September 2001

Board Meeting Highlights

The following is a summary of reports presented and issues discussed at the June 2001 meeting of the Catholic Health Initiatives Board of Stewardship Trustees.

Transfer of Our Lady of Fatima Villa to Dominican Sisters of Kenosha The Board approved the transfer of corporate membership in Our Lady of Fatima Villa, Saratoga, California to the Congregation of Dominican Sisters of St. Catherine of Siena of Kenosha, Wis. It is expected that the transfer of the facility will occur during the fall of 2001. Macbeth Update Leaders of Catholic Health Initiatives’ Macbeth program reported that organizational restructuring, production targets, expense management and performance improvement efforts have reduced losses associated with employed physician practices from a conservative estimate of $150 million in fiscal year 1998 to $114 million in fiscal year 2000. Executive Compensation Program Update The Board reviewed the key objectives of Catholic Health Initiatives’ variable pay plan, which is designed to assure alignment with system strategies and to focus on critical performance measures. The four performance dimensions and key objectives for fiscal year 2002 are: stakeholder satisfaction measured through staff retention; service to the poor/healthy community measured by outcomes in building healthy communities; stewardship of resources measured by excess of revenues over expenses before investment income (exclusive of system incentive program payouts); and quality/clinical outcomes measured by reductions in patient medication errors. The Board will review fiscal year 2003 system goals at its March 2002 meeting. Finance Committee Report The Board approved the consolidated financial statements for Catholic Health Initiatives for the period ended April 30, 2001; the consolidated budget of Catholic Health Initiatives for fiscal year 2002; and the Catholic Health Initiatives 2001 financing program, which authorizes the issue of $300 to $350 million of tax-exempt debt in the fall of 2001. Catholic Healthcare Audit Network Update The Board approved the Catholic Healthcare Audit Network (CHAN) Fiscal Year 2002 Annual Audit Plan. The Board received the CHAN Fiscal Year 2001 update that summarizes CHAN’s activities related to Catholic Health Initiatives. To date, 298 audits have been completed, including compliance, financial, operational and information technology audits. Treasury Report Despite market fluctuations, Catholic Health Initiatives continued to experience positive returns from its investment portfolio. The blended cost of capital rate charged to market-based organizations on intercompany debt was less than five percent during the first 10 months of fiscal year 2001. Governance Committee Report The Sponsorship Trustees of the Board elected John Anderson, Marjorie Byers, Donald Brennan and Karin Dufault to three-year terms, which expire June 30, 2004. The Board also recommended Patricia McDermott and Elizabeth Wendeln to the Corporate Members for reappointment to the Board of Stewardship Trustees.