BOARD OF

DIRECTORS OFFICE 239-343-1500

FAX: 239-343-1599

13685 DOCTORS WAY #190

FT MYERS, FLORIDA 33912

CAPE CORAL HOSPITAL GULF COAST MEDICAL CENTER

HEALTHPARK MEDICAL CENTER

LEE MEMORIAL HOSPITAL

GOLISANO CHILDRENS HOSPITAL

OF SOUTHWEST FLORIDA

THE REHABILITATION HOSPITAL

LEE PHYSICIAN GROUP

LEE CONVENIENT CARE

BOARD OF DIRECTORS

DISTRICT ONE

Stephen R. Brown, M.D.

Therese Everly, BS, RRT

DISTRICT TWO

Donna Clarke

Nancy M. McGovern, RN, MSM

DISTRICT THREE

Sanford N. Cohen, M.D.

David Collins

DISTRICT FOUR

Diane Champion

Chris Hansen

DISTRICT FIVE

Jessica Carter

Stephanie Meyer, BSN, RN

AGENDA

Workshop – Leesar Tour September 17, 2015 1:00 p.m.

Leesar Inc. 2727 Winkler Ave. Fort Myers, FL 33901 Room 3A and 3B

1. CALL TO ORDER (Sanford Cohen, M.D., Board Chairman) Lee Memorial Health System Board of Directors, sitting as the Lee Memorial Health System (LMHS) Board of Directors for Gulf Coast Medical Center & Lee Memorial Hospital/HealthPark Medical Center and the Board of Directors of its subsidiary corporations, including but not limited to Cape Memorial Hospital, Inc. doing business as Cape Coral Hospital; Lee Memorial Home Health, Inc.; and HealthPark Care Center, Inc.

3. PRESENTATIONS 1. Video Overview of Leesar – Bob Simpson 2. Culinary Solutions – Larry Altier 3. Centralized Sterile Processing – Kim Blakey 4. Slides of Expansion Concept – Michael McCullough

4. TOUR OF FACILITY 1. Culinary Solutions 2. Centralized Sterile Processing 3. Pharmacy Repackaging 4. Distribution Center

5. Reconvene for Q & A

Next Meeting – 1:00 p.m. – Finance and Full Board of Directors Gulf Coast Medical Center – Boardroom 13685 Doctors Way, Ft. Myers FL 33912

ADJOURN

Background

• 1999 Cook Serve operations on 3 campuses

• Aging Infrastructure - 3 Kitchens – 15 + years old

• Estimated capital equipment $1.5 million to refurbish

• No return on investment with refurbishment

• Recommended consolidation to centralized operation in fiscal 2000

• Consolidated Tray Operations For LMH, HPMC, CCH, SW, GC, HPCC

• $2.3 million Cook Chill investment – 2.5 year ROI

• Reduced productive FTES by 30 through attrition

2009 Validation

• 2009 Feasibility Analysis – Kaizen Associates Foodservice Planning and Design

• Evaluated Food Service Systems – Cook Serve, Advanced Meal, Room Service

• Reviewed total net present value of operational and capital expenses

• Recommendation was to maintain Consolidated Advanced Meal Operations

• Best Return – Net Present Value = 10 years

• Timing – LeeSar expansion needs, LMHS expansion needs

• Spatial needs driven by admission projections with a 2% growth rate

Growth and Efficiency

1,872,867 meals

0.090

0

50

100

150

200

250

0.000

0.020

0.040

0.060

0.080

0.100

0.120

0.140

0.160

0.180

99-'00 00-'01 01-'02 02-'03 03-'04 04-'05 05-'06 06-'07 12-13 13-14

Prod Hours per Stat Productive FTE's

Total Meal Equivalents

.16

FY 06/07

Acquired SW/GCMC

5,626,723 meals

Fiscal Impact

Productive Hours – Room Service: .12 Productive Hours per Stat

Total FTE’s Room Service: 315

Actual Productive FTE’s: 280

Net Efficiency Gain: 35 FTE’s

Average Salary per FTE: $30,242

35 FTE’s

Value – Inflation Adjusted Cost Per Stat vs Actual Cost

$3.82

$3.50 $3.31 $3.31

$3.45 $3.45 $3.45 $3.36 $3.40

$3.93

$4.38 $4.04

$3.99

$3.68

3.49 $3.40 $3.47 $3.56

$3.85 $3.99

$3.46

$3.69

$4.20 $4.34

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

2000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Cost per stat actual Inflation stat

Efficiency in Operations

FAQ

• Culinary Solutions Is A Multi-faceted Broad Line Private Label Manufacturer

• Specializes In Therapeutic Meal Products

• Prepares Recipe Components Allowing Client Facilities To Finish Products

• 38,000+ Square Foot Sanitary Design, Production, Education, Café, Bakery,

Administrative, Centralized Call Center

• Work With LMHS Food And Nutrition Department In A Symbiotic Fashion

• Employs A Food Safety And Quality Assurance Manager With LMHS

• Continuous Electronic Temperature Monitoring Of Refrigerators

• Verifiable Sanitary Practices And Processes For Safe Food

• Committed Vendor Requirements

Operations - Products

Baked Goods - Cakes, Pies, Loaf Bread, Rolls, Assorted Cookies, Pastries

Entrees - Meatloaf, Beef, Grilled Chicken, Pasta, Assorted Starches

Soups - Regular, Low Sodium, Broth Based And Cream Soups

Vegetable Products - Processed And Unprocessed Vegetables

Sauces - Sauces And Gravies As Required For Clients

Cold Processing - Bulk Salad Mixes, Fresh Fruit Salads, Deli Meats /Cheeses

Full Prepared Prepackaged Meals - Frozen And Chilled Formats

Grab And Go Meals - Sandwiches, Salads, Fruit, Parfaits, Specialty Meals

Special Service - Café, Event Management, Floor Stock Services, Catering

Operations – Business Lines

• Product Line Development

• Flavor Harvest Acute Care 4 Week Menu Plan

• Flavor Harvest Post Acute 4 Week Menu Plan (Promise and HPRC)

• Flavor Harvest Home Meal Replacement Plan – FH@HOME

• Flavor Harvest 5 Week Cycle – Retail Services

• Senior Nutrition Menu Plan

• LMHS Daycare Centers – Child Nutrition Program

• LMHS Floor Stock Support

• New Business FY14/15

• Collier County Senior Nutrition Meals

• Special Services Catering: FY12/13 = $73,276 – FY14/15 = $222,756

• Centralized Floor Stock Services: FY13/14 = $600,076 – FY14/15 = $1,251,241

• Hope PACE

• Villages Patient and Retail Meal Support – 180 Bed Hospital – 700 MPD

• Promise Health Care – 60 Bed LTAC

• Hodges University

• Construction Catering

Business Clients

The Villages Regional Hospital

Cape Coral Hospital

Gulf Coast Medical Center

Lee Memorial Hospital

HealthPark Medical Center

LMHS Rehabilitation Hospital

Lee County Emergency Management

Expansion

2012/13 2013/14 2014/15 FY16 FY17 FY18 FY19 FY20

Census 345,927 355,853 413,489

LMHS Meal Volume

5,037,525 5,626,724 6,025,229 6,446,995 6,898,285 7,381,165 7,897,846 8,450,695

CS Meal Volume

2,802,625 3,089,575 4,199,626 4,493,600 5,392,320 6,201,168 7,131,344 9,484,687

7% 20% 15% 15% 33%

Meals 12,311 14,773 16,990 19,538 25,985

Storage Capacity

48.09 57.71 66.37 76.32 101.51

• 50 ounces per meal with flex • 3.13 pounds per meal • 800 weight of pallet with food

• 30 current freezer capacity • 30 current refer capacity • 60 existing maximum storage capacity

Operations – Business Lines

• Original spatial needs based on admissions with 2% growth

• Volume growth - Floor stock, products, new clients

• Variety reduces pallet storage capacity as much as 33%

• Current capacity includes the use of a box truck

• Observation-ER bed support began in FY15, reflected in FY16

• Growth occurs in FY17 due Golisano opening

• Raw material capacity will be reached in FY17

• GCMC build out to retherm to occur in FY20

Timeline LMHS / Culinary Solutions

LeeSar Expansion Design and Development

HPMC Enabling Projects Complete

Warehouse Construction

P-1 Culinary Solutions – Production Equipment

Install and Modification

Warehouse Complete

P-2 Culinary Solutions – Chilled Storage

Complete

P-2 Culinary Solutions Operational

Future Business Development

Golisano Construction

GCMC Design and Development

Observation Bed Expansion

HMR Development

Golisano Complete

GCMC Construction

HMR Expansion

GCMC Construction GCMC Construction

GCMC Retherm Installation

GCMC Construction

Complete

2016 2017 2018 2019 2020

Future Plans

Culinary Solutions

Decontamination

Assembly

Sterilization Storage & Case Pick

Paces Onsite Surgical Instrument Maintenance and Repair

Maximize the system’s resources in one, state of the art facility

Improves instrument & tray standardization with evidence-based practices to optimize quality

Enhances process standardization to optimize quality

Allows for efficient use of inventory to support multiple campuses

Reduces the need for replacement of end of life equipment at 5 separate facilities

Frees up valuable space at busy campuses

Leesar SPD processes surgical instrumentation for all Lee Memorial surgical patients

Annually: ◦ Serving 46,000 surgical cases

◦ Processing over 230,000 trays

◦ At an average of 35 instruments per tray… over 8 MILLION instruments

2015 processing 40% of the system volume

2016 increase to at least 65% + and begin vendor storage

2017 increase to 80% + through outreach to the community surgical services

Adding automatic washer in 2016

Increasing staff to 2 per workstation as volume increases

Adding workstations

Adding Steam Sterilizer

Increasing staffing & improving workflows

Current Instrument Volume Stored at ORC = 2089 Trays

Future Instrument Storage (at 80%) = 4775 Trays

Images show 50 trays

Current picking 75% of supplies for 105 cases

Future picking at 95% of supplies for 155-180 cases +

Current Average Daily Volume = 105 Cases

FY 2016 Projected Daily Volume = 155-180+ Cases

This image shows 36 carts …

Features & Benefits ◦ Eliminates maintenance scheduling

conflicts

◦ Staff readily available for emergency repairs

◦ Centralization of repair processes

◦ Customized parts stock and processes

◦ In-servicing education and CEU credits

◦ Promotes Staff & Physician satisfaction, helping OR meet their surgical objectives

Total cost management approach delivers 65% savings compared to original equipment manufacturer with ROI at least $500,000 annually

The business model results in conservation of resources by maintaining versus replacing with $324,000 (flat rate) to support 6 million in inventory

Tripled trays, scope, instrument

maintenance & repair over last 5 years

2015 serviced 3,000 trays & at least

125,000 instruments Space allows PACES to keep up with

the projected growth ◦ Space for technical staff, equipment, &

storage ◦ Add machine shop & technology ◦ Increase DaVinci (Robotics) scope repair ◦ Add case cart repair

Lee Memorial Healthcare Board Workshop LeeSar Expansion Project

September 2015

Agenda

• Expansion Drivers Overview

• Current State Facility Layout

• Proposed Future State Facility Layout

Expansion Drivers Overview

• Growth

• Our members continue to expand and grow via additions and new facilities

• LeeSar has experienced triple digit sales growth in each of the past 3 fiscal years

• Sterile Processing will double its LMHS volume between FY15 and FY17

• Culinary Services growth of 23% in the past 3 years

• LeeSar EMS Service’s Team has recently added 3 new, large Customers

• Pack Operations has grown to over 250,000 packs per year

• Over the past 5 years, PACES has doubled its business volume

• This past “season”, our Distribution Center was at approximately 94% capacity

• For the past 4 years, Distribution Center Line Picks have increased 9% per year

Current State Facility Layout

Proposed Future State Facility Layout

Tour Begins