© 2013 Health Catalyst Proprietary and Confidential © 2013 Health Catalyst Proprietary and Confidential January 16, 2014 – David A. Burton, MD Advanced Efforts to Identify and Reduce Waste in Healthcare Delivery

© 2013 Health Catalyst Proprietary and Confidential © 2013 Health Catalyst 1.Constructs for understanding healthcare waste

© 2013 Health Catalyst Proprietary and Confidential Clinical Integration Construct Clinical Programs – ordering of care Primary Care CareProcessFamiliese.g.,Diabetes CVCV CareProcessFamiliese.g., Heart Failure W&CW&C CareProcessFamiliese.g.,Pregnancy GIGI CareProcessFamiliese.g., Lower GILower GIDisorders Resp- iratory CareProcessFamiliese.g., Obstructive Lung Disorders Neuro Sciences CareProcessFamiliese.g., Spine Disorders Musculo- skeletal CareProcessFamiliese.g.,Joint Replace- ment SurgerySurgery CareProcessFamiliese.g., Urologic Disorders GeneralMedGeneralMed CareProcessFamiliese.g., Infectious Disease OncologyOncology CareProcessFamiliese.g.,BreastCancer Peds Spec CareProcessFamiliese.g.,Peds CV SurgCV Surg Mental Health CareProcessFamiliese.g.,Depression

© 2013 Health Catalyst Proprietary and Confidential Clinical Integration Construct Clinical Support Services – workflow and defects Primary Care CareProcessFamiliese.g.,Diabetes CVCV CareProcessFamiliese.g., Heart Failure W&CW&C CareProcessFamiliese.g.,Pregnancy GIGI CareProcessFamiliese.g., Lower GILower GIDisorders Resp- iratory CareProcessFamiliese.g., Obstructive Lung Disorders Neuro Sciences CareProcessFamiliese.g., Spine Disorders Musculo- skeletal CareProcessFamiliese.g.,Joint Replace- ment SurgerySurgery CareProcessFamiliese.g., Urologic Disorders GeneralMedGeneralMed CareProcessFamiliese.g., Infectious Disease OncologyOncology CareProcessFamiliese.g.,BreastCancer Peds Spec CareProcessFamiliese.g.,Peds CV SurgCV Surg Mental Health CareProcessFamiliese.g.,Depression Clinical Support Services (Delivery of Care) Diagnostic Clinical Support Service (work flow models) (e.g., Pathology and Laboratory Medicine, Diagnostic Radiology) Diagnostic Clinical Support Service (work flow models) (e.g., Pathology and Laboratory Medicine, Diagnostic Radiology) Ambulatory Clinic Clinical Support Service (work flow models) (e.g., Primary Care Clinics, Chronic Disease Specialty Clinics, Sub-specialty Clinics)) Ambulatory Clinic Clinical Support Service (work flow models) (e.g., Primary Care Clinics, Chronic Disease Specialty Clinics, Sub-specialty Clinics)) Acute Medical Clinical Support Service (work flow models) (e.g., Emergency Care, ICU/CCU/NICU/PICU, General Med-Surg) Acute Medical Clinical Support Service (work flow models) (e.g., Emergency Care, ICU/CCU/NICU/PICU, General Med-Surg) Invasive Clinical Support Service (work flow models) (Interventional Medical [e.g., cath lab, interventional radiology, GI lab, L&D, rad onc] and Surgical [e.g., amb, IP]) Invasive Clinical Support Service (work flow models) (Interventional Medical [e.g., cath lab, interventional radiology, GI lab, L&D, rad onc] and Surgical [e.g., amb, IP]) Therapeutic Clinical Support Service (work flow models) (e.g., Pharmacy, Transfusion Medicine, Respiratory Therapy, Physical, Occupational, Speech Therapy) Therapeutic Clinical Support Service (work flow models) (e.g., Pharmacy, Transfusion Medicine, Respiratory Therapy, Physical, Occupational, Speech Therapy)

© 2013 Health Catalyst Proprietary and Confidential Organization of teams Clinical and technical Provides steady state domain governance and oversight GUIDANCE TEAM Refines Work Group output and leads implementation CLINICAL IMPLEMENTATION TEAM Provides l forum to develop and/or refine clinical content and analytics feedback WORK GROUP Supports development of clinical content and analytics feedback CONTENT AND ANALYTICS TEAM Provides overall governance and prioritization of initiatives SENIOR EXECUTIVE LEADERSHIP TEAM Chief Knowledge Officer

© 2013 Health Catalyst Proprietary and Confidential Technical support personnel

© 2013 Health Catalyst Proprietary and Confidential = Organization of clinical teams Women & Newborn’s Clinical Program Guidance Team Pregnancy SAM Pregnancy MD Lead RN SME RN, Clinical Ops Director Guidance Team MD lead (e.g., Pregnancy MD Lead) = Subject Matter Expert = Data Capture = Data Provisioning & Visualization = Data Analysis Normal Newborn SAM NL Newborn MD Lead RN SME Gynecology SAM Gyn MD Lead RN SME Permanent teams Integrated clinical and technical members Technical personnel support multiple packets AbNL NB 3-A SAM AbNL NB MD Lead RN SME

© 2013 Health Catalyst Proprietary and Confidential Repeatable system for deployment KickoffAIM Statement Implementation Design Launch Approval Results Review Mission Cohort Discover Data Analysis and Review BMJ Best Practices Building Multiple Potential AIM statements Supplement BMJ content Refine Cohort Refine Metrics Develop Draft Visualizations Develop Recommended AIM statement #1 Cluster Reps Obtain Front Line Input Finalize Cohort Develop Additional metrics based on feedback Develop Additional Visualizations to support PDSA cycle Cluster Reps Obtain Front Line Input Improvement Plan Implementation Plan Develop cluster rep assignments, and deliverables Collect cluster rep feedback Prepare Initial Results from AIM statement #1 Summarized report for historical review Refine, recommend AIM statement #2 Monthly Tasks and Checkpoints 7 Steps (Work Streams) 1.Gather knowledge assets 2.Define cohort 3.Select Aim Statement 4.Select, build & refine metrics 5.Develop implementation plan 6.Implement plan 7.Measure progress Select Initial Metric Build and Refine

© 2013 Health Catalyst Proprietary and Confidential © 2013 Health Catalyst Proprietary and Confidential Population Health Management construct

© 2013 Health Catalyst Proprietary and Confidential Population Health Management Medicare fee-for-service payments by venue OutpatientClinic CareInpatient SNF Home Health Hospice $ 31.7 Billion 11.8% 77.6 Billion 28.8% 90.6 Billion 33.7% $ 29.7 Billion 11.0% $ 18.4 Billion 6.8% $ 10.1 Billion 3.7% $ 11.1 Billion 4.1% LTCH/IRF

© 2013 Health Catalyst Proprietary and Confidential 11 Home (Patient Portal) * To Invasive Care Processes Clinic Care Non-recurrent Clinic Care Chronic Clinic Care Chronic Acute Medical IP Med-Surg Acute Medical IP Med-Surg Acute Medical IP ICU Invasive Medical Invasive Surgical Diagnostic Work-up Bedside care Triage to Treatment Venue Substance Preparation Invasive* Subspecialist Chronic Disease Subspecialist Screening & Preventive Symptoms Population Health Management Anatomy of Healthcare Delivery Diagnostic algorithms Indications for Referral Indications for Intervention Triage Criteria Diagnostic Algorithms, Triage Criteria, Referral & Intervention Indications Utilization Management Knowledge Assets Substance Selection Clinical Supply Chain Management Procedure Treatment and Monitoring Algorithms Admission Order Sets Supplementary Order Sets Pre-Procedure Order Sets Post- procedure Order Sets Discharge Bedside care practice guidelines, risk assessment and patient injury prevention protocols, bedside care procedures, transfer and discharge protocols Treatment and Monitoring Algorithms Health Maintenance and Preventive Guidelines Standardized Follow-up Standardized Follow-up Post-acute care order sets IP (SNF, IRF) Home health Hospice Post-acute care order sets IP (SNF, IRF) Home health Hospice Management of Preventive, Ambulatory, Acute Medical, Invasive & PAC Modules Prevention and Treatment Knowledge Assets Clinical ops procedure guidelines and patient injury prevention Post-procedure Care

© 2013 Health Catalyst Proprietary and Confidential © 2013 Health Catalyst Proprietary and Confidential Waste construct

© 2013 Health Catalyst Proprietary and Confidential 13 Utilization management waste and prevention and treatment waste Utilization Management Waste Per capita management (population focus) Per encounter and per case management (individual patient focus) Prevention and Treatment Waste Sample Metrics Admits/1000 members IP days/1000 members OP visits/1000 members Procedures/1000 members ED visits/1000 members Readmissions/1000 members Sample Metrics Cost/visit Cost/case OR minutes L&D hours LOS # of comorbidities Population Health Management Per Capita Waste Per Capita Waste Per Encounter or Per Case Waste

© 2013 Health Catalyst Proprietary and Confidential Ordering WasteWorkflow WasteDefect Waste Ordering tests, care, substances and supplies that do not add value Variation in efficiency of delivering tests, care and procedures ordered Patient injuries incurred in delivering tests, care and procedures ordered 14 Three forms of waste

© 2013 Health Catalyst Proprietary and Confidential Ordering WasteWorkflow WasteDefect Waste Ordering of tests that are neither diagnostic nor contributory Variation in efficiency of delivering tests, care and procedures ordered Patient injuries incurred in delivering tests, care and procedures ordered Ordering Waste Ordering tests, care, substances and supplies that do not add value 15 Ordering waste

© 2013 Health Catalyst Proprietary and Confidential Clinical Integration Construct Clinical Programs – ordering of care Primary Care CareProcessFamiliese.g.,Diabetes CVCV CareProcessFamiliese.g., Heart Failure W&CW&C CareProcessFamiliese.g.,Pregnancy GIGI CareProcessFamiliese.g., Lower GILower GIDisorders Resp- iratory CareProcessFamiliese.g., Obstructive Lung Disorders Neuro Sciences CareProcessFamiliese.g., Spine Disorders Musculo- skeletal CareProcessFamiliese.g.,Joint Replace- ment SurgerySurgery CareProcessFamiliese.g., Urologic Disorders GeneralMedGeneralMed CareProcessFamiliese.g., Infectious Disease OncologyOncology CareProcessFamiliese.g.,BreastCancer Peds Spec CareProcessFamiliese.g.,Peds CV SurgCV Surg Mental Health CareProcessFamiliese.g.,Depression

© 2013 Health Catalyst Proprietary and Confidential Ordering of care Improvement initiative process Mapping of admin codes to HC clinical hierarchy Basic cohorts – admin rules Per Case Key Process Analyses Advanced cohorts - admin and clinical rules Care Process Models for KPA Care Process list AIM statement starter sets Prevention, treatment, & UM starter sets Process and outcome metrics & visualizations

© 2013 Health Catalyst Proprietary and Confidential 18 Wasteful Cardiac ventriculography to measure ejection fraction Contributory Two-view chest X-ray Arterial blood gases Two-view chest X-ray Arterial blood gases Diagnostic Cardiac echo to measure ejection fraction Brain natriuretic peptide (BNP) Cardiac echo to measure ejection fraction Brain natriuretic peptide (BNP) Ordering waste example

© 2013 Health Catalyst Proprietary and Confidential Ordering WasteWorkflow WasteDefect Waste Ordering tests, care, substances and supplies that do not add value Variation in OR room turnover (cycle time) or Emergency Care wait time Patient injuries incurred in delivering tests, care and procedures ordered Workflow Waste Variation in efficiency of delivering tests, care and procedures ordered 19 Workflow waste

© 2013 Health Catalyst Proprietary and Confidential Primary Care CareProcessFamiliese.g.,Diabetes CVCV CareProcessFamiliese.g., Heart Failure W&CW&C CareProcessFamiliese.g.,Pregnancy GIGI CareProcessFamiliese.g., Lower GILower GIDisorders Resp- iratory CareProcessFamiliese.g., Obstructive Lung Disorders Neuro Sciences CareProcessFamiliese.g., Spine Disorders Musculo- skeletal CareProcessFamiliese.g.,Joint Replace- ment SurgerySurgery CareProcessFamiliese.g., Urologic Disorders GeneralMedGeneralMed CareProcessFamiliese.g., Infectious Disease OncologyOncology CareProcessFamiliese.g.,BreastCancer Peds Spec CareProcessFamiliese.g.,Peds CV SurgCV Surg Mental Health CareProcessFamiliese.g.,Depression Clinical Support Services (Delivery of Care) Diagnostic Clinical Support Services (work flow models) (e.g., Pathology and Laboratory Medicine, Diagnostic Radiology) Diagnostic Clinical Support Services (work flow models) (e.g., Pathology and Laboratory Medicine, Diagnostic Radiology) Ambulatory Clinic Clinical Support Services (work flow models) (e.g., Primary Care Clinics, Chronic Disease Specialty Clinics, Sub-specialty Clinics)) Ambulatory Clinic Clinical Support Services (work flow models) (e.g., Primary Care Clinics, Chronic Disease Specialty Clinics, Sub-specialty Clinics)) Acute Medical Clinical Support Services (work flow models) (e.g., Emergency Care, ICU/CCU/NICU/PICU, General Med-Surg) Acute Medical Clinical Support Services (work flow models) (e.g., Emergency Care, ICU/CCU/NICU/PICU, General Med-Surg) Invasive Clinical Support Services (work flow models) (Interventional Medical [e.g., cath lab, interventional radiology, GI lab, L&D, rad onc] and Surgical [e.g., amb, IP]) Invasive Clinical Support Services (work flow models) (Interventional Medical [e.g., cath lab, interventional radiology, GI lab, L&D, rad onc] and Surgical [e.g., amb, IP]) Therapeutic Clinical Support Services (work flow models) (e.g., Pharmacy, Transfusion Medicine, Respiratory Therapy, Physical, Occupational, Speech Therapy) Therapeutic Clinical Support Services (work flow models) (e.g., Pharmacy, Transfusion Medicine, Respiratory Therapy, Physical, Occupational, Speech Therapy) Clinical Integration construct Clinical Support Services – delivery of care

© 2013 Health Catalyst Proprietary and Confidential Mapping of client data to HC clinical hierarchy Triage of client data into care unit & ancillary depts Clinical department value stream maps Intra- & inter- departmental VSMs, A3s, & AIM statements Pareto and opportunity analyses Workflow (delivery of care) Improvement initiative process Process and outcome metrics & visualizations

© 2013 Health Catalyst Proprietary and Confidential Workflow waste – surgical services

© 2013 Health Catalyst Proprietary and Confidential 23 Workflow waste – surgical services reduce room turnover time

© 2013 Health Catalyst Proprietary and Confidential Ordering WasteWorkflow WasteDefect Waste Ordering tests, care, substances and supplies that do not add value Variation in efficiency of delivering tests, care and procedures ordered ADEs, transfusion reactions, pressure ulcers, HAIs, VTE, falls, wrong surgery Defect Waste Patient injuries incurred in delivering tests, care and procedures ordered 24 Defect waste (patient injury)

© 2013 Health Catalyst Proprietary and Confidential Primary Care CareProcessFamiliese.g.,Diabetes CVCV CareProcessFamiliese.g., Heart Failure W&CW&C CareProcessFamiliese.g.,Pregnancy GIGI CareProcessFamiliese.g., Lower GILower GIDisorders Resp- iratory CareProcessFamiliese.g., Obstructive Lung Disorders Neuro Sciences CareProcessFamiliese.g., Spine Disorders Musculo- skeletal CareProcessFamiliese.g.,Joint Replace- ment SurgerySurgery CareProcessFamiliese.g., Urologic Disorders GeneralMedGeneralMed CareProcessFamiliese.g., Infectious Disease OncologyOncology CareProcessFamiliese.g.,BreastCancer Peds Spec CareProcessFamiliese.g.,Peds CV SurgCV Surg Mental Health CareProcessFamiliese.g.,Depression Clinical Support Services (Delivery of Care) Diagnostic Clinical Support Services (work flow models) (e.g., Pathology and Laboratory Medicine, Diagnostic Radiology) Diagnostic Clinical Support Services (work flow models) (e.g., Pathology and Laboratory Medicine, Diagnostic Radiology) Ambulatory Clinic Clinical Support Services (work flow models) (e.g., Primary Care Clinics, Chronic Disease Specialty Clinics, Sub-specialty Clinics)) Ambulatory Clinic Clinical Support Services (work flow models) (e.g., Primary Care Clinics, Chronic Disease Specialty Clinics, Sub-specialty Clinics)) Acute Medical Clinical Support Services (work flow models) (e.g., Emergency Care, ICU/CCU/NICU/PICU, General Med-Surg) Acute Medical Clinical Support Services (work flow models) (e.g., Emergency Care, ICU/CCU/NICU/PICU, General Med-Surg) Invasive Clinical Support Services (work flow models) (Interventional Medical [e.g., cath lab, interventional radiology, GI lab, L&D, rad onc] and Surgical [e.g., amb, IP]) Invasive Clinical Support Services (work flow models) (Interventional Medical [e.g., cath lab, interventional radiology, GI lab, L&D, rad onc] and Surgical [e.g., amb, IP]) Therapeutic Clinical Support Services (work flow models) (e.g., Pharmacy, Transfusion Medicine, Respiratory Therapy, Physical, Occupational, Speech Therapy) Therapeutic Clinical Support Services (work flow models) (e.g., Pharmacy, Transfusion Medicine, Respiratory Therapy, Physical, Occupational, Speech Therapy) Clinical Integration construct Clinical Support Services – delivery of care

© 2013 Health Catalyst Proprietary and Confidential Hospital-Acquired Condition (HAC) cohorts Analysis of frequency, costs, potential savings Patient injury Improvement initiative process Define criteria for PIPP intervention Define care units to which PIPPs apply PIPP surveillance process, outcome metrics & visualizations AIM statement starter sets PIPP intervention protocol starter sets Patient Injury Prevention Process (PIPP) starter set maps

© 2013 Health Catalyst Proprietary and Confidential Defect waste – CLABSI prevention

© 2013 Health Catalyst Proprietary and Confidential © 2013 Health Catalyst 2.Prioritization – Sample healthcare industry analyses

© 2013 Health Catalyst Proprietary and Confidential 29 Utilization versus prevention and treatment waste Utilization Management Waste Per capita management (population focus) Per encounter and per case management (individual patient focus) Prevention and Treatment Waste Sample Metrics Admits/1000 members IP days/1000 members OP visits/1000 members Procedures/1000 members ED visits/1000 members Readmissions/1000 members Sample Metrics Cost/visit Cost/case OR minutes L&D hours LOS # of comorbidities To be included in future waste analyses (at such time as claims data are available) Population Health Management Included in today’s analysis (a subset of the total waste in the healthcare system) Included in today’s analysis (a subset of the total waste in the healthcare system) Per Capita Waste Per Capita Waste Per Encounter or Per Case Waste

© 2013 Health Catalyst Proprietary and Confidential © 2013 Health Catalyst Proprietary and Confidential Clinical Programs Key Process Analysis (KPA)

© 2013 Health Catalyst Proprietary and Confidential Inpatient per case KPA Primary Care CareProcessFamiliese.g.,Diabetes CVCV CareProcessFamiliese.g., Heart Failure W&CW&C CareProcessFamiliese.g.,Pregnancy GIGI CareProcessFamiliese.g., Lower GILower GIDisorders Resp- iratory CareProcessFamiliese.g., Obstructive Lung Disorders Neuro Sciences CareProcessFamiliese.g., Spine Disorders Musculo- skeletal CareProcessFamiliese.g.,Joint Replace- ment SurgerySurgery CareProcessFamiliese.g., Urologic Disorders GeneralMedGeneralMed CareProcessFamiliese.g., Infectious Disease OncologyOncology CareProcessFamiliese.g.,BreastCancer Peds Spec CareProcessFamiliese.g.,Peds CV SurgCV Surg Mental Health CareProcessFamiliese.g.,Depression

© 2013 Health Catalyst Proprietary and Confidential Inpatient per case KPA $ 31.7 Billion 11.8% 77.6 Billion 28.8% 90.6 Billion 33.7% $ 29.7 Billion 11.0% $ 18.4 Billion 6.8% $ 10.1 Billion 3.7% $ 11.1 Billion 4.1% OutpatientClinic CareInpatient SNF Home Health Hospice LTCH/IRF

© 2013 Health Catalyst Proprietary and Confidential Inpatient per case KPA

© 2013 Health Catalyst Proprietary and Confidential Top 10 Care Process Families account for over 40% of the opportunity Top 32 Care Process Families account for 80% of the opportunity X-Axis = Care Process Families by resources consumed (High to Low) Cumulative Care Process Family % of total resources Individual Care Process Family % of total resources Y-Axis = Percent of total resources consumed Inpatient per case KPA

© 2013 Health Catalyst Proprietary and Confidential 35 Y- Axis = Internal Variation in Resources Consumed Bubble Size = Case CountBubble Color = Clinical DomainX Axis = Variable Direct Cost Inpatient per case KPA PCI

© 2013 Health Catalyst Proprietary and Confidential ~ $20,000 difference in Average Direct Costs between “highest cost” provider and “lowest cost” provider for patients with identical intermediate level severity scores Grouped by APR DRG – Severity Score Bubble Size = Case Count for provider Bubble Color = APRDRG - Severity Score X Axis = Average Variable Cost per Case for provider Inpatient per case KPA

© 2013 Health Catalyst Proprietary and Confidential Dr. J. 15 Cases $60,000 Avg. Cost Per Case Mean Cost per Case = $20,000 $40,000 x 15 cases = $600,000 opportunity Total Opportunity = $600,000 Total Opportunity = $1,475,000 $35,000 x 25 cases = $875,000 opportunity Total Opportunity = $2,360,000 Total Opportunity = $3,960,000 Cost Per Case, Vascular Procedures Inpatient per case opportunity analysis

© 2013 Health Catalyst Proprietary and Confidential Grouped by APR DRG – Severity Score Bubble Size = Case Count for provider Bubble Color = APRDRG - Severity Score X Axis = Average Variable Cost per Case for provider Inpatient per case opportunity Waste reduction opportunity is calculated based on bringing the cases in each severity level of each APR-DRG down to the mean of the severity level

© 2013 Health Catalyst Proprietary and Confidential 39 Inpatient per case opportunity* Physician variation perspective * This $97 MM is based on the impact of variation in MD practice across all types of relevant inpatient care units

© 2013 Health Catalyst Proprietary and Confidential © 2013 Health Catalyst Proprietary and Confidential IP per case ordering waste Opportunity analysis

© 2013 Health Catalyst Proprietary and Confidential IP per case ordering waste Primary Care CareProcessFamiliese.g.,Diabetes CVCV CareProcessFamiliese.g., Heart Failure W&CW&C CareProcessFamiliese.g.,Pregnancy GIGI CareProcessFamiliese.g., Lower GILower GIDisorders Resp- iratory CareProcessFamiliese.g., Obstructive Lung Disorders Neuro Sciences CareProcessFamiliese.g., Spine Disorders Musculo- skeletal CareProcessFamiliese.g.,Joint Replace- ment SurgerySurgery CareProcessFamiliese.g., Urologic Disorders GeneralMedGeneralMed CareProcessFamiliese.g., Infectious Disease OncologyOncology CareProcessFamiliese.g.,BreastCancer Peds Spec CareProcessFamiliese.g.,Peds CV SurgCV Surg Mental Health CareProcessFamiliese.g.,Depression

© 2013 Health Catalyst Proprietary and Confidential IP per case ordering waste Sources of ordering variation within a case Diagnostics Laboratory tests Diagnostic imaging studies Therapeutics Therapies (e.g., respiratory, physical, et al) Substances (e.g., antibiotics, blood products) Clinical supply chain (e.g., prosthetics, stents, synthetic bypass grafts, heart rhythm devices)

© 2013 Health Catalyst Proprietary and Confidential 43 Home (Patient Portal) * To Invasive Care Processes Clinic Care Non-recurrent Clinic Care Chronic Clinic Care Chronic Acute Medical IP Med-Surg Acute Medical IP Med-Surg Acute Medical IP ICU Invasive Medical Invasive Surgical Diagnostic Work-up Bedside care Triage to Treatment Venue Substance Preparation Invasive* Subspecialist Chronic Disease Subspecialist Screening & Preventive Symptoms Sources of per case ordering waste Diagnostic algorithms Indications for Referral Indications for Intervention Triage Criteria Diagnostic Algorithms, Triage Criteria, Referral & Intervention Indications Utilization Management Knowledge Assets Substance Selection Clinical Supply Chain Management Procedure Treatment and Monitoring Algorithms Admission Order Sets Supplementary Order Sets Pre-Procedure Order Sets Post- procedure Order Sets Discharge Bedside care practice guidelines, risk assessment and patient injury prevention protocols, bedside care procedures, transfer and discharge protocols Treatment and Monitoring Algorithms Health Maintenance and Preventive Guidelines Standardized Follow-up Standardized Follow-up Post-acute care order sets IP (SNF, IRF) Home health Hospice Post-acute care order sets IP (SNF, IRF) Home health Hospice Management of Preventive, Ambulatory, Acute Medical, Invasive & PAC Modules Prevention and Treatment Knowledge Assets Clinical ops procedure guidelines and patient injury prevention Post-procedure Care

© 2013 Health Catalyst Proprietary and Confidential IP per case ordering waste opportunity * The $57 MM is based on the impact of variation in ordering of tests and services from ancillary (non-patient- care) departments (e.g., lab, imaging, pharmacy, therapies, supply chain, central services) adjusted by APR-DRG severity level

© 2013 Health Catalyst Proprietary and Confidential Reducing per case ordering waste Order sets. Evidence-based order sets for the Care Processes in the Pareto list to reduce variation in the ordering of simple diagnostic tests (lab, imaging) Indications. Evidence-based indications and cost information to standardize utilization Imaging tests (e.g., MRI, CT, US, nuclear scans) Substances (e.g., utilization criteria for blood, antibiotics, total parenteral nutrition) Major clinical supplies (e.g., joint prosthetics, cardiac and vascular stents, synthetic bypass grafts, heart rhythm devices, neurostimulators)

© 2013 Health Catalyst Proprietary and Confidential Reducing per case ordering waste Health Catalyst advanced applications. High-level Care Process map laying out the scientific flow Aim Packet with 2-5 Aim statements Cohort definition to support the Aim Packet Common metrics plus additional outcome, process and balance metrics to support the Aim Packet Starter visualizations such as dashboards, scorecards, and/or interactive drill down reports

© 2013 Health Catalyst Proprietary and Confidential © 2013 Health Catalyst Proprietary and Confidential Workflow waste Opportunity analysis

© 2013 Health Catalyst Proprietary and Confidential Primary Care CareProcessFamiliese.g.,Diabetes CVCV CareProcessFamiliese.g., Heart Failure W&CW&C CareProcessFamiliese.g.,Pregnancy GIGI CareProcessFamiliese.g., Lower GILower GIDisorders Resp- iratory CareProcessFamiliese.g., Obstructive Lung Disorders Neuro Sciences CareProcessFamiliese.g., Spine Disorders Musculo- skeletal CareProcessFamiliese.g.,Joint Replace- ment SurgerySurgery CareProcessFamiliese.g., Urologic Disorders GeneralMedGeneralMed CareProcessFamiliese.g., Infectious Disease OncologyOncology CareProcessFamiliese.g.,BreastCancer Peds Spec CareProcessFamiliese.g.,Peds CV SurgCV Surg Mental Health CareProcessFamiliese.g.,Depression Clinical Support Services (Delivery of Care) Diagnostic Clinical Support Services (work flow models) (e.g., Pathology and Laboratory Medicine, Diagnostic Radiology) Diagnostic Clinical Support Services (work flow models) (e.g., Pathology and Laboratory Medicine, Diagnostic Radiology) Ambulatory Clinic Clinical Support Services (work flow models) (e.g., Primary Care Clinics, Chronic Disease Specialty Clinics, Sub-specialty Clinics)) Ambulatory Clinic Clinical Support Services (work flow models) (e.g., Primary Care Clinics, Chronic Disease Specialty Clinics, Sub-specialty Clinics)) Acute Medical Clinical Support Services (work flow models) (e.g., Emergency Care, ICU/CCU/NICU/PICU, General Med-Surg) Acute Medical Clinical Support Services (work flow models) (e.g., Emergency Care, ICU/CCU/NICU/PICU, General Med-Surg) Invasive Clinical Support Services (work flow models) (Interventional Medical [e.g., cath lab, interventional radiology, GI lab, L&D, rad onc] and Surgical [e.g., amb, IP]) Invasive Clinical Support Services (work flow models) (Interventional Medical [e.g., cath lab, interventional radiology, GI lab, L&D, rad onc] and Surgical [e.g., amb, IP]) Therapeutic Clinical Support Services (work flow models) (e.g., Pharmacy, Transfusion Medicine, Respiratory Therapy, Physical, Occupational, Speech Therapy) Therapeutic Clinical Support Services (work flow models) (e.g., Pharmacy, Transfusion Medicine, Respiratory Therapy, Physical, Occupational, Speech Therapy) Per case workflow waste opportunity Clinical Support Services

© 2013 Health Catalyst Proprietary and Confidential Source: CA Office of State- wide Health Planning and Development (OSHPD) Annual financial reports for hospitals Exclusions: Kaiser State hospitals Small psych H’s Source: CA Office of State- wide Health Planning and Development (OSHPD) Annual financial reports for hospitals Exclusions: Kaiser State hospitals Small psych H’s Per case workflow KPA - OSHPD

© 2013 Health Catalyst Proprietary and Confidential CA OSHPD Data Per case workflow KPA - OSHPD

© 2013 Health Catalyst Proprietary and Confidential Per case workflow KPA * The $87 MM is based on variation in efficiency of care delivery for inpatient care units (e.g., ICU, general med-surg acute care, sub-acute care, observation) adjusted by APR-DRG severity level

© 2013 Health Catalyst Proprietary and Confidential Reducing per case workflow waste Value Stream Maps (VSMs). VSMs for the clinical departments in the Pareto list Improved capture of time stamps. Today’s Lean/TPS improvement systems are highly manual – automation is essential to ability to scale Timely and complete capture of time stamps is key to automation of workflow improvement systems Success in wringing out workflow waste will depend on improved focus on completeness and timeliness of time stamp capture in the EMR

© 2013 Health Catalyst Proprietary and Confidential Reducing per case workflow waste Health Catalyst advanced applications. Value Stream Map laying out the workflow to be improved (Health Catalyst has about 70 starter set VSMs) Aim Packet with 2-5 Aim statements Cohort definition to support the Aim Packet Common metrics plus additional outcome, process and balance metrics to support the Aim Packet Starter visualizations such as dashboards, scorecards, and/or interactive drill down reports

© 2013 Health Catalyst Proprietary and Confidential © 2013 Health Catalyst Proprietary and Confidential Defect (patient injury) waste Opportunity analysis

© 2013 Health Catalyst Proprietary and Confidential 55 HAC cohorts/registries Ventilator-associated pneumonia (VAP) Adverse drug events (ADEs)

© 2013 Health Catalyst Proprietary and Confidential California Data Medicare Data Count

© 2013 Health Catalyst Proprietary and Confidential Cost estimated from gross charges based on cost to charge ratio = 0.254); Savings calculated from cost of DRG with HAC subtracted from average cost of DRG (for MS-DRGs and HAC with at least 5 cases). Estimated cost per case for all cases in California = $12,700 (3.7 million cases). Michael Dietzel analysis. Estimated cost of defects 2011 OSHPD data

© 2013 Health Catalyst Proprietary and Confidential Estimated potential savings Patient injury (defect) waste Analytic methodology For each MS-DRG and Hospital Acquired Condition (HAC) with at least five cases: Define the average total cost for each case which includes a Hospital Acquired Condition (defect) Define the average cost of the base MS-DRG case (without complication or comorbidity) Estimated potential savings (if HAC patient injury were eliminated) = cost of HAC case minus cost of base case

© 2013 Health Catalyst Proprietary and Confidential Patient injury waste opportunity

© 2013 Health Catalyst Proprietary and Confidential Focus on workflow/defect waste CMS’s establishment of penalties weighted by measurement domain creates an incentive to choose CLABSI and CAUTI improvement initiatives (65% of total)

© 2013 Health Catalyst Proprietary and Confidential Reducing per case defect waste Define for each type of defect a Patient Injury Prevention Process (PIPP). Screening cohort of patients who may be at risk Screening criteria/tool (e.g., Braden Scale) to define patients who are at risk Clinical operations protocol to be implemented with at-risk patients to prevent injury Tracking system to detect injuries and near misses Treat patient injury as a “process failure” to be subjected to root-cause analysis rather than an “incident” to be reported

© 2013 Health Catalyst Proprietary and Confidential Reducing per case defect waste Health Catalyst advanced applications. Patient Injury Prevention Process map (combination of workflow VSM and scientific flow; e.g., Health Catalyst maps for CLABSI, CAUTI, pressure ulcers) Aim Packet with 2-5 Aim statements Cohort definitions to support the Aim Packet Common metrics plus additional outcome, process and balance metrics to support the Aim Packet Starter visualizations such as dashboards, scorecards, and/or interactive drill down reports

© 2013 Health Catalyst Proprietary and Confidential © 2013 Health Catalyst Proprietary and Confidential Why focus on workflow and defect waste?

© 2013 Health Catalyst Proprietary and Confidential IP per case waste reduction opportunity Facility perspective Per case ordering waste Per case workflow waste Per case defect waste 64 $144 MM ~ 23% Total IP per case waste $57 MM* ~ 9 % (~ 40% of total of 23%) $87 MM* ~ 14 % (~ 60% of total of 23%) In Progress < 1* % * Preliminary Findings Work in Progress

© 2013 Health Catalyst Proprietary and Confidential Focus on workflow and defect waste Size of the opportunity (14%) and aura of safety Payment structure schizophrenia (see next slide) Reduction in workflow waste benefits the system under all forms of payment Reduction in defect waste benefits the system for all Medicare patients CMS penalties – helps system reduce or eliminate penalties under readmission reduction and HAC Clinical teams are clinical operations-centric rather than physician-centric (organizational readiness)

© 2013 Health Catalyst Proprietary and Confidential = Negative Impact= Positive or Negative= Positive Impact Care Process Family Knowledge Asset Discounted FFS Per Diem Per CaseBundled Per Case Condition Capitation Full Capitation CMSCommercialCMSCommercial Workflow Diagnostic Variation Standing Orders Medication Selection Triage Patient Safety Ambulatory Treatment and Monitoring Indications for Referral Indications for Intervention Payment structure considerations

© 2013 Health Catalyst Proprietary and Confidential CMS penalty considerations

© 2013 Health Catalyst Proprietary and Confidential Thank you