Health for a Better World

1. Health for a Better World Accelerating to Health 2.0 Progress and Upcoming Changes October 16, 2018

2. Welcome! • Rod Hochman, M.D. • October 16, 2018

3. Recap: Our Journey to Health 2.0 5 1 2 3 4 • March • January May / June Today • December Introduction to Health 2.0 New Mission, Vision and Values • Accelerating to Health 2.0 • Leading our teams through change • 2018 – 2022 • Integrated Strategic and Financial Plan

4. It has been an incredible last few months! Collectively, we… Rhonda Medows, M. D. Population Health Kevin Manemann Physician Enterprises Mike Waters Ambulatory Care Robert Hellrigel Home & Community Care …scoped 100+ unique opportunities …launched 4 “Lines of Business” …launched a new Capital Allocation Framework

5. We are getting more comfortable with explaining what we are doing Health for a Better World: October Summit Pre-Survey How able are you to explain the work we are doing for the Revenue Growth Portfolio? How able are you to explain the work we are doing for the Capital Efficiency Portfolio? How able are you to explain the work we are doing for the Modernization Portfolio? How much do you know about Accelerating to Health 2.0 and the changes that will support our vision of Health for a Better World? 60% - “motivated and committed to gain others' commitment” 47% 29% 37% 45% 50% 28% Selected ‘Good’ or ‘Excellent’ Indicated ‘Poor’ or ‘Fair’ Selected ‘Good’ or ‘Excellent’ Indicated ‘Poor’ or ‘Fair’ Selected ‘Good’ or ‘Excellent’ Indicated ‘Poor’ or ‘Fair’

6. And we need to provide more details! We asked, “What else do you need to support and lead your team?” “Concrete specifics as soon as they become available to share” “More clarity and timelines” “Want to hear more about our new businesses” More of the What “Continued focus on clarity / simplification of our comms starting with the Mission” More of the Why “Materials relevant to my team” “How will we implement the changes being proposed?” More of the How

7. Our goals for the next two days Share, Inspire… • Learn about the changes happening across the organization • Exchange ideas with peers that will inform your regional change plans • Be motivated by the business value and wins realized today and in the future Summit Goals …Take Action • Develop regional change plans to be implemented in Q4, lay the foundation for Q1

8. Bringing our change leaders together

9. ReflectionOrest Holubec

10. Six ways we are organizing for our future • Rod Hochman, M.D.

11. Six ways we are organizing for our future

12. Health for a Better World: Progress Update • Mike Butler

13. health for a better world

14. Performance strengths • People served grew by 5% • Access to primary care grew by10% • Ambulatory services grew by 4% • Managed care revenue grew by 8% • Productivity improved by 3% • EBIDA grew by 12% • Community benefit grew by 2% • Philanthropy grew by 20% • Safety measures are strong • Physician engagement is strong YTD September 2018

15. Performance challenges • Inpatient admissions down 2% • Medicare payer mix grew by 2% • Inflation grew 2% • Investment income down $429m • Sepsis O/E ratio trending negative • caregiver engagement trending negative • Long term EBIDA & affordability trends • Mission imperative is to diversify, modernize & inspire YTD September 2018

16. Health for a better world outcomes • Healthiest communities & patients • Best care, experience & cost • Best place to be called to be a caregiver • Highest % of health spend per capita • Most modern, predictable infrastructures • Leading market share in all we do • Mission imperative is to create & transform customers & caregivers for life

17. servant leadershiprequired. listen love curiosity discipline unity mission not ministry reconciliation forgive, forget, unite

18. Organizationally aligning to leading market share in all we do • Ambulatory care network +20% annual growth • Physician enterprise +10% annual growth • Home & community care +10% annual growth • Digital innovation +13% annual growth • Inpatient – 35% risk by 2022 • The role of leadership is to continually define reality • Mission imperative is to accelerate, invest, partner & compete

19. Implementing modern, predictable infrastructure • Administrative cost 4.5% > benchmark • Clinical cost $500m > Medicare reimbursement Mission imperative is to accelerate decisions & execute while living our promise with each other – know me, care for me, ease my way

20. When steadfast love and God graced skill work together, expect a masterpiece. THIS IS OUR TIME to courageously continue this 240 year old master piece that could humbly result in the most transformational company in our country’s history. 15years The Mission bonds us through every transformation

21. Reaching Escape Velocity • Venkat Bhamidpati

22. Escape Velocity How do we Reach Escape Velocity with Health 2.0?

23. Results show revenue and EBIDA improvement over prior year continues but margin still low overall NOR up 6.3% from prior year EBIDA $144M better than last year Regional EBIDA up $100M year-over-year NOI improvement of $126M Core Shared Services EBIDA improved $66M Operating margin near zero +6.3% +18% +182% $16.1B $942M $57M $899M $15.2B $15.2B $15.1B $880M $799M $32M ($33M) ($69M) PY Bud Act PY Adj* PY PY Adj* Bud Act PY PY Adj* Bud Act NOI Margin EBIDA Margin NOR EBIDA NOI YTD B/(W) Prior Year (Adjusted) YTD *Net of PAML Transaction

24. Rating Agencies appreciate our strategic plans, but note margin weakness …decision to hold off taking any rating action after 2016 financial results was justified …need to focus on improving operations and getting margins and credit metrics back to overall strength that supports current rating… …margins still low to peers. The trend upwards is good, though need to continue to improve on operations and execute on Health 2.0 and related plans which could lead to Stable outlook within next year… …strong vision. PSJH ahead of curve with Health 2.0 vs. peers (Health 1.5) giving the edge to PSJH going forward…approach to transformation actions shows thoughtfulness, and organizational alignment…not slash and burn approach…operating margin must show further improvement

25. Metrics need more work relative to peers and rating

26. CAREGIVER ENABLED Health 2.0 redesigns how we serve our communities Health for a Better World Significant scale and resources Retail Connecting with our Communities in New Ways Reimagining our Operating Model Mental Health Scientific Wellness Urgent Care Centers Ambulatory Surgery Centers Physicians Digitally Enabled Genomics & Research Health Products Specialty Hospitals Insurance Patients & Consumers Digital Innovation Hospitals Redefining the value chain Rebuilding the Organization Data Assets Telehealth Ancillaries Post Acute Home Services Health Services Companies HEALTH 2.0

27. Accelerating to Health 2.0 requires that we deliver revenue growth, modernization and functional excellence, and capital efficiency Mission Vision Why Health 2.0 Strategy What Financial objectives Ensure sustainability of the Mission: achieving >9-10% EBIDA and >11% ROIC Portfolio How Revenue growth Modernization and functional excellence Capital efficiency

28. Leading our teams through the journey • Greg Till, Greg Hoffman

29. Recap: why we started our acceleration efforts New challenges, opportunities and community needs… May 2018 …outdated and fragmented structures, processes and systems May 2018

30. Recap: Accelerating Health 2.0 will be key to transforming our future, strengthening our core and be our communities’ health partner Modernization and Functional Excellence Revenue growth Capital efficiency Care Delivery and Operations External Spend Excellence Enterprise Support Services Modernization Reallocate Capital Divest non-core assets Rev Cycle Optimization & Payor Contracting Strategies Commercial Market Growth Partnerships Ambulatory Pop Health Services & Digital Reducing Clinical Variation

31. The next two days will help us prepare to lead change Capital Efficiency Revenue Growth Modernization and Functional Excellence Insights into several of our new lines of business and our priorities Deep dives on the initiatives and upcoming changes that support our modernization journey A look at how we allocate our capital and the principles that drive our spend Care Delivery & Operations Managing Capital Allocation Physician Enterprise Services Enterprise Support Services Home & Community Care External Spend Excellence Ambulatory Reducing Clinical Variation Digital Solutions

32. Q4 starts our modernization journey To achieve our vision of Health for a Better World, we need to operate in new and different ways to respond to the realities of today and ensure the sustainability of the Mission in the future. • Simplifying core processes and reducing variation • Aligning skills and expertise to deliver better service • Optimizing our external spend • Partnering to improve value • Using technology to simplify our work Reducing organizational complexity

33. This effort is both a step-wise change in performance in and of itself, and the start of a continuous improvement journey • AH2.0 is transformative change in the near-term: farther, faster, than we have been able to go in the past • It also builds the infrastructure and organizational “muscle memory” to sustain and iterate on the change over time • Once we evolve, we'll both be in a totally different performance plane, and able to build on the improvement trajectory over and over again Performance Illustrative Future AH2.0 Current Time

34. Your role – the next two days So that you can… We will spend time on …understand what is changing • The vision behind changes • The value we need to create for the Mission • What these changes will mean for your region Together you will develop • The localized and energized region-specific messaging • Alignment on the groups you will need to bring with you on this journey …contextualize for your region Together you will agree • When, where and how you will engage your teams • How you will mitigate any risks • What you will do next …build an initial plan

35. The next few months will need active leadership Where we have been (May – Oct) Planning our Health for a Better World approach Initial Regional engagement Our current focus (Oct/Nov) Finalize regional prep Prepare Core Leaders Communicate with caregivers Engage through transition (Dec onwards) Engage and refine

36. Care Delivery and Operations • Jo Ann Escasa-Haigh, Helen Andrus

37. Care Delivery and Operations | Summary Immediate Wins / Changes On the Horizon Big Aims Yields • Labor productivity management • 340B clinic expansion • Decision to focus on centralized learning administration • Organizing our Real Estate management structure Care Delivery and Operations $300-500M • Clinical workforce contract labor optimization • Pharmacy of the “Future” • Rationalized role-based learning requirements as part of our modern learning experience • Enhance our core services • Simplification – of our structures, processes practices • Leverage our scale • Increase value by lowering cost and reducing variation • Building for the future of Health 2.0 2019 2020

38. CDO | Overview of our portfolio Intended Outcome Sustainable operating models that optimize productivity, simplify processes, enhancecore services, lower costs, and reduce variation, so that we can live out the Missionto the fullest extent.

39. CDO | Our work reflects the Mission We expect Providence ministries to cherish the Mission and values and develop ways to assess the effectiveness of the people and practices required to sustain them. Hopes and Aspirations Be courageous to undertake what God wants of you and constant to persevere in what you undertake, never giving up, whatever difficulties occur… Maxims of Jean-Pierre Medaille Faith, Foresight, Flexibility and Humility, Simplicity, Charity

40. Portfolio OverviewHelen Andrus

41. CDO | Initiative Messaging Overview Clinical Workforce

42. CDO | Initiative Messaging Overview Research

43. CDO | Initiative Messaging Overview Quality

44. CDO | Initiative Messaging Overview Medical Staff Administration

45. Initiative Deep DivesHelen Andrus

46. CDO | Ways CDO is achieving our vision To achieve our vision of Health for a Better World, we need to operate in new and different ways to respond to the realities of today and ensure the sustainability of the Mission in the future. • Simplifying core processes and reducing variation • Aligning skills and expertise to deliver better service • Optimizing our external spend • Partnering to improve value • Using technology to simplify our work Reducing organizational complexity

47. Real Estate, Construction, Facilities, Environmental Services (RECFE)Erik Wexler

48. CDO | Ways RECFE is achieving our vision To achieve our vision of Health for a Better World, we need to operate in new and different ways to respond to the realities of today and ensure the sustainability of the Mission in the future. • Simplifying core processes and reducing variation • Aligning skills and expertise to deliver better service • Optimizing our external spend • Partnering to improve value Reducing organizational complexity • Using technology to simplify our work

49. CDO | RECFE: Facilities & EVS Integration RECFE will ensure all real estate assets are being utilized efficiently and with the utmost fiscal responsibility through an integrated, high performance, multidisciplinary team which partners with and supports all campuses and ministries. • Expand scope of REC Core Team • Streamline management structure of Facilities and EVS services across system • Regionalized direction on market competitive models What to expect in November What to expect in 2019 and beyond • Integration of the full suite of services related to physical asset management • Definition of facility and EVS market competitive productivity levels • Respectful communication and treatment of our dedicated caregivers • Better visibility and strategic use of capital • Required services provided at the most cost effective levels

50. PharmacyPreston Simmons