CREATION OF LARGE FQHC SYSTEMS

1. CREATION OF LARGE FQHC SYSTEMS

2. ACCESS History…Founded as FQHC in 1991 FY 1994 • 9 sites • 100,000 primary care visits • 35,000 unduplicated patients including 13,000 HMO patients • 150 staff • $12 million in revenues on $20 million budget • Single hospital operating relationship • 40% operating deficit off-set by $8 million operating grant by affiliated hospital • Served small geographic area –primarily South and West sides of Chicago • Medical only model • Defunding notification by Bureau of Primary Health Care

3. ACCESS History cont.. FY 2004 • 43 sites (does not include all original 9 sites) • 460,000 + primary care visits • 150,000 unduplicated patients including almost 39,000 HMO patients • 600 staff • $65 million in revenues • Small operating surplus • Multiple hospital relationships • Metropolitan-wide including 11 suburban sites • Comprehensive primary care model with specialty services and wide array of behavioral health and “wrap-around”services • Added teaching programs • JCAHO accredited • Largest FQHC in U.S. • Participant in “Best Practices” FQHC forum identified by BPHC

4. ACCESS History cont.. Turnaround Strategies • Implemented basic management and financial systems • Adjusted provider and ancillary support staff to match volume and increase productivity • Redesigned service delivery model to reduce encounter costs by 27% since FY 1994 while simultaneously expanding ancillary services and improving quality of care. • Secured local, state and federal grant support as well as private philanthropic funds • Grew to respond to need, increase revenues and achieve economies of scale • Developed incentive system for staff at all levels in organization based on financial performance

5. FQHC History • Originated out of “War on Poverty” of the 1960s and 1970s. • Response to lack of primary care access and lack of community control over health services. • Two major guiding principles: • Access regardless of ability to pay • Patient/community governed • Historically small and single site operations • Some struggle to remain fiscally viable in evolving/competitive environments • Trend is toward larger and multi-site operations. • Handful of “super” FQHCs of large systems with 250,000+ medical visits • President Bush’s major health care initiative goal is to double number of FQHC users and sites

6. FQHC Benefits • Enhanced Medicaid and Medicare fee-for-service reimbursements • Enhanced reimbursement for Medicaid HMO and Medicare HMO patients (state specific) • Access to federal BPHC Section 330 funding • Access to reduced drug costs through 340(b) program • If directly federal funded, then free malpractice coverage through Federal Tort Claims Act (FTCA) • Safe-harbor provision through new Medicare legislation • Brought stability to safety net system through increased revenues and decreased costs

7. Major FQHC Regulations • Autonomous Board and management • Provide services to whole life-cycle (pediatric to geriatric) • Including dental, mental health and pharmacy (may be referred) • Board cannot be subsidiary of parent Board • 51% of Board must be patients of FQHC and reflective of patient population • Of the remaining 49% of Board members: • No more than 50% can make more than 10% of income from health care • Must be representative of community at large • Majority of providers must be employees of FQHC • Must be not-for-profit • Be located in a designated medically underserved area or serve a designated medically underserved population.

8. ACCESS Statistics • 150,000 users with 460,000+ medical visits • 60% African American, 35% Latino, 4% White, 1% Other • FY’04 Budgeted Visits: • 44% Medicaid fee-for-service • 24% Uninsured • 17% HMO (60% Medicaid, 40% Commercial) • 9% Commercial • 6% Medicare • FY’04 Budgeted Revenues: • 55% patient revenues (78% Medicaid, 10% Medicare, 7% Self-pay, 5% Commercial) • 28% HMO capitation (67% Medicaid and 33% Commercial) • 17% other (local, state and federal grants; health system grants: rent: private funding etc.)

9. FQHC Benefits to ACCESS • Enhanced Medicaid rate 4x non-FQHC rate in Illinois = $14.75 mil/yr • Medicaid HMO wrap-around payment = $3.25 mil/yr • Enhanced Medicare rate 1.3x non-FQHC rate = $750,000/yr • Malpractice savings = $4 mil/yr (no tail costs) • Federal 330 Grant = $4.5 mil/yr • 340(b) saves ACCESS about 28% on prescriptions for HMO members • Helps patients save 53% on prescriptions compared to retail

10. Recommendations • Single corporate entity with multiple sites to achieve scale to impact problem and to leverage funder, government, insurer, payors and hospital relationships • Owned and operated by private entity with public/hospital funding • Autonomy and nimbleness are critical • Managed by staff with strong ambulatory, primary care experience • Cannot be operated/staffed like hospital settings • Representation of hospitals and government on Board • Hospital and public grants executed through contractual arrangements and/or affiliation agreements. • Develop secondary level of care relationships • Including for the uninsured

11. ACCESS Senior Management Team Mike Savage CEO ms@sinai.org 773.257.6307 Dr. Dan Mukundan Medical Director mukp@sinai.org 773.257.6025 Donna Thompson COO dthomp1257@aol.com 773.257.6219 Eduardo V. de Jesus CFO deje@sinai.org 773.257.5643 Steven Glass V.P. External Affairs glas@sinai.org 773.257.5099 Warren Brodine Director-Strategic Initiatives browa@sinai.org 773.257.5362