Munroe Regional Medical Center

Munroe Regional Emergency Department at TimberRidge

Ocala Healthcare Associates d/b/a TimberRidge Nursing and Rehabilitation

Munroe Regional Medical Center in The Oaks at 138th – The Villages

TABLE OF CONTENTS Page Introduction 1

Purpose 1 Transaction Summary 1 Investment Highlights 2 Ownership and Corporate Organization 3 Transaction Description 6

Service Area 7 Description of MRMC Facilities 9

MRMC Background 9 MRMC Description 9 Awards and Accolades 10 Facilities 11 TimberRidge Medical Park 11 Munroe Regional Medical Center in The Oaks at 138th – The Villages 12 Services Provided 13 Physicians and Service Line Detail 16 Clinical Integration 16 Primary Care Market 17 Employed and Contracted Physicians 18 MRMC Recruitment Strategy 18 Hospital-Based Services 18 Top 20 Base MS-DRGs 19 Quality 19 Patient Safety 19 Educational Affiliations 20 Information Systems 21 Insurance 21 Accreditation 21 Labor Organizations 22

Operating Statistics 23 MRMC Operating Statistics 23 OHA Operating Statistics 23

Market Share 24 Market Map 25 Competitors / Other Hospitals in Service Area 25 Market Share of Medicare Discharges – Top Ten Zip Codes 26

Financial Results 27 MRHS Revenue and Expenses 27 MRMC Revenue and Expenses 28 MRMC Margin Analysis and Growth Rate 29 Additional Financial Information 29 OHA Revenue and Expenses 30 MRHS Assets 31 MRHS Liabilities and Net Assets 32 Contribution of MRHS’ Joint Ventures 33 Payer Mix 33 Capital Expenditures 34 Master Facility Plan 34 Pension Plan 35

Key Management 36

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Introduction Purpose This Information Memorandum (the “Memorandum”) provides a summary of selected information relating to Marion County Hospital District (the “District”), a special tax district of the state of Florida responsible for the direction and operation of Munroe Regional Health System (“MRHS”) located in Ocala, Florida. This Memorandum has been prepared by the District with the assistance of Ponder & Co. (“Ponder”). It is being furnished solely for use by interested parties in determining whether to proceed with further analysis of the opportunity described herein. Neither the District, MRHS nor Ponder makes any warranty, express or implied, as to the accuracy or completeness of any of the Information. The Information is not intended to be the sole basis for evaluation by any interested party. Should the District enter into negotiations with a recipient of the Information, it is expected that such recipient would be afforded an opportunity to conduct its own independent investigation of the operations and financial affairs of the District pertinent to a proposed transaction. Transaction Summary MCHD has expressed a strong preference for change of control transaction structures other than an asset sale and is willing to consider using one of the following structures: i.) a new long-term lease; ii.) a merger of MRHS into another not-for-profit health system; or iii.) a joint venture partnership that would include MRHS as a minority partner. The Strategic Partner should provide detailed information for one or more of these structures as outlined in the Instruction Letter - 1. Please be advised that should a Strategic Partner provide information related to an asset sale, the information will be used in order to support the overall evaluative process; however, there are no assurances that it will be considered as an acceptable transaction alternative. In order to complete any change of control transaction, the existing lease will need to be terminated. By considering multiple options, the District maintains flexibility as it seeks to achieve the goals outlined in the separately provided Instruction Letter and secure the future of healthcare services to District citizens.

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Investment Highlights

Outstanding Reputation for High Quality Services and Patient Safety. MRHS services and culture are highly focused on providing the highest quality services and assuring patient safety. MRHS tracks its quality measures against numerous benchmarks with a special emphasis on the leading external clinical databases. MRMC ranks at or near the top of its peers in Florida on virtually all benchmarks. A full list of accolades is provided on page 10 of this document.

The Community’s Preferred Hospital with Corresponding Local Support. MRHS

has had a presence in Ocala dating back to 1927. The community views MRMC as its primary hospital. For the past nine years, MRMC has been the recipient of the Consumer Choice Award for Marion County’s most preferred hospital for overall quality and image and for having the best doctors and nurses.

Large Population Served with Significant Medical Needs. MRHS’ primary service market is Marion County, which has a population of over 330,000 people. Marion County’s population has almost tripled in size since 1980. From 2000 to 2010 alone, the population grew by 28.0%, almost three times the national average. MRHS’ secondary market, which includes the counties of Citrus, Sumter, Lake and Levy, includes an additional 572,000 people and is an important source of patients. The PSA is characterized by a significantly older population with 25.8% of the population over the age of 65 as compared to 15% for the national average. Ocala is a major retirement area with some of the largest retirement communities in the country nearby. Due to the size of the population served and its demographics, Marion County and the surrounding markets represent tremendous demand for healthcare services.

Leading Market Position, Strong Market Share. MRHS has over 60% market share in inpatient admissions in Marion County. MRHS has been successful in growing market share and maintains a market leading position in a number of key service areas, including open heart surgery. MRHS is also the sole provider of pediatrics and obstetrics in Marion County.

Strong Medical Staff Evolving to Clinically Integrated Model. MRMC has a medical staff of over 375 physicians representing a full array of medical services. MRHS has engaged Southwind, a division of the Advisory Board Company, to develop a physician-led and governed clinical integration organization. This anticipated organization of 100+ primary care and specialty physicians will work to improve patient care and experience and by doing so, will work directly with payers on fee for service rates by qualifying under Federal Trade Commission guidelines. Clinical integration is the backbone of the physician alignment strategy for MRHS. In addition, MRHS employs 12 physicians as a secondary approach to physician alignment.

Strong Management Team. MRHS’ top four executives average approximately 30

years of healthcare experience each. In addition, these executives have extensive experience at MRHS with an average tenure at the system of over 10 years. Stephen Purves, CEO, held senior administrative roles with several leading not-for-profit and for-profit systems in the eastern United States prior to joining MRHS. Richard Mutarelli has held various positions at MRHS during his 32-year tenure at MRHS and was promoted to the CFO role in 1990.

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Ownership and Corporate Organization The District and MRHS The organization chart of the District is shown below. The District was established by an act of the Florida legislature in 1965 for the purpose of converting what was then the Munroe Memorial Hospital from a city/county-owned institution to a special tax district hospital under the direction of seven Trustees appointed by the Board of County Commissioners of Marion County. The Trustees are responsible for the direction and operation of the hospital. MRHS was created in 1983 as a Florida not-for-profit corporation and empowered to operate and manage the Munroe Regional Health System d/b/a Munroe Regional Medical Center (“MRMC”) (formerly Munroe Memorial Hospital) pursuant to a lease (“Lease”) with the District. MRHS is governed by a 13-member Board of Directors consisting of the seven Trustees and 6 non-trustee members. The District and MRHS first entered into a Lease on October 1, 1983. The current Lease has an initial 10-year term that ends on September 30, 2013, but is automatically renewable for two consecutive renewal terms of 10 years each. On September 26, 2011, the Trustees and the MRHS Board of Directors decided not to terminate the Lease on October 1, 2013, and now the Lease extends through September 30, 2023. The Board of County Commissioners, upon request and recommendation of the Hospital District’s Board of Trustees, has the discretion to levy ad valorem taxes for operational needs and capital improvements. The Board of County Commissioners has not been requested to levy, and has not levied, such ad valorem taxes in over 15 years. Thus, the financial results of MHRS have not historically, nor currently, include ad valorem tax support.

Appoint

RatifyMRHS Board (13)

7 MCHD 6 Non-Trustee

MRHS CEO

County Commission

State of Florida

Marion County HospitalDistrict (1965 Law)

District Board ofTrustees (7)

MRHS, Inc.501(c)3

Lease -----

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Organization MRMC is the primary entity of MRHS, accounting for approximately 95% of the net patient revenue of MRHS in fiscal year 2011. MRHS has interests in various subsidiary tax-exempt and taxable organizations as indicated in the chart below. The audited financial statements of MRHS include consolidating statements. Results for MRMC and Ocala Health Associates (“OHA”) are provided separately and then consolidated in these statements. All operations of MRHS, other than those of OHA, are included in MRMC’s statements. MRHS’ income statement includes minority interest expense related to the 37.5% minority stake it does not own in OHA. Financial results for the joint ventures listed below, except for OHA, are not consolidated for reporting purposes because MRHS does not own a majority interest in any of these ventures. The results for these non-majority-owned joint ventures are reported in the Joint Ventures income statement line in MRMC’s financial statements. However, these joint venture results are included in Other Operating Revenue in MRHS’s audited financial results, and ownership in these is included in Other Assets of the MRHS balance sheet.

Marion County Hospital District(Special Tax District - Public Hospital)

Lease (Control)

MRHS, Inc.Auxiliary Not-for-Profit, Tax Exempt Foundation

(501.C.3)

d/b/a MRMC

Cooperative 62.5% Ownership 50% Ownership 33.3% Ownership 49% Ownership 100% Ownership

TimberRidge Ocala Healthcare TimberRidge Medical Munroe Regional Munroe HealthWater & Associates, G.P. Imaging Center Imaging Center Home Care, LLC Ventures, Inc.

Sewer, Inc. d/b/a T/R Nursing =& Rehab Inactive

* N.F.P. *Partnership *Partnership *Partnership* Taxable *Partnership *Tax Exempt(MRHS) *Tax Exempt(MRHS) *Tax Exempt(MRHS) *Corporation

*Tax Exempt (MRHS) *Taxable

Related Organizations

TimberRidge Water & Sewer, Inc. is a not-for-profit taxable corporation originally established to own and operate a water & sewer system furnishing utility services to the TimberRidge Medical Park. At this time, this entity provides only Fire Pump services to OHA.

Ocala Healthcare Associates d/b/a TimberRidge Nursing and Rehabilitation Center, is a 180-bed, for-profit skilled nursing and rehab facility. OHA is a partnership between an entity owned by Mr. Winston Porter of Atlanta, Georgia, and MRHS, with MRHS holding a 62.5% interest and acting as general partner. Located at 9848 Southwest 110th Street in Ocala, approximately 12 miles from MRMC, the facility is managed and operated by an entity owned by Mr. Porter. Mr. Porter has developed, owned and operated four intermediate and skilled nursing and rehabilitation facilities, five assisted living facilities and one outpatient facility.

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TimberRidge Imaging Center is a partnership with MRHS having a 50% interest. Broadring, P.L., associated with Radiology Associates of Ocala, P.A. (“RAO”), a group of 17 radiologists, owns the remaining 50%. The center is located at 9521 Southwest Highway 200 in Ocala, approximately 13 miles from MRMC. The center is located in the TimberRidge Medical Park and is in a building that also houses MRHS’ 12-bed freestanding emergency department. The partnership owns the equipment and contents and leases the buildings and land. Services provided include: x-ray, fluoroscopy, ultrasound, nuclear medicine, MRI, MRA, CT, CTA and digital mammography and bone density.

Medical Imaging Center is a partnership with MRHS having a 33% interest. Broadring, P.L., and M&M of Ocala, Inc., an affiliate of HCA, each own 33% as well. The center is located at 1490 Southeast Magnolia Extension in Ocala, less than one mile from MRMC. The partnership owns the equipment and contents and leases the buildings and land. Services provided include: x-ray, fluoroscopy, ultrasound, nuclear medicine, MRI, MRA, CT, CTA and digital mammography and bone density.

Munroe Regional HomeCare, LLC, provides home health services including skilled nursing, aides, medical social workers, and physical, occupational and speech therapy. The LLC is 49% owned by MRMC and 51% by LHC Group, Lafayette, Louisiana, who also manages the entity. MRMC also receives rental income from this venture. LHC Group is a publicly-traded, for-profit corporation providing home care, hospice, long-term acute care and private duty services.

The financial statements of OHA are provided separately in the Financial Results section on page 28. In addition, the contribution of each of the non-majority owned joint ventures is included in the table titled Contribution of MRHS’ Joint Ventures within the Financial Results section. In addition, Kindred Healthcare leases from MRHS approximately 11,200 square feet on the fifth floor of the east and west wings and provides services for approximately 20 patients. Rental income to MRMC in fiscal year 2011 was approximately $473,000. In addition, MRMC provides Kindred with certain support services such as housekeeping, food service and other services.

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Transaction Description The summary below lists the properties/assets owned by the District to be included or excluded as part of the Transaction. Included Assets The proposed transaction includes the sale of owned assets and certain leased assets integral to the business operations of the District. The Included Assets primarily consist of land, buildings, equipment, operating licenses and certain working capital. The business operations of the District consist of one acute-care hospital, MRMC, which is owned by the District and leased to MRHS. OHA, the joint ventures and other healthcare-related subsidiary entities are Included Assets as well. Excluded Assets

Cash and cash equivalents Certificates of deposit and other short-term investments Estimated third-party payor settlements Assets limited as to use, including those held by trustee and board-designated and

donor-restricted assets Other long-term investments All other assets within other assets, except for MRHS’s ownership in its joint ventures

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Service Area The District serves Marion, Citrus, Sumter, Lake and Levy counties, and, the broader North Central Florida market:

At the end of the first quarter of fiscal year 2011 approximately 88% of patients admitted to MRMC are from the PSA of Marion County. The chart below shows the inpatient origin by county for MRMC:

County Disch % of Total Disch % of Total Disch % of TotalPSA

Marion 20,920 86.9% 20,973 86.5% 5,049 87.9%SSA

Citrus 820 3.4% 921 3.8% 182 3.2%Sumter 613 2.5% 662 2.7% 184 3.2%Lake 451 1.9% 412 1.7% 109 1.9%Levy 274 1.1% 239 1.0% 61 1.1%

All Other 995 4.1% 1,028 4.2% 161 2.8%

Total 24,073 100% 24,235 100% 5,746 100%

FY09 FY10 Q1 FY11

The PSA for the District is Marion County with an estimated population of 331,298 as of the April 1, 2010 Census. Marion County ranks among the 15 most populous counties in Florida. As Florida’s fifth-largest geographical county, Marion covers 1,652 square miles, yields a density of roughly 199 people per square mile and includes five municipalities: Ocala, Belleview, Dunnellon, McIntosh and Reddick. The population of the county is projected to increase to close to 400,000 over the next ten years with the largest growth segments being in the ages 65 and older according to the Florida Legislature’s Office of Economic and Demographic Research. The PSA is characterized by a significantly older population with 25.8% of the population over the age of 65 compared to 13.0% for the rest of the country. The growth of this segment is important as the over-65 population uses hospital services at a rate three times greater than the under-65 population. The median household income is $38,988.

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Below are two population statistics and forecasts tables for Marion County, Florida.

Year Marion County State of Florida United States1970 69,030 6,791,418 203,212,0001980 122,488 9,746,961 226,546,0001990 194,835 12,938,071 248,765,0002000 258,916 15,982,328 281,765,0002010 331,298 18,801,310 308,745,538

Increase 1970-1980 77.40% 43.50% 11.50%Increase 1980-1990 59.10% 32.70% 9.80%Increase 1990-2000 24.70% 19.00% 11.60%Increase 2000-2010 28.00% 17.60% 9.60%

Source: Office of Economic and Demographic Research, the Florida Legislature

PopulationMarion County, Florida and The United States

The population of Marion County is expected to reach 360,707 by 2015 and 398,204 by 2020 according to a 2009 study by the Florida Legislature’s Office of Economic and Demographic Research. The City of Ocala is the county seat of Marion County and the main economic center. Below is a list of major employers in the area:

Marion County Public Schools (6,031, Education) Munroe Regional Medical Center (2,652, Healthcare) State of Florida (All Depts.) (2,582, Government) Wal-Mart (2,370, Retail Sales) Ocala Regional Medical Center & West Marion Community Hospital (1,725, Healthcare) Marion County Board of County Commissioners (1,439, Government) Publix Supermarkets (1,275, Retail Sales) AT&T (1,000, Support Services) City of Ocala (All Depts.) (950, Government) Lockheed Martin (928, Manufacturing) E-ONE, Inc. (850, Manufacturing) Marion County Sheriff’s Office (840, Government) The Centers (568, Healthcare) College of Central Florida (401, Education)

The table below presents demographic statistics for selected characteristics of the population residing in the service areas served by the District.

County PopulationAge 65 & over

(% of pop.)HS grad +

Median Family Income

Marion 331,298 25.80% 84.10% $38,988Citrus 141,236 31.90% 83.90% $37,861Sumter 93,420 43.40% 81.90% $46,586Lake 297,052 24.20% 85.40% $42,479Levy 40,801 19.40% 79.60% $32,528

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Description of MRMC Facilities MRMC Background

MRMC is a 421-bed acute care medical center offering a complete range of healthcare services. The campus of MRMC includes eight separate parcels of land comprising of 20.7 acres of land, including 10.1 acres on which the main Medical Center buildings are situated. The oldest structure, built in 1927, is currently used for administrative services and contains 19,335 square feet. By the 1970s and early 1980s, various construction projects added beds and additional outpatient services, along with surgical intensive care and designated cardiac care units. MRMC’s Heart Center was established in the late 1980s for open heart and heart catheterization services. The addition of a sixth floor and expansion of the ED occurred in the early 1990s. In March 2004 MRMC completed the construction of a 190,000 square feet, seven-story tower housing an additional 98 beds, expanded ED, four operating rooms, ancillary facilities and a new cardiac catheterization lab. The tower also houses 73 beds transferred from an older wing of the main facility. The tower is adjacent to the lobby of the main facility. This project brought the bed capacity to the current level of 421 beds. The main campus includes the main facility with six floors and approximately 408,000 square feet, the new tower with approximately 209,000 square feet and a two-level physician parking deck with about 78,000 square feet. MRMC Description Services provided by floor include: Floor 1 – ED, central supply, other Floor 2 – Radiology, nuclear medicine, labs, cardiovascular operating rooms and other Floor 3 – Surgical operating rooms, PACU, POCU, ICU, pharmacy, other Floor 4 – Cardiovascular, maternity, nursery, sleep rooms, other Floor 5 – Medical renal, cardiology, dialysis, Kindred, other Floor 6 – Med-surg beds, neuro beds, orthopedics, other Below is a breakout of licensed beds at MRMC of which 70% are private and 30% are semi- private. Medical/Surgical 342 Maternity 19 Cardiac ICU 14 Surgical ICU 30 Pediatrics 16 421 MRMC has 19 operating rooms, including three new rooms added in fiscal year 2010. Of the 19 total operating rooms, 15 are surgical operating rooms located on the third floor, and four dedicated cardiothoracic operating rooms as part of Munroe Heart are located on the second floor. MRMC offers advanced technology to its patients including the following: Four catheterization labs RFID based asset tracking systemOne electrophysiology lab Real time bed management systemIntravascular ultrasound Advanced patient ventilation systemsIntracardiac ultrasound Bronchoscopy navigation systemda Vinci surgical system Three Brainlab surgical guidance systemsInterventional ultrasound 1.5 Tesla MRIPharmacy no error drug dispenser robot Perfect Serve physician call routing system3 dimensional echocardiography Hybrid operating room (summer 2012)

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Awards and Accolades Over the years the Medical Center has received numerous accolades. Most recently it has received the following prominent accolades:

Consumer Choice Award – Marion County’s Most Preferred Hospital for Overall Quality & Image and Best Doctors & Nurses for nine consecutive years (National Research Corporation)

Recipient of the HealthGrades 'America's 50 Best' Award™ for six Years in a Row (2007-2012)

Recipient of the HealthGrades Distinguished Hospital Award - Clinical Excellence™ for 10 Years in a Row (2003-2012)

Recipient of the HealthGrades Patient Safety Excellence Award™ for eight Years in a Row (2004-2011)

#1 in State of Florida for overall inpatient quality (CareChex, 2012) Ranked #1 in State of Florida for Medical Excellence for Interventional Coronary Care

and #5 in the U.S. (CareChex, 2012) Munroe shows the highest Inpatient Quality in Marion County (and in some cases Central

Florida) for Overall Hospital Care, Overall Medical Care, Overall Surgical Care, Cardiac Care, GI Care, Pulmonary Care, Major Orthopedic Surgery, Neurological Care, Joint Replacement, Interventional Coronary Care, Heart Failure, Stroke Care, Vascular Surgery, Women’s Health, Coronary Bypass, Hip Fracture Repair, Major Cardiac Surgery, Neuro Surgery, GI Hemorrhage, Heart Attack Treatment and Pneumonia Care (CareChex, 2012)

Among only 12% of hospitals in the United States to be recognized as an Accredited Chest Pain Center and the first Accredited Chest Pain Center in Marion County (Society of Chest Pain Center, 2011)

Recognized as one of five surgical groups in Florida, and 81 in the nation, rated above average for Open Heart surgery (Consumer Reports / Society of Thoracic Surgeons, 2011)

The only four-time recipient of the Beacon Award for Critical Care Excellence in the state of Florida and one of only six recipients recognized four or more times in the United States (American Association of Critical Care Nurses, 2011)

Recognized as a Primary Stroke Center and received Gold Seal of Approval for Diabetes Outpatient Services by Joint Commission; Munroe was the first Primary Stroke Center in Marion County (2011)

Designated a Bariatric Center of Excellence (American Society for Metabolic & Bariatric Surgery, 2011)

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Facilities The facilities listed below are all located on the main MRMC campus and owned by MRHS.

Purpose Building Name Gross Square

Feet

Hospital and Office Munroe Regional Medical Center 616,793

Utilities Central Energy Plant 24,209

Office Office Center 22,190

Office, Data Center Magnolia Center 14,942

Office Munroe Foundation 3,100

Fitness Center Lifetime Fitness 22,412

Owned Palmer-Klein Children’s Express 4,282

Office The Loft 3,480

Office Healthways Diabetes Center 1,935

Conference Center Auxiliary Conference Center 4,846

Office Kensington Place 3,850

Retail Store First Uniform Store 1,358

Parking Garage Doctors Parking 75,876

Parking Garage Auxiliary and Employee Parking 275,000

Grand Total 1,074,273

TimberRidge Medical Park Through its lease with MCHD, MRHS has 110 acres strategically located on Highway 200 near the intersection of 484 approximately 13 miles southwest of MRMC. Located on this campus is a 59,044 square foot facility that houses TimberRidge Imaging Center, a joint venture with ROA physicians, and MRHS’ 12-bed freestanding emergency department that has approximately 28,000 emergency visits each year. In response to rapid growth along Highway 200, the facility was opened in 2004, and it also includes 26,068 square feet on the basement level that is built out, currently used for certain rehabilitation services, but could be used for other medical services in the future as needed. In addition, MRHS leases 20 acres to a third-party real estate developer, Henry A. Ehlers, as a Trustee, through a 50-year ground lease that originated in January 1991. A series of eight small physician office buildings have been developed by this third-party developer and are leased primarily to physicians, many whom are members of MRHS’ medical staff. MRHS does own one 3,000 square foot building that is not part of the ground lease. This building is utilized by MRMC for two employed physician specialties.

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The TimberRidge Medical Park also includes OHA, which does business as TimberRidge Nursing and Rehab Center. However, the land and building are not owned by MCHD; these are owned directly by the joint venture between MRHS and an entity owned by Mr. Winston Porter, a developer and operator of skilled living and other senior living facilities. This facility began as a 56-bed facility and has been expanded three times to its current capacity. It consistently runs average daily census in excess of 150. OHA is an important part of MRHS’ continuum of services. Due to the size of the TimberRidge campus, MRHS has approximately 50 acres of undeveloped land. This land could be used to expand its current range of medical services provided on the campus. In addition, OHA could develop assisted and independent living on this excess acreage. There are no formal plans currently in place, but this is a strategic property for the future. Munroe Regional Medical Center in The Oaks at 138th - The Villages On December 5, 2011, MRHS opened The Oaks at 138th (“The Oaks”) in close proximity to The Villages and Stonecrest communities in Lady Lake, Florida. Initially, the leased facility will be allocated as follows: 5,000 square feet to orthopedics, 5,000 square feet to Munroe Heart and 3,000 square feet to physical therapy. Certain members of MRHS’s medical staff will treat patients on a part-time basis at The Oaks. In addition, MRHS has an employed neurologist to work full-time at this location and also has a full-time employed orthopod at The Oaks. The building is golf cart friendly from The Villages and StoneCrest. The Villages, one of the top active retirement communities in the United States, has a total population of over 93,000 and was ranked as the fastest growing micropolitan area in the United States according to a 2008 census bureau report. The Villages has very attractive demographics with an average income per household of $93,000, and 88.9% of the population are 55 years and older. In addition to heart, orthopedic and rehab services, the facility will offer wellness services, Diabetes Healthway classes and counseling and lab work and will treat movement disorders and dementia. Within this range of services, The Oaks will offer pre-admit testing, outpatient draw lab services, cardiac ultrasound exams, stress tests and other services.

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Services Provided MRHS provides a full range of diagnostic treatment and supportive services for inpatient care, emergency care, outpatient care and home health care. The services provided by MRHS are: Ablation of Barrett’s esophagus Linguistic/Translation ServicesAuxiliary Mobile Health ServicesBariatric/Weight Control Services Midwifery ServicesBreast Cancer Screening / Mammograms Natural orifice surgeryCardiology & Cardiac Surgery Services: Neurological Services

Adult Diagnostic/Invasive NurseryCatheterization Nutrition Program

Adult Interventional Cardiac ObstetricsCatheterization Occupational Health Services

Adult Cardiac Surgery Orthopedic ServicesAdult Cardiac Electrophysiology Outpatient SurgeryCardiac Rehabilitation Palliative Care programCardiac Stress Testing Palliative Care inpatient unit

Carotid stenting Patient Controlled AnalgesiaCase Management Patient Education CenterChaplaincy/Pastoral Care Services Patient Representative ServicesCommunity Outreach PharmacyCommunity Health Education Physical/Occupational/Speech TherapyComplementary and Alternative Medicine Services Physical Rehabilitation Outpatient ServicesComputer Assisted Orthopedic Surgery Radiology - Diagnostic*Electrophysiology CT ScannerEmergency Services Diagnostic Radioisotope FacilityEndoscopic Services Magnetic Resonance Imaging (MRI)Esophageal impedance study Multi-Slice Spiral Computed TomographyEndoscopic retrograde cholangiopancreatography Position Emission Tomography (PET)**Endovascular AAA repair UltrasoundEnrollment Assistance Services Robotic SurgeryExtracorporeal Shock Wave Lithotripter Social Work ServicesFitness Center SonographyGeneral Surgery Sports MedicineGeriatric Services Support GroupsHealth Screenings Surgical Intensive CareHealth Research Teen Outreach ServicesHemodialysis Tobacco Treatment / Cessation programHospital-based Outpatient Care Center Services Volunteer Services DepartmentImmunization program Women's Health Center/ServicesIndigent Care Clinic Wound Management ServicesLaboratory & Pathology Services

*Also available on outpatient basis through joint ventures**Only available on outpatient basis through Medical Imaging Center

Munroe Heart. In February 2008, MRMC announced an exclusive partnership through an employment arrangement with four of the nation's top cardiothoracic surgeons and four cardiac anesthesiologists, who joined MRMC's existing interventional cardiologists, to form Munroe Heart. Munroe Heart builds on MRMC's standing as an award winning cardiovascular center of excellence. The hospital-within-a-hospital puts MRMC in a position to offer superior heart care to

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residents in north central Florida, as well as patients throughout the United States. Munroe Heart, combines a 23-year history of top quality heart care with nationally recognized cardiologists and state-of-the-art medical practice. Comprehensive cardiovascular services include a cardiovascular ICU, heart surgery, cardiac electrophysiology, cardiac rehabilitation and cardiac catheterization. This program leverages MRMC’s four cath labs and one EP lab located in the main facility. MRMC is among the top 10 heart hospitals in the state of Florida for Cardiac Surgery by HealthGrades. In addition, HealthGrades rated Munroe Heart as a 5-star (highest rating) hospital for heart surgery (coronary bypass) in 2011. Emergency Services. MRHS’ three emergency department locations treated almost 98,000 patients in FY 2010. MRHS’ EDs are staffed with physicians who are all board certified in emergency medicine and feature state-of-the-art equipment and the ability to care for trauma and pediatric emergency patients, as well as all other medical emergencies. In addition, in March 2010, Munroe Regional received Chest Pain Center Accreditation with PCI (percutaneous coronary intervention) from the Society of Chest Pain Centers (SCPC). MRMC was the first hospital in Marion, Lake, Sumter and Citrus Counties to have received this distinction. Surgical Services. MRMC has one of the most experienced surgical medical staffs in North Central Florida. MRMC’s surgical services team of surgeons and nurses are dedicated to providing optimal patient care. They are specially trained to diagnose and treat a broad spectrum of conditions that involve every area of the body. MRMC’s surgeons continue to pioneer and apply the latest developments in surgery, particularly in the area of minimally invasive techniques. As a result, MRMC’s surgical services center offers a range of minimally invasive surgical procedures few other hospitals in the region can match, including da Vinci® robotic surgery. Surgical Services offered at MRMC include:

Cardiac Surgery Pulmonary/Lung Surgery Orthopedics Podiatry Laparoscopic Surgery Neurosurgery Vascular / Endovascular Maxillofacial Surgery Trauma Surgery Ear, Nose and Throat Surgery Robotics (Urology & Gynecology) Plastic and Reconstructive Surgery Bariatrics Urological Gynecology Colorectal Oncology Endoscopy All General Surgery Oral Surgery Natural orifice surgery

Critical Care. In November 2010, MRMC’s intensive care unit received the prestigious Beacon Award for Critical Care for the fourth consecutive year. Awarded by the American Association of Critical Care Nurses, MRMC’s ICU is the only four-time Beacon Award recipient in the state of

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Florida and one of only six in the nation to receive this distinction four or more times. The award is specifically designated to recognize the nation’s top critical care units across hospitals nationwide. MRMC has 30 surgical ICU beds on the third floor of the main hospital. Physician intensivist coverage is available 24 hours a day, seven days a week on the unit. In addition, there are 14 cardiac ICU beds on the fourth floor. This composes one of the top ICU programs in the country with large rooms and excellent nurse and physician coverage. Munroe Orthopedics. Following in the tradition and success of Munroe Heart, on January 15, 2010, MRMC unveiled its “new” orthopedics brand, Munroe Orthopedics. The Munroe Orthopedics program include a dedicated orthopedic floor, with all private patient rooms, twelve orthopedic surgeons, a nursing staff with specialized training specific to orthopedic care, a dedicated physical therapy staff exclusive to the department and a patient educational program taught by a nationally certified orthopedic nurse.

Orthopedics services offered within the Munroe Orthopedics program include:

Active Lifestyle Medicine Arthritis Treatment Osteoporosis Treatment and Bone Health Trauma, Fractures and Reconstruction Back and Neck Pain Joint Replacement Minimally Invasive Computer Assisted Surgery Diabetic Care Pediatric Orthopedics Workers' Compensation

Women’s Services. MRMC’s Women’s Center is dedicated to providing the finest healthcare for women in our community in a comfortable, safe and attractive area. MRMC is the only hospital in Marion County to offer obstetrical services. In addition, MRMC’s Women’s Center provides labor and delivery services, patient education classes, gynecological services, general surgical and urological procedures for women. Pediatrics. MRMC’s pediatric department is the only inpatient pediatric unit in Marion County providing care and management of numerous childhood conditions. The unit is staffed by a team of registered nurses, certified in pediatric advanced life support and features a playroom with toys, video games and movies. A board certified pediatric specialist provides for neurodevelopment and sensory motor needs. Other Third-Party Services at MRMC. Kindred provides long-term acute care services on the fourth floor of MRMC, including pulmonary care, complex wound care, rehabilitation, pain management and IV antibiotic therapy. Kindred has a separate license for 31 beds and leases the space in the hospital from MRMC. In addition, DaVita provides inpatient dialysis services on the fifth floor of MRMC.

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Physicians and Service Line Detail The Medical Staff of MRMC as of October 31, 2011, consisted of 425 physicians of which 339 are active staff. The table below shows the distribution of active medical staff with respect to clinical specialties as of September 30, 2010.

Number of Percent of FY Number ofPhysicians 2010 Board Average

Specialty on Staff Admissions Certified Age

Cardiology 30 3.71% 24 52Cardiovascular Surgery 4 2.72% 4 57Critical Care 4 0.02% 3 50Emergency Medicine 20 0.05% 14 49Endocrinology 4 0.01% 4 57Family Practice 45 11.02% 33 50Gastroenterology 13 0.18% 11 52General Surgery 11 2.70% 9 53Gynecology 4 0.55% 1 55Hematology/Oncology 11 0.01% 9 41Internal Medicine 74 53.05% 63 47Invasive Cardiology 6 0.14% 5 40Neonatology 6 0.01% 4 39Nephrology 10 0.85% 10 50Neurological Surgery 4 1.96% 3 51Neurology 7 0.01% 7 54OB/GYN 10 10.78% 6 56Oral/Maxillofacial Surgery 1 0.02% 1 57Orthopaedic Surgery 12 3.45% 9 52Otolaryngology 7 0.07% 7 51Pediatrics 21 2.11% 17 49Plastic Surgery 5 0.14% 5 51Podiatry 12 0.14% 10 44Pulmonary 13 0.89% 10 53Radiation Diagnostic 26 0.03% 23 44Urological Surgery 10 2.25% 10 50Vascular Surgery 5 1.40% 5 67

Totals 375 98.27% 307 Clinical Integration  MRHS has engaged Southwind, a division of the Advisory Board Company, to develop a physician-led and governed clinical integration organization. This anticipated organization of 100+ primary care and specialty physicians will work to improve patient care and experience and by doing so, will work with payers on fee for service rates by qualifying under Federal Trade Commission guidelines. Clinical integration is the backbone of the physician alignment strategy for MRHS. Current activities include current state assessment, a formalized engagement, legal review, education of 84 physicians and an organizing meeting of 62 physicians targeted for leadership. The organization is to be developed and staffed within MRHS, though led and governed by physician governed committees, with reserve powers to the MRHS board.

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Primary Care Market The Marion County has approximately 170 primary care physicians in the market. The primary care market is very fragmented with no group representing more than 11% of the total number of primary care physicians. As a result, there is no significant concentration in terms of top admitting physicians or groups for admits to MRHS. MRHS has a four-pronged strategy to primary care:

Align with physicians through clinical integration Implementation of electronic medical record using Greenway Medical Technologies

software in conjunction with the Marion County Medical Society Implement Crimson Market Advantage, designed to track referrals and enhance primary

care relationships Employ physicians on an opportunistic basis

MRMC plans to develop a large-scale, integrated network of primary care providers, known for quality management, patient satisfaction and affiliations with value-conscious specialists. This network of quality PCP’s will be characterized by a commonly held, published set of performance standards and will involve providers in a wide geography (including MRMC primary and secondary Markets). MRMC intends to leverage the Greenway Medical Technologies community physician loyalty program that includes an electronic health records module. MRMC intends to develop a custom primary care module to this comprehensive EHR initiative. The Crimson Market Advantage software is the physician loyalty tracking system that was recently purchased by MRMC. It is a tool used for targeted physician relationship management. In this case, MRMC will be using the Crimson Market Advantage system to track its primary care physician loyalty trends. MRMC will be able to quickly and effectively organize its approach and assess the primary care physicians’ overall affiliations (or potential affiliations) with specialty physicians and MRMC. In addition, MRHS intends to add other features to its PCP affiliation model to help move to a community-wide transition to an integrated network of primary care providers. Some of these features may include physician recruiting collaboration, data reporting, and an independent physician association affiliation (IPA).

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Employed and Contracted Physicians The District employs or contracts with a total of 12 physicians as of December 5, 2011. As part of this effort, in 2008 MRHS enhanced its leading position in cardiovascular service by entering into exclusive employment agreements with four key cardiovascular surgeons. Employment Agreements Number of Physicians Specialty 4 Cardiovascular 3 Intensivist 2 Orthopedic 1 Bariatric and General Surgery 1 Surgical Hospitalist 1 Neurologist Contracted Agent Agreement Number of Physicians Specialty 5 Intensivist MRMC Recruitment Strategy The MRMC recruitment strategy is primarily focused on community needs in the following areas:

Women’s Health (community-based or employed) General Surgery (Marion County primary market and Sumter County secondary market;

community-based or employed) Orthopedics (employed; Sumter County secondary market) Neurology (employed; Sumter County secondary market) Primary Care (community-based; Marion County primary market and Sumter County

secondary market)

Hospital-Based Services MRHS contracts with various groups for hospital-based services, including those listed below: Service Provider Emergency services EmCare Radiology Radiology Associates of Ocala, Inc. Pathology Alan Richmond, M.D., P.A. Anesthesiology Anesthesiology Care Team Cardiovascular Anesthesiology Cardiovascular Anesthesia Consultants, PLLC Invasive Cardiology Bob Feldman, P.A. Hospitalist IPC, Cogent & two private practice hospitals Surgical Hospitalist Employed physician

19

Top 20 Base MS-DRGs The top 20 Base MS-DRGs for MRMC are shown below for calendar year 2010.

Base MS-DRG Base MS-DRG Description IPPS Cases

293-292-291 Heart failure & shock 578872-871 Septicemia or severe sepsis w/o MV 96+ hours 427247-246 Percutaneous cardiovascular proc w drug-eluting stent 426195-194-193 Simple pneumonia & pleurisy 365287-286 Circulatory disorders except AMI, w card cath 350310-309-308 Cardiac arrhythmia & conduction disorders 313470-469 Major joint replacement or reattachment of lower extremity 304066-065-064 Intracranial hemorrhage or cerebral infarction 268192-191-190 Chronic obstructive pulmonary disease 263684-683-682 Renal failure 241690-689 Kidney & urinary tract infections 231460-459 Spinal fusion except cervical 227312 Syncope & collapse 208379-378-377 G.I. hemorrhage 207392-391 Esophagitis, gastroent & misc digest disorders 205189 Pulmonary edema & respiratory failure 204244-243-242 Permanent cardiac pacemaker implant 195331-330-329 Major small & large bowel procedures 188179-178-177 Respiratory infections & inflammations 182313 Chest pain 181

All Other Base MS-DRGs 5,897

T O T A L S 11,460*Source: American Hospital Directory

Quality Outstanding patient care outcomes is the bedrock of MRHS’ success. A commitment to improvement as measured against external benchmarks drives performance throughout the organization and is reported at all levels, including governance at the Quality Committee of the Board. External databases of audited clinical data such as STS for cardiac surgery, ACC for interventional cardiology, Get With the Guidelines for stroke, NSQIP for surgery, and NDNQI for nursing are widely analyzed and used. A second level of data from Solucient with CareDiscovery and from the Delta Group with CareChex provides analysis of administrative datasets and provides additional financial insight into care processes and outcomes. Oryx Core Measures, SCIP and HCAHPS performance are supported by dedicated teams of physicians and nurses. Physician engagement on performance improvement is extensive through service lines including: Munroe Heart, Munroe Orthopedics, Munroe Surgery, hospitalist services, and Munroe Critical Care. Individual physician performance is evaluated and managed through a highly functional and very active peer review process. Patient Safety MRHS uses an extensive array of monitoring tools that provides a proactive monitoring of patient care to minimize adverse events in scale and frequency. As a result, MRMC ranked as “better than the national average” (top 3%) by AHRQ in five of their ten publicly reported measures. Medication safety is enhanced using barcoding technology from storage in the pharmacy, to pyxis

20

stocking, and finally to patient administration. Smart IV pumps connected to MRHS’ wireless network provide an additional layer of security for infused medications. Infection control uses advanced IT systems to evaluate and investigate pathogens and at risk patients for appropriate care. Risk management oversees an event monitoring system that is pervasive in use and allows rapid identification and assignment of patient care concerns and risk situations. MRHS’ Performance Improvement department is active in facilitating root cause analyses (typically 10-20 per year) and FMEAs with leadership from a Six Sigma Master Black Belt. Educational Affiliations MRMC supports education of students in the healthcare field and is affiliated with several of the local educational institutions as listed:

Long-standing relationship with the College of Central Florida, providing clinical training for all divisions of their Allied Health Field including registered nurse, licensed practical nurse, paramedic, EMT, health management informatics, and surgical technologist

Community Technical Adult Education (CTAE), providing clinical training for radiologic technology (joint venture with College of Central Florida), medical assistant, certified nurse assistant and EMT

Rasmussen College, Nursing Program Taylor College, Nursing and Phlebotomy Program Marion County School District providing “Shadowing” for its Health Occupation Students

of America for local high school programs.

MRMC is affiliated with and provides clinical training for many other medically related programs through Florida and throughout the United States including but not limited to:

University of Florida: registered nurse programs, certified nurse midwives, physician assistant, physical therapy, occupational therapy, physical therapy assistant, occupational therapy assistant, communications, and exercise physiologists

Santa Fe Community College in Gainesville: rotations for cardiovascular technology, nuclear medicine, diagnostic medical, and respiratory therapy

Valencia Community College: rotation for Cardiovascular Technology University of South Florida: nursing program South Florida University: nursing program

Other medical specialties that MRMC supports and provides clinical training through internships and clinical rotations includes, but is not limited to, physicians assistant, food science and certified registered nurse anesthetists (Barry University).

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Information Systems

Service Vendor

Coding System 3M Company

CRRMS 3M Company

PACS Fuji Medical Systems

Hardware support IBM

Financial Management System Lawson Software, Inc

Hardware support Park Place

Payroll System PeopleSoft

Laboratory Management SCC Soft Computer

Care Discovery Clinical Suite Thomson Reuters

Consolidated System Care McKesson Technologies

HPF, HEC, & Physician's Portal McKesson

HEC/HIC McKesson

Horizon Cardiology McKesson

Meds Manager McKesson

Zynx Order Content McKesson

ARRA Roadmap McKesson

Surgical Manager McKesson

Care Records McKesson

Clinical Analytics McKesson

Care Alerts McKesson

Financial Analytics McKesson

Horizon Clinicals McKesson

Expert Orders McKesson

Physician's Portal McKesson

Meds Manager McKesson

Physician Practices Greenway Insurance MRMC is self-insured for professional liability and is entitled to the protections of Sovereign Immunity under Florida Statutes. MRHS maintains insurance coverage for the physical assets and general liability of the MRMC in addition to professional liability coverage. MRHS is self-insured for workers’ compensation and has purchased excess coverage from commercial carriers up to the amount allowed by Florida Statutes. Management believes that MRMC's insurance coverage and specific insurance reserves provide adequate protection for its assets. Accreditation

MRMC is accredited by The Joint Commission. MRMC has been reviewed by The Joint Commission and received a full three-year renewal of its accreditation in April 2011. MRMC is licensed by all applicable state licensing agencies and is fully certified for Medicare and Medicaid reimbursement.

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MRMC holds memberships in the American Hospital Association, Florida Hospital Association, Voluntary Hospital Association of America and Association of Voluntary Hospitals of Florida. Labor Organizations There are no employee unions at MRHS.

23

Operating Statistics The following pages present summaries of historical and projected utilization and financial performance of MRMC and OHA. MRMC Operating Statistics The MRMC’s patient utilization statistics are shown in the table below for the years ended September 30, 2007, through 2011. OPERATING STATISTICSOperating StatisticsSep 30 2007 2008 2009 2010 2011

Admissions - Total 25,259 24,081 24,077 24,202 22,494 Change from prior period 8.9% -4.7% 0.0% 0.5% -7.1%Med/Surg (included in Total) 21,581 20,673 20,604 21,058 19,374 Change from prior period -4.2% -0.3% 2.2% -8.0%OB (included in Total) 3,007 2,938 2,914 2,592 2,663 Change from prior period -2.3% -0.8% -11.1% 2.7%Pediatric (included in Total) 671 470 559 552 457 Change from prior period -30.0% 18.9% -1.3% -17.2% Total 25,259 24,081 24,077 24,202 22,494

Patient Days - Total 108,767 107,231 105,184 104,715 101,458 Change from prior period 4.9% -1.4% -1.9% -0.4% -3.1%

ADC 298.0 293.0 288.2 286.9 278.0 Change from prior period 4.9% -1.7% -1.6% -0.4% -3.1%

LOS 4.31 4.45 4.39 4.33 4.50 Change from prior period -3.7% 3.4% -1.4% -1.4% 3.9%

Adjusted admissions* 35,858 36,291 36,883 38,498 38,572 Change from prior period 9.4% 1.2% 1.6% 4.4% 0.2%

Equivalent patient days* 154,407 161,603 161,157 166,571 173,977 Change from prior period 5.4% 4.7% -0.3% 3.4% 4.4%

Total outpatient visits 146,575 148,822 153,032 157,034 155,217 Change from prior period -0.1% 1.5% 2.8% 2.6% -1.2%

ER Visits (included in Total OP visits) 91,618 93,638 96,306 99,389 97,323 Change from prior period -0.2% 2.2% 2.8% 3.2% -2.1%

Inpatient Surgeries 7,465 7,099 6,740 6,814 6,480 Change from prior period 7.2% -4.9% -5.1% 1.1% -4.9%

OP Surgeries (incl in Total OP visits) 4,824 4,647 5,117 5,767 5,237 Change from prior period 0.6% -3.7% 10.1% 12.7% -9.2%

Open heart surgeries 428 407 445 469 404 Change from prior period 0.7% -4.9% 9.3% 5.4% -13.9%

Adjusted occupied beds 420 441 446 473 476 Weighted average CMI-All Pts 1.47 1.52 1.54 1.58 1.58 FTEs 2,101.0 2,090.0 2,044.0 2,126.0 2,208.0

Actual

OHA Operating Statistics

2010 2011

Admissions 1,026 1,141Average Daily Census 165.3 155.9

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Market Share MRHS maintains a 62.5% lead and growing market share in its PSA for FY 2010. MRHS is the market leader for cardiovascular services and maintains between 80% to 90% of the market share for open heart surgery in the PSA. MRHS is also the sole provider of pediatrics and obstetrics in Marion County. The table below shows MRMC’s inpatient market share by service line for Marion County.

Service Line FY09

Cardiovasc 48.2% 51.4% 3,122Interventional 64.5% 64.8% 1,147Cardiac Surg 63.6% 66.0% 349Vasc/Th Surg 59.1% 58.8% 728

Delivery 76.5% 75.0% 2,412Obstetrics 60.9% 62.2% 184Gynecology 48.3% 48.6% 387

Psychiatry 4.1% 3.5% 67Subst Abuse 16.9% 16.6% 60

ENT 39.7% 41.0% 114General Med 42.3% 42.9% 2,957General Surg 47.2% 46.5% 1,273Infectious Disease 48.4% 47.8% 662Neph / Urolo 50.0% 52.8% 1,114Neuro Surg 54.2% 49.4% 321Neurology 42.5% 49.5% 1,184Obesity Surg 22.9% 36.5% 50Oncology 27.8% 31.1% 342Orthopedic 30.5% 32.6% 1,596Pediatrics 36.3% 38.7% 487Pulmonary 47.7% 49.0% 2,048Trauma 23.6% 27.6% 106

Total 45.4% 46.2% 20,835

Neonate 49.7% 45.0% 420Normal Newborn 86.2% 84.1% 2,053

23,308

Source: AHCA Inpatient Database

FY10

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Market Map

Competitors / Other Hospitals in Service Area

MilesTax Status City County from MRMC Beds

Munroe Regional Medical Center Government Ocala Marion 421

Primary Service Area Hospitals

HCA HospitalsWest Marion Community Hospital For-Profit Ocala Marion 4.8 70Ocala Regional Medical Center For-Profit Ocala Marion 225 feet 200

Secondary Service Area Hospitals and Other Hospitals

Central Florida Health AllianceLeesburg Regional Medical Center Not-For-Profit Leesburg Lake 32.6 309The Villages Regional Hospital Not-For-Profit The Villages Sumter 18.8 198

Health Management Associates: Seven Rivers Hospital For-Profit Crystal River Citrus 41.1 128

Citrus Memorial Hospital Government Inverness Citrus 31.4 198

Shands HealthCareShands at University of Florida Not-For-Profit Gainesville Alachua 39.9 630

Adventist Health System / SunbeltFlorida Hospital Waterman Not-For-Profit Tavares Lake 42.5 204

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Ocala Regional Medical Center (“ORMC”), a 200-bed facility, and West Marion Community Hospital (“WMCH”), a 70-bed hospital, form the Ocala Health System (“OHS”), a for-profit entity owned and operated by HCA Holdings, Inc. ORMC and WMCH are the primary competitors for MRHS and the only two full-service acute care hospitals in MRHS’s PSA. Patients in MRMC’s secondary service area are primarily served by hospitals in their own counties. Citrus County residents are most frequently served by Marion County when seeking care outside of their own county. Sumter County has a 74-bed hospital and residents leaving their county for care most often travel to Lake, Citrus and Marion Counties. Levy County residents are most frequently served by Alachua County hospitals, and then by hospitals in Citrus and Marion Counties. Although bordering to the North, Alachua County is not considered a portion of MRMC’s secondary service area as most of the county's patients are served by the three hospitals located in that county – Shands at University of Florida, Shands at Alachua General Hospital and North Florida Regional Medical Center. Furthermore, patients leaving Marion County for care in Alachua County primarily require quaternary care such as neonatal intensive care, burns, or transplants. Market Share of Medicare Discharges – Top Ten Zip Codes Shown in the table below is MRMC’s market share of Medicare discharges for the calendar year 2010 for each of MRMC’s top ten zip codes based on Medicare admissions. MRMC’s Medicare discharges from its top ten zip codes accounted for 55.4% of its total Medicare admissions in calendar year 2010. The hospitals that primarily compete with MRMC are shown in the table. ORMC and WMCH, both of which are owned by HCA, are listed together under OHS. These hospitals had Medicare discharges in 2010 from any of MRMC’s top Medicare zip codes. The overall market share for each hospital is shown at the bottom of the table. MRMC accounted for 48.4% of all Medicare discharges from these zip codes in 2010. Market Share of Medicare Discharges*Calendar Year 2010

Medicare Admissions From MRMC's Top ZIP Codes of Residence

MRMC Medicare

Discharges

MCMC Medicare

Mkt Share

OHS Medicare

Discharges

OHS Medicare

Mkt Share

Leesburg Medicare

Discharges

Leesburg Medicare

Mkt Share

Combined Market Share

Estimated Out-

Migration**34481 1,343 47.4% 1,057 37.3% 84.7% 15.3%34476 1,049 46.3% 856 37.8% 84.1% 15.9%34471 986 55.5% 574 32.3% 87.8% 12.2%34470 839 58.2% 433 30.0% 88.2% 11.8%34472 823 53.4% 468 30.4% 83.8% 16.2%34491 750 25.7% 378 12.9% 225 7.7% 46.3% 53.7%34482 621 44.3% 595 42.4% 86.7% 13.3%34432 559 48.5% 48.5% 51.5%34420 496 50.0% 50.0% 50.0%34479 476 54.0% 54.0% 46.0%

All other ZIP Codes 6,388

Admits From Top Zip Codes 14,330 4,361 225

Wtd Avg Share of Medicare Patients* 48.4% 18.6% 0.2% 24.7%* In MRMC's top zip Medicare zip codes

** To other than the three hospitals in this analysis

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Financial Results The audited financial statements of MRHS include consolidating statements. Results for MRMC and OHA are provided separately and then consolidated in these statements. All operations of MRHS, other than those of OHA, are included in MRMC’s statements. MRHS’ income statement includes elimination of minority interest related to the 37.5% minority stake it does not own in OHA. MRHS Revenue and Expenses MRHS’s revenues and expenses for the fiscal years ended 2007 through 2011 are shown below. The results for fiscal years 2007 through 2010 are based on audited financial statements while fiscal year 2011 results are unaudited. Fiscal year 2010 included $6.9 million in Medicaid rebasing revenue related to prior years and $1.1 million in State/Federal match money. In addition, salaries, wages and benefits were lower as a percentage of net patient revenue in fiscal year 2010 due to the higher revenue, as well as a temporary wage freeze and a temporary hiatus in 401(k) matches. CONSOLIDATED INCOME STATEMENT

PreliminarySeptember 30 ($ in millions) 2007 2008 2009 2010 2011

Net patient revenue $ 306.6 $ 317.8 $ 325.4 $ 367.7 $ 352.8 Other operating revenue 4.0 1.9 1.6 4.6 4.6 Total operating revenue 310.6 319.7 327.0 372.3 357.4

Salaries, wages, benefits 128.3 135.4 140.6 152.1 159.1 Supplies 54.9 57.8 59.4 63.3 61.0 Bad debt 32.1 38.9 44.3 52.6 44.5 Other operating expenses 74.7 73.2 68.7 70.1 69.6 Total operating expenses 290.0 305.3 313.0 338.1 334.2

EBITDA $ 20.6 $ 14.4 $ 14.0 $ 34.2 $ 23.2

Depreciation and amortization 15.6 15.6 14.8 14.9 15.3 Interest 5.0 5.3 4.8 4.5 4.2

Operating income $ (0.1) $ (6.5) $ (5.6) $ 14.8 $ 3.7

Non-operating revenue (expense) 5.1 (3.7) 5.7 4.5 0.5

Excess revenue over expenses before minority interest and discontinued operations 5.0 (10.2) 0.1 19.3 4.2

Elimination of minority interest (0.9) (1.0) (0.9) (0.6) (0.6)

Excess revenue over expense and other support $ 4.1 $ (11.2) $ (0.8) $ 18.7 $ 3.6

EBITDA after minority interest expense $ 19.7 $ 13.4 $ 13.1 $ 33.6 $ 22.6

EBITDA margin % of Net Oper Rev 6.7% 4.5% 4.3% 9.3% 6.6%

Operating income % of NOR 0.0% -2.0% -1.7% 4.0% 1.0%

Salaries, wages, benefits % of NPR 41.9% 42.6% 43.2% 41.4% 45.1%

Supplies % of NPR 17.9% 18.2% 18.2% 17.2% 17.3%

Bad debt % of NPR 10.5% 12.3% 13.6% 14.3% 12.6%

Other operating expenses % of NPR 24.4% 23.0% 21.1% 19.1% 19.7%

Change in net patient revenue 8.1% 3.6% 2.4% 13.0% -4.0%

Audited

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MRMC Revenue and Expenses The financial statements for MRMC are presented below in internally reported, EBITDA-focused format. Management tracks certain revenue and expenses in non-audit format to focus on these items separate of core hospital operations and thus reports these after Total operating expenses, but before EBITDA.

Preliminary BudgetSeptember 30 ($ in millions) 2007 2008 2009 2010 2011 2012

Net patient revenue $ 291.8 $ 302.4 $ 305.3 $ 353.1 $ 337.7 $ 348.3 Other operating revenue 3.8 3.5 6.8 2.7 3.0 2.9 Total operating revenue 295.6 305.9 312.1 355.8 340.7 351.2

Salaries 94.4 101.0 102.2 111.2 116.2 119.1 Contract labor 6.9 4.9 0.9 0.0 0.3 0.3 Employee benefits 23.7 23.7 27.0 28.6 29.9 28.8 Supplies 68.8 71.7 72.7 77.9 75.9 75.6 Professional fees 5.0 6.4 6.7 6.8 7.2 8.4 Purchased services 23.5 25.7 26.3 29.6 28.6 30.8 Repairs and maintenance 2.9 3.3 3.1 3.2 3.5 4.1 Rents and leases 2.9 2.7 2.7 2.5 2.6 3.6 Utilities 4.1 5.0 4.5 4.6 4.4 4.7 Insurance 5.3 4.0 4.9 2.8 2.5 4.4 Bad debt 31.8 38.9 44.3 52.6 44.4 47.3 Taxes and licenses 0.0 0.0 0.0 0.1 0.0 0.0 State Indigent Assessment 3.2 3.5 3.4 3.8 3.6 3.7 Other operating expenses 0.1 0.0 0.0 0.0 (0.1) 0.0 Total operating expenses 272.7 290.8 298.8 323.6 319.1 330.6

Joint ventures 3.0 2.7 2.2 2.5 1.5 1.3 Kindred rent income 0.6 0.6 0.6 0.7 0.7 0.7 Foundation (0.2) 0.3 0.8 0.2 0.8 0.5

Net of other non-operating (1) (10.2) (6.0) (4.4) (2.5) (2.5) (3.3)

EBITDA $ 16.1 $ 12.7 $ 12.4 $ 33.0 $ 22.0 $ 19.8

Depreciation and amortization 15.6 15.6 14.8 14.7 14.9 17.8 Interest 4.4 4.7 4.2 4.2 4.0 4.2

Other (1) 0.9 9.4 6.7 2.9 1.6 -

Operating income $ (4.7) $ (16.9) $ (13.2) $ 11.2 $ 1.5 $ (2.3)

Interest income 6.5 3.9 (1.1) 0.9 5.6 2.8 Net unrealized gain (loss) 1.0 (7.6) 6.9 5.1 (4.5) - Net assets rel for PPE 0.1 0.8 0.0 0.0 0.0 - Swap mark-to-market 1.1 (2.1) (0.2) (1.3) (0.4) -

Net income $ 3.9 -$ 21.9 -$ 7.6 $ 16.0 $ 2.2 $ 0.5

(1) Additional detail for these line items is provided on the following page in Section entitled "Additional Financial Information"

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MRMC Margin Analysis and Growth Rate

Preliminary BudgetSeptember 30 ($ in millions) 2007 2008 2009 2010 2011 2012

EBITDA margin % of Net Oper Rev 5.5% 4.2% 4.0% 9.4% 6.5% 5.7%Operating income margin % of NOR -1.6% -5.5% -4.2% 3.2% 0.5% -0.6%Salaries % of NPR 32.4% 33.4% 33.0% 31.5% 34.4% 34.2%Contract labor % of NPR 2.4% 1.6% 0.3% 0.0% 0.1% 0.1%Employee benefits % of NPR 8.1% 7.8% 8.7% 8.1% 8.9% 8.3%Supplies % of NPR 23.6% 23.7% 23.5% 22.1% 22.5% 21.7%Professional fees % of NPR 1.7% 2.1% 2.2% 1.9% 2.1% 2.4%Purchased services % of NPR 8.1% 8.5% 8.5% 8.4% 8.5% 8.8%Repairs and maintenance % of NPR 1.0% 1.1% 1.0% 0.9% 1.0% 1.2%Rents and leases % of NPR 1.0% 0.9% 0.9% 0.7% 0.8% 1.0%Utilities % of NPR 1.4% 1.7% 1.5% 1.3% 1.3% 1.3%Insurance % of NPR 1.8% 1.3% 1.6% 0.8% 0.7% 1.3%Bad debt % of NPR 10.9% 12.9% 14.3% 14.9% 13.2% 13.6%Taxes and licenses % of NPR 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%State Indigent Assessment % of NPR 1.1% 1.1% 1.1% 1.1% 1.1% 1.1%Other operating expenses % of NPR 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Change in net patient revenue 3.6% 2.3% 14.1% -4.4% 3.1% Additional Financial Information The following table includes supplemental information related to the MRMC results provided on page 28 and the footnote on that page.

2007 2008 2009 2010 2011

Net of other non-operatingPhysician recruitment / on call ($3.5) ($4.6) ($4.1) ($3.4) ($3.6)Rental income / other 0.5 0.0 (0.2) 0.4 0.8Net of LIP funding (1.0) 0.7 0.5 1.0 0.7Special healthcare projects (0.5) (0.5) (0.5) (0.5) (0.5)County fire rescue support (4.4) (1.7) (0.2) 0.0 0.0Cumm eff change in acct princ (1.3) 0.0 0.0 0.0 0.0

Total net of other non-op ($10.2) ($6.0) ($4.4) ($2.5) ($2.5)

OtherGain on sale $1.6 $0.0 $0.0 $0.0 $0.0Loss on sale 0.0 (0.0) 0.0 0.0 0.0SFAS 158 gain / (losses) 0.0 (9.4) (6.7) (2.7) (1.5)Loss from debt refinancing (2.5) 0.0 0.0 (0.2) (0.1)

Total other ($0.9) ($9.4) ($6.7) ($2.9) ($1.6)

30

OHA Revenue and Expenses Operating Statement

PreliminarySep 30 ($ in millions) 2007 2008 2009 2010 2011

Net patient revenue $ 17.7 $ 18.4 $ 19.0 $ 19.0 $ 19.4 Other operating revenue 0.1 0.1 0.3 0.3 0.4 Total operating revenue 17.8 18.5 19.3 19.4 19.8

Nursing services 6.0 6.3 6.5 6.5 6.5 Special services 3.3 3.5 4.1 4.4 4.3 Administration services 2.9 2.6 2.5 3.2 3.4 Dietary services 1.0 1.1 1.1 1.2 1.2 Facility operations 0.7 0.7 0.7 0.8 0.8 Housekeeping and laundry services 0.6 0.6 0.6 0.7 0.7 Social services 0.2 0.2 0.2 0.2 0.2 Activities 0.2 0.2 0.2 0.2 0.2 Medical records 0.1 0.1 0.1 0.1 0.1 Bad debt - - 0.3 - - Total operating expenses 15.0 15.2 16.3 17.2 17.4

EBITDA 2.8 3.3 3.0 2.2 2.3 Depreciation and amortization 0.4 0.4 0.4 0.3 0.4 Interest 0.3 0.3 0.3 0.2 0.2

Operating income 2.1 2.7 2.4 1.6 1.7

Elimination of minority interest (0.9) (1.0) (0.9) (0.6) (0.6)

Excess revenue over expense and other support $ 1.3 $ 1.7 $ 1.5 $ 1.0 $ 1.1

EBITDA margin % of Net Oper Rev 16.0% 18.1% 15.9% 11.6% 12.0%Operating income margin % of NOR 12.0% 14.4% 12.2% 8.4% 8.6%Nursing services % of NPR 34.0% 34.0% 34.0% 34.3% 33.4%Special services % of NPR 18.5% 19.0% 21.6% 23.0% 22.4%Administration services % of NPR 16.4% 13.9% 12.9% 16.7% 17.8%Dietary services % of NPR 5.8% 5.8% 5.9% 6.2% 6.1%Facility operations % of NPR 3.8% 3.8% 3.8% 4.1% 4.0%Housekeeping and laundry services % of NPR 3.5% 3.3% 3.4% 3.5% 3.5%Social services % of NPR 0.9% 1.0% 1.1% 1.1% 1.2%Activities % of NPR 1.1% 1.0% 0.9% 0.9% 1.0%Medical records % of NPR 0.6% 0.5% 0.4% 0.5% 0.4%

Change in net patient revenue 4.1% 3.3% 0.0% 2.0%

Audited

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MRHS Assets

PreliminarySeptember 30 ($ in millions) 2007 2008 2009 2010 2011

Cash and equivalents $ 31.8 $ 28.9 $ 52.8 $ 57.5 $ 26.4 Short term investments 15.8 16.0 0.9 5.8 2.8 Patient accounts receivable 46.0 49.8 43.8 39.1 44.6 Third party settlements 0.7 5.9 1.8 - 1.8 Assets limited as to use 5.3 5.6 5.7 4.5 2.1 Inventory 6.2 5.9 5.7 6.9 7.1 Prepaid expenses and other 5.8 4.4 4.1 5.2 6.4 Total current assets 111.4 116.5 114.7 119.0 91.2

Assets limited as to use:Held by trustee 12.5 6.1 6.4 4.3 1.9 Board-designated 77.8 72.3 79.7 87.8 88.4

90.3 78.4 86.2 92.2 90.3

Less current obligations (5.3) (5.6) (5.7) (4.5) (2.1)

PP&E subtotal 302.6 310.7 318.5 329.8 353.3 Accumulated depreciation (152.1) (166.6) (179.7) (191.1) (204.6) Net PP&E 150.5 144.1 138.8 138.7 148.7

Other assetsUnamoritized deferred financing costs 0.9 0.9 0.8 0.6 0.5 Other long-term investments - - - 15.1 15.2 Other 13.5 6.1 6.2 5.6 4.4

Total other assets 14.4 6.9 7.0 21.3 20.1

Total assets $ 361.4 $ 340.3 $ 341.0 $ 366.6 $ 348.3

Audited

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MRHS Liabilities and Net Assets

PreliminarySeptember 30 ($ in millions) 2007 2008 2009 2010 2011

Accounts payable $ 16.2 $ 15.5 $ 15.8 $ 17.0 $ 18.3 Construction payable - - 0.7 0.1 0.3 Accrued liabilities

Payroll 4.6 5.3 5.2 8.3 2.3 Employee benefits 7.5 10.2 6.9 8.1 9.0 Interest 1.8 2.1 2.0 1.9 1.6 State indigent assessment 4.2 4.4 4.4 4.7 4.5 Third party-payor settlements - - - Other 8.9 8.9 11.4 18.2 9.6

Current portion of:Bonds payable 3.5 3.6 3.8 2.6 0.5 Long term debt 0.7 1.1 0.9 0.6 1.0

Total current liabilities 47.5 51.0 51.0 61.5 47.2

Bonds payable 105.4 101.7 98.0 96.0 86.8 Long-term debt 3.4 3.5 2.8 2.5 2.4 Other liabilities 7.3 8.7 21.4 22.0 25.1 Total liabilities 163.6 164.9 173.2 182.1 161.4

Minority int'est in consol'd partnership 0.9 1.0 1.0 1.6 1.7

Net assetsUnrestricted 194.6 172.7 165.1 181.1 183.2 Temporarily restricted 1.9 1.2 1.3 1.4 1.4 Permanently restricted 0.5 0.5 0.5 0.5 0.5 Total net assets 197.0 174.4 166.9 183.0 185.1

Total liabilities and fund balance $ 361.4 $ 340.3 $ 341.0 $ 366.6 $ 348.3

Unrestricted cashCash and equivalents $ 31.8 $ 28.9 $ 52.8 $ 57.5 $ 26.4 Short term investments 15.8 16.0 0.9 5.8 2.8 Board designated 77.8 72.3 79.7 87.8 88.4 Other long-term investments - - - 15.1 15.2 Total unrestricted cash $ 125.3 $ 117.2 $ 133.4 $ 166.2 $ 132.8

Days cash on hand 165 145 161 185 150 Days in accounts receivable 57.5 60.1 52.4 40.4 48.2 Debt-to-capitalization 36.1% 38.4% 38.3% 35.4% 33.1%Average age of plant (years) 9.8 10.7 12.2 13.0 13.7

Audited

As of September 30, 2011, MRHS had $146,652 of short-term and $57,152 of long-term capital leases and installment sales. These are included in current portion of long-term debt and in long-term debt in the balance sheet above.

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Contribution of MRHS’ Joint Ventures

MRHSNine Months as of Sept 30, 2011 Ownership % Net Revenue Net Income Allocation

Munroe Regional HomeCare, LLC 49.0% $4,857,426 ($41,539) ($20,354)

TimberRidge Imaging Center 50.0% 4,186,797 380,051 190,026

Medical Imaging Center 33.3% 9,311,453 646,239 215,392

TimberRidge Nursing & Rehab Center 62.5% 14,977,613 1,213,875 758,672 Payer Mix Payer mix for MRMC is shown below based on discharges and net patient revenue. Payer Mix By Discharges, IP Disch IP OP OPDays, And NPR Excl Nbrn NPR Cases NPR

FY 2010Commercial 3.17% 3.48% 5.71% 8.64%Commercial Managed Care 18.73% 23.54% 19.07% 38.85%Medicaid 14.18% 10.85% 29.88% 11.02%Medicare 57.34% 61.74% 30.23% 40.51%Self Pay 6.58% 0.39% 15.13% 0.98%Total 100.00% 100.00% 100.02% 100.00%

FY 2011 YTD Through JuneCommercial 2.92% 2.37% 6.63% 8.29%Commercial Managed Care 14.45% 17.66% 17.49% 32.75%Medicaid 15.45% 11.70% 30.41% 11.82%Medicare 61.49% 68.06% 31.37% 46.50%Self Pay 5.68% 0.22% 14.10% 0.64%Total 100.00% 100.00% 100.00% 100.00%

% of Total

Payer mix for OHA is shown below based on total patient days.

2010 2011

Payer Mix

Medicare 44.0% 43.9%Medicaid 43.9% 41.9%Private 9.6% 10.1%Insurance 0.5% 0.4%Hospice 0.1% 2.0%Manged Care 1.9% 1.6%

Total 100.0% 100.0%

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Capital Expenditures ($ in millions)September 30 2007 2008 2009 2010

Land improvements $ 0.1 $ 0.2 - $ 0.0 Buildings 1.1 1.2 1.2 4.9 Fixed Equipment 0.7 0.0 0.5 -Moveable equipment 4.9 7.9 5.9 8.5 Construction in progess 0.6 0.3 1.8 -

Total $ 7.4 $ 9.6 $ 9.4 $ 13.9 MRHS has a number of construction and renovation projects in-progress. Below is a recap of these as of September 30, 2011.

OutstandingBudget Paid To Date Balance

South Campus $284,000 $88,909 $195,091Cath Lab #2 300,000 59,765 240,2356 SE & 5 SW 231,900 150,888 81,012ACC Building 404,407 2,673 401,734Coffee Shop 70,000 4,000 66,000ED Expansion/Observation 6,792,758 1,612,371 5,180,387

Total 8,083,065 1,918,606 6,164,459 Master Facility Plan MRMC has been in the process of analyzing its long-term facilities plan since 2005. TriBrook Healthcare Consultants conducted a master facility plan in 2005, and the plan has been updated regularly since that time with the input of TriBrook, Harvard Jolly Architects, management, key departmental staff and attending staff. The plan was last updated in 2010 with cost estimates further updated in March 2011. Population projections, required bed capacity, in-depth review of the existing plant, service line needs and a range of other factors were considered. Management, the MRHS board and MCHD strongly believe that execution of the first phase of the master plan is critical to the hospital’s future and critical to meeting the needs of the community. The first phase of the latest master plan contemplates a new five-story West Tower connecting to the existing hospital building. The five-story tower would focus on four key areas:

Emergency Department. MRHS currently has ED services provided in multiple locations, and its layout and flow needs to be reconfigured. In addition, the existing seven-bed Palmer-Klein Children's Express, a division of the ED that provides medical care for patients 17 and under, is currently located across the street from the ED and would be relocated next to the new ED in the proposed plan. There would also be a 22-bed observation unit added to improve flow and free up patient beds. Ultimately, all of these efforts would improve ED throughput, reduce wait times and enhance capacity.

Obstetrics. Labor and delivery currently has functional deficiencies. In addition, volume growth has further stressed capacity as Ocala Regional ended its OB program in 2006, leaving MRMC as the sole provider of labor and delivery services. The facilities as planned would provide a more efficient layout, enhance capacity and also provide space for the possibility of future higher-level neonatal care.

Surgical Suites. MRMC has 15 surgical operating rooms and four cardiovascular operating rooms varying in age and size. In fiscal year 2010, MRMC built three new

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ORs, but a number of the remaining rooms are outdated. In addition, patient and material flow is not optimal. The first phase of the master plan would provide state-of-the-art ORs with a streamlined layout. This would further strength its standing with its medical staff and employees and position MRMC to continue to effectively compete in the market for surgical services.

Private rooms. Currently, 30% of licensed beds are in semi-private rooms. As part of this plan, all rooms would be private rooms. As important, the quality of the rooms in use would be significantly enhanced.

The current budget for the first phase is approximately $150.0 million excluding financing costs. Due to changes in the construction market and pricing, these estimates would need to be further examined and updated. Pension Plan MRMC has a noncontributory defined benefit pension plan covering substantially all of its employees. The pension plan provides benefits on a pension equity formula. MRMC’s policy is to fund pension contribution due on an annual basis, using the aggregate cost method, in accordance with the guidelines provided by the Employee Retirement and Income Security Act (ERISA). The total accumulated benefit obligation at the end of fiscal year 2011 was $49.8MM and the funded status was ($13.9MM). Below are additional pension plan details for fiscal years 2010 and 2011:

FY 2010 FY 2011

Pension plan expense in income statement $3,093,770 $5,818,858

Cash contributions 7,100,000 4,000,000

Pension liability in Other Liabilities (long term) on balance sheet 9,705,000 13,961,000

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Key Management The executive leadership team includes:

Stephen Purves, President and Chief Executive Officer. Mr. Purves, age 55, joined Munroe Regional Health System as President and Chief Executive Officer in September of 2006 after a national search conducted by the Health System Board of Directors. He has held a number of executive positions throughout his 31-year career in healthcare administration. Most recently, he was President and CEO of 322-bed Sisters of Charity Providence Hospitals, a two-hospital regional health system located in Columbia, South Carolina. Prior to that, he was Chief Operating Officer of New Hanover Regional Medical Center, Southeastern North Carolina’s public and teaching referral hospital located in Wilmington, North Carolina. Mr. Purves has also held senior hospital executive positions with Carilion Health System in Roanoke, Virginia, and Hospital Corporation of America during his tenure in healthcare. In 2005, Mr. Purves served as Chairman of the South Carolina Hospital Association, is a delegate to the American Hospital Association Regional Policy Board, and today serves on the Board of The Florida Hospital Association. Mr. Purves received a BS degree in Health Education from Springfield College in Springfield, Massachusetts in 1978 and a Master of Science degree in Healthcare Administration from Trinity University in San Antonio, Texas, in 1981. He is a Fellow in the American College of Healthcare Executives. Richard Mutarelli, Executive Vice President and Chief Financial Officer. Mr. Mutarelli, age 55, was promoted to Senior Vice President and Chief Financial Officer in January 1990 and later promoted to EVP/CFO in 2005. Prior to such time, Mr. Mutarelli served as Vice President of Finance. Mr. Mutarelli is responsible for the financial affairs of the Medial Center and the Corporation’s owned or affiliated entities. Mr. Mutarelli was originally employed by the Medical Center as Assistant Director of Finance in July 1979. Prior to his coming to the Medical Center, Mr. Mutarelli served as Director of Finance for Hillsborough County Migrant Health Center in Ruskin, Florida. Mr. Mutarelli graduated from Wilkes University in Wilkes-Barre, Pennsylvania with a BS degree in Finance and also has a Master of Business Administration from Webster University in St. Louis, Missouri. He is licensed as a Certified Public Accountant in the State of Florida. Mr. Mutarelli is an advanced member of the Healthcare Financial Management Association. Paul Clark, Senior Vice President and Chief Operating Officer. Paul Clark, age 62, was named the Senior Vice President and Chief Operating Officer, effective May 1987. Mr. Clark also serves as Administrator of the Medical Center. Prior to this appointment, Mr. Clark served for 10 years as Vice President of Baptist Medical Center-Princeton, a Division of the Baptist Medical Center, Inc., of Birmingham, Alabama. From July 1971 to July 1976, Mr. Clark served as Assistant Administrator of Madison General Hospital and Madison County Nursing Home in Canton, Mississippi. Mr. Clark graduated from the University of Southern Mississippi in 1971 with a BS degree in Industrial Management. He received his Master of Science degree in Hospital and Health Administration from the University

Years of

Name Position Experience

Stephen Purves Chief Executive Officer 31

Richard Mutarelli Chief Financial Officer 34

Paul Clark Chief Operating Officer 40

Lon McPherson Chief Quality Officer 14

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of Alabama at Birmingham in 1978. Mr. Clark became a Fellow in the American College of Health Care Executives in 1990. Lon McPherson, MD, Senior Vice President of Medical Affairs & Chief Quality Officer. Dr. McPherson, age 52, joined Munroe Regional Health System in this position in September 2008. Prior to joining MRHS, Dr. McPherson served as Chief Medical Officer at Provena Saint Joseph Medical Center, a 428-bed tertiary community hospital in Joliet, Illinois. Dr. McPherson received his undergraduate degree in Biochemistry at the University of Illinois in Urbana-Champaign and subsequently received his medical degree from Rush University in Chicago. Dr. McPherson completed his training in Internal Medicine at Georgetown University Hospital in Washington, D.C. He practiced internal medicine in Winchester, Virginia, from 1988 to 2003 and is board certified. While he was in practice he also held leadership positions in Quality, Case Management, a 250-Physician IPA and a regional insurance network.