Charting A New Course In Healthcare Management

Presentation Introduction

Key Management

The Prime Healthcare Story

About the Prime Healthcare Services Foundation

Plan and Proposal for San Leandro Hospital

Management Expertise

• Prime has substantial experience in the acquisition, turnaround and management of community based hospitals.

• Prime’s Management Team is dedicated to the implementation of the highest standards in providing patient care.

• Brief Introduction to the Management Team and History of Prime’s Growth will illustrate our commitment to what San Leandro Hospital can expect.

Key Management• Prem Reddy, M.D., FACC, FCCP – Chairman of the Board• Lex Reddy, MBA, MHA, CEO• Roger Krissman MBA, CFO• Suzanne Richards, RN, VP Nursing and Clinical Affairs• Allen Stefanek, MBA, VP - Operations• Michael Sarrao, Esq, VP - General Counsel• Radha Savitala – Asst. General Counsel• Lloyd Wilensky, VP Health Plan Operations• Pat Silvestri, Chief Facilities and Development Officer• Gigi Douglass, Director, Clinical Laboratory• Seetha Reddy, Director, Imaging Services• Marie Falcis, Director, Performance Improvement• Sreekant Gotti, Director, IT Services• Lea Ann Rohdes, Director, Medical Staff• Ann Abe, Director, Nutritional Services• Ajith Kumar, Director, Reimbursement Mgmt.• Ken Wheeler, Director, Patient Financial Services

Mission StatementOur mission is to provide comprehensive, quality healthcare

in a compassionate, convenient, and cost-effective manner.

The Prime Healthcare Story

Prime at a Glance

A diversified healthcare management company headquartered in Victorville, CA

Charting a new course in hospital management that is Physician-driven and patient-focused

Founded by Prem Reddy, MD, FACC, FCCP, a practicing cardiologist and healthcare entrepreneur

Putting New Life into California Hospitals

Prime has a proven track record of acquiring financially distressed hospitals in California which serve a critical role

in the communities in which they are based and turning them around.

The hospitals include:

Desert Valley Hospital

• 83 bed acute care facility, built de novo in 1994

• Awarded coveted “Accreditation with Commendation” from the Joint Commission, in its first year of operation

• AOA Accreditation with 99.5% (2004) and 99.8% (2005) of achievable scores

Setting the Standard for Success

Desert Valley Hospital, Prime’s first hospital has received the following accolades:

Top 100 Hospital™ in the Nation four times 2003, 2004, 2006 & 2008

Top 1% in the Nation, Premier/ CareScience Select Practice National Quality Leader,

2007

Highest scores from Joint Commission and AOA surveys

Chino Valley Medical Center

• 126-bed Acute Care Facility in Chino, CA

• Open staff community hospital

• ED with over 100 patient visits per day – paramedic base station

• Accredited teaching facility for Family Practice Residency training program affiliated with all Osteopathic medical schools

Sherman Oaks Hospital & The Grossman Burn Center

• 153-bed acute care facility located in Sherman Oaks, CA• Tertiary burn center and home to the world renowned Grossman Burn

Center• A top performing Hospital in the Nation in a survey by The

Commonwealth Fund for CMS/Medicare in Hospital Quality Index (Core Measures)

• Open staff community hospital with prestigious medical staff that are on the faculty of UCLA/ USC Medical Centers

Montclair Hospital Medical Center

• 102-bed Acute Care Facility in Montclair, CA

• Open staff community hospital with basic emergency care

• Centers of excellence in women and maternity care

Huntington Beach Hospital

• 144-bed Acute Care Facility in Huntington Beach, CA

• Open staff community hospital with advanced surgery facilities

• Emergency Department serves as paramedic base station

• Newly added Cardiac Cath Lab facility

West Anaheim Medical Center

• 219-bed Acute Care Facility in Anaheim, CA

• Open staff community hospital with newly expanded ER

• Multi-specialty hospital with open heart surgery, psychiatry care, etc.

• Top 100 Hospital™ in the Nation in 2008

La Palma Intercommunity Hospital

• 131-bed Acute Care Facility in La Palma, CA

• Open staff community hospital with basic emergency care

• Centers of excellence in women and maternity care

• Cardiac Cath Lab, psychiatry care, etc.

Paradise Valley Hospital

• 104 year old, 301-bed Acute Care Facility in National City, CA

• Open staff community hospital with basic emergency department

• Centers of excellence in rehabilitation medicine

• Largest behavioral health care provider in South Bay area of San Diego County

• Cardiac Cath Lab, 64 Slice CT, psychiatry care, etc.

Centinela Hospital Medical Center

• 370-bed Acute Care Facility in Inglewood, Los Angeles

• Open staff community hospital with busy emergency department serving underprivileged communities in Los Angeles

• Centers of excellence in orthopedic care, neurosurgery, high risk obstetrics and neonatal intensive care unit, etc.

• Tommy Lasorda Heart Institute – a comprehensive cardiac program

Encino Hospital Medical Center

• 151-bed Acute Care Facility in Encino, Los Angeles

• Open staff community hospital

• Centers of excellence in orthopedic care, geropsych, etc.

San Dimas Community Hospital

• 93-bed Acute Care Facility in San Dimas, CA

• Open staff community hospital

• Acquired in July 2008 from Tenet Healthcare

Garden Grove Hospital and Medical Center

• 167-bed Acute Care Facility in Garden Grove, CA

• Open staff community hospital

• Full-service state-of-the-art obstetrics program and neonatal intensive care unit

• Acquired in June 2008 from Tenet Healthcare

Shasta Regional Medical Center

• 246-bed Acute Care Facility in Redding, CA with Open staff community hospital

• Saved by Prime Healthcare from closure in Nov 2008 and obtained licensure in less than eight days and accreditation in less than 45 days of acquisition

• State-of-the-art cardiac program and centers of excellence in orthopedic care, wound care, etc.

• Recently accredited by Joint Commission for Stroke Care

The Prime Model for Effective Healthcare Delivery

Physician-Driven Management

Patient-Focused Pathways

Outcome Oriented Protocols

Basic Ingredients

• Patient/Physician Driven Health Care

• Focus on quality patient care and achieving 100% compliance with Medicare’s Core Measure Initiatives

• Capital Infusion

• Reduce unnecessary lengths of stay (LOS)

• Improve ER efficiencies (goal – average time is 2 hours)

– Decrease in saturation/diversion time and LWOBS

• Operational efficiencies

• Improve Plant Aesthetics

Medicare Hospital Quality Index

(CORE Measures)

• Acute Myocardial Infarction

• Pneumonia

• Congestive Heart Failure

Core Measures

Core Measures

Acute Myocardial Infarction (Heart Attack) Care Composite Score

84% 86%

100% 100% 100% 100%94%

100% 100%

90%

0%10%20%30%40%50%60%70%80%90%100%

USA CA ARMC CVMC DVH HBH LPH MHMC PVH SOH

Source: CMS www.hospitalcompare.hhs.gov 2007

Core Measures

Heart Failure Care Composite Score

83% 85%

100% 100% 99% 100% 100% 99% 100%95%

0%10%20%30%40%50%60%70%80%90%100%

USA CA ARMC CVMC DVH HBH LPH MHMC PVH SOH

Source: CMS www.hospitalcompare.hhs.gov 2007

Core Measures

Pneumonia Care Composite Score

87% 86%

99% 98% 97% 97% 99% 95% 98%

90%

0%10%

20%30%

40%50%60%

70%80%

90%100%

USA CA ARMC CVMC DVH HBH LPH MHMC PVH SOH

Source: CMS www.hospitalcompare.hhs.gov 2007

Improvement Highlights

- Expansion or construction of new service areas (Emergency Services, Cath Lab & Surgery, POC Labs, etc.)

- State-of-the-art digital (filmless) radiology (PACS)

- New supply and pharmacy automation system (Pyxis)

- Patient monitoring systems and patient care equipment (beds, IV pumps, Telemetry, etc.)

- New or upgraded equipment (radiology, lab, etc.)

- Employee and patient safety equipment (security systems, lifting equip., etc.)

- Enhancement or new health information systems – Medi-Tech Client Server, HPF, Hospital Portal System

About Prime Healthcare Services Foundation

• The Prime Healthcare Services Foundation is a 501(c)(3) non-profit corporation formed in 2006 by Dr. Prem Reddy

• The Prime Healthcare Services Foundation operates free health clinics which serve indigent and uninsured patients

• The Prime Healthcare Services Foundation has assets of more than $60 Million with no liabilities and expectations of substantial growth in its assets over the next ten (10) years

• The Prime Healthcare Services Foundation will form a subsidiary to lease and operate San Leandro Hospital as a non-profit hospital

• Prime will continue to maintain the Emergency Department

• Prime will continue to operate San Leandro Hospital as an acute care facility

• Prime will work with HMOs and insurance companies to negotiate contracts

• Capital investments in infrastructure

• New Health Information System (Medi-Tech)

• Operate San Leandro As Non-Profit Hospital

Prime’s Plan for San Leandro

Prime’s Proposal for San LeandroFacility Lease

• Prime will lease the facility for an initial term of Ten (10) Years – with options to extend the lease.

• Prime will make an annual lease payment to the District.

• Prime will have an option to buy the facility at the end of five (5) Years.

• Prime will spend no less than $20 Million for working capital, equipment and other capital improvements at San Leandro Hospital during first year of lease.

• Prime will provide a Security Deposit equal to two (2) years of lease payments.

Prime’s Proposal for San Leandro Employees, Licensure &

Accreditation• Prime will hire substantially all of the employees.

• Prime will assume the existing Collective Bargaining Agreements with the Unions.

• Prime will keep San Leandro open as an acute care hospital with 24 hour access to Emergency Department Services under an independent and separate license.

• Prime will maintain accreditation for the hospital with The Joint Commission.

Access to care for the community

• Prime will participate in Medicare and Medi-Cal Programs.

• Prime will negotiate contracts with HMOs, PPOs and Third Party Payors, as long as San Leandro Hospital is offered the same or better rates as Sutter, for the same level of services.

• Prime will maintain the independent medical staff currently in place and work with the medical staff to improve the quality of care and establish a goal of 100% compliance with Medicare’s Core Measures.

Governance

• Prime will form a local Governing Board consisting of Community Members, Local Physicians, and a representative from the Healthcare District, if so desired.

Commitment to Community

• Prime will keep the Emergency Room open at San Leandro Hospital and improve efficiencies in order to reduce wait times, lengths of stay, Saturation/Diversion Hours in ER and Wall Time for Paramedic Transports.

• Prime will not delay or deny emergency care based on a patient’s condition or ability to pay.

• Prime will provide charity care at levels consistent with San Leandro Hospital’s historical levels on per bed occupied basis.

Questions and Answers