UK HealthCare Strategy 2020 - The Past - - The Present - - The Future -

1. UK HealthCare Strategy 2020- The Past -- The Present - - The Future - New Faculty Orientation Michael Karpf, MD Executive Vice President for Health Affairs September 29, 2015

2. - The Past -

3. FY 2004 Clinical Plan - Growing to Serve Kentucky • Advanced Subspecialty Care • Level 1 Trauma Center; Kentucky Children’s Hospital, Solid-Organ Transplantation, Markey Cancer Center, Advanced Neurosciences, Advanced Surgery, Cardiovascular Services • Regional Care – Preserving Rural Providers • Leverage community health care providers by augmenting specialty services and allowing patients to remain close to home and utilize local services • Efficiency, Quality and Patient Safety • Center for Enterprise Quality and Safety has been established to focus on the development of efficient processes aimed at optimizing clinical outcomes and the safety of patients Privileged and Confidential. Draft working document, for discussion purposes only. 2

4. UK HealthCare Initial Drivers of Change – 2003 • The mandate from the Kentucky General Assembly for the University of Kentucky to become a top 20 public research institution • The slow but steady decline in clinical activity within the organization that had to be addressed for us to maintain our relevance in the health care marketplace of the Commonwealth

5. Financial Planning UK HealthCare Developing a Vision - 2004 Board of Trustees | University HealthCare Committee | President | EVPHA | Advisory Board Executive and Legislative Branches of Government | Academic Planning Facilities Planning Strategic Planning

6. FY 2004 Clinical Plan - Growing to Serve Kentucky • Advanced Subspecialty Care • Level 1 Trauma Center; Kentucky Children’s Hospital, Solid-Organ Transplantation, Markey Cancer Center, Advanced Neurosciences, Advanced Surgery, Cardiovascular Services • Regional Care – Preserving Rural Providers • Leverage community health care providers by augmenting specialty services and allowing patients to remain close to home and utilize local services • Efficiency, Quality and Patient Safety • Center for Enterprise Quality and Safety has been established to focus on the development of efficient processes aimed at optimizing clinical outcomes and the safety of patients

7. Market Definition Primary - 0.3M population Secondary - 0.5M population Tertiary - 1.0M population Other - 2.5M population Realization – We Must Expand the Footprint

8. Defining Market Space = Potential Partnering Organizations

9. Strategic Plan 2010 - 2015: Moving Forward Advancing to serve the health care needs of Kentucky and beyond • Continue to refine approach to subspecialty care • Continue to mature relationships with regional providers • Reemphasize efficiency, quality, safety, and patient satisfaction

10. - The Present -

11. Strategy: UK HealthCare Discharges Annual discharges at UK HealthCare have grown at a CAGR of 5.7% from FY03 to FY15 – a total of 94% growth Cumulative % Growth = *FY13 forecasted based on data through February.

12. Case Mix Index - COTH Benchmark

13. The FY 2016 Budget is projected to have 46% higher ambulatory volume compared to FY 2010 Ambulatory Visits Note: Includes both Clinic Visits and Outpatient Hospital Visits

14. Economic Impact – FTEs 11,592 109% Increase 5,539

15. Economic Impact – Personnel Expenses $1,016M $375M

16. Cost of Becoming a Research Intensive Referral Center • Over $260M worth of approved major construction in progress based on Preliminary FY 2015 Financial  Statement • Approved Authority in FY2014: June 2014 FCR 11- $150M • Approved Authority in FY 2015: FCR 11-Phase 1G-$75M • Approved Authority in FY 2016: Continued KCH and Core service relocation-$37M - 16 -

17. - The Future -

18. Responding to National Drivers of Change UKHC and other providers will need to respond to national trends 2 1 7 Federal Deficit Medicaid Expansion State Cost Focus on Value 3 6 Payer Consolidation State Budget Issues Future Drivers of Change in KY 5 4 Uncompensated Care Payments Teaching Costs (GME/IME)

19. Preparing for the Future Fee For Service Value Based Care Quality Cost Efficiency Drivers: Volume Potential for risk-based reimbursement

20. UK HealthCare Goal Create a system that rationalizes care, not rations care. • Provides care in appropriate settings and develops a seamless continuum of care. • Will require partnerships with providers, insurers, and purchasers AND appropriate integrative systems – information systems and medical management tools. • System may be virtual, real or a combination.

21. UK HealthCare Strategy 2020

22. Service Line Growth Strategy Patient Care Distribution UKHC will focus on treating the most complex patients and partnering with community providers to keep lower acuity patients in their home community AMC Mandate Community Hospital Focus Primary Care

23. Service Line Operating Model UKHC leadership has identified nine service lines as priorities for growth over the next five years, supported by growth accelerators. High Risk OB/NICU Gill Heart Center • Transplant Kentucky Neuroscience Institute Markey Cancer Center Digestive Health Musculoskeletal Kentucky Children’s Hospital Trauma / Acute Care General Surgery

24. Partnership Network 9

25. UK HealthCare Alliances UK / Norton Alliance Q U A L I T Y C O L L A B O R A T I V E A network of providers who use data to monitor and improve their quality. • Objectives: • Improve overall population health through an efficient, balanced set of cooperative activities. • Agree on evidence-based practices that support quality healthcare across a coordinated network of sites. • Improve timeliness and communication across transitions in care. • Share usable data through cost-effective registries that provide standardized data elements, simple tools for data collection and submission, and transparent reports. • Focus on network-relevant, risk-adjusted quality indicators, including clinically-important delays in care, cost, patient experience, and immediate and long-term patient outcomes. Stroke Heart Failure Cancer Transplants

26. Looking Forward • Extending efficiencies • Pharmacy • Lab/genetics/pathology • Telehealth • GPO • Standardizing protocols and devices

27. Our Vision: The Kentucky Health Collaborative

28. Market Regions

29. Potential Members of the Collaborative

30. Continuum of Care Consumer / Patient 15

31. Enterprise Analytics – A Key Strategic Differentiator

32. Create Value through Medical Management Preparing to be responsible - Risk Implementation Organization Standardization Analytics Information Systems Applied Health Services Research Best Practices Learn from others-develop approaches others adopt Must do less and better with less

33. Where We Need to Go • 945 Inpatient Beds • 45,000 Discharges • Continued expansion of ambulatory services and volume • Continued shaping of our patient population – pushing our CMI even higher • Operating Revenues in excess of $2 billion for the hospital system

34. Buildout of Pavilion A

35. Redevelopment of Pavilion H

36. Future Rendering of Pavilion B

37. What We Must Be • The preeminent academic medical center serving Kentucky and beyond – in all three missions • The provider of accessible advanced subspecialty care for Kentucky and beyond • The referral center for an extensive collaborative of healthcare providers across the state and beyond • An Organization focused on appropriate care in the appropriate setting – community first, ambulatory second, hospital third • An organization operating at the highest levels of quality, safety, efficiency and patient satisfaction • A major economic driver for the Bluegrass and beyond

38. We will need to invest $2 Billion over the next decade

39. What does the faculty and staff get:1. SECURITY2. PRIDE