Return of Organization Exempt From Income Tax 2002 Under section 501(c), 527, or 4947(a)(1) of the Internal Revenue Code (except black lung benefit trust or private foundation)

The organization ma have to use a co of this return to satis state re ortln re quirements ~1e~ or tax year beginning 7 / 01 / 02 andending 6 / 30 / 03 C Name of organization D Employer ID number

38-1360529 SPECTRUM HEALTH HOSPITALS E Telephone number Number and street (or P.O box if mail Is not delivered to street address) Room/suds 616-391-2754 100 MICHIGAN AVE NE F Accounting method : U Cash City or town, state or country, and ZIP + 4 N Accrual 0 Other (specify)

Department of the Treasury I Internal Revenue Service

A For the 2002 calendar

B Check if applicable Pleas use IF

Address change label 4 Name change print s

Initial return type.

Final return See

Amended return Specif

Application Pendin GRAND RAPIDS MI 49503 1 OSecUon 501(e)(3) organizations and 4947(a)(1) nonexempt charitable H and I are not applicable to section 527 organizations

trusts must attach a completed Schedule A (Forth 990 or 990-EZ) . H(a) Is this a group return for affiliates? a Yes ~ No G Web slte:l WWW. SPECTRUM-H}3ALTH . ORG H(b) It "Yes," enter no of atnllates 1 J Organization type H(G) Are all affiliates Included? ~ . Yes a .No

check onl one 1 501 (c)( 3 t insert no . 4947 (a)( 1 ) or 527 (if "No," an a list See fnstr ) K Check here 1 if the organization's gross receipts are normally not more than H(d) is this a separate return filed by an

$25,000 . The organization need not file a return with the IRS ; but if the organization o rganization covered b a g rou p ruling? Yes 11 No received a Form 990 Package in the mail, it should file a return without financial data . I Enter 4-dig it GEN 1

M Check 1 if the organization is not required B (Form 990, 990-EZ, or 990-PF) . 17 of the instructions .)

ass receipts : Add lines 6b, 8b, 9b, and 10b to line 12 1 669,968,5971 t t t . . . Revenge, Expenses, and Changes in Net Assets or Fund Balances 1 Contributions, gifts, grants, and similar amounts received : a Direct public support 1a b Indirect public support 1b c Government contributions (grants) . , . . 1c d Total (add lines 1a through 1c) (cash $ 4 ,010 ,715 noncash $ 2 Program service revenue including government fees and contracts (from Part VII, line 93) 3 Membership dues and assessments 4 Interest on savings and temporary cash investments . . . . 5 Dividends and interest from securities . . . 6a Gross rents 6a . . . . . . . . b Less : rental expenses . . . . . . . SEE STMT. 1 . 6b c Net rental income or (loss) (subtract line 6b from line 6a) . 7 Other investment income (describe 1 . . . 8a Gross amount from sales of assets other (A) Securities

than inventory 8a b Less : cost or other basis and sales expenses . . 8b

4,010,7

R e

e A n

-~ e

6c

06

c Gain or (loss) (attach schedule) 8c 137 , 0541 d Net gain or (loss) (combine line 8c, columns (A) and (B)) SEE STMT 2 8d 9 Special events an ~ly~tjas.(a~''~ dule) a Gross, evenuq$*,4M ~ of

b Less: ~ expenses ~oth~r~ tun rye ing expenses . 9b c Net in orw ~) fFbm sp1e~~ ev subtract line 9b from line 9a)

10a Gross al of inven allowances 10a b Less : st~ofBIEN, UT . . 10b c Gross? ~tes~rtfs o inventory (aft. sch .) (subtract line 10b from line 10a)

11 Other revenue (from Part Vll, line 103) I 12 Total revenue add lines 1d 2 3 4 5 6c 7 8d 9c 10c and 11

E 13 Program services (from line 44, column (B)) . . . . . . P 14 Management and general (from line 44, column (C)) . . . . . . . . . . . . . . .

15 Fundraising (from line 44, column (D)) . . 16 Payments to affiliates (attach schedule) . .

s 17 Total expenses add lines 16 and 44 column A A 18 Excess or (deficit) for the year (subtract line 17 from line 12)

N g 19 Net assets or fund balances at beginning of year (from line 73, column (A)) . . t e 20 Other changes in net assets or fund balances (attach explanation) . . . . t

21 Net assets or fund balances at end of ear combine lines 18 19 and 20 For Paperwork Reduction Act Notice, see the separate Instructions . 4A

18 6 , 675 , 842 . 19 635 , 158, 838

SEE STMT 320 -17 , 064 , 714 1'1 21 624 , 799 966 U

Form 990 (2002) `<J

. ~ ~

Form 990 t .,

L

10,715

1,106,198 1,054,761

ocher

10c . . . . . . . . 11 12 668 , 532 , 284

. 13 574, 927 , 232 14 86 , 929 , 210

. . . . 15 . . ~ 16

r . " r

Form 99o(2002) SPECTRUM HEALTH HOSPITALS 38-1360529 Page 2 PAr'{' It Statement of All organizations must complete column (A) Columns (B), (C), and (D) are required for section 501(c)(3) and (4) organizations

Functional Expenses and section 4947 a 1 nonexempt exem pt charitable trusts but optional for others See page 21 of the Instruct] ns

Do not include amounts reported 0n line (B) Program (C) Management

6b 8b 9b 10b Or 16 Of Part I . (W Total services and general (D) Fundraising

22 Grants and allocations (attach schedule) non-(cash S cash $ , . .) 22

23 Specific assistance to individuals 23 24 Benefits paid to or for members . . . . 24 25 Compensation of officers, directors, etc. . 25 255 , 791 255 , 791 2s Other salaries andwages . SEE STMT 2s 277401892 244774657 32 , 627 , 23 ! 27 Pension plan contributions . , , 27 9 , 715 , 741 9 , 715 , 741 28 Other employee benefits . , . 28 33,315,711 25 , 762 , 44 E 7 , 553 , 265 29 Payrolltaxes . . . . . . 29 23 , 095 , 94 6 23 , 095 , 94 ( 30 Professional fundraising fees . . . . . . . 30 31 Accounting fees 31 267 , 875 267 , 875 32 Legal fees . . . . . . . . . . 32 663 , 876 187 , 5 81 476 , 295 33 supplies . . , . 33 136114828 132814059 3 , 300 , 769 34 Telephone . . . . . . . . , . . ., . , . � , 34 1 , 697 , 824 1 , 489 , 416 208 , 408 35 Postage and shipping . . . . 35 1 , 762 , 237 340 , 309 1 , 421 , 928 36 Occupancy . . . . 36 8 , 006 , 073 8 1 000 1 585 5 , 488 37 Equipment rental and maintenance . . . . . 37 2 , 323 , 905 1 , 919 , 076 404 , 829 38 Printing and publications , . . . . 38 39 Travel 39 1 , 752 , 433 1 , 029 , 645 722 , 788 40 Conferences, conventions, and meetings. 40 41 Interest 41 5 , 587 , 865 5 , 582 , 365 5 , 500 42 Depreciation, depletion, etc. (attach schedule) 42 44 , 739 , 30 4 32 , 006 , 313 12 , 732 , 99 3 43 Other expenses not covered above (itemize): a 43a b SEE STAT$MENT 4 a3b 115155139 88 , 209 , 09 3 26 , 946 , 04 E c . . 43c d . . . . . . . 43d

e 43e

44 Total functional expenses (add lines 22 - 43) Organizations

com letin columns ~B)-(D), ca these totals tolines 1s-1s 44 661856442 574927232 86 , 929 , 21 11 0 Joint Costs . Check 1 U if you are following SOP 9&2. Are any joint costs from a combined educational campaign and fundraising solicitation reported in (B) Program services? . . . 1 a Yes R No If *Yes," enter (I) the aggregate amount of these joint costs $ , (il) the amount allocated to Program services $

4

ishments (See page 24 of the instn Statement of Program Service Accom What is the organization's primary exempt purpose? 0- SEE STATEMENT 5 All organisations musfdescritie their exempt purpose achievements in a clear and concise~manner. State the number of clients served, publications issued, etc . Discuss achievements that are not measurable . (Section 501(c)(3) and (4) organizations and 4947(a)(1) nonexempt charitable trusts must also enter the amount of grants and allocations to others .) a SEE STATEMENT . 6

74927232 b

c

. (Grants and allocations d

e Other program services (attach schedule) (Grants and allocations $ ) f Total of Program Service Expenses (should equal line 44, column (B), Program services) . . . . . 1 574 927232

DAA Forth 990 (2002)

Program Service Expenses

. . . (Required for 507(c)(3) & (4) orgs., 8 4947(ax1) trusts, but optional for

' ( , 6

Form 990 (2002) SPECTRUM HEALTH HOSPITALS 38-1360529 Page 3

Past IV Balance Sheets (See page 24 of the instructions .)

47a Accounts receivable b Less : allowance for doubtful accounts

48a Pledges receivable . . 48a b Less : allowance for doubtful accounts 48b

49 Grants receivable . . 50 Receivables from officers, directors, trustees, and key employees

(attach schedule) 51a Other notes and loans receivable (attach

schedule) 51a b Less : allowance for doubtful accounts 51b

52 Inventories for sale or use . . . 53 Prepaid expenses and deferred charges . . . . . . . 54 Investments-securities . . . SEE . STMT ~ 7~ ' 10,4 Cost 55a Investments-land, buildings, and

equipment : basis . . . . . . 55a b Less : accumulated depreciation (attach

schedule) SSb

D FMV

59 Total assets (add lines 45 through 58) (must equal line 74) . . . . . . . 60 Accounts payable and accrued expenses 61 Grants payable 62 Deferred revenue 63 Loans from officers, directors, trustees, and key employees (attach

schedule) 64a Tax-exempt bond liabilities (attach schedule) SEE WORKSHEET

b Mortgages and other notes payable (attach schedule) * . . SL$. ~WORKSHL$T 65 Other liabilities (describe 1 SEE STMT 11 )

L I a b I I I t t e s

279 223 987164a 8,722,307 64b

ss Total liabilities add lines so through ss 398 , 024 , 463 sE Organizations that follow SFAS 117, check here 1 ~ and complete lines

67 through 69 and lines 73 and 74. 67 Unrestricted 576 , 056 , 851 67

e u 68 Temporarily restricted 41 , 246 , 668 68 t o 69 Permanently restricted 17 , 855 , 319 69

q Organizations that do not follow SFAS 117, check here 1 a and s B complete lines 70 through 74 . ' s a 70 Capital stock, trust principal, or current funds 70 e I 71 Paid-in or capital surplus, or land, building, and equipment fund . . . . 71 to

72 Retained earnings, endowment, accumulated income, or other funds 72 c 73 Total net assets or fund balances (add lines 67 through 69 or lines e 70 through 72 ; rg

column (A) must equal line 19 ; column (B) must equal line 21) , . . . . 635 , 158 1 8381 73 74 Total liabilities and net assets / fund balances add lines 66 and 73 10331833011 74

Form 990 is available for public inspection and, for some people, serves as the primary or sole source of information about a particular organization . How the public perceives an organization in such cases may be determined by the information presented on its return . Therefore, please make sure the return is complete and accurate and fully describes, in Part III, the organization's programs and accomplishments . DAA

16,899,62

624,769,966

Note: Where required, attached schedules and amounts within the description (A) column should be for end-of-year amounts only . Beginning

4 7 45 Cash - non-Interest-bearing 6,8 6 Savings and temporary cash investments . . , . . . 9 5

A s s e t s

56 Investments-other (attach schedule) . SEE STMT 8 57a Land, buildings, and equipment : basis 57a 761 , 307 , 355

b Less : accumulated depreciation (attach schedule) SEE STMT 9 57b 351 , 731 , 126

58 Other assets (describe 1 SEE STMT 10 )

49

50

51c 14 , 458 , 146 52 12 , 627 , 718 53 31 , 829 , 067 s4

55c 85 , 834 , 436 56

46 , 974 , 576 57c 26 , 091 , 655 58

1033183301 ss 77,029,575 60

(B) End of ear 10 , 247 , 036

92 , 663 , 363

12 , 065 , 451 9 , 507 , 906

364 , 093 , 373

30 , 624 , 517

409 , 576 , 229 111 , 533 , 747

1040311622 82 , 762 , 579

2,554,710 45,975,805

. . . . . . . . . . . . . . . . I

75 Did any officer, director, trustee, or key employee receive aggregate compensation of more than $100,000 from your organization and all related organizations, of which more than $10,000 was provided by the related organizations? . 1 ~ Yes a No If 'Yes," attach schedule-see page 26 of the instructions . SEE STMT

Form 990 (2002) DAA

' 7 L ~ , ~ L

FoRn990 2002 SPECTRUM HEALTH HOSPITALS 38-1360529 Pane 4 i Part IVA Reconciliation of Revenue per Audited Fart IV-$ Reconciliation of Expenses Per Audited

Financial Statements with Revenue per Financial Statements with Expenses per Return See page 26 of the instructions . Return

a Total revenue, gains, 8 other support a Total expenses and losses per per audited financial statements t a 667 , 899 , 976 audited financial statements t a 661 , 633 , 854

b Amounts included on line a but not on b Amounts included on line a but not line 12, Form 990 : on line 17, Form 990 :

(1) Net unrealized gains on (1) Donated services and use investments $ of facilities $

(2) Donated services and use (2) Prior year adjustments of facilities $ reported on line 20,

(3) Recoveries of poor Form 990 $ year grants $ (3) Losses reported on line 20,

(4) Other (specify): Form 990 i SEE STMT 12 (4) Other (specify) :

$ 1 , 054 , 761 SEE STMT 14 Add amounts on pines (t) through (4) t b 1 , 054 , 761 $ 1 , 054 , 761

Add amounts on lines (1) through (4) 1 b 1 , 054 , 761 c Line a minus line b , . . . 1 c 666 , 845 , 215 c Line a minus line b . . . 1 c 660 , 579 , 093 d Amounts included on line 12, d Amounts included on line 17,

Form 990 but not on line a : Form 990 but not on line a : (1) Investment expenses (1) Investment expenses

not included on line 6b, not included on line 6b, Form 990 $ Form 990 $

(2) Other (specify): (2) Other (specify) : SEE STMT 13 SEE STMT 15

$ 1 , 687 , 069 $ 1 , 277 , 349 Add amounts on lines (1) and (2) . 1 d 1 , 687 , 069 Add amounts on lines (1) and (2) t d 1 , 277 , 349

e Total revenue per line 12, Form 990 a Total expenses per line 17, Form 990 line c p lus line d 11-_ a 668 , 532 , 284 (line c plus line d) 111o, -A 661 , 856 , 442

Pad V List of Officers, Directors, Trustees, and Key Employees (List each one even if not compensated ; see page 26 of the instructions .

(B) Title and average (C) Compensation (D) CYeontnb to (E) Expense (l) Name and address hours per week devoted to (H not paid, enter plans ~ deferted account and other

po sition allowances Mfflpeoqatinn SEE STATEMENT

0 0 0

-1360529

DAA

1

76 Did the organization engage in any activity not previously reported to the IRS? If "Yes," attach a detailed description of each activity 76 X

77 Were any changes made in the organizing or governing documents but not reported to the IRS? 77 X If "Yes," attach a conformed copy of the changes .

78a Did the organization have unrelated business gross inc. of $1,000 or more during the year covered by this return? 78a X b If "Yes," has it filed a tax return on Form 990-T for this year? . . . . 78b X

79 Was there a liquidation, dissolution, termination, or substantial contraction during the year? If "Yes," attach a statement 79 X

80a Is the organization related (other than by association with a statewide or nationwide organization) through common membership, governing bodies, trustees, officers, etc., to any other exempt or nonexempt organization? BOa X

b If "Yes," enter the name of we organization 1 .SEE ATTACHED and check whether it is . , a exempt or ~ nonexempt.

81a Enter direct or indirect political expenditures . See line 81 insV. . . . . . . 81a N/A b Did the organization file Form 1120-POL for this year? . . . . , , . , . _ . . 81b X

82a Did the organization receive donated services or the use of materials, equipment, or facilities at no charge or at substantially less than fair rental value? , . . . . . . 82a X

b If "Yes," you may indicate the value of these items here . Do not include this amount as revenue ' ` " ` in Part I or as an expense in Part II . (See instructions in Part III .) . . . . . . . . . 82b N/A

83a Did the organization comply with the public inspection requirements for returns and exemption applications? , . . . . . 83a X b Did the organization comply with the disclosure requirements relating to quid pro quo contributions? . . . . N/A 83b

84a Did the organization solicit any contributions or gifts that were not tax deductible? 84a X b If "Yes," did the organization include moth every solicitation an express statement that such contributions

or gifts were not tax deductible? . . . N/A 84b 85 501(c)(4), (5), or (6) organizations . a Were substantially all dues nondeductible by members? . . . . . . . . N/A 85a

b Did the organization make only in-house lobbying expenditures of $2,000 or less? . , , N/A 85b If "Yes" was answered to either 85a or 85b, do not complete 85c through 85h below unless the organization received a waiver for proxy tax owed for the prior year.

c Dues, assessments, and similar amounts from members 85c N/A d Section 162(e) lobbying and political expenditures . . . . . . . . . . . . 85d N/A e Aggregate nondeductible amount of section 6033(e)(1)(A) dues notices . . . . . . . 85e N/A f Taxable amount of lobbying and political expenditures (line 85d less 85e) . . . . . . . . . . 85f N/A g Does we organization elect to pay the section 6033(e) tax on the amount in 85f? . . . . . N/A 85 h If section 6033(e)(1)(A) dues notices were sent, does the organization agree to add the amount in 85f to its reasonable

estimate of dues allocable to nondeductible lobbying and political expenditures for the following tax year? . . N/A 85h 86 501(c)(7) orgs . Enter : a Initiation fees and capital contributions included on line 12 86a

b Gross receipts, included on line 12, for public use of club facilities . 86b N/A 87 501(c)(12) orgs . Enter : a Gross income from members or shareholders . 87a N/A b Gross income from other sources . (Do not net amounts due or paid to other . . .

sources against amounts due or received from them .) . . . . . . . . . 87b N/A 88 At any time during the year, did the organization own a 50% or greater interest in a taxable corporation or

partnership, or an entity disregarded as separate from the organization under Regulations sections 301 .7701-2 and 301 .7701-3? If "Yes," complete Part IX 88 X

89a 501(c)(3) organizations . Enter: Amount of tax imposed on the organization during the year under: . section 4911 1 0 ; section 4912 1 0 ; section 4955 1 0

b 501(c)(3) and 501(c)(4) orgs. Did the organization engage in any section 4958 excess benefit transaction during the year or did it become aware of an excess benefit transaction from a prior year? If "Yes," attach a statement explaining each transaction . . . . . . . . . . . 89b X

c Enter. Amount of tax imposed on the organization managers or disqualified persons during we year under sections 4912, 4955, and 4958 1 0

d Enter. Amount of tax on line 89c, above, reimbursed by the organization . . . . . . 1 0 , . 90a List the states with which a copy of this return Is filed 110, NONE

b Number of employees employed in the pay period that includes March 12, 2002 (See instructions .) 190b 1 8,714 97 The books are in care of t MR . JOSEPH FI FLR . Telephone no. 1 616-391-2754

.Locatedat t GRAND RAPIDS, . .MI ZIP+a t 49503 92 Section 4947(a)(1) nonexempt charitable trusts filing Form 990 in lieu of Form 1041- Check here . . . . 10.

and enter the amount of tax-exempt interest received or accrued during the tax year . . 1 ~ . 92 ~ . . N/A Form 990 (2002)

P .1fOt Relationship of Activities to the Accomplishment of Exempt Purposes See page 32 of the ins Line No. Explain how each activity for which income is reported in column (E) of Part VII contributed importantly to the accomplishment

of the or anization's exempt p urposes other than b providing funds for such pu rposes ). SEE STATEMENT 17

of I Nature of activities

N/A

Rail X Information Regarding Transfers Associated with Personal Benefit Contract: (a) Did the organization, during the year, receive any funds, directly or Indirectly, W pay premiums on a personal benefit contract? (b) Did the organization, during the year, pay premiums, directly or indirecb Note : If "Yes' to b file Form 8870 and Form 4720 see instructions).

Under penalties a pequry, I declare that a e examined this return, includi

Please and bell , e, co and corn t eclaration of preparer (other tha

Sign Here ' Signat

' ~oSE~ . ~rz~ T or rant name and title IVA

Preparers '

Paid slnature 'r Preparer's Firm's game (or yours ANDREWS HOOPER & PA Use Only if self-employed), 1 1231 8 BELTLIN}3 NE

address and ZIP + a GRAND RAPIDS MI 4 DAA

33 of the Yes PQ No

Form 990 (2002) SPECTRUM HEALTH HOSPITALS 38-1360529 Pane s Rat* VU Analysis of Income-Producing Activities See page 31 of the instructions . Note : Enter gross amounts unless otherwise Unrelated business income Excluded b sec 512, 513, or 51(E)

Related or indicated. eusi~~ code Amount clusio Amount exempt function

93 Program service revenue: code income a SEE STATEMENT 16 8 , 248 , 647 23 095 17 630812294 b c d e f Medicare/Medicaid payments , g Fees and contracts from government agencies

94 Membership dues and assessments . . . . . . . 95 Interest on savings and temporary cash investments 98 Dividends and interest from securities 14 2 9 1764 962 97 Net rental income or (loss) from real estate : . . . .

a debt-financed property b not debt-financed property 16 51 , 437

98 Net rental income or (loss) from personal property 99 Other investment income 100 Gain or (loss) from sales of assets other than inventory 18 137 , 054 101 Net income or (loss) from special events 102 Gross profit or (loss) from sales of Inventory 103 Other revenue : a .

b c d e

104 Subtotal (add columns (B), (v), and (E)) 8 248 647 25 , 460 , 62 630812294 105 Total (add line 104, columns (B), (D), and (E)) , . . . . . . . , . . . . . , t 664,521,569 Note : Line 105 plus line 1d . Part I . should equal the amount on line 12 . Part I .

Information

of

dD 32 of

TERRENCE OIROURKE FORMER CEO GRAND RAPIDS MI 49503~ 50 649 , 292 25 , 522 729

BRUCE HAGEN FORMER COO GRAND RAPIDS MI 49503~~~~ 50 392 , 056 67 , 728 0

RODOLFO N$IROTTI MED DIRECTOR GRAND RAPIDS MI 49503 50 378,713 23 , 645 0

JAMES PAAUW PHYSICIAN GRAND RAPIDS MI 49503 50 356 , 948 22 , 738 0

STEPHEN CRUIKSHANK MLD DIRECTOR GRAND RAPIDS MI~ 49503 50 323 852 77 , 899 0

Total number of other employees paid over $50 0000 110- 1435 Rah If Compensation of the Five Highest Paid Independent Contractors for Professional Services

See page 2 of the instr . List each one whether individuals or firms) . If there are none enter "None ." (a) Name and address of each independent contractor paid more than $ 50,000 (b) Type of service (c) Compensation

AUDIT/CONS

Schedule A (Form 990 or 990-EZ) 2002

DAA

r ~ a SCHEDULE A Organization Exempt Under Section 501(c)(3)

OMB No 1545-0047 (Form 990 or 990-EZ) (Except Private Foundation) and Section 501(e), 5010, 501(k),

501(n), or Section 4947(a)(1) Nonexempt Charitable Trust ,boo Supplementary Information-(See separate instructions.)

in ternal Revenue service ry 1 MUST be completed b the above organizations and attached to their Form 990 or 990-EZ Name of the organization Employer Identification number

SPECTRUM HEALTH HOSPITALS 38-1360529 Pan I Compensation of the Five Highest Paid Employees Other Than Officers, Directors, and Trustees

See page 1 of the instructions . List each one. If there are none enter "None." (a) Name and address of each employee paid more (b) Title and average hours I I (d) Contributions to I (e) Expense

than $50,000 per week devoted to position (c) Compensation employee ben plans! account and other .~e~eRea . ........s ..~~i.... .,u . ...... .,... . . .

GRAND RAPIDS MEDICAL EDUCATION 1000 MONROE AVE, NW, GRAND RAPIDS, MI 49503

MICHIGAN MEDICAL . PC 4100 LAKE DRIVE, S8, GRAND RAPIDS, MI 49546

PHYSICIANS ORGANIZATION 121 MICHIGAN, NE, GRAND RAPIDS, MI 49503

ERNST & YOUNG LLP P .O . BOX 96550, CHICAGO, IL 60601

USR CORPORATION 3950 SPPrRKS DRIVE S8 GRAND RAPIDS MI 49546

Total number of others receiving over $50,000 for professional services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 I 8 2 For Paperwork Reduction Act Notice, see the Instructions for Form 990 and Form 990-EZ.

SEARCH

ICIAN

9,271

Schedule A (Form 990 or 990-EZ) 2002 SPECTRUM HEALTH HOSPITALS 38-136052

PafttR Statements About Activities (See page 2 of the instructions .)

1 During the year, has the organization attempted to influence national, state, or local legislation, including any attempt to influence public opinion on a legislative matter or referendum? If "Yes," enter the total expenses paid or incurred in connection with the lobbying activities 1$ 3 , 3 0 0 (Must equal amount on line 38, Part VI-A, or line I of Part VI-B .) Organizations that made an election under section 501(h) by filing Form 5768 must complete Part VI-A . Other organizations checking "Yes," must complete Part VI-B AND attach a statement giving a detailed description of the lobbying activities.

2 During the year, has the organization, either directly or indirectly, engaged in any of the following acts with any substantial contributors, trustees, directors, officers, creators, key employees, or members of their families, or with any taxable organization with which any such person is affiliated as an officer, director, trustee, majority owner, or principal beneficiary? (If the answer to any question is "Yes," attach a detailed statement explaining the transactions .)

a Sale, exchange, or leasing of property? X

2e e Transfer of any part of its income or assets?

and state 1 10 a M organization operated for the benefit of a college or university owned or operated by a governmental unit . Section 170(b)(1)(A)(iv) . . . . .

(Also complete the Support Schedule in Part IV-A ) 11a a M organization that normally receives a substantial part of its support from a governmental unit or from the general public .

Section 170(b)(1)(A)(vi) . (Also complete the Support Schedule in Part IV-A .) 11b 8 A community trust. Section 170(b)(1)(A)(vi) . (Also complete the Support Schedule in Part IV-A .) 12 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 charitable, etc ., functions-subject to certain exceptions, and (2) no more than 33113°/. 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) . (Also complete the Support Schedule in Part IV-A .)

13 a An organization that is not controlled by any disqualified persons (other than foundation managers) and supports organizations described In : (1) lines 5 through 12 above ; or (2) section 501(c)(4), (5), or (6), if they meet the test of section 509(a)(2). (See section 509(a)(3) .)

Provide the following information about the supported organizations . See page 5 of the instructions .

(a) Name(s) of supported organization(s) (b) Line number from above

14 11 M organization organized and operated to test for public safety . Section 509(a)(4) . (See page 5 of the instructions .) DAA Schedule A (Form 990 or 990-EZ) 2002

'aae 2

Yes I No

b Lending of money or other extension of credit?

c Furnishing of goods, services, or facilities?

d Payment of compensation (or payment or reimbursement of exp If more than $1,000)?

SEE STMT 18 2b X

SEE STMT 19 2c X

X SEE STMT 20

3 Does the organization make grants for scholarships, fellowships, student loans, etc.? (See Note below.) 3 4 Do you have a section 403(b) annuity plan for your employees? . . . . 4 X Note : Attach a statement to explain how the organization determines that individuals or organizations receiving grants or loans from it in furtherance of its charitable programs "q ualify" to receive payments .

Part IV Reason for Non-Private Foundation Status (See pages 3 through 5 of the instructions .)

The or anization is not a private foundation because it is : (Please check only ONE applicable box .) 5 A church, convention of churches, or association of churches . Section 170(b)(1)(A)(i) . 6 A school . Section 170(b)(1)(A)(ii) . (Also complete Part V .) 7 A hospital or a cooperative hospital service organization. Section 170(b)(1)(A)(iii) . 8 A Federal, state, or local government or governmental unit. Section 170(b)(1)(A)(v). 9 u A medical research organization operated in conjunction with a hospital . Section 170(b)(1)(A)(iu) . Enter the hospital's name, city,

(2001) , . . (2000) (1999) (1998) b For any amount included in line 17 that was received from each person (other than "disqualified persons"), prepare a list for your records to

show the name of, and amount received for each year, that was more than the larger of (1) the amount on line 25 for the year or (2) $5,000. (Include in the list organizations described in lines 5 through 11, as well as individuals .) Do not file this list with your return . After computing the difference between the amount received and the larger amount described in (1) or (2), enter the sum of these differences (the excess amounts) for each year: N/A (2001) (2000) (1999) (1998)

c Add : Amounts from column (e) for lines : 15 16 . . . 17 20 21 1 27c

d Add : Line 27a total and line 27b total 1 27d e Public support (line 27c total minus line 27d total) , . . , . . 1 27e f Total support for section 509(a)(2) test : Enter amount on line 23, column (e) 1 27f g Public support percentage (line 27e (numerator) divided by line 27f (denominator)) 1 27 h Investment Income percentage (line 18 column e numerator divided b line 27f denominator 1 27h

28 Unusual Grants : For an organization described in line 10, 11, or 12 that received any unusual grants during 1998 through 2001, prepare a list for your records to show, for each year, the name of the contributor, the date and amount of the grant, and a brief description of the nature of the grant . Do not file this list with your return. Do not include these grants in line 15.

DAA Schedule A (Form 990 or 990-EZ) 2002

Schedule A (Form 990 or 99o-EZ) 2002 SPECTRUM HEALTH HOSPITALS 38-1360529 Page 3

RAr{`MA Support SChedUle (Complete only if you checked a box on line 10, 11, or 12 .) Use cash method of accounting .

Note: You ma use the worksheet in the instructions for converting from the accrual to the cash method of accountin .

Calendar ear or fiscal ear beginning In 1 a 2001 b 2000 c 1999 d 1998 a Total

15 Gifts, grants, and contributions

received . (Do not include unusual

rants. See line 28 .

16 Membership fees received

17 Gross receipts from admissions, merchandise

sold or services performed, or furnishing of

facilities in any activity that is related to

the organization's charitable, etc , purpose

18 Gross inc from in! , dividends, amounts received from pymt on securities loans (section 512(a)(5)), rents, royalties . 8 unrelated busn taxable Inc (less sec 511 taxes) from businesses acquired b the organization after June 30, 1975

19 Net income from unrelated business

activities not included in line 18

20 Tax revn levied for the organization's ben

& either aid to it or expended on Its behalf

21 The value of serv or fact famished to the org by a governmental unit without charge Do not Incl the value of serv or fac gen- erally famished to the public without charge

22 Other income . Attach a schedule Do not Include gain or (loss) from sale of ca assets

23 Total of lines 15 through 22

24 Line 23 minus line 17

25 Enter 1% of line 23

26 Organizations described on lines 10 or 11 : a Enter 2% of amount in column (e), line 24 1 26a

b Prepare a list for your records to show the name of and amount contributed by each person (other than a

governmental unit or publicly supported organization) whose total gifts for 1998 through 2001 exceeded the

amount shown in line 26a. Do not file this list with your return . Enter the total of all these excess amounts 1 26b

c Total support for section 509(a)(1) test : Enter line 24, column (e) 1 26c

d Add: Amounts from column (e) for lines: 18 19

22 26b 1 26d

e Public support (line 26c minus line 26d total) . . . . . 1 26e

f Public support percentage (line 26e numerator divided b line 26c denominator 1 26f

27 Organizations described on line 12 : a For amounts Included in lines 15, 16, and 17 that were received from a "disqualified

person," prepare a list for your records to show the name of, and total amounts received in each year from, each "disqualified person ."

Do not file this list with your return . Enter the sum of such amounts for each year: N/A

35 Does the organization certify that it has complied with the applicable requirements of sections 4.01 through 4.05 of Rev . Proc. 750 . 1972 C.B. 587 . covering racial nondiscrimination? If "No." attach an explanation . . . . . . . . . .

Schedule A (Form 990 or 900-EZ) 2002

DAA

I~ Schedule A (Form 990 or 990-EZ) 2002 SPECTRUM HEALTH HOSPITALS 38-1360529 Page 4 Rart'V Private School Questionnaire (See page 7 of the instructions .)

To be com pleted ONLY b schools that checked the box on line 6 in Part I 29 Does the organization have a racially nondiscriminatory policy toward students by statement in its charter, bylaws, NI A Yes No

other governing instrument, or in a resolution of its governing body? , , . 29

30 Does the organization include a statement of its racially nondiscriminatory policy toward students in all its

brochures, catalogues, and other written communications with the public dealing with student admissions,

programs, and scholarships? . . 30

31 Has the organization publicized its racially nondiscriminatory policy through newspaper or broadcast media during

the period of solicitation for students, or during the registration period if it has no solicitation program, in a way

that makes the policy known to all parts of the general community it serves? , . . . . , 31

If "Yes," please describe ; if "No," please explain . (If you need more space, attach a separate statement .)

32 Does the organization maintain the following : . . . . a Records indicating the racial composition of the student body, faculty, and administrative staff? 32a

b Records documenting that scholarships and other financial assistance are awarded on a racially nondiscriminatory

basis? . . , , 32b

c Copies of all catalogues, brochures, announcements, and other written communications to the public dealing

with student admissions, programs, and scholarships? . . . 32c d Copies of all material used by the organization or on its behalf to solicit contributions? . . . . . . 32d

If you answered "No" to any of the above, please explain . (If you need more space, attach a separate statement .)

33 Does the organization discriminate by race in any way with respect to: . .

a Students' rights or privileges?

b Admissions policies? 33b

c Employment of faculty or administrative staff? 33c

d Scholarships or other financial assistance? . . 33d

e Educational policies?

f Use of facilities?

g Athletic programs?

h Other extracurricular activities?

If you answered "Yes' to any of the above, please explain . (If you need more space, attach a separate statement .)

34a Does the organization receive any financial aid or assistance from a governmental agency?

b Has the organization's right to such aid ever been revoked or suspended? If you answered "Yes" to either 34a or b, please explain using an attached statement .

11 of the instr

DAA

Schedule A (Form ,99o or 99o-EZ) 2002 SPECTRUM HEALTH HOSPITALS 38-1360529 Pane 5 Part"VI-A Lobbying Expenditures by Electing Public Charities (See page 9 of the instructions .)

To be completed ONLY b an eligible organization that filed Form 5768 N/A Check 1 a if the organization belongs to an affiliated group Check 1 b if you checked "a" and "limited control" provisions apply.

Limits on Lobbying Expenditures Affiliated gro�P totals To ~~ completed for ALL electing

he term "expenditures" means amounts aid or incurred . organizations

36 Total lobbying expenditures to influence public opinion (grassroots lobbying) 36 37 Total lobbying expenditures to influence a legislative body (direct lobbying) . . , . 37 38 Total lobbying expenditures (add lines 36 and 37) 38 39 Other exempt purpose expenditures . . . 39 40 Total exempt purpose expenditures (add lines 38 and 39) . . . . 40 41 Lobbying nontaxable amount. Enter the amount from the following table-

If the amount on line 40 Is- The lobbying nontaxable amount Is- Not over $500,000 20% of the amount on line 40 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 $1,000,00 41 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

42 Grassroots nontaxable amount (enter 25% of line 41) 42 43 Subtract line 42 from line 36 . Enter -0- if line 42 is more than line 36 43 44 Subtract line 41 from line 38. Enter -0- if line 41 is more than line 38 . 44

Caution : If there is an amount on either line 43 or line 44, you must file Form 4720 . 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 five columns below . See the instructions for lines 45 throu gh 50 on page 11 of the instructions .

Lobbying Expenditures During 4-Year Averaging Period

Calendar year (or (a) (b) (c) (d) (e) fiscal vear bealnnlna In) 1 2002 I 2001 I 2000 I 1999 I Tots

45 Lobbying nontaxable amount 46 Lobbying ceiling amount (150% of

47 Total

48 Grassroots nontaxable amount 49 Grassroots ceiling amount (150% of

50 Grassroots lobbying expenditures I I PVtS Lobbying Activity by Nonelecting Public Charities

During the year, did the organization attempt to influence national, state or local legislation, including any Yes No Amount

attempt to influence public opinion on a legislative matter or referendum, through the use of:

a Volunteers X b Paid staff or management (include compensation in expenses reported on lines c through h. ) . . . . . . . . X c Media advertisements X d Mailings to members, legislators, or the public . . . . . . X e Publications, or published or broadcast statements . . . . X f Grants to other organizations for lobbying purposes . . X g Direct contact with legislators, their staffs, government officials, or a legislative body X 3 , 300 h Rallies, demonstrations, seminars, conventions, speeches, lectures, or any other means X I Total lobbying expenditures (add lines c through h . ) . . . . . . 3 1 300

If "Yes" to any of the above, also attach a statement giving a detailed description of the lobbying activities . . . Schedule A (Form 990 or 990-EZ) 2002

Schedule A (Form 990 or 990-EZ) 2002 SPECTRUM HEALTH HOSPITALS 38-1360529 Page 6 Part-VIE Information Regarding Transfers To and Transactions and Relationships With Noncharitable

Exempt Organizations (See page 12 of the instructions .) 51 Did the reporting organization directly or indirectly engage in any of the following with any other organization described in section

501(c) of the Code (other than section 501(c)(3) organizations) or in section 527, relating to political organizations? a Transfers from the reporting organization to a noncharitable exempt organization of: Yes No

SUM X (I) Cash . . . (II) Other assets , , . , . . ,

b Other transactions: (I) Sales or exchanges of assets with a noncharitable exempt organization b(I) X (II) Purchases of assets from a noncharitable exempt organization b(II) X (III) Rental of facilities, equipment, or other assets b(III) X (Iv) Reimbursement arrangements . . . . . . , , (v) Loans or loan guarantees b(v) X (vi) Performance of services or membership or fundraising solicitations

c Sharing of facilities, equipment, mailing lists, other assets, or paid employees d If the answer to any of the above is "Yes," complete the following schedule . Column (b) should always show the fair market value of the

goods, other assets, or services given by the reporting organization . If the organization received less than fair market value in any

(b)

ie no Amount Involved Name of noncharltable exemot oraanizatlon DescrioUon of transfers . transactic

B(vz

a Is the organization directly or indirectly affiliated with, or related to, one or more tax-exempt organizations described in section 501(c) of the Code (other than section 501(c)(3)) or in section 527?

b If "Yes ." complete the following schedule :

52 111- M Yes 0 No

DAA Schedule A (Form 990 or 990-EZ) 2002

n

FACILITIES

COVERED

FOR HOSPITAL

. ,

Form Mortgages a

990%990-P F For calendar ear 2002 or tax ear be inrn

Name

SPECTRUM HEALTH HOSPITALS

'30/03 202

Employer Identification Number

38-1360529

er

7/0

iRM 990 PART IV, LINE 64B -

Name of lender

FIFTH THIRD BANK MICHIGAN STATE HOSPITAL FIN

Relationship to disqualified person

T

Original amount Maturity Interest borrowed Date of loan date Repayment terms rate

24 , 025 , 757 3 , 757 , 802 3 /15 /00 2/15/13 SEMI ANNUALLY 3 .

Purpose of loan

Consideration famished by lender

'30/03 2002

Employer Identification Number

38-1360529

For calendar Name

SPECTRUM HEALTH Ha

BOND REFUNDING CAPITAL IMPROVEME CAPITAL IMPROVEME CAPITAL ADDITIONS

SPECTRUM HEALTH HOSPI SPECTRUM HEALTH HOSPI SPECTRUM HEALTH HOSPI SPECTRUM HEALTH HOSPI

Original amount Form 8038 filed : Date retired

Completion date Unexpended of issue Y/N Date filed of project bond proceeds

48 , 096 , 000 Y 10 /20 /93 10 /23 /19 34 , 140 000 Y 8 / 14 / 98 6 / 15 / 13 36 , 357 , 114 Y 8 / 14 / 98 6/ 15 / 06 26,800,000 ~Y 8/14/98 6/15/26 100,000,000 Y 10/24/01 1/15/21

Interest rate

2 .67

Third party use percent

6 / 15/ 06 BALLOON 6 / 15/ 26 BALLOON 1/ 15/ 21 ANNUALLY AND 2021 & 2031 1/15/31 BALLOON 01/15/31

Security provided by borrower

22 .637 .579

.,

ForTn 990

FORM 990, PART IV, LINE 64A -

Name of lender Purpose of issue

REFUND PORTIONS OF 89-

Issue date

10/23/93 (2) 6/15/98 (s) 6/15/98 (a) 6/15/98 (s) 9/01/01 (s) 9/01/01

Maturity date Repayment terms

10 / 23 / 19 SEMI ANNUAL

Amount outstanding at end of year

Federal Statements ~38-1360529

Statement 3 - Form 990, Line 20 - Other Changes in Net Assets or Fund Balances

Description

NET UNREALIZED GAINS ON INVESTMENTS HELD FAS 136 ACTIVITY - CURRENT YEAR NET ASSET TRANSFER FROM BLODGETT BUTTERWORTH

HEALTHCARE FOUNDATION (38-2752328) OTHER RECONCILING ADJUSTMENTS TO NET ASSESTS

WITH NO IMPACT ON REVENUES OR EXPENSES UNREALIZED LOSS IN SWAP INSTRUMENTS NET GUILD INCOME REPORTED ON 990 BUT NOT

INCLUDED IN NET ASSETS OF HOSPITAL NET ASSET TRANSFER TO SPECTRUM HEALTH

URGENT CARE CENTERS (38-2454555) NET ASSET TRANSFER TO

SPECTRUM HEALTH (38-3382353) NET ASSET TRANSFER TO AEROMED

AT SPECTRUM HEALTH (38-2688381) NET ASSET TRANSFER TO SPECTRUM HEALTH PRIMARY CARE

PARTNERS (38-1358164) RELATED TO PRIOR YEAR . NO IMPACT ON REVENUES AND EXPENSES .

TOTAL -15631361

$ -17064714

3

Amount $15,446,091

6,483,164

348,183

2,685,272 -13289971

-409,720

-2,450,000

-9,141,372

-1,105,000

- " .

38-1360519 Federal Statements

Statement 4 - Form 990, Part II, Line 43 - Other Functional Expenses

Description Total Program Mgt & Fund-

Expenses Service General Raising

S S S S

14,567,529 14,567,529

12,019,075 7,443,860 4,575,215

17,792,960 8,885,219 8,907,741

1,010,205 1,003,883 6,322

5,479,662 45,272 5,434,390

1,315 1,315

1,043,286 169,277 874,009

7,230,627 7,218,986 11,641

30,805,956 25,372,801 5,433,155

137,470 47,676 89,794

24,844,466 23,230,685 1,613,781

-1,054,761 -1,054,761

1,277,349 1,277,349

$ 115155139 $88,209,091 $26,946,048 $ 0 TOTAL

Statement 6 - Form 990, Part III, Line a - Statement of Program Service Accomplishments

SPECTRUM HEALTH HOSPITALS CONSISTS OF THE BLODGETT AND BUTTERWORTH CAMPUSES WITH 410 AND 529 BEDS RESPECTIVELY . THEY ARE ACUTE CARE INPATIENT HOSPITALS WHICH INCLUDE SPECIALTY CRITICAL CARE UNITS AND OUTPATIENT SERVICES .

4-6

EXPENSES

BAD DEBT

REPAIRS & MAINTENANCE

MISCELLANEOUS

PROPERTY TAXES

INSURANCE

MICHIGAN SBT

AMORTIZATION

LEASED SPACE & PARKING

PROFESSIONAL FEES

RECRUITING

PURCHASED SERVICES

RENTAL PROPERTY EXPENSES

WINDOW SHOP, CAFE, GIFT SHOP

Statement 5 - Form 990. Part III - Organization's Primary Exempt Purpose

TO PROVIDE A COORDINATED CONTINUUM OF HEALTH CARE SERVICES TO THE CITIZENS OF WEST MICHIGAN . THE HOSPITAL TREATS ALL PATIENTS REGARDLESS OF THEIR ABILITY TO PAY.

38-1364529 Federal Statements s ,

Statement 8 - Form 990. Part IV, Line 56 - Other Investments

Description

UNEXPENDED BOND FUNDS HELD Q TRUSTEE PROFESSIONAL LIABILITY FUNDS HELD MI PROFESSIONAL INSURANCE EXCHANGE INVESTMENT - LAROC INVESTMENT - CEDAR SPRINGS INVESTMENT - WAYLAND INVESTMENT - GUN LAKE INVESTMENT - W MICH MNGD CARE

TOTAL

7-8

Statement 7 - Form 990, Part IV, Line 54 - Investments in Securities

Beginning End of Basis of Description of Year Year Valuation

CORPORATE STOCK POOLED INVESTMENTS 135858618 156908985 COST POOLED FUNDS 195970449 207184388 COST

331829067 364093373

Beginning End of Basis of of Year Year Valuation

$74,676,447 $19,181,201 5,669,357 5,026,874 4,311,456 5,007,004

991,753 1,340,805 135,771 24,581 30,626 30,162 9,330 4,194 9,696 9,696

$85,834,436 $30,624,517

38-136b529 . . Federal Statements

Beginning Accum End of Accum of Year Deprec Year Deprec

$ 152075058 $63,854,472 $ 179741647 $75,088,970

159579117 73,623,035 165415731 83,033,928

6,339,651 15,239

7,838,361 16,344,536

240965720 156636662 264105227 184352031

3,433,941 3,559,754

1,507,281 1,469,599 1,507,281 1,507,281

11,751,946 5,047,985 12,112,536 5,693,418

191,647 83,845

36,835,287 83,103,650

237

13,117,126 1,671,875 13,433,461 2,055,498

15,726,677 21,968,293

$ 649362049 $ 302387473 $ 761307355 $ 351731126 TOTAL

NOTE RECEIVABLE - UNITED MEM HOSP 1,397,175 MISCELLANEOUS 543,353

TOTAL $ 126091655 $ 111533747

9-10

Statement 9 - Form 990, Part IV, Line 57 - Land, Buildings, and Equipment

Description

BUILDINGS

BUILDING IMP

ASSETS & PROCEEDS CLR

CLINICAL INFORMATICS PROJECT

MAJOR MOVABLES

ITM SPECIAL PROJECTS

PREPAID FIXED ASSETS

LEASEHOLD IMPROVEMENTS

CAPITALIZED INTEREST

CONSTRUCTION IN PROGRESS

GIFT SHOP ASSETS

LAND IMPROVEMENTS

LAND

Statement 10 - Form 990, Part IV . Line 58 - Other Assets

Beginning End of Description of Year Year

DUE FROM AFFILIATES $28,679,709 $13,071,477 DONOR RESTRICTED ASSETS 59,615,924 66,064,405 UNAMORTIZED FINANCE COSTS 3,355,362 3,379,990 PREPAID INSURANCE PREMIUMS 3,115,821 3,081,084 LEASE DEPOSITS 45,194 45,194 PREPAID PENSION LONG TERM 16,345,410 11,473,410 SUPPLEMENTAL EXECUTIVE RETIREMENT 911,706 1,187,581 CAPITAL ACCUM ACCOUNTS 1,584,431 1,384,683 SWAP MARKET VALUE 1,553,004 WMRL PREPAID RENT 3,417,564 3,293,289 PREPAID COMPUTER SOFTWARE 7,467,530 6,612,106

38-1360529 Federal Statements

Statement 15 - Form 990, Part IV-B - Other Expenses Included on Return

Description Amount CAFE, WINDOW SHOP, & GIFT SHOP EXPENSES $ 1,277,349

TOTAL

12-15

Statement 12 - Form 990. Part IV-A - Other Revenue Included in Financial Statements

Description Amount .EXPENSES ATTRIBUTABLE TO RENTAL PROPERTY $ 1,054,761

TOTAL $ 1,054,761

Statement 13 - Form 990 . Part IV-A - Other Revenue Included on Return

Description Amount CAFE, WINDOW SHOP, & GIFT SHOP REVENUES $ 1,687,069

TOTAL $ 1,687,069

Statement 14 - Form 990, Part IV-B - Other Expenses Included in Financial Statements

Description Amount EXPENSES ATTRIBUTABLE TO RENTAL PROPERTY $ 1,054,761

TOTAL $ 1,054,761

$ 1,277,349

38-136052) Federal Statements - - i .

16-17

Statement 16 - Form 990, Part VII. Line 93 - Program Service Revenue

Business Unrelated Exclusion Exclusion Related Description Code Amount Code Amount Income

PATIENT SERVICE REVENUE $ $ $ 630812294 PATIENT REVENUE - UBI LAB 621500 8,244,965 OTHER HOSPITAL OPERATING IN 3 8,933,464 CAFETERIA 3 4,344,034 PARKING 3 195,525 DAYCARE - EMPLOYEE 3 873,830 DAYCARE - NON-EMPLOYEE 624410 3,682 MEDICAL RECORD FEES 3 244,743 SHARED SERVICES 3 5,299,432 MEDICAL EQUIPMENT SALES 1 1,517,078 WINDOW SHOP, CAFE, GIFT SHO 3 1,687,069

TOTAL $ 8,248,647 $23,095,175 $ 630812294

Statement 17 - Form 990. Part VIII - Relationship of Activities

Line No . Description

93A ALL REVENUE IS GENERATED AT REASONABLE CHARGES FOR PROVIDING HEALTH CARE SERVICES TO THE GENERAL POPULATION OF WEST MICHIGAN . SPECTRUM HEALTH OPERATES AN EMERGENCY (TRAUMA) CENTER WHICH ACCEPTS ALL PATIENTS REGARDLESS OF THEIR ABILITY TO PAY . THE HOSPITALS ACCEPT ALL FORMS OF THIRD PARTY PAYMENT PROGRAMS TO SATISFY PATIENT OBLIGATIONS .

38-136059 Federal Statements w u

18-20

Statement 18 - Schedule A, Part III, Line 2b - Lendina of Money or Extension of Credit

CERTAIN BORROWINGS HAVE BEEN OBTAINED FROM FIFTH THIRD BANK OF WHICH A HOSPITAL BOARD MEMBER IS AN OFFICER . ALL ARRANGEMENTS ARE HANDLED AT ARM'S LENGTH .

Statement 19 - Schedule A, Part III, Line 2c - Furnishing Goods, Services, or Facilities

CERTAIN MEDICAL SERVICES ARE PROVIDED BY BRIAN HOTCHKISS MD AND GRAND VALLEY INTERNAL MEDICINE . AN OFFICER OR KEY EMPLOYEE IS A HOSPITAL BOARD MEMBER . ALL SERVICES ARE CONTRACTED AT ARM'S LENGTH .

Statement 20 - Schedule A, Part III, Line 2d - Payment of Compensation l Reimbursement of Exp

CERTAIN MEDICAL SERVICES ARE PROVIDED BY BRIAN HOTCHKISS MD AND GRAND VALLEY INTERNAL MEDICINE . AN OFFICER OR KEY EMPLOYEE IS A HOSPITAL BOARD MEMBER . ALL SERVICES ARE CONTRACTED AT ARM'S LENGTH .

S I

f

Spectrum Health Hospitals Form 990 - Fixed Asset Summary Year Ended June 30, 2003

June 30, 2002 For Twelve Months Ending 6/30/2003 June 30, 2003 Bal Bal per per GL Additions Disposals Transfers GL

TOTAL COST 649,323,657.36 85,860,756.91 (1,546,201 .60) 27:669 14-2.47 761,307,355 .14

Accum Depr (302,387,474.75) (37,683,568 .69) 18'7,810 .07 339,883,233.37 0.00 Accum Depr Misc 0.00 (274,440.63) 274,440.63 0.00 0.00 Accum Depr Land Impr 0.00 (64,228 .45) 0.00 (1,991,269.15) (2,055,497 .60) Accum Depr Bldg 0.00 (98),970.27) 0.00 (74,098 )99.64) (75,088,969 .11) Accum Depr Bldg Impr 0.00 (1,621,136.15) 0.00 (81,412,791 .72) (83,033,927 .87) Accum Depr Cap Lease 0.00 (665 .44) 0.00 (1,506,615.56) (1,507,281 .00) Accum Depr Lease 0.00 (97,867 .98) 0.00 (5,595,550 29) (5,693,418.27) AccumDeprFum/Equip 0.00 (1,253,665.44) 702,399.34 (130,821,009 .63) (131,372,275 .73) Accum Depr Helicopter 0.00 0.00 0.00 0.00 0.00 AccumDeprHardware 0.00 (1,076,893.54) 0.00 (18,142,387 .61) (19,219,281 .15) Accum Depr Software 0.00 (1,642,003 .01) 0.00 (31,177,406 .07) (32,819,409 .08) Accum Depr Auto 0.00 (34,864 .53) 000 (906,200 .93) (941,065 .46)

TOTAL DEPRECIATION (302,387,474 .75) (44,739 .304 .13) 1,164,650 .04 (5,768 X97.23) (351,731,126.07)

TOTAL NBV 346,936,182 61 41,121,452.78 (331,551 56) 21,900,145 24 409,576,229 .07

38-1360529

Land 15,726,677 .45 6,241,616 .00 0.00 0.00 21,968,293 .45 Land Improvements 13,117,126.13 239,992.00 0.00 76,343.28 13,433,461 .41 Buildings 152,075,057 .74 12,334 .31 0.00 27,654,255 .20 179,741,647 .25 Bldg Improv & Reno 159,579,117 .36 5,737,628 .02 0.00 98,986.01 165,415,731 .39 Capital Leases-Bldg 1,507,281 .00 0.00 0.00 0.00 1,507,281 .00 Capital Interest 191,646.78 0.00 0.00 ( 191,646.78 ) 0.00 Fixed Equip 0.00 0.00 0.00 0.00 0.00 Furniture & Equipment 240,965,719.77 12,639,306.62 (1,483,148.28) (78,406,878 .39) 173,714,699 .72 Computer Hardware 0.00 7,946,033.55 0.00 27,800,806.10 35,746,839 .65 Computer Software 0.00 3,914,533.43 0.00 49,404,008 .85 53,318,542 .28 Automobiles 0.00 154,629 .02 (62,753 .32) 1,233,268 .20 1,325,143 .90 Capital Leases 0.00 0.00 0.00 0.00 0.00 Leasehold Improvements 11,751,945.71 360,590.49 0.00 0.00 12,112,536.20

Construction In Progress 36,797,132.82 46,306,517 .08 83,103,649 .90 Asset Clearing 6,903,920.01 (6,888,681 .38) 15,238 .63 CIP Temporary - 0.00 Proceeds Clearing (564,268.80) 564,268.80 0.00 0.00 Asset Clearing - 0 .00 . 0.00 I&TM Special Projects 3,433,940.57 125,813 .63 3,559,754.20 Clinical Informatics Prod 7,838,360.82 8,506,175 .34 16,344,536.16 Reserve fot Gam/(Loss) 0.00 000 0.00

.. s

Contributions to Expense Employee Benefit Account and Plans 8 Deferred Other

Name Related Organization Compensation' Compensation' Allowances'

$ 784,288 " $ 123,113 $4,530 $ 152,175 " $ 28,076 S0

Richard Breon Spectrum Health David M Leonard Spectrum Health

"' Spectrum Health has along-term incentive bonus plan in place for certain key executives with a measurement date of June 30, 2003 which assesses performance to targets established for the combination of the 2001, 2002 and 2003 fiscal years No amounts were accrued or paid under this plan for the calendar year 2002

Spectrum Health Hospitals 38-1380529 Form 980(2002) FY Ended June 30, 2003

Part V. List of Officers, Directors, Trustees, and Key Employees

Spectrum Health Hospitals Officers 8 Board of Directors

Column A Column B Column C Column D Column E Contributions to Expense Employee Benefit Account and

Average Plans 8 Deferred Other Officers 8 Key Employees Address Hrs/Week Compensation' Compensation' Allowances'

Richard Breon, Pres/CEO Grand Rapids, MI 49503 4 $0 $0 $0 Danny Gaydou, Treasurer Grand Rapids, MI 49503 4 $0 $0 $0 Robert Hooker, Vice Chair Grand Rapids, MI 49503 4 $0 $0 $0 Hdary Snell, Chairman Grand Rapids, MI 49503 4 $0 $0 $0 David Leonard, Secretary Grand Rapids, MI 49503 4 $0 $0 $0 Joseph Fifer, VP Hospital Finance Grand Rapids, MI 49503 50 $ 255,791 '" $ 47,477 $0

Directors Stanley Chaff Grand Rapids, MI 49503 2 $0 $0 $0 Robert H Connors, MD Grand Rapids, MI 49503 2 $0 $0 $0 Rich DeVos, Sr Grand Rapids, MI 49503 2 $0 $0 $0 Beverly Drake Grand Rapids, MI 49503 2 $0 $0 $0 Richard Espinoza Grand Rapids, MI 49503 2 $0 $0 $0 James A Fuson Grand Rapids, MI 49503 2 $0 $0 $0 Brian Hams Grand Rapids, MI 49503 2 $0 $0 $0 Nancy Hickey Grand Rapids, MI 49503 2 $0 $0 $0 Gwen Hoffman, MD Grand Rapids, MI 49503 2 $0 $0 $0 Kevin T Kabat Grand Rapids, MI 49503 2 $0 $0 $0 Birgit Klohs Grand Rapids, MI 49503 2 $0 $0 $0 Charles Lipperl Grand Rapids, MI 49503 2 $0 $0 $0 John Maurer, MD Grand Rapids, MI 49503 2 $0 $0 $0 Mark Murray Grand Rapids, MI 49503 2 $0 $0 $0 Juan R Olivarez Grand Rapids, MI 49503 2 $0 $0 $0 Valerie P Simmons Grand Rapids, MI 49503 2 $0 $0 $0 Roger Wamhuis, Jr Grand Rapids, MI 49503 2 $0 $0 $0 Paul Wilson, MD Grand Rapids, MI 49503 2 $0 $0 $0 Richard Witham Grand Rapids, MI 49503 2 $0 $0 $0

Part V, Line 75 - Information on Compensation Exceeding $100,000

" Consistent with prior years, compensation and benefits are reported using the most recent calendar year compensation data . Information above is for the year ended December 37, 2002.

"" Details of Compensation for the year ended December 31, 2002 are as follows

Joseuh Frfer. VP Hosodal Finance Annual base salary E 218,894 Short-term incentive bonus 37,097

$ 255,791 Richard Breon Annual base salary $ 588,888 Short-term incentive bonus 175,380

$ 764,288 0

David M Leonard Annual base salary $ 141,889 Short-term incentive bonus 10,288

$ 152,175

r e. v

Nonexempt ID Number

Spectrum Health Hospitals X Spectrum Health Primary Care Partners X Blodgett Mobile Cardiac Catheterization X Spectrum Health X Spectrum Health Urgent Care Centers X Butterworth Occupational Health Villa Elizabeth - Butterworth Inc . X Aeromed at Spectrum Health X Partnership for Children's Health Butterworth Self-Insurance Trust of 1977 X Spectrum Health Kent Community Campus X Reed City Hospital Corporation X Blodgett/Butterworth Health Care Foundation X Spectrum Health Continuing Care X Blodgett Emergency Services Corporation X Spectrum Health Worth Home Care X Spectrum Health Worth Residential Services X Spectrum Health Continuing Care Center X Visiting Nurse Association of Western Michigan X Visiting Nurse Services of Western Michigan X Visiting Nurse Extracare of Western Michigan X Blodgett Assurance Co. N/A Priority Health X Priority Health Managed Benefits Priority Health Governmental Programs X Hackley Health Systems, Inc . X Hackney Hospital X Child & Family Services of Muskegon X Lakeshore Community Hospital X Visiting Nurse Home Care X Lakeshore Health Ventures aka Hackley Health Ventures Metropolitan Butterworth Health Services MRI Mobile Services of West Michigan X MRI Mobile Services II of West Michigan X MRI Services of West Michigan X

38-2715520 38-3085182 32-0016523 38-2589966 38-1358196 38-1386362 38-2549295 38-2620872 38-2589959 38-2760259 38-3073745 38-3293642 38-2903473

X X

W a

Spectrum Health Form 990 (2002) Year ended June 30, 2003

Pane 5 . Part VI, Other Information, Line 80b

Name of Organization EXempt

38-3382353

Federal Tax

X

X

N/A

X

38-1360529 38-1358164 38-2950361 38-3382353 38-2454555 38-2563928 38-3245844 38-2688381 38-3364876 38-6378787 38-3472677 38-2770076 38-2752328 38-3242232 38-1642407 38-2620872 38-2786617 38-2415333 38-2613527 38-1359195 38-2613525

STOP: Do not complete Part II If you were not already granted an automatic 3-month extension on a previously filed Form 8868 .

If the organization does not have an once or place of business in the United States, check this box If this is for a Group Return, enter the organization's four digit Group Exemption Number (GEN) . If this is

for the whole group, check this box 1 0 . If it is for part of the group, c~k this box 1 ~ and attach a list with the names and EINs of all members the extension is for. 11 4 1 request an additional 3-month extension of time until 5 ~1' / 04 5 For calendar year or other tax year beginning 7 / O 1L0 2 and ending _ ( / 3 0 j0 3 6 If this tax year is for less than 12 months, check reason : E7IniUal return a Final return a Change in accounting period 7 State in detail why you need the extension

ADDITIONAL TIME NEEDED TO ACCUMULATE INFORMATION NEEDED TO ACCURATELY PREPARE A COMPLETE RETURN

8a If this application is for Form 990-BL, 990-PF, 990-T, 4720, or 6069, enter the tentative tax, less any nonrefundable credits . See instructions "'

b If this application is for Form 990-PF, 990-T,4720, or 6069, enter any refundable credits and estimated, . tax payments made . Include any prior year overpayment allowed as a credit and any amount paid - previously with Form 8868 - - ' ; ;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~ . "J

c Balance Due . Subtract line 8b from line 8a . Include your payment with this form, or, it required, deposit : " with FTD coupon or, if required, by using EFTPS (Electronic Federal Tax Payment System). See instructions

Signature and Verification Under penalties of perjury, I declare that I have examined this form, including accompanying schedules and statements, and to the best of my knowledge and belief, it is we, correct, and complete, and that I am authorized to prepare this form .

Signature 1 ~~NWV Title 1 C . P .A . n~ro " Q11610`1

~~ Notice to Applicant-To Be Completed by the IRS FBI' We have approved this application . Please attach this form to the organization's return . ~."~~VICe have not approved this application . However, we have granted a 10-day grace period from the later of the

due date of the organization's return (including any prior extensions) . This grace period is considered to be a vi elections otherwise required to be made on a timely return . Please attach this form to the organization's return . We have not approved this application . After considering the reasons stated in item 7, we cannot grant your re to file . We are not granting a 10-day grace period . We cannot consider this application because it was filed after the due date of the return for which an extenslor Other - - - - - - - - - - - - - - - - - - - - - - - - - -

UNppyVEISKOPF, FIELD D1fiECTOP.

SUBMISSION PROCESSING- OCOEN

Director

Alternate Mailing Address - Enter the address if you want the copy of this application for an additional 3-month extension

Name C/O ERIC GOOD, ANDREWS HOOPER & PAVLIK Number and street (include suite, room, or apt no.) Or a P.O . box number 1241 E HELTLINE AVE NE, STE 230

Type or print

City or town, province or state, and country (Including postal or ZIP code) GRAND RAPIDS MI 49525

:)AA Form 8868 (12-2000)

'

fT88 a

T

(12'2000

If you are filing for an Additional (not automatic) 3-Month Extension, complete only Part II and check this box

Note : Only com Part II if you have already been granted an automatic 3-month extension on a previously filed Form 8868 . 19 If you ar ink for an Automatic 3-Month Extension, complete only Part 1 (on page 1).

Part Et Additional not automatic 3-Month Extension of Time-Must File Ori final and One Co Type or Name of Exempt Organization Employer identification number print File bytr,e SPECTRUM HEALTH HOSPITALS 1 38-1360529 exceeded Number, street, and room or suite no. If a P.O . box, see instructions . For IRS use only due date for filing the 100 MICHIGAN AVE NE return see City, town or post once, state, and ZIP code. For a foreign address, see insV . instructions GRAND RAPIDS MI 49503 Check type of return to be flied (File a separate application for each return) :

Form 990 ~ I Form 990-EZ R Form 990-7 (sec. 401(a) or 408(a) trust) n Form 1041-A n Form 5227 a Form 8870 n Form 990-BL n Form 990-PF Form 990-T (Dust other than above) n Form 4720 n Form 6069

By

EXTENSION APPROVED

MAR tl 1 2004

Form', ~ 08%8 (December 2000)

Department of the Treasury

OMB No . 1545-1709

1

If you are filing for an Automatic 3-Month Extension, complete only Part I and check this box

If you are filing for an Additional (not automatic) 3-Month Extension, complete only Part II (on page 2 of this form) . . . . .

Note : Do not complete Part II unless you have already been granted an automatic 3-month extension on a previously filed Form 8868 .

Part I Automatic 3-Month Extension of Time- Only submit original (no copies needed) Note : Form 990-T corporations requesting an automatic 6-month extension-check this box and complete Part I only All other corporations (including Form 990-C filers) must use Form 7004 to request an extension of time to file income tax returns . Partnershi s REMICs and trusts must use Form 8736 to request an extension of time to file Form 1065 1066 or 1041 .

Type or Name of Exempt Organization Employer Identification number print File byme SPECTRUM HEALTH HOSPITALS 1 38-1360529 due date for Number, street, and room or suite no . If a P.O. box, see instructions. filing your return See 1840 WEALTHY ST . , SE Instructions City, town or post office, state, and ZIP code . For a foreign address, see instructions .

3a If this application is for Form 990-BL, 990-PF, 990-T, 4720, or 6069, enter the tentative tax, less any nonrefundable credits . See instructions ;

b If this application is for Form 990-PF or 990-T, enter any refundable credits and estimated tax payments , . made . Include any prior year overpayment allowed as a credit

c Balance Due . Subtract line 3b from line 3a . Include your payment .with .this form, or, if required, deposit with FTD coupon or, if required, by using EFTPS (Electronic Federal Tax Payment System). See instructions $

Signature and Verification Under penalties of perjury, 1 declare that I have examined this form, including accompanying schedules and statements, and to the best of my knowledge and belief, it is we, correct, and complete, and that I am authorized to prepare this form .

'v00J Title 1 t Illly(o3 Form 8868 (72-2000)

DAA

Application for Extension of Time To File an Exempt Organization Return

Check type of return to be filed (file a separate application for each return): Form 990 Form 990-T (corporation) Form 4720 Form 990-BL Form 990-T (sec. 401(a) or 408(a) trust) Form 5227 Form 990-EZ Form 990-T (trust other than above) Form 6069 Form 990-PF ~ ~ Form 1041-A Form 8870

If the organization does not have an office or place of business in the United States, check this box 1 If this is for a Group Return, enter the organization's four digit Group Exemption Number (GEN) . If this is

for the whole group, check this box 1 0 . If it is for part of the group, check this box 1 a and attach a list with the names and EINs of all members the extension will cover. 1 I request an automatic 3-month (6-month, for 990-T corporation) extension of time until - a/.16/04 ,

to file we exempt organization return for the organization named above . The extension is for the organization's return for: 1 calendar year or t ~ tax year beginning - 7 / 0110 2 , and ending - 6 /30/03 .

2 If this tax year is for less than 12 months, check reason : a Initial return 0 Final return 0 Change in accounting penod

For Paperwork Reduction Act Notice, see Instruction