1. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential December 17, 2013 How to Drive ROI in Your Health Care Improvement Projects

2. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Presenters Bobbi Brown, Vice President of Financial Engagement, Health Catalyst. Ms. Brown started her healthcare career with software sales and service at McKesson in the Technology Solutions Group. She worked at Intermountain Healthcare before moving to Sutter Health and, later, Kaiser Permanente, where she served as Vice President of Financial Planning and Performance. At Intermountain Health Care, she partnered with clinical teams to analyze and measure financial impact of the clinical programs. She holds an MBA from the Thunderbird School of Global Management as well as a BA in Spanish and Education from Misericordia University. Leslie Hough Falk, RN, MBA, PMP, Health Catalyst. Prior to joining Health Catalyst, Leslie held positions as a Nurse Informaticist, Director of Biomedical Engineering, Clinical Engineer for Kaiser Permanente-Northern Region and Pediatric ICU RN. Ms. Falk also worked with Hewlett-Packard in several clinical, marketing, sales and support leadership roles. She holds a Master of Science degree in Community Counseling from Seattle Pacific University as well as an MBA and Bachelor of Science in Engineering from the University of Nevada, Las Vegas. She is also a certified Project Management Professional (PMP), Lean Green Belt and Information Privacy Professional (CIPP/CIPP IT).

3. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Agenda Why IT ROI is increasingly important in Health Care improvement projects ROI in Health Care versus other industries Health Catalyst 4- step approach for driving ROI 3

4. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Poll Question #1 What is your primary area of focus?  Physician/Provider  Nursing  Finance  Information System  Other 4

5. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential The Increasing Importance of ROI in Health Care Improvement Projects 5

6. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Stagnating Margins 6 Source: Medpac report March 2013

7. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Competing Trends 7 Accountable Care Organizations Shared savings for groups of doctors and hospitals, and other providers who deliver quality care and spend wisely. Bundled Payments Payment arrangements that include financial and performance accountability for episodes of care. Health Care Organizations Improve Quality Reduce Costs Increase Value Value Based Purchasing Links payment more directly to the quality of care. Population Health Balancing the need for individuals and populations while caring for a larger number of patients. Reduced Readmissions Becoming more efficient at preventing services that once contributed to the bottom line. Eliminate Waste Improving quality and reducing costs while meeting expanded regulatory data collection and surveillance requirements.

8. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential IT ROI in Health Care versus Other Industries 8

9. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential ROI Measurements and Complexity of Environment 9 Source: Journal of Healthcare Information Management — Vol. 17, No. 4 Phase 1 Investments with Direct Cost Savings or Revenue Increases (e.g. financial systems) Phase 2 Investments to improve Productivity and Reporting (e.g. department systems) Phase 3 Investments to improve Quality of Product or Service (e.g. clinical systems) More Hard Complexity of the Environment into which IT Investment is Made Easy Measurement of Return on Investment Less

10. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Unique Health Care Governance and Payment Model 10 Source: Journal of Healthcare Information Management — Vol. 17, No. 4 Physicians Patient Other Caregivers Facility Payer Pays Enrolls Provides care to

11. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential HIMSS Health Value STEPS Model 11 Source: HIMSS Resource Center. http://www.himss.org/valuesuite

12. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Use Case Example Scenario: Clinical Improvement project Project Goals: Shift clinical resources from surveillance to interventions, and reduce Catheter-Associated Urinary Tract Infections by XX % Team: Providers, nursing, patient safety and quality, information systems Missing results: Financial impact of reduced CAUTIs such as length of stay and improved productivity related to decreased surveillance activities Team feedback: “Yes, we should consider LOS and productivity gains. However, we don’t track that. I’m sure someone else in the hospital does but we are clinicians.” 12

13. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Poll Question #2 Do you currently measure ROI in your Health Care IT improvement projects?  Always  Sometimes  Not usually  No  Unsure 13

14. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential The Health Catalyst 4-step ROI Approach 14

15. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Step 4: Evaluate Costs, Revenue & Direct Benefits Step 4: Evaluate Costs, Revenue & Direct Benefits Step 3: Recruit, Train, Plan and Implement Step 3: Recruit, Train, Plan and Implement Step 2: Begin to Quantify ROI Step 2: Begin to Quantify ROI Four Step Approach 15 Step 1: Define the Project and Business Need Step 1: Define the Project and Business Need State proposal Justify business need

16. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Project Proposal: Heart Failure Readmission Analytics Proposal Expand capabilities of the enterprise data warehouse and purchase an advanced heart failure application with a total cost of $400,000. Focus will be readmission rate. Business Need Cardiovascular clinical program is our largest program. Heart failure readmit rate has been climbing over the past three years and is now above the national average at 26%. Due to the readmit rate in 2014, Sample Medical Center received a penalty of 0.4% from CMS. Sample Proposal 16 State the proposal succinctly in one to two sentences The business need is a justification for the proposal that ties into the overall organization strategy State the proposal succinctly in one to two sentences The business need is a justification for the proposal that ties into the overall organization strategy

17. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Four Step Approach 17 Identify all costs Estimate benefits Identify direct benefits Identify indirect or intangible benefits and set improvement targets Identify all revenue opportunities Document assumptions Perform a sensitivity analysis Identify risks and alternatives Step 4: Evaluate Costs, Revenue & Direct Benefits Step 4: Evaluate Costs, Revenue & Direct Benefits Step 3: Recruit, Train, Plan and Implement Step 3: Recruit, Train, Plan and Implement Step 2: Begin to Quantify ROI Step 2: Begin to Quantify ROI Step 1: Define the Project and Business Need Step 1: Define the Project and Business Need

18. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Step Two: Direct Benefit Categories 18 General categories – I. Enhanced efficiency and productivity Examples: reductions in FTEs or less overtime; business process improvement; supply chain standardization allowing lower supply costs; increased departmental capacity; and reductions in capital expense

19. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Customer Example Enhanced Efficiency and Productivity 19 “Our clinicians thought that the EHR would be a silver bullet to get the data they needed for quality improvement and operational reporting and they blamed IT when the information wasn’t forthcoming. …Implementing an EDW should really be an appendix to the implementation of an EHR because the surge of data is just unbelievable and the appetite for it is huge.” – Myra Davis, M.E., VP of Information Services. Objective Meet the increasing demands by clinicians and operations for EHR data and reports Reduce reporting costs and free IT resources to focus on analysis versus report writing Reduce turnaround time on remaining EHR report requests Meet the increasing demands by clinicians and operations for EHR data and reports Reduce reporting costs and free IT resources to focus on analysis versus report writing Reduce turnaround time on remaining EHR report requests Health Catalyst Solution Late-Binding™ Data Warehouse Foundational Applications Discovery Applications Advanced Applications Installation Services Improvement Services Late-Binding™ Data Warehouse Foundational Applications Discovery Applications Advanced Applications Installation Services Improvement Services Results to date 67% average savings on labor costs Average time to build reports declined from 97 hours to under 30 hours 1 EDW report = 10 EHR reports 25% faster turnaround on remaining EHR reports 67% average savings on labor costs Average time to build reports declined from 97 hours to under 30 hours 1 EDW report = 10 EHR reports 25% faster turnaround on remaining EHR reports

20. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Step Two: Direct Benefit Categories General categories – I. Enhanced efficiency and productivity Examples: reductions in FTEs or less overtime; business process improvement; supply chain standardization allowing lower supply costs; increased departmental capacity; and reductions in capital expense II. Clinical improvement and waste reduction Examples: lowering LOS; reductions in uncompensated hospital readmissions; lower medication cost per case or per capita; fewer ICU days; and patient safety improvements leading to fewer complications or medical errors 20

21. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Ordering WasteWorkflow WasteDefect Waste Ordering of tests that are neither diagnostic nor contributory Variation in OR room turnover (cycle time) or Emergency Care wait time ADEs, transfusion reactions, pressure ulcers, HAIs, VTE, falls, wrong surgery 21 Types of Waste Variation in OR room turnover (cycle time) or Emergency Care wait times ADEs, transfusion reactions, pressure ulcers, HAIs, VTE, falls, wrong surgery

22. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Customer Example Clinical Improvement 22 Objective Define Heart Failure (HF) baseline measures for 30 and 90-day readmissions rates Implement evidence- based practice interventions to drive HF readmission rate reductions Establish balance metrics including ED visits, observation days and patient satisfaction Develop sustaining processes for evaluating readmission rates to ensure continuous process improvement Define Heart Failure (HF) baseline measures for 30 and 90-day readmissions rates Implement evidence- based practice interventions to drive HF readmission rate reductions Establish balance metrics including ED visits, observation days and patient satisfaction Develop sustaining processes for evaluating readmission rates to ensure continuous process improvement Health Catalyst Solution Late-Binding TM data warehouse that enables faster time-to-value Integration of clinical, patient satisfaction and financial data to establish baseline, ongoing and balance measures Discovery, Foundational and Advanced HF applications including cohort finder, registry and evidence- based clinical content Healthcare analytic visualization including gauges and trend lines for at-a-glance view Late-Binding TM data warehouse that enables faster time-to-value Integration of clinical, patient satisfaction and financial data to establish baseline, ongoing and balance measures Discovery, Foundational and Advanced HF applications including cohort finder, registry and evidence- based clinical content Healthcare analytic visualization including gauges and trend lines for at-a-glance view Results to date Seasonally adjusted rate reduction of 21% in 30-day and 14% in 90-day HF readmissions 2X increase in the number of phone calls made to patients within 48 hours of discharge Average of 63 % increase in physician medication reconciliation within 48 hours of discharge Follow-up appointment intervention baseline and balance measures established Seasonally adjusted rate reduction of 21% in 30-day and 14% in 90-day HF readmissions 2X increase in the number of phone calls made to patients within 48 hours of discharge Average of 63 % increase in physician medication reconciliation within 48 hours of discharge Follow-up appointment intervention baseline and balance measures established

23. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Customer Example Ordering Waste 23 “We knew we couldn’t completely create predictor models, as science isn’t that refined. But we have reduced the number of chest X-rays to a very respectable level. We have been able to minimize quite a bit of waste in other areas too, so overall, this approach in using the analytics has really helped us to manage our disease processes”. Dr. Charles Macias, TCH Attending Physician and Director Evidence Based Outcome Center. Objective Improve clinical outcome for asthma patients across the care continue Better manage populations in a new Valued Based Purchasing environment Measure and ensure sustained clinical quality improvements Improve clinical outcome for asthma patients across the care continue Better manage populations in a new Valued Based Purchasing environment Measure and ensure sustained clinical quality improvements Health Catalyst Solution Late-Binding™ Data Warehouse Key Process Analysis (KPA) Application Population Analytics Advanced Application- Asthma Module Installation Services Clinical Improvement Services Late-Binding™ Data Warehouse Key Process Analysis (KPA) Application Population Analytics Advanced Application- Asthma Module Installation Services Clinical Improvement Services Results to date Decreased average LOS by 11 hours Achieved and sustained a 49% decrease in unnecessary Chest X-rays over 16 months 80% order set utilization …67% sustained increase over 8 months 90% usage of asthma action plan by providers Decreased average LOS by 11 hours Achieved and sustained a 49% decrease in unnecessary Chest X-rays over 16 months 80% order set utilization …67% sustained increase over 8 months 90% usage of asthma action plan by providers

24. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Step Two: Indirect Benefits and Revenue Opportunities Can be more difficult to measure Longer-term benefits Example: an improved medical outcome such as a reduction in future hospitalizations associated with neonatal respiratory distress syndrome (RDS), which will require long-term analysis to reveal an impact on costs 24

25. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Customer Example Indirect Benefits: Opportunity Cost 25 Objective Define CLABSI and CA- UTI baseline and on-going CLABSI and CA-UTI rate measures Implement evidence- based practice interventions to drive CLABSI and CA-UTI rate reductions Leverage National Healthcare Safety Network (NHSN) definitions and calculation algorithms Shift clinical resources from surveillance and chart abstraction to interventions Define CLABSI and CA- UTI baseline and on-going CLABSI and CA-UTI rate measures Implement evidence- based practice interventions to drive CLABSI and CA-UTI rate reductions Leverage National Healthcare Safety Network (NHSN) definitions and calculation algorithms Shift clinical resources from surveillance and chart abstraction to interventions Health Catalyst Solution Late-Binding TM data warehouse that enables faster time-to-value Discovery, Foundational and Advanced ID applications including cohort finder, registry and evidence- based clinical content IDEA platform that tracked intervention compliance within days versus months Visualization and Gantt charts for clinicians that provide data behind NHSN algorithm results in one consolidated view Late-Binding TM data warehouse that enables faster time-to-value Discovery, Foundational and Advanced ID applications including cohort finder, registry and evidence- based clinical content IDEA platform that tracked intervention compliance within days versus months Visualization and Gantt charts for clinicians that provide data behind NHSN algorithm results in one consolidated view Results to date Surveillance requirements reduced by 90% Increased clinical resources on the floor to drive interventions Opportunity costs savings exceeding an estimated $1M in year 1 and $100K annually as a result of not purchasing, maintaining and supporting a one-off measurement and tracking system 164% increase in CLABSI maintenance bundle compliance Surveillance requirements reduced by 90% Increased clinical resources on the floor to drive interventions Opportunity costs savings exceeding an estimated $1M in year 1 and $100K annually as a result of not purchasing, maintaining and supporting a one-off measurement and tracking system 164% increase in CLABSI maintenance bundle compliance

26. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Customer Example Shared Savings 75 percent reduction in rate of elective deliveries occurring prior to 39 weeks of gestation in the first six months 6-figure bonus payment from payer for exceeding target reduction rate 26

27. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Sensitivity and Risk Analysis Examples Sensitivity Analysis- modeling various assumptions What if we can lower the readmit rate by 20%? What if we make two follow-up calls? What if we use a nurse for all follow-up calls? Risk Analysis- describing concerns and tactics Physician lead is new in position Finance will provide education Nurse manager respected in position and can assist in orientation. 27

28. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Health Catalyst Clinical Improvement Financial Tool Financial framework to help clinicians work with their finance team member(s) to estimate quantitative and qualitative costs and benefits Download the ROI Executive Brief and Tool at: www.healthcatalyst.com/driveroi 28

29. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Four Step Approach 29 Establish multi-disciplinary outcomes-improvement teams Agree on business objectives and an Aim statement Agree on ROI measures Provide timely executive updates Step 4: Evaluate Costs, Revenue & Direct Benefits Step 4: Evaluate Costs, Revenue & Direct Benefits Step 3: Recruit, Train, Plan and Implement Step 3: Recruit, Train, Plan and Implement Step 2: Begin to Quantify ROI Step 2: Begin to Quantify ROI Step 1: Define the Project and Business Need Step 1: Define the Project and Business Need

30. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential AccomplishmentsNext StepsIssues / Help needed Cardiovascular: Heart Failure Date: [complete]Overall Status Risks and Uncertainties Recruit /TrainKickoffAIMInterventionRollout planResults Month Year Month/Year Leadership team Mission, charter, roles confirmed Review draft cohort and data Finalize cohortDefine rollout planReview initial results Content and Analytics Leader Review AIM options Data quality issues identified Identify intervention(s) Guidance team validation Implementation plan adjusted Guidance team Best practice gathering Direct observation Solicit front-line plan input Review lessons learned Workgroup team Profile prelim. data and cohort Prioritize, select AIMSolicit front line inputFinalize rollout plan Create AIM statement #2 Training workshop2-3 AIM candidates Additional cohort criteria Analytics dev & test Guidance team validation Repeat process Guidance team validation Project Progress Key Not started In process Done well Some concerns Strong concerns Sample Long Term AIM Goal To achieve and sustain a 30% reduction in the 30-day and a 15% reduction in 90-day all cause readmission rates for patients with heart failure by November 2014, and sustained reduction in readmission rates through 2015. Short Term Project Goal Define and rollout 30-day and 90-day baseline measures and three process interventions: medication reconciliation; post discharge appointment; and, follow-up phone call by January 1, 2014 - track compliance toward long-term heart failures readmission rate reductions. Launch/Rollout date : XX Key Success and Financial Measures TargetActuals Readmission rates: 30-day and 90-day% Balance measures: ED visits and observation stays# Intervention compliance rates% Project costs (e.g., resources, travel, healthcare care analytic apps …)$ Opportunity costs (e.g., not purchasing a Point Solution, no reduction in Medicare reimbursements …)$ Direct benefits: productivity (e.g., previous manual data pulls…); waste reduction (e.g., length of stay….)$ Indirect benefits (e.g., patient satisfaction…)$ Long term project ROI%

31. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Four Step Approach 31 Identify all project costs Ensure nothing else has changed Perform Financial ROI calculations Review ROI calculations with the team Make adjustments Monitor and ensure sustained results Step 4: Evaluate Costs, Revenue & Direct Benefits Step 4: Evaluate Costs, Revenue & Direct Benefits Step 3: Recruit, Train, Plan and Implement Step 3: Recruit, Train, Plan and Implement Step 2: Begin to Quantify ROI Step 2: Begin to Quantify ROI Step 1: Define the Project and Business Need Step 1: Define the Project and Business Need

32. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential 32

33. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential The Opportunity for Change Taking the next step… Download the Health Catalyst ROI Executive Brief www.healthcatalyst.com/driveroi Contact us to learn more about our solutions, ROI modeling and communication tools www.healthcatalyst.com/company/contact-us 33

34. © 2013 Health Catalyst www.healthcatalyst.com Proprietary and Confidential Questions 34