1. Physician Employment Advocate Health Care James R. Dan, M.D.
May 2, 2014

2. Leading in a challenging environment
Intense reimbursement/price/cost pressure
Care shifting to outpatient
Rapid growth in consumerism
Massive provider consolidation
New industry entrants

3. The healthcare economic reality
2013 Federal budget
Growth projections for Federal spending
Gov’t Receipts
$2.9T
Gov’t spending as % of GDP
Federal Health Programs
Social Security
Healthcare consuming over 50% of gov’t receipts
Other Mandatory
Gov’t Outlays
$3.8T
Sources: Estimates from The Budget and Economic Outlook (January 2012) - Congressional Budget Office.

4. Reimbursement dynamics
Today
2020 Outlook
TODAY
Medicaid Expansion
3.5%
+2%
Aging/ Medicare
-4%
Exchanges
-2%
Reimbursement Cuts
Comm’l Rates
2020 Outlook
-4.5%
Commercial
40% 40%
Comm’l
Operating Margin %
20 20
0% 0%
(20) Medicare (20)
Exchange
Operating Margin %
Medicare
(40) (40)
Medicaid
Avg Margin: 3.5%
Avg Margin: (4.5)%
Medicaid
(100)%
Uninsured
(100)%
Uninsured
Health System Payer Mix
100
Health System Payer Mix
100
GE Healthcare Proprietary and Confidential Information

5. The Death of the Chargemaster
The Brill Effect
Consumer-driven high deductible plans focus the mind on price as much as use
Reference pricing scares providers
All payer transparency is coming soon
GE Healthcare Proprietary and Confidential Information

6. The Environment Intense reimbursement/price/cost pressure
Care shifting to outpatient
Rapid growth in consumerism
Massive provider consolidation
New industry entrants

7. Fill the hospital Empty the hospital
Inpatient growth Outpatient growth
Overall
-6 to -8%
Overall
+18-20%
Orthopedics
17%
Cancer
30%
Neuro 8%
Gen Med/Surg
21%
Cancer 1%
Neuro
21%
Spine
-1%
Cardio
20%
Gynecology
-5%
Spine
18%
Gen Med/Surg
-5%
Ortho
18%
Cardio
-25%
Gynecology
10%
Shift from high-cost acute settings accelerating
GE Healthcare Proprietary and Confidential Information

8. The Environment Intense reimbursement/price/cost pressure
Care shifting to outpatient
Rapid growth in consumerism
Massive provider consolidation
New industry entrants

9. GE Healthcare Proprietary and Confidential Information
Consumerism rapidly growing
GE Healthcare Proprietary and Confidential Information

10. Consumerism rapidly growing

11. The Environment Intense reimbursement/price/cost pressure
Care shifting to outpatient
Rapid growth in consumerism
Massive provider consolidation
New industry entrants

12. Provider consolidation
5 largest airlines control >75% of seats
5 largest health systems control < 10% of beds
GE Healthcare Proprietary and Confidential Information
Source: Kaufman Hall & Associates, Inc., Presentation by Anu Singh, GE analysis

13. The Environment Intense reimbursement/price/cost pressure
Care shifting to outpatient
Rapid growth in consumerism
Massive provider consolidation
New industry entrants

14. GE Healthcare Proprietary and Confidential Information
New entrants
Walgreens Goal: Reinvent Pharmacy
Advance community pharmacy to play a greater role in healthcare through integration and expanded services- focus on chronic disease management
Source: Presentation at Lazard Annual Healthcare Conference
GE Healthcare Proprietary and Confidential Information

15. New entrants

17. Pluralistic Physician Structure
Physicians on Advocate Medical Staffs = 5,900
Advocate Physician Partners (APP) = 4,400
AMG/Dreyer 1,200/200
Independent = 3,000
Non-APP = 1,500

18. What is the Role of AMG?
Advocate Vision
To be a faith-based system providing the best health outcomes and building lifelong relationships with those we serve.
AMG Role
A nationally-recognized, physician-led integrated group committed to delivering the best health outcomes.

19. AMG Growth History and Projection
Number of Physicians
*Projected

20. Group Composition
PIE CHART

21. The Advocate Medical Group Journey
Group Optimization
Rapid Growth and Integration
Physician-led Governing Council
2009
Consolidated, Dedicated Management
2008

22. AMG Contribution to Advocate Health Care
Health Outcomes/Safe Clinical Enterprise
Advocate Experience
AdvocateCare
Service Lines
Loyal Patient Growth
Progressive Care Models

23. AMG Performance Top decile in 7 of 9 national CI benchmarks
Associate Satisfaction – top decile 4 years
Physician Satisfaction – 78th %ile
Patient Satisfaction – 62th %ile
Cost/RVU actual decline over past 5 years
Growth - With Dreyer, 20% of system revenue and the engine of Advocate
Medicare Advantage medical costs flat year-over-year for 4 years

24. AMG Value Proposition Group focused on health outcomes and safety
Competitive physician compensation and benefits
Professionally satisfying practice environment
Proactive input into clinical and operational practice performance
Strong connection to Advocate system leadership
Resources of a large, nationally recognized, integrated health care system

25. What you need to believe to thrive in AMG
Committed to Vision of Best Health Outcomes and Safest Care
Cost Concerns are Best Addressed via #1
Integrated, Team Care is Essential for #1 and #2
Commitment to Personal Leadership of a Health Care Team

26. What is the Role of AMG? Advocate Vision
To be a faith-based system providing the safest environment and best health outcomes, while building lifelong relationships with the people we serve.
AMG Role
A nationally-recognized, physician-led integrated group committed to delivering the best health outcomes.

27. Historical Data
2013

28. What We Need to Believe to Thrive in AMG: Leading from Principles
Committed to Vision of Best Health Outcomes and Safest Care
Cost Concerns are Best Addressed via #1
Integrated, Team Care is Essential for #1 and #2
Commitment to Personal Leadership of a Health Care Team