There are two worlds: the world we can measure

with line and rule,

and the world that we feel

with our hearts and imagination.

Leigh Hunt, 1784-1859

CATHOLIC HEALTH PARTNERS2011 Report to the Community

MissionCatholic Health Partners extends the healing ministry of Jesus by improving the health

of our communities with emphasis on people who are poor and under-served.

Core ValuesTogether, we commit to our six Core Values:

Compassion: to serve with mercy and tendernessExcellence: to be the best in the quality of our services and the stewardship of our resources

Human Dignity: to value the diversity of all persons and to be respectful and inclusive of everyoneJustice: to act with integrity, honesty and truthfulnessSacredness of Life: to reverence all life and creation

Service: to respond to those in need

SponsorsThe Sisters of Mercy, South Central Community • The Sisters of Mercy, Mid-Atlantic Community

The Sisters of the Humility of Mary • The Franciscan Sisters of the Poor • Covenant Health Systems

Dear Friend:Every day at Catholic Health Partners (CHP), we balance two worlds. The first is one of spirituality,

healing and compassion … which define our organization’s most basic nature. CHP was created to

extend the healing ministry of Jesus. We are called upon to heal holistically, caring for the mind, body

and spirit. We serve the needs of each person who comes to us, regardless of his or her faith, race or life

circumstance. And we embrace human dignity and believe in the sacredness of life, protecting it at every

stage and, when a cure is no longer possible, providing compassionate end-of-life care.

The second world is highly defined, focusing on process, measurement, improvement, and stewardship.

It requires that we continually research and evaluate the effectiveness and efficiency of our efforts. It calls

upon us to collect and report data so that we can be accountable for defining and achieving our mission.

Because of this rigor and clarity, CHP is able to incorporate the capabilities and develop the resources

necessary to improve the health of communities and serve people who are poor and under-served.

At CHP, we are dedicated to providing exemplary care and service to our patients, residents, and clients

and improving the health of the communities we serve. We are committed to creating a workplace

culture that develops and supports our associates and physicians. We rely upon measurement and process

improvement to help us achieve our short- and long-term goals. Through thoughtful strategic planning

and a dynamic culture, we are able to balance the fluid, human-focused world of spirituality and the

linear, mathematical world of measurement.

The following pages in our 2011 Report to the Community are divided into CHP’s Key Result Areas:

quality, physician partnership, human potential, growth, and stewardship. It is within these domains

that CHP tracks its outcomes for the year, along with other achievements, reflecting those that are

measureable and those that are driven by heart and imagination.

Blessings,

Cathleen Eldridge Michael D. Connelly

Chair, Board of Trustees President and CEO

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Improving Safety and Quality Every day … across our organization, we are focused on improving safety and quality. In 2011, in two areas that are fundamental to safe, quality healthcare delivery – preventing harm and inpatient mortality (eliminating potentially preventable deaths and improving end-of-life care) – we continued to achieve improvements. We reduced preventable harm by 26 percent from last year and mortality rates dropped to 1.47 percent … an all-time best result for CHP and one of the lowest rates in the nation.

QualityAt Catholic Health Partners we’re committed to providing safe, high-quality care and services …

it’s fundamental to achieving our mission. We’ve established a systemwide quality culture that

is focused on measurement, teamwork and continuous improvement. It is due to this culture, in

tandem with our organizational expertise, operational capabilities and the modeling of our core

values, that CHP is able to fulfill its mission and continue the centuries-old ministry entrusted to

us by our sponsors.

CHP Acute Care Admissions: Preventable Harm Percentage

CHP Acute Care Admissions: Inpatient Mortality Percentage

Key 2011 Achievements

2006 2007 2008 20102009 2011

2.0%

2.5%

1.5%

0.5%

1.0%

2008 2009 2010 2011

0.4%

0.3%

0.1%

0.2%

0.38%

2.2% 2.1%

1.8%1.7% 1.57%

1.47%

0.30%

0.23%

0.17%

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Scan the QR code to see what CHP associates and physicians say about CarePATH.

A Continuing Journey Across CHP, at any given time, there are scores of initiatives under way that are focused on achieving safer, higher quality care for our patients, residents and clients.

SafeCARE—Fundamental to improving safety and quality is creating a culture and processes that promote the reporting of incidents where we caused harm or where the potential for harm existed. In 2011, CHP upgraded its incident reporting system, introducing SafeCARE to caregivers in our hospitals, physician practices, home health services, and senior health and housing and hospice facilities. Because SafeCARE is quick and easy to use, more caregivers are using the system to report incidents, which results in our ability to share improvements more rapidly. SafeCARE also gives us the ability to benchmark against same-sized systems and facilities across the nation and to receive alerts when public health or safety concerns are identified elsewhere.

Safety Across the System—In 2011, in the first U.S. partnership of its kind, CHP and the Institute for Healthcare Improve-ment (IHI) collaborated to identify and implement process improvements to reduce preventable harm. Seven “exemplar” CHP hospitals focused on achieving at least top quartile performance across all Institute of Medicine STEEEP aims (safe, timely, effective, efficient, equitable and patient-centered) by identifying ways to enhance leadership capabilities and improve processes in medical/surgical and peri-operative units. Learnings will be shared across all CHP facilities in 2012 and nationally through IHI.

Thomson Reuters Recognition—For the third consecutive year, CHP was recognized as a top health system by Thomson Reuters. In 2011, Thomson Reuters evaluated 285 systems, rating them on eight measures of clinical quality, efficiency and patient experience; CHP was ranked in the top quintile of all systems evaluated.

CarePATH CHP’s five year, $315 million initiative dedicated to imple-menting an integrated electronic health record (EHR) in employed physician practices, outpatient sites and hospitals is progressing swiftly. In its second year, CarePATH, CHP’s name for the EHR, is available in its employed physician practices in all seven regions and is live in nine hospitals. CarePATH utilizes the Epic system, which makes up 40 percent of EHRs in the nation. Of all Epic customers, CHP has proven to be the most rapid implementer of the integrated health record.

CarePATH enables caregivers to access patients’ medical records at any time, from any location. And, through a patient portal called MyChart, patients can better partner in their healthcare by more conveniently communicating with their doctors’ offices to request prescription renewals, schedule appointments and ask questions, as well as check lab reports, physician directions and upcoming appointments. Already, CarePATH is positively affecting quality of care and health outcomes, promoting practices based on evidence- based medicine and increasing patients’ involvement in managing their health.

Key 2011 Achievements

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Physician PartnershipPhysicians are central to providing patients with highly coordinated healthcare services. In 2011,

CHP continued its strategy of growing the number of primary care physicians and specialists

in our system and promoting evidence-based medicine, integrated care delivery and quality

measurement among CHP providers.

Key 2011 AchievementsEnhancing Healthcare QualityIn 2011, CHP initiated three pilot programs designed to improve healthcare quality and delivery.

Patient Centered Medical Homes—Physician practices developed the principles, processes and capabilities necessary to serve as patient centered medical homes. (In this care delivery design, patients receive more effective care, because a primary care physician or specialist oversees care and coordinates with all caregivers serving the patient.) All 10 practices are expected to apply for Level 3 National Committee for Quality Assurance recognition in 2012 and learnings from these practices will be expanded to more physician practices in the future.

Chronic Care Support—Funded by the CHP Foundation, HealthSpan (CHP’s preferred provider organization and care management company), embedded four nurse coordinators in physician practices to provide in-depth support to patients who faced challenges managing chronic conditions.

Measuring Diabetes Outcomes—HealthSpan provided employed physicians with processes for collecting and reporting key diabetes outcome measures in this CHP Foundation-supported pilot.

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Building Physician Relationships Through CHP’s Leadership Academy, high-performing CHP leaders created two new processes to enhance new physicians’ understanding of and relationship with CHP. The first is a state-of-the-art physician on-boarding process that supplements required employment information with a missioning component to assure an understanding of our culture. The second is a contact-to-contract process that standardized and streamlined the identification, selection and recruitment of new employed physicians.

Supporting Physicians’ Business Activities CHP is establishing revenue cycle centers of excellence for the “business side” of physician services. In 2011, we established physician pre-service centers in every region and a centrally located corporate physician business center that is focused on claim submissions, insurance follow-up and customer service.

2008 2009 2010 2011

75.8

178.7193.4

225.9

301.0

116.7

185.6

234.7

200

250

300

350

150

50

100

*PCPs include MD, DO, PhD and all associated Independent Clinical Providers

PCPs

*

Spec

ialis

ts

FTEs—CHP Employed Physicians

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A Transformation In 2011, CHP’s Senior Health and Housing Services began the planning and changes necessary to reposition itself as an integral component of the health system. Fifteen senior health and housing facilities that once were embedded within individual regions have restructured into a new organization. This new structure will better support the creation of more effective, enhanced processes and services for seniors.

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New IntroductionsHealthSpan, CHP’s preferred provider organization (PPO) and care management company, introduced a new PPO network for self-funded employers in Northwest Ohio in partnership with Mercy-Northern Region. The new HealthSpan high-value network trims employers’ medical plan costs by directing patients to Mercy’s high-quality, cost-effective providers, engaging members in wellness and, when needed, in disease management programs. HealthSpan serves more than 97,000 members.

In 2011, Health Partners Consulting LLC (HPC) was formed to provide expertise and guidance to hospital systems, healthcare delivery organizations and physician practices preparing for healthcare transformation initiatives. HPC offers a range of services supporting patient centered medical home development, care coordination and population health management, web-based warehousing of claims and clinical data, informatics support, network development and contracting, and disease management and health coaching across providers’ entire patient populations.

Growth in CHP RegionsIn 2011, CHP sold its regions in northeast Pennsylvania and eastern Tennessee, divesting nearly 17 percent of its assets (please see Stewardship). Yet, by year-end, CHP had regained its pre-transaction size due to continued growth in its other communities, which included increases in employed physician practice growth. CHP earned growth of 34 percent in employed physician visits, 10 percent in outpatient surgery, and 2.5 percent in admissions … results achieved despite an economic recession and in spite of a nationwide trend for volume decreases.

Key 2011 Achievements

GrowthA dynamic organization, CHP continually evaluates opportunities to expand the scope and

design of the services it provides. In 2011, regional volumes continued to grow, new services

were introduced and Senior Health and Housing Services began redesigning itself.

2010 2011 2012

$4B

$5B

$6B $5.6

$3.8$3.6

$3.9

$5.4$5.8

$3B

$1B

$2B

Tota

l Ass

ets

Tota

l Rev

enue

Projected Total

Projected Total

Total Assets and Total Revenue in Billions

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Key 2011 AchievementsProfessional GrowthIn 2011, more than 300 leaders from across the system attended systemwide Leadership Development Institutes to build alignment around strategies supporting care transfor-mation, growth, team leadership and healthcare reform. CHP conducted more than 30 other major conferences and collaboratives to enhance learning and professional growth. These focused on physician and nursing leadership, leadership formation, seven performance improvement collaboratives, and a whole host of patient experience, disease management and process training initiatives.

CHP’s Leadership Academy graduated 28 high-capacity leaders representing CHP’s regions, Senior Health and Housing Services, an employed physician group and CHP’s home office. Each Academy member participated in one of four high-impact action learning projects related to health improvement, physician on-boarding, physician recruitment and contracting, or cardiac care and re-admissions.

In support of developing future healthcare leaders, seven CHP Diversity Fellows continued their 2009-2011 Master’s program fellowship within CHP. All regions sponsored summer, multicultural, youth intern programs, partnering with Urban League affiliates, community organizations and schools to provide high school minority students with integrated, mentored, career-related experiences. And in 2011, CHP’s home office began sponsoring four students of the DePaul Cristo Rey High School, which provides students with economic need the ability to obtain a Catholic, college preparatory education combined with a corporate work study program.

At CHP, we recognize the importance of a diverse workforce in all areas of our organiza-tion – in clinical, operational and administrative settings. Through diversity and inclusion, we are better able to ensure that our organization reflects and effectively serves all who live in our communities. In 2011, CHP’s Minority Retention and Engagement scores reached parity with those of Caucasian associates.

A Just WageOne of the guiding principles

of CHP’s compensation

philosophy is that every

associate receives, at minimum,

a living wage. We fulfill this

commitment by benchmarking

our entry wage scale to 200

percent of the Federal Poverty

Limit rather than the statutory

minimum wage. For 2011, CHP’s

target wage was $10.60 per

hour, which is 46 percent higher

than the federal minimum wage.

CHP also offers comprehensive

and competitive benefit

programs for all associates

working at least 20 hours

per week, including health

coverage, pension plans, paid

time off, short- and long-term

disability, life insurance and

tuition reimbursement.

Human PotentialMore than 32,000 associates make up CHP. It is through their combined skill, compassion and

expertise that CHP, as an organization, is able to fulfill its mission. In 2011, CHP expanded its

professional development forums and furthered its capabilities to support associates’ health

and wellness.

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Improving Associate Health while Reducing ExpensesIn 2011, the CHP Foundation awarded our regions more than $200,000 to develop pilot population health management programs that focus on diseases most likely to reduce our associates’ quality of life, result in poor health outcomes and drive high-cost claims: diabetes, obesity and breast cancer. CHP also re-designed its associate health plans to promote prevention and wellness and reduce cost increases in plan expenses. In 2011, costs were expected to increase 12 percent, but increased only 5.7 percent over 2010, exceeding our goal of containing health expense inflation to less than 10 percent.

Cultural FormationJust as CHP offered professional growth opportunities, our commitment also extended to helping associates connect with their spirituality, gain understanding of our heritage, grow in sensitivity to our mission and prepare to model mission-based leadership. In 2011, a new program called “Day of Renewal” was introduced, integrating mission and leadership formation, along with renewal strategies for CHP leaders, especially nurse managers and physician leaders. And at its 2011 annual retreat, the CHP Board focused on “The Spirituality of Change.”

“We don’t take time in our daily duties to reflect and think about ourselves. We also do not think of ways to keep ourselves grounded and focused. I took a lot away to assist in keeping myself energized!” –Nurse who attended a “Day of Renewal”

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StewardshipBecause of our commitment to quality (high quality healthcare is, ultimately, the most inexpensive

care) and our ability to manage supply costs and labor productivity, CHP has been able, over the

past seven years, to keep healthcare cost increases nearly flat. Cost stewardship such as this

gives CHP the resources necessary to meet communities’ healthcare needs and serve persons

who are poor and under-served.

Key 2011 AchievementsCommunity Benefit and PhilanthropyThe heart of CHP’s mission is to extend our healing ministry to those who are in need. In 2011, CHP provided $345.7 million in community benefit, placing the organization in the top quartile of Catholic health systems. It is CHP’s commitment to cost discipline that enables us to provide nearly $1 million per day in community benefit. The value of our community benefit far exceeds the value of our not-for-profit tax exemption. For example, in 2010 (the latest year of available data), CHP provided $181 in community benefit for every $100 we would have paid in taxes.

CHP Community Benefit in Millions

To meet an ever-increasing need, CHP provides a real and essential safety net for our communities, assuring that those who come to us receive both the compassionate and quality care and financial support they need. We offer free care to anyone without insurance earning up to twice the federal poverty guidelines, and substantial discounts to those earning up to four times the federal poverty guidelines. Those who have no insurance and earn more also can qualify for discounts.

$116.7 M Charity Care

$124.3 M Unreimbursed care for those who are poor and qualify for Medicaid

$ 28.7 M Support for other programs for those who are poor

$ 76.0 M Benefits to the broader community

$345.7 Million Total

Supporting Community Needs through ChangeBecause we are stewards of not only our facilities’ resources, but communities’ healthcare resources as well, in 2011, CHP made the difficult decision to sell its regions in northeastern Pennsylvania and eastern Tennessee. Both communities had too many hospitals, beds and duplicated services. By stepping out of the way and allowing new organizations to enter both communities, CHP served as a catalyst for change. CHP established foundations which were seeded with a total of $93 million earmarked for continued health improvement in the two communities. As a result of the sales, CHP attained improved financial viability, which provides opportunities for capital and operational improvements in CHP facilities … and resources to extend the Church’s healing ministry in other communities in the future.

Also in 2011, CHP transferred the membership of its 15 affordable housing facilities to Mercy Housing, a national organization that is dedicated to providing affordable housing for poor individuals and homeless families. The transfer strengthened the housing ministry by taking advantage of Mercy Housing’s national leadership in affordable housing and its proven core competencies.

Mission Outreach Program CHP’s Mission Outreach Program awarded 10 regional programs approximately $196,000 in 2011 in support of faith community nursing; nutrition, obesity and exercise; disease prevention; dental care; and massage therapy for chronically or terminally ill persons. Over the past 20 years, the Mission Outreach Program has awarded more than $2.4 million to help improve the health of the communities we serve. CHP’s home office associates also contributed $77,000 to support relief efforts coordinated by agencies in Japan in response to the earthquake and tsunami and in Joplin, MO in response to the tornado.

$116.7M

$124.3M

$28.7M

$76.0M

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Scan the QR code to view CHP’s anniversary video in which associates, sponsors and leaders share their thoughts on CHP’s legacy and ministry.

Centuries of Service Vibrant Future In 2011, CHP celebrated its

25th anniversary as a system.

We developed an anniversary

video and commemorative book

that captured what it means

for our sponsors to share and

entrust their ministry to laity who

multiply its impact … and what

it means to laity who receive this

trust and help bring the ministry

to life. A ritual for use across

the system and a special Mass

held at Cincinnati’s St. Peter in

Chains Cathedral prior to the

final 2011 Board meeting further

highlighted this quarter century

of “system” in a centuries-long

ministry.

Financial Strength and Environmental StewardshipCHP is known for strong financial management and consistently excellent results, which continued to be the case in 2011. CHP achieved a higher margin than targeted by successfully managing expenses over the course of the year. The organization achieved an operating margin of 3.3 percent, resulting in operating income of nearly $119.9 million. Due to positive operating results and proceeds from the divestiture of the Pennsylvania and Tennessee regions, CHP ended 2011 with 226 days cash on hand, exceeding its target of 170 days.

Also in 2011, CHP refinanced fixed rate bonds with a tax-exempt private placement loan. The expected net present value savings in interest costs totaled $5.9 million. CHP’s effective borrowing rate became 3.4 percent on underlying debt (4.3 percent with the effect of swaps), and this likely will decline further as we refinance more bonds for additional savings in 2012.

To confirm that our efforts to provide excellent value and good stewardship are achieving our goals, CHP relies on independent, outside organizations to review our performance. Each year, Ernst & Young compares CHP to a group of high performing health systems. Since 2007, CHP has ranked number 1 in community benefit, cost containment, pension funding, EBIDA margin, and in attaining the lowest costs per case, per discharge and for supplies.

True to our Catholic roots, CHP is committed to reverence all life and creation. Our mission calls us to improve the health of the communities we serve. One way that CHP fulfills these expectations is by managing its resources in an environmentally sustainable manner. CHamPion Green, CHP’s environmental stewardship program, promotes and coordinates CHP’s recycling and conservation efforts systemwide. Through recycling of paper, plastic and corrugate; by reducing the use of bottled water; by conserving energy; and by reduc-ing waste, CHP is working to reduce its environmental footprint. Since 2009, CHP has reduced its energy consumption by 8 percent and has initiatives in place to further reduce consumption by 5-7 percent.

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Where We Serve CHP at a GlanceHospitals 24

Senior Health and HousingFacilities

15

Health Insurance Plan (PPO) Covered Lives

97,182

Home Health Agencies 8

Associates 32,537

FTEs 26,686

Affiliated Physicians 5,593

Total Assets $5.4 B

Net Operating Revenues $3.6 B

Net Income ($6.1 M)

Operating Income $119.9 M

Total Annual Community Service Benefits

$345.7 M

Bond Ratings Moody’s: A1 Positive OutlookS&P: AA-Stable OutlookFitch: AA-Stable Outlook

* Affiliated physicians count is current as of 12/31/2010. All other data in this report, including financials, are unaudited as of 12/31/2011, pending review first quarter 2012.

Vision Statement In our quest for excellence and market leadership,

we will transform our healthcare system to one of seamless, team-based care to meet the needs of those we serve.

Cincinnati: Mercy Health

Lima: St. Rita’s Health Partners

Lorain: Mercy

Paducah: Mercy Health Partners

Springfield: Community Mercy Health Partners

Toledo: Mercy

Youngstown: Humility of Mercy Health Partners

Senior Health and Housing Services (provided throughout CHP’s service areas)

615 Elsinore PlaceCincinnati, Ohio 45202Phone (513) 639-2800Fax (513) 639-2700

Partnerships for Healthwww.health-partners.org