Strategic Moves for Enhanced Vitality: North Country Health Services 2005-2010

1. Strategic Moves for Enhanced Vitality:North Country Health Services 2005-2010 Strategic & Financial Plan for October 1, 2005- September 30, 2010

2. Collaboration to Build Strategy & Vitality Our future vitality is driven by a new sense of collaboration to better serve our patients and our communities. Our plans have been built from a broad base of cooperation and input from community leaders, our physician colleagues and our frontline employees and managers. Building our success on a foundation of service excellence and new engagement with our frontline workers. Working together to show we respect and value each of our many individual and team contributions NCHS Strategic Moves for 2010

3. Our environment demands a bold vision, excellent strategy execution, and an enhanced alliance with MeritCare and other community medical partners Building our future on solid pillars of: Service, Quality, Growth, Finance & People Celebration of progress to plan enhances our persistence to succeed.

4. The essence of strategic planning at NCHS … Great planning is needed to assure that work gets done to achieve our vision and mission with pride, on budget. Not reports, but results! Not so much about profits, as about people … our patients, our residents, our visitors, our communities, our physician colleagues, our employee associates, our volunteers, our frontline managers, our senior leadership of board, medical staff and management. Not just cash flow, but a culture of caring and curing Building results, by building respect Mindful of our heritage, but not constrained by it as we move together into a brighter future.

5. Strategic Challenges to NCHS Plans: Complex regulatory compliance issues Many decision makers in continuum of care Competition for stakeholders’ loyalty Large capital requirements Geographic distance and demographic diversity Calls for faster, smarter, and more cost-effective decision-making processes Tough fiscal pressures Need stability with growth Press to deliver on economies of scale Growing government, media, and bond holder scrutiny of our performance Need to deliver on promise of mission for caring and curing Press for experiences & engagement of our physicians, staff, volunteers, & donors Calls for enhanced quality and safety NCHS Strategic Moves for 2010

6. Contents of NCHS Strategic & Financial Plan 2010 • Letter from Board Chair and CEO • Introduction: • Purpose of plan • Process to develop plan • Monitoring progress of plan execution • Strategic Direction: • Mission Matters • Vision driven, values based • Five Strategic Pillars for Performance • Measurable Goals within our Performance Pillars • Governance Matters • Links to Financial Plans • Capital Budget • Operating Budget for NCHS and its Units NCHS Strategic Moves for 2010

7. Letter from CEO & Board Chairperson February 15, 2005 To our valued medical staff colleagues and friends within the region’s health care clinics and programs, our employees and the communities we exist to serve … Thank you for your past support, and your interests in our future plans to enhance your access to health and healthcare that is of high quality, safe, cost-effective and customized to your unique needs. Our region and the U.S. health sector face significant challenges regarding our collective desires for more medical technologies, higher quality of services, reduced rise in health service costs, and rising health problems from lifestyles that are not healthy. The needs and challenges are larger than any single group can address on their own. We will all need to plan and act together to meet these challenges. Our leadership is enthusiastic about our future vitality and our commitment and ability to address these challenges with your help. Please join us to refine and implement our strategic and financial plans. Sincerely yours, Jim Hanko, CEO Dean Crotty, Board Chairperson NCHS Strategic Moves for 2010

8. Introduction • Purpose of plan • To guide the development and execution of policies and work by many parties to enhance the health and health care of people of the Greater Bemidji Region • Process to develop plan • People from throughout the NCHS service area were invited to share insights about community health needs and health care system strategies in a web survey • NCHS internal and external stakeholder leaders participated in full day strategy review and development session on January 26 • NCHS governance participants and spouses were engaged in sessions that explored vision dimensions and strategies and investments in eight key issue areas (see following pages) • Monitoring progress of plan execution • The board and senior management of NCHS will conduct monthly/quarterly reviews of and reports about the degree of progress being made to each of the strategic and financial performance targets identified in each of the five strategic pillars of: finance, growth, quality, service and people. NCHS Strategic Moves for 2010

9. Top priority issue areas for planning & investments • Governance participants were invited on Feb 4 to explore actions to enhance NCHS performance in these 8 priority issue areas: • Enhancing patient and visitor loyalty with excellent customer service (Pillar 4 Service) • Enhancing our culture as the preferred regional employer with excellent employee pride and loyalty (Pillar 5 People) • Enhancing our collaboration with MeritCare and other area health providers (Pillar 1, 2, 3, 4, 5) • Enhancing our culture driven toward quality outcomes and patient safety (Pillar 3 Quality) • Expanding availability of mental health and chemical dependency services (Pillar 2 Growth • Protecting our financial vitality with processes to add or drop services (Pillar 1 Finance) • Enhancing our role in cardiovascular services (Pillar 2 Growth) • Expanding physician pride and loyalty with NCHS services and programs (Pillar 5 People) Initiatives in all 8 of these areas were defined & are available under separate cover. NCHS Strategic Moves for 2010

10. 5 Performance Pillars support efforts to achieve our NCHS vision NCHS Vision 2010 Our strategy requires synergistic work among all of our five pillars; work that is grounded on and built from our commitment to our mission, values and principles Finance Growth Quality Service People Principled Passion Values Guided Mission Based NCHS Strategic Moves for 2010

11. NCHS Vision 2010 NCHS is Northern Minnesota’s premier provider system recognized as a seamless & integrated system that delivers outstanding and progressive health care services Our Mission is to assure a lifetime continuum of health care services for the people of Northern Minnesota Mission Based NCHS Strategic Moves for 2010

12. positioning statements from our leaders. “Making a positive difference in lives and living” “Our Community. Our Future.” “Our people serving neighbors and friends” “A proud heritage. A bright future.” “Modern curing. Old fashioned caring” NCHS Strategic Moves for 2010

13. Our Values and Principles Guide Our Work in the 5 Pillars as We Drive Toward Our Vision NCHS Vision 2010 P ersonal Customer Services R esponsiveness and Teamwork I ndividualized Care D edication & Commitment E xceeding Expectations of Quality Principled Passion: W orking as a Team, Shared Responsibility E mployee Knowledge and Skills C ompassion A ccountability and Leadership R espect, Integrity and Diversity E xperience and Innovation Values Guided: Mission Based NCHS Strategic Moves for 2010

14. How can we enhance plan execution? More measurable targets, clearer accountabilities, more results celebrations, more pay for performance

15. Vision 2010 Pillar What is our goal The NCHS New, Board level, Strategic & Financial Plan is built up from a “Results Hierarchy” of a major goal for each pillar; a strategy to achieve the goal; and three major sub-strategies as key to implement the strategy. Matrix workplans and budgets are then developed and followed for each of the system’s operating units and managers How measured How accomplished Lead Strategy Sub-strategies Lead Manager Matrix Connections & Support Across NCHS Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit NCHS Strategic Moves for 2010

16. The NCHS “Results Hierarchy” Vision 2010 Finance Growth Quality Service People What What What What What Top 100 US Rural Hospital Systems 97% Patient Satisfaction Top Bemidji Employer “A” Credit Rating 5% More Market Share How How How How How Operate Performance Driven Processes Expand Role in ED & Chronic Diseases Recognize & Reward Service Excellence Nurture a Culture of Respect & Value Put the Patient First Center for Patients & Visitors Earn Physician Pride & Loyalty Earn Employee Pride & Loyalty Celebrate People Stories Often Invest in Specialty Centers Focus on Cash Smart Care Management Processes Build Philanthropy Recruit Physicians Active Marketing Blame Free Work 24/7 Education Evidence Based Medicine Assess Moments of Truth Transparent Reporting • Each unit leader asks and answers 2 questions: • How can our unit/team best contribute to the achievement of the NCHS “Results Hierarchy”? • How can I best earn the work & enthusiasm of my followers to best accomplish my monthly & annual workplans and budgets? Action Plans & Budgets for Each Division, Department or Unit Principled Passion Values Guided Mission Based NCHS Strategic Moves for 2010

17. Pillar strategy developments The following pages outline the board level definition of what we hope to accomplish, and how, over the next five years within each of the five pillars. Management will be developing specific workplans for each of the strategies and sub-strategies during the Spring of 2005

18. The NCHS “Results Hierarchy” Vision 2010 Finance What is our goal “A” Credit Rating How measured Exceed S & P/Moody’s Cash & Debt Coverage Ratios How accomplished Lead Strategy Operate Performance Driven Processes Focus on Cash Management* Smart Care Management Processes* Sub-strategies Build Philanthropy* Lead Manager Vic and Craig New VPMA Sherri Matrix Connections & Support Across NCHS Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit *Several actions defined under separate cover *Several actions defined under separate cover *Several actions defined under separate cover NCHS Strategic Moves for 2010

19. The NCHS “Results Hierarchy” Vision 2010 Growth What is our goal 5% More Market Share in All Services How measured MHA Quarterly Data Reports How accomplished Lead Strategy Expand Role in ED & Chronic Diseases Recruit Physicians: Peds, Cardiology, Ortho* Invest in Specialty Centers: Cardiac, Cancer, Ortho, Mental Health/CD* Active Marketing in All Media* Sub-strategies Lead Manager Jim Hanko New VPMA Sherri Matrix Connections & Support Across NCHS Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit *Several actions defined under separate cover *Several actions defined under separate cover *Several actions defined under separate cover NCHS Strategic Moves for 2010

20. The NCHS “Results Hierarchy” Vision 2010 Quality What is our goal Top 100 US Rural Health Systems How measured Solucient Competition How accomplished Lead Strategy Put The Patient First Evidence Based Medicine* Blame Free Work Culture* 24/7 Access to Education in Six Sigma & Baldridge* Sub-strategies Lead Manager Who Who Who Matrix Connections & Support Across NCHS Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit *Several actions defined under separate cover *Several actions defined under separate cover *Several actions defined under separate cover NCHS Strategic Moves for 2010

21. The NCHS “Results Hierarchy” Vision 2010 Service What is our goal 97% Patient Satisfaction How measured Avatar Systems and Focus Groups How accomplished Lead Strategy Recognize & Reward Service Excellence Assess Moments of Truth in Each Service Unit* Establish Center/Council for Patients & Visitors* Transparent Reporting for All Units* Sub-strategies Lead Manager Who Who Who Matrix Connections & Support Across NCHS Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit *Several actions defined under separate cover *Several actions defined under separate cover *Several actions defined under separate cover NCHS Strategic Moves for 2010

22. The NCHS “Results Hierarchy” Vision 2010 People What is our goal Top Bemidji Employer How measured Chamber of Commerce Annual Survey How accomplished Lead Strategy Nurture a Culture of Respect & Value Earn Physician Pride & Loyalty* Earn Employee Pride & Loyalty* Celebrate People Stories Often* Sub-strategies Lead Manager Who Who Who Matrix Connections & Support Across NCHS Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit Workplans and Budgets of Each Unit *Several actions defined under separate cover *Several actions defined under separate cover *Several actions defined under separate cover NCHS Strategic Moves for 2010

23. The NCHS “Results Hierarchy” Vision 2010 Finance Growth Quality Service People What What What What What Top 100 US Rural Hospital Systems 97% Patient Satisfaction Top Bemidji Employer “A” Credit Rating 5% More Market Share How How How How How Operate Performance Driven Processes Expand Role in ED & Chronic Diseases Recognize & Reward Service Excellence Nurture a Culture of Respect & Value Put the Patient First Center for Patients & Visitors Earn Physician Pride & Loyalty Earn Employee Pride & Loyalty Celebrate People Stories Often Invest in Specialty Centers Focus on Cash Smart Care Management Processes Build Philanthropy Recruit Physicians Active Marketing Blame Free Work 24/7 Education Evidence Based Medicine Assess Moments of Truth Transparent Reporting • Each unit leader asks and answers 2 questions: • How can our unit/team best contribute to the achievement of the NCHS “Results Hierarchy”? • How can I best earn the work & enthusiasm of my followers to best accomplish my monthly & annual workplans and budgets? Action Plans & Budgets for Each Division, Department or Unit Principled Passion Values Guided Mission Based NCHS Strategic Moves for 2010

24. Governance Matters Better Governance Yields Better Performance Better Health Gain Governance Building Blocks Better Health System Performance Better Governance Better Health Care What are the key building blocks for an excellent governance system? NCHS Strategic Moves for 2010

25. Building Blocks for Great Governance? Market Needs & Strategic Plans Board Information System Size & Structure of Board Board Composition KSA Matrix Excellent Committees Great Meetings: Calendars Agendas Ongoing Assessment and Refinement Excellent Ongoing Education Program Terrific Orientation Process Board Job Descriptions The Board of NCHS intends to continuously review and refine its work in all these areas to assure the effective governance of the community’s assets entrusted to its use for community and patient health gain NCHS Strategic Moves for 2010

26. Financial Planning Matters: • NCHS will develop its capital plan and budget for the period October 1, 2005 through September 30, 2010 over the Summer and Fall of 2005. Board review and approval is to be in August and September • The NCHS operating budgets for our next fiscal year will be built up from each unit, department, service and division during the Summer and Fall for final review and approval by the board in September and October 2005 • Our financial planning drives us toward achieving the financial vitality captured in the fiscal ratios of an “A” rated credit as measured by Standard & Poors, Moodys or Fitch NCHS Strategic Moves for 2010