Strategic Planning

Integrated Clinical Solutions, Inc. Cook County Hospitals & Health Services Strategic Planning – Project Kick-off and Orientation May 16, 2009

Retreat Agenda

Morning Discussion WELCOME & INTRODUCTIONS PURPOSE & OVERVIEW OF THE DAY BRIEFING – FRAMING THE CONTEXT DISCUSSION – KEY CHALLENGES, OPPORTUNITIES, AND PRIORITIES LUNCH 3

Retreat Objectives • Set the stage for the strategic planning process: • Discuss the current state of CCHHS. • Identify the critical issues/strategic questions facing CCHHS. • Develop consensus re: “principles of success.” • Review the strategic planning approach. • Identify planning process “must do’s” and potential pitfalls. • Establish the charge: roles and responsibilities of the Board, Strategic Planning Advisory Council, Executive Leadership, and Advisors.

Cook County Health & Hospitals System: Strategic Planning Board Retreat May 16, 2009

Presentation Goal Set the context for the remainder of the day. Includes basic overview of services we provide and high-level environmental scan. NOTE: Today’s discussion focuses primarily on the hospitals and clinics. The CORE, Cermak and the Public Health Department are important areas, but their issues are on different dimensions. They will be addressed at a later date.

Majority of Expenses in Clinical Areas FY08 Expenditures by Function/Location (Estimated) NOTE: After allocations of costs that are specifically traceable to individual facilities. Specialty outpatient activity is largely included in the budgets of the three hospitals, as is primary care offered at hospital sites. 9

Activity Summary by Location 10

1. Vulnerable Populations • Uninsured • Medicaid • Medicare 11

Large Number of Uninsured Number of uninsured people in Cook County equals entire population of San Francisco 785,000* 799,000** * 2005 ** 2007 12

Uninsured Need Probably Grown Number of uninsured from 2005 probably understates full need: • Overall population has grown • Poor economy has increased share of • population uninsured • Number of underinsured (estimated at 50% • number of uninsured in 2007) has almost • certainly increased even faster 13

County Major Provider for Uninsured CCHHS provides more than 1/3 of all inpatient care for uninsured patients, about 18K Cases Source: Self-Pay/Charity, CompData Cook Cnty Hosp Discharges

Similar Role in Outpatient Care • CCHHS provides hugely more outpatient care to uninsured • than other hospitals • Roughly half of • System’s outpatient • care is primary care, • which is not typically • part of hospital care System Clinic Visits By Type, 2008 • Primary care typically offered in other venues—such as • FQHCs and physician offices • Specialty care disproportionately in CCHHS • On balance, is probably in same range as inpatient—35% • to 50% of all care to uninsured in Cook County 15

CCHHS Provides Less Medicaid Care CCHHS provides about 7,000 inpatient admissions to Medicaid clients, less than 4% of Medicaid patients county-wide Source: CompData, Cook Cnty Hosp Discharges 16

CCHHS Medicare Share Even Smaller Medicare county-wide covers 40% more care than Medicaid, but CCHHS provides only 1% of Medicare inpatient care Inpatient Medicare Cases (Discharges, 2007-2008) Stroger = 2,585 Provident = 462 Oak Forest = 267 All Others = 268,489 Source: CompData, Cook Cnty Hosp Discharges 17

Medicaid Key Part of CCHHS Revenue Medicaid is the only material source of CCHHS revenue outside of the County Subsidy Transfers CCHHS Revenue = $1,075M** (2008) System Activity, I/P & O/P (2008) * Includes BIFA/IGT; note all Medicaid subject to revisions not yet reflected ** Includes loss from operations 18

Others Variable in Care of Vulnerable Different hospitals provide care to vulnerable populations in different shares. See example hospitals below. Vulnerable Populations by Payor (Discharges, 2007-2008) Source: CompData, Cook Cnty Hosp Discharges 19

FQHCs Provide Primary Care to Vulnerable 20

Limited Changes Expected Absent some significant policy change, other hospitals and FQHCs not likely to expand care of uninsured: Community hospitals face increasing margin pressure due to declining revenue from private insurers Number of FQHCs growing, but federal grant coverage of uninsured declining—from 56% to 48% between 2000 and 2007 Other providers will probably desire to maintain Medicaid activity—it’s a good payor for FQHCs and adequate for safety net hospitals 21

2. Potential Opportunities In current environment, two major opportunities exist: Provide more care Increase revenue 22

Provide More Care Current care provisions leave gaps in care for uninsured Improved throughput and targeting of resources could allow CCHHS to better fill gaps Hard data not yet available, but seems very likely 10 to 20 percent throughput improvements possible in existing operations Reallocation of resources could allow greater increases in high need areas Better throughput would also improve quality of care for existing patients 23

Increase Revenue Most likely source of increased revenue would be to increase number of Medicaid patients: State has incentive to increase CCHHS share FQHCs only provide primary care Not all private hospitals competing for Medicaid • Would require: • Much improved throughput • Focus on select Medicaid services • Develop alliances with other providers to • provide services in their gaps 24

Morning Agenda INTRODUCTIONS PURPOSE & OVERVIEW OF THE DAY OVERVIEW BRIEFING DISCUSSION – KEY CHALLENGES, OPPORTUNITIES, AND PRIORITIES LUNCH 25

Group Discussion Discussion Goals: • Develop consensus on the fundamental issues/challenges facing CCHHS. • Define a “vision of success.”

Key Challenges Facing CCHHS Some basic premises... • The size of the vulnerable population (uninsured and under-insured) is substantial and growing. • CCHHS is the single largest provider of care to the vulnerable population. • The needs of the vulnerable population exceed manifest demand. • The demand for services outstrips available resources.

Key Challenges Facing CCHHS (cont’d) Some basic premises… • The demand for services can be expected to grow. • The availability of funding through subsidy transfers and other sources will not grow at a corresponding pace. • Other healthcare systems face growing economic pressures and may be less responsive to the needs of the vulnerable population.

Key Challenges Facing CCHHS (cont’d) Some basic premises… • Services provided by CCHHS are: • Not efficient • Not particularly well distributed, geographically speaking • May not represent the optimal mix of services from a mission-effectiveness standpoint • Other premises—what’s missing??

The Opportunities Key Strategic “Levers”… • Improve operational effectiveness/throughput • Reconfigure service mix/delivery platform • Rationalize system through “make/buy/partner” relationships • Combination of the above • Other?

Group Discussion What does success “look like” in 2012? What are the critical priorities in attaining this vision of success? What are the things we must focus on RIGHT NOW? 31

Morning Agenda INTRODUCTIONS PURPOSE & OVERVIEW OF THE DAY OVERVIEW BRIEFING DISCUSSION – KEY CHALLENGES, OPPORTUNITIES, AND PRIORITIES LUNCH 32

Afternoon Agenda STRATEGIC PLANNING APPROACH STAKEHOLDER ENGAGEMENT ROLE OF STRATEGIC ADVISORY COUNCIL CONCLUDING REMARKS ADJOURNMENT 33

Process Overview Phase 1 Phase 1 – Kick-off & Retreat: • Set the Stage for the Planning Process Phase 2 – Discovery: • Evaluate Current Position and Opportunities Phase 3 – Strategic Direction: • Develop a Shared Vision and Strategic Direction Phase 4 – Financial Plan: • Specify Action Plan and Accountabilities Phase 5 – Action Plan: • Specify Action Plan and Accountabilities Phase 2 Phase 3 Phase 4 Phase 5 35

Project Timetable June-July Aug.-Sep. May Sep.-Oct. Nov. • Kick-Off & Board Retreat • Strategic • Direction II. Discovery IV. Financial Plan V. Action Plan • Steering Group Kick-Off Meeting • Engagement Start-up & Data Acquisition • Board Retreat session • External Market Analysis • CCHHS Profile & Analysis • Interviews & Focus Groups • Town Hall Meetings • Steering Group Progress Report • Identification of Strategic Opportunities & Options • Board/Steering Group Retreat • Vision and Goal Formulation • Identification of Major Strategic Initiatives • Development of “momentum” scenario and baseline budget • Financial Modeling re: Impact of Strategic Direction • Completion of 3-year Financial Plans • Development of Targets and Metrics for Internal Management Reporting • Development of Action Plans: • Strategic initiatives • Timetables • Resource requirements • Implementation roles and responsibilities • Identification of Performance Targets • Translation of Targets to Specific Metrics for Dashboard Monitoring

Process Outcomes—CCHHS Direction, Focus, and Action Objectives and Indicators Key Initiatives Core Goals Direction – CCHHS Preferred Future State To become… 2000 2001 2002 Revenues $4,234 $5,103 $5,509 Expenses Salaries 2,008 2,466 2,859 Supplies 1,432 1,478 1,989 Rent 555 789 1,001 Misc. 2,2222,4892,876 Net Income (1,333) (1,034) (1,567)

Phase 1 – Kick-off & Retreat 1. Kick-off 2. Discovery Work with System leadership to define and structure the following: • An executive leadership group (Executive Team) that will process oversight, assistance in data acquisition, meeting coordination, draft report reviews, etc. • A Strategic Planning Advisory Council (Advisory Council) consisting of System Board, management, and selected constituency groups • Meet with the Executive Team to discuss and refine strategic planning objectives and approach, objectives and format for May Board retreat, agree on a timetable, milestones, communications, etc. • Facilitate a Board Retreat to formally launch the engagement process. • Coordinate with the Executive Team and Public Relations representatives to ensure that Retreat proceedings are recorded and communicated to various publics in a timely and appropriate fashion. 3. Strategic Direction 4. Financial Plan 5. Action Plan 38

Phase 2 – Discovery 1. Kick-off • Provide an assessment of the System’s external and internal • operating environments, critical issues and future options: • Review market data and area healthcare profiles, including relevant health-related data and projections for Cook County. • Analyze CCHHS’ clinical and operating environment and review related utilization and medical staff data • Examine other county systems where progressive models have been implemented; undertake benchmark research on model structures, financial performance, and operational performance. • Concurrent with the above activities, conduct interviews/focus group sessions with a variety of stakeholders (100-120). • Facilitate 3-5 “Town Hall” meetings with a cross-section of County residents/consumers to elicit input re: health care interests, concerns, and priorities • Based on the above information and evaluations, develop an overall current state assessment summary • Facilitate a working session with the Advisory Council to share findings and discuss future development options 2. Discovery 3. Strategic Direction 4. Financial Plan 5. Action Plan

Translate the Vision into Core Goals and Strategic Initiatives for future direction and development: Phase 3 – Strategic Direction 1. Kick-off • Work closely with the Leadership Team and the Advisory Council • to develop a vision, core goals, and overall strategic direction for • CCHHS: • Identify CCHHS’ opportunities and options. • As an integral part of the above analyses, complete a portfolio analysis of CCHHS’ relevant business units and clinical service lines based on market attractiveness and current capabilities • Identify specific service lines that could be considered as priorities for focused development Also, evaluate opportunities for partnership or outsourcing services and/or market segments that are not an optimal fit with CCHS’ capabilities profile. • Facilitate a Board/Strategic Planning Committee “visioning” retreat to develop group consensus regarding a shared Vision for the future development of CCHHS. • Translate the Vision into Core Goals and Strategic Initiatives for future direction and development. • Summarize Phase 3 outputs and make a progress report to the Executive Team and Advisory Council. 2. Discovery 3. Strategic Direction 4. Financial Plan 5. Action Plan 40

Phase 4 – Financial Plan 1. Kick-off • Develop a 3-year financial forecast: • Develop a baseline forecast (prior to strategic initiatives). • Validate past and current methods of revenue/expense forecasting and budgeting processes. • Develop the logic structure to perform sensitivity modeling. • Upon completion of the momentum forecast, incorporate strategic and performance improvement initiatives into the 3-year forecast. • Based on the developed forecast (baseline plus key strategic initiatives) complete the forecast/model roll-up, with multiple iterations, as necessary, prior to final approvals. 2. Discovery 3. Strategic Direction 4. Financial Plan 5. Action Plan 41

Phase 5 – Action Plan 1. Kick-off • Translate the preferred strategic direction into an action plan: • Link the overall strategic direction and core goals to specific strategic initiatives and action steps. • Establish timetables for implementation and ensure initiatives have identified accountability for execution.. • Identify performance metrics as a basis for ongoing dashboard measures and monitoring. • Link targets, timetables, and responsibilities to Executive and Board reporting mechanisms. • Complete the draft Strategic Plan and make presentations to various stakeholders for review and comment. • Based on the input, make final revisions to the draft Strategic Plan document. • Make final presentations to key stakeholders as appropriate. • Coordinate with the Executive Team and Public Relations representatives to ensure that the CCHHS Vision and Strategic Plan are appropriately recorded and communicated. 2. Discovery 3. Strategic Direction 4. Financial Plan 5. Action Plan 42

Framework for Implementation and Results Monitoring 1. Kick-off “How are we doing?” “Where are we going?” CCHHS Vision 2. Discovery Strategic Direction Adjustment/Redirection 3. Strategic Direction • Dashboard Metrics, e.g. • Public/patient metrics • Outcomes • Operating results • Core Goals, e.g. • Access • Service Excellence • Cost-effectiveness • Partnerships 4. Financial Plan Targets & Key Perf. Indicators Strategic Priorities 5. Action Plan • Action Steps • Strategic Initiatives • Timetables • Responsibilities 43

Stakeholder Engagement The strategic planning process will involve a cross-section of stakeholders to build consensus and define the organization’s future state.

Discussion Outline: Town Hall Meeting Discussion Guide (sample)

Strategic Planning – Project Kick-off and Orientation