1. Bennett Bigelow & Leedom Washington Managed Imaging Strategy for the Future

2. Bennett Bigelow & Leedom 2 Our Goals Help you distill your goals Help you distill your goals Describe options and considerations Describe options and considerations Develop a time frame for action Develop a time frame for action Design a structure that meets your needs Design a structure that meets your needs Implement your decisions Implement your decisions

3. Bennett Bigelow & Leedom 3 Context for Planning Market has evolved since WMI formed as messenger model IPA Market has evolved since WMI formed as messenger model IPA Large groups have expressed interest in acquiring member groups Large groups have expressed interest in acquiring member groups These changes prompt consideration of a more integrated organization appropriate for current market These changes prompt consideration of a more integrated organization appropriate for current market

4. Bennett Bigelow & Leedom 4 Integration Planning Issues Transaction Process Business Issues Integrated Practice Models Legal Issues Feasibility

5. Bennett Bigelow & Leedom 5 Transaction Process Goal: One-Year Timeline Today Initial Commitment 2 months Design Practice Model Design Practice Model Business Issues Feasibility Analysis Feasibility Analysis Due Diligence 5 months Negotiate Transaction and Practice Agreements 5 months Sign Exclusive Confidentiality Agreement Sign Definitive Agreements Close: Go Live! Term Sheet (Re-commit) Implementation 4 months

6. Bennett Bigelow & Leedom 6 Feasibility Analysis Due Diligence Financial Modeling for Overhead Articulate Goals of Integration Successful Transaction Process Member Support

7. Bennett Bigelow & Leedom 7 Transaction Legal Issues Anti-Trust Law Facility Ownership Hospital Contracts Federal Stark Law Benefit Issues Corporate Tax

8. Bennett Bigelow & Leedom 8 Integrated Practice Model Design Governance Local v. Centralized Shared Services Ancillary Facilities Participation Terms for MDs

9. Bennett Bigelow & Leedom 9 Required Legal Characteristics of Any Integrated Entity Financial Integration Financial Integration Clinical Integration Clinical Integration Legal Integration (Stark law compliance) Legal Integration (Stark law compliance)

10. Bennett Bigelow & Leedom 10 Financial, Clinical and Legal Integration Practice has one name, TIN and fee schedule; bills for at least 75% of each physician’s services Practice has one name, TIN and fee schedule; bills for at least 75% of each physician’s services Central representative body with decision making authority and control over assets Central representative body with decision making authority and control over assets E.g. budget approval, employment of staff E.g. budget approval, employment of staff

11. Bennett Bigelow & Leedom 11 Consolidated billing, accounting and financial reporting Consolidated billing, accounting and financial reporting Shared financial risk, e.g. overhead — but profit sharing for each location or specialty may be based on that group’s results Shared financial risk, e.g. overhead — but profit sharing for each location or specialty may be based on that group’s results Shared clinical elements: protocols, coverage, risk control Shared clinical elements: protocols, coverage, risk control Financial, Clinical and Legal Integration

12. Bennett Bigelow & Leedom 12 Integrated Practice Business Issues ManagementFinances Facility Management Information Flow and Access ClinicalOperations OrganizationOperations Future changes

13. Bennett Bigelow & Leedom 13 Consolidation — creation of a new practice owned by the existing practice entities Consolidation — creation of a new practice owned by the existing practice entities Merger — one existing practice survives, MDs retain or acquire an interest in it Merger — one existing practice survives, MDs retain or acquire an interest in it New practice — members of existing practices create a new practice New practice — members of existing practices create a new practice Need to consider ownership of imaging facilities and other legal issues to structure transaction Need to consider ownership of imaging facilities and other legal issues to structure transaction Transaction Options That Achieve Integration

14. Bennett Bigelow & Leedom 14 New Practice, PLLC Existing Practice 1 Existing Practice 2 Existing Practice 3 Integrated Practice Consolidation Assets Assets Staff Staff Office Office Infrastructure Infrastructure Contracts Contracts MDMDMDMDMDMDMDMDMD

15. Bennett Bigelow & Leedom 15 Consolidation: Characteristics New company is the practice entity, through which services are delivered, bills are issued New company is the practice entity, through which services are delivered, bills are issued Existing practices Existing practices Can own new practice but cannot be operating practices Can own new practice but cannot be operating practices Can administer specialties or practice locations Can administer specialties or practice locations May be able to employ physicians who provide services through new practice (pending final anti-markup rule) May be able to employ physicians who provide services through new practice (pending final anti-markup rule)

16. Bennett Bigelow & Leedom 16 Consolidation: Considerations Existing practices retain identity but add a layer of administration Existing practices retain identity but add a layer of administration Pre-closing liabilities remain with existing practices Pre-closing liabilities remain with existing practices New contracts and credentialing required for new practice New contracts and credentialing required for new practice

17. Bennett Bigelow & Leedom 17 Merger Existing Practice 1 Existing Practice 2 Existing Group 3 Group 1 Division Group 2 Division Group 3 Division

18. Bennett Bigelow & Leedom 18 Merger Physicians exchange their interest in existing practice for interest in another existing practice Physicians exchange their interest in existing practice for interest in another existing practice Existing practice may take on a new name Existing practice may take on a new name Specialties and/or locations become divisions of practice Specialties and/or locations become divisions of practice

19. Bennett Bigelow & Leedom 19 Merger Considerations Liabilities of existing groups carry over Liabilities of existing groups carry over No new credentialing, TIN or Medicare number. No new credentialing, TIN or Medicare number. May assume favorable agreements of existing group May assume favorable agreements of existing group

20. Bennett Bigelow & Leedom 20 Transaction Process Goal: One-Year Timeline Today Initial Commitment 2 months Design Practice Model Design Practice Model Business Issues Feasibility Analysis Feasibility Analysis Due Diligence 5 months Negotiate Transaction and Practice Agreements 5 months Sign Exclusive Confidentiality Agreement Sign Definitive Agreements Close: Go Live! Term Sheet (Re-commit) Implementation 4 months

21. Bennett Bigelow & Leedom 21 Transaction Process Commitment Commitment Consensus to pursue discussion Consensus to pursue discussion Member support is key Member support is key Execute confidentiality & exclusivity agreement Execute confidentiality & exclusivity agreement Retain consultant and counsel Retain consultant and counsel Fund transaction budget Fund transaction budget Each group retains independent counsel for itself Each group retains independent counsel for itself

22. Bennett Bigelow & Leedom 22 Transaction Process Due Diligence & Feasibility Analysis Due Diligence & Feasibility Analysis Each group provides financial data to consultant (no payor info) Each group provides financial data to consultant (no payor info) Consultant uses financial data for modeling combined overhead Consultant uses financial data for modeling combined overhead Need to resolve some business issues to do modeling (e.g., eliminate duplicative expenses) Need to resolve some business issues to do modeling (e.g., eliminate duplicative expenses) Due diligence on each party Due diligence on each party

23. Bennett Bigelow & Leedom 23 Transaction Process Design Practice Model Design Practice Model Degree of division autonomy Degree of division autonomy Buy-sell provisions for MDs Buy-sell provisions for MDs Governance Governance Legal entity Legal entity Tax Issues Tax Issues Structure facility relationships Structure facility relationships

24. Bennett Bigelow & Leedom 24 Transaction Process Business Issues Business Issues Management Management Facility ownership and management Facility ownership and management IT-billing IT-billing Transition existing joint ventures and contracts Transition existing joint ventures and contracts Common overhead assessment Common overhead assessment

25. Bennett Bigelow & Leedom 25 Documents Documents Develop term sheet to begin document drafting Develop term sheet to begin document drafting Develop transaction documents Develop transaction documents Develop practice documents including MD compensation and buy-sell agreements Develop practice documents including MD compensation and buy-sell agreements Structure for practice facilities Structure for practice facilities Transaction Process

26. Bennett Bigelow & Leedom 26 Implementation Implementation Staffing changes Staffing changes Accounting, banking, billing changes Accounting, banking, billing changes Marketing Marketing Third party consents (payor and hospital contracts) Third party consents (payor and hospital contracts) Transaction Process