Steven C. Glass Chief Financial Officer Cleveland Clinic May 14, 2013
Cleveland Clinic Overview
From the beginning a unique model of care Founded in 1921 Four doctors with a vision for a new model of medicine Non-profit, physician-led group practice Collaboration across disciplines All physicians are salaried employees Patient-centered mission Dr. Frank E. Bunts Dr. George W. Crile Dr. William E. Lower Dr. John Phillips
43,890 employees 5.1 million total visits 157,474 admissions Over 3,000 physicians and scientists Over 1,000 community physicians Over 1,100 residents and fellows in training Cleveland Clinic Fast Facts
Patients First
Institutes a key step in achieving our mission We see this new approach to patient care as the wave of the future. It may challenge some existing professional boundaries, but we welcome change when change improves care. Institutes put patients first. - Delos M. Cosgrove, M.D. CEO and President -
Institutes physician led Anesthesia Arts & Medicine Cleveland Clinic Lorain Cole Eye Dermatology & Plastic Surgery Digestive Disease Education Emergency Services Endocrinology & Metabolism Glickman Urological & Kidney Head & Neck Heart & Vascular Imaging Lerner Research Medicine Neuroscience Nursing OBGYN & Women s Health Orthopaedic and Rheumatologic Pathology & Laboratory Medicine Pediatrics & Children s Medicine Philanthropy Regional Operations Respiratory Quality & Patient Safety Taussig Cancer Wellness
Physician Group that manages a Health System Cleveland Clinic Delos Cosgrove, MD, CEO Hillcrest Hospital Steve Davis, MD, COO Medina Hospital Thomas Tulisiak, MD, President Lakewood Hospital Robert Weil, MD, President Lutheran Hospital Brian Donley, MD, President Euclid Hospital Mark Froimson, MD, President South Pointe Hospital Brian Harte, MD, President Weston, Florida Bernardo Fernandez, MD, CEO
Program Rationalization Heart Surgery Obstetrics Behavioral Health Pediatrics Neonatal ICU Trauma Inpatient Rehabilitation Skilled Nursing
Program Rationalization Trauma H Euclid Hospital H Ashtabula County Medical Center H Lakewood Hospital H Lutheran Hospital Cleveland Clinic Huron Hospital H H South Pointe Hospital H Hillcrest Hospital H Fairview Hospital H Marymount Hospital H Medina Hospital
Program Rationalization Trauma H Euclid Hospital H Ashtabula County Medical Center Lakewood Hospital H H Fairview Hospital H Medina Hospital H Cleveland Clinic H Lutheran Hospital METROHEALTH H Marymount Hospital H South Pointe Hospital H Hillcrest Hospital
Northern Ohio Trauma System 5.0 4.0 Before % Mortality 3.0 2.0 After 1.0 0.0 2008-2009 2010-2011
Huron Hospital Closed
Stephanie Tubbs Jones Health Center Opened October 2011 Primary & Specialty Care Wellness Education Chronic Disease Management
Lou Ruvo Brain Institute Las Vegas Cleveland Clinic Canada Sheikh Khalifa Medical City Main Campus Cardiovascular affiliations Urological affiliations Cleveland Clinic Abu Dhabi West Palm Beach Health and Wellness Center Cleveland Clinic Florida
Health Care s Service Fanatics How the Cleveland Clinic leaped to the top of patient satisfaction surveys By James I. Merlino, M.D. and Ananth Raman 17
Cleveland Clinic Experience
Cleveland Clinic Overall Rating Mayo (3) Mass Gen (1) Johns Hopkins (2) UCLA (5) CC (4) 50th
Patient Safety Indicators Occurrences 250 200 150 100 50 0 Jan Apr Jul Oct Jan Apr Jul Oct 2011 Enterprise CC-Main Regional Hospitals Weston 2011 Target: 93 2012 2012 Target: 50 Source: UHC pulled 2013.03.11
University Hospital Consortium Quality 80 70 60 Rank 50 20 th 2012 49 th 2011 80 th 2010 40 30 1 25 Rank 50 75 101
Cleveland Clinic Financials
Utilization Statistics Acute Admissions Transfer Admissions 200 14 Thousands 180 160 140 120 100 80 60 156 156 153 147 145 Thousands 12 10 8 6 4 10 12 13 13 14 40 20 2 0 2008 2009 2010 2011 2012 0 2008 2009 2010 2011 2012 Health System
Utilization Statistics Surgical Cases 220 200 180 Thousands 160 140 186 194 194 191 201 120 100 2008 2009 2010 2011 2012 Health System
Utilization Statistics Outpatient Visits ED Visits 6 500 5 450 Millions 4 3 2 1 3.6 4.0 4.2 4.7 5.1 Thousands 400 350 300 250 200 150 419 440 436 439 457 0 2008 2009 2010 2011 2012 100 2008 2009 2010 2011 2012 Health System
Professional Staff 4,000 3,000 10 Year Growth: ` 2,000 1,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Statement of Operations FY December 31 ($ in millions) 2010 2011 2012 Net patient service revenue $ 5,050 $ 5,213 $ 5,610 Other operating revenue 550 614 605 Total operating revenue 5,600 5,827 6,215 Total operating expenses 4,950 5,065 5,507 EBIDA 650 762 708 Depreciation and amortization 310 335 369 Interest 89 93 105 Special Charges - 33 6 Operating income $ 251 $ 301 $ 228 Operating margin 4.5% 5.2% 3.7% EBIDA margin 11.6% 13.1% 11.4%
Gross Revenue Payor Mix 2011 2012
Cash and Investments 6 Restricted Unrestricted 5.2 $ Billions 4 0.97 0.85 0.67 0.79 2 0.75 2.25 2.89 3.44 3.70 4.41 0 2008 2009 2010 2011 2012
Investment Allocation $5.2 Billion Cash Fixed income 31% 6% 32% Marketable equity securities 3% Real estate 7% 21% December 2012 Private equity Hedge funds
Key Ratios Days Cash On Hand Operating Cash Flow Margin # % Cash To Debt Debt To Capitalization % %
Debt Overview 22% 2% 76% Series 2013A Plan of Finance - $20mm of new money projects - Current refund $84.9mm Series 2003A Bonds Series 2013B Plan of Finance - Refund $200mm Series 2004B VRDBs December 2012 Total: $2.85 billion
Cleveland Clinic Strategies and Direction
Imperatives PATIENTS FIRST Caregiver engagement Innovate the care & business model Financial strength Reduce cost Optimize resources Growth Leadership and management
Strategic Direction Striving to be the world s leader in patient experience, clinical outcomes, research and education Referral center Healthcare provider Academic center New models of value-based care
Growth Extend capabilities - Cleveland Clinic integrated care model Leverage our current offerings - Clinical care - Intellectual property - Consulting and management
Growth Northeast Ohio National International
The New World Volume-Based Value-Based Payment Fee-for-Service Outcome Based Incentives Volume Value Focus Acute Episodes Populations Role of the Provider Single Episodes Care Continuum Information Retrospective Real-time & Predictive
Four Components of Value Based Operations ( VBO ) Medical Home Shared savings Episodes of Care PAMC
Program for Advanced Medical Care (PAMC) Existing Clients:
Strategic Alliance - Community Health Systems (CHS) One of the nation s largest publiclytraded hospital companies headquartered in Tennessee 135 hospitals operating in non-urban and mid-size markets in 29 states Focus of collaboration - Quality Alliance - Cardiovascular Services - Clinical and Operational Services Under the terms of the five-year agreement, Cleveland Clinic and CHS will remain independent entities
CHS + Quorum Footprint Hospitals 135 Managed 150
Network of Affiliated Hospitals Allows Cleveland Clinic to offer high quality, cost effective patient care across the U.S. Current Affiliates National Network Expansion Markets Cleveland Clinic Facilities
Cleveland Clinic Abu Dhabi (CCAD)
Quality Alliance 5,200 Providers Insurers Quality Metrics
National Network Owned & Partnered
Integrated Care Model Retail Venues Home Community - Based Organizations Care System CC Clinic Post-Acute (other) Independent Physician Offices Skilled Nursing Facilities MyChart Rehab Ambulatory D&T Hospitals Emergency
Care Transformation Evidence-based Consistency One Cleveland Clinic Across Continuum Leadership & Culture PATIENTS FIRST
Our Opportunity Patients and caregivers Aligned model Integrated system Intellectual rigor Culture of innovation