Cleveland Clinic Health System Obligated Group - FMSbonds.com

I. COLLABORATIVE PROGRAMSIn addition to the collaborative activities of the Health System outside the United States, the ClevelandClinic has an affiliation agreement with Ashtabula County Medical Center (“ACMC”), an Ohio nonprofitcorporation and Tax-Exempt Organization that operates a 180-bed acute-care hospital in Ashtabula County,approximately 60 miles northeast of Cleveland.The Cleveland Clinic has entered into a number of contractual relationships in the past several years toprovide various professional, technical, medical management, and telemedicine services to other hospitals, includingother members of the Obligated Group, and their patients. The services provided by the Cleveland Clinic pursuantto these relationships include radiology, anesthesia, cardiovascular surgery, radiation oncology, neonatology,neuroradiology and pediatric cardiology. The services are provided on-site at participating hospitals by members ofthe Professional Staff or delivered from the Cleveland Clinic’s main campus.The Cleveland Clinic and the other members of the Obligated Group are likely to enter into additionalarrangements with other healthcare providers. The nature of any such arrangement and its effect on the ObligatedGroup is not determinable at present. See the discussion under “PART IV – MANAGEMENT’S DISCUSSIONAND ANALYSIS OF RESULTS OF HEALTH SYSTEM OPERATIONS AND FINANCIAL POSITION –H. ANTICIPATED EXPENDITURES, FUTURE PLANS AND OUTLOOK FOR OPERATIONS” regardingpotential new affiliations or relationships with other organizations and enterprises.J. PHILANTHROPYFrom 2001 to 2006, the Cleveland Clinic averaged approximately $145 million in gifts and pledges,including revocable and conditional commitments, per year. In 2007, gifts and pledges totaled more than $176million.Sydell and Arnold Miller Family Pavilion Campaign. The Cleveland Clinic has had under way sinceJanuary 2003 a capital campaign to secure funds for construction of the Miller Family Pavilion, which uponcompletion will be the centerpiece of the Heart and Vascular Institute. See “PART II – THE OBLIGATED GROUP– A. THE CLEVELAND CLINIC - Principal Facilities.” The Miller Family Pavilion campaign has a $300 milliongoal. The majority of the campaign is directed at individuals and corporations. Support from private foundationsand public entities is also being sought. As of December 31, 2007, the Cleveland Clinic had secured pledgestotaling approximately $320 million, of which $140 million has been received in cash. It is anticipated that morethan $30.0 million in additional cash will be received from current and future pledges during the next two years.Glickman Tower Campaign. In 2005, the Cleveland Clinic initiated a $60 million campaign to securefunds for the Glickman Tower, which upon its completion will be the home of the Glickman Urological Institute.As of December 31, 2007, the campaign had secured pledges of approximately $47 million. See “PART II – THEOBLIGATED GROUP – A. THE CLEVELAND CLINIC - Principal Facilities.”Today’s Innovations, Tomorrow’s Healthcare. On May 8, 2006, the Cleveland Clinic announced thepublic phase of a $1.25 billion fundraising campaign to further the Health System’s mission. The campaign willprimarily benefit four areas: patient care; medical and patient education; basic and clinical research; and campusmaster plan and construction. As of December 31, 2007, more than $975 million in cash and pledges had beenraised toward that goal, including the silent phase which began in July 2001.K. LIABILITY CONSIDERATIONS AND LITIGATIONProfessional Liability and Other Insurance CoverageThe Health System has established and maintains comprehensive programs of medical professional andgeneral liability insurance covering each of the members of the Obligated Group, including, but not limited to, theCleveland Clinic, Fairview, Lutheran, Marymount, CCHS-East Region and Florida Clinic, as well as all employeesof these entities, including physicians, nurses, and allied health providers. The insurance protection is written onclaims-made policies issued by the Cleveland Clinic’s wholly owned subsidiaries, CCHS Indemnity Co., Ltd.(“CCHSICO”) and Cleveland Clinic Health System Community Hospital Insurance Program (“CHIP”). See “PARTV – NON-OBLIGATED HEALTH SYSTEM PARTICIPANTS” for a description of each company. TheA-23