Overview of Nashville s Health Care Industry

1. Overview of Nashville�s Health Care Industry 

3. Industry Outlook � Key Points Health care is a great place to be A vast industry � 15.3 percent of GDP in 2003 Aging population and increasing cost trends Recession resistant � a key engine for economic growth Global opportunities As a health care industry capital, Nashville is well-positioned to benefit from increased health care spending in the future Health care management expertise Venture capital and private equity support Professional services firms

4. U.S. Health Care Industry

5. Nashville�s Health Care Industry Over 290 health care companies with multi-state, national, or international presence 19 publicly traded companies, with revenue over $59 billion 2,400 facilities across the United States 89,000+ employees in Nashville area, with 430,000+ globally More than 250 professional support firms

6. Rich History Of Entrepreneurship Four new industry segments originated or developed here Hospital management Outpatient surgery centers Physician practice management Disease management More than 150 companies spawned by HCA and HAI alumni 23 initial public offerings since late 1989 Over $300 million in venture capital and private equity in 2004

7. World Leaders in Key Industry Segments Hospital management Ambulatory surgery and outpatient services Disease management Pharmaceutical services Academic medicine and research Emerging sectors (HIT and bio-pharmaceutical)

8. Nashville Bio-pharmaceutical Assets VUMC a premier academic medical center (16th in NIH funding) Number of emerging companies New life science facilities/incubators (e.g., CSLSC and CET) Caremark Rx (the second largest pharmaceutical services firm) Opportunity to merge entrepreneurial/management expertise with clinical/research expertise

9. A Vast Industry (and Becoming Larger) Health care expenditures reached $1.5 trillion in 2003, accounting for 15.3% of GDP By 2013, health care expenditures expected to reach $3.4 trillion, or 18.4% of GDP Between 2003 and 2013, health care expenditures expected to grow at average annual rate of 7.2%

10. Industry Prospects Capital market prospects are strong Significant debt and equity opportunities for companies Huge growth in private equity Venture capital � focused on experienced management teams and steady revenue streams that health care services offers Long-term fundamentals continue to create significant opportunities Demographics, increasing cost trends, and political commitment Relatively stable government environment (e.g., reimbursement) Transformation of the health care system

11. Health Care Providers Stock Performance(June 2004 to May 2005)

12. Hospital Use Increases with Age(Rate per 1,000)

13. Major Policy Roles U.S. Senator Bill Frist, M.D. Senate Majority Leader Former Member of Bipartisan Medicare Commission U.S. Representative Jim Cooper Tennessee Governor Phil Bredesen Former Nashville Mayor Accomplished health care entrepreneur Past three Chairs of the Federation of American Hospitals Colleen Conway-Welch, Dean, Vanderbilt School of Nursing HHS Advisory Committee on Disaster Preparedness Former Member of Bipartisan Medicare Commission

14. Nashville Health Care Council An association of industry leaders working to further establish Nashville�s position as the nation�s heath care industry capital A program of Nashville Chamber�s PARTNERSHIP 2010 initiative 120 member organizations Program activities � educational programs, communications, economic development (e.g., trade missions, Tennessee Biotechnology Association)

15. 2004-2005 Board of Directors Harry Jacobson (Chairman), Vanderbilt University Medical Center Wayne Smith (Vice Chairman), Community Health Systems Chris Howard, Young Health Care Leaders Alfredo Arguello, GE Medical Systems Richard Bracken, HCA Ira Chilton, The CFP Group Thomas Cigarran, American Healthways Mac Crawford, Caremark Rx Kenneth Donahey, LifePoint Hospitals Richard Francis, Symbion Thomas Frist, Jr., M.D., HCA Vicky Gregg, BlueCross BlueShield of TN Dennis Grimaud, Premier Micronutrient Corp.

16. Major Program Activities Organize educational events Meetings with nationally recognized leaders Briefings with key policy officials �Garage to Wall Street� Workshops (e.g., industry analysts and VCs) Young Health Care Leaders Serve as the information resource on the industry Work with key audiences at local, national, and international levels to promote the interests of Nashville�s health care community Support economic development efforts (e.g., trade missions, biotechnology, corporate recruitment)

17. Recent and Upcoming Events Event Date MedPAC Executive Director Mark Miller June 2004 CMS Administrator Mark McClellan August 2004 Zimmer Global Vice President Sheryl Conley November 2004 Wall Street�s Outlook for the Industry with Key Analysts January 2005 U.S. Representative Nancy Johnson (R-CT) February 2005 UnitedHealth Group Chairman & CEO Bill McGuire, M.D. March 2005 Physician Alignment & Joint Venture Strategies April 2005 U.S. Senator Max Baucus (D-MT) May 2005 Financing the Deal with Bankers, VCs and Private Equity May 2005 McKesson CEO John Hammergren and HIT Panel June 2005

18. Nashville Health Care Trade Missions Germany and England - March 1999 France and Spain - March 2000 Belgium and Italy - June 2002 England and the Netherlands � June 2003 Hungary and the Czech Republic � September 2004 Austria and Poland � June 2006

19. Rapidly Aging Populations � Over 65

20. Trade Mission Goals Establish contacts with key business and government leaders Generate new business opportunities for mission participants Facilitate dialogue on common health care challenges in respective systems Showcase Nashville�s health care industry on a global basis

21. Policy/Operational Issues Facing the Industry Implementation of Medicare Modernization Act (e.g., prescription drug coverage) The uninsured (45 million) Patient safety and quality issues Workforce issues (nursing shortage) Medical malpractice and tort reform Fostering greater use of HIT

22. Nashville�s Health Care Industry A Bright Future Strong management and entrepreneurial talent Increasing cost pressures and continued change in U.S. health care system National recognition of the expertise and leadership that Nashville offers International opportunities

23. Having Covered Some Ground