CEO FORUMApril 2, 2013

Jim FitzgeraldSenior Advisor, CA

Special Operating Partner, FCA

Overview

1. GPO’s

2. Parallon

3. CoreTrust

Group Purchasing Organizations

1. Four Major GPO’s• Premier• Novation• MedAssets• HealthTrust

2. What do GPO’s do?• Aggregate volume, negotiate pricing• Custom Contracting e.g. Medical Devices• Spend Analytics• Consulting

3. How are the GPO’s Different?

Group Purchasing Organizations

4. • GPO’s key focus areas are supplies, pharma,

medical devices and capital

• GPO’s May or May Not be right for your business

• They are acutely focused on technology companies

• They can assist with introductions to providers

Jim Fitzgerald

April 2, 2013

Introduction to HealthTrust, CoreTrust &

Parallon Business Solutions

HealthTrust - A Global GPO

2010 – HealthTrust Europe, Birmingham, U.K.

2011 – CoreTrust Europe, London, England

2010 – Global Sourcing, Shanghai, China

• Owned by five investor-owned and 10 not-for-profit institutions including: HCA, CHS, HMA, Lifepoint, UHS and Consorta

•Serving three market segments:– HealthTrust – 1,400+ hospitals– AdvantageTrust – 10,000+ sites– CoreTrust – 400+ non-healthcare

companies

2006 – AdvantageTrust, Schaumburg, IL

1999 – HealthTrust,Brentwood, TN

HealthTrust Overview

• Established as a Group Purchasing

Organization in 1999– Operating as a committed model– Providing total cost management

solutions– Driven by member advisory boards

• Dynamic member growth– Leveraging $21 billion in annualized

compliant purchasing volume – 99% member retention rate

since inception– Partners with 7 of 9 largest

for-profit IDNs

Committed Spend ($ billions)

$9.8

$14.1

$17.0 $18.1 $19.0

$21.2

0

5

10

15

20

25

2007 2008 2009 2010 2011 2012

Equity IDNs

Strength Through Diverse Members

Hospitals / Systems

Alternate Sites

HealthTrust’s Foundation – An Aligned Membership

• “Patients First” philosophy – Member-led Advisory Boards approve all

contract awards

• Broadest Contract Coverage– Portfolio covers at least 85% of typical

spend, including non-traditional areas

• One-Price-for-All– Due diligence history of 7 - 12% savings– Extended to sub-acute classes via

AdvantageTrust

• Total Cost Management Solution– Category expertise in custom

contracting for medical devices and purchased services

– Comprehensive supply chain and clinical expertise supporting all consulting offerings

• Integrity and Culture– Unsurpassed ethics, no conflicts of

interest

SustainablePrice

Advantage*

*Internal due diligence over prior 18 months

7.2%8.0%

10.7%

12.2%

0%

2%

4%

6%

8%

10%

12%

14%

GPO A GPO B GPO C GPO D

Data Analytics - inSight• Standardize Master Files• Create an enterprise data warehouse• Develop analytic tools• Measure Key Performance Indicators• Reference price, operating and outcomes benchmarks

Integrated Supply Chain – Total Cost Management

Expense Management

• Leverage GPO portfolio & expertise

• Implement strategic custom contracting− SourceTrust− ServiceTrust

• Ensure robust Value Analysis process, including− Formulary development− Clinical intervention− Standardization

initiatives− Utilization review

• Develop standard operating model

• Optimize technology• Integrate supply chain

management in clinical areas (OR and Rx)

• Evaluate Shared Service opportunities

• Implement pharmacy remote order entry

EVALUATION

EFFICIENCYEFFECTIVEN

ESS

Point of Care

Delivery

Right Product, Right Price, Right Place

Supply Chain Operations

11

…extending the HealthTrust portfolio to non-health-care companies to increase

scaleand value for all HealthTrust members

12

CoreTrust…a division of HealthTrust

By The Numbers:

99% 21+ 30+

Retention Rate

Billion Compliant Purchasing Volume

Private Equity Relationships

65+ Categorie

s

415+ Members

FormedMar 2006

Blackstone Relationship

Bain CapitalK.K.R.

Welsh Carson

Vestar Capital

2006 2007 2008 2009 2010 2011 Today

Onex, CDR andApax Partners

32 Members 60 Members 126 Members 310 Members210 Members

Warburg Pincus

THLee

• CoreTrust– 2006 - extended leveraged buying model to

the commercial sector

– Primary driver of initial growth – 7 of largest 10 private equity firms sponsor CoreTrust to their portfolio companies

– Combined leverage enhances price value for all

– $1B in committed volume across 30+ indirect spend categories, e.g. HR, IT, office supplies, parcel, rental cars

13

CoreTrust’s Foundation – an Aligned Model

• Member driven decision making

– Advisory boards led by subject matter experts in collaboration with HealthTrust

– Private equity advisors

– Summit meetings – forum for alignment, negotiations and communications

– Integrity and culture – no conflicts of interest, safe harbor rules

Vendor QualificationAdvisory Board approved

RFP IssuanceMust satisfy prerequisite terms and conditions

Financial AnalysisMember-specific

Board Review& ConsensusAlign on sole, dual, or multi source vendor

Contract AwardSummary & tools Account conversion support

• Unparalleled Value – One-Price-for-all philosophy

– Broadest contract coverage in indirect spend

– Due diligence history of 10%+ sustainable savings

• Exceptional Vendor Support– Dedicated account resources

– Executive sponsorship

– Superior contract terms & conditions

14

CoreTrust Membership Process

Step 1

Sign non-disclosure agreement

Step 2

Provide data for market

basket analysis

Step 3

Review savings

assessment summary

Step 4

Sign ParticipationAgreement

Step 5

Vendors are notified and

programs are implemented

Assessment Decision

Implementation

Day 1 Day 45Speed to Savings

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Type Offering Vendors Details

Committed

IT Hardware/Software/Storage •Desktops, laptops, servers, printers & peripherals

Office Supplies•Expansive core list with discounted staples alternatives•Quarterly price refresh based on wholesale index

Small Parcel•Very competitive rates on domestic and Int’l parcel •Includes Ground & Express

Rental Car•Includes National, Enterprise and Alamo•Emerald status preserved for conversions•US & Canada, customized city surcharges

Optional

Pharmacy Benefits Management•Fastest growing pharmacy collective in the market• Open architecture; implementation allowances

Life/Disability/Travel Insurance•Dedicated services at the national account level•Guarantees, price protection, implementation allowances

Temp Labor• Full staffing plus vendor management service options• One markup rate nationally for most employee types

Copiers• Aggressively discounted click-charges include service and supplies, periodic maintenance, & repairs

•Purchase, lease or rent options

Extended Warranty• Extend the useful life of IT assets, No EOSL•Reduce the annual maintenance cost

Conferencing•Reservationless audio, web and Video conferencing •Global Network access

Corp. Purchase & Travel Card•Rebates on all AMEX payment offerings•Includes T-, P-card, B2B Payment Solutions (BIP & vPay)

Key CoreTrust Offerings

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CoreTrust Members You Recognize or Know

© 2011 Parallon Business Solutions, LLC.

…HealthTrust is closely integrated with the provider-proven

capabilities of Parallon Business Solutions

18

The Evolution of Parallon Business Solutions

1993

1999

2008

2011

HCA Shared Service Initiatives

MarketOfferings

All About Staffing Formed

Rev Cycle Operationsconsolidate

d into 8 centers

All About Staffing

signed first IDN

HealthTrust Launched

Parallon Launched

HealthTrust Europe

Acquisition

Supply Chain

Consolidated into 18 centers

IT and Project Mgmt

Services developed

2009

160 hospitals120 ASCs

Market Dynami

cParallo

n Charter

Sharing “operator” expertise built upon 12 years of shared-service success to provide progressive solutions in a dynamic market

Intensifying financial and operating pressures related to reform, technology and point-of-care delivery evolution

19

Parallon’s Objectives for Clients

Partner with health-care systems to build long-term client success

Focus on improving cost efficiency and cash flow enhancement

Allow clients to focus and protect their clinical core

Provide deep expertise in health-care operations

Develop innovative solutions to meet evolving market/government requirements

Integrate solutions into client culture that optimize client outcomes (quality, service, satisfaction, financial)

20

Parallon Client Snapshot

Business Performanc

e

Technology Solutions

HealthTrust Supply Chain

Workforce Manageme

nt