1. THE ENVIRONMENT OF ACUTE CARE IN THE UNITED STATES AND A COMPARISON WITH JAPAN Osaka March 1, 2014 Tokyo March 2, 2014 Lee Pickler, DBA 1

2. ACUTE CARE IN THE UNITED STATES ROLE OF LTAC’s CURRENT HIGHLIGHTS OF HEALTHCARE TODAY – UNTIL 2013 HEALTHCARE COSTS HAVE INCREASED EITHER ALARMINGLY OR AT LEAST SIGNIFICANTLY – FORTY-SEVEN MILLION AMERICANS EITHER UNDER- INSURED OR UNINSURED – THE DEMOGRAPHICS WILL NOT IMPROVE THE SITUATION—ONLY WORSEN IT – THE PRIVATE SECTOR HAS NOT BEEN ABLE TO ADDRESS THE PROBLEM – THE AFFORDABLE CARE ACT IS THE GOVERNMENT’S RESPONSE TO THE PROBLEM 2

3. THE ENVIRONMENT DEMOGRAPHICS MACRO ECONOMICS HEALTHCARE RESOURCES PUBLIC SECTOR 3

4. Japan United States Demographic Comparisons 2012 Population Japan127,515,000 U.S.313,914,000 2013 Elderly (65+) %tage of Population Japan23.7% U.S.13.9% 4

5. Projection of Population over 80 Years 5

6. Notes on Japan -- LTC Japan public spending on long-term care is projected to more than double from 1.4% in 2007, and could even reach 4.4% of GDP in 2050. Japan’s real public LTC spending is expected to grow at a faster rate between 2006 and 2025. – Highlights from Help Wanted? Providing and Paying for Long- Term Care, OECD Publishing, 2011. 6

7. Japan United States Macro Economic Comparisons 2010 Health Expense Per Capita Japan$3,958 U.S.$8,233 Health Cost %tage covered by the public (2011) Japan80.0% U.S.45.9% http://www.oecd.org 7

8. Japan United States Macro Economic Comparisons 2012 GDP Per Capita (in U.S. Dollars): JapanUS$46,720 U.S.US$49,965 8

9. RESOURCES Acute Care Beds Density per 1000 (2011) Japan – 8 (Avg length of stay 17.9) U.S. -- 2.6 (Ave length of stay 4.8) Physician Density per 1000 (2010) Japan – 2.23 U.S. -- 2.44 9

10. FIND A NEED AND FIX IT GOVERNMENT POSITION—REGULATE AND PRICE FIX. RESULT WILL BE ADJUSTMENTS MADE BY THE PRIVATE SECTOR TO ADDRESS THE PROBLEM. PRIVATE SECTOR CHANGED ACORDING TO WHO HAD THE POWER. PHYSICIAN POWER, INSUROR POWER 10

11. THE RESULT NO INCREASE IN PATIENT ACCESS INCREASED COST OF CARE – DUE TO THIRD PARTY PAYORS – TECHNOLOGY – SERVING THE UNDER-SERVED NOTHING FIXED SO THEREFORE: OBAMA CARE (THE AFFORDABLE CARE ACT) 11

12. TWO CHALLENGES ACCESS TO CARE FOR EVERYONE – IMPROVE COVERAGE DRIVE COST OUT – SOME METHODS: REGULATE INSURORS CONTROL/DECREASE REIMBURSEMENT BEGIN TO BUNDLE PRICING DON’T PAY FOR MISTAKES 12

13. DELIVERING CARE IN THIS ENVIRONMENT SHORT TERM ACUTE CARE LONG TERM ACUTE CARE INPATIENT REHABILITATION SKILLED NURSING FACILITY HOME CARE 13

14. A Comparison of Facilities 14

15. LTACH DEFINITION LONG TERM ACUTE CARE HOSPITALS PROVIDE SPECIALIZED ACUTE CARE FOR MEDICALLY COMPLEX PATIENTS WHO ARE CRITICALLY ILL WITH MULTI-SYSTEM COMPLICATIONS AND REQUIRE LONG HOSPITALIZATIONS. 15