1. The Benefits of System Affiliation for Independent Rural Hospitals Presented by: Donna Russell-Cook, FACHE President St. Elizabeth Hospital Franciscan Health System Sue Reiter, RN, BSN Board Member Franciscan Health System

2. St. Elizabeth Hospital Franciscan Health System Affiliation—May 2007 Enumclaw, WA

3. St. Elizabeth Hospital Service Area (Southeast King and Northeast Pierce Counties) Population of 36,000 Medicare/Medicaid payer mix is 58.1% 40,000 annual outpatient visits 75% of primary care providers are FMG 13,300 ER visits 300 births 1,500 admissions 16 – average daily census

4. Number of Hospitals in Health Systems, (1) 2002 – 2012 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2012, for community hospitals. (1)Hospitals that are part of a corporate body that may own and/or manage health provider facilities or health-related subsidiaries as well as non-health-related facilities including freestanding and/or subsidiary corporations. Many are doing it…does it make sense for YOUR organization? What synergies exist with potential partners?

5. ACCESS TO CAPITAL Prior to Affiliation After Affiliation Enumclaw Regional HospitalSt. Elizabeth Hospital FACILITIES Updates, expansion, and new construction

6. ACCESS TO CAPITAL INFORMATION TECHNOLOGY Implementation/advancement of EHR, new equipment OUR EHR JOURNEY MEANINGFUL USE STAGE 2

7. ECONOMIES OF SCALE NEGOTIATING POWER SYSTEM CHARGE MASTER One contract was non-negotiable for the past 20 years, upon affiliation, it was renegotiated, bringing Enumclaw into FHS payer agreements Increased Charges = Increased Revenue It’s critical to monitor not just the impact on the organization, but also on the patient and community KNOW YOUR COMMUNITY Supplies as a % of revenues decreased from 7.3% pre-affiliation to 2.8% post-affiliation despite increase in total patient services revenue of over 200% during same period Affiliation FINANCIAL VIABILITY

8. ACCESS TO HUMAN RESOURCES AND SYSTEM PROGRAMS End of Health Services Consortium (90’s) Virginia Mason was providing advice/assistance during that time No connection to larger resource (early 2000’s) Led to affiliation talks with Franciscan Health System Great platform for guidance and structure Integration of system policies for admin, clinical, and HR Shift from “home grown” practices to best practices Access to talent, expertise, structure, procedures, and practices

9. COMMUNITY RELEVANCE ADMISSIONS 43% BIRTHS 38% ER VISITS 13% Immediate assurance of ongoing existence of hospital Community Employees Community Relations Health Care Coalition Shifting perception (positive) with increased involvement System (FHS) and parent (CHI) financial support Marketing Grants/Sponsorships FHS Foundation Volunteer Services/Community Integration FTE’s

10. PERMANENT HEALTHCARE FOR COMMUNITY CONTINUUM OF CARE POPULATION HEALTH The new facility is symbolic of the greater benefit of the organization supporting the increased resources for community and patients EVOLUTION GROWTH

11. PROFESSIONAL RESOURCES “It can get a bit lonely out in the country.” -Dennis Popp, Administrator, Enumclaw Regional Hospital Now able to interact with… MANAGERS DIRECTORS SENIOR LEADERS Additional STAFF

12. MEDICAL STAFF CONNECTION “ Recruiting and retaining talented physicians, providers, nurses, ancillary professionals, and other positions is the single biggest challenge in ensuring a competent and quality delivery service in a rural community.” -James Diegel, president and CEO, St. Charles Health System Inc., Bend, OR Pre-affiliation >50% of referrals were from FMG

13. VISIBILITY AND PRESTIGE ST. ELIZABETH HOSPITAL CATHOLIC HEALTH INITIATIVES FRANCISCAN HEALTH SYSTEM 1- CAH Hospital 282* Employees Local Community 8 – Hospital System Franciscan Medical Group Hospice/Palliative Care 12,440 Employees Regional Network 18 – States 86 – Hospitals 2 – Academic Med. Ctrs. 3 rd Largest Faith-Based Health System 85,500 Employees $12B in Revenue National Network

14. Thank You