Accelerating to Health 2.0

1. Accelerating to Health 2.0 Updated June 2018

2. Reflection

4. Headlines and trends WSJ, February 2018 Boss Magazine, May 2018 Washington Post, March 2018 Chicago Tribune, March 2018 Becker’s Hospital Review, April 2018 Modern Healthcare, May 2018

5. As health care changes, the future requiresa new approach Our current challenges • Rapid input cost growth • High exposure to regulatory risk • Reimbursement pressures are getting worse • Our payor mix is challenging

6. Our transformation to Health 2.0 requires changeand ensures the future sustainability of the Mission Mission Vision Why Health 2.0 Strategy What Clinical Quality | People | Experience | Financial Sustainability

7. Three portfolios of work will enable us to accelerate to Health 2.0 Modernization and functional excellence Revenue growth Capital efficiency Reallocate Capital Divest in non-core assets Partnerships Rev Cycle Optimization Payor Contracting Strategies Commercial Market Growth Care Delivery and Operations External Spend Excellence Enterprise Support Services Modernization Digital Transformation Diversification Ambulatory Diversification Pop Health Diversification Services & Digital Solution Clinical Variation Enterprise (Xnovate)

8. Your role is critical Challenge ourselves to think differently, act differently Know we will need to make hard choices Provide honest and candid feedback - andbring constructive solutions Our role as leaders Leading our teams through this journey How we will accelerate to Health 2.0 • Deliver Excellence • Support functional and delivery excellence where it matters most, learn fromthe best Focus on the Future Think differently. Act differently. Be Affordable Improve and sustain the affordability of care for our communities • Stay Sustainable • Enable our organization to deliver our Mission now and in the future • Remain Faithful Remain faithful while responding to the signs of the times • Modernize • Build a foundation for the future, easing the way of caregivers, patients and communities

10. Resources Governance Assembly Keynote Videos Health for a Better World – Rod Hochman, M.D. (25:32) Health 2.0 – Our Strategic Plan – Annette Walker (17:32) Celebrating Our Successes – Mike Butler (18:53) A Healing Spirit – Sr. Carol Keehan (41:34) Fueling Our Future – Venkat Bhamidipati (47:30) Honoring the Sisters (41:59) The Many Faces of Medicaid – Ali Santori (8:02) Big Trends Shaping the World Today – Thomas Friedman (1:11:55) Changing Health Care – Michael Leavitt (12:29) Additional Resources What Hospitals of Future Look Like (WSJ) – WSJ What Amazon & Co Should Fix First In Our Healthcare System (Tribune Interactive)– Amazon Myth: All Healthcare is Local (www.paulkeckley.com) CVS-Aetna wants to be in your neighborhood (Washington Post)

11. Appendix • Reflection: Courageous Leadership • Narrative: Slides 13-16 contain the narrative to assist you in framing accelerating to Health 2.0.

12. Courageous Leadership • Courageous leadership is not about naiveté or false bravado. It involves feeling fear, anxiety and uncertainty; facing it, and moving forward. • To be an effective leader in today’s world requires something significantly more fundamental than technique or skills: it requires the courage to move beyond simple answers, the paralysis of fear, or the safe anonymity of the sidelines in order to help make things better. Here are four dimensions of the courage necessary to lead in today’s world. • The Courage to Resist Cynicism • It is easy to succumb to anger, blaming, and cynicism in tough times. Effective leaders, however, face their frustrations and anxieties, maintain a positive perspective and work to find answers. • The Courage to Help Others • In times of stress and confusion, leaders who make a difference have the grit to put their own issues aside and make themselves available to others. A person who is struggling with fear and an uncertain future needs a leader who has had the courage to face her problems and the focus to be present for others. • The Courage to Engage • One response to the problems we face today is to hunker down, avoid risk, and hope things improve. Courageous leaders get up in the morning and choose to engage. They experience anxiety, but they choose to make a difference. Rather than adding to problems, they seek to help solve them. • The Courage to Look in the Mirror • Courageous leaders are made, not born. They have the ability to learn from their mistakes and from feedback. Leaders who make a difference have the ability to look in the mirror and the bravery to do something about what they see. • There is no magic formula for developing courage. It comes down to a matter of choice. Those who have the courage to help make things better consciously decide not to let their frustrations and fears disable them. They instead choose to rebuild. The bravery of the leaders we need to help us through uncertain times is found not in flashy speeches but in their steady, quiet, and unrelenting efforts to make things better. These people we need to lead our organizations, our nation, and our world. • (Source Unknown, adapted)

13. Accelerate to Health 2.0 Narrative (page 1/4) Why accelerate to Health 2.0? Imagine a world where patients and consumers use virtual health services as much as physical sites of care. Imagine that healthy people in all 50 states use an app on their phones to prevent catastrophic disease. Imagine that we use our vast data sets to develop breakthrough, personalized treatments to individuals based on their genes. Imagine that we partner with other organizations, such as retail, to create new health products, which provide new revenue streams. Imagine that we invest the new revenue in preventive health and provide more health services to those who are poor and vulnerable. Imagine that we save millions of lives. This is the vision of Health 2.0, which will help us fulfill and sustain the Mission. Our journey to Health 2.0 We see the opportunity, and so do other organizations entering health services – Amazon, CVS, Optum, JPMorgan Chase and Berkshire Hathaway to name a few. We’re all looking at innovation, pharmaceuticals, supplies and other areas. We are a diverse family of organizations united by a belief that health is a human right. We are proactively creating the best health model for the future to improve the health of all, especially those who are poor and vulnerable – regardless of coverage or ability to pay. As health care changes, new opportunities are emerging As health care changes, the future requiresa new approach With a challenging payor mix, reimbursement pressures, regulatory risk and cost growth, we must do some things differently.

14. Health 2.0 Narrative (page 2/4) Health 2.0 ensures the future sustainability of the Mission What will it take? Guided by the Mission and our value of excellence, we have a moral imperative to achieve the highest standards for ourselves and our ministries. In the Providence St. Joseph Health Integrated Strategic and Financial Plan (ISFP), Health 2.0, one of our strategic goals is to steward our resources to improve operational earnings. We hope that you will offer your best selves, your highest potential to help build this new health world for all, especially those who are poor and vulnerable To do this we need to make intentional decisions about the businesses we are in, and ensure we have best-in-class operational models to support delivery excellence in those areas. • What will it take? • We need to think and act differently. Incremental change is no longer enough. We need to be bold. It will be a lot of work and may require us to make hard choices. • To accelerate to Health 2.0, we will focus on three portfolios: • Revenue growth • Capital efficiency • Modernization and functional excellence • We need to focus in on what we must do to modernizehow we deliver our services: to simplify, streamline processes and eliminate unnecessary variation. If we eliminate 20 percent of unnecessary variation, we can provide more health services to those who are poor and vulnerable and invest in prevention. We’ll digitize the health experience and use our data to drive improvements in care. We need to provide care when, where, and how our consumers and patients want to receive it. This will challenge us to change structures, create new competencies and design compelling jobs of the future. 3 portfolios of work will support our journey

15. Health 2.0 Narrative (page 3/4) What is our role as leaders? We will not get to these outcomes through gradual, incremental changes to the things we do today. This is the time to think boldly. Be willing to challenge the way that we have done things where you see opportunities to make them faster, easier, and improve the experiences for patients, communities and caregivers. Think “what if … ?” not “we can’t!” This work will not be easy, and we’ll need to make difficult decisions. We won’t have all the answers to all the questions immediately. But serving the Mission – now and for the long-term – requires us to be willing to do things differently from the past as the needs are not the same as the past. Be comfortable providing feedback – as long as you have suggestions that will help us move forward. And above all else, provide the guidance and energy for your teams. While they will not have detailed views into much of the work that we will need to do, we, as leaders, set the tone for how we will change as an organization. That tone should be forward-looking and create a foundation for a bright future. Acknowledge that the journey will be uncomfortable at times, and not without bumps, but that if we stay grounded in the Mission and understand how the needs of our community will change, the Mission will sustain and we will continue to serve our communities by providing care that is affordable and accessible. Our work starts now – and your role is critical

16. Health 2.0 Narrative (page 4/4) How we will accelerate to Health 2.0? We need toremain faithful to our Mission while responding to the signs of the times. The needs of our communities may change, and we may need to change to support our communities: however our Mission remains our guide. We need to be affordable to serve our communities in the best way possible and to sustain the Mission. We seek to diversify revenues beyond health care. And we plan to engage 111,000 caregivers to crowdsource ideas to conserve and preserve our resources. We must deliver excellence to be indispensable in our markets and virtually across the United States. We need to be best-in-class in everything we do. We need to have the best health outcomes and be the trusted health navigator for our consumers. We’ll learn from the best models and use insights from data to make the best decisions. We’ll assess what we should we do alone and what should we do with others. We’ll seek partners for functions where partners can help increase efficiency. What will stay the same? Our commitment to the Mission and improving the health and lives of those we serve, especially the poor and vulnerable, will never change. We will continue to draw on our heritage and pioneering spirit to develop creative solutions to meet the needs. Our caregivers and providers are our priority. We will continue to create a work experience where caregivers are developed, fulfilled and inspired to carry on the Mission. To improve health outcomes, we’ll continue to excel in quality, safety, and patient experience. Together, we provide 10,000 surgeries and 63,000 ED or physician visits a day. We have the awesome responsibility to be there for the births, the deaths and the healing. Those who encounter us go from us more healed, more whole, more able to live, to love, to hope and even to die. Our work starts now – and your role is critical