1. Payment and Delivery Reform Steve Arner Senior Vice President / 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. 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 at odds with countering rising costs

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

8. Outcomes Cost Value =

9. Health Episodes Per Person Processes Per Health Episode Cost Per Process xx Transformational Management Operational Excellence Increased Productivity and Quality & Lower Unit Cost Cost in Health Care

10. Changing the Value Proposition Reducing the number of “Health Episodes per person” Case Study: Congestive Heart Failure

11. Action Team 5/08: Cardiologists Nursing leaders Hospitalist Palliative Medicine Case Management Home Health Primary Care IT

12. Action Timeline EPIC order sets, CPGs & best practice alerts (late ’07- early ‘09) Medical Director (Steve Phillips MD)2/09 Program Co-ordinator (Mary Davis RN)2/09 Outpatient CHF clinic8/09 Dedicated inpatient unit11/09 “Transitions of Care” program (late ’09 – present) Home health – use of Telemedicine link1/08 Began JCAHO DSC for Heart Failure process10/10 JCAHO DSC for CHF Accreditation8/11 Broad Education Initiatives ’09-present

13. 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

14. Changing the Value Proposition Reducing the number of “Health Episodes per person” Case Study: Congestive Heart Failure Other focus areas: –Reduce Waste –Prevention –Patient Involvement

15. Risk Sharing in the Future is a Must Partnerships between providers and payers is critical

16. 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.

17. 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)

18. Medicaid Expansion Why it is important to business