1. FINANCE COMMITTEE MEETING OCTOBER 19, 2009 Fourth Quarter Financial Report – FY 2009

2. Highlights of Operating Results Academic Enterprise (everything but the hospital)  FY 2009 original budget operating margin = -1.5%  FY 2009 amended budget operating margin = -3.2%  FY 2009 actual operating margin = -2.1%  FY 2010 budgeted operating margin = 0% Clinical Enterprise  FY 2009 budgeted operating margin = 5.1%  FY 2009 actual operating margin = 1.1%  FY 2010 budgeted operating margin = 3% Overall  FY 2009 original budget operating margin =.9%  FY 2009 amended budget operating margin = -.2%  FY 2009 actual operating margin = -1%  FY 2010 actual operating margin = 1%

3. Academic Financial Results ($millions)ActualBudgetFavorable (unfavorable) Net Tuition$ 189.0$ 185.2$ 3.8 SSI$ 125.9$ 124.8$ 1.1 Sales & Service$ 81.9$ 71.7$ 10.2 Grants/Other$ 108.6$ 89.0$ 19.6 Total Revenue$505.4$470.7$34.7 Salaries & Benefits$ 306.2$ 301.2($ 5.0) Supplies, etc$ 53.7$ 47.7($ 6.0) Occupancy$ 25.5$ 26.1$ 0.6 COGS Auxiliary$ 30.7$ 22.7($ 8.0) Depreciation$ 30.8$ 30.0($ 0.8) Hospital cross chg($ 8.9)($ 10.4)($ 1.5) Grants$ 72.7$ 63.7($ 9.0) Other$ 5.6$ 4.8($ 0.8) Total operating expenses$ 516.3$ 485.8($ 30.5) Operating loss($ 10.9)($ 15.1)$ 4.2 Investments loss($ 31.4)($ 8.0)($ 23.4) Net Loss($ 42.2)($ 23.1)($ 19.1)

4. Senate Bill 6 Ratios Primary Reserve Ratio – expendable net assets / total operating expenses Viability Ratio – expendable net assets / long-term debt Net Income Ratio – net income / total operating revenues

5. OSU = 3.2 Miami = 2.9 UT = 2.6 Cincinnati = 2.3 Akron = 2.0 Ohio University Scores Senate Bill 6 Composite Score Akron Cincinnati Miami Ohio State

6. Outlook for FY 2010 Reasons for Optimism  Fall Enrollments Exceeded Budgeted Amounts  More Reliable Budget – Structural Deficits Corrected in FY 2010 Budget Process  New IT-enabled Budgetary Controls Implemented July 1, 2009  State of Ohio Exceeded First Quarter Revenue Projections by $30 Million  New Hospital Alliances  Healthcare Reform Reasons for Concern  State of Ohio FY 2011 Operating Budget  Video slots  Rescission of tax cut  State of Ohio FY 2012 Operating Budget  Federal stimulus dollars  UTMC Operating Margin  Partially Funded Depreciation  Payer Mix – Uncompensated Care  AFSCME Negotiations

7. 20082009Change $15,345,785$16,152,110$806,325 YTD 20092010Change $2,626,246$5,351,525$2,725,279

8. Cost Savings Initiatives - Clinical Reduction in force and workforce reorganizations. Vendor consolidation/renegotiation. Controlling the use of high-cost biological agents and drugs. New procedures to control uncompensated care. Outsourcing/more student employment where appropriate. Strategic service line growth strategy. New strategic alignments/joint ventures. New union contract (in progress). New departmental liaison program (“Margin Marines”).  Hired new hospital budget director. Furlough program (continued planning)

9. Conclusion FY 10 operating budget for the Academic Enterprise is currently solid; State of Ohio budget is an unsettled issue. There are ongoing UTMC cost-reduction initiatives to protect its 3% operating margin and to create a more sound fiscal footing in a highly dynamic environment.