January 2014 Prime Healthcare Services Prime Healthcare Services - - PowerPoint PPT Presentation

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January 2014

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Prime Healthcare Services

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• Prime Healthcare Services is one of the largest for-profit hospital systems in the U.S.

– Founded by Dr. Prem Reddy, M.D., FACC, FCCP. – Began by rescuing Desert Valley Hospital and Desert Valley Medical Group in Victorville from bankruptcy. – Specializes in saving failing hospitals from bankruptcy – saving hospitals, saving jobs, saving lives. – Largest for-profit operator of hospitals in the state of California based on number of facilities – Recent diversification into Pennsylvania, Kansas, Nevada and Texas; acquisitions pending in Michigan, New Jersey and Rhode Island.

• Hospitals provide full range of both inpatient and outpatient including general acute care services, emergency room,

general and specialty surgery, intensive/critical care, obstetrics, behavioral health, rehabilitation and diagnostic services.

• Prime Healthcare hospitals are known for always keeping their emergency rooms open, rarely requiring patients

diversion to other hospitals.

• Operates 25 acute care hospitals (includes 6 managed by the non-profit Prime Healthcare Services Foundation) with 5.2

thousand licensed beds and more than 30,000 employees; facilities are located in the following states – California: 14 – Texas: 4 – Kansas: 2 – Pennsylvania: 2 – Rhode Island: 2 – Nevada: 1

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• Dr. Prem Reddy, Chairman of the Board, President, and CEO

Prem Reddy, MD, FACC, FCCP

• Dr. Prem Reddy is double Board-Certified in Internal Medicine and Cardiology.

During his 25 years of practice in California, he performed more than 5,000 cardiac procedures, including coronary angiography and angioplasty and permanent pacemaker implantations. In 2001, Dr. Reddy founded Prime Healthcare Services, which owns and operates 19 hospitals. Among the many accolades, Prime Healthcare was recognized as

• ne of the “15 Top Health Systems” in the nation in 2013. This was the third time

in five years Prime Healthcare has been recognized. In addition, since 2003, 21 Prime Healthcare hospitals have been recognized among the “100 Top Hospitals” in the nation. Dr. Reddy also founded and has been the sole contributor to the Prime Healthcare Foundation, a 501(c)(3) nonprofit public charity that owns six non-profit hospitals. Combined, Prime Healthcare Services and Prime Healthcare Foundation have hospitals in six states: California, Kansas, Nevada, Pennsylvania, Rhode Island and Texas. In addition, he and his family founded the Dr. Prem Reddy Family Foundation, a nonprofit foundation that has donated millions toward charities, including college scholarships, public healthcare education and free community clinics. Both foundations combined have assets in excess of $700 million, all donated by Dr. Reddy and his family.

• Dr. Reddy has been named as one of the 50 Most Influential Physician

Executives in health care by Modern Healthcare, the fourth time in six years.

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Prime Healthcare Affiliated Foundations

• Dr. Prem Reddy Family Foundation, 501(c)3, Est. 1989
• Dr. Reddy recently donated $500,000 to Cal State San Bernardino and its department of nursing. To recognize

his gift, the nursing lab will be renamed the Dr. Prem Reddy Nursing Laboratory.

• The Dr. Prem Reddy School of Health Sciences at Victor Valley Community College.
• Public Health Library.
• Awards scholarships for students entering the field of healthcare, including the Dr. Prem Reddy Academic

Excellence Scholarship.

• Supports free community clinics.
• Provides grants and support for community education, public projects and to other non-profit organizations.

The Prime Healthcare Services Foundation, 501(c)3, nonprofit public charity, Est. 2008

• Includes five non-profit hospitals donated debt free to the Foundation:

– Encino Hospital Medical Center – Huntington Beach Hospital – Montclair Hospital Medical Center – Pampa Regional Medical Center – Sherman Oaks Hospital

• Knapp Medical Center acquired directly by the Foundation in 2013

Both foundations, founded and funded by Dr. Reddy and his family, have combined assets of more than $700 million.

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Company History: Long Term Track Record of Facility Growth

1 2 7 9 13 13 12 12 16 19 24 2 3 4 6 6 5 10 15 20 25 30 2001 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E Prime Healthcare Hospitals Donated Hospitals

Acquired Desert Valley Chino Valley Sherman Oaks Montclair Huntington Beach La Palma West Anaheim Paradise Valley Centinela Encino Garden Grove Shasta San Dimas Alvarado Harlingen (TX) Roxborough (PA)

• St. Mary’s

(NV) Lower Bucks (PA) Dallas (TX) Pampa (TX)

• St. John (KS)

Providence (KS) Landmark (RI) Rehabilitation Hospital of RI (RI)

• St. Mary’s (NJ) -

APA

• St. Michaels (NJ)

– APA

• St. Clare’s Health

System (NJ) – APA 3 Hospitals Donated Encino Montclair Sherman Oaks Huntington Beach Knapp (TX) – acquired by Foundation Pampa Regional (TX)

• Recent expansion focused on diversifying outside CA and into TX, PA, NV, KS, and RI
• Signed purchase agreements in NJ with LOIs in CA and MI

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Facility Characteristics

Prime Healthcare Today: Strong, Growing, and Diversified Acute Care Footprint

6 Facility Locations

Shasta Regional Medical Center Roxborough Memorial Hospital Saint Mary's Regional Medical Center Nevada California Lower Bucks Hospital Dallas Medical Center Harlingen Medical Center Knapp Medical Center Pampa Regional Medical Center

Paradise Valley Hospital Alvarado Hospital Medical Center Garden Grove Hospital Medical Center West Anaheim Medical Center La Palma Intercommunity Hospital San Dimas Community Hospital Centinela Hospital Medical Center Desert Valley Hospital Encino Hospital Medical Center Huntington Beach Hospital Montclair Hospital Medical Center Sherman Oaks Hospital

Providence Medical Center

• St. John Medical Center

Chino Valley Medical Center

Kansas Texas Hospitals

• No. occupied

beds Number of licensed beds Acquisition date

• 1. Desert Valley Hospital

148 148 6/1/01

• 2. Chino Valley Medical Center

70 126 9/1/05

• 3. La Palma

75 141 10/1/06

• 4. West Anaheim

110 219 10/1/06

• 5. Paradise Valley

195 291 3/1/07

• 6. Centinela Hospital Medical Center

220 369 11/1/07

• 7. Garden Grove

85 167 7/1/08

• 8. San Dimas

101 101 7/1/08

• 9. Shasta

120 246 11/1/08

• 10. Alvarado

120 306 11/17/10 California totals 1,244 2,114

• 16. St. John Hospital

70 80 04/01/13

• 17. Providence Medical Center

120 400 04/01/13 Kansas totals 190 480

• 14. Roxborough

80 140 02/22/12

• 15. Lower Bucks Hospital

85 138 10/02/12 Pennsylvania totals 165 278

• 11. Landmark Medical Center

140 214 12/31/13

• 12. Rehabilitation Hospital of Rhode Island

20 82 12/31/13 Rhode Island totals 160 296

• 11. Harlingen Medical Center

80 112 12/1/11

• 12. Dallas Medical Center

50 150 9/26/12 Texas totals 130 262

• 18. St. Mary's

200 380 07/01/12 Nevada totals 200 380 Prime Healthcare consolidated totals 2,446 4,391 12/31/2013

• 19. Sherman Oaks Hospital

85 153 3/1/06

• 20. Montclair Hospital Medical Center

102 102 7/1/06

• 21. Huntington Beach Hospital

100 131 10/1/06

• 22. Encino Hospital Medical Center

80 150 6/1/08

• 23. Pampa Regional Medical Center

30 115 6/1/12

• 25. Knapp Medical Center

120 226 1/2/13 Prime Healthcare Foundation consolidated totals 517 877 12/31/13 Pennsylvania Landmark Medical Center Rehabilitation Hospital

• f Rhode

Island

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Prime Healthcare Services has been recognized by Truven Health Analytics (formerly Thomson Reuters) as one of the “Top 15 Health Systems” in the U.S. based on clinical performance

• Prime Healthcare named as a Top 15 Health System in 2012 and 2013 based on

quality of care, efficiency and patient satisfaction by Truven Health Analytics (formerly Thomson Reuters) – Also ranked in the Top 10 in 2009 – Only for profit health system named in the Top 15 in the nation in 2013

• Eight Prime Healthcare hospitals named 100 Top Hospitals in the nation by

Truven Health Analytics (formerly Thomson Reuters) in 2013. Prime Healthcare hospitals have been ranked among the top 100 hospitals 21 times.

• Key criteria evaluated:

– Mortality rates – Medical complications – Medicare core measures (quality measures) and patient safety standards – Risk-adjusted length of stay – Patients satisfaction

Recognized Quality Healthcare Provider

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Top 15 Health Systems in the Nation by Truven Health Analytics – 2012 Detail

Top 15 Health Systems Clinical Metrics of Top Health Systems

Recognized Quality Healthcare Provider (Cont’d)

Health System Location Large Health Systems (> $1.5 bn) Banner Health Phoenix, AZ CareGroup Healthcare System Boston, MA Jefferson Health System Radnor, PA Memorial Hermann Healthcare System Houston, TX

• St. Vincent Health

Indianapolis, IN Medium Health Systems ($750 mm - $1.5 bn) Baystate Health Springfield, MA Geisinger Health System Danville, PA HCA Central and West Texas Division Austin, TX Mission Health System Asheville,NC Prime Healthcare Services Ontario, CA Small Health Systems (<$750 mm) Baptist Health Montgomery, AL Maury Regional Healthcare System Columbia, TN Poudre Valley Health System Fort Collins, CO Saint Joseph Regional Health System Mishawaka, IN Tanner Health System Carrollton, GA Winning Health System Mortality Index Complic- ations Index Patient Safety Index Core Measure Percent (%) ALOS (days) Banner Health 0.85 0.98 0.91 96.4 4.8 Baptist Health 0.93 0.72 0.72 97.2 4.5 Baystate Health 0.65 0.86 0.60 96.6 4.8 CareGroup Healthcare System 0.81 1.42 0.70 97.3 4.8 Geisinger Health System 0.80 1.04 0.82 96.2 4.5 HCA Central and West Texas Division 0.83 0.86 0.86 99.2 5.2 Jefferson Health System 0.81 0.85 1.01 98.1 4.9 Maury Regional Healthcare System 0.70 0.62 0.77 95.3 4.1 Memorial Hermann Healthcare System 0.70 0.73 0.94 97.4 4.9 Mission Health System 0.97 0.73 0.69 96.9 4.7 Poudre Valley Health System 0.91 1.05 0.63 95.5 4.2 Prime Healthcare Services 0.55 0.63 0.55 99.0 4.3 Saint Joseph Regional Health System 0.99 0.79 0.77 97.6 4.4

• St. Vincent Health

1.04 0.68 0.88 93.8 4.7 Tanner Health System 0.92 0.62 0.76 96.8 4.5 Benchmark Health Systems Medians 0.83 0.79 0.77 96.9 4.7 Peer Group Medians 1.04 0.98 0.98 95.8 5.1

Note: Prime’s performance measures place the Company in the top quintile of all health systems

Top performer Second in class Third in class

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Top 15 Health Systems in the Nation by Truven Health Analytics – 2013 Detail

Top 15 Health Systems Clinical Metrics of Top Health Systems

Recognized Quality Healthcare Provider (Cont’d)

Health System Location Large Health Systems (> $1.5 bn) Advocate Health Care Oak Brook, IL Banner Health Phoenix, AZ Memorial Hermann Healthcare System Houston, TX OhioHealth Columbus, OH Scripps Health San Diego, CA Medium Health Systems ($750 mm - $1.5 bn) Alegent Creighton Health Omaha, NE Exempla Healthcare Denver, CO Mission Health Asheville, NC Prime Healthcare Services Ontario, CA TriHealth Cincinnati, OH Small Health Systems (<$750 mm) Asante Medford, OR Cape Cod Healthcare Hyannis, MA Mercy Health Southwest Ohio Region Cincinnati, OH Poudre Valley Health System Fort Collins, CO Roper St. Francis Healthcare Charleston, SC Winning Health System Mortality Index Complic- ations Index Patient Safety Index Core Measure Percent (%) ALOS (days) Advocate Health Care 0.97 0.95 0.97 98.4 4.7 Alegent Creighton Health 1.00 0.99 0.93 98.7 4.8 Asante 0.98 0.94 0.81 97.1 4.4 Banner Health 0.96 1.00 0.94 97.2 4.4 Cape Cod Healthcare 0.97 1.02 0.79 97.2 4.5 Exempla Healthcare 0.93 1.01 0.97 97.4 4.4 Memorial Hermann Healthcare Sys 0.96 0.95 1.08 98.1 4.7 Mercy Health Southwest Ohio Region 0.93 0.95 0.89 97.4 4.5 Mission Health 1.01 0.97 0.87 97.7 5.0 Ohio Health 0.98 0.97 0.99 98.6 4.4 Poudre Valley Health System 0.96 0.99 0.91 96.9 4.0 Prime Healthcare Services 0.94 0.89 0.72 97.8 4.0 Roper St. Francis Healthcare 0.99 0.91 0.93 97.3 5.0 Scripps Health 0.97 0.99 0.98 98.5 4.6 TriHealth 0.97 0.98 0.89 97.6 4.7 Bench Median 0.97 0.97 0.93 97.6 4.5 Peer Median 1.00 1.00 1.00 96.5 5.1

Note: Prime’s performance measures place the Company in the top quintile of all health systems

Top performer Second in class

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Recognized Quality Healthcare Provider (Cont’d)

• Thomson Reuters (now, Truven Health Analytics) with Modern

Healthcare Magazine also issues a study each year that recognizes the Top 100 Hospitals in the Nation. Prime Healthcare hospitals are regularly among the Top 100 Hospitals:

• Desert Valley Hospital – 7 Times including 2013
• West Anaheim Medical Center – 4 Times including 2013
• Montclair Hospital Medical Center – 2 Times including 2013
• Centinela Hospital Medical Center - 2 Times including 2013
• Garden Grove Hospital Medical Center – 2 Times including 2013
• Chino Valley Medical Center – 2 Times including 2013
• San Dimas Community Hospital - 2013

The Company's hospitals have been recognized numerous times in the past by various renowned national benchmarking organizations for their quality and efficiency in patient care

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Recognized Quality Healthcare Provider (Cont’d)

• In 2012, over 2,600 hospitals were given a letter grade by the

Leapfrog Group based on patient safety metrics such as, preventable errors, medication mix-ups, hospital-acquired infections and medical complications.

• Only 729 hospitals received an “A” grade. 11 of Prime Healthcare’s

hospitals were given an “A” grade.

• Prime Healthcare hospitals have also received recognition for

clinical excellence from The Delta Group, US News and World Report, Premier Care Science and PacifiCare's Quality INDEX

The Company's hospitals have been recognized numerous times in the past by various renowned national benchmarking organizations for their quality and efficiency in patient care

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Recognized Quality Healthcare Provider (Cont’d)

• Eleven Prime Healthcare Hospitals were recognized as Top

Performers by The Joint Commission in 2013, the leading accreditation agency of health care organizations in the nation (Eight in California).:

• Centinela Hospital Medical Center
• Encino Hospital Medical Center (Non-Profit)
• Garden Grove Hospital Medical Center
• Huntington Beach Hospital (Non-Profit)
• La Palma Intercommunity Hospital
• Paradise Valley Hospital
• San Dimas Community Hospital
• Shasta Regional Medical Center
• In Kansas: Saint John Hospital
• In Pennsylvania: Roxborough Memorial Hospital
• In Texas: Harlingen Medical Center

The Company's hospitals have been recognized numerous times in the past by various renowned

national benchmarking organizations for their quality and efficiency in patient care

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Infrastructure Improvements

In 2012, Prime Healthcare Services spent approximately $85 Million on Capital Improvements and Equipment. Since 2005, the organization has invested approximately $650 Million on Capital Improvements and Equipment for its facilities.

• 65 bed expansion at Desert Valley Hospital including new operating rooms and new Heart

Center with full cardiac surgery program.

• New Cardiac Cath Labs at Desert Valley Hospital, Chino Valley Medical Center, Huntington

Beach Hospital, and Sherman Oaks Hospital.

• ER expansion of Roxborough Memorial Hospital in Pennsylvania.
• $40 million investment in Landmark Medical Center and the Rehabilitation Hospital of Rhode

Island.

• $30 million investment in St. Mary’s Hospital in New Jersey.
• $40 Million ER expansion and seismic upgrades at Centinela Hospital Medical Center.
• New state-of-the-art Patient Monitoring and IT Systems.
• State of the art medical/radiology equipment.
• Information Systems Infrastructure.
• Hospital Physical Environment/ Plant improvements.
• Modernization of Hospital Systems to increase safety.

Prime Healthcare Hospitals continuously strive to improve patient care and experience by improving their infrastructure by investing:

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Charity Care

Prime Healthcare’s for-profit and non-profit hospitals provide more charity and uncompensated care on a per patient day basis than their competitors. During 2010 to 2012, Prime Healthcare hospitals provided more than $ 902 Million in charity and uncompensated care. Prime Healthcare Foundation also operates 2 indigent community clinics.

• 2010 - $ 287 million
• 2011 - $ 304 million
• 2012 - $ 311 million

Prime Healthcare Hospitals continuously strive to provide safety net acute care services to uninsured and indigent residents of the communities they serve:

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• Each hospital has local governing board consisting of community members and

physicians

• Flat organization with lean executive team

– Hospital CEO, CFO, CMO supported by corporate management team

• Reliance on CMO to drive outcomes

– Hands on daily interaction with hospital staff – “Gatekeeper” of respective facilities – Works closely with staff to integrate clinical services and drive clinical and financial outcomes

Physician and Patient Focused Operating Model Drives Quality

Physician Driven Model Emergency Department (ED) Focus

• Serves as the primary patient portal into the facility with approximately 80 -

85% of admissions originating from ED

• Increase efficiency of ED patient flows
• Wait times significantly decreased with an average wait time of 30 mins vs.

industry average of 4 hours

• Paramedic wait time of <15 minutes resulting in higher satisfaction for

paramedic personnel and contributing to a larger number of paramedic runs

• Investment in technologies and IT systems to further improve efficiency

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Physician and Patient Focused Operating Model Drives Quality (Cont’d)

• Standardized procedures and protocols drive strong operating results
• Focus on technology investments to drive quality and efficiency

Proven Clinical Protocol Efficient Operating Model Targeted Infrastructure Improvements for Newly Acquired Hospitals

• Rigorously follow standardized protocols based on proven clinical pathways
• Include care management protocols for common conditions such as pneumonia, heart

failure, chest pain, myocardial infarction and surgical care

• Hospitalists coordinate and implement clinical protocols
• Protocols focus on:

– Appropriately treating patients along care continuum (improving clinical efficiencies) – Reducing unnecessary and inefficient practices; achieving lowest rates of mortality and complications and lowest length of stay in the nation – Developing and implementing best practices (clinical and financial)

• State of the art medical/radiology equipment
• Information Systems Infrastructure
• Hospital physical environment/ plant improvements
• Seismic upgrades in California hospitals for earthquake safety
• Modernization of Hospital Systems to increase safety

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Prime Healthcare “Then vs. Now” Snapshot

17 Then – 2010 Now – 2014 Organization

• Geographic and revenue concentration in

California

• Limited application of turnaround business

strategy outside of CA

• Limited corporate governance structure
• Awarded as Top 10 Health System in 2009
• Nationally recognized organization with

geographic diversification in 3 states

• Corporate governance structure in place with

Audit, Compliance, and Compensation committees

• Top tier management team recruited
• Awarded as Top 15 health system in 2012 and

2013

Scale

• 12 acute care hospitals

– 2 hospitals owned by Foundation

• 2,650 licensed beds (2,398 for Prime HC, 252

for Foundation Hospitals)

• Average daily census 908
• Approximately 10K total employees
• 25 acute care hospitals

– 6 hospitals owned by Foundation

• 4,730 licensed beds (3,853 for Prime HC, 877

for Foundation Hospitals)

• Approximately 30,000 total employees
• Average daily census of 1,400

Quality & Operational Performance

• Core measure 95.2%
• FTEs per Adjusted Occupied Bed (Casemix

Adjusted) of 5.9

• Average Medicare adjusted LOS (Casemix

Adjusted) of 4.7 days

• Core measure 97.8%
• FTEs per Adjusted Occupied Bed (Casemix

Adjusted) of 5.5

• Average Medicare LOS (Casemix Adjusted) of

4.0 days