rating agency for ghs - fy 2011

RATING AGENCY

PRESENTATION

MAY 31 - JUNE 1, 2011

Overview of Greenville Hospital System (GHS)

Local Economy and Competitive Environment

Strategic Initiatives

• Total Health

• Highly Integrated Delivery System

– Physician Network and Engagement

– Leadership Development

– Improving Operational Performance

– Growth

• Accountable Care Organization

• Academics and School of Medicine

Agenda for Discussion

2

• Financial Sustainability

– Reimbursement and Managed Care Strategies

– Operating and Financial Overview

o Key Utilization Statistics

o Statements of Revenues and Expenses

o Balance Sheets

o Cash Flow Statements

o Financial Ratios

– Capital Structure and Investment Update

Summary/Takeaway Points

Agenda for Discussion - continued

3

4

Overview of Greenville Hospital System

Overview of GHSVision and Mission

GHS Vision

Transform health care for the benefit of the people

and communities we serve

GHS Mission

Heal compassionately. Teach innovatively.

Improve constantly.

5

Founded in 1912 as City Hospital

Established in 1947 by Act of the South Carolina Legislature

Largest healthcare system in South Carolina

One of the largest multi-hospital systems in the Southeast with five medical campuses located throughout Greenville County

• 4 acute care hospitals

• 13 specialty healthcare facilities includinglong-term acute care, rehabilitation, behavioral, and skilled nursing

• Physician network of 544 employed physicians

Overview of GHSGreenville Hospital System

6

Regional tertiary referral center with the following signature services:

• Heart Institute

• Children’s Hospital

• Neurosciences

• Musculoskeletal

A physician-led, comprehensive, integrated healthcare delivery system

• Centrally managed and operated

• Single governance, corporate management, medical staff, support services, and standard of care

University Medical Center that provides undergraduate and graduate medical education and medical research in support of the clinical enterprise

Overview of GHSGreenville Hospital System

7

Overview of GHSBoard of Trustees

8

9

Hired

Michelle

Taylor

Smith

7-25-11

Overview of GHSPresident’s Council

Overview of GHSNew CFO

10

Terri T. Newsom, Vice President and Chief Financial Officer, joined Greenville Hospital

System University Medical Center (GHS) in March 2011. Ms. Newsom is responsible for all

financial functions of the hospital system and its affiliates, including accounting, treasury,

financial planning and analysis, revenue cycle, corporate integrity, and supply chain. Prior

to joining GHS, she was the Associate Vice President for Ambulatory Care Finance at Duke

University Health System and the Divisional Chief Financial Officer of Duke Raleigh

Hospital.

Ms. Newsom has been involved in health care since 1991. While at Duke, she served on

the boards of community and civic organizations and was also a member of the North

Carolina Chapter of the Healthcare Financial Management Association. She earned a

bachelor’s degree in accounting from Appalachian State University and is a certified public

accountant.

Overview of GHSLinking Strategy, Operations, and Finance

GHS has already made the big investments in facilities,

programs, and people

GHS is integrating and optimizing those investments to

succeed under health reform

GHS has five multi-year goals to health reform:

• Total Health



• Academics that support the clinical enterprise

• Sustainable Financial Model

11

12

Overview of GHSGreenville Hospital System at a Glance

Significant Investments

Baptist Easley

Hospital

• Patewood Memorial Hospital $65.9m

• Greer Memorial Hospital $61.6m

• Cottages at Brushy Creek $23.0m

• Greenville Memorial Hospital (GMH)

• Emergency Room $18.5m

• Private Room Renovations $50.0m

• Baptist Easley Hospital $42.0m

Overview of GHSGreenville Memorial Medical Campus

• Greenville Memorial Hospital

• Children’s Hospital

• Roger C. Peace Rehabilitation Hospital

• Marshall I. Pickens Hospital

• Cancer Center

• Memorial Medical Offices

• Health Sciences Education Building 13

• Outpatient Centers

• Patewood Medical Offices

• Patewood Memorial Hospital

GHS / Clemson University

Translational Research Hub

Overview of GHSPatewood Medical Campus

14

• Greer Memorial Hospital

• Greer Medical Office Buildings

• Cottages at Brushy Creek Skilled Nursing and Subacute

Overview of GHSGreer Medical Campus

15

• Hillcrest Memorial Hospital

• Hillcrest Medical Offices

Overview of GHSSimpsonville Medical Campus

16

• North Greenville Hospital

- Long Term Acute Care

• North Greenville Medical Offices

Overview of GHSNorth Greenville Medical Campus

17

50/50

Ownership

through

Greenville

Health

Corporation

Overview of GHSBaptist Easley Hospital

18

Overview of GHSSummary of Major Investments

System Attribute GHS Investments

Physician Alignment 544 employed physicians; growing to 600 in the next

12 months

Sites of Care Greenville County

Information Technology 3rd year of a 5-year, $65 million spending plan

Market Focus Dominant presence in SC’s most attractive healthcare

market

Resource Management Operating performance allows us to invest in physician

strategy

Quality A top performer in quality (UHC report, 2011)

Revenue Focus A top performer in managed care contracting (UHC report, 2011)

Management Orientation Successful management team with extensive, varied

background

Clinical Focus Primary care through quaternary care19

20

Local Economy and

Competitive Environment

Local Economy and

Competitive Environment Greenville Economy

Hub of the Upstate, the fastest growing region in South Carolina

Population growth of 1.6% per year

Unemployment rate of 7.8% as compared to 9.8% for the State of

South Carolina

Greenville County has announced over $1.1 billion in new capital

investment and 6,195 new jobs in the last five years

The SC Department of Commerce indicates that Greenville is

home to more corporate headquarters than any other region in

South Carolina

As of 2010, more than 50 Fortune 500 companies maintained

offices in Greenville County

Source: SC Employment Security Commission, April 2011 / Greenville Area Development Corporation (GADC)

21

2010 - Relocating and existing companies created 2,083 new jobs and

new capital investment of $251.9 million (GADC)

2011 - Anticipating investment of over $950 million

• Michelin North America– Michelin expanding every major facility in South Carolina; investing $350 million,

adding 100 jobs

• BMW of North America

– New $750 million assembly line and paint shop alongside the original plant

– 1,600 new jobs are being created as a result of a 50% increase in production

capacity set for 2011

• General Electric - Aviation

– Multi-million dollar investment and 100 additional jobs by 2013

• Kemet Corporation

– $34.1 million expansion, 110-120 new positions

• Amy’s Kitchen

– The $63 million investment is expected to create 700 jobs over the next five years

Source: SC Employment Security Commission, April 2011 / Greenville Area Development Corporation (GADC) 22

Local Economy and

Competitive Environment Major Employer Investment

Mission St. Joseph’s Health System

Asheville, NC

62 miles

Carolinas Medical Center

Charlotte, NC

106 miles

..GreenvillePickens

Spartanburg

Cherokee

Union

Laurens

Greenwood

Anderson

Oconee

Abbeville

.Primary Market

Secondary Market

. .. ...

.

..

..

.

AnMed Health

Medical Center

Oconee Memorial

Hospital

Cannon Memorial

Hospital

Baptist Easley

Hospital

Abbeville Area

Medical Center

Self Regional

Healthcare

Laurens County

Hospital

Wallace Thomson

Hospital

Upstate Carolina

Medical Center

Mary Black

Health System

Spartanburg Reg.

Healthcare Center

North

Greenville

Medical

Campus

Simpsonville

Medical Campus

Greer Medical

Campus

Bon Secours St. Francis

Eastside

Bon Secours

St. Francis

Health System

Memorial Medical

Campus

Larger Medical Facility

Smaller Medical Facility

Palmetto Health Alliance

Columbia, SC

104 miles

Emory

Atlanta, GA

181 miles

.Patewood Medical

Campus

.AnMed Health

Women’s &

Children’s Hospital

Village at Pelham. ..

23

1.4 million people in the Upstate

Local Economy and

Competitive Environment Primary Market and Five-county Secondary Market

2008 2009 2010

Primary Service Area

Greenville 65.6% 65.1% 64.4%

Secondary Service Area (GHS market share of inpatient cases that leave home county)

Pickens 54.5% 52.1% 51.5%

Laurens 31.4% 28.8% 29.9%

Oconee 42.0% 42.6% 44.7%

Anderson 61.3% 63.1% 60.1%

Spartanburg 64.5% 67.3% 67.6%

24

Local Economy and

Competitive Environment Inpatient Market Share by County

25


Strategic InitiativesMulti-Year Goals Bridge

Long-term Strategy and Annual Goals

Strategy

to Annual

System

Goals

26

Strategic InitiativesMulti-Year Goals

27

Total Health• Right Care, Right Time, Right Place

• Clinical competencies to perform under Health Reform

Highly Integrated

Delivery System• Systems, structures, and processes to improve operating performance

• Network development for FFS business and for population coverage

Accountable Care

Organization• Business systems and structures to perform under Health Reform

• Partnerships with payors

Academics that Support

the Clinical Enterprise

• Leverage academics to improve clinical and financial performance

• Create a clinical workforce to lead in a reformed healthcare

environment

Sustainable Financial

Model

• Efficiently create and allocate resources to achieve mission

• Strong performance in today’s environment while positioning for

Health Reform

28

Total Health



Total Health

The GHS Total Health philosophy is central to our approach to

healthcare delivery, work force development, and medical education.

We value interdisciplinary collaboration throughout a highly integrated

delivery structure using patient-centered, standardized, and evidence-

based practices with reportable quality and financial outcomes.

GHS Pillars of Excellence

People

We work to

transform

health care

Service

Patients and

families are the

focus of

everything we

do

Quality

We provide right

care at the right

time and in the

right place

Growth

We develop our

System to meet

the needs of our

communities

Finance

We responsibly

direct our

resources to

support our

mission

Academics

We educate to

transform health

care

29

30

Total Health is our approach to develop clinical

competencies to accommodate health reform in the future,

which includes the following:

• Care coordination

• Evidence-based practices

• Clinical decision support system

Chief Medical Officer leading the effort

Characteristics

• Cost effective and efficient

• Patient centered

• Coordinated team based care

• Personalized medicine with focus on prevention

• More spent on pre- and post-acute care settings


Total Health

31

Highly Integrated Delivery System


Physician Network and Engagement

Leadership Development

Improving Operational Performance

Growth



32

33

Physician Network and Engagement




Highly Integrated Delivery SystemEmployed Physician Network

* Includes 3

Medicine/Pediatrics

Physicians

Source: UMG Master Physician File, dated 3.1.11

NOTE: These numbers do not include 111 non-MD providers34

544

Total MDs

Primary Care Physicians

Specialty #MDs

Family Practice 45

General Internal Medicine* 40

MD360 6

OB/GYN 25

Pediatrics 43

Total 159

Specialty Physicians

Specialty #MDs

Behavioral Medicine 13

Cardiology 30

Hospitalists 37

Neurology 5

Neurosurgery 6

OB/GYN 26

Ophthalmology 1

Ortho/Sports Medicine 28

Other Medicine Specialties 37

Otolaryngology 6

Pediatrics 78

Physiatry 8

Pulmonary 16

Radiology 39

Surgery 54

Urology 1

Total 385

Expansion of GHS physician network throughout primary and

secondary service areas

• New models of consumer-oriented primary care

– Creating new models for a new market:

MD360 Convenient Care on Demand

o 19,570 visits; 47% did not have a PCP; 86% of all MD

referrals to GHS

• Leveraging GHS specialty services capabilities

– Managing mix and referrals: GHS surgeons covering

ED call in regional community hospitals

• Extending GHS physicians in new markets

– Extending GHS MD network: Laurens County

Healthcare System contracting with GHS to provide

employed physicians to their medical community35


Highly Integrated Delivery SystemPhysician Network

Board of Trustees

(Physician leaders are voting members of Board Committees)

GHS President’s Council

(Executive Team includes key physician leaders)

Operations Council

(COO, VP Medical Services, CFO, Clinical Chairs, Campus Presidents)

Physician Operations Council

(Physician Executives, Clinical Chairs)

Unit Leaders

(Physician/Nurse Leader Partnership)

36


Highly Integrated Delivery SystemPhysician Engagement

Partnership/collaboration at all levels directed toward clinical and operational improvements

37





PEOPLE

• Management Orientation

• Leadership Dev. Retreats

• Emerging Leaders

• Center for Frontline Leadership

• Coaching Partnerships

• Charge Nurse Development

• Faculty Development

• Leader Grand Rounds

• Conscious Leadership

• Authentic Community

• 4 Ways of Being

• Decision Rights

• Clearing Model

• Drama Triangle

Partners:

SC Hospital Association Jim Dethmer

Executive ConsultantStuder Group

GE Healthcare

Clemson University

Evidence Based Leadership

PEOPLE

• Monthly Meeting Model

• Thank-you Notes

• Staff Rounding

• HML

• Selection/Retaining Talent

SERVICE/QUALITY

• Patient Rounding

• AIDET

• Owner vs. Renter

• 10/5 Rule

• Walking to destination

• DC Phone calls

• Hourly Rounding

• Bedside Shift Report

FINANCE

• LEM

Performance Improvement

PEOPLE/SERVICE/ QUALITY/GROWTH/ FINANCE/ACADEMICS

• Change Acceleration Process (CAP)

• Work-Out

• Lean Methodology

• Six Sigma DMAIC Methodology

Safety Culture

PEOPLE/QUALITY

• Just Culture

• Teamwork Training

• Communication Facilitation Training

• Hand Hygiene

• Surgical Safety Checklist

• PSN (Event Reporting)

38


Highly Integrated Delivery SystemLeadership Development

39




40




©2011 University HealthSystem Consortium

Adjusted cost/discharge (1)

• Adjusted cost/discharge declined in all major categories, 2009 to 2010

• Clinical portfolio intensification a significant contributor

• Total cost/discharge now 21% below UHC 25th percentile

• Supply cost/discharge now 17% below UHC 25th percentile

• Labor cost/discharge now 12% below UHC 25th percentile

Total Expense

Labor Expense

Supply Expense

$7,851

$4,185

$530

$6,648

$3,439

$481

2009 2010

UHC rank in 2010 5/70 8/69 7/69

(1) Total expense/discharge adjusted by CMI and wage index.

Supply expense/discharge adjusted by UHC supply intensity

score. Labor expense/discharge adjusted by CMI and wage

index.


Highly Integrated Delivery SystemImproving Operational Performance

Greenville Memorial Hospital

Now Top 10 in Efficiency

41

©2011 University HealthSystem

Consortium4242


A Top Performer in Readmissions

30-day readmission rates, all causes

Rank among UHC

members8/112 9/114

28% lower



2009 2010

9.0% 8.7%

11.9% 12.1%

Greenville

UHC Median

4343



©2011 University HealthSystem Consortium

UHC Members National Hospital Compare

Highest observed

75th percentile

Greenville

Median

25th percentile

Lowest observed


A Top Quartile AMC in Value Based Purchasing

©2011 University HealthSystem

Consortium4444



GE Centricity - Global registration, scheduling, patient portal

eClinical Works - Electronic Medical Record for physician

practices

Siemens Soarian - Hospital Electronic Medical Record/CPOE

Telus - Enterprise-wide Data Warehouse

Enterprise-wide IT Platform

45



Aggregation and analysis of data from various internal and external

systems

• Includes clinical, financial, demographic, quality, and market data

How it has helped us

• Optimal location for primary care practice placement

• Value of Marshall I. Pickens behavioral health hospital to the System

• Identifying high-value DRG cost-reduction targets and facilitating

data analysis and performance improvement process

Business Intelligence:

Making Better Decisions by Knowing Our Business Better

46

Growth



Volume through Transfer and Referral Center

Improving flow of targeted cases to GHS from key referral sources

0

100

200

300

400

500

600

700

800

900

Referral Center Totals By Month - March '11

47


Highly Integrated Delivery SystemGrowth - Access

Increase referrals to GHS specialty programs

Develop and expand business lines

Extend reach into new markets

Leverage our scale by providing corporate services• Supply Chain

• Information Technology

• Revenue Cycle

Support academic enterprise • Patient volume

• Diversity of patient base

• Diversified economics

Position for health reform

The local choice for those seeking partnerships and affiliations

48


Highly Integrated Delivery SystemGrowth - Affiliations

49

Accountable Care Organization



Accountable Care Organization

Pilot with GHS Employee Health Plan

• Pharmacy: 340(b), step therapy, and generics

• Benefit plan design: increasing patient responsibility for

out-of-network services

• Network design: concentration on GHS provider platforms

• Results: 0% change in per capita spend CY10 compared to

CY09

Planning for ACO

• Preparing for new forms of risk-based payment

• Population management capabilities with Palmetto Health

50

51

Academics and

School of Medicine


Good for Our Patients and Families

• Enhanced quality, access to clinical innovations, etc.

• Helps address looming physician shortage

Good for Community

• Supports knowledge-based economy; job creation

Good for GHS

• Consistent with vision and mission

• Research focus: comparative effectiveness research and

implementation science

• Enhances GHS’ position as a destination specialty referral

center - Academic Medical Center brand

52


Academics and School of MedicineWhy a Medical School?

Projected to cost $186 million over 10 years

$105 million will be covered by tuition and fees

GHS will pay remaining $81 million over 10 years

• $45 million from existing medical education spending

• $35 - $45 million from new incremental support

– Affordable and sustainable

New model for medical education embedded in a delivery system

• Leverage existing GHS infrastructure

• Control over funding through budget approval process

53


Academics and School of MedicineMedical School Cost and Organization

54

Financial Sustainability


55

Reimbursement and

Managed Care Strategies



6 Months

FY2009 FY2010 FY2011

Medicare 34.7% 33.7% 35.3%

Medicaid 16.2% 15.8% 16.0%

Managed Care 30.2% 31.9% 28.6%

Commercial 1.1% 0.9% 0.7%

Self-Pay 6.6% 7.3% 7.3%

Charity 6.4% 5.4% 5.5%

Other 4.8% 5.0% 6.6%

Total 100.0% 100.0% 100.0%


Financial SustainabilityStable/Attractive Payor Mix

56

Pay for Performance

• GHS is ready to respond to CMS quality initiatives

– Value Based Purchasing Program, Physician Quality Reporting Initiative,

HCAHPS, and All Care Measures

Meaningful Use

• Following significant investments in IT, GHS will qualify for

Meaningful Use beginning in FY2011

Risked-based ACO Reimbursement

• GHS is organizationally well positioned to respond to risk-based or

global/bundled payment reimbursement; additional investment in

operational infrastructure is still required

• Exploring partnership opportunities with BCBS for innovative

provider/payor arrangements


Financial SustainabilityMedicare Reimbursement

57

58

Operating and

Financial Overview



59

6 Months 6 Months

FY2008 FY2009 FY2010 FY2010 FY2011

Discharges 43,359 42,689 42,570 21,193 21,547 Acute 40,378 39,535 39,443 19,573 19,956

Specialty/Post-acute 2,981 3,154 3,127 1,620 1,591

Average Length of Stay 6.63 6.67 6.72 6.76 6.78

Acute 5.08 4.90 4.79 4.85 4.91

Specialty/Post-acute 26.24 28.82 31.03 29.86 28.86

Average Daily Census 785 780 783 787 803

Medicare Case Mix Index 1.77 1.87 1.89 1.93 1.84

Inpatient Surgeries* 15,630 15,634 15,506 7,552 7,737

Outpatient Surgeries 19,888 21,328 23,306 11,771 11,680

Outpatient Visits 1,596,016 1,715,435 2,235,528 1,073,827 1,175,949Facility 747,104 739,718 786,518 381,331 391,366

Physician Practice* 848,912 975,717 1,449,010 692,496 784,583

*Prior year amounts restated due to change in methodology


Operating and Financial Overview Key Utilization Statistics

60

2008 2009 2010 2010 2011

Gross Revenues $2,826.8 $3,137.6 $3,458.4 $1,685.0 $1,911.2

Net Revenues $ 1,111.8 $ 1,240.5 $ 1,346.1 $ 658.2 $ 695.6

Total Expenses 1,091.1 1,232.9 1,314.6 655.4 683.5

Operating Margin 20.7 7.6 31.5 2.8 12.1

Non-operating Gains/

(Losses) (0.3) 26.1 31.4 7.7 3.6

Revenue and Gains

Over Expenses $ 20.4 $ 33.7 $ 62.9 $ 10.5 $ 15.7

(In Millions)

For the Six

Months Ended

March 31

For the Fiscal Years Ended

September 30


Operating and Financial Overview Statements of Revenues and Expenses

61

Actual Budget Variance Budget

Gross Revenues $ 1,911.2 $ 1,887.4 $ 23.8 $ 3,743.7

Net Revenues $ 695.6 $ 691.7 $ 3.9 $ 1,397.0

Total Expenses 683.5 685.4 1.9 1,376.0

Operating Margin 12.1 6.3 5.8 21.0

Non-operating Gains 3.6 5.8 (2.2) 11.7

Revenue and Gains

Over Expenses $ 15.7 $ 12.1 $ 3.6 $ 32.7

(In Millions)

FY2011

Annual

For the Six Months Ended

March 31, 2011


Operating and Financial Overview Budget Comparison

(In Millions) 62

2008 2009 2010 2010 2011

Assets

Cash and Investments $ 185.3 $ 155.3 $ 154.3 $ 123.6 $ 187.5

Board Designated 296.3 490.8 513.9 492.8 524.8

Other Current Assets 188.2 230.7 237.9 224.7 245.0

Other Assets 11.7 9.6 9.7 9.2 10.1

Property, Plant and Equipment, Net 813.6 704.5 705.0 693.7 676.2

Total Assets $ 1,495.1 $ 1,584.0 $ 1,620.8 $ 1,544.0 $ 1,643.6

Liabilities and Fund Balance

Current Liabilities $ 169.8 $ 164.8 $ 192.0 $ 154.6 $ 210.1

Long-term Debt 534.5 525.8 514.6 526.6 515.3

Capital Lease - - 3.7 - 4.5

Other 25.4 91.9 93.6 94.7 83.4

Fund Balance 765.4 801.5 816.9 768.1 830.3

Total Liabilities and Fund Balance $ 1,495.1 $ 1,584.0 $ 1,620.8 $ 1,544.0 $ 1,643.6

At Fiscal Years Ended

September 30

At Interim Periods Ended

March 31


Operating and Financial Overview Balance Sheets

63

6 Months 6 Months

FY2008 FY2009 FY2010 FY2010 FY2011

Profitability

Operating Margin % 1.9% 0.6% 2.3% 0.4% 1.7%

Excess Margin % 1.8% 2.7% 4.6% 1.6% 2.2%

Operating EBIDA Margin % 10.1% 8.9% 9.4% 7.7% 8.8%

Liquidity

Days Cash on Hand 172.3 203.0 197.3 182.0 201.6

Days in Accounts Receivable 54.5 53.4 50.3 52.2 52.8

Leverage

Debt Service Coverage Ratio 3.9 3.7 4.4 3.3 3.9

Long-term Debt/Total Capital 41.5% 40.1% 39.9% 41.8% 39.6%


Operating and Financial Overview Financial Ratios

64

Capital Structure and

Investment Update



GHS recently restructured its four series of variable rate bonds (2008B-E) to achieve the following goals:

• Reduce concentration of letter of credit (LOC) backed debt

− Replaced majority of bank LOC-backed debt with bank direct placements. Prior to

restructuring, entire variable rate debt portfolio was backed by bank LOCs subject to

key risks: bank downgrade, bank renewal, market put, SIFMA dislocation, etc.

• Improve bank credit quality within the variable rate portfolio

− Replaced SunTrust as LOC provider, given its low credit ratings and associated rate

volatility and put risk

• Reduce renewal risk through staggered term expirations

− Extended facilities out 3 to 5 years, with flexibility in negotiating rolling extensions

• Create a more diversified portfolio that will reduce funding risk

− Tied portion of variable debt to LIBOR as opposed to SIFMA via bank direct placements

• Restructure debt in a cost-effective manner

− Maintained current and historical advantages of variable rate debt with minimal

expected incremental cost

65


Financial SustainabilityVariable Rate Bonds

The following changes were made to GHS’ variable rate debt portfolio:

Rationale:

• US Bank LOC (replaced low rated-SunTrust)

− Low-cost facility at extended term (0.50% for 5 years); no material additional covenants; solid bank credit (Aa2/AA-/AA); favorable renewal provisions

• Bank of America LOC (renewed existing facility)

− Lowest cost facility (0.32% for 3 years); existing relationship allowed for efficient LOC extension; favorable renewal provisions

• Wells Fargo / Wachovia Direct Placement (mode change away from LOC)

− Eliminated bank credit risk and put risk associated with LOC-backed VRDBs; attractive pricing and term (current all-in rate of 1.01% with 5-year term); created more diversified overall capital structure

GHS Variable Rate Debt Profile - Previous GHS Variable Rate Debt Profile - Current

Bond

SeriesPar Amount Structure Enhancement

Bond

SeriesPar Amount Structure

Enhancement /

Provider

2008B $60,595,000 Weekly VRDB-SIFMA SunTrust LOC 2008B $60,595,000 Weekly VRDB-SIFMA U.S. Bank LOC

2008C $61,195,000 Weekly VRDB-SIFMA Bank of America LOC 2008C $61,195,000 Weekly VRDB-SIFMA Bank of America LOC

2008D $56,395,000 Weekly VRDB-SIFMA Wells Fargo LOC 2008D $56,395,000 Direct Placement-LIBOR Wells Fargo

2008E $86,620,000 Weekly VRDB-SIFMA Wells Fargo LOC 2008E $86,620,000 Direct Placement-LIBOR Wells Fargo

$264,805,000 $264,805,000

66


Financial SustainabilityRestructuring Specifics

Previous Underlying Debt Mix

* Overall debt mix reflects $30 million fixed rate payer swap with termination date of 5/1/15 (MTM of -$2.1 million at 4/30/11).

GHS Debt Profile – Previous

Bond

SeriesPar Amount Structure Enhancement

Facility

Fee

Current Trade

over SIFMA (%)Rate Term

1990 15,675,000 Fixed None - - 6.000% 10 yrs

2001 101,075,000 Fixed Ambac - - 5.192% 21 yrs

2003A 54,095,000 Fixed Ambac - - 4.645% 15 yrs

2008A 86,495,000 Fixed None - - 4.965% 13 yrs

2008B 60,595,000 Weekly VRDB-SIFMA SunTrust LOC 0.375% 0.170% 0.875% < 1 yr

2008C 61,195,000 Weekly VRDB-SIFMA Bank of America LOC 0.350% -0.010% 0.640% < 1 yr

2008D 56,395,000 Weekly VRDB-SIFMA Wells Fargo LOC 0.430% -0.010% 0.730% < 1 yr

2008E 86,620,000 Weekly VRDB-SIFMA Wells Fargo LOC 0.430% -0.010% 0.730% < 1 yr

$522,145,000 2.865%

Note: Assumed rate on VRDBs is 4/6/11 SIFMA (0.23%) + LOC fees + bank trading spread + remarketing fees

GHS Debt Profile – Current

Bond

SeriesPar Amount Structure

Enhancement /

Provider

Facility

Fee /

Spread

Current Trade

over SIFMA (%)Rate Term

1990 15,675,000 Fixed None - - 6.000% 10 yrs

2001 101,075,000 Fixed Ambac - - 5.192% 21 yrs

2003A 54,095,000 Fixed Ambac - - 4.645% 15 yrs

2008A 86,495,000 Fixed None - - 4.965% 13 yrs

2008B 60,595,000 Weekly VRDB-SIFMA US Bank LOC 0.500% -0.040% 0.770% 5 yrs

2008C 61,195,000 Weekly VRDB-SIFMA Bank of America LOC 0.320% -0.010% 0.610% 3 yrs

2008D 56,395,000 Direct Placement Wells Fargo 0.850% - 1.008% 5 yrs

2008E 86,620,000 Direct Placement Wells Fargo 0.850% - 1.008% 5 yrs

$522,145,000 2.926%

Note: Assumed rate on VRDBs is 5/4/11 SIFMA (0.23%) + LOC fees + bank trading spread + remarketing fees

Note: Assumed rate on Wells Fargo Direct Placement is 75% of current LIBOR (0.21%) + GHS credit spread (0.85%)

67

Fixed Rate

49%

Variable

LOC

23%

Variable

Direct

Placement

28%

Fixed Rate

49%

Variable

LOC

51%

Fixed Rate

49%

Variable

45%

Synthetic

Fixed Rate

6%


Financial SustainabilityCapital Structure

Outstanding debt is structured to achieve level annual debt service

Notes

1) 2008B and 2008C assume 20-year SIFMA average of 2.770% + LOC fees + remarketing fees.

2) 2008D and 2008E assume 20-year LIBOR average of 3.841% with direct placement priced at LIBOR x 75% + 0.85% credit spread. 68


Financial SustainabilityAnnual Debt Service Requirements

Cash andEquivalents

24.1%

Fixed Income64.0%

Equity-linked Notes *11.9%

Total Cash and Investments: $712.3 Million

* Principal Guaranteed

69

In addition to the risk-reduction benefits of the recent variable rate debt restructuring, interest rate risk and event

risk are further mitigated by $171 million of conservatively invested cash and equivalents coming due in less than

one year and $455 million of conservatively invested fixed income investments with an average duration of

approximately 4 years.


Financial SustainabilityInvestment Allocation is Conservative

70

Summary/Takeaway Points

Summary/Takeaway PointsLinking Strategy, Operations, and Finance

GHS has made the big investments in facilities, programs, and

people

• Dominant market position

• Modern facilities across-the-care continuum

• Large employed physician network

• Sophisticated IT system

GHS has five multi-year goals

• Total Health



• Academics that support the clinical enterprise

• Sustainable Financial Model

71

We are integrating and optimizing prior investments to succeed under

health reform

• Focus on operating efficiencies

• Extending network in key secondary service areas

• Evidence-based medicine

• Partnerships with payors

• Building and leveraging academic medical center brand

72

Summary/Takeaway PointsLinking Strategy, Operations, and Finance

rating agency for ghs - fy 2011

Health & Medicine