990 return oforganization exemptfromincometax990s.foundationcenter.org/990_pdf_archive/364/... ·...

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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 lung2012benefit trust or private foundation)

Department of the Treasury

Internal Revenue Service 1-The organization may have to use a copy of this return to satisfy state reporting requirements

A For the 2012 calendar year, or tax year beginning 09-01-2012 , 2012, and ending 08-31-2013

B Check if applicableC Name of organization D Employer identification numberNorthwestern Memorial Healthcare Group

fl Address change 36-4724966Doing Business As

• Name change

1 Initial return Number and street (or P 0 box if mail is not delivered to street address) Room/suite E Telephone number251 E Huron 541 N Fairbanks

p TerminatedSuite 1630

(312)926-2000-( Amended return City or town, state or country, and ZIP + 4

Chicago, IL 6061129081 Application pending G Gross receipts $ 1,885,329,845

F Name and address of principal officer H(a) Is this a group return forDEAN M HARRISON affiliates? F Yes fl No251 E HuronChicago, IL 60611 H(b) Are all affiliates included? F Yes (- No

If "No," attach a list (see instructions)I Tax-exempt status F 501(c)(3) 1 501(c) ( ) I (insert no ) (- 4947(a)(1) or F_ 527

H(c) Group exemption number 0- 5878J Website : 1- WWW N M H O RG

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

Summary

1 Briefly describe the organization's mission or most significant activitiesThe primary mission of the Northwestern memorial Healthcare affiliates included in this group Return is to support the activities ofNorthwestern memorial Hospital & Northwestern Lake Forest Hospital

w

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 130of:2 4 Number of independent voting members of the governing body (Part VI, line 1 b) . . . . 4 101

5 Total number of individuals employed in calendar year 2012 (Part V, line 2a) . 5 9,641

6 Total number of volunteers (estimate if necessary) 6 1,127

7aTotal unrelated business revenue from Part VIII, column (C), line 12 . 7a 11,929,751

b Net unrelated business taxable income from Form 990-T, line 34 . . . . . . . 7b -19,235

Prior Year Current Year

8 Contributions and grants (Part VIII, line 1h) . 60,190,556 49,719,334

9 Program service revenue (Part VIII, line 2g) . 1,622,330,021 1,630,631,836

N 10 Investment income (Part VIII, column (A), lines 3, 4, and 7d . 122,745,545 114,047,936

11 Other revenue (Part VIII, column (A), lines 5, 6d, 8c, 9c, 10c, and 11e) 79,970,739 83,463,550

12 Total revenue-add lines 8 through 11 (must equal Part VIII, column (A), line12) . . . . . . . . . . . . . . . . . . 1,885,236,861 1,877,862,656

13 Grants and similar amounts paid (Part IX, column (A), lines 1-3) 106,771,351 189,147,418

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) 661,782,497 632,968,080

16a Professional fundraising fees (Part IX, column (A), line 11e) 110,021 0

LLJb Total fundraising expenses (Part IX, column (D), line 25) 0-3,793,336

17 Other expenses (Part IX, column (A), lines 11a-11d, 11f-24e) . . . . 990,895,875 1,006,715,601

18 Total expenses Add lines 13-17 (must equal Part IX, column (A), line 25) 1,759,559,744 1,828,831,099

19 Revenue less expenses Subtract line 18 from line 12 125,677,117 49,031,557

Beginning of CurrentEnd of Year

Year

20 Total assets (Part X, l i n e 1 6 ) . . . . . . . . . . . . 4,493,292,214 4,952,272,240

% 21 Total l i a b i l i t i e s (Part X, l i n e 2 6 ) . . . . . . . . . . . . 1,950,941,821 2,228,633,467

ZLL 22 Net assets or fund balances Subtract line 21 from line 20 2,542,350,393 2,723,638,773

lijaW Signature Block

Under penalties of perjury, I declare that I have examined this return, includinmy knowledge and belief, it is true, correct, and complete Declaration of prepspreparer has any knowledge

SignSignature of officer

Here DOUGLAS M YOUNG Interim CFO & Treasurer

Type or print name and title

Print/Type preparer's name Preparers signatureAngela M Moore

PaidFirm's name 1- ERNST & YOUNG US LLC

Pre pare rUse Only Firm's address 1 111 MONUMENT CIRCLE SUITE 4000

INDIANAPOLIS, IN 46204

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

For Paperwork Reduction Act Notice, see the separate instructions.

Form 990 ( 2012)

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

NORTHWESTERN MEMORIAL HOSPITAL IS AN ACADEMIC MEDICAL CENTER HOSPITAL WHERE THE PATIENT COMES FIRST WEARE AN ORGANIZATION OF CAREGIVERS WHO ASPIRE TO CONSISTENTLY HIGH STANDARDS OF QUALITY, COST-EFFECTIVENESS AND PATIENT SATISFACTION WE SEEK TO IMPROVE THE HEALTH OF THE COMMUNITIES WE SERVE BYDELIVERING A BROAD RANGE OF SERVICES WITH SENSITIVITY TO THE INDIVIDUAL NEEDS OF OUR PATIENTS AND THEIRFAMILIES WE ARE BONDED IN AN ESSENTIAL ACADEMIC AND SERVICE RELATIONSHIP WITH NORTHWESTERN UNIVERSITYFEINBERG SCHOOL OF MEDICINE THE QUALITY OF OUR SERVICES IS ENHANCED THROUGH THEIR INTEGRATION WITHEDUCATION AND RESEARCH IN AN ENVIRONMENT THAT ENCOURAGES EXCELLENCE OF PRACTICE, CRITICAL INQUIRY ANDLEARNING NORTHWESTERN LAKE FOREST HOSPITAL IS COMMITTED TO PROVIDING THE COMMUNITIES WE SERVE THEHIGHEST QUALITY HEALTH CARE THROUGH EXCEPTIONAL ACCESS TO STATE-OF-THE-ART CLINICAL SERVICES WITHCOMPASSIONATE AND PERSONAL CARE NORTHWESTERN MEMORIAL FOUNDATION CONDUCTS FUNDRAISING AND OTHER

2 Did the organization undertake any significant program services during the year which were not listed onthe prior Form 990 or 990-EZ7 . . . . . . . . . . . . . . . . . . . . . . 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? . . . . . . . . . . . . . . . . . . . . . . . . . . . . F7 Yes F No

If"Yes,"describe these changes on Schedule 0

4 Describe the organization's program service accomplishments for each of its three largest program services, as measured byexpenses Section 501(c)(3) and 501( c)(4) organizations are required to report the amount of grants and allocations to others,the total expenses , and revenue , if any, for each program service reported

4a (Code ) ( Expenses $ 1,228,306,745 including grants of $ 184,801, 268 ) (Revenue $ 1,333,016,702

For 149 years, NMH and its predecessor institutions, Passavant Memorial and Wesley Memorial hospitals, have served the people of Chicago The commitment toprovide healthcare, regardless of the ability to pay, reaches back to the founding principles of Passavant and Wesley and continues to be integral to our PatientsFirst mission Importantly, it provides the foundation for our mission-driven commitment to improve the health of the communities we serve This commitment isadvanced by focusing on enhancing patient access, safety and quality through hospital-based care and services and partnerships with community health centers thatdate back more than 50 years As the primary teaching hospital for Northwestern University Feinberg School of Medicine (Feinberg), the more than 1,700 physicianson the medical staff at NMH carry faculty appointments at Feinberg and represent virtually every medical specialty Northwestern Memorial and Feinberg share avision to transform medical care through clinical innovation, breakthrough research and academic excellence to make a positive difference in people's lives and thehealth of our communities NMH is among only six percent of the nation's hospitals designated as an AMC hospital, which according to the Association of AmericanMedical Colleges, in aggregate deliver a vastly disproportionate share of the nation's trauma, intensive care and tertiary services, provide 28 percent of all Medicaidcare, and underwrite 41 percent of all hospital-based charity care As the only acute care hospital located in Chicago's growing downtown area, more than 46,000adult patients were admitted to NMH as inpatients in fiscal year 2013 As the only adult Emergency Department (ED) in downtown Chicago with 24/7 service, NMHhad more than 84,900 ED visits in fiscal year 2013, a number that continues to see annual increases NMH is also the only AMC hospital in Chicago participating inboth city and state Level I trauma networks and as a Level III neonatal intensive care unit, allowing us to provide lifesaving care and treatment to the mostseriously injured adults and premature and sick infants Through Northwestern Memorial Physicians Group (NMPG), NMHC's primary care medical group subsidiary,Northwestern Memorial has increased access to high quality primary care in Chicago and in Lake County In the past several years, NMPG has expanded its eveningand weekend hours at many sites, added new primary care locations in seven communities and opened five comprehensive immediate care sites, responding to thechanging needs of our community for convenient access to primary and urgent care In addition to meeting the needs of the patients and communities in ourprimary service area, NMH also serves an important role for patients outside of Chicago As a nationally ranked AMC hospital and a major referral center in theMidwest and beyond, NMH is one of a limited number of places in the region where patients requiring advanced tertiary, quaternary or specialty services can accessthe care and services they need

4b (Code ) (Expenses $ 193,076,896 including grants of $ 7,700 ) (Revenue $ 216,535,597 )

Northwestern Memorial provides access to specialty medical care, clinical trials and a host of other healthcare services for patients in Lake County and surroundingregions through NLFH From its founding 115 years ago as the Alice Home on the campus of Lake Forest College, NLFH has upheld the promise to provide LakeCounty residents with convenient access to quality care supported by advanced diagnostics and technology NLFH has continually expanded its healthcare servicesto respond to the growing needs of the community NLFH shares Northwestern Memorial's commitment to provide care for those unable to pay, consistentlyproviding the highest percentage of charity care as a percent of patient revenue among Lake County hospitals NLFH's board-certified emergency physicians andtrauma-trained nurses serve and support the Region 10 Emergency Medical System, providing trauma and emergency care to patients through the Level II TraumaCenter at NLFH and emergency services at the Northwestern Grayslake Emergency Center

4c (Code ) (Expenses $ 73,663,064 including grants of $ ) (Revenue $ 73,431,119

Northwestern Memorial Physicians Group (NMPG) is a multi-site practice of primary care physicians who are on the medical staff at Northwestern Memorial Hospitaland faculty members of Northwestern University's Feinberg School of Medicine NMPG brings the exceptional quality of Northwestern Memorial Hospital toconvenient locations throughout Chicago, Northern cook and Lake Counties

See Additional Data Table

4d Other program services (Describe in Schedule 0

(Expenses $ 9,586,897 including grants of $ 4,338,450 ) (Revenue $ 49,647,621

4e Total program service expenses 0- 1,504,633,602

Form 990 (2012)

Form 990 (2012)

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 instructions)? . 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,

Part HIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 N o

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

Schedule D, Part I . . . . . . . . . . . . . . . . . . . . . . 6Yes

7 Did the organization receive or hold a conservation easement, including easements to preserve open space,

the environment, historic land areas, or historic structures? If "Yes," complete Schedule D, Part IIS . . 7 No

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

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

9 Did the organization report an amount in Part X, line 21 for escrow or custodial account liability, serve as acustodian for amounts not listed in Part X, or provide credit counseling, debt management, credit repair, or debt

negotiation services? If "Yes,"complete Schedule D, Part IV . . . . . . . . . . . . 9 No

10 Did the organization, directly or through a related organization, hold assets in temporarily restricted endowments, 10 Yespermanent endowments, or quasi-endowments? If "Yes,"complete Schedule D, Part V .

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, line 10?

If "Yes,"complete Schedule D, Part VI. . . . . . . . . . . . . . . . . . . . lla 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, "complete Schedule D, Part VIIS . . . . . . llb 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 . . . . . . llc No

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' . . . . . . . . . . . . lld Yes

e Did the organization report an amount for other liabilities in Part X, line 25? If "Yes," complete Schedule D, Part )(lle Yes

f Did the organization's separate or consolidated financial statements for the tax year include a footnote thatllf No

addresses the organization's liability for uncertain tax positions under FIN 48 (ASC 740 )? If "Yes,"complete

Schedule D, Part X. . . . . . . . . . . . . . . . . . . . . . . . . .

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

If "Yes,"complete Schedule D, Parts XI and XII . . . . . . . . . . . . . . . . . 12a N o

b Was the organization included in consolidated, independent audited financial statements for the tax year? If12b Yes

"Yes,"and if the organization answered "No" to line 12a, then completing Schedule D, Parts XI and XII is optional IN

13 Is the organization a school described in section 170(b)(1)(A)(ii)? If "Yes, "complete Schedule E . .13 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, investment, and program service activities outside the United States, or aggregate foreign investments

valued at $100,000 or more? If "Yes,"complete Schedule F, Parts I and IV . . . . . . . . 14b Yes

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 United States? If "Yes," complete Schedule F, Parts II and IV 95 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 United States? If "Yes," complete Schedule F, Parts III and IV . . . IN 1 16 No

17 Did the organization report a total of more than $15,000 of expenses for professional fundraising services on Part

1

17 No

IX, column (A), lines 6 and 11 e? If "Yes," complete Schedule G, Part I (see instructions) . . . . 95

18 Did the organization report more than $15,000 total of fundraising event gross income and contributions on Part

VIII, lines 1c and 8a? If "Yes,"complete Schedule G, Part II . . . . . . . . . . . . 18 Yes

19 Did the organization report more than $15,000 of gross income from gaming activities on Part VIII, line 9a? If

1

19 No

"Yes,"complete Schedule G, Part III . . . . . . . . . . . . . . . . . . . 95

20a Did the organization operate one or more hospital facilities? If "Yes,"completeScheduleH . . 20a Yes

b If"Yes" to line 20a, did the organization attach a copy of its audited financial statements to this return? 9520b Yes

Form 990 (2012)

Form 990 (2012)

Checklist of Required Schedules (continued)

21 Did the organization report more than $5,000 of grants and other assistance to any government or organization 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 . . . . . . . .

Yes

23 Did the organization answer "Yes" to Part VII, Section A, line 3,4, or 5 about compensation of the organization'scurrent and former officers, directors, trustees, key employees, and highest compensated employees? If "Yes," 23 Yes

complete Schedule J . . . . . . . . . . . . . . . . . . . . . .

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 through 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 . . . . . . . . 15 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, highest compensated employee, odisqualified 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 employee thereof, a grant selection committee member, or to a 35% controlled entity or family 27 No

member of any of these persons? If "Yes,"complete Schedule L, Part III . . . . . . . . 95

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 Yes

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 Yes

30 Did the organization receive contributions of art, historical treasures, or other similar assets, or qualified

conservation contributions? If "Yes, "complete Schedule M . . . . . . . . . . . . 30 Yes

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 Regulations

sections 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, Part II, III, orIV,

and Part V, line l . . . . . . . . . . . . . . . . . . . . . . . 34 Yes

35a Did the organization have a controlled entity within the meaning of section 512(b)(13)735a Yes

b If'Yes'to line 35a, did the organization receive any payment from or engage in any transaction with a controlled35b Yes

entity within the meaning of section 512 (b)(13 )? If "Yes," complete Schedule R, Part V, line 2 . . .

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 V, line 2 . . . . . . . . . . . . . IS 1 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 1 lb and 19?Note . All Form 990 filers are required to complete Schedule 0 . . . . . . . . . . . 38 Yes

Form 990 (2012)

Form 990 (2012)

MEW-Statements Regarding Other IRS Filings and Tax Compliance

Check if Schedule 0 contains a res p onse to an y q uestion in this Part V (-

Yes No

la Enter the number reported in Box 3 of Form 1096 Enter -0- if not applicable . la 681

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

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

2a Enter the number of employees reported on Form W-3, Transmittal of Wage andTax Statements, filed for the calendar year ending with or within the year coveredby this return . . . . . . . . . . . . . . . . . 2a 9,641

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 the year? . . 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 0-CJ , EI , LU

See 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 as charitable contributions? . .

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 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 . 10a

b Gross receipts, included on Form 990, Part VIII, line 12, for public use of club 10bfacilities

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

a Gross income from members or shareholders . . . . . . . . 11a

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

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 hand 13c

5a N o

5b N o

5c

6a N o

6b

7a Yes

7b Yes

7c I I N o

7e N o

7f N o

7g

7h

8

9a

9b

12a

13a

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 (2012)

Form 990 (2012)

Governance , Management, and Disclosure For each "Yes"response to lines 2 through 7b below, and for a"No" response to lines 8a, 8b, or 10b below, describe the circumstances, processes, or changes in Schedule 0.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 taxla 130

year

If there are material differences in voting rights among members of the governingbody, or if the governing body delegated broad authority to an executive committeeor similar committee, explain in Schedule 0

b Enter the number of voting members included in line la, above, who areindependent . . . . . . . . . . . . . . . . . . lb 101

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 Yes

3 Did the organization delegate control over management duties customarily performed by or under the direct3 No

supervision of officers, directors or trustees, or key employees to a management company or other person?

4 Did the organization make any significant changes to its governing documents since the prior Form 990 wasfiled? . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Yes

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

6 Did the organization have members or stockholders? 6 Yes

7a Did the organization have members, stockholders, or other persons who had the power to elect or appoint one ormore members of the governing body? . . . . . . . . . . . . . . . . . . . 7a Yes

b Are any governance decisions of the organization reserved to (or subject to approval by) members, stockholders, 7b Yesor persons other than the governing body?

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 p olicies not required b y the Internal Revenue Code.)Yes No

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

b If"Yes," did the organization have written policies and procedures governing the activities of such chapters,affiliates, and branches to ensure their operations are consistent with the organization's exempt purposes? 10b

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

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

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

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

c Did the organization regularly and consistently monitor and enforce compliance with the policy? If "Yes,"describein Schedule 0 how this was done . 12c Yes

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

14 Did 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," did the organization follow a written policy or procedure requiring the organization to evaluate itsparticipation in joint venture arrangements under applicable federal tax law, and take 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- IL

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 made these available Check all that apply

fl Own website fl Another's website 17 Upon request fl Other (explain in Schedule 0)

19 Describe in Schedule 0 whether (and if so, how), the organization made its governing documents, conflict ofinterest policy, and financial statements available to the public during the tax year

20 State the name, physical address, and telephone number of the person who possesses the books and records of the organization-ROBERT GERECKE 541 N FAIRBANKS RM 1639 CHICAGO, IL (312) 926-9495

Form 990 (2012)

Form 990 (2012)

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 amount

of compensation 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, or 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

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

(A)Name and Title

(B)Averagehours perweek (listany hours

(C)Position (do not check

more than one box, unlessperson is both an officerand a director/trustee)

(D)Reportable

compensationfrom the

organization (W-

( E)Reportable

compensationfrom relatedorganizations

(F)Estimated

amount of othercompensation

from thefor relatedorganizations

belowdotted line)

.ca:

J.•

4•

m_

D

0 =adoart

7

^

T 2/1099-MISC) (W- 2/1099-MISC)

organization andrelated

organizations


Form 990 (2012)

Form 990 (2012)

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

(A)Name and Title

(B)Averagehours perweek ( listany hours

(C)Position (do not check

more than one box, unlessperson is both an officerand a director/trustee )

(D)Reportable

compensationfrom the

organization ( W-

( E)Reportable

compensationfrom related

organizations (W-

(F)Estimated

amount of othercompensation

from thefor relatedorganizations

belowdotted line )

0--

C:SL

a

747.

;3

m_

;rl

!

M=

boo

fD

ur

T

a

2/1099-MISC) 2/1099-MISC) organization andrelated

organizations

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

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

d Total ( add lines lb and 1c) . . . . . . . . . . . . 0- 19,700,734 0 3,838,075

Total number of individuals (including but not limited to those listed above) who received more than$100,000 of reportable compensation from the organization-423

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 ofcompensation from the organization Report compensation for the calendar year ending with or within the organization's tax year

(A)Name and business address

(B)Description of services

(C)Compensation

bovis lend lease US construction , One North wacker drive ste 850 CHICAGO IL60606 construction 77,670,520

NORTHWESTERN MEDICAL FACULTY FOUNDA , 680 N LAKE SHORE DRIVE STE 1118 CHICAGO IL60611 MEDICAL SERVICES 54,574,182

MCGAW MEDICAL CENTER OF NORTHWESTER , 645 N MICHIGAN AVE CHICAGO IL60611 MED SVCS/RESIDENCY 35,774,249

NORTHWESTERN UNIVersity , 710 N lake Shore Drive CHICAGO IL60611 medical services 27,486,584

pepper construction group , 643 n orleansCHICAGO IL60654 construction service 14,881,531

2 Total number of independent contractors (including but not limited to those listed above) who received more than$100,000 of compensation from the organization 0-105

Form 990 (2012)

Form 990 (2012)

Statement of RevenueCheck if Schedule 0 contains a response to any question in this Part VIII F

(A) (B) (C) (D)Total revenue Related or Unrelated Revenue

exempt business excluded fromfunction revenue tax underrevenue sections

512, 513, or514

la Federated campaigns . laZ

b Membership dues . . . . lb6- 0

0 E c Fundraising events . . . . 1c 362,200

d Related organizations . ld

tJ'E e Government grants (contributions) le 9,125,171

V f All other contributions, gifts, grants, and 1f 40,231,963^ similar amounts not included above

g Noncash contributions included in lines 985,631la-If $

h Total. Add lines la-1f . 49,719,334

Business Code

2a NMH PATIENT SERVICES AND OTHER 561000 1,333,016,702 1,333,016,702REVENUE

b NLFH PATIENT SERVICES AND OTHER 621500 216,535,597 211,804,209 4,731,388REVENUE

c NMPG PATIENT SERVICES AND OTHER 561000 73,431,119 73,431,1195 REVENUE

d HFI REVENUE 561000 7,648,418 7,641,935 6,483

e

f All other program service revenue

g Total . Add lines 2a-2f . . . . . . . . 0- 1,630,631,836

3 Investment income (including dividends, interest,and other similar amounts) . . . . . . 114,047,936 114,047,936

4 Income from investment of tax-exempt bond proceeds , , 0- 0

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

(i) Real (ii) Personal

6a Gross rents 34,421,870

b Less rentalexpenses

c Rental income 34,421,870 0or (loss)

d Net rental inco me or (loss) . . . . . . . lii^ 34,421,870 34,421,870

(i) Securities (ii) Other

7a Gross amountfrom sales ofassets otherthan inventory

b Less cost orother basis andsales expenses

c Gain or (loss)

d Net gain or (loss) . lim- 0

8a Gross income from fundraisingevents (not including

w $ 362,200

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

ixa 1 198,440

b Less direct expenses b 351,393

s c Net income or (loss) from fundraising events 0- -152,953 -152,953

9a Gross income from gaming activitiesSee Part IV, line 19 . .

a

b Less direct expenses . b

c Net income or (loss) from gaming acti vities . . .- 0

10a Gross sales of inventory, lessreturns and allowances .

a 7,119, 346

b Less cost of goods sold . b 7,115,796

c Net income or (loss) from sales of inventory . lim- 3,550 3,550

Miscellaneous Revenue Business Code

11a NON PATIENT MEDICAL 561000 11,411,470 4,699,302 6,712,168

SERVICES

b PROFESSIONAL SERVICE FEES 561000 10,753,270 10,753,270

c PROFESSIONAL SERVICES TO 561000 10,279,079 10,279,079

AFFILIATES

d All other revenue 16,747,264 16,267,552 479,712

e Total.Add lines 11a-11d . 0-49,191,083

12 Total revenue . See Instructions0- 1 1,877,862,656 1,667,893,168 11,929,751 148,320,403

Form 990 (2012)

Form 990 (2012)

Statement of Functional Expenses

Section 501(c)(3) and 501(c)(4) organizations must complete all columns All other organizations must complete column (A)

Check if Schedule 0 contains a response to any auestion in this Part IX . . . . . . . . . . . . . .

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 organizationsin the United States See Part IV, line 21

189,102,919 189,102,919

2 Grants and other assistance to individuals in theUnited States See Part IV, line 22

44,499 44,499

3 Grants and other assistance to governments,organizations , and individuals outside the UnitedStates See Part IV, lines 15 and 16 0

4 Benefits paid to or for members 0

5 Compensation of current officers, directors , trustees, and

key employees 17,714,822 6,126,169 11,171,951 416,702

6 Compensation not included above, to disqualified persons(as defined under section 4958(f)(1)) and personsdescribed in section 4958( c)(3)(B) . 0

7 Other salaries and wages 524,245,313 484,368,767 38,483,863 1,392,683

8 Pension plan accruals and contributions ( include section 401(k)and 403(b) employer contributions ) 11 ,825,331 10,739,797 1,079,043 6,491

9 Other employee benefits 44 ,598,304 39,295,047 4,926,967 376,290

10 Payroll taxes 34,584,310 31,245,677 3,319,105 19,528

11 Fees for services ( non-employees)

a Management 158,344,359 158,344,359

b Legal 1,371 ,803 174,677 1,197,126

c Accounting 1,545,249 570,406 957,215 17,628

d Lobbying 0

e Professional fundraising services See Part IV, line 17 0

f Investment management fees 786 786

g Other (If line 11g amount exceeds 10 % of line 25,

column ( A) amount, list line 11g expenses on

Schedule 0 ) . 136,775,618 109,836,067 26,130,575 808,976

12 Advertising and promotion 3,253,054 542,913 2,672,686 37,455

13 Office expenses 42,728,144 35,587,190 6,891,281 249,673

14 Information technology 13,685,556 4,920,616 8,744,041 20,899

15 Royalties . 0

16 Occupancy 89,855,269 50,852,926 38,999,544 2,799

17 Travel 1,468,440 1,072,049 365,610 30,781

18 Payments of travel or entertainment expenses for any federal,state, or local public officials 0

19 Conferences , conventions , and meetings 1,153,551 439,618 499,547 214,386

20 Interest 35,093,436 35,006,914 86,522

21 Payments to affiliates 0

22 Depreciation , depletion, and amortization 135,557,179 127,029,182 8,509,760 18,237

23 Insurance 26,090,089 23,004,329 3,075,150 10,610

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

a MEDICAL SUPPLIES 243,383,036 243,205,420 175,999 1,617

b MEDICAID TAX 41,395,021 41,395,021

c BAD DEBT 30,719,910 30,719,637 273

d SWAP TERMINATION 22,701,000 22,701,000

e All other expenses 21,594,101 16,652,762 4,772,758 168,581

25 Total functional expenses. Add lines 1 through 24e 1,828,831,099 1,504,633,602 320,404,161 3,793,336

26 Joint costs. Complete this line only if the organizationreported in column ( B) joint costs from a combinededucational campaign and fundraising solicitation Checkhere F- if following SOP 98-2 (ASC 958-720)

Form 990 (2012)

Form 990 (2012 )

Balance SheetCheck if Schedule 0 contains a response to any question in this Part X F

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

1 Cash-non-interest-bearing 0 1 0

2 Savings and temporary cash investments . . . . . . . . 137,446,129 2 195,195,076

3 Pledges and grants receivable, net 43,794,943 3 49,755,746

4 Accounts receivable, net . . . . . . . . . . . . 279,774,948 4 245,661,965

5 Loans and other receivables from current and former officers, directors, trustees,key employees, and highest compensated employees Complete Part II ofSchedule L . .

0 5 0

6 Loans and other receivables from other disqualified persons (as defined undersection 4958(f)(1)), persons described in section 4958(c)(3)(B), and contributingemployers and sponsoring organizations of section 501(c)(9) voluntary employees'beneficiary organizations (see instructions) Complete Part II of Schedule L

0 6 0

7 Notes and loans receivable, net 0 7 0

8 Inventories for sale or use 31,528,365 8 33,872,993

9 Prepaid expenses and deferred charges . 51,373,390 9 129,914,002

10a Land, buildings, and equipment cost or other basisComplete Part VI of Schedule D 10a 2,466,075,028

b Less accumulated depreciation . . . . 10b 1 ,103,958,917 1,326,318,673 10c 1,362,116,111

11 Investments-publicly traded securities . 1,099,721,709 11 0

12 Investments-other securities See Part IV, line 11 1,212,047,352 12 0

13 Investments-program-related See Part IV, line 11 0 13 0

14 Intangible assets . . . . . . . . . . . . . . 0 14 0

15 Other assets See Part IV, line 11 311,286,705 15 2,935,756,347

16 Total assets . Add lines 1 through 15 (must equal line 34) . 4,493,292,214 16 4,952,272,240

17 Accounts payable and accrued expenses . . . . . . . . 193,710,946 17 236,200,625

18 Grants payable . . . . . . . . . . . . . . . . 134,841,937 18 262,015,729

19 Deferred revenue . . . . . . . . . . . . . . . 6,372,582 19 6,164,180

20 Tax-exempt bond liabilities . . . . . . . . . . . . 820,654,963 20 807,254,451

21 Escrow or custodial account liability Complete Part IV of Schedule D . 0 21 0

22 Loans and other payables to current and former officers, directors, trustees,key employees, highest compensated employees, and disqualified

persons Complete Part II of Schedule L . . . . . . . . . 0 22 0

23 Secured mortgages and notes payable to unrelated third parties 0 23 0

24 Unsecured notes and loans payable to unrelated third parties 0 24 0

25 Other liabilities (including federal income tax, payables to related third parties,and other liabilities not included on lines 17-24) Complete Part X of ScheduleD . 795, 361, 393 25 916, 998, 482

26 Total liabilities . Add lines 17 through 25 . 1,950,941,821 26 2,228,633,467

Organizations that follow SFAS 117 (ASC 958), check here 1- F and complete

lines 27 through 29, and lines 33 and 34.

C5 27 Unrestricted net assets 2,245,299,813 27 2,415,174,524

Mca

28 Temporarily restricted net assets 155,279,701 28 157,721,974

r29 Permanently restricted net assets . . . . . . . . . . 141,770,879 29 150,742,275

_Organizations that do not follow SFAS 117 (ASC 958), check here 1 andFW_complete 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

33 Total net assets or fund balances . . . . . . . . . . 2,542,350,393 33 2,723,638,773

34 Total l i a b i l i t i e s and net assets/fund balances 4,493,292,214 34 4,952,272,240

Form 990 (2012)

Form 990 (2012)

« Reconcilliation of Net Assets('hark if crhariiila () rnntainc a rocnnnca to anv niiactinn in Chic Part YT 7

1 Total revenue (must equal Part VIII, column (A), line 12) . .

2 Total expenses (must equal Part IX, column (A), line 25) . .

3 Revenue less expenses Subtract line 2 from line 1

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

5 Net unrealized gains (losses) on investments

6 Donated services and use of facilities

7 Investment expenses . .

8 Prior period adjustments . .

9 Other changes in net assets or fund balances (explain in Schedule 0)

10 Net assets or fund balances at end of year Combine lines 3 through 9 (must equal Part X, line 33,column (B))

1 1,877,862,656

2 1,828,831,099

3 49,031,557

4 2,542,350,393

5 -19,189

6

7

8

9 132,276,012

10 2,723,638,773

Financial Statements and Reporting

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

Yes No

1 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

If'Yes,'check a box below to indicate whether the financial statements for the year were compiled or reviewed ona separate basis, consolidated basis, or both

fl Separate basis fl Consolidated basis fl Both consolidated and separate basis

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

If'Yes,'check a box below to indicate whether the financial statements for the year were audited on a separatebasis, consolidated basis, or both

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

c If"Yes,"to line 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? 2c Yes

If the organization changed either its oversight process or selection process during the tax year, explain inSchedule 0

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 0 MB Circular A-1 33? 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 (2012)

Additional Data

Software ID:

Software Version:

EIN: 36-4724966

Name : Northwestern Memorial Healthcare Group

Form 990, Part III - 4 Program Service Accomplishments (See the Instructions)

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

(Code ) (Expenses $ 5,248,447 including grants of$ ) (Revenue $ 7,648,418 )

hEALTH AND fITNESS member programs

(Code ) (Expenses $ 4,338,450 including grants of $ 4,338,450 ) (Revenue $

NM Foundation activity


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

(Code ) (Expenses $ including grants of $ ) (Revenue $ 4,699,302

Non patient medical


professional service fees


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


service fees to subordinates


parking



(Code ) (Expenses $ including grants of $ ) (Revenue $ 2,845,074 )

nursing


miscellaneous




home infusion

(Code ) (Expenses $ including grants of $ ) (Revenue $ 808,421

education



(Code ) (Expenses $ including grants of $ ) (Revenue $ 223,651

joint venture

Form 990, Part VII - Compensation of Officers, Directors,Trustees, Key Employees, HighestCompensated Employees, and Independent Contractors

(A) (B) (C) (D) ( E) (F)Name and Title Average Position (do not check Reportable Reportable Estimated amount

hours more than one box, compensation compensation of otherper unless person is both from the from related compensationweek an officer and a organization (W- organizations (W- from the(list director/trustee) 2/1099-MISC) 2/1099-MISC) organization andany 0 ,o = T relatedhours

2-D ^Z organizations

forQ- ^Z

m o ?related

_r.

organizations 2

^

0

te

0below - KD --dotted mline)

CAROL L BERNICK NMHC5 0

X X 0 0 0CHAIR/DIRECTOR

THOMAS A COLE NMHC5 0

CHAIR/DIRECTORX X 0 0

JOHN A CANNING JR NMHC5 0

X X 0 0VICE CHAIR/DIRECTOR

WILLIAM A OSBORN NMHC5 0

X X 0 0VICE CHAIR/DIRECTOR

NICHOLAS D CHABRAJA NMHC5 0

X 0 0DIRECTOR

PETER D CRIST NMHC5 0

DIRECTORX 0 0

Kent P Dauten NMHC5 0

X 0 0DIRECTOR

JOHN H DICK NMHC5 0

DIRECTORX 0 0

DEAN M HARRISON NMHC40 0

X X 3,489,002 447,646DIRECTOR PRESIDENT & CEO

W JAMES MCNERNEY JR NMHC5 0

X 0 0DIRECTOR

GARY A NOSKIN MD NMHC40 0

X 96,558 0DIRECTOR

ROBERT L PARKINSON JR NMHC5 0

X 0 0DIRECTOR

HOMI B PATEL NMHC5 0

X 0 0DIRECTOR

PHILIP J PURCELL III NMHC5 0

X 0 0DIRECTOR

J CHRISTOPHER REYES NMHC5 0

X 0 0DIRECTOR

LARRY D RICHMAN NMHC5 0

X 0 0DIRECTOR

Nancy W Sassower MD NMHC40 0

X 77,225 - 5DIRECTOR

Samuel C SCOTT III NMHC5 0

DIRECTORX 0 0

GLENN F TILTON NMHC5 0

X 0 0DIRECTOR

FORREST R WHITTAKER NMHC5 0

X 0 0DIRECTOR

William J Brodsky NMH5 0

CHAIR/DIRECTORX X 0 0

Gregory Q Brown NMH5 0

DIRECTORX 0 0

Joseph F Damico Jr NMH5 0

X 0 0DIRECTOR

John A Edwardson NMH5 0

DIRECTORX 0 0

Sharon Gist Gilliam NMH5 0

X 0 0DIRECTOR


(A) (B) (C) (D) (E) (F)Name and Title Average Position (do not check Reportable Reportable Estimated amount

hours more than one box , compensation compensation of otherper unless person is both from the from related compensationweek an officer and a organization ( W- organizations (W- from the(list director/trustee ) 2/1099-MISC) 2/1099-MISC) organization andany 0 ,o = T relatedhours


forQ- ^Z

m o ?related

_r.

organizations 2

^

0

te


Ilene S Gordon NMH5 0

DIRECTORX 0 0

Eric G Neilson MD NMH5 0

DIRECTORX 0 0

William D Perez NMH5 0

DIRECTORX 0 0

Anna Pramaggiore NMH5 0

X 0 0DIRECTOR

Timothy P Sullivan NMH5 0

X 0 0DIRECTOR

Donald Thompson NMH5 0

DIRECTORX 0 0

Frederick H Waddell NMH5 0

X 0 0DIRECTOR

Miles D White NMH5 0

DIRECTORX 0 0

Abra Prentice Wilkin NMH5 0

X 0 0DIRECTOR

Maria C Bechily NMF5 0

VICE CHAIR/DIRECTORX 0 0

Ellen S Alberding NMF5 0

DIRECTORX 0 0

THOMAS L BERNARDIN NMF5 0

X 0 0DIRECTOR

NEIL G BLUHM NMF5 0

X 0 0DIRECTOR

Sharon M Brady NMF5 0

DIRECTORX 0 0

CHARLES M BRENNAN III NMF5 0

X 0 0DIRECTOR

DENNIS H CHOOKASZIAN NMF5 0

X 0 0DIRECTOR

Sean Connolly NMF5 0

DIRECTORX 0 0

william M Daley NMF5 0

DIRECTORX 0 0

Anthony B Davis NMF5 0

DIRECTORX 0 0

Laura Davis NMF5 0

DIRECTORX 0 0

Michael F DeSantiago NMF5 0

X 0 0DIRECTOR

Shawn M Donnelley NMF5 0

DIRECTORX 0 0

STEPHEN C FALK NMF40 0

X X 578,115 47,564DIRECTOR VP-DEVELOPMENT & PRES

MICHAEL W FERRO NMF5 0

X 0 0DIRECTOR

ALBERT M FRIEDMAN NMF5 0

X 0 0DIRECTOR





forQ- ^Z

m o ?related

_r.

organizations 2

^

0

te


C GARY GERST NMF5 0

DIRECTORX 0 0

Torsten Gessner NMF5 0

DIRECTORX 0 0

LISA M GILES NMF5 0

DIRECTORX 0 0

William Goldberg NMF5 0

DIRECTORX 0 0

JAMES A GORDON NMF5 0

DIRECTORX 0 0

Judy Greffin NMF5 0

DIRECTORX 0 0

SANDRA L HELTON NMF5 0

DIRECTORX 0 0

ROBERTO R HERENCIA NMF5 0

DIRECTORX 0 0

BRUCE A HEYMAN NMF5 0

DIRECTORX 0 0

WILLIAM M HUNTER NMF5 0

DIRECTORX 0 0

PETER S HURST BDS NMF5 0

X 0 0DIRECTOR

RICK H KASH NMF5 0

DIRECTORX 0 0

Robert J Kelsey MD NMF5 0

DIRECTORX 0 0

JOHN A KESSLER MD NMF5 0

DIRECTORX 0 0

WILLIAM C KUNKLER III NMF5 0

X 0 0DIRECTOR

LAWRENCE F LEVY NMF5 0

DIRECTORX 0 0

Stephanie Lieber NMF5 0

DIRECTORX 0 0

WILLIAM T LYNCH JR NMF5 0

DIRECTORX 0 0

JOSEPH D MANSUETO NMF5 0

X 0 0DIRECTOR

TRINA GORDON MCCALLISTER NMF5 0

DIRECTORX 0 0

RICHARD MELMAN NMF5 0

DIRECTORX 0 0

JOANNE C MILLER NMF5 0

DIRECTORX 0 0

Mimi Olson NMF5 0

DIRECTORX 0 0

M K PRITZKER NMF5 0

DIRECTORX 0 0

ANDREA REDMOND NMF5 0

DIRECTORX 0 0



hours more than one box, compensation compensation of otherper unless person is both from the from related compensationweek an officer and a organization (W- organizations (W- from the(list director/trustee) 2/1099-MISC) 2/1099-MISC) organization andany 0 ,o = T relatedhours -D ^Z organizationsfor m o ?

related_

r.

organizations 2

^

0

te

below - Kdotted K mline)

VICTORIA J REICH NMF5 0

DIRECTORX 0 0

LINDA JOHNSON RICE NMF5 0

DIRECTORX 0 0

MARY BETH RICHMOND MD NMF5 0

X 0 0DIRECTOR

MICHAEL A RUCHIM MD NMF40 0

DIRECTORX 672,806 48,790

Desiree Rogers NMF5 0

DIRECTORX 0 0

MANUEL SANCHEZ NMF5 0

DIRECTORX 0 0

TERRY SAVAGE NMF5 0

DIRECTORX 0 0

MARC S SCHULMAN NMF5 0

DIRECTORX 0 0

RICHARD J L SENIOR NMF5 0

X 0 0DIRECTOR

SCOTT C SMITH NMF5 0

DIRECTORX 0 0

NATHANIEL SOPER MD NMF5 0

X 0 0DIRECTOR

M CHRISTINE STOCK MD NMF5 0

DIRECTORX 0 0

ROBERT J STUCKER NMF5 0

X 0 0DIRECTOR

Katie Surkamer NMF5 0

DIRECTORX 0 0

SHEILA G TALTON NMF5 0

DIRECTORX 0 0

Jason Tyler NMF5 0

DIRECTORX 0 0

DOUGLAS E VAUGHAN MD NMF5 0

X 0 0DIRECTOR

WILLIAM A VON HOENE JR NMF5 0

DIRECTORX 0 0

REEVE B WAUD NMF5 0

DIRECTORX 0 0

ARTHUR M WOOD JR NMF5 0

DIRECTORX 0 0

Corine J Wood NMF5 0

DIRECTORX 0 0

Andrea Zopp NMF5 0

DIRECTORX 0 0

Todd Altounian NLFH5 0

DIRECTORX 0 0

Kermit Lcrawford NLFH5 0

DIRECTORX 0 0

William G Daluga NLFH5 0

DIRECTORX 0 0




2-D ^ Z organizations

forQ- ^Z

m o ?related

_r.

organizations 2

^ te

abelow - KD --dotted mline)

Anthony Kesman NLFH5 0

DIRECTORX 0 0

Richard L Lenny NLFH5 0

DIRECTORX 0 0

Thomas J McAfee NLFH40 0

Director SR VP-OPERATIons & PrX X 830,326 290,252

PATRICK M MCCARTHY MD NLFH5 0

X 0 0DIRECTOR

Charlie N Mills NLFH5 0

DIRECTORX 0 0

LEE M MITCHELL NLFH5 0

DIRECTORX 0 0

LORNA S PFAELZER NLFH5 0

X 0 0DIRECTOR

Debbie S Saran NLFH5 0

DIRECTORX 0 0

Kim R Sobinsky MD NLFH5 0

X 0 0DIRECTOR

Lewis A Steverson NLFH5 0

X 0 0DIRECTOR

Alexander D Stuart NLFH5 0

X 0 0DIRECTOR

EDWARD J WEHMER NLFH5 0

X 0 0DIRECTOR

Dennis M Murphy NMPG40 0

DIRECTOR Exec VPX X 1,068,883 198,023

Daniel M Derman MD NMPG40 0

Director VP-OPERATION & PRESX X 861,150 4,191

Jeffrey D Kopin MD NMPG40 0

DIRECTORX 520,906 33,224

Peter A Lechman MD NMPG40 0

DIRECTORX 413,578 32,930

Dean L Manheimer NMPG40 0

Director SR VP-HUMAN RESOURCESX X 724,289 174,139

Earl J Barnes HFI40 0

DIRECTORX X 516,956 46,575

Matthew J Flynn HFI40 0

Director Assistant SecretaryX X 330,923 45,896

PETER J MCCANNA NMHC40 0

EXEC VP and COOX 1,269,120 761,570

CAROL M LIND NMHC40 0

X 758,201 272,892SR VP, GEN COUNSEL & SECRETARY

Douglas M Young NMHC40 0

Interim CFO and TreasurerX 492,024 44,201

JENNIFER S WOOTEN NMHC40 0

X 152,814 35,293ASSISTANT SECRETARY

Francis d fraher NMHC40 0

assistant TreasurerX 230,993 22,627

stephen L Ondra NMHC40 0

SR VP Medical AffairsX 461,075 31,348


(A) (B) (C) (D) ( E) (F)Name and Title Average Position (do not check Reportable Reportable Estimated amount


2-D ^ Z organizations

forQ- ^Z

m o ?related

_r.

organizations 2

^ te

abelow - KD --dotted mline)

Michelle A Janney NMH40 0

Senior VP & Chief Nurse ExecX 627,823 220,195

Michael G Arkin MD NLFH40 0

VP & CMOX 445,511 36,017

Kimberly A Nagy NLFH40 0

VP & Chief Nursing OfficerX 263,444 9,056

TIMOTHY R ZOPH NMHC40 0

SR VP-Adman & CIOX 1,069,073 206,345

JULIA L CREAMER NMHC40 0

X 698,071 584,341Senior VP-Quality & Planning

Scott Moses MD NMPG40 0

PhysicianX 673,580 32,728

Holli Salls NMHC40 0

VP PR & marketingX 650,960 99,642

Steven P Klimkowski NMHC40 0

Chief Investment OfficerX 625,463 50,653

Charles M Watts40 0

SR VP Medical AffairsX 500,040 23,119

Matthew Koschmann NLFH40 0

VP External Affairs Bus DIrX 112,994 287

Jane Griffin NLFH40 0

VP Philantrophy & marketingX 214,709 35,441

Marsha Oberrieder NLFH40 0

VP HR & Professional ServicesX 274,122 3,095


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

(Form 990 or 990EZ)2012Complete 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 numberNorthwestern Memorial Healthcare Group

36-4724966

Reason for Public Charity Status (All organizations must complete this part.) See instructions.The organi zation 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 the

hospital's name, city, and state5 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 in section 170 ( b)(1)(A)(vi ). (Complete Part II )

8 1 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 See section 509(a)(4).

11 1 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 Ile through 11 h

a fl Type I b 1 Type II c fl Type III - Functionally integrated d (- Type III - Non-functionally integrated

e (- 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, orType III supporting organization,check this box (-

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 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)

(i) Name of (ii) EIN (iii) Type of (iv) Is the (v) Did you notify (vi) Is the (vii) Amount ofsupported organization organization in the organization organization in monetary

organization (described on col (i) listed in in col (i) of your col (i) organized supportlines 1- 9 above your governing support? in the U S ?or IRC section document?

(seeinstructions))

Yes No Yes No Yes No

Total

For Paperwork Reduction Act Notice, see the Instructions for Form 990 or 990EZ . Cat No 11285F ScheduleA(Form 990 or 990-EZ)2012

Schedule A (Form 990 or 990-EZ) 2012 Page 2

MU^ 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 qualify underPart 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) 2008 (b) 2009 (c) 2010 (d) 2011 (e) 2012 (f) Total

in) 111111 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 SupportCalendar year ( or fiscal year beginning (a) 2008 (b) 2009 (c) 2010 (d) 2011 (e) 2012 (f) Total

in) ►7 Amounts from line 4

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

9 Net income from unrelatedbusiness activities, whether or notthe business is regularly carriedon

10 Other income Do not include gainor loss from the sale of capitalassets (Explain in Part IV )

11 Total support (Add lines 7 through10)

12 Gross receipts from related activities, etc (see instructions) 12

13 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, checkthis box and stop here .ItE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section C. Com p utation of Public Support Percenta g e14 Public support percentage for 2012 (line 6, column (f) divided by line 11, column (f)) 14

15 Public support percentage for 2011 Schedule A, Part II, line 14 15

16a 331 / 3%support test-2012 . 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

b 331 / 3%support test-2011 . If the organization did not check a 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

17a 10%-facts-and -circumstances test -2012 . 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

b 10%-facts-and-circumstances test -2011 . 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

18 Private foundation . If the organization did not check a box on line 13, 16a, 16b, 17a, or 17b, check this box and seeinstructions

Schedule A (Form 990 or 990-EZ) 2012


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) 2008 (b) 2009 (c) 2010 (d) 2011 (e) 2012 (f) Total

in) 111111 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 SuuuortCalendar year ( or fiscal year beginning (a) 2008 (b) 2009 (c) 2010 (d) 2011 (e) 2012 (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, 1Oc,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 501(c)(3) organization,check this box and stop here

Section C. Computation of Public Support Percentage

15 Public support percentage for 2012 (line 8, column (f) divided by line 13, column (f)) 15

16 Public support percentage from 2011 Schedule A , Part III, line 15 16

Section D. Com putation of Investment Income Percenta g e

17 Investment income percentage for 2012 (line 10c, column (f) divided by line 13, column (f)) 17

18 Investment income percentage from 2011 Schedule A, Part III, line 17 18

19a 331 / 3%support tests-2012 . 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 supported organization lk'F-

b 331/3%support tests-2011 . If the organization did not check a box on line 14 or line 19a , and line 16 is more than 33 1/3% and line 18is not more than 33 1/3%, check this box and stop here . The organization qualifies as a publicly supported organization lk'F-

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 . Complete this part to provide the explanations required by Part II, line 10;Part II, line 17a or 17b; and Part III, line 12. Also complete this part for any additional information. (Seeinstructions).

Facts And Circumstances Test

Explanation

Listed beloware THOSE gROUP MEMBERS THAT ARE NEITHER A HOSPITAL NOR A COOPERATIVE HOSPITAL SERVICEORGANIZATION DESCRIBED IN SECTION 170(B)(1)(a)(III) nORTHWESTERN mEMORIAL fOUNDATION, tYPE 7, aN ORGANIZATIONTHAT NORMALLY RECEIVES A SUBSTANTIAL PART OF ITS SUPPORT FROM A GOVERNMENTAL UNIT OR FROM THE GENERALPUBLIC DESCRIBED IN SECTION 170(B)(1)(a)(VI) TAKE fOREST HEALTH & fITNESS iNSTITUTE,TYPE 9,AN ORGANIZATION THATNORMALLY RECEIVES (1) MORE THAN 33 1/3% OF ITS SUPPORT FROM CONTRIBUTIONS, MEMBERSHIP FEES, AND GROSSRECEIPTS FROM ACTIVITIES RELATED TO ITS EXEMPT FUNCTIONS-SUBJECT TO CERTAIN EXCEPTIONS, AND (2) NO MORETHAN 33 1/3% OF ITS SUPPORT FROM GROSS INVESTMENT INCOME AND UNRELATED BUSINESS TAXABLE INCOME (LESSSECTION 511 TAX) FROM BUSINESSES ACQUIRED BY THE ORGANIZATION AFTER JUNE 30, 1975 SEE SECTION 509(a)(2)


l efile GRAPHIC p rint - DO NOT PROCESS As Filed Data - DLN: 93493195012304

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 2

Department of the Treasury 1- Complete if the organization is described below. 0- Attach to Form 990 or Form 990-EZ.

Internal Revenue Service0- See separate instructions . Open

I InspectionIf 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 only

If 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-A

If the organization answered "Yes" to Form 990, Part IV, Line 5 ( Proxy Tax) or Form 990-EZ , Part V, line 35c ( Proxy Tax), then* Section 501(c)(4), (5), or (6) organizations Complete Part IIIName of the organization Employer identification numberNorthwestern Memorial Healthcare Group

36-4724966

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 0- $

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 0- $

2 Enter the amount of any excise tax incurred by organization managers under section 4955 0- $

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 0- $

2 Enter the amount of the filing organization's funds contributed to other organizations for section 527exempt function activities 0- $

3 Total exempt function expenditures Add lines 1 and 2 Enter here and on Form 1120-PO L, line 17b 0- $

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-

i-or raperworK rteauction Act Notice, see the instructions Tor corm 99U or yyu -tc. Cat No 50084S Schedule C ( Form 990 or 990-EZ) 2012

Schedule C (Form 990 or 990-EZ) 2012 Page 2

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

A Check - if the filing organization belongs to an affiliated group (and list in Part IV each affiliated group member's name, address, EIN,expenses, and share of excess lobbying expenditures)

B Check - (- if the filing organization checked box A and "limited control" provisions apply

Limits on Lobbying Expenditures(The term "expenditures" means amounts paid or incurred.)

(a) Filingorganization's

totals

(b) Affiliatedgrouptotals

411,552

411,552

1,748,846,117

1,749,257,669

1,000,000

250,000

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: The lobbying nontaxable amount is:

Not over $500,000 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

1,494,012,345

1,494,012,345

1,000,000

g Grassroots nontaxable amount (enter 25% of line 1f) 250,000

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? F- Yes 17 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 five

columns below. See the instructions for lines 2a through 2f on page 4.)

Lobbvina Exoenditures During 4-Year Averaaina Period

Calendar year (or fiscaI year(a) 2009 (b) 2010 (c) 2011 (d) 2012 (e) Total

beginning in)

2a Lobbying nontaxable amount 1,000,000 1,000,000 1,000,000 1,000,000 4,000,000

b Lobbying ceiling amount(150% of line 2a, column(e))

6,000,000

c Total lobbying expenditures 192,553 190,640 532,186 411,552 1,326,931

d Grassroots nontaxable amount 250,000 250,000 250,000 250,000 1,000,000

e Grassroots ceiling amount 1,500,000150% of line 2d column e

f Grassroots lobbying expenditures 5,000 10,209 ^ 1 15,209

Schedule C (Form 990 or 990-EZ) 2012

Schedule C (Form 990 or 990-EZ) 2012 Pa g e 3Complete if the organization is exempt under section 501 ( c)(3) and has NOTfiled Form 5768 ( election under section 501(h)).

For each "Yes" response to lines la through li below, provide in Part IV a detailed description of the lobbyingactivity . Yes No Amount

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?

b Paid staff or management (include compensation in expenses reported on lines 1c through 1i)?

c Media advertisements?

d Mailings to members, legislators, or the public?

e Publications, or published or broadcast statements?

f Grants to other organizations for lobbying purposes?

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

h Rallies, demonstrations, seminars, conventions, speeches, lectures, or any similar means?

i Other activities?

j Total Add lines 1c through 1i

2a Did the activities in line 1 cause the organization to be not described in section 501(c)(3)?

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

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 carry over 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) and if either ( a) BOTH Part 111-A , lines 1 and 2, are answered "No" OR (b) Part 111-A,line 3 , is answered "Yes."

Dues, assessments and similar amounts from members 1

2 Section 162(e) nondeductible 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, Part II-A (affiliated group list),Part II-A line 2 , and Part 11-13, 1 Also , com p lete this p artforan y additional information

Identifier Return Reference Explanation

Affiliated Group schedule Schedule C, Part II-A affiliated Organization Name Northwestern Memorial Hospital Addressorganizations 251 E Huron Address Chicago, IL 60611 FEIN 37-0960170

Grassroots Lobbying Amount Direct Lobbying Amount TotalLobbying Expenditures Other Exempt Purpose Expenditures1,222,387,740 Total Exempt Purpose Expenditures1,222,387,740 Lobbying Nontaxable Amount 1,000,000Grassroots Nontaxable Amount 250,000 Total GrassrootsLess Nontaxable Amount Total Expenditures Less NontaxableAmount Share of Excess Lobbying Expenditures OrganizationName Northwestern Lake Forest Hospital Address 660 NWestmoreland Road ADDRESS Lake Forest, IL 60645 FEIN36-2179779 Grassroots Lobbying Amount Direct LobbyingAmount Total Lobbying Expenditures Other Exempt PurposeExpenditures 188,396,784 Total Exempt PurposeExpenditures 188,396,784 Lobbying Nontaxable Amount1,000,000 Grassroots Nontaxable Amount 250,000 TotalGrassroots Less Nontaxable Amount Total Expenditures LessNontaxable Amount Share of Excess Lobbying ExpendituresOrganization Name Northwestern Memorial HealthCareAddress 251 E Huron Address Chicago, IL 60611 FEIN 36-3152959 Grassroots Lobbying Amount Direct LobbyingAmount 411,552 Total Lobbying Expenditures 411,552 OtherExempt Purpose Expenditures 254,833,772 Total ExemptPurpose Expenditures 255,245,324 Lobbying NontaxableAmount 1,000,000 Grassroots Nontaxable Amount 250,000Total Grassroots Less Nontaxable Amount Total ExpendituresLess Nontaxable Amount Share of Excess LobbyingExpenditures Organization Name Northwestern MemorialPhysicians Group Address 251 E Huron Address Chicago, IL60611 FEIN 36-4030256 Grassroots Lobbying AmountDirect Lobbying Amount Total Lobbying Expenditures OtherExempt Purpose Expenditures 73,663,065 Total ExemptPurpose Expenditures 73,663,065 Lobbying NontaxableAmount 1,000,000 Grassroots Nontaxable Amount 250,000Total Grassroots Less Nontaxable Amount Total ExpendituresLess Nontaxable Amount Share of Excess LobbyingExpenditures Organization Name Lake Forest Health & FitnessInstitute Address 1200 N Westmoreland Road Address LakeForest, IL 60045 FEIN 36-3835030 Grassroots LobbyingAmount Direct Lobbying Amount Total Lobbying ExpendituresOther Exempt Purpose Expenditures 5,226,307 Total ExemptPurpose Expenditures 5,226,307 Lobbying NontaxableAmount 411,315 Grassroots Nontaxable Amount 102,829Total Grassroots Less Nontaxable Amount Total ExpendituresLess Nontaxable Amount Share of Excess LobbyingExpenditures Organization Name Northwestern MemorialFoundation Address 351 E Huron Address Chicago, IL 60611FEIN 36-3155315 Grassroots Lobbying Amount DirectLobbying Amount Total Lobbying Expenditures Other ExemptPurpose Expenditures 4,338,450 Total Exempt PurposeExpenditures 4,338,450 Lobbying Nontaxable Amount366,923 Grassroots Nontaxable Amount 91,731 TotalGrassroots Less Nontaxable Amount Total Expenditures LessNontaxable Amount Share of Excess Lobbying ExpendituresTotal Expenditures Less Nontaxable Amount Share of ExcessLobbying Expenditures

Schedule C (Form 990 or 990EZ) 2012


SCHEDULE D OMB No 1545-0047

(Form 990) Supplemental Financial Statements2012

1- Complete if the organization answered "Yes," to Form 990,Department of the Treasury Part IV , line 6 , 7 , 8 , 9 , 10 , 11a 11b 11c 11d 11e 11f 12a , or 12b

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


36-4724966Organizations 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 1

2 Aggregate contributions to (during year) 2,056,760

3 Aggregate grants from (during year) 174,702

4 Aggregate value at end of year 7,491,161

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 can beused only for charitable purposes and not for the benefit of the donor or donor advisor, or for any other purposeconferring impermissible private benefit? F Yes fl No

MRSTI-ConservationEasements . 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 education ) 1 Preservation of an historically important land area

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

fl Preservation of open space

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

a Total number of conservation easements

b Total acreage restricted by conservation easements

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

d Number of conservation easements included in (c) acquired after 8/17/06, and not on ahistoric structure listed in the National Register

Held at the End of the Year

2a

2b

2c

2d

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

the tax 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

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

0-

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

0- $

8 Does each conservation easement reported on line 2(d) above satisfy the requirements of section 170(h)(4)(B)(i)and section 170(h)(4)(B)(ii)? F Yes 1 No

9 In Part XIII, 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 oraanization answered "Yes" to Form 990. Part IV. line 8.

la If the organization elected, as permitted under SFAS 116 (ASC 958), not to report in its revenue statement and balance sheetworks of art, historical treasures, or other similar assets held for public exhibition, education, or research in furtherance of publicservice, provide, in Part XIII, the text of the footnote to its financial statements that describes these items

b If the organization elected, as permitted under SFAS 116 (ASC 958), to report in its revenue statement and balance sheetworks of art, historical treasures, or other similar assets held for public exhibition, education, or research in furtherance of publicservice, 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 (ASC 958) relating to these items

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

b Assets included in Form 990, Part X $

For Paperwork Reduction Act Notice, see the Instructions for Form 990. Cat No 52283D Schedule D ( Form 990) 2012

Schedule D (Form 990) 2012 Page 2

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

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

a F Public exhibition d fl Loan or exchange programs

b F 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 XIII

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 F 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 XIII and complete the following table

c Beginning balance 1c

d Additions during the year ld

e Distributions during the year le

f Ending balance if

A mount

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 XIII Check here if the explanation has been provided in Part XI II . . . . . . . . F

MWAF-Endowment Funds . Com p lete if the or anization answered "Yes" to Form 990 , Part IV, line 10.

la Beginning of year balance .

b Contributions

c Net investment earnings, gains, and 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 b (c)Two years back (d)Three years back (e)Four years back

141,770,880 126,328,570 105,903,251 79,495,000 77,797,000

2,363,845 16,347,337 19,682,870 26,169,000 1,884,000

6,607,550 -905,027 742,449 239,251 -186,000

150, 742, 27 5 141, 770, 880 126, 328, 570 105, 903, 2 51 79, 495, 000

2 Provide the estimated percentage of the current year end balance (line 1g, column (a)) held as

a Board designated or quasi-endowment 0-

b Permanent endowment 0- 100 000 %

c Temporarily restricted endowment 0-

The percentages in lines 2a, 2b, and 2c should equal 100%

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) No

(ii) related organizations . . . . . . . . . . . . . . . . . . . . . . 3a(ii) No

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

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

Land . Buildings . and Eauiument. See Form 990. Part X. line 10.

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

(b)Cost or otherbasis (other)

(c) Accumulateddepreciation

(d) Book value

la Land 237,952,616 237,952,616

b Buildings 1,701,356,417 830,308,406 871,048,011

c Leasehold improvements . .

d Equipment 373,995,335 273,650,510 100,344,825

e Other 152,770,659 0 152,770,659

Total . Add lines la through le (Column (d) must equal Form 990, Part X, column (8), line 10(c).) . . 0- 1,362,116,111

Schedule D (Form 990) 2012


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) must equal Form 990, Part X, col (B) line 12 ) 0.1

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

(a) Description of investment typeI I

(b) Book value (c) Method of valuationCost or end-of-year market value

Total . (Column (b) must equal Form 990, Part X, col (8) line 13 ) 0. 1

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

(a) DescriDtion (b) Book value


Total . (Column (b) must equal Form 990, Part X, co/.(8) line 15.)

Other Liabilities . See Form 990 , Part X line 25.1 (a) Description of liability (b) Book value

Federal income taxes 0

ACCRUED BOND INTEREST 1,121,328

EST THIRD PARTY PAYOR SETTLEME 229,051,422

DUE TO AFFILIATES 72,863,721

SELF INSURANCE RESERVES 554,795,148

INTEREST RATE SWAPS 43,915,778

SECTION 457-B AND PENSION PLAN 4,806,328

DEFERRED RENT 2,654,923

OTHER 7,789,834

. 0-1 2.935.756.347

Total . (Column (b) must equal Form 990, Part X, col (B) line 25) p. I 9 16,9 9 8,4 8 2

2. Fin 48 (A SC 740) Footnote In Part XIII, provide the text of the footnote to the organization's financial statements that reports theorganization's liability for uncertain tax positions under FIN 48 (A SC 740) Check here if the text of the footnote has been provided inPart XIII F



171174W Reconciliation of Revenue per Audited Financial Statements With Revenue per Return

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

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

a Net unrealized gains on investments . 2a

b Donated services and use of facilities . 2b

c Recoveries of prior year grants 2c

d Other (Describe in Part XIII ) 2d

e Add lines 2a through 2d . . . . . . . . . . . . . . . . . . . . 2e

3 Subtract line 2e from line 1 . . . . . . . . . . . . . . . . . . . . 3

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 XIII ) . . . . . . . . . . 4b

c Add lines 4a and 4b . . . . . . . . . . . . . . . . . . . . . . 4c

5 Total revenue Add lines 3 and 4c. (This must equal Form 990, Part I, line 12 ) . . . . .

-

5

Reconciliation of Ex penses per Audited Financial Statements With Ex penses perMfft".Off Return

1 Total expenses and losses per audited financial statements . . . . . . . . . . 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 XIII ) . . . . . . . . . . . 2d

e Add lines 2a through 2d . . . . . . . . . . . . . . . . . . . . . 2e

3 Subtract line 2e from line 1 . . . . . . . . . . . . . . . . . . . . 3

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 XIII ) . . . . . . . . . . . 4b

c Add lines 4a and 4b . . . . . . . . . . . . . . . . . . . . . . 4c

5 Total expenses Add lines 3 and 4c. (This must equal Form 990, Part I, line 18 ) . . . . . 5

UTIT."M Supplemental 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, line 2, Part XI, lines 2d and 4b, and Part XII, lines 2d and 4b Also complete this part to provide any additionalinformation


FIn 48 Statement Sch D Part X Line 2 The organization's financial statements do not report anyuncertain tax positions under FIN 48

Endowments schedule D part V The Northwestern Group disclosed the endowment funds in PartV in accordance with SFAS 117 (ASC 958) The Group reportsboard designated funds of$145,545,000 in unrestricted netassets as of August 31, 2013 These amounts were notincluded in Part V so that the Endowment funds match thefinancial statements The Group also has temporarily restrictedassets generated from endowment funds of $48,928,000 as ofAugust 31, 2013 In accordance with SFAS 117 (ASC 958)these amounts are not considered endowments and have notbeen included in Part V The 4 prior years are the combinedGroup members endowment information

Collections of Art Schedule D part III Due to immateriality there is no separate footnote in thefinancial statements regarding SFAS 116 (ASC 958)contributed art The hospital maintains artwork that is on publicdisplay The arts program was developed in response toresearch that demonstrates the healing value ofrepresentational art depicting natural landscapes and positivehuman interactions Our art collection provides comfort, evokespositive emotions and can help promote healing for our patientsThe hospital also maintains historical items that relate to caresuch as historical medical instruments and nursing uniforms


Additional Data

Software ID:

Software Version:

EIN: 36-4724966


Form 990, Schedule D, Part IX, - Other Assets(a) Description ( b) Book value

(1) DUE FROM AFFILIATES 6,076,833

(2) BENEFICIAL INTEREST IN TRUSTS 13,282,380

(3) ARTWORK 1,067,904

(4) INSURANCE RECOVERABLE 259,892,785

(5) SECTION 457-B PLAN ASSET 4,806,328

(6) OTHER ASSETS 4,901,343

(7) INVEST NONGROUP SUBS &JV 12,000,000

(8) BOND ISSUANCE COSTS 6,877,297

(9) GOODWILL 10,613,973

(10)I/C RECEIVABLE 2,616,237,504

Form 990, Schedule D, Part X, - Other Liabil1 (a) Description of Liability

ities(b) Book Value

ACCRUED BOND INTEREST 1,121,328

EST THIRD PARTY PAYOR SETTLEME 229,051,422

DUE TO AFFILIATES 72,863,721

SELF INSURANCE RESERVES 554,795,148

INTEREST RATE SWAPS 43,915,778

SECTION 457-B AND PENSION PLAN 4,806,328

DEFERRED RENT 2,654,923

OTHER 7,789,834


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

(Form 990)Complete if the organization answered " Yes" to Form 990,

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

0-201 2

Department of the Treasury n Attach to Form 990 . ► See separate instructions. O pen to PublicInternal Revenue Service Inspection

Name of the organizationNorthwestern Memorial Healthcare Group

Employer identification number

36-4724966

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 outsidethe United States.

3 Activites per Region (The following Part I, line 3 table can be duplicated if additional space is needed )

(a) Region (b) Number ofoffices in the

region

(c) Number ofemployees,agents, andindependentcontractors in

re g ion

(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) is aprogram service, describe

specific type ofservice(s) in region

(f) Total expendituresfor and investments

in region

Central America and theCaribbean

1 0 Program Services liability risk funding 81,660,034

3a Sub-total 1 0 81,660,034

b Total from continuation sheetsto Part I

c Totals ( add lines 3a and 3b ) 1 0 81 , 660 , 034

For Paperwork Reduction Act Notice, see the Instructions for Form 990 . Cat N o 50082W Schedule F (Form 990) 2012

Schedule F (Form 990) 2012 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. Part II can be duplicated 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)

2 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) 2012


Grants and Other Assistance to Individuals Outside the United States . Complete if the organization answered "Yes" to Form 990, Part IV, line 16.Part III can be duplicated 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, Return by a U.S. Transferor of Property to a Foreign Corporation (seeInstructions for Form 926) F Yes F- N o

2 Did the organization have an interest in a foreign trust during the tax year? If "Yes, " the organlzatlonmay berequired to file Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain ForeignGifts, and/or Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner (see Instructions forForms 3520 and 3520-A) F- Yes F N o

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) F Yes F- N o

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 fi le Form 8621, Return by aShareholder of a Passive Foreign Investment Company or Qualified Electing Fund . (see Instructions for Form 8621) F- Yes F N o

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) F- Yes F N o

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

Schedule F ( Form 990) 2012


Supplemental InformationComplete this part to provide the information required by Part I, line 2 (monitoring of funds); Part I, line 3,column (f) (accounting method; amounts of investments vs. expenditures per region); Part II, line 1(accounting method); Part III (accounting method); and Part III, column (c) (estimated number of recipients),



SCHEDULEG SU lemental Information Re ardin OMB No 1545-0047

(Form 990 or 990-EZ) pp g gFundraising or Gaming ActivitiesComplete if the organization answered "Yes" to Forth 990, Part IV, lines 17, 18, or 19, or if the organization entered

more than $15,000 on Form 990-EZ, line 6a. Form 990-EZ filers are not required to complete this part.

Department of the Treasury PrAttach to Form 990 or Forth 990-EZ. PrSee separate instructions.

Internal Revenue Service


2012


36-4724966

Fundraising Activities . Complete if the organization answered "Yes" to Form 990, Part IV, line 17.

Indicate whether the organization raised funds through any of the following activities Check all that apply

a F Mail solicitations e F Solicitation of non-government grants

b 1 Internet and email solicitations f 1 Solicitation of government grants

c 1 Phone solicitations g F Special fundraising events

d F In-person solicitations

2a Did the organization have a written or oral agreement with any individual (including officers, directors, trusteesor key employees listed in Form 990, Part VII) or entity in connection with professional fundraising services? F Yes 1! No

b If "Yes," list the ten highest paid individuals or entities (fundraisers) pursuant to agreements under which the fundraiser isto be compensated at least $5,000 by the organization

(i) Name and address ofindividual

or entity (fundraiser)

(ii) Activity (iii) Didfundraiser have

custody orcontrol of

contributions?

(iv) Gross receiptsfrom activity

(v) Amount paid to(or retained by)

fundraiser listed incol (i)

(vi) Amount paid to(or retained by)organization

Yes No

less than 5000 No

Total

3 List all states in which the organization is registered or licensed to solicit funds or has been notified it is exempt from registration orlicensing

FL, IL, NY, WI

For Paperwork Reduction Act Notice, see the Instructions for Form 990or 990-EZ . Cat No 50083H Schedule G ( Form 990 or 990 - EZ) 2012

Schedule G (Form 990 or 990-EZ) 2012 Page 2

Fundraising Events . Complete if the organization answered "Yes" to Form 990, Part IV, line 18, or reportedmore than $15,000 of fundraising event contributions and gross income on Form 990-EZ, lines 1 and 6b. Listevents with gross receipts greater than $5,000.

(a) Event #1 (b) Event #2 (c) Other events (d) Total events(add col (a) through

Golf Outing Womens' Board 1 col (c))

(event type) (event type) (total number)

co1 Gross receipts 67,775 400,028 92,837 560,640

75T 2 Less Contributions 28,275 287,158 46,767 362,200

3 Gross income (line 1minus line 2)

4 Cash prizes

39,5001 112,870 46,0701 198,440

u75 Noncash prizes 9,778 9,778

6 Rent/facility costs 52,384 103,234 11,931 167,549

7 Food and beverages 43,765 5,012 48,777

8 Entertainment 68,735 , 68,735

9 Other direct expenses 214 29,004 27,336 56,554

10 Direct expense summary Add lines 4 through 9 in column (d) . . . . . . . . . . . ► (351,393)

11 Net income summary Combine line 3, column (d), and line 10 . . . . . . . . . . 111k.

11

-152,953

Gaming . Complete if the organization answered "Yes" to Form 990, Part IV, line 19, or reported more than$15,000 on Form 990-EZ, line 6a.

(a) Bingo (b) Pull tabs/Instant (c) Other gaming (d) Total gaming (addbingo/progressive bingo col (a) through col

co (c) )

1 Gross revenue .

2 Cash prizesu)C

3 Non-cash prizes

LIJ

4 Rent/facility costs .

5 Other direct expenses

F Yes F Yes F Yes6 Volunteer labor n No F No F No

7 Direct expense summary Add lines 2 through 5 in column (d) . . . . . . . . . . . ►

8 Net gaming income summary Combine lines 1 and 7 in column (d) . . . . . . . . . . ►

9 Enter the state (s) in which the organization operates gaming activities

a Is the organization licensed to operate gaming activities in each of these states? . . . . . . . . . . . . . Yes r No

b If "No," explain

------------- ------------------------- ------------------------- ------------------------- ------------------------ ------------------------- ------------------------- ------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10a Were any of the organization ' s gaming licenses revoked, suspended or terminated during the tax year? . . . . . F Yes F No

b If "Yes," explain

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Schedule G (Form 990 or 990-EZ) 2012


Does the organization operate gaming activities with nonmembers? . . . . . . . . . . . . . . . . . . Yes r- No

12 Is the organization a grantor , beneficiary or trustee of a trust or a member of a partnership or other entity

formed to administer charitable gaming? . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes r- No

13 Indicate the percentage of gaming activity operated in

a The organization ' s facility 13a

b An outside facility 13b

14 Enter the name and address of the person who prepares the organization ' s gaming/special events books and records

Name ►

Address ►

15a Does the organization have a contract with a third party from whom the organization receives gaming

revenue? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . r- Yes r- No

b If "Yes," enter the amount of gaming revenue received by the organization ► $ and the

amount of gaming revenue retained by the third party $

c If "Yes," enter name and address of the third party

Name '

Address '

---------------- ------------------------------ ------------------------------ ------------------------------------------------------------ ------------------------------ -

16 Gaming manager information

Name llik^------------ ----------------------- ---------------------- ----------------------- ----------------------- ----------------------- ---------------------- -

Gaming manager compensation ► $ _ --------------------------------------------

Description of services provided---------- ------------------ ------------------ ------------------ ------------------- ------------------ ------------------ ------------------ ----------

r- Director/officer Employee Independent contractor

17 Mandatory distributions

a Is the organization required understate law to make charitable distributions from the gaming proceeds to

retain the state gaming license? . . . . . . . . . . . . . . . . . . . . . . . . . . . . r-Yes r-No

b Enter the amount of distributions required under state law distributed to other exempt organizations or spent

in the organization's own exempt activities during the tax year $

Supplemental Information . Complete this part to provide the explanations required by Part I, line 2b,columns (iii) and (v), and Part III, lines 9, 9b, 10b, 15b, 15c, 16, and 17b, as applicable. Also complete thispart to provide any additional information (see instructions).

IIdentifier Return Reference

IExplanation

Page 311


l efile GRAPHIC print - DO NOT PROCESS As Filed Data - DLN: 93493195012304

SCHEDULE H HospitalsOMB No 1545-0047

(Form 990)201 21- 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


36-4724966

Financial Assistance and Certain Other Community Benefits at CostYes No

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

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

2 If the organization had multiple hospital facilities , indicate which of the following best describes application of thefinancial assistance policy to its various hospital facilities during the tax year

F Applied uniformly to all hospital facilities F Applied uniformly to most hospital facilities

r Generally tailored to individual hospital facilities

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

a Did the organization use Federal Poverty Guidelines ( FPG) as a factor in determining eligibility for providing free care?

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

F 100% F 150% F 200% I_ Other 250 %

b Did the organization use FPG as a factor in determining eligibility for providing discounted care? If "Yes," indicate

which of the following was the family income limit for eligibility for discounted care 3b Yes

F 200% F 250% F 300% F 350% F 400% I_ Other 600 %

c If the organization used factors other than FPG in determining eligibility, describe in Part VI the income basedcriteria for determining eligibility for free or discounted care Include in the description whether the organizationused an asset test or other threshold , regardless of income, as a factor in determining eligibility for free ordiscounted care

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

5a Did the organization budget amounts for free or discounted care provided under its financial assistance policy duringthe 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 Did the organization prepare a community benefit report during the tax year? 6a Yes

b 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

Financial Assistance and (a) Number ofOb Persons ( c) Total communit y Od Direct offsetting (e) Net community benefit (f) Percent of

Means-Testedactivities or served benefit expense revenue expense total expense

Government Programsprograms(optional)

(optional)

a Financial Assistance at cost(from Worksheet 1) . 63,609,641 4,731,402 58,878,239 3 270 %

b Medicaid (from Worksheet 3,column a) . . . 129,577,312 112,988,000 16,589,312 0 920 %

c Costs of other means-testedgovernment programs (fromWorksheet 3, column b)

d Total Financial Assistanceand Means-TestedGovernment Programs 193,186,953 117,719,402 75,467,551 4 190 %

Other Benefitse Community health

improvement services andcommunity benefit operations(from Worksheet 4) . 2,374,500 18,410 2,356,090 0 130 %

f Health professions education(from Worksheet 5) . 62,091,543 9,951,000 52,140,543 2 900 %

g Subsidized health services(from Worksheet 6) . 13,437,164 13,437,164 0 750 %

h Research (from Worksheet 7) 14,150,844 14,150,844 0 790 %

i Cash and in-kindcontributions for communitybenefit (from Worksheet 8) 171,568,474 171,568,474 9 540 %

j Total . Other Benefits . 263,622,525 9,969,410 253,653,115 14 110 0/6

k Total . Add lines 7d and 7j 456,809,478 127,688,812 329,120,666 18 300 0/6

For Paperwork Reduction Act Noticee see the Instructions for Form 990 . Cat N o 50192T Schedule H (Form 990) 2012

Schedule H (Form 990) 2012 Page

Community Building Activities Complete this table if the organization conducted any 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 477,218 477,218 0 030 %

9 Other

10 Total 477,218 477,218 0 030 %

Ill: Bad Debt , Medicare , & Collection PracticesSection 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 Enter the amount of the organization's bad debt expense Explain in Part VI themethodology used by the organization to estimate this amount 2 6,450,651

3 Enter the estimated amount of the organization's bad debt expense attributable topatients eligible under the organization's financial assistance policy Explain in Part VIthe methodology used by the organization to estimate this amount and the rationale, ifany, for including this portion of bad debt as community benefit 3

4 Provide in Part VI the text of the footnote to the organization's financial statements that describes bad debt expenseor the page number on which this footnote is contained in the attached financial statements

Section B. Medicare

5 Entertotal revenue received from Medicare (including DSH and IME) . 5 340,385,000

6 Enter Medicare allowable costs of care relating to payments on line 5 . 6 440,839,613

7 Subtract line 6 from line 5 This is the surplus (or shortfall) . 7 -100,454,613

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 Did the organization have a written debt collection policy during the tax year? .

b If "Yes," did the organization 's collection policy that applied to the largest number of its patients during the tax yearcontain provisions on the collection practices to be followed for patients who are known to qualify for financialassistance? Describe in Part VI 9b Yes. . . . . . . . . . . . . . . . . . . . . . .

Management Comnanies and Joint VenturesrnvunPri ,n° nr mnra hvnfrarc rLrartnrc triictaac kavamnlnvaac and nhvananc-s inctrnrtinncl

(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 Lake Forest Endo LLC Endoscopy Center 30 000 % 70 000 %

2

3

4

5

6

7

8

9

10

11

12

13

Schedule H (Form 990) 2012


Facility Information

Section A . Hospital Facilities 5 s CD

CID {32

-, N

(list in order of size from largest to

(P =

0 T0 CID

smallest-see instructions) CL o 0How many hospital facilities did the 5 (P -0 (organization operate during the tax year? P_ o

2

e3 ^

Name, address, and primary website addressn

- Other (Describe) Facility reporting group

1 Northwestern memorial Hospital251 E Huron

X X X X XChicago,IL 60611www nmh org

2 Northwestern Lake Forest Hospital660 N Westmoreland Road

X X X XLake Forest,IL 60045www I fh o r



Facility Information (continued)Section B. Facility Policies and Practices(Complete a separate Section B for each of the hospital facilities or facility reporting groups listed in Part V, Section A)

Northwestern memorial Hospital

Name of hospital facility or facility reporting group

For single facility filers only: line Number of Hospital Facility (from Schedule H, Part V, Section A)

No

i Health Needs Assessment (Lines 1 through 8c are optional for tax years begining on or before March 23, 2012

During the tax year or either of the two immediately preceding tax years, did the hospital facility conduct a communityhealth needs assessment (CHNA)? If "No," skip to line 9 . . . . . . . . . . . . . . . . . . . 1 Yes

If"Yes," indicate what the CHNA report describes (check all that apply)

a 7 A definition of the community served by the hospital facility

b I Demographics of the community

c 7 Existing health care facilities and resources within the community that are available to respond to the health needs ofthe community

d I How data was obtained

e I The health needs of the community

f 7 Primary and chronic disease needs and other health issues of uninsured persons, low-income persons, and minoritygroups

9 F The process for identifying and prioritizing community health needs and services to meet the community health needs

h F The process for consulting with persons representing the community's interests

i 7 Information gaps that limit the hospital facility's ability to assess the community's health needs

j 7 Other (describe in Part VI)

2 Indicate the tax year the hospital facility last conducted a CHNA 20 13

3 In conducting its most recent CHNA, did the hospital facility take into account input from representatives of the communityserved by the hospital facility, including those with special knowledge of or expertise in public health? If"Yes," describe inPart VI how the hospital facility took into account input from persons who represent the community, and identify thepersons the hospital facility consulted . . . . . . . . . . . . . . . . . . . . 3 Yes

4 Was the hospital facility's CHNA conducted with one or more other hospital facilities? If"Yes," list the other hospitalfacilities in Part VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 No

5 Did the hospital facility make its CHNA report widely available to the public? . . . . . . . . . . . . . 5 Yes

If"Yes," indicate how the CHNA report was made widely available ( check all that apply)

a F Hospital facility's website

b F Available upon request from the hospital facility

c I Other( describe in Part VI)

6 If the hospital facility addressed needs identified in its most recently conducted CHNA, indicate how (check all that applyto date)

a F Adoption of an implementation strategy that addresses each of the community health needs identified through theCHNA

b 7 Execution of the implementation strategy

c F Participation in the development of a community- wide plan

d 1 Participation in the execution of a community -wide plan

e I Inclusion of a community benefit section in operational plans

f 7 Adoption of a budget for provision of services that address the needs identified in the CHNA

g I Prioritization of health needs in its community

h 1 Prioritization of services that the hospital facility will undertake to meet health needs in its community

i 1 Other ( describe in Part VI)

7 Did the hospital facility address all of the needs identified in its most recently conducted CHNA? If"No," explain in Part VIwhich needs it has not addressed and the reasons why it has not addressed such needs . . . . . . . . 7 No

8a Did the organization incur an excise tax under section 4959 for the hospital facility's failure to conduct a CHNA asrequired by section 501( r)(3)? . . . . . . . . . . . . . . . . . . . . . . . . . . . 8a No

b If "Yes" to line 8a, did the organization file Form 4720 to report the section 4959 excise tax? . . . . . . 8b

c If "Yes" to line 8b, what is the total amount of section 4959 excise tax the organization reported on Form 4720 for all of its

hospital facilities? $



Facility Information (continued)

Financial Assistance Policy Yes No

9 Did the hospital facility have in place during the tax year a written financial assistance policy that

Explained eligibility criteria for financial assistance, and whether such assistance includes free or discounted care? 9 Yes

10 Used federal poverty guidelines (FPG) to determine eligibility for providing free care? . . . . . . . . . . . 10 Yes

If "Yes," indicate the FPG family income limit for eligibility for free care 250 %If "No," explain in Part VI the criteria the hospital facility used

11 Used FPG to determine eligibility for providing discounted care? . . . . . . . . . . . . . . . . . 11 Yes

If"Yes," indicate the FPG family income limit for eligibility for discounted care 600 %

If "No," explain in Part VI the criteria the hospital facility used

12 Explained the basis for calculating amounts charged to patients? . . . . . . . . . . . . . . . . . 12 Yes

If"Yes," indicate the factors used in determining such amounts (check all that apply)

a F' Income level

b F' Asset level

c F' Medical indigency

d I Insurance status

e I Uninsured discount

f F' Medicaid/Medicare

g F' State regulation

h I Other (describe in Part VI)

13 Explained the method for applying for financial assistance? . . . . . . . . . . . . . . . . . . . 13 Yes

14 Included measures to publicize the policy within the community served by the hospital facility? . . . . . . . 14 Yes

If"Yes," indicate how the hospital facility publicized the policy (check all that apply)

a I The policy was posted on the hospital facility's website

b I The policy was attached to billing invoices

c I The policy was posted in the hospital facility's emergency rooms or waiting rooms

d I The policy was posted in the hospital facility's admissions offices

e I The policy was provided, in writing, to patients on admission to the hospital facility

f F The policy was available upon request

g I Other (describe in Part VI)

Billing and Collections

15 Did the hospital facility have in place during the tax year a separate billing and collections policy, or a written financialassistance policy (FAP) that explained actions the hospital facility may take upon non-payment? . . . . . . . 15 Yes

16 Check all of the following actions against an individual that were permitted under the hospital facility's policies duringthe tax year before making reasonable efforts to determine the patient's eligibility under the facility's FA P

a F' Reporting to credit agency

b F' Lawsuits

c F' Liens on residences

d F' Body attachments

e ' Other similar actions (describe in Part VI)

17 Did the hospital facility or an authorized third party perform any of the following actions during the tax year beforemaking reasonable efforts to determine the patient's eligibility under the facility's FAP? . . . . . . . . . . 17 No

If"Yes," check all actions in which the hospital facility or a third party engaged

a ' Reporting to credit agency

b F' Lawsuits



e FO ther similar actions (describe in Part VI)




18 Indicate which efforts the hospital facility made before initiating any of the actions listed in line 17 (check all that apply)

a F Notified individuals of the financial assistance policy on admission

b F Notified individuals of the financial assistance policy prior to discharge

c F Notified individuals of the financial assistance policy in communications with the patients regarding the patients' bills

d F- Documented its determination of whether patients were eligible for financial assistance under the hospital facility'sfinancial assistance policy

e I Other (describe in Part VI)

Policy Relating to Emergency Medical Care

Yes No

19 Did the hospital facility have in place during the tax year a written policy relating to emergency medical care that requiresthe hospital facility to provide, without discrimination, care for emergency medical conditions to individuals regardless oftheir eligibility under the hospital facility's financial assistance policy? . . . . . . . . . . 19 Yes

If"No," indicate why

a 1 The hospital facility did not provide care for any emergency medical conditions

b 1 The hospital facility's policy was not in writing

c 1 The hospital facility limited who was eligible to receive care for emergency medical conditions (describe in Part VI)

d 1 Other (describe in Part VI)

Charges to Individuals Eligible for Assistance under the FAP (FAP -Eligible Individuals)

20 Indicate how the hospital facility determined, during the tax year, the maximum amounts that can be charged to FA P-eligible individuals for emergency or other medically necessary care

a F- The hospital facility used its lowest negotiated commercial insurance rate when calculating the maximum amounts thatcan be charged

b F- The hospital facility used the average of its three lowest negotiated commercial insurance rates when calculating themaximum amounts that can be charged

c 1 The hospital facility used the Medicare rates when calculating the maximum amounts that can be charged

d I Other (describe in Part VI)

21 During the tax year, did the hospital facility charge any FAP-eligible individuals to whom the hospital facility providedemergency or other medically necessary services, more than the amounts generally billed to individuals who had insurancecovering such care? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 No

If"Yes," explain in Part VI

22 During the tax year, did the hospital facility charge any FAP-eligible individuals an amount equal to the gross charge for anyservice provided to that individual? . . . . . . . . . . . . . . . . . . . . . . . . . 22 No




Facility Information (continued)Section B. Facility Policies and Practices(Complete a separate Section B for each of the hospital facilities or facility reporting groups listed in Part V, Section A)

Northwestern Lake Forest Hospital

Name of hospital facility or facility reporting group

For single facility filers only: line Number of Hospital Facility (from Schedule H, Part V, Section A)

No

i Health Needs Assessment (Lines 1 through 8c are optional for tax years begining on or before March 23, 2012

During the tax year or either of the two immediately preceding tax years, did the hospital facility conduct a communityhealth needs assessment (CHNA)? If "No," skip to line 9 . . . . . . . . . . . . . . . . . . . 1 Yes

If"Yes," indicate what the CHNA report describes (check all that apply)

a 7 A definition of the community served by the hospital facility

b I Demographics of the community

c 7 Existing health care facilities and resources within the community that are available to respond to the health needs ofthe community

d I How data was obtained

e I The health needs of the community

f 7 Primary and chronic disease needs and other health issues of uninsured persons, low-income persons, and minoritygroups

9 F The process for identifying and prioritizing community health needs and services to meet the community health needs

h F The process for consulting with persons representing the community's interests

i 7 Information gaps that limit the hospital facility's ability to assess the community's health needs

j 7 Other (describe in Part VI)

2 Indicate the tax year the hospital facility last conducted a CHNA 20 13

3 In conducting its most recent CHNA, did the hospital facility take into account input from representatives of the communityserved by the hospital facility, including those with special knowledge of or expertise in public health? If"Yes," describe inPart VI how the hospital facility took into account input from persons who represent the community , and identify thepersons the hospital facility consulted . . . . . . . . . . . . . . . . . . . . 3 Yes

4 Was the hospital facility's CHNA conducted with one or more other hospital facilities? If"Yes," list the other hospitalfacilities in Part VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 No

5 Did the hospital facility make its CHNA report widely available to the public? . . . . . . . . . . . . . 5 Yes

If"Yes," indicate how the CHNA report was made widely available ( check all that apply)

a F Hospital facility's website

b F Available upon request from the hospital facility

c I Other (describe in Part VI)

6 If the hospital facility addressed needs identified in its most recently conducted CHNA, indicate how (check all that applyto date)

a F Adoption of an implementation strategy that addresses each of the community health needs identified through theCHNA

b 7 Execution of the implementation strategy

c F Participation in the development of a community -wide plan

d 1 Participation in the execution of a community- wide plan

e I Inclusion of a community benefit section in operational plans

f 7 Adoption of a budget for provision of services that address the needs identified in the CHNA

g I Prioritization of health needs in its community

h F Prioritization of services that the hospital facility will undertake to meet health needs in its community

i 1 Other ( describe in Part VI)

7 Did the hospital facility address all of the needs identified in its most recently conducted CHNA? If"No," explain in Part VIwhich needs it has not addressed and the reasons why it has not addressed such needs . . . . . . . . 7 No

8a Did the organization incur an excise tax under section 4959 for the hospital facility's failure to conduct a CHNA asrequired by section 501( r)(3)? . . . . . . . . . . . . . . . . . . . . . . . . . . . 8a No

b If "Yes" to line 8a, did the organization file Form 4720 to report the section 4959 excise tax? . . . . . . 8b

c If "Yes" to line 8b, what is the total amount of section 4959 excise tax the organization reported on Form 4720 for all of its

hospital facilities? $




Financial Assistance Policy Yes No

9 Did the hospital facility have in place during the tax year a written financial assistance policy that

Explained eligibility criteria for financial assistance, and whether such assistance includes free or discounted care? 9 Yes

10 Used federal poverty guidelines (FPG) to determine eligibility for providing free care? . . . . . . . . . . . 10 Yes

If "Yes," indicate the FPG family income limit for eligibility for free care 250 %If "No," explain in Part VI the criteria the hospital facility used

11 Used FPG to determine eligibility for providing discounted care? . . . . . . . . . . . . . . . . . 11 Yes

If"Yes," indicate the FPG family income limit for eligibility for discounted care 600 %

If "No," explain in Part VI the criteria the hospital facility used

12 Explained the basis for calculating amounts charged to patients? . . . . . . . . . . . . . . . . . 12 Yes

If"Yes," indicate the factors used in determining such amounts (check all that apply)

a F' Income level

b F' Asset level

c F' Medical indigency

d I Insurance status

e I Uninsured discount

f F' Medicaid/Medicare

g F' State regulation

h I Other (describe in Part VI)

13 Explained the method for applying for financial assistance? . . . . . . . . . . . . . . . . . . . 13 Yes

14 Included measures to publicize the policy within the community served by the hospital facility? . . . . . . . 14 Yes

If"Yes," indicate how the hospital facility publicized the policy (check all that apply)

a I The policy was posted on the hospital facility's website

b I The policy was attached to billing invoices

c I The policy was posted in the hospital facility's emergency rooms or waiting rooms

d I The policy was posted in the hospital facility's admissions offices

e I The policy was provided, in writing, to patients on admission to the hospital facility

f F The policy was available upon request

g I Other (describe in Part VI)

Billing and Collections

15 Did the hospital facility have in place during the tax year a separate billing and collections policy, or a written financialassistance policy (FAP) that explained actions the hospital facility may take upon non-payment? . . . . . . . 15 Yes

16 Check all of the following actions against an individual that were permitted under the hospital facility's policies duringthe tax year before making reasonable efforts to determine the patient's eligibility under the facility's FA P

a F' Reporting to credit agency

b F' Lawsuits



e ' Other similar actions (describe in Part VI)

17 Did the hospital facility or an authorized third party perform any of the following actions during the tax year beforemaking reasonable efforts to determine the patient's eligibility under the facility's FAP? . . . . . . . . . . 17 No

If"Yes," check all actions in which the hospital facility or a third party engaged

a ' Reporting to credit agency

b F' Lawsuits



e FO ther similar actions (describe in Part VI)




18 Indicate which efforts the hospital facility made before initiating any of the actions listed in line 17 (check all that apply)

a F Notified individuals of the financial assistance policy on admission

b F Notified individuals of the financial assistance policy prior to discharge

c F Notified individuals of the financial assistance policy in communications with the patients regarding the patients' bills

d F- Documented its determination of whether patients were eligible for financial assistance under the hospital facility'sfinancial assistance policy

e I Other (describe in Part VI)

Policy Relating to Emergency Medical Care

Yes No

19 Did the hospital facility have in place during the tax year a written policy relating to emergency medical care that requiresthe hospital facility to provide, without discrimination, care for emergency medical conditions to individuals regardless oftheir eligibility under the hospital facility's financial assistance policy? . . . . . . . . . . 19 Yes

If"No," indicate why

a 1 The hospital facility did not provide care for any emergency medical conditions

b 1 The hospital facility's policy was not in writing

c 1 The hospital facility limited who was eligible to receive care for emergency medical conditions (describe in Part VI)

d 1 Other (describe in Part VI)

Charges to Individuals Eligible for Assistance under the FAP (FAP -Eligible Individuals)

20 Indicate how the hospital facility determined, during the tax year, the maximum amounts that can be charged to FA P-eligible individuals for emergency or other medically necessary care

a F- The hospital facility used its lowest negotiated commercial insurance rate when calculating the maximum amounts thatcan be charged

b F- The hospital facility used the average of its three lowest negotiated commercial insurance rates when calculating themaximum amounts that can be charged

c 1 The hospital facility used the Medicare rates when calculating the maximum amounts that can be charged

d I Other (describe in Part VI)

21 During the tax year, did the hospital facility charge any FAP-eligible individuals to whom the hospital facility providedemergency or other medically necessary services, more than the amounts generally billed to individuals who had insurancecovering such care? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 No


22 During the tax year, did the hospital facility charge any FAP-eligible individuals an amount equal to the gross charge for anyservice provided to that individual? . . . . . . . . . . . . . . . . . . . . . . . . . 22 No





Section C. Other Health Care Facilities That Are Not Licensed, Registered , or Similarly Recognized as aHospital Facility(list in order of size, from largest to smallest)

How many non-hospital health care facilities did the organization operate during the tax year?19

Name and address Typ e of Facility ( describe )1 See Additional Data Table

2

3

4

5

6

7

8

9

10



Supplemental Information

Complete this part to provide the following information

1 Required descriptions. Provide the descriptions required for Part I, lines 3c, 6a, and 7, Part II, Part III, lines 4, 8, and 9b, Part V,Section A, and Part V, Section B, lines 1j, 3, 4, 5c, 6i, 7, 10, 11, 12h, 14g, 16e, 17e, 18e, 19c, 19d, 20d, 21, and 22

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

8 Facility reporting group(s). If applicable, for each hospital facility in a facility reporting group provide the descriptions required forPart V, Section B, lines 1j, 3, 4, 5c, 6i, 7, 10, 11, 12h, 14g, 16e, 17e, 18e, 19c, 19d, 20d, 21, and 22

Identifier ReturnReference Explanation

Community benefit Report Schedule H, Part I, Line 6a NORTHWESTERN MEMORIAL HEALTHCARE ANDSUBSIDIARIES (NMHC) SUBMIT A COMMUNITY BENEFITREPORT TO THE ILLINOIS ATTORNEY GENERALACCORDING TO THE REQUIREMENTS FOR THE STATE OFILLINOIS NORTHWESTERN MEMORIAL HOSPITAL'S(NMH),NORTHWESTERN LAKE FOREST HOSPITAL'S (NLFH)ANDLL OTHER NMHC NON-PROFIT SUBSIDIARIES' RESULTSRE INCLUDED IN THIS REPORT A COMPLETE COPY OFHE REPORT IS AVAILABLE ON RE Q UEST

Costing methodology Schedule H, Part I, line 7 HE COST OF financial assistance at cost WAS CALCULATEDBY APPLYING THE TOTAL COST-TO-CHARGE RATIO FROMEACH HOSPITAL'S MEDICARE COST REPORT (CMS 2552-10 WORKSHEET C, PART 1, CONSISTENT WITH THE STATEOF ILLINOIS ATTORNEY GENERAL OFFICE DEFINITION)O THE CHARGES ON ACCOUNTS IDENTIFIED AS

QUALIFYING FOR CHARITY CARE (AS DEFINED IN THEMERICAN INSTITUTE OF CERTIFIED PUBLICCCOUNTANTS ACCOUNTING AND AUDITING GUIDE -

HEALTHCARE ORGANIZATIONS) THE RESULTANTCALCULATED COST WAS THEN OFFSET BY ANY PAYMENTSND/OR CONTRIBUTIONS RECEIVED THAT WERE

DESIGNATED FOR THE PAYMENT OF PATIENT BILLSQUALIFYING FOR A CHARITY CARE DISCOUNT (ASDEFINED IN THE HEALTHCARE FINANCIAL MANAGEMENTASSOCIATION'S PRINCIPLES AND PRACTICES BOARDSTATEMENT 15 VALUATION AND FINANCIAL STATEMENTPRESENTATION OF CHARITY CARE AND BAD DEBTS BYINSTITUTIONAL HEALTHCARE PROVIDERS) THEUNREIMBURSED COST OF BAD DEBT, MEDICAID,MEDICARE OR ANY OTHER FEDERAL, STATE OR LOCALINDIGENT HEALTHCARE PROGRAM IS NOT INCLUDED INHE UNREIMBURSED COST FIGURE FOR CHARITY CAREHE UNREIMBURSED COST OF MEDICAID FOR THE

HOSPITALS WAS CALCULATED BY APPLYING THEHOSPITALS' OVERALL COST-TO-CHARGE RATIOS TOHEIR TOTAL MEDICAID INPATIENT AND OUTPATIENT

CHARGES AND THEN SUBTRACTING PAYMENTS RECEIVEDUNDER THESE PROGRAMS THE COST-TO-CHARGERATIOS ARE ADJUSTED TO EXCLUDE MEDICALEDUCATION AND OTHER COSTS THAT ARE INCLUDEDELSEWHERE ON SCHEDULE H THE UNREIMBURSED COSTOF MEDICAID FOR FISCAL YEAR 2013 IS REDUCED BY$14 8 MILLION OF NET REIMBURSEMENT NMHC RECEIVEDUNDERTHE ILLINOIS HOSPITAL ASSESSMENT PROGRAMhe costs for OTHER BENEFITs WERE CALCULATED

PRIMARILY BASED ON DIRECT COSTING METHODOLOGYCONSISTENT WITH FUNCTIONAL EXPENSE REPORTING INHE FOOTNOTES TO THE AUDITED FINANCIAL

STATEMENTS


Bad Debt expense removed schedule h, part I, line 7 a thru k he amount of bad debt expenses included in Part IX line 25 is$30,719,637 Of this amount $30,652,373 , representing thepatient-related portion of bad debts, is subtracted from totalcosts for calculatin g the p ercenta g es

Subsidized Health Services schedule H , Part I, line 7g HE BENEFITS REPORTED ARE PRIMARILY ASSOCIATEDWITH OPERATING LOSSES SUPPORTING NMH'S MENTALHEALTH PROGRAMS NMHC DOES NOT INCLUDE COSTSTTRIBUTABLE TO PHYSICIAN CLINICS AS SUBSIDIZED

HEALTH SERVICES


Community Building activities schedule H, part II, Description Line Community Training and Education programs at Northwestern

8 Work Force Development Memorial work to ensure that a highly trained healthcareworkforce of adequate capacity is in place to serve theresidents of the region, that at-risk members of the communityhave pathways to jobs in the healthcare system and that theyouth have access to programs that help them learn about andpotentially become interested in healthcare careersNorthwestern Memorial is committed to providing training andemployment opportunities for residents of the community whileaddressing the shortage of healthcare workers through a direct,formal training pipeline Certificate Programs NMH offers 12 to21-month certificate programs in four areas including nuclearmedicine technology, radiation therapy, radiography anddiagnostic medical sonography The programs are available toemployees as well as the general public Many students comefrom the local community as well as from affiliated colleges anduniversities Leaders of these programs visit city high schools,colleges and universities to introduce various medical fields toprospective students and increase their general knowledge ofvarious allied health fields NMH is an important clinical settingfor the education of the next generation of healthcare workers,from physicians to nurses to skilled technicians Throughclinical affiliations with top regional universities and colleges,as well as established clinical rotation, mentoring, clinicianshadowing, traditional didactic lectures and other teachingprograms, NMH provided a clinical setting for education ofhundreds of students, many of whom will become professionalsn fields identified as areas of current or future workforceshortage in the U S healthcare system In fiscal year 2013,NMH provided education to A More than 700 undergraduateand graduate nursing students B 300 students from university-based pharmacy programs C 50 respiratory therapy studentsD 5 graduate social work interns E 4 interns in biomedicalengineering F Students in cardiac rehabilitation, clinical coding,clinical pastoral care, clinical psychology, computedtomography, counseling and human services, exercise andsports sciences, health informatics technology, healthcareresearch, kinesiology, nutrition/dietician services, phlebotomy,physical therapy, physical therapy assistant, occupationaltherapy and occupational therapy aide programs, social work,special care nursery and newborn nutrition, speech therapy andaudiology, ultrasound technology and vascular ultrasoundtechnology on-the-Job Training and Youth Education Programs

Since 1997, NMH has partnered with the CARA program tohelp homeless and other at-risk adults in their efforts toachieve long-term employment success by providing on-the-jobtraining skills that ready them to move into the work force N M Hhas hired more than 120 employees through this partnershipsince it began, including three in fiscal year 2013 B NMHoffers ongoing, comprehensive youth programs that exposeChicago students to potential healthcare careers i For 13years, through the Medical and Health Careers Academy, NMHhas partnered with high schools in the Chicago Public School(CPS) System ii Percy L Julian on the South Side, Roger CSullivan on the North Sid Richard T Crane TechnicalPreparatory on the Near West Side and Dunbar Vocationalcademy on the South Side iii to promote interest in post-high

school education and healthcare careers NMH employeesspeak to the students about theirjobs in healthcare andstudents with their parents visit the hospital, where they havethe opportunity for a behind-the-scenes understanding ofclinical areas and potential careers Through this program, 117high school students visited NMH in fiscal year 2013 iv NMHhas hosted Medical Explorers Post 9766 since 1996 Studentsparticipate in a variety of activities designed to encourage theirexpressed interest in healthcare careers and expose them tothe field The program emphasizes career exploration, life skills,service learning, character development and leadershipStudents participate in tours, hear guest speakers and join indiscussions and projects The program offers internships,mentorship, tutoring, networking, community serviceopportunities and scholarships To date, more than 800 highschool and college students have participated in NMH'sMedical Explorers Post Since the program began, manyMedical Explorers have pursued careers in nursing andmedicine and several are now employed at NMH, including arecent nursing Medical Explorer student who now works in theneonatal intensive care unit v the Cristo Rey InternshipProgram, run collaboratively with the Cristo Rey Jesuit HighSchool in the Pilsen neighborhood on the city's Near West Side,offers students from a primarily Hispanic community anopportunity to work one day a week in an administrative rolewith the Human Resources division or within the InformationServices department at NMH to gain valuable work experienceand learn time management and organizational skills in acorporate setting Nine students participated in this program infiscal year 2013 vi NMH and Feinberg developed theNorthwestern Medicine Scholar's Program at the CPS'sWestinghouse College Preparatory High School, a selectiveenrollment high school located in the Chicago West Sideneighborhood of Garfield Park Through the program, talentedstudents who wish to become physicians or biomedicalresearchers are provided learning opportunities A group ofhigh-achieving high school freshmen are selected each year toparticipate in the four-year program which includes mentoringby senior faculty members, an intensive three-week summerprogram, distance learning, ACT test preparation andeadership and life skills development Eighteen studentsparticipated in fiscal year 2013 vii NLFH staff provide Medicalcareer advisory training at Lake Count High Schools TechnicalCampus for students pursuing careers in healthcare directlyfollowing high school or seeking professional healthcarecareers viii NLFH provides on-site training For physically,mentally and emotionally challenged students learning toperform housekeeping duties in partnership with the SpecialEducation District of Lake County, a cooperative educationalorganization working among 35 school districts in Lake County,Illinois C NMH continues to offer comprehensive internshipsand fellowships for college students and post-graduates i NMHsponsors the INROADS Program, which provides progressiventernships, year-round academic instruction and summerworkshops to prepare minority college students for thecorporate work setting Initially developed under the federalHire the uture program, NMH was the first Chicago hospital toparticipate in this program Students benefit from mentoring andeadership training to prepare them for future positions in ahealthcare career

Bad debt expense footnote Schedule H, part III, Line 4 PART III LINE 2 Patient revenue, net of contractualallowances and discounts, is reduced by the provision for baddebts, and net patient accounts receivable are reduced by anallowance for uncollectible accounts These amounts are basedprimarily on management's assessment of historical andexpected write-offs and net collections, along with the agingstatus for each major payor source Management regularlyreviews data about these major payor sources of revenue inevaluating the sufficiency of the allowance for uncollectibleaccounts Based on historical experience, a portion ofNorthwestern Memorial's self-pay patients who do not qualifyfor charity care will be unable or unwilling to pay for the servicesprovided Thus, a provision is recorded for bad debts in theperiod services are provided related to these patients After allreasonable collection efforts have been exhausted inaccordance with Northwestern Memorial's policies, accountsreceivable are written off and charged against the allowance foruncollectible accounts


Medicare shortfall Schedule H , part III, line 8 HE UNREIMBURSED COST OF MEDICARE IS DEFINED BYHE STATE OF ILLINOIS ATTORNEY GENERAL'S OFFICENNUAL NONPROFIT HOSPITAL COMMUNITY BENEFITS

PLAN REPORT AS A COMMUNITY BENEFIT THEHEALTHCARE FINANCial MANAGEMENT ASSOCIATIONLSO VIEWS THE UNREIMBURSED COSTS OF MEDICARES PART OFA HOSPITAL'S COMMUNITY BENEFIT

PROGRAM NMHC PROVIDES MEDICAL CARE TOMEDICARE PATIENTS AT A COST HIGHER THAN THEREIMBURSEMENT IT RECEIVES FROM MEDICARE THEMOUNTS LISTED FOR PART III, LINES 5 THRU 7, ARE

CALCULATED CONSISTENT WITH THE METHODOLOGYDESCRIBED FOR CALCULATING UREIMBURSED COST OFMEDICAID FOR FISCAL 2013

Financial Assistance collection Schedule H, part III, line 9b NMHC's Credit and Collection Policy contains a provision forpractices financial counseling tHE POLICY STATES THAT patients with

self-pay balances and without the resources to pay theirobligations will be assessed FOR FREE AND DISCOUNTEDCARE eligibility By the Financial Counseling Departments Theassessment involves an evaluation of all levels of assistanceincluding governmental assistance, extended pay alternatives,and free or discounted care If THE PATIENT QUALIFIES FORfree care , THE ACCOUNT IS ADJUSTED TO ZERO SO NOCOLLECTION ACTIVITY OCCURS If financial assistanceresults in a discounted or reduced balance, only the reducedbalance will be subject to the collection practices


NMH Community Health Needs Schedule H, Part V, Section B, Line 1 he CHNA report also describes Background of NM H, NMHssessment (CHNA) Charity Care, NMH Mission, Providing and Ensuring Access to

Care, CHNA Goals and Objectives, Public Dissemination, andDevelo p ment of the Im p lementation Plan

NMH CHNA Community Schedule H, Part V, Section B, Line 3 As part of the CHNA, four focus groups were held among keyRepresentatives stakeholders representing public health, physicians, other

healthcare professionals, social service providers and othercommunity leaders from throughout Chicago Potentialparticipants were chosen because of their ability to identifyprimary concerns of the populations with whom they work, aswell as of the community overall Focus group candidates werefirst contacted by letter to request their participation Follow-upphone calls were then made to ascertain whether or not theywould be able to attend Audio from the focus group sessionswas recorded Findings from the focus group representqualitative rather than quantitative data The group wasdesigned to gather input from participants regarding theiropinions and perceptions of the health of the residents in thearea Thus, these findings are based on perceptions, not factsIn total, focus groups held as part of this CHNA incorporatedinput form 26 key informants (or community stakeholders), withspecial emphasis on persons who work with or have specialknowledge about vulnerable populations in South Chicago,North Chicago, Downtown/West Chicago, as well as throughoutCook County, including low-income individuals, minoritypopulations, those with chronic conditions and other medicallyunderserved residents To ensure that organizations impactinghealth in Chicago were meaningfully engaged in reviewing andinterpreting the findings of the CHNA, developing prioritiesamong the identified needs and forming a collaborative plan toaddress the top priority needs, a steering committee (theExternal Steering Committee) was established and maintainedMembers include representatives of 1 Chicago Department ofPublic Health 2 CommunityHealth (Chicago's largest freehealth clinic) 3 Consortium to Lower Obesity in ChicagoChildren 4 Erie Family Health Center (Federally QualifiedHealth Center) 5 Greater Humboldt Park Community DiabetesEmpowerment Center 6 Kelly Hall YMCA 7 Near North HealthServices Corporation (Federally Qualified Health Center) 8United Way of Chicago 9 West Humboldt Park DevelopmentCouncil


NMH CHNA Making available to the Schedule H, Part V, section B, line 5c ln addition to providing the CHNA report on the websitepublic Other ( http //www nmh org / nm/Community-Health-Needs-

ssessment ), and making it available to the public upon request,the CHNA report was also provided to a variety of communitypartners , including a Key Community Organizations b NMHInternal & External Steering Committee Members cNorthwestern University Institute of Public Health dNorthwestern Medicine Leadershi p

NMH CHNA NON - Addressed Needs schedule H, Part V, section B, line 7 he CHNA report completed in August 2013 identified areas ofopportunity for health improvement for which NMH and itsExternal Steering Committee determined it would not prepare animplementation plan and strategy These areas of opportunityand the reasons for not addressing are below Chronic KidneyDisease (Kidney Disease Deaths) NMH provides clinicalservices to treat chronic kidney disease The External SteeringCommittee recommended focusing efforts on other healthconditions for which NMH could have a greater impact FamilyPlanning (Births to U nwed M others, Births to Teens) N M Hprovides a comprehensive range of outpatient and inpatientservices to expectant women and teens, including familyplanning services N M H will continue to sustain these servicesand work to strengthen community-based medical homes wherefamily planning services can be conveniently accessed HIV( HIV/AIDS Deaths ) NMH provides clinical services to treatchronic HIV /AIDS and collaborates with Feinberg in conductingresearch to better prevent, detect and treat HIV/AIDS TheExternal Steering Committee recommended focusing efforts onimproving access to medical homes , where access to theseservices can be effectively coordinated Maternal, Infant andChild Health (Lack of Prenatal Care, Low Birth Weight, InfantMortality) NMH provides a comprehensive range of outpatientand inpatient services to expectant women and teens NMH willcontinue to sustain these services The External SteeringCommittee recommended that NMH focus on strengthening andimproving access to medical homes, where access to theseservices and other prenatal care can be effectively coordinatedOral Health (Recent Dental Care (Adults)) NMH does notprovide office - based dental care services Respiratory Disease( Pneumonia/Influenza Deaths, Pneumonia Vaccinations (65+),Prevalence ofAsthma ( Adults ), Tuberculosis Incidence) NMHprovides clinical services to treat pneumonia, asthma andtuberculosis The External Steering Committee recommendedthat NMH focus on strengthening and improving access tomedical homes, where preventive care and screening servicescan be effectively coordinated and access to medicallynecessary specialty care can be facilitated Sexuallyransmitted Diseases ( Gonorrhea Incidence, Syphilis

Incidence, Chlamydia Incidence ) The External SteeringCommittee recommended that NMH focus on strengthening andimproving access to medical homes, where counseling onprevention and screening for disease can be effectivelycoordinated and access to medically necessary specialty carecan be facilitated Substance Abuse (Cirrhosis / Liver DiseaseDeaths, Binge Drinking, Illicit Drug Use ) The External SteeringCommittee recommended focusing efforts on other healthconditions for which N M H could have a greater impact TobaccoUse (Exposure to Environmental Tobacco Smoke) NMHsupports public policies aimed at reducing tobacco use TheExternal Steering Committee recommended focusing efforts onother health conditions for which NMH could have a greaterimpact Vision (Blindness/Uncorrectable Vision Problems) TheExternal Steering Committee recommended that NMH focus onstrengthening and improving access to medical homes, whereprimary vision screenings can be effectively and convenientlyprovided The External Steering Committee recommendedfocusing efforts on other health conditions for which NMH couldhave a greater impact Many health organizations in Chicagowere identified as providers of services to treat these healthneeds (see CHNA Report)


NLFH Community Health Needs Schedule H, Part V,Section B, Line 1 he CHNA report also describes Background of NLFH,ssessment (CHNA) Providing Access to Care, CHNA Goals and Objectives, Public

Dissemination, Information on NLFH's Committee Partners, andDevelo p ment of the Im p lementation Plan

NLFH CHNA Community Schedule H, Part V,Section B, Line 3 As part of the CHNA, a focus group was held among keyRepresentatives stakeholders including representatives from public health and

social service providers A list of recommended participants forthe NLFH focus groups was provided by NLFH Potentialparticipants were chosen because of their ability to identifyprimary concerns of the populations with whom they work, aswell as of the community overall Participants included arepresentative of public health, as well as several individualswho work with low-income, minority or other medicallyunderserved populations, and those who work with persons withchronic disease conditions Focus group candidates were firstcontacted by letter to request their participation Follow-upphone calls were then made to ascertain whether or not theywould be able to attend Audio from the focus group sessionswas recorded Findings from the focus group representqualitative rather than quantitative data The group wasdesigned to gather input from participants regarding theiropinions and perceptions of the health of the residents in thearea Thus, these findings are based on perceptions, not factsTo ensure that organizations impacting health in Lake Countywere meaningfully engaged in reviewing and interpreting thefindings of the CHNA, developing priorities among the identifiedneeds and forming a collaborative plan to address the toppriority needs, a steering committee (the External SteeringCommittee) was established and maintained Members includerepresentatives of 1 HealthReach (Free Health Clinic) 2 LakeCounty Council for Seniors 3 Lake County Health Department4 Lake Forest High School and District 39 5 Mano a ManoFamily Resource Center


NLFH CHNA Making available to Schedule H, Part V, section B, line In addition to providing the CHNA report on the websitethe public Other 5c (http //www lfh org/community_health_needs_assessment), and

making it available to the public upon request, the CHNA reportwas also provided to a variety of community partners, includinga Key Community Organizations b NLFH Internal & ExternalSteering Committee Members c Northwestern UniversityInstitute of Public Health d Northwestern Medicine Leadership

NLFH CHNA NON-Addressed schedule H, Part V, section B, line 7 he CHNA report completed in August, 2013 identified threeNeeds areas of opportunity for health improvement for which NLFH and

its External Steering Committee determined it would not preparean implementation plan and strategy These areas of opportunityand the reasons for not addressing are below Chronic KidneyDisease (Kidney Disease Deaths) Although NLFH has clinicalservices available to treat kidney disease, the External SteeringCommittee recommended that NLFH focus its efforts on healthneeds for which it could have a greater public health impactChronic Pain (Chronic Neck Pain) Although NLFH has clinicalservices available to treat chronic neck pain, the ExternalSteering Committee recommended that NLFH focus its efforts onhealth needs for which it could have a greater public healthimpact Dementias, Including Alzheimer's Disease AlthoughNLFH has clinical services available to treat dementia, theExternal Steering Committee recommended that NLFH focus itsefforts on health needs for which it could have a greater publichealth impact Many health organizations in Lake County wereidentified as providers of services to treat these health needs(see CHNA Report)


mounts Charged to patients Schedule H, Part V, schedule B, Line other variables used to determine amounts charged to patients

12h, Other included state of residency, family size, extenuatingcircumstances and medicall y necessary services

Publicizing Policy Schedule H, Part V, Line 14g, Other Summary brochure was available at check-in


actions taken Schedule H, Part V, Line 18e, Other NMH/NLFH made no such efforts

Determination of FAP eligible Schedule H, Part V, Line 20d, Other he maximum amount that can be charged to FAP-eligiblecharges individuals is dependent upon their household income level and

family size Emergency or other medically necessary care forindividuals with household income up to 250% of the publishedfederal poverty income levels (FPL) is provided at no chargeCare for individuals with family income from 251% to 600% ofthe FPL is charged at the approximate cost of the careprovided, with the cost calculation based on the annual filedMedicare Cost Report In addition, the FAP for NMHC hasprovisions to address catastrophic care situations Paymentsunder the NM HC FAP shall not exceed 21% of the patient'sannual household income, for patients under 600% of FPL, andshall not exceed 35% of the patient's household income forqualifying patients above 600% of FPL primary care providersthat can serve as their medical home


Community Information Schedule H, Part VI, Line 4 Northwestern Memorial's patient care, education and researchprograms provide broad benefit to Chicago, the region,nationally and internationally Patient care is provided at bothNMH and at NLFH, each serving surrounding regions NMHdivides its total service area into three geographic areas theprimary service area (PSA), the city of Chicago and thesurrounding seven-county area The PSA, which is defined bythe 22 zip codes surrounding NMH, accounts for 39 percent ofinpatient admissions The city of Chicago in total accounts for66 percent of inpatient admissions The community in NMH'sPSA has a large and growing population and it is important forus to continue to grow so that we can continue to providequality healthcare services, especially those only available inan AMC environment Between 2013 and 2018, the populationin NMH's PSA is projected to increase by 3 1 percent, and thepopulation of Chicago is projected to increase by 0 9 percentChicago is a diverse city, with a large African Americanpopulation and growing Latino and Asian populationsNorthwestern Memorial is committed to providing culturallycompetent care that is responsive to the needs of all ourpatients NMH has worked with community health centers insome of Chicago's medically underserved areas to identifypriority health concerns and jointly develop community-basedhealth initiatives designed to address healthcare disparitiesamong people living in the community NLFH primarily servesLake County Lake County is defined by 28 zip codes andaccounts for 90 percent of inpatient admissions at NLFH Ofthe approximately 702,000 residents in the county , anestimated 78,000 under the age of 65 are uninsured and morethan 79,000 live in poverty Lake County's population isgrowing Between 2013 and 2018, the population of LakeCounty is p ro j ected to increase b y 1 1 p ercent

Promotion of Community health schedule H, Part VI, Line 5 Objective As an academic medical center hospital, NMHvalues continual learning and innovation among itsadministrative as well as clinical staff NMH seeks out andsupports opportunities to share its knowledge as well astangible resources with safety-net hospitals and not-for-profitproviders of health and social services in Chicago andelsewhere Donation of Furniture and Equipment In fiscal year2013, Northwestern Memorial donated furniture and equipmentthat would have cost more than $100,000 if purchased newfrom a physician practice office to a local community healthcareorganization Chicago Cares In fiscal year 2013, NorthwesternMemorial served as corporate sponsor for the 19th AnnualChicago Cares Serve-a-Thon At the event, more than 700NMH and NLFH employees and their family members donatedpersonal time to volunteer work in general maintenance,construction and painting in public school campuses citywideSupporting Lambs Farm More than 160 NLFH employees andtheir families participated in a day of service at Lambs Farm, anot-for-profit organization that provides residence, vocationalservices, employment and support to adults with developmentaldisabilities in Lake County, Illinois The families helped withpainting and landscaping services Objective NorthwesternMemorial seeks and maintains strong relationships with localresidents, business leaders and community serviceorganizations in the area immediately surrounding the NMHmedical campus These relationships help to ensure that N M Haddresses its responsibility to provide healthcare services toits campus neighbors - not only residents, but also a largenumber of hotels, commercial properties and businesses thatserve many thousands of visitors and tourists within blocks ofthe medical campus every day NMH works to be a goodneighbor in the community by participating in local activitiesand keeping residents and businesses informed about hospitalprograms and new developments that have an impact on thesurrounding neighborhoods Similarly, NLFH activelyparticipates in a broad range of initiatives that benefit localcommunities throughout Lake County, ranging from communityprograms like stroke awareness education and obesityprevention to affordable workforce housing and bike helmetsafety Northwestern Memorial actively seeks partners amongthe Chicago business community to join in health promotionand awareness initiatives Members of Northwestern Memorial'sleadership team serve on boards and advisory boards of localcommunity health organizations, including but not limited toNear North, Erie, HealthReach, University HealthSystemConsortium, the Illinois Hospital Association, the Institute ofMedicine of Chicago, the Metropolitan Chicago HealthcareCouncil, the American Orthopaedics Association and othersMembers of Northwestern Memorial's senior management teamalso hold leadership positions or memberships with significantcivic organizations such as the United Way of MetropolitanChicago, World Business Chicago, the Business LeadershipGroup for Workforce Chicago 2 0, Greater North MichiganAvenue Association, Streeterville Chamber of Commerce, TheCommercial Club of Chicago, the Economic Club of Chicago,the Chicagoland Chamber of Commerce, the Lake Forest/LakeBluff Chamber of Commerce, Susan G Komen Race for a Cure,and the American Cancer Society of Lake County NorthwesternMemorial's employees generously support a wide range ofcauses, including participating in blood drives and raising fundsfor the United Way, March of Dimes, walks to raise funds forcauses such as cancer research and AIDS and NMH's Adopt-a-School program Northwestern Memorial actively participatesin planning initiatives that impact the broader community, suchas transit and transportation planning in the downtown Chicagocentral area NMH also participates in local neighborhooddevelopment planning to ensure that development in the southarea of Streeterville, which includes the medical campus, isconsiderate of Streeterville residents and keeps them informed


affilated health care system Schedule H, part VI, Line 6 As described throughout this Form 990, the subbordinatesreported in this group return are all part of NorthwesternMemorial HealthCare The community benefit plan, describedearlier in Schedule H, gives details about each subbordinate'srespective role in promoting the health of the communities weserve

STATE FILING OF COMMUNITY 990 SCHEDULE H, PART VI IL,BENEFIT REPORT

Additional Data

Software ID:

Software Version:

EIN: 36-4724966


Form 990 Schedule H, Part V Section C. Other Facilities That Are Not Licensed, Registered, or SimilarlyRecognized as a Hospital Facility

Section C. Other Health Care Facilities That Are Not Licensed , Registered , or Similarly Recognized as aHospital Facility(list in order of size, from largest to smallest)

How many non-hospital health care facilities did the organization operate during the tax year?19

Name and address Type of Facility (describe)NMPG - Streeterville Obstetrics and Gyne outpatient clinic680 N Lake Shore Drive Ste 810chicago,IL 60611

NMPG - Lincoln Park SoNo outpatient clinic1460 N Halsted Ste 203 502 504chicago,IL 60611

NMPG -Lakeview outpatient clinic1333 W Belmont Suite 100 200chicago,IL 60657

NMPG - Northwestern Memorial Hospital outpatient clinic201 E Huron 12th Floorste 105chicago,IL 60611

NMPG - Loop outpatient clinic20 S Clark Street 11th Floorchicago,IL 60603

NMPG - Northwestern Integrative Medicine outpatient clinic150 E Huron Street Ste 1100chicago,IL 60611

NMPG Deerfield outpatient clinic350 s waukegandeerfield,IL 60015

NMPG - Corporate Health and Travel Medic outpatient clinic676 N Saint Clair St Ste 900chicago,IL 60611

Northwestern Executive Health outpatient clinic676 N St Clair St Suite 2200chicago,IL 60611

NMPG Libertyville outpatient clinic1800 Hollister Drive Ste 610Libertyville,IL 60048

NMPG Bucktown IM Office outpatient clinic1913 W North Avenuechicago,IL 60611

NMPG - Highland Park outpatient clinic600 Central Suite 333Highland Park,IL 60035

NMPG Grayslake outpatient clinic1275 E Belvidere Road Suite 250Grayslake,IL 60030

NMPG - Lake Forest outpatient clinic800 N Westmoreland Road ste 201Lake Forest,IL 60045

NMPG Hospitalist & Health North outpatient clinic660 N Westmoreland RoadLake Forest,IL 60045

N MPG 0 B triage outpatient clinicPrentice womens Hospital 251 E hurchicago,IL 60611

NMPG-Evanston outpatient clinic1704 Maple Suite 100 200Evanston,IL 60201

NMPG GLenviewCenter outpatient clinic2501 Compass road ste 105glenview,IL 60026

NMPG Follow UP Clinic outpatient clinic676 N St Clair Suite 701Chicago,IL 60611

efile GRAPHIC print - DO NOT PROCESS I As Filed Data - I DLN: 93493195012304

Schedule I OMB No 1545-0047

(Form 990) Grants and Other Assistance to Organizations,2012Governments 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

Northwestern Memorial Healthcare Group36-4724966

JL^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. Part II can be duplicated if additional space is needed.

(a) Name and address of (b) EIN (c) IRC Code (d) Amount of cash (e) Amount of non- (f) Method of (g) Description of (h) Purpose of grantorganization section grant cash valuation non-cash assistance or assistance

or government if applicable assistance (book, FMV,appraisal,

other)


2 Enter total number of section 501(c)(3) and government organizations listed in the line 1 table . ► 15

3 Enter total number of other organizations listed in the line 1 table .

For Paperwork Reduction Act Notice, see the Instructions for Form 990 . Cat No 50055P Schedule I (Form 990) 2012

Schedule I (Form 990) 2012 Pa g e 2Grants and Other Assistance to Individuals in the United States . Complete if the organization answered "Yes" to Form 990, Part IV, line 22.Part III can be duplicated if additional space is needed.

(a)Type of grant or assistance (b)N umber of (c)Amount of (d)Amount of (e)Method of valuation (book, (f)Description of non-cash assistancerecipients cash grant non-cash assistance FMV, appraisal, other)

(1) Employees Crisis Assistance 31 44,499


Monitoring use of Grant Form 990, Schedule I, Question THE MAJORITY OFTHE GRANTS FROM THE NORTHWESTERN MEMORIAL HEALTHCARE GROUP ARE ADMINISTEREDfunds 2 THROUGH NORTHWESTERN MEMORIAL FOUNDATION ("NMF") NMF MAINTAINS DETAILED RECORDS AND

INTERNAL CONTROL PROCEDURES TO ENSURE GRANT RECIPIENTS ARE QUALIFIED, AWARD AMOUNTS AREDOCUMENTED AND SELECTION CRITERIA ARE CLEAR ONCE A GRANT HAS BEEN AWARDED, NMF INITIATES AWRITTEN AGREEMENT WITH THE GRANT RECIPIENT THAT INCORPORATES A BUDGET AND TIME PERIOD FORSPENDING THE GRANT DOLLARS REASONABLE DIRECT COSTS, SUPPORTED BY DIRECT BUDGET JUSTIFICATIONAND RELATED TO THE PROJECT'S PURPOSE, ARE ALLOWABLE RECIPIENTS AGREE TO ABIDE BY THE BUDGET ANDALL RELEVANT POLICIES IN EFFECT AT NORTHWESTERN MEMORIAL HEALTHCARE GRANT EXPENDITURES AREMONITORED FOR COMPLIANCE WITH THEIR RESPECTIVE AGREEMENTS, AT LEAST ONCE A YEAR TO ENSURETHAT BUDGETS ARE FOLLOWED AND EXPENSES ARE APPROPRIATE AT THE END OF EACH BUDGET PERIOD, NMFREQUIRES THE GRANT RECIPIENT TO SUBMIT A WRITTEN NARRATIVE AND FINANCIAL REPORT OUTLININGPROJECT ACCOMPLISHMENTS AND HOWTHE GRANT DOLLARS WERE EXPENDED UNEXPENDED FUNDS ARERETURNED TO NMF GRANTS PROVIDED BY NORTHWESTERN MEMORIAL HOSPITAL AND NORTHWESTERN LAKEFOREST HOSPITAL TO OTHER QUALIFYING TAX-EXEMPT ORGANIZATIONS ARE SUPPORTED BY A GRANTAGREEMENT THAT DEFINES ANY RESTRICTIONS ASSOCIATED WITH THE GRANT AND ANY RELATED REPORTINGREQUIREMENTS

Schedule I (Form 990) 2012

Complete this part to provide the information required in Part I, line 2, Part III, column (b), and any other additional information

Additional Data

Software ID:

Software Version:

EIN: 36-4724966


Form 990,Schedule I, Part II, Grants and Other Assistance to Governments and Organizations in the United States

Return to Form

(a) Name and address of (b) EIN (c) IRC Code section (d) Amount of cash (e) Amount of non- (f) Method of (g) Description of (h) Purpose of grantorganization if applicable grant cash valuation non-cash assistance or assistance

or government assistance (book, FMV, appraisal,other)

Northwestern University750 36-2167817 501 c 3 181,081,779 Research supportN Lake Shore DriveChicago,IL 60611

Northwestern Medical 36-3097297 501 c 3 6,675,548 fellowshipsFaculty Foundation680 NLake Shore DriveChicago,IL 60611




Near North Health Services 36-3197647 501 c 3 310,000 Operating supportCorporation1276 N ClybournChicago,IL 60610

Erie Family Health Center 36-3088628 501 c 3 275,000 Operating support1701 W SuperiorChicago,IL 60622




YMCA of Metropolitan 36-2179782 501 c 3 236,537 Operating supportChicago824 N HamlinChicago,IL 60651

Community Health2611 West 36-3831791 501 c 3 125,000 Research supportChicago AvenueChicago,IL 60622




Evans Scholars Foundationl 36-3538303 501 c 3 125,000 operating supportBriar RdGolf,IL 60029

Sinai Urban Health Institute 36-3166895 501 c 3 75,000 Research supportCalifornia Avenue at 15thStreet- RoChicago,IL 60608




Cease Fire1603 Taylor 37-6006007 501 c 3 65,000 Operating supportStreetChicago,IL 60612

HealthReach Incorporated 36-3816410 501 c 3 55,000 Operating support1800 Grand Avenuewaukegan,IL 60085




Chicago Cares2 N Riverside 36-3777709 501 c 3 25,000 Operating supportPlazA STE 2200Chicago,IL 60606

American Cancer Society 13-1788491 501 c 3 13,247 Operating support250 Williams Street NWAtlanta, GA 30303




American Diabetes 13-1623888 501 c 3 7,500 Operating supportAssociation55 E Monroe StSTE 3420Chicago,IL 60603

Bears Care1000 Football 36-3931105 501 c 3 5,500 OPERATINGDrive SUPPORTLake Forest,IL 60045


(a) Name and address oforganization

or government

Ann & Robert H Luriechildren's Hospital of chicag255 e Chicago aveChicago,IL 60611

(b) EIN (c ) IRC Code section (d) Amount of cashif applicable grant

36-2170833 501 c 3 5,028

(e) Amount of non- (f) Method of (g) Description of (h) Purpose of grantcash valuation non-cash assistance or assistance

assistance ( book, FMV, appraisal,other)

OPERATINGSUPPORT


Schedule J Compensation Information OMB No 1545-0047

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

2012Compensated Employees1- 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



36-4724966

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

1 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 F 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 or provision of all of 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 all officers,directors, trustees, and the CEO/Executive Director, regarding the items checked in line la? 2 Yes

3 Indicate which , if any, of the following the filing organization used to establish the compensation of theorganization 's CEO/Executive Director Check all that apply Do not check any boxes for methodsused by a related organization to establish compensation of the CEO/Executive Director, but explain in Part III

F Compensation committee F Written employment contract

F Independent compensation consultant F Compensation survey or study

F Form 990 of other organizations F 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? 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 Yes

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 Yes

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 Yes

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 Regulations 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 Paperwork Reduction Act Notice, see the Instructions for Form 990. Cat No 50053T Schedule 3 ( Form 990) 2012

Schedule J (Form 990) 2012 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 VIINote . The sum of columns (B)(1)-(iii) for each listed individual must equal the total amount of Form 990, Part VII, Section A, line la, applicable column (D) and (E) amounts for that individual

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

(i) Base (ii) Bonus & (iii) Other other deferred benefits columns reported as deferred

compensationincentive reportable compensation (B)(i)-(D) in prior Form 990

compensation compensation


Schedule 3 (Form 990) 2012

Schedule J (Form 990) 2012 Page 3

Supplemental InformationComplete this part to provide the information, explanation, or descriptions required for Part I, lines la, 1b, 3, 4a, 4b, 4c, 5a, 5b, 6a, 6b, 7, and 8, and for Part IIAlso complete this part for any additional information

I Identifier I Return Reference I Explanation

NON FIXED PAYMENTS FORM 990 SCH J PART I QUEStion The bonus and incentive compensation amounts listed in column (B)(ii) for all listed individuals were nonfixed7 amounts All incentive compensation amounts are at risk and are not paid unless there is exceptional individual and

organizational performance in accordance with substantial pre-approved goals

SUPPLEMENTAL NO NQUALIFIED FORM 990 SCHEDULE J PART I There are two different nonqualified deferred compensation plans sponsored by Northwestern Memorial Healthcare,RETIREMENT PLAN QUESTION 4 b which provide supplemental, competitive retirement benefits The employer pays the cost of participation, and the

benefits and contributions are subject to a substantial risk of forfeiture based on the completion of substantialservice requirements The amounts earned by participants fluctuate from year to year based on factors such as achange in market interest rates Daniel derman and dean Harrison completed their substantial service requirementsduring the reporting period resulting in "other reportable compensation" that consists largely of amounts reported inprior form 990s Participants in one or both of the plans who are listed on the schedule are Julia Creamer, DeanHarrison, Michelle Janney, Dean Manheimer, Thomas McAfee, Peter McCanna, Daniel Derman, Stephen Falk, CarolLind, Dennis Murphy, Charles Watts, Douglas Young and Timothy Zoph

Contingent Compensation Schedule J part I lines 5a and 6a 5a Revenue Certain listed individuals, namely Michael Ruchim, Daniel Derman, Jeffery Kopin, Peter Lechman andScott Moses are also employed as physicians The compensation listed in Schedule J is provided solely inconnection with their employment as physicians, and is in part based on revenues associated with their personallyperformed services 6a Net earnings Certain listed individuals, namely Michael Ruchim, Peter Lechman, and ScottMoses are also employed as physicians The compensation listed in Schedule J is provided solely in connectionwith their employment as physicians, and may include a bonus that is in part based on achievement of practice netearnings as a result of their personally performed professional services Any such bonus is capped and representsno more than a modest percentage of each such physician's total compensation

severance Question 4 a during fiscal 2013, Charles Watts received severance from NMHC in the amount of$ 516,997 and MatthewKoschmann received $ 129,907 from NLFH

health club dues schedule J, part 1, question 1 Employees of Northwestern Lake Forest Hospital are offered discounted health and fitness club dues at Lake ForestHealth and Fitness Institute The amount of the discount is treated as taxable income for each of the employees

Group Titles and Compensation Schedule J, part II Northwestern Memorial HealthCare (NMHC), is the direct parent organization for Northwestern Memorial HospitalPresentation (NMH), Northwestern Memorial Foundation (NMF), and Northwestern Lake Forest Hospital (NLFH) NMHC is also

the indirect parent for Northwestern Memorial Physicians Group (NMPG), and Lake Forest Health and FitnessInstitute (HFI) These six corporations have combined through the election under Regulation 1 6033-2 (d) (5) toreport the directors, officers, key employees and five highly compensated employees under the Group Returnrequirements for Form 990 for the fiscal year ended 8/31/2013 No organization in this Group Return compensatesits directors for services performed as directors Where compensation is reported for a director, the compensationis associated with another position held within the six corporations Certain individuals hold multiple positionsthroughout these six corporations In order to simplify the reporting, their names are listed only once per Form 990,Part VII and Schedule J Each individual listed has his or her organization's initials listed next to their respectivename and the box checked for their position at that corporation Additional director or officer positions held by eachindividual are noted below Thomas A Cole is the Chair and Director for NM H John A Canning JR is the Vice-Chairand Director for NM H Kent P Dauten is the Chair for NMF Dean M Harrison is director, President and CEO ofNMHC and nmh and the CEO and a Director of NM F and NLFH Gary A Noskin MD is a Director of NM H Robert LParkinson JR is the Chair of NLFH Homi P Patel is a Director of NLFH Maria C Bechily is a director of NLFH DanielM Derman MD is the President of NMPG Dennis M Murphy is the Executive Vice President of NM HC, and anExecutive Vice President and the Chief Operating Officer of NM H, as well as Chair of NMPG Douglas M Young isTHE INTERIM cfO AND TREASURER OF nmhc, nmh and nmf, TREASURER OF nlfh and Assistant Treasurer ofNMH, NM F, and NLFH Secretary & Assistant Treasurer of NM PG, and Treasurer of hfi Stephen C Falk is Presidentof NMF Thomas a McAfee is the President of NLFH, as well as the chair, a director and the president of hfi PeterJMcCanna is the Executive vice president administrative CFO &Treasurer ofNMH as well as the CFO & Treasurer ofNMF, the Treasurer of NMPG & NLFH Carol L Lind is the Senior Vice President Senior Counsel & Secretary of NMHand the Secretary of NMF and NLFH Francis d fraher is the ASSISTANT TREASURER OF nmh, nmF AND nlfhJennifer S Wooten is the Assistant Secretary of NMH Matthew) Flynn is Senior VP, CFO, & Assistant Secretary ofNLFH as well as secretary ofHFI Nancy W SassowerMD is a director of NM F, and is also compensated by NM H fora non-director position The following are Directors per the listed corporations, they are not compensated asDirectors or Officers of any entities, Earl J Barnes, Jeffery D Kopin MD, Peter A Lechman MD, Nancy W SassowerMD, MICHAEL A RUCHIM MD and GARY A NO SKIN MD The compensation disclosed for Jane Griffin and MarshaOberrieder is not paid to them as former key employees of NLFH The compensation is provided solely inconnection with their ongoing employment as executive employees of Northwestern Lake Forest Hospital

Schedule 3 (Form 990) 2012

Additional Data

Software ID:

Software Version:

EIN: 36-4724966


Form 990, Schedule J, Part II - Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees

Return to Form

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

(ii) Bonus & compensation benefits (B)(i)-(D) reported in prior Form

(i) Base (iii) Other 990 or Form 990-EZ

Compensationincentive

compensationcompensation

DEAN M HARRISON (1) 1,138,382 984,500 1,366,120 413,605 34,041 3,936,648 644,520NMHC (u)

STEPHEN C FALK NMF (i) 328,219 121,500 128,396 25,613 21,951 625,679 0

MICHAEL A RUCHIM (i) 545,223 75,000 52,583 23,512 25,278 721,596 0MD NMF (ii)

Thomas J McAfee NLFH (1)

(11)

473,831 311,800 44,695 257,257 32,995 1,120,578 0

Dennis M Murphy (1) 602,669 415,700 50,514 159,815 38,208 1,266,906 0NMPG (ii)

Daniel M Derman MD (i) 359,049 155,800 346,301 -38,747 42,938 865,341 169,967NMPG (ii)

Jeffrey D Kopin MD (1) 373,076 125,000 22,830 7,500 25,724 554,130 0NMPG (ii)

PeterA Lechman MD (1) 359,107 20,000 34,471 7,500 25,430 446,508 0NMPG (ii)

Dean L Manheimer (i) 359,187 256,400 108,702 144,250 29,889 898,428 0NMPG (ii)

Earl J Barnes HFI (1)

(11)

334,482 155,000 27,474 22,703 23,872 563,531 0

Matthew3 Flynn HFI (1) 218,951 81,200 30,772 21,678 24,218 376,819 0

PETER J MCCANNA (i) 715,449 494,600 59,071 723,822 37,748 2,030,690 0NMHC (ii)

CAROL M LIND NMHC (i) 409,996 306,500 41,705 239,523 33,369 1,031,093 0

Douglas M Young (1) 271,942 106,400 113,682 22,280 21,921 536,225 0NMHC (ii)

JENNIFER S WOOTEN (i) 123,198 18,376 11,240 10,182 25,111 188,107 0NMHC (ii)

Francis d fraher NMHC (1)

(11)

189,612 23,904 17,477 -4,854 27,481 253,620 0

stephen L Ondra NMHC (1)

(11)

307,591 103,300 50,184 7,500 23,848 492,423 0

Michelle A Janney NMH (i) 334,065 238,000 55,758 196,411 23,784 848,018 0

Michael G Arkin MD (1) 300,025 108,600 36,886 24,943 11,074 481,528 0NLFH (ii)

Kimberly A Nagy NLFH (1)

(11)

181,926 61,400 20,118 9,006 50 272,500 0

Form 990. Schedule J. Part II - Officers. Directors. Trustees. Kev Emulovees. and Highest Comuensated Emulovees

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

(i) Base (ii) Bonus &(iii) Other

compensation benefits (B)(i)-(D) reported in prior Form990 or Form 990-EZ

Compensationincentive

compensationcompensation

Charles M Watts (1)

(ii)0 500,040 6,162 16,957 523,159 0

TIMOTHY R ZOPH (i) 416,423 287,500 365,150 167,884 38,461 1,275,418 0NMHC (u)

JULIA L CREAMER (i) 347,495 255,300 95,276 547,349 36,992 1,282,412 0NMHC (ii)

Scott Moses MD NMPG (1)

(11)

608,770 30,000 34,810 7,500 25,228 706,308 0

Holli Salls NMHC (1)

(11)

262,749 101,000 287,211 77,034 22,608 750,602 0

Steven P Klimkowski ()i 447,561 154,220 23,682 23,308 27,345 676,116 0NMHC (H )

Matthew Koschmann (1) 0 112,994 -16,626 16,913 113,281 0NLFH (ii)

Jane Griffin NLFH (1)

(11)

135,249 54,400 25,060 11,053 24,388 250,150 0

Marsha Oberrieder (i) 161,979 61,600 50,543 -32,453 35,548 277,217 0NLFH (H)

efile GRAPHIC print - DO NOT PROCESS I As Filed Data - I DLN: 93493195012304

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- 2012

explanations, and any additional information in Part VI.

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


Name of the organization Employer identification number

Northwestern Memorial Healthcare Group36-4724966

Bond Issues

(h) On(i) Pool

(a) Issuer name ( b) Issuer EIN (c) CUSIP # (d) Date issued ( e) Issue price (f) Description of purpose(g) Defeased behalf of

financingissuer

Yes No Yes No Yes No

A Illinois Finance Authority86-1091967 45200FBZ1 12-19-2007 214,500,000 refund bonds issued 5 /27/2004 X X X

Illinois Finance authority REFUND BONDS ISSUEDB86-1091967 45200FTB5 01-13-2009 207,360,000

5/27/2004X X X

Illinois Finance Authority see supplementALC86-1091967 45200FWW5 04-09-2009 470,335,841

INFORMATION pviX X X

Illinois FINANCE Authority SEE SUPPLEMENTALD86-1091967 45203HPT3 02-27-2013 119,589,286

INFORMATION pviX X

n n.ii Proceeds

A B C D

1 Amount of bonds retired 5,000,000 128,585,000 48,350,000 0

2 Amount of bonds legally defeased 0 0 48,685,000 0

3 Total proceeds of issue 214,500,000 207,360,000 470,335,841 119,589,286

4 Gross proceeds in reserve funds 0 0 0 0

5 Capitalized interest from proceeds 0 0 0 0

6 Proceeds in refunding escrows 197,913,082 0 0 51,456,508

7 Issuance costs from proceeds 1,871,062 1,985,000 5,350,841 1,667,403

8 Credit enhancement from proceeds 0 25,000 0 0

9 Working capital expenditures from proceeds 0 0 0 0

10 Capital expenditures from proceeds 0 0 0 65,004,825

11 Other spent proceeds 63,312,900 205,350,000 464,985,000 1,460,550

12 Other unspent proceeds 0 0 0 0

13 Year of substantial completion 2011 2011

Yes No Yes No Yes No Yes No

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

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

16 Has the final allocation of proceeds been made? X X X X

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

X X X X

iIII Private Business Use

A B C D


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

X X X X

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

financed property?

For Paperwork Reduction Act Notice, see the Instructions for Form 990. Cat No 50193E Schedule K (Form 990) 2012

Schedule K (Form 990) 2012 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 business useof bond-financed property?

X X X X

b If "Yes" to line 3a, does the organization routinely engage bond counsel or other outsidecounsel to review any management or service contracts relating to the financed X X X Xproperty?

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

d If "Yes" to line 3c, does the organization routinely engage bond counsel or other outsidecounsel to review any research agreements relating to the financed property? X X X X

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- 0% 0 00000% 0 00000% 0 00000%

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 section 0 00000% 0 00000% 0 00000% 0 00000%501(c)(3) organization, or a state or local government 0-

6 Total of lines 4 and 5 0 00000% 0 00000% 0 00000% 0 00000%

7 Does the bond issue meet the private security or payment test? X X X X

ga Has there been a sale or disposition of any of the bond financed property to anongovernmental person other than a 501(c)(3) organization since the bonds were X X X Xissued?

b If "Yes" to line 8a, enter the percentage of bond-financed property sold or disposed of 0 00000% 0 00000% 0 00000% 0 00000%

c If "Yes" to line 8a, was any remedial action taken pursuant to Regulations sections1 141-12 and 1 145-27

X X X X

g Has the organization established written procedures to ensure that all nonqualifiedbonds of the issue are remediated in accordance with the requirements under X X X XRegulations sections 1 141-12 and 1 145-2?

ArbitrageA B C D


1 Has the issuerfiled Form 8038-T? X X X X

2 If "No" to line 1, did the following apply?

a Rebate not due yet? X X X X

b Exception to rebate? X X X X

c No rebate due? X X X X

If you checked No rebate due" in line 2c, provide in Part VIthe date the rebate computation was performed

3 Is the bond issue a variable rate issue? X X X X

4a Has the organization or the governmental issuer enteredinto a qualified hedge with respect to the bond issue?

X X X X

b Name of provider jpmorgan & UBS 0 0

c Term of hedge 34 7

d Was the hedge superintegrated? X

e Was a hedge terminated? X

Schedule K (Form 990) 2012

Schedule K (Form 990) 2012 Page 3

Arbitrage (Continued )

A B C D


5a Were gross proceeds invested in a guaranteed investmentX X X X

contract (GIC)7

b Name of provider 0 0 0 0

c Term of GIC

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

6 Were any gross proceeds invested beyond an available temporaryperiod?

X X X X

7 Has the organization established written procedures to monitorthe requirements of section 148?

X X X X

ff^illl Procedures To Undertake Corrective ActionA I B I C I D

I Yes I No I Yes I No I Yes I No I Yes I No

1 Has the organization established written procedures to ensurethat violations of federal tax requirements are timely identified

X X X Xand corrected through the voluntary closing agreement program ifself-remediation is not available under arDlicable regulations?

Supp lemental Information . Com p lete this p art to provide additional information for res p onses to q uestions on Schedule K ( see instructions ) .



Schedule K (Form 990) 2012

Additional Data

Software ID:

Software Version:

EIN: 36-4724966


Form 990 Schedule K, Part VI - Supplemental Information

Return to Form

I Identifier I Return Reference I Explanation

Part I, Line C, COLUMN F 10 1 refund bonds issued on 8/3/95, 5/27/04, 12/19/07 and 1/13/09

Form 990 Schedule K. Part VI - Suuulemental Information

Identifier I Return Reference Explanation

PART I, Line D, Column F 0 healthcare facility construction and refund ofCUSIP 45200FXJ3 that was issued on4/9/09



part II line 14 column b 1 0 1 the refunded bonds were redeemed on 1/13/09



part II line 14 column c 10 1 the refunded bonds were redeemed on 4/9/09 and 4/20/09


Schedule L Transactions with Interested Persons OMB No 1545-0047

(Form 990 or 990-EZ ) 0- Complete if the organization answered

2012"Yes" on Form 990, Part IV, lines 25a, 25b, 26, 27, 28a, 28b, or 28c,or Form 990-EZ, Part V, line 38a or 40b.

Department of the Treasury 0- Attach to Form 990 or Form 990-EZ. 0- See separate instructions. • .



36-4724966

L^l Excess Benefit Transactions (section 501(c)(3) and section 501(c)(4) organizations only).Cmmnlata iftha nrnanvatinn ancwarari "Yac" nn Fnrm 99O Part TV lino 75a nr 75h nr Fnrm 990-F7 Part V lino 40h

1 (a) Name of disqualified person (b) Relationship between disqualified (c) Description of transaction (d) Corrected?person and organization Yes No

2 Enter the amount of tax incurred by organization managers or disqualified persons during the year under section4958 . . . . . . . . . . . . . . . . . . . . . . . . . . . ► $

3 Enter the amount of tax, if any, on line 2, above, reimbursed by the organization . ► $

Loans to and/or From Interested Persons.Complete if the organization answered "Yes" on Form 990-EZ, Part V, line 38a, or Form 990, Part IV, line 26, or if the

(a) Name of (b) Relationship (c) Purpose (d) Loan to (e)Original (f)Balance (g) In (h) (i)Writteninterested with organization of loan or from the principal due default? Approved agreement?person organization? amount by board or

committee?

To From Yes No Yes No Yes No

Total ► $

Grants or Assistance Benefitting Interested Persons.Complete if the organization answered "Yes" on Form 990, Part IV, line 27.

(a) Name of interested (b) Relationship between (c) Amount of assistance (d) Type of assistance (e) Purpose of assistanceperson interested person and the

organization

For Paperwork Reduction Act Noticee see the Instructions for Form 990 or 990 -EZ. Cat No 50056A Schedule L (Form 990 or 990-EZ) 2012

Schedule L (Form 990 or 990-EZ) 2012 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) Relationship

between interestedperson and theorganization

(c) Amount oftransaction

(d) Description of transaction (e) Sharingof

organization'srevenues?

Yes No


Supplemental InformationComplete this part to provide additional information for responses to questions on Schedule L (see instructions)


Exelon schedule L Part IV lines 1 to 3 John a Canning, jr, Donald Thompson and Anne Pramaggioreare directors of Northwestern memorial Hospital John ACanning and Donald Thompson are directors of Exelon and annePramaggiore is an officer of Com Ed, a subsidiary of Exelon, apublic utility that provides electrical service to Northwesternmemorial Hospital

Lamajack Schedule L Part IV line 4 Carol I Bernick is a current director of Northwestern MemorialHealthCare and a former director of Northwestern memorialHospital She has an interest in a business that pays rent toNorthwestern memorial Hospital

McDonald's Corporation Schedule L Part IV lines 5 and 6 Donald Thompson and Miles white are directors of Northwesternmemorial Hospital They are also Directors of Mcdonald'sCorporation Mcdonald's pays rent to Northwestern memorialHospital

Northern trust schedule L part IV Line 7 Frederick Waddell is a Director of Northwestern memorialHospital He is also a director and an Officer of Northern TrustNorthern trust supplies financial services to Northwesternmemorial hospital

Medline schedule L part IV Line 8 Charles n Mills is a director of Northwestern Lake ForestHospital He is also a Director and officer of MEdline Medlineprovides medical products to Northwestern LAke ForestHospital

CDW GOvernment Schedule L Part IV line 10 John A edwardson is a Director ofNMH He is also an officer ofCDW CDW supplies computer related equipment and servicesto NMH

NMIC Schedule L Part IV line 1 Northwestern memorial Insurance Company (NMIC), is a forprofit risk servicing operation for the Northwestern memorialhealthcare organization PeterJ McCanna, Carol m Lind, andDouglas m Young are officers of NMIC Carol M Lind andDouglas M Young are also directors at NMIC PeterJMccanna, Carol M Lind, and Douglas M Young are officers ofNorthwestern Memorial Hospital (NMH) and Northwestern LakeForest Hospital (NLFH) PeterJ McCanna and Douglas MYoung are officers at Northwestern memorial Physicians Group(NMPG) NMIC provides services to NMH, NLFH and NMPG

NHC Schedule L Part IV line 2 gARY a nOSKIN and is a directors at Northwestern HealthcareCorporation (NHC) He is also a director of Northwesternmemorial Hospital, (NMH) NHC provides services forphysicians at NMH

bAXTER iNTERNATIO NAL schedule L part IV line 3 Robert L parkinson JR is a former director of NorthwesternMemorial Hospital He is also a director and officer at baxterInternational Baxter provides medical products to NorthwesternMemorial Hospital

Bannockburn mediplex Partners Schedule L part IV Line 4 Michael G Arkin, MD is an officer of Northwestern Lake ForestHospital He is also an owner of Bannockburn Mediplex partnerswhich receives rent from Northwestern Lake Forest Hospital

Abbott laboratories Schedule L Part IV line 5 Miles White is on the Board of Directors of Abbott andNorthwestern Memorial Hospital Abbott furnishes medicalproducts to Northwestern memorial Hospital

Abbott Laboratories schedule L part IV line 6 Edward M Liddy is a former director at Northwestern Lake forestHospital He is also on the Board at abbott laboratories abbottsupplies medical products to NLFH

Baxter International Schedule L part iv Line 7 Robert L parkinson is the chairman and director at Northwesternlake Forest Hospital He is also a director and officer at BaxterInternational Baxter provides medical products to NLFH

Schedule L (Form 990 or 990-EZ) 2012

Additional Data

Software ID:

Software Version:

EIN: 36-4724966


Form 990, Schedule L, Part IV - Business Transactions Involving Interested Persons

(a) Name of interested person (b) Relationshipbetween interested

person and the

(c) Amount oftransaction

(d) Description of transaction (e) Sharing oforganization'srevenues?

organizationYes No

(1) Exelon John Canning Director 6,024,639 electric Utility No

(2) exelon Donald ThompsonDirector

6,024,639 electric utility No

(3)exelon Anne PramaggioreDirector

6,024,639 electric utility No

(4) Lamajak Carol Bernick Fmr Dir 101,979 rent No

(5) McDonald's Corporation Donald ThompsonDirector

156,174 rent No

(6) McDonald's Corporation Miles White Director 156,174 rent No

(7) Northern Trust Frederick waddell Dir 1,076,409 bank services No

(8) Medline Charles Mills Director 3,769,734 medical product No

(9) C DW GO vernment inc John EdwardsonDirector

4,493,563 computer services No

(10) NMIC See supplemental 23,128,861 risk funding services No

(11) NHC see supplemental 467,424 services to physicians No

(12) baxter international Robert parkinson FMrDir

1,330,409 medical products No

(13) Bannockburn Mediplex Partners Michael ankin MDofficer

119,905 rent No

(14) Abbott laboratories Miles white director 3,654,603 medical products No

(15) abbott laboratories Edward Liddy FmrDirector

292,035 medical products No

(16) baxter international Robert parkinson Dir 132,518 medical products No


SCHEDULEM Noncash Contributions OMB No 1545-0047

(Form 990)

2012Complete if the organizations answered "Yes" on Form

Department of the Treasury990, Part IV, lines 29 or 30.

P- Attach to Form 990.Internal Revenue Service


36-4724966

Types of Property

(a) (b) (c) (d)Check Number of contributions Noncash contribution Method of determining

if or items contributed amounts reported on noncash contribution amountsapplicable Form 990, Part VIII, line

1g

1 Art-Works of art . . . .

2 Art-Historical treasures

3 Art-Fractional interests .

4 Books and publications

5 Clothing and householdgoods . . . . . . .

6 Cars and other vehicles .

7 Boats and planes . . . .

8 Intellectual property . . .

9 Securities-Publicly traded . X 57 985,336 market quote

10 Securities-Closely held stock

11 Securities-Partnership, LLC,or trust interests

12 Securities-Miscellaneous

13 Qualified conservationcontribution-Historicstructures

14 Qualified conservationcontribution-Other . . .

15 Real estate-Residential

16 Real estate-Commercial

17 Real estate-Other . . .

18 Collectibles . . . . .

19 Food inventory . . .

20 Drugs and medical supplies . X 4 8 estimated value

21 Taxidermy . . . . . .

22 Historical artifacts . . . .

23 Scientific specimens . .

24 Archeological artifacts

25 Other P- ( tickets ) X 1 287 face value

26 Other(

27 Other(

28 Other n ( )

29 Number of Forms 8283 received by the organization during the tax year for contributionsfor which the organization completed Form 8283, Part IV, Donee Acknowledgement . 29

Yes No

30a During the year, did the organization receive by contribution any property reported in Part I, lines 1-28 that it

must hold for at least three years from the date of the initial contribution, and which is not required to be used

for exempt purposes for the entire holding period? 30a No

b If "Yes," describe the arrangement in Part II

31 Does the organization have a gift acceptance policy that requires the review of any non-standard contributions? 31 Yes

32a Does the organization hire or use third parties or related organizations to solicit, process, or sell noncash

contributions? . . . . . . . . . . . . . . . . . . . . . . . . 32a Yes

b If "Yes," describe in Part II

33 If the organization did not report an amount in column (c) for a type of property for which column (a) is checked,

describe in Part II

For Paperwork Reduction Act Noticee see the Instructions for Form 990 . Cat No 51227 ] Schedule M (Form 990 ) ( 2012)

Schedule M (Form 990 ) (2012) Page 2

Supplemental Information . Complete this part to provide the information required by Part I, lines 30b,32b, and 33, and whether the organization is reporting in Part I, column (b), the number of contributions, thenumber of items received , or a combination of both. Also com p lete this p art for an y additional information.


Gift acceptance Policy Form 990 schedule M Line 31 Members of the Northwestern Memorial HealthCare Group havea gift acceptance policy that requires the review of gifts of realor personal property and other non-standard contributions Allgifts must be fully consistent with the mission and objectives ofNorthwestern Memorial HealthCare All gifts of personalproperty valued at $5,000 or more, real estate, life insurance,other assets, non-publicly traded securities, other incomeproducing assets, contingent bequests and other non-standardcontributions require approval by Northwestern MemorialHealthCare Group's Member Executive Committee prior toacceptance

Use of Third parties Form 990 Schedule M Question 32 b Members of the Northwestern Memorial HealthCare Group donot use third parties to solicit or process noncash contributionsHowever third parties are used to sell contributions of real orpersonal property

Schedule M (Form 990) (2012)


SCHEDULE 0OMB No 1545 0047

(Form 990 or 990-EZ) Supplemental Information to Form 990 or 990-EZ2012

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


Identifier ReturnReference

Explanation

NMHC Form 990, Part NMHC centralized its cash and investments in the parent operation Reasons supporting the transfers wereDepartmental III, Question 3 a align the financial reporting for investments with the governance structure b maintain individual entitles'Transfers focus on their core functions Participant entities earn a constant rate of return removing short-term market

volatility in their financial statements c simplify investment reporting and tracking d Support centralizeationof capital allocation decisions e Maximize credit strength f This change is in line with recent AICPAguidance for financial reporting of cash and investment pooling

Identifier Return ExplanationReference

Other Form 990, Part Revenue in other program services includes non-patient related medical services, Lake Forest Health andProgram III, Line 4d Fitness Institute revenue, income associated with services provided to Northwestern Memorial HealthCareServices which is the parent of this group, and other Some of the expenses associated with these revenues are

included in Form 990 Part III lines 4a - 4c


Explanation

BUSINESS FORM 990, Group/NMF Terry Savage and Dennis S Chookaszian are directors at Northwestern Memorial FoundationRELATIONSHIPS Part VI, They are also directors of the Chicago Mercantile Exchange Judy Greff in and Andrea Redmond are directors

SECTION A, at Northwestern Memorial Foundation Judy Greffin is an officer and Andrea Redmond is a board member ofQUEStion 2 allstate corporation Michael a Ruchim MD, M Christine stock rd and nancy sassower MD are Directors at

Northwestern memorial Foundation They are also directors at Northwestern Healthcare corporation NancyW sassower MD is also an officer of Northwestern healthcare corporation GROUP/NMH Donald Thompsonand Miles white are Directors at Northwestern memorial Hospital Mr Thompson is an officer and a Boardmember and MR white is also a director at McDonald's Corporation Donald Thompson, John A Canning Jrand Anne Pramaggiore are Directors at Northwestern memorial Hospital mr Thompson and mr Canning arealso directors at Exelon corporation and Ms Pramaggiore is an officer of commonwealth Edison, a subsidiaryof exelon corporation Anne Pramaggiore, Gregory Q brown and Frederick H waddell are directors atNorthwestern memorial Hospital They are also directors of the federal reserve bank of chicago AnnePramaggiore and Gregory Q brown are directors at Northwestern memorial hospital They are also directorsat motorola solutions John A Canning Jr and Timothy P sullivan are directors at Northwestern memorialhospital Timothy is the managing director and John A Canning Jr is the chairman of Madison dearbornpartners Both John and Timothy are also Directors at sage products Peter J McCanna, Douglas M Youngand Carol M Lind are officers of Northwestern Memorial HealthCare, Northwestern memorial Hospital,Northwestern memorial Foundation, and Northwestern Lake Forest Hospital Douglas M Young and Peter JmcCanna are also officers at Northwestern memorial Physicians group Peter J mcCanna is an officer ofNorthwestern Memorial Insurance Company Douglas M Young and Carol M land are directors and officers ofNorthwestern Memorial Insurance Company GROUP/NMPG Jeffery D Kopin MD and Daniel M Derman MDare Directors of Northwestern memorial Physicians Group Daniel M derman MD is also an officer ofNorthwestern memorial Physicians group Both of these individuals are also partners in an LLC


Explanation

members Form 990, pART nORTHWESTERN MEMORIAL hOSPITAL, nORTHWESTERN MEMORIAL FOUNDATION AND nORTHWESTERNvi, SECTION a, TAKE FOREST hOSPITAL EACH HAVE ONE MEMBER, nORTHWESTERN MEMORIAL hEALTHCArE, fern 36-question 6 3152959 TAKE FOREST hEALTH AND fITNESS INSTITUTE HAS ONE MEMBER, nORTHWESTERN TAKE FOREST

hOSPITAL nORTHWESTERN MEMORIAL PHYSICIANS GROUP HAS ONE MEMBER nORTHWESTERN MEMORIAL

HOSPITAL


Explanation

eLECTING fORM 990, Each member of the group has similar by laws regarding how individual directors of their governing board ofMEMBERS OF pART vI, directors are determined In the case of NMH, NMF and NLFH, certain officer positions are automatically alsoGOVERNING sECTION a, board of director positions For NMH, these are the president and chief executive officer of NorthwesternBODY question 7A Memorial HealthCare (NMHC), the chairs of the standing committees of the board of directors of Northwestern

Memorial Hospital, the chief of staff of the Northwestern Memorial Hospital medical staff, the dean ofNorthwestern University's Feinberg School of Medicine (FSM),the president of the corporation, and (b) twoindividuals who are chairs of FSM clinical departments or who are physicians, members of the faculty of FSM,and who hold a leadership position in FSM, the member, or an Affiliate of the member For NLFH, these are thepresident and chief executive officer of NMHC, the president of the NLFH medical staff, and the president of thecorporation For NMF, these are the president of the corporation, the president and chief executive officer ofNMHC, the president and chief executive officer of Northwestern Memorial Hospital, the president of theWoman's Board of Northwestern Memorial Hospital, the vice chief of the Northwestern Memorial Hospitalmedical staff, and the chairs of the board's standing committees All other directors shall be nominated by theexecutive committee of their member, NMHC, and submitted to the board of directors of that member inaccordance with the corporate bylaws of NMHC For NMPG, the president of the corporation, shall serve, exofficio, as a member of the board of directors All other directors shall be identified by the board of directors ofthe member in accordance with the corporate bylaws of Northwestern Memorial Hospital For Lake Foresthealth & Fitness Institute, the president of the corporation shall serve, ex officio, as a member of the board ofdirectors All other directors shall be identified by the board of directors of the member in accordance with thecorporate bylaws of Northwestern Lake Forest Hospital


governance Form 990, Part VI, Reserved powers exist in the member of each affiliate included in this Group, which ultimately isdecisions section A, question NMHC The method of exercising such powers can occur through a number of processes, all of

7b which must be supported by resolutions communicated to the affiliate


Explanation

REVIEW FORM 990, The Form 990 (Form) was GENERATED internally by the finance department with support from variousFORM 990 PART VI, departments within the organization Various sections of the Form were reviewed by senior management of

SECTION A, Northwestern Memorial HealthCare (NMHC), as the parent organization, and various committees As examples,QUESTION 11 the Chief Integrity Executive reviewed disclosures for related party transactions, the Tax and Regulatory Review

Committee reviewed the community benefit report that describes the exempt purpose achievements, and lobbyingexpenditures were reviewed by the VP External Affairs and communications The Executive CompensationSubcommittee of the Board of Directors of NMHC was provided the compensation disclosures The organizationthen worked with a national, independent public accounting firm as the paid preparer of the Form 990 filing Thefinal Formwas reviewed by members of the Finance department prior to review by the NMHC Vice President,Finance and Interim Chief Financial Officer Prior to filing, the completed Form 990 was provided to the Board ofDirectors through a secure website


Explanation

Conflict of Form 990, Part Northwestern Memorial HealthCare (NMHC) maintains both a Conflict of Interest Policy and an IntermediateInterest VI, Section B, Sanctions Policy These policies have been approved by its Board of Directors and apply to all entities, directors,

Question 12 c officers, employees and transactions which take place within the NMHC system The policies were written toassist board members and management with the identification of those transactions that warrant attention andconsideration to ensure proper adherence to the tax laws impacting tax-exempt organizations The conflict ofinterest policy requires completion of an annual certification which affirms that such person has received, readand understands the conflict of interest policy, has agreed to comply, has disclosed any matters required to bedisclosed under the policy, and agrees to report any changes promptly to the Chief Integrity Executive Once theannual certifications are complete, the Chief Integrity Executive reviews the disclosures for compliance with thepolicy


Explanation

COMPENSATION Form 990 , Part AS A MEMBER OF THE NORTHWESTERN MEMORIAL HEALTHCARE ORGANIZATION, NMHC IS INCLUDED INPOLICY VI, Section B , THE OVERALL Board-led executive compensation review and approval process THE PROCESS FOR

Question 15 a DETERMINING EXECUTIVE COMPENSATION AT NORTHWESTERN MEMORIAL COMPLIES WITH IRSand b GUIDELINES FOR TAX-EXEMPT ORGANIZATIONS, IS DETERMINED BY A SEPARATE SUBCOMMITTEE OF

THE BOARD OF DIRECTORS WHOSE MEMBERS ARE ALL INDEPENDENT AND NON-PAID, AND ISANNUALLY EVALUATED IN THE CONTEXT OF COMPENSATION DATA GATHERED BY EXTERNALCONSULTANTS FROM A PEER GROUP COMPRISED OF similarly situated healthcare organizations INADDITION, a significant portion of compensation is at risk and is payable only upon achievement ofsubstantial goals THE BOARD PLACES A HIGH PRIORITY ON ITS ABILITY TO RECRUIT AND RETAIN ASTRONG LEADERSHIP TEAM TO ENSURE WE SERVE OUR MISSION AND ACHIEVE OUR GOALS THEOFFICERS OF NORTHWESTERN MEMORIAL HEALTHCARE ALSO FULFILL OFFICER AND EXECUTIVEFUNCTIONS FOR NMHC'S SUBSIDIARIES


Explanation

Governing Form 990 , Part THE CORPORATION'S GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY AND FINANCIALDocuments VI, Section C, STATEMENTS ARE AVAILABLE UPON REQUEST THE CONSOLIDATED FINANCIAL STATEMENTS OFDisclosure Question 19 NORTHWESTERN MEMORIAL HEALTHCARE AND SUBSIDIARIES ARE AVAILABLE on the w ebsites for

Northwestern memorial Hospital and Northwestern Lake Forest Hospital The financial statements are alsoavailable FROM THE ILLINOIS ATTORNEY GENERAL'S OFFICE AS PART OF ITS ANNUAL COMMUNITYBENEFITS REPORT and through the ELECTRONIC MUNICIPAL MARKET ACCESS SYSTEM OF THE MUNICIPALSECURITIES RULEMAKING BOARD


Explanation

Group Titles & Form 990, Northwestern Memorial HealthCare (NMHC), is the direct parent organization for Northwestern Memorial HospitalCompensation Part VII, (NMH), Northwestern Memorial Foundation (NMF), and Northwestern Lake Forest Hospital (NLFH) NMHC is alsoPresentation section A, the indirect parent for Northwestern Memorial Physicians Group (NMPG), and Lake Forest Health and Fitness

line 1A Institute (HFI) These six corporations have combined through the election under Regulation 1 6033-2 (d) (5) toreport the directors, officers, key employees and five highly compensated employees under the Group Returnrequirements for Form 990 for the fiscal year ended 8/31/2013 No organization in this Group Returncompensates its directors for services performed as directors Where compensation is reported for a director,the compensation is associated with another position held within the six corporations Certain individuals holdmultiple positions throughout these six corporations In order to simplify the reporting, their names are listed onlyonce per Form 990, Part VII and Schedule J Each individual listed has his or her organization's initials listed nextto their respective name and the box checked for their position at that corporation Additional director or officerpositions held by each individual are noted below Thomas A Cole is the Chair and Director for NMH John ACanning JR is the Vice-Chair and Director for NMH Kent P Dauten is the Chair for NMF Dean M Harrison isdirector, President and CEO of NMHC and nmh and the CEO and a Director of NMF and NLFH Gary A Noskin MDis a Director of NMH Robert L Parkinson JR is the Chair of NLFH Homi P Patel is a Director of NLFH Maria CBechily is a director of NLFH Daniel M Derman MD is the President of NMPG Dennis M Murphy is the ExecutiveVice President of NMHC, and an Executive Vice President and the Chief Operating Officer of NMH, as well asChair of NMPG Douglas M Young is THE INTERIM cfO AND TREASURER OF nmhc, nmh and nmf, TREASUREROF nlfh and Assistant Treasurer of NMH, NMF, and NLFH Secretary & Assistant Treasurer of NMPG, andTreasurer of hfi Stephen C Falk is President of NMF Thomas a McAfee is the President of NLFH, as well as thechair, a director and the president of hfi Peter J McCanna is the Executive vice president administrative CFO &Treasurer of NMH as well as the CFO & Treasurer of NMF, the Treasurer of NMPG & NLFH Carol L Lind is theSenior Vice President Senior Counsel & Secretary of NMH and the Secretary of NMF and NLFH Francis d fraheris the ASSISTANT TREASURER OF nmh, nmF AND nlfh Jennifer S Wooten is the Assistant Secretary of NMHMatthew J Flynn is Senior VP, CFO, & Assistant Secretary of NLFH as well as secretary of HFI Nancy W

Sassower MD is a director of NMF, and is also compensated by NMH for a non-director position The followingare Directors per the listed corporations, they are not compensated as Directors or Officers of any entities, EarlJ Barnes, Jeffery D Kopin MD, Peter A Lechman MD, Nancy W Sassower MD, MICHAEL A RUCHIM MD andGARY A NOSKIN MD


Explanation

HOURS WORKED Form 990, Part JULIA L CREAMER, DANIEL M DERMAN MD, STEPHEN c FALK, DEAN M HARRISON, MICHELLE ARELATED VII, section A, JANNEY, CAROL M LIND, DEAN L MANHEIMER, THOMAS J MCAFEE, PETER J MCCANNA, DENNIS MCOMPANIES QUESTION 1 B MURPHY, CHARLES M WATTS MD, DOUGLAS M YOUNG , Stephen I ondra, earl j barnes, Jennifer s

wooten, AND TIMOTHY R ZOPH, ARE ALL EMPLOYEES OF NMHC THEY GENERALLY WORK MORETHAN 40 HOURS A WEEK AND PERFORM SERVICES FOR VARIOUS NMHC SUBSIDIARIES

Identifier Return ExplanationReference

Reconciliation of Net Form 990, Part XI , Post Retirement Benefit Changes 69,774,975 Other (27,800 ) Change in Beneficial interestsAssets Line 9 1,716,567 Change in interest rate swaps 60,756,670 total 132,276,012

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:93493195012304

OMB No 1545-0047

2012


36-4724966

Identification of Disregarded Entities (Complete if the organization answered "Yes" to Form 990, Part IV, line 33.)

(a)Name, address, and EIN (if applicable) of disregarded entity

(b)Primary activity

(c)Legal domicile (stateor foreign country)

(d)Total income

(e)End-of-year assets

(f)Direct controlling

entity

Identification of Related Tax-Exempt Organizations (Complete if the organization answered "Yes" to Form 990, Part IV, line 34 because it had oneor more related tax-exempt organizations during the tax year.)

( a)Name, address, and EIN of related organization

(b)Primary activity

(c)Legal domicile (stateor foreign country)

(d)Exempt Code section

(e)Public charity status

(if section 501(c)(3))

(f)Direct controlling

entity

(g)Section 512(b)(13) controlled

entity?

Yes No


For Paperwork Reduction Act Notice, see the Instructions for Form 990. Cat No 50135Y Schedule R (Form 990) 2012

Schedule R (Form 990) 2012 Page 2

Identification of Related Organizations Taxable as a Partnership (Complete if the organization answered "Yes" to Form 990, Part IV, line 34because it had one or more related organizations treated as a partnership during the tax year.)

(a)Name, address, and EIN of

related organization

(b)Primary activity

(c)Legal

domicile(state orforeigncountry)

(d)Direct

controllingentity

(e)Predominant

income(related,unrelated,

excluded fromtax under

sections 512-514)

(f)Share of

total income

(g)Share of

end-of-yearassets

(h)Disproprtionateallocations?

(i)Code V-UBIamount in box

20 ofSchedule K-1(Form 1065)

0)General ormanagingpartner?

(k)Percentageownership

Yes No Yes No

Identification of Related Organizations Taxable as a Corporation or Trust (Complete if the organization answered "Yes" to 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) (b) (c) (d) (e) (f) (g) (h) (i)Name, address, and EIN of Primary activity Legal Direct controlling Type of entity Share of total Share of end-of- Percentage Section 512

related organization domicile entity (C corp, S corp, income year ownership (b)(13)(state or foreign or trust) assets controlled

country) entity?

Yes No

(1) NORTHWESTERN SErvices NMH C Corp 1,094,192 964,429 100 000 % YesHEALTHCARE CORPORATION

541 FAIRBANKS SUITE 1630IL

CHICAGO, IL 60611330936-3382383

(2) NORTHWESTERN risk funding CJ NMH C CORP 10,786,740 607,218,365 100 000 0/ YesMEMORIAL INSURANCECOMPANY

GRAND PAVILLION CTRGRAND CAYMAN ISLA PO

BOX 1085CJ98-0384611

Schedule R (Form 990) 2012


ff^ Transactions With Related Organizations (Complete if the organization answered "Yes" to Form 990, Part IV, line 34, 35b, or 36.)

Note . Complete line 1 if any entity is listed in Parts II, III, or IV of this schedule

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 or (iv) rent from a controlled entity

b Gift, grant, or capital contribution to related organization(s)

c Gift, grant, or capital contribution from related organization(s)

d Loans or loan guarantees to or for related organization(s)

e Loans or loan guarantees by related organization(s)

f Dividends from related organization(s)

g Sale of assets to related organization(s)

h Purchase of assets from related organization(s)

i Exchange of assets with related organization(s)

j Lease of facilities, equipment, or other assets to related organization(s)

k Lease of facilities, equipment, or other assets from related organization(s)

I Performance of services or membership or fundraising solicitations for related organization(s)

m Performance of services or membership or fundraising solicitations by related organization(s)

n Sharing of facilities, equipment, mailing lists, or other assets with related organization(s)

o Sharing of paid employees with related organization(s)

p Reimbursement paid to related organization(s) for expenses

q Reimbursement paid by related organization(s) for expenses

r Other transfer of cash or property to related organization(s)

s Other transfer of cash or property from related organization(s)

Yes No

la Yes

lb Yes

1c No

ld No

le No

if No

1g Yes

1h Yes

li No

lj No

1k No

11 Yes

1m Yes

in No

10 No

1p Yes

1q Yes

lr No

is No

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)Name of other organization

(b)Transactiontype (a-s)

(c)Amount involved

(d)Method of determining amount involved




Unrelated Organizations Taxable as a Partnership (Complete if the organization answered "Yes" to 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 orforeigncountry)

(d)Predominant

income(related,unrelated,

excluded fromtax under

section 512-

(e)Are all partners

section501(c)(3)

organizations?

(f)Share of

totalincome

(g)Share of

end-of-yearassets

(h)Disproprtionateallocations?

(i)Code V-UBIamount inbox 20

of ScheduleK-1

(Form 1065)

U)General ormanagingpart ner?

(k)Percentageownership

514)Yes No Yes No Yes No


Additional Data

Software ID:

Software Version:

EIN: 36-4724966


Return to Form


Supplemental Information

Complete this part to provide additional information for responses to questions on Schedule R (see instructions)

Identifier I Return Reference I Explanation

--> Form 990_ Schedule R. Part V - Transactions With Related Ornaniiations

(a)Name of other organization

(b)Transactiontype(a-s)

(c)Amount Involved

(d)

Method of determiningamount involved

Northwestern memorial healthcare line 1,458,821 cost

Northwestern healthcare Corporation Line 76,704 cost


Northwestern memorial healthcare Line 1,031,282 cost

Northwestern memorial insurance Corporation Line 21,314,414 cost



Northwestern memorial healthcare Line 1,684,583,604 cost




Northwestern memorial healthcare line 603,254 cost











Northwestern healthcare Corporation line 467,424 cost

Northwestern healthcare Corporation line 63,204 cost


Form 990. Schedule R. Part V - Transactions With Related Organizations

(a) (b) (c) (d)Name of other organization Transaction Amount Involved

Method of determiningtype(a-s)

amount involved




TY 2012 Earnings and Profits OtherAdjustments Statement


EIN: 36-4724966

Description Amount

deferred insurance premiums 376,177

unearned premiums 761,518

reinsurance premiums ceded 6,434,750

losses and loss adjustments 33,751,102

unrealized gains on investments 4,824,815


TY 2012 Earnings and Profits OtherAdjustments Statement


EIN: 36-4724966

Description Amount

gross insurance premiums written 41,389,673


TY 2012 Itemized Other Assets Schedule


EIN: 36-4724966

Corporation Name CorporationEIN

Other Assets Description BeginningAmount

Ending Amount

Insurance premiuims receivable 171,357,285 320,260,276

reinsurance recoverable 61,507,439 62,900,792

deferred reinsurance premiums 5 ,202,240 4,826,063

Prepaid & other 421,600 184,655


TY 2012 Other Deductions Schedule


EIN: 36-4724966

Description Foreign Amount(should only be usedwhen attached to5471 Schedule C

Line 16)

Amount

consulting fees 141,777

actuarial fees 228,709

legal fees 33,205

management fees 75,000

investment custodial fees 10,660

meeting expenses 8,072

audit fees 38,500

federal excise tax 33,911

govt fees 13,130

other expenses 3,627


TY 2012 Itemized Other Investments Schedule


EIN: 36-4724966


Other Investments Description BeginningAmount

Ending Amount

Investments 302,735,311 218,985,596


TY 2012 Itemized Other Liabilities Schedule


EIN: 36-4724966


Other Liabilities Description BeginningAmount

Ending Amount

unearned premiums 52,949,794 53,711,312

reserve for losses & loss adj expen 350,465,160 351,568,038

Due to insureds 62,414,970 116,290,976


TY 2012 Other Income Statement


EIN: 36-4724966

Description Foreign Amount Amount

gross insurance premiums written 41,389,673

reinsurance prmiums ceded -6,434,750

change in unearned premiums -761,518

change in deferred reinsurance prem -376,177

investment income net 10,625,117

losses & allocated loss add expense -33,751,102

other operating income 95,497


TY 2012 Paid-In or Capital Surplus Reconciliation Statement


EIN: 36-4724966

Description Beginning Amount Ending Amount

additional paid in capital 9,950,000 9,950,000

CONSOLIDATED FINANCIAL STATEMENTS

AND SUPPLEMENTARY INFORMATION

Northwestern Memorial HealthCare and SubsidiariesYears Ended August 31, 2013 and 2012With Reports of Independent Auditors

Ernst K Young LEE'

=^ ERNST&YOUNG

Northwestern Memorial HealthCare and Subsidiaries

Consolidated Financial Statementsand Supplementary Information

Years Ended August 31, 2013 and 2012

Contents

Report of Independent Auditors

Consolidated Financial Statements

Consolidated Balance Sheets 3Consolidated Statements of Operations and Changes in Net Assets 5Consolidated Statements of Cash Flows 7Notes to Consolidated Financial Statements 8

Supplementary Information

Report of Independent Auditors on Supplementary Information 56Consolidating Balance Sheet 57Consolidating Statement of Revenue and Expenses 59Obligated Group Combined Balance Sheets 60Obligated Group Combined Statements of Operations and Changes in Net Assets 62

1309-1140617

Report of Independent Auditors

The Board of DirectorsNorthwestern Memorial HealthCare

We have audited the accompanying consolidated balance sheets of Northwestern MemorialHealthCare (an Illinois not-for-profit corporation) and Subsidiaries (Northwestern Memorial) asof August 31, 2013 and 2012, and the related consolidated statements of operations and changesin net assets and cash flows for the years then ended, and the related notes to the consolidatedfinancial statements

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements

in conformity with U S generally accepted accounting principles, this includes the design,

implementation , and maintenance of internal control relevant to the preparation and fair

presentation of financial statements that are free of material misstatement, whether due to fraud

or error

Auditor' s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits Weconducted our audits in accordance with auditing standards generally accepted in the UnitedStates Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements The procedures selected depend on the auditor'sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error In making those risk assessments, the auditor considersinternal control relevant to the entity's preparation and fair presentation of the financialstatements in order to design audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the entity's internal controlAccordingly, we express no such opinion An audit also includes evaluating the appropriatenessof accounting policies used and the reasonableness of significant accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion

1309-1140617

EJ1

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects,the consolidated financial position of Northwestern Memorial HealthCare and Subsidiaries atAugust 31, 2013 and 2012, and the consolidated results of their operations and changes in theirnet assets and their cash flows for the years then ended in conformity with U S generallyaccepted accounting principles

^tn.o^ It ^ou^+yLla

oNovember 21, 2013

1309-1140617 2

1, HIP HI ^ r inn, d t n, J, v^ ^ 1, 1,'1 ^i i , d, ^1


Consolidated Balance Sheets(In Ihoirwnds)

August 31

2013 2012AssetsCurrent assetsCash and cash equivalents $ 230,326 $ 139,343Short-term investments 195,195 112,925

Current portion of investments, including

assets limited as to use 77,320 89,247Patient accounts receivable, net of estimateduncollectibles of $41,721 and $39,036 in 2013and 2012, respectively 245,663 279,775

Current portion of pledges and grants receivable , net 11 ,844 9,257Current portion of insurance recoverable 10,412 13,060Inventories 33,873 31,528Other current assets 45,161 33,138

Total current assets 849,794 708,273

Investments, including assets limited as to use,less current portion 2,676,116 2,430,351

Property and equipment, at costLand 237,953 237,953

Buildings 1,701,356 1,668,000

Equipment and furniture 535,490 522,343

Construction in progress 152,770 46,573

2,627,569 2,474,869Less accumulated depreciation 1,239,777 1,116,818

1,387,792 1,358,051

Prepaid pension cost 105,962 30,814Insurance recoverable, less current portion 69,233 74,444Other assets, net 150,998 99,751Total assets $ 5,239,895 $ 4,701,684

1309-1140617

August 31

2013 2012Liabilities and net assetsCurrent liabilitiesAccounts payable $ 111,294 $ 81,070Accrued salaries and benefits 88,769 94,948Grants and academic support payable, current portion 70,381 37,588Accrued expenses and other current liabilities 54,472 34,871Due to third-party payors 229,052 207,440Current accrued liabilities under self-insurance programs 60,025 65,633

Current maturities of long-term debt 13,435 14,500

Total current liabilities 627,428 536,050

Long-term debt, net, less current maturities 793,819 806,155Accrued liabilities under self-insurance programs,

less current portion 409,126 420,941Grants and academic support payable, less current portion 191,635 97,254Due to insureds 116,291 62,415Interest rate swaps 43,916 104,503Pension liability - 3,863

Other liabilities 50,187 51,929Total liabilities 2,232,402 2,083,110

Net assetsUnrestrictedUndesignated 2,553,524 2,182,940Board-designated 145,545 138,600

Total unrestricted 2,699,069 2,321,540Temporarily restricted 157,682 155,263Permanently restricted 150,742 141,771

Total net assets 3,007,493 2,618,574

Total liabilities and net assets $ 5,239,895 $ 4,701,684

See accompanying notes to consolidated ,fmnancial statements.

1309-1140617 4


Consolidated Statements of Operationsand Changes in Net Assets

(In Thousands)

Year Ended August 31

2013 2012

Revenue

Patient service revenue $ 1,622,973 $ 1,614,123Provision for uncollectible accounts 30,652 32,072Net patient revenue 1,592,321 1,582,051Rental and other revenue 98,583 100,996Net assets released from donor restrictionsand federal and state grants 18,762 18,493

Total revenue 1,709,666 1,701,540

ExpensesSalaries and professional fees 578,924 587,971Employee benefits 156,971 186,633Supplies 267,505 268,197Purchased services 174,449 173,545Depreciation 145,643 145,686Insurance 40,500 59,711Rent and utilities 39,431 41,486Repairs and maintenance 46,686 45,581Interest 35,387 40,271Illinois Hospital Assessment 41,395 41,395Other 51,428 22,756Total expenses 1,578,319 1,613,232Operating income 131,347 88,308

Nonoperating gains (losses)

Investment return 301,730 150,762

Change in fair value of interest rate swaps 40,585 (30,533)

Loss on extinguishment of long-term debt ( 6,381) -

Grants and academic support provided (188,858 ) (106,708)

Other 31,053 19,970Total nonoperating gains, net 178,129 33,491Excess of revenue over expenses 309,476 121,799

1309-1140617 5


Consolidated Statements of Operationsand Changes in Net Assets ( continued)

(In Thoirwnds)


2013 2012Unrestricted net assetsExcess of revenue over expenses $ 309,476 $ 121,799Net assets released from restrictions used forproperty and equipment additions 1,248 1,579

Postretirement benefit-related changes other than netperiodic pension cost 69,340 (8,044)

Other (2,535) (125)Increase in unrestricted net assets 377,529 115,209

Temporarily restricted net assetsContributions 31,254 34,021Investment return 7,380 9,715

Net assets released from restrictions used forOperating expenses , charity care, andresearch and education (30,074 ) (27,232)

Property and equipment additions ( 1,248 ) (1,579)

Change in fair value of split - interest agreements 660 81Other (5,553) (131)Increase in temporarily restricted net assets 2,419 14,875

Permanently restricted net assetsContributions 2,364 16,347

Change in fair value of split- interest agreements 1,057 (1,025)

Other 5,550 120

Increase in permanently restricted net assets 8,971 15,442

Change in total net assets 388,919 145,526Net assets, beginning of year 2,618,574 2,473,048Net assets, end of year $ 3,007,493 $ 2,618,574

See accompanying notes to consolidated ,fnancial statements.

1309-1140617 6


Consolidated Statements of Cash Flows(In Ihoul sannds)


2013 2012

Operating activities

Change in total net assets $ 388,919 $ 145.526

Adjustments to reconcile change in total net assets to net

cash provided bN operating activities

Postretirement benefit-related changes other than net periodic

pension cost (69,340) 8.044

Change in fair value of interest rate saps (38,056 ) 30.658

Loss on extinguishment of long -term debt 6,381 -

Net investment return and net change in

unrealized investment gains/losses ( 301,730 ) (153.602)

Restricted contributions. change in fair value of split interest

agreements . and realized investment return (42,715 ) (56.299)

Depreciation and amortization 145,580 145.356

Provision for uncollectible accounts 30,720 32.164

Change in operating assets and liabilities

Patient accounts receivable 3,392 (79.479)

Due to third-part\ pa\ ors 19,158 29.790

Grants and academic support paN able 127,174 70.524

Other operating assets and liabilities ( 10,213 ) 11.649

Net cash provided b-N operating activities 259,270 184.331

Investing activities

Purchases of trading securities (771,618) (589.584)

Sales of trading securities 606,773 410.091

Unrestricted realized investment return 150,467 124.061

Capital expenditures. net (175,384) (163.456)

Net cash used in investing activities (189,762) (218.888)

Financing activities

PaNments of long-term debt (139,162) (13.710)

PaN meats of bond issue costs (1,667) -

Proceeds from issuance of long-term debt 119,589 -

Restricted contributions and realized investment return 42,715 56.299

Net cash provided b,, financing activities 21,475 42.589

Net increase in cash and cash equivalents 90,983 8.032

Cash and cash equivalents. beginning of N ear 139,343 131.311

Cash and cash equivalents. end of N ear $ 230,326 $ 139.343

See accompanying notes to consolidated financial statements

1309-1140617 7


Notes to Consolidated Financial Statements(In Ihoulsands)

Years Ended August 31, 2013 and 2012

1. Organization and Summary of Significant Accounting Policies

Northwestern Memorial HealthCare (NMHC) serves as the sole corporate member ofNorthwestern Memorial Hospital (NMH), Northwestern Lake Forest Hospital (NLFH), andNorthwestern Memorial Foundation (the Foundation) NMH's subsidiaries are NorthwesternHealthCare Corporation (NHC), Northwestern Memorial Physicians Group (NMPG) andNorthwestern Memorial Insurance Company (NMIC) NLFH's subsidiary is Lake Forest Healthand Fitness Institute (HFI) As of December 20, 2012, all entities are members of the obligatedgroup for all of the outstanding bonds, except NHC and NMIC

NMH is a major academic medical center located in the Streeterville neighborhood of Chicago,providing a complete range of adult inpatient and outpatient services, primarily to residents ofChicago and surrounding areas, in an educational and research environment It is licensed for894 beds NMH, whose origins date back to 1849, is the primary teaching hospital forNorthwestern University's Feinberg School of Medicine (FSM)

NLFH is a community hospital located in Lake Forest, Illinois, providing a complete range ofadult inpatient and outpatient services, as well as skilled nursing care, primarily to residents ofLake Forest and the surrounding area It is licensed for 117 acute care beds, 40 skilled nursingcare beds, and 44 long-term care beds

The Foundation carries out fund-raising and other related development activities to promote andsupport the tax-exempt interests and purposes of NMH and NLFH

Basis of Presentation

The accompanying consolidated financial statements include the accounts of NMHC, theFoundation, NMH and its subsidiaries, and NLFH and its subsidiary (collectively referred toherein as Northwestern Memorial) All significant intercompany transactions and balances havebeen eliminated in consolidation

Charity Care and Community Benefit

Northwestern Memorial provides care to patients regardless of their ability to pay NorthwesternMemorial developed a Free and Discounted Care Policy (the Policy) for both the uninsured andthe underinsured Under the Policy, patients are offered discounts of up to 100% of charges on a

1309-1140617 8


Notes to Consolidated Financial Statements (continued)(In Ihoulsands)

1. Organization and Summary of Significant Accounting Policies (continued)

sliding scale, which is based on income as a percentage of the Federal Poverty Level guidelines(up to 600%) The Policy also contains provisions that are responsive to those patients subject tocatastrophic health care expenses and uninsured patients not covered by the provisions aboveSince Northwestern Memorial does not pursue collection of these amounts, they are not reportedas net patient revenue, and the cost of providing such care is recognized within operatingexpenses

Northwestern Memorial estimates the direct and indirect costs of providing charity care by

applying a cost to gross charges ratio to the gross uncompensated charges associated with

providing charity care to patients Northwestern Memorial also receives certain funds to offset or

subsidize charity care services provided These funds are primarily received from investment

return on free care endowment funds The cost of providing charity care was $61,243 and

$57,738 for the years ended August 31, 2013 and 2012, respectively In addition, funds received

to offset or subsidize charity care were $468 and $491 for the years ended August 31, 2013 and

2012, respectively In filing the Annual Non Profit Hospital Community Benefits Plan Report to

the Illinois Attorney General for the year ended August-3 1, 2012, Northwestern Memorial

reported total community benefit of $315,074 (unaudited), including unreimbursed cost of

charity care of $58,668 (unaudited), which is calculated using a different methodology than that

used for the consolidated financial statements Management is currently collecting the

information needed to file the 2013 report

Use of Estimates

The preparation of financial statements in conformity with U S generally accepted accountingprinciples (GAAP) requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and the disclosure of contingent assets and liabilities atthe date of the financial statements and the reported amounts of revenues and expenses duringthe reporting period Actual results could differ from those estimates

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid short-term investments with maturities of90 days or less from the date of purchase

1309-1140617 9




Patient Accounts Receivable

Patient accounts receivable are stated at net realizable value Northwestern Memorial maintainsallowances for uncollectible accounts and for estimated losses resulting from a payor's inabilityto make payments on accounts Northwestern Memorial estimates the allowance for uncollectibleaccounts based on management's assessment of historical and expected net collections,considering historical and current business and economic conditions, trends in health carecoverage, and other collection indicators Accounts receivable are charged to the allowance foruncollectible accounts when they are deemed uncollectible

Assets Limited as to Use

Assets limited as to use consist primarily of investments designated by the appropriate board ofdirectors (the Board) for certain medical education and health care programs The appropriateBoard retains control of these investments and may, at its discretion, subsequently use them forother purposes In addition, assets limited as to use include investments held by trustees underdebt agreements and for self-insurance and collateral related to interest rate swaps

Investments

Investments in equity securities with readily determinable fair values and all investments in debtsecurities are reported at fair value based on quoted market prices Unless in pension plan assets,alternative investments are reported using the equity method Alternative investments includecommon collective trusts, commingled funds, 103-12 entities, and other limited partnershipinterests in hedge funds, private equity, venture capital, and real estate funds Alternativeinvestments in the pension plan are reported at fair value based on net asset value (NAV) pershare or equivalent

Derivative Instruments

Derivative instruments, specifically interest rate swaps, are recorded on the consolidated balancesheets at fair value The change in the fair value of derivative instruments is recorded innonoperating gains (losses)

1309-1140617 10




Inventories

Inventories, consisting primarily of pharmaceuticals and other medical supplies, are stated at thelower of cost on the first-in, first-out method or fair value

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method overthe estimated useful lives of the assets Typical useful lives are 5 to 40 years for buildings andbuilding service equipment and 3 to 20 years for equipment and furniture Interest incurred onborrowed funds during the period of construction of capital assets is capitalized as a componentof the cost of acquiring those assets

Asset Impairment

Northwestern Memorial considers whether indicators of impairment are present and performs thenecessary tests to determine if the carrying value of an asset is appropriate Impairmentwrite-downs are recognized in operating income at the time the impairment is identified Theimpairment of long-lived assets was $2,603 and $0 for the years ended August 31, 2013 and2012, respectively

Deferred Charges

Deferred finance charges and bond discounts or premium are amortized or accreted using theeffective interest method or the bonds outstanding method, which approximates the effectiveinterest method, over the life of the related debt

Net Assets

Resources are classified for reporting purposes into four net asset categories as generalunrestricted, board-designated unrestricted, temporarily restricted, and permanently restricted,according to the absence or existence of board designations or donor-imposed restrictionsBoard-designated net assets are unrestricted net assets that have been set aside by the Board forspecific purposes Temporarily restricted net assets are those assets, including contributions andaccumulated investment returns, whose use has been limited by donors for a specific purpose ortime period Permanently restricted net assets are those for which donors require the principal ofthe gifts to be maintained in perpetuity to provide a permanent source of income

1309-1140617 11




Any changes in donor restrictions that change the net asset category of previously recordedcontributions are recorded as other in the accompanying consolidated statements of operationsand changes in net assets in the period communicated by the donor

Net Patient Revenue

Northwestern Memorial has agreements with third-party payors that provide for payments toNorthwestern Memorial at amounts different from its established rates Payment arrangementsinclude prospectively determined rates per admission or visit, reimbursed costs, discountedcharges, and per diem rates Net patient revenue is reported at the estimated net amount due frompatients and third-party payors for services rendered, including estimated adjustments underreimbursement agreements with third-party payors, certain of which are subject to audit byadministering agencies These adjustments are accrued on an estimated basis and are adjusted, asneeded, in future periods

EHR Incentive Payments

The American Recovery and Reinvestment Act of 2009 included provisions for implementinghealth information technology under the Health Information Technology for Economic andClinical Health Act (HITECH) The provisions were designed to increase the use of electronichealth records (EHR) technology and establish the requirements for a Medicare and Medicaidincentive payment program beginning in 2011 for eligible providers that adopt and meaningfullyuse certified EHR technology Eligibility for annual Medicare incentive payments is dependenton providers demonstrating meaningful use of EHR technology in each period over a four-yearperiod Initial Medicaid payments are available to providers that adopt, implement, or upgradecertified EHR technology Providers must demonstrate meaningful use of such technology insubsequent years to qualify for additional Medicaid incentive payments

Northwestern Memorial recognizes HITECH incentive payments as revenue under the grantaccounting model when it is reasonably assured that the meaningful use objectives have beenachieved Northwestern Memorial recognized incentive payments totaling $3,937 and $5,422 forthe years ended August 31, 2013 and 2012, respectively, as net assets released from donorrestrictions and federal and state grants in the accompanying consolidated statements ofoperations and changes in net assets Northwestern Memorial's compliance with the meaningfuluse criteria is subject to audit by the federal government

1309-1140617 12


Notes to Consolidated Financial Statements ( continued)(In Ihoulsands)


Contributions

Unrestricted gifts, other than long-lived assets, are recorded as a component of othernonoperating gains in the accompanying consolidated statements of operations and changes innet assets Unrestricted gifts of long-lived assets, such as land, buildings, or equipment, arerecorded at fair value as an increase in unrestricted net assets Contributions are reported aseither temporarily or permanently restricted net assets if they are received with donorrestrictions When a donor restriction expires, that is, when a stipulated time restriction ends orpurpose restriction is accomplished, temporarily restricted net assets are reclassified asunrestricted net assets and reported in the accompanying consolidated statements of operationsand changes in net assets as net assets released from restrictions

Unconditional promises to give cash or other assets are reported as pledges receivable andcontributions within the appropriate net asset category An allowance for uncollectible pledgesreceivable is estimated based on historical experience and other collection indicators Pledgesreceivable with payment terms extending beyond one year are discounted using market rates ofreturn reflecting the terms and credit of the pledges at the time a pledge is made

Northwestern Memorial is a beneficiary of several split-interest agreements, primarily perpetualtrusts held by others The Foundation recognizes its interest in these perpetual trusts astemporarily or permanently restricted net assets based on the Foundation's percentage of the fairvalue of the trusts' assets

Nonoperating Gains (Losses)

Nonoperating gains (losses) consist primarily of investment returns (including realized gains andlosses, net change in unrealized investment gains and losses, changes in NorthwesternMemorial's proportionate share of its equity interest in alternative investments, interest, anddividends), unrestricted contributions received, grants and academic support provided to externalorganizations, net assets released from restriction and used for grants and academic support,changes in fair value of interest rate swaps and loss on extinguishment of debt

11309-1140617 J


Notes to Consolidated Financial Statements ( continued)(In Thoursands)


Excess of Revenue Over Expenses

The accompanying consolidated statements of operations and changes in net assets include theexcess of revenue over expenses Changes in unrestricted net assets, which are excluded from theexcess of revenue over expenses, consist primarily of contributions of long-lived assets(including assets acquired using contributions, which, by donor restriction, are to be used for thepurposes of acquiring such assets), transfers between net asset categories based on changes indonor restrictions, and postretirement benefit-related changes other than net periodicpension cost

Reclassifications

Certain reclassifications have been made to the 2012 consolidated financial statements toconform with classifications used in 2013 The reclassifications had no effect on the changes innet assets previously reported

New Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting

Standards Update (ASU) 2011-11, Disclosures about Offsetting Assets and Liabilities ASU

2011-11 enhances disclosures about financial and derivative instruments that are either offset on

the statement of financial position or subject to an enforceable master netting agreement or

similar agreement, irrespective of whether they are offset on the statement of financial position

In January 2013, the FASB issued ASU 2013-01, (7arrfying the Scope of Disclosure about

Offsetting Assets and Liabilities ASU 2013-01 clarifies that ASU 2011-11 applies only to

derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including

bifurcated embedded derivatives, repurchase agreements and reverse purchase agreements, and

securities borrowing and securities lending transactions This new guidance is effective for fiscal

years and interim periods within those years beginning on or after January 1, 2013 This

guidance will be effective for Northwestern Memorial in fiscal year 2014 At this time,

Northwestern Memorial has no transactions that would qualify for the new disclosure

requirements, hence, this guidance will have no effect on its consolidated financial statement

disclosures

1309-1140617 14


Notes to Consolidated Financial Statements (continued)(In Thousands)


In October 2012, the FASB issued ASU 2012-05, Notfor-Profrt Entities. Classification of the

Sale Proceeds of Donated Financial Assets in the Statement of Cash Floitws ASU 2012-05

requires not-for-profit entities (NFPs) to classify cash receipts from the sale of donated financial

assets consistent with cash donations if those cash receipts were from the sale of donated

financial assets that upon receipt were directed without any NFP-imposed limitations for sale and

were converted nearly immediately into cash These cash receipts would be classified as inflows

from operating activities, unless the donor restricted the use of the contributed resources to long-

term purposes, in which case they would be classified as cash flows from financing activities

This new guidance is effective for fiscal years and interim periods within those fiscal years

beginning on or after June 15, 2013 This guidance will be effective for Northwestern Memorial

in fiscal year 2014 Northwestern Memorial is evaluating the effect this guidance will have on its

consolidated financial statements

1309-1140617 15



2. Investments and Other Financial Instruments

The composition of investments and cash and cash equivalents at August 31 is as follows

Measured at fair valueCash and short-term investmentsMutual fundsCommon collective trustsCommingled fundsCorporate bondsU S government and agency issuesForeign government issuesEquity securities

103-12 entities

Accounted for under the equity methodAlternative investments

2013 2012

$ 435,329 $ 304,586685,570 736,48696,205 72,893

112,859 199,66149,555 60,86116,804 818

- 1,38891,675 50,496

171,741 123,182

1,659,738 1,550,371

1,519,219 1,221,495

$ 3,178,957 $ 2,771,866

Investments and other financial instruments consist of the following

Assets limited as to useTrustee-held fundsSelf-insurance programsBoard-designated funds

Total assets limited as to useDonor-restricted fundsUnrestricted, undesignated funds

Total investments, excluding short-term investmentsOther financial instrumentsCash and cash equivalents and short-term investments

2013 2012

$ 26 $ 26,296538,349 540,796145,545 138,600

683,920 705,692252,175 245,498

1,817,341 1,568,408

2,753,436 2,519,598

425,521 252,268

$ 3,178,957 $ 2,771,866

1309-1140617 16



2. Investments and Other Financial Instruments (continued)

The composition and presentation of investment returns are as follows for the years endedAugust 31

2013 2012

Interest and dividend incomeInvestment expensesRealized gains on alternative investments, netRealized gains on other investments, netNet increase in unrealized gains on alternative investments

Net increase (decrease) in unrealized gains on other

investments

Reported asNonoperating investment return

Temporarily restricted - investment return

$ 28,280 $ 14,935(3,109 ) (4,547)45,129 34,92587,547 85,622116,066 30,680

35,197 (1,138)

$ 309,110 $ 160,477

$ 301,730 $ 150,7627,380 9,715

$ 309,110 $ 160,477

Northwestern Memorial's investments measured at fair value include mutual funds, commonequities, corporate and U S government debt issues, state, municipal, and foreign governmentdebt issues, commingled funds, common collective trusts, and 103-12 entities

Commingled investments, common collective trusts, and 103-12 investment entities arecommingled investment funds formed from the pooling of investments under commonmanagement Unlike a mutual fund, these investments are not a registered investment companyand, therefore, are exempt from registering with the Securities and Exchange Commission

The investment strategy for the mutual funds, commingled funds, common collective trusts, and

103-12 investment entities involves maximizing the overall returns by investing in a wide variety

of assets, including domestic large cap equities, domestic small cap equities, international

developed equities, natural resources, and private equity limited partnerships (LPs)

Northwestern Memorial's non-pension plan investments measured under the equity method ofaccounting include absolute return hedge funds, equity long/short hedge funds, real estate,natural resources, and private equity limited partnerships, collectively referred to as alternativeinvestments Alternative investments in the pension plan assets are measured at fair value

1309-1140617 17



2. Investments and Other Financial Instruments (continued)

Absolute return hedge funds include funds with the ability to opportunistically allocate capitalamong several strategies The funds typically diversify across strategies in an effort to deliverconsistently positive returns regardless of the movement within global markets These fundsgenerally exhibit relatively low volatility and are generally redeemable quarterly with a 60-daynotice period Equity long/short hedge funds include hedge funds that invest both long and shortin U S and international equities These funds typically focus on diversifying or hedging acrossparticular sectors, regions, or market capitalizations and are generally redeemable quarterly witha 60-day notice period

Real estate includes LPs that invest in land and buildings and seek to improve property-leveloperations by increasing lease rates, recapitalizing properties, rehabilitating aging/distressedproperties, and repositioning properties to attract higher-quality tenants Real estate LPs typicallyuse moderate leverage Natural resources include a diverse set of LPs that invest in oil andnatural gas-related companies, commodity-oriented companies, and timberland Private equityincludes LPs formed to make equity and debt investments in operating companies that are notpublicly traded These LPs typically seek to influence decision-making within the operatingcompanies Investment strategies in this category may include venture capital, buyouts, anddistressed debt These three categories of investments can never be redeemed with the fundsDistributions from each fund will be received as the underlying assets of the fund are expected tobe liquidated periodically over the lives of the LPs, which generally run 10 to 12 years

As of August 31, 2013, $914,029 of alternative investments are subject to various redemptionlimits and lockup provisions, of which $717,501 expires within one year and $196,528 expiresafter one year from the balance sheet date

At August 31, 2013, Northwestern Memorial had commitments to fund an additional $265,809 toalternative investment entities, which is expected to occur over the next 12 years

3. Fair Value Measurements

Northwestern Memorial follows the requirements of Accounting Standards Codification (ASC)820 in regards to measuring the fair value of certain assets and liabilities as well as disclosuresabout fair value measurements ASC 820 defines fair value as the price that would be receivedfor an asset or paid for a transfer of a liability in an orderly transaction on the measurement date

1309-1140617 18



3. Fair Value Measurements (continued)

The methodologies used to determine fair value of assets and liabilities reflect market participantobjectives and are based on the applications of a three-level valuation hierarchy that prioritizesobservable market inputs over unobservable inputs The three levels are defined as follows

Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identicalassets or liabilities in active markets

Level 2 - Inputs to the valuation methodology include quoted prices for similar assets orliabilities in active markets and inputs that are observable for the asset or liability, eitherdirectly or indirectly, for substantially the full term of the financial instrument Examplesof Level 2 inputs are quoted prices for similar assets or liabilities in non-active markets orpricing models with inputs that are observable for substantially the full term of the assetor liability

Level 3 - Inputs to the valuation methodology are significant to the fair value of the assetor the liability and less observable These inputs reflect the assumptions marketparticipants would use in the estimation of the fair value of the asset or the liability

Fair Values

A financial instrument's categorization within the valuation hierarchy is based on the lowestlevel of input that is significant to the fair value measurement

1309-1140617 19



3. Fair Value Measurements ( continued)

The following table presents the financial instruments measured at fair value on a recurring basisas of August 31, 2013

AssetsCash and cash equixalents

Inx estnientsShort-teem inxestmentsCwieneN

Fixed income

Total short-teem in'estments

Mutual funds

Fixed incomeInternational equities

US equities

Total mutual funds

Coninion collectsxe trusts

International equities

US equities

Total coninion collectixe trusts

Commingled fundsInternational equitiesNatwal iesouicesGlobal equities

Total commingled funds

Le,.el1 Le,. el 2 Le,. el 3 Total

230,326 $ - $ - $ 230,326

7,607 7,607- 187,588 - 187,588

7,607 187,588 - 195,195

280,632 280,63264,208 64,208

340,730 340,730

685,570 685,570

- 51,085 - 51,085- 45,120 - 45,120

- 96,205 - 96,205

- 3,576 - 3,576- 1,648 - 1,648- 107,635 - 107,635

- 112,859 - 112,859

Bonds

Coi poi ate bonds - 49,555 - 49,555U S goxeinment and agencies' issues - 16,804 - 16,804

Total bonds - 66,359 - 66,359

EquitN seem sties 91,387 288 - 91,675

W3-12 entities - inter national equities - 171,741 - 171,741Cash equixalents in inxestment accounts 9,808 9,808

Total inxestments 794,372 635,040 - 1,429,412

Beneficial interests in trusts - 13,282 - 13,282

Total assets $ 1,024,698 $ 648,322 $ - $ 1,673,020

LiabilitiesInterest late s\\aps $ - $ 43,916 $ - $ 43,916

1309-1140617 20




The following table presents the financial instruments measured at fair N slue on a recurring basis as ofAugust 31. 2012

Le,.el1 Le,. el 2 Le,. el 3 Total

Assets

Cash and cash equix alents S 139343 S - S - S 139.34

Inx estments

Short-teem investments

CwieneN 7.592 - - 7.592

Fixed income - 105.333 - 105.333

Total short-teem investments 7.592 105.33 - 112.925

Mutual funds

Fixed income 346.876 - - 346.876

International equities 84.175 - - 84.175

U S equities 305.435 - - 305.435

Total mutual funds 736.-486 - - 736.-486

Coninion olleetixetiusts c

International equities - 39.892 - 39.892

US equities - 3.001 - 3.001

Total coninion collectixe trusts - 72.893 - 72.893

Commingled ands f

Intel national equities - 21.321 - 21.321

Natwal iesouices - 26.-495 - 26.-495

Global equities - 151.8 45 - 151.8 45

Total commingled funds - 199.661 - 199.661

Bonds

Coi poi ate bonds - 60.861 - 60.861

U S goxeinment and agencies' issues - 818 - 818

Foreign goxeinment issues - 1.388 - 1.388

Total bonds - 63.067 - 63.067

EquitN securities 50,443 53 - 50.496

103-12 entities - inteinationalequities - 123.182 - 123.182

Cash egwxalents in inxestment accounts 52.318 - - 52.318

Total inxestments 846.839 564.189 - 1.411.028

Beneficial interests in trusts - 11.594 - 11.594

Total saets S 986.182 S 575.783 S - S 1.561.965

Liabilities

Interest late s\\aps S - S 104.5O S - S 104.50

1309-1140617 21




There were no transfers into or out of Level 2 or Level 1 during the year ended August 31, 2013

Reconciliation to the Consolidated Balance Sheets

A reconciliation of the fair value of assets to the consolidated balance sheets at August 31, 2013and 2012, is as follows

2013 2012

Short-term investments measured at fair valueInvestments, including assets limited as to usemeasured at fair value

Total investments at fair valueAlternative investments accounted for under equitymethod included in investments, including assetslimited as to use

Total investments

Other long-term assetsBeneficial interests in trusts at fair valueOther long-term assets, net

Total other long-term assets

Valuation Techniques and Inputs

$ 195,195 $ 112,925

1,234,217 1,298,103

1,429,412 1,411,028

1,519,219 1,221,495

$ 2,948,631 $ 2,632,523

$ 13,282 $ 11,594137,716 88,157

$ 150,998 $ 99,751

Beneficial Interests in Trusts The fair value of beneficial interests in trusts is based on eitherthe Foundation's percentage of the fair value of the trusts' assets or the Foundation's percentageof the fair value of the trusts' assets adjusted for any outstanding liabilities (discounted using arate per Internal Revenue Service (IRS) regulations), based on each trust arrangement

1309-1140617 22



3. Fair Value Measurements (continued)

Interest Rate Swaps The fair value of interest rate swaps is based on generally acceptedvaluation techniques, including discounted cash flow analysis on the expected cash flows of eachderivative and quoted prices from dealer counterparties and other independent market sourcesThe valuation incorporates observable interest rates and yield curves for the full term of theswaps The valuation is also adjusted to incorporate non-performance risk for NMH or therespective counterparty The adjustment is based on the credit spread for entities with similarcredit characteristics as NMH or market-related data for the respective counterpartyNorthwestern Memorial pays fixed rates of 3 889% and receives cash flows based on rates equalto 63% of the London Interbank Offered Rate (LIBOR) plus 28 basis points

Investments The fair value of Level 1 investments, which consist of equity securities andcertain mutual funds, is based on quoted market prices that are valued on a daily basis Level 2investments consist of U S government securities, corporate bonds, commingled funds, commoncollective trusts, interest in 103-12 entities, and fixed income instruments issued bymunicipalities and foreign government agencies The fair value of the U S government andagency securities and corporate bonds is established based on values obtained from nationallyrecognized pricing services that value the investments based on similar securities and matrixpricing of similar quality and maturity securities The fair values of commingled funds, commoncollective trusts, and 103-12 entities are based on either the fair value of the underlyinginvestments of the fund, as determined by the fund, or on the ownership interest in the NAV pershare or its equivalent, of the respective fund

Northwestern Memorial's investments are exposed to various kinds and levels of risk Equitysecurities and equity mutual funds expose Northwestern Memorial to market risk, performancerisk, and liquidity risk Market risk is the risk associated with major movements of the equitymarkets Performance risk is that risk associated with a company's operating performance Fixedincome securities and fixed income mutual funds expose Northwestern Memorial to interest raterisk, credit risk, and liquidity risk As interest rates change, the value of many fixed incomesecurities is affected, including those with fixed interest rates Credit risk is the risk that theobligor of the security will not fulfill its obligations Liquidity risk is affected by the willingnessof market participants to buy and sell particular securities Liquidity risk tends to be higher forequities related to small capitalization companies and certain alternative investments Due to thevolatility in the capital markets, there is a reasonable possibility of subsequent changes in fairvalue, resulting in additional gains and losses in the near term

1309-1140617 2J




The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accruedexpenses and other current liabilities, and short-term borrowings are reasonable estimates of theirfair values due to their short-term nature

The estimated fair value of the long-term debt portfolio, including the current portion, was$812,408 and $871,382 at August 31, 2013 and 2012, respectively The fair value of thisLevel 2 liability is based on quoted market prices for the same or similar issues and therelationship of those bond yields with various market indices The market data used to determineyield and calculate fair value represents Aa/AA-rated tax-exempt municipal health care bondsThe effect of third-party credit valuation adjustments , if any, is immaterial

The fair value of pledges receivable, a Level 2 asset, is based on discounted cash flow analysisand approximates the carrying value at August 31, 2013 and 2012

4. Self-Insurance Liabilities and Related Insurance Recoverables

NMH retains certain levels of professional and general liability risks covering itself and NMPGNMH also retains certain levels of workers' compensation risks For those risks, NMH hasestablished trust funds to pay claims and related costs

NMIC provides coverage, on a claims-made basis, in excess of the amounts retained by NMHfor professional and general liability claims occurring and reported between October 1, 2002 andNovember 1, 2004 NMIC is fully reinsured for these risks

Effective November 1, 2004, NMIC provides, on a claims-made basis, professional and general

liability coverage to NMH and professional liability coverage to Northwestern Medical Faculty

Foundation (NMFF) under a joint indemnification program NMFF is an unconsolidated, not-for-

profit, multi-specialty group practice, which serves as the clinical faculty practice plan arm of

FSM and is one of the faculty components of the academic medical center NMIC also provides

excess general liability coverage to otherwise commercially insured NMHC subsidiaries NMIC

receives funding from the covered entities for the risk it covers under its indemnity policies

Under the terms of a mutual funding agreement, NMH is required to maintain cash and

investments, and NMFF is required to maintain a deposit at NMIC sufficient to fund actuarially

determined tail liabilities, to be covered by NMIC upon any cancellation, non-renewal, or other

termination for any reason of NMIC's ongoing joint coverage of both NMH and NMFF

1309-1140617 24



4. Self-Insurance Liabilities and Related Insurance Recoverables (continued)

NMFF also maintains a deposit at NMIC at a level deemed actuarially sufficient to fund its

premium obligations under a premium funding arrangement Total NMFF deposits at NMIC,

which are reported as due to insureds in the accompanying consolidated balance sheets,

amounted to $116,291 and $62,415 at August 31, 2013 and 2012, respectively

NLFH retains certain levels of professional and general liability risks for occurrences on or after

January 1, 2003 Prior to June 1, 2011, NLFH purchased commercial insurance for risks in

excess of its self-insured retention levels For the period from June 1, 2011 to June 1, 2012,

NMIC provides professional and general liability coverage to NLFH in excess of its self-insured

retention levels NMIC is fully reinsured for these risks Effective June 1, 2012, NMIC provides,

on a claims-made basis, professional and general liability coverage to NLFH through an

integrated program shared by NMH and NMFF NLFH purchased tail coverage for claims

incurred but not reported as of December 31, 2002

Northwestern Memorial's self-insurance liability and related amounts recoverable fromreinsurers are reported in the accompanying consolidated balance sheets at present value basedon a discount rate of 1 5% as of August 31, 2013 and 2012 This discount rate is based on severalfactors, including rolling averages of risk-free rates based on estimated payment patterns of theunderlying liability The undiscounted gross liabilities for the self-insured programs were$502,179 and $520,866 at August 31, 2013 and 2012, respectively The estimated undiscountedamounts recoverable from reinsurers were $85,378 and $93,708 at August 31, 2013 and 2012,respectively Provisions for the professional and general liability risks are based on an actuarialestimate of losses using actual loss data adjusted for industry trends and current conditions andon an evaluation of claims by Northwestern Memorial's legal counsel The provision forestimated self-insured claims includes estimates of ultimate costs for both reported claims andclaims incurred but not reported

NMH purchased tail coverage for risks in excess of its self-insured retentions following theexpiration of the claims-made professional and general liability program covering the periodfrom October 1, 1999 to October 1, 2002 In conjunction with this transaction, NMH recorded adeferred gain that is being amortized over the estimated runoff period The balance of thedeferred gain was $2,095 and $3,121 at August 31, 2013 and 2012, respectively

1309-1140617 25



4. Self-Insurance Liabilities and Related Insurance Recoverables ( continued)

In the opinion of management, based in part on the advice of outside legal counsel, adequateprovision has been made at August 31, 2013, for all claims incurred to date Management furtherbelieves that the ultimate disposition of these claims will not have a material adverse effect onthe financial position of Northwestern Memorial

5. Employee Benefits Obligations

There are two non-contributory defined benefit pension plans ( the Plans) maintained within the

Northwestern Memorial HealthCare controlled group that covered specified employees of

controlled group organizations The sponsors for the Plans approved resolutions to amend the

Plans effective at the end of the day on December 31, 2012 The amendments implement a hard

freeze, such that no participant will earn any additional or new benefits under the Plans on and

after January 1, 2013, and no compensation earned or service performed by any Plan participant

on and after January 1, 2013, will count for any purpose other than continued vesting under the

Plans in benefits earned prior to 2013

The following table summarizes the change in the projected benefit obligation

NMH

Projected benefit obligation,beginning of yearService costInterest costCurtailment gain

Net actuarial (gain) lossExpenses paid

Benefits paid

Projected benefit obligation,end of year

NLFH

2013 2012 2013 2012

$ 441,459 $ 414,020 $ 120,727 $ 101,9956,539 17,426 1,752 4,13 5

18,361 21,306 5,064 5,285

- (43,638) - (5,106)

(28,939 ) 46,983 (13,752 ) 17,157

- (927) - -(21,282 ) (13,711) (3,051) (2,739)

$ 416,138 $ 441,459 $ 110,740 $ 120,727

1309-1140617 26



5. Employee Benefits Obligations ( continued)

The following table summarizes the changes in the Plans' assets

NMH NLFH

2013 2012 2013 2012Plan assets at fair value,beginning of year $ 472,273 $ 456,904 $ 116,864 $ 112,327Actual return on thePlans ' assets, net ofexpenses 54,597 29,080 13,439 7,276

Employer contribution - -

Benefits paid (21 ,282) (13,711) (3,051 ) (2,739)

Plan assets at fair value,end of year $ 505,588 $ 472,273 $ 127,252 $ 116,864

The following table sets forth the Plans ' funded status, as well as recognized amounts in theconsolidated balance sheets as of August 3 1

NMH NLFH2013 2012 2013 2012

Plan assets at fair value $ 505,588 $ 472,273 $ 127,252 $ 116,864Projected benefit obligation 416,138 441,459 110,740 120,727

Funded status recognized asprepaid pension cost/(pension payable ) $ 89,450 $ 30,814 $ 16,512 $ (3,863)

The accumulated benefit obligations of the Plans are $526,878 and $562,003 as ofAugust 31, 2013 and 2012, respectively

1309-1140617 27




Included in unrestricted net assets are the Plans' amounts that have not yet been recognized innet periodic pension cost at August 31 as follows

NMH NLFH

2013 2012 2013 2012Unrecognized prior service

cost $ - $ (13) $ - $ -Unrecognized actuarial loss ( 66,092 ) (117,037) (968) (19,784)

$ (66,092 ) $ (117,050) $ (968) $ (19,784)

Changes in the Plans' assets and benefit obligations recognized in unrestricted net assets during2013 and 2012 include the following

NMH NLFH

2013 2012 2013 2012Current year actuarial gain

(loss) $ 48,912 $ (50,541) $ 18,563 $ (13,075)Effect of curtailmentaccounting on gain - 43,638 - -

Recognized actuarial loss 2,034 7,315 253 -Current year amortization of

prior service cost 13 125 - -Current year amortization ofcurtailment accountingcredit - 510 - -

$ 50,959 $ 1,047 $ 18,816 $ (13,075)

The Plans' prior service cost and net actuarial gain included in unrestricted net assets expected tobe recognized in net periodic pension cost during 20 14 are $0 and $401, respectively

1309-1140617 28



5. Employee Benefits Obligations (continued)

Net periodic pension (benefit) cost included in operating results for the years ended August 31consists of the following

NMH NLFH

2013 2012 2013 2012Service cost of benefitsearned during the year $ 6,539 $ 17,426 $ 1,752 $ 4,135

Interest cost of projectedbenefit obligation 18,361 21,306 5,064 5,285

Expected return on thePlans' assets (34,624 ) (33,564 ) (8,627 ) (8,301)

Recognized actuarial loss 2,034 7,315 253 -Amortization of prior

service costs 13 125 - -Recognized loss due tocurtailment - 510 - -

Net periodic pension(benefit) cost $ (7,677 ) $ 13,118 $ (1,558 ) $ 1,119

The following table sets forth the weighted-average assumptions used to determine the projectedbenefit obligation and benefit cost as of August 31

2013 2012

Used to determine projected benefit obligationDiscount rate 5.15% 425%Rate of compensation increase - 3 50

2013 2012

Used to determine benefit costDiscount rate 4.25% 5 25%Expected long-term rate of return on the Plans' assets 7.50 7 50Rate of compensation increase 3.50 3 50

1309-1140617 29




The expected long-term rate of return on assets is determined based on a capital market assetmodel, which assumes that future returns are based on long-term, historical performance asadjusted for contemporary dividend yields The adjusted historical returns were weighted by thecurrent long-term asset allocation targets and reduced by 100 basis points to produce a morenormal risk premium Northwestern Memorial's investment advisor assisted with the analysis

The Plans' asset allocation and investment strategies are designed to earn returns on plan assetsconsistent with a reasonable and prudent level of risk Investments are diversified across classes,sectors, and manager style to minimize the risk of loss Northwestern Memorial uses investmentmanagers specializing in each asset category and, where appropriate, provides the investmentmanager with specific guidelines that include allowable and/or prohibited investment typesNorthwestern Memorial regularly monitors manager performance and compliance withinvestment guidelines

The target allocation of the Plans' assets as of August 31 is as follows

2013 2012

Cash and cash equivalents -% -%Equity securities 47 42

Alternative investments 43 44

Fixed income 10 14

100% 100%

1309-1140617 30




The following table presents the Plans' financial instruments as of August 31, 2013, measured atfair value on a recurring basis by the valuation hierarchy described in Note 3

LeN el 1 LeN el 2 LeN el 3 Total

Cash and cash equi\ alents s 342 S - S - S 342103-12 imestmententities

International equities - 44,017 - 44,017Prn ate equit} - - 1,474 1,474

Total 10;-12 investment entities - 44,017 1,474 45,491

Common collectiN e trustsFixed income - 2,986 - 2,986International equities - 21,149 - 21,149Prn ate equrt} - - 2,213 2,213

U S equities - 18,008 - 18,008

Total common collectiN e trusts - 42,143 2,213 44,356

US goN enuuent debtTreasun notes - 1,655 - 1,655

Corporate debt

Corporate debt instruments - other - 13,863 - 13,863

EquitN securities

U S equities 20,930 103 - 21,033

Hedge funds and otherAbsolute return hedge fund - 17,183 69,900 87,083Equiri long/short Hedge fiord - 44,747 56,871 101,618Fixed income - 844 - 844Natural resources - 3,300 9,923 13,223

Total hedge funds and other - 66,074 136,694 202,768

Interest in limited partnerslups

U S equities - 25,685 - 25,685International equities - 28,118 - 28,118Natural resources - - 18,015 18,015Prn ate equrth - - 60,251 60,251Real estate - - 22,483 22,483

Total interest in limited partnerslups - 53,803 100,749 154,552

Mutual fundsFixed income 28,915 11,641 - 40,556International equities 15,879 - - 15,879U S equities 92,345 - - 92,345

Total nu tual funds 137,139 11,641 - 148,780

Grand total s 158,411 S 233,299 S 241,130 S 632,840

J 11309-1140617



5. Employee Benefits Obligations (continued)

The following table presents the Plans' financial instruments as of August 31, 2012, measured atfair value on a recurring basis by the valuation hierarchy described in Note 3

LeN el 1 LeN el 2 LeN el 3 Total103-12 imestmententities

International equitiesPm ate equm

Total 103-12 investment entities

Common collectiN e trustsFixed incomeInternational equitiesPm ate equit}

U S equities

Total common collectiN e trusts

US goN enuuent debtTreasun notes

Corporate debtCorporate debt instruments - other

Corporate debt instruments -

preferred

Total corporate debt

EquitN securities

U S equities

Hedge funds and otherAbsolute return Hedge fundEquiri long/short Hedge fundFixed incomeNatural resources

Total Hedge funds and other

Interest in limited partnerslupsNatural resourcesPm ate equityReal estate

Total interest in limited partnerslups

Mutual fundsFixed incomeInternational equitiesU S equities

Total nu tual funds

Grand total

$ - $ 35,169 $

- -

- $

1,910

35,169

1,910

- 35,169 1,910 37,079

- 5.965 - 5.965- 21,815 - 21,815- - 2,961 2,961

- 12,928 - 12,928

- 40,708 2,961 43.669

- 1,257 - 1,257

- 8,020 - 8,020

- 8,04; - 8,04;

- 16,06; - 16,06;

15,018 16 - 15.034

- 8,222 63,681 71,90;- 7,821 7 5, 986 83,807- 1,377 - 1,377- 387 3,579 6,966

- 20,807 143.246 164.05 3

- - 17,807 17,807- 36.866 68,249 105,115- - 21,846 21,846

- 36.866 107,902 144,768

57,694 - - 57,69430,607 - - 30,60778,91; - - 78,91;167,214 - - 167,214

$ 182.232 $ 150,886 $ 256,019 $ 589.137

1309-1140617 32




The fair value of Level 1 investments, which consist of equity securities and certain mutual

funds, is based on quoted market prices that are valued on a daily basis Level 2 investments

consist of U S government securities, corporate bonds, commingled funds, common collective

trusts, interest in 103-12 entities, and fixed income instruments issued by municipalities or

foreign government agencies Included in Level 2 investments are certain hedge funds and

limited partnerships that can be liquidated without restrictions The fair value of the U S

government securities and corporate bonds is established based on values obtained from

nationally recognized pricing services that value the investments based on similar securities and

matrix pricing of similar quality and maturity securities The fair values of the commingled

funds, common collective trusts, and 103-12 entities are based on either the fair value of the

underlying investments of the fund, as determined by the fund, or based on the Master Trust's

ownership interest in the NAV per share of its equivalent of the respective fund The Plans

utilize the NAV as the practical expedient for the fair value estimate as permitted All Level 2

investments can be redeemed without restrictions on the financial statement date or shortly

thereafter

The fair value of Level 3 investments , which primarily consist of alternative investments(principally limited partnership interests in hedge, private equity , real estate, and naturalresources funds ) and certain common collective trusts and 103-12 investments, are based onNAV The fair values of the securities held by limited partnerships that do not have readilydeterminable fair values are determined by the general partner taking into consideration, amongother things, the financial performance of underlying investments, recent sales prices ofunderlying investments, and other pertinent information In addition, actual market exchanges atperiod-end provide additional observable market inputs of the exit price NAV is calculated bythe investment ' s management monthly for all of the Master Trust's alternative investments otherthan limited partnerships , whose NAV is calculated on a quarterly basis The methods describedabove may produce a fair value calculation that may not be indicative of net realizable value orreflective of future fair values Furthermore, while the Plans' valuation methods are appropriateand consistent with other market participants , the use of different methodologies or assumptionsto determine the fair value of certain financial instruments could result in a different estimate offair value at the reporting date

All financial instruments with redemption restrictions in the near future or early withdrawal feesare categorized as Level 3 investments Some of the redemption restrictions are temporary innature If restrictions expire and an investment can be redeemed at NAV, such investment is

J J1309-1140617




reclassified from Level 3 to Level 2 of the fair value hierarchy During the years endedAugust 31, 2013 and 2012, $51,572 and $28,405 was transferred from Level 3 to Level 2,respectively

Investments in LPs, which cannot be redeemed on request, totaled $104,436 as of

August 31, 2013 Certain marketable alternative investments are subject to various redemption

restrictions As of August 31, 2013, $136,694 of alternative investments are subject to various

redemption limits and lockup provisions, of which $96,592 expires within one year and $40,102

expires after one year from the balance sheet date

The table below sets forth a summary of changes in the fair value of the Plans' Level 3 assets forthe period from September 1, 2011 to August 31, 2013

103-12 Common Interest inIrn estment CollectiN e Hedge Funds LimitedEntities Trusts and Other Partnerships Total

Value at September 1. 2011 $ 2,223 $ 3,593 $ 142,81; $ 107,691 $ 256.320Gain realized on assets sold

during the period 299 512 5 6A70 7,286Change in unrealized (loss)

gain related to holdings atAugust 31. 2012 (477) (874) 6,520 992 6,161

Purchases at cost 64 65 15,227 19,027 34,38;Sales at cost (199) (33 5) (1,889 ) (17,303) (19,726)

Transfers to LeNel 2 - - (19, 4,0) (8,975) (28,405)

Value at August 31. 2012 1,910 2,961 143.246 107,902 256,019Gain realized on assets sold

during the period 302 486 139 7,584 8,511Change in unrealized (loss)

gain related to holdings atAugust 31. 2013 (559 ) (906) 12,748 (5,426) 5,857

Purchases at cost 13 1 32,000 18 ,200 50,214Sales at cost (192 ) (329) (12 ,979) (14,399) (27,899)

Transfers to LeN el 2 - - (38,460) (13,112 ) (51,572)

Value at August 31. 2013 S 1,474 S 2,213 S 136,694 S 100,749 S 24 1,130

1309-1140617 34




The Plans' assets are managed solely in the interest of the Plans' participants and theirbeneficiaries The assets are invested with the investment objective of funding the accumulatedand projected retirement benefit obligations of the Plans consistent with the Plans' long-termrate-of-return assumption A time horizon of greater than five years is assumed, and therefore,interim volatility in returns is regarded with appropriate perspective

Northwestern Memorial has no current plans to contribute to the Plans during the year endingAugust 31, 2014

Benefit payments, which reflect future service, as appropriate, are expected to be paid as follows

NMH NLFHYear ending August 312014 $ 18,861 $ 3,542

152015 19,288 4,0012016 20,684 4,4782017 21,385 4,9942018 22,128 5,354

2019-2023 128,678 32,323

Northwestern Memorial also maintains defined contribution plans covering substantially all of its

full-time and part-time employees Effective January 1, 2013, employee contributions are limited

to 80% of each covered employee's salary and matched at 100% up to the first 6% of the

employee's salary contributed each pay period, with an annual maximum of $15,300 per

employee For the period from September 1, 2011 through December 31, 2012, contributions

were limited to 80% of each covered employee's salary and matched at 50% up to the first 6% of

the employee's salary contributed each pay period, with an annual maximum of $7,500 per

employee In addition, a non-elective provision for those employees who were not participants in

the defined benefit plans provided for employer contributions of 1% to 2% of each employee's

salary, provided that they were employed as of December 31 of the plan year and had at least one

thousand hours of service in the plan year The non-elective provision was eliminated as of

January 1, 2013, and the final 2012 contribution was made in early 2013 Employer contributions

related to these defined contribution plans included in employee benefits expense in the

accompanying consolidated statements of operations and changes in net assets totaled $21,284

and $13,220 in 2013 and 2012, respectively

1309-1140617 35




NMHC also maintains other noncontributory postretirement benefit plans (the NoncontributoryPlans ) for certain executive employees

Included in unrestricted net assets are an unrecognized actuarial gain of $173 and $787 atAugust 31, 2013 and 2012, respectively, for the Noncontributory Plans that have not yet beenrecognized in net periodic pension cost

Changes in the Noncontributory Plans' assets and benefit obligations recognized in unrestrictednet assets during 2013 and 2012 include the following

Current year actuarial lossRecognized actuarial net (gain)/lossRecognized service cost

2013 2012

$ 653 $ 1,313(1,267) 2,850

180 -$ (434) $ 4,163

As of August 31, 2013 and 2012, the Noncontributory Plans' unfunded projected benefit

obligation amounted to $19,502 and $19,376, respectively , and is included in other long-term

liabilities in the accompanying consolidated balance sheets The weighted -average discount rate

utilized in determining the actuarial present value was 5 15% and 4 25% in 2013 and 2012,

respectively The Noncontributory Plans' actuarial gain included in unrestricted net assets

expected to be recognized in net periodic pension cost during 2014 is $401

1309-1140617 36



6. Long-Term Debt

Long-term debt consists of the following at August 31

2013 2012Revenue Bonds, Series 2013 (NMHC), payable in annual

installments beginning August 31, 2031 throughAugust 31, 2043 (fixed coupon rates from 4 00% to5 00%) $ 111,235 $ -

Revenue Bonds, Series 2009A, payable in annualinstallments through August 15, 2039 (fixed coupon

rates range from 5 00% to 6 00%) 330,550 342,260Revenue Bonds, Series 2009B, payable in annual

installments through August 15, 2030 (fixed coupon

rates range from 5 00% to 6 00%) 47,415 96,100Variable-Rate Demand Revenue Bonds, Series 2008A,payable in annual installments through August 15, 2038

(weighted-average interest rate was 0 12% in 2013 and0 13% in 2012) 78,775 78,775

Variable-Rate Demand Revenue Bonds, Series 2007A,payable in annual installments through August 15, 2042

(weighted-average interest rate was 0 13% in 2013 and0 14% in 2012) 209,500 210,600

Revenue Bonds, Series 2003 (Lake Forest Hospital) - 25,950Variable-Rate Demand Revenue Bonds, Series 2002C,payable in annual installments beginningAugust 15, 2026 through August 15, 2031 (weighted-average interest rate was 0 13% in 2013 and 0 13% in2012) 27,450 33,000

Revenue Bonds, Series 2002A (Lake Forest Hospital) - 40,850

804,925 827,535LessUnamortized (premium) discount, net (2,329) 6,880

Current maturities 13,435 14,500

$ 793,819 $ 806,155

1309-1140617 37



6. Long-Term Debt (continued)

In February 2013, the following transactions occurred related to NMHC's long-term debt

• The Illinois Finance Authority issued fixed rate Revenue Bonds, Series 2013 (Series2013 Bonds) in the aggregate amount of $111,235 on behalf of NMHC as the borrowerand NMH as the user of the bond proceeds The proceeds of $119,589 from the bondsincluded original issue premiums of $8,354 A portion of the Series 2013 Bonds proceedswas placed in an irrevocable trust to legally defease $48,685 of the Series 2009B Bondsmaturing on August 15, 2039 The remaining proceeds of the Series 2013 Bonds wereused to pay or reimburse NMH for the cost of constructing certain of its health carefacilities and to pay certain expenses incurred in the issuance of the Series 2013 Bonds

• NLFH redeemed all the outstanding Series 2002A Bonds ($40,850) and legally defeased

all the outstanding Series 2003 Bonds ($25,950) by placing the proceeds in an irrevocable

trust

• NMH redeemed $5,550 of the Series 2002C Bonds maturing on August 15, 2032, with

cash

• The accompanying consolidated statements of operations and changes in net assetsinclude a $6,381 loss on extinguishment of long-term debt as a result of the above-mentioned transactions

NMH currently has a line of credit available for operations in the amount of $50,000, whichexpires in July 2015 Under this committed line of credit, NMH has the option to borrow atvarious rates expressed as an adjustment to the LIBOR, prime rate, or other bank-offered ratesAt August 31, 2013 and 2012, no amount was borrowed under the available line of credit

NMH has standby bond purchase agreements (SBPAs) with multiple banks that cover all of itsvariable-rate demand revenue bonds (VRDBs) The short-term credit rating for each series ofVRDBs is based on the respective bank's short-term credit rating The long-term credit rating for

1309-1140617 38




each series of VRDBs is based on NMH's long-term credit rating Changes in credit ratings mayimpact the interest paid on or remarketing of the VRDBs The banks provide liquidity support inthe event of a failed remarketing as follows

Par Value Expiration Date

Series 2008A $ 78,775 July 2017Series 2002C 27,450 July 2017Series 2007A 209,500 December 2014

The SBPAs require NMH to maintain reporting, financial, and other covenants If an SBPA is

not renewed or replaced prior to its expiration, or if some portion, or all, of the related VRDBs

are not successfully remarketed (failed remarketing) during the term of the SBPAs, the related

VRDBs convert to a term loan at the earlier of the expiration date of the related SBPA or after 90

consecutive days of failed remarketing Principal payments on the term loan would then be

payable over a three-year term The earliest principal payment on any term loan associated with

the bonds is 367 days from the failed remarketing date Therefore, the VRDBs, less any current

portion, are classified as long-term debt in the accompanying consolidated balance sheets

Scheduled principal repayments for the next five years, assuming remarketing of VRDBs, onlong-term debt are as follows

Year ending August 312014 $ 13,4352015 14,0952016 14,7852017 15,5152018 16,215

The provisions under the respective debt agreements require the Obligated Group to maintainreporting, financial, and other covenants At August 31, 2013, the Obligated Group was incompliance with these provisions

1309-1140617 39




Northwestern Memorial paid interest of $37,672 in 2013 and $40,012 in 2012 (which includes

$8,684 and $10,570, respectively, for net swap payments included in interest expense in the

accompanying consolidated statements of operations and changes in net assets) Northwestern

Memorial capitalized interest of $3,612 and $2,452 in 2013 and 2012, respectively

7. Derivatives

Northwestern Memorial's only derivative financial instruments are interest rate swaps, whichNMH maintains on its 2007A VRDBs for the sole purpose of risk management These bondsexpose NMH to variability in interest payments due to changes in interest rates To managefluctuations in cash flows resulting from interest rate risk, NMH entered into various interest rateswap agreements These swaps limit the variable-rate cash flow exposure on the VRDBs tosynthetically fixed cash flows By using interest rate swaps to manage the risk of changes ininterest rates, NMH exposes itself to credit risk and market risk Credit risk is the risk that acounterparty will fail to perform under the terms of a derivative contract When the fair value ofa swap is positive, the counterparty owes NMH, which creates credit risk for NMH When thefair value of a swap is zero or negative, the counterparty does not owe NMH NMH minimizesthe credit risk in its swap contracts by entering into transactions that require the counterparty topost collateral for the benefit of NMH based on the credit rating of the counterparty and the fairvalue of the swap contract The aggregate fair value of the swaps on the consolidated balancesheets as of August 31, 2013 and 2012, reflects a reduction of $2,305 and $9,497, respectively,for nonperformance risk Market risk is the adverse effect on the value of a financial instrumentthat results from a change in interest rates The market risk associated with interest rate changesis managed by establishing and monitoring parameters that limit the types and degree of marketrisk that may be undertaken Management also mitigates risk through periodic reviews of theirswap positions in the context of their total blended cost of capital As shown in the summarybelow, three interest rate swaps were terminated with their counterparties in February 2013 Thistermination resulted in the recognition of $2,467 of unamortized deferred gain remaining fromthe de-designation as hedging instruments

1309-1140617 40



7. Derivatives ( continued)

The following is a summary of the outstanding positions under existing interest rate swapagreements at August 31, 2013 and 2012

Notional Amount Maturity

2013 2012 Date Rate Paid Rate Received

$ 104,750 $ 105,300 August 2042 3 889%104,750 105,300 August 2042 3 889

- 35,250 May 2035 3 310- 35,250 May 2035 3 310- 43,200 May 2035 3 313

$ 209,500 $ 324,300

The fair value of derivative instruments at August 31 is as follows

Derivatives not designated ashedging instrumentsInterest rate contracts

Balance SheetLocation

63% of LIBOR + 28 bps63% of LIBOR + 28 bps63% of LIBOR + 28 bps63% of LIBOR + 28 bps63% of LIBOR + 28 bps

Liabilities

2013 2012

Interest rate swaps $ 43,916 $ 104,503

1309-1140617 41



7. Derivatives ( continued)

The effects of derivative instruments on the consolidated statements of operations and changes innet assets for 2013 and 2012 are as follows

Amount of Gain (Loss)Recognized in Excess ofRevenue Over Expenses

on Derivatives

Interest Rate Contracts 2013 2012

Derivatives not designated as hedging instrumentsOperating expense - interest $ (8,684 ) $ (10,570)

Nonoperating - change in fair value ofinterest rate swaps 40,585 (30,533)

NMH's derivative instruments contain provisions that require NMH's debt to maintain an

investment-grade credit rating from certain major credit rating agencies If NMH's debt were to

fall below investment grade, it would be in violation of these provisions, and the counterparties

to the derivative instruments could request immediate payment or demand immediate and

ongoing collateralization on derivative instruments in net liability positions NMH has posted

collateral of $0 and $20,451 as of August 31, 2013 and 2012, respectively If the credit risk-

related contingent features underlying these agreements were triggered to the fullest extent on

August 31, 2013, NMH would be required to post $46,221 of collateral to its counterparties

8. Income Tax Status

NMHC, NMH, NLFH, the Foundation , HFI, and NMPG are qualified under the Internal

Revenue Code (the Code ) as tax-exempt organizations and are exempt from tax on income

related to their tax -exempt purposes under Section 501(a) of the Code Accordingly , no income

taxes are provided for the majority of the income in the accompanying consolidated financial

statements for these corporations NMHC, NMH, NLFH, HFI, and the Foundation had unrelated

business income (UBI) generated primarily through limited partnerships within the investment

portfolio and the sale of certain services that are not directly related to patient care NMHC,

NMH, NLFH, HFI, and the Foundation have unused net operating loss carryforwards available

to offset the UBI tax The net operating loss carryforwards expire through 2029 The deferred tax

1309-1140617 42



8. Income Tax Status (continued)

assets associated with these net operating loss carryforwards of $3,736 and $4,708 at August 31,2013 and 2012, respectively, are offset by valuation allowances on the consolidated balancesheets of $3,736 and $4,708, respectively

In assessing the realizability of deferred tax assets, management considers whether it is morelikely than not that some portion or all of the deferred tax asset will not be realized The ultimaterealization of deferred tax assets is dependent on the generation of future taxable income duringthe periods in which those temporary differences become deductible

NMIC is incorporated under the laws of the Cayman Islands The Cayman Islands governmentimposes no tax on income or capital gains, and NMIC has received an undertaking from theCayman Islands government exempting it from future income and capital gains taxes untilMarch 25, 2023 However, NMIC is subject to U S federal corporate taxation to the extent that itgenerates net income that is effectively connected with a U S trade or business NMIC is notengaged in any such trade or business in the U S In addition, distributions that NMH receivesfrom NMIC are treated as dividends and, as such, are not taxable to NMH Therefore, no incometax provision has been recorded related to NMIC and its operations

Interest and penalties on income taxes, when incurred, are included in operating expenses

9. Temporarily and Permanently Restricted Net Assets

Temporarily restricted net assets are available for the following purposes at August 31

Health care servicesPurchase of property and equipmentOperating expenses and charity care

Research, education, and other

2013 2012

$ 16,638 $ 15,28748,737 49,82092,307 90,156

$ 157,682 $ 155,263

1309-1140617 43



9. Temporarily and Permanently Restricted Net Assets (continued)

Net assets were released from donor restrictions by incurring expenditures for the followingpurposes

2013 2012

Health care servicesPurchase of property and equipment $ 1,248 $ 1,579Operating expenses and charity care 12,473 8,286

Research, education, and other 17,601 18,946

$ 31,322 $ 28,811

Permanently restricted net assets at August 31, 2013 and 2012, are summarized below, theincome from which is expendable to support

2013 2012Health care servicesPurchase of property and equipment $ 14,304 $ 13,415Operating expenses and charity care 68,420 68,754

Research , education, and other 68,018 59,602

$ 150,742 $ 141,771

Northwestern Memorial's endowment consists of individual donor-restricted funds establishedfor a variety of purposes Net assets associated with endowment funds are classified and reportedbased on the donor-imposed restrictions

Northwestern Memorial has interpreted the Uniform Prudent Management of Institutional FundsAct of 2006 (UPMIFA), as adopted by the State of Illinois, as requiring the preservation of thefair value of the original gift as of the gift date of the donor-restricted endowment funds absentexplicit donor stipulations to the contrary As a result of this interpretation, NorthwesternMemorial classifies as permanently restricted net assets the original value of gifts donated to thepermanent endowment, the original value of subsequent gifts to the permanent endowment, andaccumulations to the permanent endowment made in accordance with the direction of theapplicable donor gift instrument at the time the accumulation is added to the fund The remainingportion of the donor-restricted endowment fund that is not classified in permanently restrictednet assets is classified as temporarily restricted net assets until those amounts are appropriated

1309-1140617 44



9. Temporarily and Permanently Restricted Net Assets ( continued)

for expenditure , consistent with the donor intent or, where silent, standard of prudence prescribedby UPMIFA In accordance with UPMIFA, Northwestern Memorial considers the followingfactors in making a determination to appropriate or accumulate donor-restricted funds

• The duration and preservation of the fund

• The purposes of Northwestern Memorial and the endowment fund

• General economic conditions

• The possible effects of inflation and deflation

• The expected total return from income and the appreciation of investments

• Other resources of Northwestern Memorial

• The investment policies of Northwestern Memorial

Northwestern Memorial has adopted investment and spending policies for endowment assetsdesigned to provide a predictable stream of funding to programs supported by its endowmentwhile seeking to maintain purchasing power of the endowment assets Endowment assets includethose assets of donor-restricted funds that must be held in perpetuity or for a donor-specifiedperiod Under this policy, endowment assets are allocated a fixed annual return, which iscurrently set at 6%

1309-1140617 45



9. Temporarily and Permanently Restricted Net Assets (continued)

Northwestern Memorial has a policy that limits annual spending from endowment funds to 4% ofthe endowment fund balance at the midpoint of the preceding fiscal year In establishing thispolicy, Northwestern Memorial considered the long-term expected return on its endowmentAccordingly, over the long term, Northwestern Memorial expects the spending policy to allowits endowment to grow at an average annual rate of 2% This is consistent with its objective tomaintain the purchasing power of the endowment assets held in perpetuity or for a specific term,as well as to provide additional real growth through new gifts and investment return

The changes in endowment net assets for the years ended August 31, 2013 and 2012, aresummarized below

Temporarily Permanently

Restricted Restricted Total

Endowment net assets,September 1, 2011Contributions

Change in value of trusts

Investment return

Appropriation for expenditure

Other

Endowment net assets,

August 31, 2012

Contributions

Change in value of trusts

Investment return

Appropriation for expenditure

Other

Endowment net assets,August 31, 2013

$ 52,833 $ 126,329 $ 179,162(535) 16,347 15,812(62) (1,025) (1,087)

8,269 - 8,269

(5,199) - (5,199)(322) 120 (202)

54,984 141,771 196,7551,573 2 ,364 3,937

32 1,057 1,089

5,924 - 5,924

(8,113) - (8,113)(5,472 ) 5,550 78

$ 48,928 $ 150,742 $ 199,670

1309-1140617 46



10. Pledges Receivable

As of August 31, 2013, donor-restricted pledges are expected to be realized as follows

Less than one year $ 1,616One to five years 28,204Thereafter 4,115

Total pledges receivable 33,935Less discount and allowance 5,425Net pledges receivable $ 28,510

11. Net Patient Revenue

Northwestern Memorial recognizes patient revenue associated with services provided to patientswho have third-party payor coverage with Medicare, Medicaid, Blue Cross, other managed careprograms, and other third-party payors on the basis of the contractual rates for the servicesrendered at the time services are provided Payment arrangements with those payors includeprospectively determined rates per admission or visit, reimbursed costs, discounted charges, andper diem rates Reported costs and/or services provided under certain of the arrangements aresubject to retroactive audit and adjustment Net patient revenue increased by $15,208 in 2013and decreased by $720 in 2012 as a result of changes in estimates due to final prior fiscal years'cost report settlements and the disposition of other payor audits and settlements Changes inMedicare and Medicaid programs and reduction in funding levels could have an adverse effecton Northwestern Memorial

Northwestern Memorial also provides care to self-pay patients Under its Free and DiscountedCare Policy (the Policy), Northwestern Memorial provides medically necessary care to patientsin its community with inadequate financial resources at discounts of up to 100% of charges usinga sliding scale that is based on patient household income as a percentage (up to 600%) of theFederal Poverty Level Guidelines The Policy also contains a catastrophic financial assistanceprovision that limits a patient's total financial responsibility to Northwestern Memorial SinceNorthwestern Memorial does not pursue collection of these amounts, they are not reported aspatient revenue The Policy has not changed in fiscal year 2013 or 2012 Northwestern Memorialrecognizes patient revenue on services provided to these patients at the discounted rate at thetime services are rendered

1309-1140617 47



11. Net Patient Revenue ( continued)

Patient revenue, net of contractual allowances and discounts, is reduced by the provision for baddebts, and net patient accounts receivable are reduced by an allowance for uncollectibleaccounts These amounts are based primarily on management's assessment of historical andexpected write-offs and net collections, along with the aging status for each major payor sourceManagement regularly reviews data about these major payor sources of revenue in evaluating thesufficiency of the allowance for uncollectible accounts Based on historical experience, a portionof Northwestern Memorial's self-pay patients who do not qualify for charity care will be unableor unwilling to pay for the services provided Thus, a provision is recorded for bad debts in theperiod services are provided related to these patients After all reasonable collection efforts havebeen exhausted in accordance with Northwestern Memorial's policies, accounts receivable arewritten off and charged against the allowance for uncollectible accounts

Northwestern Memorial has determined, based on an assessment at the reporting-entity level,that patient service revenue is primarily recorded prior to assessing the patient's ability to pay,and as such, the entire provision for bad debts is recorded as a deduction from patient servicerevenue in the accompanying consolidated statements of operations and changes in net assets

For the years ended August 31, 2013 and 2012, patient service revenue (including patientco-pays and deductibles), net of contractual allowances and discounts (but before the provisionfor uncollectible accounts) by primary payor source was as follows

2013 2012

Medicare $ 353,963 $ 365,081Medicaid 153,115 151,854Other third-party payors 1,097,297 1 ,081,831Patients 18,598 15,357

$ 1,622,973 $ 1,614,123

Medicaid patient service revenue includes revenue received through the Illinois HospitalAssessment Program (see Note 12)

1309-1140617 48



11. Net Patient Revenue ( continued)

Northwestern Memorial grants credit without collateral to its patients, most of whom are local

residents and are insured under third-party payor agreements At August 31, 2013 and 2012,

patient accounts receivable, including patient co-pays and deductibles by major primary payor

source, before deducting estimated uncollectibles, were as follows

2013 2012

Medicare 16% 14%Medicaid 11 21Blue Cross 21 21Other managed care 31 30Other third-party payors 13 7

Patients 8 7

100% 100%

Patient accounts receivable, net of contractual adjustments, were $287,384 and $318,811 as ofAugust 31, 2013 and 2012, respectively, or 17 7% and 19 8% of patient revenue for the fiscalyears then ended The related allowance for uncollectible accounts was $41,721 and $39,036, or14 5% and 12 2%, of the related patient accounts receivable, net of contractual adjustments as ofAugust 31, 2013 and 2012, respectively The allowance for uncollectible accounts as a percent ofpatient accounts receivable, net of contractual allowances, has increased mainly due to theincrease in patients' (self-pay) accounts receivables at August 31, 2013, compared to August 31,2012, compounded by decreases in Medicaid patients' accounts receivables, net of contractualallowances as of August 31, 2013 and August 31, 2012 This decrease was primarily due to theincreased cash collections received from the state of Illinois in 2013, offsetting slower cashcollections experienced by the Hospital at August 31, 2012

12. Illinois Hospital Assessment Program

In December 2008, the Illinois Hospital Assessment Program (HAP) was approved by theFederal Centers for Medicare and Medicaid Services for the period from July 1, 2008 throughJune 30, 2013 Under HAP, the state receives additional federal Medicaid funds for the state'shealth care system, administered by the Illinois Department of Healthcare and Family ServicesHAP includes both a payment to NMH and NLFH from the state and an assessment (the providertax) against NMH and NLFH, which is paid to the state in the same year Included in the

1309-1140617 49



12. Illinois Hospital Assessment Program (continued)

accompanying consolidated statements of operations and changes in net assets for the yearsended August 31, 2013 and 2012, respectively, are $56,216 and $57,915 of patient servicerevenue and $41,395 and $41,395 of assessment

13. Functional Expenses

Northwestern Memorial provides general health care services primarily to residents within itsgeographic location and supports research and education programs For the years endedAugust 31, 2013 and 2012, expenses related to providing these services were as follows

2013 2012

Health care servicesResearch and educationFund-raisingGeneral, administrative, and other

$ 1,168,571 $ 1,259,81599,413 64,0305,632 7,532

304,703 281,855

$ 1,578,319 $ 1,613,232

The research and education costs include $5,154 and $7,553 of expenses supported by federal,state, and corporate grants and $12,447 and $11,393 of expenses supported by other donor-restricted funds in 2013 and 2012, respectively

14. Commitments and Contingencies

Academic, Program, and Other Support

Consistent with its mission, Northwestern Memorial provides academic, program, and othersupport to other not-for-profit entities The present value of the total remaining commitmentsrelated to this support is $262,016 and $134,842 at August 31, 2013 and 2012, respectively,which is reported as grants and academic support payable in the accompanying consolidatedbalance sheets

The Alignment Agreement signed on September 1, 2012, between NMHC, NMFF, andNorthwestern University (NU) furthers the mutual purpose and mission of the entities ThisAlignment Agreement provided for a one-time grant for research of $167,000 by NorthwesternMemorial to NU In addition, the agreement called for ongoing funding based on net patient

1309-1140617 50



14. Commitments and Contingencies (continued)

revenue (excluding HAP revenue) and operating income The remaining commitment of thisongoing funding is $18,156 as of August 31, 2013, and is reported in accrued expenses and othercurrent liabilities in the accompanying consolidated balance sheet

NMHC entered into a clinical affiliation agreement with NMFF as of September 1, 2013 (seeNote 15) Pursuant to this agreement, the Alignment Agreement was amended and restated,effective as of September 1, 2013, to terminate the ongoing funding obligation described above

Other

As of August 31, 2013, approximately 15% of Northwestern Memorial employees wererepresented by a collective bargaining agreement This collective bargaining agreement does notexpire within one year

Capital and Leases

Various capital projects are currently being constructed that are expected to open over thenext three years The total estimated cost of these projects is approximately $643,000 As ofAugust 31, 2013, project commitments totaled $345,384, of which $195,228 has been incurred

As part of the affiliation agreement with Lake Forest Hospital in 2010, Northwestern Memorialcommitted to a plan to refurbish or replace existing inpatient and outpatient facilities on the LakeForest Campus within 10 years of the affiliation date (Replacement Project) The planningprocess for the Replacement Project is progressing on schedule Any Replacement Project planswill be subject to obtaining a Certificate of Need along with other governmental approvals

1309-1140617 51


Notes to Consolidated Financial Statements (continued)(In 1hour sands)


Certain Northwestern Memorial buildings are located on land leased from Northwestern

University under various lease agreements The principal lease requires annual payments of $314

through 2075 At August 31, 2013, minimum future rental payments under other noncancelable

operating leases, which consist primarily of leases for office space and equipment, some of

which include renewal options, are as follows

Year ending August 312014 $ 12,2762015 10,2112016 10,0662017 9,9732018 10,006Thereafter 54,824

Regulatory

Laws and regulations governing the Medicare and Medicaid programs are extremely complexand subject to interpretation As a result, there is a reasonable possibility that recorded amountswill change by a material amount in the near term During the last few years, as a result ofnationwide investigations by governmental agencies, various health care organizations havereceived requests for information and notices regarding alleged noncompliance with those lawsand regulations, which, in some instances, have resulted in organizations entering into significantsettlement agreements Compliance with such laws and regulations may also be subject to futuregovernment review and interpretation, as well as significant regulatory action, including fines,penalties, and potential exclusion from the Medicare and Medicaid programs

In addition, an increasing number of the operations or practices of not-for-profit health careproviders has been challenged or questioned to determine if they are consistent with theregulatory requirements for nonprofit, tax-exempt organizations These challenges are broaderthan concerns about compliance with federal and state statutes and regulations of core businesspractices of the health care organizations The laws and regulations regarding these practices arealso subject to interpretation and challenge Areas that have come under examination haveincluded pricing practices, billing and collection practices, charitable care, community benefit,executive compensation, exemption of property from real property taxation, and othersNorthwestern Memorial expects that the level of review and audit to which it and other health

1309-1140617 52




care providers are subject will increase There can be no assurance that regulatory authoritieswill not challenge Northwestern Memorial's compliance with these laws and regulations or thatthe laws and regulations themselves will not be subject to challenge, and it is not possible todetermine the effect, if any, such claims or penalties would have on Northwestern Memorial

Litigation

On October 25, 2012, NMH received a copy of the complaint in the lawsuit captioned United

States ofAmerica Ex Rel. Audra Souhas v. Northitwestern Uln'ersrty and Northitwestern Memorial

Hospital, 10-cv-07233 (N D Il) Plaintiff Soulias originally filed the lawsuit in November,

2010, but the case remained under seal until July 9, 2012, at which time the United States

Department of Justice declined to intervene in the suit The complaint alleged that NMH violated

the False Claims Act by submitting Medicare claims for services that were part of federally

funded clinical research, and thus caused the federal government to pay twice for the same

patient care services The case was dismissed with prejudice on July 24, 2013

Northwestern Memorial is a defendant in other various lawsuits arising in the ordinary course ofbusiness Although the outcome of these lawsuits cannot be predicted with certainty,management believes the ultimate disposition of such matters will not have a material effect onNorthwestern Memorial's financial condition or operations

15. Affiliation Agreement With Northwestern Medical Faculty Foundation

On September 1, 2013, NMFF (now doing business as Northwestern Medical Group, or NMG)became a wholly owned subsidiary of NMHC pursuant to a clinical affiliation agreement by andbetween NMHC and NMFF NU is a signatory to the agreement for certain purposes NMFF isan academic faculty practice plan with approximately 900 physicians and 1,500 additional healthprofessionals and other staff NMFF's physicians embody the traditional three areas of academicmedicine - clinical care, research, and education - and work in an array of medical and surgicalspecialties and subspecialties The majority of the physicians serve as full-time faculty at FSMand as members of the medical staff of NMH and NLFH This affiliation positions NorthwesternMemorial for expected market changes, including national healthcare reform, by providing theplatform for improving the patient experience through improved quality across care settings andenhanced care coordination It also allows for better coordination with NU/FSM to enhancesupport of the research, education and clinical missions of the organizations

1309-1140617 5 3


Notes to Consolidated Financial Statements ( continued)(In Ihoursands)

15. Affiliation Agreement With Northwestern Medical Faculty Foundation (continued)

The affiliation was effected through a membership substitution A one-time payment, estimated

to be approximately $225 million, will be provided to FSM in furtherance of the shared mission

of the three organizations The final amount of the payment will be based primarily on NMFF's

unrestricted net assets as of August 31, 2013 Initial payments of cash and investments of

$220,475 were transferred to FSM in September 2013 For accounting purposes, this transaction

is considered an acquisition under ASC 954-805, Not-fior-Profrt Entrtres. Business Combinations

Pursuant to the agreement, Northwestern Memorial will provide ongoing funding to NU in

support of the research and education mission of FSM This ongoing funding is based on the

average net patient revenue and operating results of Northwestern Memorial, with the minimum

annual amount of such funding being $39,500 plus CPI for fiscal years 2014 through 2016

The preliminary one-time payment and fair value of assets and liabilities of NMFF atSeptember 1, 2013, consist of the following

Payment to NU $ 224,748Cash and cash equivalents 56,585Other current assets 141,978Property and equipment 84,775

Other long-term assets 355,263Current liabilities (162,183)

Long-term debt (59,424)Other long-term liabilities (182,791)

Temporarily restricted net assets (47,456)Fair value of identifiable net assets 186,747

Goodwill $ 38,001

The valuation of property and equipment, other current and long-term assets, includingidentifiable intangible assets, and current and long-term liabilities is in the process of beingcompleted and is expected to be completed in fiscal 2014

Following are the unaudited pro forma results of the years ended August 31, 2013 and 2012, as ifthe affiliation had occurred on September 1, 2011

2013 2012

Total operating revenueOperating incomeExcess of revenue over expenses

$ 2,258,411144,237293,840

$ 2,206,289126,674132,164

1309-1140617 54



15. Affiliation Agreement with Northwestern Medical Faculty Foundation (continued)

The pro forma information provided should not be construed to be indicative of NorthwesternMemorial ' s results of operations had the affiliation been consummated on September 1, 2011,and is not intended to project Northwestern Memorial's results of operations for any futureperiod

16. Subsequent Events

Northwestern Memorial evaluated events and transactions occurring subsequent toAugust 31, 2013 through November 21, 2013, the date of issuance of the consolidated financialstatements There were no unrecognized subsequent events requiring disclosure, except as notedin Note 15 and below

Effective September 13, 2013, NMG and its not-for-profit subsidiary, Northwestern Foundation

for Research and Education, d/b/a Northwestern Management Services (NMS), became members

of the obligated group created under the Amended and Restated Master Trust Indenture dated as

of May 1, 2004, as supplemented and amended (the NMHC Master Indenture), among NMHC,

NMH, NMPG, NLFH, the Foundation, HFI, and Wells Fargo Bank, N A, as master trustee The

bond trustee for the $62,095 in aggregate principal amount of tax-exempt bonds issued for the

benefit of NMG (the NMG Bonds) accepted a promissory note issued by NMHC under the

NMHC Master Indenture as security for the NMG Bonds in substitution for the note previously

securing the NMG Bonds The bondholder accepted a promissory note issued by NMHC under

the NMHC Master Indenture related to the purchase by the bondholder of the NMG Bonds in

substitution for the note previously issued under the NMG Master Indenture, and the bondholder

and other lenders also accepted promissory notes issued by NMHC under the NMHC Master

Indenture related to an $80,000 currently undrawn revolving line of credit now available to

NMHC in substitution for the notes previously securing the line of credit As a result of these

transactions, NMG and NMS are both members of the obligated group created under the NMHC

Master Indenture and have joint and several liability for all of the outstanding debt secured

thereunder The NMG master trust indenture, together with the master notes issued thereunder,

has been terminated

1309-1140617 55

Supplementary Information

1309-1140617

EIJ Ernst & Young C_LP1c5 Holt' Aqc Ui DrrChicano IL 6(1,,6 t ,

TAI +T 1?- +1 3t H_ 3 4

o n-,

Report of Independent Auditors on Supplementary Information

The Board of DirectorsNorthwestern Memorial HealthCare

Our audits were conducted for the purpose of forming an opinion on the consolidated financialstatements taken as a whole The accompanying Northwestern Memorial HealthCare andSubsidiaries consolidating balance sheet and consolidating statement of revenue and expensesand the accompanying Northwestern Memorial HealthCare Obligated Group combined balancesheets and combined statements of operations and changes in net assets are presented forpurposes of additional analysis and are not a required part of the consolidated financialstatements Such information is the responsibility of management and was derived from andrelates directly to the underlying accounting and other records used to prepare the financialstatements The information has been subjected to the auditing procedures applied in the auditsof the consolidated financial statements and certain additional procedures, including comparingand reconciling such information directly to the underlying accounting and other records used toprepare the consolidated financial statements themselves, and other additional procedures, inaccordance with auditing standards generally accepted in the United States In our opinion, theinformation is fairly stated in all material respects in relation to the consolidated financialstatements as a whole

O^^ It ^urn^LLP0

November 21, 2013

1309-1140617 56


Consolidating Balance Sheet(Inn Thousands)

August 31, 2013

Assets

Cunent assets

Cash and cash eqm\ alents

Shale of cash pool

Short-teem inNestments

Cunent portion of m\ estments, including

assets limited as to use

Patient accounts iecei able, net of estunated uncollectibles

Cunent portion of pledges and giants iecenable, net

Cunent portion of msmanceieco\eiable

In\ entoi ies

Othee emientassets

Due tiom affiliates

Total current assets

InN estments, including assets limited as to use, less current portion

Shale in m\ estment pool

Piopeit-% and equipment, at cost

Northwestern Northwestern

Memorial Lake Forest Northwestern Northwestern

Hospital and Hospital and Memorial Memorial Consolidating

Subsidiaries Subsidiar,, HealthCare Foundation Entries Consolidated

S 1.006 S - S 243.607 S - S (14287) S 23,031-6

172.580 27.376 - 29.250 (229?06) -

195.168 27 - - - 195.195

77,', 30 - - - 77,330

"1.305 24.58 - - - 245.66',

856 35 - 10,95', - 11.844

9.286 1.926 - - (800) 10.412

28.901 4.972 - - - 33.873

4',050 454 4.675 2 (3.020) 45.161

4.956 91 10.758 - (15.805) -

754.428 59?39 259.040 40.205 (26.118) 849.794

170.9' - 2.534287 612.871 (641.977) 2.676.116

1.5 29.42' 153.095 - 260 (1.682.778) -

1,700.358 153.095 2.534287 613,131 (33,34,755) 2.676.116

Land 182.420 55.533 - - - 337,95',

Buildings 1.5' 9.854 161 .277 - 225 - 1,701,356

Equipment and fuinituie 340,837 ', 3,015 161.420 218 - 535.490

Construction in plogless 127.851 24.919 - - - 152.770

2.190.962 274.744 161.420 443 - 3,627.569

Less accumulated depreciation 1.03' ,870 69.8 4 8 1 5.764 295 - 1.2' 9.777

1.157.092 204. 896 25.656 148 - 1,387,792

Prepaid pension cost 89.450 16.512 - - - 105.962

Insurance ieco\eiable , less emlent portion 66,837 6.988 - - (4.592) 69.233

Inteicomparn note lecei\ able 62.114 - 62.114 (124228) -

Othei assets, net 8',044 9.271 9.027 49.656 - 150.998

Interest in umestiicted net assets of the Foundation 4'0,450 - - - (430.450) -

Inteiest in iestiicted net assets of the Foundation 269.000 - - - (269.000) -

Total assets S 4.612.77 S 450.001 S 2.890.124 S 703,140 S (3.416.143) S 5.239.895

57 1309-1140617


Consolidating Balance Sheet (continued)(Inn Thousands)

August 31, 2013




Subsidiaries Subsidiar,, HealthCare Foundation Entries Consolidated

Liabilities and net assets

Cunent liabilities

accounts paN able S 92.784 S 16,813 S 1.521 S 176 S - S 111.294

Aceiued salaries and benefits 63.328 12.231- 12.850 359 - 88.769

Giants and academic support paNable, eunent poitlon 68.028 - - 33,53 - 70.381

Aceiued expenses and other eunent liabilities 51,929 3.797 1,366 400 (3.020) 54.472

Due to thud-pait-% pawls 203,849 35?03 - - - 339,052

Due to cash pool - - 243.492 - (243.492) -

Cunent aceiued liabilities under self-insuiance

piogiams 56.329 4.496 - - (800) 60.025

Cunent matuiities of Ions-teem debt 13. - - - - 13.435

Due to affiliates 8,4 0 2.830 4.454 91 (15.805) -

Total eunent liabilities 558.112 65.371 26',683 33,79 (26.117) 627.428

Long-term debt , less cuiient matuiities 79',819 - - - - 79',819

Inteicompam note paN able - 62.114 62.114 - (124228) -

Aceiued liabilities under self-insuiance piogiams,

less cuiient poitlon 392.675 21.043 - - (4.592) 409.126

Giants and academic support paNable , less cuiient poitlon 191.'25 - - '110 - 191.6'

Due to msuieds 116.291 - - - - 116.291

Interest late s%Naps 43,916 - - - - 43,916

Due to investment pool participants - - 2.3 124.755 - (2.' 24.755) -

Othei liabilities 19.521 574 30.092 - - 50.187

Total liabilities 2.115.659 149.102 2.680.644 3,689 (2.716.692) 2.2' 2.402

Net assets

Um esti feted

Undesignated 2.072.356 271 .688 209.480 284.905 (284.905) 2.55.524

Board-designated 145.545 - - 145.545 (145.545) 145.545

Totalumestiieted 2.217.901 271.688 209.480 4'0,450 (430.450) 2.699.069

Tempoiaiil iestiieted 153.648 4,034 - 149.872 (149.872) 157.682

Peimanentl iestiieted 125.565 25.177 - 119.129 (119.129) 150.742

Total net assets 2.497,114 300.899 309,480 699.451 (699.451) 3.007.49,

Total liabilities and net assets S 4.612.773 S 450.001 S 2.890.124 S 703,140 S (3.416,14) S 5.2'

58 1309-1140617


Consolidating Statement of Revenue and Expenses(Inn Thou sai,ds)

Year Ended August 31, 2013

ReN en ue

Patient sen ice reN enue

Pro\ isu,n for uncollectible accounts

Net patient re%enue

Rental and other re%enue

Net assets released from donor restrictions

and federal and state grants

Total re%enue

Expenses

Salaries and professional fees

Emplo\ ee benefits

suppl i es

Purchased sen ices

Depreciation

Insurance

Rent and utilities

Repairs and maintenance

Interest

Illinois Hospital assessment

( )ther

Total expenses

( )peratmg income o


Ins estment return

Change in fair %alue of interest rate swaps

Loss on e\tm^,wshment of long-term debt

Grants and academic support pro% ided

Change in interest in unrestricted net

assets of the Foundation

)ther

Totaln,n,peratm,, (lxws) gains net

Excess of re%enueo%erexpenses




Subsidiaries SubsidiarN HealthCare Foundation Entries Consolidated

S 1 4()66()7 S 16 S36 S - S - S (17o) 5 1 6__ 973

-"-- 733o - - - ;n 652

1 ' S S 2n6 - - 1711) 1 S922 322 1

96 H 176 11 p 166 629 6968 ( 193 6898 S 83

18 27S 487 - - - 1S 762

1 497 636 _3_ 283 166 629 6968 ( 193 Sso) 1 7 9 666

434 938 81 14 611 7l , „6 - 78 9224

1(17(184 22 587 _6 476 C_4 - 1S6 971

49S 3_ 163 86_ 176 ( 191 I _67 5n5

258 147 4499o 411997 _ 64S 17' 3311 174449

111 5117 22 553 11 492 91 - 14S 643

41 633 _ 986 141 53 (4313) 4o Soo

3o 728 6 o6l 1_ 191 483 (In 113' 39 431

37 S S6 8 274 S S 6 - - 46 686

34 1„ , 7_4 1 4S9 - (_ 915 ; 387

36438 49S7 - - - 41 39

46 ( 44 4 C 7 6 H 7 16 Sl 4_8

1 372 692 33 1n9 1 179 7 139 ( 189 S oo 1 S78 319

1249-14 8_6 11-4 n 171 4nhn 131 347

879 9 69 1 187416 2-3-- _915 3111 7311

411 SSS - - - - 411 SSS

6 32, ( S6 - - - 6 381 1

184 S 4 C 7 (4339) - 188 8 8

7 146 _ 597 ( 1 ( 1 6 8 ) IS 41 o 6 968 31 153

_1 917 9 484 186341 33 39; _9 17_ 178 129

5 1113 (1_7 5 8 6S8 5 197 791 5 33 222 5 ( 33 ' 5 3119 476

59 1309-1140617

Northwestern Memorial HealthCareObligated Group

Combined Balance Sheets(In Ihoirwnds)

August 31

2013 2012AssetsCurrent assetsCash and cash equivalents $ 229,320 $ 138,475Short-term investments 195,195 112,925

Current portion of investments, including

assets limited as to use 29,269 40,084Patient accounts receivable , net of estimateduncollectibles of $41,721 and $39,036 in 2013and 2012, respectively 245,663 279,775

Current portion of pledges and grants receivable, net 11,844 9,257Current portion of insurance recoverable 39,824 44,078Inventories 33,873 31,528Other current assets 28,630 24,335Due from affiliates 1,630 856

Total current assets 815,248 681,313

Investments , including assets limited as to use,less current portion 2,505,181 2,176,779

Property and equipment, at costLand 237,953 237,953

Buildings 1,701,356 1,668,000

Equipment and furniture 535,415 522,258

Construction in progress 152,770 46,573

2,627,494 2,474,784Less accumulated depreciation 1,239,722 1,116,760

1,387,772 1,358,024

Prepaid pension cost 105,962 30,814Insurance recoverable, less current portion 225,460 231,132Other assets, net 100,487 81,581Total assets $ 5,140,110 $ 4,559,643

1309-1140617 60

August 31

2013 2012Liabilities and net assetsCurrent liabilitiesAccounts payable $ 111,294 $ 81,070Accrued salaries and benefits 88,677 94,848Grants and academic support payable, current portion 70,381 37,588Accrued expenses and other current liabilities 54,409 34,828Due to third-party payors 229,052 207,440Current accrued liabilities under self-insurance programs 77,354 60,333

Current maturities of long-term debt 13,435 14,500

Due to affiliates 2 1

Total current liabilities 644,604 530,608

Long-term debt, net, less current maturities 793,819 806,155Accrued liabilities under self-insurance programs,

less current portion 482,833 410,857Grants and academic support payable, less current portion 191,635 97,254Interest rate swaps 43,916 104,503Pension liability - 3,863

Other liabilities 50,187 51,929Total liabilities 2,206,994 2,005,169

Net assetsUnrestrictedUndesignated 2,479,109 2,118,802Board-designated 145,545 138,600

Total unrestricted 2,624,654 2,257,402Temporarily restricted 157,720 155,301Permanently restricted 150,742 141,771

Total net assets 2,933,116 2,554,474

Total liabilities and net assets $ 5,140,110 $ 4,559,643

1309-1140617 61

Northwestern Memorial HealthCareObligated Group

Combined Statements of Operationsand Changes in Net Assets

(In Ihour sands)


2013 2012

Revenue

Patient service revenue $ 1,622,977 $ 1,614,123Provision for uncollectible accounts 30,652 32,072Net patient revenue 1,592,325 1,582,051Rental and other revenue 89,152 80,739Net assets released from donor restrictionsand federal and state grants 18,762 18,493

Total revenue 1,700,239 1,681,283

ExpensesSalaries and professional fees 578,445 587,484Employee benefits 156,971 186,455Supplies 267,501 268,187Purchased services 175,684 173,373Depreciation 145,639 145,682Insurance 29,864 39,660Rent and utilities 39,635 41,478Repairs and maintenance 46,686 45,579Interest 35,670 40,271Illinois Hospital Assessment 41,395 41,395Other 51,389 22,736Total expenses 1,568,879 1,592,300Operating income 131,360 88,983


Investment return 291,388 129,697Change in fair value of interest rate swaps 40,585 (30,533)Loss on extinguishment of long-term debt (6,381) -Grants and academic support provided (188,858 ) (106,708)Other 31,103 19,979Total nonoperating gains, net 167,837 12,435Excess of revenue over expenses $ 299,197 $ 101,418

1309-1140617 62

Ernst & Young LLP

Assurance I Tax I Transactions I Advisory

About Ernst & Young

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