Philadelphia Investors Conference: Combined Presentations 2nd Panel

8/13/2019 Philadelphia Investors Conference: Combined Presentations 2nd Panel

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The Role of Health Care and Higher Education in Philadelphias Economy:

Vision for the FutureDISCLAIMER

The information contained herein was prepared as part

of a presentation scheduled to have been given April 18

and April 19, 2013, at an investor conference conducted

by the City of Philadelphia, and is provided solely in

response to a Right-to-Know Request, Slaughter CP

2013-1250. No representation is made as to the accuracy

and completeness of such information, nor shall its being

provided herewith create any implication that there has

been no change in the matters described or referred to

therein since the dates of the conference or the date asof which particular information is given, if earlier.


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Dr. Steve Tang

President andChief Executive Officer

University City Science Center

*SEE DISCLAIMER ON COVER PAGE


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Chris Myers

Director

Navigant



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2013 PHILADELPHIA INVESTOR CONFERENCE

The Role of Health Care and Higher Education in Philadelphias Economy:

Vision for the Future

Chris Myers

April 18, 2013



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5

NAVIGANT HEALTHCARE OVERVIEW

Navigant Consul ting (NCI) is a $800M+ global specialty consul ting fi rm wi th headquarters in Chicago. With over 450

dedicated healthcare professionals, Navigant provides a full spectrum of s trategic, operating and financial advisoryservices to the healthcare industry.

Revenue CyclePerformanceImprovement

ClinicalDocumentationImprovement

Reimbursement RateAnalysis

Pricing Analysis

Auditing Services

RevenueManagement

PerformanceImprovement PlanDevelopment ,

Assessment andImplementation

Clinical OperationsImprovement

Interim Management

Supply ChainImprovement

Physician Group andFaculty PracticeManagement

OperationalPerformanceImprovement

Strategic AlternativeAssessments

Merger & AcquisitionAdvisory Services

Capital Placements

Recapitalizations &Restructurings

Valuations & FairnessOpinions

Financial Advisory

Mergers &Acquis it ions ,Restructuring*

Compliance Monitoringof Managed CarePrograms

Reactive Risk MitigationServices

Proactive ComplianceReviews

Developing IntegratedCompliance and RiskManagement,Monitoring and TestingProcesses

Fraud &Compliance

Market Assessments

Real EstateManagement

Program/ServicePortfolio Optimization

Hospital-PhysicianClinical Integration

Pricing &Reimbursement

Delivery Innovation

Managed Care ProgramAnalysis

Strategy

* Investment Banking services provided through Navigant Capital Advisors, LLC, a FINRA Broker Dealer.



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6

NATIONA LLY, HEAL TH SYSTEMS FOCUSING ON THREEIMPERATIVES

1. Continued and expanded drive toward provider consolidation Thinly capitalized and distressed hospitals and physician groups increasingly will

seek partnerships, resulting in some transactions that could not have beenpredicted two years ago (50% of hospitals in systems in 2000 vs. 67% in 2012)

Growing innovative solution set beyond traditional M&A aimed at economies ofscale, value-based reimbursement and population management, including: ACO,CIN, hybrids (taxable and tax exempt; secular and Catholic), back office

collaboration, minority membership and more Continued consolidation of regional markets and large regional systems breaking

down traditional service areas Continued sponsor-driven reconfiguration of Catholic health systems

2. Reimbursement cuts are requiring improved performance Large federal and state budget deficits have exacerbated Medicare and Medicaid

solvency issues, pressuring provider payment and requiring new discipline andapproaches to performance improvement

3. A new reimbursement paradigm is emerging Value based rather than volume based payment



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PHILADELPHIA IS UNCONCENTRATED FOR HEAL TH SYSTEMS, BUTSUPERCONCENTRATED FOR COMMERCIAL PA YERS

Note: An Elzinga-Hogarty test (based on an analysis of patient origin data) may be used to define the relevant market; the information above is for MSAs.

Sources: US Department of Justice and Federal Trade Commission Horizontal Merger Guidelines (8/19/2010); 2012 AMA Competition in Health InsuranceStudy (January 2010 data) [Data updated November 2012]; HealthLeaders Market Overview Reports [Data updated December 2012]; NCI Analysis.

Commercial Payer HHI vs. Health Sys tem HHI

Health Systems

Commercial Payers

SuperConcentrated (18)

Highly Concentrated(25)

Moderately Concentrated(26)

Unconcentrated(18)

Super Concentrated(16)

Columbi a, SC Grand Rapids Lansing Portland, ME

Scranton Wilmington

Charleston Greenville Honolulu

Birmingham Indianapolis Pittsburgh

Baltimore Chicago Detroit Philadelphia

Highly Concentrated(29)

Aust in Des Moines Cape Coral Fresno Norfolk

Buffalo Harrisburg Hartford Knoxville Las Vegas Lexington Omaha

Raleigh Richmond Rochester Southern CT Syracuse Tucson

Cincinnati Greensboro Louisville Milwaukee

Minneapolis Nashville Providence Southern NJ

Boston Northern NJ Oklahoma City

Moderately Concentrated(42)

Charlotte

ColoradoSprings Dayton Orlando Spokane Toledo Worcester

Albany

Albuquerque Columbus El Paso Madison

Memphis

Salt Lake City Springfield, MA Tulsa

Baton Rouge

Cleveland Dallas Denver Jacksonville Little Rock New Orleans Phoenix

Portland, OR

Sacramento San Antonio San Diego St. Louis Tampa West Palm

Beach

At lan ta

Houston Kansas City Los Angeles Miami New York City

Orange County

Riverside San Francisco Seattle Washington,

DC

Unconcentr ated (0) None None None None

The Herfindahl-Hirschman Index (HHI) is calcu lated as the sum of the squares of each organi zations market share. The US Department ofJust ice and Federal Trade Commiss ion define markets w ith an HHI of >2500 as Highly Conc entrated, 1500 to 2500 as Moderately Concentrated

and 3500.



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PHILADELPHIA PROVIDER SECTOR: EXPECTEDDEVELOPMENTS

1. Large integrated, well-capitalized systems are moving across and beyond Pennsylvania

(UPMC, Geisinger, Community). Regulatory / economic uncertainty in adjacent states(NJ, NY, MD) presents opportunities for strong PA systems

2. Philadelphia systems, despite strong brands, generally have not moved beyondtraditional service areas and are focused on local / regional competition

3. Physicians will continue to join strong health systems

4. Hospital competition and M&A activity in Philadelphia will accelerate across the midterm. Across the longer-term, select Philadelphia systems will expand beyond theregion

Recent: Temple acquired Fox Chase; Prime acquired Roxborough; Catholic HealthEast and Trinity Health are exploring a national merger

Future: Market in play. Continued system formation, mostly around academicmedical centers, with freestanding hospitals and small systems seeking capitaland/or regional partners

5. Market has not been an early adopter of reform (few ACOs, status of InsuranceExchange, etc.), but there will be a greater emphasis on population health as payersand provider partner to bend the cost curve (Medicare and Medicaid are growthsegments)



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Craig R. Carnaroli

Executive Vice President

University of Pennsylvania



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2013 Philadelphia Investor Conference

Craig R. Carnaroli

Executive Vice President


The Role of Health Care and Higher Education on thePhiladelphia Economy



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Todays Penn

20,000 students (graduate, professional

and undergraduate) 12 undergraduate and graduate schools

300 acres on one contiguous urbancampus

14 million square feet of builtenvironment

$6.2 billion operating budget

$6.8 billion endowment $923 million in Sponsored

Research

2,545 standing faculty

3 hospitals

32,000 employees



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University Snapshot

Academic Component

$2.7 billion Total Revenue

$10.3 billion Total Assets$1.1 billion Debt

$6.4 billion Investments

M/S&P: Aa2/AA+

Health System Component

$3.5 billion Total Revenue

$4.4 billion Total Assets$900 million Debt


M/S&P: Aa3/AA-

$6.2 billion Total Revenue$14.7 billion Total Assets

$2.0 billion Debt


*For Fiscal Year ended June 30, 2012.



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Revenue $3.5 billion Employees 15,000

Adult/ICN admissions 80,655

Avg. length of stay 5.52

Revenue $651 million

Faculty 1,737

Medical students 725

Residents & Fellows 1,057

NIH awards $398 million

Endowment $848 million

PENN Medicine


Health System


School of Medicine

Penn Medicine Snapshot*SEE DISCLAIMER ON COVER PAGE

P E i I t
http://www.uphs.upenn.edu/news/News_Releases/2012/10/smilow/TRC_large.jpg


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Penns Economic Impact

$14 billion in total economic activity

generated for Pennsylvania in 2010

(Equivalent to $38 million per day)

$382 million generated annually in

Pennsylvania tax revenues

$463 million spent on capital investmentsin FY 2010

46.5%Growth since FY 20005

$489 million in private development

attracted to the area since 1997

145,500direct and indirect job creation for

Pennsylvania economy

$26 per day million to the City of Philadelphia

$38.5 million per day to the Commonwealth



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Dr. Neil Theobald

President

Temple University



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Temple is Philadelphias Public University

Providing a Well-Trained Workforce: creatingpathways for high school graduates with strong

academic ability to earn an affordable high-

quality college degree

Increasing Innovation: supporting a researchenterprise that drives economic growth,

provides solutions to societal problems, and

advances health care

State-wide medical education: preparing

Pennsylvanias next generation of physicians



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Providing Philadelphia with a Well-Trained Workforce:Access to College for Low-Income High School Graduates

10,285

7,949

-

2,000

4,000

6,000

8,000

10,000

12,000

Temple University Rest of City 6

Pell Grant Recipients in Phi ladelphia 4-Year Universities2010-2011



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Providing Philadelphia with a Well-Trained Workforce:Across the Professions

1 of 7 college graduates in Philadelphia holds a Temple University degree

83% of Temple bachelors degree recipients in 2012 remained in Philadelphia

More than 1 of 4 attorneys in Philadelphia holds a Temple University law degree

Nearly 1 of 2 dentists in Philadelphia holds a Temple University dental degree

In the face of a nationwide physician shortage, the Temple University School ofMedicine ranks 9thamong highly-ranked schools in supplying physicians (194 MDs

granted in 2012).



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Providing Philadelphia with a Well-Trained Workforce:Increased Temple University Degree Production

5,

754

6,

119

6,

356

7,

049

7,

152

7,

587

7,

705

7,

992

8,

360

8,

670

8,

870

01,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Total degrees awarded by Temple per year



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Increasing Innovation:Research Expenditures that Drive Economic Development

$99.2

$15.5 $15.2 $14.8

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

Medicine Science and

Technology

Health Professions Liberal Arts

Temple University Research Expenditures (in Millions)by School 2011-2012Total is $169.2 Mill ion



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Increasing Innovation:Making Philadelphia an Appealing City and Boosting Its Economy

$854.9 $828.5

$-

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

$700.0

$800.0

$900.0

$1,000.0

Unrestricted Income Expenses

2011 Operating Income and ExpensesAr ts and Culture Sector in Philadelphia



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State-wide medical education:Preparing Pennsylvanias next generation of physicians

Temple University Medical Education Sites



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Temple is Philadelphias Public University

Providing a Well-Trained Workforce: creatingpathways for high school graduates with strong

academic ability to earn an affordable high-

quality college degree

Increasing Innovation: supporting a researchenterprise that drives economic growth,

provides solutions to societal problems, and

advances health care

State-wide medical education: preparing

Pennsylvanias next generation of physicians


*


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John Fry

President

Drexel University


*S SC O CO G


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Drexel University

Philadelphia Investors Conference

APRIL 18, 2013




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Drexel at a glance

Student Enrollment > 25,000 including undergrad/grad/onlineand on all other campuses

Operating Budget $800 million

Capital Budget > $300 million

Cooperative Education Co-Op

Translational Research

Economic Development




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Drexels Economic Impact

$2.4 billion: The impact of Drexels spending, the increased earning powerof Drexel alumni and the spending of students and visitors to Drexel.

27,400 jobs for Pennsylvanians: this number goes well beyond the 9,500directly employed by Drexel, and impacts a wide range of employmentsectors.

$68 million in state and local tax revenues: higher education is a drivingeconomic force in the Commonwealth and Drexel is a leader in generatinggovernment revenues.

$110 million: Drexels commitment to life-saving research

$26 million: Civic engagement improves the quality of life forPennsylvanians far beyond the impact of the dollars spent on thoseactivities

Figures based on a 2012 Econsul t Study




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Key Strategic Initiatives:

Create an Innovation Nexus for Research,

Technology Transfer and Economic

Development

Develop the Nations Most Dynamic

Transportation Hub-Based University District

Continue to Grow Drexels Enrollment, from

25,000 to 34,000.

UNIVERSITY STRATEGIC PLAN*SEE DISCLAIMER ON COVER PAGE



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JFK Boulevard at 30thStreet, Facing WestDrexel Innovation Neighborhood

BEFORE



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Philadelphia Investors Conference: Combined Presentations 2nd Panel

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