Our presentation today

1. The changing landscape of health reform: The imperative for new payment modelsPresented by: Joel Gilbertson Jack FriedmanSenior Vice President Senior Vice PresidentCommunity Partnerships Accountable Care Services and External Affairs and Payor Relations

2. Our presentation today Providence Health & Services | 2014 GOVERNANCE CONFERENCE

3. Our voice in the long reform journey Our calling Our advocacy Health care reform Mission: Revealing God’s love for all, especially the poor and vulnerable. Proverbs 31:9: Defend the rights of the poor and needy. Health care is a basic human right. For decades we have advocated for a more just health care system with coverage for all. While not perfect, the Affordable Care Act increases coverage for millions of uninsured, reducing their vulnerability to illness and financial distress. Providence Health & Services | 2014 GOVERNANCE CONFERENCE

4. The ACA: What’s in place, pending and to come Providence Health & Services | 2014 GOVERNANCE CONFERENCE

5. Medicaid expansion exceeds projections in three states 206,086 202,168 877,000 100% Total actual enrollment: 1,285,254 Projected 700,000 Projected 136,000 Projected 136,000 No expansion Data reflects only newly eligible enrollments and is current as of March 11, 2014

6. Exchange enrollment has mostly slower start 868,936 100% Projected 280,000 Projected 183,000 Projected 691,000 Projected 37,626 Projected 19,311 Total actual enrollmentacross our five states: 1,044,212 22,542 107,262 6,666 38,806 Data current as of March 11, 2014

7. Exchanges: Early enrollment observations

8. Five issues we are watching as exchanges roll out

9. 2014 policy: The case for new business models Providence Health & Services | 2014 GOVERNANCE CONFERENCE

10. Medicare Parts A and B Annual growth in per-beneficiary spending Fee-for-service payments continuedownward trend

11. Further cuts expected in 2014 and beyond Providence Health & Services | 2014 GOVERNANCE CONFERENCE

12. Reform of sustainable growth rate brings opportunity and risk

13. Opposing political forces maydrive consensus on shared-risk models Providence Health & Services | 2014 GOVERNANCE CONFERENCE

14. Alternative payment models on the rise Oregon’s coordinated care model Integrated payment and delivery reform

15. Public wants less cost, more value and access Providence Health & Services | 2014 GOVERNANCE CONFERENCE

16. Our 2014 advocacy priorities • Redesigning how clinical care is organized and paid for • Ensuring coverage expansions are fair and sustainable • Preserving flexibility to serve the unique needs of our communities • Ensuring access for the most vulnerable among us Providence Health & Services | 2014 GOVERNANCE CONFERENCE

17. Accountable care Health reform and our shifting business model Providence Health & Services | 2014 GOVERNANCE CONFERENCE

18. Early lessons from health reform Cost over choice Payor negotiations fierce Provider networks narrowing Government programs: total cost of care incentives Primary care central: new incentives to manage downstream costs Marketplace seeing some relief

19. 2012 health spending: Lowest increase in 53 years!

20. Fundamental paradigm shifts We cannot be at mercy of health plans We must be upstream of the premium Providence/Swedish-centric provider networks Direct contracts with large employers We influence employee health benefit design At risk for episodes/total cost of care At risk for three years or more Providence Health & Services | 2014 GOVERNANCE CONFERENCE

21. Fundamental paradigm shifts (cont’d) We’re cost centers first Revenue centers second Marginally effective care is waste Everything, now………to Most good for most people at least amount of cost Providence Health & Services | 2014 GOVERNANCE CONFERENCE

22. The new imperatives Form ACOs to capture covered lives Measure lives, not admissions Commit to total cost of care over time Put PCMHs on steroids Find and train population health management leaders Continuously improve cost structure Reserve capital for future losses Get Triple Aim better—FAST Providence Health & Services | 2014 GOVERNANCE CONFERENCE

23. Providence responding to new environment ACOs in WA, CA, MT Providence/Swedish-centric networks Boeing and Intel direct—total cost of care Joints and heart surgery bundles Managed Medicaid readiness Partnering with plans for upside risk Converting FFS Medicare to Medicare Advantage Providence Health & Services | 2014 GOVERNANCE CONFERENCE

24. Providence responding to new environment(cont’d) Medicare Advantage partnerships: PHP, Premera and United Medical groups preparing: coding, analytics, case management Providence Health & Services | 2014 GOVERNANCE CONFERENCE

25. The new math

26. Role of governance: Push management to be better!! Number of covered lives dedicated to our network PMPM trend on employee health spend Percent of low acuity ED visits going down or up Risk returns in new MA products HEDIS and CAHPS scores Percent of medical admissions for ambulatory sensitive conditions Providence Health & Services | 2014 GOVERNANCE CONFERENCE

27. Role of governance: Push management to be better!!(cont’d) C-section rate: Medicaid and commercial Health care costs in last six months of life Specialty referral rates/1000 Hospital bed days/1000 Providence Health & Services | 2014 GOVERNANCE CONFERENCE

28. Thank you Together, we answer the call of every person we serve: Know me, care for me, ease my way