REGULAR MEETING OF THE BOARD OF MANAGERS

REGULAR MEETING OF THE BOARD OF MANAGERS 6:00 p.m. Board Room, University Center for Community Health 701 S. Zarzamora San Antonio, Texas MINUTES BOARD MEMBERS PRESENT: Robert L. Jimenez, M.D., Chair James R. Adams, Vice Chair Ira Smith, Secretary Robert Engberg Alex Briseño Linda Rivas Rebecca Q. Cedillo OTHERS PRESENT: George B. Hernández, Jr., President/Chief Executive Officer, University Health System Francisco Cigarroa, M.D., President, UTHSCSA David Beal, Vice President/Chief Financial Officer, Community First Health Plans, Inc. Leroy Bernal, Administrative Director, Surgical Services; University Health System Francine Crockett, Vice President, Purchased Resources, University Health System Steve Enders, Sr. Vice President/Ambulatory Services, University Health System Chase Guion, Administrative Resident, Office of the President/CEO David Hnatow, M.D., Medical Director, Emergency Center, University Hospital; and Associate Professor/Clinical Surgery, UTHSCSA Leonard Sims, Chief of Police, University Health System Charles Kight, President/CEO, Community First Health Plans, Inc. Leni Kirkman, Executive Director, Corporate Communications, University Health System Karen McMurry, Vice President, Legal Services & Risk Management, University Health System Bill Phillips, Vice President/Chief Information Office, Information Services, University Health System Richard Rodriguez, Vice President/Assistant Administrator, University Health System Jean Setzer, Ph.D., Vice President, Strategic Planning, Health Policy Research, and Grants, University Health System Theresa Scepanski, Vice President, Organizational Development, University Health System And other attendees. MEMBERS OF THE PRESS: Don Finley, San Antonio Express-News

Page 2 of 10 CALL TO ORDER AND RECORD OF ATTENDANCE: ROBERT JIMENEZ, M.D.: Dr. Jimenez called the meeting to order at 6:15 p.m. INVOCATION & PLEDGE OF ALLEGIANCE: Mr. Barber said the invocation and Dr. Jimenez led the pledge of allegiance. CITIZENS PARTICIPATON: APPROVAL OF MINUTES PREVIOUS MEETING OF THE BOARD OF MANAGERS OCTOBER 23, 2007 (SPECIAL MEETING) AND OCTOBER 30, 2007 (REGULAR MEETING): The minutes of previous meetings of the Board of Managers on Tuesday, October 23, 2007 and Tuesday, October 30, 2007 were submitted for approval. Dr. Jimenez recommended approval of the minutes as submitted. A MOTION to approve the minutes was made by Ms. Cedillo, SECONDED by Ms. Rivas, and PASSED UNANIMOUSLY. REPORT FROM THE PRESIDENT OF THE HEALTH SCIENCE CENTER DR. FRANCISCO CIGARROA Dr. Cigarroa reported that the major issue this month for the Health Science Center was the agreement signed on November 14 between the Health Science Center and CTRC, subject to approval by the Regents and continued due diligence by the UT System, for acquisition of CTRC by UTHSCSA. The issue will go before the UT System Board of Regents on December 6 for approval. The parties hope to close the transaction on or about December 17, 2007. Health Science Center faculty members treat patients at CTRC facilities, and the two institutions are partners in the San Antonio Cancer Institute, a National Cancer Institute Cancer Center, one of three in Texas. This agreement calls for melding the clinical, research and administrative structures of the institutions. Dr. Cigarroa described the transaction as a very positive move for community. NEW BUSINESS A. Consent Agenda Dr. Jimenez Action Items:

Page 3 of 10 1. Report from the Medical/Dental Staff Pam Otto, M.D., President of the Medical/Dental Staff (a) Consideration of Medical/Dental Staff Recommendations Regarding Staff Membership 2. Consideration of Consent to Issuance of Kendall Country Health Facilities Development Corporation Limited Obligation Revenue Bonds to Finance and Re-Finance the Costs of Continuing Care Facilities for Morningside Ministries Karen McMurry 3. Consideration of Purchasing Activities (See Attachment A) Francine Crockett Informational Items: 4. Progress Report on Improving Operating Room Efficiency Greg Rufe Staff recommended approval of the action items listed on consent agenda. A MOTION for approval of this recommendation was made by Mr. Engberg, SECONDED by Mr. Adams, and PASSED UNANIMOUSLY. Mr. Adams expressed confidence in staff s diligence for tackling the issues in the operating room. He is encouraged to see that staff set up the necessary dashboard and metrics for addressing the concerns. ITEMS RELATED TO BUDGET & FINANCE JIM ADAMS FOR ROBERT ENGBERG, CHAIRMAN, BUDGET & FINANCE COMMITTEE CONSIDERATION OF RENEWAL OF PHARMACY CONTRACT WITH CARVAJAL PHARMACY FOR ADULT AND JUVENILE DETENTION CENTERS THERESA SCEPANSKI At the Special Board meeting on November 15, 2007, the Board of Managers was briefed on this item but did not approve the transaction. Staff was asked to return with a more detailed justification for the annual price increase of $49,200 associated with this contract. The previous contract amount was $184,800 annually. This increase is due to additional pharmacy activity and labor costs associated with this contract. Pharmacy services and activity for 2006 2007 (annualized) including the amount of prescriptions filled and amount of prescriptions recycled was reviewed in detail with the Board. It is estimated that this activity will increase by 10.46% (31,495 prescriptions) in 2008 due to an increase in beds by 304. In addition, new services required of the vendor include: maintenance of controlled substance stock levels in 16 dispensing areas in the annex and the main jail; maintenance of perpetual inventory in pharmacy for all controlled substance; maintenance of requested diabetic medications in 2 dispensing areas in the annex and the main jail; and delivery and/or coordination for delivery of prescriptions for Bexar County inmates housed Guadalupe and Brooks county jails.

Page 4 of 10 A comparison study on employing University Health System staff to operate the Pharmacy function was conducted by staff, and the minimum cost to operate this pharmacy function is estimated at $261,040 annually. Outsourcing this service has been determined to be more cost effective. This is a planned expense for 2008. This contract is for a one year period beginning January 1 and ending December 31, 2008 in the amount of $234,000. This term shall have an option to renew for up to one successive one (1) year term thereafter unless either party gives notice of non-renewal to the other party. Staff recommends approval of the pharmacy services contract with Carvajal Pharmacy. A MOTION for approval of this recommendation was made by Mr. Briseño, SECONDED by Mr. Adams, and PASSED UNANIMOUSLY. Mr. Adams expressed interest in the internal comparison study on the pharmacy function. He asked that staff conduct a similar analysis on all UHS pharmacy services for cost efficiency. Mr. Smith asked that all areas providing pharmacy services be included, specifically, The Center for Health Care Services. Mr. Hernandez agreed to a pharmacy study of all UHS services as indicated above. CONSIDERATION OF RESOLUTION APPROVING THE UNIVESITY HEALTH SYSTEM RETIREE HEALTH TRUST THERESA SCEPANSKI At their special meeting on November 15, 2007, the Board of Managers reviewed the proposed Retiree Health Trust, but did not approve the transaction. The Board expressed concern with 1) composition of an administrative committee made up of UHS staff and whose charge is to manage investments and direct the Trustee; 2) a potential conflict with the manner in which the Trustee was selected; 3) and the Trust document framework. Staff was directed to reconsider the composition of the administrative committee. Staff was asked to return with documents outlining the duties of the Trustee and identifying the make up of the Committee, as well as a revised Trust Agreement. Staff was also asked to inform Ms. Rivas and Ms. Cedillo on the Retiree Health Trust topic before the next Board meeting. On November 27, 2007, staff submitted a revised recommendation for the Board s consideration: Instead of an Administrative Committee, the Board of Managers will appoint an Investment Committee that will manage the investments held in the Trust and direct the Trustee in accordance with the terms of the Trust Agreement. Membership on the Investment Committee shall include, but not be limited to representation from the Board of

Page 5 of 10 Managers, community, Retiree workforce, and UHS staff. The Board of Managers will establish and approve procedural guidelines or Bylaws for the Investment Committee. The Investment Committee shall be authorized to segregate assets of the Trust Fund and to appoint one or more Trustees and/or Investment Managers to manage and be responsible for investing and reinvesting the Trust Funds assets. Any reference to a specific Trustee was removed from the Trust Agreement. The Investment Committee shall be authorized to select one or more Investment Consultants to provide advice and counsel to the Investment Committee with respect to the selection, performance monitoring, evaluation and replacement from time to time of Investment Managers. Staff recommended approval by the Board of Managers of the revised recommendation for an Investment Committee; the revised Trust Agreement; and adoption and approval of the revised Resolution for the University Health System Retiree Health Trust. A MOTION for approval of staff s revised recommendation was made by Mr. Adams, SECONDED by Mr. Briseño, and PASSED UNANIMOUSLY. The Board of Managers will appoint members to the Investment Committee and establish or approve guidelines/bylaws for the Investment Committee, as soon as possible. CONSIDERATION AND APPROPRIATE ACTION REGARDING THE OPERATING AND CAPITAL BUDGETS FOR 2008 ROBERT ENGBERG/GEORGE HERNANDEZ/PEGGY DEMING Ms. Deming presented proposed consolidated budgets reflecting total operating revenue of $815.1 million, total operating expenses of $814.7 million, and operating margin of $0.4 million, investment income of $22.8 million, a bottom line of $23.2 million and capital requests of $30.8 million. In addition, the reports and attachments provided detailed information on revenue, staffing, benefits, other expenses and actions reflected in the budget, and to address the key strategic initiatives developed by the Board of Managers. Mr. Hernandez provided a preview of the graphics presentation that he plans to share with Commissioners Court on December 18, at which time the Board of Managers will make a budget recommendation. Mr. Hernandez noted that the Health System s performance in 2007 was very good in holding down costs and that the 2008 budget was a very basic one. Staff recommends that the Board of Managers approve the proposed 2008 operating and capital budgets and requested that the Board recommend approval to Commissioners Court at their meeting on December 18. A MOTION for approval of staff s revised recommendation was made by Mr. Adams, SECONDED by Mr. Briseño, and PASSED

Page 6 of 10 UNANIMOUSLY. Dr. Cigarroa asked what would happen if UPL funds are not restored in 2008. Mr. Hernandez reported that if UPL funds are not restored, the Health System will re-evaluate its priorities, and has already identified a list of projects that will not go forward. Mr. Hernandez stressed that patient care services would not be cut. Dr. Henrich interjected that the Health Science Center, too, is reevaluating its priorities. He stated that the top physicians, for example, interventional radiologists, could receive much greater compensation, and take much less weekends on-call, compared with his academic UTHSCSA colleagues. If cuts in the Health System s 2008 budget are necessary, the Health Science Center might be required to reduce services provided at the University Health System. Dr. Henrich will continue to work with Health System leadership in this process. Staff clarified for the Board that the financial impact for master facility planning in 2008 is zero for additional capital. Mr. Briseño would like to see a financial outlook on the master facility plan added to the multiyear plan. Ms. Rivas asked if the AirLife budget was incorporated in the UHS budget, and since it is a positive resource for the community, suggested that staff may want to include it as a reference for Commissioners Court s review. Mr. Engberg asked Ms. Deming to bring the AirLife information requested by Ms. Rivas to the next Budget & Finance Committee meeting. ITEMS RELATED TO PLANNING & OPERATIONS IRA SMITH, CHAIRMAN, PLANNING & OPERATIONS COMMITTEE DISCUSSION AND APPROPRIATE ACTION ON MASTER FACILITY PLAN FOR UNIVESITY HEALTH SYSTEM Prior to the master facility plan presentation Mr. Adams offered a disclaimer that this presentation was informational in nature and that the Board of Managers was not endorsing any recommendation at this time. This is the first time that Board members have heard costs estimated for the master facilities plan. Mr. Adams left the Board meeting at this time. Bob Moroz briefed the Board of Managers on Broaddus analysis of the facility and costs differences between two options of the proposed new Trauma Tower and Emergency Center expansion, in response to the Board of Manager s request at its October 23, 2007 meeting. Option II A positions the new building north to south on hospital campus; Option II B positions the new building east/west. Mr. Moroz reviewed the strengths and drawbacks of each design option. In Option II A, the emergency center would be located on the sub-level requiring a separate patient/visitor lobby. The two options are similar in terms of parking with both options resulting in a total of 4,800 cars,

Page 7 of 10 a significant increase from the current available parking of 2,376 spaces. Both options include multiple levels of parking under the new hospital building. The difference is that the Option II A would retain the existing 712 space parking garage and Option II B would not keep the existing garage, but retain more of the existing surface parking and add more parking spaces underneath the new trauma tower. A new employee parking garage would be required to be built in both options. In terms of total project costs, the two options are almost the same with Option II A $5.5 million more than Option II B primarily due to the additional parking ramps and cubic square footage required. Mr. Moroz reported on the Master Facility Plan Steering Committee s evaluation of the two options summarizing the criteria used including emergency center functionality, ability of the 2 options to optimize public and service circulation and ease of public access. The Committee recommends Option II B (east/west) over Option II A (north/south). Mr. Moroz also summarized the estimated Phase I Project Cost Summary. In millions of dollars the estimated project costs are as noted: University Hospital New Employee Garage $41 million Central Utility Plant 54 New Trauma Tower 519 University Health Center Downtown 80 Total Phase I Estimated Project Costs $694 Finally, Mr. Moroz reviewed the project schedule. In order to complete the new Trauma Tower and expanded Emergency Center by December 2011, the Health System will need to move quickly to do the following: select and contract with a programmer to do the functional space programming for University Hospital; select, design and construct a new employee parking garage; and select a project manager. In order to move forward with the UHCD phase project, the Health System would need to select a design/construction team to finalize the design. New construction of the proposed Urgent Care Center and parking will take 18 months. Staff asked the Board s input and direction in selecting the preferred option for University Hospital and identifying financing options for Phase I priorities. As indicated under follow up. Mr. Smith asked Dr. David Hnatow to comment. Dr. Hnatow voiced his strong support for the proposed trauma tower and expanded emergency center. He said that one of the strengths of the plan was the new patient care delivery model using universal beds. In this model of inpatient care, as Dr. Hnatow explained patients are cared for in single patient rooms. The model adjusts staffing and equipment to changes in patient acuity. Combined with 23 hour observation bed units, this model is a significant change and improvement over what the hospital currently has. He emphasized the need to move ahead with plans to realign services at the main hospital campus by moving

Page 8 of 10 outpatient imaging patients to the downtown facility and freeing up expensive infrastructure. Dr. Ronald Stewart agreed with Dr. Hnatow. Ms. Deming briefed the Board members on very preliminary financing options which include General Obligation bonds, Certificates of Obligation, Revenue Bonds, and cash on hand or some combination. She reported working with the Health System s financial consultants to better understand the organization s debt capacity and requirements of the rating agencies. Mr. Briseño asked for a more detailed discussion of the changes in the number and location of inpatient beds at University Hospital after the proposed trauma tower is completed. Mr. Engberg requested more information on the operating and revenue assumptions underlying the plan. Ms. Rivas requested information on Phase II costs, which are estimated to be $160 million of University Hospital. Board members agreed that they cannot yet recommend a plan to Commissioners Court until more information is received about the costs of the second phase and the impact on operating costs. Mr. Smith summarized the next steps as follows: Prior to December 18: A special session will be scheduled so that the Board can better understand aspects of the Master Facility Plan; and Mr. Hernandez will brief each County Commissioner and Judge Wolff on master facility plans in advance of the Health System s budget presentation. On December 18: Staff will take the Board approved 2008 capital and operating budgets to Commissioners Court for their consideration; and Staff will include the proposed Phase I plans for University Hospital featuring the preferred Option II B, and University Health Center Downtown Urgent Care Center to Commissioners Court. COMMUNICATIONS UHS is a bronze sponsor for the 35 th Anniversary CommuniCare Health Centers luncheon on Tuesday, November 27 at 11:30 a.m. at the Marriott Plaza Hotel. The Alamo Area Resource Center (AARC) and the University Health System Focused AIDS Clinical Treatment Services (FFACTS) will sponsor a lunch for World AIDS Day on Friday, November 30. Mr. Smith encouraged the Board participation to bring attention and better understand continuous strides being made in provision of care for those living with HIV/AIDS in San Antonio and Bexar County and surrounding areas. Mr. Adams

Page 9 of 10 requested and AIDS research presentation at an upcoming Board meeting, and Dr. Cigarroa agreed to facilitate the presentation. The first class of the UHS Performance Leadership Academy was held on Nov. 8. Forty UHS and CHCS directors are taking part in this one-year learning opportunity, demonstrating UHS commitment to succession planning and leadership development. UHS nursing held the annual strategic planning retreat on Friday, Nov. 9 at UCCH. The focus was on shared governance. The annual UHS Holiday Event will be held Friday, November 30 at the Sky Room at The University of the Incarnate Word. The 17 th Annual AirLife Christmas Party will be held on Friday, December 7 at Lose Encinos Hill Country Estate. Cocktails at 7:30 p.m., dinner will be served at 8 p.m. Attire is semi-formal. Please let Sandra know if you will attend this event. The ChildLife Department will hold its annual Giving Tree for pediatric patients. Santa is planning to arrive on the Janey Briscoe Children s Center on Christmas Day to distribute gifts. UHS is a sponsor of the 7 th Annual Small/Minority/Women & Veteran Business Owners Conference, How to Get in the Game and Stay in the Game on Dec. 5 at the Henry B. Gonzalez Convention Center. Col. Roy W. Burley was this year s inductee to the Texas Diabetes Institute Wall of Honor. The ceremony was held at UCCH on Thursday, Nov. 8, and was very well attended. All proceeds from this event benefited the UHS Foundation s TDI fund. Former UHS Board of Managers Chairmen John Peveto and Bill Thornton, as well as former UHS President/CEOs John Guest and Jeff Turner joined us for this event. The Texas Organ Sharing Alliance recognized the staff at University Hospital for their tremendous commitment to organ donation. So far this year, there have been 17 organ donors at University Hospital, which led to 61 organs being transplanted into patients in desperate need of this gift of life. The staff at University Hospital has shown remarkable improvement in its eligible death conversation rate, which currently stands at better than 90 percent. The national goal is 75 percent. Mark your calendar to attend the annual UHS holiday parties: 2007 Holiday Parties Date Day Time Location SE/SE Renal Clinic 4-Dec Tue 11:30AM - 1:30PM Lg. Conference Room Hospital 5-Dec Wed 2-4PM & 11:30PM - 1:00AM Dining Room UCCH 6-Dec Thu 11:30AM - 1:30PM Boardroom Correctional Health Care Services 7-Dec Fri 11:30AM - 1:30PM Roll Call Room SW 10-Dec Mon 11:00AM - 1:00PM Boardroom Business Center 11-Dec Tue 11:30AM - 1:30PM Common Area

Page 10 of 10 CFHP 12-Dec Wed 11:00AM - 1:00PM 2nd Fl Conf. Rooms UHC-D 13-Dec Thu 11:30AM - 1:30PM Foundation Room North/Northwest 14-Dec Fri 11:30AM - 1:30PM Conference Room ADJOURNMENT There being no further business, Dr. Jimenez adjourned the meeting at 7:30 p.m. Robert Jimenez, M.D., F.A.P.A. Chairman, Board of Managers Ira Smith Secretary, Board of Managers Sandra D. Garcia Recording Secretary