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 lung2011benefit 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 requirementsMEMO

A For the 2011 calendar year, or tax year beginning 09-01-2011 and ending 08-31-2012

C Name of organizationB Check if applicable

Northwestern Memorial Healthcare Group1 Address change

Name changeDoing Business As

r_ I nitia I return Number and street ( or P 0 box if mail is not delivered to street address ) Room/suite

F_ Terminated251 E Huron 541 N Fairbanks

1 Amended return City or town, state or country, and ZIP + 4Chicago, IL 606112908

1 Application pending

F Name and address of principal officerDEAN M HARRISON251 E Huronchicago,IL 60611

I Tax - exempt status F 501(c)(3) 1 501 (c) ( ) -4 (insert no ) 1 4947(a)(1) or F_ 527

J Website : 1- WWW N M H O RG

tmpioyer iaenuricarion nu

36-4724966

E Telephone number

(312)926-2000

G Gross receipts $ 2,185,158,961

H(a) Is this a group return foraffiliates? F Yes F_No

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

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

H(c) Group exemption number 0- 5878

K Form of organization F Corporation 1 Trust F_ Association 1 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 of

V Northwestern memorial Hospital & Northwestern Lake Forest Hospital

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

3 Number of voting members of the governing body (Part VI, line 1a) . . . . 3 129

4 N umber of independent voting members of the governing body (Part VI, line 1b) 4 111

5 Total number of individuals employed in calendar year 2011 (Part V, line 2a) 5 9,634

6 Total number of volunteers (estimate if necessary) . 6 1,010

7aTotal unrelated business revenue from Part VIII, column (C), line 12 . 7a 6,732,790

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

Prior Year Current Year

8 Contributions and grants (Part VIII, line 1h) . 50,223,810 60,190,556

9 Program service revenue (Part VIII, line 2g) 1,601,811,082 1,622,330,021

13-10 Investment income (Part VIII, column (A), lines 3, 4, and 7d . 138,811,954 122,745,545

11 Other revenue (Part VIII, column (A), lines 5, 6d, 8c, 9c, 10c, and 11e) 78,897,424 79,970,739

12 Total revenue-add lines 8 through 11 (must equal Part VIII, column (A), line12) . . . . . . . . . . . . . . . . . . 1,869,744,270 1,885,236,861

13 Grants and similar amounts paid (Part IX, column (A), lines 1-3) . . . 55,917,618 106,771,351

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) 696,731,816 661,782,497

16a Professional fundraising fees (Part IX, column (A), line l le) . 0 110,021

sCLLJ

b Total fundraising expenses (Part IX, column (D), line 25) 0-4,014,977

17 Other expenses (Part IX, column (A), lines h1a-11d, 11f-24e) . . . . 932,005,728 990,895,875

18 Total expenses Add lines 13-17 (must equal Part IX, column (A), line 25) 1,684,655,162 1,759,559,744

19 Revenue less expenses Subtract line 18 from line 12 185,089,108 125,677,117

Beginning of CurrentEnd of Year

Year

'M 20 Total assets (Part X, l i n e 1 6 ) . . . . . . . . . . . 4,024,176,222 4,493,292,214

21 Total l i a b i l i t i e s (Part X, l i n e 2 6 ) . . . . . . . . . . . 1,603,168,173 1,950,941,821

ZLL 22 Net assets or fund balances Subtract line 21 from line 20 2,421,008,049 2,542,350,393

Signature Block

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

SignSignature of officer

Here DOUGLAS M YOUNG ASSISTANT TREASURERType or print name and title

Preparers Date

Paidsignature

Ilk 2013-07-11

Preparer's Firm's name (or yours ERNST & YOUNG US LLP

Use Only if self-employed),address, and ZIP + 4 111 MONUMENT CIRCLE SUITE 2600

INDIANAPOLIS, IN 46204

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

Form 990 ( 2011)

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? . . . . . . . . . . . . . . . . . . . . . . . . . . F 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 and section 4947( a)(1) trusts are required to report the amount ofgrants and allocations to others , the total expenses , and revenue , if any, for each program service reported

4a (Code ) ( Expenses $ 1,166,607,839 including grants of $ 101,884,436 ) (Revenue $ 1,324,519,440

For 148 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 through partnerships with community healthcenters that date back more than 50 years As the primary teaching hospital for Northwestern University Feinberg School of Medicine (Feinberg), the more than1,700 physicians on the medical staff at NMH carry faculty appointments at Feinberg and represent virtually every medical specialty Through NorthwesternMedicine, Northwestern Memorial shares a vision with Feinberg and Northwestern Medical Faculty Foundation (NMFF), an independent academic multispecialtygroup practice for the fulltime faculty of Feinberg, to work collaboratively as a leading academic medical center (AMC) to positively impact the future of healthcarethrough exceptional patient care, excellence in medical education and breakthrough scientific research that can lead to improved treatments and cures NMH isamong only 6% of the nation's hospitals designated as an AMC hospital, which according to the Association of American Medical Colleges in aggregate deliver avastly disproportionate share of the nation's trauma, intensive care and tertiary services, provide 28% of all Medicaid care and underwrite 41% of all hospital-basedcharity care As the only acute care hospital located in Chicago's growing downtown area, more than 47,000 adult patients were admitted to NMH as inpatients infiscal year 2012 As the only adult Emergency Department (ED) in downtown Chicago with 24/7 service, NMH had more than 83,800 ED visits in fiscal year 2012,up 19% since fiscal year 2005 NMH is also the only AMC hospital in Chicago participating in both city and state Level I trauma networks and as a Level III neonatalintensive care unit, allowing us to provide lifesaving care and treatment to the most seriously injured adults and premature and sick infants In addition to meetingthe needs of the patients and communities in our primary service area, NMH also serves an important role for patients residing outside of Chicago As a nationallyranked AMC hospital and a major referral center in the Midwest and beyond, NMH is one of a limited number of places in the region where patients requiringadvanced tertiary, quaternary or specialty services can receive the care they need

4b (Code ) ( Expenses $ 197,759,547 including grants of $ 103,552 ) (Revenue $ 224,857,318 )

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 114 years ago as Alice Home on the campus of Lake Forest College, NLFH has upheld its promise to provide Lake Countyresidents convenient access to the highest quality, most advanced healthcare services available NLFH has continually expanded its healthcare services to respond tothe growing needs of its community NLFH shares Northwestern Memorial's commitment to provide care for those unable to pay, consistently providing the highestpercentage of charity care as a percent of patient revenue among Lake County hospitals NLFH's board-certified emergency physicians and trauma-trained nursesserve and support the Region 10 Emergency Medical System, providing trauma and emergency care to patients at its Level II Trauma Center at NLFH andemergency services at the Northwestern Grayslake Emergency Center

4c (Code ) ( Expenses $ 56,799,060 including grants of $ (Revenue $ 64 ,751,732 )

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 County

(Code ) (Expenses $ 6,410,574 including grants of $ ) (Revenue $ 8,188,608

hEALTH AND fITNESS member programs

(Code ) ( Expenses $ 4,783,363 including grants of $ 4,783,363 ) ( Revenue $

NMF's Contributions

(Code ) ( Expenses $ including grants of $ ) (Revenue $ 43,609,485

Other

4d Other program services (Describe in Schedule 0 )

(Expenses $ 11,193,937 including grants of $ 4,783,363 ) ( Revenue $ 51 ,798,093 )

4e Total program service expensesl-$ 1,432,360,383

Form 990 (2011 )

Form 990 (2011)

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 Contnbutors(see instructions)? IN . 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," completeSchedu/e C, Part III

.S 5 No

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 ID . . . . . . . . . . . . . . . . . . . 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," completeSchedu/e D, Part II19 . . 7 No

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

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

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

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

10 Did the organization, directly or through a related organization, hold assets in 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, linel0? If "Yes,"completeYes

Schedule D, Part VI. lla

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 VII. llb Yes

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

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

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

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

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

f Did the organization's separate or consolidated financial statements for the tax year include a footnote thataddresses the organization's liability for uncertain tax positions under FIN 48 (ASC 740)? If "Yes,"complete 11f NoSchedule D, Part X.9

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

Schedule D, Parts XI, XII, and XIII 95 12a N o

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

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

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

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

and program service activities outside the United States, or aggregate foreign investments valued at $100,000 or more? if "Yes, " complete

Schedule F, Part I . 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 U S ? If "Yes," complete Schedule F, Part II and IV . . 15 No

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

individuals located outside the U S ? If "Yes," complete Schedule F, Part III and IV . . 16 No

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

I

17 Yes

Part IX, column (A), lines 6 and 11e? If "Yes," complete Schedule G, PartI IN

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

I

19 No

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

20a Did the organization operate one or more hospitals? If "Yes, "complete Schedule H . 19 1 20a Yes

b If"Yes" to line 20a, did the organization attach its audited financial statement to this return? Note . All Form 990

filers that operated one or more hospitals must attach audited financial statements 20b Yes

Form 990 (2011)

Form 990 (2011)

Checklist of Required Schedules (continued)

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

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

22 Did the organization report more than $5,000 of grants and other assistance to individuals in the United States

122

on Part IX, column (A), line 2? If "Yes, "complete Schedule I, Parts I and III . . . . . 95Yes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

IV . . . . . . . . . . . . . . . . . . . . . . . . . 28a Yes

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

complete Schedule L, Part IV . . . . . . . . . . . . . . . . . . . 28b Yes

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 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 MIN Yes, , 29

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, Parts II, III, IV,

and V, line 1 . . . . . . . . . . . . . . . . . . . . . 34 Yes

35a Is any related organization a controlled entity of the filing organization within the meaning of section 512(b)(13)735a Yes

b Did the organization receive any payment from or engage in any transaction with a controlled entity within the35b Yes

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 t<, line 2 . . . . . . . . . . . 36 No

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

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

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

Form 990 (2011 )

Form 990 (2011)

KEWStatements Regarding Other IRS Filings and Tax Compliance

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

Yes No

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

la 669

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

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

2a Enter the number of employees reported on Form W-3, Transmittal of Wage and TaxStatements filed for the calendar year ending with or within the year covered by thisreturn . . . . . . . . . . . . . . . . . . . . 2a 9,634

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

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

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

b If "Yes," has it filed a Form 990-T for this year? If "No,"provide an explanation in Schedule O . . . . 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 or securitiesaccount)? . . . . . . . . . . . . . . . . . . . . . . 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? . . 5a No

b Did any taxable party notify the organization that it was or is a party to a prohibited tax shelter transaction? 5b No

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

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

b If "Yes," did the organization include with every solicitation an express statement that such contributions or giftswere not tax deductible? . . . . . . . . . . . . . . . . . . . . . . . 6b

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 and 7a Yesservices provided to the payor? . . . . . . . . . . . . . . . . . . . .

b If "Yes," did the organization notify the donor of the value of the goods or services provided? . 7b Yes

c Did the organization sell, exchange, or otherwise dispose of tangible personal property for which it was required tofile Form 82827 . . . . . . . . . . . . . . . . . . . . . . . . . . 7c No

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? . . . . . . . . . . . . . . . . . . . . . . . . . 7e N o

f Did the organization, during the year, pay premiums, directly or indirectly, on a personal benefit contract? 7f No

g If the organization received a contribution of qualified intellectual property, did the organization file Form 8899 asrequired? . 7g

h If the organization received a contribution of cars, boats, airplanes, or other vehicles, did the organization file aForm 1098-C? 7h

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? . 8

9 Sponsoring organizations maintaining donor advised funds.

a Did the organization make any taxable distributions under section 4966? . 9a

b Did the organization make a distribution to a donor, donor advisor, or related person? . 9b

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 othersources against 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? 12a

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 . All 501(c)(29) organizations must list in Schedule 0 each state in which they are licensed to issuequalified health plans, the amount of reserves required by each state, and the amount of reserves the organizationallocated to each state 13a

b Enter the aggregate amount of reserves the organization is required to maintain bythe states in which the organization is licensed to issue qualified health plans 13b

c Enter the aggregate amount of reserves on hand13c

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

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

Form 990 (2011 )

Form 990 ( 2011)

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

Section A . Governing Body and Management

Yes No

la Enter the number of voting members of the governing body at the end of the taxyear . . . . . . . . . . . . . la 129

b Enter the number of voting members included in line la, above, who areindependent . . . . . . . . . . . . . . . . lb 111

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 directsupervision of officers, directors or trustees, or key employees to a management company or other person? . 3 No

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

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

6 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 the

FTorganization's mailing address? If"Yes," provide the names and addresses i n Schedule 0 . . . 9 No

Section B. Policies (This Section B requests information about policies not required by the InternalRevenue 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 exemptpurposes? . . 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 the 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 fi Another's website F Upon request

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 See Additional Data Table

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

ROBERT GERECKE541 N FAIRBANKS RM 1639CHICAGO,IL 606113309(312)926-9495

Form 990 (2011 )

Form 990 (2011)

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

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

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

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

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

* List all of the organization's former officers, key employees, 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 organizations compensated any current or former officer, director, or trustee

(A)Name and Title

(B)Averagehoursperweek

(describe

(C)Position (do not checkmore than one box,

unless person is bothan officer and adirector/trustee)

(D)Reportable

compensationfrom the

organization (W-2/1099-MISC)

(E)Reportable

compensationfrom relatedorganizations(W- 2/1099-

(F)Estimated

amount of othercompensation

from theorganization and

hoursfor

relatedorganizations

Schedule0)

C

'

-

rt

t

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5m 4

^

iD =

boo

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M1

^

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MISC) relatedorganizations

See Additional Data Table

Form 990 (2011 )

Form 990 (2011)

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

(A)Name and Title

(B)Averagehoursperweek

(describe

(C)Position (do not checkmore than one box,

unless person is bothan officer and adirector/trustee)

(D)Reportable

compensationfrom the

organization (W-2/1099-MISC)

(E)Reportable

compensationfrom relatedorganizations(W- 2/1099-

(F)Estimated

amount of othercompensation

from theorganization and

hoursfor

relatedorganizations

Schedule0)

LG -

C

'

-

t

t

Qr

5m

D

4

^

iD =

boo

0 'D{7

m 4

M1

^

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MISC) relatedorganizations


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

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

d Total ( add lines lb and 1c) . . . . . . . . . . . . 22,736,393 0 3,584,944

Total number of individuals (including but not limited to those listed above) who received more than$100,000 of reportable compensation from the organization-624

Yes I No

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

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

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

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

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

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

Section B. Independent Contractors

1 Complete this table for your five highest compensated independent contractors that received more than$100,000 of compensation from the organization Report compensation for the calendar year ending withor within the organization's tax year

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

NORTHWESTERN MEDICAL FACULTY FOUNDA680 N LAKE SHORE DRIVE STE 1118 MEDICAL SERVICES 58,711,513CHICAGO, IL 60611

MCGAW MEDICAL CENTER OF NORTHWESTER645 N MICHIGAN AVE MED SVCS/RESIDENCY 33,667,566CHICAGO, IL 60611

W E O'NEIL COnstruction1245 washington construction 31,182,063CHICAGO, IL 60607

NORTHWESTERN UNIVersity710 N lake Shore Drive medical services 33,182,063CHICAGO, IL 60611

skender construction200 W madison construction 17,772,532CHICAGO, IL 60602

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 0-248

Form 990 (2011 )

Form 990 (2011)

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

Total revenue Related or Unrelated Revenueexempt business excluded fromfunction revenue tax underrevenue sections

512, 513, or514

la Federated campaigns . la

b Membership dues . . . . lbC C

c Fundraising events . 1c 474,4990 cc45 •Cx^

d Related organizations . ld

e Government grants (contributions) le 13,722,823

i f All other contributions, gifts, grants, and if 45,993,234similar amounts not included above

g Noncash contributions included in26,516,322

lines la-1f $

h Total . Add lines la -1f . 60,190,556

Business Code

2a NMH PATIENT SERVICES AND OTHER 561000 1,324,519,440 1,324,519,440REVENUE

b NLFH PATIENT SERVICES AND OTHER 561000 224,857,318 224,857,318REVENUE

C NMPG PATIENT SERVICES AND OTHER 561000 64,751,732 64,751,7325 REVENUE

d HFI REVENUE 561000 8,201,531 8,188,308 13,223

e

f All other program service revenue

g Total . Add lines 2a -2f . . . . . . . . 0- 1,622,330,021

3 Investment income (including dividends, interest

and other similar amounts ) . 0- 45,562,641 2,120,541 43,442,100

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

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

(i) Real (ii) Personal

6a Gross rents 31,721,779

b Less rentalexpenses

c Rental income 31,721,779or (loss)

d Net rental inco me or ( loss) . 31,721,779 31,721,779

(i) Securities (ii) Other

7a Gross amount 295,257,556 81,006,747from sales ofassets otherthan inventory

b Less cost or 252,753,132 46,327,937other basis andsales expenses

c Gain or (loss) 42,504,424 34,678,810

d Net gain or ( loss) . 10- 77,182,904 77,182,904

8a Gross income from fundraisingevents (not including

w $ 474,499

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

a 220,162

b Less direct expenses . b 365,077

c Net income or (loss ) from fundraising events . -144,915 -144,915

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

a

b Less direct expenses . b

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

10a Gross sales of inventory, lessreturns and allowances .

a 661,318

b Less cost of goods sold . b 475,954

c Net income or (loss ) from sales of inventory . 0- 185,364 185,364

Miscellaneous Revenue Business Code

11a NON PATIENT MEDICAL 561000 10,969,068 6,820,341 4,148,727

SERVICES

b PROFESSIONAL SERVICES TO 561000 10,060,935 10,060,935

AFFILIATES

c PROFESSIONAL SERVICE FEES 561000 7,140,995 7,140,995

d All other revenue 20,037,513 19,587,214 450,299

e Total .Add lines 11a-11d . .10- 48,208,511

10-12 Total revenue . See Instructions . . .1,885,236,861 1,665,926,283 6,732,790 152,387,232

Form 990 (2011)

Form 990 (2011)

Statement of Functional Expenses

Section 501(c)(3) and 501(c)(4) organizations must complete all columnsAll other organizations must complete column (A) but are not required to complete columns (B), (C), and (D)Check if Schedule 0 contains a response to any question 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

106,730,338 106,730,338

2 Grants and other assistance to individuals in theUnited States See Part IV, line 22 41,013 41,013

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 18,681,451 5,673,991 12,522,125 485,335

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 525,733,749 483,075,769 41,317,515 1,340,465

8 Pension plan contributions (include section 401(k) and section403(b) employer contributions ) 26 ,814,316 24,499,352 2,314,964

9 Other employee benefits 54 ,903,100 46,195,276 8,300,492 407,332

10 Payroll taxes 35,649,881 32,424,892 3,224,567 422

11 Fees for services (non-employees)

a Management . 131,404,848 131,404,848

b Legal 1,899 ,628 59,023 1,840,605

c Accounting 1,179,603 393,034 785,563 1,006

d Lobbying . 0

e Professional fundraising See Part IV, line 17 110,021 110,021

f Investment management fees 4,457,028 4,457,028

g Other 136 ,557,069 83,731,010 51,927,803 898,256

12 Advertising and promotion . 2,806,801 502,935 2,288,878 14,988

13 Office expenses 41,054,371 34,310,188 6,376,730 367,453

14 Information technology 11,091,755 7,751,973 3,339,748 34

15 Royalties . 0

16 Occupancy 79,762,981 51,502,251 28,248,435 12,295

17 Travel 1,911,402 1,201,958 646,492 62,952

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

19 Conferences , conventions , and meetings 1,050,696 458,391 414,450 177,855

20 Interest 28,255,031 28,255,031

21 Payments to affiliates 0

22 Depreciation , depletion, and amortization 140,414,078 130,550,649 9,863,429

23 Insurance 52,550,726 42,112,594 10,438,132

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

a MEDICAL SUPPLIES 267,314,020 267,314,020

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

c BAD DEBT 32,164,970 32,164,970

d SECURITY SERVICES 5,981,508 4,937,685 1,043,823

e

f All other expenses 9,644,339 7,079,019 2,428,757 136,563

25 Total functional expenses. Add lines 1 through 24f 1,759,559,744 1,432,360,383 323,184,384 4,014,977

26 Joint costs. Check here 1F- if following

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

Form 990(2011)

Form 990 (2011)

Balance Sheet

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

1 Cash-non-interest-bearing 0 1 0

2 Savings and temporary cash investments . 117,124,878 2 137,446,129

3 Pledges and grants receivable, net 41,947,069 3 43,794,943

4 Accounts receivable, net . 232,460,485 4 279,774,948

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

Schedule L 0 5 0

6 Receivables from other disqualified persons (as defined under section 4958(f)(1)) andpersons described in section 4958(c)(3)(B) Complete Part II of

Schedule L 0 6 0

7 Notes and loans receivable, net 0 7 0

8 Inventories for sale or use 31,714,555 8 31,528,365

9 Prepaid expenses and deferred charges 83,315,755 9 51,373,390

10a Land, buildings, and equipment cost or other basis Complete 2,316,682,236

Part VI of Schedule D 10a

b Less accumulated depreciation 10b 990,363,563 1,340,249,772 10c 1,326,318,673

11 Investments-publicly traded securities . 1,012,404,237 11 1,099,721,709

12 Investments-other securities See Part IV, line 11 1,083,439,095 12 1,212,047,352

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 81,520,376 15 311,286,705

16 Total assets . Add lines 1 through 15 (must equal line 34) . 4,024,176,222 16 4,493,292,214

17 Accounts payable and accrued expenses 214,040,402 17 193,710,946

18 Grants payable 64,318,351 18 134,841,937

19 Deferred revenue 8,494,584 19 6,372,582

20 Tax-exempt bond liabilities 835,064,027 20 820,654,963

21 Escrow or custodial account liability Complete Part IVof Schedule D 0 21 0

22 Payables to current and former officers, directors, trustees, keyemployees, 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 . 481, 250, 809 25 795, 361, 393

26 Total liabilities . Add lines 17 through 25 . 1,603,168,173 26 1,950,941,821

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

through 29, and lines 33 and 34.

C5 27 Unrestricted net assets 2,154,291,520 27 2,245,299,813

Mca

28 Temporarily restricted net assets 140,387,958 28 155,279,701

r29 Permanently restricted net assets 126,328,571 29 141,770,879

Organizations that do not follow SFAS 117, check here 1- fl and completeW_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 2,421,008,049 33 2,542,350,393

34 Total liabilities and net assets/fund balances 4,024,176,222 34 4,493,292,214

Form 990 (2011 )

Form 990 (2011)

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

1 Total revenue (must equal Part VIII, column (A), line 12)1 1,885,236,861

2 Total expenses (must equal Part IX, column (A), line 25)2 1,759,559,744

3 Revenue less expenses Subtract line 2 from line 1 .3 125,677,117

4 Net assets or fund balances at beginning of year (must equal Part X, line 33, column (A))4 2,421,008,049

5 Other changes in net assets or fund balances (explain in Schedule O) .5 -4,334,773

6 Net assets or fund balances at end of year Combine lines 3, 4, and 5 (must equal Part X, line 33, column(B)) 6 2,542,350,393

GZMM-Financial Statements and Reporting

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

Yes No

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

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

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

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

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

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

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

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

Form 990 (2011 )

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)

4d. Other program services

(Code ) ( Expenses $ 6,410,574 including grants of$ ) ( Revenue $ 8 ,188,608 )

hEALTH AND fITNESS member programs

(Code ) (Expenses $ 4,783,363 including grants of $ 4,783,363 ) (Revenue $

NMF's Contributions

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

4d. Other program services

(Code ) (Expenses $ including grants of $ ) (Revenue $ 43,609,485 )

Other

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 (check all Reportable Reportable Estimated

hours that apply) compensation compensation amount of otherper ,o = from the from related compensationweek 0 5 organization (W- organizations from the

,D 0 V 2/1099-MISC) (W- 2/1099- organization and

-n MISC) relatedc o '° °- organizations

0- m m

Qif.

if G

THOMAS A COLE NMHC5 0 X X

CHAIR/DIRECTOR

CAROL L BERNICK NMHC5 0 X X

CHAIR/DIRECTOR

JOHN A CANNING JR NMHC5 0 X X

VICE CHAIR/DIRECTOR

WILLIAM A OSBORN NMHC5 0 X X

VICE CHAIR/DIRECTOR

NICHOLAS D CHABRAJA NMHC5 0 X

DIRECTOR

PETER D CRIST NMHC5 0 X

DIRECTOR

JOHN H DICK NMHC5 0 X

DIRECTOR

Kent P Dauten NMHC5 0 X X

DIRECTOR

DEAN M HARRISON NMHC40 0 X X 3,810,450 0 291,748

DIRECTOR PRESIDENT & CEO

EDWARD M LIDDY NMHC5 0 X

DIRECTOR

W JAMES MCNERNEY JR NMHC5 0 X

DIRECTOR

GARY A NOSKIN MD NMHC40 0 X 122,447 0

DIRECTOR

ROBERT L PARKINSON JR NMHC5 0 X X

DIRECTOR

HOMI B PATEL NMHC5 0 X

DIRECTOR

PHILIP J PURCELL III NMHC5 0 X

DIRECTOR

J CHRISTOPHER REYES NMHC5 0 X

DIRECTOR

LARRY D RICHMAN NMHC5 0 X

DIRECTOR

Samuel C SCOTT III NMHC5 0 X

DIRECTOR

GLENN FTILTON NMHC5 0 X

DIRECTOR

FORREST R WHITTAKER NMHC5 0 X

DIRECTOR

William J Brodsky NMH5 0 X X

DIRECTOR

Gregory Q Brown NMH5 0 X

DIRECTOR

Joseph F Damico Jr NMH5 0 X

DIRECTOR

John A Edwardson NMH5 0 X

DIRECTOR

Sharon Gist Gilliam NMH5 0 X

DIRECTOR


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


,D 0 V 2/1099-MISC) (W- 2/1099- organization and

'°-n°

MISC) relatedc c - organizations

0- m m

Qif. Qr

a,

Jeffrey L GLassroth MD NMH5 0 X

DIRECTOR

Ilene S Gordon NMH5 0 X

DIRECTOR

J Larry Jameson MD NMH5 0 X

DIRECTOR

Eric G Neilson MD NMH5 0 X

DIRECTOR

William D Perez NMH5 0 X

DIRECTOR

Anna Pramaggiore NMH5 0 X

DIRECTOR

Timothy P Sullivan NMH5 0 X

DIRECTOR

Donald Thompson NMH5 0 X

DIRECTOR

Frederick H Waddell NMH5 0 X

DIRECTOR

Miles D White NMH5 0 X

DIRECTOR

Abra Prentice Wilkin NMH5 0 X

DIRECTOR

Richard L Wixson MD NMH5 0 X

DIRECTOR

Maria C Bechily NMFVICE CHAIR/DIRECTOR

5 0 X X

Ellen S Alberding NMF5 0 X

DIRECTOR

THOMAS L BERNARDIN NMF5 0 X

DIRECTOR

Jennifer Bianchi NMF5 0 X

DIRECTOR

NEIL G BLUHM NMF5 0 X

DIRECTOR

Sharon M Brady NMF5 0 X

DIRECTOR

CHARLES M BRENNAN III NMF5 0 X

DIRECTOR

DENNIS H CHOOKASZIAN NMF5 0 X

DIRECTOR

Michael F DeSantiago NMF5 0 X

DIRECTOR

Anthony B Davis NMF5 0 X

DIRECTOR

Shawn M Donnelley NMF5 0 X

DIRECTOR

STEPHEN A FALK NMF40 0 X X 674,212 53,427

DIRECTOR VP-DEVELOPMENT & PRES

MICHAEL W FERRO NMF5 0 X

DIRECTOR



hours that apply) compensation compensation amount of otherper ,o = from the from related compensationweek 0 ^] 5 organization (W- organizations from the

C ,D 0 'D 2/1099-MISC) (W- 2/1099- organization and

-n MISC) related0-C

(D'° a °- organizations

- a mfP (D -D

4' 4• ^4• +a

ALBERT M FRIEDMAN NMF5 0 X

DIRECTOR

C GARY GERST NMF5 0 X

DIRECTOR

LISA M GILES NMF5 0 X

DIRECTOR

ANDREA M GORDON NMF5 0 X

DIRECTOR

JAMES A GORDON NMF5 0 X

DIRECTOR

Judy Greffin NMF5 0 X

DIRECTOR

SANDRA L HELTON NMF5 0 X

DIRECTOR

ROBERTO R HERENCIA NMF5 0 X

DIRECTOR

BRUCE A HEYMAN NMF5 0 X

DIRECTOR

WILLIAM M HUNTER NMF5 0 X

DIRECTOR

PETERS HURST BDS NMF5 0 X

DIRECTOR

RICK H KASH NMF5 0 X

DIRECTOR

JOHN A KESSLER MD NMF5 0 X

DIRECTOR

WILLIAM C KUNKLER III NMF5 0 X

DIRECTOR

LAWRENCE F LEVY NMF5 0 X

DIRECTOR

Stephanie LieberNMF5 0 X

DIRECTOR

WILLIAM T LYNCH JR NMF5 0 X

DIRECTOR

JOSEPH D MANSUETO NMF5 0 X

DIRECTOR

TRINA GORDON MCCALLISTER NMF5 0 X

DIRECTOR

RICHARD MELMAN NMF5 0 X

DIRECTOR

JOANNE C MILLER NMF5 0 X

DIRECTOR

Mimi Olson NMF5 0 X

DIRECTOR

M K PRITZKER NMF5 0 X

DIRECTOR

ANDREA REDMOND NMF5 0 X

DIRECTOR

VICTORIA J REICH NMF5 0 X

DIRECTOR


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

hours that apply) compensation compensation amount of otherper ,o = from the from related compensationweek Z organization (W- organizations from the

C ,D 4 2/1099-MISC) (W- 2/1099- organization and

ID - -n MISC) related0-c o

(D+° 00 °- organizations

J- m

&a, fD

0.

LINDA JOHNSON RICE NMF5 0 X

DIRECTOR

MARY BETH RICHMOND MD NMF5 0 X

DIRECTOR

MICHAEL A RUCHIM MD NMF40 0 X 627,102 50,697

DIRECTOR

Desiree Rogers NMF5 0 X

DIRECTOR

MANUEL SANCHEZ NMF5 0 X

DIRECTOR

Nancy W Sassower MD NMF40 0 X 54,355 35

DIRECTOR

TERRY SAVAGE NMF5 0 X

DIRECTOR

MARC S SCHULMAN NMF5 0 X

DIRECTOR

RICHARD J L SENIOR NMF5 0 X

DIRECTOR

SCOTT C SMITH NMF5 0 X

DIRECTOR

NATHANIEL SOPER MD NMF5 0 X

DIRECTOR

M CHRISTINE STOCK MD NMF5 0 X

DIRECTOR

ROBERT J STUCKER NMF5 0 X

DIRECTOR

Katie Surkamer NMF5 0 X

DIRECTOR

SHEILA G TALTON NMF5 0 X

DIRECTOR

Jason Tyler N M F5 0 X

DIRECTOR

DOUGLAS E VAUGHAN MD NMF5 0 X

DIRECTOR

WILLIAM A VON HOENE JR NMF5 0 X

DIRECTOR

REEVE B WAUD NMF5 0 X

DIRECTOR

ARTHUR M WOOD JR NMF5 0 X

DIRECTOR

Corine J Wood NMF5 0 X

DIRECTOR

Todd Altounian NLFH5 0 X

DIRECTOR

Kermit L Crawford NLFH5 0 X

DIRECTOR

NEIL FREEMAN MD NLFH5 0 X

DIRECTOR

Anthony Kessman NLFH5 0 X

DIRECTOR




C ,D 0 'D 2/1099-MISC) (W- 2/1099- organization and

-n MISC) relatedc o '° a °- organizations

c^ c)- a m

T(D D

if.4• +a

Thomas J McAfee NLFH40 0 X X 811,810 137,980

Director SR V P-O PE RATIons & Pr

PATRICK M MCCARTHY MD NLFH5 0 X

DIRECTOR

Charlie N Mills NLFH5 0 X

DIRECTOR

LEE M MITCHELL NLFH5 0 X

DIRECTOR

LORNA S PFAELZER NLFH5 0 X

DIRECTOR

Debbie S Saran NLFH5 0 X

DIRECTOR

Kim R Sobinsky MD NLFH5 0 X

DIRECTOR

Lewis A Steverson NLFH5 0 X

DIRECTOR

Alexander D Stuart NLFH5 0 X

DIRECTOR

EDWARD J WEHMER NLFH5 0 X

DIRECTOR

Dennis M Murphy NMPG40 0 X X 1,036,819 187,386

DIRECTOR Exec VP

Daniel M Derman MD NMPG40 0 X X 487,182 216,936

Director VP-OPERATION & PRES

Jeffrey D Kopin MD NMPG40 0 X 420,600 31,791

DIRECTOR

PeterA Lechman MD NMPG40 0 X 364,540 32,425

DIRECTOR

Dean L Manheimer NMPG40 0 X 688,490 66,054

Director SR VP-HUMAN RESOURCES

Earl J Barnes HFI40 0 X 495,619 42,349

DIRECTOR

Matthew] Flynn HFI40 0 X X 430,918 61,994

Director Assistant Secretary/S

PETER J MCCANNA NMHC40 0 X 1,226,362 788,690

EXEC VP-ADMIN CFO &TREASURER

CAROL M LIND NMHC40 0 X 704,220 136,001

SR VP, GEN COUNSEL & SECRETARY

Douglas M Young NMHC40 0 X 485,930 270,142

assistant treasurer

JENNIFER S WOOTEN NMHC40 0 X 134,023 26,194

ASSISTANT SECRETARY

Michelle A Janney NMH40 0 X 591,254 115,884

Senior V P & Chief Nurse Exec

PAUL L SHOUN NMF40 0 X 99,007 24,235

ASSISTANT SECRETARY

Michael G Arkin MD NLFH40 0 X 532,838 61,971

VP&CMO

Kimberly A Nagy NLFH40 0 X 297,596 43,055

VP &ChiefNursing Officer



hours that apply) compensation compensation amount of otherper ,o = from the from related compensationweek Z organization (W- organizations from the

C ,D 4 2/1099-MISC) (W- 2/1099- organization and

0- (D ID -+° 0

-n°

MISC) relatedc o 0 - organizations

J- m

AndrewC Palumbo NMPG40 0 X 41,470 3,885

VICE PRESIDENT

TIMOTHY R ZOPH NMHC40 0 X 4,416,377 75,044

SR VP-Adman & CIO

JULIA L CREAMER NMHCSenior VP-Q uality & Planning

40 0 X 655,855 438,844

Timothy Garvey MD NMPG40 0 X 676,148 15,429

Physician

Scott Moses MD NMPGPhysician

40 0 X 665,964 31,588

Steven P Klimkowski NMHC40 0 X 613,777 50,863

C hief Investment Officer

Charles M Watts

SR VP Medical Affairs40 0 X 701,211 38,517

Marsha OberriederNLFH40 0 X 324,211 167,531

VP HR & Professional Services

Jane Griffin NLFH

VP Philantrophy & marketing40 0 X 256,776 73,679

Matthew Koschmann NLFH40 0 X 288,830 50,570

VP External Affairs Bus DIr


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

(Form 990 or 990EZ) 2011Complete if the organization is a section 501(c)(3) organization or a sectionDepartment 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 InstructionsThe organization is not a private foundation because it is (For lines 1 through 11, check only one box)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

0)Name ofsupported

organization

(ii)EIN

(iii)

Type of

organization

(described on

lines 1- 9 above

or IRC section

(see

(iv)Is the

organization incol (i) listed inyour governingdocument?

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

support?

(vi)Is the

organization incol (i) organized

in the U S ?

viiAmount ofsupport?

instructions)) Yes No Yes No Yes No

Total

For Paperwork Reduction Act Notice, seethe Instructions for Form 990 Cat No 11285F Schedule A (Form 990 or 990-EZ) 2011

Schedule A (Form 990 or 990-EZ) 2011 Page 2

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

Section A . Public SupportCalendar year (or fiscal year beginning (a) 2007 (b) 2008 (c) 2009 (d) 2010 (e) 2011 (f) Total

in)1 Gifts, grants, contributions, and

membership fees received (Do notinclude any "unusualgrants ")

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

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

4 Total .Add lines 1 through 3

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

6 Public Support . Subtract line 5 fromline 4

Section B. Total SupportCalendaryear (or fiscal year beginning (a) 2007 (b) 2008 (c) 2009 (d) 2010 (e) 2011 (f) Total

in)

7 Amounts from line 4

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

10

11

12

13

sourcesNet income from unrelatedbusiness activities, whether ornot the business is regularlycarried onOther income (Explain in PartIV ) Do not include gain or lossfrom the sale of capital assetsTotal support (Add lines 7through 10)Gross receipts from related activities, etc (See instructions 12

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

Section C. Computation of Public Support Percentage14 Public Support Percentage for 2011 (line 6 column (f) divided by line 11 column (f)) 14

15 Public Support Percentage for 2010 Schedule A, Part II, line 14 15

16a 331 / 3%support test -2011 . Ifthe 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 33 1 / 3%support test -2010 . Ifthe organization did not check the box on line 13 or 16a, and line 15 is 33 1/3% or more, check thisbox and stop here . The organization qualifies as a publicly supported organization

17a 10%-facts-and -circumstances test -2011 . 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 -2010 . 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) 2011


IMMITM Support Schedule for Organizations Described in IRC 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) 2007 (b) 2008 (c) 2009 (d) 2010 (e) 2011 (f) Total

in)1 Gifts, grants, contributions, and

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

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

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

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

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

6 Total . Add lines 1 through 5

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

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

c Add lines 7a and 7b

8 Public Support (Subtract line 7cfrom line 6 )

Section B. Total SupportCalendar year (or fiscal year beginning (a) 2007 (b) 2008 (c) 2009 (d) 2010 (e) 2011 (f) Total

in)

9 Amounts from line 6

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

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

c Add lines 10a and 10b

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

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

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

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

Section C. Com p utation of Public Support Percenta g e15 Public Support Percentage for 2011 (line 8 column (f) divided by line 13 column (f)) 15

16 Public support percentage from 2010 Schedule A, Part III, line 15 16

Section D. Computation of Investment Income Percentage

17 Investment income percentage for 2011 (line 10c column (f) divided by line 13 column (f)) 17

18 Investment income percentage from 2010 Schedule A, Part III, line 17 18

19a 33 1/3%support tests-2011 . 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

b 33 1 / 3% support tests-2010 . If the organization did not check a box on line 14 or line 19a, and line 16 is more than 33 1/3% and line18 is not more than 33 1/3%, check this box and stop here . The organization qualifies as a publicly supported organization

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



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

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)



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 2011

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

Internal Revenue Service 1- Attach to Form 990 or Form 990-EZ. 1- See separate instructions . • • - ' •

If the organization answered "Yes," to Form 990, Part IV, Line 3 , or Form 990-EZ , Part V, line 46 ( Political Campaign Activities),then• Section 501(c)(3) organizations Complete Parts I-A and B Do not complete Part I-C• Section 501(c) (other than section 501(c)(3)) organizations Complete Parts I-A and C below Do not complete Part I-B• Section 527 organizations Complete Part I-A onlyIf the organization answered "Yes," to Form 990, Part IV , Line 4 , or Form 990-EZ , Part VI, line 47 (Lobbying Activities), then• Section 501(c)(3) organizations that have filed Form 5768 (election under section 501(h)) Complete Part II-A Do not complete Part II-B• Section 501(c)(3) organizations that have NOT filed Form 5768 (election under section 501(h)) Complete Part II-B Do not complete Part II-AIf the organization answered "Yes," to Form 990, Part IV, Line 5 (Proxy Tax) or Form 990-EZ, 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 on behalf of orin opposition to candidates for public office in Part IV

2 Political expenditures - $

3 Volunteer hours

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

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

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

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

4a Was a correction made? fl Yes fl No

b If "Yes," describe in Part IV

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

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

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

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

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

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

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

funds If none, enter -0-

(e) Amount of politicalcontributions received

and promptly anddirectly delivered to a

separate politicalorganization If none,

enter -0-

i-or Privacy Act ana raperworK rteauction Act Notice, see the instructions Tor corm 99U. Cat No 50084S Schedule C ( Form 990 or 990 - EZ) 2011

Schedule C (Form 990 or 990-EZ) 2011 Page 2

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

A Check F 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 1 if the filing organization checked box A and "limited control" provisions apply

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

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

(a) FilingOrganization's

Totals

0

0

0

1,428,862,178

1,428,862,178

(b) AffiliatedGroupTotals

10,209

521,977

532,186

1,581,224,431

1,581,756,617

1,000,000

250,000

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

Not over $500,000

The lobbying nontaxable amount is:

20% of the amount on line le

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

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

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

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

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 F 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

Ca lenda r yea r ( or f isca I yea r(a) 2008 (b) 2009 (c) 2010 (d) 2011 (e) Total

beginning in)

2a Lobbying non-taxable amount 1,000,000 1,000,000 1,000,000 1,000,000 4,000,000

b Lobbying ceiling amount 6,000,000150% of line 2a column a

c Total lobbying expenditures 194,319 192,553 190,640 532,186 1,109,698

d Grassroots non-taxable amount 250,000 250,000 250,000 250,000 1,000,000

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

1,500,000

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

Schedule C (Form 990 or 990-EZ) 2011

Schedule C (Form 990 or 990-EZ) 2011 Pa g e 3Complete if the organization is exempt under section 501(c)(3) and has NOT filed Form 5768(election under section 501(h)).

A mount

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? If "Yes," describe in Part IV

j Total 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 carryover lobbying and political expenditures from the prior year? 3

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

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

Dues, assessments and similar amounts from members 1

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

a Current year 2a

b Carryover from last year 2b

c Total 2c

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

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

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

Su lementalInformation

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

Identifier Return Reference Explanation

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

Grassroots Lobbying Amount Direct Lobbying Amount TotalLobbying Expenditures Other Exempt Purpose Expenditures1,163,190,071 Total Exempt Purpose Expenditures1,163,190,071 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 Lake Forest, IL 60645 FEIN 36-2179779Grassroots Lobbying Amount Direct Lobbying Amount TotalLobbying Expenditures Other Exempt Purpose Expenditures197,741,699 Total Exempt Purpose Expenditures197,741,699 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 Memorial HealthCare Address 251 EHuron Chicago, IL 60611 FEIN 36-3152959 GrassrootsLobbying Amount 10,209 Direct Lobbying Amount 521,977Total Lobbying Expenditures 532,186 Other Exempt PurposeExpenditures 152,362,253 Total Exempt PurposeExpenditures 152,894,439 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 Physicians GroupAddress 251 E Huron Chicago, IL 60611 FEIN 36-4030256Grassroots Lobbying Amount Direct Lobbying Amount TotalLobbying Expenditures Other Exempt Purpose Expenditures56,799,060 Total Exempt Purpose Expenditures 56,799,060Lobbying Nontaxable Amount 1,000,000 GrassrootsNontaxable Amount 250,000 Total Grassroots LessNontaxable Amount Total Expenditures Less NontaxableAmount Share of Excess Lobbying Expenditures OrganizationName Lake Forest Health & Fitness Institute Address 1200 NWestmoreland Road Lake Forest, IL 60045 FEIN 36-3835030Grassroots Lobbying Amount Direct Lobbying Amount TotalLobbying Expenditures Other Exempt Purpose Expenditures6,410,574 Total Exempt Purpose Expenditures 6,410,574Lobbying Nontaxable Amount 470,529 Grassroots NontaxableAmount 117,632 Total Grassroots Less Nontaxable AmountTotal Expenditures Less Nontaxable Amount Share of ExcessLobbying Expenditures Organization Name NorthwesternMemorial Foundation Address 351 E Huron Chicago, IL 60611FEIN 36-3155315 Grassroots Lobbying Amount DirectLobbying Amount Total Lobbying Expenditures Other ExemptPurpose Expenditures 4,720,774 Total Exempt PurposeExpenditures 4,720,774 Lobbying Nontaxable Amount386,039 Grassroots Nontaxable Amount 96,510 TotalGrassroots Less Nontaxable Amount Total Expenditures LessNontaxable Amount Share of Excess Lobbying ExpendituresTotal Grassroots Less Nontaxable Amount Total ExpendituresLess Nontaxable Amount Share of Excess LobbyingExpenditures

Schedule C (Form 990 or 990EZ) 2011

lefile GRAPHIC print - DO NOT PROCESS I As Filed Data - I DLN: 934931930053131

SCHEDULE D(Form 990) Supplemental Financial Statements

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

OMB No 1545-0047

2011Department of the Treasury Part IV, line 6, 7, 9, 10, 11a 11b 11c 11d 11e 11f 12a, or 12b •' 'Internal 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 theoraanization answered "Yes" to Form 990. Part IV. line 6.

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

1 Total number at end of year

2 Aggregate contributions to (during year)

3 Aggregate grants from (during year)

4 Aggregate value at end of year

688,320

600,000

5,609,103

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 1 No

6 Did the organization inform all grantees , donors, and donor advisors in writing that grant funds may beused only for charitable purposes and not for the benefit of the donor or donor advisor, or for any other purposeconferring impermissible private benefit 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 pleasure ) 1 Preservation of an historically importantly land area

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

fl Preservation of open space

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

Held at the End of the Year

a Total number of conservation easements 2a

b Total acreage restricted by conservation easements 2b

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

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

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

the taxable year 0-

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

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

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

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

0-$Does each conservation easement reported on line 2 ( d) above satisfy the requirements of section170(h)(4)(B)(i) and 170(h)(4)(B)(ii)? 1 Yes fl No

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

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

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

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

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

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

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

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

b Assets included in Form 990, Part X $

For Privacy Act and Paperwork Reduction Act Notice, see the Intructions for Form 990 Cat No 52283D Schedule D (Form 990) 2011

Schedule D (Form 990) 2011 Page 2

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

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

a F Public exhibition d fl Loan or exchange programs

b 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 XIV

5 During the year, did the organization solicit or receive donations of art, historical treasures or other similarassets to be sold to raise funds rather than to be maintained as part of the organization's collection? 1 Yes 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 XIV and complete the following table

Amount

c Beginning balance 1c

d Additions during the year ld

e Distributions during the year le

f Ending balance if

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

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

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

la Beginning of year balance

b Contributions

c Investment earnings or losses

d Grants or scholarships . .

e Other expenditures for facilitiesand programs

f Administrative expenses

g End of year balance .

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

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

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

-905,027 742,449 239,251 -186,000

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

2 Provide the estimated percentage of the yearend balance held as

a Board designated or quasi-endowment 0-

b Permanent endowment 0- 100 000 %

c Term endowment 0-

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

(i) unrelated organizations . . . . . . . . . . . . . . . . . . . . . . . . 3a(i) 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 XIV the intended uses of the organization's endowment funds

ITTMvi d Land . Buildinas . and Eauioment. 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 ,668,000,013 735,915,403 932,084,610

c Leasehold improvements . .

d Equipment 364,156,475 254,448,180 109,708,295

e Other 46,573,132 0 46,573,132

Total . Add lines la -le (Column (d) should equal Form 990, Part X, column (B), line 10 (c).) . . 0- 1,326,318,653

Schedule D (Form 990) 2011


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

(3)Other(A) LIMITED PARTN'SHIP INVESTMENTS 1,212,047,352 F

Total . (Column (b) should equal Form 990, Part X, col (B) line 12) 01 1 1,2 12,0 4 7,3 5 2

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

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

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

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

(a) Description (b) Book value

(1) DUE FROM AFFILIATES -2,750,660

(2) BENEFICIAL INTEREST IN TRUSTS 11,565,814

(3) ARTWORK 1,137,904

(4) INSURANCE RECOVERABLE 275,208,535

(5) SECTION 457-B PLAN ASSET 3,950,563

(6) OTHER ASSETS 2,646,713

(7) INVEST NONGROUP SUBS &JV 13,400,900

(8) BOND ISSUANCE COSTS 6,126,936

Total . (Column (b) should equal Form 990, Part X, co/.(8) line 15.) . 0. 311,286,705

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

Federal Income Taxes 0

ACCRUED BOND INTEREST 1,741,383

EST THIRD PARTY PAYOR SETTLEMENT 207,439,885

DUE TO AFFILIATES -8,827,799

SELF INSURANCE RESERVES 471,190,378

INTEREST RATE SWAPS 104,502,789

SECTION 457-B AND PENSION PLAN LIABILITY 7,813,530

DEFERRED RENT 2,758,496

OTHER 8.742.731

Total . (Column (b) should equal Form 990, Part X, col (B) line 25) P. I 7 9 5,3 6 1,3 9 3

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

Schedule D ( Form 990) 2011


« Reconciliation of Chang e in Net Assets from Form 990 to Financial Statements

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

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

3 Excess or (deficit) for the year Subtract line 2 from line 1 3

4 Net unrealized gains (losses) on investments 4

5 Donated services and use of facilities 5

6 Investment expenses 6

7 Prior period adjustments 7

8 Other (Describe in Part XIV) 8

9 Total adjustments (net) Add lines 4 - 8 9

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

« 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 XIV) . . . . . . . . . . . 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 XIV) . . . . . . . . . . 4b

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

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

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

1 Total expenses and losses per audited financialstatements . 1

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

a Donated services and use of facilities . 2a

b Prior year adjustments 2b

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

d Other (Describe in Part XIV) . . . . . . . . . . . 2d

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 XIV) . . . . . . . . . . . 4b

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

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

« Su lementalInformation

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


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 FAS 117 The Group reports boarddesignated funds of $138,600,000 in unrestricted net assets asof August 31, 2012 These amounts were not included in Part Vso that the Endowment funds match the financial statementsThe Group also has temporarily restricted assets generatedfrom endowment funds of 54,984,000 as of August 31, 2012 Inaccordance with FAS 117 these amounts are not consideredendowments and have not been included in Part V The twoyears and three years back have been combined to present thegroup endowment information

Collections of Art Schedule D part III Due to immateriality there is no separate footnote in thefinancial statements regarding SFAS 116 contributed art Thehospital maintains artwork that is on public display The artsprogram was developed in response to research thatdemonstrates the healing value of representational art depictingnatural landscapes and positive human interactions Our artcollection provides comfort, evokes positive emotions and canhelp promote healing for our patients The hospital alsomaintains historical items that relate to care such as historicalmedical instruments and nursing uniforms

Schedule D (Form 990) 2011

Additional Data

Software ID:

Software Version:

EIN: 36-4724966


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

DUE FROM AFFILIATES -2,750,660

BENEFICIAL INTEREST IN TRUSTS 11,565,814

ARTWORK 1,137,904

INSURANCE RECOVERABLE 275,208,535

SECTION 457-B PLAN ASSET 3,950,563

OTHER ASSETS 2,646,713

INVEST NONGROUP SUBS &JV 13,400,900

BOND ISSUANCE COSTS 6,126,936

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

ities

(b) Amount

ACCRUED BOND INTEREST 1,741,383

EST THIRD PARTY PAYOR SETTLEMENT 207,439,885

DUE TO AFFILIATES -8,827,799

SELF INSURANCE RESERVES 471,190,378

INTEREST RATE SWAPS 104,502,789

SECTION 457-B AND PENSION PLAN LIABILITY 7,813,530

DEFERRED RENT 2,758,496

OTHER 8,742,731


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

(Form 990) 2011n Complete if the organization answered " Yes" to Form 990,

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

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

Internal Revenue Service Inspection

ivame ortne 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 outside theUnited States

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

(a) Region (b) Number ofoffices in the

region

(c) Number ofemployees or

agents in region orindependentcontractors

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

services, investments, grantsto recipients located in the

reg ion)

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

specific type ofservice(s) in region

(f) Totalexpenditures for

region/ investmentsin region

Central America and theCaribbean

1 Program Services liability risk funding 71,459,885

Central America and theCaribbean

Investments 621,789,961

Europe (Including Iceland andGreenland)

Investments 27,348,806

East Asia and the Pacific Investments 13,084,007

Sub-Saharan Africa Investments 1,450,876

3a Sub-total 1 7355 , 13 3 , 5

b Total from continuation sheetsto Part I

c Totals (add lines 3a and 3b) 1 735,133,535

For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990 . Cat No 50082W Schedule F (Form 990) 2011

Schedule F (Form 990) 2011 Page 2

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

1(a) Name oforganization

(b) IRS codesection

and EIN ( ifapplicable)

( c) Region ( d) Purpose ofgrant

(e) Amount ofcash grant

(f) Manner ofcash

disbursement

(g) Amount ofof non-cashassistance

(h) Descriptionof non-cashassistance

(i) Method ofvaluation

(book, FMV,appraisal, other)

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

Enter total number of other organizations or entities .

Schedule F (Form 990) 2011


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

(a) Type of grant orassistance

(b) Region ( c) Number ofrecipients

( d) Amount ofcash grant

( e) Manner of cashdisbursement

(f) Amount ofnon-cashassistance

(g) Descriptionof non-cashassistance

(h) Method ofvaluation

(book, FMV,a pp raisal , other )



Foreign Forms

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

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

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

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

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

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

F Yes F- No

F- Yes F No

F Yes F- No

F Yes F- No

F Yes F- No

F- Yes F No


Additional Data

Software ID:

Software Version:

EIN: 36-4724966



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


SCHEDULEG Supplemental Information Regarding OMB No 1545-0047

(Form 990 or 990-EZ) Fundraising or Gaming Activities2011

Complete if the organization answered " Yes" to Forth 990, Part IV, lines 17, 18, or 19,

Department of the Treasury or if the organization entered more than $ 15,000 on Form 990-EZ, line 6a . Open to Public

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

Name of the organizationNorthwestern Memorial Healthcare Group


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 e-mail 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 r 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 Form 990-EZ filers are not required to complete this table

(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

Campbell Company1 EastUpperwackerdrive

chicago, IL 60601

consulting

No 110,021

Total . . . . . . . . . . . . . . . . .. . 1 1 0 , 0 2 1

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, I L, WI

For Privacy Act and Paperwork Reduction Act Noticee see the Instructions for Form 990 . Cat No 50083H Schedule G ( Form 990 or 990-EZ) 2011

Schedule G (Form 990 or 990-EZ) 2011 Page 2

Fundraising Events . Complete if the organization answered "Yes" to Form 990, Part IV, line 18, or reportedmore than $15,000 on Form 990-EZ, line 6a. List events with gross receipts greater than $5,000.

(a) Event #1 (b) Event #2 (c) Other Events (d) Total Events(Add col (a) through

golf womens Board 1 col (c))(event type) (event type) (total number)

co1 Gross receipts 108,300 469,375 116,986 694,661

2 Less Charitable38,400 377,804 58,295 474,499

contributions

3 Gross income (line 169,900 91,571 58,691 220,162

minus line 2)

4 Cash prizes

u75 Non-cash prizes

6 Rent/facility costs 65,039 96,539 12,254 173,832

7 Food and beverages 43,735 5,087 48,822

8 Entertainment 74,540 74,540

9 Other direct expenses 1,243 39,703 26,937 67,883

10 Direct expense summary Add lines 4 through 9 in column (d) . . . . . . . . . . . ► ( 365,077 )

11 Net income summary Combine lines 3 and 10 in column (d). . . . . . . . . . -144,915

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.

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

co col (c))co

1 Gross revenue .

cn 2 Cash prizes .

3 Non-cash prizes .

LIJ4 Rent/facility costs .

n 5 Other direct expenses

6 Volunteer labor F Yes F Yes F Yes------------------- ------------------- -------------------fl No fl No fl 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 F No

b If "No," Explain

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

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

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

b If "Yes," Explain

------------- ------------------------- ------------------------- ------------------------- ------------------------ ------------------------- ------------------------- ------------------------- -------------1

Schedule G ( Form 990 or 990-EZ) 2011

Schedule G (Form 990 or 990-EZ) 2011 Page 3

11 Does the organization operate gaming activities with nonmembers? . . . . . . . . . . . . . . . . . r-Yes 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 Provide the name and address of the person who prepares the organization's gaming/special events books andrecords

Name ►

Address ►

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

revenue? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . fl Yes fl 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

Name ►------------ ----------------------- ---------------------- ----------------------- ----------------------- ----------------------- ---------------------- ----------------------- --------

Address ►

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

16 Gaming manager information

Name ►------------------------------------------------------------

Gaming manager compensation 11111 $ _ -----------------------

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? . . . . . . . . . . . . . . . . . . . . . . . . . . . . F Yes F 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 $

Complete this part to provide additional information for responses to quuestion on Schedule G (seeinstructions.)

Identifier ReturnReference Explanation

Schedule G (Form 990 or 990-EZ) 2011

l efile GRAPHIC print - DO NOT PROCESS As Filed Data - DLN: 93493193005313

SCHEDULE H HospitalsOMB No 1545-0047

(Form 990) 20111- 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

Charity Care and Certain Other Community Benefits at CostEVINWYes No

la Did the organization have a charity care policy? If "No," skip to question 6a . la Yes

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

2 If the organization had multiple hospitals, indicate which of the following best describes application of the charitycare policy to the various hospitals

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

F Generally tailored to individual hospitals

3 Answer the following based on the charity care eligibility criteria that applies to the largest number of theorganization ' s patients during the tax year

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

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

F 1000/0 F 150% F 200% I_ Other 250.%

b Did the organization use FPG to determine eligibility for providing discounted care? If

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

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

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

4 Did the organization's policy provide 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 charity care 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 reportduring the tax year? 6a Yes

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

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

7 Charity Care and Certain Other Community Benefits at Cost

Charity Care and (a) Number of (b) Persons (c) Total community (d) Direct offsetting (e) Net community benefit (f) Percent of

Means-Testedactivities or served benefit expense revenue expense total expense

Government Programsprograms(optional)

(optional)

a Charity care at cost (fromWorksheet 1) . . 64,091,255 5,423,018 58,668,237 3 400 %

b Medicaid (from Worksheet 3,column a) . . . . 175,271,987 149,710,316 25,561,671 1 480 %

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

d Total Charity Care andMeans-Tested GovernmentPrograms 239,363,242 155,133,334 84,229,908 4 880 %

Other Benefitse Community health improvement

services and communitybenefit operations (from(Worksheet 4) . . . 2,473,749 22,934 2,450,815 0 140 %

f Health professions education(from Worksheet 5) . 48,450,142 9,405,474 39,044,668 2 260 %

g Subsidized health services(from Worksheet 6) 9,169,552 9,169,552 0 530 %

h Research (from Worksheet 7) 15,579,978 15,579,978 0 900 %

i Cash and in-kind contributionsfor community benefit (fromWorksheet 8) . . . 67,309,873 67,309,873 3 900 %

j Total Other Benefits . . . 142,983,294 9,428,408 133,554,886 7 730 %

k Total . Add lines 7d and 7j 382,346,536 , 164,561,742 , 217,784,794 , 12 610 %

For Privacy Act and Paperwork Reduction Act Noticee see the Instructions for Form 990 . Cat N o 50192T Schedule H (Form 990) 2011

Schedule H (Form 990) 2011 Page 2

Community Building Activities Complete this table if the organization conducted any community buildingactivities.

(a) Number ofactivities orprograms(optional)

(b) Personsserved (optional)

(c) Total communitybuilding expense

(d) Direct offsettingrevenue

(e) Net communitybuilding expense

(f) Percent oftotal expense

1 Physical improvements and housing

2 Economic develo p ment

3 Community support

4 Environmental im p rovements

5 Leadership development and trainingfor community members

6 Coalition building

7 Community health improvementadvocacy

8 Workforce development 510,228 510,228 0 030 %

9 Other

10 Total 510,228 , 510,228 , 0 030 %

Bad Debt, Medicare, & Collection Practices

Section A. Bad Debt Expense Yes No

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

2 Enterthe amount of the organization's bad debt expense . 2 7,545,967

3 Enter the estimated amount of the organization's bad debt expense attributable topatients eligible under the organization's charity care policy . 3

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

Section B. Medicare

5 Entertotal revenue received from Medicare (including DSH and IME) . 5 337,284,036

6 Enter Medicare allowable costs of care relating to payments on line 5 . 6 442,808,092

7 Subtract line 6 from line 5 This is the surplus or (shortfall) . 7 -105,524,056

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 I' Cost to charge ratio F Other

Section C. Collection Practices

9a Did the organization have a written debt collection policy during the tax year? . 9a Yes

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 Comeanies and Joint Ventures (see instructions)

(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) 2011


Facility Information

Section A . Hospital Facilities

list in order of size from largest to smallest)

ow many hospital facilities did the organization operate duringthe tax year? 2

ame and address

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er (Describe)

1 Northwestern memorial Hospital251E Huronchica o IL 60611

X X X X X

2 Northwestern lake FO rest Hospital660 N westmoreland roadlake forest, IL 60045

X X X X



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

Northwestern memorial Hospital

Name of Hospital Facility:

Line Number of Hospital Facility (from Schedule H, Part V, Section A): 1

Community Health Needs Assessment (Lines 1 through 7 are optional for 2011

1 During the tax year or any prior tax year, did the hospital facility conduct a community health needs assessment("Needs Assessment")? If "No," skip to question 8 . . . . . . . . . . . . . . . . . . . . .

If"Yes," indicate what the Needs Assessment describes (check all that apply)

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

b F Demographics of the community

Existing health care facilities and resources within the community that are available to respond to the healthc

needs of the community

d F How data was obtained

e F The health needs of the community

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

minority groups

g F The process for identifying and prioritizing community health needs and services to meet those needs

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

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

j F Other (describe in Part VI)

2 Indicate the tax year the hospital facility last conducted a Needs Assessment 20 _

3 In conducting its most recent Needs Assessment, did the hospital facility take into account input from persons whorepresent the community served by the hospital facility? If "Yes," describe in Part VI how the hospital facility took intoaccount input from persons who represent the community, and identify the persons the hospital facility consulted 3

4 Was the hospital facility's Needs Assessment conducted with one or more other hospital facilities? If"Yes," list theother hospital facilities in Part VI . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5 Did the hospital facility make its Needs Assessment widely available to the public? . . . . . . . . . . .

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

a 1 Hospital facility's website

b 1 Available upon request from the hospital facility

c 1 Other (describe in Part VI)

6 If the hospital facility addressed needs identified in its most recently conducted Needs Assessment, indicate how(check all that apply)

a F Adoption of an implementation strategy to address the health needs of the hospital facility's community

b F Execution of the implementation strategy

c F Development of a community-wide community benefit plan for the facility

d F Participation in community-wide community benefit plan

e F Inclusion of a community benefit section in operational plans

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

g F Prioritization of health needs in the community

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

i F Other (describe in Part VI)

7 Did the hospital facility address all of the needs identified in its most recently conducted Needs Assessment? If"No,"

Financial Assistance Policy

Yes I No

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

8 Explains eligibility criteria for financial assistance, and whether such assistance includes free or discounted care? 8 Yes

9 Used federal poverty guidelines (FPG) to determine eligibility for providing free care? . . . . . . . . . . . 9 Yes

I f "Yes," indicate the FPG family income l i m i t for e l i g i b i l i t y for free care 250 %If "No," explain in Part VI the criteria the hospital facility used



Facility information (continued)

10 Used FPG to determine eligibility for providing discounted care? . . . . . . . . . . .

If"Yes," indicate the FPG family income limit for eligibility for discounted care 600 0/0If "No," explain in Part VI the criteria the hospital facility used

11 Explained the basis for calculating amounts charged to patients? . . . . . . . . . . .

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

a I Income level

b I Asset level

c I Medical indigency

d I Insurance status

e I Uninsured discount

f I Medicaid/Medicare

g F State regulation

h I Other (describe in Part VI)

12 Explained the method for applying for financial assistance? . . . . . . . . . . . . .

13 Included measures to publicize the policy within the community served by the hospital facility?

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

a F The policy was posted at all times on the hospital facility's web site

b I The policy was attached to all 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 F The policy was provided, in writing, to patients upon admission to the hospital facility

f F' The policy was available upon request

g F Other (describe in Part VI)

Yes No

10 Yes

. . 1 11 I Yes

. . . . 12 Yes

. . . . 13 Yes

Billing and Collections

14 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? . . . . . . . 14 Yes

15 Check all of the following collection actions against an individual that were permitted under the hospital facility'spolicies during the tax year before making reasonable efforts to determine the patient's eligibility under the facility'sFA P

a 1' Reporting to credit agency

b I' Lawsuits

c 1' Liens on residences

d 1 Body attachments or arrests

e FO ther similar actions (describe in Part VI)

16 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? . . . . . . . . . . 16 No

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

a 1 Reporting to credit agency

b I' Lawsuits

c 1 Liens on residences

d 1 Body attachments


17 Indicate which efforts the hospital facility made before initiating any of the actions checked in question 16 (check allthat apply)

a F' Notified patients of the financial assistance policy upon admission

b F' Notified patients of the financial assistance policy prior to discharge

c F' Notified patients 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's financial assistance policy

e ' Other (describe in Part VI)



Facility Information (continued)

Policy Relating to Emergency Medical Care

No

18 Did the hospital facility have in place during the tax year a written policy relating to emergency medical care thatrequires the hospital facility to provide, without discrimination, care for emergency medical conditions to individualsregardless of their eligibility under the hospital facility's financial assistance policy? . . . . . . . . . . 18 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)

Individuals Eligible for Financial Assistance

19 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 1 The hospital facility used its lowest negotiated commercial insurance rate when calculating the maximum

amounts that can be charged

b 1 The hospital facility used the average of its three lowest negotiated commercial insurance rates when calculating

the maximum amounts that can be charged

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

d 1 Other (describe in Part VI)

20 Did the hospital facility charge any of its patients who were eligible for assistance under the hospital facility's financialassistance policy, and to whom the hospital facility provided emergency or other medically necessary services, morethan the amounts generally billed to individuals who had insurance covering such care? . . . . . . . . . 20 No

If"Yes," explain in Part VI

21 Did the hospital facility charge any of its FAP-eligible patients an amount equal to the gross charge for servicesprovided to that patient?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 No




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

Northwestern lake FO rest Hospital

Name of Hospital Facility:

Line Number of Hospital Facility (from Schedule H, Part V, Section A): 2

Community Health Needs Assessment (Lines 1 through 7 are optional for 2011

1 During the tax year or any prior tax year, did the hospital facility conduct a community health needs assessment("Needs Assessment")? If "No," skip to question 8 . . . . . . . . . . . . . . . . . . . . .

If"Yes," indicate what the Needs Assessment describes (check all that apply)

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

b F Demographics of the community

Existing health care facilities and resources within the community that are available to respond to the healthc

needs of the community

d F How data was obtained

e F The health needs of the community

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

minority groups

g F The process for identifying and prioritizing community health needs and services to meet those needs

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

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

j F Other (describe in Part VI)

2 Indicate the tax year the hospital facility last conducted a Needs Assessment 20 _

3 In conducting its most recent Needs Assessment, did the hospital facility take into account input from persons whorepresent the community served by the hospital facility? If "Yes," describe in Part VI how the hospital facility took intoaccount input from persons who represent the community, and identify the persons the hospital facility consulted 3

4 Was the hospital facility's Needs Assessment conducted with one or more other hospital facilities? If"Yes," list theother hospital facilities in Part VI . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5 Did the hospital facility make its Needs Assessment widely available to the public? . . . . . . . . . . .

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

a 1 Hospital facility's website

b 1 Available upon request from the hospital facility

c 1 Other (describe in Part VI)

6 If the hospital facility addressed needs identified in its most recently conducted Needs Assessment, indicate how(check all that apply)

a F Adoption of an implementation strategy to address the health needs of the hospital facility's community

b F Execution of the implementation strategy

c F Development of a community-wide community benefit plan for the facility

d F Participation in community-wide community benefit plan

e F Inclusion of a community benefit section in operational plans

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

g F Prioritization of health needs in the community

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

i F Other (describe in Part VI)

7 Did the hospital facility address all of the needs identified in its most recently conducted Needs Assessment? If"No,"

Financial Assistance Policy

Yes I No

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

8 Explains eligibility criteria for financial assistance, and whether such assistance includes free or discounted care? 8 Yes

9 Used federal poverty guidelines (FPG) to determine eligibility for providing free care? . . . . . . . . . . . 9 Yes

I f "Yes," indicate the FPG family income l i m i t for e l i g i b i l i t y for free care 250 %If "No," explain in Part VI the criteria the hospital facility used



Facility information (continued)

10 Used FPG to determine eligibility for providing discounted care? . . . . . . . . . . .

If"Yes," indicate the FPG family income limit for eligibility for discounted care 600 0/0If "No," explain in Part VI the criteria the hospital facility used

11 Explained the basis for calculating amounts charged to patients? . . . . . . . . . . .

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

a I Income level

b I Asset level

c I Medical indigency

d I Insurance status

e I Uninsured discount

f I Medicaid/Medicare

g F State regulation

h I Other (describe in Part VI)

12 Explained the method for applying for financial assistance? . . . . . . . . . . . . .

13 Included measures to publicize the policy within the community served by the hospital facility?

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

a F The policy was posted at all times on the hospital facility's web site

b I The policy was attached to all 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 F The policy was provided, in writing, to patients upon admission to the hospital facility

f F' The policy was available upon request

g F Other (describe in Part VI)

Yes No

10 Yes

. . 1 11 I Yes

. . . . 12 Yes

. . . . 13 Yes

Billing and Collections

14 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? . . . . . . . 14 Yes

15 Check all of the following collection actions against an individual that were permitted under the hospital facility'spolicies during the tax year before making reasonable efforts to determine the patient's eligibility under the facility'sFA P

a 1' Reporting to credit agency

b I' Lawsuits

c 1' Liens on residences

d 1 Body attachments or arrests


16 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? . . . . . . . . . . 16 No

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

a 1 Reporting to credit agency

b I' Lawsuits

c 1 Liens on residences

d 1 Body attachments


17 Indicate which efforts the hospital facility made before initiating any of the actions checked in question 16 (check allthat apply)

a F' Notified patients of the financial assistance policy upon admission

b F' Notified patients of the financial assistance policy prior to discharge

c F' Notified patients 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's financial assistance policy

e ' Other (describe in Part VI)




Policy Relating to Emergency Medical Care

No

18 Did the hospital facility have in place during the tax year a written policy relating to emergency medical care thatrequires the hospital facility to provide, without discrimination, care for emergency medical conditions to individualsregardless of their eligibility under the hospital facility's financial assistance policy? . . . . . . . . . . 18 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)

Individuals Eligible for Financial Assistance

19 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 1 The hospital facility used its lowest negotiated commercial insurance rate when calculating the maximum

amounts that can be charged

b 1 The hospital facility used the average of its three lowest negotiated commercial insurance rates when calculating

the maximum amounts that can be charged

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

d 1 Other (describe in Part VI)

20 Did the hospital facility charge any of its patients who were eligible for assistance under the hospital facility's financialassistance policy, and to whom the hospital facility provided emergency or other medically necessary services, morethan the amounts generally billed to individuals who had insurance covering such care? . . . . . . . . . 20 No


21 Did the hospital facility charge any of its FAP-eligible patients an amount equal to the gross charge for servicesprovided to that patient?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 No





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

How many non-hospital facilities did the organization operate during the tax year? 22

Name and address Type 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, and PartV, Section B, lines 1j, 3, 4, 5c, 6i, 7, 9, 10, 11h, 13g, 15e, 16e, 17e, 18d, 19d, 20, and 21

2 Community health needs assessment . Describe how the organization assesses the health care needs of the communities it serves,in addition to any community health needs 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


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 REQUEST A SUMMARYERSION IS ALSO AVAILABLE ON THE NMH ORG AND

LFH ORG WEBSITES




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




Bad Debt expense removed schedule h, part I, line 7 f he amount of bad debt expenses included in Part IX line 25 is32,164,970 Of this amount 32,072,599 is subtracted fromtotal costs for calculating the percentages




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 2012 IS REDUCED BY$16 5 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




Community Building activities schedule H, part II, Description Community Training and Education programs at NorthwesternMemorial work to ensure that a h ighly trained healthcareworkforce of adequate capacity is in place to serve theresidents of the region, that at-risk members of the communityhave access to jobs in the healthcare system and that theyouth have access to programs that help them learn about andpotenti ally become interested in healthcare careers Objective#1 Continue to provide training a nd employment opportunitiesfor residents of the community while addressing the shortage o fhealthcare workers through a direct, formal training pipelineOngoing Initiatives N M H offers 12 to 21-month certificateprograms in four areas including nuclear medicine techno logy,radiation therapy, radiography and diagnostic medicalsonography The programs are a vailable to employees as wellas the general public Many students come from the local community as well as from affiliated colleges and universitiesLeaders of these programs vis it city high schools, colleges anduniversities to introduce various medical fields to pro spectivestudents and increase their general knowledge of various alliedhealth fields NM H is an important clinical setting for theeducation of the next generation of healthcare workers, fromphysicians to nurses to skilled technicians Through clinicalaffiliations with top regional universities and colleges, as wellas established clinical rotation, ment oring, clinician shadowing,traditional didactic lectures and other teaching programs, NMHprovided a clinical setting for education of hundreds of students,many of whom will beco me professionals in fields identified asareas of current or future workforce shortage in the U Shealthcare system In fiscal year 2012, NMH providededucation to a More than 7 00 undergraduate and graduatenursing students b 300 students from university-based pharmacy programs c 50 respiratory therapy students d 5 graduatesocial work interns e 23 cl inical pastoral students f 4 internsin biomedical engineering g 6 students in clinical coding hStudents in cardiac rehabilitation, clinical psychology,counseling and human se rvices, exercise and sports sciences,health informatics technology, healthcare research, kinesiology,nutrition/dietician services, phlebotomy, physical therapy,physical therapy assistant, occupational therapy andoccupational therapy aide programs, respiratory therap y, socialwork, special care nursery and newborn nutrition, ultrasoundtechnology and vasc ular ultrasound technology Additionally,NLFH provides clinical training for students in phlebotomy,physical therapy, occupational therapy, speech therapy andaudiology 0 bjectiv e #2 Continue to provide on-the-jobtraining programs for at-risk members of our communit yOngoing Initiatives a Since 1997, NMH has partnered with theCARA program to help hom eless and other at-risk adults intheir efforts to achieve long-term employment success byproviding on-the-job training skills that ready them to move intothe work force NMH has hired more than 120 employeesthrough this partnership since it began b NMH participate s inthe Chicago Career Tech, a public-private program initiated in2010 The program prov ides job training in public and privateorganizations and placement services for unemploye d, mid-career technology professionals Since 20 10, 25 students havereceived training at N M H and two have been hired into full-timepositions Objective #3 Continue to support yo uth educationprograms, helping students understand the potential forjobopenings and suc cess in healthcare careers ongoingInitiatives a NMH offers ongoing, comprehensive yout hprograms that expose Chicago students to potential healthcarecareers - For 13 years, t hrough the Medical and HealthCareers Academy, NMH has partnered with high schools in theChicago Public School (CPS) System - Percy L Julian on theSouth Side, Roger C Sullivan on the North Side, Richard TCrane Technical Preparatory on the Near West Side and DunbarVocational Academy on the South Side - to promote interest inpost-high school education and healthcare careers NMHemployees speak to the students about theirjobs in healthcareand students with their parents visit the hospital, where theyhave the opportunity for a behind-the-scenes understanding ofclinical areas and potential careers Through this pro gram, 100high school students visited NM H in fiscal year 2012 - NMHhas hosted Medical E xplorers Post 9766 since 1996 Studentsparticipate in a variety of activities designed to encourage theirexpressed interest in healthcare careers and expose them tothe field Th e program emphasizes career exploration, lifeskills, service learning, character developm ent and leadershipStudents participate in tours, hear guest speakers and join indiscuss ions and projects The program offers internships,mentorship, tutoring, networking, commu nity serviceopportunities and scholarships To da




Community Building activities schedule H, part II, Description te, more than 800 high school and college students haveparticipated in NMH's Medical Expl orers Post Since theprogram began, many Medical Explorers have pursued careersin nursing and medicine and several are now employed at NMH,including a recent nursing Medical Exp lorer student who nowworks in the neonatal intensive care unit Cristo Rey JesuitHigh Sc hool in the Pilsen neighborhood on the city's Near WestSide, offers students from a prima rely Hispanic community anopportunity to work one day a week in an administrative role with the Human Resources division or within the InformationServices department at NMH to ga in valuable work experienceand learn time management and organizational skills in a corporate setting Twelve students participated in this program infiscal year 2012 - NMH and the Feinberg school of medicinedeveloped the Northwestern Medicine Scholar's Program at Chicago Public School system's Westinghouse CollegePreparatory High School, a selective en rollment high schoollocated in 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 andleadership and life skill s development Two classes of sixstudents participated in fiscal year 2012 and studied cardiology High Schools Technical Campus for students pursuingcareers in healthcare direct ly following high school or seekingprofessional healthcare careers a emotionally challe ngedstudents learning to perform housekeeping duties in partnershipwith the Special Educ ation District of Lake County, acooperative educational organization working among 35 sch ooldistricts in Lake County, Illinois b NMH continues to offercomprehensive internship s and fellowships for college studentsand post-graduates c internships, year-round acad emicinstruction and summer workshops to prepare minority collegestudents for the corpora to work setting Initially developedunder the federal Hire the future program, NMH was th e firstChicago hospital to participate in this program Studentsbenefit from mentoring a nd leadership training to prepare themfor future positions in a healthcare career - In fiscal year2012, NMH offered a paid internship to a college-level studentparticipating in the Chicago Scholars program ChicagoScholars is a not-for-profit organization that prov ides acomprehensive five-year program of mentoring, internshipplacement, networking and college admission assistance andscholarships to college-bound and college-level Chicago y outhfrom underprivileged backgrounds select post-graduatestudents to various aspects of leadership within our AMChospital




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 theservices provided Thus, a provision is recorded for bad debtsin the period services are provided related to these patientsAfter all reasonable collection efforts have been exhausted inaccordance with Northwestern Memorial's policies, accountsreceivable are written off and charged against the allowance foruncollectible accounts Northwestern Memorial has determined,based on an assessment at the reporting-entity level, thatpatient service revenue is primarily recorded prior to assessingthe patient's ability to pay, and as such, the entire provision forbad debts is recorded as a deduction from patient servicerevenue in the accompanying consolidated statements ofoperations and changes in net assets




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 2012




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




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

11h, Other included state of residency, family size, extenuatingcircumstances and medically necessary services




Publicizing Policy Schedule H, Part V, Line 13g, Other Summary brochure was available at check-in




Determination of FAP eligible Schedule H, Part V, Line 19d, 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




Needs assessment schedule H, part VI, Line 2 Healthcare Needs Considered in Developing the CommunityBenefits Plan NMHC's mission to im prove the health of thecommunities we serve is advanced through innovative programsto be tter manage chronic diseases, particularly among themedically underserved NMhC's Communi ty Benefit Planfocuses on addressing chronic diseases and is consistent withthe strategi c priorities of public health organizations at boththe state and local levels Among the leading health indicatorsidentified in the United States Department of Health and HumanS ervices (HHS) Healthy People 2020 initiative is clinicalpreventive services Through use of preventive strategies andscreenings, both chronic and acute diseases can be detected and treated at earlier, more treatable stages, significantlyreducing the risk of illness, disability, early death, and medicalcare costs The Chicago Department of Public Health ( CDPH)Healthy Chicago agenda prioritizes prevention of chronicdiseases, health awareness and access for all Chicagoans,reduction in health disparities based on socioeconomic stat us,and promotion of healthier lifestyles and environment TheHealthy Chicago agenda expl icitly calls for increasedpartnerships between public, community-based, and hospitalheal thcare providers and researchers to attain its goalsMembers of the Metropolitan Chicago Healthcare Council(MCHC) engaged Professional Research Consultants,Incorporated (PRC) in 2009 to design, implement and analyze acomprehensive statistical assessment of the healt h needs,behaviors and disparities among residents of Cook, DuPage andLake Counties in II linois NMH purchased the report andutilizes the findings in identifying the most importa nt healthneeds in the communities served by NMH and NLFH NMH hasformal and longstanding affiliations with two Federally QualifiedHealth Center partners based in the community, Near Northhealth service corp and Erie family health center Through thesepartnerships, programs are collaboratively developed andimplemented to address the healthcare needs of the patients inmedically underserved communities throughout Chicago Onemember of NMH's senior management team serves as a boardmember at Near North and two serve at Erie Near North, acommunity health partner for more than 40 years, providesneighborhood-based care and support services through eightprimary healthcare sites and four ancillary sites to m ore than35,000 primarily low-income uninsured or underinsuredresidents who live in some of the city's most impoverishedcommunities, including the Near North/Cabrini Green area,West Town, Humboldt Park, West Garfield Park, Austin,Kenwood/Oakland, Douglas, Grand Boul evard and UptownNear North operates primary care clinics on Chicago's South,West and Ne ar North sides Erie was founded in the 1950s as aproject of volunteer physicians from NM H and ErieNeighborhood House Erie provides a variety of primary careand case management services through nine sites and anumber of other partnership programs to more than 34,00 0patients annually from the Chicago neighborhoods of AlbanyPark, Avondale, Belmont Cragi n, Hermosa, Humboldt Park,Logan Square, Lincoln Square, North Lawndale and West TownEn e serves a population that is primarily Hispanic, the majorityof which come from househol ds with incomes that fall below thefederal poverty level NMH collaborates with both Near Northand Erie to identify health concerns for the populations theyserve, and both organ izations have targeted diabetes andwomen's health as priority areas of focus The collabo rativedevelopment of health initiatives among NMH, Near North, Erie,Feinberg and others to address chronic disease in theircommunities is detailed in a subsequent section ofthi s reportBased on the success of Diabetes Collaborative, the programwas expanded to the Humboldt Park community, an area ofextraordinarily high incidence of diabetes, as detaile d further inthis report Through charity care, outreach services and healtheducation pro grams at NLFH, NMHC responds to the priorityhealth needs of the residents of Lake County, especially amongthe uninsured or underinsured Information on health needscomes from th e Lake County Health Department andCommunity Health Center's Annual Report and Informatio nGuide and NLFH also participated in the Metropolitan ChicagoHealthcare Council's 2009 C ommunity Health Assessment,which evaluated the health needs of residents in each county throughout the Chicago region Through charity care, outreachservices and health education programs at NLFH, NorthwesternMemorial responds to the priority health needs of the resid entsof Lake County, especially among the uninsured orunderinsured Information on health needs comes from the LakeCounty Health Department and Community Health Center'snnual R eport and Information Guide and NLFH also

participated in the Metropolitan Chicago Healthc are Council's2009 Community Health Assessment, wh




Needs assessment schedule H, part VI, Line 2 ich evaluated the health needs of residents in each countythroughout the Chicago region




Patient education of financial Schedule H, part VI, Line 3 here are many ways that patients of the Hospitals are informedassistance eligibility or made aware of the availability of the Hospital's various

financial assistance programs a To increase awareness of itsfinancial assistance programs, the Hospitals have developedbrochures (in English and Spanish) that are provided to patientsupon admission and available at registration points-of-entry bEnglish and Spanish-language signs notifying patients thatfinancial assistance is available are present at every patientregistration area, including the emergency department c Aspart of the registration process, patients are provided with afinancial assistance information brochure which describes thetypes of assistance available and how to qualify for one or moreof the programs d The general consent form that every patientsigns contains information about the NMHC financialassistance programs, and is available in English, Spanish,Russian and Polish at NMH, while NLFH has programs in englishand spanish e Inpatients receive a Patient Welcome Packagethat includes the financial assistance information f Patientscan learn about and assess their eligibility for the Hospital'sfinancial assistance programs with the help of the Hospital'steam of financial counseling and patient inquiry representativeshese representatives are available on a walk-in basis or

through a toll-free number g Processes are in place to linkpatients with financial counselors and patient inquiryrepresentatives when financial hardship is identified as aconcern during social services assessments h The entryportal to the NMH and NLFH websites contain a prominent linkto information about NMH's various financial assistanceprograms, the financial assistance brochure and downloadableapplications in multiple languages i Working in conjunctionwith clinical staff, financial counselors visit inpatients notenrolled in government or private health plans while they arestill in the hospital to assist them in determining their eligibilityfor both government health programs and for Hospital Free andDiscounted Care programs j The Hospitals inform uninsuredpatients, and patients with an outstanding balance afternsurance, of the availability of various financial assistanceprograms, including the free care and discounted care program,and the catastrophic program offered by the Hospitals, inwritten correspondence sent to those patients This informationncludes the toll-free phone number to the team of patientaccount representatives k The Hospitals have on-site patientaccount staff who are trained and available to assist patientswith financial assistance I The Hospitals provide proactivefinancial counseling for self-pay patients who have a schedulednpatient admission Financial counseling includes assessmentfor publicly or privately funded insurance and the Hospitals'financial assistance programs Financial assistance programs,ncludes the free care and discounted care programs, and thecatastrophic program offered by the Hospitals, in writtencorrespondence sent to those patients This informationncludes the toll-free phone number to the team of patientaccount representatives




Community Information Schedule H, Part VI, Line 4 Populations and Community Served by Northwestern MemorialNorthwestern 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 regionsNorthwestern Memorial Hospital Service Area NMH divides itstotal service area into three geographic areas the primaryservice area (PSA), the city of Chicago and the surroundingseven-county area The PSA, which is defined by the 22 zipcodes surrounding NMH, accounts for 38% of inpatientadmissions The city of Chicago in total accounts for 65% ofinpatient admissions The community in NMH's PSA has a largeand growing population and it is important for us to continue togrow so that we can continue to provide quality healthcareservices, especially those only available at an Academicmedical Center (AMC) Between 2012 and 2017, thepopulation in NMH's PSA is projected to increase by 1 0%,whereas the population of Chicago is projected to decrease by1 5% Chicago 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 Northwestern LakeForest Hospital Service Area NLFH primarily serves LakeCounty Lake County is defined by 28 zip codes and accountsfor 90% of inpatient admissions at NLFH Of the approximately706,000 residents in the county, an estimated 80,000 underthe age of 65 are uninsured and more than 80,000 live inpoverty Lake County's population is growing Between 2012and 2017, the population of Lake County is projected toincrease by 3 1%




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 year2012, 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 2012, NorthwesternMemorial served as corporate sponsor for the 19th AnnualChicago Cares Serve-a-Thon At the event, more than 750NMH and NLFH employees and their family members donatedpersonal time to volunteer work in general maintenance,construction and painting in public school campuses citywideNorthwestern Memorial was recognized for sending the largestteam in the history of the event Supporting Lambs Farm Morethan 160 NLFH employees and their families participated in aday of service at Lambs Farm, a not-for-profit organization thatprovides residence, vocational services, employment andsupport to adults with developmental disabilities in LakeCounty, Illinois The families helped with painting andlandscaping services Objective Northwestern Memorial seeksand maintains strong relationships with local residents,business leaders and community service organizations in thearea immediately surrounding the NMH medical campus Theserelationships help to ensure that NMH addresses itsresponsibility to provide healthcare services to its campusneighbors - not only residents, but also a large number ofhotels, commercial properties and businesses that serve manythousands of visitors and tourists within blocks of the medicalcampus every day NMH works to be a good neighbor in thecommunity by participating in local activities and keepingresidents and businesses informed about hospital programs andnew developments that have an impact on the surroundingneighborhoods Similarly, NLFH actively participates in a broadrange of initiatives that benefit local communities throughoutLake County, ranging from community programs like strokeawareness education and obesity prevention to affordableworkforce housing and bike helmet safety NorthwesternMemorial actively seeks partners among the Chicago businesscommunity to join in health promotion and awarenessinitiatives Members of Northwestern Memorial's leadershipteam serve on boards and advisory boards of local communityhealth organizations, including but not limited to Near North,Erie, HealthReach, University HealthSystem Consortium, theIllinois Hospital Association, the Institute of Medicine ofChicago, the Metropolitan Chicago Healthcare Council, themerican Orthopaedics Association and others Members of

Northwestern Memorial's senior management team also holdleadership positions or memberships with significant civicorganizations such as the United Way of Metropolitan Chicago,World Business Chicago, the Business Leadership Group forWorkforce Chicago 2 0, Greater North Michigan AvenueAssociation, 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 affiliates reportedin this group return are all part of Northwestern MemorialHealthCare The community benefit plan, described earlier inSchedule H, gives details about each affiliate's respective rolein promoting the health of the communities we serve




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 Facilities That Are Not Licensed,Registered , or Similarly Recognized as a Hospital Facility(list in order of size from largest to smallest)

How many non-hospital facilities did the organization operateduring the tax year? 22

Type of Facility

Name and address (Describe)

Grayslake Outpatient & Acute Care Center Outpatient & acute care1475 E Belvidere RoadGRayslake,IL 60045




















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

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

How many non-hospital facilities did the organization operateduring the tax year? 22

Type of Facility

Name and address (Describe)



efile GRAPHIC print - DO NOT PROCESS I As Filed Data - I DLN: 93493193005313

Schedule I OMB No 1545-0047

(Form 990 ) Grants and Other Assistance to Organizations, 2011Governments and Individuals in the United StatesComplete 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

General Information on Grants and Assistance

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

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

Grants and Other Assistance to Governments and Organizations in the United States . Complete if the organization answered "Yes" toForm 990, Part IV, line 21 for any recipient that received more than $5,000. Check this box if no one recipient received more than $5,000. UsePart IV and Schedule I-1 (Form 990) if additional space is needed . . . . . . . . . . . . . . . . . . . . . . . . . F

(a) Name and address oforganization

or government

( b) EIN (c ) IRC Codesection

if applicable

( d) Amount of cashgrant

( e) Amount of non-cash

assistance

(f ) Method ofvaluation

(book, FMV,appraisal,

other)

(g) Description ofnon-cash assistance

(h) Purpose of grantor assistance


2 Enter total number of section 501(c)(3) and government organizations listed in the line 1 table . llk^ 14

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

For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990 . Cat No 50055P Schedule I (Form 990) 2011

Schedule I (Form 990) 2011 Pa g e 2

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

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

(c)Amount ofcash grant

(d)Amount ofnon-cash assistance

( e)Method of valuation (book,FMV, appraisal, other)

(f)Description of non-cash assistance

(1) Employees Crisis Assistance 30 37,461

(2) employees Crisis assistance 3 3,552

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


Monitoring use of Grant Form 990, Schedule I, Question Northwestern Memorial Hospital, Northwestern Lake Forest Hospital and Northwestern Memorial Foundation maintainfunds 2 detailed records and internal control procedures to ensure grant recipients are qualified, award amounts are documented and

selection criteria are clear Once a grant has been awarded, these organizations initiate a written agreement with the grantrecipient that incorporates a budget and time period for spending the grant dollars Reasonable direct costs, supported bydirect budget justification and related to the project's purpose are allowable Recipients agree to abide by the budget and allrelevant policies in effect at Northwestern Memorial HealthCare Grant expenditures are monitored for compliance with theirrespective agreements, at least once a year to ensure that budgets are followed and expenses are appropriate At the end ofeach budget period, these organizations require the grant recipient to submit a written narrative and financial report outliningproject accomplishments and how the grant dollars were expended Unexpended funds are returned to the organizations

Schedule I (Form 990) 2011

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

(a) Name and address (b) EIN (c) IRC Code ( d) Amount of ( e) Amount of ( f) Method of (g) Description (h) Purpose ofof organization section cash grant non-cash valuation of grantor government if applicable assistance (book, FMV, non- cash or assistance

appraisal, assistanceother)

NorthwesternUniversity710 N 36- ResearchLake Shore Drive 2167817

501 c 388,717,540 support

Chica o IL 60611

Northwestern UnivFeinberg School

36- Research &Medicine303 E

2167817501 c 3

12 103 298 EducationChicago Ave , ,

Chicago,IL 60611

Return to Form


(a) Name andaddress oforganization

or government

(b) EIN (c) IRC Codesection

if applicable

(d) Amount ofcash grant

(e) Amount ofnon-cashassistance

(f) Method ofvaluation

(book, FMV,appraisal,other )

(g) Descriptionof

non-cashassistance

(h) Purpose ofgrantor assistance

NorthwesternMedical FacultyFoundation680 N

29501 c 3 fellowships

Lake Shore Drive3097 7 2 , 253,741

Chicago,IL 60611

McGaw MedicalCenter ofNorthwesternUniversity645 N

3 6 -501 c 3 fellowships

Michigan Ave Suite 2656113 1,850,910

1058AChicago,IL 60611


(a) Name andaddress oforganization

or government


if applicable





(g) Descriptionof

non-cashassistance


Children'sMemorial Hospital2300 Childrens 36-

501 c 3Operating

Plaza 2170833 456,074 supportChicago, IL60614

Erie Family HealthCenter1701 W

36- OperatingSuperior

3088628501 c 3

350 000 supportChicago, IL ,

60622


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

or government appraisal, assistanceother )

Near North HealthServices

36- OperatingCorporation1276 N

3197647501 c 3

330 000 supportClybourn ,

Chicago,IL 60610

Community Health2611 West Chicago 36-

501 c 3Research

Avenue 3831791 220,000 supportChicago,IL 60622


(a) Name and addressof organizationor government


if applicable





(g) Descriptionof

non-cashassistance


Sinai Urban HealthInstituteCalifornia

36- ResearchAvenue at 15th 501 c 3Street- Ro

3166895 175,000 support

Chicago,IL 60608

HealthReachIncorporated1800Grand Avenue

36-501 c 3

Operating

waukegan,IL3816410 100,000 support

60085


(a) Name and address (b) EIN (c) IRC Code (d) Amount of (e) Amount of (f) Method of (g) Description (h) Purpose ofof organization section cash grant non-cash valuation of grantor government if applicable assistance (book, FMV, non-cash or assistance

appraisal, assistanceother )

Cease Fire UnivIllinois at Chicago 37-

501 c 3Operating

1603 Taylor Street 6006007 65,000 supportChicago,IL 60612

YMCA ofMetropolitan

36- OperatingChicago824 N

2179782501 c 3

57 760 supportHamlin ,

Chicago,IL 60651


(a) Name and address (b) EIN (c) IRC Code (d) Amount of (e) Amount of (f) Method of (g) Description (h) Purpose ofof organization section cash grant non-cash valuation of grantor government if applicable assistance (book, FMV, non-cash or assistance

appraisal, assistanceother

West Humboldt ParkDevelopmentC 3620 W

36-501 c 3

Operating

Chicago Ave3807011 37,540 support

Chicago,IL 60651

Bears Care1000Football Drive 36- OPERATINGLake Forest, IL 3931105

501 c 35,500 SUPPORT

60045


Schedule J Compensation Information OMB No 1545-0047

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

2011Compensated 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

Name of the organizationNorthwestern Memorial Healthcare Group


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 orprovision of all the expenses described above? If "No," complete Part III to explain lb Yes

2 Did the organization require substantiation prior to reimbursing or allowing expenses incurred by allofficers, directors, trustees, and the CEO/Executive Director, regarding the items checked in line la? 2 Yes

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

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 Regs section 53 4958-4(a)(3)? If "Yes," describein Part III 8 No

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

For Privacy Act and Paperwork Reduction Act Notice, see the Intructions for Form 990 Cat No 50053T Schedule 3 ( Form 990) 2011

Schedule J (Form 990) 2011 Page 2

Officers, Directors , Trustees , Key Employees, and Highest Compensated Employees . Use Schedule 3-1 if additional space needed.

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

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

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

(i) Basecompensation

(ii) Bonus &incentive

compensation

(iii) Otherreportable

compensation

other deferred

compensation

benefits (B)(1)-(D) reported in prior

Form 990 or

Form 990-EZ


Schedule 3 (Form 990) 2011

Schedule J (Form 990) 2011 Page 3


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

Identifier Return ExplanationReference

NON FIXED FORM 990 bonuses are a significant portion of compensation these portions are at risk and payable only upon achievement of substantial goalsPAYMENTS SCH J PART I

QUEStion 7

SUPPLEMENTAL FORM 990 There are two different nonqualified deferred compensation plans sponsored by Northwestern Memorial Healthcare, which provide supplemental, competitiveNONQUALIFIED SCHEDULE 3 retirement benefits The employer pays the cost of participation, and the benefits and contributions are subject to a substantial risk of forfeiture based on theRETIREMENT PART I completion of substantial service requirements The amounts earned by participants fluctuate from year to year based on factors such as a change in marketPLAN QUESTION 4 interest rates Timothy Zoph completed his substantial service requirements during the reporting period resulting in "other reportable compensation" that

b consists largely of amounts reported in prior 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, Carol Lind, Dennis Murphy, Charles Watts,Douglas Young and Timothy Zoph

Contingent Schedule J 5a Revenue Certain employed physicians are compensated on the basis of productivity that takes into account the revenues associated with servicesCompensation part I lines 5a personally performed by them 6a Net earnings Certain employed physicians may receive a bonus in part based on a percentage of their practice group's

and 6a net surplus (i e practice group revenue less overhead expenses) over a predetermined target amount The amount of the bonus is capped and represents nomore than a modest percentage of each physician's total compensation

severance Question 4 a during fiscal 2012, Charles Watts received severance from NMHC in the amount of$ 484,794

health club dues schedule J, Employees of Northwestern Lake Forest Hospital are offered discounted health and fitness club dues at Lake Forest Health and Fitness Institute Thepart 1, amount of the discount is treated as taxable income for each of the employeesquestion 1

Schedule 3 (Form 990) 2011

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

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

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

Compensationincentive

compensationcompensation

DEAN M HARRISON (1) 1,082,040 1,003,502 1,724,908 252,772 38,976 4,102,198 413,200NMHC (u) 0 0 0 0

STEPHEN A FALK NMF (1) 319,652 124,400 230,160 28,858 24,569 727,639 114,197

MICHAEL A RUCHIM (i) 532,029 55,700 39,373 24,839 25,858 677,799MD NMF (ii)

Thomas J McAfee NLFH (i) 453,228 314,607 43,975 106,934 31,046 949,790 30,100

Dennis M Murphy (i) 565,559 410,008 61,252 152,683 34,703 1,224,205 178,600NMPG (ii)

Daniel M Derman MD (i) 320,908 113,000 53,274 173,589 43,347 704,118NMPG (ii)

Jeffrey D Kopin MD (i) 368,546 29,762 22,292 7,350 24,441 452,391NMPG (ii)

PeterA Lechman MD (i) 238,260 126,280 4,985 27,440 396,965NMPG (ii)

Dean L Manheimer (i) 336,105 246,893 105,492 34,905 31,149 754,544 112,500NMPG (ii)

Earl J Barnes HFI (i) 321,965 151,501 22,153 17,996 24,353 537,968

Matthew3 Flynn HFI (i) 207,858 199,900 23,160 35,673 26,321 492,912

PETER J MCCANNA (i) 671,305 499,536 55,521 754,295 34,395 2,015,052 226,200NMHC (H)

CAROL M LIND NMHC (i)(ii)

424,878 238,562 40,780 106,781 29,220 840,221 147,000

Douglas M Young (i) 265,975 109,900 110,055 241,622 28,520 756,072NMHC (H)

JENNIFER S WOOTEN ()i 100,197 13,008 20,818 8,758 17,436 160,217NMHC (H )

Michelle A Janney NMH (i)(ii)

314,235 222,786 54,233 93,672 22,212 707,138 100,600

Michael G Arkin MD (1) 298,180 204,019 30,639 49,438 12,533 594,809NLFH (ii)

,Kimberly A Nagy NLFH (i)

(ii)

165,100 114,212 18,284 42,424 631 340,651

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

(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

TIMOTHY R ZOPH (1) 432,978 229,322 3,754,077 35,434 39,610 4,491,421 3,409,635NMHC (ii)

JULIA L CREAMER (i) 325,053 239,845 90,957 402,859 35,985 1,094,699 106,700NMHC (ii)

Timothy Garvey MD (i) 545,642 15,827 114,679 7,350 8,079 691,577NMPG (u)

Scott Moses MD NMPG (i)(1^)

462,171 35,167 168,626 7,350 24,238 697,552

Steven P Klimkowski (i) 437,379 153,246 23,152 23,765 27,098 664,640NMHC (ii)

Marsha Oberrieder (i) 170,984 125,773 27,454 164,657 2,874 491,742NLFH (ii)

Jane Griffin NLFH (i)(ii)

132,700 100,703 23,373 49,866 23,813 330,455

Matthew Koschmann (1) 93,298 107,184 88,348 34,020 16,550 339,400NLFH (ii)

Charles M Watts (1)(11)

3,243 188,893 509,075 22,220 16,297 739,728 131,300

efile GRAPHIC urint - DO NOT PROCESS I As Filed Data - I DLN: 93493193005313

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- 2011

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

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

Internal Revenue Service

Name of the organization Employer identification number

Northwestern Memorial Healthcare Group36-4724966

Bond Issues

(h) On(i) Pool

(a)Issuer Name (b)IssuerEIN

(c)C U SIP #

(d)Date Issued (e) Issue Price

(f)Descri

ption of Pur

pose

(g) Defeased Behalf offinancing

Issuer

Yes No Yes No Yes No

A Illinois Finance Authority86-1091967 45200fww5 04-09-2009 470,335,841 see schedule 0 X X X

B Illinois Finance authority86-1091967 45200fbz1 12-19-2007 214,500,000

refund bonds issuedX X X

5/27/2004

C Illinois Finance Authority86-1091967 45200ftb5 01-13-2009 207,360,000

refund bonds issuedX X X

5/27/2004

Illinois Health facilitiesD Authority 37-9881399 45200pvm6 12-13-2003 27,358,669 renovation & construction X X X

•'A-ii Prncpprlc

A B C D

1 Amount of bonds retired 36,640,000 3,900,000 128,585,000 1,050,000

2 A mount of bonds defeased 0 0 0 0

3 Total proceeds of issue 470,335,841 214,500,000 207,360,000 27,572,592

4 Gross proceeds in reserve funds 0 0 0 1,575,575

5 Capitalized interest from proceeds 0 0 0 0

6 Proceeds in refunding escrow 0 201,298,513 0 0

7 Issuance costs from proceeds 5,350,841 1,871,062 1,985,000 477,950

8 Credit enhancement from proceeds 0 0 25,000 0

9 Working capital expenditures from proceeds 0 0 0 0

10 Capital expenditures from proceeds 0 0 0 25,519,067

11 Other spent proceeds 464,985,000 52,760,750 205,350,000 0

12 Other unspent proceeds 0 0 0 0

13 Year of substantial completion 2004

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

i n.iii Private Business Use

A B C D


1 Was the organization a partner in a partnership, or a member of an LLC, which ownedX X X X

property financed by tax-exempt bonds?

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

financed property?

For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990 . Cat No 50193E Schedule K (Form 990) 2011

Schedule K (Form 990) 2011 Pa g e 2

Private Business Use (Continued)

A B C D


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

X 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 % 0 %

0-

5 Enter the percentage of financed property used in a private business use as a result ofunrelated trade or business activity carried on by your organization, another section 0 % 0 % 0 %501(c)(3) organization, or a state or local government 0-

6 Total of lines 4 and 5 0% 0% 0 %

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

X X X X

ArbitrageA B C D


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

X X X X

2 Is the bond issue a variable rate issue? X X X X

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

X X X X

b Name of provider 0 JP Morgan & UBS 0

c Term of hedge 34 7

d Was the hedge superintegrated?

X

e Was a hedge terminated?

X

4a Were gross proceeds invested in a GIC? X X X X

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?

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

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

Procedures To Undertake Corrective Action

Check the box if the organization established written procedures to ensure that violations of federal tax requirements are timely identified and corrected through the voluntaryclosing agreement program if self-remediation is not available under applicable regulations fl Yes 17 No

IFTWOM Supplemental information

Complete this part to provide additional information for responses to questions on Schedule K (see instructions)

I IIdentifier Return Explanation

Reference

Part I, Line A IO ISee schedule 0 for explanationsand Part IICol A. c. and d

Schedule K (Form 990) 2011


Schedule L Transactions with Interested Persons OMB No 1545-0047

(Form 990 or 990-EZ) 0- Complete if the organization answered

2011"Yes" on Form 990, Part IV , lines 25a , 25b, 26, 27, 28a, 28b, or 28c,or Form 990-EZ, Part V lines 38a or 40b.

Department of the Treasury 0- Attach to Form 990 or Form 990-EZ . 1-See separate instructions . • . -



36-4724966

L^l Excess Benefit Transactions (section 501(c)(3) and section 501 (c)(4) organizations only).

Loans to and / or From Interested Persons.C'mmnlata iftha nrnannatinn ancwarari "Vac" nn Fnrm QQn Part T\/ Imp 7A, nr Fnrm QQn-F7 Part \/ lino '3Ra

(a) Name of interested person andpurpose

(b) Loan toor from the?

organization(c)Original

principal amount(d)Balance due

(e) Indefault?

App o)vedby board orcommittee?

(g )Writtenagreement?

To From Yes No Yes No Yes No

Total $

IT.IIl Grants or Assistance Benefitting Interested Persons.Com p lete if the org anization answered "Yes" on Form 990 , Part IV, line 27.

(a) Name of interested person(b)Relationship between interested person

(c)Amount of grant or type of assistanceand the organization

For Privacy Act and Paperwork Reduction Act Noticee see the Cat No 50056A Schedule L (Form 990 or 990-EZ) 2011Instructions for Form 990 or 990-EZ.

2 Enter the amount of tax imposed on the organization managers or disqualified persons during the year undersection 4958 . ► $

3 Enter the amount of tax, if any, on line 2, above, reimbursed by the organization . ► $

Schedule L (Form 990 or 990-EZ) 2011 Page 2

Business Transactions Involving Interested Persons.

Complete if the organization answered "Yes" on Form 990, Part IV, line 28a, 28b, or 28c.

(a) Name of interested person

(b) Relationshipbetween interested

person and the(c) Amount oftransaction

escription of transaction(d) Description

(e) Sharing of

revenues?

organization Yes No


4-


Complete this part to provide additional information for responses to questions on Schedule L (see instructions)

Identifier Return Reference

Exelon schedule L Part IV lines 1 to 3

Lamajack Schedule L Part IV line 4

McDonald's Corporation Schedule L Part IV lines 5 and 6

Northern trust schedule L part IV Line 7

Medline schedule L part IV Line 8

Northern trust Schedule L Part IV line 9

Family member Schedule L part IV line 10

CDW GOvernment Schedule L Part IV line 1

NMIC Schedule L Part IV line 2

NHC Schedule L Part IV line 3

Baxter schedule L part IV line 4

Bannockburn mediplex Partners Schedule L part IV Line 5

advanced resources LLC schedule L part iv line 6

Abbott laboratories Schedule L Part IV line 7

Roundtable Schedule L Part IV line 8

A J Gallagher Schedule L Part IV line 9

Explanation

John a Canning, jr, Donald Thompson and Anne Pramaggiore aredirectors of Northwestern memorial Hospital John A Canningand 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

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

Donald Thompson and Miles white are directors of Northwesternmemorial Hospital They are also Directors of Mcdonald'sCorporation Mcdonald's pays rent to Northwestern memorialHospital

Frederick Waddell is a Director of Northwestern memorialHospital He is also an Officer of Northern Trust Northern trustsupplies financial services to Northwestern memorial hospital

Charles n Mills is a director of Northwestern Lake ForestHospital He is also a Director and officer of M Edline Medlineprovides medical supplies to Northwestern LAke ForestHospital

William c Kunkler III, is a director and Michael h Moskow is aformer director at Northwestern memorial Foundation Michael hMoskow is a member of the Board of Trustees at Northern Funds,William c Kunkler III's spouse is a director at Northern TrustNorthern trust provides financial services to Northwesternmemorial Foundation

Edward m Liddy is a former Director of Northwestern LakeForest Hospital A family member is an employee ofNorthwestern Lake Forest Hospital

John A edwardson is a Director of NM H He is also an officer ofCDW CDW supplies computer related equipment and servicesto NMH

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

ARVYDAS d vANAGUNAS md, gARY a nOSKIN md,jEFFREY IgLASSRoTH and are directors of Northwestern HealthCareCorporation (NHC) they are also directors of Northwesternmemorial Hospital, (NMH) Charles m Watts was also a directorof NHC and was an officer ofNMH NHC provides services forphysicians at NMH

Robert L parkinson JR is a former director of NorthwesternMemorial Hospital He is also a director and officer at baxterInternational Baxter provides hospital supplies to NorthwesternMemorial Hospital

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

Mary beth Richmond, MD , former director of Northwesternmemorial Hospital has a family member that has an ownershipinterest in advanced resources LLC, which provides personnelservices to NMH

Miles White is on the Board of Directors ofAbbott andNorthwestern Memorial Hospital Abbott furnishes hospitalsupplies to Northwestern memorial Hospital

Joseph F damico JR is a director of both Northwestern memorialhospital and roundtable healthcare partners Northwesternmemorial hospital has invested in Roundtable's financialproducts

Ilene S Gordon is a Board memeber of Northwestern MemorialHospital and A J Gallagher A J Gallagher's subsidiary providesfinancial services to Northwestern memorial Hospital

Schedule L (Form 990 or 990-EZ) 2011

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) Relationship (c) Amount of (d) Description of transaction (e) Sharing ofbetween interested transaction $ organization's

person and the revenues?organization

Yes No

Exelon John Canning Director 3,034,208 electric Utility No

exelon Donald Thompson 3,034,208 electric utility NoDirector

exelon Anne Pramaggiore 3,034,208 electric utility NoDirector

Lamajak Carol Bernick 128,000 rent NoFmrDirector

McDonald's Corporation Donald Thompson 136,000 rent NoDirector

McDonald's Corporation Miles White Director 136,000 rent No

Northern Trust Frederick waddell 535,456 bank services NoDirecto

Medline Charles Mills Director 4,115,408 medical product No

Northern Trust William Kunkler 195,864 bank services NoDirector

family member Edward Liddy Fmr 10,000 Compensation NoDirector

CDW GOvernment inc John Edwardson 2,623,472 computer services NoDirector

NMIC See supplemental 63,151,415 risk funding services No

Form 990, Schedule L, Part IV - Business Transactions Involving Interested Persons

(a) Name of interested person (b) Relationship (c) Amount of (d) Description of transaction (e) Sharing ofbetween interested transaction $ organization's

person and the revenues?organization

Yes No

NHC see supplemental 473,479 services physicians No

baxter Robert parkinson FMr 1,319,468 hospital supplies NoDir

Bannockburn Mediplex Partners Michael ankin MD 119,905 rent Noofficer

Abbott Miles white director 3,291,228 hospital supplies No

Advanced Resources LLC Mary beth richmond 990,026 personnel services NoFMrDir

Roundtable Healthcare Partners Joseph Damico 211,207 Financial services NoDirector

A 3 Gallagher Ilene Gordon Director 2,378,965 Financial services No


SCHEDULEM NonCash Contributions OMB No 1545-0047

(Form 990)

2011Complete if the organization answered "Yes" on Form

Department of the Treasury990, Part IV, lines 29 or 30.

we

Internal Revenue ServiceP- Attach to Form 990.

1R-W


of

(a) (b) (c)Check Number of Contributions Contribution amounts

if or items contributed reported onapplicable Form 990, Part VIII, line

la

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

Art-Works of art . . . .

Art-Historical treasures X 1

Art-Fractional interests

Books and publications

Clothing and householdgoods . . . . . X 4=t fCars and other vehicles . .

Boats and planes . . . .

Intellectual property . . .

36-4724966

(d)Method of determiningcontribution amounts

2,0001sale of comparables

9,8471sale of comparables

Securities-Publicly traded . X 41 876,761 market quote

Securities-Closely held stock . X 1 25,627,714 opinions of experts

Securities-Partnership, LLC,or trust interests

Securities-Miscellaneous

Qualified conservationcontribution-Historicstructures

Qualified conservationcontribution-Other . . .

Real estate-Residential

Real estate-Commercial

Real estate-Other . . .

Collectibles . . . . .

Food inventory . . .

Drugs and medical supplies

Taxidermy . . . . . .

Historical artifacts . . . .

Scientific specimens . .

Archeological artifacts

OtherOther( )

O ther )

Other )

Other P- (

Numberof 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 non-cash

contributions? 32a Yes

b If "Yes," describe in Part II

33 If the organization did not report revenues in column (c) for a type of property for which column (a) is checked,

describe in Part II

For Privacy Act and Paperwork Reduction Act Noticee see the Instructions for Form 990 . Cat No 51227] Schedule M (Form 990) 2011

Schedule M (Form 990 ) 2011 Page 2

Supplemental Information . Complete this part to provide the information required by Part I, lines 30b,32b, and 33. Also complete this part for any 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 do notuse third parties to solicit or process noncash contributionsHowever third parties are used to sell contributions of real orpersonal property

Schedule M (Form 990) 2011

efile GRAPHIC p rint - DO NOT PROCESS As Filed Data - DLN: 93493193005313

SCHEDULE 0OMB No 1545 0047

(Form 990 or 990-EZ) Supplemental Information to Form 990 or 990-EZ2011

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

Conflict of Part VI Northwestern Memorial HealthCare (NMHC) maintains both a Conflict of Interest Policy and an IntermediateInterest Section B Sanctions Policy These policies have been approved by its Board of Directors and apply to all entities, directors,

Question 12 officers, employees and transactions which take place within the NMHC system The policies were written toc assist board members and management with the identification of those transactions that warrant attention and

consideration to ensure proper adherence to the tax laws impacting tax-exempt organizations The conflict of

interest 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 Part VI AS A MEMBER OF THE NORTHWESTERN MEMORIAL HEALTHCARE ORGANIZATION, NMHC IS INCLUDED INPOLICY 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 IS ANNUALLYEVALUATED IN THE CONTEXT OF COMPENSATION DATA GATHERED BY EXTERNAL CONSULTANTS FROMA PEER GROUP COMPRISED OF similarly situated healthcare organizations IN ADDITION, a significant portionof compensation is at risk and is payable only upon achievement of substantial goals THE BOARD PLACESA HIGH PRIORITY ON ITS ABILITY TO RECRUIT AND RETAIN A STRONG LEADERSHIP TEAM TO ENSURE WESERVE OUR MISSION AND ACHIEVE OUR GOALS THE OFFICERS OF NORTHWESTERN MEMORIALHEALTHCARE ALSO FULFILL OFFICER AND EXECUTIVE FUNCTIONS FOR NMHCS SUBSIDIARIES


Explanation

Governing Part VI THE CORPORATION'S GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY AND FINANCIALDocuments 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

BUSINESS FORM 990 Group/NMF Terry Savage and Dennis S Chookaszian are directors on NMF's Board They are also directorsRELATIONSHIPS SECTION VI of the Chicago Mercantile Exchange Judy Greffin and Andrea Redmond are Board members of NMF Judy

QUEStion 2 Greff in is an officer and Andrea Redmond is a board member of allstate corporation Michael a Ruchim MD,M Christine stock rd and nancy sassower are Directors at Northwestern memorial Foundation They arealso directors at Northwestern Healthcare corporation Nancy W sassower MD is also an officer ofNorthwestern healthcare corporation GROUP/NMH gary A Noskin and Jeffery I Glassroth are directors ofNorthwestern memorial Hospital They are also directors of Northwestern Healthcare Corporation DonaldThompson and Miles white are Directors at Northwestern memorial Hospital Mr Thompson is an officer and aBoard member and MR white is also a director at McDonald's Corporation Donald Thompson, John ACanning Jr and Anne Pramaggiore are Directors at Northwestern memorial Hospital mr Thompson and mrCanning are also directors at Exelon corporation and Ms Pramaggiore is an officer of commonwealth Edison,a subsidiary Peter J McCanna, Douglas M Young and Carol M Lind are officers of Northwestern MemorialHealthCare, Northwestern memorial Hospital, Northwestern memorial Foundation, and Northwestern LakeForest Hospital Douglas M Young and Peter J mcCanna are also officers at Northwestern memorialPhysicians group Peter J mcCanna is an officer of Northwestern Memorial Insurance Company Douglas MYoung and Carol M land are directors and officers of Northwestern Memorial Insurance CompanyGROUP/NMPG Jeffery D Kopin and Daniel M Derman are Directors of Northwestern memorial PhysicianGroup Andrew palumbo and Daniel M derman MD are officers of Northwestern memorial Physicians groupThese individuals are also partners in a partnership and greater than 10% owners in an LLC


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 The Executive Compensation Subcommittee of theBoard of Directors of NMHC was provided the compensation disclosures The organization then worked with anational, independent public accounting firm as the paid preparer of the Form 990 filing The final Form wasreviewed by members of the Finance department prior to review by the NMHC Vice President, Finance andInterim Chief Financial Officer Prior to filing, the completed Form 990 was provided to the Board of Directorsthrough a secure website


Explanation

HOURS WORKED Form 990 JULIA L CREAMER, DANIEL M DERMAN MD, STEPHEN C FALK, DEAN M HARRISON, MICHELLE A JANNEY,RELATED Part VII CAROL M LIND, DEAN L MANHEIMER, THOMAS J MCAFEE, PETER J MCCANNA, DENNIS M MURPHY,COMPANIES CHARLES M WATTS MD, DOUGLAS M YOUNG AND TIMOTHY R ZOPH, ARE ALL EMPLOYEES OF NMHC

THEY GENERALLY WORK MORE THAN 40 HOURS A WEEK AND PERFORM SERVICES FOR VARIOUSNMHC SUBSIDIARIES


Reconciliation Form 990 Part Post Retirement Benefit Changes (12,028,160) Unrealized Gains 39,060,359 Net assets released 243,284Net Assets XI Line 5 Change in Value Split Interest Agreements (943,686) Change in Beneficial interests (45,855) Change in

interest rate swaps (30,658,253) changes in restricted income 70,514 Miscellaneous (32,978) total(4,334,775)


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 the indirect parent for Northwestern Memorial Physicians Group (NMPG), and Lake Forest Health and Fitness

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 8/31/2012 No organization in this Group Returncompensates their directors for services performed as directors Where compensation is reported for adirector, the compensation is associated with another position held within the six corporations Certainindividuals hold multiple positions throughout these six corporations In order to simplify the reporting, theirnames are listed only once per Form 990, Part VII and Schedule J Each individual listed has his or herorganization's initials listed next to their respective name and the box checked for their position with thatcorporation Additional director or officer positions held by each individual are noted below Thomas A Cole isalso the Chair and Director for NMH John A Canning JR is also the Vice-Chair and Director for NMH Kent PDauten is also the current Chair for NMF Dean M Harrison is director, President and CEO of NMHC and nmh heis also a Director and CEO of NMF and NLFH Gary A Noskin MD is also a Director of NMH Robert L Parkinson JRis also the Chair of NLFH Homi P Patel is also a Director of NLFH J Larry Jameson MD is also a Director of NLFHMaria C Bechily is also a director of NLFH Daniel M Derman MD is also the President of NMPG Dennis M Murphyis the Executive Vice President of NMHC He is also the Executive Vice President and Chief Operating Officer ofNMH, as well as Chair of NMPG Douglas M Young is also the Assistant Treasurer of NMH, NMF, and NLFH, aswell as the Secretary & Assistant Treasurer of NMPG and the Treasurer of hfi Stephen C Falk is also Presidentof NMF Thomas a McAfee is also the President of NLFH, as well as the chair, director and president of hfi PeterJ McCanna is also the Exec VPAdmin, CFO & Treasurer of NMH as well as the CFO & Treasurer of NMF, theTreasurer of NMPG & NLFH Carol L Lind is also the Senior Vice President Senior Counsel & Secretary of NMHand the Secretary of NMF and NLFH Jennifer S Wooten is also the Assistant Secretary of NMH Matthew JFlynn is also Senior VP, CFO, & Assistant Secretary of NLFH as well as secretary of HFI Nancy W SassowerMD is a director of NMF She is also compensated by NMH for a non-director position The following areDirectors per the listed corporations, they are not compensated as Directors or Officers of any entities, Earl JBarnes, Jeffery D Kopin MD, Peter A Lechman MD, Nancy W Sassower MD, MICHAEL A RUCHIM MD and GARYA NOSKIN MD


NMHC Form 990, Part NMHC transferred a number of departments and employees from its subsidiaries to establish a moreDepartmental III, Question 3 complete operating entity Formerly it only had an executive employee roster and utilized departmentsTransfers and their employees from its affiliates Those departments and employees have now been transferred

to NMHC


Schedule K Schedule K Part VI Part I, Line A, Column F refund bonds issued on 8/3/95, 5/27/04, 12/19/07 and 1/13/09 Part II, LineSupplemental supplemental 6, Column A the refunded bonds were redeemed on 4/9/09 and 4/20/2009 PArt II, Line 6 Column CInformation Information the refunded bonds were redeemed on 1/13/09 Part II, Line 3, Column DThe difference between

Part I, Column e, and Part II , Line 3 is due to investment earnings


Other Part III, Line Revenue in other program services includes non-patient related medical services, Lake Forest Health andProgram 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

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:93493193005313

OMB No 1545-0047

2011


36-4724966

Identification of Disregarded Entities (Complete if the organization answered "Yes" on Form 990, Part IV, line 33.)

(a)Name, address, and EIN of disregarded entity

(b)Primary activity

(c)Legal domicile (stateor foreign country)

(d )Total income

( e)End-of-year assets

(f)Direct controlling

entity

Identification of Related Tax-Exempt Organizations (Complete if the organization answered "Yes" on Form 990, Part IV, line 34 because it had oneor more related tax-exempt organizations during the tax year.)

(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)

controlledorganization

Yes No


For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990. Cat No 50135Y Schedule R (Form 990) 2011

Schedule R (Form 990) 2011 Page 2

Identification of Related Organizations Taxable as a Partnership (Complete if the organization answered "Yes" on Form 990, Part IV, line 34because it had one or more related organizations treated as a partnership during the tax year.)

(a)Name, address, and EIN

ofrelated organization

(b)Primary activity

(c)Legal

domicile

(state or

foreign

country)

(d)Direct controlling

entity

(e)Predominant income(related, unrelated,excluded from taxunder sections 512-

514)

(f)Share of total

income

( g)Share of end-of-

yearassets

(h)Disproprtionateallocations7

(i)Code V-UBI

amount in box 20 ofSchedule K-1(Form 1065)

0)General ormanagingpart ner?

(k)Percentageownership

Yes N. Yes N.

Identification of Related Organizations Taxable as a Corporation or Trust (Complete if the organization answered "Yes" on Form 990, Part IV,line 34 because it had one or more related organizations treated as a corporation or trust during the tax year.)

(a)Name, address, and EIN of related organization

(b)

Primary activity

(c)Legal domicile

(state or

(d )Direct controlling

entity

(e)Type of entity(C corp, S corp,

Share(oftotalincome

(g)Share of

end-of-year

(h)Percentageownership

foreign or trust) assetscountry)

(1) NORTHWESTERN HEALTHCARE CORPORATION541 FAIRBANKS SUITE 1630CHICAGO, IL 606113309

SErvices ILNMH

C Corp 67,403 842,780 100 000 %

36-3382383

(2) NORTHWESTERN MEMORIAL INSURANCE COMPANYGRAND PAVILLION COMMERCIAL CENTREGRAND CAYMAN ISLAND PO BOX 1085 liability ris CJ

NMHC CORP 20,307,623 541,276,812 100 000 %

CJ98-0384611

Schedule R (Form 990) 2011


Transactions With Related Organizations (Complete if the organization answered "Yes" on Form 990, Part IV, line 34, 35, 35A, or 36.)

Note . Complete line 1 if any entity is listed in Parts II, III or IV Yes No

1 During the tax year, did the orgranization engage in any of the following transactions with one or more related organizations listed in Parts II-IV?

a Receipt of (i) interest (ii) annuities (iii) royalties (iv) rent from a controlled entity la Yes

b Gift, grant, or capital contribution to related organization( s) lb No

c Gift, grant, or capital contribution from related organization(s) lc Yes

d Loans or loan guarantees to or for related organization( s) ld No

e Loans or loan guarantees by related organization( s) le No

f Sale of assets to related organization(s) if Yes

g Purchase of assets from related organization( s) lg Yes

h Exchange of assets with related organization (s) lh No

i Lease of facilities, equipment, or other assets to related organization( s) li No

j Lease of facilities, equipment, or other assets from related organization( s) 1j No

k Performance of services or membership or fundraising solicitations for related organization( s) lk Yes

I Performance of services or membership or fundraising solicitations by related organization(s) 11 Yes

m Sharing of facilities, equipment, mailing lists, or other assets with related organization( s) lm No

n Sharing of paid employees with related organization (s) In No

o Reimbursement paid to related organization(s) for expenses

p Reimbursement paid by related organization(s) for expenses

q Other transfer of cash or property to related organization( s) lq No

r Other transfer of cash or property from related organization( s) lr 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-r)

(^)Amount involved

(d)Method of determining amountinvolved

(1) See Additional Data Table

(2)

(3)

(4)

(5)

(6)



Unrelated Organizations Taxable as a Partnership (Complete if the organization answered "Yes" on Form 990, Part IV, line 37.)

Provide the following information for each entity taxed as a partnership through which the organization conducted more than five percent of its activities (measured by total assets or grossrevenue) that was not a related organization See instructions regarding exclusion for certain investment partnerships

(a)Name, address, and EIN of

entity

(b)Primary activity

(c)Legal domicile

(state orforeigncountry)

(d)Predominant

income(related,unrelated,

excluded fromtax under

sections 512-514

(e)Are allpartnerssection

501(c)(3)organizations?

(f)Share of

total income

(g)Share of

end-of-yearassets

(h)Disproprtionate allocations?

(i)Code V-UBIamount in box

20 of Schedule K-1(Form 1065)

U)General ormanagingpart ner?

(k)Percentageownership

)Yes No Yes No Yes No




Complete this part to provide additional information for responses to questions on Schedule R (see instructions)



Additional Data

Software ID:

Software Version:

EIN: 36-4724966


Form 990, Schedule R, Part II - Identification of Related Tax-Exempt Organizations

(c) (e) g(a)

(b

)Legal ( d) Public ( f) Section 512

Name, address , and EIN of related Domicile Exempt Code charity Direct (b)(13)organization

Primary Activity ( State section status Controlling controlledor Foreign (if501( c) Entity organizationCountry) (3))

NORTHWESTERN MEMORIALHOSPITAL

501(c )3 nmhc251 E HURON 541 FAIRBANKS

HOSPITAL IL3

es

CHICAGO, IL 6061137-0960170

NORTHWESTERN MEMORIALFOUNDATION

501(c)3 nmhc215 E HURON 541 FAIRBANKS

FUNDRAISING IL7

es

CHICAGO, IL 6061136-3155315

NORTHWESTERN MEMORIALPHYSICIANS GROUP

501( c)3 NMH251 E HURON 541 FAIRBANKS

HEALTHCARE IL3

es

CHICAGO, IL 6061136-4030256

NORTHWESTERN LAKE FORESTHOSPITAL

Hospital IL501(c)3 3 nmhc

es660 N WESTMORELAND ROADLAKE FOREST, IL 6004536-2179779

Lake Forest Health & Fitness Inst

1200 N WESTMORELAND Health IL501(c)3 9 NLFH

esLake FOREST, IL 6004536-3835030

northwestern memorial healthcare

251 e huron management IL501(c)3

11-III-FI nA Nochicago, IL 6061136-3152959

Service League of N M H

501(c)3NA240 E ontario ste 300 supporting IL 11-III-FI No

chicago, IL 6061123-7291156

friends of prentice

251 e huron ste 3-200 supporting IL501(c)3

11-III-0 NA Nochciago, IL 6061136-3930139

mcgaw medical center Northwestern Univ

645 n michigan supporting IL501( c)3

11-I na Nochicago, IL 6061136-2656113

Return to Form

Form 990, Schedule R, Part V - Transactions With Related Organizations

(a) (b) Amount (d)Name of other organization Transaction

Involved Method of determiningtype (a r) ($) amount involved

(1) Northwestern memorial insurance Corporationline 18,994,726 cost

(2) Northwestern memorial insurance CorporationLine 50,494,411 cost

(3) Northwestern healthcare Corporationline 130,907 cost

(4) Northwestern memorial healthcareLine 20,546,540 cost

(5) Northwestern memorial healthcareLine 229,917 cost




(9) Northwestern Healthcare corporationLine 473,479 cost


(11) Northwestern memorial insurance Corporationline 1,031,282 cost

(12) Northwestern memorial healthcareline 40,990,780 cost




TY 2011 Earnings and Profits OtherAdjustments Statement


EIN: 36-4724966

Description Amount

deferred insurance premiums 1,257,744

unearned premiums 214,202

reinsurance premiums ceded 6,936,320

losses and loss adjustments 38,386,090

unrealized gains on investments 5,506,064

policy dividends 25,808,592


TY 2011 Earnings and Profits OtherAdjustments Statement


EIN: 36-4724966

Description Amount

gross insurance premiums written 72,445,630


TY 2011 Itemized Other Assets Schedule


EIN: 36-4724966

Corporation Name CorporationEIN

Other Assets Description BeginningAmount

Ending Amount

Insurance premiuims receivable 123,954,218 171,357,285

reinsurance recoverable 57,131,113 61,507,439

deferred reinsurance premiums 6 ,459,984 5,202,240

Prepaid & other 142,838 421,600


TY 2011 Other Deductions Schedule


EIN: 36-4724966

Description Foreign Amount(should only be usedwhen attached to5471 Schedule C

Line 16)

Amount

consulting fees 131,891

actuarial fees 223,625

legal fees 61,741

management fees 72,500

investment custodial fees 10,045

meeting expenses 11,396

audit fees 37,000

federal excise tax 36,837

govt fees 11,098

other expenses 3,957


TY 2011 Itemized Other Investments Schedule


EIN: 36-4724966


Other Investments Description BeginningAmount

Ending Amount

Investments 310,791,926 302,735,311


TY 2011 Itemized Other Liabilities Schedule


EIN: 36-4724966

TY 2011 Itemized Other Liabilities Schedule


Other Liabilities Description BeginningAmount

Ending Amount

unearned premiums 52 ,735,592 52,949,794

reserve for losses & loss adj expen 345 ,304,491 350,465,160

Due to insureds 45,302,829 62,414,970


TY 2011 Other Income Statement


EIN: 36-4724966

Description Foreign Amount Amount

gross insurance premiums written 72,445,630

reinsurance prmiums ceded -6,936,320

change in unearned premiums -214,202

change in deferred reinsurance prem -1,257,744

investment income net 21,065,031

losses & allocated loss add expense -38,386,090


TY 2011 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

I

CONSOLIDATED FINANCIAL STATEMENTS

AND SUPPLEMENTARY INFORMATION

Northwestern Memorial HealthCare and SubsidiariesYears Ended August 31, 2012 and 2011

With Reports of Independent Auditors

=! ERNST&YOUNG

Northwestern Memorial HealthCare and Subsidiaries

Consolidated Financial Statements

and Supplementary Information

Years Ended August 31, 2012 and 2011

Contents

Report of Independent Auditors....

Consolidated Financial Statements

Consolidated Balance Sheets ...........................................................................................................2Consolidated Statements of Operations and Changes in Net Assets ...............................................4Consolidated Statements of Cash Flows ..........................................................................................6Notes to Consolidated Financial Statements ....................................................................................7

Supplementary Information

Report of Independent Auditors on Supplementary Information ..................................................52

Consolidating Balance Sheet .........................................................................................................53

Consolidating Statement of Revenue and Expenses ......................................................................55

Obligated Group Combining Balance Sheet ..................................................................................56

Obligated Group Combining Statement of Revenue and Expenses ..............................................58

1207-1377461

V A I Vi

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, 2012 and 2011, and the related consolidated statements of operations and changesin net assets and cash flows for the years then ended. These financial statements are theresponsibility of Northwestern Memorial's management. Our responsibility is to express anopinion on these financial statements based on our audits.

We conducted 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. We were not engagedto perform an audit of Northwestern Memorial's internal control over financial reporting. Ouraudits included consideration of internal control over financial reporting as a basis for designingaudit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of internal control over financial reporting. Accordingly, weexpress no such opinion. An audit also includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements, assessing the accounting principles usedand significant estimates made by management, and evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for our 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 as of

August 31, 2012 and 2011, and the consolidated results of their operations and changes in net

assets and their cash flows for the years then ended, in conformity with U.S. generally accepted

accounting principles.

As discussed in Note 1 to the consolidated financial statements, NMHC changed its presentation

of the provision for uncollectible accounts as a result of the adoption of the amendments to the

Financial Accounting Standards Board's Accounting Standards Codification resulting from

Accounting Standards Update 2011-07, Presentation and Disclosure ofPatient Service Revenue,

Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care

Entities, effective September 1, 2010.

19^ -ff7

UP

November 29, 2012

1207-1377461


Consolidated Balance Sheets(In Thousands)

August 31

2012 2011

Assets

Current assets:Cash and cash equivalents $ 139,343 $ 131,311

Short-term investments 112,925 85,188

Current portion of investments, includingassets limited as to use 89,247 91,138

Patient accounts receivable, net of estimateduncollectibles of $39,036 and $32,338 in 2012and 2011, respectively 279,775 232,460

Current portion of pledges and grants receivable, net 9,257 16,250

Current portion of insurance recoverable 13,060 14,433

Inventories 31,528 31,715

Other current assets 33,138 28,239

Total current assets 708,273 630,734

Investments, including assets limited as to use,less current portion 2,430,351 2,247,163

Property and equipment, at cost

Land 237,953 227,820

Buildings 1,668 ,000 1,613,399

Equipment and furniture 522,343 509,021

Construction-in-progress 46,573 90,101

2,474,869 2,440,341

Less accumulated depreciation 1,116 ,818 1,100,060

1,358 ,051 1,340,281

Prepaid pension cost 30,814 53,216

Insurance recoverable, less current portion 74,444 71,249

Other assets, net 99,751 98,495

Total assets $ 4,701 ,684 $ 4,441,138

2 1207-1377461

August 31

2012 2011

Liabilities and net assets

Current liabilities:Accounts payable $ 81,070 $ 87,535

Accrued salaries and benefits 94,948 85,044

Grants and academic support payable, current portion 37,588 28,250

Accrued expenses and other current liabilities 34,871 42,575

Due to third-party payors 207,440 177,399Current accrued liabilities under self-insurance programs 65,633 72,462

Current maturities of long-term debt 14,500 13,710

Total current liabilities 536,050 506,975

Long-term debt, less current maturities 806,155 821,354

Accrued liabilities under self-insurance programs,less current portion 420,941 414,173

Grants and academic support payable, less current portion 97,254 36,068

Due to insureds 62,415 45,303

Interest rate swaps 104,503 73,845

Pension liability 3,863 -

Other liabilities 51,929 70,372

Total liabilities 2,083,110 1,968,090

Net assets:

Unrestricted:Undesignated 2,182 ,940 2,075,713

Board-designated 138,600 130,618

Total unrestricted 2,321 ,540 2,206,331

Temporarily restricted 155,263 140,388

Permanently restricted 141,771 126,329

Total net assets 2,618,574 2,473,048

Total liabilities and net assets $ 4,701 ,684 $ 4,441,138

See accompanying notes to consolidated financial statements

1207-1377461 3


Consolidated Statements of Operationsand Changes in Net Assets

(In Thousands)

Year Ended August 31

2012 2011

Revenue

Patient service revenue $ 1,614 ,123 $ 1,593,596

Provision for uncollectible accounts 32,072 33,196

Net patient revenue 1,582 ,051 1,560,400

Rental and other revenue 100,996 101,792

Net assets released from donor restrictions

and federal and state grants 18,493 21,466

Total revenue 1,701 ,540 1,683,658

Expenses

Salaries and professional fees 587,971 563,583

Employee benefits 186,633 188,614

Supplies 268,197 263,831

Purchased services 173,545 170,876

Depreciation 145,686 138,249

Insurance 59,711 75,766

Rent and utilities 41,486 40,978

Repairs and maintenance 45,581 44,327

Interest 29,701 28,824

Illinois Hospital Assessment 41,395 41,395

Other 33,326 34,812

Total expenses 1,613,232 1,591,255

Operating income 88,308 92,403

Nonoperating gains (losses)

Investment return 150,762 237,074

Change in fair value of interest rate swaps (30,533) 4,527

Grants and academic support provided (106,708) (55,560)

Other 19,970 9,432

Total nonoperating gains, net 33,491 195,473

Excess of revenue over expenses 121,799 287,876

Continued on next page

1207-1377461 4


Consolidated Statements of Operationsand Changes in Net Assets (continued)

(In Thousands)


2012 2011

Unrestricted net assets

Excess of revenue over expenses $ 121,799 $ 287,876

Net assets released from restrictions used for

property and equipment additions 1,579 380

Postretirement-benefit-related changes other than net

periodic pension cost (8,044) 40,165

Other (125) (127

Increase in unrestricted net assets 115,209 328,294

Temporarily restricted net assets

Contributions 34,021 22,578

Investment return 9,715 16,146

Net assets released from restrictions used for:Operating expenses, charity care, and

research and education (27,232) (22,118)

Property and equipment additions (1,579) (380)

Change in fair value of split-interest agreements 81 (192)

Other (131) (146)

Increase in temporarily restricted net assets 14,875 15,888

Permanently restricted net assets

Contributions 16,347 19,683

Change in fair value of split-interest agreements (1,025) 993

Other 120 (250)

Increase in permanently restricted net assets 15,442 20,426

Change in total net assets 145,526 364,608

Net assets , beginning of year 2,473,048 2,108,440

Net assets , end of year $ 2,618,574 $ 2,473,048

See accompanying notes to consolidated financial statements

1207-1377461 5


Consolidated Statements of Cash Flows(In Thousands)


2012 2011

Operating activities

Change in total net assets $ 145,526 $ 364,608

Adjustments to reconcile change in total net assets to net

cash provided by operating activities:

Postretirement-benefit-related changes other than net periodic

pension cost 8,044 (40,165)

Change in fair value of interest rate swaps 30,658 (4,402)

Net investment return and net change in

unrealized investment gains/losses (153,602) (246,873)

Restricted contributions and realized investment return (56,299) (49,409)

Depreciation and amortization 145,356 137,639

Provision for uncollectible accounts 32,164 33,296

Change in operating assets and liabilities:

Patient accounts receivable (79,479) (47,610)

Due to third-party payors 29,790 22,255

Grants and academic support payable 70,524 (4,972)

Other operating assets and liabilities 11,649 55,697

Net cash provided by operating activities 184,331 220,064

Investing activities

Purchases of trading securities (589,584 ) (410,539)

Sales of trading securities 410,091 296,581

Unrestricted realized investment return 124,061 95,477

Capital expenditures, net (163,456) (178,886)

Net cash used in investing activities (218,888 ) (197,367)

Financing activities

Payments of long-term debt (13,710) (13,140)

Restricted contributions and realized investment return 56,299 49,409

Net cash provided by financing activities 42,589 36,269

Net increase in cash and cash equivalents 8,032 58,966

Cash and cash equivalents, beginning of year 131,311 72,345

Cash and cash equivalents, end of year $ 139,343 $ 131,311

See aeeonipan17ng notes to consolida ted financial statements

1207-1377461 6


Notes to Consolidated Financial Statements(In Thousands)

Years Ended August 31, 2012 and 2011

1. Organization and Summary of Significant Accounting Policies

Northwestern Memorial HealthCare (NMHC) serves as the sole corporate member of

Northwestern Memorial Hospital (NMH), Northwestern Lake Forest Hospital (NLFH), and

Northwestern Memorial Foundation (the Foundation). NMH's subsidiary corporations are

Northwestern HealthCare Corporation (NHC), Northwestern Memorial Physicians Group

(NMPG), and Northwestern Memorial Insurance Company (NMIC). NLFH's subsidiary

corporation is Lake Forest Health and Fitness Institute (HFI). NMH and NLFH are both

members of the obligated group (Obligated Group) for all of the outstanding bonds of NMH and

NLFH.

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 of

Chicago and surrounding areas, in an educational and research environment. It is licensed for

894 beds. NMH, whose origins date back to 1849, is the primary teaching hospital for

Northwestern University's Feinberg School of Medicine (FSM).

NLFH is a community hospital located in Lake Forest, Illinois, providing a complete range of

adult inpatient and outpatient services, as well as skilled nursing care, primarily to residents of

Lake Forest and the surrounding area. It is licensed for 117 acute care beds and 84 skilled

nursing care beds.

The Foundation carries out fund-raising and other related development activities to promote and

support 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.

1207-1377461 7


Notes to Consolidated Financial Statements (continued)(In Thousands)

1. Organization and Summary of Significant Accounting Policies (continued)

Charity Care and Community Benefit

Northwestern Memorial provides care to patients regardless of their ability to pay. Northwestern

Memorial developed a Free and Discounted Care Policy (the Policy) for both the uninsured and

the underinsured. Under the Policy, patients are offered discounts of up to 100% of charges on a

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 to

catastrophic healthcare expenses and uninsured patients not covered by the provisions above.

Since Northwestern Memorial does not pursue collection of these amounts, they are not reported

as net patient revenue, and the cost of providing such care is recognized within operating

expenses.

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 $57,738 and

$50,105 for the years ended August 31, 2012 and 2011, respectively. In addition, funds received

to offset or subsidize charity care were $491 and $496 for the years ended August 31, 2012 and

2011, respectively. In filing the Annual Non Profit Hospital Community Benefits Plan Report to

the Illinois Attorney General for the year ended August 31, 2011, Northwestern Memorial

reported total community benefit of $279,435 (unaudited), including unreimbursed cost of

charity care of $51,787 (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 2012 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 disclosure of contingent assets and liabilities at thedate of the financial statements and the reported amounts of revenues and expenses during thereporting 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.

1207-1377461 8




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 collectionsconsidering historical and current business and economic conditions, trends in healthcarecoverage, 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 healthcare 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 balance

sheets at fair value. The change in the fair value of derivative instruments is recorded in

nonoperating gains (losses).

1207-1377461 9




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 cost incurredon borrowed funds during the period of construction of capital assets is capitalized as acomponent of the cost of acquiring those assets.

Asset Impairment

Northwestern Memorial considers whether indicators of impairment are present and performs the

necessary tests to determine if the carrying value of an asset is appropriate. Impairment write-

downs are recognized in operating income at the time the impairment is identified. There was no

impairment of long-lived assets in 2012 or 2011.

Deferred Charges

Deferred finance charges and bond discount 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 general

unrestricted, board-designated unrestricted, temporarily restricted, and permanently restricted,

according to the absence or existence of board designations or donor-imposed restrictions.

Board-designated net assets are unrestricted net assets that have been set aside by the Board for

specific purposes. Temporarily restricted net assets are those assets, including contributions and

accumulated investment returns, whose use has been limited by donors for a specific purpose or

time period. Permanently restricted net assets are those for which donors require the principal of

the gifts to be maintained in perpetuity to provide a permanent source of income.

1207-1377461 10




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 to

Northwestern Memorial at amounts different from its established rates. Payment arrangements

include prospectively determined rates per admission or visit, reimbursed costs, discounted

charges, and per diem rates. Net patient revenue is reported at the estimated net amount due from

patients and third-party payors for services rendered, including estimated adjustments under

reimbursement agreements with third-party payors, certain of which are subject to audit by

administering agencies. These adjustments are accrued on an estimated basis and are adjusted, as

needed, in future periods.

EHR Incentive Payments

The American Recovery and Reinvestment Act of 2009 included provisions for implementing

health information technology under the Health Information Technology for Economic and

Clinical Health Act (HITECH). The provisions were designed to increase the use of electronic

health record (EHR) technology and establish the requirements for a Medicare and Medicaid

incentive payment program beginning in 2011 for eligible providers that adopt and meaningfully

use certified EHR technology. Eligibility for annual Medicare incentive payments is dependent

on providers demonstrating meaningful use of EHR technology in each period over a four-year

period . Initial Medicaid payments are available to providers that adopt, implement, or upgrade

certified EHR technology . Providers must demonstrate meaningful use of such technology innm

subsequent years to qualify for additional Medicaid incentive payments.

Northwestern Memorial recognizes HITECH incentive payments as revenue under the grant

accounting model when it is reasonably assured that the meaningful use objectives have been

achieved. Northwestern Memorial recognized incentive payments totaling $5,422 and $0 for the

years ended August 31, 2012 and 2011, respectively, as net assets released from donor

restrictions and federal and state grants in the accompanying consolidated statements of

operations and changes in net assets. Northwestern Memorial's compliance with the meaningful

use criteria is subject to audit by the federal government.

1207-1377461 11




Contributions

Unrestricted gifts, other than long-lived assets, are recorded as a component of other

nonoperating gains in the accompanying consolidated statements of operations and changes in

net assets. Unrestricted gifts of long-lived assets such as land, buildings, or equipment are

recorded at fair value as an increase in unrestricted net assets. Contributions are reported as

either temporarily or permanently restricted net assets if they are received with donor

restrictions. When a donor restriction expires, that is, when a stipulated time restriction ends or

purpose restriction is accomplished, temporarily restricted net assets are reclassified as

unrestricted net assets and reported in the accompanying consolidated statements of operations

and 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, andchanges in fair value of interest rate swaps.

1207-1377461 12




Excess of Revenue Over Expenses

The accompanying consolidated statements of operations and changes in net assets include the

excess of revenue over expenses. Changes in unrestricted net assets, which are excluded from the

excess 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 the

purposes of acquiring such assets), transfers between net asset categories based on changes in

donor restrictions, and postretirement-benefit-related changes other than net periodic pension

cost.

New Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting

Standards Update (ASU) 2010-06, Improving Disclosures about Fair Value Measurements

(ASU 2010-06). ASU 2010-06 amends Accounting Standards Codification (ASC) 820, Fair

Value Measurement, to require a number of additional disclosures regarding fair value

measurements. These disclosures include the amounts of significant transfers between Level 1

and Level 2 of the fair value hierarchy and the reasons for these transfers; the reasons for any

transfer in or out of Level 3; and information in the reconciliation of recurring Level 3

measurements about purchases, sales, issuances, and settlements on a gross basis, as well as

clarification on previous reporting requirements. This new guidance is effective for the first

reporting period, including interim periods, beginning after December 15, 2009, for all

disclosures except the requirement to separately disclose purchases, sales, issuances, and

settlements of recurring Level 3 measurements, which was effective for Northwestern Memorial

in fiscal year 2012. Northwestern Memorial adopted this guidance in fiscal year 2010, with the

exception of the additional Level 3 disclosures, which were adopted in fiscal year 2012. The

adoption of ASU 2010-06 had no effect on the consolidated financial statements of Northwestern

Memorial.

1207-1377461 13




In August 2010, the FASB issued ASU 2010-23, Measuring Charity Care for Disclosure

(ASU 2010-23). The provisions of ASU 2010-23 are intended to reduce the diversity in how

charity care is calculated and disclosed across healthcare entities that provide it. Charity care is

required to be measured at cost, defined as the direct and indirect costs of providing the charity

care. Funds received to offset or subsidize the cost of charity care provided, for example from

gifts or grants restricted for charity care, should be separately disclosed . As a healthcare entity

does not recognize revenue when charity care is provided, this update only requires enhanced

disclosures and has no effect on the consolidated statements of operations and changes in net

assets. This new guidance is effective for fiscal years beginning after December 15, 2010, with

retrospective application required and with early application permitted. Northwestern Memorial

adopted this guidance in fiscal year 2012. The adoption of ASU 2010-23 had no effect on the

consolidated financial statements of Northwestern Memorial.

In August 2010, the FASB issued ASU 2010-24, Presentation of Insurance Claims and Related

Insurance Recoveries (ASU 2010-24). ASU 2010-24 prohibits the netting of insurance

recoveries against a related claim liability and requires the claim liability to be reported without

consideration of insurance recoveries unless a right of setoff exists. This guidance is effective for

fiscal years, and interim periods within those years, beginning after December 15, 2010, with

early application permitted. Northwestern Memorial has adopted this guidance in fiscal year

2012. The effect of the adoption of ASU 2010-24 resulted in an increase in current portion of

insurance recoverable of $836 and an increase in insurance recoverable, less current portion of

$1,686, with offsetting increases in current accrued liabilities under self-insurance programs of

$836 and in accrued liabilities under self-insurance programs, less current portion of $1,686 as of

September 1, 2011. There was no effect on the consolidated statements of operations and

changes in net assets or consolidated statements of cash flows.

In December 2010, the FASB issued ASU 2010-29, Disclosure of Supplementary Pro Forma

Information for Business Combinations (ASU 2010-29). ASU 2010-29 clarifies the disclosure

requirement for pro forma revenue and earnings for comparative current and prior reporting

periods. Pro forma information should be disclosed as though the business combination(s) that

occurred during the current year had occurred as of the beginning of the comparable prior fiscal

year only. ASU 2010-29 also expands the disclosures to include a description of the nature and

amount of material, nonrecurring pro forma adjustments directly attributable to the business

combination(s). This guidance is effective for business combinations for which the acquisition

date is on or after the beginning of the first annual reporting period beginning on or after

1207-1377461 14




December 15, 2010, with early adoption permitted. This guidance was effective for and adoptedby Northwestern Memorial in fiscal year 2012. The adoption of ASU 2010-29 had no effect onthe consolidated financial statements of Northwestern Memorial.

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value

Measurement and Disclosure Requirements in US GAAP and IFRSs (ASU 2011-04). ASU

2011-04 changes the wording used to describe many of the requirements in U.S. GAAP for

measuring fair value and for disclosing information about fair value measurements. This update

was issued to improve the comparability of fair value measurements presented and disclosed in

financial statements prepared in accordance with U.S. GAAP and International Financial

Reporting Standards (IFRS). ASU 2011-04 includes amendments that clarify the FASB's intent

about the application of existing measurement and disclosure and changes certain principles and

requirements for measuring fair value and for disclosing information about fair value

measurements. This new guidance is effective for interim and annual periods beginning after

December 15, 2011. Early application is not permitted. This guidance was effective for and

adopted by Northwestern Memorial in the third quarter of fiscal year 2012. This adoption had no

effect on the consolidated financial position and the consolidated results of their operations and

changes in net assets.

In July 2011, the FASB issued ASU 2011-07, Presentation and Disclosure of Patient Service

Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health

Care Entities (ASU 2011-07) ASU 2011-07 requires healthcare entities that recognize

significant amounts of patient service revenue at the time of service, even though they do not

assess the patient's ability to pay, to present the provision for bad debts related to patient service

revenue as a deduction from patient service revenue on the statement of operations. In addition,

enhanced disclosure about the entity's policies for recognizing revenue and assessing bad debts,

including disclosures of patient service revenue (net of contractual allowances and discounts) as

well as qualitative and quantitative information about changes in the allowance for doubtful

accounts, is required. This new guidance is effective for fiscal years and interim periods within

those fiscal years beginning after December 15, 2011, with early adoption permitted.

Northwestern Memorial adopted this guidance as of and for the year ended August 31, 2012,

with retrospective application to all periods presented. The adoption of ASU 2011-07 had the

effect of reducing net patient revenue by $33,196 with offsetting reduction in operating expenses

for the year ended August 31, 2011, on the consolidated statements of operations and changes in

net assets of Northwestern Memorial. There was no effect on operating income. The provision

for non-patient related doubtful accounts of $100 is included in other operating expenses.

1207-1377461 15




In December 2011, the FASB issued ASU 2011-11, Disclosures about Ofjetting Assets and

Liabilities (ASU 2011-11). 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. 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. Northwestern Memorial is evaluating

the effect this guidance will have on its consolidated financial statement disclosures.

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 investments $ 304,586

Equity securities 50,496

Mutual funds 736,486

Common collective trusts 72,893

Commingled funds 199,661

103-12 entities 123,182Corporate bonds 60,861

U.S. government and agency issues 818

Foreign government issues 1,388

1,550,371

Accounted for under the equity method:Alternative investments 1,221,495

2012 2011

235,89243,510

608,099192,900212,726131,54637,403

5731,462,649

1,092,151

$ 2,771,866 $ 2,554,800

1207-1377461 16



2. Investments and Other Financial Instruments (continued)

Investments and other financial instruments consist of the following:

Assets limited as to use:Trustee-held fundsSelf-insurance programsBoard-designated funds

Total assets limited as to useDonor-restricted fundsUnrestricted, undesignated fundsTotal investments, excluding short-term investmentsOther financial instruments:Cash and cash equivalents and short-term investments

2012 2011

$ 26,296 $ 7,247

540,796 498,098138,600 130,618

705,692 635,963

245,498 215,5941,568,408 1,486,744

2,519 ,598 2,338,301

252,268 216,499

$ 2,771 ,866 $ 2,554,800

The composition and presentation of investment returns are as follows for the years endedAugust 31:

2012 2011

Interest and dividend income

Investment expenses

Realized gains on alternative investments, netRealized gains on other investments, netNet increase in unrealized gains on alternative investmentsNet increase in unrealized gains on other investments

Reported as:

Nonoperating investment return

Temporarily restricted - investment return

$ 14,935 $ 40,682

(4,547 ) (3,988)

34,925 21,266

85,622 43,338

30,680 86,883

(1,138) 65,039

$ 160,477 $ 253,220

$ 150,762 $ 237,0749,715 16,146

$ 160,477 $ 253,220

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.

1207-1377461 17




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.

Absolute return hedge funds include funds with the ability to opportunistically allocate capital

among several strategies. The funds typically diversify across strategies in an effort to deliver

consistently positive returns regardless of the movement within global markets. These funds

generally exhibit relatively low volatility and are generally redeemable quarterly with a 60-day

notice period. Equity long/short hedge funds include hedge funds that invest both long and short

in U.S. and international equities. These funds typically focus on diversifying or hedging across

particular sectors, regions, or market capitalizations and are generally redeemable quarterly with

a 60-day notice period.

Real estate includes LPs that invest in land and buildings and seek to improve property level

operations by increasing lease rates, recapitalizing properties, rehabilitating aging/distressed

properties, and repositioning properties to attract higher-quality tenants. Real estate LPs typically

use moderate leverage. Natural resources include a diverse set of LPs that invest in oil and

natural gas-related companies, commodity-oriented companies, and timberland. Private equity

includes LPs formed to make equity and debt investments in operating companies that are not

publicly traded. These LPs typically seek to influence decision-making within the operating

companies. Investment strategies in this category may include venture capital, buyouts, and

distressed debt. These three categories of investments can never be redeemed with the funds.

Distributions from each fund will be received as the underlying assets of the fund are expected to

be liquidated periodically over the lives of the LPs, which generally run 10 to 12 years.

1207-1377461 18




Certain alternative investments are subject to various redemption restrictions. As of

August 31, 2012, $631,905 of these alternative investments cannot be redeemed for at least one

year from the balance sheet date. In addition , $520,753 is subject to redemption limits and

lockup provisions that expire within one year of the balance sheet date.

At August 31, 2012, Northwestern Memorial had commitments to fund an additional $244,234 to

alternative investment entities, which is expected to occur over the next 12 years.

3. Fair Value Measurements

Northwestern Memorial follows the requirements of ASC 820 in regards to measuring the fairvalue of certain assets and liabilities as well as disclosures about fair value measurements. ASC820 defines fair value as the price that would be received for an asset or paid for a transfer of aliability in an orderly transaction on the measurement date.

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 nonactive 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.

1207-1377461 19



3. Fair Value Measurements (continued)

The following table presents the financial instruments measured at fair value on a recurring basis as ofAugust 31, 2012:

Level1 Level 2 Level 3 Total

Assets

Cash and cash equivalents $ 139,343 $ - $ - $ 139,343

Investments

Short-term investments

Currency 7,592 - - 7,592

Fixed income - 105,333 - 105,333

Total short-term investments 7,592 105 , 333 - 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

Common collective trusts

International equities - 39,892 - 39,892

U S equities - 33,001 - 33,001

Total common collective trusts - 72,893 - 72,893

Commingled funds


Natural resources - 26,495 - 26,495

Global equities - 151,845 - 151,845

Total commingled funds - 199,661 - 199,661

Bonds

Corporate bonds - 60,861 - 60,861

U S government and agencies issue - 818 - 818

Foreign government issues - 1,388 - 1,388

Total bonds - 63,067 - 63,067

Equity securities 50,443 53 - 50,496

103-12 entities - international equities - 123,182 - 123,182

Cash equivalents in investment accounts 52,318 - - 52,318

Total investments 846,839 564,189 - 1,411,028

Beneficial interests in trusts - 11,594 - 11,594

Total assets $ 986,182 $ 575,783 $ - $ 1,561,965

Liabilities

Interest rate swaps $ - $ 104,503 $ - $ 104,503

1207-1377461 20




The following table presents the financial instruments measured at fair value on a recurring basis as ofAugust 31, 2011:


Assets

Cash and cash equivalents S 131,311 S - S - 5 131.311

Investments


Currency 12,174 - - 12,174

Fixed income - 73.014 - 73.014

Total short-term investments 12.174 73.014 - 85.188

Mutual funds

Fixed income 376,590 - - 376,590

International equities 68,748 - - 68,748

U S equities 162.761 - - 162.761

Total mutual funds 608,099 - - 608,099



U S equities - 152,835 - 152,835

Total common collective trusts - 192 . 900 - 192 . 900

Commingled funds


Natural resources - 22,439 - 22,439

Global equities - 116.181 - 116.181

Total commingled funds - 212.726 - 212.726

Bonds

Corporate bonds - 37,403 - 37,403

Foreign government issues - 573 - 573

Total bonds - 37.976 - 37.976

Equity securities 43,461 49 - 43,510

103-12 entities - international equities - 131,546 - 131,546

Cash equivalents in investment accounts 19,393 - - 19,393

Total investments 683,127 648.211 - 1,331,338

Beneficial interests in trusts - 12,010 - 12,010

Total assets S 814,438 S 660.221 5 - S 1,474,659

Liabilities

Interest rate swaps S - S 73.845 S - S 73.845

1207-1377461 21




There were no transfers into or out of Level 2 or Level 1 during the year ended August 31, 2012.

Reconciliation to the Consolidated Balance Sheets

A reconciliation of the fair value of assets to the consolidated balance sheets at August 31, 2012and 2011, is as follows:

2012 2011

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 assets limitedas to use

Total investments

Other long-term assets:Beneficial interests in trusts at fair valueOther long-term assets, net

Total other long-term assets

Valuation Techniques and Inputs

$ 112,925 $ 85,188

1,298,103 1,246,150

1,411 ,028 1,331,338

1,221 ,495 1,092,151

$ 2,632 ,523 $ 2,423,489

$ 11,594 $ 12,01088,157 86,485

$ 99,751 $ 98,495

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 IRS regulations), based on each trust arrangement.

1207-1377461 22




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 sources.The valuation incorporates observable interest rates and yield curves for the full term of theswaps. The valuation is also adjusted to incorporate nonperformance 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 counterparty.Northwestern Memorial pays fixed rates ranging from 3.3% to 3.9% and receives cash flowsbased on rates equal to 63% of 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 securitiesand corporate bonds is established based on values obtained from nationally recognized pricingservices that value the investments based on similar securities and matrix pricing of similarquality and maturity securities. The fair values of 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 ownership interest in the NAV per share or itsequivalent, 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.

1207-1377461 23




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 the short-term nature.

The estimated fair value of the long-term debt portfolio , including the current portion, was$871,382 and $874,400 at August 31, 2012 and 2011, respectively . The fair value of this Level 2liability is based on quoted market prices for the same or similar issues and the relationship ofthose bond yields with various market indices . The market data used to determine yield andcalculate fair value represents Aa/AA-rated tax - exempt municipal healthcare bonds. The effectof 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 analysis

and approximated the carrying value at August 31, 2012 and 2011.

4. Self-Insurance Liabilities and Related Insurance Recoverables

NMH retains certain levels of professional and general liability risks covering itself and NMPG.NMH 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, Inc. (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 cancelation,

nonrenewal, or other termination for any reason of NMIC's ongoing joint coverage of both NMH

1207-1377461 24



4. Self-Insurance Liabilities and Related Insurance Recoverables (continued)

and NMFF. 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 $62,415 and $45,303 at August 31, 2012 and 2011, 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 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 from

reinsurers are reported in the accompanying consolidated balance sheets at present value based

on a discount rate of 1.5% and 3.0% as of August 31, 2012 and 2011, respectively. This discount

rate is based on several factors, including rolling averages of risk-free rates based on estimated

payment patterns of the underlying liability. The undiscounted gross liabilities for the self-

insured programs were $520,866 and $549,206 at August 31, 2012 and 2011, respectively. The

estimated undiscounted amounts recoverable from reinsurers were $93,708 and $96,907 at

August 31, 2012 and 2011, respectively. Provisions for the professional and general liability

risks are based on an actuarial estimate of losses using actual loss data adjusted for industry

trends and current conditions and on an evaluation of claims by Northwestern Memorial's legal

counsel. The provision for estimated self-insured claims includes estimates of ultimate costs for

both reported claims and claims incurred but not reported.

NMH purchased tail coverage for risks in excess of its self-insured retentions following the

expiration of the claims-made professional and general liability program covering the period

from October 1, 1999 to October 1, 2002. In conjunction with this transaction, NMH recorded a

deferred gain that is being amortized over the estimated runoff period. The balance of the

deferred gain was $3,121 and $4,582 at August 31, 2012 and 2011, respectively.

In the opinion of management, based in part on the advice of outside legal counsel, adequateprovision has been made at August 31, 2012, 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.

1207-1377461 25



5. Employee Benefits Obligations

There are two noncontributory 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 NLFH

2012 2011 2012 2011

Projected benefit obligation,beginning of year $ 414,020 $ 398,443 $ 101,995 $ 93,853Service cost 17,426 18,509 4,135 4,111Interest cost 21,306 20,532 5,285 4,859

Curtailment gain (43,638) - (5,106) -

Net actuarial loss (gain) 46,983 (6,241) 17,157 1,599Expenses paid (927) - - -

Benefits paid (13,711) (17,223) (2,739) (2,427)

Projected benefit obligation,end of year $ 441,459 $ 414,020 $ 120,727 $ 101,995

The following table summarizes the changes in the Plans' assets:

Plan assets at fair value,

beginning of year

Actual return on the

Plans' assets, net of

expenses

Employer contribution

Benefits paid

Plan assets at fair value,end of year

NMH NLFH

2012 2011 2012 2011

$ 456,904 $ 422,507 $ 112,327 $ 97,917

29,080 51,620 7,276 11,837

- - - 5,000

(13,711) (17,223) (2,739) (2,427)

$ 472,273 $ 456,904 $ 116,864 $ 112,327

1207-1377461 26



5. Employee Benefits Obligations (continued)

The following table sets forth the Plans' funded status, as well as recognized amounts in theconsolidated balance sheets as of August 31:

NMH NLFH

2012 2011 2012 2011

Plan assets at fair value $ 472,273 $ 456,904 $ 116,864 $ 112,327Projected benefit obligation 441,459 414,020 120,727 101,995

Funded status recognized asprepaid pension cost/

(pension payable) $ 30,814 $ 42,884 $ (3,863 ) $ 10,332

The accumulated benefit obligations of the Plans are $562,003 and $480,742 as ofAugust 31, 2012 and 2011, respectively.

Included in unrestricted net assets are the Plans' amounts that have not yet been recognized in

net periodic pension cost at August 31 as follows:

NMH NLFH

2012 2011 2012 2011

Unrecognized prior service

cost $ (13) $ (648) $ - $ -Unrecognized actuarial loss (117,037 ) (117,449) ( 19,784 ) (6,709)

$ (117,050 ) $ (118,097) $ ( 19,784 ) $ (6,709)

1207-1377461 27




Changes in the Plans' assets and benefit obligations recognized in unrestricted net assets during2012 and 2011 include the following:

Current year actuarial (loss)

gain

Effect of curtailment

accounting on gain

Recognized actuarial loss

Current year amortization of

prior service cost

Current year amortization ofcurtailment accountingcredit

NMH NLFH

2012 2011 2012 2011

$ (50,541 ) $ 26,818 $ (13,075) $ 3,017

43,638 - - -

7,315 11,501 - -

125 125 - -

510 - - -

$ 1,047 $ 38,444 $ (13,075) $ 3,017

The Plans' prior service cost and actuarial loss included in unrestricted net assets expected to be

recognized in net periodic pension cost during 2013 are $125 and $7,315, respectively.

Net periodic pension cost included in operating results for the years ended August 31 consists ofthe following:

NMH NLFH

2012 2011 2012 2011

Service cost of benefitsearned during the year $ 17,426 $ 18,509 $ 4,135 $ 4,111

Interest cost of projected

benefit obligation 21,306 20,532 5,285 4,859

Expected return on thePlans' assets (33,564) (31,044 ) (8,301 ) (7,221)

Recognized actuarial loss 7,315 11,501 - -

Amortization of prior

service costs 125 125

Recognized loss due tocurtailment 510 - - -

Net periodic pension cost $ 13,118 $ 19,623 $ 1,119 $ 1,749

1207-1377461 28




The following table sets forth the weighted-average assumptions used to determine the projectedbenefit obligation and benefit cost as of August 31:

2012 2011

Used to determine projected benefit obligation

Discount rate 4.25% 5.25%

Rate of compensation increase 3.50 3.50

2012 2011

Used to determine benefit cost

Discount rate 5.25% 5.25%

Expected long-term rate of return on the Plans' assets 7.50 7.50

Rate of compensation increase 3.50 3.50

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 assets

consistent 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 investment

managers specializing in each asset category and, where appropriate, provides the investment

manager with specific guidelines that include allowable and/or prohibited investment types.

Northwestern Memorial regularly monitors manager performance and compliance with

investment guidelines.

The target allocation of the Plans' assets as of August 31 is as follows:

2012 2011

Cash and cash equivalents -% -%Equity securities 42 42

Alternative investments 44 44

Fixed income 14 14

100% 100%

1207-1377461 29




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 4:

103-12 investment entitiesInternational equities

Private equity

Total 103-12 investment entities


Fixed incomeInternational equitiesPrivate equity

US equities

Total collective trusts

U S government debt

Treasury notes

Corporate debtCorporate debt instruments - otherCorporate debt instruments -

preferred

Total corporate debt

Equity securities

US equities

Hedge fiends and otherAbsolute return hedge fundEquity long/short hedge fundFixed incomeNatural resources

Total hedge fiends and other

Interest in limited partnerships


$ - $ 35,169 $ - $ 35,169

- - 1,910 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

- 8,043 - 8,043

- 16,063 - 16,063

15,018 16 - 15,034

- 8,222 63 , 681 71,903- 7,821 75,986 83,807- 1,377 - 1,377- 3,387 3,579 6,966

- 20,807 143,246 164,053

Natural resources - - 17,807 17,807Private equity - 36,866 68,249 105,115Real estate - - 21,846 21,846

Total interest in limited partnerships - 36,866 107,902 144,768

Mutual fundsFixed income 57,694 - - 57,694International equities 30,607 - - 30,607US equities 78,913 - - 78,913

Total mutual fiends 167,214 - - 167,214Grand total $ 182,232 $ 150,886 $ 256,019 $ 589,137

1207-1377461 30




The following table presents the Plans' financial instruments as of August 31, 2011, measured atfair value on a recurring basis by the valuation hierarchy described in Note 4:

103-12 investment entities

International equities

Private equity

Total 103-12 investment entities


Fixed income

International equities

Private equity

US equities

Total collective trusts

Corporate debtCorporate debt instruments - otherCorporate debt instruments -

preferredTotal corporate debt

Equity securities

US equities

Hedge funds and otherAbsolute return hedge fundEquity long/short hedge fundFixed incomeNatural resources

Total hedge fiends and other

Interest in limited partnerships


$ $ 42,949 $ - $2,223

42,9492,223

42,949 2,223 45,172

5,782 - 5,78223,659 - 23,659

3,593 3,59344,081 - 44,081

- 73,522 3,593 77,115

- 2,922 - 2,922

- 6,903 - 6,903- 9,825 - 9,825

12,641 15 - 12,656

65,649 65,64966,573 66,573

1,551 - 1,55110,591 10,591

- 1,551 142,813 144,364

Natural resources 17,009 17,009

Private equity - 25,247 71,825 97,072Real estate 18,857 18,857

Total interest in limited partnerships - 25,247 107,691 132,938

Mutual fundsFixed income 66,592 66,592

International equities 23,739 23,739

US equities 56,830 56,830

Total mutual fiends 147,161 147,161Grand total $ 159,802 $ 153,109 $ 256,320 $ 569,231

1207-1377461 31




The fair value of Level 1 investments, which consist of equity securities and certain mutualfunds, is based on quoted market prices and are valued on a daily basis. Level 2 investmentsconsist of U.S. government securities, corporate bonds, commingled funds, common collectivetrusts, interest in 103-12 entities, and fixed income instruments issued by municipalities orforeign government agencies. Included in Level 2 investments are certain hedge funds andlimited 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 fromnationally recognized pricing services that value the investments based on similar securities andmatrix pricing of similar quality and maturity securities. The fair values of the commingledfunds, common collective trusts, and 103-12 entities are based on either the fair value of theunderlying investments of the fund, as determined by the fund, or based on the Master Trust'sownership interest in the NAV per share of its equivalent of the respective fund. The Plansutilize the NAV as the practical expedient for the fair value estimate as permitted. All Level 2investments can be redeemed without restrictions on the financial statement date or shortlythereafter.

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 believe its valuation methods areappropriate and consistent with other market participants, the use of different methodologies orassumptions to determine the fair value of certain financial instruments could result in a differentestimate of fair value at the reporting date.

All financial instruments with redemption restrictions in the near future or early withdrawal fees

are categorized as Level 3 investments. Some of the redemption restrictions are temporary in

nature. If restrictions expire and an investment can be redeemed at NAV, such investment is

reclassified from Level 3 to Level 2 of the fair value hierarchy. During the years ended

August 31, 2012 and 2011, $28,405 and $0 was transferred from Level 3 to Level 2,

respectively.

1207-1377461 32




Investments in LPs, which cannot be redeemed on request , totaled $100,971 as of

August 31, 2012. Certain marketable alternative investments are subject to various redemption

restrictions . As of August 31, 2012, $38,481 of these alternative investments cannot be redeemed

for at least one year. In addition , $156,774 is subject to redemption limits and lockup provisions

that expire within one year of the balance sheet date.

The table below sets forth a summary of changes in the fair value of the Plans' Level 3 assets for

the period from September 1, 2010 to August 31, 2012:

Value at September 1, 2010

Gain (loss) realized on assets

sold during the periodChange in unrealized (loss) gain

related to holdings atAugust 31, 2011

Purchases at costSales at cost

Value at August 31, 2011Gain realized on assets sold

during the periodChange in unrealized (loss)

gain related to holdings atAugust 31, 2012

Purchases at cost

Sales at cost

Transfers to Level 2

Value at August 31, 2012

103-12 Common Interest in

Investment Collective Hedge Funds Limited

Entities Trusts and Other Partnerships Total

$ 2,237 $ 3,802 $ 121,375 $ 84,874 $ 212,288

239 642 ( 2,219) 6,333 4,995

(119) (697) 11,310 4,514 15,00851 165 24,400 21 , 742 46,358

(185) (319 ) ( 12,053 ) (9,772) (22,329

2,223 3 ,593 142 , 813 107,691 256,320

299 512 5 6,470 7,286

(477) (874) 6,520 992 6,16164 65 15,227 19,027 34,383

(199) (335) (1,889) (17,303) (19,726)

- - (19,430) (8,975) (28,405)

$ 1,910 $ 2,961 $ 143,246 $ 107,902 $ 256,019

The Plans' assets are managed solely in the interest of the Plans' participants and their

beneficiaries. The assets are invested with the investment objective of funding the accumulated

and projected retirement benefit obligations of the Plans consistent with the Plans' long-term

rate-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, 2013.

1207-1377461 33




Benefit payments, which reflect future service, as appropriate, are expected to be paid as follows:

NMH NLFH

Year ending August 31:

2013 $ 16,223 $ 3,1672014 17,149 3,5612015 19,773 4,0182016 20,905 4,4662017 21,054 4,917

2018-2022 123,135 29,926

Northwestern Memorial also maintains defined contribution plans covering substantially all of its

full-time and part-time employees. For 2012, contributions are limited to 80% of each covered

employee's salary and a matching portion of 50% of the first 6% of the employee's contribution

per pay period, with an annual maximum of $7.5 per employee. In addition, a non-elective

provision for those employees who are not participants in the defined benefit plans provides for

employer contributions of I% to 2% of each employee's salary provided they are employed as of

December 31 of the plan year and have one thousand hours of service in the plan year. Effective

January 1, 2013, the employer matching portion will be 100% of the first 6% of the employee's

contribution per pay period, subject to the 2013 IRS limits. The non-elective provision will be

eliminated and the final 2012 contribution will be 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 $13,220

and $10,862 in 2012 and 2011, respectively.

NMHC also maintains other noncontributory postretirement benefit plans ( the NoncontributoryPlans) for certain executive employees.

Included in unrestricted net assets are unrecognized actuarial gain of $787 at August 31, 2012,

and an unrecognized actuarial loss of $3,376 at August 31, 2011, respectively, for the

Noncontributory Plans that have not yet been recognized in net periodic pension cost.

1207-1377461 34




Changes in the Noncontributory Plans' assets and benefit obligations recognized in unrestrictednet assets during 2012 and 2011 include the following:

2012 2011

Current year actuarial gain (loss)Recognized actuarial net loss

$ 1,313 $ (2,811)2,850 1,515

$ 4,163 $ (1,296)

As of August 31, 2012 and 2011, the Noncontributory Plans' unfunded projected benefit

obligation amounted to $19,376 and $18,814, 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 4.25% and 5.25% in 2012 and 2011,

respectively. The Noncontributory Plans' actuarial loss included in unrestricted net assets

expected to be recognized in net periodic pension cost during 2013 is $1,371.

1207-1377461 35



6. Long-Term Debt

Long-term debt consists of the following at August 31:

2012 2011

Revenue Bonds, Series 2009A, payable in annual

installments through August 15, 2039 (fixed coupon

rates range from 5.00% to 6.00%) $ 342,260 $ 353,470Revenue Bonds, Series 2009B, payable in annual

installments through August 15, 2039 (fixed coupon

rates range from 5.00% to 6.00%) 96,100 96,100Variable-Rate Demand Revenue Bonds, Series 2008A,

payable in annual installments through August 15, 2038

(weighted-average interest rate was 0. 13% in 2012 and

0.18% in 2011) 78,775 78,775Variable-Rate Demand Revenue Bonds, Series 2007A,

payable in annual installments through August 15, 2042

(weighted-average interest rate was 0. 14% in 2012 and

0.21% in 2011) 210 ,600 211,600Revenue Bonds, Series 2003 (Lake Forest Hospital),

payable in annual installments through July 1, 2033(fixed coupon rates range from 4.50% to 6.00%) 25,950 26,250

Variable-Rate Demand Revenue Bonds, Series 2002C,payable in annual installments beginningAugust 15, 2026 through August 15, 2032 (weighted-average interest rate was 0. 13% in 2012 and 0. 18% in

2011) 33,000 33,000Revenue Bonds, Series 2002A (Lake Forest Hospital),

payable in annual installments through July 1, 2029(fixed coupon rates range from 5.75% to 6.25 %) 40,850 42,050

827,535 841,245

Less:

Unamortized discount, net 6,880 6,181

Current maturities 14,500 13,710

$ 806,155 $ 821,354

1207-1377461 36



6. Long-Term Debt (continued)

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 rates.At August 31, 2012 and 2011, 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 foreach 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 2014Series 2002C 33,000 July 2014Series 2007A 210,600 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.

1207-1377461 37



6. Long-Term Debt (continued)

Scheduled principal repayments for the next five years, assuming remarketing of VRDBs, onlong-term debt are as follows:

Year ending August 31

2013 $ 14,5002014 15,2202015 15,9852016 16,7852017 17,645

The provisions under the respective debt agreements require the Obligated Group to maintainreporting, financial, and other covenants. At August 31, 2012, the Obligated Group was incompliance with these provisions.

Northwestern Memorial paid interest of $40,012 in 2012 and $41,418 in 2011 (which includes

$10,570 and $10,639, respectively, for net swap payments included in other operating expense in

the accompanying consolidated statements of operations and changes in net assets).

Northwestern Memorial capitalized interest of $2,452 and $3,299 in 2012 and 2011, respectively.

7. Derivatives

Northwestern Memorial's only derivative financial instruments are interest rate swaps, which

NMH maintains on its VRDBs for the sole purpose of risk management. These bonds expose

NMH to variability in interest payments due to changes in interest rates. Management believes

that it is prudent to limit the variability of its interest payments. To meet this objective and to

take advantage of low interest rates, NMH entered into various interest rate swap agreements to

manage fluctuations in cash flows resulting from interest rate risk. These swaps limit the

variable-rate cash flow exposure on the VRDBs to synthetically fixed cash flows. By using

interest rate swaps to manage the risk of changes in interest rates, NMH exposes itself to credit

risk and market risk. Credit risk is the risk that a counterparty will fail to perform under the terms

of a derivative contract. When the fair value of a swap is positive, the counterparty owes NMH,

which creates credit risk for NMH. When the fair value of a swap is zero or negative, the

counterparty does not owe NMH. NMH minimizes the credit risk in its swap contracts by

entering into transactions that require the counterparty to post collateral for the benefit of NMH

based on the credit rating of the counterparty and the fair value of the swap contract. The

1207-1377461 38



7. Derivatives (continued)

aggregate fair value of the swaps on the consolidated balance sheets as of August 31, 2012 and

2011, reflects a reduction of $9,497 and $6,858, respectively, for nonperformance risk. Market

risk is the adverse effect on the value of a financial instrument that results from a change in

interest rates. The market risk associated with interest rate changes is managed by establishing

and monitoring parameters that limit the types and degree of market risk that may be undertaken.

Management also mitigates risk through periodic reviews of their swap positions in the context

of their total blended cost of capital.

The following is a summary of the outstanding positions under existing interest rate swap

agreements at August 31, 2012 and 2011:

Notional Amount

2012 2011Maturity

Date Rate Paid Rate Received

$ 35,250 $ 35,250 May 2035 3.310%35,250 35,250 May 2035 3.31043,200 43,200 May 2035 3.313105,300 105,800 August 2042 3.889105,300 105,800 August 2042 3.889

$ 324,300 $ 325,300

The fair value of derivative instruments at August 31 is as follows:

Derivatives not designated ashedging instruments:Interest rate contracts

Balance Sheet

Location

63% of LIBOR + 28 bps63% of LIBOR + 28 bps63% of LIBOR + 28 bps63% of LIBOR + 28 bps63% of LIBOR + 28 bps

Liabilities

2012 2011

Interest rate swaps

liabilities $ 104,503 $ 73,845

1207-1377461 39



7. Derivatives (continued)

The effects of derivative instruments on the consolidated statements of operations and changes in

net assets for 2012 and 2011 are as follows:

Amount of Gain (Loss)

Recognized in Excess of

Revenue Over Expenses

on Derivatives

Interest Rate Contracts 2012 2011

Derivatives not designated as hedging instruments:

Operating expense - other $ (10,570) $ (10,639)

Nonoperating - change in fair value of interest

rate swaps (30,533) 4,527

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 $20,451 and $1,172 as of August 31, 2012 and 2011, respectively. If the credit risk-

related contingent features underlying these agreements were triggered to the fullest extent on

August 31, 2012, NMH would be required to post $114,000 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

1207-1377461 40



8. Income Tax Status (continued)

assets associated with these net operating loss carryforwards of $4,708 and $5,395

at August 31, 2012 and 2011, respectively, are offset by valuation allowances on the

consolidated balance sheets of $4,708 and $5,395, 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, 2012 and2011:

2012 2011

Healthcare services:

Purchase of property and equipment $ 15,287 $ 16,313

Operating expenses and charity care 49,820 74,251

Research, education, and other 90,156 49,824

$ 155,263 $ 140,388

1207-1377461 41



9. Temporarily and Permanently Restricted Net Assets (continued)

Net assets were released from donor restrictions by incurring expenditures for the following

purposes:

2012 2011


Purchase of property and equipment $ 1,579 $ 380


Research, education, and other 18,946 11,625

$ 28,811 $ 22,498

Permanently restricted net assets at August 31, 2012 and 2011, are summarized below, the

income from which is expendable to support:

2012 2011


Purchase of property and equipment $ 13,415 $ 15,408


Research , education, and other 59,602 32,093

$ 141,771 $ 126,329

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 appropriatedfor expenditure by the organization in a manner consistent with the donor intent or, where silent,

1207-1377461 42




standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, Northwestern

Memorial considers the following factors 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 assets that

attempt to provide a predictable stream of funding to programs supported by its endowment

while seeking to maintain purchasing power of the endowment assets. Endowment assets include

those assets of donor-restricted funds that must be held in perpetuity or for a donor-specified

period. Under this policy, the endowment assets are invested in a manner that is intended to

produce a real return, net of inflation and investment management costs, of at least 6% over the

long term. Actual returns in any given year may vary from this amount.

To satisfy its long-term rate-of-return objectives, Northwestern Memorial relies on a total returnstrategy in which investment returns are achieved through both capital appreciation (realized andunrealized) and current yield (interest and dividends). Northwestern Memorial targets adiversified asset allocation that places an emphasis on equity-based and alternative investmentsto achieve its long-term objective within prudent risk constraints.

Northwestern Memorial has a policy of appropriating for distribution each year no more than 4%of the endowment fund balance at the midpoint of the preceding fiscal year. In establishing thispolicy, Northwestern Memorial considered the long-term expected return on its endowment withthe objective of maintaining the purchasing power of the endowment assets.

1207-1377461 43




The changes in endowment net assets for the years ended August 31, 2012 and 2011, are

summarized below:

Temporarily Permanently

Restricted Restricted Total

Endowment net assets,September 1, 2010Contributions

Change in value of trusts

Investment return

Appropriation for expenditure

Other

Endowment net assets,

August 31, 2011

Contributions

Change in value of trusts

Investment return

Appropriation for expenditure

Other

Endowment net assets,August 31, 2012

$ 43,406 $ 105,903 $ 149,3091,573 19,683 21,256

44 993 1,037

12,968 - 12,968

(5,035) - (5,035)(123) (250) (373)

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 $ 196,755

10. Pledges Receivable

As of August 31, 2012, donor-restricted pledges are expected to be realized as follows:

Less than one year

One to five years

Thereafter

Total pledges receivableLess discount and allowanceNet pledges receivable

$ 2,36619,8134,683

26,862(4,247)

$ 22,615

1207-1377461 44



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 decreased by $1,605 in 2012 andincreased by $7,366 in 2011 as a result of changes in estimates due to final cost reportsettlements and the disposition of other payor audits and settlements. Changes in Medicare andMedicaid programs and reduction in funding levels could have an adverse effect onNorthwestern Memorial.

Northwestern Memorial also provides care to self-pay patients. Under its Free and Discounted

Care Policy (the Policy), Northwestern Memorial provides medically necessary care to patients

in its community with inadequate financial resources at discounts of up to 100% of charges using

a sliding scale that is based on patient household income as a percentage (up to 600%) of the

Federal Poverty Level guidelines. The Policy also contains a catastrophic financial assistance

provision that limits a patient's total financial responsibility to Northwestern Memorial. Since

Northwestern Memorial does not pursue collection of these amounts, they are not reported as

patient revenue. The Policy has not changed in fiscal year 2012 or 2011. NLFH adopted this

policy in June 2011. Northwestern Memorial recognizes patient revenue on services provided to

these patients at the discounted rate at the time services are rendered.

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 source.Management 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.

1207-1377461 45



11. Net Patient Revenue (continued)

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 service

revenue in the accompanying consolidated statements of operations and changes in net assets.

For the years ended August 31, 2012 and 2011, patient service revenue (including patient copays

and deductibles), net of contractual allowances and discounts (but before the provision for

uncollectible accounts) by primary payor source was as follows:

2012 2011

MedicareMedicaidOther third-party payorsPatients

$ 365,081 $ 347,610

151,854 153,6271,081 ,831 1,073,666

15,357 18,693

$ 1,614 ,123 $ 1,593,596

Medicaid patient service revenue includes revenue received through the Illinois Hospital

Assessment Program (see Note 12).

Northwestern Memorial grants credit without collateral to its patients, most of who are local

residents and are insured under third-party payor agreements. At August 31, 2012 and 2011,

patient accounts receivable, including patient copays and deductibles by major primary payor

source, before deducting estimated uncollectibles, was as follows:

2012 2011

Medicare 14% 16%

Medicaid 21 15

Blue Cross 21 23

Other managed care 30 29Other third-party payors 7 10

Patients 7 7

100% 100%

1207-1377461 46



11. Net Patient Revenue (continued)

Patient accounts receivable net of contractual adjustments were $318,811 and $264,798 as of

August 31, 2012 and 2011, respectively, or 19.8% and 16.6% of patient revenue for the fiscal

years then ended. The related allowance for uncollectible accounts was $39,036 and $32,338, or

12.2% and 12.2% of the related patient accounts receivable net of contractual adjustments as of

August 31, 2012 and 2011, respectively. The allowance for uncollectible accounts remained

consistent as a percent of the related accounts receivable net of contractual allowances between

August 31, 2012 and 2011.

12. Illinois Hospital Assessment Program

In December 2008, the Illinois Hospital Assessment Program (HAP) was approved by the

Federal Centers for Medicare and Medicaid Services for the period July 1, 2008 through June 30,

2013. Under HAP, the state receives additional federal Medicaid funds for the state's healthcare

system, administered by the Illinois Department of Healthcare and Family Services. HAP

includes both a payment to NMH and NLFH from the state and an assessment (the provider tax)

against NMH and NLFH, which is paid to the state in the same year. Included in the

accompanying consolidated statements of operations and changes in net assets for the years

ended August 31, 2012 and 2011, respectively, are $57,915 and $58,255 of patient service

revenue and $41,395 and $41,395 of assessment.

13. Functional Expenses

Northwestern Memorial provides general healthcare services primarily to residents within its

geographic location and supports research and education programs. For the years ended

August 31, 2012 and 2011, expenses related to providing these services were as follows:

2012 2011

Healthcare services $ 1,259 ,815 $ 1,254,836

Research and education 64,030 64,471

Fund-raising 7,532 5,842

General, administrative, and other 281,855 266,106

$ 1,613,232 $ 1,591,255

The research and education costs include $7,553 and $3,448 of expenses supported by federal,

state, and corporate grants and $11,393 and $8,178 of expenses supported by other donor-

restricted funds in 2012 and 2011, respectively.

1207-1377461 47



14. Commitments and Contingencies

Consistent with its mission, Northwestern Memorial from time to time provides academic,

program, and other support to other not-for-profit entities. The present value of the total

remaining commitments related to this support are $134,842 and $64,318 at August 31, 2012 and

2011, respectively, which are reported as grants and academic support payable in the

accompanying consolidated balance sheets.

As of August 31, 2012, approximately 15% of Northwestern Memorial employees were

represented by a collective bargaining agreement. This collective bargaining agreement does not

expire within one year.

Various capital projects are currently being constructed that are expected to open over the

next three years. The total estimated cost of these projects is approximately $496,000. As of

August 31, 2012, project commitments totaled $322,857, of which $113,555 has been incurred.

As part of the affiliation agreement with Lake Forest Hospital in 2010, Northwestern Memorial

committed to a plan to refurbish or replace existing inpatient and outpatient facilities on the Lake

Forest Campus within ten years of the affiliation date ("Replacement Project"). The planning

process for the Replacement Project is progressing on schedule. Any Replacement Project plans

will be subject to obtaining a certificate of need along with other governmental approvals.

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 2074. At August 31, 2012, 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 31:

2013

2014201520162017Thereafter

10,5469,7058,9968,7798,526

39,827

1207-1377461 48



14. Commitments and Contingencies (continued)

Laws and regulations governing the Medicare and Medicaid programs are extremely complex

and subject to interpretation. As a result, there is a reasonable possibility that recorded amounts

will change by a material amount in the near term. During the last few years, as a result of

nationwide investigations by governmental agencies, various healthcare organizations have

received requests for information and notices regarding alleged noncompliance with those laws

and regulations, which, in some instances, have resulted in organizations entering into significant

settlement agreements. Compliance with such laws and regulations may also be subject to future

government 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 healthcare providers has been

challenged or questioned to determine if they are consistent with the regulatory requirements for

nonprofit tax-exempt organizations. These challenges are broader than concerns about

compliance with federal and state statutes and regulations of core business practices of the

healthcare organizations. Areas that have come under examination have included pricing

practices, billing and collection practices, charitable care, community benefit, executive

compensation, exemption of property from real property taxation, and others. Northwestern

Memorial expects that the level of review and audit to which it and other healthcare providers are

subject will increase. There can be no assurance that regulatory authorities will not challenge

Northwestern Memorial's compliance with these laws and regulations, and it is not possible to

determine the effect, if any, such claims or penalties would have on Northwestern Memorial.

In August 2011, the Illinois Department of Revenue (the Department ) denied property tax

exemption applications submitted by NMH and two other unaffiliated hospitals . The NMH

denial related to its application for an exemption for the Prentice Women ' s Hospital pavilion

( Prentice pavilion ) for the 2007 tax year.

NMH also filed property tax exemption applications for the Prentice pavilion for the 2009 and

2010 tax years. Nevertheless, in October 2011, NMH received from the Cook County Assessor's

Office (the Assessor) notices of intent to list omitted assessments for the Prentice pavilion for

2008, 2009, and 2010, and the Assessor issued proposed assessments for the Prentice pavilion

for 2011. On March 30, 2012, NMH filed a property tax exemption application for the Prentice

pavilion for the 2011 tax year. On July 5, 2012, NMH received tax bills for the Prentice pavilion

for 2008 through 2011.

1207-1377461 49




On June 14, 2012, Illinois Governor Pat Quinn signed legislation (Public Act 97-688)

establishing clear criteria for property, sales, and use tax exemptions for not-for-profit hospitals.

The legislation expressly applies to exemption applications, such as those filed by NMH

regarding the Prentice pavilion and other Illinois hospitals, that have either not been decided by

the Illinois Department of Revenue or for which such Department decisions are not final and

non-appealable. NMH sought and received property tax exemptions for the Prentice pavilion for

2007 and subsequent years pursuant to the recent legislation. As a result, no property tax will be

due for the Prentice pavilion for tax years 2007-2011.

On February 8, 2010, NMH and NMHC were served as defendants in a lawsuit filed by a former

NMH clinical coordinator alleging that employees were not compensated for all time worked.

The former employee seeks to represent a class of all NMH hourly employees in over 20

different job classifications. In August 2011, NMHC was dismissed from the case, and the court

conditionally certified a narrower-than-petitioned-for collective action consisting of NMH non-

union, direct patient care employees. The opt-in period has closed, with approximately 132 of

4,360 (approximately 3%) eligible current and former employees opting in as plaintiffs. On

October 24, 2012, the parties mediated the claims outlined in the aforementioned lawsuit. The

mediation resulted in a settlement (subject to Court approval), pursuant to which NMH has

agreed to settle and release all outstanding claims related to the litigation. The settlement is made

without any admission of liability by NMH. Management has accrued amounts estimated to be

payable under the proposed settlement as of August 31, 2012; any changes in the final settlement

amount will be accrued at the time of final settlement.

On October 25, 2012, NMH received a copy of the complaint in the lawsuit captioned, United

States ofAmerica Ex Rel Audra Soulias v Northwestern University and Northwestern 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 alleges 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 is currently pending in the United States District Court for the

Northern District of Illinois Eastern Division. NMH has yet to respond to the complaint or to

conduct any formal discovery, and accordingly at this time management is unable to determine

what effects, if any, this matter may have on the consolidated financial statements.

1207-1377461 50




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. Elmhurst Memorial Healthcare

In February 2012, NMHC and Elmhurst Memorial Healthcare (EMHC ), the corporate parent of

Elmhurst Memorial Hospital, executed a non-binding letter of intent that provided for a period of

exclusive discussions regarding a potential affiliation . On June 28 , 2012, NMHC and EMHC

announced they had terminated the letter of intent, ending the period of exclusive discussions.

16. Subsequent Events

Northwestern Memorial evaluated events and transactions occurring subsequent to

August 31, 2012 through November 29, 2012, the date of issuance of the consolidated financial

statements. During this period, there were no subsequent events requiring recognition in the

consolidated financial statements that have not been recorded. In September 2012, Northwestern

Memorial signed an Alignment Agreement with NMFF and Northwestern University (NU) that

furthers the mutual purpose and mission of the entities. This alignment agreement provides for a

one-time grant for research of $167,000 by Northwestern Memorial to NU and provides for

ongoing funding to NU toward clinical program development called for in the shared strategic

plan. This ongoing funding consists of 0.5% of Northwestern Memorial's net patient revenue

(excluding HAP revenue) and 10% of Northwestern Memorial operating income up to a 5%

operating margin and 20% of operating income that exceeds a 5% operating margin. There were

no other unrecognized subsequent events requiring disclosure except as previously disclosed in

Note 14.

1207-1377461 51

Supplementary Information

1207-1377461

V A I Vi

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 basic consolidatedfinancial statements as a whole. The accompanying consolidating balance sheet and statement ofrevenue and expenses are presented for purposes of additional analysis and are not a requiredpart of the financial statements. Such information is the responsibility of management and wasderived from and relates directly to the underlying accounting and other records used to preparethe consolidated financial statements. The information has been subjected to the auditingprocedures applied in the audit of the consolidated financial statements and certain additionalprocedures, including comparing and reconciling such information directly to the underlyingaccounting and other records used to prepare the financial statements or to the financialstatements themselves, and other additional procedures in accordance with auditing standardsgenerally accepted in the United States. In our opinion, the information is fairly stated in allmaterial respects in relation to the consolidated financial statements as a whole.

U 7November 29, 2012

1207-1377461 52


Consolidating Balance Sheet(In Thousands)

August 31, 2012

Assets

Current assets

Cash and cash equivalents


Current portion of investments, including

assets limited as to use

Patient accounts receivable, net

Current portion of pledges and grants receivable, net

Current portion of insurance recoverable

Inventories

Other current assets

Due from affiliates

Total current assets

Investments, including assets limited as to use, less current portion


Land

Buildings

Equipment and furniture

Construction-in-progress

Less accumulated depreciation

Prepaid pension cost

Insurance recoverable, less current portion

Other assets, net

Interest in unrestricted net assets of the Foundation

Interest in restricted net assets of the Foundation

Total assets

Northwestern Northwestern

Memorial Lake Forest Northwestern Northwestern

Hospital and Hospital and Memorial Memorial Consolidating

Subsidiaries Subsidiary HealthCare Foundation Entries Consolidated

S 92.067 S 24.588 5 1.029 5 21.659 S - 5 139.343

112.898 27 - - - 112.925

83.480 5.767 - - - 89.247

246.794 32.981 - - - 279.775

998 15 - 8.244 - 9.257

11.760 1.300 - - - 13.060

26.793 4.735 - - - 31.528

27.340 2.081 3.776 3.233 (3.292) 33.138

8.406 250 2.773 - (11.429) -

610.536 71.744 7.578 33.136 (14.721) 708.273

1.687.975 145.816 18.019 578.541 - 2.430.351

182.420 55.533 - - - 237.953

1.508.294 159.479 - 227 - 1.668.000

332.828 31.205 158.102 208 - 522.343

45.430 1.143 - - - 46.573

2.068.972 247.360 158.102 435 - 2.474.869

943.441 46.715 126.396 266 - 1.116.818

1.125.531 200.645 31.706 169 - 1.358.051

30.814 - - - - 30.814

69.580 4.864 - - - 74.444

45.557 518 8.214 45.462 - 99.751

397.234 - - - (397 234) -

256.487 - - - (256.487) -

5 4.223.714 5 423.587 5 65.517 5 657.308 5 (668,442) $ 4.701.684

53 1207-1377461


Consolidating Balance Sheet (continued)(In Thousands)

August 31, 2012


Current liabilities

Accounts payable

Accrued salaries and benefits

Grants and academic support payable. current portion

Accrued expenses and other current liabilities

Due to third-party payors

Current accrued liabilities under self-insurance

programs

Current maturities of long-term debt

Due to affiliates

Total current liabilities

Long-term debt, less current maturities

Accrued liabilities under self-insurance programs.

less current portion

Grants and academic support payable. less current portion

Due to insureds

Interest rate swaps

Pension liability

Other liabilities

Total liabilities

Net assets

Unrestricted

Undesignated

Board-designated

Total unrestricted

Temporarily restricted

Permanently restricted

Total net assets

Total liabilities and net assets





S 70.978 S 8.062 5 1.940 5 90 5 - 5 81.070

69.793 11.661 13.094 400 - 94.948

36.523 - - 1.065 - 37.588

32.004 4.640 259 1.260 (3.292) 34.871

181.969 25.471 - - - 207.440

60.926 4.707 - - - 65.633

12.810 1.690 - - - 14.500

661 2.556 7.995 217 (11.429) -

465.664 58.787 23.288 3.032 (14.721) 536.050

740.523 65.632 - 806.155

398.889 22.052 - - - 420.941

96.699 - - 555 - 97.254

62.415 - - - - 62.415

104.503 - - - - 104.503

- 3.863 - - - 3.863

21.446 377 30.106 - - 51.929

1.890.139 150.711 53.394 3.587 (14.721) 2.083.1 10

1.927.089 243.728 12.123 258.634 (258.634) 2.182.940

138.600 - - 138.600 (138.600) 138.600

2.065.689 243.728 12.123 397.234 (397.234) 2.321.540

151.292 3.971 - 139.892 (139.892) 155.263

116.594 25.177 - 116.595 (116.595) 141.771

2.333.575 272.876 12.123 653.721 (653.721) 2.618.574

S 4.223.714 5 423.587 5 65.517 5 657.308 5 (668.442) 5 4.701.684

54 1207-1377461


Consolidating Statement of Revenue and Expenses(In Thousands)

Year Ended August 31, 2012





Revenue

Patient service revenue S 1.389 271 S 224 .858 S - S - $ (6) $ 1.614.123

Provision for uncollectible accounts 24.476 7.596 - - - 32.072

Net patient revenue 1 .364.795 217.262 - - (6) 1.582.051

Rental and other revenue 89.900 24.474 160.911 7.340 (181.629) 100.996


and federal and state grants 16.259 2.234 - - - 18.493

Total revenue 1.470.954 243.970 160.911 7.340 (181.635) 1.701.540

Expenses

Salaries and professional fees 436.440 86.456 62.819 2.256 - 587.971

Employee benefits 128.888 24 .986 31 .808 951 - 186.633

Supplies 233.766 33.332 872 269 (42) 268.197

Purchased services 238.981 50.970 43.381 2.696 (162.483) 173.545

Depreciation 114.149 20.766 10.745 26 - 145.686

Insurance 58.805 2.665 39 58 (1.856) 59.711

Rent and utilities 32.073 6.771 12.068 488 (9.914) 41.486

Repairs and maintenance 38.141 6.116 1.321 3 - 45.581

Interest 25 .832 3.869 - - - 29.701

Illinois Hospital Assessment 36.438 4.957 - - - 41.395

Other 29.438 4.179 (864) 573 - 33.326

Total expenses 1.372.951 245.067 162.189 7.320 (174.295) 1.613.232

Operating income ( loss) 98 .003 (1.097) (1.278) 20 (7.340 ) 88.308

Nonoperating gains ( losses)

Investment return 111 .322 8.759 1.175 29.506 - 150.762

Change in fair value of interest rate swaps (30.533) - - - - (30.533)

Grants and academic support provided ( 101.884 ) (104) (8) (4.712) - (106.708)

Change in interest in unrestricted net

assets of the Foundation 29.056 - - - (29.056) -

Other 8.829 (395) (47) 4.243 7.340 19.970

Total nonoperating gains, net 16 .790 8.260 1.120 29.037 (21.716) 33.491

Excess (deficit) of revenue over expenses $ 114.793 $ 7.163 $ (158) $ 29.057 $ (29.056) $ 121.799

55 1207-1377461

Obligated Group

Combining Balance Sheet(In Thousands)

August 31, 2012

Assets

Current assets

Cash and cash equivalents


Current portion of investments, including

assets limited as to use

Patient accounts receivable, net

Current portion of pledges and grants receivable, net

Current portion of insurance recoverable

Inventories

Other current assets

Due from affiliates

Total current assets

Investments, including assets limited as to use.



Land

Buildings

Equipment and furniture

Construction-in-progress

Less accumulated depreciation

Prepaid pension cost

Insurance recoverable, less current portion

Other assets, net

Interest in unrestricted net assets of the Foundation

Interest in restricted net assets of the Foundation

Total assets


Memorial Lake Forest Combining Obligated

Hospital Hospital Entries Group

S 89.641 S 20.874 5 - 5 110.515

112,898 27 - 112.925

34.317 5.767 - 40.084

238.785 32.981 - 271.766

998 15 - 1.013

42.778 1.300 - 44.078

25.659 4.708 - 30.367

14.353 1.920 - 16.273

10.933 4.920 (430) 15.423

570.362 72.512 (430) 642.444

1.434.403 145.816 - 1.580.219

182.420 54.533 - 236.953

1.502 264 146.086 - 1.648.350

328.558 31.017 - 359.575

45.430 1.143 - 46.573

2.058.672 232.779 - 2.291.451

936.678 43.046 - 979.724

1.121.994 189.733 - 1.311.727

30.814 - - 30.814

226.268 4.864 - 231.132

24.585 518 - 25.103

397.234 - - 397.234

256.487 - - 256.487

S 4.062.147 5 413.443 5 (430) 5 4.475.160

1207-1377461 56

Obligated Group

Combining Balance Sheet (continued)(In Thousands)

August 31, 2012


Current liabilities

Accounts payable

Accrued salaries and benefits

Grants and academic support payable. current portion

Accrued expenses and other current liabilities

Due to third-party payors

Current accrued liabilities under self-insurance

programs

Current maturities of long-term debt

Due to affiliates

Total current liabilities

Long-term debt, less current maturities

Accrued liabilities under self-insurance programs.


Grants and academic support payable. less current portion

Interest rate swaps

Pension liability

Other liabilities

Total liabilities

Net assets

Unrestricted

Undesignated

Board-designated

Total unrestricted

Temporarily restricted

Permanently restricted

Total net assets

Total liabilities and net assets




S 69.364 S 7.953 5 - 5 77.317

63.747 11.552 - 75.299

36.523 - - 36.523

27.603 4.173 - 31.776

181.969 25.471 - 207.440

55.626 4.707 - 60.333

12.810 1.690 - 14.500

1 2.552 (430) 2.123

447.643 58.098 (430) 505.311

740.523 65.632 - 806.155

388.805 22.052 - 410.857

96.699 - - 96.699

104.503 - - 104.503

- 3.863 - 3.863

18.221 377 - 18.598

1.796.394 150 . 022 (430) 1.945.986

1.859 229 234 .2 73 - 2.093.502

138.600 - - 138.600

1.997.829 234.273 - 2,232.102

151.330 3.971 - 155.301

116.594 25 .177 - 141.771

2.265.753 263 . 421 - 2.529.174

S 4.062 .147 5 413.443 5 (430) 5 4.475.160

1207-1377461 57

Obligated Group

Combining Statement of Revenue and Expenses(In Thousands)

Year Ended August 31, 2012




Revenue

Patient service revenue $ 1,324,519 $ 224,858 $ - $ 1,549,377

Provision for uncollectible accounts 23,365 7,596 30,961

Net patient revenue 1,301,154 217,262 - 1,518,416

Rental and other revenue 70,600 17,147 (97) 87,650


and federal and state grants 15,615 2,234 - 17,849

Total revenue 1,387,369 236,643 (97) 1,623,915

Expenses

Salaries and professional fees 395,379 82,962 - 478,341

Employee benefits 120,417 24,686 - 145,103

Supplies 227,679 32,962 (42) 260,599

Purchased services 231,486 50,354 (54) 281,786

Depreciation 113,464 19,344 - 132,808

Insurance 32,560 2,468 35,028

Rent and utilities 30,576 6,853 (1) 37,428

Repairs and maintenance 37,558 5,999 - 43,557

Interest 25 ,832 3,869 - 29,701

Illinois Hospital Assessment 36,438 4,957 41,395

Other 28,552 3,588 - 32,140

Total expenses 1,279,941 238,042 (97) 1,517,886

Operating income (loss) 107,428 (1,399) - 106,029

Nonoperating gains (losses)

Investment return 90 ,257 9,042 99,299

Change in fair value of interest rate swaps (30,533) - - (30,533)

Grants and academic support provided (101,884 ) (104) - (101,988)

Change in interest in unrestricted net

assets of the Foundation 29,056 - - 29,056

Other 8 ,838 (395) - 8,443

Total nonoperating gains, net (4 ,266) 8,543 - 4,277

Excess of revenue over expenses $ 103,162 $ 7,144 $ - $ 110,306

1207-1377461 58

Assurance I Tax I Transactions I Advisory

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