UW Hospital & Clinics Watertown Regional Medical Center Pediatric Funding Proposal Mike Buhl, Senior Vice President and Chief Financial Officer April 7, 2010

2 Confidential 2 Background  Watertown Regional Medical Center (WRMC) has been a UW Health Partner since February  Over the last 2 years, UW Health has developed many service, program and physician services with WRMC. –pulmonary/sleep, telestroke, Johnson Creek clinics, cardiology, neurology and orthopedics.  Desire to continue relationship and build upon areas that will benefit both organizations.

3 Confidential 3 Proposal  With the AFCH brand and service quality, it is anticipated that both WRMC and AFCH will capture increased market share with this association.  The Pediatric/AFCH business plan strategy for growth is to develop relationships in the region.  WRMC’s desire is to increase their capability to provide pediatric services.  An AFCH branded pediatric inpatient unit at WRMC could accomplish both objectives.  AFCH would provide a clinical nurse manager, training of WRMC’s nursing staff and Medical Directorship through Dr. Chris Green.

4 Confidential 4 Business Plan / Investment  WRMC will require an initial investment for their inpatient pediatric unit for demolition and rebuild of new patient/family rooms. This investment is approximately $570,000.  The proposal for sharing in both the startup and on-going operating gains/losses is 50/50 between WRMC and AFCH.  This would require an upfront investment of $280,000 and a potential year one share of the loss of $278,000.  Achieving positive net income by year 5.

5 Confidential 5

6 6 Recommendation The Finance Committee recommends to the UWHC Authority Board that UWHC partner with WRMC in the AFCH Pediatric brand and share in the funding as outlined above.