agenda - lee health | lee health · 2019. 12. 18. · agenda finance & investment committee...

AGENDA FINANCE & INVESTMENT COMMITTEE MEETING

MAY 30, 2019 AT 9:00 A.M. Gulf Coast Medical Center – Boardroom (Medical Office Building)

13685 Doctor’s Way, Ft. Myers, FL 33912

1. Call to Order – David Collins, Chairman

2. Public Input

3. Committee Minutes – There are no minutes to approve.

4. SEI Investment Update (30) (Informational) Peter Glennon, Senior Client Portfolio Manager, Client Portfolio Management Team Brian Bono, CFA, Client Investment Strategist, Advisory Services Team Sandra Ackermann-Schaufler, CFA, Portfolio Manager, Investment Management Unit

5. Financial & Statistical Update FYTD 4/30/2019 (15) (Informational) Ben Spence‐ Chief Financial Officer

6. Employee Total Rewards Program 2020 (15) (For Recommendation to the Board) Alison Thurau‐ System Director HR Total Rewards

7. Budget 2020 Operating Margin Target & Budget Assumptions (15) (For Recommendation to the Board)

Ben Spence – Chief Financial Officer

8. Medicare Advantage Update (25) (Informational)

John Chomeau – Chief Population Health Officer

9. License Agreement for Parking Spaces (5) (For Recommendation to the Board)

Latrice Davis – VP of Operations ‐ LPG

10. 3 Year Continuing Services Contract for Construction Management (10) (For recommendation to the Board)

a) Acute Care b) Outpatient Care Dave Kistel –VP Facility Management

11. Adjourn – David Collins, Chairman

Date of the next Committee Meeting: September 26, 2019 at 9:00 a.m. Gulf Coast Medical Center – Boardroom ‐ 13685 Doctors Way, Ft. Myers, FL 33912

1 FOR INSTITUTIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION.

SEI’s Fiduciary

Management Solution

May 30, 2019

A flexible approach for managing your

asset pools and their impact on your

healthcare organization’s finances


Agenda

• SEI Corporate Overview and Update

• SEI Strategic Advice

− Process

− Current Financial Ratios

− Lee Health Dashboard

• Investment Management Review/Outlook, Process and Philosophy

• International Equities (tabled for November 2019 meeting)

• Appendix: Performance and Fund Detail

SEI Participants

• Peter Glennon, Senior Client Portfolio Manager, Client Portfolio Management Team

• Brian Bono, CFA, Client Investment Strategist, Advisory Services Team

• Sandra Ackermann-Schaufler, CFA, Portfolio Manager, Investment Management Unit


SEI overview: Over 25 years of taking accountability for

healthcare client investment results

• A financially sound organization – Publicly held firm (NASDAQ: SEIC), global company

– Repurchased more than $1 billion in SEI stock since January 2008

– More than $740 million of unrestricted cash on hand

• $89 billion in institutional assets under management with 479 clients

• SEI is the largest OCIO to healthcare providers* – 44 healthcare clients

– $15.3B in healthcare AUM

– Greater than 30% compound annual growth rate in

healthcare AUM since 2009

• Manage assets for a variety of healthcare organizations, including large

and small regional health systems, specialty care hospitals and long-term

care organizations

• Named ‘Top OCIO Provider’ for the second consecutive year at the 2018

Institutional Asset Management Awards1

• SEI’s healthcare solution has achieved the

“Peer Reviewed by HFMA®” standard

since 2011

Data as of March 31, 2019. $332 billion in firm wide assets under management. Source: SEI fourth quarter earnings release, 2018. 1As of November 2018. * Distinction based on

competitive research utilizing publicly available information as of 12/31/18. Largest based on number of healthcare clients, and/or based on healthcare client assets under management in

SEI’s OCIO program for which SEI has discretion for money manager hiring and replacement decisions on behalf of those clients. HFMA staff and volunteers determined that these

products and services have met specific criteria developed under the HFMA Peer Review Process. HFMA does not endorse or guarantee the use of these products and services.

$6.9B

$15.3B

2009 2019


SEI quarterly update

Will There be Growth in the Spring?

A summary of the first-quarter outlook by CFA and Chief Market Strategist, James Solloway.

Is the Rate Hike Cycle Over? The Federal Reserve’s latest projections depicted a softer assessment of the economic outlook.

2019 Fixed-Income Manager Survey We polled the sub-advisors within our U.S. investment-grade fixed-income strategies about their outlooks for interest

rates, monetary policy and bond-market conditions in 2019.

Investment Liquidity How or when should you explore the opportunities that can come with liquidity?

Pension Accounting Research Series: ASC 715 Discount Rate Selections 2019: Disclosure ranges for 2018.

SEI Adds $1.1 Billion in New OCIO Assets in Fourth-Quarter 2018 Nine new clients represent continued market demand for OCIO. Guide Dogs for the Blind, Pine Crest School and

the Jerusalem Foundation, Inc. are among SEI’s institutional clients added in the fourth-quarter of 2018.

Jim Smigiel on Bloomberg Daybreak: Australia Jim Smigiel, Chief Investment Officer of Absolute Return Strategies, discusses the global markets and shares his

thoughts on U.S. and China trade relations with Bloomberg's Shery Ahn and Haidi Stroud-Watts.

SEI Named "Top OCIO Provider" at 2018 Institutional Asset Management Awards SEI is recognized for second consecutive year.

Q1 2019. Financials as of March 31, 2019. *Distinction based on competitive research utilizing publicly available information as of 12/31/18. Largest based on number of healthcare clients, and/or based on healthcare client assets under management in SEI’s OCIO program for which SEI has discretion for money manager hiring and replacement decisions on behalf of those clients. HFMA staff and volunteers determined that SEI’s outsourced investment management solution met specific criteria developed under the HFMA Peer Review process. HFMA does not endorse or guarantee the use of this product. Top OCIO Provider at the Fund Intelligence 2017 and Fund Map 2018 Institutional Asset Management Awards as of November 2018. *Pensions & Investments, July, 2018. SEI ranked as a largest outsourcer based on worldwide institutional outsourced assets under management.

.

Research and Commentary

SEI in the News

April 30, 2019: Plan Sponsor Council of America Annual Conference Tampa, Florida. SEI will have a booth. Please let us know if you plan to attend.

Events

SEI is the largest OCIO for healthcare providers and

hospitals*. See how SEI stands out on our webpage.

HFMA Peer Review: Key Findings

billion

Institutional

AUM

billion

Worldwide

AUM

$332

$89

For more information or a digital copy, email

[email protected]

https://seic.com/knowledge-center/economic-outlook-will-there-be-growth-spring

https://seic.com/knowledge-center/rate-hike-cycle-over

https://seic.com/knowledge-center/rate-hike-cycle-over

https://seic.com/knowledge-center/case-core-fixed-income

https://seic.com/knowledge-center/2019-fixed-income-manager-survey



https://seic.com/knowledge-center/investment-liquidity

https://seic.com/knowledge-center/pension-accounting-research-series-asc-715-discount-rate-selections

https://seic.com/newsroom/sei-adds-11-billion-new-ocio-assets-fourth-quarter-2018



https://seic.com/newsroom/jim-smigiel-bloomberg-daybreak-australia

https://seic.com/newsroom/sei-named-top-ocio-provider-2018-institutional-asset-management-awards

https://seic.com/knowledge-center/hfma-peer-review-key-findings


SEI brings a centrally focused, team-based approach to

Lee Health

Client Advisory Team

Client Service

Director

Vivian Estadt

• Overall client strategy

• Regular client meetings

• Committee/Board education

• Asset allocation analysis

• Portfolio design

• Investment policy formulation

• Performance reporting

• Transition management

• Customized portfolio modeling

• Enterprise risk management

Investment

Strategist

Brian Bono, CFA

Portfolio

Manager

Sandra

Ackermann-

Schaufler, CFA

Managing

Director, Advice

Al Pierce, CPA

Client Portfolio

Manager

Peter Glennon

Portfolio Strategies Group

• Capital market assumptions

• Dynamic strategies

• Portfolio strategies

• Economic outlook

Traditional and Non-Traditional Strategies Group

• Portfolio construction

• Manager placement and portfolio weighting

• Public and alternative strategies

• Manager selection

Manager Research Group

• Global manager research

• Manager due diligence

• Manager sourcing

• Manager monitoring

Investment Management Unit

Investment Strategy Oversight Committee and Risk Management Group


SEI Strategic Advice Process


SEI’s Fiduciary Management model for

healthcare organizations

*Defined benefit plans only

- Goal setting & monitoring

- Integrated financial modeling

- Asset allocation strategy development

- Asset / liability study*

- Investment policy formulation

- Liability driven investing*

- Metric reporting

- Portfolio structure

- Manager research & selection

- Manager oversight & replacement

- Dynamic asset management

- Transition management

- Exclusive fiduciary

- Multi-level risk analysis

- Trust & custodial services

- Rebalancing

- Disbursements

- Sub-accounting & reporting

- Benefit payments*

- Defined benefit actuarial

services

- Account transition

Strategic

Advice

Trustee

Services

Additional

Services

Investment

Management

OCIO/ FIDUCIARY

MANAGEMENT

• Integrated and holistic approach to designing and implementing asset allocation strategies for multiple investment pools maintained

by healthcare organizations

• Alignment of investment allocation strategies with organizational goals, objectives, risk tolerances and key financial metrics /

covenants as quantified through in-depth enterprise risk analysis

• Dedicated team of healthcare sector specialists

• Time-tested manager selection team focused on evaluating industry-leading independent institutional firms

• Actively managed portfolios designed to take advantage of market opportunities based on SEI’s active view

• Choice around the type of investment implementation, level of discretionary delegation and size of delegation engagement


Capital Structure

Operations/ Capital Budgeting

Unrestricted Cash/

Investments

Relationship between the inherent risk ‘components’ of a

healthcare provider

Unrestricted Cash/Investments

› Operating / working capital liquidity

› Growth targets

› Support of strategic objectives

› Net financial margin

› Funding capital spending

› Asset allocation

Operations/Capital Budgeting

› Competitive positioning

› Strategic initiatives

› Capital spending

› ACA / health policy changes

› Forecasted performance

› Current / desired rating

Capital Structure

› Debt portfolio

› Interest rate sensitivity

› Credit facilities

› Interest rate swaps

› Bond covenants

› Credit rating implications

Healthcare Enterprise Risk

Organizational goals / financial constraints drive allocation strategies for:

Cash / short-term Board-designated / long-term

Foundation / endowment Self / captive insurance reserves


SEI’s advice process incorporates Enterprise Risk

Management principles into allocation strategy development

Enterprise Risk Management (ERM):

› Closely links organizational strategy,

operations, finance and treasury

› Identifies potential risks that may impact

the organization

› Helps prioritize and manage identified

risks within the defined risk ‘appetite’

Risk appetite:

› Amount of risk an organization is willing

to accept in the pursuit of value

› Broad and strategic

Risk budget:

› Guides operating units or initiatives and

is closely linked to risk appetite

› Tactical and operational

Identify risk exposures

Financial forecasting

Scenario development / stress testing

Monitor risks / revise strategy

INTEGRATED

ERM

PROCESS


Healthcare enterprise integration: Balance sheet investment

strategy should incorporate strategic metrics

For illustrative purposes only.

A benchmark-based focus fails to accurately demonstrate the impact on

the organization and performance relative to key financial metrics

SEI: Strategic Financial Metrics Basic Metrics

Returns vs. Benchmarks

Actual Benchmark

Returns vs. Peers

% R

etu

rns

% R

etu

rns

1 YR 3 YR 5 YR

1 YR 3 YR 5 YR

Rating Agency Median

Organization-Specific Metric

0

50

100

150

200

250

300

350

Days Cash on Hand

Days

0

1

2

3

4

5

6

7

8

Debt Service Coverage

%

x

0

50

100

150

200

250

300

Cash to Debt

Rating Category Rating Category

Rating Category


Important information: Asset allocation & performance

Inception date: 9/30/2007

Property and alternative asset values and performance may be reported on a monthly or quarterly lag.

The Portfolio Return numbers are calculated using Gross Fund Performance, using a true time-weighted performance method (prior to 6/30/2012,

the Modified Dietz method of calculation was used). Gross Fund Performance reflects the effective performance of the underlying mutual funds that

are selected or recommended by SIMC to implement an institutional client’s investment strategy. Gross Fund Performance does not reflect

the impact of fund level management fees, fund administration or shareholder servicing fees, all of which, if applicable, are used to offset the

account level investment management fees the client pays to SIMC. Gross Fund Performance does reflect certain operational expenses charged

by the funds and the reinvestment of dividends and other earnings. The inclusion of the fund level expenses that the client incurs but that are offset

against the client’s account level investment management fees would reduce the Gross Fund Performance of the mutual funds.

If applicable, alternative, property and private assets performance and valuations may be reported on a monthly or quarterly lag. Alternative,

property and private assets performance is calculated gross of investment management fees and net of administrative expenses and underlying

fund expenses. However: Structured Credit Fund performance is calculated gross of investment management fees and net of administrative

expenses; SEI Offshore Opportunity Fund II Ltd. Class A performance is calculated net of investment management and administrative expenses;

and Energy Debt Fund performance is calculated net of management fees, performance fees, as applicable, and operating expenses. For

additional information about how performance is calculated, please see your monthly performance report.


How we create probability distributions and what they mean

• The probability distribution graphs and / or tables that follow are meant to

provide an overview of the range of possible outcomes for a given variable

(e.g., returns, pension contributions, expense) for a given asset allocation.

• The probability distributions are generated using SEI’s proprietary

modeling tool and simulated capital market behavior.

• Capital market behavior is simulated for 1,000 possible scenarios based on

expected performance of each asset class and reflecting current economic

conditions. Capital market assumptions such as return, standard deviation

and covariances are inputs into this process, combining with model

parameters to create market scenarios.

• We use these 1,000 capital market scenarios to create 1,000 output

scenarios for each variable being considered.

• A 90% confidence interval should be interpreted as 90% of the projected

output variables, falling between the 5% and 95% results, based on SEI

Capital Market Assumptions.

• This projection is hypothetical in nature, does not reflect actual investment

results and is not a guarantee of future results.

95th percentile:

95% of outcomes are less than

or equal to this value

5th percentile:

5% of outcomes are less than or

equal to this value

50th percentile:

50% of outcomes are greater than

this amount, and 50% are less

$ M

illi

on

s

Distribution of

Probable Outcomes

95th Percentile

Median

(50th Percentile)

5th Percentile

75th Percentile

25th Percentile

22

20

18

16

14

12

10

8

6

4

2

0

About Capital Market Assumptions

• SEI Investments Management Corporation develops forward-looking, long-term capital market assumptions for risk, return, and

correlations for a variety of global asset classes, currencies, interest rates, and inflation.

• These assumptions are created using a combination of historical analysis, future market environment expectations and by applying our

own judgment. In certain cases, alpha and tracking error estimates for a particular asset class are also factored into the assumptions.

• We believe this approach is less biased than using pure historical data, which may be affected by unsustainable trends or permanent

material shifts in market conditions.


Key financial ratios vs. Moody’s hospital and health system

medians

*Sources: Lee Health audited financial statements for the fiscal years ended 9/30/2018 and 9/30/2017, and unaudited interim financials for the seven months ended 4/30/2019;

S&P Ratings Direct report dated 3/14/2019; Moody’s ratings report dated 3/21/2019; Moody’s Not-for-Profit Hospital and Healthcare System Medians report dated 4/12/2019; SEI analysis

Credit Ratings

• S&P: ‘A+’ rating affirmed in May 2019;

outlook maintained at Positive

• Moody’s: ‘A2’ rating affirmed in May 2019;

Stable outlook

• Leading market share in favorable service areas

• Continued strong margins remain favorable to ‘A2’

medians

• Strong unrestricted liquidity provides flexibility

• Large construction projects impacting cash reserves

and ultimately drives increased leverage

• Projected liquidity will improve through reimbursement

financing

Prelim 2018 Audit Audit Prelim

A Rating 2016 2017 2018 (Prelim) 30-Sep-17 30-Sep-18 30-Apr-19

Key Ratios

Operating Margin 2.00 2.7% 1.8% 1.7% 4.1% 3.0% 4.1%

Days Cash on Hand 220.60 213.1 213.7 209.7 231.2 195.6 210.2

Unrestricted Cash & Inv to Total Debt 176.4% 160.9 175.4 172.6 146.2 133.2 127.4

Medicare % of Gross Revenues 48.30 44.9 45.8 47.2 49.1 52.2 53.6

Other Ratios/Stats

Capital Spending / Depreciation 1.1 1.2 1.2 1.1 2.1 3.1 2.0

Total Debt to Capitalization (%) 29.4% 33.1% 32.4% 32.1% 32.4% 30.5% 33.8%

MADS Coverage - Moody's Adjusted (x) 4.7 4.7 4.4 4.4 4.2 3.1 3.9

Regional Hospitals

Moody's Medians LMHS


Lee Health

Asset allocation

Portfolio metrics presented gross investment management fees.

Source: SEI Capital Market Assumptions. Please see important disclosures at the beginning of this section and at the back of the presentation.

Asset Class Current

Effective 4/30/19

S&P 500 Index 19.0

US Small/Mid Cap Equity Index 5.5

World Equity ex-US 7.5

World Equity ex-US Index 6.5

Emerging Markets Equity (+ Frontier) 4

Global Low Beta Equities 5.5

Total Equity Exposure 48

Limited Duration Fixed Income 11.5

Core Fixed Income 24

TIPS 5.5

Total Fixed Income Exposure 41

Directional Hedge 4.5

Private Real Estate 6.5

Total Alternatives Exposure 11

Portfolio Metrics

Expected Return 6.0%

Standard Deviation 11.5%

1-Year Value at Risk (5th percentile) -11.2%


Executive summary / portfolio review as of March 31, 2019

Fiscal Year 2019 Performance Summary (October 2018 through March 2019)

• Assets totaled $753,108,978 as of 3/31/19

– 9/30/17 assets: $830,861,182

– Net contributions/disbursements to portfolio: ($80,000,000)

– Net investment gain/loss: $2,250,845 in FYTD ‘19

– Fiscal year to date return as of 3/31/19: 0.53%

• Assets totaled $919,256,440 as of 4/30/19

– Net contributions/disbursements to portfolio: $70,138,366

– Net investment gain/loss: $18,256,892

– Fiscal year to date return as of 4/30/19: 2.58%

Economic Highlights

• Risky assets rebounded sharply from a difficult fourth quarter, thanks to oversold conditions, a suddenly-more-dovish Federal Reserve, and hopes for

further stimulus measures in China.

• U.S. equities led the way once more. Although first-quarter returns were impressive, developed and emerging markets were still down from a year ago,

driven by ongoing worries about China and Europe.

• A more-dovish Fed, falling interest rates, and benign financial conditions were tailwinds to credit, allowing spreads to reverse much of the widening that

occurred in late 2018. These dynamics were especially helpful to long-duration and high-yield bonds, although most areas of fixed income did well.

• Consumer price inflation continued to slow from its mid-2018 highs, creating a bit of a headwind for inflation-linked Treasurys. However, the favorable

environment for fixed income allowed TIPS to post a positive return for the quarter despite falling inflation.

• Commodities also performed well, led by cyclical areas like energy and industrial metals, as both oil and nickel rebounded from steep fourth-quarter

declines.

Strategy Review

• LH investment portfolio produced positive return towards budget for FYTD 2019 (+)

• LH investment portfolio contributed to improved LH financial ratios for FYTD 2019 (+)

• 6 of 10 funds held in the portfolio for FYTD 2018 met or exceeded their benchmarks (+)

No Manager Changes YTD

Please refer to the “Important information: Asset allocation & performance” page for additional information on portfolio performance.

For Institutional Investor use only. Not for public distribution.

Lee Health

16

Investment Objective

1. Long term objective is to generate a return sufficient to

meet its current and expected future financial

requirements

2. To earn the greatest total return possible consistent

with its general risk tolerance, the securities noted as

eligible for purchase and permissible investments

3. Funds shall be invested with safety of capital, liquidity

of funds and income as primary priorities

FYTD through April 2019

$387.1 $413.9 $451.6 $458.0 $493.8

$612.4

$727.2

$836.3

$941.0 $957.2

$830.9 $753.1

$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Q2FY2019

1) ~$150 million was added to the Lee Health accounts on 4/17/2019

Source: Lee Health Investment Policy Statement, SEI. Data as of 4/30/19 unless otherwise indicated. Inception date 9/30/2007.

Portfolio Market Value

Risk Tolerance

1. Short-term volatility and uncertainty of investment

results are recognized as real and will be managed

appropriately through specific asset allocation

strategies and diversification

2. Portfolios will be evaluated on a "total return“ basis,

measured against risk taken by the Sharpe ratio

3. Investments should be made with judgement and care

$919,256,4401

Total Market Value 4/30/19


Lee Health FYTD through April 2019 (continued)

IPS Target Actual % Compliant

Equity 48% 46.6%

Fixed Income 41% 40.5%

Alternatives/Core

Property 11% 12.9%

(1) Returns greater than one year are annualized. Allocation split for Alternatives reflects the split between Hedge and Private Real Estate as of 3/31/2019. Please refer to the Important Information: Asset Valuation and portfolio returns page for additional information on portfolio performance. (2) All returns reflect Alternative returns as of 12/31/18 unless otherwise noted. (3) Alternatives Q2 FY19 return is as of 3/31/19. Source SEI, Lee Health Investment Policy Statement. Data as of 4/302019 unless otherwise indicated.

PotentialBased on

CMAs

Actual

-30% -20% -10% 0% 10% 20% 30% 40% 50%

Investment Policy Compliance Investment Policy Objectives Review

Standard Deviation

(3 years trailing)

Expected Return Distribution (short term, gross of fees1)

3Y 5Y 10Y ITD

Portfolio Sharpe Ratio 1.3 0.9 1.4 0.5

Benchmark Sharpe Ratio 1.2 0.8 1.2 0.4

11.4%

4.8%

Q2

FY19

FYTD

2019 7Y 10Y

Lee Health 6.32 2.6 6.4 6.9

Equity 12.8 1.1 10.4 12.7

Fixed Income 2.5 3.9 2.8 4.1

Alternatives/

Core Property 3.92 4.3 8.1 n/a

-11.20 6.00 26.50

-20.20 6.90 43.20

-15.90 6.40 34.60

5th 50th 95th

17

UPSIDE CAPTURE

DOWNSIDE

CAPTURE

106.97% 103.78%

113.82%

100.19% 95.43% 99.60%

-4.00 3.90 12.50

109.41%

99.00%


Lee Health FYTD through April 2019 (continued)

-9.09%

-5.70%

6.20%

1.40%

9.30% 9.70% 7.50%

-1.10%

8.30% 10.24%

5.52%

2.90% 3.40% 4.20% 4.20% 4.10% 3.90% 3.80% 3.40% 3.10% 3.10% 3.20%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

Annual Return

Est. Cost ofDebt

21 20 23 23 37 40

45 48 47 40 45 44

43 38

43 48

38 28

38 37 37

33 42

42.8

22

18

21 23 22

18

5 4 4

4

5 5.1 4

3

3

3 4

3 3 3 5

5

6 8.2 10

21 10

3 1

11 8 8 8

7

6 10

2

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q2 FY19

Cash

Other

Real Estate

Alternatives

Fixed Income

Equity

Sources: Lee Health audited financial statements for the fiscal years ended 9/30/2008 to 9/30/2018, and unaudited interim financials for the seven months ended 4/30/2019; estimated

cost of debt is calculated as annual interest cost divided by outstanding debt; SEI institutional account statements; FY 2017 and 2018 allocation changes and growth stats include

amounts segregated into the Liquidity Pool in FY 2017 and the Liquidity Pool and Money Market Account in FY2019; www.emma.msrb.org; SEI analysis

Annual Return vs. Estimated Cost of Debt

Allocation Changes

18

6.3% Q2 FY19 Return

3/31/19

2.6% FYTD Return

4/30/19


Total allocation strategies outperform broad market indexes

*Total Real Estate strategy returns and NCREIF are as of 12/31/2018. Source: SEI, MSCI, Bloomberg Barclays. Indexes are unmanaged and cannot be invested

in directly. Returns greater than one year are annualized.

As of April 30, 2019 Q1

(%)

1Y

(%)

3Y

(%)

5Y

(%)

7Y

(%)

10Y

(%)

Total Equity strategy 12.80 2.09 11.09 7.38 9.75 13.49

MSCI All Country World Index 12.33 3.16 11.27 7.03 9.01 12.59

Excess +0.47 -1.07 -0.18 +0.35 +0.74 +0.90

Total Fixed Income strategy 2.54 3.97 2.67 2.86 2.84 4.15

Bloomberg Barclays U.S. Aggregate Bond Index 2.94 4.48 2.03 2.74 2.48 3.77

Excess -0.40 -0.51 +0.64 +0.12 +0.36 +0.38

Total Real Estate strategy* 1.81 8.31 8.73 10.53 11.02 n/a

NCREIF Property Index 1.80 6.82 7.07 9.12 9.61 n/a

Excess +0.01 +1.49 +1.66 +1.41 +1.41 n/a

Total Hedge strategy 6.98 3.33 6.64 2.72 3.55 -

HFRI Composite Fund of HF 4.62 0.15 3.94 2.20 3.10 -

Excess +2.36 +3.18 +2.70 +0.52 +0.45


DCOH

218 (+8 days)

213 (+3 days)

205 (-5 days)

192 (-18 days)

208 (-8 days)

201 (-9 days) -$43 (-4.73%)

-$37 (-3.99%)

-$86 (-9.37%)

-$26 (-2.79%)

$17 (1.86%)

$38 (4.16%)

-$120 -$100 -$80 -$60 -$40 -$20 $0 $20 $40 $60

Rising US Inflation

Trade Protectionism

Global Bear

Int'l Equity Correction

US Steady Pace

US Equity Rally

Stress test – current portfolio

Source: Blackrock Portfolio Risk Tools;

SEI Investment Management Unit

Starting market value (4/30/19): $919.2 million

Starting DCOH (4/30/19): 210 days $ millions

Scenario descriptions:

• US Equity Rally: Risk-on trading environment where the Russell 3000 Index increases 10.0%.

• US Steady Pace: Inflation surprises to the upside, catching the Fed off guard. Nonetheless, the Fed maintains the current pace of

tightening. Equities and spread assets are up on the back of robust growth.

• International Equity Correction: MSCI EAFE Index decreases 10.0%.

• Global Bear: World equities decline 20.0%.

• Trade Protectionism: US protectionism escalates trade disputes, and market sentiment deteriorates amid fears of a global trade war.

Global equities sell-off, with Chinese and EM equities underperforming.

• Rising US Inflation: Higher inflation than expected forces the Fed to change tack, tightening more than priced-in by the market. Risk

assets are hit by faster-than-anticipated rate hikes by the Fed. US equities underperform other global assets.

21 Footer

Investment Management Review/Outlook,

Process and Philosophy


5.9

2.2

5.0

8.9

6.0

3.0

12.1

13.2

18.5

18.6

6.3

1.8

4.9

7.4

6.5

2.9

9.8

10.3

14.6

14.0

-0.4

0.5

0.0

1.4

-0.4

0.0

2.1

2.6

3.4

4.0

-5 0 5 10 15 20

Commodities

Inflation-Linked

Emerging Markets Debt

High Yield Bonds

Long Duration

U.S. Investment-Grade Bonds

Emerging Markets Equity

Developed Int'l Equity x US

U.S. Small Cap

U.S. Large Cap

Financial Markets Review (%)

1 Month (Apr-30)

Q1 2019

YTD (Apr-30)

Market performance overview

• Risky assets rebounded sharply from a difficult fourth

quarter, thanks to oversold conditions, a

suddenly-more-dovish Federal Reserve, and hopes for

further stimulus measures in China.

• U.S. equities led the way once more. Although

first-quarter returns were impressive, developed and

emerging markets were still down from a year ago,

driven by ongoing worries about China and Europe.

• A more-dovish Fed, falling interest rates, and benign

financial conditions were tailwinds to credit, allowing

spreads to reverse much of the widening that occurred

in late 2018. These dynamics were especially helpful to

long-duration and high-yield bonds, although most

areas of fixed income did well.

• Consumer price inflation continued to slow from its

mid-2018 highs, creating a bit of a headwind for

inflation-linked Treasurys. However, the favorable

environment for fixed income allowed TIPS to post a

positive return for the quarter despite falling inflation.

• Commodities also performed well, led by cyclical areas

like energy and industrial metals, as both oil and nickel

rebounded from steep fourth-quarter declines.

U.S. Large Cap = Russell 1000, U.S. Small Cap = Russell 2000, Developed International Equity x

U.S. = MSCI World ex-US, Emerging Markets Equity = MSCI EFM (Emerging+Frontier Markets),

U.S. Investment Grade Bonds = Bloomberg Barclays U.S. Aggregate, High Yield = BofA ML

Master II HY Constrained, Emerging Markets Debt = 50% JPM EMBI GD / 50% GBI- EM GD

Indexes, Long Duration = Bloomberg Barclays Long US Govt/Credit, Inflation Linked = Barclays 1-

5 Year TIPS, Commodities = Bloomberg Commodity. Sources: SEI, index providers. Past

performance is no guarantee of future results.


U.S. equity market review

• Equity markets rebounded after an especially weak fourth

quarter. Small caps got off to a hot start but the performance

gap closed by the end of the first quarter.

• Outside of real estate, which was buoyed by sharply lower

interest rates, defensives generally lagged cyclical sectors.

• Growth was supported by a strongly rebounding technology

sector, while value lagged due to the relatively lackluster

healthcare and financials sectors.

• Valuations, which had come down significantly following the

fourth quarter sell-off, started to push up moderately.

towards the end of the quarter. -5%

0%

5%

10%

15%

20%

Dec '18 Jan '19 Feb '19 Mar '19

Cu

mu

lati

ve

To

tal R

etu

rn

QTD Domestic Equity Market Returns

U.S. Large Cap (14%) U.S. Small Cap (14.6%)

11.9%

16.1%

19.9%

17.5% 17.2% 16.4% 15.7%14.0%

12.0%10.8% 10.3%

8.6%6.6%

5.7%

12.7%

15.4%

21.0%

3.2%1.3%

13.2%

7.7%

10.5%

19.3%

-0.4%

-4.7%

14.9%

-10%

-5%

0%

5%

10%

15%

20%

25%

Value Growth Technology RealEstate

Industrials Energy Con.Disc.

Comm.Services

Con.Staples

Utilities Materials Financials HealthCare

To

tal R

etu

rn

U.S. Large Cap Sectors

QTD 1-yr

Source: Bloomberg, Russell, Standard & Poor’s. US Large Cap represented by Russell 1000 Index, US Small Cap represented by Russell 2000 Index. Value and Growth represented by

Russell 1000 Value Index and Russell 1000 Growth Index respectively. Sectors are represented by respective S&P 500 sector indexes. As of 3/31/2019.


International equity market review

Source: Bloomberg, Russell, MSCI. Developed (ex-US) by MSCI World ex-U.S. Index, Emerging Markets by MSCI Emerging Markets Index, U.S. represented by Russell 3000 Index. Regions

are represented by respective MSCI Index. All returns in USD. As of 3/31/2019.

• International markets rebounded from a weak fourth

quarter but still underperformed the U.S.

• Developed ex-U.S. and emerging markets performed

largely in line over the quarter.

• Within emerging markets, Asia showed the most strength,

due largely to the performance of China’s equity market.

• Valuations have been lifted from their 2018 lows by

rallying equity markets but are still close to their longer-

term averages.

14.0%

10.4% 9.9% 10.0%8.5% 7.8%

11.1%

7.9% 7.6%8.8%

-3.1%

-7.4% -6.6%

-3.9%-5.8%

-6.8% -6.7% -6.4%-10%

-5%

0%

5%

10%

15%

20%

U.S. Developed(ex-U.S.)

Emerging Europe Pacific Far East Asia Latin America Europe

Broad Regions Developed Regions Emerging Regions

To

tal R

etu

rn

Regional PerformanceQTD 1-yr

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

Dec '18 Jan '19 Feb '19 Mar '19

Cu

mu

lati

ve

To

tal R

etu

rn

QTD International Equity Market Returns

Developed (ex-U.S.) (10.4%) Emerging Markets (9.9%)


Fixed income review

• Fixed income markets provided solid returns during

the quarter, with the Bloomberg Barclays U.S.

Aggregate up 2.9%. High Yield was especially

strong, rising 7.3%.

• Lower credit quality tended to do better along with

longer duration.

• Spreads, particularly within high yield, compressed

significantly during the quarter after sharply

widening in the fourth quarter. They once again are

sitting well below long-term averages.

• Yields continued to fall while the curve continued to

flatten out.

1.5%

2.0%

2.5%

3.0%

3.5%

00 05 10 15 20 25 30

Yie

ld

Maturity Length (years)

U.S. Yield Curve

3/31/2019 12/31/2018 3/31/2018

Source: Bloomberg, JP Morgan. Investment Grade (IG) spreads determined from Bloomberg Barclays U.S. Corporate Index. High Yield (HY) spreads determined from Bloomberg Barclays U.S.

Corporate High Yield Index. Emerging Market Debt determined by JP Morgan EMBI Diversified Sovereign Index. As of 3/31/2019.

1.2%

3.9%

3.5%

1.5%

5.3%

4.2%

1.1%

3.5%

3.0%

1.5%

5.3%

3.4%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

US InvestmentGrade

US High Yield Emerging MarketDebt

Op

tio

n-A

dju

ste

d S

pre

ad

Option-Adjusted Spreads

March '19 Last Quarter 1-Year Ago 10-Yr Average

FOR INSTITUTIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION

26 Data as of 3/31/2019 unless otherwise noted

The outlook: Spring has sprung

The good news

• We are seeing the initial signs of improving global

growth, including in Europe and the U.K.

• The U.S. is near full employment. Upward pressure on

wages are not yet reflected in inflation growth. U.S.

productivity has accelerated, which is a big plus.

• China’s stimulus measures should help its economy

gain traction. Despite the setback in trade talks with

the U.S., we think China’s domestic demand will

improve, which should offset difficulties the country

may face with respect to U.S. trade.

• The Federal Reserve’s sharp pivot to dovishness was

a catalyst for the strong performance of risk assets in

the first quarter.

• We expect stock prices to grind higher. Last week’s

events rattled investors, but remember that bear

markets are fundamentally induced, not investor-

induced.

The bad news

• U.S. stocks are expensive, and profit growth has

slowed; although still positive, it is now comparable to

growth in other parts of the world.

• The U.S. Treasury yield curve remains close to

inversion. Yet we think this means very little to the

economy and stock-market performance.

• Unresolved trade tensions between China and the

U.S. are certainly a negative development. Corporate

supply chains will likely be realigned over time,

although low-cost countries may benefit as production

of low-margin goods are moved out of China.

• Inflation pressures could begin to rise as companies

strive to maintain their profit margins. An

improvement in productivity has somewhat limited

this.

FOR INSTITUTIONAL INVESTOR USE ONLY. NOT FOR PUBLIC DISTRIBUTION

Data as of 3/31/2019 unless otherwise noted.


More than 100 professionals

globally:

• US

• UK

• Canada

• Hong Kong

More than 60 CFAs, MBAs

and other advanced

designations

Over 25 years of manager

selection and portfolio

construction experience

Risk

Management

Group

Portfolio risk

management

oversight and

operational due

diligence

Investment Oversight

Committees

Several committees oversee the

products and services we offer.

Each has a unique focus, including

portfolio management, asset allocation and manager research.

Portfolio Strategies

Group

Asset allocation team that

creates capital market

assumptions and directs both

strategic and long-term portfolio

positioning.

Portfolio Managers

Equity . Fixed Income .

Hedge Funds . Private Equity .

Real Estate

Global portfolio management

team responsible for investment

manager selection and portfolio

construction.

Manager Research

Global manager research team

responsible for identifying and

monitoring investment

managers in each asset class.

A global investment unit with highly credentialed investment

experts

As of December 31, 2018.


SEI investment philosophy and implementation

Strategic Asset Allocation

Markets are mostly efficient and investors should

avoid market timing by developing a diversified,

long-term asset allocation

Tactical/Opportunistic Investing

Markets can occasionally be inefficient and

present thematic opportunities in public and

private markets

Manager Implementation

Style tilts and strong active investment manager

selection within less efficient asset classes can

create better risk-adjusted returns

Risk Management

Separating risk management from investment

management is crucial in maintaining objectivity

and effectively managing portfolio risk


Advisory and Client Portfolio Teams

Portfolio Strategies Team

Manager Research and Portfolio Manager Teams

Advisory and client teams design a unique investment portfolio based on your

return, risk, liquidity and qualitative goals / objectives

Long-term (3-10 year) optimized asset allocation based on SEI’s viewpoints and

assessment of asset class valuations

Shorter-term (1-3 year) asset allocation based on shorter-term viewpoints and

relative value opportunities between asset classes

Our global manager research team identifies and oversees best of breed

specialist managers by asset class and geography. Manager positioning /

weightings are implemented inside each fund by the portfolio manager team.

Strategic Allocation

Short / Medium

Term Allocation

Manager Allocations

XYZ

Client

Portfolio

Robust investment platform enables custom portfolio

building that addresses long- and short-term investor needs


SEI’s representative institutional investment strategies

SEI Large Cap Equity Strategy AJO, L.P. – Quantitative Relative Value Coho Partners – Relative Value Fred Alger Management, Inc. – Differentiated

Momentum LSV Asset Management* – Quantitative Contrarian

Value Mar Vista Investment Partners LLC – Stability Schafer Cullen Capital Management – Disciplined Value

SEI U.S. Small Cap II Equity Strategy ArrowMark Partners – Stable Growth Copeland Capital Management, LLC – Dividend Growth EAM Investors, LLC – Momentum Growth LMCG Investments, LLC – Relative Value Snow Capital Management, LP – Value

SEI Extended Markets Index Strategy State Street Global Advisors – Passive

SEI World Equity ex-U.S. Strategy Acadian Asset Management – Quant Value/Momentum Alliance Bernstein, L.P. – Quant Value Baillie Gifford – Growth BlackRock International Ltd. – Style Flexibility EARNEST Partners – Core/Relative Value Tilt JO Hambro Capital Management – GARP McKinley Capital Management – Quantitative

Momentum Wells Capital Management, Inc. – Value

SEI Global Managed Volatility Strategy Acadian Asset Management Wells Capital Management LSV Asset Management*

Domestic Equity

Global Equity

U.S. Equity Factor Allocation Strategy SEI Investments Management Corporation

SEI U.S. Large Cap Disciplined Equity Strategy AJO, L.P. – Large Cap Momentum AQR Capital Management – Enhanced S&P 500 Ceredex Value Advisors LLC – Large Cap Value Coho Partners, Ltd. – Stability Quantitative Mgmt. Associates – Quantitative Bias

Exploitation

SEI U.S. Small Cap Equity Strategy Axiom International Investors, LCC – Quantitative Growth EAM Investors, LLC – Momentum Growth Falcon Point Capital – Emerging Growth LSV Asset Management L.P. – Value Martingale Asset Management, L.P. – Low Volatility William Blair & Company – Relative Value

SEI Large Cap Index Strategy State Street Global Advisors – Passive

SEI S&P 500 Index Strategy State Street Global Advisors – Passive

SEI Screened World Equity ex-U.S. Strategy Acadian Asset Management – Core Baillie Gifford – Growth EARNEST Partners – Value McKinley Capital Management – Growth

SEI World Select Equity Strategy AS Trigon – Emerging European Value Fiera Capital – Deep Quality/Stability INTECH – Global Volatility Capture / Momentum LSV Asset Management* – U.S. Value Mackenzie Investments –Momentum Maj Invest. – Global Value/Stability Metropole – Pan European Value Poplar Forest Capital, LLC – Value SNAM – Japan Value Towle – U.S. Value

SEI U.S. Small / Mid Cap Equity Strategy ArrowMark Partners – Stable Growth Axiom International Investors – Quantitative Growth Cardinal Capital - SMID Cap Value Copeland Capital Management, LLC – Dividend Growth LSV Asset Management* – Contrarian Value 361 Capital, LLC – Diversified Momentum

SEI Real Estate Strategy CenterSquare Investment Management – REIT

SEI U.S. Managed Volatility Strategy Wells Capital Management LSV Asset Management* - Contrarian Value

SEI Emerging Markets Equity Strategy AllianceBernstein L.P. – Value Causeway Capital Management – Quantitative Core JO Hambro Capital Management – Growth Kleinwort Benson Investors International Ltd. – Dividend

Focus RWC Asset Advisors (U.S.) LLC. – Growth WCM Investment Management – Quality Growth

Sub-Adviser Diversification as of April 30, 2019. The strategies above are not an exhaustive list, but represent those that are typically utilized by SEI Institutional clients. Certain strategies are

currently available only in registered mutual fund products. References to specific SEI funds are designed to illustrate SEI’s manager selection process, which is implemented by SEI

Investments Management Corporation (SIMC). The managers may be offered exclusively through mutual funds. References to specific securities do not constitute an offer or

recommendation to buy, sell or hold such securities. *As of March 31, 2019, SEI Investments Company has a 38.9% minority ownership interest in LSV Asset Management.


SEI’s representative institutional investment strategies

(continued)

Sub-Adviser Diversification as of April 30, 2019. The strategies above are not an exhaustive list, but represent those that are typically utilized by SEI Institutional clients. Certain strategies are

currently available only in registered mutual fund products. References to specific SEI funds are designed to illustrate SEI’s manager selection process, which is implemented by SEI Investments

Management Corporation (SIMC). The managers may be offered exclusively through mutual funds. References to specific securities do not constitute an offer or recommendation to buy, sell or

hold such securities.

Fixed Income

SEI Cash Management Strategies Money Market Funds Custom Separate Accounts

SEI Opportunistic Income Strategy Ares Management – Bank Loans Manulife Asset Management – Multi-Sector LIBOR Plus Schroders Asset Management. – Enhanced Cash Wellington Management Company – Enhanced Cash

SEI Ultra Short Duration Bond Strategy Logan Circle Partners Wellington Management Company

SEI Short Gov’t Bond Strategy Wellington Management Company

SEI Limited Duration Bond Strategy Logan Circle Partners Metropolitan West Asset Management LLC

SEI High Yield Bond Strategy Ares Management – Opportunistic Benefit Street Partners – Relative Value Brigade Capital Management – Opportunistic J.P. Morgan Asset Management – Relative Value T. Rowe Price Associates – High Yield

SEI Emerging Markets Debt Strategy Colchester Global Investors – Consistency Investec Asset Management – Security Selection Marathon Asset Management, LP –Experience Neuberger Berman – Macro Stone Harbor Investment Partners – Relative Value

SEI Core Fixed Income Plus Strategy U.S. Core Fixed Income Strategy High Yield Strategy Emerging Debt Strategy

SEI U.S. Core Fixed Income Strategy Jennison Associates – Security Selector w/Corporate Bond Focus Logan Circle Partners, L.P. – Core Fixed Income Metropolitan West Asset Management – Macro/Value-Oriented Wells Capital Management – Security Selection Western Asset Management – Macro/Sector Rotator

SEI Intermediate Duration Credit Strategy Income Research & Management Legal & General Inv. Mgmt. America Logan Circle Partners

SEI Long Duration Credit Strategy Income Research & Management Jennison Associates Legal & General Inv. Mgmt. America Logan Circle Partners Metropolitan West Asset Management

SEI Long Duration Bond Strategy Income Research & Management Jennison Associates Legal & General Inv. Mgmt. America Metropolitan West Asset Management

SEI Dynamic Asset Allocation Strategy State Street Global Advisors

SEI Multi-Asset Real Return Strategy AllianceBernstein L.P. – Multi Asset Real Return Columbia Management Investments – Active Commodities Credit Suisse – Quantitative QS Investors, LLC – Inflation Long/Short Equity

Alternative Investments

Other

SEI Alternative Investments Equity Long/Short Strategies Event Driven Strategies Global Macro Strategies Relative Value Strategies Venture Capital Strategies Buyout Strategies Private Debt Strategies Private Real Assets Strategies Private Real Estate Strategies Structured Credit Strategies Energy Debt Strategies


Risk Management and Research Systems

Risk Management

Systems such as Aladdin and Axioma provide daily updates which allow for

stress testing, scenario analysis and risk evaluation at the manager, strategy

and portfolio level

Research Tools

Systems and subscriptions such as FactSet, Axioma, Style Research, Intex

and Decision Lens utilized for qualitative and quantitative analysis and

benchmark data

Due Diligence Systems such as Financial Risk Management, FactSet and eVestment, First

Advantage, BackTrack and BDO Consulting to perform background checks *

*As of December, 2018. The above breakouts of our approximate and certain tools/systems are used for multiple functions and may overlap between groupings.

APPROXIMATELY

$10.2M

IN ANNUAL

TECHNOLOGY

INVESTMENTS* $4.1 M

Risk Management

$3.8 M

Research Tools $2.3 M

Due Diligence

Significant investments in industry-leading technology to

facilitate risk management and research


Risk management analysis at multiple levels

This chart illustrates the type and frequency of reports and analysis that SEI has available to monitor risk at the manager and portfolio level. Specific risk management protocols may

vary depending on the manager or portfolio and may be customized for particular clients.

Manager Level Analysis

Metric Description Frequency

Security Level Holdings Analysis Access to portfolio holdings Daily

Tracking error Aggregates risk from all active exposures relative to a benchmark Weekly

Manager contribution to risk Measures how the active risk budget is allocated Weekly

Manager risk-adjusted return Provides an objective measure of manager alpha Monthly

Portfolio Level Analysis

Metric Description Frequency

VaR model integrity Compare manager return forecast with results Daily

Portfolio benchmark-relative exposure guidelines

Controls tracking error by setting limits on relative exposures Daily

Counterparty risk Monitors exposure to dealers from OTC derivative transactions Daily

Relative value at risk Identifies excessive risk-taking relative to benchmark Daily

Cover Measures the amount of capital in excess of the liabilities created by derivative exposures

Daily

Tracking error Aggregates risk from all active exposures relative to a benchmark Weekly

Stress testing Uses stress scenarios to identify non-linear behavior Monthly


International Equities Tabled for November 2019 meeting


Portfolio design | Blueprint for success Portfolio Design

• Alpha Source Expectations

• Investment Levers and Powers

• Strategic Blueprint

• Tactical Framework

• Risks and Mitigation

• Exposure Limits


Manager selection | Idea generation

Quantitative

Portfolio Characteristics

Performance Patterns

Qualitative

Industry Contacts

External Databases & Internet

Manager

Selection

For Illustrative Purposes Only


Manager selection | Manager research & monitoring

Quantitative Consistency with Philosophy

Evidence of Skill vs Luck

Qualitative Alpha Drivers - Philosophy, Process & People

Alpha Risks – Organization & Resources

Judgement

Personal Assessment

Analysis

Manager

Selection



Manager selection | Hiring & firing

Manager

Selection

SEI Thesis Based Hire

Decision

• Research Alpha Sources

Exploited

• Discover Source of

Competitive Advantage

• Assess Future Headwinds &

Tailwinds

SEI Thesis Based Fire

Decision

• Thesis Review Trigger

• Identify Better Idea

• Future Headwinds

Typical Hire Decision

Good Performance

Smart People

Typical Fire Decision

Bad Performance

Staff Turnover


Portfolio construction | Strategic risk budgeting Portfolio

Construction

Fund Thesis Manager Selection Risk Management

Portfolio Design

TE 1.43 %

Beta 0.99

Stock Specific 50%

Style Risk 23%

Country Risk 17%

Sector Risk 9%

FX Risk -1%

SII

T W

orl

d E

qu

ity

ex

US

Fu

nd

Source : SEI / Factset / BlackRock

Solutions Dec 31st, 2018

AB

Acadian

Baillie Gifford

BlackRock

Earnest Partners

JO Hambro

McKinley

EverKey

% Capital $ % Risk


Portfolio construction | Dynamic manager weights Tactical

Allocation

Source: SEI, Factset

Note: Value managers consist of NFJ and BHMS. Value factor attractiveness/payoff is a measure of the likelihood of a factor outperforming. The attractiveness (RHS) is

measured in terms of standard deviation units here, with a standard deviation of 2 signaling a high likelihood of outperformance and a standard deviation of -2 signaling a high

likelihood of underperformance. More details on the exact metric used can be provided.

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

0

5

10

15

20

25

7/3

1/2

01

5

8/3

1/2

01

5

9/3

0/2

01

5

10

/30

/20

15

11

/30

/20

15

12

/31

/20

15

1/2

9/2

01

6

2/2

9/2

01

6

3/3

1/2

01

6

4/2

9/2

01

6

5/3

1/2

01

6

6/3

0/2

01

6

7/2

9/2

01

6

8/3

1/2

01

6

9/3

0/2

01

6

10

/31

/20

16

11

/30

/20

16

12

/30

/20

16

1/3

1/2

01

7

2/2

8/2

01

7

3/3

1/2

01

7

4/2

8/2

01

7

5/3

1/2

01

7

6/3

0/2

01

7

7/3

1/2

01

7

8/3

1/2

01

7

9/3

1/2

01

7

10

/31

/20

17

11

/30

/20

17

12

/30

/20

17

1/3

0/2

01

8

2/2

8/2

01

8

3/2

8/2

01

8

4/2

8/2

01

8

5/2

8/2

01

8

6/2

8/2

01

8

7/2

8/2

01

8

8/2

8/2

01

8

9/2

8/2

01

8

10

/28

/20

18

11

/28

/20

18

12

/28

/20

18

Val

ue

Fac

tor

Att

ract

ive

ne

ss/P

ayo

ff

We

igh

t o

f V

alu

e M

anag

ers

Value Attractiveness/Payoff (RHS) Value Managers Weight (LHS)


Risk management | Independent oversight


ACTIVITY FREQUENCY

• Relative value at risk

• Portfolio fund benchmark-relative exposure guidelines

• VaR model integrity 1

• Counterparty risk 2

• Coverage 3

DAILY

• Tracking error 4 WEEKLY

• Manager contribution to risk 5 WEEKLY

• Manager risk-adjusted return

• Stress testing

MONTHLY

Notes:

1 - Comparison of ex-ante forecasts

with ex-post realisations

2 - Measures the amount of capital in

excess of notional OTC derivative

exposures

3 - Exposure to dealers from OTC

derivative transactions

4 - Standard Deviation of excess

returns

5 - Measures how active risk is

allocated across the managers in a

portfolio

Risk

Management


US 13.65%

Canada 15.37%

Europe ex

UK 10.45%

UK 11.89%

Australia 11.39%

China 17.69%

Brazil 8.14%

Russia 12.18%

MSCI ACWI performance

YTD 2019 (as of 3/31/2019)

India 7.16%

Japan

6.66%

Argentina

-2.01%

Colombia

24.8%

South Africa

4.43% Positive

Neutral

Negative

Below %15

Sources: MSCI Indices except Panama, which is sourced via FTSE Indices, USD, FactSet, SEI,

The performance data shown is past performance. Past performance is no guarantee of future results. The

investment return and principal value of an investment will fluctuate so that an investor’s shares, when

redeemed, may be worth more or less than their original cost and current performance may be lower or

higher than the performance quoted. For performance data current to the most recent month end, please

call 1-800-DIAL-SEI.


Global equity market overview:

Growth less balanced – risks increasing1

• Sources: 1World Economic Outlook, January 2019; 2Credit Suisse, March 31, 2019 (Risk Appetite chart).

• Global growth forecast for 2019 and 2020 were revised downward in autumn of 2018 and then

again at the beginning of 2019 based on weaker momentum in the second half of 2018.

• Idiosyncratic activities weighted on larger developed economies (e.g. Germany, Italy, France, Japan)

but this happened against a framework weakening financial market sentiment, tightening of financial

conditions in advanced economies, trade policy uncertainty and concerns about China’s growth.

• Risks to global growth tilt to the downside.

Global Risk Appetite2

Euphoria

Panic


Valuations look more attractive

Source: Bloomberg, FactSet, MSCI and AB

Based on MSCI US, MSCI Europe ex-UK, MSCI UK, MSCI Japan and MSCI Emerging Markets. Price/forward earnings ratios are based on earnings estimates for the next 12

months.

Data as of 12/31/2018


Retail Sales (USD Billions) China: Net Export as Percent of Nominal GDP

0

1,500

3,000

4,500

6,000

1992 1998 2004 2010 2016

Left display as of December 31, 2017; right display through September 30, 2018

Source: AB, Bloomberg, CEIC Data, National Bureau of Statistics of China

Chinese economy goes consumer

US Retail Sales

China Retail Sales


China A-Share Korea Taiwan Indonesia Other

China A-shares weighting will increase through 2019

Source: MSCI, Lazard

Starting in May the weighting of China A-shares will be raised 3x in 2019

Saudi Arabian equities will be added in two steps (May and August)

Argentina’s equities will be added in one step (May)

Current May 2019 Aug 2019 Future Nov 2019


World Equity ex U.S.

Performance and risk statistics: April 30, 2019

Data as of 4/30/2019, Source: SEI Data Portal, FactSet. Gross Fund Performance reflects the effective performance of the underlying mutual funds that are selected or recommended by

SIMC to implement an institutional client’s investment strategy. Gross Fund Performance does not reflect the impact of fund level management fees, fund administration or shareholder

servicing fees, all of which, if applicable are used to offset the account level investment management fees the client pays to SIMC. Gross Fund Performance does reflect certain

operational expenses charged by the funds and the reinvestment of dividends and other earnings. The inclusion of the fund level expenses that the client incurs but that are offset against

the client’s account level investment management fees would reduce the Gross Fund Performance of the mutual funds. Past performance is no guarantee of future results. The principal

value and investment return of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original value. Current performance may be higher or

lower. For performance data current to the most recent month end, please call 1-800-DIAL-SEI.

Calendar Years Apr

2019

Q1

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

SIIT World Equity Ex-US Fund 2.68 12.08 -15.74 29.88 4.20 -5.62 -2.34 18.32 18.70 -12.75 13.40 35.30

MSCI All Country World ex US Index 2.64 10.31 -14.20 27.19 4.50 -5.66 -3.87 15.29 16.83 -13.71 11.15 41.45

Trailing Periods 1 Yr 3 Yr 5 Yr 7 Yr 10 yr

SIIT World Equity Ex-US Fund -3.33 9.04 3.77 6.29 8.75

MSCI All Country World ex US Index -3.23 8.09 2.83 5.35 7.74

Risk Statistics - 3 Year Standard

Deviation

Tracking

Error

Sharpe

Ratio

World Equity Ex-US Strategy 10.98 1.94 0.72

MSCI All Country World ex US Index 10.56 - 0.66

Risk Statistics - 5 Year Standard Deviation Tracking Error Sharpe

Ratio

World Equity Ex-US Strategy 12.00 2.10 0.26

MSCI All Country World ex US Index 12.05 - 0.17

48 Footer

Appendix: Performance and Fund Detail


Lee Health main account

Asset allocation & performance as of April 30, 2019

Fiscal Year

to Date

As of 4/30/19, cash assets of $70,165,196 in money market pool and $50,045,353 in liquidity pool.


Lee Health cash accounts

Asset allocation & performance as of April 30, 2019

As of 3/31/19, cash assets totaled $3,049.

Liquidity Pool

Money Market Account


Data as of 3/31/2019

• During the first quarter, the market rebounded from 2018’s

negative end.

• U.S. stocks had their strongest quarter since 2009.

• The S&P 500 Index was up 13.65% for the period.

• Information technology and industrials were the leading sectors

for the quarter.

• Materials and utilities lagged.

• The fastest-growing stocks drove performance during the period

across all indexes.

• The cheapest stocks underperformed their benchmarks, despite a

strong start in January.

Source: SEI Data Portal, FactSet based on data from SEI

Figures in parenthesis are end of period weights.

Performance data quoted is past performance, gross of fees. Past performance does not guarantee future results. The investment return and principal

value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost, and current

performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, please call 1-800-DIAL-

SEI.

0.28

0.52

0.35

0.90

0.86

1.61

1.57

1.46

1.24

1.02

3.83

0.0 1.0 2.0 3.0 4.0 5.0

Materials (2.7%)

Real Estate (3%)

Utilities (3.2%)

Energy (5.5%)

Consumer Staples (7.2%)

Industrials (9.5%)

Consumer Discretionary (10%)

Communication Svcs (10.2%)

Financials (13.3%)

Healthcare (15%)

Information Technology (20.4%)

Quarter

Contribution to Absolute Return By Sector (%)

SIIT S&P 500 Index Fund



Source: FactSet, SEI

Figures in parenthesis are end of period weights.

Performance data quoted is past performance, gross of fees. Past performance does not guarantee future results. The investment return and principal

value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost, and current

performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, please call 1-800-DIAL-

SEI.

0.21

0.32

0.66

0.60

0.72

1.48

1.33

2.20

2.13

1.74

4.54

0.0 1.0 2.0 3.0 4.0 5.0

Consumer Staples (2.6%)

Utilities (2.9%)

Energy (3.4%)

Communication Svcs (4.3%)

Materials (4.5%)

Real Estate (8.8%)

Consumer Discretionary (11.8%)

Healthcare (12.1%)

Industrials (13.9%)

Financials (16.1%)

Information Technology (19.5%)

Quarter

Contribution to Absolute Return By Sector(%) • During the first quarter, the market rebounded from 2018’s

negative end.

• The Russell Small Cap Completeness Index was up 15.95% for

the period.

• Information technology and industrials were the leading sectors

for the quarter.

• Materials and utilities lagged.

• The fastest-growing stocks drove performance during the period

across all indexes.

• The cheapest stocks underperformed their benchmarks, despite a

strong start in January.

• The Fund aims to produce investment results that correspond to

the performance of the Russell Small Cap Completeness Index.

SIIT Extended Market Index Fund



SIIT Emerging Markets Equity Fund

(#) indicates the percent target allocation in the Fund excluding cash

Benchmark: MSCI Emerging & Frontier Markets Index. Source: FactSet, SEI Data Portal.

Performance data quoted is past performance, gross of fees. Past performance does not guarantee future results. The investment return and

principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost, and

current performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, please call

1-800-DIAL-SEI.

Performance Review

• The Fund struggled modestly during the quarter due to a

combination of allocation and selection effects within the consumer

discretionary sector. Weak selection within financials (particularly

insurance) also detracted. From a regional perspective, a lack of

exposure to and poor selection within Chinese financials hurt, as did

an overweight to financials within the Philippines.

• Selection within real estate (China, Vietnam and the Philippines)

was positive. Selection within materials in South Africa, the U.K.

and off-benchmark Canada also helped.

• KBI Investors suffered due to weak selection within large

technology names in China, Korea and Taiwan. AllianceBernstein’s

lack of exposure in China, overweight to consumer staples and

underweight to information technology hurt. Causeway detracted

due to poor selection within emerging Asia and India (materials and

industrials).

• WCM’s selection within consumer discretionary (retailing), financials

and health care contributed. J.O. Hambro benefited from selection

across multiple sectors (real estate, energy, financials). This was

offset by weak selection within consumer discretionary and lack of

exposure to Chinese company Alibaba. Selection was also poor

within health care and industrials.



SIIT Emerging Markets Equity Fund

Positioning Review

• From a sector perspective, the overweight to financials was

decreased during the quarter by trimming holdings in banks and

diversified financials.

• The Fund was underweight communications services in many of the

larger emerging-market countries (China and Korea) and instead

invested in smaller technology names.

• It was overweight industrials as growth is picking up in the sector.

• The Fund was also overweight consumer staples due to the rising

middle class in emerging markets.

• From a country perspective, emerging Asia (China, Korea and

Taiwan) was the largest overweight.

• The overweight to India was increased during the period.

• The Fund was also overweight smaller countries (Vietnam,

Thailand, Philippines).

• It was overweight Latin America. Managers see attractively priced

growth opportunities in Argentina and Colombia.

• It was also overweight the Europe, Middle East and Africa (EMEA)

region, although the overweight was reduced during the quarter by

pulling out of Kuwait and Saudi Arabia.

• Managers also exited out of names that had reached target price in

South Africa.

Source: FactSet

*Versus the MSCI Emerging & Frontier Markets Index; figures in parentheses are actual Fund weights, excluding cash; only the three largest active

sector and region over- and underweights are shown.



SIIT World Equity Ex-US Fund


*Benchmark: MSCI ACWI ex USA Index. Source: FactSet, SEI Data Portal




1-800-DIAL-SEI.

Performance Review

• The Fund performed well during the quarter. Selection within

information technology (IT) (software and services) contributed.

• Selection within and an overweight to banks were beneficial.

• From a country perspective, selection was strong in Israel,

Singapore and Germany. Selection within Dutch and U.K. materials

stocks and an overweight to Australian metal and mining stocks

helped.

• An underweight to Canadian energy stocks detracted. Poor

selection in Norway also hurt. Overweights to Polish and

Portuguese energy stocks held back performance.

• J.O. Hambro’s selection across multiple sectors contributed. Baillie

Gifford benefited from selection within consumer discretionary

(retailing), industrials, IT and specialty materials. BlackRock added

to performance via selection across multiple sectors.

• Wells EverKey suffered due to poor selection within financials and

industrials, which offset good selection within IT and materials.



SIIT World Equity Ex-US Fund

Source: FactSet

*Versus the MSCI ACWI ex USA Index; figures in parentheses are actual Fund weights, excluding cash; only the three largest active sector and

region over- and underweights are shown.

Positioning Review

• During the quarter, the Fund’s underweight to consumer staples

was decreased as managers added to food staples, retail

beverages, tobacco and household products.

• The overweight to financials was also decreased by trimming from

banks and diversified financials due to profit-taking.

• From a regional perspective, financials were mostly trimmed in

China and India.

• From a country perspective, the underweight to emerging Asia was

increased, trimming from Chinese, Indian and Taiwanese equities.

• The underweight to Japan was decreased by adding to consumer

discretionary and communications stocks that offer good growth

opportunities.

• From a sector perspective, the Fund remained overweight

information technology as managers are optimistic on long-term

growth opportunities in the sector.

• It was overweight materials due to company-specific opportunities.

• The Fund was also overweight health care, focusing on companies

that either reduced costs of the health care system or addressed the

needs of an aging population.

• The largest position was an overweight to Europe ex-U.K.

Managers continued to find company-specific opportunities in the

region.

• It was underweight the U.K. due to Brexit concerns.



SIIT Core Fixed Income Fund


*Benchmark: Bloomberg Barclays U.S. Aggregate Bond Index. Source: SEI Data Portal with data from Fund sub-advisors.




1-800-DIAL-SEI.

Performance Review

• The Fund performed well during the quarter as all spread sectors

outperformed comparable Treasury bonds. Its duration was longer than the

benchmark, but moved closer to neutral by quarter-end. This added to

performance as yields declined. The Fund’s overweight to the long end of

the yield curve contributed as 30-year yields declined. A small overweight to

credit helped. An overweight to financials also contributed, as did a small

overweight to industrials.

• A higher-quality bias within commercial mortgage-backed securities

detracted as lower-quality tranches outperformed.

• Western Asset Management benefited from an overweight to spread

sectors. Logan Circle Partners’ overweight to credit helped, but an

underweight to non-corporates hurt. MetWest’s overweight to financials and

non-agency mortgages was beneficial. An underweight to corporates

detracted as spreads narrowed.

• Wells Fargo Asset Management’s performance suffered due to selection

within corporates. Jennison’s defensive positioning detracted as spreads

widened.



SIIT Core Fixed Income Fund

*Benchmark: Bloomberg Barclays U.S. Aggregate Bond Index. Source: BlackRock Solutions based on data from SEI. Performance data quoted

represents past performance, gross of fees. Past performance does not guarantee future results. The investment return and principal value of an

investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost, and current performance

may be lower or higher than the performance quoted. For performance data current to the most recent month end, please call 1-800-DIAL-SEI.

(#) indicates the relative weight to the benchmark on a contribution-to-duration basis; because of its different interest-rate sensitivities, Non-Agency

MBS is shown on a market-value basis.

Positioning Review

• The Fund reduced the overweight to banking during the quarter, as

spreads have narrowed.. Capital positions are stronger now than they

were pre-2008.

• Duration moved around a neutral posture. The Fund was overweight the

25-30 year segment of the yield curve; underweight the 15-20 year

segment; and neutral the short and intermediate segments.

• The Federal Reserve is keeping interest rates low, which encourages

borrowing and could foster inflation. Accordingly, exposure was added in

the middle section of the yield curve, which would be less impacted than

longer-dated bonds should inflation begin to rise. Still, the Fund

maintained an overweight to the long end of the curve as inflationary

pressures are likely to advance only gradually.

• The Fund had a small overweight to the corporate sector.

• It was neutral to slightly overweight both industrials and utilities.

• Securitized overweights to asset-backed securities (ABS) and

commercial mortgage-backed securities (CMBS) remained. These bonds

offer competitive yields, especially on a risk-adjusted basis.

• Within CMBS, managers believe a higher-quality bias should help ease

concerns about retail properties.

• The Fund maintained an allocation to non-agency mortgages.

• It was overweight agency mortgages, which serve as a high-quality

alternative to Treasurys.

• Managers remain in gradual risk-reduction mode and look for

opportunities to add back risk.



SIIT Limited Duration Bond Fund


*Benchmark: ICE BofA Merrill Lynch 1-3 Year U.S. Treasury Index. Source: SEI Data Portal with data from Fund sub-advisors.




1-800-DIAL-SEI.

Performance Review

• The Fund outperformed its benchmark during the quarter.

Overweights to financials and industrials contributed.

• MetWest benefited from selection within financials and industrials and

a long duration posture. An overweight to cash detracted.

• Logan Circle Partners’ overweight to banking, industrials and asset-

backed securities (ABS) contributed. Its short duration posture hurt.



SIIT Limited Duration Bond Fund

*Benchmark: ICE BofA Merrill Lynch 1-3 Year U.S. Treasury Index. Sources: SEI, BlackRock Solutions based on data from SEI




1-800-DIAL-SEI.

Positioning Review

• During the quarter, the Fund’s underweight to government bonds

was increased to buy more attractive securities within securitized

sectors.

• The overweight to ABS was increased as managers find these

more appealing than corporates.

• The Fund remained overweight financials.



SIIT Real Return Fund

Performance Review

• The Fund performed in line with its benchmark for the quarter. An

underweight to Treasury Inflation Protected Securities (TIPS)

contributed as they outperformed nominal bonds.

• There were no material detractors during the quarter.

Source: SEI Data Portal




1-800-DIAL-SEI.

SIIT Real Return Fund

Absolute Return (%)



SEI Special Situations Fund:

Performance versus other asset classes

1SEI Special Situations Fund Ltd returns include December estimates. Performance is gross of investment management fees and net of administrative

expenses and underlying fund expenses. Actual performance for investors will be presented in the monthly statements produced by the administrator.

Clients implemented via collective investment trusts incur product-level fees, including trustee and administrative fees, which will affect performance. 2 Volatility is annualized 3-year standard deviation through 03/31/2019. 3Assumes risk-free rate of 1.2% 03/31/2016-03/31/2019. 4 October 2009 is used as

date of Inception.Performance for periods of less than one year is cumulative. Performance data quoted is past performance. Past performance is no

guarantee of future results. The principal value and investment return of an investment will fluctuate so that shares, when redeemed, may be worth more or

less than their original value. Current performance may be higher or lower. For performance data current to the most recent month end, please call your

client service representative. Sources: SEI, Bloomberg.

Market Indexes 1Q19 YTD 1Y Return 3Y Return 5Y Return

Since

Inception4 Volatility2 Sharpe Ratio3

S&P 500 TR: 13.6% 13.6% 9.5% 13.5% 10.9% 13.3% 10.7% 1.1

MSCI World TR: 12.5% 12.5% 4.0% 10.7% 6.8% 9.0% 10.1% 0.9

MSCI Emerging Markets: 9.6% 9.6% -9.6% 8.1% 1.2% 1.6% 13.0% 0.5

Dollar Index: 1.2% 1.2% 8.1% 0.9% 4.0% 2.5% 5.8% 0.0

Bloomberg Barclays Global

Agg: 2.2% 2.2% -0.4% 1.5% 1.0% 2.0% 4.7% 0.1

Bloomberg Barclays US Agg: 2.9% 2.9% 4.5% 2.0% 2.7% 3.4% 3.0% 0.3

Bloomberg Commodity: 6.3% 6.3% -5.3% 2.2% -8.9% -4.2% 9.9% 0.1

Hedge Fund Indexes

HFRI Composite Fund of HF: 3.8% 3.8% -0.6% 3.2% 1.7% 2.1% 3.2% 0.6

HFRI Div. Fund of HF: 4.5% 4.5% 1.0% 3.7% 2.2% 2.8% 3.4% 0.7

HFRX Global HF Index: 2.6% 2.6% -3.3% 1.9% -0.3% 0.8% 3.7% 0.2

SEI Funds

Special Situations Fund:1 7.1% 7.1% 3.1% 6.6% 2.7% 4.0% 4.6% 1.2 Strategy Performance (gross)

Special Situations Fund

Equity Hedge: 9.1% 9.1% 5.4% 6.9% 4.3%

Relative Value: 4.0% 4.0% 3.2% 6.9% 3.3%

Event-Driven: 6.2% 6.2% 0.7% 7.9% 3.0%



SEI Special Situations Fund: Performance review

In base currency, gross of fees

Sources: SEI

Performance for periods of less than one year is cumulative. Performance data quoted is past performance. Past performance is no guarantee of future

results. The principal value and investment return of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their

original value. Current performance may be higher or lower. For performance data current to the most recent month end, please call your client service

representative.

All sub-strategies were positive in the first quarter.

Contributors:

• Equity Hedge returned 9.1%, adding significant alpha over its 44% net market exposure.

Gains were broadly distributed, but payment services (First Data, Worldpay), small-cap

equities, long-biased strategies and China exposure were areas of particular strength.

• Event-Driven returned 6.2%, in line with its market exposure. Activist investors Third Point

and Starboard Value performed best, helped by positions in Nestle, Papa John’s and

Mellanox.

• Relative Value returned 4.0%, outperforming its 20% net market exposure. Multi-strategy

fund Schonfeld and credit long/short specialist GCA were the best performers.

• There were no detractors, but we had relatively weak performance in securitized assets

(short hedges hurt), distressed debt (PG&E bonds) and Europe.



U.S. property market landscape

Sources: NCREIF ODCE Vacancy Rate is from the NCREIF ODCE Details spreadsheet and is calculated as 1 minus the Occupancy rate; NPI Net Operating

Income Growth, Transaction Cap Rates, Current Value cap Rates, and NPI Price Index are from the NCREIF Trends Report and the Index figures are 4-quarter

rolling averages



U.S. property market returns

Source: NCREIF. NPI is a quarterly time series composite total rate of return measure of a very large pool of individual commercial real estate properties acquired

in the private market for investment purposes only on an unlevered basis. The ODCE (Open-End Diversified Core Equity) is a Fund-level capitalization weighted,

time-weighted return index and includes property investments at ownership share, cash balances and leverage. Past performance does not guarantee future

results. Performance for periods of less than one year is cumulative; greater than one year is annualized.

• It was another positive quarter for the U.S. property market, with

both income and capital growth contributing to returns.

• Strong operating fundamentals continued and supported higher

valuations, with appreciation contributing 0.4% of the ODCE’s 1.4%

total return.

• All five sectors had gains; industrial and retail led the way with

increases of 3.0% and 1.7% and were followed by office, multifamily

and hotel at 1.6%, 1.3%, and 0.4%, respectively.

• Rounding out the real estate marketplace, the west and south

regions had the strongest performance (up 2.2% and 1.9%,

respectively). Occupancy rates and current cap rates all remained

in line with the prior quarter. Same store net-operating-income

growth rate increased relative to the prior quarter.



Core Property Fund: Performance review

Contributors

• Of the nine underlying Funds, four exceeded the NPI benchmark of

1.8% and seven were ahead of the ODCE peer group of 1.4%.

• Gains were broad based, as all four of the primary sectors posted

positive returns. The three sector specialists again generated

attractive income returns relative to the more diversified managers.

• The Fund’s overweight to industrial assets, as well as the non-core

exposure to self storage, both contributed on a comparative basis.

Detractors

• Overall, the managers performed well, with only two posting an

absolute return lower than 1.2%.

• The primary laggard was a diversified fund that is in the process of

selling assets and returning capital; quarter to quarter volatility in the

return of this manager is anticipated throughout the process.

Sources: SEI and NCREIF. Fund Allocation excludes cash.

Performance for periods of less than one year is cumulative; greater than one year is

annualized. Performance is gross of investment management fees and net of

administrative expenses and underlying fund expenses. Clients implemented via

collective investment trusts incur product-level fees, including trustee and

administrative fees, which will affect performance.

Performance data quoted represents past performance. Past performance does not

guarantee future results. The investment return and principal value of an investment

will fluctuate so that an investor’s shares, when redeemed, may be worth more or

less than their original cost, and current performance may be lower or higher than the

performance quoted. For performance data current to the most recent month end,

please call 1-800-DIAL-SEI.



Core Property Fund: Positioning and actions

Sources: SEI, NPI. Based on actual invested position of money drawn by Underlying Funds and excluding cash; “Other” includes predominantly self-storage, hotel and land.

Positioning

• The Fund currently maintains overweights to the industrial and other

sectors at the expense of office and retail.

• Fund-level leverage stands at 22.8%, and occupancy is 93.4% for

the quarter; both of these are higher than the corresponding ODCE

figures by 1.2% and 0.6% , respectively.

• The Fund remains well diversified through its nine managers, which

in total provide exposure to more than 900 individual properties.

Actions

• The Fund received additional commitments of approximately $31.0

million for January 1, 2019 and currently has no investment queue.

Additionally, redemption requests totaled $31.2 million for March 31,

2019, with many of those due to rebalancing requests.

• Current assets under management are $2.2 billion.

• For a variety of reasons, including both risk positioning and capacity

addition, we are in the process of replacing one of the diversified

managers; this exchange will reduce the fund’s leverage ratio while

also adding a manager with a larger portfolio of properties in an

effort to lower individual property risk.

68 Footer

Disclosures


Important information This presentation is provided by SEI Investments Management Corporation (SIMC), a registered investment adviser and wholly owned subsidiary

of SEI Investments Company. The material included herein is based on the views of SIMC. Statements that are not factual in nature, including

opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are

subject to change without notice. Nothing herein is intended to be a forecast of future events, or a guarantee of future results. This presentation

should not be relied upon by the reader as research or investment advice (unless SIMC has otherwise separately entered into a written agreement

for the provision of investment advice).

There are risks involved with investing including loss of principal. There is no assurance that the objectives of any strategy or fund will be achieved

or will be successful. No investment strategy, including diversification, can protect against market risk or loss. Current and future portfolio

holdings are subject to risk. Past performance does not guarantee future results.

For those SEI funds which employ a “manager of managers” structure, SIMC is responsible for overseeing the sub-advisers and recommending

their hiring, termination, and replacement. References to specific securities, if any, are provided solely to illustrate SIMC’s investment advisory

services and do not constitute an offer or recommendation to buy, sell or hold such securities.

Any presentation of gross mutual fund performance of underlying mutual fund investments or gross account level performance is only intended for

one-on-one presentations with clients and may not be duplicated in any form by any means or redistributed without SIMC’s prior written consent.

Through June 30, 2012, annual performance is calculated based on monthly return streams, geometrically linked. From June 30, 2012 onward,

annual performance is based upon daily return streams, geometrically linked as of the specific month end.

Performance results do not reflect the effect of certain account level advisory fees. The inclusion of such fees would reduce account level

performance, particularly when compounded over a period of years. The following hypothetical illustration shows the compound effect fees have

on investment return: For an account charged 1% with a stated annual return of 10%, the net total return before taxes would be reduced from 10%

to 9%. A ten year investment of $100,000 at 10% would grow to $259,374, and at 9%, to $236,736 before taxes. For a complete description of all

fees and expenses, please refer to SIMC’s Form ADV Part 2A, the investment management agreement between SIMC and each client, and

quarterly client invoices.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties, which in certain

cases have not been updated through the date hereof. While such sources are believed to be reliable, neither SEI nor its affiliates assumes any

responsibility for the accuracy or completeness of such information and such information has not been independently verified by SEI.

Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any

management fees, transaction costs, or expenses, which would reduce returns. Indexes are unmanaged and one cannot invest directly in an

index.


Important information

SIMC develops forward-looking, long-term capital market assumptions for risk, return, and correlations for a variety of global asset classes, interest

rates, and inflation. These assumptions are created using a combination of historical analysis, current market environment assessment and by

applying our own judgment. In certain cases, alpha and tracking error estimates for a particular asset class are also factored into the

assumptions. We believe this approach is less biased than using pure historical data, which is often biased by a particular time period or event.

The asset class assumptions are aggregated into a diversified portfolio, so that each portfolio can then be simulated through time using a monte-

carlo simulation approach. This approach enables us to develop scenarios across a wide variety of market environments so that we can educate

our clients with regard to the potential impact of market variability over time. Ultimately, the value of these assumptions is not in their accuracy as

point estimates, but in their ability to capture relevant relationships and changes in those relationships as a function of economic and market

influences.

The projections or other scenarios in this presentation are purely hypothetical and do not represent all possible outcomes. They do not reflect

actual investment results and are not guarantees of future results. All opinions and estimates provided herein, including forecast of returns, reflect

our judgment on the date of this report and are subject to change without notice. These opinions and analyses involve a number of assumptions

which may not prove valid. The performance numbers are not necessarily indicative of the results you would obtain as a client of SIMC.

We believe our approach enables our clients to make more informed decisions related to the selection of their investment strategies.

For more information on how SIMC develops capital market assumptions, please refer to the SEI paper entitled “Executive Summary: Developing

Capital Market Assumptions for Asset Allocation Modeling.” If you would like further information on the actual assumptions utilized, you may

request them from your SEI representative.


Important information

Annual performance is calculated based on monthly return streams, geometrically linked as of the end of the specified month end.

Performance results do not reflect the effect of certain fund fees and expenses or investment advisory fees which would lower performance.

Performance reflects the reinvestment of dividends and other earnings. Performance information shown does not reflect any charges or fees which

may or may not be imposed by SIMC or the money manager, which will reduce performance returns. The following hypothetical illustrates the

compound effect fees have on investment return: For an account charged 1% with a stated annual return of 10%, the net total return before taxes

would be reduced from 10% to 9%. A ten year investment of $100,000 at 10% would grow to $259,374, and at 9%, to $236,736 before taxes. For a

complete description of all fees and expenses, please refer to SIMC’s Form ADV Part 2A, the investment management agreement between SIMC

and each client, and quarterly client invoices. For more details on the manager’s fees and expenses, please refer to their Form ADV Part 2A. This

presentation of modified gross performance is only intended for one-on-one presentations with clients and may not be duplicated in any form by

any means or redistributed without SIMC’s prior written consent.

#3400.1

59 R

ev. 1

0/1

6

Board of Directors

Financial Update

FY 2019 period ending 4/30/19

Presented on 5/30/19

Financial Services

System AdmissionsFor the seven months ending April 30, 2019

Fiscal year to date inpatient admissions were relatively flat

to budget and prior year by 0.3% and 0.7% respectively.

Overall growth of adjusted admission fiscal year to date

was 1.8% higher than prior year but under budget -1.1%2

89,000

90,000

91,000

92,000

93,000

94,000

93,274

92,267

90,659

YTD Budget YTD Actual YTD Prior Yr

Adjusted Admissions47,700

47,800

47,900

48,000

48,100

48,200

48,300

48,400

48,140

48,316

47,925


Admissions

Average Length of StayFor the seven months ending April 30, 2019

FY’19 LOS increased 2.0% from prior year and 0.6% from budget.

Inpatient cases have become more complex and documentation

has improved. Case mix index increased to 1.64 from 1.61 prior year

and 1.62 budget.3

5.00

5.05

5.10

5.15

ALOS

5.205.24

5.14


Average Daily Census (ADC)For the seven months ending April 30, 2019

1050

1100

1150

1200

1250

1300

1350

1400

ADC ADC with Short Stays

1,182

1,342

1,193

1,372

1,161

1,326

YTD Budget YTD Actual YTD Prior Year

ADC YTD is over 1.0% and 2.8% from budget and prior

year, respectively. Of significance is the month of

February’s ADC was 122 higher, March was 99 higher and

April’s ADC was also 93 higher compared to prior year. 4

SurgeriesFor the seven months ending April 30, 2019

0

10,000

20,000

IP Surgeries OP Surgeries

12,29716,80912,379

14,450

12,52914,498


Outpatient surgeries trending down from budget across all

locations. Coconut point cases were lower than budget by 1,053

cases due to an even spread of budget cases which should have

reflected a steady build up. Coconut Point surgeries are growing

rapidly, Jan - Mar from 52 to 127. cases.

24,000

26,000

28,000

30,000

Total Surgeries

29,106 26,829 27,024


ER Visits For the seven months ending April 30, 2019

6

ER adult treated and released visits up 5.4% from prior year,

Lee Health at Coconut point, 6,881 visits or 10.5% over budget.

Total system-wide average ER visits per day in month of April

was 858 vs. prior year 814, an increase of 45 patient per day.

130,000

135,000

140,000

145,000

150,000

ER Visits

148,173 147,086

138,974


15.0%

20.0%

25.0%

% ER Visits Admitted

19.0% 18.8% 20.2%


Physician VisitsFor the seven months ending April 30, 2019

7

FY’19 Physician Visits are 3.7% under budget and 0.6%

above prior year. The majority of this variance is due to

Specialty visits (both adult & pediatric) being below

budget and prior year by 26,533 and 348 visits respectively.

860,000

870,000

880,000

890,000

900,000

910,000

920,000

930,000

926,115

892,182886,974


OP ProceduresFor the seven months ending April 30, 2019

8

Outpatient procedures are 3.7% above budget YTD and

10.5% from prior year. Cardiology and Rehab Services saw

the most significant increases in volume along with the

opening of Coconut Point.

420,000

440,000

460,000

480,000

500,000

520,000

482,516

500,497

452,770


Income Statement

Fiscal Year to Date 2019seven month period through 4/30/2019

9

Statement of OperationsFor the seven months ending April 30, 2019

10

Act to Bud

$ Var

STATEMENT OF OPERATIONS:

Revenues:

Net Patient Revenue 1,090,933 1,098,663 1,034,822 7,730 0.7% 6.2%

Other Operating Revenue 58,185 39,228 22,889 (18,957) -32.6% 71.4%

Total Net Operating Revenue 1,149,118 1,137,891 1,057,711 (11,227) -1.0% 7.6%

Expenses:

Operating Expenses 1,026,332 1,012,188 948,402 14,144 1.4% -6.7%

Capital Expenses 78,663 78,492 67,849 171 0.2% -15.7%

Total Expenses 1,104,995 1,090,680 1,016,251 14,315 1.3% -7.3%

Operating Gain 44,123 47,211 41,460 3,088 7.0% 13.9%

Operating Margin % 3.8% 4.1% 3.9%

Non Operating Revenue 37,155 19,195 24,374 (17,960) -48.3% -21.2%

Excess Revenues Over Expenses 81,278 66,406 65,834 (14,872) -18.3% 0.9%

Profit Margin % 7.1% 5.8% 6.2%

Year to Date

Actual Prior Year

Act to Bud

% Var

Act to PY

% VarBudget

11

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

FY19 BUD FY19 ACT FY18 ACT

36.6% 35.6% 36.7%

16.6% 18.0% 16.7%

4.2% 4.3% 4.3%

9.0% 8.6% 8.8%

19.5% 19.4% 19.1%

14.1% 14.1% 14.4%

Comm/Other

HMO/PPO

Medicaid HMO

Medicaid

Medicare HMO

Medicare

Payer MixFor the seven months ending April 30, 2019

FY’19 Payer mix increase of Medicare HMO and increase

demand for Medicare Advantage plans in our region.

Relatively stable payer mix otherwise.

12

Charity Write-offs & Bad Debt ExpenseFor the seven months ending April 30, 2019 (in thousands)

FY’19 Charity as a % of Gross Revenue is higher than prior

year by 9.4% and budget by 2.1%. Bad Debt as a % of Net

Revenue is running also lower than prior year by 9.4% and

budget by 6.3%.

Charity Write-offs 172,498 178,046 167,371 -3.2% -6.4%

Bad Debt Expense 152,859 144,289 150,036 5.6% 3.8%

Total Charity Write-Offs & Bad Debt Expense 504,602 491,031 463,365 2.7% -6.0%

Gross Patient Revenues 5,139,697 5,245,551 4,795,253 -2.1% -9.4%

Net Patient Revenues (to include bad debt) 1,090,933 1,098,663 1,034,822 -0.7% -6.2%

Charity as a % of Gross Revenue 3.4% 3.4% 3.5% -1.1% 2.8%

Bad Debt as a % of Net Revenue 14.0% 13.1% 14.5% 6.3% 9.4%

Actual Prior Year

Act to Bud %

Variance

Act to Prior

% VarianceBudget

Net Revenue per Adjusted AdmitFor the seven months ending April 30, 2019

13

11,100

11,200

11,300

11,400

11,500

11,600

11,700

11,800

11,900

12,000

Net Rev per AA

11,696

11,907

11,414

Budget Actual Prior Year

FY’19 Net Patient Revenue per adjusted admit increase from

budget is 1.8% and prior year 4.3%.

Net Revenue per CMI Adjusted AdmitsFor the seven months ending April 30, 2019

14

6,950

7,000

7,050

7,100

7,150

7,200

7,250

Net Rev per CMAA

7,205

7,250

7,082


1.50

1.55

1.60

1.65

System Case Mix

1.62

1.64

1.61


FY’19 Net Patient Revenue increase from budget is $7.7m. The

revenue impact due to volume was negative $11.8m offset by a

positive rate impact of $19.5m. Case Mix Index has remained

higher than both budget and prior year.

Operating Expense Analysis Fiscal Year to Date 2019seven month period through 4/30/2019

15

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

FY19 BUD FY19 ACT FY18 ACT

53.4% 52.9% 54.9%

19.1% 19.0%19.7%

4.3% 4.7%4.5%

11.4% 11.1% 9.4%

5.6% 5.8% 5.2%

Gain from Operations

Depreciation/Interest

Purchased Services

Other Services

Supplies

Salaries/Benefits

(4,518)

4,987

(1,333)

2,549

11,184

Percent of Total Operating RevenueFor the seven months ending April 30, 2019

Budget Actual Prior Year Bud Variance PY Variance Var %

Total Operating Expenses 1,026,332 1,012,188 948,402 14,144 (63,786) 1.4%

Expenses – Salaries and Benefits For the seven months ending April 30, 2019

17

Labor expenses

increased $21.8 million

from prior year and

came in under budget by

$11.2 million primarily

due to a 3.3% gain in

labor productivity.

Average Hourly Rate

FTE per AOB

Average hourly rate

increased 3.5% from

prior year and was 1.0%

over budget resulting in

a negative rate variance

to budget of $5.3m.

5.00

5.10

5.20

5.30

5.26

5.11

5.30


34.50

35.00

35.50

36.00

36.50

36.11

36.49

35.24



Total Salaries & Benefits 613,670 602,486 580,654 11,184 (21,832) 1.8%

Expenses – Supplies per CMAAFor the seven months ending April 30, 2019

1,410

1,420

1,430

1,440

1,450

Supplies per CMAA

1,448

1,430 1,428


18

Supply Expense came in $2.6 million under budget overall and is 1.2% lower

per case mix adjusted admission than budget. Drugs had the most

significant favorable variance at $3.4 million under budget.


Total Supplies 219,180 216,631 208,585 2,549 (8,046) 1.2%

Expenses – Purchased ServicesFor the seven months ending April 30, 2019

-

50,000

100,000

150,000

Purchase Services

131,551 126,564

99,199


19

Purchased services ran under budget by $5.0 million with most significant favorable variances in the Medicaid Provider Service Network lower membership and corresponding fees. The favorable variance was partially offset by greater than budgeted contract expense for contracted hospitalists services at Gulf Coast Medical Center and Cape Coral Hospital ($1.4m over budget) , and increases in contract service agreements for equipment repairs and maintenance and information technology.


Total Purchased Services 131,551 126,564 99,199 4,987 (27,365) 3.8%

Gain (Loss) From Operations ( in 000’s )

For the seven months ending April 30, 2019 (in thousands)

20

38,000

40,000

42,000

44,000

46,000

48,000

44,123

47,211

41,461

Budget 2019 Actual 2019 Prior Year 2018

Operating Margin: 3.8% 4.1% 3.9%

Financial RatiosFor the seven months ending April 30, 2019

21

2017 Moody's

Median

2019 Financial

Goals

FYE 4/30/19 FYE 9/30/18

226.5

195.8

210.2

195.6

Days Cash on Hand

2017 Moody's

Median

2019 Financial

Goals

FYE 4/30/19 FYE 9/30/18

169.6%141.5% 127.4% 133.2%

Cash to Debt %

For the month of April, cash increased from the issuance of

new debt by $150m.

22

Strong Financial Results

Year over Year freestanding

outpatient net revenue

growth

Nat'l Leader Desired Meets Exceeds Current Reporting

Target Direction Goal Goal Status Tracking Period

Year over Year freestanding

outpatient net revenue 25.0% 30.0% 34.3% FTYD Aprgrowth

Key Performance Indicator

Results

Strategic Priority

FTYD Apr

Higher is

Better

Higher is

Better3.0% 3.5% 4.1%

Better than

Goal

Better than

GoalOperating Margin %

__

4.60%

Right Cost

Strong Financial

Key Performance Indicator

Right Cost

Operating Margin %

Definition

Annual percentage increase in net revenues generated in freestanding outpatient centers. Compare

growth between FY 2018 and FY 2019.

Operating Margin percent is calculated by dividing the system’s gain from operations by total

operating revenuew. This is reported in the monthly consolidated financial statements on page A.8.

Strong Financial

Results

Strategic Priority

Thank You

Lee Memorial Health System Board of Directors Updated 3/2/17

BBBOOOAAARRRDDD OOOFFF DDDIIIRRREEECCCTTTOOORRRSSS

RECOMMENDED FOR BOARD FINANCE COMMITTEE ACTION (Action includes Acceptance, Approval, Adoption, etc)

Keep form to one page, EMAIL to: [email protected] by Noon

Eight (8) days PRIOR to presenting.

DATE: May 22, 2019 LEGAL SERVICE REVIEW? YES X NO__

SUBJECT: FY 2020 Lee Health Total Rewards Recommendations

REQUESTOR & TITLE: Alison Thurau, System Director HR, Total Rewards and Michael Wukitsch, Chief Human Resources Officer

PREVIOUS BOARD ACTION ON THIS ITEM (IF ANY) (justification and/or background for recommendations – internal groups which support the recommendation)

Annually the LH Board of Directors reviews the fiscal year LH Compensation and

Benefits budget approved by senior leadership and presented by Human Resources. Upon review, action is taken to approve a recommended program pending full Board

approval of the final budget in September.

SPECIFIC PROPOSED MOTION:

Approval of the FY 2020 LH Compensation Program Recommendations pending the

Board of Directors’ final approval of the FY 2020 LH Budget.

Approval of the FY 2020 LH Benefits Program Recommendations pending the Board of Directors’ final approval of the Fiscal Year 2020 LH Budget.

FINANCIAL IMPLICATIONS Budgeted Account X Non-Budgeted ____ (Annual Project Budget and Total Project Budget)

STAFFING & OPERATIONAL IMPLICATIONS

(including FTEs, facility needs, etc.)

PURPOSE/REASON FOR RECOMMENDATION

To attract and retain LH staff, approval will help LH remain market competitive for both compensation and benefits.

SUMMARY (including alternatives considered, Pros and Cons)

Compensation Budget- $18.8 M Benefits: Health Plan Budget - $118 M

mailto:[email protected]

#3400.1

59 R

ev. 1

0/1

6

Total Rewards Presentation

Presented By; Alison Thurau , System Director HR Total Rewards May 2019

1

Positioning Total Rewards: Does it give employees what they really want?

WHAT COMPANIES OFFERWHAT EMPLOYEES CRAVE

13%EVP differentiated by having a purpose-driven mission

75%Thriving employees are 3x times more likely to work for

a company with a strong sense of purpose…

21% Practice some form of internal pay disclosure

28% Offer a career management/pathing tool

14%Have health & well-being as a talent management priority this year

75%10x more likely to feel career-

empowered

77%3x more likely to say their workplace

focuses on health & well-being

MERCER GLOBAL TALENT TRENDS 2018 STUDYCopyright 2019 Mercer (US) Inc. All Rights Reserved.

2

Annual Pay Raise:The Highs and Lows of the Employee Experience

3

Total Rewards Strategy: Main Drivers= Organizational Culture and Business Strategy

• Our employees are the heart of Lee Health and it’s essential that we link our culture, business strategy, employee performance and recognition and rewards. As we succeed in improving patient and employee safety and experience, and in operating margin, we share that success with our employees through pay for performance.

• Our goal is to optimize the health, wellness and productivity of Lee Health employees and their families while managing future benefit plan costs, offering competitive benefits and maintaining employee engagement and retention.

Our Values : Respect, Excellence, Compassion, Education

Total Rewards Strategy – Compensation

Base pay structure and hiring packages must support our ability to hire, develop, and retain talent. Base pay structure should be competitive -- matching the market (50th %tile) where we compete for talent. We should be more competitive (60th and 75th %tile) for high demand and difficult-to-recruit positions. “Competitive” is defined by base pay, hiring incentives and key contributor bonuses at the current time – but needs to focus on identifying top performers, team and individual incentives in the future.

Markets where we recruit:

Support Positions – Florida Market

Professional Positions – National Market

Leader Positions – National Market

4

Total Rewards Strategy – Compensation

Recommendation FY 2020:

• This year we are requesting approval of :

• A 3% merit pool of $ 14.5 million and a 0%-6% range with an average merit of 3.0%.

• $1.5 million for market adjustments, along with a Key Contributor’s Pool of $700,000 and a Nursing certification pool of $1.2 million.

• Including three additional Holidays to be paid at the Special Holiday Premium rate for a cost of $900,000. ( Memorial Day , July 4th and Labor Day)

• FY 2020 compensation budget of $18.8 million for approval.

5

Thank You

Benefits – The Journey

• How to improve

health status,

hold costs, and

make limited

decreased plan

design

changes.

The Health Plan has been

conservatively budgeted for

years with increasing

enrollment. The Lee Health

Employee Health Plan

medical claims trend

(4.7%) is below market

(6.0%) without benefit

reductions or significant

premium increases.

Benchmarking – vs. 2018 PPO BenchmarksPlan design details

▲ Favorable to benchmark

T H E L E E H E A LT H P L A N H A S A H I G H E R A C T U A R I A L / P L A N VA L U E C O M PA R E D T O B E N C H M A R K

P P O D E S I G N S .

— Comparable to benchmark

Source: Mercer’s National Survey of Employer-Sponsored Health Plans, 2018.

▼ Unfavorable to benchmark

• Values represent in-network benefits

*2018 PPO Plan Designs

Lee Health Plan Hospitals 500+ Health Care 500+ National 500+

ACTUARIAL VALUE 91% ▲ 88% 87% 87%

INDIVIDUAL/FAMILY DEDUCTIBLE $350 / $1,050 ▲ $600 / $1,250 $1,000 / $2,000 $750 / $1,500

INDIVIDUAL/FAMILY OOPM $2,500 / $7,500 ▲ $3,250 / $7,000 $3,300 / $7,000 $3,000 / $6,850

PLAN COINSURANCE 10% ▲ 20% 20% 20%

PHYSICIAN VISIT (PCP/SPC) $25 / $60 ▼ $25 / $40 $25 / $40 $25 / $40

EMERGENCY ROOM

Copay for ER (% of ER’s / Median) Yes / $150 81% / $150 84% / $150 78% / $150

Coinsurance for ER (% of ER’s / Median Yes / 10% ▲ 38% / 20% 28% / 20% 46% / 20%

Health Plan Cost BenchmarksActive Health Care Costs

Lee Health Benchmarking Health Care CostsAverage Plan Cost per Active Employee

BenchmarksLee Health vs. Benchmark

2018 Category 2018 PPO

Lee Health Medical Cost $13,122

Hospitals 500 + $14,374 ($1,252)/ -9.5%

Health Care 500 + $13,268 ($146)

National 500 + $13,178 ($56)

Source: Mercer’s National Survey of Employer-Sponsored Health Plans, 2018.

Forecast of 2020 Financials Based on Incurred Claims Data Paid Through December 2018

• Assumes Employee Only and Employee + Children contributions increase by 5%; Employee + Spouse and Family tiers increase by 10%

• Holding contributions flat in 2020 (at 2019 levels) would results in net costs of $117.7M.

Lee Health 2020 Forecast

Forecast Item Medical Pharmacy Total

2019 Projected Net Incurred Claims (9,457 enrollment) $111,181,000 $19,690,000 $130,871,000

Claims Trend 1.060 1.115 1.068

Forecasted 2020 Claims Cost for 9,457 Employees $117,852,000 $21,954,000 $139,806,000

Less Projected Rx Rebates $0 ($3,905,000) ($3,905,000)

Forecasted 2020 Claims Cost Net of Rx Rebates $117,852,000 $18,049,000 $135,901,000

Administration $2,019,000

Rx Dispensing $105,000

Network Access Fees $454,000

Stop Loss Insurance Premiums $1,882,000

Florida Cancer Payments $1,380,000

Status Quo Total Cost Before Considering Employee Contributions $141,741,000

Status Quo 2020 Illustrative Employee Contributions $25,932,000

Lee Health Status Quo Net Cost for 2020 (expected enrollment of 9,457) $115,809,000

Status Quo 2020 Net per Capita Cost $12,246

Strategic Next Steps – From the Committee

Strategies to Manage the Plan Going Forward:

Move RX Specialty Medicines – Top 2 to Lee and HPMC sites for 340 pricing and care advantages.

Develop a strong OB/GYN Care Management Program

Promote to plan participants our Oncologists and Advanced Providers in our Cancer Center.

For recruiting purposes offer employee and spouses the same coverage as if at Lee Health if working outside Lee, Charlotte and Collier counties.

Explore telemedicine offering for behavioral health.

Consider a move to a value based network.

10

Recommendations for Approval

• No increase in premiums except for the top tier. This is the tier of $100,000 plus salary. The increase in premiums would be 3% for this tier.

• Continue with current plan qualifiers and expand our outreach e-learning programs to Hyperlipidemia. Also convert our Osteoarthritis Program to a e-learning program.

• Approval of the 2020 health plan budget of $118 million.

11

12

In Summary :

Our 403(b) retirement plan match

remains above the market. If a

participant contributes 5% after

one year of service, Lee Health

contributes a matching 5% up to

IRS limits.

The PTO benefit remains very

competitive to market with no cap

on accruals and cash in provided.

Thank You



RECOMMENDED FOR BOARD ACTION (Action includes Acceptance, Approval, Adoption, etc)



DATE: May 30, 2019 LEGAL SERVICE REVIEW? YES__ NO_x_

SUBJECT: FY 2020 Financial Projections and Ratio Targets REQUESTOR & TITLE: Ben Spence, Chief Financial and Business Services Officer

PREVIOUS BOARD ACTION ON THIS ITEM (IF ANY) (justification and/or background for recommendations – internal groups which support the recommendation)

None

SPECIFIC PROPOSED MOTION:

Motion to approve the gain from operations target and budget assumptions to correspond

with a 3.0% profit margin and establish the financial goals for the FY 2020 budget

FINANCIAL IMPLICATIONS Budgeted Account ____ Non-Budgeted ____ (Annual Project Budget and Total Project Budget)

Lee Health sets it prices in a manner that ensure the financial viability of the system to maintain a reasonable

operating margin sufficient to meet the long term capital needs that support the strategic plan of the

organization that enables its mission an vision to be realized. Hospital prices reflect rates that are sufficient

to cover the cost of charity care, losses on uninsured and losses on reimbursement from payers that do not

fully cover the cost of services provided.

STAFFING & OPERATIONAL IMPLICATIONS (including FTEs, facility needs, etc.)


To allow Lee Health to continue FY 2020 budget process in a timely manner.

SUMMARY (including alternatives considered, Pros and Cons) Three year financial projections are used to assist with establishing the target operating margin for the 2020 Budget.

Based on the assumptions provided in the presentation, the target operating margin for the FY 2020 Budget will be 3%. The three year financial projection continues to support the System’s ability to meet the financial ratio goals.


#3400.159 Rev. 10/16

FY 2020 Financial Assumptions Projections and Ratios

Ben Spence, Chief Financial & Business Services Officer May 30, 2019

Key Assumptions – Inpatient Volume

• Population Growth of 2.2% • Hospital Inpatient use rate per 1,000 persons decrease of

1.8% • Inpatient Admission Growth of 1.3% in FY 2020 and 0.4%

in FY 2021 and FY 2022 • Acute Care Admissions 0.2% • Post Acute Admissions 27.5%

• Opening of Gulf Coast SNU

• Average Length of Stay (ALOS): • FY 2020 flat with Acute Care decrease of 2.5%

offset by growth in the Gulf Coast SNU • FY 2021 and FY 2022 at a 2.5% reduction

Key Assumptions – Outpatient Volume

• Observation Growth of 1%

• Outpatient Centers Growth of 5.0% • Lee Health Coconut Point Open for full year • Recent or Anticipated Acquisitions

• Physician Services Growth of 16.3% • Physician Recruitment and Acquisitions

• Overall Volume Growth of 3.2% in Adjusted Admissions • FY 2021 and FY 2020 at 2.4%

Revenue/Reimbursement Assumptions

• Hospital rate increase of Gross 5% / Net 2%. • Rate Increases will be set within the parameters of the

Hospital Rate Setting Guiding Principals attached

• Overall net revenue per adjusted admission rate increase • FY 2020: 2.00% increase • FY 2021: 1.25% increase • FY 2022: 1.00% increase

• Rationale: • Increased pressure on governmental reimbursement

(70% of our payer mix) • Increase pressure on commercial reimbursement rate • Uncertainty around ACA and uninsured trend line

Operating Expense as a % of Net Operating Revenue

Actual Projected2018 2019 2020 2021 2022

Salaries & Wages 46.9% 45.7% 45.0% 44.5% 44.1%Employee Benefits 7.7% 7.6% 7.4% 7.4% 7.4%Supplies 19.3% 18.8% 17.8% 18.2% 18.6%Purchased Services 10.5% 11.8% 13.4% 13.4% 13.3%Other Services 5.8% 5.8% 5.7% 5.7% 5.7%Depreciation & Amortization 5.6% 6.0% 6.2% 6.4% 6.3%Interest 1.2% 1.3% 1.4% 1.4% 1.4%

Total Operating Expenses 97.0% 97.0% 97.0% 97.0% 96.8%

Gain from Operations 3.0% 3.0% 3.0% 3.0% 3.2%

Statement of Operations (in thousands)


Gross Patient Revenue 8,000,779 8,627,112 9,092,060 9,608,109 10,159,061

Total Deductions from Revenue 6,250,285 6,797,678 7,150,287 7,594,722 8,076,573

Net Patient Revenue 1,750,494 1,829,433 1,941,772 2,013,387 2,082,488Other Operating Revenue 39,488 74,096 144,601 146,049 147,509Total Operating Revenue 1,789,982 1,903,530 2,086,374 2,159,436 2,229,997

Operating Expenses

Salaries & Wages 839,206 869,221 939,445 961,325 983,220Employee Benefits 137,404 145,384 154,328 160,541 165,181Supplies 346,082 357,572 372,018 392,367 413,870Purchased Services 187,941 223,908 280,055 288,457 297,111Other Services 104,143 111,288 119,380 123,541 127,558

Total Operating Expenses 1,614,777 1,707,373 1,865,226 1,926,231 1,986,940Depreciation & Amortization 100,366 113,878 129,569 138,529 140,576Interest 20,996 25,377 28,936 29,500 31,000

Gain From Operations 53,843 56,902 62,643 65,176 71,482

Non Operating Revenue 47,196 26,135 59,395 61,579 63,945

Excess of Revenue over Expenses 101,039 83,037 122,038 126,754 135,426

Lee Health Ratios Based on Projections

2017 Moody's Actual ProjectedMedian 2018 2019 2020 2021 2022

Profitability Ratios:

Operating Margin 2.3% + 3.0% 3.0% 3.0% 3.0% 3.2%Excess Margin 5.2% + 5.5% 4.3% 5.7% 5.7% 5.9%Operating Cashflow Margin 8.6% + 9.8% 10.3% 10.6% 10.8% 10.9%

Liquidity Ratios:

Days Cash on Hand 226.5 + 195.6 215.6 202.2 201.0 212.2Cushion Ratio 23.9 + 13.1 14.1 14.4 16.1 17.5 Cash-to-Debt 169.6% + 133.2% 130.1% 141.0% 153.1% 176.6%

Liquidity Ratios:

Debt-to-Capitalization 32.9% (-) 30.5% 33.2% 30.4% 27.8% 25.3%Annual Debt Service Coverage 5.4 + 3.1 3.3 3.7 4.0 4.1 Debt-to-Cash Flow 3.0 (-) 3.6 3.7 3.3 3.0 2.7

Note:+ = Ratios that should be above the Moody's median(-) = Ratios that should be lower than the Moody's median

Cash Available for Capital Based on Projections (in thousands)


Sources of Cash:

Gain From Operations 53,843 56,902 62,643 65,176 71,482Non Operating Revenue (Excluding Investment Income) 4,675 7,056 7,056 7,056 7,056Depreciation & Amortization 100,366 113,878 129,569 138,529 140,576

Total Sources of Cash 158,884 177,836 199,268 210,761 219,113

Uses of Cash:

Change in Patient Accounts Receivable (13,323) (13,390) (15,014) (10,790) (9,693)Net Borrowings/(Repayments Long Term Debt) (21,456) 128,518 (44,524) (38,527) (39,618)Change in All Other Assets 15,819 (4,165) (5,684) (4,017) (3,876)Change in All Other Liabilities (11,812) 34,819 7,000 3,372 3,131

Total Uses of Cash (30,772) 145,782 (58,222) (49,962) (50,056)

Cash Provided Prior to Investment Income 128,112 323,618 141,046 160,799 169,057Cash Provided by Investment Income 42,521 19,079 52,339 54,523 56,889

Cash Provided (Used) 170,633 342,696 193,384 215,322 225,946

Cash Balance Beginning of Period 996,434 876,521 1,023,312 1,046,695 1,077,017

Cash Balance Before Capital Spending 1,167,067 1,219,217 1,216,696 1,262,017 1,302,963

Projected Capital Spending 290,547 195,905 170,001 184,999 130,001Excess Cash After Capital Expenditures (119,914) 146,791 23,383 30,323 95,945

Total Cash & Investments 876,520 1,023,312 1,046,695 1,077,018 1,172,962Total Outstanding Debt 658,166 786,684 742,160 703,633 664,015

Cash-to-Debt Ratio 133.2% 130.1% 141.0% 153.1% 176.6%

Lee Memorial Health System Guiding Principles for hospital charges and rate setting

1) Lee Health hospital average annual price increases for all services including room and board rates and ancillary hospital services are based upon the most recent medical cost trend index as published by PriceWaterhouse Coopers, Health Research Institute (HRI). Average price is computed by dividing total charges by total adjusted admissions and case mix index. The Medical cost trend has ranged from 5 – 12% over the past 10 years.

2) Lee Health’s pricing goal is for its average hospital price per case mix adjusted admission

to be at or below the 45th percentile in the State of Florida based on hospital charge data reported annually to the Agency for Health Care Administration.

3) Lee Health sets it prices in a manner that ensure the financial viability of the system to maintain a reasonable operating margin sufficient to meet the long term capital needs that support the strategic plan of the organization that enables its mission an vision to be realized. Hospital prices reflect rates that are sufficient to cover the cost of charity care, losses on uninsured and losses on reimbursement from payers that do not fully cover the cost of services provided.

4) When the Board approves the annual operating and capital budget assumptions and financial goals to initiate the development of the budget, the Board approves the price increase which was determined using the pricing parameters and methodology listed above in 1 – 3.

Supplemental Information Lee Health prices compared to State of Florida average hospital prices based on 2017 AHCA data

• Lee Health prices are 24% lower than average hospital prices in state of Florida • 67% of hospitals in Florida have higher average prices • Lee Health prices are 2% lower than regional not-for-profit hospital average • Lee Health prices are 47% lower than regional for-profit hospitals

Historical Pricing Fact: Lee Health lowered community health care prices significantly in 2007 when it acquired the two HCA hospitals. Average prices at Gulf Coast Hospital and Southwest Florida Regional Medical Center on the highest volume DRG’s went down by 18% after Lee Health acquired these facilities.

Net Revenue impact of gross price increases

• Lee Health’s average net per-patient reimbursement has essentially kept up with inflation in recent years, increasing roughly 1 – 2% annually.

• Those net changes reflect the amounts the health system actually recovers, and are substantially less than the gross average charge master price increases of 5% annually.

• To be clear: raising the gross price by 5% does not translate to a 5% increase in health system reimbursement from payers and patients.

• The reason higher prices do not result in correspondingly higher reimbursement is because a large percentage of our payments are based on fixed case rates rather than a percentage of charge methodology.

• Medicare, Medicaid and our largest contracted commercial insurance companies pay on a predetermined fixed payment based on the type of service provided. In other words, those payers do not necessarily pay more when overall inflation and health system prices increase.

• Medicare and Medicaid insure approximately 68% of all Lee Health patients. Significantly, Medicare and Medicaid do not allow hospitals to negotiate for rates but rather publish their prices annually and providers choosing to participate in these programs must accept these rates as payment in full.

• Both Medicare and Medicaid reimburse Lee Health at amounts that are significantly less than our actual costs of providing care.

• Gaps in health insurance pose another hurdle. At least 9% of our patients are uninsured. Lee Health’s charity policy provides that patients with incomes from 0 –200% of the federal poverty level receive a complete 100% write-off of their bills. Lee Health absorbs all of the cost of care for these patients.

• Another often overlooked fact is that, despite Lee Health’s status as a special purpose unit of local government, Lee Health does not receive any direct tax support to help offset the losses on charity care and uninsured patients. Lee Health is the largest public health system in Florida that does not receive direct taxpayer support.

• Altogether, the challenge we face is as apparent as it is daunting. To maintain its public mission to our community, Lee Health must find ways to offset the losses on Medicare and Medicaid patients, and the $280 million in charity care write-offs to the uninsured and underinsured in the fiscal year that ending September 30, 2018, all without direct taxpayer support.

• In addition, we face challenges with the 25% our patients who have private (non-governmental) commercial insurance. This insurance generally is offered through patients’ employers.

• A small portion of these commercial payers have contract provisions that pay providers on a mutually agreed upon percentage of the gross charge master prices. Although these contracts represent a small percentage of our overall payer arrangements, they bring in additional net reimbursement related to our annual gross price increases.

• Those increases help offset the losses on the governmental payer reimbursement and charity care for the uninsured. To be clear: Even with those modest increases, the health system’s net reimbursement only manages to keep up with inflation.

• Choosing to raise charge master prices less than 5% would require a corresponding decrease in costs. That would be achieved largely through lower wage rates and/or fewer employees. The 5% rate increase is necessary to support the Board-approved operating margin, currently set at 3% for FY 2019.

The table below provides the impact of each 1% increase in gross prices for Lee Health:

Table of Net Reimbursement expected for each 1% in price increase

5% price increase = $15 million net revenue increase*

4% price increase = $12 million net revenue increase




Budgeted Merit & Market Increase for FY 2019 to continue providing competitive compensation for staff $15.4 million

Lee Health“Moving Care from Volume to Value”

• Population Health Transformation

Strategic Introduction

Dr. Larry Antonucci

• The Administration has been focused on the emerging marketpressures and these proposals are what administration believe are“must do and can’t fail” initiatives

Dr. Scott Nygaard

• We know that physician engagement and alignment to value basedcare models are essential and required to achieve Right Care in theRight Place at the Right Time and Right Cost

Ben Spence

• Remembering that we no longer are financially sustainable if we donot move to the a balanced payment model that fully takesadvantage of “Value Based Payments”

Why is Medicare Advantage a Must Do, Can’t Fail?The Market Landscape Is Changing

Competitors are targeting Lee Health’s Physicians and Patients and will challenge Lee Health if we fail to align patents and physicians to our advanced payment arrangement (CON, Ambulatory Expansion, ACO’s and Insurance Products)

• As HCA enters they are intending to target high margin business and Lee Health could lose patients, encounters and associated revenue.

• As Aetna/CVS and Optum launch Retail/MedExpress and expanded MinuteClinics, ambulatory patterns may shift volume, reducing LPG Encounters and associated ED, Inpatient and Service Line Revenue

Implications: “Provide our Community with Local, Physician-Led Options”

What if Lee Health Does Nothing?

Lee County FFS vs MA Comparison

Developed based on BCC's 2018 ACO costs adjusted to FFS levels and to exclude ESRD

MA estimate reflects estimated discount of approximately 25% in aggregate PMPM costs

Major Subcategory Unit Util/1,000 Cost/Service PMPM Util/1,000 Cost/Service PMPM

Inpatient Short-Term Stay Hospital Admits 240.6 $10,565 $211.80 156.4 $10,565 $137.67

Inpatient Skilled Nursing Facility & RehabAdmits 79.7 $11,069 $73.51 51.8 $11,069 $47.78

Inpatient Psychiatric Hospital Admits 4.3 $7,828 $2.82 2.8 $7,828 $1.83

Total Inpatient $288.12 $187.28

Outpatient Hospital Outpatient Visit 5,647.7 $262 $123.16 3,953.4 $262 $86.21

Professional Procedures Procedures 13,102.7 $110 $120.48 10,482.2 $110 $96.39

Professional Evaluation and Management Visits 11,195.3 $65 $60.98 10,819.1 $66 $59.07

Professional Laboratory and Other Tests Procedures 32,110.0 $33 $89.05 25,688.0 $33 $71.24

Professional Part B Drugs Units 73,412.2 $14 $85.65 58,729.7 $14 $68.52

Total Professional $356.16 $295.21

Ancillary Home Health Agency Units 13,147.5 $70 $76.69 10,518.0 $70 $61.36

Ancillary Ambulance Units 2,416.3 $38 $7.65 1,933.0 $38 $6.12

Ancillary Durable Medical Equipment Hardware 63.5 $2,411 $12.75 50.8 $2,411 $10.20

Ancillary Other Visits 1,889.0 $64 $10.11 1,511.2 $64 $8.09

Total Ancillary $107.20 $85.76

Total $874.64 $654.46

Difference ($220.18)

Note

- Costs shown here are not risk-adjusted, however risk score for the baseline population is 1.002

- Trend has not been applied from 2018 to 2020. Based on the MA rate books, trend from 2018 to 2020 in Lee County is 8.6%

MA EstimateFL FFS Estimate

Unchecked - As payers expand Medicare Advantage, the shift to value will pressure revenue

Strategic Imperative: “Building options for our Community”

The competitive landscape requires

- Meaningful differentiation to protect pricing against declining FFS

- Physician alignment and loyalty to provider-led insurance products

- Patient “Delight” achieved through quality, integrated care management and the “Exceptional Lee” experience

Clinical Quality – “Raising the Performance Bar”

As a Medicare Advantage payer, we control 100% of the Premium, allowing Lee Health to set the standards of experience, quality, care delivery and value based payment arrangements

Quality standards are established across the entire continuum of care and the physician-led operating boards are accountable to set the quality standards and drive performance accountability

Profits are not taken out of our community and will be reinvested in quality, safety, innovation, enhanced benefits and provider incentives.

Proof of Quality: Provider Plans are Medicare STAR Rating Leaders

Provider-sponsored plans more likely to be rated 4.5 or 5 stars

• Distribution of 2015 MA Enrollees by Contract Quality Score. All plans vs. provider-sponsored plans

MA – A Focus on Quality

Plans are judged based on 9 Quality Categories

The following measures from these categories have direct and tangible impact on the Quality of Care received by a patient:• Staying healthy: screening tests and vaccines. Hitting the mark on these improve quality through

early detection, illness prevention, and perception of health/well-being• Managing chronic (long-term) conditions. Adherence to clinical standards of best practice, by design,

will improve the health and outcomes of members.• Member experience with the health plan. Especially focused on provider access and availability.

Access and coordination of care are the cornerstones for improved outcomes and health• Health plan customer service. Timely decisions on authorization and appeals and appropriate

Translation Service availability – improves patient experience, adding value and improving sense of well-being

• Drug plan customer service. How well the plan handles member calls and questions, again focusing on Timely Decisions and the Ease of Rx filling, as above

• Drug safety and accuracy of drug pricing. Ensuring medication safety, by definition, improves the quality of care delivered.

Independent Physician Engagement and Alignment is High

Clarion Health and the CIN (Innovatus) are generating physician excitement, engagement and alignment

Aligns PCP and Specialists into the Value Based Care model (Unlike the Medicare ACO that favors PCPs)

County Current Adequacy*Anticipated % of 2020

membership# of Providers

Charlotte 97.56% 876 183

Collier 97.56% 498 362

DeSoto 97.56% 36 22

Glades 90.24% 27 0

Hendry 95.12% 18 79

Lee 100% 2,562 918

Sarasota 97.56% 1,983 460

Total 6,000 2,024

* Currently credentialing contracted providers

Confidential – Do Not Distribute10

prepared for

• “Mark to Market” Process of multiple iterations and Actuarial Models

• Stakeholders

o Marketing

o Salesforce/Distribution - Brokers

o Lee Health and Evolent

o Actuarial – Evolent, Lee and Independent

• Comparisons and Benchmarks

o “Value Indexing”

• Clarion

• UHG

• Humana

Benefit Design and Competitiveness

Medicare Advantage Opportunity

Medicare Advantage Capability Readiness Dashboard

Culture/ Leadership

Quality / Outcomes

Risk Adjustment

Care Management

Network TechnologyHealth Plan Operations Functions

May2019

• Large Medicare Population and growing

• Positive P and L scenarios

• Alignment of initiatives across all lines

• ACO success

• Value of lives in MA are lucrative

Strengths

• Capital Reserves are in place

• Membership Enrollment

• Opportunity cost for other initiatives

• Physician engagement and alignment

Considerations

Combined Population Health Proforma

12

2020 2021 2022 2023 2024

Employee Health Plan Members 20,603 21,427 22,284 23,176 24,103

Savings $1.8M $1.9M $2.0M $2.2M $2.3M

Commercial Contracts Members 47,895 78,035 85,359 93,895 102,710

Shared Savings $3.5M $6.0M $6.8M $7.6M $8.5M

Medicare Advantage Members 6,000 7,200 8,280 9,108 10,019

Net Margin ($12.4M) ($5.4M) ($1.0M) $5.0M $9.8M

Direct to Employer Members 2,000 3,000 5,000 6,000 7,000

Net Margin $0.9M $1.4M $2.4M $3.0M $3.5M

Total Net Margin Impact ($6.3M) $3.9M $10.1M $17.7M $24.2M

Next Generation ACO will contribute ~$2.5 M Net Margin in 2019 and forecasted to Deliver ~$4.5 M in 2020.


prepared for

2020

Numerous milestones for BCP’s MA Launch Timeline for 2020

20192018

Jan JanJuly

Imp

lem

enta

tion/B

uild

Op

era

tio

ns

Diligence

Foundation(Aug 18’ –April 19’)

Product & Bid(Dec 18’ – Oct 19’)

Implementation(Jun 18’ – Dec 19’)

Readiness & Go-live(Jul 19 – Dec 19’)

Transition / Hand-offs(Dec 19 –Mar 20)

Ongoing

Operations(Jan 20 +)

• Market Entry

Strategy

• Business

Case

• Network Devo Contracting, o Network compositiono Payment methods

o Contract

Templates

• Legal Entities

• State Licensure

• Market Org

• NOIA preparation

• CMS Application

• Product Design

• Bid

• Advertising

• Member

Materials

F/M/B office

• Process

development

• Benefit Build

• Provider

Loading

• Interfaces

• IT Dev

• Staffing

• Variable

Staffing

• ID Cards

• Testing

• Vendor

Readiness

• Training

Feb 13, 2019

MA Application

Submission

November 13, 2018

Notice of Intent to

Apply (Non-Binding)

June 3, 2019

Bid Submission

September

CMS Approval and

Contract Execution

Mid-Aug 2019: Part D Benchmark / Rebate Reallocation

CM

S

April October

Oct 15 – Dec 7

AEP Jan 1, 2020

Plan Effective Date

Thank You


prepared for

Medicare Advantage market in Lee County is dominated by United and Humana

FL PENETRATION IS HIGH; LEE

COUNTY HAS OPPT’Y TO EXPAND

67%58%

67%

33%42%

33%

Lee

County, FL

183K

Florida

4,344K

National

56,998K

Traditional Medicare

MA enrollees

UNITED AND HUMANA DOMINATE LEE COUNTY

22%

48%

Humana

Other

FL Blue

United

Lee

County, FL

59K

23%

7%

AARP MedicareComplete Choice

Plan 2 (Regional PPO)

4 stars

AARP Medicare Complete (HMO) 4.5 stars

HumanaChoice Florida (PPO) 3.5 stars

Humana Gold Plus (HMO) 4 stars

HumanaChoice (RPPO) 3 stars

BlueMedicare HMO LifeTime 3.5 stars

AARP MedicareComplete Choice

Plan 1 (PPO)

4 stars

PLAN(S) STAR RATING


prepared for

Addressable Market & Membership Projections

1 CMS Penetration Files (April 2018)2 CMS Ratebook Filing (2019)

Counties

MA

Eligibles1

MA

Enrolled1

Penetration

MA

Eligbles

(3-Year

CAGR) Quartile

Double

Bonus 2019 FFS2

2019

Benchmark

(No Bonus)2

2019

Benchmark

(3.5% Bonus)2

2019

Benchmark

(5% Bonus)2

Lee 192,312 64,267 33.4% 5.7% 95% NO $938 $891 $924 $938

Collier 99,271 23,282 23.5% 5.6% 100% NO $901 $901 $932 $946

Charlotte 68,968 23,663 34.3% 5.7% 95% NO $929 $882 $915 $929

Sarasota 142,658 40,578 28.4% 5.0% 100% NO $907 $907 $939 $953

Hendry 5,978 1,681 28.1% 4.9% 95% NO $919 $873 $905 $919

Glades 2,663 890 33.4% 5.7% 95% NO $962 $914 $948 $962

Desoto 7,370 2,158 29.3% 4.5% 95% NO $918 $872 $904 $918

Total 519,220 156,519 30.1% 5.5% 97% 0% $923 $895 $927 $941

ILLUSTRATIVE

Counties surrounding Lee have

only 30% penetration compared to

42% in Florida and 33% nationally






DATE: 5/22/2019 LEGAL SERVICE REVIEW? YES_X_ NO__

SUBJECT: License Agreement for parking spaces – Samile Investments, LLC (Licensor) and Lee Memorial Health System (Licensee) REQUESTOR & TITLE: Latrice Davis, VP Lee Physician Group, Tammy Powell, LPG System Director Practice Operations

PREVIOUS BOARD ACTION ON THIS ITEM (IF ANY)

(justification and/or background for recommendations – internal groups which support the recommendation)

N/A

SPECIFIC PROPOSED MOTION: 1. Approve proposed licensing agreement between Samile Investments, LLC (Licensor) and Lee Memorial Health

System (Licensee) for 425 SE 47th Terrace, Cape Coral, FL 33904 comprising 31,744 square feet of vacant land to be utilized by Lee Health for parking to support the LPG South Cape practice located at 507 Cape Coral Parkway E, Cape Coral, FL 33904. Cost of License Agreement is $300.00 per month. Term begins on the effective date and may be terminated by either party with 30-days written notification.

2. Authorize the Lee Health President or Chairman to execute the lease upon final LMHS and/or Board counsel

review and revision of the final license agreement document as long as such revisions do not materially modify the specific license agreement terms as set forth above.

FINANCIAL IMPLICATIONS Budgeted Account ____ Non-Budgeted _X___

(Annual Project Budget and Total Project Budget)

STAFFING & OPERATIONAL IMPLICATIONS (including FTEs, facility needs, etc.)


Not enough patient parking. Current Parking spaces 45. Staff need 24, This leaves 21 for Patients. Future growth and practice

needs such as a Coumadin Clinic and additional nurse visits cannot be initiated as we are limited by the number of spaces available

for patient parking.

SUMMARY Additional spaces are needed to sustain the current patient parking needs and provide additional services, such as

Coumadin Clinic. New providers cannot be considered at this location until the parking challenges are addressed.


LICENSE AGREEMENT

This License Agreement (“Agreement”) is effective on May 1, 2019 (the “Effective Date”)

between Lee Memorial Health System, a Florida public health care system (“Licensee”), and

Samile Investments LLC, a Florida limited liability company (“Licensor”).

TERMS AND CONDITIONS

1. Grant of License. Pursuant to this Agreement, Licensor grants to Licensee, upon terms and

conditions that follow, a revocable, non-exclusive license for the use of a parking lot

(“Parking Lot”) owned by Licensor.

2. Parking Lot. The Parking Lot is located outdoors on land with an address of 452 SE 47th

Terrace, Cape Coral, FL 33904. The Parking Lot is approximately 31,744 square feet.

Licensee accepts the Parking Lot “as-is” and may not change the Parking Lot in any way

without Licensor’s prior written approval.

3. Term. The term of this Agreement begins on the Effective Date and expires upon the

occurrence of any of the following events:

a. either party’s delivery of a termination in accordance with the applicable provisions of

this License;

b. upon Licensor’s ceasing to be the fee simple owner of the Parking Lot;

c. Licensee’s default and Licensor’s election to terminate pursuant to the default provisions

contained in this License.

4. Use. Licensee shall have access to the entire Parking Lot at all days and times that this

Agreement is in effect, in order that employees, patients, contractors, and guests of Licensee

may park their vehicles.

5. Fees. Licensee shall pay to Licensor a fee of $300.00 per month for the use of the Parking

Spaces. The monthly fee will be due on the first of each month during the term of this

Agreement and will immediately be deemed late and in default if not received by Licensor

when due.

6. Default. If Licensee should default in or otherwise fail to perform any of the obligations set

forth in this License, including without limitation any applicable rules and regulations

established by Licensor from time to time, and fail to cure any such breach or default within

twenty four (24) hours after notice from Licensor, then Licensor may, in addition to all other

remedies available at law or in equity, revoke this License upon delivery of notice to

Licensee. In such event, Licensee shall immediately vacate the Parking Lot in accordance

with this License. In the event this Agreement is terminated, Licensee shall not have the right

to occupy the Parking Lot. Should Licensee do so after termination, without the express

written consent of Licensor, it is agreed that said occupancy shall constitute a trespass and

that, in addition to any other remedies available to it, Licensor shall be entitled to seek

immediate injunctive relief.

9. Termination. Licensor or Licensee may terminate this License for any reason upon giving

30 days’ notice to the other party as provided for in this License. In the event of termination,

this License shall immediately become void and the Licensee shall vacate the Parking Lot in

accordance with this License.

10. Notices. Any notice required or permitted to be delivered pursuant to this Agreement will be

in writing and will be deemed delivered: (a) immediately, if delivered in person; (b) in three

business days if sent by certified U.S. mail, postage prepaid; or (c) in one business day if sent

by a national overnight courier, in each case addressed to the following addresses or such

other address as may be specified by either party hereto upon notice given to the other:

If to Licensor:

Innova Property Management

4645 SE 11th Place, Suite 102

Cape Coral, FL 33904

If to Licensee:

Lee Health Ambulatory Facilities

12801 Westlinks Drive, Suite 102

Fort Myers, FL 33913

11. Complete Agreement. With respect to its subject matter, this Agreement constitutes and

expresses the entire agreement of the parties and supersedes all prior agreements and

understandings, whether written or oral, between the parties. No change or amendment of

any of the terms or provisions hereof will be binding unless in writing and signed by the

party against whom the same is sought to be enforced. Neither the failure of either party to

exercise any right, power, or remedy provided under this Agreement or to insist upon

compliance by any other party with its obligations under this Agreement, nor any custom or

practice of the parties at variance with the terms of this Agreement, will constitute a waiver

by such party of its right to exercise any such right, power, or remedy or to demand such

compliance. The waiver by a party of any breach or violation of any provision of this

Agreement will not operate as, or be construed to be, a waiver of any subsequent breach or

violation hereof.

12. Choice of Law & Forum. This Agreement is governed by and construed in accordance with

Florida law, without regard to conflict of laws principles. Each party specifically consents to

Florida as the proper jurisdiction for all legal actions arising directly or indirectly from this

Agreement and agrees that the state or federal courts located in Lee County, Florida shall be

the exclusive forum and venue for any such action.

13. Counterparts. This Agreement may be executed in multiple counterparts, each of which will

be deemed an original, and all of which together will constitute one and the same instrument,

whether by original, electronic, or facsimile signature.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective

Date.

LEE HEALTH SAMILE INVESTMENTS LLC

_____________________________________ _______________________________________

Name & Title: __________________________ Name & Title: __________________________





DATE: May 30, 2019 LEGAL SERVICE REVIEW? YES_x_ NO__ SUBJECT: 3 Year Continuing Services Contract for Construction Management for Acute Care Facilities REQUESTOR & TITLE: Dave Kistel, V.P. Facilities & Support Services PREVIOUS BOARD ACTION ON THIS ITEM (IF ANY) (justification and/or background for recommendations – internal groups which support the recommendation) On June 23, 2016, Lee Health Board of Directors authorized Lee Health administration to negotiate a Three (3) Year Continuing Services Contract Construction Management for Acute Care/Inpatient Services per Board Policy. The Three (3) Year Continuing Services Contract was subsequently executed. The proposed agreement, attached hereto, is the same form that was approved by this Board in 2016. SPECIFIC PROPOSED MOTIONS: First Motion: to accept the Certification & Selection Committee’s Rankings for the 3-Year Construction Management Continuing Services Contract for Acute Care Facilities as determined on May 16, 2019. Second Motion: to authorize Lee Health administration to Proceed with contract negotiations for a Three (3) Year Continuing Services Contract for Construction Management for Acute Care Facilities, per Board Policy 20.15 D and the Consultants Competitive Negotiation Act, starting with the highest numerically ranked firm, RD Johnson Construction and, if such negotiations are not successful to authorize the Lee Health Administration to then negotiate with the next ranked firm. Third Motion: Upon successful negotiation in accordance with Board Policy 20.15 D, authorize the President & Chief Executive Officer or Board Chairman to execute a Three (3) Year Continuing Services Contract for Acute Care Facilities, in substantially the same form as the attached draft contract, subject to final legal review. FINANCIAL IMPLICATIONS Budgeted Account _x__ Non-Budgeted ____ (Annual Project Budget and Total Project Budget) The 3-year Continuing Services Contract for Acute Care will be utilized for projects that are either currently funded or will be funded in the future through capital and contingency funds as approved by Lee Health and the Board of Directors. The continuing services contracts are for individual construction projects not exceeding 2 million dollars. STAFFING & OPERATIONAL IMPLICATIONS None. PURPOSE/REASON FOR RECOMMENDATION Selection of Construction Management Firms for Acute Care Projects allows Lee Health to move forward on smaller projects without delays, in a cost effective and time efficient manner.

SUMMARY (including alternatives considered, Pros and Cons) The Certification & Selection Committee ranked firms based upon their qualifications for 3-year Continuing Services Contracts for Acute Care Services per Board Policy. RD Johnson was highest ranked firm for Acute Care Services. The Board is being asked to approve Lee Health administration to proceed with contract negotiations and execution of the contract pursuant to Board Policy 20.15 D.


1 2 3 4 5 6 7 8

DEANGELIS DIAMOND 80 77 62.5 89 77 92 75 72 624.5

STEVENS CONSTRUCTION 86 85 91 95 87 79 85 92 700

RD JOHNSON CONSTRUCTION 94 99 86 98 89 95 100 97 758

LMHS 3‐YEAR CONSTRUCTION CONTINUING SERVICES AGREEMENT

ACUTE CARE/INPATIENT FACILITIES

FIRMSELECTION COMMITTEE MEMBER ID

TOTAL

1

CONTINUING SERVICES AGREEMENT CONSTRUCTION MANAGEMENT SERVICES AT RISK

ACUTE CARE SERVICES

THIS AGREEMENT is made and entered into as of the _____ day of ________________, 2019, by and between Lee Memorial Health System, d/b/a Lee Health, a special purpose unit of local government (“Owner”) and ________________________ (“Construction Manager”).

RECITALS:

WHEREAS, Owner is a special unit of local of local government engaged in

the delivery of health care services to the residents of Lee County, Florida; and

WHEREAS, Construction Manager is a construction manager engaged in the delivery of construction management services to the residents of Southwest Florida; and

WHEREAS, in the course of fulfilling its legislative purpose, Owner periodically utilizes construction management services relating to the construction and remodeling of acute care healthcare projects requiring Agency for Health Care Administration (“AHCA”) submission, compliance and inspection (referred to as “Acute Care Project”); and

WHEREAS, the Owner and Construction Manager desire to enter into a Continuing Services Agreement for Construction Management Services at Risk relating to Acute Care Projects undertaken by Owner over the next three (3) years in which the construction costs of each-individual Acute Care Project does not exceed Two Million and No/100 Dollars ($2,000,000.00); and

WHEREAS, the specific scope of services to be performed by Construction Manager for each individual Acute Care Project (“Project”) shall be defined in work orders (“Work Order[s]”) which are issued pursuant to the terms of this Agreement. A sample copy of the Work orders to be issued under this Agreement is attached hereto as Exhibit “A”.

OPERATIVE PROVISIONS:

NOW, THEREFORE, for and in consideration of the mutual covenants and

agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Owner and Construction

2

Manager, intending to be legally bound, agree as follows: 1. Recitals. The recitals set forth above are true and correct and are incorporated

herein in their entirety.

2. Term. This Agreement shall be for a term of three (3) years. The contract period shall commence on _____________ and shall terminate on _________________.

3. Construction Manager’s Services.

3.1 Scope of Services. The specific scope of services to be performed by the Construction Manager in connection with any Acute Care Project performed under the provisions of this Agreement shall be described in detail in the Work Order issued for the Acute Care Project (“Work”).The form of the Work Order to be used is attached hereto as Exhibit “A”.

3.2 Basic Services. The basic services to be performed by the Construction

Manager in connection with any Work Order issued under the terms of this Agreement shall consist of the following services:

3.2.1 Construction Manager shall provide competent supervision of all

phases of the Work.

3.2.2 Construction Manager shall cause the Work to be performed in accordance with the applicable drawings and specifications and all things indicated thereon or implied therefrom.

3.2.3 Prior to the commencement of any construction under a Work

Order, Construction Manager shall prepare and submit for Owner’s approval a Project Schedule which shall indicate the dates for starting and completion of the various stages of construction.

3.2.4 Construction Manager shall provide scheduling and periodic

updating on a monthly basis in the interest of completing the Work in the most expeditious and economical manner (“Progress Schedules”).

3.2.5 Before performing any Work contemplated in a Work Order,

Construction Manager shall carefully study and compare the

3

various drawings, specifications and other contract documents relevant to the Work, take field measurements of existing conditions related to the Work, observe any conditions at the project and promptly report to the Owner and Architect any errors, omissions or inconsistencies discovered by Construction Manager.

3.2.6 Construction Manager shall supervise and direct the Work, using

the Construction Manager’s best skill and attention

3.2.7 Construction Manager shall be solely responsible for and have control over construction means, methods, techniques, sequences and procedures and for coordinating all portions of the Work called for under a Work Order.

3.2.8 Construction Manager shall be fully and solely responsible for job

site safety.

3.2.9 Construction Manager shall be responsible for the acts and omissions of Construction Manager’s employees, subcontractors and their agents and employees and any other persons or entities performing portions of the Work for or on behalf of Construction Manager or any of its subcontractors.

3.2.10 Unless otherwise provide in the Work Order, Construction

Manager shall provide and pay for all labor, materials, equipment, tools, construction equipment and machinery, water, heat, utilities, transportation and other facilities and services necessary for proper execution and completion of the Work whether temporary or permanent and whether or not incorporated or to be incorporated in the Work.

3.2.11 Construction Manager shall enforce strict discipline and good order

among the Construction Manager’s employees and other persons carrying out the Work Order. Construction Manager shall not permit the employment of unfit persons or persons not skilled in tasks assigned to them.

3.2.12 Construction Manager shall deliver, handle, store, and install

materials in accordance with manufacturer’s instructions.

3.2.13 Construction Manager shall review for compliance with the

4

specifications and contract drawings, approve in writing and submit to the Architect shop drawings, product data, samples and similar submittals required by the specifications with reasonable promptness.

3.2.14 Construction Manager shall perform all work in accordance with

approved submittals.

3.2.15 Construction Manager shall confine its operations at the project site to areas permitted by law, ordinances, permits, specifications and construction drawings and shall not unreasonable encumber the project site with materials or equipment.

3.2.16 Construction Manager shall be responsible for cutting, fitting or

patching required to complete the Work or to make its parts fit together properly.

3.2.17 Construction Manager shall provide the Owner and Architect

access to the Work in preparation and progress wherever located.

3.2.18 Construction Manager shall keep the premises and surrounding area free from accumulation of waste materials or rubbish caused by operations under this Agreement. At the completion of the Work, Construction Manager shall remove from and about the Project waste materials, rubbish and Construction Manager's tools, construction equipment, machinery and surplus material.

4. Change Orders.

4.1 From time to time, Owner may authorize changes in Work Orders

issued pursuant to this Agreement, issue additional instructions, require additional Work, or direct the omission of Work previously ordered; provided, however, that Construction Manager shall not proceed with any change involving an increase or decrease in cost or extension of the substantial completion date without the prior written authorization of Owner in accordance with the procedures set forth herein.

4.2 Owner shall order changes in the Work by giving Construction Manager a written change order request (“Change Order Request”) setting forth in detail the nature of the requested change. Upon receipt of a Change Order Request, Construction Manager shall furnish to Owner a statement

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setting forth in detail, with a suitable breakdown by trades and work classifications, Construction Manager's estimate of the changes in the Guaranteed Maximum Price attributable to the changes set forth in such Change Order Request and a proposed adjustment to the substantial completion date resulting from such Change Order Request. If Owner approves in writing the estimate of Construction Manager, such Change Order Request and such estimate shall constitute a change in the Guaranteed Maximum Price and the substantial completion date shall be adjusted as set forth in such estimate. The foregoing procedure shall apply to both additive and deductive change orders. Agreement on any change orders shall constitute a final settlement on all items covered therein, subject to performance thereof and payment therefore pursuant to the terms of this Agreement. Construction Manager agrees to perform all change order Work on the basis of reimbursement to it of the cost of the Work plus the overhead and profit percentages specified herein.

4.3 It is understood and agreed that refinement and detailing will be accomplished from time to time with respect to the drawings and specifications set forth in any Work Orders issued pursuant to this Agreement. No adjustment in the Guaranteed Maximum Sum or the substantial completion date set forth in Work Orders shall be made unless such refinement or detailing results in changes in scope, quality, function and/or intent of the drawings and specifications not reasonably inferable or anticipatable by a Construction Manager of Construction Manager's expertise and experience.

5. Owner's Responsibilities. For each Project constructed under the terms of

this Agreement, Owner shall provide Construction Manager with the following information: 5.1 Owner shall designate a representative authorized to act on Owner's

behalf with respect to the Project described in the Work Order. Owner or such authorized representative shall render decisions in a timely manner pertaining to issues submitted by Construction Manager in order to avoid unreasonable delay in the orderly and sequential progress of Construction Manager’s services.

5.2 Except for the permits and fees which are the responsibility of Construction Manager, under this Agreement, Owner shall secure and pay for necessary approvals, easements, assessments and charges required for construction, use or occupancy of permanent structures or

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for permanent changes in existing facilities.

5.3 Owner shall furnish the services of architects, engineers and other professional consultants when such services are reasonably required by the scope of the Project.

5.4 Owner shall furnish structural, mechanical, chemical, air and water

pollution tests, tests for hazardous materials, and other laboratory and environmental tests, inspections and reports required by law or this Agreement.

6. Contract Price.

6.1 Compensation. In full consideration for the performance of any Work

Orders issued pursuant to this contract, Owner shall pay to Construction Manager the contract sum which shall consist of (1) the Cost of the Work; and (2) a profit and overhead component of ____ percent (__%) of the Cost of the Work (“Contract Sum”). Notwithstanding the foregoing, in no event shall the Contract Sum exceed the guaranteed maximum price established for each Work Order (“Guaranteed Maximum Price”). Owner shall not be obligated to Construction Manager for any sums in excess of the Guaranteed Maximum Price established for each Work Order.

6.2 The Cost of the Work. For purposes of this Agreement the phrase, “Cost of the Work” shall consist of the following items:

6.2.1 wages of hourly workers employed by Construction Manager to

perform any work called for under a Work Order;

6.2.2 cost of all materials, supplies and equipment incorporated or to be incorporated in any Project described in a Work Order issued pursuant to this Agreement, including the cost of transportation and storage thereof.

6.2.3 payments due to subcontractors from the Construction Manager or

made by the Construction Manager to subcontractors for their work performed pursuant to any Work Order issued under this Agreement;

6.2.4 rental charges for all temporary facilities, necessary machinery and

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equipment, exclusive of hand tools used at the site of any Project described in any Work Order issued pursuant to this Agreement, whether rented from ·Construction Manager or any third party, equipment supplier, including installation, repairs and replacements, dismantling, removal, cost of lubrication, transportation and delivery costs thereof, which are used in the support of a subcontractor or Construction Manager's own forces in the performance of any Work called for under a Work Order issued pursuant to this Agreement, at rental charges consistent with those prevailing in the area. Automobiles and trucks shall only be rented and/or leased with the Owner's prior written consent and approval;

6.2.5 the cost of premiums for all insurance and bonds which

Construction Manager is required to procure by this Agreement for any Projects described in Work Orders issued pursuant to the terms of this Agreement;

6.2.6 sales, use, gross receipts, or similar taxes related to expenses

allowable as part of the Cost of the Work imposed by any governmental authority, and for which Construction Manager is liable;

6.2.7 expenses associated with telephone service, heat, light, power,

water, sanitary facilities, weather protection and elevator services at the Project;

6.2.8 costs for trash and debris control and removal from the Project;

6.2.9 costs incurred due to an emergency affecting the safety of persons

and property at the Project;

6.2.10 costs for watchmen and security services for the Project;

6.2.11 costs for efficient logistical control of the Project, including horizontal and vertical transportation of materials and personnel;

6.2.12 wages and salaries of Construction Manager's supervisory

personnel when stationed at the Project described in a Work Order but only with Owner's written approval and only for that portion of their time devoted to performing the Work described in the Work Order; and

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6.2.13 any and all permits specifically required for the performance of

any Work described in a Work Order issued pursuant to this Agreement.

6.3 The Cost of the Work shall not include the following:

6.3.1 Any costs or expenses made necessary to correct defective

workmanship or to correct any Work not in conformance with any plans or specifications described in the Work Order or to correct any deficiency or damage caused by the negligent acts of Construction Manager or any other party for whom it is responsible including, but not limited to, its subcontractors and suppliers;

6.3.2 general operating expenses of Construction Manager's principal and branch offices other than the field office located at the Project identified in any Work Order issued pursuant to this Agreement;

6.3.3 any part of Construction Manager's capital expenses, including

interest on Construction Manager' s capital employed for the Project;

6.3.4 overhead and general expenses of any kind except as may be

expressly allowed in paragraph 6.1 of this Agreement;

6.3.5 any cost in excess of the guaranteed maximum price;

6.3.6 minor expenses, such as telegrams, telephone service, data processing costs, courier services, photocopies, reproductions and similar “petty cash” items; and

6.3.7 the cost of hand tools, such as shovels, hammers and the cost of

expendable items, such as bits, brooms, brushes, ropes and hard hats.

7. Payment.

7.1 Progress Payments.

7.1.1 Construction Manager shall submit to the Owner monthly

applications for payment in a form satisfactory to Owner

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(“Application for Payment”). Each Application for Payment shall contain an itemization of all payments made to subcontractors, material suppliers and all other matters which represent a portion of the Cost of the Work as well as that portion of Construction Manager's overhead and profit attributable to the Cost of the Work reflected in each Application for Payment.

7.1.2 The period covered by each Application for Payment shall be one calendar month ending on the last day of the month. No more than one (1) Application for Payment shall be submitted to the Owner during any month.

7.1.3 Owner shall make payment to Construction Manager not later than

thirty (30) days after the Owner receives the Application for Payment.

7.1.4 As an express condition precedent to the making of any progress

payments, Construction Manager shall furnish to Owner the following items:

7.1.4.1 A sworn Application for Payment. In each such Application for Payment, Construction Manager shall certify that it has completed all of the Work to be performed so as to entitle it to the progress payment for which it is applying. Construction Manager shall further certify in its Application for Payment that all such work has been performed in accordance with the applicable building codes and the plans and specifications described in the Work Order and that Construction Manager knows of no deviations or defects relating to the Work performed by it. Furthermore, Construction Manager shall certify in the Application for Payment as follows: “That as of the date of this Application for Payment, all due and payable bills with respect to the Project described in the Work Order to which this Application for Payment relates have been paid to date.”

7.1.4.2 A consent of surety from the surety issuing the Public Construction Bond furnished by Construction Manager in connection with the Work Order;

7.1.4.3 A partial lien waiver for the period of time covered by the

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Application for Payment complying with the provisions of Section 713.20, Florida Statutes.

7.1.4.4 Such other forms and documents as Owner, in its sole discretion may require in order to assure an effective waiver of construction lien rights and/or bond claims of any nature whatsoever.

7.1.5 Construction Manager agrees that ten percent (10%) of the amount

due under each Application for Payment shall be retained by Owner until final payment is made. The amount of any retainage shall be included in Construction Manager's Application for Payment for the purpose of indicating the value of the Work performed, however, Construction Manager shall not request payment therefore from Owner until such retainage is actually due and payable.

7.2 Final Payment. The provision of the following documents shall constitute an express condition precedent to Owner's obligation to make final payment, including retainage amounts, hereunder:

7.2.1 A sworn final Application for Payment;

7.2.2 A final Contractor's Affidavit attesting to the fact that the Construction Manager has fully completed all Work to be performed under the Work Order and that all individuals, firms, or corporations furnishing material, labor, or services instant to the completion of construction and Work under the Work Order have been paid in full;

7.2.3 A final Contractor's Waiver acknowledging receipt of final payment and providing that said final payment constitutes a full release and discharge by Construction Manager to Owner of all claims and liens of Construction Manager against Owner arising out of, connected with, or resulting from performance of the Work Order.

7.2.4 Notebooks containing all warranties required under the project specifications and plans described in the Work Order as well as all warranties relating to equipment supplied by Construction Manager; and

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7.2.5 A clean set of “As Built Documents”.

7.3 The payment of any Application for Payment by Owner, including the final application, does not constitute approval of or acceptance of that part of the Work to which such payment relates nor does it relieve Construction Manager of any of its obligations hereunder nor shall such payment constitute a waiver of any claims which Owner may then have or thereafter discover.

7.4 Notwithstanding any provisions hereof to the contrary, Owner shall not be

obligated to make payment to Construction Manager hereunder if any one (1) or more of the following conditions exist:

7.4.1 Construction Manager is in default of any of its obligations hereunder;

7.4.2 Any part of such payment is attributable to Work which is defective or not performed in accordance with the requirements of this Agreement; provided, however, such payment shall be made as to the part thereof attributable to the Work which is performed in accordance with such requirements and is not defective;

7.4.3 Construction Manager has failed to make payments promptly to Construction Manager's subcontractors or for material or labor used in the Work for which Owner has made payment to Construction Manager;

7.5 If Owner, in good faith, determines that the portion of the Guaranteed

Maximum Price then remaining unpaid will not be sufficient to properly complete the Work contemplated in the Work Order, whereupon no additional payments will be due Construction Manager hereunder unless and until Construction Manager, at its sole cost, performs a sufficient portion of the Work so that the portion of the Guaranteed Maximum Price then remaining unpaid is determined by the Owner to be sufficient to complete the Work; or if Owner, in good faith, determines that Construction Manager has not or will not with prompt acceleration of the Work, meet the substantial completion date specified in the Work Order.

7.6 In the event-of-a bona fide dispute by Owner-of any sums for which

payment has been requested, no interest shall be due on such disputed sums until such dispute is resolved, provided that all undisputed sums

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shall have been paid in due course.

7.7 Owner reserves the right to issue joint checks to Construction Manager and its subcontractors or materialmen, or, to make payments to Construction Manager's subcontractors or materialmen, if, in Owner's sole judgment, it is necessary to do so in order to ensure payment to the aforesaid parties. The amount of said joint or direct checks shall be deducted from the Contract Sum.

7.8 The acceptance of final payment shall constitute a waiver of all claims

by Construction Manager except those previously made in writing 'and identified by the Construction Manager as unsettled at the time of the final Application for Payment.

7.9 Florida Prompt Payment Act. Notwithstanding anything contained herein

to the contrary, the Construction Manager agrees and acknowledges that the limited portion of the Florida Prompt Payment Act, as set forth in Section 218.735(6), Florida Statutes pertaining to “timely payment for purchases of construction services” is incorporated by reference into this Agreement with respect to the Construction Manager’s obligation to pay subcontractors. Consistent with Section 218.735(6), Florida Statutes, when the Construction Manager receives payment for labor, services or materials furnished by any subcontractor or supplier hired by the Construction Manager, the Construction Manager must remit payment due to those subcontractors and suppliers within fifteen (15) days after the Construction Manager’s receipt of payment. The Construction Manager will flow this requirement to its sub-subcontractors such that when a subcontractor receives payment from the Construction Manager for labor, services or materials furnished by sub-subcontractors or suppliers hired by the subcontractor, the subcontractor will remit payment due to those subcontractors and suppliers within fifteen (15) days after the subcontractor’s receipt of payment.

8. Setoff and Recoupment. Payment for goods, work or services to be

performed under this Agreement shall be subject to setoff or recoupment for any present or future claim which Owner may have against Construction Manager in connection with this Agreement, any Work Orders issued under this Agreement or any other agreements existing between the parties.

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9. Insurance. Construction Manager shall, with respect to each Work Order issued pursuant to this Agreement, provide and maintain, and require all of its subcontractors to do the same, the following types of insurance protecting the interests of Owner and Construction Manager with limits of liability not less than those set forth below or as otherwise may be required by the specifications described in any Work Order, whichever limits are greater:

9.1 Worker's Compensation Insurance. Construction Manager shall maintain

worker's compensation insurance, insuring its liability under the Worker's Compensation and Occupational and Disease Laws of the State of Florida, with limits of liability not less than the minimum limits required by Florida law. The worker's compensation policy provided by Construction Manager must be endorsed with a waiver of subrogation endorsement, waiving Construction Manager's right of subrogation against Owner and any architect or engineer utilized by Owner.

9.2 Comprehensive General Liability Insurance. Comprehensive general liability insurance which shall include coverage on an “occurrence” basis for the hazards of:

9.2.1 Premises-operation;

9.2.2 Explosion, collapse and underground property damage;

9.2.3 Mold;

9.2.4 Elevators and escalators;

9.2.5 Independent contractors;

9.2.6 Products and completed operations, including coverage for

explosion, collapse and underground hazards (with completed operations coverage to remain in force for two (2) years following the date of the acceptance of the Work by Owner);

9.2.7 Contractual liability;

9.2.8 Personal injury liability for all groups of offenses with the exclusion

pertaining to employment removed; and

9.2.9 Incidental malpractice coverage.

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Such comprehensive general liability insurance must be endorsed with a broad form property damage endorsement (including completed operations). Owner shall be named as an additional named insured on the comprehensive general liability policy. The limits of liability associated with the Construction Manager's general liability policy shall not be less than the following:

$1,000,000.00 each occurrence; $2,000,000.00 aggregate.

Notwithstanding anything contained herein to the contrary, the coverages under the comprehensive general liability policy to be furnished by the Construction Manager must be afforded on a policy form no more restrictive than the last edition of the comprehensive general liability policy filed by the Insurance Service Office, Inc.

9.3 Excess Liability Policy. Construction Manager shall maintain an

umbrella (excess) liability insurance policy in an amount not less than $1,000,000.00 combined single limit bodily injury/property damage, in excess of the comprehensive general liability insurance described above.

9.4 Automobile Liability Insurance. Construction Manager shall maintain automobile liability insurance covering all owned, non-owned and hired vehicles used in connection with the Work to be provided hereunder with a combined minimum limit of $1,000,000.00 single limit for bodily injury and property damage liability each person/each aggregate.

9.5 Fire Insurance. It is Construction Manager's responsibility to carry its own fire insurance on all items, including equipment that will not become an integral part of the project described in any Work Order issued pursuant to this Agreement.

9.6 Builder's Risk Insurance. Construction Manager shall procure builder's

risk insurance covering Construction Manager and Owner at the site from loss or damage caused by or from risk of direct physical damage or loss. Construction Manager's builder's risk policy shall have minimum limits of $1,000,000.00.

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9.7 Public Construction Bond. In the event the Guaranteed Maximum Price

associated with a Work Order is in excess of Two Hundred Thousand and No/100 Dollars ($200,000.00), Construction Manager shall furnish a public construction bond in an amount equal to one hundred percent (100%) of the Guaranteed Maximum Price associated with any Work Order issued pursuant to this Agreement. The public construction bond to be issued by Construction Manager shall be in a form acceptable to Owner issued by a surety satisfactory to the Owner and shall name the Owner as an obligee. The public construction bond to be provided by Construction Manager shall comply with the provisions of Section 255.05, Florida Statutes. In such an event, the cost of the Public Construction Bond shall be added to the Contract Sum.

9.8 Insurance Certificate. Prior to performing any services with respect to

a Work Order, Construction Manager shall file with Owner a certificate of insurance in a form acceptable to Owner. The certificate of insurance shall reflect Owner as an additional insured on Construction Manager's comprehensive general liability policy, automobile liability policy, worker's compensation policy and excess liability policy. The certificate of insurance furnished by Construction Manager shall contain a provision that the coverages afforded under the policies described thereon will not be cancelled until at least thirty (30) days' prior written notice has been given to Owner.

9.9 Rating Insurance Companies. All insurance companies issuing the policies

provided for herein shall be licensed and approved by the Department of Insurance, State of Florida and shall have a financial rating no lower than II and a policy holder's surplus rating no lower than (A) as listed in the most current edition of A.M. Best TK Rating Guide. Companies with ratings lower than those specified herein shall only be acceptable upon the written consent of Owner.

9.10 Extent of Coverages. The insurance coverages referred to above are

set forth in full in their respective policy forms, and the foregoing descriptions of such policies are not intended to be complete or to alter or amend any provision of the actual policies and should said descriptions conflict with the actual policies of insurance, the provisions of the policies of insurance shall govern.

9.11 Failure to Secure Insurance. If Construction Manager does not provide

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the insurance coverages required hereunder, Owner may procure such insurance coverages at Construction Manager's expense and deduct the amount paid for said coverages from any sums owed Construction Manager.

9.12 Waiver of Subrogation. Construction Manager's policies shall be endorsed

to provide that the insurers waive their rights of subrogation against Owner and also to provide that the policy provides primary coverage over any other applicable insurance coverages.

10. Safety Standards. Construction Manager agrees to require that all of its

employees, subcontractors and other personnel be required to fully comply with and implement all government laws (OSHA) pertaining to safety standards Construction Manager agrees that any fines, assessments or penalties imposed upon Owner by failure of the Construction Manager, its employees or subcontractors to comply with government standards will be fully charged back and paid for by Construction Manager.

11. Indemnification. In consideration of the first One Hundred and No/100 Dollars ($100.00) to be paid hereunder and to the fullest extent permitted by law, Construction Manager agrees to indemnify, hold harmless, and defend Owner, Owner's agents and their respective agents, servants and employees from and against all claims, costs, expenses or liabilities (including attorneys' fees) attributable to bodily injury, sickness, disease or death or damage to or destruction of property arising out of, or resulting from, the performance of Work by Construction Manager, its subcontractors, their agents, servants or employees but only to the extent caused by the negligent acts or omissions of them. Construction Manager's obligation hereunder shall only be limited to the extent of the monetary limitations set forth herein and shall not be limited by the provisions of any worker's compensation or similar act. Construction Manager's monetary obligation under this indemnification provision is specifically limited to the sum of One Million and No/100 Dollars ($1,000,000.00). The parties hereby agree that the foregoing monetary limitation bears a reasonable commercial relationship to the Agreement. This indemnity provision is intended to comply with Florida laws on indemnity and, specifically, to comply with Section 725.06, Florida Statutes, and is to be interpreted in such a way as to be enforceable.

12. Termination.

12.1 Termination for Cause by Owner.

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12.1.1 If Construction Manager shall fail to commence any work called

for under a Work Order or fail to diligently prosecute Work called for under a Work Order to completion in a diligent, efficient, timely, workmanlike, skillful, and careful manner and in accordance with the provisions of any specifications and/or plans identified in the Work Order, fail to use an adequate amount or quality of personnel or equipment to complete such Work without undue delay, fail to perform any of its obligations under this Agreement or any Work Orders issued pursuant to this Agreement, or fail to make prompt payments to its subcontractors, materialmen or laborers, then Owner shall have the right, if Construction Manager shall not cure such default after five (5) days' written notice thereof, to (i) terminate this Agreement or, in the alternative, any Work Orders issued pursuant the terms of this Agreement; (ii) take possession of and use of all or any part of Construction Manager's materials, equipment, supplies, or other property of any kind used by Construction Manager in the performance of Work related to any Work Order and to use such property in the completion of said Work; or (iii) complete any Work Order in a manner it deems desirable including engaging the services of other parties therefore. Any such acts by Owner shall not be deemed a waiver of any other right or remedy of Owner. If, after exercising any such remedy, the cost to Owner of the performance of the balance of any Work associated with a Work Order is in excess of that part of the Contract Sum associated with the Work Order which has not heretofore been paid to Construction Manager hereunder, Construction Manager shall be liable for and shall reimburse the Owner for such excess.

12.1.2 It is recognized that if Construction Manager is adjudged

bankrupt, or makes a general assignment for the benefit of creditors, or if a receiver is appointed for the benefit of creditors, or if a receiver is appointed on account of Construction Manager's insolvency, such an event could impair or frustrate the Construction Manager's performance of this Agreement and any Work Orders issued under the provisions of this Agreement. Accordingly, it is agreed that upon the occurrence of any such event, Owner shall be entitled

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to request of Construction Manager or its successor in interest adequate assurance of further performance in accordance with the terms and conditions hereof. Failure to comply with such a request within ten (10) days from date of delivery of the request shall entitle Owner to terminate this Agreement. In all events, pending receipt of adequate assurance of performance and actual performance in accordance therewith, Owner shall be entitled to proceed with any Work called for under a Work Order with its own forces or with such other contractors on a time and material or other appropriate basis, the cost of which will be back charged against the amount then or thereafter paid or otherwise due Construction Manager.

12.2 Termination for Cause by Construction Manager. If Owner fails to

perform any of its obligations hereunder, Construction Manager shall have the right to give Owner a written notice thereof, stating the nature of the default complained of. If Owner does not cure such default or commence the curing of such default within five (5) days after receipt of such notice, Construction Manager shall have the right to terminate this Agreement or any Work Order issued pursuant to this Agreement by giving Owner written notice thereof at any time thereafter while such default remains uncured and payment shall only be made to the Construction Manager for reasonable demobilization costs, the fee earned to the date of the termination and all outstanding costs incurred as of the date of termination. Said payment shall be Construction Manager’s sole damages for Owner's breach. Construction Manager shall similarly have the right to terminate upon five 5) days' written notice if any Work to be performed in connection with the Work Order is suspended for a period of sixty (60) days or more from causes not the fault of the Construction Manager.

12.3 Termination for Owner's Convenience. Owner hereby reserves the right to terminate this Agreement and/or any Work Orders issued under the terms of this Agreement without regard to fault or breach upon written notice to Construction Manager, effective immediately, unless otherwise provided in said notice. In the event of such a termination, Owner shall pay as the sole amount due to Construction Manager (i) all sums due for Work performed to date; and (ii) reasonable costs of demobilization. Such sums shall be due and payable on the same conditions as set forth herein for the final payment. Upon receipt of such payment, the parties

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hereto shall have no further obligations to each other except the Construction Manager's obligation to perform corrective and/or warranty work and to indemnify Owner as provided for in this Agreement. It is understood and agreed that no fee or other compensation or payment shall be due or payable for unperformed Work. Construction Manager agrees that each subcontract and purchase order issued by it will reserve for Construction Manager the same right of termination provided for in this paragraph and that Construction Manager further agrees to require that comparable provisions be included in all lower tier subcontracts and purchaser orders.

13. Time of Completion. 13.1 Time. All time limits stated in Work Orders issued pursuant to this

Agreement are of the essence of this Agreement. By executing Work Orders issued pursuant to this Agreement, Construction Manager confirms that the contract time specified in a Work Order is a reasonable period for performing the Work contemplated therein.

13.2 Substantial Completion. The date of substantial completion shall be deemed the date on which the permitting authority for the project in question issues a final certificate of occupancy.

13.3 Delay Damages. CONSTRUCTION MANAGER SHALL NOT BE

ENTITLED TO RECOVER ANY MONETARY DAMAGES IT MAY SUSTAIN AS A RESULT OF ANY DELAY CAUSED CONSTRUCTION MANAGER BY ANY ACT OF OWNER, ARCHITECT, ANY SEPARATE CONTRACTOR EMPLOYED BY OWNER, OR ANY OTHER CAUSES WHATSOEVER. CONSTRUCTION MANAGER FURTHER AGREES THAT IT WILL ACCEPT IN FULL SATISFACTION FOR SUCH DELAYS ANY EXTENSIONS OF TIME WHICH ARE GRANTED IT BY OWNER.

14. Accuracy, Technical Sufficiency of Services Provided by Construction Manager.

14.1 Notwithstanding anything contained herein to the contrary, it is

understood and agreed between the parties that Owner is not examining any contract documents for accuracy and technical sufficiency, and is not under any obligation to inspect the Project. Furthermore, it is understood and agreed between the parties that neither the review, approval, nor acceptance by Owner of data, surveys, studies, designs,

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specifications, calculations, plans, drawings, or any other documents furnished hereunder by Construction Manager shall in any way relieve Construction Manager of responsibility for the adequacy, completeness, and accuracy of its Work, and in no event shall Owner's review, approval, acceptance of or payment for such services be construed to operate as a waiver of any of Owner's rights under this Agreement or of any cause of action it may have, arising out of the performance of this Agreement.

14.2 Construction Manager hereby acknowledges that Owner does not make any representations or warranties to Construction Manager by virtue of the information contained in the request - for proposals or any program descriptions contained therein. Construction Manager further acknowledges that it, alone, is responsible for the accuracy, completeness, and technical sufficiency of all Work performed under this Agreement and that the information contained in Owner's request for proposal and program description does not relieve, release, or in any way whatsoever diminish Construction Manager' s ultimate responsibility for the accuracy, completeness and technical sufficiency of the Project and any Work performed hereunder.

15. Legal Terms.

15.1 The terms and provisions of this Agreement and any dispute arising

in connection herewith shall be governed by and construed in accordance with Florida Law. The parties agree that all disputes arising under this Agreement shall be resolved by the courts and not by arbitration. The parties further agree that the venue for any legal action brought in connection with this Agreement shall be in Lee County, Florida. In connection with any litigation arising out of this Agreement, the prevailing party shall be entitled to recover all costs incurred, including reasonable attorneys' fees.

15.2 Prior to the filing of any litigation by Owner or Construction Manager against the other (and, except as described below, as a precondition to any such filing), Owner and Construction Manager shall engage in presuit non-binding mediation. Such mediation may be requested by either party at any time and shall be conducted the same as if such mediation were ordered by Florida Circuit Court (i.e. in accordance with and subject to, all of the laws and rules applicable to court ordered mediation). Such mediation shall be conducted within a reasonable period

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of time after the same is requested in writing by either party. If the parties are unable to agree upon the selection of a mediator, either party may petition or request that the Circuit Court in Lee County, Florida (or the Mediation Coordinator for the Court of Lee County, Florida) appoint a mediator. A mediator who is so appointed may only be challenged for cause, and not preemptorally. While the request for and the conducting of such a mediation may be a precondition to the filing of a civil action, in the event either party is in jeopardy of losing its right to sue (e.g., the statute of limitations is about to expire), then suit may be filed before a mediation is conducted provided that mediation is requested before, or simultaneously with the filing of such suite, and is conducted before the named defendant in the suit is required to respond to the complaint. If the scheduling of the mediation requires, the plaintiff in the suit shall grant the defendant an appropriate extension of time to respond to the complaint so as to permit the mediation to be conducted before the defendant must so respond. The mediation contemplated hereunder shall be conducted, unless otherwise agreed by the parties, in Lee County, Florida. The parties shall bear the mediator's fee and any filing fees associated with the mediation equally.

16. Non-Exclusive Agreement. Owner may, in its discretion, issue Work Orders to Construction Manager during the contract period contemplated herein. All such Work Orders shall incorporate by reference the documents referred to in paragraph 17 below. Owner shall not, however, be obligated to issue Work Orders to Construction Manager for all Acute Care Projects it undertakes and expressly reserves the right to utilize other construction managers to perform work of a similar nature should it, in its sole discretion, elect to do so.

17. Contract Documents. The “Contract Documents” shall consist of this Agreement, any Work Order issued pursuant to this Agreement, any drawings and specifications referenced in the Work Order and any change orders modifying a Work Order issued pursuant to this Agreement. These documents form the Agreement existing between the parties, and are as fully a part of the Agreement as if attached to this Agreement or repeated herein.

18. Special Provisions.

18.1 The Construction Manager warrants that it has not employed or retained any company or person, other than a bonafide employee working solely for Construction Manager, to solicit or secure this Agreement and that it

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has not paid any person, company, corporation, individual, or firm, other than a bonafide employee working solely for Construction Manager any fee, commission, percentage, gift, or other consideration contingent upon or resulting from the award or making of this Agreement.

18.2 Public Entity Crime Information Statement. Any person or affiliate who has been placed on the Convicted Vendor List following a conviction for a public entity crime may not submit a bid on a contract to provide any goods or services to a public entity, may not submit a bid on a contract with a public entity, for the construction or repair of a public building, or public work, may not submit bids or leases of real property to a public entity, may not be awarded or perform work as a contractor, supplier, subcontractor, or consultant under a contract with any public entity, and may not transact business with any public entity in excess of the threshold amount provided in Section 287.017, for CATEGORY 2 for a period of thirty-six (36) months from the date of being placed on the Convicted Vendors List.

18.3 The Construction Manager affirmatively represents to Owner that it shall

perform its services under this Agreement in a skillful and competent manner in accordance with good and sound healthcare construction practices.

18.4 Except as otherwise provided in this Agreement, the Construction Manager agrees not to divulge, furnish, or make available to any third parties, firm, or organization, without the Owner’s prior written consent, or unless instant to the proper performance of Construction Manager’s obligations hereunder, or in the course of any judicial or legislative proceedings where such information has been properly subpoenaed, any information concerning services to be rendered by Construction Manager or any of its subcontractors to this Agreement.

18.5 In the event Construction Manager should be deemed subject to the

disclosure requirements of 42 U.S.C. 1395X(v)(1)(1), or amendments thereto until the expiration of four (4) years following the completion of furnishing services under this Agreement upon written request of Owner, Construction Manager shall make available to the Secretary of the Department of Health and Human Services, or the Controller General, or any duly authorized representatives thereof, a copy of the Agreement and such books, documents and records of Construction Manager that are necessary to certify the nature and extent of any costs incurred by Owner. If Construction Manager carries out any of the duties of this Agreement

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through a subcontract, having a contract price of $10,000.00 or more over a twelve (12) month period, with an organization that would be a related organization within the meaning of 42 C.F.R. 405.427, or amendments thereto, such subcontract shall contain a clause to the effect that for a period of four (4) years following the completion of the subcontract, the subcontractor, upon the written request of Owner, shall make available to the Secretary, or to the Controller General, or any of their duly authorized representatives, the subcontract, and books, documents and all other records of the subcontractor that are necessary to verify the nature and extent of such costs.

18.6 Construction Manager represents and warrants to Owner and Owner’s affiliates that Construction Manager (and each person or entity providing services or work under this Agreement on behalf of Construction Manager): (i) is not currently excluded, debarred or otherwise ineligible to participate in the Federal health care programs as defined in 42 U.S.A.§1320a-7b(f) (the “Federal Health Care Programs”); (ii) is not convicted of a criminal offense related to the provisions of healthcare items or services but has not yet been excluded, debarred, or otherwise declared ineligible to participate in the Federal Health Care Program; and (iii) is not under investigation or otherwise aware of any circumstances which may result in Construction Manager (or any subcontractor, person or entity providing services on behalf of Construction Manager hereunder)being excluded from participation in the Federal Health Care Programs. This shall be an ongoing representation and warranty during the term of this Agreement and Construction Manager shall immediately notify Owner of any change in the status of the representation and warranty set forth in this section. As a condition precedent to the Construction Manager’s right to progress and other payments under this Agreement, Construction Manager shall submit a statement, in writing, and in such form as approved by the Owner, of the above. Any breach of this section shall give Owner the right to terminate this Agreement immediately for cause, which right shall be in addition to any other rights and remedies available to Owner for such breach under the Agreement or otherwise. Construction Manager agrees to indemnify and hold Owner harmless from any liability incurred by Owner to the extent that Construction Manager’s representation and warranty is not accurate.

18.7 Construction Manager hereby represents and warrants to Owner that neither it nor any of its subcontractors, as of the date of the making of their respective subcontracts, have been excluded from participation in

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Federal Healthcare Programs or in any Federal procurement or non-procurement program. Construction Manager further represents and warrants that none of its employees, or the employees of subcontractors, have been convicted of a criminal offense related to the provision of healthcare items or services and has not been reinstated in a Federal Healthcare Program after a period of exclusion, suspension, debarment, or ineligibility. Construction Manager acknowledges that Owner maintains an ongoing policy of screening for exclusion from Federal Healthcare Program participation by referencing the List of Excluded Individuals Entities (LEIE), Excluded Parties Listing System (EPLS) and other applicable tools and further acknowledges receiving a copy of that policy. Construction Manager agrees to implement as part of its basic services a similar compliance monitoring program with respect to all individuals and entities it employs or otherwise uses on the Project. The Construction Manager shall provide in each and every one of its subcontracts that the exclusion from participation in Federal Healthcare Programs or in any Federal procurement or non-procurement program is cause for termination of the subcontract. If the Construction Manager discovers, after the making of the subcontract, that a subcontractor has been excluded from participating in Federal Healthcare Programs or in any Federal procurement or non-procurement program, the Construction Manager shall immediately terminate the debarred subcontractor for cause. Construction Manager shall maintain all documentation evidencing compliance with the screening requirements set forth in this paragraph for a minimum period of seven (7) years or longer if required by law. Upon Owner’s request, Construction Manager will promptly make all such information available to Owner for audit, accreditation and investigation purposes.

18.8 Business Ethics. Construction Manager agrees to maintain business ethics meeting the Owner’s business ethics expectations. The Owner’s business ethics expectations are more particularly described in Exhibit “B” attached hereto and incorporated herein by reference.

18.9 The Owner will consider the employment by the Construction Manager of

unauthorized aliens a violation of Section 274A(e) of the Immigration and Naturalization Act. Such violation shall be cause for unilateral cancellation of this Agreement.

18.10 Any and all drawings, specifications, designs, models, photographs,

reports, surveys or other data and documents submitted, provided or

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created by the Construction Manager in connection with this Agreement are and will remain the property of the Owner, whether the Project for which they are made is completed or not. All documents, data, studies, surveys, drawings, maps, models, photographs and reports prepared by the Construction Manager, whether finished or unfinished, will become the property of the Owner and must be delivered by the Construction Manager to the Owner within seven (7) days of the date that this Agreement is terminated by either party; but not later than the date of the final payment request for this Project. Any compensation due to the Construction Manager will be withheld until all documents are received as provided herein. This applies to all Contract Documents and Construction Documents produced for the Project.

18.11 The Construction Manager shall afford the Owner and its authorized

designees access to the Project site at all times.

18.12

18.13 19. Diversity and Local Participation.

19.1 Non-Discrimination. The Construction Manager shall not discriminate

against employees or subcontractors because of race, color, religion, sex, age, national origin, or ancestry. The Construction Manager shall insure that employees and subcontractors are retained and utilized on the Project without regard to the race, color, religion, sex, age, national origin, or ancestry.

19.2 Disadvantaged Business Enterprise Participation. The Owner encourages

the Construction Manager to use subcontractors who are certified as disadvantaged business enterprises as defined in Section 288.703, Florida Statutes (“DBE”) so as to promote opportunities for disadvantaged business enterprises to participate in the Project. The Construction Manager, when seeking subcontractors for the Project, agrees to use its best efforts to insure the participation of local DBE.

19.3 Local Business Enterprises. The Owner encourages the Construction

Manager to utilize business enterprises based in Lee County, Florida. The Construction Manager, when seeking subcontractors, agrees to use its best efforts to assure the participation of business enterprises based

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in Lee County, Florida. 20. Miscellaneous.

20.1 No modification, waiver, amendment, discharge or any change of this Agreement or any Work Orders issued pursuant to this Agreement shall be valid unless the same are in writing, signed by the parties against whom the enforcement of such modification, waiver, amendment, charge or change is sought. This Agreement, the Work Orders issued pursuant to this Agreement, any plans and specifications referred to in said Work Orders and any documents attached hereto constitute the entire agreement between the parties relating to the transactions contemplated hereby and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged herein.

20.2 This Agreement shall be construed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute a single instrument.

20.3 All pronouns and any variations thereof shall be deemed to refer to

the masculine, feminine, neuter, singular, or plural as the identity of the persons or entity may require.

20.4 If any provision or any portion of any provision of this Agreement or

the application of any provision or portion thereof to any person or circumstance shall be held invalid or unenforceable, the remaining portion of such provision and the remaining provisions of this Agreement, or the application of such provision held invalid, or unenforceable to persons or circumstances other than those to which it has been held invalid or unenforceable, shall not be affected thereby.

20.5 In the event of any dispute as to the precise meaning of any term

contained herein, the rules of contract construction and interpretation that written contracts be construed against the drafter shall not apply.

20.6 All articles, titles, or captions contained in this Agreement are for

convenience only and shall not be deemed a part of this Agreement and shall not affect the meaning or interpretation of this Agreement.

20.7 All notices, demands, or other communications made pursuant to this

Agreement shall be in writing and copies thereof shall be

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simultaneously directed to the parties listed below. Further, all notices, demands, or communications shall be deemed to have been duly given by mailing, unless otherwise specified, by United States registered or certified mail, return receipt requested, with the proper postage prepaid at the following addresses:

If to Owner: Dave Kistel Vice President Facilities and Support Lee Memorial Health System 636 Del Prado Boulevard Cape Coral, FL 33990

With a copy to: Teri Isacson, Esq. Legal Services and Risk Management Lee Memorial Health System 2776 Cleveland Ave. Fort Myers, FL 33901 If to Construction Manager: ______________________________ ______________________________ ______________________________ Or to such other addresses or to such other persons as any party may designate to the other for purposes set forth above.

20.8 Assignment. This Agreement shall not be assignable to either party.

20.9 Statutory Notice. ANY CLAIMS FOR CONSTRUCTION DEFECTS ARE SUBJECT TO THE NOTICE AND CURE PROVISIONS OF CHAPTER 558, FLORIDA STATUTES.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written.

Signed, sealed, and delivered in the presence of:

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_______________________________ Witness Signature Print Name:_____________________ _______________________________ Witness Signature Print Name:_____________________

Owner: LEE MEMORIAL HEALTH SYSTEM By:___________________________________ Stephen R. Brown, M.D. Chairman of the Board of Directors


CONSTRUCTION MANAGER: __________________________________

By:___________________________________ Printed Name: _____________________ Title:______________________________





DATE: May 30, 2019 LEGAL SERVICE REVIEW? YES_x_ NO__ SUBJECT: 3 Year Continuing Services Contract for Construction Management for Outpatient Facilities REQUESTOR & TITLE: David Cato – Chief Administrative Officer of Outpatient Services PREVIOUS BOARD ACTION ON THIS ITEM (IF ANY) (justification and/or background for recommendations – internal groups which support the recommendation) On June 23, 2016, Lee Health Board of Directors authorized Lee Health administration to negotiate a Three (3) Year Continuing Services Contract Construction Management for Outpatient Services per Board Policy. The Three (3) Year Continuing Services Contract was subsequently executed. The proposed agreement, attached hereto, is the same form that was approved by this Board in 2016. SPECIFIC PROPOSED MOTIONS: First Motion: to accept the Certification & Selection Committee’s Rankings for the 3-Year Construction Management Continuing Services Contract for Outpatient Facilities as determined on May 16, 2019. Second Motion: to authorize Lee Health administration to Proceed with contract negotiations for a Three (3) Year Continuing Services Contract for Construction Management for Outpatient Facilities, per Board Policy 20.15 D and the Consultants Competitive Negotiation Act, starting with the highest numerically ranked firm, Stevens Construction and, if such negotiations are not successful to authorize the Lee Health Administration to then negotiate with the next ranked firm. Third Motion: Upon successful negotiation in accordance with Board Policy 20.15 D, authorize the President & Chief Executive Officer or Board Chairman to execute a Three (3) Year Continuing Services Contract for Outpatient Facilities, in substantially the same form as the attached draft contract, subject to final legal review. FINANCIAL IMPLICATIONS Budgeted Account _x__ Non-Budgeted ____ (Annual Project Budget and Total Project Budget) The 3-year Continuing Services Contract for Outpatient Facilities will be utilized for projects that are either currently funded or will be funded in the future through capital and contingency funds as approved by Lee Health and the Board of Directors. The continuing services contracts are for individual construction projects not exceeding 2 million dollars. STAFFING & OPERATIONAL IMPLICATIONS None. PURPOSE/REASON FOR RECOMMENDATION Selection of Construction Management Firms for Outpatient Facilities allows Lee Health to move forward on smaller projects without delays, in a cost effective and time efficient manner.

SUMMARY (including alternatives considered, Pros and Cons) The Certification & Selection Committee ranked firms based upon their qualifications for 3-year Continuing Services Contracts for Outpatient Facilities per Board Policy. Stevens Construction was highest ranked firm for Outpatient Facilities. The Board is being asked to approve Lee Health administration to proceed with contract negotiations and execution of the contract pursuant to Board Policy 20.15 D.


1 2 3 4 5 6 7 8

DEANGELIS DIAMOND 92 78 80 63.5 91 82 84 83 653.5

STEVENS CONSTRUCTION 96 85 90 82 97 89 97 94 730

RD JOHNSON CONSTRUCTION 90 87 100 93 85 99 81 92 727

LMHS 3‐YEAR CONSTRUCTION CONTINUING SERVICES AGREEMENT

OUTPATIENT FACILITIES

FIRMSELECTION COMMITTEE MEMBER ID

TOTAL

1

CONTINUING SERVICES AGREEMENT CONSTRUCTION MANAGEMENT SERVICES AT RISK

OUTPATIENT SERVICES

THIS AGREEMENT is made and entered into as of the _____ day of ________________, 2019, by and between Lee Memorial Health System d/b/a Lee Health, a special purpose unit of local government (“Owner”) and ________________________ (“Construction Manager”).

RECITALS:

WHEREAS, Owner is a special unit of local of local government engaged in

the delivery of health care services to the residents of Lee County, Florida; and

WHEREAS, Construction Manager is a construction manager engaged in the delivery of construction management services to the residents of Southwest Florida; and

WHEREAS, in the course of fulfilling its legislative purpose, Owner periodically utilizes construction management services relating to the construction and remodeling of outpatient healthcare projects including, but not limited to, outpatient medical projects requiring Agency for Health Care Administration (“AHCA”) submission, compliance and inspection (referred to as “Outpatient Project”); and

WHEREAS, the Owner and Construction Manager desire to enter into a Continuing Services Agreement for Construction Management Services at Risk relating to Outpatient Projects undertaken by Owner over the next three (3) years in which the construction costs of each-individual Outpatient Project does not exceed Two Million and No/100 Dollars ($2,000,000.00); and

WHEREAS, the specific scope of services to be performed by Construction Manager for each individual Outpatient Project (“Project”) shall be defined in work orders (“Work Order[s]”) which are issued pursuant to the terms of this Agreement. A sample copy of the Work orders to be issued under this Agreement is attached hereto as Exhibit “A”.

OPERATIVE PROVISIONS:

NOW, THEREFORE, for and in consideration of the mutual covenants and

agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Owner and Construction

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Manager, intending to be legally bound, agree as follows: 1. Recitals. The recitals set forth above are true and correct and are incorporated

herein in their entirety.

2. Term. This Agreement shall be for a term of three (3) years. The contract period shall commence on ______________ and shall terminate on ________________.

3. Construction Manager’s Services.

3.1 Scope of Services. The specific scope of services to be performed by the Construction Manager in connection with any Outpatient Project performed under the provisions of this Agreement shall be described in detail in the Work Order issued for the Outpatient Project (“Work”).The form of the Work Order to be used is attached hereto as Exhibit “A”.

3.2 Basic Services. The basic services to be performed by the Construction

Manager in connection with any Work Order issued under the terms of this Agreement shall consist of the following services:

3.2.1 Construction Manager shall provide competent supervision of all

phases of the Work.

3.2.2 Construction Manager shall cause the Work to be performed in accordance with the applicable drawings and specifications and all things indicated thereon or implied therefrom.

3.2.3 Prior to the commencement of any construction under a Work

Order, Construction Manager shall prepare and submit for Owner’s approval a Project Schedule which shall indicate the dates for starting and completion of the various stages of construction.

3.2.4 Construction Manager shall provide scheduling and periodic

updating on a monthly basis in the interest of completing the Work in the most expeditious and economical manner (“Progress Schedules”).

3.2.5 Before performing any Work contemplated in a Work Order,

Construction Manager shall carefully study and compare the

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various drawings, specifications and other contract documents relevant to the Work, take field measurements of existing conditions related to the Work, observe any conditions at the project and promptly report to the Owner and Architect any errors, omissions or inconsistencies discovered by Construction Manager.

3.2.6 Construction Manager shall supervise and direct the Work, using

the Construction Manager’s best skill and attention

3.2.7 Construction Manager shall be solely responsible for and have control over construction means, methods, techniques, sequences and procedures and for coordinating all portions of the Work called for under a Work Order.

3.2.8 Construction Manager shall be fully and solely responsible for job

site safety.

3.2.9 Construction Manager shall be responsible for the acts and omissions of Construction Manager’s employees, subcontractors and their agents and employees and any other persons or entities performing portions of the Work for or on behalf of Construction Manager or any of its subcontractors.

3.2.10 Unless otherwise provide in the Work Order, Construction

Manager shall provide and pay for all labor, materials, equipment, tools, construction equipment and machinery, water, heat, utilities, transportation and other facilities and services necessary for proper execution and completion of the Work whether temporary or permanent and whether or not incorporated or to be incorporated in the Work.

3.2.11 Construction Manager shall enforce strict discipline and good order

among the Construction Manager’s employees and other persons carrying out the Work Order. Construction Manager shall not permit the employment of unfit persons or persons not skilled in tasks assigned to them.

3.2.12 Construction Manager shall deliver, handle, store, and install

materials in accordance with manufacturer’s instructions.

3.2.13 Construction Manager shall review for compliance with the

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specifications and contract drawings, approve in writing and submit to the Architect shop drawings, product data, samples and similar submittals required by the specifications with reasonable promptness.

3.2.14 Construction Manager shall perform all work in accordance with

approved submittals.

3.2.15 Construction Manager shall confine its operations at the project site to areas permitted by law, ordinances, permits, specifications and construction drawings and shall not unreasonable encumber the project site with materials or equipment.

3.2.16 Construction Manager shall be responsible for cutting, fitting or

patching required to complete the Work or to make its parts fit together properly.

3.2.17 Construction Manager shall provide the Owner and Architect

access to the Work in preparation and progress wherever located.

3.2.18 Construction Manager shall keep the premises and surrounding area free from accumulation of waste materials or rubbish caused by operations under this Agreement. At the completion of the Work, Construction Manager shall remove from and about the Project waste materials, rubbish and Construction Manager's tools, construction equipment, machinery and surplus material.

4. Change Orders.

4.1 From time to time, Owner may authorize changes in Work Orders

issued pursuant to this Agreement, issue additional instructions, require additional Work, or direct the omission of Work previously ordered; provided, however, that Construction Manager shall not proceed with any change involving an increase or decrease in cost or extension of the substantial completion date without the prior written authorization of Owner in accordance with the procedures set forth herein.

4.2 Owner shall order changes in the Work by giving Construction Manager a written change order request (“Change Order Request”) setting forth in detail the nature of the requested change. Upon receipt of a Change Order Request, Construction Manager shall furnish to Owner a statement

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setting forth in detail, with a suitable breakdown by trades and work classifications, Construction Manager's estimate of the changes in the Guaranteed Maximum Price attributable to the changes set forth in such Change Order Request and a proposed adjustment to the substantial completion date resulting from such Change Order Request. If Owner approves in writing the estimate of Construction Manager, such Change Order Request and such estimate shall constitute a change in the Guaranteed Maximum Price and the substantial completion date shall be adjusted as set forth in such estimate. The foregoing procedure shall apply to both additive and deductive change orders. Agreement on any change orders shall constitute a final settlement on all items covered therein, subject to performance thereof and payment therefore pursuant to the terms of this Agreement. Construction Manager agrees to perform all change order Work on the basis of reimbursement to it of the cost of the Work plus the overhead and profit percentages specified herein.

4.3 It is understood and agreed that refinement and detailing will be accomplished from time to time with respect to the drawings and specifications set forth in any Work Orders issued pursuant to this Agreement. No adjustment in the Guaranteed Maximum Sum or the substantial completion date set forth in Work Orders shall be made unless such refinement or detailing results in changes in scope, quality, function and/or intent of the drawings and specifications not reasonably inferable or anticipatable by a Construction Manager of Construction Manager's expertise and experience.

5. Owner's Responsibilities. For each Project constructed under the terms of

this Agreement, Owner shall provide Construction Manager with the following information: 5.1 Owner shall designate a representative authorized to act on Owner's

behalf with respect to the Project described in the Work Order. Owner or such authorized representative shall render decisions in a timely manner pertaining to issues submitted by Construction Manager in order to avoid unreasonable delay in the orderly and sequential progress of Construction Manager’s services.

5.2 Except for the permits and fees which are the responsibility of Construction Manager, under this Agreement, Owner shall secure and pay for necessary approvals, easements, assessments and charges required for construction, use or occupancy of permanent structures or

6

for permanent changes in existing facilities.

5.3 Owner shall furnish the services of architects, engineers and other professional consultants when such services are reasonably required by the scope of the Project.

5.4 Owner shall furnish structural, mechanical, chemical, air and water

pollution tests, tests for hazardous materials, and other laboratory and environmental tests, inspections and reports required by law or this Agreement.

6. Contract Price.

6.1 Compensation. In full consideration for the performance of any Work

Orders issued pursuant to this contract, Owner shall pay to Construction Manager the contract sum which shall consist of (1) the Cost of the Work; and (2) a profit and overhead component of ____ percent (__%) of the Cost of the Work (“Contract Sum”). Notwithstanding the foregoing, in no event shall the Contract Sum exceed the guaranteed maximum price established for each Work Order (“Guaranteed Maximum Price”). Owner shall not be obligated to Construction Manager for any sums in excess of the Guaranteed Maximum Price established for each Work Order.

6.2 The Cost of the Work. For purposes of this Agreement the phrase, “Cost of the Work” shall consist of the following items:

6.2.1 wages of hourly workers employed by Construction Manager to

perform any work called for under a Work Order;

6.2.2 cost of all materials, supplies and equipment incorporated or to be incorporated in any Project described in a Work Order issued pursuant to this Agreement, including the cost of transportation and storage thereof.

6.2.3 payments due to subcontractors from the Construction Manager or

made by the Construction Manager to subcontractors for their work performed pursuant to any Work Order issued under this Agreement;

6.2.4 rental charges for all temporary facilities, necessary machinery and

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equipment, exclusive of hand tools used at the site of any Project described in any Work Order issued pursuant to this Agreement, whether rented from ·Construction Manager or any third party, equipment supplier, including installation, repairs and replacements, dismantling, removal, cost of lubrication, transportation and delivery costs thereof, which are used in the support of a subcontractor or Construction Manager's own forces in the performance of any Work called for under a Work Order issued pursuant to this Agreement, at rental charges consistent with those prevailing in the area. Automobiles and trucks shall only be rented and/or leased with the Owner's prior written consent and approval;

6.2.5 the cost of premiums for all insurance and bonds which

Construction Manager is required to procure by this Agreement for any Projects described in Work Orders issued pursuant to the terms of this Agreement;

6.2.6 sales, use, gross receipts, or similar taxes related to expenses

allowable as part of the Cost of the Work imposed by any governmental authority, and for which Construction Manager is liable;

6.2.7 expenses associated with telephone service, heat, light, power,

water, sanitary facilities, weather protection and elevator services at the Project;

6.2.8 costs for trash and debris control and removal from the Project;

6.2.9 costs incurred due to an emergency affecting the safety of persons

and property at the Project;

6.2.10 costs for watchmen and security services for the Project;

6.2.11 costs for efficient logistical control of the Project, including horizontal and vertical transportation of materials and personnel;

6.2.12 wages and salaries of Construction Manager's supervisory

personnel when stationed at the Project described in a Work Order but only with Owner's written approval and only for that portion of their time devoted to performing the Work described in the Work Order; and

8

6.2.13 any and all permits specifically required for the performance of

any Work described in a Work Order issued pursuant to this Agreement.

6.3 The Cost of the Work shall not include the following: 6.3.1 Any costs or expenses made necessary to correct defective

workmanship or to correct any Work not in conformance with any plans or specifications described in the Work Order or to correct any deficiency or damage caused by the negligent acts of Construction Manager or any other party for whom it is responsible including, but not limited to, its subcontractors and suppliers;

6.3.2 general operating expenses of Construction Manager's principal and branch offices other than the field office located at the Project identified in any Work Order issued pursuant to this Agreement;

6.3.3 any part of Construction Manager's capital expenses, including

interest on Construction Manager' s capital employed for the Project;

6.3.4 overhead and general expenses of any kind except as may be

expressly allowed in paragraph 6.1 of this Agreement;

6.3.5 any cost in excess of the guaranteed maximum price;

6.3.6 minor expenses, such as telegrams, telephone service, data processing costs, courier services, photocopies, reproductions and similar “petty cash” items; and

6.3.7 the cost of hand tools, such as shovels, hammers and the cost of

expendable items, such as bits, brooms, brushes, ropes and hard hats.

7. Payment.

7.1 Progress Payments.

7.1.1 Construction Manager shall submit to the Owner monthly

applications for payment in a form satisfactory to Owner (“Application for Payment”). Each Application for Payment shall

9

contain an itemization of all payments made to subcontractors, material suppliers and all other matters which represent a portion of the Cost of the Work as well as that portion of Construction Manager's overhead and profit attributable to the Cost of the Work reflected in each Application for Payment.

7.1.2 The period covered by each Application for Payment shall be one calendar month ending on the last day of the month. No more than one (1) Application for Payment shall be submitted to the Owner during any month.

7.1.3 Owner shall make payment to Construction Manager not later than

thirty (30) days after the Owner receives the Application for Payment.

7.1.4 As an express condition precedent to the making of any progress

payments, Construction Manager shall furnish to Owner the following items:

7.1.4.1 A sworn Application for Payment. In each such Application for Payment, Construction Manager shall certify that it has completed all of the Work to be performed so as to entitle it to the progress payment for which it is applying. Construction Manager shall further certify in its Application for Payment that all such work has been performed in accordance with the applicable building codes and the plans and specifications described in the Work Order and that Construction Manager knows of no deviations or defects relating to the Work performed by it. Furthermore, Construction Manager shall certify in the Application for Payment as follows: “That as of the date of this Application for Payment, all due and payable bills with respect to the Project described in the Work Order to which this Application for Payment relates have been paid to date.”

7.1.4.2 A consent of surety from the surety issuing the Public Construction Bond furnished by Construction Manager in connection with the Work Order;

7.1.4.3 A partial lien waiver for the period of time covered by the Application for Payment complying with the provisions

10

of Section 713.20, Florida Statutes.

7.1.4.4 Such other forms and documents as Owner, in its sole discretion may require in order to assure an effective waiver of construction lien rights and/or bond claims of any nature whatsoever.

7.1.5 Construction Manager agrees that ten percent (10%) of the amount

due under each Application for Payment shall be retained by Owner until final payment is made. The amount of any retainage shall be included in Construction Manager's Application for Payment for the purpose of indicating the value of the Work performed, however, Construction Manager shall not request payment therefore from Owner until such retainage is actually due and payable.

7.2 Final Payment. The provision of the following documents shall constitute an express condition precedent to Owner's obligation to make final payment, including retainage amounts, hereunder:

7.2.1 A sworn final Application for Payment;

7.2.2 A final Contractor's Affidavit attesting to the fact that the Construction Manager has fully completed all Work to be performed under the Work Order and that all individuals, firms, or corporations furnishing material, labor, or services instant to the completion of construction and Work under the Work Order have been paid in full;

7.2.3 A final Contractor's Waiver acknowledging receipt of final payment and providing that said final payment constitutes a full release and discharge by Construction Manager to Owner of all claims and liens of Construction Manager against Owner arising out of, connected with, or resulting from performance of the Work Order.

7.2.4 Notebooks containing all warranties required under the project specifications and plans described in the Work Order as well as all warranties relating to equipment supplied by Construction Manager; and

7.2.5 A clean set of “As Built Documents”.

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7.3 The payment of any Application for Payment by Owner, including the final application, does not constitute approval of or acceptance of that part of the Work to which such payment relates nor does it relieve Construction Manager of any of its obligations hereunder nor shall such payment constitute a waiver of any claims which Owner may then have or thereafter discover.

7.4 Notwithstanding any provisions hereof to the contrary, Owner shall not be

obligated to make payment to Construction Manager hereunder if any one (1) or more of the following conditions exist:

7.4.1 Construction Manager is in default of any of its obligations hereunder;

7.4.2 Any part of such payment is attributable to Work which is defective or not performed in accordance with the requirements of this Agreement; provided, however, such payment shall be made as to the part thereof attributable to the Work which is performed in accordance with such requirements and is not defective;

7.4.3 Construction Manager has failed to make payments promptly to Construction Manager's subcontractors or for material or labor used in the Work for which Owner has made payment to Construction Manager;

7.5 If Owner, in good faith, determines that the portion of the Guaranteed

Maximum Price then remaining unpaid will not be sufficient to properly complete the Work contemplated in the Work Order, whereupon no additional payments will be due Construction Manager hereunder unless and until Construction Manager, at its sole cost, performs a sufficient portion of the Work so that the portion of the Guaranteed Maximum Price then remaining unpaid is determined by the Owner to be sufficient to complete the Work; or if Owner, in good faith, determines that Construction Manager has not or will not with prompt acceleration of the Work, meet the substantial completion date specified in the Work Order.

7.6 In the event-of-a bona fide dispute by Owner-of any sums for which

payment has been requested, no interest shall be due on such disputed sums until such dispute is resolved, provided that all undisputed sums shall have been paid in due course.

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7.7 Owner reserves the right to issue joint checks to Construction Manager and its subcontractors or materialmen, or, to make payments to Construction Manager's subcontractors or materialmen, if, in Owner's sole judgment, it is necessary to do so in order to ensure payment to the aforesaid parties. The amount of said joint or direct checks shall be deducted from the Contract Sum.

7.8 The acceptance of final payment shall constitute a waiver of all claims

by Construction Manager except those previously made in writing 'and identified by the Construction Manager as unsettled at the time of the final Application for Payment.

7.9 Florida Prompt Payment Act. Notwithstanding anything contained herein

to the contrary, the Construction Manager agrees and acknowledges that the limited portion of the Florida Prompt Payment Act, as set forth in Section 218.735(6), Florida Statutes pertaining to “timely payment for purchases of construction services” is incorporated by reference into this Agreement with respect to the Construction Manager’s obligation to pay subcontractors. Consistent with Section 218.735(6), Florida Statutes, when the Construction Manager receives payment for labor, services or materials furnished by any subcontractor or supplier hired by the Construction Manager, the Construction Manager must remit payment due to those subcontractors and suppliers within fifteen (15) days after the Construction Manager’s receipt of payment. The Construction Manager will flow this requirement to its sub-subcontractors such that when a subcontractor receives payment from the Construction Manager for labor, services or materials furnished by sub-subcontractors or suppliers hired by the subcontractor, the subcontractor will remit payment due to those subcontractors and suppliers within fifteen (15) days after the subcontractor’s receipt of payment.

8. Setoff and Recoupment. Payment for goods, work or services to be

performed under this Agreement shall be subject to setoff or recoupment for any present or future claim which Owner may have against Construction Manager in connection with this Agreement, any Work Orders issued under this Agreement or any other agreements existing between the parties.

9. Insurance. Construction Manager shall, with respect to each Work Order issued pursuant to this Agreement, provide and maintain, and require all of

13

its subcontractors to do the same, the following types of insurance protecting the interests of Owner and Construction Manager with limits of liability not less than those set forth below or as otherwise may be required by the specifications described in any Work Order, whichever limits are greater:

9.1 Worker's Compensation Insurance. Construction Manager shall maintain

worker's compensation insurance, insuring its liability under the Worker's Compensation and Occupational and Disease Laws of the State of Florida, with limits of liability not less than the minimum limits required by Florida law. The worker's compensation policy provided by Construction Manager must be endorsed with a waiver of subrogation endorsement, waiving Construction Manager's right of subrogation against Owner and any architect or engineer utilized by Owner.

9.2 Comprehensive General Liability Insurance. Comprehensive general liability insurance which shall include coverage on an “occurrence” basis for the hazards of:

9.2.1 Premises-operation;

9.2.2 Explosion, collapse and underground property damage;

9.2.3 Mold;

9.2.4 Elevators and escalators;

9.2.5 Independent contractors;

9.2.6 Products and completed operations, including coverage for

explosion, collapse and underground hazards (with completed operations coverage to remain in force for two (2) years following the date of the acceptance of the Work by Owner);

9.2.7 Contractual liability;

9.2.8 Personal injury liability for all groups of offenses with the exclusion

pertaining to employment removed; and

9.2.9 Incidental malpractice coverage.

Such comprehensive general liability insurance must be endorsed with

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a broad form property damage endorsement (including completed operations). Owner shall be named as an additional named insured on the comprehensive general liability policy. The limits of liability associated with the Construction Manager's general liability policy shall not be less than the following:

$1,000,000.00 each occurrence; $2,000,000.00 aggregate.

Notwithstanding anything contained herein to the contrary, the coverages under the comprehensive general liability policy to be furnished by the Construction Manager must be afforded on a policy form no more restrictive than the last edition of the comprehensive general liability policy filed by the Insurance Service Office, Inc.

9.3 Excess Liability Policy. Construction Manager shall maintain an

umbrella (excess) liability insurance policy in an amount not less than $1,000,000.00 combined single limit bodily injury/property damage, in excess of the comprehensive general liability insurance described above.

9.4 Automobile Liability Insurance. Construction Manager shall maintain automobile liability insurance covering all owned, non-owned and hired vehicles used in connection with the Work to be provided hereunder with a combined minimum limit of $1,000,000.00 single limit for bodily injury and property damage liability each person/each aggregate.

9.5 Fire Insurance. It is Construction Manager's responsibility to carry its own fire insurance on all items, including equipment that will not become an integral part of the project described in any Work Order issued pursuant to this Agreement.

9.6 Builder's Risk Insurance. Construction Manager shall procure builder's

risk insurance covering Construction Manager and Owner at the site from loss or damage caused by or from risk of direct physical damage or loss. Construction Manager's builder's risk policy shall have minimum limits of $1,000,000.00.

9.7 Public Construction Bond. In the event the Guaranteed Maximum Price

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associated with a Work Order is in excess of Two Hundred Thousand and No/100 Dollars ($200,000.00), Construction Manager shall furnish a public construction bond in an amount equal to one hundred percent (100% ) of the Guaranteed Maximum Price associated with any Work Order issued pursuant to this Agreement. The public construction bond to be issued by Construction Manager shall be in a form acceptable to Owner issued by a surety satisfactory to the Owner and shall name the Owner as an obligee. The public construction bond to be provided by Construction Manager shall comply with the provisions of Section 255.05, Florida Statutes. In such an event, the cost of the Public Construction Bond shall be added to the Contract Sum.

9.8 Insurance Certificate. Prior to performing any services with respect to

a Work Order, Construction Manager shall file with Owner a certificate of insurance in a form acceptable to Owner. The certificate of insurance shall reflect Owner as an additional insured on Construction Manager's comprehensive general liability policy, automobile liability policy, worker's compensation policy and excess liability policy. The certificate of insurance furnished by Construction Manager shall contain a provision that the coverages afforded under the policies described thereon will not be cancelled until at least thirty (30) days' prior written notice has been given to Owner.

9.9 Rating Insurance Companies. All insurance companies issuing the policies

provided for herein shall be licensed and approved by the Department of Insurance, State of Florida and shall have a financial rating no lower than II and a policy holder's surplus rating no lower than (A) as listed in the most current edition of A.M. Best TK Rating Guide. Companies with ratings lower than those specified herein shall only be acceptable upon the written consent of Owner.

9.10 Extent of Coverages. The insurance coverages referred to above are

set forth in full in their respective policy forms, and the foregoing descriptions of such policies are not intended to be complete or to alter or amend any provision of the actual policies and should said descriptions conflict with the actual policies of insurance, the provisions of the policies of insurance shall govern.

9.11 Failure to Secure Insurance. If Construction Manager does not provide

the insurance coverages required hereunder, Owner may procure such insurance coverages at Construction Manager's expense and deduct

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the amount paid for said coverages from any sums owed Construction Manager.

9.12 Waiver of Subrogation. Construction Manager's policies shall be endorsed

to provide that the insurers waive their rights of subrogation against Owner and also to provide that the policy provides primary coverage over any other applicable insurance coverages.

10. Safety Standards. Construction Manager agrees to require that all of its

employees, subcontractors and other personnel be required to fully comply with and implement all government laws (OSHA) pertaining to safety standards Construction Manager agrees that any fines, assessments or penalties imposed upon Owner by failure of the Construction Manager, its employees or subcontractors to comply with government standards will be fully charged back and paid for by Construction Manager.

11. Indemnification. In consideration of the first One Hundred and No/100 Dollars ($100.00) to be paid hereunder and to the fullest extent permitted by law, Construction Manager agrees to indemnify, hold harmless, and defend Owner, Owner's agents and their respective agents, servants and employees from and against all claims, costs, expenses or liabilities (including attorneys' fees) attributable to bodily injury, sickness, disease or death or damage to or destruction of property arising out of, or resulting from, the performance of Work by Construction Manager, its subcontractors, their agents, servants or employees but only to the extent caused by the negligent acts or omissions of them. Construction Manager's obligation hereunder shall only be limited to the extent of the monetary limitations set forth herein and shall not be limited by the provisions of any worker's compensation or similar act. Construction Manager's monetary obligation under this indemnification provision is specifically limited to the sum of One Million and No/100 Dollars ($1,000,000.00). The parties hereby agree that the foregoing monetary limitation bears a reasonable commercial relationship to the Agreement. This indemnity provision is intended to comply with Florida laws on indemnity and, specifically, to comply with Section 725.06, Florida Statutes, and is to be interpreted in such a way as to be enforceable.

12. Termination.

12.1 Termination for Cause by Owner. 12.1.1 If Construction Manager shall fail to commence any work called

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for under a Work Order or fail to diligently prosecute Work called for under a Work Order to completion in a diligent, efficient, timely, workmanlike, skillful, and careful manner and in accordance with the provisions of any specifications and/or plans identified in the Work Order, fail to use an adequate amount or quality of personnel or equipment to complete such Work without undue delay, fail to perform any of its obligations under this Agreement or any Work Orders issued pursuant to this Agreement, or fail to make prompt payments to its subcontractors, materialmen or laborers, then Owner shall have the right, if Construction Manager shall not cure such default after five (5) days' written notice thereof, to (i) terminate this Agreement or, in the alternative, any Work Orders issued pursuant the terms of this Agreement; (ii) take possession of and use of all or any part of Construction Manager's materials, equipment, supplies, or other property of any kind used by Construction Manager in the performance of Work related to any Work Order and to use such property in the completion of said Work; or (iii) complete any Work Order in a manner it deems desirable including engaging the services of other parties therefore. Any such acts by Owner shall not be deemed a waiver of any other right or remedy of Owner. If, after exercising any such remedy, the cost to Owner of the performance of the balance of any Work associated with a Work Order is in excess of that part of the Contract Sum associated with the Work Order which has not heretofore been paid to Construction Manager hereunder, Construction Manager shall be liable for and shall reimburse the Owner for such excess.

12.1.2 It is recognized that if Construction Manager is adjudged

bankrupt, or makes a general assignment for the benefit of creditors, or if a receiver is appointed for the benefit of creditors, or if a receiver is appointed on account of Construction Manager's insolvency, such an event could impair or frustrate the Construction Manager's performance of this Agreement and any Work Orders issued under the provisions of this Agreement. Accordingly, it is agreed that upon the occurrence of any such event, Owner shall be entitled to request of Construction Manager or its successor in interest adequate assurance of further performance in

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accordance with the terms and conditions hereof. Failure to comply with such a request within ten (10) days from date of delivery of the request shall entitle Owner to terminate this Agreement. In all events, pending receipt of adequate assurance of performance and actual performance in accordance therewith, Owner shall be entitled to proceed with any Work called for under a Work Order with its own forces or with such other contractors on a time and material or other appropriate basis, the cost of which will be back charged against the amount then or thereafter paid or otherwise due Construction Manager.

12.2 Termination for Cause by Construction Manager. If Owner fails to

perform any of its obligations hereunder, Construction Manager shall have the right to give Owner a written notice thereof, stating the nature of the default complained of. If Owner does not cure such default or commence the curing of such default within five (5) days after receipt of such notice, Construction Manager shall have the right to terminate this Agreement or any Work Order issued pursuant to this Agreement by giving Owner written notice thereof at any time thereafter while such default remains uncured and payment shall only be made to the Construction Manager for reasonable demobilization costs, the fee earned to the date of the termination and all outstanding costs incurred as of the date of termination. Said payment shall be Construction Manager’s sole damages for Owner's breach. Construction Manager shall similarly have the right to terminate upon five 5) days' written notice if any Work to be performed in connection with the Work Order is suspended for a period of sixty (60) days or more from causes not the fault of the Construction Manager.

12.3 Termination for Owner's Convenience. Owner hereby reserves the right to terminate this Agreement and/or any Work Orders issued under the terms of this Agreement without regard to fault or breach upon written notice to Construction Manager, effective immediately, unless otherwise provided in said notice. In the event of such a termination, Owner shall pay as the sole amount due to Construction Manager (i) all sums due for Work performed to date; and (ii) reasonable costs of demobilization. Such sums shall be due and payable on the same conditions as set forth herein for the final payment. Upon receipt of such payment, the parties hereto shall have no further obligations to each other except the Construction Manager's obligation to perform corrective and/or warranty

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work and to indemnify Owner as provided for in this Agreement. It is understood and agreed that no fee or other compensation or payment shall be due or payable for unperformed Work. Construction Manager agrees that each subcontract and purchase order issued by it will reserve for Construction Manager the same right of termination provided for in this paragraph and that Construction Manager further agrees to require that comparable provisions be included in all lower tier subcontracts and purchaser orders.

13. Time of Completion. 13.1 Time. All time limits stated in Work Orders issued pursuant to this

Agreement are of the essence of this Agreement. By executing Work Orders issued pursuant to this Agreement, Construction Manager confirms that the contract time specified in a Work Order is a reasonable period for performing the Work contemplated therein.

13.2 Substantial Completion. The date of substantial completion shall be deemed the date on which the permitting authority for the project in question issues a final certificate of occupancy.

13.3 Delay Damages. CONSTRUCTION MANAGER SHALL NOT BE

ENTITLED TO RECOVER ANY MONETARY DAMAGES IT MAY SUSTAIN AS A RESULT OF ANY DELAY CAUSED CONSTRUCTION MANAGER BY ANY ACT OF OWNER, ARCHITECT, ANY SEPARATE CONTRACTOR EMPLOYED BY OWNER, OR ANY OTHER CAUSES WHATSOEVER. CONSTRUCTION MANAGER FURTHER AGREES THAT IT WILL ACCEPT IN FULL SATISFACTION FOR SUCH DELAYS ANY EXTENSIONS OF TIME WHICH ARE GRANTED IT BY OWNER.

14. Accuracy, Technical Sufficiency of Services Provided by Construction Manager.

14.1 Notwithstanding anything contained herein to the contrary, it is

understood and agreed between the parties that Owner is not examining any contract documents for accuracy and technical sufficiency, and is not under any obligation to inspect the Project. Furthermore, it is understood and agreed between the parties that neither the review, approval, nor acceptance by Owner of data, surveys, studies, designs, specifications, calculations, plans, drawings, or any other documents furnished hereunder by Construction Manager shall in any way relieve

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Construction Manager of responsibility for the adequacy, completeness, and accuracy of its Work, and in no event shall Owner's review, approval, acceptance of or payment for such services be construed to operate as a waiver of any of Owner's rights under this Agreement or of any cause of action it may have, arising out of the performance of this Agreement.

14.2 Construction Manager hereby acknowledges that Owner does not make any representations or warranties to Construction Manager by virtue of the information contained in the request - for proposals or any program descriptions contained therein. Construction Manager further acknowledges that it, alone, is responsible for the accuracy, completeness, and technical sufficiency of all Work performed under this Agreement and that the information contained in Owner's request for proposal and program description does not relieve, release, or in any way whatsoever diminish Construction Manager' s ultimate responsibility for the accuracy, completeness and technical sufficiency of the Project and any Work performed hereunder.

15. Legal Terms.

15.1 The terms and provisions of this Agreement and any dispute arising

in connection herewith shall be governed by and construed in accordance with Florida Law. The parties agree that all disputes arising under this Agreement shall be resolved by the courts and not by arbitration. The parties further agree that the venue for any legal action brought in connection with this Agreement shall be in Lee County, Florida. In connection with any litigation arising out of this Agreement, the prevailing party shall be entitled to recover all costs incurred, including reasonable attorneys' fees.

15.2 Prior to the filing of any litigation by Owner or Construction Manager against the other (and, except as described below, as a precondition to any such filing), Owner and Construction Manager shall engage in presuit non-binding mediation. Such mediation may be requested by either party at any time and shall be conducted the same as if such mediation were ordered by Florida Circuit Court (i.e. in accordance with and subject to, all of the laws and rules applicable to court ordered mediation). Such mediation shall be conducted within a reasonable period of time after the same is requested in writing by either party. If the parties are unable to agree upon the selection of a mediator, either party

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may petition or request that the Circuit Court in Lee County, Florida (or the Mediation Coordinator for the Court of Lee County, Florida) appoint a mediator. A mediator who is so appointed may only be challenged for cause, and not preemptorally. While the request for and the conducting of such a mediation may be a precondition to the filing of a civil action, in the event either party is in jeopardy of losing its right to sue (e.g., the statute of limitations is about to expire), then suit may be filed before a mediation is conducted provided that mediation is requested before, or simultaneously with the filing of such suite, and is conducted before the named defendant in the suit is required to respond to the complaint. If the scheduling of the mediation requires, the plaintiff in the suit shall grant the defendant an appropriate extension of time to respond to the complaint so as to permit the mediation to be conducted before the defendant must so respond. The mediation contemplated hereunder shall be conducted, unless otherwise agreed by the parties, in Lee County, Florida. The parties shall bear the mediator's fee and any filing fees associated with the mediation equally.

16. Non-Exclusive Agreement. Owner may, in its discretion, issue Work Orders to Construction Manager during the contract period contemplated herein. All such Work Orders shall incorporate by reference the documents referred to in paragraph 17 below. Owner shall not, however, be obligated to issue Work Orders to Construction Manager for all Outpatient Projects it undertakes and expressly reserves the right to utilize other construction managers to perform work of a similar nature should it, in its sole discretion, elect to do so.

17. Contract Documents. The “Contract Documents” shall consist of this Agreement, any Work Order issued pursuant to this Agreement, any drawings and specifications referenced in the Work Order and any change orders modifying a Work Order issued pursuant to this Agreement. These documents form the Agreement existing between the parties, and are as fully a part of the Agreement as if attached to this Agreement or repeated herein.

18. Special Provisions.

18.1 The Construction Manager warrants that it has not employed or retained any company or person, other than a bonafide employee working solely for Construction Manager, to solicit or secure this Agreement and that it has not paid any person, company, corporation, individual, or firm, other than a bonafide employee working solely for Construction Manager any

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fee, commission, percentage, gift, or other consideration contingent upon or resulting from the award or making of this Agreement.

18.2 Public Entity Crime Information Statement. Any person or affiliate who has been placed on the Convicted Vendor List following a conviction for a public entity crime may not submit a bid on a contract to provide any goods or services to a public entity, may not submit a bid on a contract with a public entity, for the construction or repair of a public building, or public work, may not submit bids or leases of real property to a public entity, may not be awarded or perform work as a contractor, supplier, subcontractor, or consultant under a contract with any public entity, and may not transact business with any public entity in excess of the threshold amount provided in Section 287.017, for CATEGORY 2 for a period of thirty-six (36) months from the date of being placed on the Convicted Vendors List.

18.3 The Construction Manager affirmatively represents to Owner that it shall

perform its services under this Agreement in a skillful and competent manner in accordance with good and sound healthcare construction practices.

18.4 Except as otherwise provided in this Agreement, the Construction Manager agrees not to divulge, furnish, or make available to any third parties, firm, or organization, without the Owner’s prior written consent, or unless instant to the proper performance of Construction Manager’s obligations hereunder, or in the course of any judicial or legislative proceedings where such information has been properly subpoenaed, any information concerning services to be rendered by Construction Manager or any of its subcontractors to this Agreement.

18.5 In the event Construction Manager should be deemed subject to the

disclosure requirements of 42 U.S.C. 1395X(v)(1)(1), or amendments thereto until the expiration of four (4) years following the completion of furnishing services under this Agreement upon written request of Owner, Construction Manager shall make available to the Secretary of the Department of Health and Human Services, or the Controller General, or any duly authorized representatives thereof, a copy of the Agreement and such books, documents and records of Construction Manager that are necessary to certify the nature and extent of any costs incurred by Owner. If Construction Manager carries out any of the duties of this Agreement through a subcontract, having a contract price of $10,000.00 or more over a twelve (12) month period, with an organization that would be a related

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organization within the meaning of 42 C.F.R. 405.427, or amendments thereto, such subcontract shall contain a clause to the effect that for a period of four (4) years following the completion of the subcontract, the subcontractor, upon the written request of Owner, shall make available to the Secretary, or to the Controller General, or any of their duly authorized representatives, the subcontract, and books, documents and all other records of the subcontractor that are necessary to verify the nature and extent of such costs.

18.6 Construction Manager represents and warrants to Owner and Owner’s affiliates that Construction Manager (and each person or entity providing services or work under this Agreement on behalf of Construction Manager): (i) is not currently excluded, debarred or otherwise ineligible to participate in the Federal health care programs as defined in 42 U.S.A.§1320a-7b(f) (the “Federal Health Care Programs”); (ii) is not convicted of a criminal offense related to the provisions of healthcare items or services but has not yet been excluded, debarred, or otherwise declared ineligible to participate in the Federal Health Care Program; and (iii) is not under investigation or otherwise aware of any circumstances which may result in Construction Manager (or any subcontractor, person or entity providing services on behalf of Construction Manager hereunder)being excluded from participation in the Federal Health Care Programs. This shall be an ongoing representation and warranty during the term of this Agreement and Construction Manager shall immediately notify Owner of any change in the status of the representation and warranty set forth in this section. As a condition precedent to the Construction Manager’s right to progress and other payments under this Agreement, Construction Manager shall submit a statement, in writing, and in such form as approved by the Owner, of the above. Any breach of this section shall give Owner the right to terminate this Agreement immediately for cause, which right shall be in addition to any other rights and remedies available to Owner for such breach under the Agreement or otherwise. Construction Manager agrees to indemnify and hold Owner harmless from any liability incurred by Owner to the extent that Construction Manager’s representation and warranty is not accurate.

18.7 Construction Manager hereby represents and warrants to Owner that neither it nor any of its subcontractors, as of the date of the making of their respective subcontracts, have been excluded from participation in Federal Healthcare Programs or in any Federal procurement or non-procurement program. Construction Manager further represents and

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warrants that none of its employees, or the employees of subcontractors, have been convicted of a criminal offense related to the provision of healthcare items or services and has not been reinstated in a Federal Healthcare Program after a period of exclusion, suspension, debarment, or ineligibility. Construction Manager acknowledges that Owner maintains an ongoing policy of screening for exclusion from Federal Healthcare Program participation by referencing the List of Excluded Individuals Entities (LEIE), Excluded Parties Listing System (EPLS) and other applicable tools and further acknowledges receiving a copy of that policy. Construction Manager agrees to implement as part of its basic services a similar compliance monitoring program with respect to all individuals and entities it employs or otherwise uses on the Project. The Construction Manager shall provide in each and every one of its subcontracts that the exclusion from participation in Federal Healthcare Programs or in any Federal procurement or non-procurement program is cause for termination of the subcontract. If the Construction Manager discovers, after the making of the subcontract, that a subcontractor has been excluded from participating in Federal Healthcare Programs or in any Federal procurement or non-procurement program, the Construction Manager shall immediately terminate the debarred subcontractor for cause. Construction Manager shall maintain all documentation evidencing compliance with the screening requirements set forth in this paragraph for a minimum period of seven (7) years or longer if required by law. Upon Owner’s request, Construction Manager will promptly make all such information available to Owner for audit, accreditation and investigation purposes.

18.8 Business Ethics. Construction Manager agrees to maintain business ethics meeting the Owner’s business ethics expectations. The Owner’s business ethics expectations are more particularly described in Exhibit “B” attached hereto and incorporated herein by reference.

18.9 The Owner will consider the employment by the Construction Manager of

unauthorized aliens a violation of Section 274A(e) of the Immigration and Naturalization Act. Such violation shall be cause for unilateral cancellation of this Agreement.

18.10 Any and all drawings, specifications, designs, models, photographs,

reports, surveys or other data and documents submitted, provided or created by the Construction Manager in connection with this Agreement are and will remain the property of the Owner, whether the Project for

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which they are made is completed or not. All documents, data, studies, surveys, drawings, maps, models, photographs and reports prepared by the Construction Manager, whether finished or unfinished, will become the property of the Owner and must be delivered by the Construction Manager to the Owner within seven (7) days of the date that this Agreement is terminated by either party; but not later than the date of the final payment request for this Project. Any compensation due to the Construction Manager will be withheld until all documents are received as provided herein. This applies to all Contract Documents and Construction Documents produced for the Project.

18.11 The Construction Manager shall afford the Owner and its authorized

designees access to the Project site at all times.

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19. Diversity and Local Participation.

19.1 Non-Discrimination. The Construction Manager shall not discriminate

against employees or subcontractors because of race, color, religion, sex, age, national origin, or ancestry. The Construction Manager shall insure that employees and subcontractors are retained and utilized on the Project without regard to the race, color, religion, sex, age, national origin, or ancestry.

19.2 Disadvantaged Business Enterprise Participation. The Owner encourages

the Construction Manager to use subcontractors who are certified as disadvantaged business enterprises as defined in Section 288.703, Florida Statutes (“DBE”) so as to promote opportunities for disadvantaged business enterprises to participate in the Project. The Construction Manager, when seeking subcontractors for the Project, agrees to use its best efforts to insure the participation of local DBE.

19.3 Local Business Enterprises. The Owner encourages the Construction

Manager to utilize business enterprises based in Lee County, Florida. The Construction Manager, when seeking subcontractors, agrees to use its best efforts to assure the participation of business enterprises based in Lee County, Florida.

20. Miscellaneous.

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20.1 No modification, waiver, amendment, discharge or any change of this

Agreement or any Work Orders issued pursuant to this Agreement shall be valid unless the same are in writing, signed by the parties against whom the enforcement of such modification, waiver, amendment, charge or change is sought. This Agreement, the Work Orders issued pursuant to this Agreement, any plans and specifications referred to in said Work Orders and any documents attached hereto constitute the entire agreement between the parties relating to the transactions contemplated hereby and all prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged herein.

20.2 This Agreement shall be construed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute a single instrument.

20.3 All pronouns and any variations thereof shall be deemed to refer to

the masculine, feminine, neuter, singular, or plural as the identity of the persons or entity may require.

20.4 If any provision or any portion of any provision of this Agreement or

the application of any provision or portion thereof to any person or circumstance shall be held invalid or unenforceable, the remaining portion of such provision and the remaining provisions of this Agreement, or the application of such provision held invalid, or unenforceable to persons or circumstances other than those to which it has been held invalid or unenforceable, shall not be affected thereby.

20.5 In the event of any dispute as to the precise meaning of any term

contained herein, the rules of contract construction and interpretation that written contracts be construed against the drafter shall not apply.

20.6 All articles, titles, or captions contained in this Agreement are for

convenience only and shall not be deemed a part of this Agreement and shall not affect the meaning or interpretation of this Agreement.

20.7 All notices, demands, or other communications made pursuant to this

Agreement shall be in writing and copies thereof shall be simultaneously directed to the parties listed below. Further, all notices, demands, or communications shall be deemed to have been duly given by mailing, unless otherwise specified, by United States registered or

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certified mail, return receipt requested, with the proper postage prepaid at the following addresses:

If to Owner: David Cato Chief Administrative Officer, Outpatient Services Medical Plaza One 9800 S. HealthPark Dr., Suite 200 Fort Myers, FL 33908 With a copy to: Teri Isacson, Esq. Legal Services and Risk Management Lee Memorial Health System 2776 Cleveland Ave. Fort Myers, FL 33901 If to Construction Manager: ______________________________ ______________________________ ______________________________ Or to such other addresses or to such other persons as any party may designate to the other for purposes set forth above.

20.8 Assignment. This Agreement shall not be assignable to either party.

20.9 Statutory Notice. ANY CLAIMS FOR CONSTRUCTION DEFECTS ARE SUBJECT TO THE NOTICE AND CURE PROVISIONS OF CHAPTER 558, FLORIDA STATUTES.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written.

Signed, sealed, and delivered in the presence of:

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Owner: LEE MEMORIAL HEALTH SYSTEM By:___________________________________ Stephen R. Brown, M.D. Chairman of the Board of Directors


CONSTRUCTION MANAGER: __________________________________

By:___________________________________ Printed Name:

______________________ Title:______________________________