1. Virginia Chamber of Commerce Health Care Conference Steve Arner SVP / Chief Operating Officer June 6, 2013

2. Carilion Clinic Who we are (FY 2012) Physicians 592 Hospitals 8 Employees 11,300 Admissions 50,300 Revenue$1.3 B

4. Vision 2017 We are committed to a Common Purpose of Better Patient Care, Better Community Health and Lower Cost

5. Affordable Care Act 2700 pages and virtually nothing about payment reform

6. Challenges with Today’s Care Model High prevalence of chronic disease and mental illness Health care cost growing; burden to business Shortage of healthcare professionals Overuse; volume “treadmill” Inconsistent care; fragmentation Lack of coordination Payment models are at odds with addressing rising costs

8. Outcomes Cost Healthcare Value = Changing the Value Proposition

9. Improving Outcomes and Lowering Costs –A Few High Level Focus Areas: Reduce Waste Prevention Patient Involvement Provider, Insurer, Employer, Patient Collaboration –Case Study: Congestive Heart Failure

10. Steady improvement has placed us in the top 10 percent Carilion Medical Center – Heart Failure Readmission Rate CMC 30 Day Readmission Rate (All Cause) for Medicare Patients with Heart Failure Diagnosis

11. Risk Sharing in the Future is a Must Partnerships between providers and insurers and employers is critical: –Share Financial Risk –Share and Use Data for Accountability and Best Practice Align quality / outcome metrics between insurers will allow focus on better care: –Carilion currently has 9 pay-for-performance agreements and these have a total of 300 at risk measures. About 225 are unique measures.

12. Accountable Care Key Facts:  ACO product with Aetna, start date 1/1/2012 (in addition to collaboration on Medicaid, Medicare Advantage, and Employee programs)  Participating in other payers’ shared savings initiatives (Anthem PC2 for example) Key Facts:  MSSP Participant, start date 1/1/2013  Shared savings based upon achievement of quality benchmarks and cost reduction  46,400 beneficiaries  Qualitative application process; Carilion medical home strategies very helpful for questions regarding quality, care coordination, beneficiary engagement, evidence-based medicine, and reporting. Key Facts:  Dedication of senior leadership to ACO strategy and development.  Recruitment of a Chief Strategy Officer  Development of a comprehensive enterprise data warehouse (EDW) for integration of EMR data and healthcare claims.  Creation of a Transformation Oversight Committee of senior leadership to develop care delivery strategies for key disease states (CHF, COPD, Diabetes). Commercial StrategyMedicare StrategyCarilion Clinic Support  575 employed Carilion physicians are Doctors Connected ACO participants.

13. What is Population Health Management? Goal is optimal patient health Healthcare, not sick care –Proactive, not reactive Align care team resources to meet the needs of different patient segments and personalized to the patient. Reduce the need for higher cost services (ED, hospitalizations, imaging tests, etc)

14. Past Solutions: Cost-Shifting Gov’t Cuts to Private Payers Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2008, for community hospitals. Hospital Payment-to-Cost Ratios for Private Payers, Medicare, and Medicaid, 1988 – 2008

15. Medicaid Reform and Expansion Why this topic is important to businesses? General health of a population and availability of quality health care important to potential employers Medicaid expansion isn’t a panacea for payment reform, but will help address the health care needs of an “at-risk” population Transforming the health system requires new investments and innovations in care delivery and expansion of Medicaid will: –Help deploy new approaches to a broad population –Allow flexibility to try new approaches to Population Health Management which hold great potential for lower cost patient care