Health System Partnerships May 3, 2010

Changing Landscape: Health Systems 2006 Physician Challenges: Waning out of network model Poor reimbursement Expense pressures Reduced margins, distributions and valuations Affiliation Goals: Access to capital Stability Growth Contracting leverage Management effectiveness Partial liquidity event Hospital/ Corporate Partner 25% Physicians Only 75% 2008 Hospital/ Corporate Partner 37% Physicians Only 63%

Health System Perspective on ASCs Build a leading network of ASC JVs Recapture, grow ambulatory surgery volumes Access efficient, convenient and high quality facilities Free up hospital-based OR capacity Align with high quality physicians Leverage scarce capital across wide network Expand brand name and market presence Grow other IP, OP, and ancillary services Earn strong financial returns Prepare for Accountable Care Organization structure

Structuring Health System Partnerships Build a scalable strategic plan Know what you’re going after Maximize physician ownership and commitment Contract on behalf of your network Control does not require 51% Partner for the long term Access partner capital Negotiate effective non-competes Negotiate effective buy-back provisions Be flexible in approach to physician integration

Changing Landscape: ASC Industry Past Today + Future “Flip This House” strategy – buy low, then sell to larger ASC company at high price “Build It, And They Will Come” strategy Out-of-network as corner- stone of strategy Larger companies inhibited by accounting consolidation from making minority investments Larger companies open to full range of deal structures – including minority investments Sellers looking for long-term operating partner, who can bring sustained value Economies of scale more important than ever Reimbursement + cost pressure  consolidation accelerating

SCA Overview 126 facilities Strong clinical results 5,000 teammates 2,000 physician investors $700 million revenue Strong financial results Significant capital Flexible deal structures Acquisitions New builds Hospital partnerships

SCA Operating Model How We Work Value To Our Centers Focus on clinical quality and patient safety Commitment to serving physicians and creating value Investment in recruiting and developing leaders Data driven processes and disciplined execution Economies of scale Best practice sharing Clinical Excellence Advocacy Supply Savings Volume Growth Payer Contracting Benchmarking Training Labor Management

SCA Performance Prior Company New Company

SCA Health System Experience Health System/Hospital Location Sutter Health Sacramento, Santa Rosa, & Auburn, CA California Pacific Medical Center San Francisco, CA University of California San Diego San Diego, CA Redlands Community Hospital Redlands, CA Loyola University Oakbrook Terrace, IL Baylor University Houston, TX Holy Spirit Camp Hill, PA Mainline Health Paoli, PA Baptist Health System Memphis, TN Vanderbilt University Nashville, TN Shands Hospital Jacksonville, FL Florida Hospital Winter Park, FL Owensboro Health System Owensboro, KY Northeast Georgia Medical Ctr Gainesville, GA Muskogee Regional Med Ctr Muskogee, OK Norman Regional Hospital Norman, OK

SCA Perspective Three areas of focus: Actively acquiring centers Provide outstanding patient care + clinical outcomes Create measurable value for physicians Recruit + develop outstanding leaders Actively acquiring centers Private equity partner with interest to invest more capital Make both majority and minority investments Both physician/SCA and physician/hospital/SCA structures Open to out-of-network centers, at appropriate price Built to last – a stable partner for the long-term Active corporate citizen for our teammates + communities

ASC Strategies for the Foreseeable Future: National Landscape as Viewed Through the ASC Prism Brent W. Lambert, MD, FACS Principal and Founder Luke M. Lambert, MBA, CFA, CASC Chief Executive Officer Ambulatory Surgical Centers of America

The ASC industry is no longer growing. We will see as many closing ASCs this year as new openings.

The pool of surgeons is not growing, but rather contracting as a function of the population.

Maturation of ASCs where there are inadequate or no evergreen provisions in the documents.

Consolidation of payers.

Elimination of OON.

Private equity fervor for the ASC industry declining.

Minority model gaining acceptance with private equity investors.

ASC industry is weak politically vis-a-vis the hospital industry. This is changing with the ASC Association Advocacy Committee, comprised of corporate industry leaders and the ASC Association.

The Squeeze is On Now reaping the effects of dramatic cost inflation. Reimbursement has been flat or down over the course of many years for most centers. Large numbers of centers are not delivering positive returns.

Capital Driven Growth Will Disappoint Capital is relatively abundant compared to good management. Companies and capital providers that ignore accounting presentation in favor of business logic will prevail, others are handicapped. Good operators don’t need capital. You’d be surprised how often I hear: We have to own a majority, this works from a CF perspective but not for EPS, or our investors too trend oriented to be able to buy OON centers even at ridiculously low prices.

Keys to Future Success: Efficiency Schedule consolidation delivers good old fashioned labor productivity and margin improvement. Surgeon preference drives supply cost. With financial returns threatened surgeons willing to make hard decisions.

Payer Contracting Accept what you’re offered and you’ll struggle financially. Surgeon direction of surgical venue key to negotiating success. Hospital partnerships can enable centers to maintain profits while going in network.

Physician Recruitment Dwindling numbers of available physicians – musical chairs. It’s becoming uncommon to find physicians that aren’t bound by non-competitive covenants. Hospital employment is a significant limiting trend.

Minority Model will Continue to Deliver Superior Results Level of surgeon participation impacts: schedule, supply costs, and recruitment. Accounting driven business models compete with one arm tied behind their back. Corporate partners do deliver value with expertise and assistance As in the past, there will be many more happy minority model investors than majority.

THINK PROFITS www.ascoa.com Brent W. Lambert, MD, FACS Principal & Founder Luke M. Lambert, CFS, CASC Chief Executive Officer Ambulatory Surgical Centers of America www.ascoa.com

Question and Answer Session

Hospitals and Surgery Centers Key Thoughts on Strategic Planning David Fleisch Partner Healthcare Practice Bain & Company David.fleisch@bain.com 312.629.4070 Andrew Hayek Chief Executive Oficer Surgical Care Afiliates Andrew.hayek@scasurgery.com 205.545.2755 Brent Lambert President & Owner Ambulatory Surgical Centers of America Blambert@ascoa.com 781.258.1533 Luke Lambert Chief Executive Officer Ambulatory Surgical Centers of America Llambert@ascoa.com 781.826.6610 Scott Becker, JD, CPA Partner McGuireWoods, LLP Sbecker@mcguirewoods.com 312.750.6016