1. Bradley J. Berg 206.447.8970 | bergb@foster.com AWPHD A Retreat for CEOs and Administrators Only “Leading Wisely, Living Well” The Heathman Lodge Vancouver, WA May 19-21, 2010

2. Leading Wisely, Living Well PHD Collaboration Models  Merger/Consolidation  Sale  Lease  Management Agreement  Joint Venture Agreement --Joint Operating Agreement --Interlocal Agreement

3. Leading Wisely, Living Well Key Variables in Collaboration Models  Who owns the assets?  Who is responsible for funding capital?  Who has the right to receive revenue and who has responsibility for liabilities and expenses?  Who owns the licenses and provider agreements?  Who employs the staff?  Who is responsible for governance and management?

4. Leading Wisely, Living Well Public Hospital District Issues 1.Statutory authority 2.Constitutional limitations -- prohibition against gift of public funds or property -- prohibition against lending public funds or public credit -- prohibition against owning stock in any private company -- requirement that public funds be used for public purposes

5. Leading Wisely, Living Well Public Hospital District Issues 3.Statutory limitations  Requirement that public hospital districts appoint a superintendent and that the superintendent be the "chief administrative officer of the public district hospital and … have control of administrative functions of the district."  Requirement that any sale of real property be preceded by three appraisals and a public hearing and that the property not be sold for a price less than 90% of the average of the three appraisals.

6. Leading Wisely, Living Well Public Hospital District Issues  Requirement that any lease of real property be preceded by a resolution adopted by the commissioners finding that the property "presently is not required for public hospital district purposes...."  Requirement that any meetings be held in compliance with the provisions of the Open Public Meetings Act.  Requirement that any records be made available to the public pursuant to the Public Records Act.

7. Leading Wisely, Living Well Public Hospital District Issues  Prohibition against any public officer having any beneficial interest in any contract that they approve or supervise.  Requirement that any construction projects paid for with public money be publicly bid and that the construction workers be paid prevailing wages.

8. Leading Wisely, Living Well Public Hospital District Issues 4.Common Law Limitations  Prohibition against a public officer simultaneously holding a public office and an incompatible private office.  Other?

9. Leading Wisely, Living Well Restrictions Relating to Outstanding Bonds 1.Bond Covenants -- Restrictions on transfers of property  Unlimited tax general obligation bonds  Limited tax general obligation bonds  Revenue bonds -- Restrictions on issuance of additional debt

10. Leading Wisely, Living Well Restrictions Relating to Outstanding Bonds 2.Federal Tax Law Limitations --Restrictions on change in use of property financed with the proceeds of tax-exempt bonds --Restrictions on management agreements or services agreements relating to the use of property financed with the proceeds of tax-exempt bonds

11. Leading Wisely, Living Well Government Approvals 1.Certificate of Need 2.Antitrust --Hart-Scott-Rodino filing --U.S. Department of Justice --Federal Trade Commission --State Attorney General

12. Leading Wisely, Living Well Government Approvals 3.State Auditor 4.Washington State Department of Health 5.CMS 6.Other?

13. Leading Wisely, Living Well Other Legal Issues 1.Labor Issues --Multiple unions --Jurisdiction of National Labor Relations Board versus Public Employees Relations Commission --Compensation and benefits structures --Reductions in work force --Other?

14. Leading Wisely, Living Well Other Legal Issues 2.Medicare Reimbursement --Billing under a single provider --Other?

15. Leading Wisely, Living Well Other Legal Issues 3.Federal tax limitations relating to Section 501(c)(3) organizations 4.State Tax Issues --Business and occupation tax and requirements for social welfare organizations --Property tax exemptions

16. Leading Wisely, Living Well Other Legal Issues 5.Restrictions on assignment of existing contracts including significant payers 6.Other?

17. Leading Wisely, Living Well Collaboration Examples Involving Public Hospitals Mason County PHD No. 2/Harrison Medical Center  New PHD formed for the purpose of collecting taxes and contracting with Harrison to own and operate an urgent care clinic within the District

18. Leading Wisely, Living Well Collaboration Examples Involving Public Hospitals San Juan County PHD No. 1/Peace Health  PHD closing its ambulatory care clinic and contracting with PeaceHealth to construct a new critical care hospital, which will be owned and operated by PeaceHealth, and a new EMS facility, which will be owned and operated by the District

19. Leading Wisely, Living Well Collaboration Examples Involving Public Hospitals Grant County PHD No. 5/Mattawa Community Medical Clinic  PHD contracts with a separate nonprofit corporation to operate a Federally Qualified Health Center Look-A-Like in the PHD’s facilities

20. Leading Wisely, Living Well Collaboration Examples Involving Public Hospitals Snohomish County PHD No. 2/Swedish Health Services  PHD agrees to lease all of its health care facilities to Swedish Health Services. Swedish will operate the hospital under its license. The PHD is exploring other functions beyond operating a hospital.

21. Leading Wisely, Living Well Collaboration Examples Involving Public Hospitals University of Washington/Northwest Hospital  UW has become the sole corporate member of the nonprofit corporation that owns and operates Northwest Hospital and has been granted certain reserved powers including the power to appoint the board of directors of the corporation.

22. Leading Wisely, Living Well Collaboration Examples Involving Public Hospitals  Other examples  King County PHD No. 4/PeaceHealth  University of Washington/Harborview  Pacific Hospital and Preservation Development Authority/Pacific Medical Centers

23. Leading Wisely, Living Well New Financing Options for Public Hospital Districts  FHA 242 Program — HB 2510  USDA Financing  State LOCAL Program  Build America Bonds (currently expires 12/31/2010)  Increase in bank qualification from $10 M to $30 M (currently expires 12/31/2010)

24. Leading Wisely, Living Well Litigation Challenging Hospital’s Right to Employ Physicians  Columbia Physical Therapy v. Benton Franklin Orthopedic Associates  Witham v. Clallam County PHD No. 2 and Olympic Hospitalist Physicians

25. Leading Wisely, Living Well Health Care Reform Changes New requirements applicable to 501(c)(3) hospitals  Must conduct a health-needs assessment every three years  Must adopt and make widely available a financial assistance policy  Must limit charges for those eligible for financial assistance policy to lowest amount charged to those who have insurance  Must limit billing and collection practices

26. Leading Wisely, Living Well Health Care Reform Changes Fraud and abuse law changes  Amends anti-kickback statute to relax specific intent requirement and to clarify that violation results in false claim  Liberalizes the qui tam law  Requires expansion of RAC audits to Medicaid by 12/31/2010  Requires the establishment of a disclosure protocol for violations of the Stark Law and permits settlements

27. Leading Wisely, Living Well Health Care Reform Changes  Requires overpayments to be refunded within 60 days to avoid a false claim  Requires all fee for service claims for services provided after 1/1/2010 within one year of the date of service  Requires physicians who own who operate imaging services in their offices to inform patients in writing from an outside source. Providers must also be accredited by 1/1/2012

28. Leading Wisely, Living Well Health Care Reform Changes  Expands 340B drug program eligibility to critical access hospitals (participating rural hospitals report average monthly savings of $19,700 on total outpatient drugs in 2006)

29. Leading Wisely, Living Well 29 Contact Information Brad Berg Telephone: 206-447-8970 Email: BergB@Foster.comBergB@Foster.com Foster Pepper PLLC 1111 Third Avenue, Suite 3400 Seattle, WA 98101 www.foster.com www.foster.com