A Unique Approach to Margin Improvement, Leadership Development and Cultural Change

1. FROM SURVIVING TO THRIVING A Unique Approach to Margin Improvement, Leadership Development and Cultural Change

2. A Case Study of how one health system’s senior leaders came together and made strategic decisions based on values, with Safety First and Work Life as a cornerstone to a business strategy.

3. FACTS AND STATS: • Not-for-profit. • Integrated health system. • Employer of Choice. • $1.4 billion in net revenue. • 11,000 employees. • Five hospitals, 1311 beds. • 400 physicians/providers. • Serve 1 million people. • 1.1 million office visits. • 273,000 emergency visits. • 64,000 discharges. • Over 75 locations.

4. “An organization that provides a coordinated continuum of services to a defined population and is willing to be held clinically and fiscally accountable for the outcomes and health status of the population it serves.” Stephen Shortell, Ph.d.; Dean-School of Public Health, University of California-Berkley

5. WellStar’s Journey to Employer of Choice • Creating an effective workplace where every team member is valued and given the opportunity and support to succeed at work and at home • An organization that provides a coordinated continuum of work life programs, family friendly benefits and workplace options and is willing to be held accountable for the outcomes and health status of it’s greatest asset – their people • Benchmarking ourselves against the best

6. VISION: To Deliver World-Class Health Care MISSION: To create and deliver high quality hospital, physician, and other healthcare related services that improve the health and well-being of the individuals and communities we serve. FINANCIAL PERSPECTIVE Income From Operations Philanthropy PRODUCTIVITY GROWTH Cost Asset Utilization Market Share Revenue Opportunities Employee Value Customer Value Compensation Relationships Image Product Relationships Image Salary Incentive Benefits Service Partnership Brand Equity Quality Access Selection Service Partnership Brand Equity OPERATIONS PROCESSES INFORMATION KNOWLEDGE TRAINING PEOPLE CULTURE Strategic Focus Investments Return on Investment (ROI) 6 04-2009

7. “You only learn who has been swimming naked when the tide goes out...” Warren E. BuffettChairman, Berkshire Hathaway Inc. Letter to shareholders, February 2008

8. Primary reasons for the negative sector outlook are: • The tightening of credit markets, • Expected broad based weakening in hospital • operating performance, • Declining liquidity, • Softer volumes; and, • More uninsured patients.

9. What hospitals are doing • to meet this challenge: • Hiring freezes • Reductions in force • Eliminating incentive pay • Reducing management ranks • Suspending merit increases • Salary cuts • Reducing 403b match • Ending defined benefit plans • Renegotiating with • supply vendors

10. Hospitals Losing Money April 2009 Survey Healthcare Financial Management Association

11. WellStar’s financial condition was strong (top 15% of all health systems in the country). However, to meet the challenges of the economic environment, our community needs and to continue to invest in our strategic plan, we needed to not only survive the current environment, but to thrive in it.

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14. “Great things are not done by impulse, but by a series of small things brought together.” Vincent van Gogh (1853-1890)Dutch painter

15. Top Opportunities Group Opportunity Teams Labor Utilization Supply Expense Purchased Services / Other Non-Patient Revenue Revenue Cycle Utilization Mgmt Benefits Expense Reduction Physician Group (WPG) Enterprise Support Cobb Douglas Kennestone Paulding Windy Hill Business Unit Teams

16. TOG Responsibilities: • Prioritization & Oversight • Develop strategy for accomplishing Opportunities 2010 goals • Identify potential performance improvement initiatives & opportunity • Prioritize and determine targets for each initiative • Communicate strategy to organization • Identify Project Opportunity Teams (Define Expectations) • Weekly feedback on progress with supporting leadership decisions • Allocate of resources to assist teams 8

17. Opportunity Teams Responsibilities: • Planning / Execution / Implementation • Develop project plans to accomplish Goals & present to TOG • Collect Data, perform analysis, and develop recommendations • Communicate targets to Business Units Teams • Maintain a system approach across business units • Secure resources needed for Implementation • Develop & initiate measurement / feedback mechanism

18. Business Unit Teams Responsibilities : • Planning / Execution / Implementation • Develop project plans to accomplish Opportunities 2010 Goals • Collect Data, perform analysis, and develop proposed tactics & submit to Opportunity Teams • Assist with communication to staff regarding purpose and process for Opportunities 2010 • Secure resources needed and implement tactics within Business Unit • Develop & initiate measurement / feedback mechanism

19. Recommendation Development: Opportunity Teams identify strategic performance improvement initiatives that assist in achieving the team goals for improving operating margin. Develop recommendation through analysis and quantify by business unit, if applicable. Pass I Approval: Opportunity Team presents recommendation to TOG for Pass I approval. Pass I approval indicates that the TOG believes that the recommendation is feasible and additional analysis should be completed to validate opportunity at the business unit level. Pass II Approval: Business Unit Teams will evaluate recommendations with Pass I approval for implementation feasibility, and make adjustments to recommendation. Business Units will work in partnership with Opportunity Teams to take revised recommendation back to TOG for Pass II approval. Implementation Planning and Execution: Recommendations that receive Pass II approval are ready for implementation planning. Opportunity Teams will support Business Unit Teams in the development of implementation plans and execution. Measurement / Validation: Opportunity Teams will determine metrics to measure and sustain success of implementation. Metrics will be reported to TOG..

20. Our Credo I believe every person and every job is important and I am accountable for achieving my goals. I believe in compassion and understanding. I believe in innovation and creative thinking. I believe in our WellStar Team and we are making a difference in people’s lives. Our greatest asset is our people and we will consider the human toll of our business decisions and ensure we are valuing their input, ideas and experience.

21. Provides an opportunity for all team members and physicians to submit their ideas for performance improvement. The key is to draw upon the wisdom, insight and strength of our team members.

22. Building Trust Through Transparency • Opportunities 2010, e-newsletter sent as initiatives are approved. Messaging aligns with the Strategic Plan, including “Myth Busters” to dispel rumors. • Monthly Partners news brief • eSource Spotlight • Hospital & Medical Staff Newsletters • Director Meetings • Manager Roundtables • Town Halls Meetings • WellStar Medical Staff Meetings

23. Eliminated non-essential outside consultation • Renegotiated cardiac implant pricing • Renegotiated neuro stimulator pricing • Implementing e-payables • Restructured courier service and bid out services • Performed a lighting retrofit of facilities • Drilled a well for cooling tower and boiler • Improving patient chart documentation • Implemented new productivity monitoring system • Consolidated janitorial services • Standardized custom packs • Discontinued personal inkjet printers • Reduced outside catering • Renegotiated spine implant pricing • Restructured case management function • Eliminated budgeted, but unfilled positions • Renegotiated IT maintenance agreements • Reduced insurance company payment denials • Eliminated non-essential outside consultation

24. Implement in-house employee pharmacy • Increase results of blood drives • Implement blood conservation program • Adjust certain pay practices to reflect local market conditions • In source esoteric lab tests • Renegotiate revenue contracts which were below current market conditions • Implement in room patient massage and salon services • Begin selling spa robes on a retail basis • Restructure transcription services • Implement UV window tinting • In source self pay collection process • Reduced distribution center inventory levels • Terminate IT recovery center no longer needed • Standardize formulary for office supplies • Redesign laundry/line process at hospitals • Redesign process and control utilization of scrubs • Renegotiate vascular graph pricing • Work closely with hospital GPO to enforce a “no price increase” policy

26. Operating MarginFY 2009 Trend

28. Fiscal Year ImprovementsFrom 2008 to 2009

29. Employer of Choice Goals 2010 • Gallup Engagement Scores in Top Quartile • Medical Staff Satisfaction Scores in Top Quartile • Turnover Rate significantly below national healthcare benchmark • Low vacancy rates in all positions – especially difficult to fill roles • National Recognition by Working Mother Magazine, AARP, Fortune 100, Alfred P. Sloan

30. Performance Management Work Force Development Cultural Competency Work/Life Balance Benefits/Comp LeaderShip Development & Learning Employer of Choice Alignment

31. Happy endings and happy beginnings . . . The Labor Utilization Team Out of over 11,000 positions • only 44 positions were identified to eliminate • all 44 were offered reassignment with 1 being a promotion. • Only 3 chose to seek opportunity elsewhere.

32. WellStar has taken extraordinary effort to make my transition into my new role a wonderful experience. I now have a better job, a great manager and am working on my computer tech degree. Thank you WellStar for considering me in your decisions! On left is Teresa Walker, Systems Analyst 1, with Manager Pam Pfeifer

33. Thank you for this opportunity. Questions?