990 return oforganization...

l efile GRAPHIC p rint - DO NOT PROCESS As Filed Data - DLN: 93493132017632

Form990 Return of Organization Exempt From Income Tax OMB No 1545-0047

Under section 501 ( c), 527, or 4947( a)(1) of the Internal Revenue Code ( except black lung201

0benefit trust or private foundation)

Department of the Treasury • .

Internal Revenue Service 0- The organization may have to use a copy of this return to satisfy state reporting requirements

A For the 2010 calendar year, or tax year beginning 07-01-2010 and ending 06-30-2011

B Check if applicableC Name of organization D Employer identification number

UW MEDICINE NORTHWESTF Address change 91-0637400

Doing Business AsF Name change NORTHWEST HOSPITAL & MEDICAL CENTER E Telephone number

fl Initial return Number and street (or P 0 box if mail is not delivered to street address ) Room/ suite (206)368-3012

(Terminated1550 NORTH 115TH STREET NO D-180

1 Amended return City or town, state or country, and ZIP + 4G Gross receipts $ 277,247,086

SEATTLE, WA 981331 Application pending

F Name and address of principal officerC WILLIAM SCHNEIDER1550 NORTH 115TH STREET NO D-180SEATTLE,WA 98133

I Tax - exempt status F 501(c)(3) 1 501( c) ( ) I (insert no ) 1 4947(a)(1) or F_ 527

J Website : 1- WWW NWHOSPITAL ORG

H(a) Is this a group return foraffliates7l Yes I' No

H(b) Are all affiliates included? F Yes F_ No

If "No," attach a list (see instructions)

H(c) Group exemption number 0-

K Form of organization F Corporation 1 Trust F_ Association 1 Other 0- L Year of formation 1949 M State of legal domicileWA

Summary

1 Briefly describe the organization's mission or most significant activitiesUW MEDICINE NORTHWEST IS A FULL-SERVICE, NON-PROFIT COMMUNITY HOSPITAL

2 Check this box Of- if the organization discontinued its operations or disposed of more than 25% of its net assets

3 Number of voting members of the governing body (Part VI, line 1a) . . . . 3 9

r,f 4 N umber of independent voting members of the governing body (Part VI, line 1 b) . . . 4 9

5 Total number of individuals employed in calendar year 2010 (Part V, line 2a) 5 2,133

6 Total number of volunteers (estimate if necessary) . 6 265

7aTotal unrelated business revenue from Part VIII, column (C), line 12 . 7a 974,305

b Net unrelated business taxable income from Form 990-T, line 34 . 7b 0

Prior Year Current Year

8 Contributions and grants (Part VIII, line 1h) . 630,276 2,896,559

9 Program service revenue (Part VIII, line 2g) 115,332,181 248,579,757

13-10 Investment income (Part VIII, column (A), lines 3, 4, and 7d . . . 20,754 3,590,839

11 Other revenue (Part VIII, column (A), lines 5, 6d, 8c, 9c, 10c, and 11e) -298,427 -196,243

12 Total revenue-add lines 8 through 11 (must equal Part VIII, column (A), line12) . . . . . . . . . . . . . . . . . . 115,684,784 254,870,912

13 Grants and similar amounts paid (Part IX, column (A), lines 1-3) . . . 23,885 5,825,871

14 Benefits paid to or for members (Part IX, column (A), line 4) . 0 0

15 Salaries, other compensation, employee benefits (Part IX, column (A ), lines5-10) 62,186,880 126,838,837

16a Professional fundraising fees (Part IX, column (A), line l le) . 0 0

sCLLJ

b Total fundraising expenses (Part IX, column (D), line 25) 0-0

17 Other expenses (Part IX, column (A), lines h1a-11d, 11f-24f) . . . . 58,649,473 133,731,596

18 Total expenses Add lines 13-17 (must equal Part IX, column (A), line 25) 120,860,238 266,396,304

19 Revenue less expenses Subtract line 18 from line 12 -5,175,454 -11,525,392

Beginning of CurrentEnd of Year

e lYear

l'M 20 Total assets (Part X, line 16) . . . . . . . . . . . 223,053,140 216,241,405

21 Total liabilities (Part X, line 26) . . . . . . . . . . . 136,722,268 140,395,783

ZLL 22 Net assets or fund balances Subtract line 21 from line 20 86,330,872 75,845,622

Signature Block

Under penalties of perjury, I declare that I have examined this return, including accoknowledge and belief, it is true, correct, and complete. Declaration of preparer (otherknowledge.

SignSignature of officer

Here BRUCE FERGUSON VP AND CFOType or print name and title

Print/Type Preparers signaturepreparers name SARA ELIZABETH J SARA E

PaidHYRE HYRE

Firm's name CLARK NUBER PS

PreparerUse Only Firm's address 10900 NE 4TH STREET SUITE 1700

May the IRS discuss this return with the preparer shown above? (see instructs

Form 990 (2010)

Statement of Program Service AccomplishmentsCheck if Schedule 0 contains a response to any question in this Part III . F

1 Briefly describe the organization's mission

OUR MISSION IS TO RAISE THE LONG-TERM HEALTH STATUS OF OUR COMMUNITY BY PROVIDING PERSONALIZED, QUALITYCARE WITH COMPASSION, DIGNITY, AND RESPECT

2 Did the organization undertake any significant program services during the year which were not listed onthe prior Form 990 or 990-EZ? . . . . . . . . . . . . . . . . . . . . fl Yes F No

If"Yes,"describe these new services on Schedule 0

3 Did the organization cease conducting, or make significant changes in how it conducts, any programservices? . . . . . . . . . . . . . . . . . . . . . . . . . . F Yes F No

If"Yes,"describe these changes on Schedule 0

4 Describe the exempt purpose achievements for each of the organization's three largest program services by expensesSection 501(c)(3) and 501(c)(4) organizations and section 4947(a)(1) trusts are required to report the amount of grants andallocations to others, the total expenses, and revenue, if any, for each program service reported

4a (Code ) (Expenses $ 239,674,074 including grants of $ 5,825,871 ) (Revenue $ 248,579,757

UW MEDICINE NORTHWEST, DOING BUSINESS AS NORTHWEST HOSPITAL & MEDICAL CENTER (NWHMC), IS A FULL-SERVICE, NON-PROFIT COMMUNITY HOSPITAL,OFFERING COMPREHENSIVE MEDICAL, SURGICAL AND THERAPEUTIC SERVICES WITH 281 BEDS, MORE THAN 1,700 EMPLOYEES AND A WORLD-CLASS MEDICALSTAFF, WE PROVIDE INNOVATIVE, TECHNOLOGICALLY ADVANCED CARE ON A PATIENT-FRIENDLY, EASY-ACCESS CAMPUS JUST NORTH OF SEATTLE - FROMPRIMARY CARE TO HIGHLY SPECIALIZED CARE, NORTHWEST HOSPITAL PROVIDES EVERYTHING YOU WOULD NEED IN ONE PLACE - A NETWORK OF THE BESTPHYSICIANS AND CLINICAL PROFESSIONALS THE REGION HAS TO OFFER - AN ENVIRONMENT OF CARE THAT IS WARM, COMFORTABLE AND STATE-OF-THE-ART -INPATIENT, OUTPATIENT AND 24-HOUR EMERGENCY SERVICES AS THE WINNER OF THE HEALTHGRADES DISTINGUISHED HOSPITAL AWARD FOR PATIENT SAFETYFOR THE LAST THREE YEARS IN A ROW, WE ARE ALSO ONE OF THE SAFEST PLACES TO GET CARE - AMONG THE TOP 5% IN THE COUNTRY SINCE 1960, NWHMCHAS PIONEERED TREATMENTS AND PROCEDURES THAT HAVE BECOME STANDARDS OF CARE IN OUR STATE AND BEYOND - OUR 24-HOUR EMERGENCYDEPARTMENT FEATURES ALL-PRIVATE ROOMS, LEADING-EDGE TECHNOLOGY AND EQUIPMENT, AND ONE OF THE FASTEST TIMES-TO-TREATMENT IN THE STATEFOR HEART ATTACK AND STROKE PATIENTS - WE ARE A NOTED NATIONAL LEADER IN CANCER TREATMENT, INCLUDING BRAIN, BREAST, GYNECOLOGIC ANDPROSTATE CANCERS - WE HAVE ESTABLISHED PREEMINENT PROGRAMS IN CARDIOLOGY, CARDIAC SURGERY AND CARDIAC REHABILITATION, IN PARTNERSHIPWITH THE UNIVERSITY OF WASHINGTON MEDICAL CENTER AND OTHER REGIONAL ORGANIZATIONS - THE FIRST TO INTRODUCE THE LABOR, DELIVERY, RECOVERYAND POSTPARTUM BIRTHING SUITE TO THE REGION, WE WELCOME MORE THAN 1,100 BABIES IN OUR CHILDBIRTH CENTER EACH YEAR - OUR SEATTLE BREASTCENTER IS ONE OF ONLY A FEW IN THE AREA TO OFFER ALL-DIGITAL MAMMOGRAPHY, BOARD-CERTIFIED BREAST RADIOLOGISTS, AND BREAST MRI AND MRIBIOPSY ALL UNDER ONE ROOF - OUR AWARD-WINNING NEUROSCIENCES PROGRAMS INCLUDE STROKE, DEEP BRAIN STIMULATION AND GAMMA KNIFERADIOSURGERY FOR NON-INVASIVE TREATMENT OF BRAIN DISEASES AND DISORDERS - WE ARE A VITAL SOURCE OF COMMUNITY HEALTH EDUCATION ANDWELLNESS, OFFERING CLASSES, SUPPORT GROUPS, SCREENINGS AND OTHER RESOURCES NWHMC'S MISSION IS TO RAISE THE LONG-TERM HEALTH STATUS OFOUR COMMUNITY BY PROVIDING PERSONALIZED, QUALITY CARE WITH COMPASSION, DIGNITY, AND RESPECT THE VISION OF NWHMC IS A COMMUNITY OFCARING HEALTH PROFESSIONALS, VALUED AND RECOGNIZED FOR PROMOTING WELLNESS THROUGH EARLY DETECTION AND PREVENTION, MINIMALLY INVASIVEINTERVENTIONS, AND INNOVATIVE CLINICAL PRACTICES NWHMC PROVIDES COMPLETE MEDICAL AND SURGICAL SERVICES IN BOTH INPATIENT AND OUTPATIENTSETTINGS, AT TWO CONVENIENT LOCATIONS - OUR MAIN HOSPITAL CAMPUS AND THE NORTHWEST OUTPATIENT MEDICAL CENTER WE OFFER A FULL RANGE OFSERVICES INCLUDING THE FOLLOWING - BARIATRIC SURGERY- CANCER CARE- CARDIAC CARE- CENTER FOR MEDICAL REHABILITATION- CHILDBIRTH CENTER-COMMUNITY HEALTH EDUCATION & SIMULATION CENTER- DIAGNOSTIC IMAGING- EMERGENCY DEPARTMENT- GAMMA KNIFE CENTER- GEROPSYCHIATRICCENTER- INPATIENT TEAM- NEUROSCIENCES- NORTHWEST CLINICAL LABORATORY- PHYSICAL THERAPY- PREVENTATIVE HEALTH & WELLNESS SERVICES- ROBOTICSURGICAL SERVICES- SEATTLE BREAST CENTER- SLEEP CENTER- SPORTS MEDICINE- STROKE PROGRAM- SURGICAL SERVICES- WEIGHT LOSS SURGERY- WOUNDCARENWHMC IS COMMITTED TO ONGOING PERFORMANCE IMPROVEMENT AND QUALITY PATIENT CARE THE FOCUS OF THESE EFFORTS HAS BEEN TO PROVIDE ANEFFECTIVE AND CONTINUOUS PROGRAM TO MEASURE, ASSESS AND IMPROVE PERFORMANCE, PATIENT SAFETY AND THE SAFETY OF THE WORK ENVIRONMENTTHE HIGHLY SUCCESSFUL QUALITY EFFORT AT NWHMC HAS RESULTED IN A NUMBER OF PRESTIGIOUS LOCAL AND NATIONAL QUALITY AWARDS, AND HAS HELPEDTHE HOSPITAL EARN A REPUTATION AS ONE OF THE SAFEST, HIGHEST QUALITY PROVIDERS IN THE PACIFIC NORTHWEST NWHMC IS ALSO AN ACTIVE PARTICIPANTIN NUMEROUS LOCAL, STATE AND NATIONAL QUALITY INITIATIVES NWHMC WAS ALSO AN EARLY ADOPTER/"DRY RUN" PARTICIPANT IN THE CMS NATIONALCONSUMER ASSESSMENT OF CARE (HCAHPS PATIENT SATISFACTION SURVEY) SOME OF THE VOLUNTARY QUALITY INITIATIVES IN WHICH NWHMC ACTIVELYPARTICIPATES INCLUDE - THE INSTITUTE FOR HEALTHCARE IMPROVEMENT'S 100K LIVES AND 5 MILLION LIVES CAMPAIGN- LEAPFROG HOSPITAL QUALITY &PATIENT SAFETY SURVEY - AS AN EARLY ADVOCATE OF THE LEAPFROG STANDARDS NWHMC WAS ONE OF THE FIRST HOSPITALS IN THE AREA TO MEET THE ICULEAP- QUALIS SURGICAL CARE IMPROVEMENT PROJECT COLLABORATIVE- CMS HCAHPS (PATIENT PERSPECTIVES ON CARE) SURVEY- HQA QUALITY INDICATORPROGRAM- JCAHO CORE MEASURES PROGRAM- JCAHO NATIONAL PATIENT SAFETY GOALS- WA STATE COAP QUALITY IMPROVEMENT PROGRAM FORINTERVENTIONALCARDIOLOGY AND CARDIOTHORACIC SURGERY- WASHINGTON STATE TRAUMA REGISTRY- WASHINGTON STATE BIRTH DEFECTS SURVEILLANCEPROGRAMAT NWHMC, WE BELIEVE THAT INFORMATION AND EDUCATION ARE VITAL PARTS OF THE HEALTHCARE EXPERIENCE FOR EVERY PERSON WE OFFER AWIDE VARIETY OF CLASSES, SUPPORT GROUPS AND OTHER PROGRAMS MANY ARE COMPLIMENTARY WHETHER YOU ARE PLANNING A PREGNANCY, WORKING TOMAINTAIN GOOD HEALTH, LEARNING TO LIVE WITH A CHRONIC DISEASE OR COPING WITH A NEW DIAGNOSIS, OUR TRAINED EDUCATORS AND EXPERTS PROVIDETHE LATEST INFORMATION AND A WEALTH OF UNDERSTANDING AS AN INTEGRAL PART OF NWHMC'S CHARITABLE MISSION, THE HOSPITAL PROVIDES PATIENTCARE TO INDIVIDUALS IN THE COMMUNITIES IT SERVES WHO DO NOT HAVE ADEQUATE RESOURCES TO PAY FOR HEALTH CARE SERVICES CHARITY CARE HASBEEN MEASURED IN TERMS OF CHARGES FORGONE FOR SERVICES FURNISHED UNDER THE CHARITY CARE POLICY THE FORGONE CHARGES FOR SERVICES TOPERSONS UNABLE TO PAY WERE $3,357,547 IN 2011 IN ADDITION TO CHARITY CARE, NWHMC PROVIDES CARE AT LESS THAN COST FOR MEDICAID ANDMEDICARE PATIENTS LASTLY NWHMC PROVIDES A VARIETY OF COMMUNITY SERVICES AT NO COST TO THE COMMUNITY INCLUDING BUT LIMITED TOCOMMUNITY EDUCATION, COMMUNITY HEALTH SERVICES AND SUPPORT GROUPS, SENIOR WELLNESS PROGRAMS, PATIENT TRANSPORTATION AND CANCERPROGRAMS

4b (Code ) (Expenses $ including grants of $ ) (Revenue $

4c (Code ) (Expenses $ including grants of $ ) (Revenue $

4d Other program services (Describe in Schedule 0 )

(Expenses $ including grants of $ ) (Revenue $

4e Total program service expensesl-$ 239,674,074

Form 990 (2010)

Form 990 (2010)

Checklist of Required Schedules

Yes No

1 Is the organization described in section 501(c)(3) or4947(a)(1) (other than a private foundation)? If "Yes," Yes

complete Schedule As . . . . . . . . . . . . . . . . . . . 1

2 Is the organization required to complete Schedule B, Schedule of Contributors (see instruction) ? 2 Yes

3 Did the organization engage in direct or indirect political campaign activities on behalf of or in opposition to No

candidates for public office? If "Yes, "complete Schedule C, Part Is . . . . . . . . .

4 Section 501 ( c)(3) organizations . Did the organization engage in lobbying activities, or have a section 501(h) Yes

election in effect during the tax year? If "Yes, "complete Schedule C, Part II 4

5 Is the organization a section 501(c)(4), 501(c)(5), or 501(c)(6) organization that receives membership dues,assessments, or similar amounts as defined in Revenue Procedure 98-19? If "Yes, "complete Schedule C, PartIII . . . . . . . . . . . . . . . . . . . . . . . 5

6 Did the organization maintain any donor advised funds or any similar funds or accounts where donors have theright to provide advice on the distribution or investment of amounts in such funds or accounts? If "Yes,"complete

N oSchedule D, Part Is . . . . . . . . . . . . . . . . . . . . . . 6

7 Did the organization receive or hold a conservation easement, including easements to preserve open space,No

the environment, historic land areas or historic structures? If "Yes," completeSchedu/e D, Part II 7

8 Did the organization maintain collections of works of art, historical treasures, or other similar assets? If "Yes,"N o

complete Schedule D, Part III . . . . . . . . . . . . . . . . . . . . 8

9 Did the organization report an amount in Part X, line 21, serve as a custodian for amounts not listed in Part X, orprovide credit counseling, debt management, credit repair, or debt negotiation services? If "Yes,"

complete Schedule D, Part IV . . . . . . . . . . . . . . . . . . 9 N o

10 Did the organization, directly or through a related organization, hold assets in term, permanent,or quasi- 10 Noendowments? If "Yes,"complete Schedule D, Part VS I

11 If the organization's answer to any of the following questions is 'Yes/then complete Schedule D, Parts VI, VII,VIII, IX, or X as applicable

a Did the organization report an amount for land, buildings, and equipment in Part X, linel0? If "Yes,"complete

Schedule D, Part VI.95 11a Yes

b Did the organization report an amount for investments-other securities in Part X, line 12 that is 5% or more of

its total assets reported in Part X, line 16? If "Yes," completeSchedu/e D, Part VII. 11b No

c Did the organization report an amount for investments-program related in Part X, line 13 that is 5% or more of

its total assets reported in Part X, line 16? If "Yes, "complete Schedule D, Part VIII.95 11c

d Did the organization report an amount for other assets in Part X, line 15 that is 5% or more of its total assets

reported in Part X, line 16? If "Yes," complete Schedule D, Part IX. 11d Yes

e Did the organization report an amount for other liabilities in Part X, line 25? If "Yes," complete Schedule D, PartX.95lie Yes

f Did the organization's separate or consolidated financial statements for the tax year include a footnote thataddresses the organization's liability for uncertain tax positions under FIN 48 (ASC 740)? If "Yes,"complete 11f NoSchedule D, Part X.95

12a Did the organization obtain separate, independent audited financial statements for the tax year? If "Yes,"

complete Schedule D, Parts XI, XII, and XIII 12a N o

b Was the organization included in consolidated, independent audited financial statements for the tax year? If"Yes,"and if the organization answered 'No'to line 12a, then completing Schedule D, Parts XI, XII, and XIII is optional 12b Yes

13 Is the organization a school described in section 170(b)(1)(A)(ii)? If "Yes, "complete Schedule E13 No

14a Did the organization maintain an office, employees, or agents outside of the United States? . 14a No

b Did the organization have aggregate revenues or expenses of more than $10,000 from grantmaking, fundraising, business, and programYes

service activities outside the United States? If "Yes," complete Schedule F, Parts I and IV 19^ 14b

15 Did the organization report on Part IX, column (A ), line 3, more than $5,000 of grants or assistance to any

organization or entity located outside the U S ? If "Yes," complete Schedule F, Parts II and IV . . 95 1 15 No

16 Did the organization report on Part IX, column (A ), line 3, more than $5,000 of aggregate grants or assistance to

individuals located outside the U S ? If "Yes," completeSchedu/e F, Parts III and IV . IN 116 No

17 Did the organization report a total of more than $15,000, of expenses for professional fundraising services on 17 NoPart IX, column (A), lines 6 and 11e? If "Yes," completeSchedu/e G, PartI (see instructions)

18 Did the organization report more than $15,000 total of fundraising event gross income and contributions on PartVIII, lines 1c and 8a? If "Yes," completeSchedu/e G, Part II . . . . . . . . . 18 No

19 Did the organization report more than $15,000 of gross income from gaming activities on Part VIII, line 9a? If 19 No"Yes,"complete Schedule G, Part III . . . . . . . . . . . . . . . . . . .

20a Did the organization operate one or more hospitals? If "Yes, "complete Schedule H . 19 20a Yes

b If "Yes" to line 20a, did the organization attach its audited financial statement to this return? Note . Some Form 20b Yes990 filers that operate one or more hospitals must attach audited financial statements (see instructions)

Form 990 (2010)

Form 990 (2010)

Checklist of Required Schedules (continued)

21 Did the organization report more than $5,000 of grants and other assistance to governments and organizations in 21 Yes

the United States on Part IX, column (A), line 1? If "Yes," complete Schedule I, Parts I and II . .

22 Did the organization report more than $5,000 of grants and other assistance to individuals in the United States 22on Part IX, column (A), line 2? If "Yes," complete Schedule I, Parts I and III .

No

23 Did the organization answer "Yes" to Part VII, Section A, questions 3, 4, or 5, about compensation of theorganization's current and former officers, directors, trustees, key employees, and highest compensated 23 Yes

employees? If "Yes,"completeScheduleJ . . . . . . . . . . . . . . . .

24a Did the organization have a tax-exempt bond issue with an outstanding principal amount of more than $100,000as of the last day of the year, that was issued after December 31, 2002? If"Yes," answer lines 24b-24d and

complete Schedule K. If "No,"go to line 25 . . . . . . . . . . . . . . . 24a Yes

b Did the organization invest any proceeds of tax-exempt bonds beyond a temporary period exception? . 24b No

c Did the organization maintain an escrow account other than a refunding escrow at any time during the yearto defease any tax-exempt bonds? . 24c No

d Did the organization act as an "on behalf of" issuer for bonds outstanding at any time during the year? 24d No

25a Section 501(c)( 3) and 501 ( c)(4) organizations . Did the organization engage in an excess benefit transaction with

a disqualified person during the year? If "Yes," complete Schedule L, Part I . 25a No

b Is the organization aware that it engaged in an excess benefit transaction with a disqualified person in a prioryear, and that the transaction has not been reported on any of the organization's prior Forms 990 or 990-EZ? If 25b No

"Yes,"complete Schedule L, Part I . . . . . . . . . . . . . . . 95

26 Was a loan to or by a current or former officer, director, trustee, key employee, highly compensated employee, ordisqualified person outstanding as of the end of the organization's tax year? If "Yes," complete Schedule L, 26 NoPart II . . . . . . . . . . . . . . . . . . . . . . . . . . .

27 Did the organization provide a grant or other assistance to an officer, director, trustee, key employee, substantialcontributor, or a grant selection committee member, or to a person related to such an individual? If "Yes," 27 No

complete Schedule L, Part III . . . . . . . . . . . . . . 19

28 Was the organization a party to a business transaction with one of the following parties? (see Schedule L, Part IVinstructions for applicable filing thresholds, conditions, and exceptions)

a A current or former officer, director, trustee, or key employee? If "Yes,"complete Schedule L, Part

IV . . . . . . . . . . . . . . . . . . . . . . . . . 28a No

b A family member of a current or former officer, director, trustee, or key employee? If "Yes,"

complete Schedule L, Part IV . . . . . . . . . . . . . . . . . . . 28b No

c A n entity of which a current or former officer, director, trustee, or key employee (or a family member thereof) was

an officer, director, trustee, or direct or indirect owner? If "Yes," complete Schedule L, Part IV . 28c Yes

29 Did the organization receive more than $25,000 in non-cash contributions? If "Yes, "complete Schedule M 29 No

30 Did the organization receive contributions of art, historical treasures, or other similar assets, or qualifiedconservation contributions? If "Yes, "complete Schedule M . . . . . . . . . . . 30 No

31 Did the organization liquidate, terminate, or dissolve and cease operations? If "Yes," complete Schedule N,Part I . . . . . . . . . . . . . . . . . . . . . . . . . . 31 N o

32 Did the organization sell, exchange, dispose of, or transfer more than 25% of its net assets? If "Yes, " completeSchedule N, Part II . . . . . . . . . . . . . . . . . . . . . . 32 N o

33 Did the organization own 100% of an entity disregarded as separate from the organization under RegulationsISIsections 301 7701-2 and 301 7701-3? If "Yes,"complete Schedule R, PartI . . . . . . . . 33 No

34 Was the organization related to any tax-exempt or taxable entity? If "Yes,"complete Schedule R, Parts II, III, IV,

and V, line 1 . . . . . . . . . . . . . . . . . . . . . IN 134 Yes

35 Is any related organization a controlled entity within the meaning of section 512(b)(13)? .35 Yes

a Did the organization receive any payment from or engage in any transaction with a controlled entity within the

meaning of section 512(b)(13)? If "Yes,"complete Schedule R, Part V, line2 . . . 99 FYes fNo

36 Section 501(c)( 3) organizations . Did the organization make any transfers to an exempt non-charitable related

organization? If "Yes,"complete Schedule R, Part t<, line 2 . . . . . . . . . . . 95 36 No

37 Did the organization conduct more than 5% of its activities through an entity that is not a related organization

and that is treated as a partnership for federal income tax purposes? If "Yes," complete Schedule R, Part VI 37 No

38 Did the organization complete Schedule 0 and provide explanations in Schedule 0 for Part VI, lines 11 and 19?Note . All Form 990 filers are required to complete Schedule 0 . . . . . . . . . . 38 Yes

Form 990 (2010)

Form 990 (2010)

KEWStatements Regarding Other IRS Filings and Tax Compliance

Check if Schedule 0 contains a response to any question in this Part V

Yes I No

la Enter the number reported in Box 3 of Form 1096 Enter-0- if not applicablela 285

b Enter the number of Forms W-2G included in line la Enter-0- if not applicablelb 0

c Did the organization comply with backup withholding rules for reportable payments to vendors and reportablegaming (gambling) winnings to prize winners? . . . . . . . . . . . . . . . . . 1c Yes

2a Enter the number of employees reported on Form W-3, Transmittal of Wage and TaxStatements filed for the calendar year ending with or within the year covered by thisreturn . . . . . . . . . . . . . . . . . . . . 2a 2,133

b If at least one is reported on line 2a, did the organization file all required federal employment tax returns?2b Yes

Note . If the sum of lines la and 2a is greater than 250, you may be required to e-file (see instructions)

3a Did the organization have unrelated business gross income of $ 1,000 or more during theyear? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3a Yes

b If "Yes," has it filed a Form 990-T for this year? If "No,"provide an explanation in Schedule 0 . . . . 3b Yes

4a At any time during the calendar year, did the organization have an interest in, or a signature or other authorityover, a financial account in a foreign country (such as a bank account, securities account, or other financialaccount)? . . . . 4a Yes

b If "Yes," enter the name of the foreign country .CJSee instructions for filing requirements for Form TD F 90-22 1, Report of Foreign Bank and Financial Accounts

5a Was the organization a party to a prohibited tax shelter transaction at any time during the tax year? . .

b Did any taxable party notify the organization that it was or is a party to a prohibited tax shelter transaction?

c If"Yes" to line 5a or 5b, did the organization file Form 8886-T?

6a Does the organization have annual gross receipts that are normally greater than $100,000, and did theorganization solicit any contributions that were not tax deductible? . .

b If "Yes," did the organization include with every solicitation an express statement that such contributions or giftswere not tax deductible? . . . . . . . . . . . . . . . . . . . . . . . .

7 Organizations that may receive deductible contributions under section 170(c).

a Did the organization receive a payment in excess of $75 made partly as a contribution and partly for goods andservices provided to the payor? .

b If "Yes," did the organization notify the donor of the value of the goods or services provided? . .

c Did the organization sell, exchange, or otherwise dispose of tangible personal property for which it was required tofile Form 82827 . . . . . . . . . . . . . . . . . . . . . . . . . . .

d If"Yes,"indicate the number of Forms 8282 filed during the year . I 7d

e Did the organization receive any funds, directly or indirectly, to pay premiums on a personal benefitcontract? . . . . . . . . . . . . . . . . . . . . . . . . . .

f Did the organization, during the year, pay premiums, directly or indirectly, on a personal benefit contract?

g If the organization received a contribution of qualified intellectual property, did the organization file Form 8899 asrequired? .

h If the organization received a contribution of cars, boats, airplanes, or other vehicles, did the organization file aForm 1098-C? .

8 Sponsoring organizations maintaining donor advised funds and section 509(a )( 3) supporting organizations. Didthe supporting organization, or a donor advised fund maintained by a sponsoring organization, have excessbusiness holdings at any time during the year? .

9 Sponsoring organizations maintaining donor advised funds.

a Did the organization make any taxable distributions under section 4966?

b Did the organization make a distribution to a donor, donor advisor, or related person?

10 Section 501(c)( 7) organizations. Enter

a Initiation fees and capital contributions included on Part VIII, line 12 .

b Gross receipts, included on Form 990, Part VIII, line 12, for public use of clubfacilities

11 Section 501(c)( 12) organizations. Enter

a Gross income from members or shareholders . .

b Gross income from other sources (Do not net amounts due or paid to other sourcesagainst amounts due or received from them ) . . . . . . . .

10a

10b

11a

11b

12a Section 4947( a)(1) non-exempt charitable trusts. Is the organization filing Form 990 in lieu of Form 1041?

b If "Yes," enter the amount of tax-exempt interest received or accrued during theyear 12b

13 Section 501(c)( 29) qualified nonprofit health insurance issuers.

a Is the organization licensed to issue qualified health plans in more than one state?Note . See the instructions for additional information the organization must report on Schedule 0

5a N o

5b N o

5c

6a N o

6b

7a N o

7b

7c N o

7e N o

7f N o

7g

7h

8

9a

9b

12a

13a

b Enter the amount of reserves the organization is required to maintain by the statesin which the organization is licensed to issue qualified health plans 13b

c Enter the amount of reserves on hand13c

14a Did the organization receive any payments for indoor tanning services during the tax year? . 14a No

b If "Yes," has it filed a Form 720 to report these payments? If "No,"provide an explanation in Schedule 0 14b

Form 990 (2010)

Form 990 ( 2010)

Lam Governance , Management, and Disclosure For each "Yes" response to lines 2 through 7b below, and fora "No" response to lines 8a, 8b, or 10b below, describe the circumstances, processes, or changes in Schedule0. See instructions.Check if Schedule 0 contains a response to any question in this Part VI .F

Section A . Governing Body and Management

Yes No

la Enter the number of voting members of the governing body at the end of the taxyear . . . . . . . . . . . . . la 9

b Enter the number of voting members included in line la, above, who areindependent . . . . . . . . . . . . . . . . lb 9

2 Did any officer, director, trustee, or key employee have a family relationship or a business relationship with anyother officer, director, trustee, or key employee? 2 No

3 Did the organization delegate control over management duties customarily performed by or under the directsupervision of officers, directors or trustees, or key employees to a management company or other person? 3 No

4 Did the organization make any significant changes to its governing documents since the prior Form 990 wasfiled? 4 No

5 Did the organization become aware during the year of a significant diversion of the organization's assets? 5 No

6 Does the organization have members or stockholders? 6 Yes

7a Does the organization have members, stockholders, or other persons who may elect one or more members of thegoverning body? . . . . . . . . . . . . . . . . . . . . . . . . 7a Yes

b Are any decisions of the governing body subject to approval by members, stockholders, or other persons? 7b Yes

8 Did the organization contemporaneously document the meetings held or written actions undertaken during theyear by the following

a The governing body? 8a Yes

b Each committee with authority to act on behalf of the governing body? 8b Yes

9 Is there any officer, director, trustee, or key employee listed in Part VII, Section A, who cannot be reached at theorganization's mailing address? If"Yes," provide the names and addresses in Schedule 0 . 9 No

Section B. Policies (This Section B requests information about policies not required by the InternalRevenue Code.)

Yes No

10a Does the organization have local chapters, branches, or affiliates? 10a No

b If"Yes,"does the organization have written policies and procedures governing the activities of such chapters,affiliates, and branches to ensure their operations are consistent with those of the organization? . 10b

11a Has the organization provided a copy of this Form 990 to all members of its governing body before filing the form?11a Yes

b Describe in Schedule 0 the process, if any, used by the organization to review this Form 990

12a Does the organization have a written conflict of interest policy? If "No,"go to line 13 . 12a Yes

b Are officers, directors or trustees, and key employees required to disclose annually interests that could give riseto conflicts? . . . . . . . . . . . . . . . . . . . . . . . . . . 12b Yes

c Does the organization regularly and consistently monitor and enforce compliance with the policy? If "Yes,"describe in Schedule 0 how this is done . . . . . . . . . . . . . . . . . . . 12c Yes

13 Does the organization have a written whistleblower policy? 13 Yes

14 Does the organization have a written document retention and destruction policy? . 14 Yes

15 Did the process for determining compensation of the following persons include a review and approval byindependent persons, comparability data, and contemporaneous substantiation of the deliberation and decision?

a The organization's CEO, Executive Director, or top management official 15a Yes

b Other officers or key employees of the organization 15b Yes

If "Yes" to line 15a or 15b, describe the process in Schedule 0 (See instructions

16a Did the organization invest in, contribute assets to, or participate in a joint venture or similar arrangement with ataxable entity during the year? 16a Yes

b If "Yes," has the organization adopted a written policy or procedure requiring the organization to evaluate itsparticipation in joint venture arrangements under applicable federal tax law, and taken steps to safeguard theorganization's exempt status with respect to such arrangements? 16b Yes

Section C. Disclosure

17 List the States with which a copy of this Form 990 is required to be filed- WA

18 Section 6104 requires an organization to make its Form 1023 (or 1024 if applicable), 990, and 990-T (501(c)(3 )s only) available for public inspection Indicate how you make these available Check all that apply

fl Own website fi Another's website F Upon request

19 Describe in Schedule 0 whether (and if so, how), the organization makes its governing documents, conflict ofinterest policy, and financial statements available to the public See Additional Data Table

20 State the name, physical address, and telephone number of the person who possesses the books and records of the organization 0-

BRIAN DAVID1550 NORTH 115TH STREET D-180SEATTLE, WA 98133(206)368-3012

Form 990 (2010)

Form 990 (2010)

Compensation of Officers , Directors ,Trustees, Key Employees, Highest CompensatedEmployees, and Independent ContractorsCheck if Schedule 0 contains a response to any question in this Part VII .F

Section A. Officers, Directors, Trustees, Kev Employees, and Highest Compensated Employees

la Complete this table for all persons required to be listed Report compensation for the calendar year ending with or within the organization'stax year* List all of the organization's current officers, directors, trustees (whether individuals or organizations), regardless of amountof compensation, and current key employees Enter -0- in columns (D), (E), and (F) if no compensation was paid

* List all of the organization's current key employees, if any See instructions for definition of "key employee "

* List the organization's five current highest compensated employees (other than an officer, director, trustee or key employee)who received reportable compensation (Box 5 of Form W-2 and/or Box 7 of Form 1099-MISC) of more than $100,000 from theorganization and any related organizations

* List all of the organization's former officers, key employees, and highest compensated employees who received more than $100,000of reportable compensation from the organization and any related organizations

* List all of the organization's former directors or trustees that received, in the capacity as a former director or trustee of theorganization, more than $10,000 of reportable compensation from the organization and any related organizations

List persons in the following order individual trustees or directors , institutional trustees , officers, key employees, highestcompensated employees , and former such persons

1 Check this box if neither the organization nor any related organization compensated any current officer, director, or trustee

(A) (B) (C) (D) (E) (F)Name and Title Average Position (check all Reportable Reportable Estimated

hours that apply) compensation compensation amount of otherper from the from related compensationweek _ 3 Z organization ( W- organizations from the

(describeq

2/1099-MISC) (W- 2/1099- organization andhours

CD ^4 MISC ) related

for =• 'orD 0 Ta organizationsrelated 5 -0 5organizations

m-

a -0m a,

inSchedule

0)

(1) PETER R EVANS1 00 X 0 0 0

CHAIR

(2) SCOTT L HARDMAN1 00 X 0 0 0

VICE CHAIR

(3) JAMES K ANDERSON1 00 X 0 0 0

TRUSTEE

(4) TERRY L LENGFELDER1 00 X 0 0 0

TRUSTEE

(5) EDWARD J BUCHWALD1 00 X 0 0 0

TRUSTEE

(6) SHAIZA DAMJI1 00 X 0 0 0

TRUSTEE

(7) WILLIAM J REX1 00 X 0 0 0

TRUSTEE

(8) MARIAN SVINTH1 00 X 0 0 0

TRUSTEE

(9) PAMELA FOWLER1 00 X 0 0 0

TRUSTEE

(10) C WILLIAM SCHNEIDER1 00 X 0 778,140 541,915

PRESIDENT & CEO

(11) BRUCE FERGUSON1 00 X 0 0 0

VP, CFO, SECRETARY/TREASURER

(12) GREG SCHROEDL1 00 X 0 277,317 149,820

VP, CQO

(13) GAYLE WARD1 00 X 0 256,091 140,878

VP, CNO

(14) ANNA KARIN ANDREWS1 00 X 0 365,007 178,831

VP, COO

(15) MICHAEL SCHEER40 00 X 0 124,646 3,326

CFO (6/1/10-10/1/10)

(16) DANIEL L DOWNEY40 00 X 363,402 0 15,864

PHYSICIAN

Form 990 (2010)

Form 990 (2010)

Section A. Officers, Directors , Trustees, Key Employees, and Highest Compensated Employees (continued)

(A) (B) (C) (D) ( E) (F)Name and Title Average Position ( check all Reportable Reportable Estimated

hours that apply) compensation compensation amount of otherper from the from related compensationweek _ 3 organization ( W- organizations from the

(describe 9 2/1099-MISC) (W- 2/1099- organization andhours Q2_ 74 4 MISC) relatedfor C =•0

2

(D 'oCD T organizationsrelated r' 5 _0organizations

m-

E Dm a,

inSchedule &

0)

(17) KATHRYN F MCGONIGLE40 00 X 353,499 0 5,930

PHYSICIAN

(18) HOWARD G MUNTZ40 00 X 346,824 0 5,690

PHYSICIAN

(19) CHAU-SU OU40 00 X 340,344 0 20,249

PHYSICIAN

(20) LYNN M KEENAN40 00 X 327,275 0 10,005

PHYSICIAN

(21) ROBERT STEIGMEYERX 0 1,040,692 285,865

FORMER SR VP OF OPS & FIN

lb Sub-Total . . . . . . . . . . . . . . . . .

c Total from continuation sheets to Part VII, Section A . . . . 0-

d Total ( add lines lb and 1c) . . . . . . . . . . . . 0- 1,731,344 2,841,893 1,358,373

Total number of individuals (including but not limited to those listed above) who received more than$100,000 in reportable compensation from the organization-158

Yes I No

Did the organization list any former officer, director or trustee, key employee, or highest compensated employee

on line la? If "Yes," complete Schedule Jfor such individual . . . . . . . . . . . . 3 Yes

4 For any individual listed on line 1a, is the sum of reportable compensation and other compensation from theorganization and related organizations greater than $150,0007 If "Yes," complete Schedule -7 for such

individual . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Yes

Did any person listed on line la receive or accrue compensation from any unrelated organization or individual for

services rendered to the organization? If "Yes,"complete Schedule J for such person . 5 No

Section B. Independent Contractors

1 Complete this table for your five highest compensated independent contractors that received more than$100,000 of compensation from the organization

(A) (B) (C)Name and business address Description of services Compensation

SELLEN CONSTRUCTION CO INCPO BOX 9970 CONSTRUCTION 12,865,727SEATTLE, WA 98109

SIEMENS MEDICAL SOLUTIONS USA INCDEPT LA 21536 IT CONSULTANTS 10,302,439PASADENA, CA 91185

EMERGENCY SERVICES NORTHWEST4731 BEACH DRIVE SW ER DOCTORS 4,225,886SEATTLE, WA 98116

PUGET SOUND BLOOD CENTER921 TERRY AVE HEALTHCARE SERVICES 2,018,367SEATTLE, WA 98104

WOUND CARE CENTERS INCPO BOX 637114 MEDICAL MANAGEMENT 1,131,713CINCINNATI, OH 45263

2 Total number of independent contractors (including but not limited to those listed above) who received more than$100,000 in compensation from the organization 0-11

Form 990 (2010)

Form 990 (2010)

N Statement of Revenue(A) (B) (C) (D)

Total revenue Related or Unrelated Revenueexempt businessfunction revenue excludedrevenue from

taxunder

sections

512,513, or514

la Federated campaigns . la

b Membership dues . . . . lb

cc c Fundraising events . 1c

d Related organizations . ld 2,535,235

e Government grants (contributions) le 292,609

f All other contributions, gifts, grants, and if 68,715similar amounts not included above

g Noncash contributions included in lines la-If $

h Total. Add lines la-1f . 2,896,559

Business Code

2aPATIENT FEES 624100 243,297,296 243,297,296

b OTHER PROGRAM REVENUE 624100 5,282,040 4,337,083 944,957

c AUXILIARY MEMBERSHIP 900099 421 421

d

e

f All other program service revenue

g Total . Add lines 2a-2f . 248,579,757

3 Investment income (including dividends, interest

and other similar amounts) 1,669,422 29,348 1,640,074

4 Income from investment of tax-exempt bond proceeds

5 Royalties . . . . . . . . . . . . 0-

(i) Real (ii) Personal

6a Gross Rents 3,301,882

b Less rental 4,238,933expenses

c Rental income -937,051or (loss)

d Net rental income or (loss) . -937,051 -937,051

(i) Securities (ii) Other

7a Gross amount 19,577,950 395,357from sales ofassets otherthan inventory

b Less cost or 17,933,204 118,686other basis andsales expenses

c Gain or (loss) 1,644,746 276,671

d Net gain or (loss) . 1,921,417 1,921,417

8a Gross income from fundraising events(not including

of contributions reported on line 1c)See Part IV, line 18 .

q^ a 6,771

b Less direct expenses . b 3 703,

c Net income or (loss) from fundraising events . 3,068 3,068

9a Gross income from gaming activities See Part IV, line 19 a 114

b Less direct expenses . b

c Net income or (loss) from gaming activities . . .0- 114 114

10a Gross sales of inventory, lessreturns and allowances .

a 62,044

b Less cost of goods sold . b 81,648

c Net income or (loss) from sales of inventory . -19,604 -19,604

Miscellaneous Revenue Business Code

11aDAY CARE REVENUES 624410 756,987 756,987

b M I S C E L LA N E O U S 900099 243 243

C

d All other revenue . .

e Total . Add lines 11a-11d . .757,230

12 Total revenue . See Instructions . . .254,870,912 974,305 3,365,248

247, 634,800 1

Form 990 (2010)

Form 990 (2010)

Statement of Functional Expenses

Section 501 ( c)(3) and 501(c)(4) organizations must complete all columns.All other organizations must complete column (A) but are not required to complete columns (B), (C), and (D).

Do not include amounts reported on lines 6b,

7b, 8b, 9b, and 10b of Part VIII .

( A)

Total expenses

(B)Program service

expenses

(C)Management andgeneral expenses

(D)Fundraisingexpenses

1 Grants and other assistance to governments and organizations

in the U S See Part IV, line 215,825,871 5,825,871

2 Grants and other assistance to individuals in theU S See Part IV, line 22

3 Grants and other assistance to governments,organizations , and individuals outside the U S SeePart IV, lines 15 and 16

4 Benefits paid to or for members

5 Compensation of current officers, directors , trustees, andkey employees . .

6 Compensation not included above, to disqualified persons(as defined under section 4958 (f)(1)) and personsdescribed in section 4958( c)(3)(B)

7 Other salaries and wages 100,960,131 97,185,637 3,774,494

8 Pension plan contributions ( include section 401(k) and section

403(b) employer contributions ) 3,167,699 3,167,699

9 Other employee benefits 15,083,936 14,038,996 1,044,940

10 Payroll taxes 7,627,071 7,627,071

a Fees for services (non-employees)Management . .

b Legal 1,074 ,136 184,834 889,302

c Accounting 159,200 159,200

d Lobbying 60,000 60,000

e Professional fundraising services See Part IV, line 17

f Investment management fees . .

g Other 25,478,496 21,632,883 3,845,613

12 Advertising and promotion . 1,534,427 1,520,490 13,937

13 Office expenses 12,212,898 11,575,078 637,820

14 Information technology 3,897,266 3,509,831 387,435

15 Royalties

16 Occupancy 11,165,555 4,388,085 6,777,470

17 Travel 473,506 316,806 156,700

18 Payments of travel or entertainment expenses for any federal,state, or local public officials

19 Conferences , conventions , and meetings .

20 Interes t 3,336,544 146,031 3,190, 513

21 Payments to affiliates

22 Depreciation , depletion, and amortization 16,794,837 12,868,216 3,926,621

23 Insurance 1,710,442 483,162 1,227,280

24 Other expenses Itemize expenses not covered above (Listmiscellaneous expenses in line 24f If line 24f amount exceeds 10% ofline 25, column ( A) amount, list line 24f expenses on Schedule 0

a MEDICAL SUPPLIES 35,493,925 35,488,980 4,945

b BAD DEBT 13,583,531 13,583,531

c PHYSICIAN FEES 4,980,021 4,846,521 133,500

d MEAL SERVICES 866,085 738,145 127,940

e EMPLOYEE RELATIONS 586,154 402,951 183,203

f All other expenses 324,573 143,256 181,317

25 Total functional expenses. Add lines 1 through 24f 266,396,304 239,674,074 26,722,230 0

26 Joint costs. Check here 1F- if following

SOP 98-2 (ASC 958-720) Complete this line only if theorganization reported in column ( B) joint costs from acombined educational campaign and fundraising solicitation

Form 990 (2010)

Form 990 (2010)

Balance Sheet

(A) (B)Beginning of year End of year

1 Cash-non-interest-bearing 8,401,564 1 7,938,728

2 Savings and temporary cash investments 2

3 Pledges and grants receivable, net 3

4 Accounts receivable, net . 30,479,519 4 31,452,783

5 Receivables from current and former officers, directors, trustees, key employees, andhighest compensated employees Complete Part II of

Schedule L 5

6 Receivables from other disqualified persons (as defined under section 4958(f)(1 )),persons described in section 4958(c)(3)(B), and contributing employers, andsponsoring organizations of section 501(c)(9) voluntary employees' beneficiaryorganizations (see instructions)

Schedule L 6

0 7 Notes and loans receivable, net . . . . . . . . . . . . 161,719 7 629,617

8 Inventories for sale or use 3,976,952 8 4,014,256

9 Prepaid expenses and deferred charges 3,400,099 9 2,136,937

10a Land, buildings, and equipment cost or other basis Complete 312,332,300

Part VI of Schedule D 10a

b Less accumulated depreciation 10b 190,720,430 120,974,409 10c 121,611,870

11 Investments-publicly traded securities . 11

12 Investments-other securities See Part IV, line 11 1,278,468 12 2,336,233

13 Investments-program-related See Part IV, line 11 . 13

14 Intangible assets . 14 99,735

15 Other assets See Part IV, line 11 54,380,410 15 46,021,246

16 Total assets . Add lines 1 through 15 (must equal line 34) . . 223,053,140 16 216,241,405

17 Accounts payable and accrued expenses 31,838,713 17 38,056,803

18 Grants payable 18

19 Deferred revenue 735,999 19 254,838

20 Tax-exempt bond liabilities 82,000,000 20 79,900,000

21 Escrow or custodial account liability Complete Part IVof Schedule D . 21

22 Payables to current and former officers, directors, trustees, keyemployees, highest compensated employees, and disqualified

persons Complete Part II of Schedule L . 22

23 Secured mortgages and notes payable to unrelated third parties 7,316,455 23 8,385,843

24 Unsecured notes and loans payable to unrelated third parties 24

25 Other liabilities Complete Part X of Schedule D . 14,831,101 25 13,798,299

26 Total liabilities . Add lines 17 through 25 . 136,722,268 26 140,395,783

Organizations that follow SFAS 117, check here 1- F and complete lines 27

co through 29, and lines 33 and 34.c327 Unrestricted net assets 83,648,783 27 74,377,744

28 Temporarily restricted net assets 967,292 28 1,467,878

29 Permanently restricted net assets 1,714,797 29 0

Organizations that do not follow SFAS 117, check here 1 F- and completeLL.lines 30 through 34.

30 Capital stock or trust principal, or current funds 30

31 Paid-in or capital surplus, or land, building or equipment fund 31

< 32 Retained earnings, endowment, accumulated income, or other funds 32

Z 33 Total net assets or fund balances 86,330,872 33 75,845,622Z

34 Total liabilities and net assets/fund balances 223,053,140 34 216,241,405

Form 990 (2010)

Form 990 (2010)

« Reconcilliation of Net AssetsCheck if Schedule 0 contains a response to any question in this Part XI . F

1 Total revenue (must equal Part VIII, column (A), line 12)1 254,870,912

2 Total expenses (must equal Part IX, column (A), line 25)2 266,396,304

3 Revenue less expenses Subtract line 2 from line 1 .3 -11,525,392

4 Net assets or fund balances at beginning of year (must equal Part X, line 33, column (A))4 86,330,872

5 Other changes in net assets or fund balances (explain in Schedule O) .5 1,040,142

6 Net assets or fund balances at end of year Combine lines 3, 4, and 5 (must equal Part X, line 33, column(B)) 6 75,845,622

GZMM-Financial Statements and Reporting

Check if Schedule 0 contains a response to any question in this Part XII . (-

Yes No

Accounting method used to prepare the Form 990 fl Cash 17 Accrual (OtherIf the organization changed its method of accounting from a prior year or checked "Other," explain inSchedule 0

2a Were the organization's financial statements compiled or reviewed by an independent accountant? 2a No

b Were the organization's financial statements audited by an independent accountant? . 2b Yes

c If "Yes," to 2a or 2b, does the organization have a committee that assumes responsibility for oversight of theaudit, review, or compilation of its financial statements and selection of an independent accountant?If the organization changed either its oversight process or selection process during the tax year, explain inSchedule 0 2c Yes

d If "Yes" to line 2a or 2b, check a box below to indicate whether the financial statements for the year were issuedon a separate basis, consolidated basis, or both

fl Separate basis F Consolidated basis fl Both consolidated and separated basis

3a As a result of a federal award, was the organization required to undergo an audit or audits as set forth in theSingle Audit Act and OMB Circular A-133? . . . . . . . . . . . . . . . 3a Yes

b If"Yes," did the organization undergo the required audit or audits? If the organization did not undergo the required 3b Yesaudit or audits, explain why in Schedule 0 and describe any steps taken to undergo such audits .

Form 990 (2010)


SCHEDULE A Public Charity Status and Public SupportOMB No 1545-0047

(Form 990 or 990EZ) 201 0Complete if the organization is a section 501(c)(3) organization or a section

Department of the Treasury 4947(a)(1) nonexempt charitable trust.

Internal Revenue Service► Attach to Form 990 or Form 990-EZ . ► See separate instructions.

Name of the organization Employer identification numberUW MEDICINE NORTHWEST

91-0637400

Reason for Public Charity Status (All organizations must complete this part.) See InstructionsThe organization is not a private foundation because it is (For lines 1 through 11, check only one box)

1 1 A church, convention of churches, or association of churches described in section 170(b)(1)(A)(i).

2 1 A school described in section 170(b)(1)(A)(ii). (Attach Schedule E )

3 F A hospital or a cooperative hospital service organization described in section 170 ( b)(1)(A)(iii).

4 1 A medical research organization operated in conjunction with a hospital described in section 170(b)(1)(A)(iii). Enter thehospital's name, city, and state

5 fl An organization operated for the benefit of a college or university owned or operated by a governmental unit described in

section 170 ( b)(1)(A)(iv ). (Complete Part II )

6 fl A federal, state, or local government or governmental unit described in section 170 ( b)(1)(A)(v).

7 1 An organization that normally receives a substantial part of its support from a governmental unit or from the general publicdescribed insection 170 ( b)(1)(A)(vi ) (Complete Part II )

8 fl A community trust described in section 170 ( b)(1)(A)(vi ) (Complete Part II )

9 1 An organization that normally receives (1) more than 331/3% of its support from contributions, membership fees, and gross

receipts from activities related to its exempt functions-subject to certain exceptions, and (2) no more than 331/3% of

its support from gross investment income and unrelated business taxable income (less section 511 tax) from businesses

acquired by the organization after June 30, 1975 See section 509(a)(2). (Complete Part III )

10 fl An organization organized and operated exclusively to test for public safety Seesection 509(a)(4).

11 fl An organization organized and operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes ofone or more publicly supported organizations described in section 509(a)(1) or section 509(a)(2) See section 509(a)(3). Checkthe box that describes the type of supporting organization and complete lines 11e through 11h

a fl Type I b fl Type II c fl Type III - Functionally integrated d fl Type III - Other

e fl By checking this box, I certify that the organization is not controlled directly or indirectly by one or more disqualified personsother than foundation managers and other than one or more publicly supported organizations described in section 509(a)(1 ) orsection 509(a)(2)

f If the organization received a written determination from the IRS that it is a Type I, Type II or Type III supporting organization,check this box F

g Since August 17, 2006, has the organization accepted any gift or contribution from any of thefollowing persons?(i) a person who directly or indirectly controls, either alone or together with persons described in (ii) Yes No

and (iii) below, the governing body of the the supported organization? 11g(i)

(ii) a family member of a person described in (i) above? 11g(ii)

(iii) a 35% controlled entity of a person described in (i) or (ii) above? 11g(iii)

h Provide the following information about the supported organization(s)

0)Name ofsupported

organization

(ii)EIN

(iii)

Type of

organization

(described on

lines 1- 9 above

or IRC section

(see

(iv)Is the

organization incol (i) listed inyour governingdocument?

(v)Did you notify theorganization incol (i) of your

support?

(vi)Is the

organization incol (i) organized

in the U S ?

viiAmount ofsupport

instructions )) Yes No Yes No Yes No

Total

For Paperwork Reduction Act Notice, seethe Instructions for Form 990 Cat No 11285F Schedule A (Form 990 or 990-EZ) 2010

Schedule A (Form 990 or 990-EZ) 2010 Page 2

Support Schedule for Organizations Described in Sections 170(b )( 1)(A)(iv) and 170(b)(1)(A)(vi)(Complete only if you checked the box on line 5, 7, or 8 of Part I or if the organization failed to qualifyunder Part III. If the organization fails to qualify under the tests listed below, please complete Part III.)

Section A . Public SupportCalendar year (or fiscal year beginning (a) 2006 (b) 2007 (c) 2008 (d) 2009 (e) 2010 (f) Total

in) ►1 Gifts, grants, contributions, and

membership fees received (Do notinclude any "unusualgrants ")

2 Tax revenues levied for theorganization's benefit and eitherpaid to or expended on itsbehalf

3 The value of services or facilitiesfurnished by a governmental unit tothe organization without charge

4 Total .Add lines 1 through 3

5 The portion of total contributionsby each person (other than agovernmental unit or publiclysupported organization) included online 1 that exceeds 2% of theamount shown on line 11, column(f)

6 Public Support . Subtract line 5 fromline 4

Section B. Total SupportCalendaryear (or fiscal year beginning (a) 2006 (b) 2007 (c) 2008 (d) 2009 (e) 2010 (f) Total

in)7 Amounts from line 4

8 Gross income from interest,dividends, payments received onsecurities loans, rents, royaltiesand income from similar

10

11

12

13

sourcesNet income from unrelatedbusiness activities, whether ornot the business is regularlycarried onOther income Do not include gainor loss from the sale of capitalassets (Explain in Part IVTotal support (Add lines 7through 10)Gross receipts from related activities, etc (See instructions 12

First Five Years If the Form 990 is for the organization's first, second, third, fourth, or fifth tax year as a 501(c)(3) organization,check this box and stop here

Section C. Com p utation of Public Support Percenta g e14 Public Support Percentage for 2010 (line 6 column (f) divided by line 11 column (f)) 14

15 Public Support Percentage for 2009 Schedule A, Part II, line 14 15

16a 331 / 3%support test -2010 . If the organization did not check the box on line 13, and line 14 is 33 1/3% or more, check this boxand stop here . The organization qualifies as a publicly supported organization llik^F-

b 33 1 / 3%support test -2009 . If the organization did not check the box on line 13 or 16a, and line 15 is 33 1/3% or more, check thisbox and stop here . The organization qualifies as a publicly supported organization lk'F-

17a 10%-facts-and -circumstances test -2010 . If the organization did not check a box on line 13, 16a, or 16b and line 14is 10% or more, and if the organization meets the "facts and circumstances" test, check this box and stop here . Explainin Part IV how the organization meets the "facts and circumstances" test The organization qualifies as a publicly supportedorganization llik^F-

b 10%-facts-and-circumstances test -2009 . If the organization did not check a box on line 13, 16a, 16b, or 17a and line15 is 10% or more, and if the organization meets the "facts and circumstances" test, check this box and stop here.Explain in Part IV how the organization meets the "facts and circumstances" test The organization qualifies as a publiclysupported organization lk'F-

18 Private Foundation If the organization did not check a box on line 13, 16a, 16b, 17a or 17b, check this box and seeinstructions llik^F-

Schedule A (Form 990 or 990-EZ) 2010


IMMITM Support Schedule for Organizations Described in Section 509(a)(2)(Complete only if you checked the box on line 9 of Part I or if the organization failed to qualify underPart II. If the organization fails to qualify under the tests listed below, please complete Part II.)

Section A . Public SupportCalendar year (or fiscal year beginning (a) 2006 (b) 2007 (c) 2008 (d) 2009 (e) 2010 (f) Total

in) llik^1 Gifts, grants, contributions, and

membership fees received (Do notinclude any "unusual grants ")

2 Gross receipts from admissions,merchandise sold or servicesperformed, or facilities furnished inany activity that is related to theorganization's tax-exemptpurpose

3 Gross receipts from activities thatare not an unrelated trade orbusiness under section 513

4 Tax revenues levied for theorganization's benefit and eitherpaid to or expended on itsbehalf

5 The value of services or facilitiesfurnished by a governmental unit tothe organization without charge

6 Total . Add lines 1 through 5

7a Amounts included on lines 1, 2,and 3 received from disqualifiedpersons

b Amounts included on lines 2 and 3received from other thandisqualified persons that exceedthe greater of$5,000 or 1% of theamount on line 13 for the year

c Add lines 7a and 7b

8 Public Support (Subtract line 7cfrom line 6 )

Section B. Total SupportCalendar year (or fiscal year beginning (a) 2006 (b) 2007 (c) 2008 (d) 2009 (e) 2010 (f) Total

in)

9 Amounts from line 6

10a Gross income from interest,dividends, payments received onsecurities loans, rents, royaltiesand income from similarsources

b Unrelated business taxableincome (less section 511 taxes)from businesses acquired afterJune 30, 1975

c Add lines 10a and 10b

11 Net income from unrelatedbusiness activities not includedin line 10b, whether or not thebusiness is regularly carried on

12 Other income Do not includegain or loss from the sale ofcapital assets (Explain in PartIV )

13 Total support (Add lines 9, 10c,11 and 12)

14 First Five Years If the Form 990 is for the organization's first, second, third, fourth, or fifth tax year as a section501(c)(3) organization,check this box and stop here

Section C. Com p utation of Public Support Percenta g e15 Public Support Percentage for 2010 (line 8 column (f) divided by line 13 column (f)) 15

16 Public support percentage from 2009 Schedule A, Part III, line 15 16

Section D . Computation of Investment Income Percentage

17 Investment income percentage for 2010 (line 10c column (f) divided by line 13 column (f)) 17

18 Investment income percentage from 2009 Schedule A, Part III, line 17 18

19a 33 1/3%support tests-2010 . If the organization did not check the box on line 14, and line 15 is more than 33 1/3% and line 17 is notmore than 33 1/3%, check this box and stop here . The organization qualifies as a publicly supportedorganization

b 33 1 / 3% support tests-2009 . If the organization did not check a box on line 14 or line 19a, and line 16 is more than 33 1/3% and line18 is not more than 33 1/3%, check this box and stop here . The organization qualifies as a publicly supported organization

20 Private Foundation If the organization did not check a box on line 14, 19a or 19b, check this box and see instructions



Supplemental Information . Supplemental Information. Complete this part to provide the explanationsrequired by Part II, line 10; Part II, line 17a or 17b; and Part III, line 12. Also complete this part for anyadditional information. (See instructions).



SCHEDULE C Political Campaign and Lobbying Activities OMB No 1545-0047

(Form 990 or 990-EZ)For Organizations Exempt From Income Tax Under section 501(c) and section 527 201 0

Department of the Treasury 1- Complete if the organization is described below.

Internal Revenue Service 1- Attach to Form 990 or Form 990-EZ. 1- See separate instructions. Open to Public

If the organization answered "Yes," to Form 990, Part IV , Line 3 , or Form 990-EZ , Part V, line 46 ( Political Campaign Activities),then• Section 501(c)(3) organizations Complete Parts I-A and B Do not complete Part I-C• Section 501(c) (other than section 501(c)(3)) organizations Complete Parts I-A and C below Do not complete Part I-B• Section 527 organizations Complete Part I-A onlyIf the organization answered "Yes," to Form 990, Part IV , Line 4, or Form 990-EZ, Part VI, line 47 (Lobbying Activities), then• Section 501(c)(3) organizations that have filed Form 5768 (election under section 501(h)) Complete Part II-A Do not complete Part II-B• Section 501(c)(3) organizations that have NOT filed Form 5768 (election under section 501(h)) Complete Part II-B Do not complete Part II-AIf the organization answered "Yes," to Form 990, Part IV , Line 5 (Proxy Tax) or Form 990-EZ , Part V, line 35a ( Proxy Tax), then* Section 501(c)(4), (5), or (6) organizations Complete Part IIIName of the organization Employer identification numberUW MEDICINE NORTHWEST

91-0637400

Complete if the organization is exempt under section 501(c) or is a section 527 organization.

1 Provide a description of the organization's direct and indirect political campaign activities in Part IV

2 Political expenditures - $

3 Volunteer hours

Complete if the organization is exempt under section 501(c)(3).

1 Enter the amount of any excise tax incurred by the organization under section 4955 - $

2 Enter the amount of any excise tax incurred by organization managers under section 4955 - $

3 If the organization incurred a section 4955 tax, did it file Form 4720 for this year? fl Yes fl No

4a Was a correction made? fl Yes fl No

b If "Yes," describe in Part IV

rMWINT-Complete if the organization is exempt under section 501(c) except section 501 ( c)(3).

1 Enter the amount directly expended by the filing organization for section 527 exempt function activities - $

2 Enter the amount of the filing organization's funds contributed to other organizations for section 527exempt funtion activities - $

3 Total exempt function expenditures Add lines 1 and 2 Enter here and on Form 1120-PO L, line 17b - $

4 Did the filing organization file Form 1120-POL for this year? fl Yes fl No

5 Enter the names, addresses and employer identification number (EIN) of all section 527 political organizations to which the filingorganization made payments For each organization listed, enter the amount paid from the filing organization's funds Also enter theamount of political contributions received that were promptly and directly delivered to a separate political organization, such as aseparate segregated fund or a political action committee (PAC) If additional space is needed, provide information in Part IV

(a) Name (b) Address ( c) EIN (d ) Amount paid fromfiling organization's

funds If none, enter -0-

(e) Amount of politicalcontributions received

and promptly anddirectly delivered to a

separate politicalorganization If none,

enter -0-

For Paperwork Reduction Act notice, see the instructions for Form 990 or 990 -EZ. Cat No 50084S Schedule C (Form 990 or 990 - EZ) 2010

Schedule C (Form 990 or 990-EZ) 2010 Page 2

Complete if the organization is exempt under section 501 ( c)(3) and filed Form 5768 ( electionunder section 501(h)).

A Check 1 if the filing organization belongs to an affiliated groupB Check 1 if the filing organization checked box A and "limited control" provisions apply

Limits on Lobbying Expenditures(a) Filing (b) Affiliated

(The term "expenditures" means amounts paid or incurred .)O rganization's Group

Totals Totals

la Total lobbying expenditures to influence public opinion (grass roots lobbying)

b Total lobbying expenditures to influence a legislative body (direct lobbying)

c Total lobbying expenditures (add lines la and 1b)

d Other exempt purpose expenditures

e Total exempt purpose expenditures (add lines 1c and 1d)

f Lobbying nontaxable amount Enter the amount from the following table in bothcolumns

If the amount on line le, column (a) or (b) is:

Not over $500,000

The lobbying nontaxable amount is:

20% of the amount on line le

Over $500,000 but not over $1,000,000 $100,000 plus 15% of the excess over $500,000

Over $1,000,000 but not over $1,500,000 $175,000 plus 10% of the excess over $1,000,000

Over $1,500,000 but not over $17,000,000 $225,000 plus 5% of the excess over $1,500,000

Over $17,000,000 $1,000,000

g Grassroots nontaxable amount (enter 25% of line 1f)

h Subtract line 1g from line la If zero or less, enter-0-

i Subtract line 1f from line 1c If zero or less, enter-0-

i If there is an amount other than zero on either line 1h or line 11, did the organization file Form 4720 reportingsection 4911 tax for this year? Yes No

4-Year Averaging Period Under Section 501(h)

(Some organizations that made a section 501 ( h) election do not have to complete all of the fivecolumns below. See the instructions for lines 2a through 2f on page 4.)

Lobbying Expenditures During 4-Year Averaging Period

Calendar year (orfiscaI yearbeginning in)

(a) 2007 (b) 2008 (c) 2009 (d) 2010 (e) Total

2a Lobbying non-taxable amount

b Lobbying ceiling amount150% of line 2a column e

c Total lobbying expenditures

d Grassroots non-taxable amount

e Grassroots ceiling amount(150% of line 2d, column (e))

f Grassroots lobbying expenditures

Schedule C (Form 990 or 990-EZ) 2010

Schedule C (Form 990 or 990-EZ) 2010 Page 3

Complete if the organization is exempt under section 501 ( c)(3) and has NOT filed Form 5768( election under section 501 ( h )) .

(a) (b)

Yes No Amount

1 During the year, did the filing organization attempt to influence foreign, national, state or locallegislation, including any attempt to influence public opinion on a legislative matter or referendum,through the use of

a Volunteers? No

b Paid staff or management (include compensation in expenses reported on lines 1c through 1i)? No

c Media advertisements? No

d Mailings to members, legislators, or the public? No

e Publications, or published or broadcast statements? No

f Grants to other organizations for lobbying purposes? No

g Direct contact with legislators, their staffs, government officials, or a legislative body? Yes 60,000

h Rallies, demonstrations, seminars, conventions, speeches, lectures, or any similar means? No

i Other activities? If "Yes," describe in Part IV No

j Total lines 1c through 11 60,000

2a Did the activities in line 1 cause the organization to be not described in section 501(c)(3)? No

b If "Yes," enter the amount of any tax incurred under section 4912

c If "Yes," enter the amount of any tax incurred by organization managers under section 4912

d If the filing organization incurred a section 4912 tax, did it file Form 4720 for this year?

Complete if the organization is exempt under section 501 ( c)(4), section 501(c )( 5), or section501 ( c )( 6 ) .

Yes No

1 Were substantially all (90% or more) dues received nondeductible by members? 1

2 Did the organization make only in-house lobbying expenditures of $2,000 or less? 2

3 Did the organization agree to carryover lobbying and political expenditures from the prior year? 3

Complete if the organization is exempt under section 501 ( c)(4), section 501(c)(5), or section

501(c )( 6) if BOTH Part 111-A , lines 1 and 2 are answered "No" OR if Part III-A, line 3 isanswered "Yes".

1 Dues, assessments and similar amounts from members 1

2 Section 162(e) non-deductible lobbying and political expenditures (do not include amounts of politicalexpenses for which the section 527(f ) tax was paid).

a Current year 2a

b Carryover from last year 2b

c Total 2c

3 Aggregate amount reported in section 6033(e)(1 )(A) notices of nondeductible section 162(e) dues 3

4 If notices were sent and the amount on line 2c exceeds the amount on line 3, what portion of the excessdoes the organization agree to carryover to the reasonable estimate of nondeductible lobbying andpolitical expenditure next year? 4

5 Taxable amount of lobbying and political expenditures (see instructions) 5

Su lementalInformation

Complete this part to provide the descriptions required for Part I-A, line 1, Part I-B, line 4, Part I-C, line 5, and Part II-B, line 1iAlso , com p lete this p art for an y additional information

Identifier Return Reference Explanation

EXPLANATION OF OTHER PART II-B, LINE 1I THE HOSPITAL INCURRED LOBBYING EXPENSES INLOBBYING ACTIVITIES SECURING A GRANT FOR THE SIMULATION CENTER

Schedule C (Form 990 or 990EZ) 2010

lefile GRAPHIC print - DO NOT PROCESS I As Filed Data - I DLN: 934931320176321

SCHEDULE D(Form 990) Supplemental Financial Statements

1- Complete if the organization answered "Yes," to Form 990,

OMB No 1545-0047

2010Department of the Treasury Part IV, line 6, 7, 8, 9, 10, 11, or 12.

bafffimInternal Revenue Service 1- Attach to Form 990. 1- See separate instructions.


91-0637400Organizations Maintaining Donor Advised Funds or Other Similar Funds or Accounts . Complete if theorg anization answered "Yes" to Form 990 Part IV , line 6.

(a) Donor advised funds ( b) Funds and other accounts

1 Total number at end of year

2 Aggregate contributions to (during year)

3 Aggregate grants from (during year)

4 Aggregate value at end of year

5 Did the organization inform all donors and donor advisors in writing that the assets held in donor advisedfunds are the organization ' s property , subject to the organization's exclusive legal control? F Yes I No

6 Did the organization inform all grantees, donors, and donor advisors in writing that grant funds may beused only for charitable purposes and not for the benefit of the donor or donor advisor, or for any other purposeconferring impermissible private benefit fl Yes fl No

MRSTI-Conservation Easements . Complete if the organization answered "Yes" to Form 990, Part IV , line 7.

1 Purpose ( s) of conservation easements held by the organization ( check all that apply)

1 Preservation of land for public use ( e g , recreation or pleasure ) 1 Preservation of an historically importantly land area

1 Protection of natural habitat 1 Preservation of a certified historic structure

fl Preservation of open space

Complete lines 2a-2d if the organization held a qualified conservation contribution in the form of a conservationeasement on the last day of the tax year

Held at the End of the Year

a Total number of conservation easements 2a

b Total acreage restricted by conservation easements 2b

c Number of conservation easements on a certified historic structure included in (a) 2c

d Number of conservation easements included in (c) acquired after 8/17/06 2d

N umber of conservation easements modified, transferred, released, extinguished, or terminated by the organization during

the taxable year 0-

4 N umber of states where property subject to conservation easement is located 0-

5 Does the organization have a written policy regarding the periodic monitoring , inspection , handling of violations, andenforcement of the conservation easements it holds? fl Yes fl No

Staff and volunteer hours devoted to monitoring, inspecting and enforcing conservation easements during the year 1-

Amount of expenses incurred in monitoring , inspecting , and enforcing conservation easements during the year - $

Does each conservation easement reported on line 2 ( d) above satisfy the requirements of section170(h)( 4)(B)(i) and 170 ( h)(4)(B)(ii)? fl Yes l No

9 In Part XIV, describe how the organization reports conservation easements in its revenue and expense statement, andbalance sheet, and include, if applicable, the text of the footnote to the organization's financial statements that describesthe organization's accounting for conservation easements

Organizations Maintaining Collections of Art, Historical Treasures, or Other Similar Assets.Complete if the organization answered "Yes" to Form 990, Part IV, line 8.

la If the organization elected, as permitted under SFAS 116, not to report in its revenue statement and balance sheet works ofart, historical treasures, or other similar assets held for public exhibition, education or research in furtherance of public service,provide, in Part XIV, the text of the footnote to its financial statements that describes these items

b If the organization elected, as permitted under SFAS 116, to report in its revenue statement and balance sheet works of art,historical treasures, or other similar assets held for public exhibition, education, or research in furtherance of public service,provide the following amounts relating to these items

(i) Revenues included in Form 990, Part VIII, line 1 -$

(ii)Assets included in Form 990, Part X -$

2 If the organization received or held works of art, historical treasures, or other similar assets for financial gain, provide thefollowing amounts required to be reported under SFAS 116 relating to these items

a Revenues included in Form 990, Part VIII, line 1 - $

b Assets included in Form 990, Part X - $

For Privacy Act and Paperwork Reduction Act Notice, see the Intructions for Form 990 Cat No 52283D Schedule D ( Form 990) 2010

Schedule D (Form 990) 2010 Page 2

r:FTnFW Organizations Maintaining Collections of Art, Historical Treasures , or Other Similar Assets (continued)

3 Using the organization's accession and other records, check any of the following that are a significant use of its collectionitems (check all that apply)

a F_ Public exhibition d fl Loan or exchange programs

b 1 Scholarly research e (- Other

c F Preservation for future generations

4 Provide a description of the organization's collections and explain how they further the organization's exempt purpose inPart XIV

5 During the year, did the organization solicit or receive donations of art, historical treasures or other similarassets to be sold to raise funds rather than to be maintained as part of the organization's collection? 1 Yes 1 No

Escrow and Custodial Arrangements . Complete if the organization answered "Yes" to Form 990,Part IV, line 9, or reported an amount on Form 990, Part X, line 21.

la Is the organization an agent, trustee, custodian or other intermediary for contributions or other assets notincluded on Form 990, Part X7 1 Yes F No

b If "Yes," explain the arrangement in Part XIV and complete the following table

Amount

c Beginning balance 1c

d Additions during the year ld

e Distributions during the year le

f Ending balance if

2a Did the organization include an amount on Form 990, Part X, line 21? fl Yes fl No

b If"Yes," explain the arrangement in Part XIV

MITIT-Endowment Funds . Com p lete If the org anization answered "Yes" to Form 990, Part IV , line 10.

la Beginning of year balance

b Contributions .

c Investment earnings or losses

d Grants or scholarships . .

e Other expenditures for facilitiesand programs

f Administrative expenses

g End of year balance .

(a)Current Year (b)Prior Year (c)Two Years Back (d)Three Years Back (e)Four Years Back

2 Provide the estimated percentage of the yearend balance held as

a Board designated or quasi-endowment 0-

b Permanent endowment 0-

c Term endowment 0-

3a Are there endowment funds not in the possession of the organization that are held and administered for theorganization by Yes No

(i) unrelated organizations . . . . . . . . . . . . . . . . . . . . . . . . 3a(i)

(ii) related organizations . . . . . . . . . . . . . . . . . . . . . . 3a(ii)

b If "Yes" to 3a(ii), are the related organizations listed as required on Schedule R? . . I 3b

4 Describe in Part XIV the intended uses of the organization's endowment funds

I Investments- Land . Buildinas . and Eauioment . See Form 990. Part X. line 10.

Description of investment(a) Cost or otherbasis ( investment )

(b)Cost or otherbasis (other )

( c) Accumulateddepreciation

( d) Book value

la Land 15,366,118 15,366,118

b Buildings 95,719,721 44,313,208 51,406,513

c Leasehold improvements 17,392,086 9,374,173 8,017,913

d Equipment 174,378,227 137,033,049 37,345,178

e Other 9,476,148 9,476,148

Total . Add lines la -le (Column (d) should equal Form 990, Part X, column (B), line 10 (c).) . . 0- 121,611,870

Schedule D (Form 990) 2010


Investments -Other Securities . See Form 990 , Part X , line 12.

(a) Description of security or category(b)Book value

(c) Method of valuation(including name of security) Cost or end-of-year market value

(1 )Financial derivatives

(2)Closely-held equity interests

Other

Total . (Column (b) should equal Form 990, Part X, col (B) line 12 ) 01 1

Investments-Program Related . See Form 990, Part X, line 13.

(a) Description of investment type (b) Book value I (c) Method of valuationCost or end-of-vear market value

Total . (Column (b) should equa l Form 990, Part X, col (B) line 13) 01

Other Assets . See Form 990. Part X . line 15.

(a) Description ( b) Book value

(1) ASSETS WHOSE USE IS LIMITED - BOARD APPROVED CAPITAL INVESTMENTS 30,455,035

(2) ASSETS WHOSE USE IS LIMITED - BOND INDENTURE AGREEMENTS 10,233,584

(3) PROFESSIONAL LIABILITY SELF-INSURANCE 4,502,720

(4) DEFERRED FINANCING COSTS 703,159

(5) OTHER RECEIVABLES 44,114

(6) OTHER LONG-TERM ASSETS 82,634

Total . (Column (b) should equal Form 990, Part X, co/.(8) line 15.) . 0.1 46,021,246

Other Liabilities . See Form 990 , Part X line 25.1 (a) Description of Liability (b) Amount

Federal Income Taxes

RESERVE FOR PROFESSIONAL LIABILITY 4,524,650

PAYABLE TO AFFILIATES 4,848,646

RESERVE FOR ASBESTOS LIABILITY 1,992,564

OTHER LONG-TERM LIABILITIES 2.432.439

Total . (Column (b) should equal Form 990, Part X, col (B) line 25) p. I 13,798,299

2. Fin 48 (ASC 740) Footnote In Part XIV, provide the text of the footnote to the organization's financial statements that reports theorganization's liability for uncertain tax positions under FIN 48 (ASC740)



171174T- Reconciliation of Chang e in Net Assets from Form 990 to Financial Statements

1 Total revenue (Form 990, Part VIII, column (A), line 12) 1 254,870,912

2 Total expenses (Form 990, Part IX, column (A), line 25) 2 266,396,304

3 Excess or (deficit) for the year Subtract line 2 from line 1 3 -11,525,392

4 Net unrealized gains (losses) on investments 4 2,547,047

5 Donated services and use of facilities 5

6 Investment expenses 6

7 Prior period adjustments 7

8 Other (Describe in Part XIV) 8 -535,235

9 Total adjustments (net) Add lines 4 - 8 9 2,011,812

10 Excess or (deficit) for the year per financial statements Combine lines 3 and 9 10 -9,513,580

« Reconciliation of Revenue per Audited Financial Statements With Revenue per Return

1 Total revenue, gains, and other support per audited financial statements . 1 244,456,598

2 Amounts included on line 1 but not on Form 990, Part VIII, line 12

a Net unrealized gains on investments . . . . . . . . . 2a 2,547,047

b Donated services and use of facilities . 2b

c Recoveries of prior year grants 2c

d Other (Describe in Part XIV) . . . . . . . . . . . 2d -17,075,641

e Add lines 2a through 2d . . . . . . . . . . . . . . . . . . . . 2e -14,528,594

3 Subtract line 2e from line 1 . . . . . . . . . . . . . . . . . . . . 3 258,985,192

4 Amounts included on Form 990, Part VIII, line 12, but not on line 1

a Investment expenses not included on Form 990, Part VIII, line 7b 4a

b Other (Describe in Part XIV) . . . . . . . . . . 4b -4,114,280

c Add lines 4a and 4b . . . . . . . . . . . . . . . . . . . . . 4c -4,114,280

5 Total Revenue Add lines 3 and 4c. (This should equal Form 990, Part I, line 12 . . . . 5 254,870,912

« Reconciliation of Expenses per Audited Financial Statements With Expenses per Return

1 Total expenses and losses per audited financial 253,970,178statements . 1

2 Amounts included on line 1 but not on Form 990, Part IX, line 25

a Donated services and use of facilities . 2a

b Prior year adjustments 2b

c Other losses . . . . . . . . . . . . . . . 2c

d Other (Describe in Part XIV) . . . . . . . . . . . 2d 4,649,515

e Add lines 2a through 2d . . . . . . . . . . . . . . . . . . . . . 2e 4,649,515

3 Subtract line 2e from line 1 . . . . . . . . . . . . . . . . . . . . 3 249,320,663

4 Amounts included on Form 990, Part IX, line 25, but not on line 1:

a Investment expenses not included on Form 990, Part VIII, line 7b 4a

b Other (Describe in Part XIV) . . . . . . . . . . . 4b 17,075,641

c Add lines 4a and 4b . . . . . . . . . . . . . . . . . . . . . . 4c 17,075,641

5 Total expenses Add lines 3 and 4c. (This should equal Form 990, Part I, line 18 . . . . . 5 266,396,304

9711SNIM Supp lemental Information

Complete this part to provide the descriptions required for Part II, lines 3, 5, and 9, Part III, lines la and 4, Part IV, lines lb and 2b,Part V, line 4, Part X, Part XI, line 8, Part XII, lines 2d and 4b, and Part XIII, lines 2d and 4b Also complete this part to provide anyadditional information


PART XI, LINE 8 - OTHER CONTRIBUTION FROM FOUNDATION REPORTED IN NETADJUSTMENTS ASSETS ON FINANCIALS -535,235

PART XII, LINE 2D - OTHER BAD DEBT -13,583,531 INTEREST EXPENSE -72,312ADJUSTMENTS GRANT EXPENSE TO HEALTH RESOURCES NW REPORTED

WITH REVENUE ON FINANCIALS -3,419,798

PART XII, LINE 4B - OTHER RENTAL EXPENSES REPORTED WITH EXPENSES ONADJUSTMENTS FINANCIAL STATEMENTS -4,238,933 COST OF GOODS

SOLD REPORTED WITH EXPENSES ON FINANCIALSTATEMENTS -81,648 OTHER RECLASSES -328,934CONTRIBUTION REVENUE FROM FOUNDATION REPORTEDWITH NET ASSETS ON FINANCIALS 535,235

PART XIII, LINE 2D - OTHER RENTAL EXPENSES REPORTED WITH EXPENSES ONADJUSTMENTS FINANCIAL STATEMENTS 4,238,933 COST OF GOODS

SOLD REPORTED WITH EXPENSES ON FINANCIALSTATEMENTS 81,648 OTHER RECLASSES 328,934

PART XIII, LINE 4B - OTHER BAD DEBT 13,583,531 INTEREST EXPENSE 72,312 GRANTADJUSTMENTS EXPENSE TO HEALTH RESOURCES NW REPORTED WITH

REVENUE ON FINANCIALS 3,419,798



SCHEDULE F Statement of Activities Outside the United StatesOMB No 1545-0047

(Form 990)2010

n Complete if the organization answered " Yes" to Form 990,

Part IV, line 14b, 15, or 16.

Department of the Treasury n Attach to Form 990. ► See separate instructions.Open to Public

Internal Revenue Service Inspection


91-0637400

General Information on Activities Outside the United States . Complete if the organization answered"Yes" to Form 990, Part IV, line 14b.

1 For grantmakers . Does the organization maintain records to substantiate the amount of the grants or

assistance, the grantees' eligibility for the grants or assistance, and the selection criteria used to award

the grants or assistance? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . fl Yes fl No

2 For grantmakers . Describe in Part V the organization's procedures for monitoring the use of grant funds outside theUnited States

3 Activites per Region (Use Part V if additional space is needed

(a) Region (b) Number ofoffices in the

region

(c) Number ofemployees or

agents in region orindependentcontractors

(d) Activities conducted inregion (by type) (e g ,fundraising, program

services, investments, grantsto recipients located in the

reg ion)

(e) If activity listed in (d) isa program service, describe

specific type ofservice(s) in region

(f) Totalexpenditures for

region/ investmentsin region

CENTRAL AMERICA AND THECARIBBEAN

0 0 SELF-INSURANCE N/A 2,605,154

3a Sub-total 0 0 2 , 605 , 154

b Total from continuation sheetsto Part I

00

0

c Totals (add lines 3a and 3b) 0 0 2,605,154

For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990 . Cat No 50082W Schedule F (Form 990) 2010

Schedule F (Form 990) 2010 Page 2

Grants and Other Assistance to Organizations or Entities Outside the United States . Complete if the organization answered "Yes" to Form 990,Part IV, line 15, for any recipient who received more than $5,000. Check this box if no one recipient received more than $5,000 . . . . . . . . ► FUse Part V if additional space is needed.

1(a) Name oforganization

(b) IRS codesection

and EIN ( ifapplicable)

( c) Region ( d) Purpose ofgrant

(e) Amount ofcash grant

(f) Manner ofcash

disbursement

(g) Amount ofof non-cashassistance

(h) Descriptionof non-cashassistance

( i) Method ofvaluation

(book, FMV,appraisal, other)

Enter total number of recipient organizations listed above that are recognized as charities by the foreign country, recognized astax-exempt by the IRS, or for which the grantee or counsel has provided a section 501(c)(3) equivalency letter . . . . .

Enter total number of other organizations or entities .

Schedule F (Form 990) 2010


Grants and Other Assistance to Individuals Outside the United States . Complete if the organization answered "Yes" to Form 990, Part IV, line 16.Use Part V if additional space is needed.

(a) Type of grant orassistance

(b) Region ( c) Number ofrecipients

( d) Amount ofcash grant

(e) Manner of cashdisbursement

( f) Amount ofnon-cashassistance

(g) Descriptionof non-cashassistance

( h) Method ofvaluation

(book, FMV,a pp raisal , other )



Foreign Forms

1 Was the organization a U S transferor of property to a foreign corporation during the tax year? If "Yes," theorganization may be required to file Form 926 (see instructions for Form 926)

2 Did the organization have an interest in a foreign trust during the tax year? If "Yes," the organization may berequired to file Form 3520 and/or Form 3520-A. (see instructions for Forms 3520 and 3520-A)

3 Did the organization have an ownership interest in a foreign corporation during the tax year? If "Yes," theorganization may be required to file Form 5471, Information Return of U.S. Persons with respect to Certain ForeignCorporations. (see instructions for Form 5471)

4 Was the organization a direct or indirect shareholder of a passive foreign investment company or a qualifiedelecting fund during the tax year? If "Yes,"the organization may be required to file Form 8621, Return by aShareholder of a Passive Foreign Investment Company or Qualified Electing Fund. (see instructions for Form 8621)

5 Did the organization have an ownership interest in a foreign partnership during the tax year? If "Yes," theorganization may be required to file Form 8865, Return of U.S. Persons with respect to Certain Foreign Partnerships.(see instructions for Form 8865)

6 Did the organization have any operations in or related to any boycotting countries during the tax year? If "Yes,"the organization may be required to file Form 5713, International Boycott Report (see instructions for Form5713).

F- Yes F No

F- Yes F No

F Yes F- No

F- Yes F No

F- Yes F No

F- Yes F No



Supplemental InformationComplete this part to provide the information (see instructions) required in Part I, line 2, and any additionalinformation.

Identifier ReturnReference

Explanation

PROCEDURE FOR SCHEDULE F, PART I, LINE 2 NORTHWEST HOSPITAL & MEDICAL CENTER DOES NOT PROVIDE GRANTSMONITORING TO ENTITIES OUTSIDE THE UNITED STATES THE HOSPITAL IS SELF-INSURED THROUGH NORTHWESTGRANTS OUTSIDE ASSURANCE CO LTD, A WHOLLY OWNED SUBSIDIARY LOCATED IN THE CAY MAN ISLANDS THETHE U S COMPANY PROVIDES INSURANCE COVERAGE FOR THE HOSPITAL AND ITS PHYSICIANS AMOUNTS

SENT TO NORTHWEST ASSURANCE ARE FOR INSURANCE EXPENSES THERE ARE NO DIRECTACTIVITIES THAT OCCUR WITHIN THE CAY MAN ISLANDS


l efile GRAPHIC print - DO NOT PROCESS As Filed Data - DLN: 93493132017632

SCHEDULE H HospitalsOMB No 1545-0047

(Form 990)20101- Complete if the organization answered "Yes" to Form 990, Part IV , question 20.

Department of the Treasury 1- Attach to Form 990. 1- See separate instructions. OpenInternal Revenue Service

I Inspection


91-0637400

Financial Assistance and Certain Other Community Benefits at Cost

Yes No

la Did the organization have a finnancial assistance policy during the tax year? If "No," skip to question 6a . la Yes

b If "Yes," is it a written policy? . . . . . . . . . . . . . . . . . . . . . lb Yes

2 If the organization has multiple hospitals, indicate which of the following best describes application of the financialassistance policy to its various hospital facilities during the tax year

F Applied uniformly to all hospitals F Applied uniformly to most hospitals

F Generally tailored to individual hospitals

3 Answer the following based on the the financial assistance eligibility criteria that applied to the largest number of theorganization's patients during the tax year

a Does the organization use Federal Poverty Guidelines (FPG) to determine eligibility for providing free care to low

income individuals? If "Yes," indicate which of the following is the FPG family income limit for eligibility for free care 3a Yes

F 1000/0 F 150% F 200% F Other 0/0

b Does the organization use FPG to determine eligibility for providing discounted care to low income individuals? If

"Yes," indicate which of the following is the family income limit for eligibility for discounted care 3b Yes

F 200% F 250% F 300% F 350% F 400% F Other 0/0

c If the organization does not use FPG to determine eligibility, describe in Part VI the income based criteria fordetermining eligibility for free or discounted care Include in the description whether the organization uses an assettest or other threshold, regardless of income, to determine eligibility for free or discounted care

L4 Did the organization's financial assistance policy that applied to the largest number of its patients during the tax yea r 4 Yesprovide for free or discounted care to the "medically indigent"?

5a Did the organization budget amounts for free or discounted care provided under its financial assistance policy during the tax year? . 5a Yes

b If "Yes," did the organization's financial assistance expenses exceed the budgeted amount? . 5b Yes

c If "Yes" to line 5b, as a result of budget considerations, was the organization unable to provide free or discountedcare to a patient who was eligibile for free or discounted care? . 5c No

6a Does the organization prepare a community benefit report during the tax 6a Yesyear? . .

6b If "Yes," did the organization make it available to the public? 6b Yes

Complete the following table using the worksheets provided in the Schedule H instructions Do not submit theseworksheets with the Schedule H

7 Financial Assistance and Certain Other Community Benefits at Cost

FinancialAssistanceand (a) Number of b Persons( )

c Total community()

d Direct offsetting( )

a Net community benefit( )

Percent of(f)

Means-Testedactivities or served benefit expense revenue expense total expense

Government Programsprograms(optional)

(optional)

a Financial Assistance at cost(from Worksheets 1 and 2) 3,500,734 3,500,734 1 310 %

b Unreimbursed Medicaid (fromWorksheet 3, column a) 23,101,627 14,913,067 8,188,560 3 070 %

c Unreimbursed costs-othermeans-tested governmentprograms (from Worksheet 3,column b) . .

d Total Financial Assistance andMeans-Tested GovernmentPrograms 26,602,361 14,913,067 11,689,294 4 380 %

Other Benefitse Community health improvement

services and communitybenefit operations (from(Worksheet 4) . . . 1,238,318 1,238,318 0 460 %

f Health professions education(from Worksheet 5) 68,766 68,766 0 030 %

g Subsidized health services(from Worksheet 6) .

h Research (from Worksheet 7)

i Cash and in-kind contributionsto community groups(from Worksheet 8) 32,483 32,483 0 010 %

j Total Other Benefits . . . 1,339,567 1,339,567 0 500

k Total . Add lines 7d and 7j 27,941,928 14,913,067 13,028,861 4 880

For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990 . Cat N o 50192T Schedule H (Form 990) 2010

Schedule H (Form 990) 2010 Page 2

Community Building Activities during the tax year, and describe in Part VI how its community buildingactivities during the tax year, and describe in Part VI how its community building activities promoted the healthof the communities it serves-

(a) Number ofactivities orprograms(optional)

(b) Personsserved (optional)

(c) Total communitybuilding expense

(d) Direct offsettingrevenue

(e) Net communitybuilding expense

(f) Percent oftotal expense

1 Ph y sical im p rovements and housin g

2 Economic development

3 Community su pp ort

4 Environmental improvements

5 Leadership development and trainingfor community members

6 Coalition building

7 Community health improvementadvocacy

8 Workforce development

9 Other

10 Total

Ill: Bad Debt , Medicare , & Collection Practices

Section A. Bad Debt Expense Yes No

1 Did the organization report bad debt expense in accordance with Heathcare Financial Management AssociationStatement No 15? . . . . . . . . . . . . . . . . . . . . 1 Yes

2 Enterthe amount of the organization's bad debt expense (at cost) . 2 4,666,314

3 Enter the estimated amount of the organization's bad debt expense (at cost)attributable to patients eligible under the organization's financial assistance policy 3 0

4 Provide in Part VI the text of the footnote to the organization's financial statements that describes bad debt expenseIn addition, describe the costing methodology used in determining the amounts reported on lines 2 and 3, andrationale for including a portion of bad debt amounts as community benefit

Section B. Medicare

5 Entertotal revenue received from Medicare (including DSH and IME) . 5 56,870,118

6 Enter Medicare allowable costs of care relating to payments on line 5 . 6 105,845,093

7 Subtract line 6 from line 5 This is the surplus or (shortfall) . 7 -48,974,975

8 Describe in Part VI the extent to which any shortfall reported in line 7 should be treated as community benefitAlso describe in Part VI the costing methodology or source used to determine the amount reported on line 6Check the box that describes the method used

r- Cost accounting system F Cost to charge ratio F Other

Section C . Collection Practices

9a Does the organization have a written debt collection policy? 9a Yes

b If "Yes," does the organization's collection policy contain provisions on the collection practices to be followed forpatients who are known to qualify for charity care or financial assistance? Describe in Part VI 9b Yes

Mananement Comnanies and Joint Ventures

(a) Name of entity (b) Description of primaryactivity of entity

(c) Organization'sprofit % or stockownership %

(d) Officers, directors,trustees, or key

employees' profit %or stock ownership%

(e) Physicians'profit % or stockownership

1

2

3

4

5

6

7

8

9

10

11

12

13

Schedule H (Form 990) 2010


Facility Information

Section A . Hospital Facilities

(list in order of size , measured by total revenue per facility, fromlargest to smallest)

How many hospital facilities did the organization operate duringthe tax year? 1

Name and address

r5`̂

-

iTCua

M-

3

t2-

p

cu

P

0

6(P

o

P-

Zco

m

y

m

C.

her (Describe)

1 UW MEDICINE NORTHWEST1550 NORTH 115TH STREETSEATTLE WA 98133

X X X


MMA Facility Information (continued)

Section C. Other Facilities That Are Not Licensed , Registered, or Similarly Recognized as a Hospital Facility(list in order of size, measured by total revenue per facility, from largest to smallest)

How many non-hospital facilities did the organization operate during the tax year? 2

Name and address Typ e of Facility ( Describe )1 WESTERN RADIOLOGY LLC

10700 MERIDIAN AVE N STE 505SEATTLE WA 98133

HEALTHCARE DIAGNOSTIC IMAGING

2 WESTERN RADIOLOGY LLC10700 MERIDIAN AVE N STE 505SEATTLE, WA 98133

HEALTHCARE DIAGNOSTIC IMAGING

3

4

5

6

7

8

9

10



Supplemental Information

Complete this part to provide the following information

1 Required descriptions. Provide the description required for Part I, lines 3c, 6a, and 7, Part II, Part III, lines 4, 8, and 9b, and PartV, Section B, lines 1j, 3, 4, 5c, 6i, 7, 11h, 13g, 15e, 16e, 17e, 18d, 19d, 20, and 21

2 Needs assessment . Describe how the organization assesses the health care needs of the communities it serves, in addition to anyneeds assessments reported in Part V, Section B

3 Patient education of eligibility for assistance . Describe how the organization informs and educates patients and persons who maybe billed for patient care about their eligibility for assistance under federal, state, or local government programs or under theorganization's financial assistance policy

4 Community information . Describe the community the organization serves, taking into account the geographic area and demographicconstituents it serves

5 Promotion of community health . Provide any other information important to describing how the organization's hospital facilities orother health care facilities further its exempt purpose by promoting the health of the community (e g , open medical staff, communityboard, use of surplus funds, etc )

6 Affiliated health care system . If the organization is part of an affiliated health care system, describe the respective roles of theorganization and its affiliates in promoting the health of the communities served

7 State filing of community benefit report . If applicable, identify all states with which the organization, or a related organization, filesa community benefit report

Identifier ReturnReference Explanation

PART III, LINE 4 THE HOSPITAL PROVIDES ANLLOWANCE FOR POTENTIAL UNCOLLECTIBLE PATIENTCCOUNTS RECEIVABLE, WHEREBY SUCH RECEIVABLESRE REDUCED TO THEIR ESTIMATED NET REALIZABLE

V ALUE THE HOSPITAL ESTIMATES THIS ALLOWANCEBASED ON THE AGING OF ACCOUNTS RECEIVABLE,HISTORICAL COLLECTION EXPERIENCE BY PAYOR,ANDOTHER RELEVANT FACTORS THERE ARE VARIOUSFACTORS THAT CAN IMPACT THE COLLECTION TRENDS,SUCH AS CHANGES IN THE ECONOMY, WHICH IN TURNHAVE AN IMPACT ON UNEMPLOYMENT RATES AND THENUMBER OF UNINSURED AND UNDERINSURED PATIENTS,HE INCREASED BURDEN OF COPAYMENTS TO BE MADE

BY PATIENTS WITH INSURANCE, AND THE BUSINESSPRACTICES RELATED TO COLLECTION EFFORTS THESEFACTORS CONTINUOUSLY CHANGE AND CAN HAVE ANIMPACT ON COLLECTION TRENDS AND THE ESTIMATIONPROCESS THE BAD DEBT COSTING METHODOLOGY USEDWAS TO APPLY A RATIO OF COST TO CHARGES TO BADDEBT WRITE-OFFS ADJUSTED PATIENT CARE CHARGESDIVIDED BY ADJUSTED PATIENT CARE COST (EXPENSESLESS BAD DEBTS LESS NON PATIENT EXPENSES LESSCOMMUNITY BENEFIT EXPENSES) RESULTED IN THERATIO OF COST TO CHARGES CHARGES FOR PATIENTSELIGIBLE FOR CHARITY ARE NOT WRITTEN OFF TO BADDEBT PREADMISSION FINANCIAL COUNSELING IS DONEIN SOME CASES TO IDENTIFY CHARITY ELIGIBILITYPRIOR TO TREATMENT WHEN THIS IS NOT POSSIBLE, ITIS OFFERED DURING OR AFTER SERVICE OR EVEN ONCEHE ACCOUNT HAS BEEN ASSIGNED TO A COLLECTIONGENCY THE HOSPITAL MAKES A DEDICATED EFFORT TO

IDENTIFY CHARITY ELIGIBILITY DISCOUNTS ANDPAYMENTS ON PATIENT ACCOUNTS ARE NOT WRITTENOFF TO BAD DEBT FOR 2010, BAD DEBT EXPENSE ISSHOWN AS REDUCTION FROM REVENUE ON THEFINANCIAL STATEMENTS CONSISTENT WITH GASB


PART III, LINE 8 STANDARD MEDICARE STEP-DOWNMETHODOLOGY IS USED IN THE MEDICARE COSTREPORT


PART III, LINE 9B IT IS THE POLICY OF UW MEDICINENORTHWEST TO EXPECT FULL PAYMENT ON SERVICESPROVIDED FULL PAYMENT IS DUE FROM THE PATIENTUPON RECEIPT OF INITIAL BILLING FOR NON-INSURANCECOVERED BALANCES UNLESS ARRANGEMENTS ARE MADEWITH THE PATIENT FINANCIAL SERVICESDEPARTMENT OPTIONS TO CLEAR AN ACCOUNTSRECEIVABLE THERE ARE 8 OPTIONS TO CLEAR THECCOUNTS RECEIVABLE - CHARGE REVERSAL-

CONTRACTUAL ADJUSTMENT- CHARITY-DMINISTRATIVE/OTHER ADJUSTMENT- INSURANCE

PAYMENT- PATIENT PAYMENT- BAD DEBT - NON-GENCY/OTHER- BAD DEBT - COLLECTIONGENCYPATIENT FINANCIAL SCREENING ALL PATIENTS

WILL BE SCREENED TO DETERMINE FINANCIALRESPONSIBILITY DURING PRE-ADMISSION OR DURINGDMISSION/REGISTRATION IT IS EXPECTED THAT

PATIENTS WILL PROVIDE HONEST AND COMPLETE DATAFROM WHICH STAFF WILL ESTABLISH THE PATIENTPAYMENT PARTICIPATION ONCE THE PATIENT'SRESPONSIBILITY IS DETERMINED, STAFF IS OBLIGATEDO NOTIFY THE PATIENT PROMPTLY FINANCIAL

SCREENING INCLUDES SOME OR ALL OF THE FOLLOWINGASKS - COLLECTING FINANCIAL DEMOGRAPHICINFORMATION - DETERMINING INSURANCE ELIGIBILITYND BENEFITS - COMPLETING A CONFIDENTIAL

FINANCIAL FORM - OBTAINING INSURANCEUTHORIZATION NUMBERS AND REFERRALS -

ESTABLISHING A PLAN WITH THE PATIENT TO CLEARCCOUNT BALANCES - COLLECTING DEPOSITS BASED

ON DEDUCTIBLES AND CO-INSURANCE AMOUNTS ASALLOWED BY THE PATIENT'S INSURANCE PLAN -REVIEWING A PATIENT'S PAST CREDIT HISTORY ORREQUESTING A CREDIT BUREAU REPORT COLLECTION OFDEPOSITS BASED ON FINANCIAL SCREENING ANDESTIMATED SELF PAY BALANCES, IT IS THE POLICY TOREQUEST DEPOSITS AND ESTIMATED INSURANCE CO-PAY BALANCES AS SOON AS THE AMOUNT CAN BEDETERMINED OR ALLOWED BY THE PATIENT'S INSURANCEPLAN ACCOUNTS MAY BE SET UP FOR PATIENTS TO PRE-PAY FOR THEIR CARE PAYMENTS MAY ALSO BECOLLECTED DURING THE PERIOD OF CARE OR ATDISCHARGE IN THE EMERGENCY ROOM DEPOSITS ARE TOBE REQUESTED ONLY AFTER MEDICAL SERVICES HAVEBEEN PROVIDED ALL PAYMENTS ARE TO BE REQUESTEDWITH SENSITIVITY, CONSISTENT WITH ALL HOSPITALPOLICIES NON-EMERGENT SERVICE IS NOT CONTINGENTUPON PAYMENT OF A DEPOSIT EXCEPT IN CASES OFPOOR CREDIT HISTORY AND WHEN APPROVED BY ADIRECTOR OR A VICE PRESIDENT COSMETIC OR NON-MEDICALLY REQUIRED SERVICES ARE TO BE PAID IN FULLIN ADVANCE OF SERVICE SPECIAL CIRCUMSTANCES MAYWARRANT AN EXCEPTION TO PAYMENT IN FULL BUT MUSTBE APPROVED BY THE DIRECTOR OR VICE PRESIDENTGENERAL COLLECTION FRAMEWORK ALL ACCOUNTBALANCES ARE DUE UPON RECEIPT OF FIRST BILLINGWITH THE FOLLOWING SELF PAY EXCEPTIONS - PAYMENTPLAN ARRANGEMENTS CONSISTENT WITH THIS POLICY -DDITIONAL FINANCIAL SCREENING IS BEING

DEVELOPED - HOSPITAL BILLING ERRORS, DELAYS ORUNRESOLVED DISPUTES - UNPAID INSURANCE CLAIMSWHEN PATIENT BALANCES CANNOT EASILY BEDETERMINED INSURANCE BILLING POLICY NORTHWESTPATIENT FINANCIAL SERVICES WILL BILL STATE,FEDERAL AND CONTRACTED INSURANCE PLANS OTHERPAYMENT SOURCES WILL BE BILLED WHENEVER THEPATIENT PROVIDES NECESSARY DATA NWHMC TAKESSSIGNMENT ON ALL MEDICARE CHARGES PATIENT

BALANCES PATIENT PAY ACCOUNTS ARE PAYABLE UPONRECEIPT OF INITIAL BILLING, UNLESS OTHERRRANGEMENTS ARE MADE WITH PATIENT FINANCIAL

SERVICES (PFS) ACCOUNTS WAITING FOR INSURANCEPAYMENT BECOME THE PATIENT'S RESPONSIBILITY 60DAYS AFTER INITIAL INSURANCE BILLING, UNLESSDICTATED BY AN INSURANCE CONTRACT, FINANCIALA RRANGEMENTS ARMADE, OR THIS PROVISION ISWAIVED BY PFS MANAGER OR DIRECTOR NORTHWESTWILL RE-BILL OR OTHERWISE AID A PATIENT'SCOLLECTION EFFORTS WITH THEIR INSURANCECOMPANY, HOWEVER IT CANNOT ACCEPTRESPONSIBILITY FOR THE INSURANCE CLAIM ORNEGOTIATE SETTLEMENT OFA DISPUTED CLAIM QUALITYOF CARE AND BILLING ACCURACY ISSUES ARE TO BERESOLVED AS QUICKLY AS POSSIBLE AND PRIOR TOENFORCING COLLECTION STANDARDS ALL PATIENTSWHO INDICATE FINANCIAL HARDSHIP ARE TO BESCREENED FOR CHARITY CHARITY MAY BE GRANTED ANYIME, EVEN AFTER COLLECTION AGENCY ASSIGNMENT UP

UNTIL FILING OF LEGAL ACTION


PART VI, LINE 2 NORTHWEST HOSPITAL IS A COMMUNITYOF CARING HEALTH PROFESSIONALS, VALUED ANDRECOGNIZED FOR PROMOTING WELLNESS THROUGHEARLY DETECTION AND PREVENTION, MINIMALLYINVASIVE INTERVENTIONS, AND INNOVATIVE CLINICALPRACTICES NORTHWEST HOSPITAL IS ACTIVELYINVOLVED WITH LOCAL, STATE, AND FEDERAL QUALITYINITIATIVES INCLUDING -LEAPFROG HOSPITAL QUALITY& PATIENT SAFETY SURVEY - AS AN EARLY ADVOCATE OFHE LEAPFROG STANDARDS NORTHWEST HOSPITAL WAS

ONE OF THE FIRST HOSPITALS IN THE AREA TO MEET THEICU LEAP -CMS HOSPITAL CONSUMER ASSESSMENT OFHEALTHCARE PROVIDERS AND SYSTEMS (HCAHPS) -CMS &JOINT COMMISSION HOSPITAL INPATIENT QUALITYREPORTING PROGRAM (IQR, FORMERLY HQDAPU/'COREMEASURES')-CMS HOSPITAL OUTPATIENT QUALITY DATAREPORTING PROGRAM (OQR, FORMERLY HOPQDRP)-CMSPHYSICIAN QUALITY REPORTING INITIATIVE (PQRI)-JOINT COMMISSION NATIONAL PATIENT SAFETY GOALS-JOINT COMMISSION PRIMARY STROKE CENTERCERTIFICATION PROGRAM-AMERICAN HEARTSSOCIATION GET WITH THE GUIDELINES (GWTG)

STROKE REGISTRY-FOUNDATION FOR HEALTHCAREQUALITY'S CLINICAL OUTCOMES ASSESSMENT PROGRAM(COAP) FOR INTERVENTIONAL CARDIOLOGY ANDCARDIOTHORACIC SURGERY-FOUNDATION FORHEALTHCARE QUALITY'S SURGICAL CARE ANDOUTCOMES ASSESSMENT PROGRAM (SCOAP)-SOCIETY OFTHORACIC SURGEONS (STS) ADULT CARDIAC SURGERYREGISTRY-AMERICAN COLLEGE OF SURGEONS (ACOS)COMMISSION ON CANCER CERTIFIED CANCER REGISTRY-WASHINGTON STATE DEPARTMENT OF HEALTH TRAUMAREGISTRY -WASHINGTON STATE DEPARTMENT OF HEALTHBIRTH DEFECTS SURVEILLANCE PROGRAM-CENTERS FORDISEASE CONTROL AND PREVENTION NATIONALHEALTHCARE SAFETY NETWORK (CDC NHSN)


PART VI, LINE 3 FINANCIAL COUNSELING IS PROVIDEDT REGISTRATION WHENEVER POSSIBLE AND A LETTER

REGARDING FINANCIAL ASSISTANCE IS PROVIDED ATTHAT TIME WE ALSO CONTRACT WITH RCA (RESOURCECORP OF AMERICA)TO SCREEN SELF PAY PATIENTS ORUNDERFUNDED (POOR INSURANCE COVERAGE) FORMEDICAID EACH PATIENT BILLING STATEMENTCONTAINS INFORMATION ABOUT THE CHARITYSSISTANCE POLICY ALONG WITH THE RELEVANT

CONTACT INFORMATION IN ADDITION,THERE ISINFORMATION ON OUR WEBSITE AND SIGNAGE IN THEORGANIZATION REGARDING THE AVAILABILITY OFFINANCIAL ASSISTANCE AND CHARITY


PART VI, LINE 4 NORTHWEST HOSPITAL IS A FULLSERVICE, NON-PROFIT COMMUNITY HOSPITALESTABLISHED IN 1960 MORE THAN 600 PRIMARY CAREPROVIDERS AND SPECIALISTS IN THE COMMUNITY ARECTIVE OR AFFILIATED TO OUR MEDICAL STAFF

NORTHWEST HOSPITAL IS THE SECOND LARGEST ACUTECARE MARKET SHARE HOLDER IN OUR PRIMARY SERVICEAREA, WITH 20% OF PATIENTS OUR PRIMARY SERVICEREA CONSISTS OF 13 PRIMARY ZIP CODES IN NORTH

SEATTLE OUR SECONDARY SERVICE AREA INCLUDESMANY SNOHOMISH COUNTY ZIP CODES AS WELL ASDDITIONAL SEATTLE ZIP CODES OTHER ACUTE CARE

HOSPITALS LOCATED IN NORTHWEST HOSPITAL'SSERVICE AREAS INCLUDE SWEDISH MEDICAL CENTER, UWMEDICAL CENTER, VIRGINIA MASON MEDICAL CENTER,HARBORVIEW MEDICAL CENTER, PROVIDENCE EVERETTMEDICAL CENTER, SEATTLE CHILDREN'S HOSPITAL ANDEVERGREEN HOSPITAL


PART VI, LINE 6 NORTHWEST HOSPITAL IS A FULL-SERVICE, NON-PROFIT COMMUNITY HOSPITAL, OFFERINGCOMPREHENSIVE MEDICAL, SURGICAL ANDTHERAPEUTIC SERVICES WITH 281 LICENSED BEDS,MORE THAN 1,900 EMPLOYEES AND A WORLD-CLASSMEDICAL STAFF, WE PROVIDE INNOVATIVE,TECHNOLOGICALLY ADVANCED CARE ON A PATIENT-FRIENDLY, EASY-ACCESS CAMPUS JUST NORTH OFDOWNTOWN SEATTLE IN 2010, NORTHWEST HOSPITALBECAME AN ENTITY OFTHE UWMEDICINE HEALTHSYSTEM NORTHWEST HOSPITAL PROVIDES -A NETWORKOFTHE BEST PHYSICIANS AND CLINICALPROFESSIONALS THE REGION HAS TO OFFER - ANENVIRONMENT OF CARE THAT IS WARM, COMFORTABLEA ND STATE-OF-THE-ART - INPATIENT, OUTPATIENT AND24-HOUR EMERGENCY SERVICES - NORTHWESTHOSPITAL HAS WON THE HEALTHGRADES PATIENTSAFETY EXCELLENCE AWARD FOR THE PAST FIVE YEARSIN A ROW, PUTTING IT AMONG THE TOP 5% IN THECOUNTRY FOR PATIENT SAFETY - SINCE 1960,NORTHWEST HOSPITAL HAS PIONEERED TREATMENTSA ND PROCEDURES THAT HAVE BECOME STANDARDS OFCARE IN OUR STATE AND BEYOND, INCLUDINGRADIOACTIVE SEED IMPLANTATION FOR PROSTATECANCER AND GAMMA KNIFE RADIOSURGERY, AMONGOTHERS - OUR 24-HOUR EMERGENCY DEPARTMENTFEATURES ALL-PRIVATE ROOMS, LEADING-EDGET ECHNOLOGY AND EQUIPMENT,AND ONE OFTHEFASTEST TIMES-TO-TREATMENT IN THE STATE FORHEART ATTACK AND STROKE PATIENTS - WE ARE ANOTED NATIONAL LEADER IN CANCER TREATMENT,INCLUDING BRAIN, BREAST, GYNECOLOGIC ANDPROSTATE CANCERS - WE HAVE ESTABLISHEDPREEMINENT PROGRAMS IN CARDIOLOGY,ORTHOPAEDICS, CARDIAC SURGERY AND CARDIACREHABILITATION, IN PARTNERSHIP WITH THEUNIVERSITY OF WASHINGTON MEDICAL CENTER ANDOTHER REGIONAL ORGANIZATIONS - THE FIRST TOINTRODUCE THE LABOR, DELIVERY, RECOVERY ANDPOSTPARTUM BIRTHING SUITE TO THE REGION, WEWELCOME MORE THAN 1,100 BABIES IN OUR CHILDBIRTHCENTER EACH YEAR - OUR SEATTLE BREAST CENTER ISONE OF ONLY A FEW IN THE AREA TO OFFER ALL-DIGITALMAMMOGRAPHY, BOARD-CERTIFIED BREASTRADIOLOGISTS, AND BREAST MRI AND MRI BIOPSY ALLUNDER ONE ROOF - OUR AWARD-WINNINGNEUROSCIENCES PROGRAMS INCLUDE STROKE, DEEPBRAIN STIMULATION AND GAMMA KNIFE RADIOSURGERYFOR NON-INVASIVE TREATMENT OF BRAIN DISEASESA ND DISORDERS - WE AREA VITAL SOURCE OFCOMMUNITY HEALTH EDUCATION AND WELLNESS,OFFERING CLASSES, SUPPORT GROUPS, SCREENINGS ANDOTHER RESOURCES


PART VI, LINE 7 ON JANUARY 1, 2010,THE HOSPITALJOINED THE UNIVERSITY OF WASHINGTON MEDICINEHEALTH SYSTEM (UW MEDICINE) NORTHWEST HOSPITAL& MEDICAL CENTER, UW SCHOOL OF MEDICINE, UWMEDICAL CENTER, UW PHYSICIANS, ASSOCIATION OFUNIVERSITY PHYSICIANS, HARBORVIEW MEDICALCENTER, VALLEY MEDICAL CENTER, AND AIRLIFTNORTHWEST COMPRISE UW MEDICINE, AN UMBRELLAORGANIZATION SERVING TO COORDINATE THESECTIVITIES AND PROMOTE QUALITY HEALTHCARE INHE PACIFIC NORTHWEST AND BEYOND, AND TOCONDUCT CUTTING EDGE MEDICAL RESEARCH WITHWORLDWIDE BENEFIT


efile GRAPHIC print - DO NOT PROCESS I As Filed Data - I DLN: 93493132017632

Schedule I OMB No 1545-0047

(Form 990 ) Grants and Other Assistance to Organizations,20 1 OGovernments and Individuals in the United States

Complete if the organization answered "Yes," to Form 990, Part IV, line 21 or 22.Department of the Treasury l Attach to Form 990Internal Revenue Service

Name of the organization Employer identification number

UW MEDICINE NORTHWEST91-0637400

JE^ll General Information on Grants and Assistance

1 Does the organization maintain records to substantiate the amount of the grants or assistance, the grantees' eligibility for the grants or assistance, andthe selection criteria used to award the grants or assistance? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F Yes 1 No

2 Describe in Part IV the organization's procedures for monitoring the use of grant funds in the United States

Grants and Other Assistance to Governments and Organizations in the United States . Complete if the organization answered "Yes" toForm 990, Part IV, line 21 for any recipient that received more than $5,000. Check this box if no one recipient received more than $5,000. Part II can beduplicated if additional space is needed. . . . . . . . . . . . . . . . . . . . . . . . . . llii^ F

1 (a) Name and address oforganization

or government

( b) EIN (c) IRC Code sectionif applicable

( d) Amount of cashgrant

(e) Amount of non-cash

assistance

(f ) Method ofvaluation

(book, FMV,appraisal,other)

(g) Description ofnon - cash assistance

(h) Purpose of grantor assistance

(1) NORTHWESTHOSPITAL FOUNDATION1550 NORTH 115T STREETD-180SEATTLE, WA 98133

91-1011603 501(C)(3) 399,823 N/A N/A INSTITUTIONALSUPPORT

(2) HEALTH RESOURCESNORTHWEST1550 NORTH115T STREET D-180SEATTLE, WA 98133

91-1157294 501(C)(3) 5,419,798 N/A N/A OPERATINGSUPPORT

2 Enter total number of section 501(c)( 3) and government organizations . . . . . . . . . . . . . . . . . . . . . . . . . ► 2

3 Enter total number of other organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0

For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990 . Cat No 50055P Schedule I (Form 990) 2010

Schedule I (Form 990) 2010 Pa g e 2

Grants and Other Assistance to Individuals in the United States . Complete if the organization answered "Yes" to Form 990, Part IV, line 22.Use Schedule I-1 (Form 990) if additional space is needed.

(a)Type of grant or assistance (b)N umber ofrecipients

(c)Amount ofcash grant

(d)Amount ofnon-cash assistance

(e)Method of valuation(book,

FMV, appraisal, other)

(f)Description of non-cash assistance

Suuulemental Information . Complete this Dart to provide the information reauired in Part I. line 2. and any other additional information.


PROCEDURE FOR PART I, LINE 2 SCHEDULE I, PART I, LINE 2 THE HOSPITAL MAKES LIMITED GRANTS TO UNRELATED ORGANIZATIONS RECORDSMONITORING GRANTS ARE KEPT FOR THESE TRANSACTIONS THE HOSPITAL ALSO MAKES GRANTS TO ITS RELATED ORGANIZATIONSIN THE U S THROUGHOUT THE YEAR THESE GRANTS ARE TO ASSIST WITH OPERATING EXPENDITURES FOR THE RELATED

ENTITIES AND HELP FURTHER THE OVERALL MISSION OF NORTHWEST HOSPITAL AND ITS RELATEDORGANIZATIONS ADEQUATE RECORDS ARE KEPT REGARDING THE TRANSACTIONS TO ENSURE THE FUNDS AREBEING USED FOR CHARITABLE PURPOSES

Schedule I (Form 990) 2010


Schedule J Compensation Information OMB No 1545-0047

(Form 990)For certain Officers, Directors, Trustees, Key Employees, and Highest

Compensated Employees 20 1 01- Complete if the organization answered "Yes" to Form 990,

Department of the Treasury Part IV, question 23. PublicOpen to

Internal Revenue Service 1- Attach to Form 990. 1- See separate instructions. Inspection

Name of the organizationUW MEDICINE NORTHWEST

Employer identification number

91-0637400

Questions Regarding Compensation

la Check the appropiate box(es) if the organization provided any of the following to or for a person listed in Form990, Part VII , Section A, line la Complete Part III to provide any relevant information regarding these items

F First-class or charter travel 1 Housing allowance or residence for personal use

1 Travel for companions 1 Payments for business use of personal residence

1 Tax idemnification and gross-up payments 1 Health or social club dues or initiation fees

1 Discretionary spending account 1 Personal services ( e g , maid, chauffeur, chef)

Yes I No

b If any of the boxes in line la are checked, did the organization follow a written policy regarding payment orreimbursement orprovision of all the expenses described above? If "No," complete Part III to explain lb Yes

2 Did the organization require substantiation prior to reimbursing or allowing expenses incurred by allofficers, directors, trustees, and the CEO/Executive Director, regarding the items checked in line la? 2 No

3 Indicate which , if any, of the following the organization uses to establish the compensation of theorganization 's CEO/Executive Director Check all that apply

fl Compensation committee fl Written employment contract

1 Independent compensation consultant 1 Compensation survey or study

fl Form 990 of other organizations fl Approval by the board or compensation committee

4 During the year, did any person listed in Form 990, Part VII, Section A, line la with respect to the filing organizationor a related organization

a Receive a severance payment or change-of-control payment from the organization or a related organization? 4a Yes

b Participate in, or receive payment from, a supplemental nonqualified retirement plan? 4b Yes

c Participate in, or receive payment from, an equity-based compensation arrangement? 4c No

If "Yes" to any of lines 4a-c, list the persons and provide the applicable amounts for each item in Part III

Only 501(c)(3) and 501 ( c)(4) organizations only must complete lines 5-9.

5 For persons listed in form 990, Part VII, Section A, line la, did the organization pay or accrue anycompensation contingent on the revenues of

a The organization? 5a No

b Any related organization? 5b No

If "Yes," to line 5a or 5b, describe in Part III

6 For persons listed in form 990, Part VII, Section A, line la, did the organization pay or accrue anycompensation contingent on the net earnings of

a The organization? 6a No

b Any related organization? 6b No

If "Yes," to line 6a or 6b, describe in Part III

7 For persons listed in Form 990, Part VII, Section A, line la, did the organization provide any non-fixedpayments not described in lines 5 and 6? If "Yes," describe in Part III 7 No

8 Were any amounts reported in Form 990, Part VII, paid or accured pursuant to a contract that wassubject to the initial contract exception described in Regs section 53 4958-4(a)(3)? If "Yes," describein Part III 8 No

9 If "Yes" to line 8, did the organization also follow the rebuttable presumption procedure described in Regulationssection 53 4958-6(c)? 9

For Privacy Act and Paperwork Reduction Act Notice, see the Intructions for Form 990 Cat No 50053T Schedule 3 (Form 990) 2010

Schedule J (Form 990) 2010 Page 2

Officers, Directors , Trustees , Key Employees, and Highest Compensated Employees . Use duplicate copies if additional space is needed.

For each individual whose compensation must be reported in Schedule J, report compensation from the organization on row (i) and from related organizations, described in theinstructions on row (ii) Do not list any individuals that are not listed on Form 990, Part VII

Note . The sum of columns ( B)(i)-(iii) must equal the applicable column (D) or column ( E) amounts on Form 990, Part VII, line la

(A) Name (B) Breakdown of W-2 and/or 1099-MISC compensation (C) Retirement and (D) Nontaxable (E) Total of columns (F) Compensation

(ii) Bonus & (iii) Other other deferred benefits (B)(i)-(D) reported in prior(i) Base

compensationincentive reportable compensation Form 990 or

compensation compensation Form 990-EZ

(1) C WILLIAM (1) 0 0 0 0 0 0 0SCHNEIDER (ii) 446,250 0 331,890 518,863 23,052 1,320,055 327,994

(2) GREG SCHROEDL0 0 0 0 0 0 0

203,055 0 74,262 127,476 22,344 427,137 112,815

(3) GAYLE WARD ^i )0 0 0 0 0 0 0

I 182 , 98 0 73,102 123,129 17,749 396,969 108,831

(4) ANNA KARIN (i) 0 0 0 0 0 0 0ANDREWS (ii) 279,742 0 85,265 163,890 14,941 543,838 124,957

(5) DANIEL L DOWNEY (i) 363,402 0 0 6,290 9,574 379,266 0(ii) 0 0 0 0 0 0 0

(6) KATHRYN F (1) 353,499 0 0 4,123 1,807 359,429 0MCGONIGLE (ii) 0 0 0 0 0 0 0

(7) HOWARD G MUNTZ (1) 346,824 0 0 3,883 1,807 352,514 0(i1) 0 0 0 0 0 0 0

(8)CHAU-SU OU (1) 340,344 0 0 8,250 11,999 360,593 0(i1) 0 0 0 0 0 0 0

(9) LYNN M KEENAN (1) 327,275 0 0 1,652 8,353 337,280 0(i1) 0 0 0 0 0 0 0

(10) ROBERT (i) 0 0 0 0 0 0 0STEIGMEYER (ii) 200,789 0 839,903 274,451 11,414 1,326,557 530,087

( 11 )

( 12 )

( 13 )

14

( 15 )

( 16 )

Schedule 3 (Form 990) 2010

Schedule J (Form 990) 2010 Page 3


Complete this part to provide the information, explanation, or descriptions required for Part I, lines la, 1b, 4c, 5a, 5b, 6a, 6b, 7, and 8 Also complete this part for any additional information

Identifier Return ExplanationReference

PART I, LINE FIRST CLASS TRAVEL WAS PROVIDED FOR PETER R EVANS, CHAIRMAN, FOR ONE BUSINESS RELATED TRIP DURING THE YEAR IT WAS NOT1A CONSIDERED TAXABLE COMPENSATION

PART I, DURING THE YEAR, C WILLIAM SCHNEIDER RECEIVED $55,781 IN TAXABLE DISTRIBUTIONS FROM A SECTION 457(F) PLAN THE AMOUNTSLINES 4A-B WERE REPORTED AS NONTAXABLE COMPENSATION ON A PREVIOUS TAX RETURN WHEN THE CONTRIBUTION TO THE PLAN WAS MADE ROBERT

STEIGMEYER, FORMER SENIOR VICE PRESIDENT OF OPERATIONS AND FINANCE, RECEIVED A SEVERANCE PAYMENT AS A RESULT OF THEORGANIZATION'S AFFILIATION WITH THE UNIVERSITY OF WASHINGTON $367,259 WAS PAID OVER A 12 MONTH PERIOD BEGINNING 7/1/10THE SEVERANCE AGREEMENT WAS CONDITIONED UPON MR STEIGMEYER'S CONTINUED EMPLOYMENT WITH THE ORGANIZATION THROUGHJUNE 30, 2010 TO ASSIST WITH THE ORGANIZATIONAL CHANGE THE TOTAL REPORTED FOR MR STEIGMEYER INCLUDES $274,451 INDEFERRED COMPENSATION ROBERT STEIGMEYER'S POSITION AS SENIOR VICE PRESIDENT OF OPERATIONS AND FINANCE AND CHIEFFINANCIAL OFFICER OF NORTHWEST HOSPITAL & MEDICAL CENTER WAS SUBSTANTIALLY IMPACTED WITH THE AFFILIATION OF HEALTHRESOURCES NORTHWEST AND THE UNIVERSITY OF WASHINGTON IT WAS EXTREMELY IMPORTANT TO MAINTAIN STABILITY OF LEADERSHIP,ESPECIALLY AT THE OFFICER LEVEL GIVEN THE MAGNITUDE OFTHE ORGANIZATION CHANGE AND THE IMPACT ON THE MEDICAL STAFF,EMPLOYEES AND COMMUNITY HEALTH RESOURCES NORTHWEST PROVIDED A SEVERANCE PACKAGE TO MR STEIGMEYER IN EXCHANGE FORHIS COMMITMENT TO REMAIN WITH THE ORGANIZATION DURING THE INITIAL TRANSITION THROUGH JUNE 30, 2010

SUPPLEMENTAL PART III SCHEDULE J, PART I, LINE 3 THE TOP MANAGEMENT OFFICIAL IS UNCOMPENSATED BY UW MEDICINE NORTHWEST UW MEDICINEINFORMATION NORTHWEST RELIES ON HEALTH RESOURCES NORTHWEST,A RELATED ORGANIZATION,TO ESTABLISH COMPENSATION FOR THE TOP

MANAGEMENT OFFICIAL

Schedule 3 (Form 990) 2010

efile GRAPHIC urint - DO NOT PROCESS I As Filed Data - I DLN: 93493132017632

Schedule K OMB No 1545-0047

(Form 990) Supplemental Information on Tax Exempt BondsComplete if the organization answered "Yes" to Form 990, Part IV, line 24a. Provide descriptions,1- 20 1 0

explanations, and any additional information in Schedule 0 (Form 990).

Department of the Treasury 1- Attach to Form 990. 1- See separate instructions. •

Internal Revenue Service

Name of the organization Employer identification number

UW MEDICINE NORTHWEST91-0637400

Bond Issues

(a)Issuer Name (b)IssuerEIN

(c

)CUSIP #

(d)Date Issued (e) Issue Price

(f)Descri

ption of Pur

pose

(g) Defeased(h) OnBehalf ofIssuer

(i) Poolfinancing

Yes No Yes No Yes No

WASHINGTON HEALTH CAREA FACILITIES AUTHORITY SER

200791-1108929 11-29-2007 84,042,940

CAPITAL EXPENDITURES &DEBT

X X X

• iii Prncppdc

A B C D

1 Amount of bonds retired 4,100,000

2 Amount of bonds legally defeased

3 Total proceeds of issue 84,042,940

4 Gross proceeds in reserve funds 6,706,015

5 Capitalized interest from proceeds

6 Proceeds in refunding escrow 27,714,593

7 Issuance costs from proceeds 320,700

8 Credit enhancement from proceeds

9 Working capital expenditures from proceeds

10 Capital expenditures from proceeds 48,212,431

11 Other spent proceeds

12 Other unspent proceeds 2,283,079

13 Year of substantial completion 2011

Yes No Yes No Yes No Yes No

14 Were the bonds issued as part of a current refunding issue? X

15 Were the bonds issued as part of an advance refunding issue? X

16 Has the final allocation of proceeds been made? X

17 Does the organization maintain adequate books and records to support the finalallocation of proceeds?

X

i n.iii Private Business Use

A B C D


1 Was the organization a partner in a partnership, or a member of an LLC, which owned Xproperty financed by tax-exempt bonds?

2 Are there any lease arrangements that may result in private business use of bond- Xfinanced property?

For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990 . Cat No 50193E Schedule K (Form 990) 2010

Schedule K (Form 990) 2010 Pa g e 2

Private Business Use (Continued)

A B C D


3a Are there any management or service contracts that may result in private businessuse?

X

b Are there any research agreements that may result in private business use of bond-financed property?

X

C Does the organization routinely engage bond counsel or other outside counsel to reviewany management or service contracts or research agreements relating to the financed Xproperty?

4 Enter the percentage of financed property used in a private business use by entitiesother than a section 501(c)(3) organization or a state or local government

0-

5 Enter the percentage of financed property used in a private business use as a result ofunrelated trade or business activity carried on by your organization, another section501(c)(3) organization, or a state or local government 0-

6 Total of lines 4 and 5

7 Has the organization adopted management practices and procedures to ensure thepost-issuance compliance of its tax-exempt bond liabilities?

X

ArbitrageA B C D


1 Has a Form 8038-T, Arbitrage Rebate, Yield Reduction andPenalty in Lieu of Arbitrage Rebate, been filed with respect to thebond issue?

X

2 Is the bond issue a variable rate issue? X

3a Has the organization or the governmental issuer enteredinto a hedge with respect to the bond issue?

X

b Name of provider

C Term of hedge

d Was the hedge superintegrated?

e Was a hedge terminated?

4a Were gross proceeds invested in a GIC? X

b Name of provider

C Term of GIC

d Was the regulatory safe harbor for establishing the fair marketvalue of the GIC satisfied?

5 Were any gross proceeds invested beyond an available temporaryperiod? X

6 Did the bond issue qualify for an exception to rebate?X


Complete this part to provide additional information for responses to questions on Schedule K (see instructions)

Schedule K (Form 990) 2010


Schedule L Transactions with Interested Persons OMB No 1545-0047

(Form 990 or 990-EZ ) 0- Complete if the organization answered

20 1 0"Yes" on Form 990, Part IV , lines 25a , 25b, 26, 27, 28a , 28b, or 28c,or Form 990-EZ, Part V lines 38a or 40b.

Department of the Treasury 0- Attach to Form 990 or Form 990-EZ . 1-See separate instructions . • . -



91-0637400

L^l Excess Benefit Transactions (section 501(c)(3) and section 501 (c)(4) organizations only).

Loans to and/or From Interested Persons.C'mmnlata iftha nrnannatinn ancwarari "Vac" nn Fnrm QQn Part T\/ Iina 7A, nr Fnrm QQn-F7 Part \/ Iina '3Ra

(a) Name of interested person andpurpose

(b) Loan toor from the?

organization(c)Original

principal amount(d)Balance due

(e) Indefault?

App o)vedby board orcommittee?

(g )Writtenagreement?

To From Yes No Yes No Yes No

Total $

IT.IIl Grants or Assistance Benefitting Interested Persons.Com p lete if the org anization answered "Yes" on Form 990 , Part IV, line 27.

(a) Name of interested person(b)Relationship between interested person

(c)Amount of grant or type of assistanceand the organization

For Privacy Act and Paperwork Reduction Act Noticee see the Cat No 50056A Schedule L (Form 990 or 990 - EZ) 2010Instructions for Form 990 or 990-EZ.

2 Enter the amount of tax imposed on the organization managers or disqualified persons during the year undersection 4958 . ► $

3 Enter the amount of tax, if any, on line 2, above, reimbursed by the organization . ► $

Schedule L (Form 990 or 990-EZ) 2010 Page 2

Business Transactions Involving Interested Persons.

Complete if the organization answered "Yes" on Form 990, Part IV, line 28a, 28b, or 28c.

( a) Name of interested person

(b) Relationshipbetween interestedperson and the

(c) Amount oftransaction

escription of transaction( d) Description

( e) Sharing of

revenues?

organization Yes No

(1) EMERGENCY SERVICES NW SEE PART V 4,225,886 SEE PART V No


Complete this part to provide additional information for responses to questions on Schedule L (see instructions)


SCHEDULE L, PART IV, BUSINESS (B) RELATIONSHIP BETWEEN INTERESTED PERSON ANDTRANSACTIONS INVOLVING ORGANIZATION GREGORY SCHROEDL,AN OFFICER FORINTERESTED PERSONS NORTHWEST HOSPITAL & MEDICAL CENTER, IS A 50%

OWNER IN EMERGENCY SERVICES NORTHWEST (D)DESCRIPTION OF TRANSACTION BUSINESSTRANSACTION WITH EMERGENCY SERVICES NORTHWESTTO PROVIDE HEALTH CARE SERVICES

Schedule L (Form 990 or 990-EZ) 2010

efile GRAPHIC p rint - DO NOT PROCESS As Filed Data - DLN: 93493132017632

SCHEDULE 0OMB No 1545-0047

(Form 990 or 990-EZ) Supplemental Information to Form 990 or 990-EZ201

O

Department of the Treasury Complete to provide information for responses to specific questions onForm 990 or to provide any additional information . Open

Internal Revenue Service1- Attach to Form 990 or 990-EZ. Inspection

Name of the organizationUW MEDICINE NORTHWEST

Employer identification number

91-0637400


FORM 990, PART I, NORTHWEST HOSPITAL VOLUNTEERS PERFORM MANY NON-TECHNICAL SERVICES IN SUPPORT OFLINE 6, PATIENT CARE AND OTHER DEPARTMENTS THEY ACT AS IN-HOUSE COURIERS, HELP RUN THE GIFTVOLUNTEERS SHOP, WORK THE GREETER DESK AND ASSIST STAFF AS NEEDED THE HOSPITAL AUXILIARY RAISES

MONEY TO SUPPORT SCHOLARSHIPS AND GRANTS IN ADDITION, THERE ARE 9 VOLUNTEER BOARDMEMBERS


FORM 990, PART VI, THE SOLE MEMBER OF UW MEDICINE NORTHWEST (DBA NORTHWEST HOSPITAL & MEDICALSECTION A, LINE 6 CENTER) IS THE UNIVERSITY OF WASHINGTON


FORM 990 , PART VI, PER THE BYLAWS, THE MEMBER SHALL ELECT TRUSTEES TO THE BOARD OF TRUSTEESSECTION A, LINE 7A AND THE MEMBER MAY REMOVE TRUSTEES FROM OFFICE


Explanation

FORM 990, PER THE BYLAWS, THE MEMBER HAS MANY RESERVE POWERS INCLUDING, BUT NOT LIMITED TO,PART VI, APPROVALS OF SALES OR TRANSFERS OF ASSETS, APPOINTMENT OF AUDITORS, ESTABLISHMENT OFSECTION A, LINE SUBSIDIARY, AFFILIATED OR RELATED ENTITIES, APPROVAL OF THE ANNUAL OPERATING AND CAPITAL7B BUDGETS, ADOPTION OF MERGER, CONSOLIDATION OR DISSOLUTION PLAN, APPROVAL OF ACQUISITION

OR TRANSFER OF REAL PROPERTY


FORM 990, PART THE FORM 990 IS REVIEWED BY THE CONTROLLER, CFO AND CEO FOR ACCURACY AND COMPLETENESS

VI, SECTION B, ONCE COMPLETED, A COPY OF THE FORM 990 IS SUBMITTED TO THE AUDIT COMMITTEE OF THE BOARDLINE 11 OF TRUSTEES FOR REVIEW AND APPROVAL BEFORE FILING THE AUDIT COMMITTEE IN TURN REPORTS TO

THE BOARD THE OUTCOME OF THEIR REVIEW PRIOR TO FILING THE FORM 990 WITH THE IRS


Explanation

FORM 990, WE ADMINISTER AN ANNUAL CONFLICT OF INTEREST SURVEY TO ALL OFFICERS, TRUSTEES AND KEYPART VI, EMPLOYEES COMPLETED SURVEYS ARE THEN REVIEWED BY OUR LEGAL COUNSEL TO DETERMINESECTION B, LINE WHETHER ANY CONFLICT OF INTEREST EXISTS WHEN A CONFLICT OF INTEREST DOES ARISE, THOSE12C INDIVIDUALS ARE REQUIRED BY THE CONFLICT OF INTEREST POLICY TO ABSTAIN FROM VOTING ON

MATTERS THAT PERTAIN TO THE ISSUE ANY IDENTIFIED CONFLICTS OF INTEREST ARE DISCLOSED IN THEBOARD MINUTES AND MADE AVAILABLE TO THE ENTIRE BOARD


Explanation

FORM 990, COMPENSATION FOR THE SENIOR TEAM IS REGULARLY EVALUATED FOR FAIR MARKET VALUE (FMV) THEPART VI, SENIOR TEAM INCLUDES THE CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER, CHIEF QUALITY OFFICER,SECTION B, CHIEF NURSING OFFICER, AND THE CHIEF OPERATIONS OFFICER THE PROCESS FOR ASSESSING FMVLINE 15 INVOLVES ENGAGING AN INDEPENDENT COMPENSATION CONSULTANT TO ASSESS COMPENSATION LEVELS

AND REPORT BACK TO THE COMPENSATION COMMITTEE OF THE BOARD THE INDEPENDENT CONSULTANTWILL BRING FORTH RELEVANT COMPARISON INFORMATION INCLUDING SURVEYS AND REGIONAL DATA THECOMPENSATION COMMITTEE OF THE BOARD IN TURN APPROVES THE COMPENSATION OF THE SENIOR TEAM


FORM 990, PART VI, SECTION C,LINE 19

GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND FINANCIAL STATEMENTSARE AVAILABLE UPON REQUEST


FORM 990, PART VII, COLUMN B THE OFFICER'S AVERAGE HOURS PER WEEK ARE BASED ON INDIVIDUAL HOURS WORKEDHOURS FOR RELATED PER ORGANIZATION THE REMAINING HOURS ARE REPORTED ON THE RELATEDORGANIZATIONS ORGANIZATION'S (HEALTH RESOURCES NORTHWEST) TAX RETURN


CHANGES IN NET FORM 990, NET UNREALIZED GAINS ON INVESTMENTS 2,547,047 PRIOR PERIOD ADJUSTMENT TO CORRECTASSETS OR FUND PART XI, LINE PLEDGE MADE TO UW MEDICINE NORTHWEST 422,204 RELEASE OF PERMANENTLY RESTRICTEDBALANCES 5 NET ASSETS OF RELATED ORGANIZATION -1,716,527 OTHER CHANGES IN NET ASSETS -212,582

TOTAL TO FORM 990, PART XI, LINE 5 1,040,142

jefile GRAPHIC print - DO NOT PROCESS

SCHEDULE R(Form 990)

Department of the Treasury


As Filed Data -

Related Organizations and Unrelated Partnerships

1- Complete if the organization answered "Yes" to Form 990, Part IV, line 33, 34, 35, 36, or 37.1- Attach to Form 990. 1- See separate instructions.

DLN:93493132017632

OMB No 1545-0047

2010


91-0637400

Identification of Disregarded Entities (Complete if the organization answered "Yes" on Form 990, Part IV, line 33.)

(a)Name, address, and EIN of disregarded entity

(b)Primary activity

(c)Legal domicile (stateor foreign country)

(d)Total income

(e)End-of-year assets

(f)Direct controlling

entity

See Additional Data Table

Identification of Related Tax-Exempt Organizations (Complete if the organization answered "Yes" on Form 990, Part IV, line 34 because it had oneor more related tax-exempt organizations during the tax year.)

(g)(a) (b) (c) (d) Public charity status (f) Section 512(b)(13)

Name, address, and EIN of related organization Primary activity Legal domicile (state Exempt Code section(if section 501(c)

Direct controlling controlledor foreign count rY) (3)) entity organization

Yes No

(1) HEALTH RESOURCES NORTHWEST

1550 NORTH 115TH STREET MS D-180MANAGEMENT SERVICES WA 501(C)(3) LINE 11B, II

UW MEDICINENORTHWEST No

SEATTLE, WA 9813391-1157294

(2) NORTHWEST HOSPITAL FOUNDATION

1550 NORTH 115TH STREET MS D-180UW MEDICINE

SUPPORT THE HOSPITAL WA 501(C)(3) LINE 7 NORTHWEST Yes

SEATTLE, WA 9813391-1011603

(3) THE ASSOCIATION OF UNIVERSITY PHYSICIANS

501 EASTLAKE AVENUE EAST SUITE 400MEDICAL PRACTICE WA 501(C)(3) LINE 11A, I

UNIVERSITY OFWASHINGTON No

SEATTLE, WA 9810991-1220843

(4) UW PHYSICIANS NETWORK

4333 BROOKLYN AVENUE NEUNIVERSITY OF

MEDICAL PRACTICE WA 501(C)(3) LINE 11A, I WASHINGTON No

SEATTLE, WA 9810591-1715882

(5) UNIVERSITY OF WASHINGTON

1959 NE PACIFIC STREET EDUCATION AND MEDICAL WA GOVERNMENT N/A N/A NoCARE

SEATTLE, WA 9819591-6001537

For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990. Cat No 50135Y Schedule R (Form 990) 2010

Schedule R (Form 990) 2010 Page 2

Identification of Related Organizations Taxable as a Partnership (Complete if the organization answered "Yes" on Form 990, Part IV, line 34because it had one or more related organizations treated as a partnership during the tax year.)

(c) (h) (i) 0)(a) (b) Legal ( d) (e) (f) (g ) Disproprtionate Code V-UBI General or

Name, address, and EIN of Primary activity domicile Direct controllingPredominant income

Share of total income Share of end-of-year allocations7 amount in box 20 of managing (k)

related organization (state or entity(related, unrelated,

assets Schedule K-1 part ner? Percentage

foreignexcluded from tax (Form 1065) ownership

country)under sections 512-

514)

Yes No Yes No

(1) NORTH SEATTLESURGERY CENTER LLC

10330 MERIDIAN AVEOFFICES OF WA N/A RELATED 93,030 1,564,913 No Yes 50 000 %

NORTH SUITE 150PHYSICIANS

SEATTLE, WA9813320-2033654

(2) RICHMOND BUILDINGPARTNERSHIP

355 RICHMOND BEACHRENTAL OF PHYSICIAN WA N/A RELATED 32,248 624,267 No Yes 37 500 %

ROADOFFICE

SEATTLE, WA9817791-1518742

(3) WESTERN RADIOLOGYIMAGING

10330 MERIDIAN AVEMEDICAL IMAGING WA N/A RELATED 280,289 1,156,186 No No 50 000 %

NORTH SUITE 505SERVICES

SEATTLE, WA9813305-0627028

Identification of Related Organizations Taxable as a Corporation or Trust (Complete if the organization answered "Yes" on Form 990, Part IV,line 34 because it had one or more related organizations treated as a corporation or trust during the tax year.)

( a)Name, address, and EIN of related organization

(b)Primary activity

(c)Legal domicile

(state orforeigncountry)

(d)Direct controlling

entity

(e)Type of entity(C corp, S corp,

or trust)

(f)Share of total income

(g)Share of

end-of-yearassets

(h)Percentageownership

See Additional Data Table

Schedule R (Form 990) 2010


ff^ Transactions With Related Organizations (Complete if the organization answered "Yes" on Form 990, Part IV, line 34, 35, 35A, or 36.)

Note . Complete line 1 if any entity is listed in Parts II, III or IV Yes No

1 During the tax year, did the orgranization engage in any of the following transactions with one or more related organizations listed in Parts II-IV?

a Receipt of (i) interest (ii) annuities (iii) royalties (iv) rent from a controlled entity la Yes

b Gift, grant, or capital contribution to other organization (s) lb Yes

c Gift, grant, or capital contribution from other organization(s) 1c Yes

d Loans or loan guarantees to or for other organization( s) ld Yes

e Loans or loan guarantees by other organization (s) le Yes

f Sale of assets to other organization( s) if No

g Purchase of assets from other organization (s) 1g No

h Exchange of assets 1h No

Yesi Lease of facilities, equipment, or other assets to other organization (s) ii

j Lease of facilities, equipment, or other assets from other organization (s) 1j Yes

k Performance of services or membership or fundraising solicitations for other organization (s) 1k No

I Performance of services or membership or fundraising solicitations by other organization (s) 11 Yes

m Sharing of facilities, equipment, mailing lists, or other assets 1m No

n Sharing of paid employees in Yes

o Reimbursement paid to other organization for expenses

p Reimbursement paid by other organization for expenses

q Other transfer of cash or property to other organization(s)

r Other transfer of cash or property from other organization(s)

2 If the answer to any of the above is "Yes," see the instructions for information on who must complete this line, including covered relationships and transaction thresholds

(a) (b) (^) (d)Name of other organization

TransactionAmount involved

Method of determining amounttype(a-r) involved

(1) NORTHWEST HOSPITAL FOUNDATIONC 535,235 ACTUAL COST

(2) NORTHWEST HOSPITAL FOUNDATIONN 237,551 ACTUAL COST

(3) NORTHWEST HOSPITAL FOUNDATIONB 404,823 ACTUAL COST

(4) NORTHWEST HOSPITAL FOUNDATIOND 501,980 ACTUAL COST

(5)

(6)



Unrelated Organizations Taxable as a Partnership (Complete if the organization answered "Yes" on Form 990, Part IV, line 37.)

Provide the following information for each entity taxed as a partnership through which the organization conducted more than five percent of its activities (measured by total assets or grossrevenue) that was not a related organization See instructions regarding exclusion for certain investment partnerships

(a)Name, address, and EIN of entity

(b)Primary activity

(c)Legal domicile

(state or foreigncountry)

(d )Are allpartnerssection

501(c)(3)organizations?

( e)Share of

end-of-yearassets

(f)Disproprtionateallocations?

(g)Code V-UBIamount in box

20 of Schedule K-1(Form 1065)

(h)General ormanagingpart ner?

Yes No Yes No Yes No




Complete this part to provide additional information for responses to questions on Schedule R (see instructions)



Additional Data

Software ID:

Software Version:

EIN: 91 -0637400

Name : UW MEDICINE NORTHWEST

Form 990, Schedule R, Part I - Identification of Disregarded Entities

Return to Form

(a) (b) Legal Domicile (d) (e) (f)Name, address, and EIN of disregarded entity Primary Activity (State Total income End -of-year Direct Controlling

or Foreign ($) as )tss EntityCountry)

BARIATRIC SURGERY CLINIC TRUST GRANTOR TRUST WA 1,027,364 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813326-6073244

DEEP BRAIN SIMULATION TRUST GRANTOR TRUST WA 15,543 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813327-6267538

DOWNEY PLASTIC SURGERY TRUST GRANTOR TRUST WA 686,231 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813327-6380184

GYNECOLOGY CANCER CLINIC TRUST GRANTOR TRUST WA 2,868,454 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813326-6036216

JAMES A JOKI TRUST GRANTOR TRUST WA 593,025 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813326-6534299

LAKE FOREST PARK CLINIC TRUST GRANTOR TRUST WA 1,985,638 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813391-6546627

LEE CLINIC TRUST GRANTOR TRUST WA 193,515 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813327-6267496

MERIDIAN WOMENS HEALTH TRUST GRANTOR TRUST WA 2,004,190 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813326-6534323

MIDWIVES CLINIC TRUST GRANTOR TRUST WA 0 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813345-6330980

NEUROLOGY NORTHWEST TRUST GRANTORTRUST WA 0 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813345-6442668

NORTHWEST HOSPITAL CRITICAL CARE TRUST GRANTOR TRUST WA 901,616 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813326-6173993

NORTHWEST HOSPITAL INPATIENT SERVICES TRUST GRANTOR TRUST WA 2,150,036 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813326-6173905

NORTHWEST HOSPITAL PROVIDERS TRUST GRANTOR TRUST WA 1,436,962 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813371-6214304

NORTHWEST INTERNAL MEDICINE TRUST GRANTOR TRUST WA 1,064,373 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813341-6558148

NWH&MC SURGICAL PRE-OP CLINIC TRUST GRANTOR TRUST WA 0 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813345-6578380

OLYMPIC MEDICAL CENTER TRUST GRANTOR TRUST WA 805,215 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813322-7007168

OU CLINIC TRUST GRANTOR TRUST WA 418,656 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813327-6380225

RICHMOND CLINIC TRUST GRANTOR TRUST WA 0 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813345-6333945

ROOSEVELT MEDICAL CENTER TRUST GRANTOR TRUST WA 354,545 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813391-1685889

SEATTLE EAR NOSE THROAT TRUST GRANTOR TRUST WA 439,380 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813320-7122044

SULLIVAN PULMONARY CLINIC TRUST GRANTOR TRUST WA 401,981 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813326-6533882

UWNWH MEDICAL GROUP TRUST GRANTOR TRUST WA 0 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813345-6658242

WESTERN WASHINGTON CARDIOLOGY TRUST GRANTOR TRUST WA 550,967 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813345-6220351

WOUND CARE CENTER TRUST GRANTOR TRUST WA 221,807 0 N/A1550 NORTH 115TH STREET MS D-180SEATTLE, WA 9813326-6534268

Form 990, Schedule R, Part IV - Identification of Related Organizations Taxable as a Corporation or Trust

(a) (b) (c) (d) (e) (f) (g) (h)Name, address, and EIN of related Primary Legal Domicile Direct Controlling Type of entity Share of total income Share of Percentageorganization activity (State or Entity (C corp, S corp, ($) end-of-year ownership

Foreign or trust) assetsCountry) ($)

NORTHWEST ASSURANCE COMPANYUW MEDICINE

GRAND CAYMAN INSURANCECJ NORTHWEST C -19,669 3,084,905 100 000 %

CAYMAN ISLANDS PROVIDERCJ

SEATTLE ARTHRITIS CLINIC HEALTH1550 NORTH 115TH STREET MS D-180 OFFICES OF RESOURCESWA CSEATTLE, WA98133 PHYSICIANS NORTHWEST20-3890258

RICHMOND INTERNAL MEDICINE HEALTH1550 NORTH 115TH STREET MS D-180 OFFICES OF RESOURCESWA CSEATTLE, WA98133 PHYSICIANS NORTHWEST20-4512942

SPORTS MEDICINE GROUPHEALTH

10330 MERIDIAN AVENUE NORTH SUITEOFFICES OF RESOURCES

3WA CPHYSICIANS NORTHWEST

SEATTLE, WA9813391-1698413

NEUROSURGICAL CONSULTANTS NW HEALTH801 BROADWAY SUITE 617 OFFICES OF RESOURCESWA CSEATTLE, WA98122 PHYSICIANS NORTHWEST91-1856460

BONE &JOINT CENTER OF SEATTLE HEALTH1550 NORTH 115TH STREET MS D-180 OFFICES OF RESOURCESWA CSEATTLE, WA98133 PHYSICIANS NORTHWEST27-0208005

PRIMARY CARE PARTNERS NW PS HEALTH1550 NORTH 115TH STREET MS D-180 OFFICES OF RESOURCESWA CSEATTLE, WA98133 PHYSICIANS NORTHWEST27-0568642

SUMMIT CARDIOLOGY HEALTH1550 NORTH 115TH STREET MS D-180 OFFICES OF RESOURCESWA CSEATTLE, WA98133 PHYSICIANS NORTHWEST27-3492322


TY 2010 Itemized Other Current Liabilities Schedule


EIN: 91-0637400

Corporation Corporation Description Beginning EndingName EIN Amount Amount

NORTHWEST UNEARNED PREMIUMS 543,748 2,285,110ASSURANCECOMPANY LTD

DEFERRED COMMISSION INCOME 50,000 0

PROVISION FOR OUTSTANDING CLAIMS 280,250


TY 2010 Itemized Other Current AssetsSchedule


EIN: 91-0637400

Corporation Corporation Other Current Assets Description Beginning EndingName EIN Amount Amount

NORTHWEST PREPAID REINSURANCE PREMIUMS 543 ,748 2,285,110ASSURANCECOMPANY LTD

PREPAID EXPENSES 5,732 5,732

OUTSTANDING CLAIMS RECOVERABLE 0 280,250


TY 2010 Other Deductions Schedule


EIN: 91-0637400

Description Foreign Amount Amount(should only be usedwhen attached to5471 Schedule C

Line 16)

MANAGEMENT FEES 31,388

PROFESSIONAL FEES 26,775

GOVERNMENT FEES/LICENSE 11,770

OTHER EXPENSES 221

REINSURANCE PREMIUMS CEDED 2,535,000


TY 2010 Itemized Other Investments Schedule


EIN: 91-0637400

Corporation Name Corporation Other Investments Description Beginning Ending AmountEIN Amount

NORTHWEST US GOVERNMENT TREASURY NOTES 386,239 350,044ASSURANCE COMPANYLTD


TY 2010 Other Income Statement


EIN: 91-0637400

Description Foreign Amount Amount

PLACEMENT FEE 50,000

UW MEDICINE/NORTHWEST

(A Component Unit of the University of Washington)

Financial Statements

June 30, 2011

(With Independent Auditors' Report Thereon)

UW MEDICINE/NORTHWEST(A Component Unit of the University of Washington)

Table of Contents

Independent Auditors' Report

Management's Discussion and Analysis (Unaudited)

Financial Statements:

Balance Sheet

Statement of Revenues , Expenses, and Changes in Net Assets

Statement of Cash Flows

Notes to Financial Statements

Supplementary Information (Unaudited)

Page

17

19

20

21

46

'11"Mi^KPMG LLPSuite 900801 Second AvenueSeattle, WA 98104

Independent Auditors' Report

The Board of Trustees

UW Medicine/Northwest:

We have audited the accompanying financial statements of the business-type activities and aggregate

discretely presented component units of UW Medicine/Northwest, a component unit of the University of

Washington, as of and for the year ended June 30, 2011, which collectively comprise UW

Medicine/Northwest's basic financial statements as listed in the table of contents. These financial

statements are the responsibility of UW Medictne/Nortbwest's management. Our responsibility is to

express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of

America. Those standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. An audit 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 UW

Medicine/Northwest's internal control over financial reporting. Accordingly, we express no such opinion.

An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements, assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statements presentation. We believe that our audit

provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to previously present fairly, in all material respects, the

respective financial position of the business-type activities and the aggregate discretely presentedcomponent units ofUW Medicine/Nortbwest as of year ended June 30, 2011, and the respective changes in

financial position and, where applicable, cash flows thereof for the year then ended, in conformity withaccounting principles generally accepted in the United States of America.

Management's discussion and analysis as shown on pages 2 through 12 is not a required part of the basicfinancial statements of the UW Medicine/Northwest but is supplementary information required by

U.S. generally accepted accounting principles. We have applied certain limited procedures, whichconsisted principally of inquiries of management regarding the methods of measurement and presentation

of the supplementary information. However, we did not audit the information and express no opinion on it.

K`F'MC, LLB

November 14, 2011

KPMG LLP is Delaware limited liability partnershipthe U S member firm of KPMG International Cooperative( KPMG International ) a Swiss entity


Management 's Discussion and Analysis (Unaudited)

June 30, 2011

Introduction

UW Medicine/Northwest (Northwest Hospital or the Hospital), doing business as Northwest Hospital & Medical

Center, is a full-service, nonprofit medical facility with 281 licensed beds, more than 1,700 employees and

approximately 600 active medical staff members. Its 33-acre main campus and 11-acre outpatient medical center

are located near Northgate in North Seattle, Washington. The organization is dedicated to raising the health statusof the community by providing personalized, quality care with compassion, dignity, and respect.

Northwest Hospital offers technologically advanced emergency, medical, surgical, and therapeutic services. Itsoutstanding staff of healthcare professionals is valued and recognized for promoting wellness through early

detection and prevention, minimally invasive interventions, and innovative clinical practices.

On January 1, 2010, the Hospital became a member of the University of Washington Medicine Health System

(UW Medicine). The Hospital's legal name was changed to UW Medicine/Northwest and the fiscal year-endchanged from December 31 to June 30, to conform to the UW Medicine fiscal year.

As defined by generally accepted accounting principles (GAAP), the reporting entity consists of the primary

government (UW Medicine/Northwest) and its component units, which are legally separate organizations for

which the elected officials of the primary government are financially accountable. Financial accountability is

defined as appointment of the voting majority of the component units' board, and either (a) the ability to imposewill by the primary government, or (b) the possibility that the component unit will provide a financial benefit to

or impose a financial burden on the primary government, or (c) the component unit is financially dependent on

the primary government.

The primary government includes the Hospital, Northwest Assurance Company, Ltd. (NWA), the NorthwestHospital Foundation (the Foundation), and certain affiliated operations determined to be part of Northwest

Hospital's financial reporting entity. NWA and the Foundation are included in the primary government's

financial statements as blended component units as they serve the primary government exclusively, or almost

exclusively.

The Management's Discussion and Analysis provides an overview of the financial position and activities of the

primary government for the year ended June 30, 2011. This discussion has been prepared by management and

should be read in conjunction with the financial statements and accompanying notes. The following sections are

included in this discussion:

• Background

• Recognition

• Results of Operations 2011

• Looking Ahead - Opportunities and Challenges

• Volumes and Statistics

• Financial Statements

• Charity Care , Uncompensated Care and Community Services

(Continued)



June 30, 2011

Background

From primary care to highly specialized care, Northwest Hospital provides comprehensive services in an

environment that is warm, comfortable, state-of-the-art, and safe. The Hospital treats approximately 11,000

inpatients and more than 400,000 outpatients per year.

Throughout its history, Northwest Hospital has been a healthcare pioneer, introducing techniques and proceduresthat have become standards of care in our region and beyond. Medical "firsts" have ranged from the introduction

of single labor, delivery, recovery and postpartum (LDRP) birthing suites to radioactive seed implantation forprostate cancer, to minimally and noninvasive neurosurgery.

Among its areas of expertise, Northwest Hospital is a noted leader in the successful treatment of cancer,

particularly brain, breast, and gynecologic cancers.

The Hospital has established a preeminent cardiac program, including emergency cardiac care, cardiology andinterventional cardiology, a state-of-the-art catheterization lab, comprehensive cardiac rehabilitation, and an

open-heart surgery program in collaboration with the UW Medicine Regional Heart Center.

Northwest Hospital is also a regional leader in the neurosciences, with award-winning programs dedicated todiseases of the brain and nervous system, from stroke to Parkinson's disease to cancer.

The Hospital also continues to act as a vital source of community health education, providing screening andpublic education programs that include early detection and assistance with treatment, rehabilitation, and

follow-up for a wide variety of health conditions and diseases.

Recognition

The Hospital has received numerous awards for excellence.

• HealthGrades, a national healthcare ratings organization, has given the Hospital its Patient Safety

Excellence Award for the past five years, ranking it among the top 5% of hospitals in the nation for patientsafety.

• HealthGrades also awarded the Hospital with its Spine Surgery Excellence Award in 2011.

• HealthGrades also named the Hospital's cardiac surgery program the best in the Puget Sound Region -

including Seattle, Tacoma, and Bellevue - for 2010.

• In addition, HealthGrades has recognized the Hospital for excellence in stroke treatment and back and neck

surgery.

• Press Ganey, a patient satisfaction and performance improvement leader, gave the Hospital several of its

Hospital Value Index Awards in 2010, including the Best in ValueTM: Quality, Affordability & Efficiency,

and Satisfaction; Best in Market; Best in Region; Best in State; and Best-Kept Secret.

• The Hospital's stroke program has received a gold seal and certification as a Primary Stroke Center by The

Joint Commission. It also earned a Gold Plus Award in 2011 and a Silver Award in 2010 from the

American Stroke Association and American Heart Association.

(Continued)



June 30, 2011

The Hospital's Wound Care & Hyperbaric Center received the 2010 Diversified Clinical Services (DCS)

Center of Distinction award, given in recognition of the center's high patient satisfaction rates, exceptional

healing results, and outstanding clinical outcomes over a 12-month period.

Dozens of members of the Hospital's medical staff are ranked in the "Top Doctors" issues of both Seattle

Magazine and Seattle Metropolitan Magazine each year, including 84 physicians in 2011's Seattle

Metropolitan Magazine poll and 49 in 2011's Seattle Magazine issue.

Results of Operations 2011

The Hospital reported an operating loss of $8.6 million and a total decrease in net assets of $8.7 million for the

year ended June 30, 2011. Factors contributing to the unfavorable operating financial performance include the

following:

Declining volumes in both inpatient and outpatient activities

An increase in reserves for expected repayments due to Medicare as a result of audits conducted by the

Center for Medicare and Medicaid Services Recovery Audit Program

Significant operating investments required for the addition of a new clinic (Summit Cardiology), a new

outpatient cardiac imaging center, and new radiation oncology program

Looking Ahead - Opportunities and Challenges

Universih' of Washington Integration

Northwest Hospital's affiliation with UW Medicine provides significant opportunities for joint program

development, facilities growth, campus development, and advances in patient care. In addition, NorthwestHospital's ongoing integration with the UW Medicine health system will help achieve greater efficiencies and

cost savings, adoption of best practices, and development ofjointly beneficial programs.

Discussions are underway regarding joint program development, with a near-term focus on joint replacement,

oncology, maternal and child health, and cardiovascular services.

Through the "Patients are First" initiative, Northwest Hospital also continues to work as part of UW Medicine on

a shared commitment to improving health and working collaboratively as a system that values patients, theirfamilies, employees, and medical staff, and is focused on service quality and excellence.

Radiation Oncology and Cancer Center Planning

With the termination of the radiation oncology services agreement with the Swedish Tumor Institute, NorthwestHospital had the opportunity to develop a new radiation oncology program on its campus, including an upgrade

of facilities and installation of a state-of-the-art linear accelerator and CT simulator. The new radiation oncologyprogram and facility at Northwest Hospital opened in February 2011 and operates under the management of the

Seattle Cancer Care Alliance.

Northwest Hospital continues to move forward on other joint oncology projects, most notably, the development

of a proton beam therapy center on the Northwest Hospital campus . The facility, a joint development betweenProCure Treatment Centers, Inc. (Procure ) and the Seattle Cancer Care Alliance (SCCA), will be the only facility

(Continued)



June 30, 2011

of its kind in the region, and is expected to open in early 2013. SCCA unites the adult and pediatric cancer-care

services of Fred Hutchinson Cancer Research Center, UW Medicine and Seattle Children's. A major focus ofSCCA is to expedite the transfer of new diagnostic and treatment techniques from the research setting to the

patient bedside while providing premier, patient-focused cancer care. ProCure was founded to improve the lives

of patients with cancer by increasing access to proton therapy. ProCure collaborates with leading radiation

oncology practices and hospitals and provides management leadership and a comprehensive approach for the

design, construction, financing, staffing, training and day-to-day operations of world-class proton therapycenters.

Upgrade Information Technology (IT)

Northwest Hospital embarked on a two-year plan in early 2010 to implement computerized Clinical Systemsthroughout the enterprise enhancing patient safety and care. The expectation is that physician's orders, whether

executed in ambulatory clinics, the Emergency Department or the Hospital, will be automated. The Clinical

support systems that surround the physician's order entry system, such as Physician Documentation, Plans of

Care, and Emergency Department will be implemented throughout the two-year period. In order to tie theseclinical systems together, the Hospital will require an interoperability capability that provides the physician a

single view of a patient across all enterprise medical record systems. UW Medicine is currently assessing the

options for the ambulatory patient record and interoperability.

Economic Factors Affecting the Future

A number of contingencies face the Northwest Hospital over the next few years. The recession that began in

2008 has resulted in increased unemployment, resulting in downward pressure on hospital revenues and

increased requirements for expense management. Charity care and bad debt are increasing as more and more

patients find themselves without health insurance. The shape of national health reform is still very uncertain andthe potential impact cannot be forecasted. While the economy will recover over an extended period, the financial

outlook for healthcare is less clear and will require a continuous focus on making operations more efficient,

patient centered and coordinated with the other entities comprising Northwest Hospital.

Volumes and Statistics

Following are key operating statistics for the year ended June 30, 2011:

Statistic

Admissions 10,743

Average daily census 129

Patient days 47,194Average length of stay 4

Emergency department visits 35,146

Surgery cases 7,119

Births 1,167Outpatient visits 418,442

Full-time equivalents (FTEs) 1,552

(Continued)



June 30, 2011

The following graphs show trends in certain of the Hospital's key operating statistics including admissions,

patient days, emergency department visits, surgery cases, and outpatient clinic visits over the last five fiscalyears.

Admissions

11 ,006 7 i 24^ 11.212,000

11,000

10,000

9,000 '8 000,

7 000,

6 000,

5 000,4 000,

3,000

2 000,1,000

02007 2008 2009 2010 2011

s,^r,.^

5 5 5- ; F^ 4J ^^ 4J s. ; F^ 4 F^ , F^5qx 5qx x5q 5qx

6 (Continued)



June 30, 2011

Emergency Department Visits

45 000,35,14635,146

40, 000

35,000

30 000,

25 000,

20 000,

15 000,

10 000,

5,000 nye0

2007 2008 2009 2010 2011

Surgeries

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g4 72757 , 7. 118 000,

7 000,

6,000

5 000,

4 000,

3 000,

2,000

1,000

02007 2008 2009 2010 2011

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7 (Continued)



June 30, 2011

Financial Statements

The balance sheet, the statement of revenues, expenses, and changes in net assets, and statement of cash flows

provide an indication of Northwest Hospital's financial health. The balance sheet includes all Northwest

Hospital's assets and liabilities, using the accrual basis of accounting, as well as an indication about which assetscan be utilized for operations and which are restricted as a result of donor's or third party's restricted purposes.

The statement of revenues, expenses, and changes in net assets report all of the revenues and expenses during the

time period indicated. The statement of cash flows reports the cash provided by the operating activities, as well

as other sources such as investment income and cash payments for capital additions and improvements.

8 (Continued)



June 30, 2011

Shown below are the Hospital's assets, liabilities, and net assets as of June 30, 2011 and 2010:

June 30Assets 2011 2010

Current assets:Cash and cash equivalents S 7,980,786 8,443,802Investments 1,765,660 1,643,392Patient accounts receivable, net 26,929,523 27,459,346Restricted investments 556,224 515,253Other current assets 10,842,630 10,371,496

Total current assets 48,074,823 48,433,289

Noncurrent assets:Investments , net of current portion 34,057,212 33,260,173Restricted investments, net of current portion 11,556,922 18,167,058Investments in joint ventures and other 1,932,457 1,426,058Capital assets, at cost , net of accumulated depreciation 121,611,611,870 120,974,410Deferred financing costs, net 703,159 764,780

Total noncurrent assets 169,861,620 174,592,479

Total assets S 217,936,443 223,025,768

9 (Continued)



June 30, 2011

June 30Liabilities and Net Assets 2011 2010

Current liabilities:Accounts payable $ 11,541,234 12,014,019Accrued salaries , wages , and employee benefits 6,835,350 6,542,423Accrued paid leave 6 ,865,078 6,489,702Interest payable and other accrued liabilities 8,116,181 6,714,263Current portion of long-term debt 3,330,726 3,767,072Current portion of reserve for professional and

general liability self-insurance 904,930 1,933,800Other current liabilities 7,773,377 2,938,846

Total current liabilities 45,366,876 40,400,125

Noncurrent liabilities:Long-term debt, net of current portion 84,955,118 85,549,384Reserve for professional and general liability

self-insurance , net of current portion 3,619,720 7,735,200Other noncurrent liabilities 6,425,003 3,023,255

Total noncurrent liabilities 94,999,841 96,307,839

Total liabilities 140,366,717 136,707,964

Commitments and contingenciesNet assets:

Invested in capital assets , net of related debt 43,129,146 48,335,730Restricted for:

Nonexpendable 1,716,527 1,714,797Expendable 1,467,878 967,292

Unrestricted 31,256,175 35,299,985

Total net assets 77,569,726 86,317,804

Total liabilities and net assets $ 217,936,443 223,025,768

Assets

As of June 30, 2011, the Hospital had total assets of approximately $217.9 million, a decrease of approximately

$5.1 million from June 30, 2010. For the year ended June 30, 2011, the decrease in total assets was primarily dueto a decrease in invested funds held by the Hospital of $5.6 million.

Current assets consist of cash and cash equivalents, and other assets that are expected to be converted to cash

within a year. Current assets also include net patient accounts receivable valued at the estimated net realizableamount due from patients and their insurers. As of June 30, 2011, 51% of the patient accounts receivable balance

is due from government payors Medicare and Medicaid, 32% from commercial insurers, and 17% from

patients/other payors. As employers and insurers continue to shift responsibility to patients in the form ofincreased coinsurance and deductibles, the patient responsibility component of accounts receivable has increased.

10 (Continued)



June 30, 2011

Collection of patient responsibility amounts requires significantly more effort than collection of insurance

amounts because patient responsibility is generally composed of a high number of small dollar accounts.

Gross AR Payor Mix

500%

450%

400%

350%

300%

250%

200%

150%

100%

50%

00%

®2011 ®2010

Net accounts receivable were $26.9 million as of June 30, 2011 and $27.5 million as of June 30, 2010. Based on

a three-month rolling average, gross days in accounts receivable decreased from 45.7 days to 44.4 days duringthis period.

Other current assets remained consistent at $10.8 million at June 30, 2011 as compared to $10.4 million atJune 30, 2010. The balance at June 30, 2011 includes approximately $1.6 million in receivables associated with

the Hospital Safety Net Assessment Act discussed in note 4 to the financial statements. This includes an

approximately $0.8 million due from UW Medicine and approximately $0.8 million due from the state of

Washington. These receivables are largely offset by an approximately $1.1 million decrease in the Hospital'sprepaid insurance asset balance. Effective January 1, 2011, the Hospital became fully insured under the

University of Washington's insurance program for professional liability claims incurred subsequent to January 1,

2011. As a result of its participation in the University's insurance program, the Hospital did not renew certain

insurance policies.

Noncurrent assets include capital assets net of accumulated depreciation, noncurrent investments held by theHospital, donor-restricted funds, and other assets. Capital assets, including buildings and equipment, the single

(Continued)

Medicare Medicaid Commercial Other



June 30, 2011

largest asset of the Hospital as of June 30, 2011 are carried at net book value of $121.6 million as compared with

$121.0 million as of June 30, 2010. During the year ended June 30, 2011, capital asset additions wereapproximately $19.2 million. The 2011 additions include continued work on the surgery expansion project,

conversion to EMR, medical information systems expansion, clinic acquisition, and routine replacement.

As of June 30, 2011 and 2010, the Hospital had noncurrent unrestricted investments of approximately$34.1 million and $33.3 million, respectively, an increase of approximately $0.8 million. These investments are

used by Northwest Hospital to fund professional liability claims and capital improvements. The Hospital also hadnoncurrent restricted investments of approximately $11.6 million and $18.2 million as of June 30, 2011 and2010, respectively, which are funds established in accordance with the Series 2007 Revenue Bonds Trust

Indenture and certain endowment agreements. During the year ended June 30, 2011, approximately $7.0 millionof the restricted funds were sold with proceeds used to fund the Hospital's expansion of its operating room and to

purchase related equipment. This decrease was offset by approximately $0.3 million of unrealized appreciation

on the Hospital's donor-restricted endowment assets.

Other noncurrent assets consist primarily of the Hospital's investments in joint ventures and deferred financingcosts. These assets increased by approximately $0.4 million for the year ended June 30, 2011 due to the incomeof the joint ventures offset by additional amortization of deferred financing costs.

Liabilities

The Hospital had approximately $140.4 million and $136.7 million of liabilities as of June 30, 2011 and 2010,

respectively.

Current liabilities include payables to employees, vendors, and other third parties as well as the current portion oflong-term debt. The current portion of long-term debt decreased by approximately $0.4 million and current

liabilities other than debt increased by approximately $5.4 million to $42.0 million at June 30, 2011 from

$36.6 million at June 30, 2010. Of the total decrease, approximately $1.7 million relates to amounts accrued for

assessments due under the Hospital Safety Net Assessment Act discussed in note 4 to the financial statements.This increase is partially offset by a $1.0 reduction in the current portion of the Hospital's professional liability

self-insurance reserve. Other current liabilities increased by approximately $4.8 million from approximately$2.9 million at June 30, 2010 to approximately $7.8 million at June 30, 2011. The increase is largely due to an

approximately $2.8 million liability for expected repayments due to Medicare as a result of audits conducted by

the Center for Medicare and Medicaid Services Recovery Audit Program as discussed in note 5 to the financialstatements. The remaining increase relates to changes in the Hospital's estimated payables to Medicare as related

to cost report and other settlements as well as increases in amounts due from the component unit.

Noncurrent liabilities consist of long-term debt, the long-term reserve for professional and general liability, and

other noncurrent liabilities. Long-term debt as of June 30, 2011 consists of revenue bonds issued to finance

construction and equipment. The Hospital's reserve for professional liability (including the current portion)decreased $5.1 million as a result of the Hospital's becoming fully insured by the University of Washington's

professional liability insurance program effective January 1, 2011. At June 30, 2011, the other noncurrent

liabilities balance includes the Hospital's accrual for a $2.0 million capital contribution due to its component unit

during fiscal year 2011 (as discussed in note 13 to the financial statements) as well as an approximately

$1.3 million accrual for certain information technology services received during the fiscal year but for which

12 (Continued)



June 30, 2011

payment is contractually deferred until 2013. Other noncurrent liabilities also include deferred rent and liabilities

for environmental remediation obligations.

Net Assets

The Hospital reports its net assets in four categories:

Invested in Capital Assets, Net of Related Debt

This component of net assets consists of capital assets net of accumulated depreciation and reduced by any

outstanding borrowings that are attributable to the acquisition, construction, or improvements of these assets.

Restricted - Nonexpendable

This component of net assets is subject to externally imposed requirements that they be maintained

permanently by Northwest Hospital , including permanent endowment funds.

Restricted - Expendable

This component of net assets consists of noncapital assets that must be used for a particular purpose, as

specified by creditors, grantors, or contributors external to the primary government.

Unrestricted

This component of net assets consists of net assets that do not meet the definition of "restricted-expendable,""restricted-nonexpendable," or "invested in capital assets, net of related debt."

As of June 30, 2011, assets exceeded liabilities by $77.6 million, a decrease of $8.7 million from June 30,2010. Decreases in net assets are primarily the result of the net loss generated during the year.

13 (Continued)



June 30, 2011

Summary of Revenues , Expenses , and Changes in Net Assets

A summary of revenues, expenses, and changes in net assets for the year ended June 30, 2011 is shown below.

Net patient service revenues $ 229,795,839

Other revenue 9,944,666

Total operating revenues 239,740,505

Salaries and wages 100 ,453,420

Employee benefits 25,519,030Supplies and other 59,929,543Purchased services 44,004,162

Depreciation and amortization 18,469,062

Total operating expenses 248,375,217

Loss from operations (8,634,712)

Nonoperating revenues ( expenses):

Investment income 6,094,474

Operating subsidy to component unit (3,419,797)

Interest expense (3,734,290)

Gifts and other, net 736,623

Net nonoperating expenses (322,990)

Loss before capital grants (8,957,702)

Capital grants 209,624

Total capital grants 209,624

Total change in net assets (8,748,078)

Net assets - beginning of year 86,317,804

Net assets - end of year $ 77,569,726

Operating revenues consist primarily of net patient service revenues. Net patient service revenues are recordedbased on standard billing rates less contractual adjustments, charity, and an allowance for uncollectible accounts.

The Hospital has agreements with federal and state agencies, and commercial insurers that provide for payments

at amounts different from gross charges. The differences between gross charges and the contracted payments are

identified as contractual adjustments. The Hospital provides care at no charge or reduced charges to patients who

qualify under the Hospital's charity policy. The Hospital also estimates the amount of patient responsibilityaccounts receivable that will become uncollectible. The difference between gross charges and the estimated net

realizable amounts from payors and patients is recorded as an adjustment to charges. The resulting net patient

service revenues are shown on the statements of revenues, expenses, and changes in net assets.

14 (Continued)



June 30, 2011

The mix of services provided to governmental, commercial, and uninsured patients is a key driver of the

Hospital's profitability. Reimbursement from governmental payors is generally below commercial rates andreimbursement rules are complex and subject to interpretation. Both Medicare and Medicaid programs require

current year settlement estimates that may be adjusted in future years as year-end reports are filed, audited, and

potentially appealed and settled. The graph below shows the payor mix for the year ended June 30, 2011 and for

the six-month period ended June 30, 2010 based on gross revenues.

Gross Revenue Payor Mix

550%

450%

350%

250%

150%

50%

-50%

®2011 ®2010

Total operating expenses were approximately $248.4 million for the year ended June 30, 2011. Labor expenses

accounted for 51% of operating expenses, with supplies and other accounting for 24%, purchased services

accounted for 18%, and the remaining 7% related to depreciation and amortization.

Total nonoperating revenues (expenses) include investment income of approximately $6.1 million. This includes

unrealized gains on investments of approximately $2.7 million. Nonoperating revenues (expenses) also include

certain transactions with the component unit. During the year ended June 30, 2011, the Hospital provided anoperating subsidy of $3.4 million to its component unit.

15 (Continued)

Medicare Medicaid Commercial Other



June 30, 2011

As required by governmental accounting standards, the Hospital has reflected interest expense as a nonoperating

expense and bad debt expense as a component of net patient service revenues. Industry practice for healthcareentities not subject to governmental accounting standards is to reflect interest expense and bad debt expense as

operating expenses.

Charity Care , Uncompensated Care, and Community Services

As a part of the Hospital's charitable mission in providing services to the communities it serves, direct patient

care is provided to the poor, and service programs are provided at no cost or lower than the Hospital cost to theSeattle area communities in which the Hospital operates. Community services include community education,

community health services, support groups, wellness programs, patient transportation, and cancer programs. The

cost of charity, uncompensated care, and community services provided for the year ended June 30, 2011 is shownbelow:

Cost of charity care provided $ 3,357,547

Cost of uncompensated care

Cost of uncompensated care for Medicaid patients 5,656,951

Cost of uncompensated care for Medicare patients 23,695,326

Total uncompensated care 29,352,277

Community services cost

Community education and services

Community health services and support groups

Senior wellness program

Patient transportation

Cancer program

Total community services cost

Total cost of charity care, uncompensated care, and community services

500,993211,889211,999252,829161,858

1,339,568

$ 34,049,392

16


Balance Sheet

June 30, 2011

AssetsNorthwestHospital

Componentunit - HRN

Current assets:Cash and cash equivalentsInvestments (note 6)

Patient accounts receivableLess allowance for uncollectible accounts

Accounts receivable, net

Due from:Primary governmentComponent unit

Notes and other receivablesSupplies inventoryRestricted investments (note 6)Prepaid expenses, deposits, and other

Total current assets

Noncurrent assets:Investments, net of current portion (note 6)Restricted investments, net of current portion (note 6)Investments in joint ventures and otherDeferred financing costs, netCapital assets, at cost, net of accumulated depreciation (note 7)Due from primary governmentOther assets

Total noncurrent assets

Total assets

$ 7,980,7861,765,660

37,276,288(10,346,765)

3,598,558

4,347,212(162,837)

26,929,523 4,184,375

2,848,6462,008,7252,696,4754,000,493556,224

2,136,937

48,074,823

34,057,21211,556,9221,603,743703,159

121,611,870

328,714

169,861,620

331,656349,715

59,212

11,372,162

800,000109,500106,780

11,342,6162,000,000357,248

14,716,144

$ 217,936,443 26,088,306

17


Balance Sheet

June 30, 2011

Northwest ComponentLiabilities and Net Assets Hospital unit - HRN

Current liabilities:Accounts payable $ 11,541,234 124,243Accrued salaries, wages, and employee benefits 6,835,350 2,447,657Accrued paid leave 6,865,078 624,409Interest payable and other accrued liabilities 8,116,181 1,168,774Due to:

Primary government - 2,008,725Component unit 2,848,646 -

Payable to contractual agencies, net 4,924,731 -Current portion of long-term debt (note 8) 3,330,726 406,998Current portion of reserve for professional and general

liability self-insurance (note 9) 904,930 -

Total current liabilities 45,366,876 6,780,806

Noncurrent liabilities:Long-term debt, net of current portion (note 8) 84,955,118 9,362,837Reserve for professional and general liability self-insurance, net

of current portion (note 9) 3,619,720 -Due to:

Component unit 2,000,000 -Other noncurrent liabilities 4,425,003 1,407,641

Total noncurrent liabilities 94,999,841 10,770,478

Total liabilities 140,366,717 17,551,284

Commitments and contingencies (note 12)

Net assets:Invested in capital assets, net of related debt 43,129,146 1,572,781Restricted for:

Nonexpendable 1,716,527 -Expendable 1,467,878 -

Unrestricted 31,256,175 6,964,241

Total net assets 77,569,726 8,537,022

Total liabilities and net assets $ 217,936,443 26,088,306

See accompanying notes to financial statements.

18


Statements of Revenues, Expenses, and Changes in Net Assets

Year ended June 30, 2011

Northwest ComponentHospital unit - HRN

Operating revenues:Net patient service revenues (note 3) $ 229,795,839 35,533,398Other revenue 9,944,666 6,258,054

Total operating revenues 239,740,505 41,791,452

Operating expenses:Salaries and wages 100,453,420 23,340,066Employee benefits 25,519,030 3,525,414Supplies and other 59,929,543 11,161,168Purchased services 44,004,162 4,357,448Depreciation and amortization 18,469,062 1,743,833

Total operating expenses 248,375,217 44,127,929

Loss from operations (8,634,712) (2,336,477)

Nonoperating revenues (expenses):Investment income (note 6) 6,094,474Interest expense (3,734,290) (555,595)Capital contribution to component unit (2,000,000)Gifts 505,331 -Operating subsidy paid to component unit (3,419,797) 3,419,797Operating subsidy paid to primary government 2,000,000 (2,000,000)Other, net 231,292 39,738

Net nonoperating revenues (expenses) (322,990) 903,940

Loss before capital grants and gifts (8,957,702) (1,432,537)

Capital grants and contributions:Capital grants 209,624 -Contribution from primary government - 2,000,000

Total capital grants and contributions 209,624 2,000,000

Total change in net assets (8,748,078) 567,463

Net assets - beginning of year 86,317,804 7,969,559

Net assets - end of year $ 77,569,726 8,537,022

See accompanying notes to financial statements.

19


Statements of Cash Flows

Year ended June 30. 2011

Cash flows from operating activitiesCash received for patient careCash received for other servicesCash paid to employeesCash paid to suppliers and others

Net cash provided by (used in) operating activities

Cash flow from capital and related financing activitiesAcquisition and construction of capital assetsProceeds from dispositions of property and equipmentPrincipal payments on debt and capital lease obligationsProceeds from new borrowingsInterest payments

Net cash used in capital and related financing activities

Cash flows from noncapital financing activitiesGifts and grants for other than capital purposesOperating subsidy paid to component unitOperating subsidy paid to primary government

Net cash provided by (used in) noncapital financing activities

Cash flow from investing activitiesInterest and dividend incomeProceeds from sales of investmentsPurchases of investments

Net cash provided by (used in) investing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Reconciliation of loss from operations to net cash provided by (used in) operating activitiesLoss from operationsAdjustments to reconcile loss from operations to net cash provided by (used in) operating activities

Depreciation and amortizationProvision for uncollectible accountsChange in assets and liabilities

Patient accounts receivable, netNotes and other receivablesDue from

Primary governmentComponent unit

Supplies inventoryPrepaid e\penses, deposits, and otherOther assetsAccounts payable

Due to

Primary governmentComponent unit

Accrued salaries, wages, and employee benefitsAccrued paid leaveReserve for professional and general liability self-insurancePayable to contractual agencies, netOther noncurrent liabilities

Net cash provided by (used in) operating activities

See accompanying notes to financial statements

Northwest ComponentHospital unit - HRN

S 230.325.662 34.921.2398.250.894 5.473.096

(125.304.147) (26.606.101)(103.123.637) (15.310.631)

10.148.772 (1.522.397)

(15,943,391) (1.179.618)395.357

(3.939.912) (377.135)2.909.300

(4.958.070) (555.595)

(21.536.716) (2.112.348)

713.224(3.419.797) 3.419.7972.000.000 (2.000.000)

(706.573) 1.419.797

1.597.074 39.73820.366.630

(10,332,203) (800.000)

11.631.501 (760.262)

(463.016) (2.975.210)

8.443.802 6.573.768

S 7.980.786 3.598.558

S (8.634.712) (2.336.477)

18.469.062 1.743.83313.583.532 142.055

(13.053.709) (754.216)(856.795) (75.160)

(709.798)(836.980)(40.525) 18.702

1.263.163 23.848(328.714) 115.801

(LI75.782) (1.242.040)

836.980709.798292.927 68.470375.376 75.108

(5.144.350)4.124.7331.401.748 570.497

5 10.148.772 (1 . 522.397)

20



June 30, 2011

(1) Organization

On January 1, 2010, the University became the sole member of the Hospital. The Hospital changed its

legal name to UW Medicine/Northwest and its year-end from December 31 to June 30.

UW Medicine/Northwest (Northwest Hospital or the Hospital), doing business as Northwest Hospital &Medical Center, is a component unit of the University of Washington (University).

In the Affiliation Agreement effective January 1, 2010 and between the University, Northwest Hospital

and Health Resources Northwest, the parties agreed that Northwest Hospital's Board of Trustees (theBoard) is the governing board of Northwest Hospital subject to certain powers reserved to UW Medicine

as the sole corporate member of the corporation. The Board's members during the year ended June 30,

2011 were:

Peter Evans, Chairman

Scott Hardman, Vice Chairman

James K. Anderson

Edward J. Buchwald

Shaiza Damji

Pamela Fowler

Terry L. Lengfelder

William J. Rex

Marian Svinth

The primary purpose of Northwest Hospital is to serve the healthcare needs of the residents of north

Seattle, northern King County, and southern Snohomish County, Washington with a principal focus on

clinical care, including emergency, inpatient, outpatient, and therapeutic care.

During the transitional period, Northwest Hospital has experienced operating losses. Continued lossescould result in Northwest Hospital not being able to fund operating needs or meet required debt servicecovenants. Management is in the process of expanding certain programs, reviewing potential cost savings

opportunities, and exploring debt structure alternatives to help alleviate these shortfalls. UW Medicine hasthe resources necessary for Northwest Hospital to meet its working capital and debt service needs through

July 1, 2012, and in the event that Northwest Hospital is unable to do so, will take actions permitted byUW Medicine under the affiliation agreement to enable Northwest Hospital to meet such requirements.

(2) Summary of Significant Accounting Principles

(a) Financial Reporting Entity

As defined by generally accepted accounting principles (GAAP ), the reporting entity consists of

Northwest Hospital ( the primary government), and its component units, which are legally separate

organizations for which the elected officials of Northwest Hospital (the primary government) are

21 (Continued)



June 30, 2011

financially accountable. Financial accountability is defined as appointment of the voting majority of

the component units' board, and either (a) the ability to impose will by the primary government, or(b) the possibility that the component unit will provide a financial benefit to or impose a financial

burden on the primary government, or (c) the component unit is financially dependent on the

primary government.

Component units are reported as part of the reporting entity under the blended or discrete method of

presentation. Blending involves merging the component unit data with the primary government

(Northwest Hospital). There are two situations when blending is allowed: (1) when the board of thecomponent unit is substantially the same as that of the primary government, and (2) when the

component unit serves the primary government exclusively, or almost exclusively. The following areconsidered to be blended component units as they serve the primary government exclusively, or

almost exclusively.

Northwest Hospital Foundation (the Foundation) is a Washington not-for-profit corporation

that serves as a centralized entity for receiving donations for the benefit of the Hospital. The

Foundation is authorized to cultivate broad community support through various campaigns,

projects, and programs. In 2010, Northwest Hospital became the sole member of theFoundation.

Northwest Assurance Company, Ltd. (NWA or Northwest Assurance) was registered under

the Companies Law of the Cayman Islands on October 21, 1993, and holds an UnrestrictedClass B Insurer's License under Section 4(2) of the Cayman Islands Insurance Law. Northwest

Assurance is a wholly owned subsidiary of the Hospital. Northwest Assurance provides claims

made excess healthcare professional liability, comprehensive general liability, personal injury,

and contractual liability insurance for the Hospital and its affiliates.

The discrete method presents the financial statements of the component unit outside of the basis of

the financial statement totals of the primary government. The following are considered to be

discretely presented component units.

Northwest Hospital (the primary government) is financially accountable for Health Resources

Northwest (HRN) as it has the ability to impose its will on the component unit and appoint thecomponent unit's board members. HRN is a Washington not-for-profit, tax-exempt

organization formed to carry on property management services, educational activities, and

participate in fundraising activities for its affiliated healthcare entities. HRN's board is notsubstantially the same as that of Northwest Hospital (the primary government) nor does it

serve the primary government exclusively, or almost exclusively, and therefore, is included inthe financial statements as a discretely presented component unit.

HRN is the sole member of the Sports Medicine Group (SMG), Neurosurgical Consultants of

Washington (NCW), Richmond Internal Medicine, P.S. (RIM), The Seattle Arthritis Clinic,

P.S. (TSAC), Primary Care Partners Northwest, P.S. (PCPNW), The Bone & Joint Center of

Seattle, P.S. (TBJCS), and Summit Cardiology (Summit). These entities are considered to be

the component units of HRN and their financial information is aggregated and presentedwithin the HRN's financial statements.

22 (Continued)



June 30, 2011

All significant transactions with blended component units have been eliminated in the primary

government and discretely presented component unit's financial statements.

The primary government and the component unit report their financial information in a form that

complies with the "Healthcare Organizations Audit and Accounting Guide" of the American

Institute of Certified Public Accountants. The accounting systems of the primary government and thecomponent unit have been adapted to also provide the financial information necessary to meet the

governmental reporting requirements of the University. The aggregated Northwest Hospital financial

information is shown as a discretely presented component unit within the University's financialstatements.

(b) Accounting Standards

The primary government and the component unit report as business-type activities, as defined byGovernmental Accounting Standards Board (GASB) Statement No . 34, Basic Financial Statements

- and Management's Discussion and Analysis - for State and Local Governments. Business-type

activities are those that are financed in whole or in part by fees charged to external parties for goodsor services.

Under GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds andOther Governmental Entities That Use Proprietary Fund Accounting, all proprietary funds must

follow Financial Accounting Standards Board (FASB) standards issued on or before November 30,

1989. However, subsequent to that date, proprietary funds must either choose (1) not to apply all

new FASB standards (including amendments of earlier pronouncements), or (2) to continue tofollow all new FASB pronouncements (unless they conflict with GASB guidance). The Hospital haschosen not to apply new FASB standards subsequent to November 30, 1989.

(c) Accrual Basis

The primary government and the component unit's financial statements have been prepared using theaccrual basis of accounting with the economic resources measurement focus. Under this method of

accounting, revenues are recognized when earned and expenses are recorded when liabilities areincurred without regard to receipt or disbursement of cash.

(d) Use ofEstimates

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 and liabilities and disclosure of contingent assets and liabilities at the

date of the financial statements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those estimates.

(e) Cash and Cash Equivalents

Cash and cash equivalents include investments in highly liquid debt instruments with an originalmaturity of three months or less at the date of purchase, excluding amounts whose use is limited by

23 (Continued)



June 30, 2011

board designation or other arrangements under trust agreements. Cash equivalents for the primary

government were approximately $2,002,000 at June 30, 2011.

(fj Patient Accounts Receivable and Allowance for Uncollectible Accounts

Patient accounts receivable primarily comprise amounts due for healthcare services from patientsand third-party payors and are recorded net of allowance for contractual adjustments and bad debt.

The primary government and the component unit provide an allowance for potential uncollectible

patient accounts receivable, whereby such receivables are reduced to their estimated net realizablevalue. The primary government estimates this allowance based on the aging of accounts receivable,

historical collection experience by payor, and other relevant factors. There are various factors that

can impact the collection trends, such as changes in the economy, which in turn have an impact on

unemployment rates and the number of uninsured and underinsured patients, the increased burden ofcopayments to be made by patients with insurance, and business practices related to collection

efforts. These factors continuously change and can have an impact on collection trends and the

estimation process.

(g) Supplies Inventory

Supplies inventory, consisting principally of surgical, medical, and pharmaceutical supplies, is

carried at the lower of cost (first-in, first-out (FIFO)) or market.

(h) Investments

The primary government holds investments in the form of equity securities, fixed income securities,

as well as government obligations . The primary government's investment guidelines also permit

alternative investments, which include limited liability partnerships, limited liability corporations,

and trusts . The primary government accounts for its marketable investments in accordance with

GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and forEvter•nal Investment Pools , which requires that most investments be reported at fair value. Fair value

is determined based on quoted market prices. Alternative investments are reported at amortized cost.

(i) Capital Assets

Capital assets (comprised of land, construction-in-progress, land improvements, buildings, leasehold

improvements, fixed equipment, and movable equipment) are stated at cost at acquisition or if

acquired by gift, at fair market value at the date of the gift. Additions, replacements, major repairs,and renovations are capitalized. Maintenance and repairs are expensed. The cost of the capital assets

sold or retired and the related accumulated depreciation are removed from the accounts, and any

resulting gain or loss is recorded.

24 (Continued)



June 30, 2011

The provision for depreciation is determined by the straight-line method, which allocates the cost of

tangible property ratably over its estimated useful life. The estimated useful lives used by theprimary government and component unit are as follows:

Land improvements 5 to 25 yearsBuildings 15 to 40 yearsLeasehold improvements 5 to 15 yearsFixed equipment 5 to 25 years

Major and minor movable equipment 3 to 15 years

Equipment under capital lease is amortized on the straight-line method over the shorter of the lease

term or the estimated useful life of the equipment. Such amortization is included in depreciation andamortization in the statements of revenues, expenses, and changes in net assets.

(j) Deferred Financing Costs

Expenses relating to the issuance of the revenue bonds and other financing arrangements are

amortized using the effective interest method.

(k) Parable to Contractual Agencies, Net

The primary government is reimbursed for Medicare inpatient, outpatient, psychiatric, and

rehabilitation services, and for capital and medical education costs during the year either

prospectively or at an interim rate. The difference between interim payments and the reimbursement

computed based on the Medicare filed cost report results in an estimated receivable from or payableto Medicare at the end of each year.

The Medicare program's administrative procedures preclude final determination of amounts

receivable from or payable to the primary government until after the cost reports have been audited

or otherwise reviewed and settled by Medicare. The estimated amounts for unsettled cost reports are

included in payable to contractual agencies, net in the accompanying primary government balance

sheet.

(1) Net Assets

Net assets of the primary government and the component unit are classified in the following fourcomponents:

Invested in Capital Assets, Net of Related Debt

This component of net assets consists of capital assets net of accumulated depreciation and reduced

by any outstanding borrowings that are attributable to the acquisition, construction, or improvements

of these assets.

Restricted - Nonexpendable

This component of net assets is subject to externally imposed requirements that they be maintained

permanently by Northwest Hospital , including permanent endowment funds.

25 (Continued)



June 30, 2011

Restricted - Expendable

This component of net assets consists of noncapital assets that must be used for a particular purpose,

as specified by creditors, grantors, or contributors external to the primary government.

Unrestricted

This component of net assets consists of net assets that do not meet the definition of

"restricted-expendable," "restricted-nonexpendable," or "invested in capital assets, net of relateddebt."

(in) Net Patient Service Revenues

Northwest Hospital has agreements with third-party payors that provide for payments to Northwest

Hospital at amounts different from its established rates. Payment arrangements include prospectivelydetermined rates per discharge, reimbursed costs, discounted charges, and per diem payments. Net

patient service revenues are 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. A summary of thepayment arrangements with major third-party payors is as follows:

Medicare

Acute inpatient services rendered to Medicare program beneficiaries are paid at prospectively

determined rates per discharge based on Medicare severity diagnosis-related groupings (MS-DRGs),

as well as reimbursements related to capital costs. These rates vary according to a patient

classification system that is based on clinical, diagnostic, and other factors. Payments for Medicareoutpatient services are provided based upon a prospective payment system known as ambulatory

payment classifications (APCs). APC payments are prospectively established and may be greater

than or less than the primary government's actual charges for its services. The Medicare programutilizes the prospective payment system known as case mix group (CMGs) for rehabilitation services

reimbursement. As with MS-DRGs, CMG payments are prospectively established and may be

greater than or less than primary government's actual charges for its services. Geropsychiatric

services are also paid prospectively using a federal per diem payment rate adjusted for comorbidityand various adjustment factors. Third-party settlements are accrued on an estimated basis in the

period the related services are rendered and adjusted in future periods as final settlements are

determined.

Medicaid

Inpatient services rendered to Medicaid program beneficiaries are provided at prospectively

determined rates per discharge. Outpatient services rendered are provided based upon the APC

prospective payment system.

26 (Continued)



June 30, 2011

Commercial

The primary government also has entered into payment agreements with certain commercial

insurance carriers and preferred provider organizations. The basis for payment to the primary

government under these agreements includes prospectively determined rates per discharge, discounts

from established charges, and prospectively determined daily rates.

(n) Operating Revenues and Expenses

The primary government and the component unit's statements of revenues, expenses, and changes in

net assets distinguish between operating and nonoperating revenues and expenses. Operatingrevenues, such as patient service revenue, result from exchange transactions associated with

providing healthcare services - the primary government and the component units' primary business.

Exchange transactions are those in which each party to the transaction receives and gives upessentially equal values. Nonexchange revenues, such as operating subsidies received from the

primary government or component unit, are reported as nonoperating revenues. Operating expenses

are all expenses incurred to provide healthcare services, other than financing costs.

(o) Federal Income Taxes

HRN, the Hospital, and the Foundation have received determinations from the Internal Revenue

Service indicating that they are exempt from federal income tax, except for unrelated business

income, under Section 501(c)(3) of the Internal Revenue Code (IRC). SMG, NCW, RIM, TSAC,

TBJCS, PCPNW, Summit, and NWA are taxable entities or pass-through entities in which taxableincome or losses pass through to participating owners.

Income taxes did not have a material impact on the financial position or results of operations of anyof the taxable or tax-exempt entities as of and for year ended June 30, 2011.

(3) Net Patient Service Revenues

The following are the components of net patient service revenues for the year ended June 30, 2011 for the

primary government and component unit:

Patient service charges

Primary

government

$ 675,971,966

(10,190,566)(422,402,029)(13,583,532)

Component

unit

Less adjustments to patient service charges

Charity

Contractual discountsProvision for uncollectible accounts

Total adjustments to patient service charges

Net patient service revenues

27

69,184,724

(33,509,271)(142,055)

(446,176,127) (33,651,326)

$ 229,795,839 35,533,398

(Continued)



June 30, 2011

The mix of gross patient charges for the year ended June 30, 2011 from significant third-party payors for

the primary government and component unit were as follows:

Patient service chargesPrimary Component

government unit

Medicare 49% 23%Medicaid 8 1Commercial 38 72Other 5 4

Total 100% 100%

Charity Care

The primary government and component unit provide care at no charge or reduced charges to those

patients who qualify under the primary government's approved charity care guidelines. The primarygovernment has adopted guidelines that provide charity to a greater number of patients, which are

monitored by the Washington Department of Health. General economic conditions, declines in

employer-sponsored healthcare, and decreased funding for state-sponsored health programs all contribute

to an upward trend in the amount of charity care provided.

Included in the definition of charity care are patients who are uninsured or underinsured. Because the

primary government does not pursue collection of amounts determined to qualify as charity care, these arenot reported as net revenue.

For the year ended June 30, 2011, the amount of gross revenue forgone for charity, based on established

rates, was approximately $10,191,000.

Applying the primary government's Medicaid cost to charge ratio of 33% to total charity of approximately

$10,191,000 results in a cost of charity care of approximately $3,358,000 for the year ended June 30, 2011.

(4) Hospital Safety Net Assessment

In 2009, the State of Washington enacted a safety net assessment program involving Washington Statehospitals to increase funding from other sources and obtain additional federal funds to support increased

payments to providers for Medicaid services.

Under the requirements of this program, state hospitals pay monthly assessments, which are partially offset

by higher Medicaid reimbursement rates. During the year ended June 30, 2011, the Hospital recorded

approximately $4.6 million of expense for these assessments. This amount is included in supplies and other

expense on the statement of revenues, expenses, and changes in net assets. The Hospital received increasedreimbursements from the State of Washington of approximately $2.8 million under the program. The

reimbursements are included in net patient service revenues on the statement of revenues, expenses, and

changes in net assets.

28 (Continued)



June 30, 2011

Under a separate agreement, the University agreed to reimburse the Hospital for any shortfall arising as a

result of the safety net program during the year ending June 30, 2011. As a result, the Hospital recordedapproximately $1.8 million of additional reimbursements from the University in net patient services

revenues.

(5) Recovery Audit Program

Section 302 of the Tax Relief and Health Care Act of 2006 made the Recovery Audit Program permanent

and required the Secretary of the Department of Health and Human Services to expand the program to all50 states by no later than 2010. Under the Medicare Integrity Program, Recovery Audit Contractors

(RACs) are utilized to identify underpayments and overpayments and recoup overpayments under the

Medicare program associated with services for which payment was made under part A or B of title XVIIIof the Social Security Act.

The RACs are authorized by Medicare to audit any and all fee for service providers for improper

payments . RACs review Medicare claims filed by providers on a postpayment basis and are limited to a

three-year look back period . The Centers for Medicare and Medicaid Services (CMS) authorize that issuesthe RACs are allowed to audit.

In February 2010, the Hospital received its first request for medical records to be audited. During the yearended June 30, 2011, the Hospital has recognized losses of approximately $3.8 million in its statement of

revenues, expenses, and changes in net assets for repayment exposure attributed to the Recovery Audit

Program. Of this amount, during the year ended June 30, 2011, the Hospital remitted payment to CMS for

approximately $1.0 million of claims that were denied after audit. At June 30, 2011, the Hospital hasrecorded an estimated liability of $2.8 million for additional repayment exposure. This liability, included in

payable to contractual agencies on the balance sheet, is based on historical repayment experience and

management's judgment of the remaining exposure based upon recent interpretation of clinical and

payment guidelines as of June 30, 2011.

(6) Deposits and Investments

(a) Deposits

Custodial credit risk for deposits is the risk that in the event of a financial institution failure, theFoundation's deposits may not be returned. In July 2010, the Dodd-Frank Wall Street Reform and

Consumer Protection Act was signed into law, which, in part, permanently raises the FDIC's

standard maximum deposit insurance amount to $250,000. In November 2010, the FDIC issued aFinal Rule implementing section 343 of the Dodd Frank Wall Street Reform and Consumer

Protection Act that provides for unlimited insurance coverage of noninterest-bearing transaction

accounts. Beginning December 31, 2010, through December 2012, all noninterest-bearingtransaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured

institutions. The unlimited insurance coverage is available to all depositors, including consumers,businesses, and government entities. This unlimited insurance coverage is separate from, and in

addition to, the insurance coverage provided to a depositor's other deposit accounts held at an

FDIC-insured institution. As of June 30, 2011, the primary government had bank balances ofapproximately $514,000 that were subject to custodial credit risk as they were neither insured nor

29 (Continued)



June 30, 2011

collateralized. As of June 30, 2011, the component unit's bank balances were subject to the FDIC

insurance.

(b) Investments

The Board of Northwest Hospital is responsible for the management of the primary government'sinvestments. The Board establishes investment policy that is carried out by an external investmentmanager. The primary government's Finance Committee, specifically the Investment Subcommittee,

comprised of Board members, advises on matters relating to the management of the primarygovernment's investment portfolios. The composition of the carrying amounts of investments by

type at June 30, 2011 is as follows:

Nonalternative investmentsOvernight repurchase agreements $ 375,000

Money market 2,845,980Domestic fixed income 1,101,034

Foreign fixed income 58,268

Domestic equity 855,827

Foreign equity 236,638Open end mutual funds 21,273,459

Government obligations - fixed income 8,186,990

Total nonalternative investments 34,933,196

Alternative investmentsLimited liability partnership 6,341,944

Limited liability corporation 860,878

Common commingled trust funds 5,800,000

Total alternative investments 13,002,822

Total investments $ 47,936,018

Net appreciation in the fair value of nonalternative investments includes both realized and unrealized

gains and losses on investments. The primary government realized net gains of approximately

$1,618,000 for the year ended June 30, 2011. The calculation of realized gains and losses isindependent of the net appreciation of the fair value of investments. Realized gains and losses on

investments that have been held longer than the current reporting period and are sold in the current

period include the net appreciation of these investments reported in the prior period(s). The primary

government's net change in unrealized gains on investments during the year ended June 30, 2011 is

approximately $2,728,000.

Alternative investments, which are reported at amortized cost, have estimated fair value of

approximately $16,292,000 as of June 30, 2011 based on investees' reported net assets value.

Managed Accounts

The primary government's investments are managed through internal investment managed accounts

which correspond to funds held by a trustee under the terms of bond indenture agreements (Bond

30 (Continued)



June 30, 2011

Indenture), assets designated by the primary government's Board for future plan improvements and

replacements (Funded Depreciation), and assets designated by the Board for professional and generalliability coverage under a self-insurance program (Professional Liability). The following table

summarizes the total amounts held in each internal managed account as of June 30, 2011:

Funded depreciation $ 30,455,036Bond indenture 10,233,584Professional liability 4,502,717Endowment 1,879,561

Total $ 47,070,898

Investment Risk Factors

There are many factors that can affect the value of investments. Some, such as custodial risk,concentration of credit risk, and foreign currency risk may affect both equity and fixed-income

securities. Equity securities respond to such factors such as economic conditions, individual

company earnings performance, and market liquidity, while fixed income securities are particularly

sensitive to credit risks and changes in interest rates.

Interest Rate Risk

Interest rate risk is the risk that the value of the fixed income securities will decline because of rising

interest rates. The sensitivity of a fixed income security's price to interest rate changes is estimated

through Modified duration, which is based on a calculation entitled Macaulay duration. Macaulay isan accepted calculation developed for a portfolio of bonds assembled to fund a fixed liability.

Macaulay duration is calculated as follows: sum of discounted time-weighted cash flows divided by

the fixed income security's price. Modified duration is calculated using the following formula:Macaulay duration divided by one plus yield-to-maturity divided by the number of coupon payments

per year. The primary government minimizes interest rate risk by limiting the balances maintained in

certain economic and financial sectors, and issuers. In addition, the primary government monitors

the weighted average duration at the portfolio level as compared to the investment manager'srelevant benchmark index. The primary government's investment policies for fixed income

securities within the Funded Depreciation and Professional Liability managed accounts require that

the fixed income investments have intermediate to long-term duration. Fixed income securitieswithin the Bond Indenture managed account mature within five years in accordance with the

investment policy that fixed income securities mature to meet the anticipated cash requirements ofthe primary government.

31 (Continued)



June 30, 2011

The modified duration of the primary government's investments for which duration is measured as

of June 30, 2011 is presented in the following table:

Duration as of June 30, 2011

Asset value Duration in years

Asset category

Domestic fixed income $

Government and agencies 8,186,990

Corporate bonds 1,101,034

Subtotal 9,288,024

Foreign fixed income - corporate bonds 58,268

Total $ 9,346,292

Credit Risk and Concentration of Credit Risk

2 54

2 60

2 55

5 20

2 57

Fixed income securities are subject to credit risk, which is the risk that the issuer or other

counterparty to a financial instrument will not fulfill its obligations, or negative perceptions of the

issuer's ability to make these payments will cause prices to decline. Concentration of credit risk is

the risk of loss attributed to the magnitude of a government's investment in a single issuer.

The primary government's Investment Policies limit fixed income exposure to investment grade

assets.

The Investment Policies for the Funded Depreciation and Professional Liability managed accounts

require each investment manager to maintain a high average credit quality (i.e., normally a weighted

average credit rating of "AA" or better and never below "A", as determined by a nationally

recognized rating agency). In addition, the Funded Depreciation managed account Investment Policy

requires that no more than 5% of the fixed income portfolio may be invested in securities of anysingle issuer, at cost with the exception of no limitation imposed on the percentage of the portfolio

that may be invested in obligations of or guaranteed by the U.S. government.

32 (Continued)



June 30, 2011

The Investment Policy of the Bond Indenture Agreement managed account requires that investments

will be limited to securities described in the Bond Indenture, including but not limited toU.S. Treasury securities; senior debt obligations of government-sponsored enterprises; and

commercial paper P1/A1+. There are no limitations on the percentage of the funds that can be

invested in U.S. Treasury securities or on the government-sponsored enterprise obligations and

holdings of commercial paper may comprise only up to 50% of the portfolio in the aggregate but no

more than 5% may be invested in obligations in any single commercial paper issuer. Investmentssubject to credit risk (as determined through a nationally recognized rating agency - Moody's are

presented in the table below:

Aaa $ 8,153,235Aa 79,605A 948,592Nonrated 164,860

Total fixed income $ 9,346,292

Custodial Credit Risk

Custodial credit risk for deposits and investments is the risk that in the event of failure of thecustodian, the primary government may not be able to recover the value of investment securities that

are in the possession of an outside party. The primary government had no investments exposed to

custodial credit risk as of June 30, 2011. The component unit has an investment in a certificate ofdeposit valued at approximately $800,000 at June 30, 2010. Of this balance, $550,000 is subject to

custodial credit risk as this portion exceeds FDIC insurance limits.

Foreign Currency Risk

Foreign currency risk is the risk that changes in exchange rates will adversely affect the cash flows

or fair value of an investment, deposit, or transaction. The primary government's Investment Policiespermit investments in international equity and other assets classes, which can include foreign

currency exposure. The following table details the market value of foreign investments by currency

type at June 30, 2011:

Foreign fixed Foreignincome equity

Foreign investments denominated in U S dollar $ 58,268 236,638

33 (Continued)



June 30, 2011

(7) Capital Assets

Pri»:art' Government's Capital Assets

The activity in the primary government's capital asset accounts and the related accumulated depreciation

accounts for the year ended June 30, 2011 Is set forth below:

Balance BalanceJune 30, J une 30,2010 Additions Ti ansfets Retuements 2011

C apital assets not being depreciated

Land $ 10 816 822 10 816 822C onstruction in progess 30 3 77 0 35 18 360 240 ( 39 261 121) 9 4 76 154

Total capital assets notbeing depreciated 41 193 857 18 360 240 (39 261 121) 20 292 976

C apital assets being depreciated

Land improvements 4 551 (>81 79 321 (81 106) 4 549 296Buildings 75 676 519 (5 375) 21 934013 (1 885 436) 95 719 721

Leasehold improvements 14 901 363 3 644 128 (1 153 406) 17 392 (>85

Fixed equipment 36 088 951 85 821 5 110 677 41 285 449Mov able equipment 124 309 662 723 (>81 8 492 982 (132 949) 133 092 776

Total capital assets

being depreciated 255 52 7 57 6 803 52 7 39 261 121 (3 552 89 7) 292039 32 7

Total capital assets athistorical cost 296 721 433 19 163 767 (3 552 897) 312 332 303

Less accumulated depreciation forLand improvements (3 159 17 ) (253 9 1) 34 243 (3 378 883)Buildings (38 528 391) (4 098 7:9) 1 692 823 (40934327)Leasehold improvements (8 402 656) (2 (168 630) 1 097 113 (9 374 173)Fixed equipment (32 286 852) (798 105) (33(>84957)

Mov able equipment (93 369 949) (10887 736) 309 92 (103 948 093)

Total accumulated

depreciation ( 175 747 (123) (18 107 181) 3 133 771 ( 190 720 433)

Total capital assets net $ 120 974 410 1 ( 15 6 586 (419 126) 121 611 8 70

Interest expense on borrowed funds during construction is a component of the cost of assets. The amountcapitalized represents interest on funds expended for construction. Capitalization of interest ceases whenthe asset is substantially complete or placed in service. Interest earned on these project funds is applied

against interest expense for purposes of capitalization. Interest capitalized was approximately $1,236,000

during the year ended June 30, 2011.

Approximately $5,700,000 of the primary government's accounts payable as of June 30, 2011 relate to

capital assets.

34 (Continued)



June 30, 2011

Component Unit's Capital Assets

The activity in the component unit's capital asset accounts and the related accumulated depreciation

accounts for the year ended June 30, 2011 Is set forth below:

Balance BalanceJune 30, June 30,2010 -1ddtttons Transfers Retirements 2011

C apital assets not being depreciatedLand S

Construction in progress

Total cap ital assets not

being depreciated

C apital assets being depreciated

Land mipro ements ±25 4 78 ±42 696 668 164Buildings 2 ± 583 43 ;57 592 2; 940 9±5

Leasehold mipro ements I ±89 208 76 975 1 466 18±

Fixed equipment

Mo\able equipment + ±10 8119 547 268 ± 858 107

Total cap ital assets

being depreciated 28 608 868 I ±24 521 29 933, 3,89

Total cap ital assets at

historical cost 28 608 868 I ±24 521 29 933, 3,89

Less accumulated depreciation forLand mipro ements (1971±1) (54070) (25I201)

Buildings (I± 552 920) (I 141 499) (14694419)

Leasehold mipro ements (63975±) (200912) (940 665)Fred equipment

Mo\able equipment (2479 675) (32 5 81±) (2 804 488)

Total accumulated

depreciation (16 868479) (I 722 294) 18 590 773)

Total capital assets net S I 1740 ±89 (±97 771) 11 3,42 616

35 (Continued)



June 30, 2011

(8) Long-Term Debt and Capital Leases

Prim art' Government's Long-Tern: Debt

Long-term debt for the primary government consists of the following as of June 30, 2011:

Series 2007 Revenue Bonds, 4 9% to 5 7%, annual debt service including

interest, ranging from approximately $5,900,000 to $6,700,000 through 2032,

secured by an interest in the Hospital's gross receivables and certainproperty and equipment $ 79,900,000

Note payable at 9 62%, monthly installments including interest of $67,679

through May 2015, secured by a medical office building 2,595,109

Note payable at 5 5% through October 2007 and 7 0% thereafter, monthly

installments including interest of $23,763 through October 2012, secured

by a medical office building 2,705,376


through December 2017, secured by equipment 1,560,173


through March 2018, secured by equipment 1,126,409


through May 2012, secured by equipment 348,953


through July 2013, secured by software licenses 49,824

Total long-term debt 88,285,844

Less current portion (3,330,726)

Total long-term debt, net of current portion $ 84,955,1 18

(a) Series 2007 Revenue Bonds

The primary government issued $84,000,000 of revenue bonds in November 2007 to retire the Series

1993 Revenue Bonds and a note payable on the parking garage and reimburse the primarygovernment for certain qualifying capital expenditures made prior to the issuance of the Series 2007

Revenue Bonds and for capital projects planned for 2007 through 2010. The following trust fundshave been established in accordance with the Series 2007 Revenue Bonds Trust Indenture:

Debt Service Reserve Fund - established for the deposit of funds equal to the maximum annualprincipal and interest payments due in any one year ; the funds will be held in trust until the

bonds are retired.

Bond Fund - established for the regular deposit of interest and principal payments.

Project Fund - established from bond proceeds to pay for projects planned for 2007 through

2010, as defined by the Series 2007 Revenue Bonds documents.

As security for repayment of the bonds, the primary government has granted to the Washington

Health Care Facilities Authority a security interest in the cash and investments in the bond fund, debt

36 (Continued)



June 30, 2011

service fund, and project fund. The primary government has granted to U.S. Bank Trust National

Association, as master trustee, a security interest in the primary government's gross receivables andcertain property and equipment.

Under the terms of its loan agreements, the primary government has agreed to maintain certain

financial ratios, including a minimum debt service coverage ratio of 1.25, as well as excess marginand cushion ratios. In management's opinion, the primary government was in compliance with all

such covenants as of June 30, 2011.

(b) Line of Credit

The primary government maintains an unsecured line of credit with Wells Fargo Bank, under which

it may borrow up to $5,000,000 at 2.75% per annum plus the greater of LIBOR (London Interbank

Offered Rate), or 1.00% LIBOR floor. This line of credit expired at August 1, 2011. There were noamounts drawn during the year ended June 30, 2011 and there were no draws outstanding at June 30,

2011.

(c) Long-Tern: Debt Maturities

The following schedule shows future long-term debt maturities by year for the primary governmentas of June 30, 2011:

Fiscal year ending June 30, 2011:201220132014201520162017 - 20212022 - 20262027- 20312032 - 2033

Principal

3,330,7265,624,1553,699,8773,856,9853,231,68516,542,41619,700,00024,100,0008,200,000

Interest Total

4,807,3734,501,9284,236,0624,008,2203,816,19916,545,43711,979,2806,147,600467,400

Long-term debt $ 88,285,844 56,509,499

37

8,138,09910,126,0837,935,9397,865,2057,047,884

33,087,85331,679,28030,247,6008,667,400

144,795,343

(Continued)



June 30, 2011

(d) Change in Long-Tern: Debt

Changes in the primary government's long-term debt during the year ended June 30, 2011 are

summarized below:

Balance Balance

June 30, June 30, Due within

2010 Additions Retirements 2011 one year

Revenue bonds S 82.000.000 (2.100.000) 79.900.000 1.900.000

Notes payable 7.316.456 2.909.300 (1.839.912) 8.385.844 1.430.726

Total noncurrent

liabilities 5 89.316.456 2.909.300 (3.939.912) 88.285.844 3.330.726

Component Unit 's Long-Tern: Debt and Capital Leases

Long-term debt for the component unit consists of the following as of June 30, 2011:

Note payable at 5 5% through December 2012 and variable thereafter,

monthly installments including interest of $73,690 through January 2028,

secured by a medical office building

Capital lease payable

Total long-term debt

Less current portion

Total long-term debt, net of current portion

$ 9,576,380193,455

9,769,835

(406,998)

$ 9,362,837

The following schedule shows future notes payable maturities by year for the component unit as of

June 30, 2011:

Fiscal year ending June 30, 2011:201220132014201520162017 - 20212022 - 20262027 - 2031

Total notes payable

Principal Interest Total

366,968 517,551 884,519387,428 496,864 884,292409,282 475,010 884,292432,369 451,923 884,292456,758 427,534 884,292

2,700,585 1,720,875 4,421,4603,553,169 868,291 4,421,4601,271,655 56,007 1,327,662

$ 9,578,214 5,014,055 14,592,269

38 (Continued)



June 30, 2011

Future minimum lease payments under capital leases for the component unit are as follows:

Principal Interest Total

Fiscal year ending June 30, 2011:2012 $ 40,030 11,789 51,8192013 42,827 8,992 51,8192014 45,820 5,999 51,8192015 40,532 2,950 43,4822016 22,412 574 22,986

$ 191,621 30,304 221,925

Changes in the component unit's notes payable and capital lease payable during the year ended June 30,

2011 are summarized below:

Balance Balance

June 30, June 30 , Due within

2010 Additions Retirements 2011 one year

Notes payable S 9.933.150 (347.159) 9.585.991 366.968

Capital lease payable 53.880 159.940 (29.976) 183.844 40.030

Total noncurrent

liabilities S 9.987.030 159.940 (377.13 5) 9.769.83 5 406.998

(9) Self-Insurance

The primary government is exposed to risk of loss related to professional and general liability, and injuries

to employees. The primary government maintains a program of self-insurance reserves and excessinsurance coverage. The self-insurance reserve represents the estimated ultimate cost of settling claims

resulting from events that have occurred on or before the balance sheet date. The reserve includes amounts

that will be required for future payments of claims that have been reported and claims related to events that

have occurred but have not been reported.

(a) Professional and General Liability

Effective January 1, 2011, the Hospital began participating in the professional liability program of

the University. This program provides the Hospital unlimited coverage for professional liability

claims incurred on or after January 1, 2011. For claims incurred prior to this date, the Hospital hasobtained tail coverage for claims in excess of $2.0 million per occurrence for Hospital and $25,000per claim for physicians employed by the primary government and its component unit.

For its self-insured risk, the primary government has recorded an estimated reserve of approximately

$4,525,000 at June 30, 2011. This estimate is based upon an actuarial valuation and is presented

under reserve for professional and general liability self-insurance in the accompanying primary

government balance sheet. The professional and general liability reserve at June 30, 2011 isundiscounted.

39 (Continued)



June 30, 2011

The Hospital's annual funding to the University's professional liability program is determined by the

University administration using information from an annual actuarial study. The actuary discountsfunding needs by approximately 6.25% in recognition of the expected earnings of the self-insurance

fund. The various participants in the program contribute to the self-insurance fund and share a

portion of the expenses of the University's Health Sciences Risk Management Office.

The Hospital's pro rata share of premiums paid to the self-insurance revolving fund was

approximately $383,000 in 2011 and is included in supplies and other expenses on the statement of

revenues, expenses, and changes in net assets.

(b) Workers' Compensation

The primary government is self-insured for excess workers' compensation. The self-insured

retention under the workers' compensation program was $350,000 per claim in 2011. The accruedliabilities for the self-insured components of this plan include the unpaid portion of claims that have

been reported and estimates for claims that have been incurred but not reported. The primary

government also carries an excess coverage policy for its workers' compensation program. Theprimary government has recorded an actuarially determined estimated liability for workers'

compensation claims of approximately $2,725,000 at June 30, 2011, which is included in accrued

salaries, wages, and employee benefits in the accompanying primary government balance sheet. The

workers' compensation reserve at June 30, 2011 is undiscounted.

(c) Employee Medical

The primary government is self-insured for medical benefits. The accrued liabilities for the

self-insured components of the plan include the unpaid portion of claims that have been reported and

estimates for claims that have been incurred but not reported. The primary government also carries

stop-loss coverage for claims in excess of $175,000 in 2011. The primary government has recorded

an estimated liability of approximately $1,089,000 as of June 30, 2011, which is included in accruedsalaries, wages, and employee benefits in the accompanying primary government balance sheet.

(d) Changes in the Self-Insurance Reserve

The primary government has set up a reserve based on the requirement of GASB 10, Accounting andFinancial Reporting for Risk Financing and Related Insurance Issues, which requires that a liability

for claims be reported if information prior to the issuance of the financial statements indicates that it

is probable that a liability has been incurred at the date of the financial statements and the amount ofthe loss can be reasonably estimated. The reserve includes the amount that will be required for future

payments of claims that have been reported and claims related to events that have occurred but have

not been reported and an estimated tail liability for the employed physicians.

40 (Continued)



June 30, 2011

Changes in the self-insurance reserve for the year ended June 30, 2011 is noted below:

Reserve at June 30, 2010 $ 13,754,655

Incurred claims and changes in estimates 7 ,1 16,284

Claim payments (12,532,504)

Reserve at June 30, 2011 $ 8,338,435

(10) Vacation and Sick Leave

(a) Vacation

All biweekly paid employees of the primary government and component unit who are in regularlyscheduled full or part-time positions, except for employees who have elected a wage premium in lieu

of benefits or as otherwise specified in individual employment contracts or relevant labor contracts,earn annual vacation hours based on a actual hours worked/paid up to a maximum of 80 per payperiod. Employees become eligible to use accrued annual vacation hours the first full pay period

following the completion of three (3) continuous months (90) day of employment. The biweekly

annual vacation accrual rates vary depending on the employee's level of employment and length of

service. The maximum accrual of annual leave is two times the annual accrual rate. After one year(365 days) of continuous service, upon termination in good standing and that the employee has given

appropriate notice, payment for unused accrued annual leave will be made. At June 30, 2011, the

primary government and component unit's liability are approximately $5,433,000 and $453,000,

respectively, and included in accrued paid leave in the accompanying balance sheet.

(b) Extended Illness Bank Leave

All biweekly paid primary government and component unit employees who are in regularlyscheduled full or part-time positions, except for employees who have elected a wage premium in lieu

of benefits or as otherwise specified in individual employment contracts or relevant labor contracts,earn extended illness bank (EIB) leave hours based on a actual hours worked/paid up to a maximum

of 80 per pay period. Employees become eligible to use accrued EIB hours the first full pay period

following the completion of three (3) continuous months (90) day of employment. The biweekly EIB

rate is 0.0308 times number of hours worked/paid. The maximum accrual of EIB is 576 hours. After

five years of continuous service (1 year = 2080 hours worked/paid), upon termination in goodstanding and that the employee has given appropriate notice, payment of a percentage of unused

accrued EIB leave will be made. The percentage varies based on the employees' years of continuous

service. The amount accrued as of June 30, 2011 for EIB is a probabi lity-weighted calculation basedon employees' number of years of service as of June 30, 2011. At June 30, 2011, the primary

government and component unit's liability are approximately $1,432,000 and $171,000,

respectively, and included in accrued paid leave in the accompanying balance sheet.

41 (Continued)



June 30, 2011

(11) Retirement Plans

(a) 401(k) Profit Sharing Plan

All employees of the primary government and the component unit are covered by the Health

Resources Northwest 401(k) Profit Sharing Plan (the 401(k) Plan), a defined contribution plan. Theprimary government and component unit, as the Plan Sponsors, contribute based on a defined

formula, with participants immediately vesting in all employer and employee contributions.

Employee contribution rates can vary from 1% to 80% of gross compensation, up to $16,500 for2010, whichever is less. Fidelity Management Trust Company serves as the trustee of the plan. The

Plan is administered by Health Resources Northwest 401(k) Profit Sharing Plan and 403(b)

Retirement Plan Committee. The primary government's employee and employer contributions to the401(k) Plan during the fiscal year ended June 30, 2011 are approximately $5,691,000 and

$2,567,000, respectively. The component unit's employee and employer contributions for the 401(k)

Plan during the fiscal year ended June 30, 2011 are approximately $830,000 and $285,000,

respectively.

(b) 403(b) Retirement Plan

Highly compensated employees who are not employed by a taxable affiliate of the primary

government or component unit and who are not participating in the 401(k) Plan are eligible to

participate in the Health Resources Northwest 403(b) Retirement Plan (the 403(b) Plan). The 403(b)Plan is a defined contribution plan, which includes a qualified cash or deferred arrangement.

Employee contribution rates can vary from 1% to 80% of gross compensation, up to $16,500 for

2010, whichever is less. Fidelity Management Trust Company serves as the trustee of the plan. The

Plan is administered by Health Resources Northwest 401(k) Profit Sharing Plan and 403(b)Retirement Plan Committee. The employee contributions to the 403(b) Plan during the fiscal year

ended June 30, 2011 for the primary government and the component unit are approximately

$1,337,000 and $86,000, respectively. The employer contributions to the 403(b) Plan during the

fiscal year ended June 30, 2011 for the primary government and component unit are approximately

$488,000 and $31,000, respectively.

42 (Continued)



June 30, 2011

(12) Commitments and Contingencies

(a) Operating Leases

The primary government leases certain medical office space and other equipment under operating

leases with its component unit and third parties. Similarly, the component unit leases certain medicaloffice space and other equipment under operating leases with the primary government and third

parties. The recorded rental expense of approximately $7,086,000 and $1,194,000 for the primary

government and the component unit, respectively, during the year ended June 30, 2011, is includedin supplies and other expenses in the accompanying statements of revenues, expenses, and changes

in net assets. The following schedule shows total future minimum lease payments by year for the

primary government and the component unit:

Primarygovernment

Year ending June 30:2012 $ 5,912,0272013 4,691,6772014 3,817,7882015 3,280,8622016 3,656,4452017 - 2020 2,083,200

$ 23,441,999

(b) Union Contracts

Primary Government's Union Contracts

Componentunit

155,207109,21369,69841,47238,861

414,451

Approximately 65% of the primary government's 1,552 full-time-equivalent employees are coveredunder collective bargaining agreements, including nurses, professional, and service employees.

Nurses are represented by the Washington State Nurses Association (WSNA) and other healthcare

and support workers are represented by the Service Employees International Union (SEIU). The

current collective bargaining agreement with WSNA expires on May 15, 2013. The SEIU agreementexpired on June 30, 2011 and is currently in negotiation.

Component Unit's Union Contracts

The component unit has no union contracts.

(c) Other Contracts

The primary government engaged Siemens Medical Solution USA, Inc. (Siemens) in 2005 to

manage its information technology services for a contracted period of 10 years. It has been amended

and extended to expire on June 12, 2018. Payments made to Siemens during the year ended June 30,2011 for services rendered during the same period totaled approximately $5,138,000, which is

43 (Continued)



June 30, 2011

included in supplies and other expenses in the accompanying statements of revenues, expenses and

changes in net assets of the primary government.

(d) Litigation

Northwest Hospital is involved in litigation arising in the course of business . After consultation withlegal counsel, management estimates that these matters will be resolved without material adverseeffect to Northwest Hospital 's financial statements.

(e) Regulatory Environment

The healthcare industry is subject to numerous laws and regulations of federal , state, and localgovernments . These laws and regulations include , but are not limited to, matters such as licensure,

accreditation , governmental healthcare program participation requirements, reimbursement for

patient services, and Medicare and Medicaid fraud and abuse. Government agencies are actively

conducting investigations concerning possible violations of fraud and abuse statutes and regulations

by healthcare providers. Violations of these laws and regulations could result in expulsion byhealthcare providers, together with the imposition of significant fines and penalties, as well as

significant repayments for patient services previously billed. Management believes that the primary

government and the component unit are in compliance with the fraud and abuse regulations as wellas other applicable government laws and regulations . Compliance with such laws and regulations

can be subject to future government review and interpretation as well as regulatory actions known or

unasserted at this time.

(13) Related-Party Transactions

The following is a summary of the material transactions between the Hospital and its component units (seenote 1):

The primary government has lease agreements with the component unit for building space located in

its Northwest Outpatient Medical Center. Rent expense and rental income recorded by the primarygovernment and component unit, respectively, for space leased by the primary government during

the year ended June 30, 2011 was approximately $1,114,000.

The primary government contracts with the component unit to provide management services. During

the year ended June 30, 2011, the primary government paid approximately $3,204,000 for purchased

services from the component unit.

The Foundation raises funds for the benefit of the primary government. In addition, the primary

government receives investment earnings from endowments that are held and recorded by the

Foundation, the income of which is designated to support the Hospital's programs. During the year

ended June 30, 2011, the Foundation provided approximately $508,000 of funds to the Hospital.Total assets held by the Foundation and due to the primary government as of June 30, 2011 are

approximately $502,000. The cost and fair value of the endowments were approximately $1,717,000

and $1,880,000 as of June 30, 2011.

44 (Continued)



June 30, 2011

In connection with the UW Medicine affiliation that took effect as of January 1, 2010, the primary

government committed to making an annual $2,000,000 capital contribution to its component unit

for each of five fiscal years beginning 2010 and through 2014 to fund new ventures. InDecember 2010, the component unit's Board of Trustees approved an amendment to the Affiliation

Agreement whereby the primary government's payment of the $2,000,000 due in fiscal year 2011

was deferred until 2015. At June 30, 2011, this obligation is included in the primary government's

financial statements as a payable to its component unit and nonoperating expense. The component

unit has recorded a receivable from the primary government in its balance sheet. In its statement ofrevenues, expenses, and changes in net assets, the contribution from the primary government is

presented separately after nonoperating revenues and expenses.

In 2011, the Hospital received an operating subsidy of $2.0 million from its component unit.

Similarly, the primary government provided an operating subsidy of approximately $3.4 million to

its component unit. The Hospital and its component unit have agreed that the primary governmentwill fund any operating losses of HRN's wholly owned subsidiary clinics. In the statements of

revenues, expenses, and changes in net assets, these transactions are recognized as nonoperating

income to the recipient and nonoperating expense to the payor.

45

IIW MEDIC IN E/NORTHWEST(A Component Unit of the Unnersitr of Washington)

Supplementary Information

Aggregating Balance Sheet

June 30 2011

Assets

C urrent assets

C ash and cash equn alents

Ink estments (note 6 )

Patient accounts recen able

Less allo« ante for uncollectible accounts

Accounts recen able

Due from

Primary gokernment

C omponent unit

Notes and other recen ables

Supplies ink entory

Restricted mkestments (note 6)

Prepaid expenses deposits and other

Total current assets

Noncurrent assets

Inkestments of current portion (note 6)

Restricted mkestments net of current portion (note 6)

Ink estments in joint k entures and other

Deferred financing costs

C apital assets at cost of accumulated depreciation (note 7)

Due from primary gokernment

Other assets

Total noncurrent assets

Total assets

Notthi%est ComponentHospital unit - HRN Eliminations Aggregated

S 7 980 786 3 598 558 11 579 344

1 765 660 1 765 660

37 276 288 4 347 212 41 623 500

(10346 765) (162 837) (10509602)

26 929 523 4 184 375 31 113 898

2 848 646 (2 848 646)

2 008 725 (2 008 725)

2 696 475 331 656 30 2 81 3 1

4000493 339715 4350208

556 224 556 224

2 136 937 59 212 2 196 149

48074823 11 372162 (4857371) 54589614

34057212 34057212

11 556 922 800 000 12 356 922

1 603 743 109 500 1 713 243

703 159 106 780 809 939

1 2 1 6 1 1 870 1 1 342 616 132 954 486

2 000 000 (2 000 000)

328 714 357 248 685 962

169 861 620 14 716 144 (2 000000) 182 577 764

S 217 936 443 26 088 306 (6 8 5 7 371) 237 167 378

Unaudited - See accompany mg accountants ' report

46

IIW MEDIC IN E/NORTHWEST(A Component Unit of the Unitersitr of Washington)

Supplementary Information

Aggregating Balance Sheet

Tune 30 2011

Liabilities and Net Assets

C urrent liabilities

Accounts payable

Accrued salaries ages and employee benefits

Accrued paid lease

Interest payable and other accrued liabilities

Due to

Primary gokernment

C omponent unit

Payable to contractual agencies net

C urrent portion of long-term debt (note 8)

C urrent portion of reserk e for professional and general

liability self-insurance (note 9)

Total current liabilities

Noncurrent liabilities

Long-term debt net of current portion (note 8)

Reserke for professional and general liability self-insurance

net of current portion (note 9)

Due to

C omponent unit

)ther noncurrent liabilities

Total noncurrent liabilities

Total liabilities

C ommitments and contingencies (note 12)

Net assets

Ink ested in capital assets net of related debt

Restricted for

Nonexpendable

Expendable

Unrestricted

Total net assets

Total liabilities and net assets

Notthi%est ComponentHospital unit - HRN Eliminations Aggregated

S 11 541 234 124 243 11 665 477

6 835 350 2 447 657 9 283 0076 865 078 624 309 7 489 387

8 116 181 1 168 774 9 284 955

2 008 725 (2 008 725)

2 848 646 (2 848 646)

4924731 4924731

3 330 726 306 998 3 737 724

903 930 903 930

4 5 366 876 6 780 806 (4 857371) 47 290311

84955 118 9362837 94317955

3619720 3619720

2 000 000 (2 000 000)4 42 5 003 1 307 631 5 832 644

94 999 831 10 770 378 (2 000 000) 103 770 319

140366 717 17551 284 (6857371) 151 060630

43 129 146 1 572 781 44 701 927

l 716 527 l 716 527

1 467 878 1 467 878

31 256 175 6 963 241 38 220 316

77 569 726 8 537 022 86 106 748

S 217 936 443 26 088 306 (6 8 5 7 371) 237 167 378

Unaudited - See accompany mg accountants ' report

47

IIWW' MEDIC INE/NORTHWEST

(A C omponent Unit of the Unit eisity of Washington)

Supplementary Iufoimation

Aggiegatme Statement of Rekenues Expenses and C hanges in Net Assets

Feat ended June 30 2011

Opeiatme iek enues

Net patient sen ice iekenues (note 3)

Other iekenue

Total opeiating iekenues

Opelatme expenses

Salaries and \ ages

Employee benefits

Supplies and other

Purchased services

Depieciation and amortization

Total opeiatme expenses

Loss tiom opeiations

Nonopeiatme iekenues (expenses)

In esmient uiconie (note 6)

Inteiest expense

C onhibution to component unit

Gifts

Opelatme subsidy paid to component unit

Opelatme subsidy paid to piimaiy gokeimuent

Other net

Net nonopeiatme iekenues (expenses)

Loss before capital giants and gifts

C apital giants and contributions

C apital giants

C onhibution fiom piimaiy gokeimuent

Total capital giants and contnbutions

Total change in net assets

Net assets - beguining of yeas

Net assets - end of yeas

Unaudited - See accompanying accountants report

Not tIi est C omponent

Hospital unit - HRN Eliminations Aggi egated

S 229 795 839 35 533 398 265 329 2379944666 6258054 (5692589) 105I0131

239 740 505 41 791 452 (5 692 589) 275 839 368

100 453 420 23 340 066 123 793 48625519030 3525414 2904444459 929 543 I 1161 168 (I 348408) 69 742 303

44 004 162 4 357 448 (4 344 181) 44 017 429

18 469 062 1 743 833 20 212 895

248 375 217 44 127 929 (5 692 589) 286 810 557

(8 634 712) (2 336]77) (10971 189)

6094474 6094474

(3 734 290) (555 595) (4 289 885)

(2 000 000) 2 000 000505 331 505 331

(3419797) 3419797

2000000 (2 000 000 )

231 292 39 738 271 030

(322 990) 903 940 2 000 000 2 580 950

(8 957 702) (I 432 537) 2 000 000 (8 390 239)

209624 209 624

2 000 000 (2 000 000)

209 624 2 000 000 (2 000 000) 209 624

(8748078) 567463 (8180615)

86 317 80] 7 969 559 94 287 363

S 77 569 726 8 537 022 86 106 748

48

IIWW' MEDIC INE/NORTHWEST

(A C omponent Unit of the Unnei sity of Washington)

Supplenientaly Iufonuation

Aggiegating Statement of C ash Flo« s

Feat ended Tune 30 2011

C ash tlo« s fioni opeiatme acts sties

C ash iecened for patient case

C ash lecen ed for other serv ices

C ash paid to employees

C ash paid to suppliers and others

Net cash plodded by (used ui) opeiatme acts sties

C ash t1o« fioni capital and related financing acts sties

Acquisition and constiuction of capital assets

Proceeds fioni dispositions ofpiopeity and equipment

Pimcipal payments on debt and capital lease obligations

Proceeds fioni ne« bono«mes

Interest payments

Net cash used by capital and related fuiancing acts sties

C ash tlo« s fioni noncapital financing acts sties

Gifts and giants for other than capital puiposes

Opelatme subsidy paid to component unit

Opelatme subsidy paid to piimaiy gokeimuent

Net cash plotided by (used ui) noncapital financing

acts sties

C ash tlo« fioni in esting acts sties

Interest and di idend uiconie

Proceeds fioni sales of in esmients

Put chases of ink estnients

Net cash plodded (used) by mkestme acts sties

Net decrease in cash and cash equnalents

C ash and cash equn alents at beguining of yeas

C ash and cash equnalents at end of yeas

Reconciliation of loss fioni opeiations to net cash plot ided by (used in)

opeiating actRities

Loss fioni opeiations

Adjustments to reconcile loss fioni opeiations to net cash plot ided

by (used in) opeiatme acts sties

Depieciation and amortization

Piokision for uncollectible accounts

C hange in assets and liabilities

Patient accounts iecenable net

Notes and other iecenables

Due fioni

Pi uuaiy gokeimuent

C omponent unit

Supplies in entoiy

Prepaid expenses deposits and other

Other assets

Accounts Payable

Due to

Pi uuaiy gokeimuent

C omponent unit

Accrued salaries \ ages and employee benefits

Accrued paid lease

Reserve for professional and general liability self-insuiance

Payable to contractual agencies net

Other noncunent liabilities

Net cash plot ided by (used ui) opeiatme acts sties

Not tIi est C omponent

Hospital unit - HRN Eliminations Aggregated

S 230 325 662 34 921 239 265 246 9018 250 894 5 473 096 13 723 990

(125 304 147) (26606 101) (151 910248)(103 123637) ( 1 5 310631) (1 18 434 268 )

10 148 772 (I 522 397) 8 626 375

(I5943391) (I 179618) (17123009)

395 357 395 357

(3939912) (377 135) (4317047)

2909300 2 909 300

(4958070) (555 595) (5513665)

(21536716) (2112348) (23649064)

713 224 713 224

(3419797) 3] 19 797

2 000000 (2 000 000 )

(706 573) 1 419 797 713 224

1 597 074 39 738 1 636 812

20 366 630 20 366 630

(10332 203) (800000) (II 132 203)

11 631 501 (760 262) 10 871 239

(463 016) (2 975 210) (3438 226)

8 443 802 6 573 768 15 017 570

S 7 980 786 3 598 558 I 1579 344

5 (863471 2) (2336477) (10971 189)

18 469 062 1 743 833 20 212 895

13 583 532 142 055 13 725 587

(13 053 709) (754 216) (13 807925)(856 795) (75 160) (931 955)

(709 798) 709 798

(836 980) 836 980(40525) 18702 (21 823)

263 163 23 848 1287 011

(328 714) 115 801 (212 913)

(I 175 782) (I 242 040) (2]17822)

836 980 (836 980)

709 798 (709 798)

292 927 68 470 361 397

375 376 75 108 450 484(5 144 350) (5 144 350)

4 124 733 4 124 733

401 748 570 497 1972 245

S 10 148 772 (I 522 397) 8 626 375

Unaudited - See accompanying accountants report

49

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