University of Alabama Health Services Foundation, P.C. A brief glimpse inside a Faculty Practice Plan...

Not a Typical MD Practice A bona fide corporation “Shareholder value and earnings” not in annual distributions but for –program development / expansion –compensation / expenses for operation –retention for business downturns MDs are “fully employed / only here”

A Brief View of our History Founded in 1973 –IRS Tax Exempt 501(c)(3) As a physician-led company –Superior Patient Care –Group Practice in an Academic Environment –Establish Funds for Program Development The era was ripe for such activities –Medical Practice Plans birthed out of “university anxieties”

The “Stages of our Growth” 1970s - a benefit plan and to bill and collect professional revenue 1980s - organizational development –University Affiliation –Ambulatory Clinics –Complete Health Joint Venture 1990s - corporate style behavior –The Kirklin Clinic –UAB Prime Care –Sale of Complete Health –UAB Health System

Board of Directors Purpose –Develop major policy and strategy –Provide a balanced perspective to our goals –Recruit key executives and hold them accountable for success Membership –10 public members (“outside directors”) –9 physician leaders (“internal directors”) –Executive leadership

Public Board Members Eddie Adair Cordova Ventures Dr. Neal Berte Birmingham Southern College Donald James Vulcan Materials Company Charles McCrary Alabama Power Company Charles Perry, Jr. Highland Associates Thomas Lowder Colonial Properties Trust Van Richey American Cast Iron Pipe Company Jerome Rose Lehr, MiddleBrooks, Price & Proctor James Stephens EBSCO Industries, Inc. Lee Styslinger, III Altec, Inc.

Executive Leadership A uniquely balanced and important partnership of MD / business leadership Corporate service functions –General Counsel, Finance, Human Resources, Treasury, Corporate Compliance, et al

UNIVERSITY OF ALABAMA HEALTH SERVICES FOUNDATION Clinical Services Managed by UAB Health System UAHSF Board of Directors Executive Officers Ray Watts, M.D., President Reid F. Jones Executive Vice President UAB Health System Director Insurance Risk Management Executive Director Human Resources Chief Financial Officer General Counsel Management Services Organization Senior Vice President TKC Chief Information Officer Corporate Services

9 Financial Overview Extremely strong Balance Sheet –$409 cash and investments, $183 debt 2011B 2010P 2009A Net Patient Revenue$324 $317 $306 Total Revenue$405 $390 $380 $ in Millions

Total Payor Mix Blue Cross Blue Shield37% Medicare19% Medicaid11% Commercial Insurance 5% Viva10% Self Pay 5% Other13%

11 UAHSF Expense Structure

General Endowment Fund The Successful Failure Over $100 million dollars Research Initiatives Creation and Implementation of the MSO Faculty Recruitment

Scope of Services Portfolio Offers services in 32 clinical specialties … primary and specialty care Employs 920 physicians and 1,800 non- physician employees 22nd largest employer in the State of Alabama

Service Locations Have the “clinical franchise” for physician services at UA Hospital Also provide services at other hospitals, in TKC, at selected regional clinics, and in “local offices” The Kirklin Clinic Acton Road

The Kirklin Clinic Opened June 15, ,000 Square Feet Clinic Encounters - 769,000 in 2005 –754,000 in 2006 –683,000 in 2007 –699,000 in 2008 –711,000 in 2009 *based on TKC Patient Encounter Report