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1. UC Irvine HealthInstitute for Clinical and Translational ScienceAddressing unmet clinical needsTerry A. BelmontCEO, UC Irvine Medical CenterJune 19, 2012 - 1 -

2. Addressing unmet clinical needs Will hospitals become extinct in 2050?What would be the implications?

3. An evolution is taking place in healthcare Our changing needs will require innovation

4. DiscoverTeachHeal Mission – our purpose An ever-present reminder of why our organization exists. In addition to describing what we do, it centers us and serves as a foundation for our work, plans and vision.

5. Vision – our aspiration Identifies the overall direction and long-term view of our organization. It is visceral and inspiring and serves to differentiate and promote our aspirations to all constituents.

6. Core values ARI2SE: Accountability – We are each responsible for the achievements and successes of UC Irvine Health. Respect – We foster an environment of mutual respect and trust amongst ourselves and with all whom we serve. Integrity – We tell the truth and strive to earn the trust of those around us. • Innovation – We seek ideas and approaches that can change the way the world discovers, • teaches and heals. Service through teamwork – As departments, units and individuals, we collaborate to effectively and compassionately serve our patients, each other and our community. Excellence – We are committed to achieving the highest level of excellence in patient care, discovery and education.

7. Our foundation Combined, these elements represent the foundation of UC Irvine Health’s strategic plan. They ensure that all strategies and actions within the strategic plan support UC Irvine Health’s purpose and long-term direction.

8. Strategic themes The seven strategic themes represent key areas of focus.Each of these themes has one or more goals and associated strategies defining the actions required to move UC Irvine Health closer to its vision.

9. Where we are today There are many external pressures / forces impacting UC Irvine Health today and in the future. UC IrvineHealth

10. The long-standing, existing provider business model based on volume, will be supplanted by a model based on the best possible quality at the lowest possible price or “VALUE” Current / Existing Business Model Future Business Model • Activity based reimbursement / reward volume growth • Emphasis on aggressive top line / revenue negotiations • Consolidate for market / negotiating power • Indirect / minimal financial incentives for quality, safety, satisfaction etc. • Minimal risk assumed by hospitals • Provider payment tied to quality, outcomes, and cost effectiveness • Emphasis on cost control, productivity, and efficiencies • Consolidate to secure “populations”, scale, and build coordinated / aligned continuum • Assuming / sharing risk (next generation capitation) • Pricing power tied to ability to demonstrate “value” Prepared by UC Irvine Medical Center Strategic Services Department

11. The emphasis on “value” will require providers to re-evaluate their clinical processes and infrastructure • Healthcare is rapidly moving from an activity-based model to a value-based care delivery model • Best possible quality at lowest possible price • Away from fee-for-service model • Community or population health models • Provider (Hospital & Physician)

12. Performance categories for UC Irvine Medical Center’s organizational goals are based on the value equation Service / Patient Experience Quality / Safety Patient Experience Quality of Care Patient Experience + Quality of Care Cost of Care I.T. Size / Growth Finance / Cost Cost of Care

13. Needs in patient care delivery. Burning platform priorities and initiatives for FY2013 • Quality & Safety Outcomes • Utilization Management / Case Management • Lean Sigma (SPI) • Patient Experience (SPI) • Cost Reduction • Throughput Improvement • Lean Sigma (SPI) • Resource Opportunity Improvement (ROI) • Robust EMR/EHR • QUEST implementation • Delivery System / Network Infrastructure • Primary Care Strategy (SPI) • Ambulatory Care Strategy (SPI) • Market Essentiality • Brand Strategy Development & Implementation (SPI) • Portfolio Analysis (SPI) • Cancer Center Clinical Strategic Business Plan • Funds Flow / SOM Deficit (SPI) *(SPI) = Strategic Plan initiative

14. 10 value imperative issues Quality Outcomes:Ability to demonstrate quality outcomes (outcomes of care, process of care, safety, etc.) that are exceptional. ALOS / Throughput:Reduction in ALOS and improvements in throughput (patient flow and reduced wait times once in our system) that free up capacity, improve service, and reduce costs. Cost Reduction (Make Margin at Medicare Rates):Reduce the cost of delivering care (both inpatient and outpatient) at UC Irvine Medical Center to improve our value, enable competitive pricing and provide sustainable cash flow and capital to the organization. Payment Models (Taking Risk):Pilot, build infrastructure for and begin taking risk (capitation) for populations. May include large populations (ACO), professional capitation (HMO), or target specific populations (bundled payments). Primary Care:Develop a robust primary care network in key geographies to secure secondary referrals and prepare for primary management of (select) patient populations. Community Network of Care:Expand UC Irvine Health’s ambulatory footprint in the community including specialty care and ambulatory care both on / off campus as well as implementation of other cost-effective care settings (urgent care, retail, etc.). Patient Experience:Ability to demonstrate and distinguish UC Irvine Medical Center through an exceptional patient experience as measured by HCAHPS and other service measurements. Senior / Medicare Opportunities:Implement strategies and programs to capture senior market share and capitalize on the growing senior market. Includes dual-eligible strategy. Health Insurance Exchanges:Implement strategies and programs to capture market share resulting from the advent of the California Health Benefit Exchange. Medi-Cal Eligibility Expansion:Implement strategies and programs to capture market share resulting from the eligibility expansion of Medi-Cal.

15. So, will hospitals become extinct in 2050?

16. Rethinking the delivery of care

17. Rethinking the delivery of care Prepared by Geisinger Health System, Nov. 2011

18. The implications Will require us to continue leveraging technology.

19. Again, will hospitals become extinct? Yes. In their present form.

20. Thank you. Questions?