Doing Well, Doing Good

15 March 2012

Presentation Outline

The Regional Healthcare MarketThe Guam Regional Medical CityEconomic Impact of GRMC

Regional Healthcare Market

Historical and Estimated Healthcare Expenditure (HE) per Payor (in $ millions)

Guam USA

10-year HE CAGR 4.4% 6.8%

9-year GIP CAGR 3.1% 4.0%

Health Expenditure / GDP

Guam 8.8%

USA 17.4%

World 9.7%

395

Guam’s healthcare spending per capita and as a % of GDP is quite low compared to U.S. and World averages – pointing to room for further growth.

256

Source: GHDI and FCCM estimates; US Department of Commerce - Bureau of Economic Analysis; National Health Expenditures Report, 2009; World Bank Report, 2009

Guam authorities project Population CAGR at 1.18% from 2010 to 2020. The number of persons over 65 is expected to approach 10% of the total

population by 2030, from 7% today.

Guam’s population growth rate is higher than that of the U.S. and the World average. Guam’s median age exceeds World averages and is rising geometrically.

Comparative Population Statistics : Guam, USA, World PopulationGuam USA World

Population Growth Rate (%) 1.31% 0.96% 1.09%Median Age (in years)

Total 29.40 36.90 28.40 Male 29.00 35.60 27.70 Female 29.80 38.20 29.00

Source: CIA estimates, CIA World Factbook 2011

Guam’s disease burden is more severe than U.S. averages. Diabetes, heart disease and cancer are particular areas of concern.

As of 2009, at least 40,000 people on Guam have diabetes (close to 25% of the population)

Diabetes incidences

Cancer Incidences and Mortality*

100% 73%

Poor oncology services on Guam may be a factor for the significant increase in mortality rates, even as incidence rates remained steady.

Mortality Incidence In the United States, only 8% of the

population have diabetes (less than one in ten)

Heart disease 228.4 190.9Malignant neoplasms 122.3 178.4Cerebrovascular disease 50.1 42.2Diabetes mellitus 44.0 22.5Suicide 16.0 11.3Motor vehicle accidents 16.0 14.4All other accidents and adverse events 26.2 40.0Fibrosis and cirrhosis of the liver 18.9 9.1Chronic obstructive pulmonary disease 23.2 40.8*Age-adjusted incidences/deaths per 100,000. The age-adjusted rates are rates that would have existed if the population under study had been distributed by age the same way as in the US population.

Top leading causes of death (2007) Guam* U.S.

Sources: Guam Cancer Facts and Figures 2003-2007 (June 2009), National Vital Statistics Report US Department of Health and Human Services 2007. CDC National Diabetes Fact Sheet 2007. Department of Health and Senior Services – Missouri.

Majority of Guam’s population have the capacity to pay for healthcare through third party private and public payors.

Medicaid8% MIP

6%

Medicare

12%

Tricare21%

Private

Insurance41%

Self-Pay12%

Estimated Breakdown of Guam Health Expenditures by Payor (2010)

Medicare7%

Medicaid17%

Tricare7%

Private Insurance

34%

MIP7%

Self-Pay28%

Estimated Guam Population by Healthcare Coverage (2010)

158

43

112

48160

GMH Navy Insured Gap Uninsured Gap

Guam suffers from a severe shortage in hospital beds. Specialized care and services are likewise deficient.

8

Source: GHDI estimates based on the World Health Organization’s recommended 1:500 bed-to-population ratio, Guam Bureau of Statistics and Plans 2008 Guam Statistical Yearbook

Many healthcare services needed to address Guam’s growing disease burden are not available on-island.

• Limited number of MD Specialists• Only 1 operational MRI • No regular Cardiac Catheterization service• Old Linear Accelerator

Required Beds = 360

Guam Memorial Hospital

38%

US Navy Hospital

18%

Other clinics29%

Off-island15%

Estimated Breakdown of Healthcare Expenditures by Source (2010)

15,000 Estimated number traveling off-island every year to receive specialized and “higher quality” healthcare.

$ 58.2M Estimated total off-island healthcare spending in 2010

As a result of deficiencies in the local health sector, many citizens of Guam have to travel abroad for healthcare.

9

Neighboring Pacific Islands and growing tourism sector present additional demand for healthcare services.

10

*FCCM estimates based on World Bank 2008 population figures

Commonwealth of the Northern Mariana Islands

Guam

Republic of PalauFederated States of Micronesia

Republic of the Marshall Islands

Country Pop. (2009)Guam** 178,287Commonwealth of the Northern Mariana Islands 63,112Federated States of Micronesia 107,973 Republic of the Marshall Islands 61,300 Republic of Palau 20,397 Total 431,069

Guam Visitors 1,215,180*Based on World Bank population figures** Population estimates excludes the impact of the military build-upSources: Guam Statistical Yearbook 2008, World Bank

The Guam Regional Medical City

Components of Project Cost (USD MMs) Total

Hospital building 127.9

Equipment 26.3

Furniture and Fixtures 5.1

IT 5.5

Land and Site Preparation 4.0

Start –up Costs 13.4

Financing Costs 20.8

Contingency 13.0 Total Project Cost 216.0

Location Dededo, Guam

Bed Capacity 130 Beds

Floor Area 266,785 Square Feet

Project Cost US$216 Million

Target Date of Operation June 2014

GRMC, the only private hospital on Guam, is scheduled for operation in June 2014, with total project cost estimated at US$ 216 million.

Project Summary

US Naval Station

  420-768  249-419  155-248  85-154

GRMC will be strategically located in the most densely populated area of the island, Dededo, and within reasonable proximity to major tourist areas in Tumon Bay and US military bases.

Tumon Bay

Guam Regional Medical City

Andersen Air Force Base

Guam Memorial Hospital

Naval Hospital

Guam population density mapNumber of Households

  39-8413-380-12

Close to 70% of the island population live in the Northern part of Guam

Source: Guam Statistical Yearbook 2008

Guam Regional

Medical City

Operates the largest healthcare network under a single trade name in the Philippines, including a world-class 500-bed tertiary flagship hospital, 3 provincial hospitals and 20 outpatient clinics.

Serves some 40,000 inpatients and 1.2 million outpatients every year.

Engages 2,700 employees and 1,500 medical staff.

Has been accredited and re-accredited by the Joint Commission International, the most prestigious accrediting body of healthcare organizations. In its accreditation surveys, TMC has received perfect scores in key standards on service quality and patient safety.

With Centers of Excellence in Wellness, Cancer, Cardiovascular and Regenerative Medicine that are well-aligned with healthcare needs of Guam and the rest of Micronesia.

Has had a medical coordination office in Guam since 2008 to support the large and growing number of patients from Micronesia receiving care in its Manila site.

GRMC will be operated by PSI / TMC, a Joint Commission accredited organization with an established track record in healthcare quality, safety and innovation.

GHHDF, a long-time champion of the hospital project, serves as a vital link between the developers and the local community.

The Foundation has developed key relationships : Local and federal government agencies Military and veterans’ groups Medical and allied medical organizations Insurance companies Educational institutions Business and community leaders

Peter R. Sgro, Jr.  J.D. President & Board ChairmanFrank Arriola   M.S.S.M: Vice-PresidentFrances Taitague-Mantanona  M.H.A; SecretaryJohn Onedera   CPA; Treasurer

Peter R. Sgro, Jr. J.D. President & Chairman, International Group, Inc.Katherine Calvo Sgro M.B.A..  EVP & Chairman, Payless Markets, Inc.Ruth Gurusamy R.N., M.N. Administrator, Health Services of the PacificJohn Onedera CPA. Partner, Ernst & YoungArt Mesa: Veterans’ Advocate, Small Business 2010 Veteran of the Year. Mayor Roke Blas. Mayor, Municipality of Sinajana  Richard Lai: Director of the Chinese Chamber of Commerce. Frank Arriola  M.S.S.M; CEO of Pacific Rim Brokers, Inc.Mary Torre. President, Guam Hotel & Restaurant AssociationHidenobu “George” Takagi.  President. Takagi & Associates Larry Lizama M.D. Internal MedicineKia Rahmani M.D. General, Vascular and Oncologic Surgeon Frances Taitague-Mantanona. Masters in Health AdministrationThomas Shieh, M.D. Fellow American College of Obstetricians & GynecologistsJohn Ray Taitano M.D. MSS FACP Internal MedicineDavid Silva, EMBA. General Manager, Century Insurance GuamErnesto V. Espaldon, Jr. President, Sun Foods Int’l dbaLina Leon Guerrero: General Manager of Marianas Physicians Group

GHHDF Officers

GHHDF Board of Directors

Cardiology

Oncology

Endocrinology

Pulmunology

Neurology

Laboratory

Radiology

Pharmacy

Physical Therapy

Emergency Medicine

Services

Orthopedics

Ophthalmology

ENT

General Surgery

Anesthesia

Gastroenterology

Nephrology

Infectious Disease

Pediatrics/ Neonatology

OB-Gynecology

GRMC will augment bed capacity and deliver world-class healthcare services that respond to the specific needs of the Region.

Hospital Beds

158

130

361 380

43

Emergency

2 Triage Rooms

9 Exam Rooms

1 Trauma Room

6 Observation Units

Delivery

6 LDRs

4 IMUs

13 NICU

Facilities

Surgery

4 Major ORs

5 Minor ORs

12 PACU/RR

Intensive Care

10 ICUs

4 Isolation

Project development and construction will proceed from 2011 to 2014. Hospital operations will commence mid-2014.

Economic Impact of Project

Peak employment during construction will number 290. Some 75% of staff will be sourced on-island.

Guam Other

Office Quality Control Manager 1 1 Field Quality Control Manager 1 1 Electrical Engineer 1 1 Mechanical Engineer 1 1 Cost Controller 1 1 Assistant Supervisor 1 1 Field Foreman 1 1 MEP Superintendent 1 1 Finishes Superintendent 1 1 Administrative Assistant 1 1

Equipment Operators 10 10 Laborers 15 5 20 Carpenters 15 5 20 Concrete Finishers 15 5 20 Masons 6 4 10 Drywall Hangars 30 10 40 Painters 15 5 20 Mechanics/Sheet Metal 48 17 65 Plumbers 25 10 35 Electricians 30 10 40

Total 218 72 290

Position Source Total

Peak

At full operation, GRMC will employ 58 hospitalists and 396 allied medical and support staff. In addition, GRMC will credential some 250 medical staff across all clinical services.

“Rural hospitals provide a source of high-tech jobs for young people who might otherwise leave communities heavily dependent upon natural resource-based industries and tourism. Rural hospitals also provide an anchor for other health care jobs, such as physicians and pharmacists that, in the absence of the hospital, may not be available.”

Healthy Hospitals. Healthy Communities. The Economic Impact of Wisconsin’s Hospitals, 2008.

Service Staff CountNursing 158Ancillary Services 134Administration and Support 104TOTAL 396

Service Consultants HospitalistsInternal Medicine 90 12 Surgery 35 6 OB-Gyn 25 4 Pediatrics 70 6 Anesthesia 7 3 Ophthalmology 5 3 Otolaryngology 5 3 Radiology 6 6 Pathology 4 - Physical Medicine 3 - Emergency - 6 Intensive Care - 6 Neonatal Intensive Care - 3 TOTAL 250 58

GRMC will generate multiplier effects conservatively estimated at $585 million during the construction period and $210 million per year during full operation.

* Healthcare Spending Retained On-island $58 Million x 65% = $38 Million per Year

Construction Investment Multiplier 195 x 3.0 = 585 Million Income Multiplier 12 x 3.0 = 36 Million

Operations Staff Income Multiplier 40 x 3.0 = 120 MD Income Multiplier 30 x 3.0 = 90

210 Million per Year

GRMC will likewise produce substantial incremental (albeit unquantifiable) economic and social benefits.

Enhanced quality and retention of hospital staff from investments in staff and organizational development

More attractive environment for business and industryGrowth in tourism, retirement and other economically-beneficial sectors Larger Social Security, Medicare and other inflows from the Federal

governmentImproved disease prevention and health promotion Healthier, more productive, population