Physician Employment Advocate Health Care James R. Dan, M.D. May 2, 2014

1. Physician Employment Advocate Health Care James R. Dan, M.D. May 2, 2014

2. Leading in a challenging environment • Intense reimbursement/price/cost pressure • Care shifting to outpatient • Rapid growth in consumerism • Massive provider consolidation • New industry entrants

3. Thehealthcareeconomicreality GrowthprojectionsforFederalspending 2013Federalbudget Gov’t Receipts $2.9T Gov’tspendingas%ofGDP FederalHealthPrograms SocialSecurity Healthcare consuming over 50% of gov’t receipts OtherMandatory Gov’t Outlays $3.8T Sources:EstimatesfromTheBudgetandEconomicOutlook(January2012)-CongressionalBudgetOffice.

4. Reimbursementdynamics Today 2020Outlook Commercial 40%40% Comm’l Exchange 2020 0%0% (20)Medicare(20) OperatingMargin% OperatingMargin% Medicare (40)(40) Medicaid AvgMargin:3.5% AvgMargin:(4.5)% Medicaid Uninsured Uninsured (100)% (100)% 0 255075 HealthSystem PayerMix 100 0 255075 HealthSystem PayerMix 100 GEHealthcareProprietaryandConfidentialInformation

5. TheDeathoftheChargemaster • TheBrillEffect • Consumer-drivenhighdeductibleplansfocusthemindon priceasmuchasuse • Referencepricingscaresproviders • Allpayertransparencyis comingsoon GEHealthcareProprietaryandConfidentialInformation

6. The Environment • Intense reimbursement/price/cost pressure • Care shifting to outpatient • Rapid growth in consumerism • Massive provider consolidation • New industry entrants

7. FillthehospitalEmptythehospital 2012-2020Inpatientgrowth2012-2020Outpatientgrowth Overall Overall -6 to -8% +18-20% Orthopedics Cancer 30% 17% Neuro Gen Med/Surg 8% 21% Neuro Cancer 21% 1% Cardio Spine -1% 20% Gynecology Spine -5% 18% Gen Med/Surg Ortho -5% 18% Cardio Gynecology -25% 10% Shiftfromhigh-costacutesettingsaccelerating GEHealthcareProprietaryandConfidentialInformation

8. The Environment • Intense reimbursement/price/cost pressure • Care shifting to outpatient • Rapid growth in consumerism • Massive provider consolidation • New industry entrants

9. Consumerism rapidly growing GEHealthcareProprietaryandConfidentialInformation

10. Consumerism rapidly growing

11. The Environment • Intense reimbursement/price/cost pressure • Care shifting to outpatient • Rapid growth in consumerism • Massive provider consolidation • New industry entrants

12. Providerconsolidation • 5largestairlinescontrol>75%ofseats • 5 largest health systems control < 10% of beds GEHealthcareProprietaryandConfidentialInformation Source:KaufmanHall &Associates,Inc., PresentationbyAnuSingh, GEanalysis

13. The Environment • Intense reimbursement/price/cost pressure • Care shifting to outpatient • Rapid growth in consumerism • Massive provider consolidation • New industry entrants

14. Newentrants WalgreensGoal:ReinventPharmacy Advancecommunitypharmacytoplayagreaterroleinhealthcarethroughintegrationandexpandedservices-focusonchronicdiseasemanagement Source:PresentationatLazardAnnualHealthcareConference GEHealthcareProprietaryandConfidentialInformation

15. Newentrants

17. Pluralistic Physician Structure Physicians on Advocate Medical Staffs = 5,900 Advocate Physician Partners (APP) = 4,400 AMG/Dreyer 1,200/200 Independent = 3,000 Non-APP = 1,500

18. What is the Role of AMG? Advocate Vision To be a faith-based system providing the best health outcomes and building lifelong relationships with those we serve. AMG Role A nationally-recognized, physician-led integrated group committed to delivering the best health outcomes.

19. AMG Growth History and Projection Number of Physicians *Projected

20. Group Composition

21. The Advocate Medical Group Journey Group Optimization 2012-2014 Rapid Growth and Integration 2010-2011 Physician-led Governing Council 2009 Consolidated, Dedicated Management 2008

22. AMG Contribution to Advocate Health Care • Health Outcomes/Safe Clinical Enterprise • Advocate Experience • AdvocateCare • Service Lines • Loyal Patient Growth • Progressive Care Models

23. AMG Performance • Top decile in 7 of 9 national CI benchmarks • Associate Satisfaction – top decile 4 years • Physician Satisfaction – 78th %ile • Patient Satisfaction – 62th %ile • Cost/RVU actual decline over past 5 years • Growth - With Dreyer, 20% of system revenue and the engine of Advocate • Medicare Advantage medical costs flat year-over-year for 4 years

24. AMG Value Proposition Group focused on health outcomes and safety Competitive physician compensation and benefits Professionally satisfying practice environment Proactive input into clinical and operational practice performance Strong connection to Advocate system leadership Resources of a large, nationally recognized, integrated health care system

25. What you need to believe to thrive in AMG • Committed to Vision of Best Health Outcomes and Safest Care • Cost Concerns are Best Addressed via #1 • Integrated, Team Care is Essential for #1 and #2 • Commitment to Personal Leadership of a Health Care Team

26. What is the Role of AMG? Advocate Vision To be a faith-based system providing the safest environment and best health outcomes, while building lifelong relationships with the people we serve. AMG Role A nationally-recognized, physician-led integrated group committed to delivering the best health outcomes.

27. Historical Data 2013

28. What We Need to Believe to Thrive in AMG: Leading from Principles • Committed to Vision of Best Health Outcomes and Safest Care • Cost Concerns are Best Addressed via #1 • Integrated, Team Care is Essential for #1 and #2 • Commitment to Personal Leadership of a Health Care Team