GreenMountainSurgeryCenterAmyCooper,ManagerACTDLLC

Rou8neOutpa8entSurgicalCareintherightse*ng,attheright-me,

fortherightprice

GreenMtnSurgeryCenterKeyStats:•  ProjectCost:$1.8M

•  Loca8on:Colchester(GreaterBurlington)

•  Ini8alproceduretypes:GI,Ob/Gyn,PainManagement,GeneralSurgery,Orthopedics

•  Size:12,879Q

•  Opera8ngRooms:2,ProcedureRooms:4

•  NumberofPhysiciansPlanningtoU8lizeGMSC:16Vermont-licensedindependentphysicians(membersofHealthFirst)

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SurgeryCentersprovideasuperiorpa8entexperienceatlowercost

•  Smallerenvironmentbasedoutinthecommunity,improvedaccess,shorterwait8mesforpa8ents

•  Rou8ne,predictableproceduresandmorespecializednursingstaffensureORs/PRsrunon8me

•  ChargesforprocedureswillbeabouthalfofhospitalratesforMedicare/MedicaidandCommercial

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Vermontersdonothavesuitableaccesstohigh-quality,low-costsurgerycenters•  1singlespecialtyEyeSurgeryCenterinSouthBurlington

•  VTranks50out50statesinprocedurespercapitadoneinsurgerycenters

•  5,000–6,000surgerycentersna8onwide•  125inNewEngland;23inNewHampshire,17inMaine

•  Stateswithpopula8onlessthan1millionhave16ASCseach,onaverage

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GreenMountainSurgeryCenterwillserveallVermonters

1)  Financialprojec8onsassume12%MedicaidCasesand2%CharityCarecases

2)  Strictnon-discrimina8onlanguageaspartofsubscrip8on/ownershipdocumentsandopera8ngagreement

3)  QualityImprovementCommiieewithPeerReviewfunc8onforcaseappropriateness

4)  An8cipatedregularrepor8ngtoGMCBonFreeCare/CharityCareandMedicaidamounts

5)  ReviewedandmatchedlanguagefromcharitycarepoliciesatlocalhospitalsforGMSC’scharitycarepolicy

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GMSChelpsVermontmeetkeygoalsoftheHealthReformPlan

Thereare14principlesforhealthcarereform(VSA§9371),GMSChelpsVermontachieveitsgoalsforatleast7ofthem:(1)ThestateofVermontmustensureuniversalaccesstoandcoverageforhigh-quality,medicallynecessaryhealthservicesforallVermonters.Systemicbarriers,suchascost,mustnotpreventpeoplefromaccessingnecessaryhealthcare.AllVermontersmustreceiveaffordableandappropriatehealthcareattheappropriate<meintheappropriatese=ng.(2)OverallhealthcarecostsmustbecontainedandgrowthinhealthcarespendinginVermontmustbalancethehealthcareneedsofthepopula8onwiththeabilitytopayforsuchcare.

(5)EveryVermontershouldbeabletochoosehisorherhealthcareproviders.

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GMSChelpsVermontmeetkeygoalsoftheHealthReformPlan

(6)Vermontersshouldbeawareofthecostsofthehealthservicestheyreceive.Costsshouldbetransparentandeasytounderstand.(9)Vermont'shealthdeliverysystemmustseekcon<nuousimprovementofhealthcarequalityandsafetyandofthehealthofthepopula8onandpromotehealthylifestyles.(10)Vermont'shealthcaresystemmustincludemechanismsforcontainingallsystemcostsandelimina8ngunnecessaryexpenditures,includingbyreducingadministra8vecostsandbyreducingcoststhatdonotcontributetoefficient,high-qualityhealthservicesorimprovehealthoutcomes.Effortstoreduceoverallhealthcarecostsshouldiden8fysourcesofexcesscostgrowth.(13)Vermont'shealthcaresystemmustoperateasapartnershipbetweenconsumers,employers,healthcareprofessionals,hospitals,andthestateandfederalgovernment.

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BasisForU8liza8onProjec8ons

8Note:Applica-onatpage28

•  Theprojec8onsarebasedonactualhistoricaloutpa8entcasevolumeperformedbythephysicianswhohaveexpressedinterestintheproject;collectedthroughastandardizedsurveyissuedini8allyinsummer2014

•  Annualcasegrowthof1%,anes8matetypicallyusedforASCfinancialmodeling

U8liza8onProjec8onsRela8vetoNumberofPRsandORs

•  Byyear4,GreenMountainSurgeryCenteres8matestotalvolumeof~6,000cases;~4,000willbeperformedinProcedureRoomsand~2,000inOpera8ngRooms

–  Generallyspeaking,GIcasesare“non-invasive”andwillbeperformedinprocedurerooms(Es8mated3,709GIcasesbyYear4)

–  Mostoftheproceduresfromtheotherini8alspecial8es(OB/GYN,Ortho,PainMgmt,andGenSurgery)willbeperformedintheOpera8ngRooms,howeveraminorityofthesecaseswillusePRs(Es8mated2,334casesbyYear4)

•  ASCBenchmarkingDatafromAvanzaStrategiesandVMGHealth(whichregularlycollectsbenchmarkingdatafromapanelofover200opera8onalASCs),showarangeofapprox.700–1200casesperformedannuallyinORsand900–1400casesperformedannuallyinPRs

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Note:VMGHealthIntellimarkerMul--SpecialtyASCStudies(2012&2016),AvanzaASCOpera-onalBenchmarks(2014)

GMSCPricingPhilosophy•  Thepricefortheserviceand“cost”forthepayeror

pa8entshouldbethesame-->1rate

•  GMSCdoesnotplantohavea“chargemaster”or“pricelist”

•  Wewillseektosimplifysothatactualreimbursementamounts=prices=coststopayersandpa8ents

•  Weplantoofferpricetransparencytoolsforpa8entsonourwebsitesopa8entswillknowinadvancehowmuchtheyortheirinsurancewillbebilled

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MedicareOverallCostSavings

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YEAR 1 YEAR 2 YEAR 3 YEAR 4 TOTAL

(4 YEARS) PROJECTED MEDICARE REVENUE $2,221,818 $2,604,440 $2,668,195 $2,736,866 $10,231,319

ADJUSTMENT FACTOR (ASC as % HOPD) 56.00% 56.00% 56.00% 56.00% 56.00%

HOPD REVENUE $3,967,532 $4,650,786 $4,764,634 $4,887,261 $18,270,213

ASC MEDICARE SAVINGS $1,745,714 $2,046,346 $2,096,439 $2,150,395 $8,038,894

Medicarewillsave$2Mperyear

CommercialOverallCostSavings

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YEAR 1 YEAR 2 YEAR 3 YEAR 4 TOTAL

(4 YEARS) PROJECTED COMMERCIAL REVENUE $2,435,229 $2,852,448 $2,925,109 $2,998,647 $11,211,433

ADJUSTMENT FACTOR (ASC as % HOPD) 50.00% 50.00% 50.00% 50.00% 50.00%

HOPD NET REVENUE $4,870,458 $5,704,896 $5,850,218 $5,997,294 $22,422,866

ASC COMMERCIAL SAVINGS $2,435,229 $2,852,448 $2,925,109 $2,998,647 $11,211,433

CommercialPayerswillsave$3Mperyear

MedicaidOverallCostSavings

13Note:*WeassumeMedicarecostra-oof56%forVTMedicaid

YEAR 1 YEAR 2 YEAR 3 YEAR 4 TOTAL

(4 YEARS) PROJECTED MEDICAID REVENUE $566,720 $664,074 $681,023 $697,878 $2,609,695

ADJUSTMENT FACTOR (ASC as % HOPD) 56.00% 56.00% 56.00% 56.00% 56.00%

HOPD REVENUE $1,012,000 $1,185,846 $1,216,113 $1,246,211 $4,660,170

ASC MEDICAID SAVINGS $445,280 $521,772 $535,090 $548,333 $2,050,475

Medicaidwillsave$500Kperyear

*

GMSCwillimprovetheQualityofCareonapa8ent&systemwidebasis

•  7na8onalpeer-reviewedstudiesfrom1999-2014showASCshaveequalto(4)orbeier(3)qualityoutcomesthanHOPDs,usingoutcomemarkersofadverseevents,same-dayERadmissions,andcomplica8onsfromsurgery

•  Pa8ent-Sa8sfac8onscoresarealsobeierinASCsaccordingtothesamepeer-reviewedliterature,MedPac,andMVPHealthcarepertheirleierofsupport

•  Since2012,ASCshavebeenrequiredtoreportqualitymeasurestoMedicareorfacepenal8es,justlikehospitals

–  10measuresincludingburns,falls,andhospitaltransferrate

–  ScoresforeachASCarereportedpubliclyonCMSwebsitessince2014

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GMSCisontracktoraisetargeteddebtandequitybyfall2017

•  Ini8alEquityRaisedpriortoapplica8on:$240,000

•  TotalEquityRaisedtodate:$291,000

–  Addi8onalEquityTarget:$841,838fromcurrentandnewinvestors

–  Timeline:June–September2017

•  Loantobesecuredfromcommercialbankinamountof:$680,000

–  Timeline:Summer2017

–  Apre-approvalleiersecuredfromonelocalbank;havehadtalkswithtwoaddi8onallocalinterestedlendersoverthepastfewmonths

–  LoanwillbesecuredassoonasCONisapproved(pleasenote:interestratesarerising)

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BreakdownofCostsAllocatedforEMR

16

•  Approximately$200KcapitalizedleaseforEMRcontainedin‘EquipmentLease’lineiteminIncomeStatement

–  AmKaiSolu8onsquoteprovidedtotheBoardonJuly15,2016.Costes8mate:$111,000plus$23,000annualmaintenance,subscrip8onandsupport.Components:AmkaiOffice,AmkaiCharts

–  $30,000inlaptophardwarealsoin‘EquipmentLease’

•  $20KforEMRHardwareProfessionalServicesImplementa8onalsocontainedin‘EquipmentLease’lineiteminIncomeStatement

•  $24KforLocalITandEMRSupportincludedin‘ComputerExpenses’onIncomeStatement

•  Addi8onalHardware&SoQware,notquoted,butincludedin‘MiscellaneousExpenses’onIncomeStatement

Facili<es/EquipmentCosts: Year1BuildingLease $489,402

EquipmentLeases $638,843TotalFacili8esExpenses $1,128,245

Administra<veExpenses:LegalandAccoun8ng $15,000

Insurance-D&O $40,000Marke8ngandPR $5,000

TelephoneandCommunica8ons $12,000OfficeSuppliesandExpenses $41,054

Transcrip8on $35,922EquipmentMaintenance $10,000

ComputerExpenses $24,000Mgt/BillingFee $584,871

MiscellaneousExpenses $36,000TotalAdministra8veExpenses $803,847

GMSC’sEMRPoliciesandPlansAreConsistentwithVT’sHITPlanPrinciples•  GMSChasmadeclearintheApplica8on(p72),andinresponseto

ques8ons,itsinten8ontosubmitdataonsurgicaloutcomestotheVermontProgramforQualityinHealthcare(VPQHC).ThegoalsofVPQHC’sStatewideSurgicalServicesCollabora8vearetoimprovesurgicaloutcomes,enhancepa8entsafetyandreducecosts.

–  GMSC’spar8cipa8oninVPQHCwill“(1)supporttheeffec8ve,efficient,statewideuseofelectronichealthinforma8oninpa8entcare,healthcarepolicymaking,clinicalresearch,healthcarefinancing,andcon8nuousqualityimprovements””HITPlanb(1)

•  GMSChas12draQpoliciesthatwillbeadoptedtoensurebestprac8ceuseoftheEMR

–  Thesepolicieswill“(8)addressissuesrelatedtodataownership,governance,andconfiden8alityandsecurityofpa8entinforma8on”HITPlanb(8)

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GMSCWillHaveExtensiveEMRPoliciesinPlacetoEnsureBestUse

18

GMSCEMRPoliciesTableofContents

Note:DraXpoliciessubmiYedtotheboardtoday

GMSC’sPlansConsistentwithVTHITPlan’sfocusonIntegra-on

•  Accordingto18VSA9351,theHITPlan“(a)shallincludetheimplementa8onofanintegratedelectronichealthinforma8oninfrastructureforthesharingofelectronichealthinforma8on…”

•  AmajorreasontheproposedEMRtobeusedattheGMSC(AmkaiSolu8ons)wasselectedisbecauseintegra8onandinteroperabilityarepartofthevendor’scorephilosophy

–  Amkai’sparentcompanySurgicalInforma8onSystemsisamemberoftheCommonWellHealthAlliancewhosemembersrepresenttwo-thirdsoftheacutecareEHRmarket,andmorethanone-thirdoftheambulatorycareEHRmarket.

–  CommonWellisanon-profittradeassocia8onwhosemissionis“crea8ngandexecu8ngavendor-neutralpla{ormthatbreaksdownthetechnologicalandprocessbarriersthatcurrentlyinhibiteffec8vehealthdataexchange.Andwearecommiiedtodefiningandpromo8ngana8onalinfrastructurewithcommonstandardsandpolicies.”hip://www.commonwellalliance.org/about/

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HowwillGMSCPar8cipateintheAllPayerModelandACOs?

•  GMSCwillnotemployanyphysicians

•  GMSCwillnothaveany“aiributedpa8ents”inanyACOprogram.PrimaryCareproviderswithaiributedpa8entsplaythecentralroleinACOsresponsibleformostcarecoordina8onandqualitymeasureperformance

•  However,GMSCwillplayanac8verolecollabora8ngwithACOs,sharingdata,andadop8ngbestprac8cecarecoordina8onprotocols

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GMSCWillPar8cipateinACOsasanAffiliatedProviderandPartner

•  BoardofACTDhasreviewedproviderpar8cipa8onagreementsofACOscurrentlyopera8nginVermontandintendstosignthem

•  Responsibili8esofaffiliatepar8cipantsinclude:

– Datasharing

– Carecoordina8on

– Suppor8ngtheprimarycaremedicalhome

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GMSCWillHelpACOsMeetHealthSpendingTargets

•  Reducedpaymentsbyinsurersforthesameamountofoutpa8entprocedures,offeredatthesameorhigherquality,willreduceexpendituresandhelpVermontmeetexpendituretargetsintheAPMAgreementwithCMS

•  Timelyaccessandshorterwai8ng8mesduetoASCaddi8onalcapacityandefficiencywillimproveACOQualityPerformanceScores

–  Pa8entsa8sfac8onsscores(MSSPMeasureACO-4AccesstoSpecialists)andcolorectalcancerscreeningscores(MSSPACO-19)inthePreven8veCareDomain

•  ItisuptotheACOstodecidehowtoreducehospital“globalbudgets”ifsomeoutpa8entprocedurevolumeshiQsoutofthehospitaltotheASC

–  ACOswillhavetoadjustglobalbudgetsforchangesinmarketshareamonghospitalsanywaysotheywillhavemechanismsforadjus8nghospitalbudgets

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HowwillGMSCImpactOverallCostsofHealthCareinVermont?

•  GMSCwillloweroverallcostsbyprovidingequalqualityservices,atlowercost.Thisisthedefini8onofVALUE

•  ThosewhoclaimGMSCwillraiseoverallcostspointtothe‘SacredCows’

Ø ‘SacredCow’:Afirmlyheldmainstreambeliefthatisconsideredtobetruewithoutindependentverifica8on.

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The‘SacredCows’1.  ProvidingERServicesisnotprofitableforhospitals

2.  Trea8ngMedicaidpa8entsisnotprofitableforhospitals

3.  Mosthospitalcostsarefixedcosts

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Recentindependentstudiessuggestthatthetruthcouldbedifferent

1.  ProvidingERServicescanbeprofitableforhospitals,especiallypostPa8entProtec8onandAffordableCareAct(ACA)

–  EmergencyDepartmentProfitsAreLikelyToCon-nueAsTheAffordableCareActExpandsCoverage(HealthAffairs.2014May;33(5):792–799.)

2.  Trea8ngMedicaidpa8entsisprofitableforhospitalswhenalltheextrapublicsubsidiesthathospitalsreceiveareaccountedfor

–  ContrarytoPopularBelief,MedicaidAdmissionsAreOXenProfitableBecauseofAddi-onalMedicarePayments(JeffreyStensland,etal,HealthAffairs.2016December)

3.  Upwardsof95%ofwhathealthcaremanagersthinkofasfixedcostsareactuallyundertheircontrolandnotreallyfixed

–  TheBigIdea:HowtoSolvetheCostCrisisinHealthCare(RobertSKaplan,MichaelEPorter,HarvardBusinessReviewSeptember2011)

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