TO HEAL, COMFORT AND PROMOTE HEALTH IN THE COMMUNITIES WE SERVE

ROBERT WALSH, C.P.A. DIRECTOR OF FINANCE

FOUNDATION DEVELOPMENT

• Business Plan ECG Management Consultants

– October, 2009: “The results presented today illustrate the projected performance of the medical foundation.

These figures represent an estimate based on present fact and actual results will vary”

OCTOBER 2009 ECG ASSUMPTIONS*

YEAR

NET NEW PHYSICIAN FTEs *

TOTAL PHYSICIAN FTEs *

TOTAL PHYSICIAN COUNT *

ARCH ACTUAL TOTAL PHYSICIAN FTEs

ARCH VARIANCE TO ASSUMPTION

ARCH ACTUAL TOTAL PHYSICIAN COUNT

ARCH VARIANCE TO ASSUMPTION

2010 - 30.4 34 34.5 4.1 39 5

2011 2.0 32.4 37 33.5 1.1 44 7

2012 2.0 34.4 40 37.5 3.1 52 12

2013 - 34.4 40 62.0 27.6 75 35

2014 - 34.4 40 62.2 27.8 74 34

*ECG Consultant Report October, 2009 Arch Actuals vs. ECG Assumptions

ECG ASSUMPTION V. HOSPITAL ALIGNMENT

MULTI-SPECIALTY

FOUNDING GROUP

MAJORITY PRIMARY

CARE

HOSPITAL ALIGNMENT

CARDIOLOGY

ORTHOPEDICS

PULMONARY

PSYCHIATRY

BREAST SURGERY

…

FULLY ALIGNED: REALITY

7 YEAR NET OPERATING INCOME TRENDING

INDUSTRY COMPARISON

MGMA INDUSTRY AVERAGE INVESTMENT PER PHYSICIAN FTE

ARCH FY15 ACTUAL INVESTMENT PER PHYSICIAN FTE

ARCH FY16 PROJECTED INVESTMENT PER PHYSICIAN FTE

ARCH FY17 BUDGETED INVESTMENT PER PHYSICIAN FTE

$ 231,572 $ 367,594 $ 240,730

$ 212,654

Source: MGMA information derived from 2015 MGMA Datadive (2014 reported data).

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

FY15 FY16 FY17

MGMA MEDIAN

ARCH

FY16 YTD PERFORMANCE

FY16 PERFORMANCE*

ACTUAL BUDGET VARIANCE

Net Operating Income (Loss) $ (14,351,321) $ (14,836,853) $485,532

*Unaudited Financial Results as of July 7, 2016

FY16

Year over Year Improvement

• Improved Bottom Line Net of Provider Compensation $9.3M

• Operating Expense Reductions 9.8%

• Clinical Quality Unwavering

2017 Budget Summary

$0

$100,000

$200,000

$300,000

$400,000

$500,000

2015 2016 2017 2018 2019

MGMA MEDIAN

212

AHP TRENDLINE

Investment Per Physician FTE – FY 2017 Budget

FY 2017

Year over Year Improvement

• Improved Bottom Line Net of Provider Compensation $1.9M

• Operating Expense Reductions 2.1%

• Clinical Quality Unwavering

DEANNA KYRIMIS, M.B.A., DIPOL CHIEF EXECUTIVE OFFICER

ARCH HEALTH PARTNERS HIGHLIGHTS

FY16 • Stabilized Pulmonary Services: Escondido Pulmonary

and Sleep Acquisition

• Improved Payer Contracts Resulting in Top Line Revenue Growth

• Reduced Operational Expenses Resulting in GREATLY Improved NOI

• Grew New Patient Volumes by 7.62%

• $10.7M bottom line improvement; 43% improved

• Awarded Two Industry Achievements: IHA, CAPG

• Reorganized Arch Health Partners

• Board of Directors and Leadership Team

• Physician and Administration PH Alignment

• Leading/participating in COEs for Orthopedics and Cardiology

• Population Health Strategy

FY17 • 3 New Primary Care Physicians to Arch

• 2 August

• 1 October

• 1 New Orthopedic Surgeon to Arch

• New service line to Palomar-Foot/Ankle

• September

• Continued bottom line improvement $1.9M

• Regional Network Strategy: Expanded Network of Primary Care Physicians

• 46 Non-Arch PCPs Added 2016

• Positive Impact to Palomar District 2017 and beyond

• Continue to support Palomar Health's population health strategy through primary care regional outreach and specialty service line growth