UW Hospital & Clinics Price Change Mike Buhl, Senior Vice President and Chief Financial Officer April 7, 2010

Background UWHC typically implements a price change effective with the start of our fiscal year - July 1. The Wisconsin Statute, section 153.08(4), provides for a public notice of a hospital price increase. A reportable price increase is a change in a hospital’s prices that causes the percentage increase in the hospital’s total gross revenue. Revenue from patient care services for the 12 months following the price change will be greater than the change in the consumer price index.

Situation The transition to HealthLink Billing, ADT and Operating Room systems in October 2009 provided the opportunity to implement revised and improved patient charge structures and capture processes in certain departments. These changes were put in place to advance standardization in charging approaches across the institution, to improve the overall accuracy and specificity of charging, and to provide increased alignment with professional charge structures.

Situation (cont.) The net effect of these changes is projected to be an increase of $7.8m in gross revenue annually. The principal areas impacted were: Recovery Room – A change to a more precise system of acuity based charging, enabled by the new HealthLink Optime system, increase gross revenue by $4.5m annually. Pharmacy – Improved documentation systems in HealthLink allow more specific charging of medications used during operative cases. Impact is $950k annually. Ophthalmology – With the transition to HealthLink based charging, facility charges for certain types of eye exams were changed (increased) to standard rates and charges used across all UWHC clinics. Impact is $828k annually. Cardiac Cath/EP Labs – Procedure charges in these two areas were restructured to a high level of specificity and alignment with CPT/HCPC code structure and professional charges. This impact is $560k annually.

Situation (cont.) Overall, this annual increase in gross revenue of $7.8m represents a .4% increase in our annual FY 2010 gross revenue of $1.9b. As noted above this qualifies as a “reportable” rate increase, as this percentage increase exceeds the year over year change in CPI of .1%. Normally this CPI-based reportable threshold is much greater and this would not be a reportable rate increase. For example, the threshold in effect for any increases after December 31, 2009 is 2.7%.

Recommendation Based on the assessment of the rate changes due to the HealthLink transition and the Wisconsin Statute, management recommends approval of the .4% price increase. If approved, a public notice will be published as soon as possible.