following table summarizes the actuarial assumptions used to determine the Hospital’s cash‐balance pension plan liabilities as of June 30: 2013 2012 2011 Expected long‐term return on assets 6.0% 6.0% 7.0% Rate of compensation increases 4.0% 4.0% 4.0% Date of actuarial valuation January 2012 January 2011 January 2010 Amortization period of NPO 7 years 7 years 10 years

Components of pension activity for the years ended June 30, 2013 and 2012, consist of the following (in thousands):

2013 2012 Pension expense $ 12,665 $ 8,114 Employer contributions $ 18,005 $ 15,654 Benefits paid $ 8,024 $ 7,118

Eligible employees of the Hospital may also elect to participate in a separate deferred compensation plan (the 403(b) plan) pursuant to Section 403(b) of the Code. The Hospital acts as the administrator and sponsor, and the 403(b) plan’s assets are held by trustees designated by the Hospital’s management. Employees are eligible to participate upon employment, and participants are immediately vested in their elective contributions plus actual earnings thereon. The Hospital will match employee contributions to the 403(b) plan, subject to a maximum of 4% of each participant’s annual plan compensation. Participants are eligible for employer match in the second plan year in which they work at least 1,000 hours, and they must be on the payroll at the end of the plan year (December 31). Employer matching contributions under the 403(b) plan are made to the cash–balance pension plan and earn interest as defined by that plan. Employer matching contributions to the 403(b) plan of $6,797,000 and $6,531,000 in 2013 and 2012, respectively, are included in benefits expense. Participants are immediately vested in the employer contributions included in the cash–balance pension plan.

NOTE 7 – POSTRETIREMENT MEDICAL BENEFITS

The Hospital provides healthcare benefits and life insurance for retired employees who meet eligibility requirements as outlined in the plan document, as approved by the board of directors of the Hospital. All employees who attain age 55 with a minimum of 20 years of enrollment in the Hospital’s healthcare program and are enrolled in one of the plans upon retirement, and who were hired prior to July 1, 1994 are eligible. Under the plan, employees are credited with employment history accumulated under a prior Hospital plan.

Page 31 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Benefits are funded by the Hospital on a pay‐as‐you go basis. If a participant terminates from the Hospital after 20 years of enrollment but before reaching age 62, he or she can choose to contribute to the plan between ages 55 and 61 to retain the plan’s benefits. At age 62, eligible retirees are given an annual credit based on years of service to pay for health benefits. As of June 30, 2013 and 2012, approximately 655 employees and former employees were eligible to participate in the plan. For the fiscal years ended June 30, 2013 and 2012, the Hospital contributed $468,000 and $727,000, respectively, to fund benefits paid in those years.

The Hospital’s annual postretirement benefit cost is calculated based on the annual required contribution of the employer (“ARC”), an amount actuarially determined in accordance with parameters of GASB Codification Section P50, Postemployment Benefits Other Than Pension Benefits ‐ Employer Reporting. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

The following table shows the components of the Hospital’s annual postretirement benefit cost, the amount actually contributed to the plan, and the changes in the Hospital’s postretirement benefit obligation (in thousands):

2013 2012 Annual required contribution $ 896 $ 890 Interest on postretirement benefit obligation 630 619 Adjustment to annual required contribution (349) (485) Annual postretirement benefit expense 1,177 1,024 Employer contributions (468) (727) Increase in accumulated benefit obligation $ 709 $ 297

Postretirement benefit obligation, beginning of the year $ 14,832 $ 14,535 Postretirement benefit obligation, end of the year $ 15,541 $ 14,832

The Hospital’s annual postretirement benefit cost, the percentage of annual postretirement benefit cost contributed to the plan, and the postretirement benefit obligation for 2013 and the two preceding years were as follows (in thousands): Annual Annual Postretirement Postretirement Postretirement Benefit Expense Benefit Benefit Expense Contributed Obligation Fiscal Year Ended June 30, 2011$ 1,112 69.60%$ 14,535 June 30, 2012$ 1,024 71.00%$ 14,832 June 30, 2013$ 1,177 39.76%$ 15,541

As of July 1, 2011, the most recent actuarial valuation date, the plan was not funded. The actuarial accrued liability for benefits was $21,400,000, resulting in an unfunded actuarial accrued liability (UAAL) of $21,400,000. The covered payroll (annual payroll of active employees covered by the plan) was $42,931,000, and the ratio of the UAAL to the covered payroll was ‐49.8%.

For measurement purposes, annual rates of increase in the per capita cost of covered healthcare benefits of 9% and 10% were assumed for fiscal years 2013 and 2012, respectively. The rate was assumed to decrease gradually to 5.5% over the next four years and remain at that level thereafter. The dental benefit trend rate was assumed to be 5% in all future years. The discount rates used was 4.25% for both 2013 and 2012. The UAAL is being amortized as a level percentage over 30 years on an open basis.

Page 32 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the consolidated financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short‐term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long‐term perspective of the calculations.

NOTE 8 – INSURANCE PLANS

The Hospital purchases professional, general, automobile, and directors and officers liability insurance from BETA Healthcare Group (“BHG”), and also purchases all‐risk property insurance (including limited flood), fiduciary, crime, and excess workers’ compensation coverage needs from Alliant insurance Services (“Alliant”). The Hospital’s coverage is under a claims‐made policy with limits of $30 million per occurrence, $30 million in the annual aggregate, and with a self‐insured retention level of $50,000 per claim.

There are known claims and incidents that may result in the assertion of additional claims, as well as claims from unknown incidents that may be asserted from services provided to patients. The Hospital has actuarial estimates performed annually on its self‐insurance plans of professional liability and workers’ compensation benefits. Estimated liabilities (which have not been discounted) have been actuarially determined at an expected 75% confidence level and include an estimate of incurred, but not reported, claims. The balances are included in salaries and wages payable, workers’ compensation and other long‐term liabilities in the accompanying consolidated statements of net position.

Page 33 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – BONDS PAYABLE

Bonds payable consists of the following obligations (in thousands): June 30, 2013 2012 El Camino Hospital District 2006 General Obligation Bonds Principal $ 141,310 $ 142,280 Unamortized premium 703 889 El Camino Hospital Revenue Bonds Series 2008 Principal 134,100 136,950 Unamortized premium 465 609 Series 2009 Principal 50,000 50,000 Total long‐term debt 326,578 330,728 Less current maturities 4,592 4,150 Maturities due after one year $ 321,986 $ 326,578

2013 Balance at Balance at June 30, 2012 Payments June 30, 2013 General obligation bonds$ 143,169 $ 1,154 $ 142,015 Revenue bonds 187,559 2,995 184,564 $ 330,728 $ 4,149 $ 326,579

2012 Balance at Balance at June 30, 2011 Payments June 30, 2012 General obligation bonds$ 144,876 $ 1,707 $ 143,169 Revenue bonds 190,462 2,903 187,559 $ 335,338 $ 4,610 $ 330,728

General obligation bonds – Upon voter approval, in November 2003, the District issued in 2006, $148,000,000 principal amount of General Obligation Bonds, which consists of $115,665,000 of Current Interest Bonds, and $32,335,000 of Capital Appreciation Bonds. Interest on the Current Interest Bonds is payable semiannually at rates ranging from 4% to 5% and principal maturities ranging from $845,000 in 2010 to $18,050,000 in 2036 are due annually on August 1. Interest at rates ranging from 4.38% to 4.48% and principal of the Capital Appreciation Bonds are payable only at maturity.

The Current Interest Bonds maturing on or before August 1, 2016, are not subject to redemption. The Current Interest Bonds maturing on or after August 1, 2017, may be redeemed prior to their respective stated maturity dates, at the option of the District, from any source of available funds, as a whole or in part on any date on or after February 1, 2017, at a redemption price equal to the principal amount of the Current Interest Bonds called for redemption, together with interest accrued thereon to the date of redemption, without premium.

The Bonds are general obligations of the District payable from ad valorem taxes. Payment of principal, interest and maturity value of the Bonds, when due, is insured by a municipal bond insurance policy.

Page 34 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue Bonds, Series 2007 – Each Series of Bonds initially bore interest at Auction Rates for successive seven‐day Auction Periods. Interest on the Bonds was payable on the Business Day immediately following the applicable Auction Period.

In May 2008, the Hospital issued $147,525,000 of Santa Clara County Financing Authority Insured Revenue Bonds, Series 2007A, B, and C, at rates of 5.125% to 5.750%, to advance refund $147,525,000 of the outstanding original Series 2007A, B, and C. Principal maturities on the serial bonds range from $950,000 in 2013 to $4,725,000 in 2041, and are due annually on February 1.

Revenue Bonds, Series 2009 – In April 2009, the Hospital issued $50,000,000 of Santa Clara County Financing Authority Insured Revenue Bonds, Series 2009A to fund completion of the Hospital Replacement construction project. Interest on the Bonds is payable on the Business Day immediately following the applicable Remarketing Period. Principal maturities on the bonds range from $100,000 in 2025 to $10,920,000 in 2044, and are due annually on February 1.

The 2009 Series Revenue bond agreement contains various restrictive covenants which include, among other things, minimum debt service coverage, maintenance of minimum liquidity, and requirement to maintain certain financial ratios.

The bonds are secured by a pledge of gross revenues to an Indenture of Trust (Indenture) dated March 16, 2007. The Indenture contains certain covenants that, among other things, require the District to deposit all Gross Revenues of the Hospital as soon as practicable upon receipt. The Indenture also requires the Hospital to maintain a long‐term debt service coverage ratio of 1.15 to 1. Failure to comply with the restrictive covenants of the Indenture could result in all of the unpaid principal and accrued interest of the bonds becoming due immediately, at the option of the trustee.

Letter of credit – In March 2009, in connection with the issuance of the 2009 Series Revenue bonds, the Hospital obtained an irrevocable Letter of Credit issued by a bank for $50,000,000. This Letter of Credit expires April 2017 and requires the Hospital to maintain a long‐term debt services coverage ratio of 1.20 to 1.

Interest costs – Interest costs incurred for the years ended June 30, 2013 and 2012, are (in thousands):

June 30, 2013 2012 Operating expense $ 7,486 $ 7,603 Nonoperating expense 4,787 4,828 $ 12,273 $ 12,431

Page 35 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt service requirements for bonds payable are as follows (in thousands):

Year Ending General Obligation Bonds Revenue Bonds June 30, Principal Interest Principal Interest 2014 $ 1,300 $ 4,906 $ 3,000 $ 8,947 2015 1,665 4,848 3,075 8,797 2016 2,065 4,773 3,200 8,644 2017 2,485 4,690 53,275 8,484 2018 2,950 4,578 3,350 8,320 2019‐2023 30,021 27,687 18,700 38,753 2024‐2028 17,977 43,159 22,050 33,201 2029‐2033 33,447 31,123 25,975 26,390 2034‐2038 49,400 7,308 30,550 17,899 2039‐2043 ‐ ‐ 20,925 7,516 2044‐2045 ‐ ‐ ‐ 347 $ 141,310 $ 133,072 $ 184,100 $ 167,298

Interest rate swaps – On March 7, 2007, the Hospital entered into three interest rate swap agreements in connection with the issuance of the Series 2007 Revenue Bonds. The intention of the swap is to create debt with a synthetic, fixed interest rate on the variable‐rate Revenue Bonds. The swaps were effective March 23, 2007, with a termination date of February 1, 2041, and notional amounts of $50 million each, these terms match the terms of the underlying Series 2007 Revenue Bonds. Under each swap transaction, the Hospital pays a fixed rate of interest of 3.204% and the counterparty pays a variable rate of interest equal to the sum of (i) 56% of USD‐LIBOR‐BBA plus (ii) .23%. In March 2008, the Hospital Board directed management to terminate the floating to fixed interest rate swaps when economically prudent in connection with the refunding of their Series 2007 Revenue Bonds. In December 2009, two of the three swaps were terminated. The fair value of the remaining swap is a liability of $6,675,000 at June 30, 2013, and $10,737,000 at June 30, 2012, included in other long‐term obligations in the consolidated statements of net position.

Risks associated with the swap agreements – From the Hospital’s perspective, the following risks are generally associated with swap agreements:

Credit risk – The counterparty becomes insolvent or is otherwise not able to perform its financial obligations. In the event the counterparty become insolvent or their credit rating falls below BBB‐/Baa2 the Hospital has the right to terminate the swap. Upon exercise of early termination the amounts due from or to the counterparty will be determined by the market pricing of the swaps at the time of termination.

Termination risk – The Hospital or counterparty may terminate the swap if the other party fails to perform under the terms of the contract. If, at the time of the termination, the swap has a negative fair value, the Hospital would be liable to the counterparty for that payment.

Page 36 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – CAPITAL LEASE OBLIGATIONS

Capital lease obligations outstanding as of June 30, 2013, are as follows (in thousands):

Description Maturity Interest Rates Original Issue June 30, 2013 Capital leases ‐ equipment September 2011 ‐ 0% to 7.75% net of interest May 2014 $ 25,711 $ 4,961 Less current portion 4,961 $ ‐

Outstanding Description June 30, 2012 Increases Decreases June 30, 2013 Capital leases ‐ equipment $ 10,052 $ ‐ $ 5,091 $ 4,961

Outstanding Description June 30, 2011 Increases Decreases June 30, 2012 Capital leases ‐ equipment $ 15,853 $ ‐ $ 5,801 $ 10,052

Debt service requirements for capital lease obligations are as follows (in thousands):

Period Ending June 30, 2014 $ 4,961 Less current portion 4,961 $ ‐

NOTE 11 – RESTRICTED NET POSITION

Restricted net position consists of donor‐restricted contributions and grants and cash restricted for regulatory requirements, which are to be used as follows (in thousands): 2013 2012 Charity and other $ 5,297 $ 4,820 Endowments 1,735 2,007 Restricted by donor for specific uses 7,032 6,827

Restricted by Department of Managed Health Care 50 50 Total restricted net position $ 7,082 $ 6,877

Permanently restricted contributions (endowments) remain intact, with the earnings on such funds providing an ongoing source of revenue to be used primarily for education.

The Foundation is the beneficiary of gifts through testamentary and other trusts in which the gift assets are held by the trustees and administered for the benefit of the Foundation and Hospital. Pooled income trust assets are donated to the Foundation under life annuity agreements. The donors maintain the right to income earned on the assets during their lifetime and, in some cases, during the lifetime of their survivors.

Page 37 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Although these gifts are irrevocable, applicable GASB pronouncements permit financial statement recognition only upon satisfaction of all eligibility requirements. Since the Foundation is not eligible to receive the assets held in the trusts until maturity of the trusts (generally the donor’s death), long‐term receivables from charitable remainder trusts and pooled income funds are not recognized in the consolidated financial statements.

The total of these contributions, measured at the fair value of assets to be received, discounted to their estimated net present value, is $1,990,000 and $1,761,000, respectively, at June 30, 2013 and 2012. The applicable federal discount rate for June 2013 and 2012, of 3.14% and 3.71%, respectively, per annum and the Standard Ordinary Mortality Rate Table were used to arrive at the present value.

NOTE 12 – RELATED PARTY TRANSACTIONS

The Hospital pays vendor‐related expenses on behalf of the Foundation and is reimbursed for these costs incurred. The Hospital also pays employee‐related expenses, which are reimbursed by the Foundation. The Foundation’s employees also participate in the cash‐balance pension plan, sponsored by the Hospital. Full footnote disclosures relating to the cash‐balance pension plan is included in the consolidated financial statements. The Hospital performs certain administrative functions on behalf of the Foundation for which no amounts are charged to the Foundation. As of June 30, 2013 and 2012, the Foundation has a payable to the Hospital in the amount of $347,373 and $528,847, respectively. During the fiscal years 2013 and 2012, the Foundation paid the Hospital $5,984,638 and $4,565,594 for such expenses, respectively, which included amounts for operations, but also disbursements from Donor Restricted Funds in support of Hospital operations and capital acquisitions.

In June 2012, the Hospital board approved the funding of the Foundation’s salaries, wages, and benefits for fiscal year 2013, thus along with 2012 fiscal year approved funding of their rent provided a maximum funding of $1,783,197 for both items on an ongoing basis.

Effective May 6, 2013, ECSC sold certain medical equipment, furnishings, fixtures, inventories, and other tangible personal property in exchange for a seven and one half (7.5%) interest in El Camino Ambulatory Surgery Center, (“ECASC”). ECSC has provided a working capital line of credit to ECASC in a principal amount of $750,000 represented by a Promissory Note and has a term of 39 months with an interest rate of 5% per annum. At June 30, 2013, there were no draws against the line of credit. The Hospital leases the space to ECASC and provides certain services, such as utilities and building/equipment maintenance. There was no rental income recorded as of June 30, 2013, related to the lease.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Litigation – The District is a defendant in various legal proceedings arising out of the normal conduct of its business. In the opinion of management and its legal representatives, the District has valid and substantial defenses, and settlements or awards arising from legal proceedings, if any, will not exceed existing insurance coverage, nor will they have a material adverse effect on the financial position, results of operations, or liquidity of the District.

Page 38 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Lease commitments – The District is obligated for land and office rental under the terms of various operating lease agreements. Following is a schedule by year of future minimum lease payments under operating leases as of June 30, 2013 (in thousands): Operating Lease Lease Net Lease Commitments Income Benefit 2014 $ 2,243 $ 7,643 $ 5,400 2015 2,105 7,377 5,272 2016 1,481 6,821 5,340 2017 1,153 6,034 4,881 2018 1,139 4,985 3,846 Thereafter 26,507 6,329 (20,178) $ 34,628 $ 39,189 $ 4,561

Total rental expense in 2013 and 2012 for all operating leases was approximately $2,376,000 and $2,345,000, respectively.

Regulatory environment – The healthcare industry is subject to numerous laws and regulations of federal, state, and local governments. These laws and regulations include, but are not necessarily limited to, matters such as licensure, accreditation, government healthcare program participation requirements, reimbursement for patient services, and Medicare and Medi‐Cal fraud and abuse. Recently, government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse statutes and regulations by healthcare providers. The District is subject to routine surveys and reviews by federal, state and local regulatory authorities. The District has also received inquiries from healthcare regulatory authorities regarding its compliance with laws and regulations. Although the District management is not aware of any violations of laws and regulations, it has received corrective action requests as a result of completed and on‐going surveys from applicable regulatory authorities. Management continually works in a timely manner to implement operational changes and procedures to address all corrective action requests from regulatory authorities. Breaches of these laws and regulations and non‐compliance with survey corrective action requests could result in expulsion from government healthcare programs together with the imposition of significant fines and penalties, as well as significant repayments for patient services previously billed. Compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time.

Hospital Seismic Safety Act – In the 2010 fiscal year, the Mountain View campus completed its three year construction of the Hospital Replacement Project with the opening of its new five story, 450,000 square foot, state‐of‐ the‐art hospital facility on November 15, 2009. This completion made the Mountain View hospital campus in compliance with the State of California’s SB 1953 in meeting all requirements of the Hospital Seismic Safety Act of 1994.

The Hospital Replacement Project at the Mountain View campus financing included the proceeds from a combination of: (1) General Obligation bonds, totaling $148 million that were issued by the County of Santa Clara approved by the November 2003 Measure D; (2) $150 million in revenue bonds issued by the Hospital in 2007; (3) an additional $50 million revenue bond issue in 2009, and (4) cash reserves.

At the Los Gatos campus, where most of the buildings were constructed in the 1960’s, the campus has been going through a seismic compliance review. Over the past two years since its acquisition structural engineers have been performing seismic assessments that have rated 12 of the 14 buildings to be seismic compliant through 2030. The two remaining buildings that require seismic upgrades at an estimated cost of $7 million, under current regulations, the work in phases must be completed between 2013 and 2015. Senate Bill 90 recently signed into law, after other details being approved would provide a seven year extension on these 2013 and 2015 seismic deadlines.

Page 39 EL CAMINO HEALTHCARE DISTRICT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 – HEALTH CARE REFORM

In March 2010, President Obama signed the Health Care Reform Legislation into Law. The new law will result in sweeping changes across the health care industry. The primary goal of this comprehensive legislation is to extend health care coverage to approximately 32 million uninsured legal U.S. residents through a combination of public program expansion and private sector health insurance reforms. To fund the expansion of insurance coverage, the legislation contains measures designated to promote quality and cost efficiency in health care delivery and to generate budgetary savings in the Medicare and Medicaid programs. The District is unable to predict the full impact of the Health Care Reform Legislation at this time due to the law’s complexity and current lack of implementing regulations and or interpretive guidance. However, the District expects that several provisions of the Health Care Reform Legislation will have a material effect on its business.

NOTE 15 – SUBSEQUENT EVENTS

Subsequent events are events or transactions that occur after the consolidated statement of net position date but before consolidated financial statements are available to be issued. The District recognizes in the consolidated financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the consolidated statement of net position date, including the estimates inherent in the process of preparing the consolidated financial statements. The District’s consolidated financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the consolidated statement of net position date but arose after the consolidated statement of net position date and before consolidated financial statements are available to be issued.

The Centers for Medicare & Medicaid Services (“CMS”) determined that the Hospital was out of compliance with certain conditions of participation during a CMS validation survey in August, 2013 which may lead to the termination of the Hospital’s status as a Medicare provider, and the Hospital would lose its ability to be reimbursed for Medicare services. The Hospital has submitted a plan of correction to CMS, and management is confident that the Hospital will resolve the CMS issues favorably so as to maintain the Hospital’s status as a Medicare provider.

Page 40

SUPPLEMENTARY INFORMATION

______

EL CAMINO HEALTHCARE DISTRICT CONSOLIDATING SCHEDULE – STATEMENT OF NET POSITION June 30, 2013 (In Thousands)

El Camino El Camino El Camino Silicon Valley Eliminations Healthcare Healthcare El Camino Hospital Medical Increase District District Hospital Foundation CONCERN Surgery Center Development (Decrease) and Affiliates ASSETS Current assets Cash and cash equivalents$ 339 $ 49,691 $ 95 $ 476 $ 494 $ 164 $ ‐ $ 51,259 Short‐term investments 4,879 187,818 1,501 11,384 ‐ ‐ ‐ 205,582 Current portion of board designated, restricted funds and trusteed assets 11,461 2,675 ‐ ‐ ‐ ‐ ‐ 14,136 Patient accounts receivable, net of allowances for doubtful accounts of $9,313 ‐ 87,840 ‐ 344 178 ‐ ‐ 88,362 Prepaid expenses and other current assets ‐ 21,290 ‐ 204 ‐ 33 (1,426) 20,101 Notes receivable, current 80 ‐ ‐ ‐ ‐ ‐ (7) 73 Total current assets 16,759 349,314 1,596 12,408 672 197 (1,433) 379,513

Non‐current cash and investments Board‐designated funds 3,706 322,293 16,695 880 ‐ ‐ ‐ 343,574 Restricted funds ‐ 8 ‐ 50 ‐ ‐ ‐ 58 Funds held by trustee 8,156 6,710 ‐ ‐ ‐ ‐ ‐ 14,866 11,862 329,011 16,695 930 ‐ ‐ ‐ 358,498 Capital assets, net 12,127 634,950 108 174 ‐ ‐ (323) 647,036 Pledges receivable, net ‐ ‐ 1,651 ‐ ‐ ‐ ‐ 1,651 Prepaid pension ‐ 32,868 ‐ ‐ ‐ ‐ ‐ 32,868 Investment in health care affiliates ‐ 22,435 ‐ ‐ 1,856 ‐ (1,292) 22,999 Other assets 1,393 4,662 ‐ ‐ ‐ ‐ ‐ 6,055 Total assets $ 42,141 $ 1,373,240 $ 20,050 $ 13,512 $ 2,528 $ 197 $ (3,048) $ 1,448,620

Page 41 EL CAMINO HEALTHCARE DISTRICT CONSOLIDATING SCHEDULE – STATEMENT OF NET POSITION (CONTINUED) June 30, 2013 (In Thousands)

El Camino El Camino El Camino Silicon Valley Eliminations Heathcare Healthcare El Camino Hospital Medical Increase District District Hospital Foundation CONCERN Surgery Center Development (Decrease) and Affiliates LIABILITIES AND NET POSITION Current liabilities Current portion capital lease obligations $ ‐ $ 4,961 $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ 4,961 Accounts payable and accrued expenses ‐ 16,746 ‐ 553 230 137 (263) 17,403 Salaries, wages, and related liabilities ‐ 37,730 ‐ 567 50 92 ‐ 38,439 Other current liabilities 2,530 7,988 925 730 104 ‐ (1,170) 11,107 Estimated third‐party payor settlements ‐ 21,117 ‐ ‐ ‐ ‐ ‐ 21,117 Current portion of bonds payable 1,480 3,112 ‐ ‐ ‐ ‐ ‐ 4,592 Total current liabilities 4,010 91,654 925 1,850 384 229 (1,433) 97,619

Capital lease obligations, net of current portion ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Bonds payable, net of current portion 140,535 181,451 ‐ ‐ ‐ ‐ ‐ 321,986 Other long‐term obligations ‐ 10,005 ‐ ‐ ‐ ‐ ‐ 10,005 Workers' compensation, net of current portion ‐ 23,409 ‐ ‐ ‐ ‐ ‐ 23,409 Postretirement medical benefits, net of current portion ‐ 15,541 ‐ ‐ ‐ ‐ ‐ 15,541 Total liabilities 144,545 322,060 925 1,850 384 229 (1,433) 468,560

Net position Invested in capital assets, net of related debt (110,271) 445,426 108 174 ‐ ‐ (323) 335,114 Restricted ‐ expendable ‐ ‐ 5,297 ‐ ‐ ‐ ‐ 5,297 Restricted ‐ nonexpendable ‐ ‐ 1,735 50 ‐ ‐ ‐ 1,785 Unrestricted 7,867 605,754 11,985 11,438 2,144 (32) (1,292) 637,864

Total net position (102,404) 1,051,180 19,125 11,662 2,144 (32) (1,615) 980,060 Total liabilities and net position $ 42,141 $ 1,373,240 $ 20,050 $ 13,512 $ 2,528 $ 197 $ (3,048) $ 1,448,620

Page 42 EL CAMINO HEALTHCARE DISTRICT CONSOLIDATING SCHEDULE – STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION Year Ended June 30, 2013 (In Thousands)

El Camino El Camino El Camino Silicon Valley Eliminations Healthcare Healthcare El Camino Hospital Medical Increase District District Hospital Foundation CONCERN Surgery Center Development (Decrease) and Affiliates Operating revenues Net patient service revenue (net of provision for $ ‐ $ 686,327 $ 54 $ ‐ $ 5,164 $ ‐ $ ‐ $ 691,545 bad debts of $14,623) Other revenue 84 14,620 ‐ 10,298 19 ‐ (3,456) 21,565 Total operating revenues 84 700,947 54 10,298 5,183 ‐ (3,456) 713,110 Operating expenses Salaries, wages and benefits ‐ 366,006 1,438 3,036 2,522 734 (256) 373,480 Professional fees and purchased services 973 84,679 1,513 4,495 810 252 (2,073) 90,649 Supplies ‐ 102,144 20 ‐ 1,439 ‐ ‐ 103,603 Depreciation and amortization 250 47,839 13 31 224 ‐ ‐ 48,357 Rent and utilities ‐ 13,811 134 200 396 ‐ (604) 13,937 Other ‐ 17,834 149 236 109 ‐ ‐ 18,328 Total operating expenses 1,223 632,313 3,267 7,998 5,500 986 (2,933) 648,354 (Loss) income from operations (1,139) 68,634 (3,213) 2,300 (317) (986) (523) 64,756 Nonoperating revenues (expenses): Investment income, net 70 25,338 1,476 59 ‐ ‐ ‐ 26,943 Property tax revenue Designated for community benefit programs 6,514 ‐ ‐ ‐ ‐ ‐ ‐ 6,514 Designated for capital expenditures 4,483 ‐ ‐ ‐ ‐ ‐ ‐ 4,483 Levied for debt service 7,267 ‐ ‐ ‐ ‐ ‐ ‐ 7,267 General Obligation bond interest expense (4,787) ‐ ‐ ‐ ‐ ‐ ‐ (4,787) Restricted gifts, grants and bequests, and other ‐ ‐ 3,298 ‐ ‐ ‐ 1,134 4,432 Unrealized gain on interest rate swap ‐ 4,061 ‐ ‐ ‐ ‐ ‐ 4,061 Other, net 11 (9,174) 121 (1,989) ‐ 872 (889) (11,048) Total nonoperating revenues and (expenses) 13,558 20,225 4,895 (1,930) ‐ 872 245 37,865 Excess (deficit) of revenues over expenses before capital grants, contributions, and additions to permanent endowments 12,419 88,859 1,682 370 (317) (114) (278) 102,621 Capital transfers (5,132) 4,787 (123) ‐ 468 ‐ ‐ ‐ Increase (decrease) in net assets 7,287 93,646 1,559 370 151 (114) (278) 102,621 Total net position, beginning of year (109,691) 957,534 17,566 11,292 1,993 82 (1,337) 877,439 Total net position, end of year $ (102,404) $ 1,051,180 $ 19,125 $ 11,662 $ 2,144 $ (32) $ (1,615) $ 980,060

Page 43 EL CAMINO HEALTHCARE DISTRICT SUPPLEMENTAL PENSION AND POSTRETIREMENT BENEFIT INFORMATION June 30, 2013

Supplemental pension information – The following table summarizes the funding status of the Hospital’s cash‐ balance pension plan (in thousands): Assets in Excess/ Actuarial (Shortfall) of Accrued AAL as a Liability (AAL) Percentage Actuarial ‐ Projected Assets in of Covered Value of Unit Excess of Funded Covered Payroll Fiscal Year Assets (a) Credit (b) AAL (a‐b) Ratio (a/b) Payroll (c) ((a‐b)/c) 2009$ 103,654 $ 94,352 $ 9,302 109.9%$ 133,654 7.0% 2010$ 90,565 $ 109,373 $ (18,808) 82.8%$ 149,616 ‐12.6% 2011$ 118,424 $ 128,154 $ (9,730) 92.4%$ 178,936 ‐5.4% 2012$ 133,257 $ 150,895 $ (17,638) 88.3%$ 205,695 ‐8.6% 2013$ 138,356 $ 156,175 $ (17,819) 88.6%$ 209,314 ‐8.5%

Supplemental postretirement benefit information – The following table summarizes the funding status of the Hospital’s postretirement medical benefit plan (in thousands): Assets in Excess/ Actuarial (Shortfall) of Accrued Unfunded UAAL as a Liability (AAL) Actuarial Percentage Actuarial ‐ Projected Accrued of Covered Value of Unit Liability Funded Annual Covered Payroll Fiscal Year Assets (a) Credit (b) UAAL (a‐b) Ratio (a/b) Payroll (c) ((a‐b)/c) 2011$ ‐ $ 21,373 $ (21,373) 0.0%$ 42,931 ‐49.8% 2012$ ‐ $ 20,820 $ (20,820) 0.0%$ 45,392 ‐45.9% 2013$ ‐ $ 21,118 $ (21,118) 0.0%$ 32,016 ‐66.0%

The following table summarizes the calculation of the net benefit obligation for the Hospital’s postretirement medical benefit plan (in thousands):

Beginning of End of Year Net Year Net Annual Annual Increase in Net Benefit Benefit Required Actual Postretirement Benefit Obligation Fiscal Year Obligation (a) Contribution (b) Contribution (c) Benefit Cost (d) Obligation (d‐c) ((a)+(d‐c))

2011 $ 14,197 $ 982 $ 774 $ 1,112 $ 338 $ 14,535 2012 $ 14,535 $ 890 $ 727 $ 1,024 $ 297 $ 14,832 2013 $ 14,832 $ 896 $ 468 $ 1,177 $ 709 $ 15,541

Page 44 EL CAMINO HEALTHCARE DISTRICT SUPPLEMENTAL SCHEDULE OF COMMUNITY BENEFIT (UNAUDITED) Year Ended June 30, 2013

The Hospital maintains records to identify and monitor the level of direct community benefit it provides. These records include the charges foregone for providing the patient care furnished under its charity care policy. For the years ended June 30, 2013 and 2012, the estimated costs of providing community benefit in excess of reimbursement from governmental programs were as follows (in thousands): 2013 2012 Unpaid costs of Medi‐Cal programs $ 22,515 $ 13,175 Indigent charity care 2,417 3,154 Other community‐based programs 19,009 13,539 Total community benefits $ 43,941 $ 29,868

In furtherance of its purpose to benefit the community, the Hospital provides numerous other services to the community for which charges are not generated and revenues have not been accounted for in the accompanying consolidated financial statements. These services include providing access to healthcare through interpreters, referral and transport services, healthcare screening, community support groups and health educational programs, and certain home care and hospice programs. The estimated costs of Medicare programs in excess of reimbursement from Medicare were $66,852,000 and $56,810,000 for the years ended June 30, 2013 and 2012, respectively.

The Hospital also provides services to the community through the operations of the El Camino Hospital Auxiliary, Inc. (the “Auxiliary”). Services provided by volunteers of the Auxiliary, free of charge to the community, include assistance and counseling to patients and visitors, provision of scholarship awards to qualifying paramedical students, and daily personal contact with members of the community who are living alone. In 2013 and 2012, these volunteers contributed approximately 122,000 and 126,000 hours, respectively in providing these services, the value of which is not recorded in the accompanying consolidated financial statements.

Page 45 Separator Page

Att 9c - ECHC District - 6-13 AU-C 260 - Draft 9-13-13.pdf

DRAFT 09/13/13

Communication with Those Charged with Governance El Camino Healthcare District

June 30, 2013

COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE

To the Board of Directors El Camino Healthcare District

We have audited the consolidated financial statements of El Camino Healthcare District (the “District”) as of and for the year ended June 30, 2013, and have issued our report thereon dated October __, 2013. Professional standards require that we provide you with the following information related to our audit.

OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA

As stated in our engagement letter dated December 10, 2010, and addendum letter dated June 20, 2012, our responsibility, as described by professional standards, is to form and express an opinion about whether the consolidated financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. We will also report on whether the consolidating statement of net position, consolidating statement of revenues, expenses, and changes in net position, and supplemental pension and postretirement benefit information, presented as supplementary information, are fairly stated, in all material respects, in relation to the consolidated financial statements, as a whole. Our audit of the consolidated financial statements does not relieve you or management of your responsibilities.

Our responsibility is to plan and perform the audit in accordance with auditing standards generally accepted in the United States of America and to design the audit to obtain reasonable, rather than absolute, assurance about whether the consolidated financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over financial reporting. Accordingly, we considered the District’s internal control solely for the purposes of determining our audit procedures and not to provide assurance concerning such internal control.

We are also responsible for communicating significant matters related to the consolidated financial statement audit that, in our professional judgment, are relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

PLANNED SCOPE AND TIMING OF THE AUDIT

We performed the audit according to the planned scope and timing previously communicated to you in our engagement letter dated December 10, 2010, and addendum letter dated June 20, 2012.

Page 1

SIGNIFICANT AUDIT FINDINGS AND ISSUES

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the District are described in Note 1 to the consolidated financial statements. During the year, the District adopted Governmental Accounting Standards Board (“GASB”) Statement No. 61, The Financial Reporting Entity: Omnibus—an amendment of GASB Statements No. 14 and No. 34; and GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. There have been no other new accounting policies adopted and there were no changes in the application of existing policies during 2013. We noted no transactions entered into by the District during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the consolidated financial statements in a different period than when the transaction occurred.

Significant Accounting Estimates

Accounting estimates are an integral part of the consolidated financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the consolidated financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the District’s consolidated financial statements were:

 Management’s estimate of 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. 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. We evaluated the key factors and assumptions used to develop the estimated net realizable amounts. We found management’s basis to be reasonable in relation to the consolidated financial statements taken as a whole.

 Management’s estimate of the provision for uncollectible accounts is recognized based on management’s estimate of amounts that ultimately may be uncollectible. El Camino Hospital provides care to patients without requiring collateral or other security. Patient charges not covered by a third‐party payor are billed directly to the patient if it is determined that the patient has the ability to pay. We evaluated the key factors and assumptions used to develop the provision for uncollectible accounts. We found management’s basis to be reasonable in relation to the consolidated financial statements taken as a whole.

 Management’s estimate of the fair market values of investments in the absence of readily determinable fair values are based on information provided by the fund managers. We have gained an understanding of management’s estimate methodology and examined the documentation supporting this methodology. We evaluated the key factors and assumptions used to develop the fair market value of investments. We found management’s basis to be reasonable in relation to the consolidated financial statements taken as a whole.

 Management’s estimate of uninsured losses for professional liability is recognized based on management’s estimate of historical claims experience. We evaluated the key factors and assumptions used to develop the actuarial estimates of uninsured losses for professional liabilities and workers’ compensation. We found management’s basis to be reasonable in relation to the consolidated financial statements taken as a whole.

Page 2

 Management’s estimate of the minimum pension liability is actuarially determined using assumptions on the long‐term rate of return on pension plan assets, the discount rate used to determine the present value of benefit obligations and the rate of compensation increase. These assumptions are provided by management. We have evaluated the key factors and assumptions used to develop the estimate. We found management’s basis to be reasonable in relation to the consolidated financial statements taken as a whole.

 Management’s estimated liability for workers’ compensation claims is recognized based on management’s estimate of historical claims experience and known activity subsequent to year‐ end. We evaluated the key factors and assumptions used to develop the actuarial estimates of uninsured losses for professional liabilities and workers’ compensation. We found management’s basis to be reasonable in relation to the consolidated financial statements taken as a whole.

 Management’s estimated liability for postretirement medical benefits is recognized based on management’s estimate of historical claims experience and known activity subsequent to year‐ end. We have evaluated the key factors and assumptions used to develop the liability for postretirement medical benefits. We found management’s basis to be reasonable in relation to the consolidated financial statements taken as a whole.

 Management’s estimates of useful lives of capital assets are based on the intended use and are within accounting principles generally accepted in the United States of America. We found management’s basis to be reasonable in relation to the consolidated financial statements taken as a whole.

Actual results could differ from these estimates. In accordance with accounting principles generally accepted in the United States of America, any change in these estimates is reflected in the consolidated financial statements in the year of change.

Consolidated Financial Statement Disclosures

The disclosures in the consolidated financial statements are consistent, clear, and understandable. Certain consolidated financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the District’s consolidated financial statements was the disclosure surrounding related‐party transactions, significant concentration of net patient accounts receivable, investments, capital assets, employee benefit plans, postretirement medical benefits, insurance plans, long‐term debt, and commitment and contingencies.

Significant Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all factual and judgmental misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. There were no corrected and uncorrected financial statement misstatements whose effects, as determined by management, are material, both individually and in the aggregate, to the consolidated financial statements taken as a whole.

Page 3

Disagreements with Management

For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, which could be significant to the District’s consolidated financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Representations Requested from Management

We have requested certain representations from management that are included in the attached management representation letter dated October __, 2013.

Management’s Consultation with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the District’s consolidated financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Independence

We are required to disclose to those charged with governance, in writing, all relationships between the auditors and the District, that in the auditor’s professional judgment, may reasonably be thought to bear on our independence. We know of no such relationships and confirm that, in our professional judgment, we are independent of the District within the meaning of professional standards.

Other Significant Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the District’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

This information is intended solely for the use of the Board of Directors and management of El Camino Healthcare District and is not intended to be, and should not be, used by anyone other than these specified parties.

San Francisco, California October __, 2013

Page 4 Separator Page

Att 9d - ECHC District - 6-13 AU-C 265 - Draft 9-13-13.pdf DRAFT 9-13-13

Communication of Internal Control Related Matters El Camino Healthcare District

June 30, 2013

COMMUNICATION OF INTERNAL CONTROL RELATED MATTERS

To the Board of Directors and Management El Camino Healthcare District

In planning and performing our audit of the consolidated financial statements of El Camino Healthcare District (the “District”) as of and for the year ended June 30, 2013, in accordance with auditing standards generally accepted in the United States of America, we considered the District’s internal control over financial reporting (“internal control”) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. Given these limitations, we did not identify any deficiencies in internal controls that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Our audit was also not designed to identify deficiencies in internal control that might be significant deficiencies. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the following deficiency in the District’s internal control to be a significant deficiency:

Observation: We noted a deficiency in user access within the McKesson STAR systems related to user profiles that have access to these applications that would conflict or prevent strong segregation of duties. These areas of conflict include but are not limited to charge master pricing updates, patient charge entry and crediting, as well as general journal entry creation and editing. This deficiency was also noted as a result of prior year FY2010, FY2011, and FY2012 audit procedures.

Recommendation: Management should review user access controls within the McKesson STAR systems on at least an annual basis to ensure user access rights preserve strong segregation of duties.

Management Response: Although prolonged reliance on interim management contributed to the lack of attention to this issue, permanent management is now in place and will assure that corrective action is taken. We have very strong procedures related to the termination of or separation with an employee and the IT Security department is constantly reviewing and performing internal audits around user access, which feeds into our employee on‐boarding and off‐boarding process. Additionally, management will evaluate current work flows and user access controls within the McKesson STAR systems to create clear segregation of duties and will review access rights annually.

Page 1

We also identified certain deficiencies in internal control that we consider to be control deficiencies:

Observation: In our review of credit balances in net patient accounts receivable, we noted a credit balance in the amount of approximately $1.3 million as of June 30, 2013, that was a result of insurance payments recorded twice in error on June 28, 2013, the last business day of FY2013. While these payments were subsequently reversed out of the cash balance on July 2, 2013, there was no adjusting entry made to correct this error in the net patient accounts receivable balance as of June 30, 2013.

We further noted the credit balances were over $5 million at June 30, 2013, and had not been regularly worked or reconciled on a timely basis.

Recommendation: Management should perform monthly reconciliations of credit balances in net patient accounts receivable, including investigation and resolution of unusual credit balances items.

Management Response: Management agrees that credit balances should be investigated and resolved in a timely fashion and has re‐initiated processes which normally occur throughout the year. Management noted that credit balance accounts are generally worked routinely by an individual who was temporarily reassigned to cover an unexpected leave which created a staffing shortage in the Business Office. The double‐counted insurance payments were corrected the following business day, which happened to cross fiscal years, but was not reported to Accounting so that an adjusting entry could be made to correct year‐ end balances. Patient Accounting management is now aware of the need to communicate any similar issues to Accounting management.

Observation: In our review of the insurance refund liability, the detail of the accrual provided did not agree to the general ledger by approximately $600,000. We further noted that the accrual account did not appear to be reconciled regularly.

Recommendation: Management should perform a monthly reconciliation of the accrual for insurance refund liability.

Management Response: Management agrees that insurance refund liability should be regularly reconciled and with the implementation of the new contracting system (JDA), the system will be able to provide certain monthly reports to be used in performing a monthly reconciliation.

In addition, we noted other matters involving internal control and its operation that we believe may be of potential benefit to the District:

Observation: In our review of compliance with the charity care policy, we noted the policy was not consistently followed. Of the 18 selections made, we noted that the charity care applications were missing from the files for seven of the selections.

Recommendation: Management should implement procedures to ensure that charity care applications are consistently completed for patients who are seeking charity care and all charity care write‐offs comply with the charity care policy.

Page 2

Management Response: Management agrees that practice was not consistent with the written policy. In fiscal year 2012, El Camino Hospital (the “Hospital”) initiated a program of presumptive eligibility, using an outside service company to identify, from credit data and other databases, patients who were of limited financial means. Under this program, patients who met predefined criteria were granted charity care. The seven patients noted above were all granted charity care under this program, and documentation of their eligibility was maintained by the Hospital. In fiscal year 2013, management proposed an amended charity care policy, which the board approved. The amended policy, which became effective at the start of fiscal year 2014, includes languages that bring the policy into alignment with the previously instituted program of presumptive eligibility.

Observation: In our review of the patient accounts receivable details, we observed issues with the financial class categories that in turn, affected the contractual allowances and revenue classifications. We noted that certain patients who should have been classified as self‐pay were mapped to Medi‐Cal or Indemnity, resulting in negative net revenue for some financial classes.

Recommendation: Management should implement procedures to ensure that financial class categories are mapped appropriately and consistently throughout the year.

Management Response: Through routine review of accounting data, management was previously aware of this error and made adjustments to closing entries to account for the misclassification. Management has developed and implemented an additional review procedure to minimize the possibility that an error of this type could recur.

Observation: In our review of the results of the Uniform Commercial Code (“UCC”) search for the District, there were several liens against the District and the Hospital that were unknown to management.

Recommendation: Management should investigate those liens that are not related to any current agreements and to contact the related vendors to remove these liens against the District and the Hospital effectively.

Management Response: Management agrees. Management will contact those vendors where the liens should have been cancelled by the vendors as equipment leases have terminated or were fully paid off. For those few vendors that were not readily known, management will determine why a UCC was filed to assess if the lien was warranted. Management will perform annual “UCC” search for liens against the District and Hospital and validate the liens are current and warranted.

The District’s written responses to the significant deficiency, control deficiencies and other recommendations identified in our audit were not subjected to the auditing procedures applied in the audit of the consolidated financial statements and accordingly we express no opinion on them.

This communication is intended solely for the information and use of the Board of Directors and management of El Camino Healthcare District, and is not intended to be, and should not be, used by anyone other than these specified parties.

San Francisco, California October __, 2013

Page 3 Separator Page

Att 10 - CEO Report (Open).pdf

Date: October 9, 2013 To: El Camino Hospital Board of Directors

From: Tomi Ryba, CEO

Re: CEO Report - Open Session

1

Patient Experience

HCAHPS Composite Organizational FY 14 YTD Performance Goal for each July, August, and Sept HCAHPS Domain (partially completed) Nurse Communication 79 83.14 Staff Responsiveness 68 69.47 Communication On Medications 64 68.55 Organizational Goal 70.3% 73.72%

 Shana Padgett, an internal candidate who currently works in the PaCT office, was selected for the Director of Patient Experience position. Shana comes with patient experience skills, work – related experience and is adept at using Lean to enable performance improvement. In addition, a guest services manager begins September 30th, replacing Wendy Gerbrands. Jan Allen comes to ECH with 10 years of guest service management related skills from Kaiser Permanente.

Continuum of Care

 The month of August showed 39 new patients, 160 visits and 330 telephone/web encounters for our senior health center.

Affordability

 Adventist Health Affiliation Update - As of 7-7-13, Savings Target $1.9M, $3,066,289.61 identified, $2,040,501.60 implemented  Notable Project Reports: o Spine - Demand pricing for Phase II spine implemented 8-5-13 for an annual savings of $470K o Total Joints – Demand pricing for total joint implants implemented 8-5-13 for an annual savings of $940K o Medtronic Heart Valves – negotiated savings of $83K for Mosaic Aortic & Mitral Valves

Wellness and Health

 El Camino Hospital is in the planning stage for a pilot program to offer wellness services to local employers, school districts and cities. The pilot will target 12-14 organizations and will assist them in; a wellness culture audit, HRA data collection, establishment of a wellness culture team and the adoption of wellness policies. Organizations will be linked to a third party online portal for data tracking, biometric screening and health coaching will be offered through partner wellness providers. The project will create a collaborative to share best practices and collect and trend aggregate data on health improvement, in order to learn from each other. Currently

2 communication materials are being developed and the recruitment of organizations will begin shortly. This initiative is an opportunity to learn what employers are currently doing in the area of wellness, to offer them some powerful tools to change culture and engage their employees and to learn and improve as we refine our effort.

 Keas challenge results reviewed  1004 employees registered  122 teams formed  175,140 activities completed  21,617 comments made on social newsfeed  1171 pounds lost  31% increase physical activity & increased their fruit/veggie intake  60% weekly engagement maintained  Enrolled participants represented ECH population by age and gender

Operations

 The Nursing Division is beginning the re-designation process for Magnet Certification, which will be our third designation, due June 1, 2014. A gap analysis will be conducted mid-October.

 The new Video Conferencing Infrastructure went into production this month creating a single centralized solution on the ECH network that is available for all internal video endpoints and has presence on the Internet for connectivity to other capable organizations. Stratus Video On-Demand Interpreting (ODI) also went live across both Los Gatos and Mountain View.

Community Benefit

 The FY 13 El Camino Hospital Community Benefit report was provided to the El Camino Hospital Board of Directors. This year’s investment in the community’s health was $50,575,846 which represents a 56% increase from FY 12. (See Attached)

 Created South Asian Heart Center Advisory Council; enlisted 18 community/business leaders; hosted first meeting on 9/16/2013.

 El Camino Hospital cosponsored a forum on the Affordable Care Act for Small Businesses with the Los Altos Chamber of Commerce. Staff met with members of the Latino Caucus of the Legislature to discuss health policy. The hospital hosted a Summit for Local leaders in Aging with the Los Altos Community Foundation, met with leaders from the City of Saratoga to plan a Health Expo to be held at West Valley College on November 2, and sponsored a major community event with the Los Gatos Rotary. El Camino Hospital physician Shyamali Singhal was honored at the 30th Anniversary Gala of Asian Americans for Community Involvement. Staff

3 accepted ECHD’s “District Transparency Certificate of Excellence” at the California Special District Associations Annual Conference in Monterey. The hospital was also a major sponsor of Valley Medical Center Foundation’s Annual Gala as well as the Angel Island Immigration Foundation’s Anniversary Gala on Sept 27.

Marketing/Advertising

 The Chinese Health Initiative’s marketing campaign featuring the hospital’s minimally invasive technology, Heart and Vascular Institute, Orthopedic Institute and Stroke Center was selected as a finalist in the 2013 Multi-Cultural Health Marketing Awards in the Best Print Ad Category. The winners will be announced on 10/18/2013.

 Awarded Aetna Institute of Quality for Total Joint Replacement—MV and Spine Surgery at MV and LG.

 Among the ECH website’s most visited pages in September were the homepage, Programs and Services and Find a Doctor pages. The top performing Facebook post was regarding “Postpartum Depression” with more than 2,000 views. Facebook fans increased to 6,400. More than 23k minutes were watched on the hospital’s YouTube channel. The top three viewed videos were Maternity Care, Knee Replacement and Chest Pain. The team produced four new videos about breast health, sports medicine, sleep disorders and prostate health to be used on our digital platforms.

 Media coverage this month included coverage on MarketWatch.com and other online outlets about the initiation of the SurTAVI clinical trial comparing the Medtronic CoreValve® System with surgical aortic valve replacement in patients with severe aortic stenosis. The Mountain View Voice featured two El Camino Hospital patients in a story about lesser known signs of stroke, The Los Altos Town Crier published a feature about the 19th annual NICU Reunion, and The Almaden Times and The Los Gatos Weekly Times will cover the 3rd annual Acute Rehabilitation Reunion. ABC Channel 7 highlighted the hospital’s gourmet menu and Chef Jacque Wilson’s culinary expertise in a segment and “60 Minutes” re-aired March of the Machines which highlighted use of robotic technology in healthcare. Additionally, The San Jose Mercury News noted our district as the first in Santa Clara County and the twelfth in the state to receive the Transparency Certificate of Excellence and published a piece on the value of the OATS program for seniors.

4 Separator Page

Att 10.2 - Attachment to CEO Open Report.docx

El Camino Hospital Community Benefit Variance Between FY12 to FY13

FY12 $32,415,828

FY13 $50,575,346

The $18,159,518 increase represents a 56% positive variance.

Financial Assistance (Charity Care), MediCal, Subsidized Health Services (ED, Dialysis, Behavioral Health, Senior Health Center), Clinical Research and Health Professions Education (student interns and externs) account for $17,560,948 of the $18,159,518 increase.

MediCal +$9,340,527

Subsidized Health Services +4,472,884

Financial Assistance +2,421,669

Clinical Research +976,875

Health Professions Ed +348,993

Total +$17,560,948