1 CREATION OF LARGE FQHC SYSTEMS

2 ACCESS History… Founded as FQHC in 1991 FY sites 100,000 primary care visits 35,000 unduplicated patients including 13,000 HMO patients 150 staff $12 million in revenues on $20 million budget Single hospital operating relationship 40% operating deficit off-set by $8 million operating grant by affiliated hospital Served small geographic area –primarily South and West sides of Chicago Medical only model Defunding notification by Bureau of Primary Health Care

3 ACCESS History cont.. FY sites (does not include all original 9 sites) 460,000 + primary care visits 150,000 unduplicated patients including almost 39,000 HMO patients 600 staff $65 million in revenues Small operating surplus Multiple hospital relationships Metropolitan-wide including 11 suburban sites Comprehensive primary care model with specialty services and wide array of behavioral health and wrap-aroundservices Added teaching programs JCAHO accredited Largest FQHC in U.S. Participant in Best Practices FQHC forum identified by BPHC

4 ACCESS History cont.. Turnaround Strategies Implemented basic management and financial systems Adjusted provider and ancillary support staff to match volume and increase productivity Redesigned service delivery model to reduce encounter costs by 27% since FY 1994 while simultaneously expanding ancillary services and improving quality of care. Secured local, state and federal grant support as well as private philanthropic funds Grew to respond to need, increase revenues and achieve economies of scale Developed incentive system for staff at all levels in organization based on financial performance

5 FQHC History Originated out of War on Poverty of the 1960s and 1970s. Response to lack of primary care access and lack of community control over health services. Two major guiding principles: Access regardless of ability to pay Patient/community governed Historically small and single site operations –Some struggle to remain fiscally viable in evolving/competitive environments –Trend is toward larger and multi-site operations. –Handful of super FQHCs of large systems with 250,000+ medical visits President Bushs major health care initiative goal is to double number of FQHC users and sites

6 FQHC Benefits Enhanced Medicaid and Medicare fee-for-service reimbursements Enhanced reimbursement for Medicaid HMO and Medicare HMO patients (state specific) Access to federal BPHC Section 330 funding Access to reduced drug costs through 340(b) program If directly federal funded, then free malpractice coverage through Federal Tort Claims Act (FTCA) Safe-harbor provision through new Medicare legislation Brought stability to safety net system through increased revenues and decreased costs

7 Major FQHC Regulations Autonomous Board and management Provide services to whole life-cycle (pediatric to geriatric) –Including dental, mental health and pharmacy (may be referred) Board cannot be subsidiary of parent Board 51% of Board must be patients of FQHC and reflective of patient population Of the remaining 49% of Board members: –No more than 50% can make more than 10% of income from health care –Must be representative of community at large Majority of providers must be employees of FQHC Must be not-for-profit Be located in a designated medically underserved area or serve a designated medically underserved population.

8 ACCESS Statistics 150,000 users with 460,000+ medical visits 60% African American, 35% Latino, 4% White, 1% Other FY04 Budgeted Visits: –44% Medicaid fee-for-service –24% Uninsured –17% HMO (60% Medicaid, 40% Commercial) –9% Commercial –6% Medicare FY04 Budgeted Revenues: –55% patient revenues (78% Medicaid, 10% Medicare, 7% Self-pay, 5% Commercial) –28% HMO capitation (67% Medicaid and 33% Commercial) –17% other (local, state and federal grants; health system grants: rent: private funding etc.)

9 FQHC Benefits to ACCESS Enhanced Medicaid rate 4x non-FQHC rate in Illinois = $14.75 mil/yr Medicaid HMO wrap-around payment = $3.25 mil/yr Enhanced Medicare rate 1.3x non-FQHC rate = $750,000/yr Malpractice savings = $4 mil/yr (no tail costs) Federal 330 Grant = $4.5 mil/yr 340(b) saves ACCESS about 28% on prescriptions for HMO members –Helps patients save 53% on prescriptions compared to retail

10 Recommendations Single corporate entity with multiple sites to achieve scale to impact problem and to leverage funder, government, insurer, payors and hospital relationships Owned and operated by private entity with public/hospital funding –Autonomy and nimbleness are critical Managed by staff with strong ambulatory, primary care experience –Cannot be operated/staffed like hospital settings Representation of hospitals and government on Board Hospital and public grants executed through contractual arrangements and/or affiliation agreements. Develop secondary level of care relationships –Including for the uninsured

11 ACCESS Senior Management Team Dr. Dan Mukundan Medical Director Warren Brodine Director-Strategic Initiatives Steven Glass V.P. External Affairs Donna Thompson COO Mike Savage CEO Eduardo V. de Jesus CFO