1. 1 Bary Bailey EVP, Chief Strategic Officer.…a health and consumer services company making people’s lives better Systems & IT Outsourcing

2. 2 PacifiCare’s Future State PacifiCare’s Future State is a measured, programmatic set of business and technology projects that enable our competitive product leadership strategy The company requires business and technology change and investment.…a health and consumer services company making people’s lives better

3. 3 This is what our business users want... Objectives Key Requirements Rapid product deployment Increased operating efficiency Flexible and scalable systems Customer and member product flexibility and choice On-time, one-time and, eventually, real-time claims processing Robust medical management Consistent and complete customer interaction Information managed and used as a strategic business asset Standard business practices.…a health and consumer services company making people’s lives better

4. 4 But our historical perspective made it hard to deliver... Multiple systems –Duplicative support and investment requirements –Limit business process transformation opportunities Old “2nd tier” technology limits: –E-business transformation opportunities –Ability to rapidly deploy new products –Deployment of vendor-supported applications Consumes scarce IT resources on activities that do little to advance business strategies.…a health and consumer services company making people’s lives better

5. 5 So we created some rules for change... –Consistency will prevail over variation Process Systems –Commercially available software –No desire to be bleeding edge Core business - proven technologies and stable vendors Non-core business - lower cost and acceptable levels of performance.…a health and consumer services company making people’s lives better –Information management and use Mission-critical Corporate asset –Access strategy driven by business Efficient solutions to meet customer demands (e.g., Internet, telephone, EDI, IVR)

6. 6 The Future State is a set of business and IT transformation projects that will : –Consolidate - eliminate the deployment of redundant applications and technologies –Rationalize - migrate to common applications supported by standardized business processes –Innovate – identify and deploy applications and technologies that promote business transformation –Organize – provide a framework for future business and IT investments TECHNOLOGY INFRASTRUCTURE ENTERPRISE ACCESS ENTERPRISE APPLICATION INTEGRATION Business Logic/Functions Access to PHS Consumers Brokers Employers Employees Providers Members Customers PBHI PDVRxSol Rx Connect Health Plan TBD Data Mart Data Warehouse ENTERPRISE INFORMATION MANAGEMENT Enterprise Information Repository Data Mart Data Warehouse EDI Paper/EDE Internet Intranet VRU Partner Connectivity ENTERPRISE ACCESS.…a health and consumer services company making people’s lives better And we set a direction towards the Future State…

7. 7 System Selection Core Legacy Migrations Milestones Future State Key Business Driver We established a plan of attack…....…a health and consumer services company making people’s lives better

8. 8 And we have made good progress thus far... Outsourcing contract finalized and transition is well underway Currently implementing several Future State projects Final decision on Core Systems and Financial Systems to be made in near term.…a health and consumer services company making people’s lives better

9. 9 Outsourcing will bring benefits to the business… Facilitate the delivery of Future State Reduce/control operating expenses Improved performance and speed of delivery Access to “world class” capabilities Increased funding through efficiency improvement.…a health and consumer services company making people’s lives better

10. 10 Software Engineering Institute - Capability Maturity Model (SEI-CMM) Typical PacifiCare (Pre-Outsourcing) Low Exceptional Medium High With Outsourcing (After 12 months) 1.8.…a health and consumer services company making people’s lives better And independent experts concur... 3.0

11. 11.…a health and consumer services company making people’s lives better We maintain control, but have developed strategic partnerships… CGE&Y - Future State Strategic Planning Keane, Inc - Application Maintenance and Enhancements IBM - IT Infrastructure

12. 12.…a health and consumer services company making people’s lives better And we have aligned our structure to support Future State –Future State Combined business and IT organization Retained resources and control of strategy, architecture and investment decisions –Ongoing IT Operations Outsourcing supplier management Systems oversight

13. Questions & Comments