1. Physician Compensation June, 2015

2. NM Compensation Program Principles Highly Competitive  Attracts and retains the best physicians Performance-Based  Correlates with a physician's individual productivity and quality of care, incorporating work, academic, and relevant equivalent RVU’s Sustainable  Meets the evolving needs of Northwestern Medicine Transparent  Focuses on simplicity, consistency and equity and allows for disclosure to relevant parties as appropriate Compliant  Considers all applicable laws and regulations and includes fair market value principles 2

3. Clinician Educator Compensation Plan Simplicity  Single $/wRVU for all clinical activity  Academic/Teaching/Citizenship funded: 0.09 FTE  Value-based proposed to be built out in FY17 Chair Discretion Pool @ $5000/FTE $/wRVU Rate Selection – at the Specialty Level  Greater of (i) 50 th percentile blended academic benchmark, or (ii) imputed current rate  Rate ceiling applied where necessary 3

4. FY16 $ per wRVU Rate Methodology Algorithm applied at the specialty level across NMG A Calculated Academic Benchmark Rate B Imputed Current Rate C Fair Market Value Rate Ceiling Rate Selected: Greater of (A) or (B) chosen, subject to a ceiling of (C) Benchmarks are based on median market percentiles 4

5. FY16 $ per wRVU Rate Methodology Otolaryngology A Calculated Academic Benchmark Rate B Imputed Current Rate C Fair Market Value Rate Ceiling Rate Selected: Greater of (A) or (B) chosen, subject to a ceiling of (C) = $48.60 Benchmarks are based on median market percentiles 5

6. Clinician Educator Compensation Plan 6 Plan Components: Clinician Educator Example 1. ATC = Academic, Teaching & Citizenship =10% of base salary 2. Rate Selection based on Imputed Current Rate and blend of AAMC TCC (50 th percentile) and MGMA-Academic TCC (50 th percentile) divided by FPSC wRVUs (50 th percentile). The greater of the two rates was chosen for each specialty, subject to fair market value rate ceiling. Base Salary Quarterly Productivity Adjustment (QPA) Total Cash Compensation (TCC) Chair Discretion (CD)