1. RURAL HEALTH CONFERENCE Columbia, Missouri June 5, 2013

2. Audrain Medical Center’s affiliation experience  In 2004 committed to independence as a sole community hospital but curious about affiliation  In 2008 adopted an “affiliation lite” approach – helpful but no infusion of capital available  In 2012 began pursuit of a full merger in order to secure access to capital and share operating expenses  On April 1, 2013 joined SSM Health Care an 18 hospital system providing services in Missouri, Illinois, Oklahoma, and Wisconsin

3. AMC’s need for affiliation grew over time  Declining demographics in service area (zero population growth, more uninsured, and little growth in per capita income)  Growing competition from tertiary providers (more outmigration of patients)  Reduced access to working capital (ACA, RAC, DSH, Sequester, et al)  Ageing facility  More regulatory requirements (EMR, VBP, ICD10, et al)

4. Lessons learned at AMC about affiliation  Discuss affiliation with stakeholders well in advance of need  Once the decision is made to pursue a merger it takes 12- 15 months to complete so start while you still have sufficient working capital  Select an affiliation consultant carefully (someone who can construct a compelling RFP and negotiate well on your behalf)  Over communicate with stakeholders during the process and after it is completed  Culture trumps strategy (synergy eases the transition process and increases the odds of future success)

5. Questions please?