UNIVERSITY MEDICAL CENTER Tucson, Arizona

1. UNIVERSITY MEDICAL CENTER Tucson, Arizona Presentation to Arizona Board of Regents January 2007

2. Accomplishments • First Magnet Hospital in Arizona • Southern Arizona’s Sole Level One Trauma Center • 1 to 4 Nurse to Patient Ratio • The most recent U.S. News and World Report Publication, America’s Best Hospitals, lists UMC among the top 50 hospitals in the nation for the following programs (July 2006): • Heart and Heart Surgery (ranked 16th in the nation) • Cancer (22nd) • Neurology and Neurosurgery (22nd) • Respiratory Disorders (20th) • Urology (26th) • Kidney Disease (39th) • Orthopaedics (41st) • Digestive Disorders (45th)

3. Accomplishments UMC is one of two Arizona Hospitals to be recognized by Solucient as one of the nation’s Top 100 Hospitals. The Solucient 2005 100 Top Major Teaching Hospitals • University Medical Center Tucson, AZ • Denver Health Medical Center Denver, CO • Evanston Northwestern Healthcare Evanston, IL • University of Chicago Hospitals Chicago, IL • Advocate Lutheran General Hospital Park Ridge, IL • Beth Israel Deaconess Medical Center Boston, MA • University of Michigan Hospitals & Health Centers Ann Arbor, MI • St. John Hospital & Medical Center Detroit, MI • Mayo Clinic—Rochester Methodist Hospital Rochester, MN • Summa Health System Akron, OH • University Hospitals of Cleveland Cleveland, OH • Geisinger Medical Center Danville, PA • Vanderbilt University Medical Center Nashville, TN • Scott and White Memorial Hospital Temple, TX • University of Virginia Medical Center Charlottesville, VA

4. Strategic Plan • Emphasis on Five Pillars (Oncology, Cardiology, Trauma/ED/OR, Pediatrics, Transplant)      - Continuous Quality Improvement and Community Service - Sustained Earnings      - Improved liquidity      - Stabilized investment portfolio returns •  Increased Market Presence through      - Joint ventures      - Targeted Acquisitions - Philanthropy 

5. Growth inAverage Daily Census UMC has experienced a 34% increase in volumes since fiscal year 2001.

6. Key Statistics Key Driver: • Average Daily Census Projected (Achieved): • FY05: 272 (272) • FY06: 281 (279) • FY07: 288 (290 through December) • FY08: 300 including 9 from CDU • We are turning away patients • Seasonal fluctuations in volumes • Semi-private room utilization impacted by gender and isolation requirements Inpatient volume growth is limited by capacity constraints

7. A Brief Recent History • FY 2002 – 2003 UMC undertook the following • Became Southern Arizona’s Sole Level 1 Trauma Center • Adopted a 1:4 nurse to patient ratio • Reprocessed our revenue cycle/renegotiated major payor contracts • FY 2004 • Invested in a new ICU • New Cancer Center undertaken • Capacity challenges are on the horizon • FY 2005 • Revenue cycle efforts provide earnings growth • Undertake patient flow process enhancement to improve effective capacity • Begin facility expansion planning • Receive favorable settlement of Medicare DSH • FY 2006 • Cancer Center construction underway (opened January 2007) • Increasing costs for labor, employee medical and supplies outpace payor rate increases • UMC projects reaching effective full capacity in FY 2008 • Financing obtained for facility expansion

8. Growth inRevenues and Expenses ($ in millions) UMC has experienced a 70% increase in revenues since fiscal year 2000. Annualized

9. Financial Results

10. Financial Ratios *UMC carries a rating of Baa1 from Moody’s Investor Services and a rating of BBB+ from Standard and Poor’s

11. Financial Ratios *UMC is required to maintain a Debt Service Coverage ratio of no less than 1.1

12. QUESTIONS