2012 Healthcare M&A Conference

Where Partnership Meets

Media Sponsor

S

Sponsors

2012HealthcareM&AConference

May 9, 2012

®Grant Thornton refers to Grant Thornton LLP, the U.S. member fi rm of Grant Thornton International Ltd.

At Grant Thornton we understand the many challenges that dynamic organizations like yours are up against. We bring a real, competitive advantage of senior staff time, short decision-making chains and sound processes that our clients truly value. To help unlock your potential for growth, visit GrantThornton.com/Growth.

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www.ACGChicago.com3

Table of ContentsHealthcare M&A ConferenceKeynote Information.................................................................................................... 5Providers Panelist Information ....................................................................................11Information Technology Panelist Information ............................................................ 14Payer/Payer Services Panelist Information ............................................................... 17Medical Products & Devices Panelist Information .................................................... 20Innovation Track Panelist Information ....................................................................... 23Presentation Materials - The State of Healthcare M&A - The Marwood Group......... 27White Paper - BDCs: The Best Prescription for Healthcare Lending ........................ 33White Paper - HealthCareRx ..................................................................................... 36

The F&M Bank & Trust Company

Healthcare Finance

Size Structures

TypesSectors

Healthcare Service Companies

Healthcare IT

Medical Devices

Select Pharmaceutical Companies

Senior Debt up to $25 Million Cash Flow Term Loans

Revolving Lines of Credit

Real Estate

Mergers and Acquisitions

Recapitalizations

Growth Capital

Refinancings

Participations

Sharmila Solanki

Managing Director

(214) 780-2084

(972) 365-3651

Kevin Howell

Director

(214) 780-2091

(214) 577-5766

[email protected]@fmbanktexas.com

3811 Turtle Creek Blvd., Suite 1725

Dallas, Texas 75219

The F&M Bank & Trust Company is a 64-year old

full service institution servicing numerous industries.

For more information, please contact Sharmila or Kevin.

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www.ACGChicago.com5

John J. Kelliher is the Managing Director for the Marwood Group. Since joiningthe Marwood Group in 2007, Mr. Kelliher has been responsible for managing theday-to-day work product of the Marwood Research Group.

Keynote

John KelliherSenior Managing Director

The Marwood Group

Prior to joining Marwood, Mr. Kelliher was a Vice President at Timmons and Company, a Washington-basedlobbying firm. Previous to that position, Mr. Kelliher served from 2001 to 2003 as Chief Counsel for theCommittee on Ways and Means in the U.S. House of Representatives. As Chief Counsel, he was responsible formanaging the legislative process for the Committee. Mr. Kelliher acted as a primary advisor to Chairman BillThomas on policy issues, political strategy and procedural tactics. During his tenure at the Committee on Ways& Means, significant legislation was enacted including the Medicare Modernization Act of 2003. Mr. Kelliherhas also worked as Counsel and Chief Counsel at the Committee on House Administration. Mr. Kelliherreceived his undergraduate degree from Princeton University and then served three years of active duty in theU.S. Army. He graduated from the Boston University School of Law and holds the FINRA series 7, 24, 65, 86and 87 securities licenses

The State of Healthcare M&ASupreme Court and the Affordable Care Act:Legal Issues and Policy Implications

®

HEALTHCARE LENDING

7 Skilled Nursing Facilities in California

$58,500,000Term Loan

$5,000,000Revolving Line of Credit

32 Skilled Nursing Facilities in 6 States*


*AL, FL, GA, KY, MD, PA, TN

FINANCING OPTIONS• Real estate term loans for acquisitions or refinancing of stabilized or repositioned

facilities

• Enterprise term loans to support expansion and other initiatives

• Revolving lines of credit to meet ongoing working capital requirements

• Senior financing to support sponsor-led buyouts and recapitalizations

FOR MORE INFORMATION PLEASE CONTACT:Steve Anderson at (312) 953-6812

capitalonebank.com/commercial

©2012 Capital One. Capital One is federally registered service mark. All rights reserved.

Commercial Banking Group

HEAL

TEALLT

CARE HT

CARE ommercial Banking C

roupGommercial Banking

LENDINGHEAL

LENDINGTEALLT

LENDINGCARE HT

CARE

$58,500,000Facilities in California

7 Skilled Nursing

erm LoanTTerm Loan$58,500,000Facilities in California

7 Skilled Nursing


Facilities in California

$30,000,000Facilities in 6 States32 Skilled Nursing

Revolving Line of Credit$30,000,000

*Facilities in 6 States32 Skilled Nursing

Revolving Line of Credit$30,000,000

Revolving Line of Credit

I

$5,000,000

NANCFI


ONS

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IPT ONG

Revolving Line of Credit*AL, FL, GA, KY


A, T, MD, P PA, TN*AL, FL, GA, KY


A, TN


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Revolving lines of credit to meet ongoing working capital requirements•

Enterprise term loans to support expansion and other initiatives•

facilitiesReal estate term loans for acquisitions or refinancing of stabilized or repositioned •

ONITNFORMAATE IMOR

Senior financing to support sponsor

Revolving lines of credit to meet ongoing working capital requirements

Enterprise term loans to support expansion and other initiatives

Real estate term loans for acquisitions or refinancing of stabilized or repositioned

ACTCONTTACTE ASEPL

-led buyouts and recapitalizationsSenior financing to support sponsor




ACT

-led buyouts and recapitalizations





Steve Anderson at (312) 953-6812MORORF


Steve Anderson at (312) 953-6812ONITNFORMAATE IMOR

Steve Anderson at (312) 953-6812

ACTCONTTACTE ASEPL

Capital One is federally registered ser

:ACT

vice mark. All rights reserCapital One is federally registered ser©2012 Capital One.

ved.vice mark. All rights reser©2012 Capital One.

®

www.ACGChicago.com7

Keynote

Former U.S. Congressman Bart Stupak is a partner in Venable’s Legislative andGovernment Affairs group. As Congressman to Michigan’s First Congressional Districtfor 18 years, Mr. Stupak developed a deep understanding of issues that directly affected

Congressman Bart StupakPartner

Venable LLChis constituents, including matters related to energy, healthcare, telecommunications and international trade. As anattorney at Venable, he is in a unique position to provide clients with well-informed, extensive counsel that is based on athorough knowledge of these industries and related legislation.

While in Congress, Mr. Stupak served on the Energy and Commerce Committee for 16 years. During his tenure on theEnergy and Commerce Committee, he served on a number of subcommittees, including Health, Energy and theEnvironment, Communications, Technology and the Internet, Consumer Protection, Commerce and Trade, and Oversightand Investigations. As Chairman of the Oversight and Investigations Subcommittee, Mr. Stupak helped lead investigationsinto key issues, such as physical and cyber security breaches at U.S. nuclear labs, food and drug safety, and insurancecompany rescissions of insurance policies. He also played an important role in the passage of H.R. 3590, the PatientProtection and Affordable Care Act of 2010. Additionally, Mr. Stupak served on the Armed Services, Government Reformand Merchant Marine and Fisheries Committees.

Prior to joining the U.S. House of Representatives, Mr. Stupak worked in private practice in Michigan. Mr. Stupak beganhis career in public service as a police officer in Escanaba, Michigan. He continued his career in law enforcement as aMichigan State Police Trooper until he was medically retired due to an injury sustained in the line of duty. He also servedin the Michigan House of Representatives.

In spring 2011, Mr. Stupak was a Fellow at the Institute of Politics, Harvard University, John F. Kennedy School ofGovernment.

The Insiders View

Power comes from being understood.

Go to www.mcgladrey.com

© 2012 McGladrey LLP. All Rights Reserved.

When you trust the advice you’re getting, you know your next move is the right move. And when health care organizations are looking to control costs and improve operations, they turn to us to understand their needs.

Our experienced M&A professionals thoroughly analyze and validate financial, operational and strategic assumptions to reveal opportunities and bring potential dangers to light. We can help structure the deal to ensure the successful

integration of business operations, cultures and strategies, and maximize the value of your investment.

To learn how McGladrey can help your organization, please contact John Schmidt or Pat Kitchen at 312.634.3400.

®

www.ACGChicago.com9

Edward F.X. Hughes, MD, M.P.H., is Professor of Health Enterprise Managementand Management and Strategy in the Kellogg School of Management andProfessor of Preventive Medicine in The Medical School, NorthwesternUniversity. He first came to Northwestern in 1977 as the founding Director of theUniversity's Center for Health Services and Policy Research, now the Institute for

Edward HughesProfessor of

management & StrategyKellogg School of

Management

Health Services Research and Policy Studies, and served as its Director for 18 years. A native of Boston, Dr.Hughes is a graduate of The Boston Latin School, Amherst College, Harvard Medical School and ColumbiaUniversity School of Public Health. He trained originally in general surgery at the Columbia-PresbyterianMedical Center in the City of New York. Prior to coming to Northwestern, he was for seven and one half yearsassociated with the National Bureau of Economic Research and the Mt. Sinai School of Medicine also in theCity of New York.Under Dr. Hughes' leadership, the Center for Health Services and Policy Research, a University wide entitywith five programs of active interdisciplinary research, grew from its founding in 1977 to be one of the mosthighly regarded, University based health services research Centers in the United States. Its five programsincluded: Health Care Policy and Financing, Long Term Care, Organization Behavior in Health, the MultiPurpose Arthritis Center at Northwestern, and the Department of Veterans Affairs HSR&D Field Station incollaboration with the Edward A. Hines, Jr. VA Hospital.Dr. Hughes is particularly interested in the elaboration of national health policy, in the efficient utilization ofresources in the delivery of health care, and in the future directions of our health system. Within the Center, hewas co director of the Program in Health Care Policy and Financing and was for five and one half yearsPrincipal Investigator of the HCFA "Policy Center" at Northwestern. He was also Special Advisor to the V.A.Field Station and for many years served as the Director of the Non-Biomedical Component of the MultipurposeArthritis Center. Simultaneous with being Center Director, Dr. Hughes served for three years as the Director ofthe Program in Health Services Management in the Kellogg School. The Program was recently chosen by U.S.News and World Report as one of the two highest-ranking health management programs in the United States.Dr. Hughes is also the originator of Northwestern's Joint MD/MBA Program, one of the first programs of itskind in the United States. In addition, to the best of our knowledge, Dr. Hughes is the first physician to be atenured professor in a School of Management in the U. S.

Reality Check-up: Diagnosing the Future

Keynote

Your Partner in Healthcare Transactions bassberry.com

Equity Financings

Financings

SERVICES & ADDED VALUE

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Lonnie L. Busby, Chief Executive Officer, Medsurant Holdings, LLC: Since 2009, Mr.Busby has been the CEO of Medsurant Holdings, LLC, one of the leading providers ofintraoperative neuromonitoring services in the U.S. Mr. Busby has over 30 years ofdomestic and international experience in senior level management positions in thehealthcare industry. He has been a CEO, COO, Board Member, management consultant,and entrepreneur. He has served as a consultant to a variety of healthcare clientsdomestically, as well as in Europe, the Middle East, and Asia. His managementexperience in healthcare ranges from multi-hospital systems and solo-hospitals to surgerycenters, technology companies, imaging centers, rehab facilities, physician organizationsand group practices. Mr. Busby was President of the Midwestern Division for HCAHealthcare Corporation. He had P&L responsibility for all operations within a three-stateregion encompassing Colorado, Arizona and Nebraska, and total revenue exceeding $1.5billion. He expanded HCA’s presence in the Denver market from two hospitals to ninehospitals, growing the company’s market share from 9% to 36% in two years. Mr. Busbyreceived his Master of Healthcare Administration degree from Baylor University and aBachelor of Science in Biology from Arkansas State University.

Lonnie BusbyCEO

Medsurant Holdings

Kent E. Capps is the Director of Strategy for Surgical Care Affiliates (SCA) an operatorof 145 ambulatory surgery centers, surgical hospitals, and hospital surgery departments,with approximately 3,700 full-time teammates, 2,000 physician partners, and 21 healthsystem partners in more than 30 states. SCA provides patient care and clinical outcomesto more than 2,000 surgical patients each day, and generates more than $1 billion inannual system-wide revenue. In his role at SCA, Kent is involved in developing theoverall strategic direction of the organization, including developing inorganic and organicstrategies around new lines of business.Prior to joining SCA, Kent was a member of the Dell Corporate Development team andhas over 10 years of Mergers and Acquisitions, Investment Banking, Venture Capital andCorporate Finance experience. Prior to the Dell, Inc. acquisition of Perot Systems, Kentwas a member of the Perot Systems Corporate Development Group. Prior to joining PerotSystems, Kent worked for Challenger Capital Group a middle market merchant bankingfirm in Dallas focused on principal investing. Previously, Kent worked in the transactionservices advisory group for KPMG where he led M&A due diligence and financialanalysis for both strategic and financial buyers.Earlier in his career, Kent worked in the investment banking division of Salomon SmithBarney/ Citigroup in New York. While at Salomon Smith Barney/ Citigroup, Kentprovided financial and advisory services to the health care industry, focusing primarily onmergers and acquisitions, as well as, equity and financing transactions. Additionally, Kenthas worked with Motorola Ventures, the venture capital arm of Motorola and in thecorporate finance group of a small market cap health care services company.

Kent CappsDirector of Strategy

Surgical Care Affiliates

Providers Panel

®


Providers Panel

Eric D. Hargan is a Shareholder in Greenberg Traurig, LLP, based in its Chicago office.He focuses his practice on transactions, health care regulations and government relations.For health industry companies and investors, his experience as a senior official at theU.S. Department of Health and Human Services, combined with nearly twenty years ofexperience as a transactional attorney, allow him to provide unique and advantageousinsights to his clients.

Previously, Eric served in the position of Deputy Secretary of the U.S. Department ofHealth and Human Services. He also served as Regulatory Policy Officer of HHS,overseeing the development and approval of all HHS, CMS and FDA regulations andsignificant guidances. He also previously served as Deputy General Counsel of theDepartment.

Eric has spoken widely and been published both in the United States and overseas onhealth-related topics, including Medicare and Medicaid reform, health law, medicaldevice regulation, food safety, vaccines, quarantine, public health preparedness andpandemic influenza. He has also served as a U.S. representative to the World HealthOrganization. He is a graduate of Harvard University and Columbia University LawSchool.

Eric HarganShareholder

Greenberg Traurig

Jeffrey E. Huffman joined Ide Management Group, LLC. as Vice President ofDevelopment in 2011 as a minority partner. He was recruited to Ide Management afterworking for several years for CarDon and Associates, a long term care provider inIndiana as a business development specialist. Jeff works in Government affairs, BusinessDevelopment in relationship to strategic partnerships with hospitals, Trade Associations,Vendors and other providers. He also leads our Mergers and Acquisitions team for ourgrowth strategy in skilled and assisted living properties.

Jeff started his career in his family business owning and operating three restaurants. Hethen spent about 9 years as the number one salesperson for Electronic Liquid Fillers, Inc.a 2 time INC 500 Award winning company. Having a son born with Down syndromegave Jeff the opportunity to leave the for profit world for a tour of duty in the nonprofitsector. First as a staff member at IHCA the largest health care association in Indiana andthan as the CEO of a nonprofit disability provider. Jeff turned this company from a sleepyprovider that had been forgotten about into an industry leader while doubling the revenueand market share. In 2008, Jeff returned to long term care with CarDon and Associateswhere he helped them grow their business in total properties and strategic partnerships.

Jeff received his Bachelor’s degree in Business Administration from Findlay Collegewhere he was a 4 year member of the Champion Findlay Oiler football team andPresident of Tau Kappa Epsilon Fraternity. He utilizes his expertise in marketing andsales, business development, strategic planning and acquisition management to assist IdeManagement in growing their healthcare management company.

Jeffery HuffmanVice President of

DevelopmentIde Management Group

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M I D D L E M A R K E T L E N D I N G

Dr. Frank Naeymi-Rad is Chief Executive Officer, Chairman of the Board and co-founderof Intelligent Medical Objects, Inc. He was also co-founder of Intelligent MedicalSystems, Inc., which was bought by Glaxo in 1994, in addition to his expertise inelectronic medical record systems and other entrepreneurial ventures. He has beennominated for special recognition by the Oracle Corporation Smithsonian Award in thecategory of Medicine. Dr. Naeymi-Rad is a member of numerous professionalorganizations, as well as author and co-author of numerous peer-reviewed publicationsand patents in the field of Medical Informatics. His degrees are from Southern IllinoisUniversity and the Illinois Institute of Technology, the latter a Ph.D. in ComputerScience. His thesis work focused on the role of medical vocabulary to support data basetranslation, information retrieval, intelligent medical records, and expert systems.

Fred Naeymi-RadCEO

Intelligent Medical Objects

Thomas S. Law is President and CEO of Zotec Partners. He helped form Zotec in May1998. Prior to operating under the Zotec name, the company was Allmed Financial, Inc.,a wholly owned subsidiary of Anthem. Allmed grew by acquisitions to be the third largestmedical billing company in the nation. Law was the CFO/CIO responsible for migratingall of the 17 acquired practice management systems into one internally developedsolution. He spent three years working with Andersen Consulting to develop theElectronic Billing Center (EBC) software suite. In 1998, when Anthem wanted out of thebilling business, Law was able to divest Anthem of Allmed and purchase the EBCsoftware. Thus, Zotec Solutions was formed in 1998.

In 2007, Zotec Solutions merged with Healthcare Management Partners to create ZotecPartners. Zotec Partners merged with Susan J. Taylor, Inc. in July 2007 and withEmPhysis Medical Management in September 2007. Four years later, Zotec Partnersmerged with Medical Business Service, Inc., one of Florida's largest and most respectedmedical billing companies.

As a proud graduate of Butler University, Law enjoys giving back to his alma mater andhelping to pave the way for future business leaders. He is the Butler College of Business(COB) Zotec Entrepreneur Executive in Residence, and a Board of Visitor’s member. In2012, the COB introduced the Zotec Business Competition for the Real BusinessExperience practicum. This competition provides a monetary incentive and mentorshipfrom Zotec executives to help COB students create and manage a real businesssuccessfully.

Thomas LawPresident & CEOZotec Partners

®


Information Technology Panel

®


Information Technology PanelDrew Turitz is Managing Director, Emerging Business of Aetna Inc. Drew leads M&Afor Aetna’s Emerging Business (EB). EB is a group within Aetna responsible for buildinga portfolio of new businesses outside of Aetna’s core insurance products. EB leveragesassets such as Medicity, ActiveHealth, iTriage and other recent acquisitions. EB alsolaunches new businesses, such as Accountable Care Solutions, to address new marketopportunities.

Prior to joining Aetna, Drew was a Managing Director at Sandbox Industries in Chicago.Drew managed the corporate venture fund Blue for Cross Blue Shield, nearly $300million from 22 BCBS Plans focused on healthcare technology and innovation. Drew ledinvestments in Bloom Health, ZeOmega, Change:Healthcare, Nexidia and InVivolink.Prior to joining Sandbox, Drew was a Vice President at Bank of America in New York.He worked in the Healthcare Mergers and Acquisitions group, and executed numeroushealthcare services, life sciences, and medical device transactions. Drew was also aStrategy Consultant for USWeb / CKS and Manager of Strategy and BusinessDevelopment for Fluid, a web development firm, both in San Francisco. Drew has a BAfrom Stanford University and a MBA from the Kellogg School of Management atNorthwestern University.

Drew TuritzManaging Director, M&A,

Emerging BusinessAetna, Inc.

Raymond G. Falci is the Managing Director of Cain Brothers & Company LLC in NewYork. Ray joined Cain Brothers in early 2006 as an investment banker to lead the firm’sfranchise in Healthcare Information Technology (HCIT) and Pharmaceutical Services. Asa former sell-side equity research analyst, Ray has followed HCIT since 1994. During hiscareer as an analyst, Ray worked primarily at Bear Stearns, where he was named toInstitutional Investor’s Top-rated list in 5 of his last 6 years, including two number 1rankings. In addition to HCIT, Ray’s research coverage included pharmaceuticaloutsourcing, pharmaceutical distribution and publicly-traded hospital companies. Prior toworking on Wall Street, Ray worked for 5 years at a start-up company focused on energyefficient lighting products, where he held various positions ranging from EngineeringManager to National Sales Manager.

Ray grew up in Queens, NY and currently resides with his family in Westchester County.He received a BE from the Cooper Union in New York, NY; an MS in Engineering fromColumbia University, and an MBA from The Wharton School of the University ofPennsylvania.

Raymond FalciManaging Director

Cain Brothers & Co.

$19,000,000Senior Secured Debt Facility

to support the acquisition

byThe Riverside Company

$13,000,000Senior Secured Debt

to support the growth of

a portfolio company of KRG Capital

$20,000,000Senior Secured Debt Facility to support the acquisition of

byRiverside Partners


to support an add-on acquisition by

a portfolio company ofGTCR

$57,300,000 Senior Secured Debt Facility to refinance and support the

growth of

a portfolio company of Riverside Partners


to support expansion of credit to

byClearlight Partners


to support the acquisition of

Chicago Growth Partners

$25,000,000Last-Out Term B Loan

to support an add-on acquisition for

byBeecken Petty O’Keefe & Co.


byRiverside Partners

Technology-Enabled Home Delivery Pharmacy

Contract Design and Manufacturer of Medical Devices

Medical and Dental Care

Acquirer / Operator of Specialty Pharmaceutical Companies

Contract Manufacturer of Medical Device OEMs

Healthcare Revenue Cycle Management Services

Single-specialty Pain Management Group

Provider of Homecare Medical Products and Services

Manufacturer of Medical Devices


to support a recapitalization and add-on acquisition for

a portfolio company ofRiverside Partners


to support an add-on acquisition for

byBeecken Petty O’Keefe & Co.


byFlexpoint Ford

Highlander Partners

Manufacturer of Flat-panel Liquid Crystal Display Screens

Specialty Pharmacy Operator

Hospitalist Company

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Juan E. AlvaPartner

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®


Payer/Payer Services PanelCraig Ikens is Senior Director of Corporate Transactions and Business Analysis at HealthCare Service Corporation (HCSC), the fourth largest health insurer in the United Statesoperating the Blue Cross Blue Shield health plans in Illinois, Texas, Oklahoma, and NewMexico. In this role, Craig is responsible for overseeing HCSC's mergers, acquisitionsand joint ventures including business evaluation, valuation analyses, due-diligence,negotiations, and deal structuring and execution. Prior to joining HCSC, Craig workedfor eight years in management consulting with Accenture and Deloitte Consulting,assisting health industry clients including HCSC, CareFirst BCBS, Bristol-Myers Squibb,and Kaiser Permanente.

Craig holds a B.A. in Political Science from Hope College and a Masters in PublicAffairs from Indiana University's School of Public and Environmental Affairs.

Craig IkensSenior Director - CorporateTransactions & Business

AnalysisHealth Care Service Corp.

(BCBS)

Gary S. Velasquez is a recognized health care executive with more than 30 years ofexperience in the life sciences, managed care and specialty healthcare sectors. Mr.Velasquez’ areas of broad expertise includes organizational leadership, operations andstrategic innovation. Mr. Velasquez is a managing partner with Tricium Health Partners, aleading Knowledge Process Outsourcer which specializes in providing clinicalmanagement solutions. Previously, Mr. Velasquez served as Chief Executive Officer forone of the country’s largest health care data management companies. He also held therole of Chief Executive Officer for Synarc, a global provider of specialized scientificservices for the life sciences industry. Concurrent with his tenure at Synarc, Mr.Velasquez served as an Operating Partner with SV Life Sciences, a leading internationallife sciences venture capital firm. In addition, Mr. Velasquez has over 20 years of hands-on operating experience in leading and operating national health plan and indemnityinsurance organizations.

Mr. Velasquez has authored numerous publications covering clinical trials for metabolicdiseases, as well as operating clinical research centers in eastern Europe. He is a memberof the Health Care Financial Management Association and has been a guest lecturer atseveral health care industry conferences.

Mr. Velasquez holds a BS in Economics with High Honors from the University ofSan Francisco.

Gary VelasquezManaging Director

Tricium Health Partners

®


Deborah Gordon is an attorney and partner at Seyfarth Shaw, LLP in Chicago office. Sheis the co-chair of the firm’s Health Care Practice Group and vice-chair of the firm’sCorporate Department. Ms. Gordon concentrates her practice in general corporate lawwith a specialization in the financial and health care industries. She advises clients in theareas of general business transactions, finance and private equity, mergers andacquisitions, health care regulatory matters, compliance, and corporate governance. Ms.Gordon represents general corporate and health care clients, including health careproviders, PPOs, long term care facilities, hospitals, surgical centers, physicianassociations, physician groups, pharmaceutical companies, medical device companies,and biotech companies. She also handles commercial and real estate finance transactions,syndications, loan acquisitions, and participations, particularly in the health care andpharmaceutical industry.

Deborah GordonPartner and Co-Chair ofThe Healthcare Practice

GroupSeyfarth Shaw

Thomas P. Wiffler is the President and Chief Executive Officer of UnitedHealthcare ofIllinois, an operating division of UnitedHealth Group and the largest single health carrierin the United States. (NYSE: UNH). UnitedHealthcare of Illinois serves over 1.2 millionpeople in Illinois and contracts directly with over 22,500 physicians and 150 hospitals.

As a recognized leader in the health and well-being industry, we strive to:Help individuals access quality care at an affordable cost;•Simplify health administration and delivery;•Strengthen the physician/patient relationship;•Promote evidence-based care; and•Empower physicians, health care professionals, consumers, employers, and other•participants in the health system with actionable data to make better, moreinformed decisions.

Tom has been with UnitedHealthcare since 1999 and served in a variety of finance andoperating roles prior to his appointment as the President and CEO of UnitedHealthcare ofIllinois in April 2007. Prior to UnitedHealthcare, Tom was a finance manager with Aetnaand Prudential Health Care. He also worked at Bankers Trust in New York as a securitiessettlement analyst. His professional career began as an officer in the United States MarineCorps and served as a logistics officer and company commander.

Thomas WifflerPresident and CEO

UnitedHealthcare of Illinois

Payer/Payer Services Panel

SNR Denton is proud to sponsor the

ACG Chicago Healthcare M&A Conference

In a fast-changing healthcare market, SNR Denton brings exceptional business focus and vast experience in handling the most complex and high-profile healthcare mergers, acquisitions and other transactions.

snrdenton.com

© 2012 SNR Denton. SNR Denton is the collective trade name for an international legal practice. Attorney Advertising. Please see snrdenton.com for Legal Notices.

SNR Denton is an international legal practice serving clients from more than 60 locations worldwide, through offices, associate firms and special alliances in the US, the UK, Europe, the Middle East, Russia and the CIS, Asia Pacific and Africa. We offer our clients premier service in eight key industry sectors. For more information visit snrdenton.com.

Grant Riedinger is the Vice President, Solutions for Baxter Healthcare. Mr. Riedinger is aseasoned healthcare industry executive with over 20 years of professional experience inpharmaceuticals and medical devices. Grant has held a variety of global commercial andoperational roles having worked at industry leading companies including GE Medical,Johnson and Johnson, Abbott Laboratories and most recently Baxter Healthcare.

At Baxter Healthcare, Grant has led global marketing for Infusion Systems, managedBaxter’s Consent Decree and been the General Manager the Global PharmaceuticalInjectable business. Most recently, Grant has taken on increased responsibility forPharmaceutical Injectables, IV Solutions and Pharmacy devices which constitute aportfolio well over $2B in global sales.Grant has a Bachelor of Science from Pennsylvania State University and an MBA fromthe University of Chicago.

In his spare time, Grant is a Soccer coach and serves on the Illinois Board of FIRSTRobotics.

Grant RiedingerVice President - Solutions

Baxter HealthcareCorporation

Jane Kiernan is the President and Chief Executive Officer of Salter Labs. She has over 28years of healthcare experience, serving in numerous executive positions in finance,strategy and marketing, and operations in corporate and line roles, as well as generalmanagement roles. Prior to joining Salter Labs, Ms. Kiernan spent a cumulative total of22 years with Baxter Healthcare Corporation. Most recently, she was the GeneralManager for Baxter IV Therapy, a $1.5 billion global business unit.

After an initial 12 years with Baxter, primarily in the areas of finance and operations, in1995 Ms. Kiernan joined Allegiance Healthcare Corporation as VP of Finance,Distribution, and Services. She returned to Baxter in 2000, in 2001 was appointedVP/GM, Specialty Therapies, and became GM, Baxter Nutrition in 2003.

Ms. Kiernan serves on the board of directors of the American Red Cross of GreaterChicago, and is a past-president of the Healthcare Businesswomen’s Association,Chicago Chapter. Until its recent sale, she also served on the board of directors ofAmerican Medical Systems (NASDAQ: AMMD), a Minneapolis-based medical devicecompany.

Jane KiernanCEO

Salter Labs

®


Medical Products & Devices

®


Medical Products & DevicesJulie Sawyer Montgomery is Vice President, Global Marketing for Hospira’s MedicationManagement Systems business, a $600M global business including infusion pumps andsets, safety software, and services. She also serves as Vice President, Business Insightsfor all of Hospira’s businesses, across devices, pharmaceuticals, and biosimilars.

Prior to joining Hospira in 2010, Ms. Sawyer Montgomery served as Director, MarketingStrategy for Boston Scientific’s Cardiovascular division. Prior to her six years at BostonScientific, Ms. Sawyer Montgomery served pharmaceutical and biotech clients as aproject leader with Boston Consulting Group’s healthcare practice.

Ms. Sawyer Montgomery holds a B.A. magna cum laude in Economics from ColumbiaUniversity and a MBA from Harvard Business School.

Julie SawyerMontgomery

Vice President - GlobalInfusion Systems and

Global Business InsightsHospira, Inc.

Anthony Davis has been involved in principal investing and consulting since 1992. Priorto founding Linden LLC, he was a Partner with One Equity Partners (formerly FCEC).Mr. Davis was previously a strategy and operations management consultant with Cresap,McCormick and Paget in Chicago and Hong Kong. Mr. Davis currently serves on theboards of directors of Behavioral Centers of America and Drayer Physical TherapyInstitute and was a board member of Focused Health Solutions and Ranir. Mr. Davis is amember of the Economic Club of Chicago and the Chicago Council on Global Affairs.

Mr. Davis holds a Bachelor of Arts with honors in Economics from NorthwesternUniversity and an MBA with honors from the University of Chicago Graduate School ofBusiness, where he was a Rosett Scholar and serves as a guest lecturer on private equity.

Anthony DavisManaging Partner

Linden Capital Partners

®


Innovation Track PanelJohn Kennedy is the Co-Founder and President of Vasc-Alert. John graduated fromGeorgetown University in physics and has an MM from the Kellogg School of Businessat Northwestern University. After working in consulting and at Brunswick Corp. for theirM&A department, he started a software business called Marketing Information Systemsin 1981 developing systems to create and support a marketing database, a applicationnow termed customer relationship management systems (CRM). The company focusedon business-to-business applications and had over 500 clients including MCI, DHL, andIBM worldwide. The business was sold in 1998.

John then started Open Channel Software in 2000 to commercialize scientific andtechnical software developed in universities and research labs, with the core purpose toactively commercialize the very best of these applications. Today, the OCS web sitefeatures for licensing and download over 300 applications, many created by NASA andDOE labs and the active commercialization efforts are focused on a software applicationout of Henry Ford Health Systems in the hemodialysis market. Vasc-Alert extraqcts datacollected in the patient’s medical record and uses a patented algorithm to predict whichpatients are at risk for thrombosis. The service is offered under a ‘software as a service’business model and is currently servicing over 10,000 patients nationwide.

John KennedyCo-Founder and President

Vasc-Alert

Al B. Reid is currently Vice President of Corporate Development for AbbottLaboratories. Al joined Abbott in June 2000. Al provides the executive management teamstrategic advisory and operational support for Abbott’s pharmaceutical, medical device,diagnostic and nutrition businesses with combined revenue over $40 billion.

Mr. Reid has spent over 20 years leading a variety of healthcare initiatives for Abbott andBaxter including cross border transactions, strategic development and emerging marketacceleration programs. During his career, Mr. Reid has worked in over 50 countries andhas extensive experience executing multiple M&A transactions. Al’s previousprofessional experiences include Baxter Healthcare, Dun & Bradstreet, ParamountCommunications and the Federal Reserve Bank where he held positions of increasingresponsibilities in finance, business development and management consulting.

Mr. Reid is a member of the Executive Leadership Council, the Association of CorporateGrowth, and the Chicago Foreign Council. Al serves on the board of severalorganizations, including the HistoryMakers, Chicago Youth Centers and Advocates USA.Mr. Reid is a frequent guest panelist discussing topics ranging from sustaining businessgrowth to business expansion through emerging market activities.

Al ReidVice President of

Corporate DevelopmentAbbott Laboratories

®


Innovation Track PanelJohn Smolen is a Project Director at Northwestern Memorial HealthCare (NMHC), wherehe is responsible for technology strategy and planning. John started his career inhealthcare technology with a B.S. in Electrical and Computer Engineering fromUniversity of Illinois at Urbana-Champaign, then worked as a software engineer atMotorola.

After receiving his MBA with a concentration in Health Sector Management from DukeUniversity, John worked as a management consultant at McKinsey & Company advisingmedical device and health plan clients on business strategy. In his role at NMHC, Johndefines and leads initiatives to support and enable NMHC’s overall business strategy withinnovative technology solutions. John lives in Chicago with his wife and three children.

John SmolenProject Director

Northwestern MemorialHealth Care

Geeta Vemuri joined Baxter in January, 2012 as Senior Managing Director - BaxterVentures, the corporation’s $200 million venture fund. Prior to joining Baxter, she was aGeneral Partner at Quaker Partners, where she spent the last 8.5 years leadinginvestments in Biopharmaceutical and Healthcare companies and being integral part ofthe team in raising capital for the funds. Dr. Vemuri's role in building and mentoringportfolio companies has helped lead their exit through either acquisition or through InitialPublic Offering. Some of her representative Quaker portfolio board member or observerresponsibilities include Protez, Cempra, Corridor, Regado and Tranzyme Pharma.

Prior to Quaker, she was an Associate at Toucan Capital, where she was responsible forinvestments in seed-stage and start-up biotech opportunities. She participated in raisingcapital and helped start several portfolio companies by identifying technologies fromuniversities. Prior to that, she was an Associate Equity Analyst at SalomonSmithBarneyand First Union Securities covering specialty pharmaceuticals and healthcare sectors.Geeta was also a research scientist at The Wistar Institute and completed her postdoctoralfellow program at Thomas Jefferson University.

Dr. Vemuri received her M.S. from Central University in India, her Ph.D. in biochemistryfrom the Indian Institute of Sciences, and her M.B.A. from the Wharton School of theUniversity of Pennsylvania. Until recently she served on the Board of Directors andExecutive Committee of Southeast BIO, and the Advisory Committees of BioAdvanceGreenhouse and the Sid Martin Biotechnology Incubator.

Geeta Vemuri Senior Managing DirectorBaxter Ventures, BaxterHealthcare Corporation

®


Innovation Track PanelMichael Rosenthal has practiced in SNR Denton's Corporate practice since 1990 and hassignificant experience in private equity and venture capital transactions, corporatemergers and acquisitions, joint venture formation, securities matters, corporate finance,and workouts and restructurings, as well as general corporate counseling. Michael is amember of SNR Denton's Venture Technology practice and its Private Equity practice.

Recognized by Chambers USA as one of the leading venture capital lawyers in the nationand one of the leading private equity lawyers in Illinois, Michael represents venturecapital and private equity investors; angel investors and strategic investors in start-up,later-stage and mezzanine financing; and workout transactions and matters relating toportfolio management. His extensive fund formation experience includes representingprivate equity, venture capital and hedge fund sponsors, as well as limited partners infunds. His practice also includes representing clients in mergers and acquisitions of bothpublic and private companies, the formation of joint ventures, and counseling both publicand private clients regarding corporate governance matters. In all these areas he brings acreative yet practical approach to advising clients and structuring and negotiatingtransactions.

Michael has significant experience representing technology and other companies in theircapital-raising efforts and in general corporate matters. He is a member of the IllinoisVenture Capital Association, where he serves on its Legislative Committee, and he speaksfrequently on issues relating to venture capital and early-stage companies.

Michael RosenthalPartner

SNR Denton

SELECT HEALTHCARE SERVICES TRANSACTIONS

December 2011


Denton, TX

$4,000,000

December 2011


Plano, TX

$15,000,000

November 2011


NY

Outsourced Hospital Services Provider

$8,500,000

December 2011

Term Loan &Revolving Line of Credit

Chesterfield, MO

December 2011

$15,000,000Term Loan &


Denver, CO

Outsourced Hospital Services Provider

$15,000,000

July 2011


Timonium, MD

$16,240,000

July 2011

Term Loan

Culver City, CA

September 2011


Dallas, TX

August 2011

$20,000,000Term Loan &


Torrance, CA

$11,600,000

October 2011


Omaha, NE

$5,000,000

January 2011


Nutley, NJ

February 2011


Westlake Village, CA

$6,680,000

February 2011

Term Loan

Louisville, KY

March 2011

$5,000,000Term Loan &


Skokie, IL

$1,500,000

April 2011


Woonsocket, RI

June 2010


Huntington Park, CA

July 2010

$16,000,000Term Loan &


West Hollywood, CA

$68,500,000

October 2010


Jackson, MI

$5,000,000

December 2010


Brentwood, TN

SELECSE S SELEC

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ine of C Crolving LevRm Loan &erTTer

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Louisville, KY

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ctober 2010

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®


Presentation MaterialsPresentation Materials

© Marwood Group Advisory, LLC 2012 Unauthorized reproduction or distribution of this copyrighted work is prohibited

New York • Washington, D.C. Tel. 212 • 532 • 3651

www.marwoodgroup.com

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–! Corporate clients include over 60 healthcare providers, payors and other healthcare focused corporations

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®


Presentation Materials

© Marwood Group Advisory, LLC 2012 Unauthorized reproduction or distribution of this copyrighted work is prohibited 4

Federal Revenues and Outlays (% of GDP)

Source: CBO, January 2011

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MT

WY ID

WA

OR

NV UT

CA

AZ

ND

SD

NE CO

NM

TX

OK

KS

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MO

IA

MN WI

IL IN KY

TN

MS AL GE

FL

SC NC

VA WV OH

MI NY

PA

MD DE NJ

CT RI MA

ME VT

NH

AK HI

States with

shortfall

States without shortfall

Source: Center on Budget and Policy Priorities

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!! The reduction in uninsured will increase overall healthcare utilization, potentially reduce the amount of bad debt expense and ultimately simplify the eligibility and payment collection processes

!! In order to reduce the legislation’s costs the healthcare provider community agreed to accept multiple “pay-for” in the form of industry contributions ($480 billion) and new taxes and fees ($526 billion)

–! Impacted healthcare Industries include but are not limited to, Hospitals, SNFs, Home health, Pharmaceuticals and health plans

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Source: CBO’s Analysis of the Major Healthcare Legislation and Medicare Supplemental Data, March 30, 2011

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!! Likely to be replaced with specific deficit reduction

!! More defense cuts and fewer domestic cuts (healthcare)

!! Likely to be replaced with specific deficit reduction

!! Less defense cuts and more domestic cuts (healthcare)

DDeeffiicciitt RReedduuccttiioonn LLeeggiissllaattiioonn

!! 1 to 2 trillion of spending reductions and 1 to 2 trillion of tax increases in 2013-14

!! Half of Bush tax cuts expire

!! Over 5 trillion of spending cuts !! Bush tax cuts extended

DDoocc FFiixx !! Temporary fixes are likely, offset by reductions to other providers; $25b/year

DDeebbtt CCeeiilliinngg !! Crisis atmosphere !! Ultimately raised in combination with

deficit reduction

!! Crisis atmosphere !! Ultimately raised in combination with spending

cuts

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Traditional banks have been lukewarm when it comes to deploying capital in the healthcare industry—a sector known for its

regulatory complexities and reimbursement risk even during the best of times.

It should come then as no surprise that the period during the recent U.S. financial crisis was

particularly difficult. Credit tightened significantly, leaving small and mid-sized healthcare providers and vendors scrambling to finance their growth strategies. The healthcare reforms that followed only served to

heighten uncertainty, exacerbating the issue.

Challenging conditions aside, lending did not dry up completely. In fact, compared to other sectors at the time, total healthcare mergers and acquisitions activity fared relatively well. What the overall numbers obscure, however, is the amount of extra effort that was required to secure much-needed financing. With fewer lenders specializing in the industry, healthcare vendors and providers were forced to approach multiple lenders to successfully complete their deals.

A Variety of Financing Remedies As credit conditions may be poised to tighten again, the BDC (Business Development Company) business model appears to offer an important advantage over traditional lenders: a wider range of financing solutions. Leading BDCs enjoy diverse sources of liquidity, ranging from secured/term debt and SBIC financing to securitization financing and long-term credit facilities. Since each pocket carries its own cost and covenants, well-established BDCs are able to offer a superior product suite that runs from low

multiple, senior secured debt all the way to straight unitranche or mezzanine finance.

Traditional banks, on the other hand, are prohibited from offering one-stop financing or unsecured lending. For companies looking for a streamlined and efficient way to access a comprehensive array of financing alternatives, working with a BDC can remove some of the headache—and execution risk—that stems from dealing with multiple lending partners.

With a deeply honed, industry-specific underwriting expertise, BDCs may be better equipped to differentiate between good credits and riskier ones—a far cry from the conservative, one-size-fits-all approach that many traditional lenders take.

BDCs May Be the Cure Structural dynamics and demographic trends tend to drive a continuous need for financing in the healthcare industry, whether to underwrite mergers and acquisitions or fund capital expenditures. Yet, unique risks—from strict regulation and a heavy emphasis on government payment sources to the idiosyncrasies of healthcare receivables—create a steep learning curve. That is why healthcare companies require stable lenders with a strong, ongoing commitment to the sector. They need financing partners who possess the insight and wherewithal to lend—even during difficult market environments. With its sole mission to facilitate private financing to small and mid- sized businesses, the BDC is better positioned to meet this mark.

GREG BROWNE

BDCs: The Best Prescription for Healthcare Lending

www.fifthstreetfinance.com

Established by Congress to foster small business growth, BDCs are obligated to offer to provide managerial assistance. Because of this, their industry knowledge tends to run more than surface-deep—a stance that underscores their position as a more suitable lending partner. In fact, it is not uncommon for top-tier BDC professionals with a healthcare specialization to speak at industry conferences, attend Congressional testimony and keep highly-regarded industry consultancies on permanent retainer.

Consider a Specialist BDCs’ distinctive model confers certain benefits, such as an authentic underwriting specialization in industry verticals like healthcare. With a deeply honed, industry-specific underwriting expertise, BDCs may be better equipped to differentiate between good credits and riskier ones—a far cry from the conservative, one-size-fits-all approach that many traditional lenders take. For instance, it is not uncommon for a bank to broadly categorize healthcare lending as ‘real estate lending’ as opposed to business lending. From this standpoint, it is not hard to see why the sector suffered during the last downturn.

It appears that BDCs’ strong focus on underwriting discipline has borne fruit. For example, over the past five years, the average

cumulative loss rate for BDCs was only 111 basis points (bps) per year—a figure that stands considerably below the 155 bps per year that banks have averaged.

Looking ahead, if the U.S. economy enters another soft patch and credit conditions deteriorate, a select group of BDCs seem better positioned to continue to support this sector. In addition to their flexible financing solutions, many BDCs have used the intervening years since 2008-2009 to shore up their balance sheets. These niche players can also draw upon hard-earned underwriting expertise to analyze underlying company fundamentals—increasing the likelihood of successful deal completion.

Get a Referral When considering a BDC specialist, it should be emphasized that they are not all the same. Some BDCs experienced difficulties during the recent economic downturn when reliance on short-term revolving bank facilities left them stranded. When looking at a prospective BDC, companies would be wise to choose one with modest balance sheet leverage, diverse sources of funding, a meaningful hold size and significant ongoing capital availability.

Greg Browne is Managing Director at Fifth Street Finance.

914.286.6800

New York • Greenwich • Chicago • Los AngelesA NASDAQ Listed Company (Ticker: FSC)

Visit us at www.fifthstreetfinance.com or call us at (312) 348-7205.

Fifth Street: A Paragon of Reliability Fifth Street has diverse sources of funding, a high quality portfolio and ample capacity. As credit conditions appear poised to tighten again, we believe we are particularly well-positioned. We have proactively recast our balance sheet to support long-term value, while adopting policies that align our interests with those of our shareholders.

We have actively invested in healthcare companies since our inception and understand the complexities and challenges facing the industry. Offering in-depth industry experience combined with certainty of execution, we provide comprehensive financing solutions to middle-market healthcare companies in conjunction with private equity sponsors.

✧

Published in Healthcare Finance News in the Jan/Feb 2012 Issue

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A business intelligence prescription for health care executives Winter 2012

Health CareRx

Governance in a dynamic health care environment: A Q&A with Anne McGeorge and Dr. Lawrence PrybilHealth care as a business is changing dramatically. Between health care reform, shrinking reimbursements, accountable care, electronic health records, new technologies, growing scrutiny from regulators and other transformative aspects of health care, hospitals and health care systems are under more pressure than ever to adapt for the future. Effective governance is more important than ever, but what are the best governance features at leading health care systems?

We recently sat down with Dr. Lawrence Prybil, principal investigator of Governance in USA’s Largest Nonprofit Health Systems and an earlier study, Governance in High-Performing Community Health Systems; and Anne McGeorge, national managing partner of Grant Thornton LLP’s Health Care practice, to learn more about the current state of governance practices at some of the leading health systems in the United States.

What are the key factors that drive performance in health care systems?

Prybil: There are several factors that have emerged across the country. From the perspective of boards of large systems, there is clear recognition that, because the environment is increasingly difficult and the challenges are becoming greater, establishing and maintaining a strong, values-based leadership team is absolutely imperative. This has always been vital, but it is more critical than ever in today’s environment. Boards realize now that management and clinical leadership together are the driveshaft of maintaining and strengthening performance.

continued>

Governance in USA’s Largest Nonprofit Health Systems examines the systems’ governance structures, practices, and culture in relation to contemporary benchmarks of good governance. The findings, which will be released in spring 2012, are based on 71 on-site interviews with CEOs and senior board leaders in 14 of the country’s 15 largest nonprofit health care organizations.

2 Health CareRx – Winter 2012

Governance in a changing health care environment: A Q&A with Anne McGeorge and Dr. Lawrence Prybil (continued)

McGeorge: We see executive and clinical leadership working as a team like never before. A strong bond between the CEO and clinical leadership is essential — especially now as integrated delivery networks are emerging as the model for the provision of high quality, cost-efficient patient care. If there aren’t synergies between the management team and clinical leadership, the board ends up having to take action.

How is the role of physicians changing?

McGeorge: We have learned from talking to physicians, especially physicians new to the profession, that most don’t want to be in a stand-alone private practice. They see integration as their future. This is a distinct shift from what we witnessed 10 to 15 years ago. Now, it seems like there is a much more positive attitude about teaming with hospitals. There also are more administrative leadership opportunities for physicians within health care systems than in the past. A growing number of physicians are rising to executive ranks within hospitals. For example, many health systems have physician CEOs. Also, we see more physician organizations where physicians have their own board and make their own decisions as a physician organization, but are still affiliated with the hospital organization. This has worked well as it gives the physicians independence, while still maintaining their alignment with the health system’s mission and strategy.

There must be one vision of how to get from here to there, and financial and information systems that allow everyone to be looking at the same scoreboard and measures. Without these, how will the organization know if its performance is proving to be successful?

As hospitals pursue growing integration and coordination with physicians, what are the biggest challenges they face?

Prybil: Regardless of the exact organizational model for integration and coordination, what is paramount is that the organization establishes common metrics, shared information systems, and a clear organizational vision and direction. There must be one vision of how to get from here to there, and transparent financial and information systems that allow everyone to be looking at the same scoreboard and measures. Without these, how will the organization know if its performance is proving to be successful?

McGeorge: A shared vision and consolidation of systems and metrics are definitely the goals, but these can be a challenge for large health systems with many disparate systems. Trying to consolidate and streamline processes and information systems is a huge undertaking. For example, I was with a client yesterday, whose organization has 120 different financial systems alone. As they evaluate how to streamline their technology solutions, they are trying to create a common dashboard that will bring together all of their data into consistent metrics for decision-making. The challenge is streamlining information systems in a cost-efficient manner.

continued>


One of your preliminary study findings is that boards are spending more time on strategy than in the past. How are boards becoming more strategic in their thinking?

Prybil: One of the striking findings from our current study of governance in these large health systems, Governance in USA’s Largest Nonprofit Health Systems,is the growth in attention and focus at the board level on strategy and strategic thinking. The boards of all these large systems recognize that they need to refocus how they spend their time, which is their most precious asset. Boards are making deliberate efforts to carve out more time for strategy and strategic thinking, and decrease the percentage of time they allocate to shorter-term, operational issues. Among these health systems, nearly 30 percent of board meeting time currently is being devoted to strategy and strategic thinking. Boards recognize that the world and the health care environment have changed dramatically, and that their systems too must change. We cannot just focus on providing acute inpatient care to those that come to our doorsteps. Instead, we need to be asking questions about how to accommodate the needs of a changing population and new financial realities. We need to be able to live within Medicare rates. If we believe this is the likely scenario, how can we change from what we’ve been to what we need to be? Moreover, how can we do this while still preserving our system’s values and soul in the process?

McGeorge: The health care delivery model is gradually changing from a fee-for-service model to a model of preventative wellness and payments for quality outcomes, more like an HMO or capitated environment. Ultimately, systems need to evolve. This doesn’t happen overnight. These are entirely new challenges – ones that many boards didn’t have 10 to15 years ago. If they don’t do something to change, hospitals will not survive for the long haul.

What kinds of training do boards need as they sharpen their focus on strategy?

McGeorge: We think that boards need some training in how to think strategically. Some organizations — and we applaud them — are holding strategy retreats, where they have outside speakers and strategy consultants who help them challenge the status quo. Another area that can be helpful for boards is training on how to identify big-picture, enterprise wide risks that will affect the organization, such as competitors coming into marketplace, not integrating physicians quickly enough, not reacting to changes quickly enough, etc.

continued>


How do high-performing boards differ from ordinary boards?

In addition to sponsoring Governance in USA’s Largest Nonprofit Health Systems, which will be released in spring 2012, Grant Thornton also sponsored a 2009 study authored by Dr. Prybil, Governance in High-Performing Community Health Systems: A report of trustee and CEO Views, focused on the governance practices of leading community health systems. The study concluded that high-performing boards are more likely than other boards to:

programs,

programs,

express their views and constructively challenge each other and the management team.



Prybil: Boards and the management and clinical leadership are still grappling with what they should be looking at in terms of quality and safety. There is an explosion of measures and methods in this area. Medicaid just came out with a new study on quality measures. The National Quality Forum and other organizations have released more measures. One of the daunting challenges for boards is to understand: What do we need to look at

versus what the quality committee needs to look at versus what local leadership needs look at? What are the right targets to set? If our objective is to reduce hospital-acquired infections, what are the right measures and targets? When you give a board dozens of quality and safety measures to review, their eyes glaze over. There are so many gauges and dials and flashing numbers – but what does the board really need to be looking at?

About the newsletterHealth CareRx is published by Grant Thornton LLP. The people in the independent firms of Grant Thornton International Ltd provide personalized attention and the highest-quality service to public and private clients in more than 100 countries. Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd, one of the six global audit, tax and advisory organizations. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity.

Contact informationAnne McGeorgeNational Managing PartnerHealth [email protected]

[email protected]

Content in this publication is not intended to answer specific questions or suggest suitability of action in a particular case. For additional information on the issues discussed, consult a Grant Thornton client service partner.

© Grant Thornton LLPAll rights reservedU.S. member firm of Grant Thornton International Ltd

www.GrantThornton.com

Lawrence Prybil, PhD, FACHEDr. Lawrence Prybil is professor of health services management and associate dean in the University of Kentucky College of Public Health, and professor emeritus at the University of Iowa College of Public Health. Dr. Prybil is a fellow in the American College of Healthcare Executives and received his master’s and doctoral degrees from the University of Iowa College of Medicine. He has served on the governing boards of hospitals, multi-unit health systems, state hospital associations, the American Hospital Association (AHA) and other nonprofit and investor-owned organizations. He currently serves on the National Board of Advisors of the AHA’s Center for Healthcare Governance and the board of managers of the Catholic Healthcare Audit Network. He has authored or co-authored over 80 publications. He is recognized for his expertise in organizational governance and leadership, and currently is directing the third in a series of studies regarding governance structures, practices, and cultures in nonprofit hospitals and systems.

Anne McGeorgeAnne McGeorge is the national managing partner of Grant Thornton LLP’s Health Care practice, and has represented health care clients for almost 25 years. She has worked extensively with large health systems, academic medical centers, managed care organizations, coalitions and purchasing organizations, health care private equity firms, and physician practices. She has assisted clients in all aspects of financial consulting. McGeorge also focuses on helping clients with establishing community health needs assessments and board governance benchmarking. She has assisted with the publications, The Tax Economics of Charitable Giving, A Guide to Navigating Intermediate Sanctions, The Essentials of Physician Practice Management, and Governance in High-Performing Community Health Systems. McGeorge was selected as a “Woman Extraordinaire” by Business Leader magazine in 2011 and named one of Charlotte’s “Most Influential Women” in 2010 by the Mecklenburg Times.

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