CAMPAIGN FOR CHANGE Alecto Healthcare Services Hayward, LLC

Campaign for Change Expenses originate from: –Services Generally contracted, would need to be negotiated –Supplies Generally contracted, would need to be negotiated –Labor Can be changed within a shorter timeframe

Campaign for Change Measures Option 1- Workforce Reduction Employee Cuts 40% Decrease in Staff (391 FTE’s) Furlough Days N/A FTE Staff Salary $98,060 per year (No Decrease) FTE Management Salary $126,497 per year (No Decrease) Severance Package Cost $3,682,909 ($9,429 per Terminated FTE) Total Expense Savings $34,619,348 FTE per Unadjusted Occupied Bed Ratio 6.55 FTE’s per Occupied Bed Note: Wages and estimates were used from Fiscal Year 2011 OSHPD Report Option 2- Workforce Reduction & Furlough All FTEs 15.5% Decrease in Staff (150 FTE’s) 2 Days per Month for All Staff 8% Decrease $20,565,410 per year 8% Decrease $731,423 per year $1,414,350 ($9,429 per Terminated FTE) $34,591, FTE’s per Occupied Bed Option 3- Workforce Reduction & Furlough All FTEs 7.75% Decrease in Staff (75 FTE’s) 2 Days per Month for All Staff 8% Decrease $13,804,460 per year 8% Decrease $731,723 per year $707,175 ($9,429 per Terminated FTE) $21,183, FTE’s per Occupied Bed

Campaign for Change Key Strategic Initiatives 1.Decrease FTEs and eliminate unnecessary expenses 2.Institute the LEAN philosophy 3.Implement the Campaign for Change marketing strategy

Campaign for Change Decrease FTEs and eliminate unnecessary expenses –Reduce 7.75% FTEs and furlough all personnel two-days a month FTE reduction savings  $7 million Furlough savings  $14 million –Department heads to eliminate avoidable expenses Supplies, equipment, and travel  $117,000

Campaign for Change Institute the LEAN philosophy –Continuous Improvement –Increase quality and efficiency –Decrease cost and expenses –Total employee involvement –Zero Waste in processes Defects in outcomes Misunderstandings of procedures

Campaign for Change Types of Wastes: –Errors/rework –Excess inventory –Transportation –Waiting/delays –Over Processing –Over Production –Excess Motion –Lack of clarity and unused creativity

Campaign for Change The Campaign for Change marketing strategy –Hospital branding “Premier Cardiac Center” –Change image of hospital for employees and community –Incorporate a physician survey and increase physician engagement

Campaign for Change Health care reform impact –Reimbursement legislation Lower Medicare & Medi-Cal reimbursement rates Reduction to DSH program –Increase number of insured patients More individuals will qualify for Medi-Cal medical coverage