strategy and vision
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Back to March 2020
Introduction of
QHR Health brand
and mission
Introduction of
QHR Health’s
shared services
Introduction of
QHR Health’s vision
for the future
5
Where Are We Today?
COVID-19 still
affects hospital’s
day-to-day
QHR is an
independent
company
Still wearing
masks on
planes
7
Grant Avenue Capital Partnership
Grant Avenue Capital Acquires QHR HealthInvesting in Independent Community Healthcare
Overview• Healthcare-focused private equity firm with deep healthcare network, long-term partner-focused approach,
and forward-thinking strategic mindset
Why Grant Avenue?• Commitment to QHR Health’s mission of strengthening independent community healthcare
• Experience with supporting technology-enabled shared services
• Meaningfully investing to bring real differentiated value to QHR Health clients
9
Representing more than 8% of independent community healthcare, QHR has more
relationships with independent community hospitals than any other organization
$11.7BHospital Net Patient
Revenues (NPR)
Under Contract
>180Clients
40States with
Clients
QHR Health has Scale
*Added 30+ new clients in 2020
and already double digit adds in
2021
10
More on QHR Health’s Growth
Supply spend from
2019 to today
$700M → $1.2B
Revenue cycle
(client NPR) from
9/2020 to today
$0 → $1.6B
11
QHR is Supporting Growth Through Building
First New Build: Trinity Regional Hospital (Opening 10/21) Select Near-Term Potential New Hospital Builds
New Build Pipeline (Hospitals + ASCs)
Status
Celina, TX ▪ Kicked off third-party studies
Alvin, TX ▪ Scheduled to kick off third-
party studies in late July
Terrell, TX ▪ Met with Terrell city officials
yesterday to discuss
partnership opportunity
Colorado
Springs, CO
▪ QHR meeting with developer
on 8/4 to finalize hospital site
23 12 7
Diligence /
Funding
Markets
Confirmed
Markets
Identified
QHR has been
leading the
development of
new hospitals and
Ambulatory
Surgery Centers
(ASCs), with the
first hospital
scheduled to open
in October 2021
12
The “QHR Health Way”
QHR Health Councils More to come!
Operating Practices Diligence
Technology Vantage
Education QLI & Leadership U
13
Support
Independence
through QHR
Shared
Services
(Power Plants)
Invest in
Creating
Revenue for
our Hospitals
Prepare for
Technology
beyond EHR
Influence
Policy in
Rural
Communities
Develop Next
Generation of
Hospital
Leadership
QHR Health Continues its Committed Vision
15
Creating Economies of Scale through Leverage
Utilizing power plants (shared services) to maintain and strengthen independence
Pharmacy
Strategic Sourcing
Analytics
Purchased Services
Facility Management
Cash Acceleration
Collections
Full Insource
Alternative Payment
Models
New Build Hospitals
New Build ASCs
Outpatient Centers
Replacement Facilities
Primary Care
Changes
SDOH
Cybersecurity
Vantage / BI
Outreach
Referral Management
Virtual Leadership
TECHNOLOGY / IT
18
Breaking Through the Driving Forces
Understanding these driving forces is important
to developing a vision for a successful future
It is critical to have both a vision of the
independent community hospital and a strategy
to execute on that vision
Role of Government
Alternative Payment Models
Disruptors
SDOH
Primary Care Shifts
Data and Technology
Workforce
19
Hospital Closure Trends
Since 2010, 135
rural hospitals have
closed
46% of rural
hospitals have
negative operating
margins
40% PPS
36% CAH
24% Other
21
United States Population Shifts
Source: US Dep’t of Commerce, Bureau of the Census
Change +1.9% +2.7% +44.3% +31.6%
22
Community Hospitals Today
33% (1,688 of 5,141) of community hospitals are
independent
Community Hospitals are primarily system-affiliatedHH
H H
H H
67% 33%
Source: American Hospital Association, Fast Facts on U.S. Hospitals, 2021
35% (1,805 of 5,141) of community hospitals are
rural
Community hospitals are predominantly urban
65% 35% Non-system hospitals on average score better on
all HCAHPS measures than system hospitals
23
Newly-formed to support effective non-profits working in
communities QHR serves
State Hospital Associations
QHR Engages for Community Healthcare
Formed a policy team to stay current on
key policy changes, legislative updates,
and other factors affecting independent
community hospitals—including sharing
with our clients directly and through QLI.
Constantly exploring new opportunities
for independent community hospitals,
including demonstration projects and
novel site designations:• Rural Emergency Hospital (REH)
designation
• Community Health Access and Rural
Transformation (CHART) model
24
50%
19%
15%
8%
6%
2%Profit – 2%
Leverage key outreach and referral management services to drive
overall margin improvement & revenue growthIT – 6%
Assist with sourcing external IT solutions and integrating
proprietary offeringsCapital – 8%
Provide analytics and technology shared service to drive
improved usage of capital dollars for hospital
Purchased Services – 19%
Drive purchased service savings through strategic
sourcing and analytics
Supplies – 15%
Reduce spending on supplies through GPO scale, tiering
benefits, and shared service team
Salary, Wages, Benefits – 50%
Identify opportunities for productivity enhancements and
more efficient use of temporary staffing, physician
recruiting, revenue cycle sourcing
Addressing the Hospital P&L
What is the greatest threat to your
revenue today?
What is the greatest challenge to
managing cost today?
25
The United States’ Healthcare Dollar
Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group
Where It Came From
73% Health Insurance
4% Investment
9% Other Third Party Payers & Programs
11% Out of Pocket
3% Gov’t Public Health
31% Private
21% Medicare
10%Medicaid
(Federal)
6%Medicaid
(State/Local)
4% VA, DOD, CHIP
Where It Went
31% Hospital Care
10% Rx Drugs
14% Other
20% Physician & Clinical Services
8% Gov’t Admin, Cost of Insurance
5% Nursing & Continuing Care Facilities
5% Investment
4% Dental Services
3% Other Professional Services
Residential, Home Health, DME, Public Health, Other
26
Inpatient to Outpatient Shifts
60%
30%
40%
70%
2020
1995
Inpatient vs. Outpatient Revenue
% IP Revenue % OP Revenue
Source: American Hospital Association
36.4
%
36.6
%
37.0
%
36.5
%
36.5
%
36.1
%
35.5
%
35.1
%
34.0
%
33.8
%
33.2
%
32.6
%
32.4
%
32.0
%
31.6
%
63.6
%
63.4
%
63.0
%
63.5
%
63.5
%
63.9
%
64.5
%
64.9
%
66.0
%
66.2
%
66.8
%
67.4
%
67.6
%
68.0
%
68.4
%
2005 2007 2009 2011 2013 2015 2017 2019
Inpatient vs. Outpatient Surgeries
Inpatient Outpatient
27
Affordability Drives Consumer Decisions
27%
55%
111%
2010 2020
% Increase for U.S. Workers
Deductibles
Family Insurance Premiums
Workers' Earnings
Prescription Drugs
▪ > 1/3 Adults with insurance saying they or a
household member were denied coverage of a drug
▪ 23% Americans unable to pay for prescribed
medication at least once in the past 12 months
▪ 381% Increase in the median price of a new brand
name drug from 2006 to 2019
45% of pet owners say they spend the same or more on their pet’s health care
than their own
Pet expenditures are increasing at a higher rate than health insurance premiums
Sources: American Hospital Association, Magnify Money, Fortunly
28
FFS-to-Risk Continuum
As the focus shifts from activities that increase volumes to activities that improve the value of care
delivered, organizations and payors are seeking reimbursement models that incentivize quality
improvement and cost reduction
29
Disruptors are Affecting Access…
…and access is more than just having a hospital or front door
Approachability
Acceptability
Availability
Affordability
Appropriateness
Technology
30
Disruptors are Shifting Access Points
The U.S. is seeing a shift from traditional care delivery (Primary Care, ED, RHC, FQHC) to more
convenient and affordable care
RetailRetail Pharmacy Urgent CareVirtual
&
Total number of urgent care
centers growing 8-10% annuallyReported a 120% increase
Q1 2021 over Q1 2020
Growth to 52-54M U.S. paid
membership
Creating 1,500 health hubs across
the U.S. by 2021, in addition to
current 1,100 minute clinics
Planning 500 to 700 clinics in
the next 5 years
27 in S. California with more planned
Extensive care clinic offering medical,
dental, and more with open pricing
Ambulatory Surgery Centers (ASCs)
(December 2020)(March 2021)
Sources: https://www.businessinsider.com/urgent-care-industry-trends; https://www.accenture.com/_acnmedia/PDF-130/Accenture-2020-Digital-Health-Consumer-Survey-US.pdf#zoom=40; https://www.healthify.us/healthify-insights/where-and-when-does-healthcare-happen; https://www.fiercehealthcare.com/
Dollar General
32
Forces are Driving Healthcare IT Strategy
Collaboration in
delivery of care
Healthcare data security
“Cybersecurity”
Platform-
based
approaches
Focus on
collaborative
care
Service-oriented
delivery
Need for
predictability
Technology
Enabling
the Transformation
• Consumer Demand
• Interoperability
• Patient Engagement
• Industry Consolidation
• Technological Innovation
• Value-Based Care
Solutions
• Smarter Wearable Devices
• Digital Health Platforms
35
Chronic Conditions are Driving Health Needs
Distribution of Medicare FFS Beneficiaries by Number of Chronic Conditions & Total Medicare Spending
% of Beneficiaries % of Total Medicare
Spending
Source: CMS
18%
22%
29%
31%
54%
24%
16%
6%
Conditions
0 – 1
2 – 3
4 – 5
6+ 10 years earlier:
12% of the Medicare FFS
population had 6+ conditions
43% of the total Medicare
spending came from those with
6+ conditions
37
Shifting Needs in QHR Client Communities
2016 CHNA Top Priorities
1. Obesity / Overweight
2. Diabetes
3. Accessibility / Affordability
4. Cancer
5. Mental Health / Suicide
6. Physicians
2019 CHNA Top Priorities
1. Mental Health / Suicide
2. Obesity / Overweight
3. Cancer
4. Substance Abuse
5. Education / Prevention
6. Diabetes
Top Priorities Since March 2020
1. Substance Abuse
2. Mental Health / Suicide
3. Obesity / Overweight
4. Cancer
5. Diabetes
6. Heart Disease
38
Sample QHR Health Client Market Share
1
2
31
2
3
Primary Service Area Secondary Service Area
Securing and growing market share is critical to supplying needed care locally to the community and to
provide funding for investments and additional growth
56%44% 35%
Hosp 1 Hosp 2 Hosp 3
12% 6% 3%
Hosp 1 Hosp 2 Hosp 3
45% 44%32%
Hosp 1 Hosp 2 Hosp 3
3% 7% 7%
Hosp 1 Hosp 2 Hosp 3
57%38%
26%
Hosp 1 Hosp 2 Hosp 3
12% 10% 9%
Hosp 1 Hosp 2 Hosp 3
39
The Healthcare Workforce is Burned Out
Burnout is prevalent in the United States, with healthcare workers being at particular risk.
Burnout has detrimental personal and professional effects.
Stage 1
Honeymoon
enthusiasm
Stage 2
Onset of Stress
stagnation
Stage 3
Chronic Stress
frustration
Stage 4
Burnout
apathy
Stage 5
Habitual Burnout
intervention
Physical, Mental, & Emotional Exhaustion
Sources: American Hospital Association, De Hert (2020) Burnout in Healthcare Workers: Prevalence, Impact and Preventative Strategies, 2021 Medscape National Physician Burnout and Suicide Report
Lower patient satisfaction
Reduced quality of care
Increase in medical errors
42% physicians
40% / 70% nurses
? % administrators, support
staff, management
41
Vision and Strategy Must Intersect
QHR Health believes that independent
community healthcare must:
Imagine what it will take to…
…grow a healthier community by
engaging each person at the right
time, in the right place, and using the
right data and technology
42
Growing a Healthier Community
Outreach and referral management
Consumer and wellness analytics
Government and policy advocacy
AHA, NRHA, CMS
State and federal
Grant funding opportunites
Must-Do’s
• Manage lives
• Impact your P&L positively
• Grow your presence
• Care for your caregivers
QHR will be building and buying on your behalf
Platform and solutions
c2g Care
43
The Strong Independent Hospital of the Future
Imagine what it will take to grow a healthier community by engaging each person
at the right time, in the right place, and using the right data and technology
Economics with
Leverage
Solidify OP
Presence
Lock Down
Referrals
Strengthen
Community
Wellness &
Consumer
Engagement
Deliver Healthcare
using Technology
and Data in a New
Financial Model
44
At the Intersection of Vision and Strategy
QHR in 2021
Growing, Investing, Building
QHR 3-Year Vision
Tech-enabled “power plant”
provider for healthcare facilities
Human CapitalDevelop team, help hospitals with resource
needs, invest in QHR Learning Institute
Service ExpansionNew service lines to focus on the following: Other shared
services (i.e. IT solutions, telehealth, behavioral health) and
managing new developments / ASCs / medical office buildings
Core Operational EfficiencyOpportunities for enhanced efficiency include
RCM tech investment, “QHR Health Way”
Methodology, RPA, Business Intelligence
Tech EnablementInvest in QHR’s technology roadmap
(“Vantage”), which will collect sharable data
across facilities and identify specific areas
with operational improvement potential
Hospital StrategyProactively partner in local
communities to drive market
share & operational strategies
Strengthening Independent Community Healthcare
45
Introducing the QHR Advisory Councils
To advance the ongoing discussion of Vision & Strategy, and to help you continue to
grow healthier communities, QHR is establishing Advisory Councils
For more information
contact your QHR
representative or
Chip Holmes, SVP
cholmes@qhr.com
802.377.0676
• Board Advisory Council
• Executive Advisory Council
– Listening
– Learning
– Leading
– Together
• First Meeting: Virtual Fall 2021
• First Face to Face Meeting: Phoenix 2022
46
What are Our Take-Away’s as Leaders?
Embrace the transition of the hospital
business
It is critical to have both a vision of the
independent community hospital and a
strategy to execute on that vision
Tomorrow’s healthcare experience will
be built by consumers tailoring their own
experiences according to their own
unique health needs. It will be
“boundaryless”.
Adopt a platform and data mindset
1
3
2
4
47
Questions to Be Asking
What does my community need to grow and be healthier?
Do our strategies drive organizational growth?Go here!
What is holding back our market share?
Are we utilizing data, technology, and automation effectively?
Thank You
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This presentation may contain information that is
Proprietary, Confidential, or legally privileged or
protected. Do not deliver, distribute or copy this
message and do not disclose its contents or take any
action in reliance on the information it contains.
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