1. Medicaid Task Force Charles E. Hart, MD,MS CEO/President Regional Health

2. Accumulating Hospital Cuts Since 2010 and into the Future

3. Medicaid Cuts 10-Year Medicare Cuts$98,943,500 Additional Medicare Cuts Under Construction $245,017,700

4. Sanford / Avera * Regional Government52%69% Insurance45%25% Self Pay 3%6% Medicaid9.6%14% Payer Mix Comparison * Sanford & Avera include operations in Iowa, Minnesota, North Dakota and South Dakota

5. Medicaid Eligible EligiblePopulation Minnehaha23,000169,500 Pennington15,500101,000 Dewey/Todd/Shannon14,90025,000

6. SD Medicaid Compared to Neighboring States SFY 2010 / Enrollee 4% less than Iowa 14% less than Wyoming 22% less than Nebraska 28% less than Montana 47% less than North Dakota 55% less than Minnesota

7. Medicaid Cuts FY 2012  $7.0 Million FY 2013  $1.0 Million FY 2014  $750,000 Cumulative Impact (3 yr)  $8.75 Million 7

8. Existing Medicare Cuts (2013 – 2022) 8 Rapid City Regional Hospital Spearfish Regional Hospital Spearfish Regional Surgery Center Regional Health Total Existing Legislative Cuts Affordable Care Act - 2010 $ 67,100,100 $ 5,183,400 $ 784,400 $ 73,067,900 Budget Control Act (Sequestration) -2011 19,579,600 1,511,600 235,900 21,327,100 Tax Relief / Job Creation Act (Medicare Bad Debts) - 2012 157,600 18,100 1,000 176,700 American Taxpayer Relief Act (Coding Adjustments) - 2012 6,756,300 510,500 19,300 7,286,100 93,593,600 7,223,600 1,040,600 101,857,800 Existing Regulatory Cuts Inpatient Hospital Coding Adjustments 3,643,500 317,500 38,900 3,999,900 Grand Total $ 97,237,100 $ 7,541,100 $ 1,079,500 $ 105,857,700

9. Regional Health Community Benefit 990 Tax Form FY2011 & FY2012 IRS Form 990 FY 2012FY 2011 Financial assistance (charity) at cost $15,592,000$7,969,000 Subsidized health services 4,302,000 6,185,000 Medicaid loss 11,872,0003,747,000 Health professions education 1,830,000 1,460,000 Research 314,000 1,201,000 Community health improvement services 300,000 478,000 Contributions for community benefit 948,000 225,000 Subtotal $35,158,000$21,265,000 Medicare loss 17,529,000 11,776,000 Grand Total $52,687,000$33,041,000 Percent of Total Expenses 9.7%6.3%

10. Medicaid Expansion/Pros What is the population/costs? Cost shift ($5-8 Million Net Revenue) Maintain Services Economic Stimulus (sequester) Donut hole 52-100% poverty Moral Obligation Protect Small Business Opt Out