HFMA Capital Conference Shane Spees, CEO Joe Reppert, CFO Disclaimer Regarding Forward Looking Statements The forward looking statements in this presentation are based on management s assumptions and beliefs in light of information presently available, and involve both known and unknown risks and uncertainties. Actual financial results may differ materially from those shown in this presentation, being dependent on a number of factors. 1
Hub and Spoke Model 8 Hospitals in Mississippi and Alabama $1.0 billion in Net Revenue 6,200 employees and 490 physicians 38 Clinics + Urgent Care sites Air and ground EMS 5 Nursing Homes Post Acute Care JV Outpatient Centers Training programs: Family Practice and Nurse Practitioners Statewide PPO Third Party Administrator Primary & Secondary Service Area 2
Past NMMC Tupelo = largest non metro hospital in country (650 beds) Created hub and spoke model in 1980s through tertiary + community hospitals Specialty services concentrated in Tupelo area All hospitals are sole community providers Stringent CON regulations in state Ambulatory electronic health record adopted in 1999 Expansive scope of services, including all but transplants and burns Cardiovascular and oncology programs largest in state Only tertiary hospital between Jackson, MS and Memphis, TN Two time recipient of Malcolm Baldrige National Quality Award 3
Present Market leader with over 40% inpatient market share Experiencedgrowthinallkeystatisticalcategories Largest # of affiliated primary care providers in market Recruiting approximately 30 new physicians per year to market; spanning over 20 specialties All hospitals on same EHR; all owned (and most independent) practices on same ambulatory EHR At HIMSS certification stage 6 of meaningful use $32 million in EHR incentive payments to date Funded two largest capital projects: inpatient EHR and bed towers Recently expanded services in cancer, pediatrics and surgery 76% of medical staff aligned economically with system Future Recruitment of providers: physicians and advanced practice clinicians Fill gaps (services and providers) in market to complete our network Utilize clinical integration as framework for aligning provider network Telehealth for expanding provider capacity and outreach Pilot approachestovalue based delivery system: BCBS pilot Taking care of our own Partnering with employers on value transition Preparing for alternative payment models (e.g., bundles) High reliability in quality and efficiency Toyota Production System 4
The affirmation reflects the system s strong market presence in northeast Mississippi and the continued strengthening of the balance sheet and tested treasury function. Moody s, December 2015 Rating: Aa3 Outlook: Stable The operating performance coupled with NMHS light debt burden produced maximum annual debt service coverage of 6.2x, above Fitch s AA median of 5.5x. Fitch Ratings, July 2015 Rating: AA Outlook: Stable The affirmation reflects our opinion of NMHS improved operating performance, management s operational improvement plan, maintenance of a strong balance sheet, and leading market share in a broad nine county primary service area. Standard & Poors, May 2015 Rating: AA Outlook: Stable In God we trust; all others must bring data W. Edwards Deming 5
Operating Metrics 6
Capital Structure 7
Investment Policy Operational Focus Expansion of profitable services lines Accommodating environment for referring providers Further clinical documentation Elevate revenue cycle performance Continue relentless labor management Employee benefit redesign/healthcare utilization RFP GPO/pharmacy controls 8
Thank You Follow up Questions Joe Reppert, CFO 662.377.3978 jreppert@nmhs.net 9