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									      Health Care Foundation of Greater Kansas City
                  Finance and Investment Committee
                             Minutes of Meeting
                          Held Friday, April 30, 2004

Location:    The Local Investment Commission (LINC), 11th Floor, 3100
             Broadway, Kansas City, Missouri

Committee Members in attendance:
Landon Rowland, Chair
Mark Flaherty
Bishop Steve Jones
Rod Minkin

Committee Members not in attendance:
David Ross
Karen Pletz
Terry Thompson

Health Care Foundation of Greater Kansas City Board Members and staff in
  attendance:
Harry S. Jonas, M.D., Chair
Gurnie Gunter, Vice Chair
Tracy Skidgel, Administrative Assistant

Community Advisory Committee (CAC) Members in attendance:
Al W. Tikwart, Jr.

Guests in attendance:     Doug Anning (Seigfried Bingham)
                          Lola Butcher (The Business Journal)
                          James M. Flynn
                          George Hoech, Jr.
                          Thomas J. Langenberg (CHG)
                          Jim Wright, R.N.
                          Paul Wenske (Kansas City Star)

The Chair opened the meeting by welcoming all persons present, announcing
that the committee meeting had been properly noticed pursuant to the Missouri
Sunshine Law.

Update from Thomas J. Langenberg - Chairman Rowland introduced Tom
Langenberg of Community Health Group to the committee and thanked him for
his willingness to attend. Chairman Rowland then brought to the committee’s
attention the letter written to Mr. Langenberg by Harry S. Jonas, M.D., Chairman
of the Board, as was recommended by this committee, in which the Foundation
requested 1) a monthly Report, including revenue and expenditures of the funds
held by CHG; and 2) clarification of the second paragraph of CHG email to David
Ross, which states “The amount is before adjustments but is after the settlement
of the professional liability trust amount of $9 million to HCA per agreement by
actuaries for HCA and CHG. It includes unadjusted proceeds from the TLH sale
to the Federal Reserve and the gift from R. W. Brown.”

Mr. Langenberg directed the committee to the chart he provided detailing
amounts as per the Asset Purchase Agreement by and between Health Midwest
and HM Acquisition, Inc. dated November 22, 2002. Some particular highlights
are as follows:

The only difference in this schedule and what you have seen before is 2.6(vi)7)
The Cancer Institute ($32,160,000), this adjustment was made according to the
agreement. This represents the sale of The Cancer Institute’s activities (5 yr.
Projection) at $14,800,000. After the Cancer Institute’s exit there will be a credit
back to Schedule H-I (equity is approximately $22 Million). This was in the
contract but St. Luke’s had not decided to participate. There will be another
Schedule H-II, approximately $200 Million in assets that Mr. Langenberg will
present to the Finance Committee at a subsequent meeting. CHG will distribute
the residual between the two foundations.

2.6(iii) Deduction for Call Price of Triad Leases ($151,475,289) – was from a
lease in 1999 and treated as long-term debt.

2.6(iv) Malpractice Adjustment (to be wired) – ($25,000,000) per closing on
04/01/03; an additional ($9,000,000) as of 4/30/04; this item was the one referred
to in the e-mail to David Ross.

2.6(vi) Less any “Non-Transferred Asset Value”

All adjustments will remain except for The Cancer Institute adjustment. There
may be additional credits including one for New Directions ($2,758,777).

HCA and CHG are currently in dispute regarding reserves for accounts
receivable from third-party payers. If necessary, they will arbitrate. If the
Foundation has received its 501(c)(3) status and funds have already been
distributed to it, there will be a reserve created to cover this disputed amount.

2.6(xi) Trinity Lutheran Campus and Park Lane – The North part of Trinity
campus has been sold. The ($4,000,000) is the amount before the purchase and
is the appraised value. Zimmer Cos. is the realtor on the 3 remaining parcels.


Wire payments: represent payment of Health Midwest debt: US Bank (Pd after
closing by CHG) ($736,353)
Bank of New York – Debt, $166,099,278.94 and



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United Missouri Bank – Debt, $150,317,920.91 – are both Trustees for bonds
issued.
Under transaction fees and costs to be paid via CHG the $1,500,146 will be
credited back to the foundations.

Investment Earnings through December 31, 2003 – $3,681,003; and
Investment Earnings January – March 2004 – $1,134,236

These moneys were invested as per the Attorney General’s recommendation.

The Trinity North Net Proceeds-Estimate of$8,376,234 will go to the Health Care
Foundation of Greater Kansas City (HCF) only – and will not be split with the
REACH Foundation.

The Richard W. Brown Endowment Gift of 3/31/04 in the amount of $518,365 will
go to the Health Care Foundation of Greater Kansas City (HCF) only.

Concern was expressed regarding the attitude of HCA. It was stated that HCF
should be working on a parallel course with CHG to provide for a maximum of
funds that will be distributed to the foundations. Our objective should be to
improve the numbers and not accept reductions. We might want to have
discussions with HCA to discuss their obligations to best serve the community in
the improvement in healthcare for the indigent population.

Mr. Langenberg directed the committee’s attention to the List of Disbursements
to date and stated that if the committee is satisfied with this type of performance
he will continue to provide such information monthly.

Update from Doug Anning - Chairman Rowland introduced Doug Anning of
Seigfried Bingham whose firm prepared our 501(c)(3) filing and will be giving us
an update on the status of that filing.

Mr. Anning explained that the Foundation is attempting to be classified as a
“Public Charity” rather than a “Private Foundation.” Historically, approximately
60-70% of conversion foundations are classified as private foundations. See
handout provided by Mr. Anning for differences in public vs. private.

Private Foundations are subject to a 2% tax on net investment income – the 2%
can be reduced to as low as 1% (by taking away money you would have been
required to provide the IRS and giving it out as grants). If in a given year you
give additional moneys to grantees, the IRS will reduce what you pay to them.

5% minimum annual distribution requirement – only required if classified as a
private foundation. The 5% requirement applies to the net current fair market
value of assets. This result could be a negative if you have to reach into the
corpus to distribute the 5%.



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Limitations on certain investments – required of private foundations. This
includes venture capital, fund-to-funds, hedge funds, etc.            However, this
restriction is a very low priority for the IRS. The rules have not been modified but
are not strenuously enforced.

Limitations on grants for scholarship, travel and study – required of private
foundations. There is a very clear process set out that you must follow.
However, the process might not be a bad thing, just prohibitive with respect to
time and follow-up of grantees.

Discussion followed regarding policy issues. Which type of foundation (public or
private) would serve our community better? If we fail in our endeavor to obtain
Public Charity status, it will default to Private Foundation status. Given the
choice, we would prefer to be a public charity. However, it is not necessarily a
bad thing to be declared a private foundation. It was stated that we should not
make policy decisions on investments or spending until we receive our 501(c)(3)
status. Ultimately, this committee would like the maximum flexibility to manage
and distribute the funds. The Attorney General is the guardian over the
foundation and will make sure things are done correctly. If we are classified as a
private foundation we can go back in 2-3 years and request public charity status.
We can also lose our public charity status if we do not meet the criteria of a
public charity. The test is a six-year window. We report every year and the IRS
determines your status with a four-year average. If you do not function like a
public charity at the end of the five-years you will be required to retroactively pay
the 2% excise tax.

Limitations on lobbying and advocacy – public/moderate; private/strict – We can
never support anything of a political nature. We can, however, do public
awareness advocacy. This area will need continual guidance and is the most
complicated of the tax laws.

Can be the beneficiary of a supporting organization – public/yes; private/no – All
the non-profit hospitals have foundations; museums have foundations. Basically
these foundations provide development work for the organization.

Chairman Rowland asked Mr. Anning to revise his chart to include complete
information and to send it to Ms. Skidgel for distribution to the committee.

Mr. Anning said basically we have to convince the IRS that the contribution from
CHG is public support and that it represents a huge base of public support. To
be declared a public charity 33 1/3 percent of your support must come from
public donations. We must prove that our predecessor was in fact publicly
supported. We most likely will not meet the 33 1/3 percent in future years but will
meet the test of 10% public support. It is our belief that hospitals are more like
public supported charities than not. The requested information was sent to the



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IRS last week. The reviewer has been satisfied with our public charity argument,
closed his file, and sent it on to his supervisor. We should receive an answer
from the supervisor within the next two weeks. If we obtain public charity status it
will probably be good through the year 2009. The four-year average qualifies
you for the next two years.

How will we maintain the status of Public Charity? We must receive public
donations/support that exceeds our interest/dividends. We may not be able to
continue to meet the test for this exemption.

Mr. Langenberg and Mr. Anning were excused at this time and once again
thanked for their willingness to participate.

Finalization    of    Recommendation            to   Board    Regarding      Investment
Consultant

Chairman Rowland stated that the references of the two finalists for investment
consultants have been confirmed.

On motion made and seconded the Finance & Investment Committee
unanimously recommends the selection of Ennis Knupp as the Foundation’s
Investment Consultant.

It was suggested that we invite Ennis Knupp to attend our May 20, 2004 Board of
Directors meeting and that they come prepared to 1) present a work plan and 2)
remarks regarding matters of interest to the Board.

The Finance & Investment Committee expressed appreciation to both Mark
Flaherty and David Ross in their preparation of the RFP Comparison Charts.
Their insights are necessary and invaluable to this committee.

Mark Flaherty gave a quick overview of the Legal RFP proposals and it was
determined that we will schedule an additional meeting to discuss this matter
further. We will follow the same process as we did with investment consultants.
We will select a few firms from our preliminary review and request their presence
for an interview with the committee. Following those interviews we will narrow
our selection. Before interviewing we will have determined the criteria we will be
using, i.e., key things to look at, and conflict issues. It is very difficult to prioritize
among the information received. What might be critical to one person on the
board might not be an issue with another. During the second phase of the
interviews we will request that the firm disclose any actual or potential conflict
they might have.

We have received two responses to the Accounting RFP. One was unqualified,
leaving only one qualified proposal.




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It was mentioned that Dan Couch has had a conversation with Tom Langenberg
regarding accounting services and we should maybe follow-up on that
discussion.

Rod Minkin mentioned that the Audit Committee is up and running and would like
to be kept informed regarding the accounting proposals received.

The question was asked, if we have an ethics committee? Not a committee, per
se, but the whole board is concerned with ethics and that subject is included in
our Articles of Incorporation, and Bylaws, as well as a separate Ethics Policy.

A question was raised as to how we will handle the situation involving if potential
conflicts of interests: In the event a company is submitting a proposal currently
employs a committee member, the response that such an individual will excuse
himself and will not participate in the discussion or voting of that issue.

The next regularly scheduled meeting of the Finance & Investment Committee
will be May 18, 2004. But an earlier meeting may be scheduled.

Meeting adjourned.




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