Procurement Transformation Project Stakeholder Update

Platform for Change Our Landscape is Changing: Past Success does NOT Guarantee Future Success

Procurement Transformation Why Did We Do It and What is It? We have an obligation to ensure that the Supply Chain never becomes the weak link in our company’s value chain. - AND - The Procurement Organization required to support Intermountain in a “Fee for Service” environment today is dramatically different than the Procurement Organization required to support Intermountain in a “Shared Accountability” environment. - THEREFORE - We must aggressively implement best practices and continuously improve our Procurement infrastructure. This multi-phased effort is our Procurement Transformation!

People & Structure Sourcing Procurement Strategy Program Mgmt Program Mgmt SRM CRM Purchasing Contract Mgmt Processes & Technology Service Offerings Infrastructure Strategy Procurement Transformation Framework

We need a balanced approach to sustained excellence in the future: Our Value Contribution Support CPI + 1%; deliver $60MM in cost reduction by 2016 Enhance capabilities so Procurement can help deliver cost prevention, risk mitigation and quality improvement contributions Prepare the Procurement organization for commercialization and ultimately become a profit center for Intermountain in 5 years Transformation Objectives

Our Internal Customers: Offer a “one-stop-shop” for our key stakeholders to simplify their interaction with the SCO Streamline the decision making processes Align our resources and activities with priorities of our stakeholders Our People: Enhance job enrichment through role clarity, career planning, professional development, goal alignment and empowerment Reallocate 20% of resources from transaction processing to strategic activities Arm team members with KSA’s to meet diverse needs of our customers and suppliers Transformation Objectives

Our Suppliers: Implement a supply base management program to consolidate spend with fewer, more strategic supply partners Earn preferential treatment from supply base to create solutions for our stakeholders Collaborate with supply base to generate value; not transfer profit margin Our Processes: Mitigate acute areas of procurement/supply chain risk Increase strategic sourcing process rigor and reduce process variation E-enable processes to drive more efficiency Align objectives, goals, measures, metrics and incentives Transformation Objectives

Purpose of Solutions Manager Role CRMSRM Program Management “Sell” various SCO solutions with stakeholders Stakeholder business plans and reviews Committee support Submit projects to sourcing Local support and integration Clinical support and integration “No More / No Less” Philosophy Until We Scope This Role in Phase 2 Transformation Supplier performance management Alliance development Committee support Non-sourcing contract negotiations Governance oversight Service excellence to end users Utilization mgmt, risk mitigation, Compliance mgmt Contract performance mgmt Operations management (where applicable) Link supplies to procedures to outcomes

Solutions Manager Align Your Objectives to our Procurement Solutions Range of Potential Objectives TCO OutcomesOther Reduce Unit CostSustainability Flexibility/Responsiven ess Improve Supplier Performance Mitigate Risk Improve Clinical Efficacy Improve Patient Safety Improve Revenue Capture New Business Development Intermountain Brand Reduce Order Management Cost Improve Working Capital Reduce Assets Improve Labor Productivity Reduce Waste Reduce Logistics Cost Diversity Improve System Performance Improve Patient Satisfaction Market Share Reduce Cost per DRG Reduce Supply Variation by Procedure

Solutions Mgrs DIRECTLY PROVIDES these solutions Solutions Mgrs REPRESENT these solutions (provided by others in Procurement) The Range of Procurement Solutions is Broad Procurement-Related Solutions SourcingPost-Contract Value Adds Strategic Sourcing Supplier Performance Management Alliance Development Spot Buys / Opportunity Buys Supply Utilization Management Product Standardization Charge Capture Optimization Supply Base Management Make/Buy Assessment Contract Repository & Event Reporting Contract Amendments Renegotiation Capital Planning Sourcing Supplier Risk Assessment New Product Introduction Contract Management Value Analysis Contract Compliance Management Environmentally Preferred Products Direct Importing Benefits Tracking Dispute Resolution BAA/DSA/NDAs Change in Ownership Contract Terminations Purchasing Item Adds/Changes/ Deletes Price Management Procure-2-Pay Management EDI Management Contract Review Services Insource/ Outsource Assessment Travel Management Supply Program Management Energy Management Waste Management Office Solutions Fleet Management Printed Output Management Custom Pack Management Reprocessing Management Supplier Access Credit Card Joint Cost Reduction Co-Product Development Price Benchmarking Research and Trial Support Program Management Services

Procurement is One of MANY Solutions we Offer in the SCO

Stakeholders (Solutions Mgr) Expense Categories (Sourcing Manager) Line of Business (Solutions Mgr) Marketing Solutions Manager Assignments We Needed to Solve for Three Dimensions Products Marketing Clinical Programs Equip Software/ Services Hospitals Marketing Products Marketing Clinical Programs Equip Software/ Services Select Health Products Equip Software/ Services Marketing Products Marketing Clinical Programs Equip Software/ Services Home Care Products Equip Software/ Services Marketing Products Marketing Clinical Programs Equip Software/ Services Med Group Marketing Products Marketing Clinical Services Equip Software/ Services Hospitals Marketing Products Marketing Clinical Services Equip Software/ Services Select Health Products Equip Software/ Services Marketing Products Marketing Clinical Services Equip Software/ Services Home Care Products Equip Software/ Services Marketing Products Marketing Clinical Services Equip Software/ Services Med Group Marketing Products Marketing Support Services Equip Software/ Services Hospitals Marketing Products Marketing Support Services Equip Software/ Services Select Health Products Equip Software/ Services Marketing Products Marketing Support Services Equip Software/ Services Home Care Products Equip Software/ Services Marketing Products Marketing Support Services Equip Software/ Services Med Group

Support Business Owners Clinical ProgramsClinical ServicesSupport Services Hospital Regions Select Health Medical Group Home Care Legal Compliance Risk Education Patient Safety CNO CMO Shared Accountability Healthcare Delivery Clinical Integration Lines of Business Integration Central Office Integration We Have Two Types of Stakeholders Decision Makers and Those Impacted/Influenced by Decisions Makers