Cleveland Clinic Health System Obligated Group - FMSbonds.com

Cleveland Clinic Health SystemNotes to Consolidated Financial StatementsDecember 31, 2007 and 20061. Organization and ConsolidationThe Cleveland Clinic Foundation (Foundation) is a nonprofit tax-exempt Ohio corporationorganized and operated to provide medical and hospital care, medical research, and education.The accompanying consolidated financial statements include the accounts of the Foundation andits controlled affiliates, d.b.a. Cleveland Clinic Health System (System).The System is the leading provider of healthcare services in northeast Ohio. The System operateseleven hospitals with more than 3,400 staffed beds. Ten of the hospitals are operated in theCleveland metropolitan area, anchored by the Foundation. In addition, the System operatessixteen Family Health Centers, including five ambulatory surgery centers, and many additionalphysician offices over a six-county area of northeast Ohio. In South Florida, the System operatesa hospital and a clinic on the east coast in Weston.All significant intercompany balances and transactions have been eliminated in consolidation.2. AffiliationsIn prior years, the Foundation had an affiliation agreement with Comprehensive Health Care ofOhio, Inc. (CHC), the sole voting member of Amherst Hospital (Amherst). Pursuant to theagreement, the Foundation had a 49% membership interest in Amherst, which was accounted forusing the equity method. In 2006, the Foundation recorded a loss of $0.5 million, included inother nonoperating gains and losses, and the investment in Amherst was $0 at December 31,2006. In May 2007, the Foundation terminated its affiliation with CHC.The Foundation has an affiliation agreement with Ashtabula County Medical Center (Ashtabula).The carrying value of the investment ($12.0 million at December 31, 2007 and 2006) is recordedin other noncurrent assets and is accounted for using the cost (lower of cost or fair value) methodof accounting.7