fair market valution, operating comparison, and...

Proposal for: FAIR MARKET VALUTION, OPERATING COMPARISON, AND COMMUNITY BENEFIT ANALYSIS OF CITRUS MEMORIAL HOSPITAL Presented to: Citrus County Hospital Board Vickie D. LaMarche, COO 123 N. Apopka Avenue Inverness, FL. 34450 December 26, 2012 Navigant Consulting, Inc. Jerry M. Chang, CFA Peggy Miller Cella 1180 Peachtree Street, Suite 1900 3325 Paddocks Parkway, Suite 425 Atlanta, Georgia 30309 Suwanee, Georgia 30024 Office: 404.602.3462 Office: 678-845-7649 Mobile: 404-512-5422 Mobile: 678.472.0559 [email protected] [email protected] SOLUTIONS THAT CREATE HIGH-PERFORMING HEALTHCARE ORGANIZATIONS Navigant Healthcare takes a unique interdisciplinary approach to our clients’ challenges. This means we work as one team with one goal, leveraging the strengths and expertise of our senior-level consulting professionals in the delivery of integrated solutions.

With the depth and breadth of our industry experience as healthcare executives, clinicians and physicians, we enable clients to build their capabilities and achieve sustainable peak performance around quality of care, cost, leadership and culture in today’s changing healthcare environment.

navigant.com/healthcare

Sent via Overnight Courier December 26, 2012 Vickie D. LaMarche Chief Operating Officer Citrus County Hospital Board of Trustees 123 N. Apopka Avenue Inverness, FL 34450 Re: Fair Market Valuation, Operating Comparison, and Community Benefit Analysis of Citrus Memorial Hospital Dear Ms. LaMarche:

At your request, Navigant Consulting, Inc. (“Navigant”) is pleased to send you our proposal to provide professional valuation services to the Citrus County Hospital Board of Trustees (the “Board”) regarding the evaluation of Citrus Memorial Hospital (“CMH” or “Hospital”) as required by an amendment to Florida Statutes Section 1.155.40. Our valuation analysis will be performed as of a current date (the “Valuation Date”).

This proposal summarizes our understanding of the Board’s needs and outlines the project background, objective and scope, timing, fees, Navigant’s qualifications, experience, project team, and other professional arrangements related to providing you with valuation advisory services. In addition, we have included a summary of the valuation approaches that we will consider in our analysis.

Our team looks forward to the opportunity to assist the Citrus County Hospital Board of Trustees. Please contact me at 404.602.3462 with any questions you may have. I can also be reached on my mobile phone at 404.512.5422. Best regards,

Jerry M. Chang, CFA Director

1180 Peachtree Street Suite 1900

Atlanta, GA 30309 Tel: 404.602.3462 Fax: 404.575.4213

Table of Contents

SUBMISSION 6

6.1. Company Details ............................................................................................................................................. 6 6.2. Type of Company ............................................................................................................................................ 6 6.3. Subsidiary Company, Associated Company or Parent Company ........................................................... 7 6.4. Directors, Partners, and Associates ............................................................................................................. 7 6.5. Key Personnel ................................................................................................................................................. 8 6.6. Financial Information and Bank Details ....................................................................................................... 8 6.9. References ....................................................................................................................................................... 9 7.0 Proposal Checklist .......................................................................................................................................... 11 8.0 — Certificate As To Canvassing ................................................................................................................... 13 9.0— Contact Details ............................................................................................................................................ 14 10.0— Declaration For Applicants ...................................................................................................................... 15

I. MANAGEMENT SUMMARY 16

OVERVIEW OF CITRUS MEMORIAL HOSPITAL ........................................................................................................ 16 GENERAL BIDDER INFORMATION ........................................................................................................................... 16 OUTLINE PLAN ........................................................................................................................................................ 17 SUMMARY OF SERVICES TO BE PROVIDED ............................................................................................................... 17 FIXED PRICE COST ................................................................................................................................................... 18

II. PROPOSED SOLUTION 18

OUR PROPOSED APPROACH TO MEET YOUR NEEDS ............................................................................................. 18 METHODOLOGY ....................................................................................................................................................... 18 PROJECT PLAN ......................................................................................................................................................... 22 KEY DELIVERABLES .................................................................................................................................................. 23 TIME-SCALE FOR COMPLETION ............................................................................................................................... 24

III. PROJECT MANAGEMENT 24

DEMONSTRATED EXPERIENCE IN HOSPITAL SYSTEM ORGANIZATION VALUATION AND STRATEGIC ADVISORY

ENGAGEMENTS ........................................................................................................................................................ 24

IV. COSTS 29

PRICING STRUCTURE – PRIMARY SCOPE OF WORK ................................................................................................ 29 PRICING STRUCTURE - SPECIAL ENGAGEMENTS OR ADDITIONAL SERVICES ........................................................ 30

V. BIDDERS GENERAL INFORMATION 32

CONTACT PERSON DEALING WITH THE PROPOSAL ................................................................................................ 32 OVERALL RESPONSIBILITY FOR THE CONTRACT ..................................................................................................... 32 CONFIRMATION OF ACCEPTANCE BY THE BIDDER AND ANY THIRD PARTIES OF THE TERMS AND CONDITIONS OF THE TENDER ............................................................................................................................................................. 32

CONFIRMATION OF ACCEPTANCE BY THE TENDERER AND ANY THIRD PARTIES REGARDING OVERALL RESPONSIBILITY FOR SUCCESSFUL DELIVERY ........................................................................................................... 32

VI. BIDDERS PROFILE 32

LENGTH OF TIME IN EXISTENCE .............................................................................................................................. 32 NUMBER OF EMPLOYEES ......................................................................................................................................... 33 BRIEF DESCRIPTION OF THE COMPANY’S PRINCIPAL AREAS OF ACTIVITY .............................................................. 33 IDENTITY OF KEY PERSONNEL RESPONSIBLE FOR CARRYING OUT EACH SERVICE/TASK ........................................ 34 TECHNICAL KNOWLEDGE OF THE PERSONNEL RESPONSIBLE FOR EACH TASK ...................................................... 35 QUALIFICATION OF PERSONNEL RESPONSIBLE FOR EACH TASK. ............................................................................ 35

VII CUSTOMER BASE 35

VIII. FINANCIAL DETAILS 36

IX. TECHNICAL CAPABILITY 36

X. QUALITY CERTIFICATION 37

XI. INDUSTRY STANDARDS 37

XII. RELEVANT SERVICES 38

XIII. SPECIFIC SKILLS AND EXPERIENCE 38

XIV. DETAILS OF MANAGEMENT AND KEY PERSONNEL 39

APPENDIX A: KEY PERSONNEL 40

APPENDIX B: FINANCIAL STATEMENTS OF BIDDER 55

SUBMISSION

6.1. Company Details

Company Details

Company Name Navigant Consulting, Inc.

Address 1180 Peachtree Street, Suite 1900

Atlanta, GA

Postcode 30309

Telephone No 404-602-3462

Fax No 404.575.4213

Website http://www.navigant.com

6.2. Type of Company

Type of Company

Sole trader

Partnership

Private

Public NYSE TIC: NCI

Limited Liability

Other (please specify)

Date of Company Registration July 15, 1999

Company Registration Number FIN 36-4094854

Number of Employees 2,500

6.3. Subsidiary Company, Associated Company or Parent Company Name and address of any Subsidiary Company, Associated Company or Parent Company

Type of Company

Company Name Navigant Consulting, Inc. Headquarters

Address 30 South Wacker, Suite 3550

Chicago, Illinois

Postcode 60606

Telephone No 312.583.5700

Fax No 312.583.5701

Website http://www.navigant.com

6.4. Directors, Partners, and Associates

Name

Position

Time in Position

Jerry M. Chang Director 8 Years

Peggy Miller Cella Director 2 Years

John Leary Associate Director 1 year

6.5. Key Personnel Please give details of all personnel who will be dedicated to this project indicating qualifications and relevant experience. Provide a detailed CV for each team member.

Name

Qualification

Experience

Jerry M. Chang, CFA Director, Healthcare Valuation and Financial

19 Years

Peggy Miller Cella Director, Healthcare Strategy 30 Years

John Leary, CFA Associate Director 23 Years

6.6. Financial Information and Bank Details State your company’s turnover for the past 5 years.

Financial Year-Turnover

Company Name : Navigant Consulting 2011- $784.6 million 2010- $703.6 million 2009- $707.2 million 2008- $810.6 million 2007- $767.1 million

Address: Chicago, Illinois

Postcode: 60606

6.7. Additional Financial Statements Please submit complete copies of Financial Statements (Trading and Profit and Loss Accounts, Balance Sheets. For limited Companies, provide Directors’ and Auditors’ Reports) for these periods.

See SEC Form 10k

http://www.sec.gov/Archives/edgar/data/1019737/000119312512067394/d282198d10k.htm

6.8. Bank Details Name and address of bank(s) from who references may be requested.

Bank Details

Name Bank of America

Address Chicago Illinois

Postcode 60606

Account Number 005800151127

Sort Code

6.9. References Provide the names and addresses of three organizations that are prepared to act as referees on your behalf. Ensure that all references are relevant to the Request for Proposal.

References

Name Ms. Michele Molden EVP and Chief Transformation Officer Piedmont Healthcare

Address Atlanta, GA

Website [email protected]

Telephone Number (404) 425-1322

Sort Code

http://www.sec.gov/Archives/edgar/data/1019737/000119312512067394/d282198d10k.htm�

References

Name Ms. Kathy Maly Chief Administrative Officer Oakwood Health

Address Dearborn, Michigan



Sort Code

References

Name Mr. Bob Peebles Chief Executive Officer Mercy Medical Center

Address Sioux City, Iowa



Sort Code

7.0 Proposal Checklist The proposal should include sufficient information to permit the evaluation of the bidder’s competency. To assist this process, the following checklist should be completed and returned with your proposal:

Item

Checklist

Statement of understanding by the Bidder(s).

General approach and methodology proposed for project.

Personnel allocated to the project with the proposed time input for each individual.

CVs with specific reference to project-related expertise.

Outline of bidder’s project-related expertise and experience.

References to similar projects carried out in the previous 3 years.

Fixed cost.

Daily Rates.

Outline of the basis proposed for payment.

Taxes, or cost shown separately.

Third-party name, address, telephone, email address and other relevant contact references. Description of role in project.

NA

Financial statement for previous 5 financial years.

Statement effect that information not identified as sensitive may be released to the public domain.

Statement identifying relationship between bidder(s) and other suppliers.

NA

Additional information relevant to the proposal

8.0 — Certificate As To Canvassing I, Jerry M. Chang, certify that I have not canvassed any employee of the Citrus County Hospital Board or the Citrus Memorial Health Foundation in connection with the preparation, submission and evaluation of this Request for Proposal or award of the Contract. To the best of my knowledge and belief, no person employed by me or acting on my behalf has done, or will do, such an act.

Signed _____________________ Jerry M. Chang Title: Director Date: December 26, 2012

9.0— Contact Details Please complete this form with your company details.

1.

Company Name

Navigant Consulting, Inc.

2. Address

1180 Peachtree Street, Suite 1900

Atlanta, GA

3. Postcode / Zipcode

30309

4. Telephone Number

404.602.3462

5. Fax Number

404.575.4213

6. Contact Person

Jerry M. Chang

7. Position in Company

Director

8. Email Address

[email protected]

9. Website (if applicable)

http://www.navigant.com

10. Number of Employees Full Time 2,500

Part Time 83

mailto:[email protected]�

10.0— Declaration For Applicants I, Jerry M. Chang Director of Navigant Consulting, Inc. have completed the enclosed documentation in respect this Request for Proposal application. I declare that the following documents have been enclosed with our application:

Signed

Director Navigant Consulting, Inc. Date December 26, 2012

1.

2 Copies of Request for Proposal

Yes

2.

Completed Bank Details Forms

Yes

3.

Completed CV Forms

Yes

4.

Completed Certificate as to Canvassing

Yes

5.

Completed Contact Details Form

Yes

I. MANAGEMENT SUMMARY

The Citrus County Hospital Board of Trustees (“CCHB”, the “District” or the “Board”) has requested assistance regarding the evaluation of Citrus Memorial Hospital (“CMH”) as required by an amendment to Florida Statutes Section 1.155.40. OVERVIEW OF CITRUS MEMORIAL HOSPITAL Citrus Memorial Hospital, located in Inverness, Citrus County, Florida, was founded in 1957 as the area’s first healthcare institution for residents in Citrus and surrounding counties. The hospital offers a comprehensive continuum of care to a growing community. The Hospital is the only public hospital in Citrus County, Florida and is operated by the Citrus County Hospital Board of Trustees. The 198-bed hospital features 24 hour emergency room, orthopedic and vascular services, and other outpatient services. GENERAL BIDDER INFORMATION Navigant (NYSE: NCI) is a specialized, global expert services firm dedicated to assisting clients in creating and protecting value in the face of critical business risks and opportunities. Through senior level engagement with clients, Navigant professionals combine technical expertise in Disputes and Investigations, Economics, Financial Advisory and Management Consulting, with business pragmatism in the highly regulated Construction, Energy, Financial Services and Healthcare industries to support clients in addressing their most critical business needs. Navigant Healthcare brings together a team of more than 500 seasoned consulting professionals and industry thought leaders. We assist health systems, physician practice groups, and payers in designing, developing, and implementing integrated solutions that create high-performing healthcare organizations. With our unique interdisciplinary approach leveraging the depth and breadth of our experience as healthcare executives, clinicians, and physicians, we enable clients to build their capabilities and achieve sustainable peak performance around quality of care, cost, leadership, and culture in today’s changing healthcare environment.

OUTLINE PLAN Navigant has a standard approach when commencing and mobilizing for new projects. We will schedule an on-site project “kick-off” meeting with CCHB and CMH primary project liaisons. At this meeting, we will work with the project liaisons to identify, verify, or establish communications protocols, project timelines, deliverables, checkpoints, information and data required, and client time commitments. Following the kick-off meeting, work will commence on the project according to the project plan and standard project management activities will commence. These include weekly (or other agreed upon intervals) status reports, status meetings or conference calls, interim deliverables or presentations, and other agreed upon checkpoint actions. SUMMARY OF SERVICES TO BE PROVIDED Fair Market Valuation Analysis Navigant will perform an independent fair market valuation (“FMV”) of the consolidated business enterprise of CMH utilizing the income, market, and cost approaches, as applicable Operating Comparison Analysis Navigant will perform an operating comparison analysis to determine whether there is a difference in the cost of operations compared to other hospitals and health systems and whether the hospital can be operated by a not-for profit or for-profit entity with similar or better cost-efficiencies or measurable outcomes.

The operating Comparison Analysis will include three key components: the development of a baseline profile of CMH; the identification of comparable hospitals/health systems for comparative analysis; the development of a comparative assessment of hospitals that are comparable to CMH. Navigant will use Centers for Medicare and Medicaid administration Core Measures quality metrics for CMH and for each comparable hospital in the comparative analysis. Community Benefit Analysis

Navigant will provide a summary community benefit assessment to determine whether there is a net benefit to the community to operate the hospital as a not for-profit, or for-profit entity and use the proceeds from the sale or lease to fund a healthcare economic trust fund and an indigent care fund. This community benefit assessment will include demographic, socioeconomic, and health status data. (including payer profile data).

FIXED PRICE COST For this engagement, we estimate that the total professional fees for the services outlined in this letter will be as follows: Estimated Professional Fees and Expenses Fair Market Valuation Analysis $ 30,000 Operating Comparison Analysis $ 32,000 Community Benefit Analysis $ 15,000 Total Professional Fees $ 77,000 Expenses $ 8,000 Total Fixed Price Cost $ 85,000

II. PROPOSED SOLUTION

OUR PROPOSED APPROACH TO MEET YOUR NEEDS Navigant proposes an integrated, multi-disciplinary solution to meet your needs. Navigant will draw upon qualified and experienced professionals from the company’s Healthcare Valuation and Financial Advisory Services practice, Hospital and Health System Strategy Services practice to ensure that our engagement approach fully meets the Board’s expectations. With over 500 professionals in our national Healthcare Advisory Practice, Navigant has the breadth and depth of expertise that is necessary for this important project. The Navigant project team will work with CMH to complete all phases of the project within the designated time frame and will maintain ongoing and effective communication with the client as the project progresses. METHODOLOGY For this important project, we propose three primary analyses to meet your needs: Fair Market Valuation Analysis Navigant will perform an independent fair market valuation (“FMV”) of the consolidated business enterprise of CMH utilizing the income, market, and cost approaches, as applicable. The primary method of the Income Approach is the Discounted Cash Flow Method (“DCF Method”). The DCF Method is based on the present value of two components; projected cash

flows and a residual value. Cash flows are estimated for a future period (e.g., 5 years) based on historical data and projections compiled with input from CMH management. These cash flows are then discounted back to their present value equivalents and summed. A residual value, which represents the future cash flows of CMH beyond the discrete projection period, is then added to this first amount. In applying the DCF Method, it is essential that the cash flows to be discounted are clearly defined and that a discount rate appropriate for the degree of risk inherent in that return stream is established. The Market Approach is composed of the Guideline Hospital and the Similar Transactions Methods. The Guideline Hospital Method focuses on comparing the subject hospital to select reasonably similar (or “guideline”) publicly traded hospital companies. Under this method, valuation multiples are: (i) derived from the operating data of selected guideline hospitals; (ii) evaluated and adjusted based on the strengths and weaknesses of the subject hospital relative to the selected guideline hospitals; and (iii) applied to the operating data of the subject hospital to arrive at an indication of value. In the Similar Transactions Method, consideration is given to prices paid in recent arms-length transactions that have occurred in the subject hospital’s market or similar markets. The Adjusted Net Assets Method represents one methodology employed in the Cost Approach. In this method, a valuation analysis is performed for a hospital’s identified fixed, financial, and other assets. The derived aggregate value of these assets is then “netted” against the estimated value of all existing and potential liabilities, resulting in an indication of the value. An ongoing business enterprise is typically worth more than the fair market value of its underlying assets due to several factors: (i) the assets valued independently may not reflect economic value related to the prospective cash flows they could generate; (ii) this approach may not fully reflect the synergy of the assets but rather their independent values; and (iii) intangible assets inherent in the business such as reputation, superior management, proprietary procedures or systems, or superior growth opportunities are very difficult to measure independent of the cash flow they generate. The value of the assets may be perceived as providing a pricing “floor” in the absence of earnings. For the purposes of our project, our analysis will be consistent with FMV as defined under the amendment to Florida Statutes Section 1. 155.40, as well as the IRS Revenue Ruling 59-60 definition of FMV. FMV as defined under the amendment to Florida Statutes Section 1. 155.40: the price that a seller or lessor is willing to accept and a buyer or lessee is willing to pay on the open market and in an arms-length transaction, or what an independent expert in hospital valuation determines the fair market value to be.

FMV as defined under IRS Revenue Ruling 59-60: …the price at which an entity (asset) would change hands between a willing buyer and willing seller, neither being under compulsion to buy or sell and both having reasonable knowledge of all relevant facts. Operating Comparison Analysis The operating comparison analysis will include three key components:

Develop a baseline profile of CMH This component will require a combination of data development and analysis, on site interviews, and site visits to CMH. The baseline profile will be detailed and initially subdivided into four components: Service area definition for each individual enterprise and for the combined health system. The service area will be paired with demographic and socioeconomic characteristics for the service area. During the comparative analysis of CMH with other hospitals and health systems, it is likely that comparable hospitals for some service lines and/or CMH may require considering hospitals located in other Florida markets. In those cases it will be important to include a comparative analysis of demographic and socioeconomic characteristics that may impact strict data only comparisons. Service offerings of each individual enterprise and for the combined health system – including key differentiators such as medical and clinical education program offerings, continuum of care components offered; community education, and outreach etc. Utilization and service line profiles will be developed based on the Agency for Health Care Administration (“AHCA”) database and will include 5 year trend analysis. Operating/financial profiles - the level of analysis in this component will be sufficiently detailed to allow for comparative measures that will differentiate key variations that may be associated with higher risk population, medical education, and specialty service offerings, etc. The data source for this component will include the AHCA inpatient data base, available district level data, the outpatient database, and Florida Hospital Uniform Reporting System (“FHURS”) financial data. Quality of care metrics – state and national accepted quality of care profiles will be developed including Medicare/Medicaid Core measures, nationally recognized accrediting organizations, etc.

Identify comparable hospitals/health systems for comparative analysis Based on the profile developed for CMH, Navigant will identify those hospitals that are most comparable to CMH both individually and on a system basis. The analysis will include a minimum of two similar entities for each hospital/enterprise and for the system as a whole. As feasible, for each comparative assessment the comparable hospitals/health systems will include one or more for-profit hospitals, not for profile hospitals, and system operated hospitals. To the extent possible, the comparable will include hospitals located in markets that are similar in demographic and socioeconomic characteristics. For each hospital/entity selected for comparative assessment, a profile will be completed using the same or similar data as used in developing the CMH profiles. The data sources for comparative operating and financial analysis will include AHCA data, district data as available and needed, and FHURS financial data. Comparative assessment Hospitals will be compared to CMH in terms of quality metrics identified by the Centers for Medicare and Medicaid Core Measures. Community Benefit Analysis

Navigant will provide a summary community benefit assessment for the markets served by CMH. This community needs assessment will include:

• Demographic, socioeconomic, and health status profile (including payer profile) data which will be utilized in the operating comparative analysis, as appropriate.

• A profile of key health providers that serve the market (building as much as possible from profiles identified in the operating comparative analysis).

PROJECT PLAN

We are ready to begin work immediately upon retention. We understand that time is of the essence and anticipate delivery of our complete report on or before March 14, 2013. Although we will confirm the actual deadline date upon our retention, the following is our anticipated engagement timeline:

Stage 1: Pre-Analytics Stage

Day 1: • Execute formal engagement letter. • Kickoff call with CCHB and CMH management representatives to: • Confirm engagement logistics and deadlines; • Discuss the data available and the most efficient method of data delivery to our project

team members; and • Schedule site visit and related management interviews.

Stage 2: Analytics Stage

Day 2 through Day 16: • Review and analyze data available. • Perform on-site visit to tour the Hospital and interview management. • Perform Valuation Analysis and Transaction Analysis, including economic and market

research to support key Valuation Analysis model input assumptions. • Finalize Valuation Analysis and Transaction Analysis. • Develop a baseline profile of CMH • Identify comparable hospitals/health systems for comparative analysis

Stage 3: Post-Analytics Stage

Day 17 through Day 21: • Complete competitive assessment • Complete net community benefit analysis • Conduct internal quality control review process (math/logic check and peer review). • Finalize any edits from quality control review process and deliver verbal presentation.

Day 22 through Day 45: • Preparation of draft full narrative written report. • Deliver presentation to CCHB • Review comments • Issue final report

The expeditious completion of our analysis consistent with the timing above is dependent upon the timely receipt of all necessary information and the ability to conduct all necessary interviews. KEY DELIVERABLES Fair Market Valuation Analysis Navigant will deliver in its written report, an opinion of the fair market value (“FMV”) of Citrus Memorial Hospital and other listed CCHB properties for sale or leasing of hospital facilities owned by the board to a not-for-profit or for-profit entity. Operating Comparison Analysis Navigant will deliver in its written report an objective operating comparison between CMH and other CCHB properties and other similarly situated hospitals, both not-for-profit and for-profit which have similar service mix in order to determine whether there is a difference in the cost of operation using publicly available data provide by the Agency for Health Care Administration and the quality metrics identified by the Centers for Medicare and Medicaid Services Core Measures.

Navigant will also deliver in its written report an opinion whether it is more beneficial to taxpayers and the affected community for the hospital to be operated by a governmental entity, or whether the hospital can be operated by a not-for-profit or for-profit entity with similar or better cost-efficiencies or measurable outcomes identified by the Centers for Medicare and Medicaid Services Core Measures. Community Benefit Analysis

Navigant will deliver in its written report an opinion as to wither there is a net benefit to the community to operate the hospital as a not-for-profit or for-profit entity and use the proceeds from a sale or lease for other purposes.

TIME-SCALE FOR COMPLETION We will discuss your timing needs and mutually agree on the project timeline, including deadlines. We are prepared to develop and adhere to a project calendar and make our team available for any necessary calls, meetings, hearings or other project requirements. Navigant will adhere to the March 14, 2013 completion date as specified by the CCHB request for proposal.

III. PROJECT MANAGEMENT

DEMONSTRATED EXPERIENCE IN HOSPITAL SYSTEM ORGANIZATION VALUATION AND STRATEGIC ADVISORY ENGAGEMENTS Navigant has significant experience in working with not-for-profit, and for-profit hospital systems similar in size and scope to CMH. Many of these projects are associated with hospital organizations and systems with net revenues of at least $500 million. As the hospital industry has consolidated over the past few years, we have routinely been asked to support efforts to evaluate potential merger and acquisition scenarios. The analysis required in these efforts is very similar to the analysis requested by the CCHB. Client Example #1: Client Profile: Florida Hospital is one of the largest hospitals in the country with 22 campuses and more than 2,200 acute care beds. Adventist Health System, the parent company of Florida Hospital has more than 7,700 acute care beds over 40 campuses nationally. Client Need and Description of Service: Navigant consultants have provided a wide variety of projects for Adventist Hospitals throughout the county including Florida Hospital. Both organizations have requested assistance from Navigant on a variety of hospital projects including regulatory support, financial and health planning, performance improvement and revenue cycle services. In Florida, Navigant consultants have worked with Florida Hospital over the past 15 years in support of various planning projects primarily related to regulatory activities and certificate of need cases. These projects have required extensive knowledge and use of the various AHCA data bases and specifically the AHCA inpatient discharge database and the Florida Hospital Uniform Reporting System. Project work for the Florida Hospital System has included: new hospital market development, tertiary program development including open heart surgery, pediatric open heart surgery, liver transplant programs, heart and lung transplant programs, inpatient hospice development, home health programs.

Client Example #2: Client Profile: Duke University Health System (“DUHS”) is a three hospital system comprised of more than 1,500 acute care beds. In addition, DUHS has a strategic partnership with Lifepoint Hospitals which includes additional joint venture partnership of three additional hospitals. Client Need and Description of Service: Our client has requested a variety of planning activities over the past few years. Navigant consultant, Peggy Cella at the request of the Durham Regional Hospital Board, led the development of a five year strategic plan. The Hospital was leased by DUHS from the Durham County Commission, so this project required consideration of community needs in the county in support of the county commission’s mission, consideration of DUHS’s clinical needs and services offered at its University Hospital in addition to support for its educational offerings, and consideration of the private physicians that were not affiliated with Duke Health that provided services in the hospital. Following the strategic planning project, the Durham County Manager along with DUHS requested a comparative assessment of county leased hospitals. This assessment included a comparative analysis of current lease arrangements between county governments and large health systems. This study included identification and comparative analysis of similar organizations throughout the country. Client Example #3: Client Profile: State of New Jersey Office of the Attorney General Client Need: Our client requested an independent valuation of the full and fair market value of the assets of Meadowlands Hospital Medical Center (“MHMC”) and transaction analysis in connection with the State of New Jersey Office of the Attorney General’s review of the proposed sale of the assets of MHMC by Liberty Healthcare System, Inc. (“Liberty”) to MHA, LLC (“MHA”), in accordance with the Community Health Care Assets Protection Act, N.J.S.A. 26:2H-7.11, et seq. (“CHAPA”). Description of Service: Navigant prepared and submitted an independent valuation of the full and fair market value of the assets of the Hospital as of July 31, 2010. Navigant assessed the business enterprise value of MHMC, as well as performing discrete valuations of the hospital’s real property, fixed assets, and inventory. In addition, Navigant performed a transaction analysis that included reviewing and opining on: The proposed purchase price offered by MHA for the sale of the assets of the Hospital;

• the effect on the purchase price of the MHMC trustees process for obtaining bids for the sale of its assets;

• the proposed financing by MHA of the purchase price for the assets; • the validity of inter-corporate transfers between Liberty, MHMC and other affiliates;

and • the use of the proceeds from the sale of the MHMC to pay-off amounts due to affiliates.

Client Example #4: Client Profile: Based in Milwaukee, WI, Ministry Health Care is an integrated delivery system of clinics, hospitals, primary and specialty physicians, home care and related services, located across Wisconsin and into Minnesota. Client Need: Ministry Health management requested assistance with a fair market valuation analysis of the business enterprise and remaining 50 percent ownership interest in Affinity Health System to assist management with its strategic and transaction planning decision making. Client was contemplating negotiation with Wheaton Franciscan HealthCare. The deal has since closed. Description of Service: Navigant performed a fair market valuation analysis of Affinity Health System utilizing a discounted cash flow analysis and two market approaches (guideline company method and similar transactions method). The health system was comprised of three hospitals, Affinity Medical Group (a regional network of 23 family practice and specialty clinics in 13 communities), and Network Health Plan which provided healthcare coverage to 80,000 members and 1,400 employer groups throughout northeast Wisconsin. Client Example #5: Client Profile: Based in Boston, MA, Caritas Christi Health Care (“Caritas”) is the largest community-based health system in Massachusetts. Caritas has six acute care hospitals with more than 1,200 acute care beds throughout eastern Massachusetts and a contracted network of more than 1,200 physicians and its predecessor entity, St. Elizabeth’s Medical Center, have historically operated Caritas under the sponsorship of the Roman Catholic Archdiocese of Boston (“RCAB”) and have followed Catholic policies and adhered to Catholic Ethical and Religious Doctrines. Client Need: On March 25, 2010, Cerberus Capital Management LP agreed to acquire Caritas, a hospital operator affiliated with the Archdiocese of Boston, in a private-equity deal valued at $830 million. The purchase price includes the assumption of pension obligations, repayment of debt, funding for operations and about $400 million for upgrades to Caritas hospitals.

Description of Service: Navigant was engaged by Caritas as a financial advisor to review the transaction terms and conditions and to issue a fairness opinion/valuation. Caritas is a long-standing strategic planning client of Navigant’s Healthcare Practice. Navigant was initially requested to contribute to this engagement to provide a strategic review and assessment related to the potential sale of this non-profit organization. Examples of other recent engagements similar in size and/or scope to this project are identified below: Example of Recent Hospital System Valuation and Strategy Projects

Health System Projects Beds Net Revenues

Bay Care Health System FL Various Strategic planning project 1,101 $815M

Lee Memorial Health System, FL Physician integration and compensation

744 $537

Temple University Hospital, PA Strategic planning, performance improvement, financial assessments

916 $928M

AtlantiCare, NJ Strategic planning, physician integration, ACO preparation

503 $612

Piedmont Health (6 hospitals)

Physician integration and compensation, revenue cycle and billing, performance improvement, strategic analysis, and valuation analysis

896 $1,044M

The Moses H Cone Memorial Hospital (5 Hospitals)

Various strategy and regulatory projects

930 $736.5

As further demonstration of Navigant’s experience in working with large hospital systems, we have provided a list of representative academic medical center projects completed by Navigant consultants. Typically these organizations have net revenues far in excess of $500M, often in include multi-hospitals, and typically have integrated health systems.

System CH Health System

Client Strategy Workforce Supply Chain

Revenue Mgmt

Clinical Redesign

Faculty Practice Alignment

Temple University Health System

X

X

X

X

X

X

X

VCU Health System

X X X

Loyola University Medical Center

X

X

X

X

X

X

X

University of Arkansas

X X X X X X X

University of Alabama

X X X X X

University of Chicago Med Center

X

X

X

Fairview – U MN Health System

X

X

Wake Forest Baptist Health

X X X

Dartmouth Med School

X X

Columbia Physicians

X X

WVU Health Sciences Center

X

X

University of Iowa Hospitals and Clinics

X

Cleveland Clinic X Georgetown University Hospital

X

Shands X Emory University X University of Kentucky

X

Vanderbilt University

X X X

IV. COSTS

PRICING STRUCTURE – PRIMARY SCOPE OF WORK Navigant's professional fees are based on our understanding of the scope of work needed by CMH and our experience with similar projects. For this engagement, our professional fees will be based on the number of days worked and personnel assigned to the engagement. The estimated professional fees include a provision for time associated with two meeting with CCHB to review the results of the engagement. Below is our estimated professional fees based on maximum anticipated number of days and discounted rates by staff classification for each portion of our engagement:

Fair Market Valuation Analysis

Estimated Estimated Staff Classification

Discounted Daily Rate

Maximum Days

Professional Fee

Director $3,200 2.50 $ 8,000 Associate Director $2,600 2.30 $ 6,000 Senior Consultant $1,600 10.00 $ 16,000 Totals 14.80 $ 30,000

Operating Comparison Analysis



Maximum Days

Professional Fee

Director $3,200 7.00 $ 22,400 Senior Consultant $1,600 6.00 $ 9,600 Totals 13.00 $ 32,000

Baylor College of Medicine

X

Community Benefit Analysis



Maximum Days

Professional Fee

Director $3,200 2.81 $ 9,000 Senior Consultant $1,600 3.75 $ 6,000 Totals 6.56 $ 15,000

For this engagement, we estimate that the total professional fees for the services outlined in this letter will be as follows: Estimated Professional Fees Fair Market Valuation Analysis $ 30,000 Operating Comparison Analysis $ 32,000 Community Benefit Analysis $ 15,000 Total $ 77,000 In addition to our professional fees, we also require reimbursement for expenses, including travel, lodging, database access charges, research materials, delivery services, and other direct and indirect expenses. Our out-of-pocket expenses typically do not exceed 10 percent of professional fees. Our maximum professional fees and expenses (including all overhead and out-of-pocket expenses) are not expected to exceed $85,000. The quoted professional fees and rates are valid for 120 days We will issue progressive invoices monthly with the balance due upon conclusion of the engagement. If the scope of our engagement materially changes, we will mutually agree with CCBH on a revision to Navigant’s fee prior to commencing any of the changed work prior to beginning any additional work. PRICING STRUCTURE - SPECIAL ENGAGEMENTS OR ADDITIONAL SERVICES Navigant is committed to assisting our clients with unforeseen needs that may arise during or after our primary scope of work process. Unforeseen needs may include, but may not be limited to:

Public Hearing Support Navigant professionals are available to assist and support the Board during public hearings if our presence is requested. Pricing for public hearing support services will be based on a time and materials basis. Litigation or Regulatory Support Navigant professionals are available to participate in any litigation or regulatory proceeding activities, including document retrieval, subpoena response, expert testimony, depositions, and other services required of Navigant to assist you in preparation for such proceedings). Should support be required, pricing will be based on a time and materials basis. Qualified Purchaser or Lessee Assessment Support The amendment to Florida Statutes Section 1. 155.40 states that:

if, upon completion of the evaluation of the benefits of the sale or lease, the governing board of a county, district, or municipal hospital determines that it is no longer in the best interest of the affected community to own or operate a hospital or health care system and elects to consider a sale or lease of the hospital or health care system to a third party, the governing board must first determine whether there are any qualified purchasers or lessees…

Should transaction support be required, pricing will typically be a combination of retainer and success fee that is negotiated with client. For other special engagements or additional service needs, Navigant will gain a full understanding of the Board’s needs and structure a pricing arrangement on a time and materials basis.

V. BIDDERS GENERAL INFORMATION

CONTACT PERSON DEALING WITH THE PROPOSAL Jerry Chang, Director and leader of Navigant’s Health Care Valuation and Financial Advisory Practice is the primary contact person dealing with the proposal OVERALL RESPONSIBILITY FOR THE CONTRACT Jerry Chang will lead the entire project and assure that all components are integrated in the final valuation report. Peggy Cella will lead the operating comparison analysis and community benefit analysis component of the engagement. Senior level professionals will take primary responsibility for each of the three key components of the project. Project team bios are provided in Appendix A. CONFIRMATION OF ACCEPTANCE BY THE BIDDER AND ANY THIRD PARTIES OF THE TERMS AND CONDITIONS OF THE TENDER Navigant Consulting hereby accepts the terms and conditions as stated in Appendix A of the Citrus County Request for Proposal No. 000-10 v1 dated November 15, 2012. CONFIRMATION OF ACCEPTANCE BY THE TENDERER AND ANY THIRD PARTIES REGARDING OVERALL RESPONSIBILITY FOR SUCCESSFUL DELIVERY Navigant Consulting hereby accepts the overall responsibility for successful delivery as stated in the Citrus County Request for Proposal No. 000-10 v1 dated November 15, 2012.

VI. BIDDERS PROFILE

LENGTH OF TIME IN EXISTENCE Navigant’s healthcare consulting practice has been in existence for eight years; however, we have grown elements of our business through acquisition and several of these notable firms have been operating for over twenty years. The acquisitions range from The Hunter Group (specializing in Interim Executive Management and Turnaround services) to the Tiber Group (specializing in Strategy development for hospitals and health systems) to HP3 and AMDC

(Specializing in Clinical Documentation Improvement and Facilities Planning, respectively). Our organic growth, coupled with these focused, strategic acquisitions, has enabled Navigant’s healthcare practice to outpace the competitive consulting landscape. NUMBER OF EMPLOYEES Navigant Consulting, Inc. has more than 1,800 consultants and approximately 2,500 employees. BRIEF DESCRIPTION OF THE COMPANY’S PRINCIPAL AREAS OF ACTIVITY Navigant provides independent consulting services across industries undergoing substantial regulatory or business-model change. Representative industries include:

• Construction • Energy • Financial Services • Healthcare • Government / Public Services • All Industries

Navigant provides customized services and support to address critical business issues and enhance stakeholder value. We help clients respond to changing industry regulations and critical market factors that generate uncertainty and corporate exposure. Our solutions lead to conflict resolution, optimized performance and effective risk mitigation for our clients. Navigant services include:

• Disputes & Investigations • Economics • Financial Advisory • Management Consulting

Navigant is headquartered in Chicago, Illinois and has offices throughout the world, including core offices in London, Los Angeles, New York, San Francisco, and Washington, DC. Navigant’s dedicated Healthcare Valuation and Financial Advisory services practice consists of professionals with extensive experience valuing businesses, partial ownership interests, current assets, fixed assets, real property, intangible assets, service arrangements, lease arrangements, and compensation arrangements related to hospitals and health systems.

Navigant has valued over 100 hospitals and health systems across the U.S. under the FMV standard, including acting as the consultant to several state Attorney General offices with similar regulatory compliance valuation and assessment assignments. Navigant’s Healthcare Valuation and Financial Advisory services team is comprised of business valuation, real property valuation, and fixed assets valuation specialists. Over the past 30 years, Navigant consultants have completed numerous consulting engagements projects for hospitals, physician groups, ambulatory care programs, hospice, and home health organizations throughout Florida. Our work efforts have incorporated the wide breadth of consulting experience of our professional staff, including valuation analysis, merger and acquisition analysis, regulatory Certificate of Need development (including expert witness testimony), market needs assessment, strategic planning studies, financial analysis, new hospital and service development efforts, physician affiliation analysis, compensation analysis, and employment, supply chain analysis, revenue enhancement, and performance improvement projects. These projects routinely utilized publically available Florida data, including but not limited to:

• AHCA financial data sets • FHURS • AHCA Florida Hospital Inpatient Discharge Data • AHCA Department of Health Office of Vital Statistics Annual Report of Births • Florida Hospital Bed Need Projections and Service Utilization by District • Other service specific need program utilization and District Planning Area statistics (as

available) • For quality of care reporting, we also are well versed in the use and availability of CMS

quality core measures.

IDENTITY OF KEY PERSONNEL RESPONSIBLE FOR CARRYING OUT EACH SERVICE/TASK Senior level professionals, all located in the Atlanta, Georgia office, will take primary responsibility for each of the three key components of the project. Jerry Chang, the leader of Navigant’s dedicated Healthcare Valuation and Financial Advisory practice, will lead the entire project and assure that all components are integrated in the final valuation report. Project team bios are provided in Appendix A.

TECHNICAL KNOWLEDGE OF THE PERSONNEL RESPONSIBLE FOR EACH TASK JERRY M. CHANG, CFA- DIRECTOR Chartered Financial Analyst (CFA), 1999 MBA, Emory University, 1995 BBA Finance (cum laude), Georgia State University, 1992 PEGGY MILLER CELLA-DIRECTOR

Masters of Science – Hospital and Health Services Administration, University of Alabama, Birmingham Bachelor of Science, School of Commerce and Business Administration, University of Alabama, Tuscaloosa JOHN L. LEARY – ASSOCIATE DIRECTOR Chartered Financial Analyst (CFA), 1988 Certified Public Accountant (CPA), 1986 (Inactive Permit) MBA Finance, Georgia State University, 1980 BA Economics and Political Science, Emory University, 1978 QUALIFICATION OF PERSONNEL RESPONSIBLE FOR EACH TASK. Jerry M. Chang, CFA – 19 years experience in healthcare valuation consulting Peggy Miller Cella- 30 years experience in healthcare strategic needs assessment consulting John Leary, CFA- 23 years experience in healthcare valuation consulting

VII CUSTOMER BASE

Navigant’s client base includes public, for-profit and nonprofit hospitals and health systems located around the world.

VIII. FINANCIAL DETAILS

Navigant Consulting is a publicly traded (NYSE: NCI) with 2011 revenues totaling $785 million and earnings before interest taxes depreciation and amortization totaling $98 million See: SEC Form 10K http://www.sec.gov/Archives/edgar/data/1019737/000119312512067394/d282198d10k.htm

IX. TECHNICAL CAPABILITY

Navigant professionals have the requisite experience and credentials to assist clients in responding to current – and prepare for prospective – business challenges. Professional certifications and designations that contribute to the Navigant composite include:

• Chartered Financial Analysts (CFA) • Certified Public Accountants (CPA) and Chartered Accountants (CA) • Certified Fraud Examiners (CFE) • Certified Internal Auditors (CIA) • Certified Management Accountants (CMA) • Certified Anti-Money Laundering Specialists (CAMS) • Certified Insolvency & Restructuring Analysts (CIRA) • Investigative and Forensic Accountant (IFA) • Valuation/Appraiser Certifications (ASA, AVA, CBV, CVA) • FINRA Series 7, 24, 63 • Juris Doctor (JD) • Philosophiae Doctor (PhD) • Professional Engineers (PE) and licensed architects • Healthcare experts degreed in science, medicine and health administration including

doctors, registered nurses, physical therapists and professional coders • Certified Information Security Professionals (CISSP) • Six Sigma Green & Black Belts



X. QUALITY CERTIFICATION

At Navigant, we have implemented a rigorous firm-wide Client Satisfaction Program to conduct in-person interviews with our most valued clients. Client Satisfaction Survey teams, comprised of senior members of our firm, meet with our clients and solicit candid feedback and quantitative ratings on their satisfaction with our teams, communication, management of the engagement and overall performance of our expertise, services and deliverables. From this feedback, we gain valuable insights on how to improve our performance after assessing the results of these external quality control reviews. Navigant has a standard approach when commencing and mobilizing for new projects. Navigant advocates that the client host an on-site project “kick-off” meeting with the client’s primary project liaisons and Navigant. At this meeting, we work with the project liaisons to identify, verify, or establish communications protocols, project timelines, deliverables, checkpoints, information and data required, and client time commitments. The kick-off meeting should provide an opportunity to introduce our staff to the client as well as establish the project plan and expectations for the project. If client subject matter experts will take part in the project or if the outcome of the project will impact other client personnel besides the liaisons, a subsequent project kick-off meeting may be held to familiarize the client’s personnel with the project and the expected deliverables or outcome. Following the kick-off meeting, work will commence on the project according to the project plan established at the kick-off meeting and standard project management activities will commence. These include weekly (or other agreed upon intervals) status reports, status meetings or conference calls, interim deliverables or presentations, and other agreed upon checkpoint actions. The standard project commencement approach utilized by Navigant has proven successful in years of consulting engagements. For all of our process improvement projects we include a senior-level quality control officer as part of our project team structure. For all deliverables, we apply peer and one-over-one reviews of the work product. Where applicable, we perform plausibility and causality checks. We double check or, where possible, triangulate our results with our industry experts on our project team.

XI. INDUSTRY STANDARDS

Navigant and its employees are members of many industry trade associations in various U.S. states and around the world. Navigant’s analyses will be governed by best practices and generally accepted industry standards.

XII. RELEVANT SERVICES

Navigant Healthcare performs hundreds of engagements annually that involve the estimation of fair market value of healthcare entities and the performance of strategic and operational assessments.

XIII. SPECIFIC SKILLS AND EXPERIENCE

Navigant Healthcare has specific valuation and strategic consulting experience with 17 hospitals and health systems located in the State of Florida and 287 hospitals and health systems in the United States.

XIV. DETAILS OF MANAGEMENT AND KEY PERSONNEL

Fair Market Value Appraisal Team Jerry Chang, CFA Director John Leary, CFA Associate Director Comparative Analysis Team Peggy Cella Director John Leary Associate Director Community Benefit Assessment Team Peggy Cella Director John Leary Associate Director

APPENDIX A: KEY PERSONNEL

Jerry M. Chang, CFA

Jerry M. Chang, CFA Director Navigant Consulting, Inc. 1180 Peachtree Street, NE, Suite 425 Atlanta, Georgia 30309 Tel 404-602-3462 Fax 404-575-4213 Cell 404-512-5422 [email protected] Work Experience Navigant Consulting, Inc., 2004-Present Director, Valuation Services Group Ernst & Young, LLP, 2003-2004 Manager, Valuation Services Group CareerBuilder, Inc., 2000-2002 Director of Corporate Development KPMG LLP, 1995-2000 Manager, Valuation Services Group Investors’ Fiduciary Svcs, Inc., 1992-1994 Corporate Financial Analyst Educational and Professional Chartered Financial Analyst (CFA), 1999 MBA, Emory University, 1995 BBA Finance (cum laude), Georgia State University, 1992 Professional Associations CFA Institute Atlanta Society of Financial Analysts (ASFA)

Jerry M. Chang is a Director in the Healthcare Strategy practice in Atlanta where he serves as Navigant’s business unit leader for Healthcare Valuation and Financial Advisory Services. Mr. Chang is responsible for valuation analysis and financial advisory services for clients seeking support related to transaction planning, strategic decision making, regulatory compliance, litigation/arbitration expertise, financial reporting, and tax compliance. Mr. Chang has over 19 years of corporate finance and valuation experience and specializes in valuing businesses, equity interests, partnership interests, intangible assets, professional services, stock options, and tangible assets. Prior to joining Navigant Consulting, Mr. Chang held managerial positions with the valuation services practices of Ernst & Young LLP and KPMG LLP where he performed services for clients in a wide variety of industry segments, including health care, aerospace/defense, manufacturing, retail, distribution, technology, media, and financial services. Mr. Chang began his financial and business analysis career at Investors’ Fiduciary Services, Inc. (sold to Institutional Shareholder Services, Inc.) where he consulted institutional investors on corporate governance and shareholder value issues. Health Care Provider and Payer Representative Experience Most projects performed for transaction planning and/or regulatory compliance purposes, including compliance with the Medicare and Medicaid fraud and abuse laws (Anti-Kickback Statute), Physician Self Referral Regulation (Stark), and IRS 501(c)(3) (Private Inurement/Private Benefit)

• Valued over 150 physician practices across a variety of different specialties for transaction purposes and regulatory compliance. Practices ranged from sole practitioners to large multi-specialty physician groups

• Provided valuation analysis for numerous ambulatory surgery centers, including multi-specialty centers and single specialty centers for transaction purposes and regulatory compliance.

• Provided valuation and pricing analysis related to for-profit and

Jerry M. Chang, CFA Director (Continued) Healthcare Financial Management Association (HFMA) – Georgia Chapter American Health Lawyers Association (AHLA) Testimony Experience Provided deposition as a valuation expert witness in the State of Illinois regarding a dispute involving a podiatry practice and a healthcare insurance company. Provided deposition and court testimony as a valuation expert witness in the State of New Hampshire regarding a hospital ownership dispute. Provided a Rule 26 expert report and deposition in a Federal case involving the valuation of healthcare operational software. Provided arbitration testimony as a valuation expert witness in the State of California regarding a pharmacy shareholder dispute. Provided deposition and court testimony as a valuation expert witness in the State of Florida regarding a surgery center shareholder dispute.

not-for-profit urban and rural acute care and specialty hospitals across the United States for transaction purposes and regulatory compliance.

• Provided fair market value opinions related to physician services compensation, management services agreements, medical director compensation, call coverage compensation, and equipment leases for regulatory compliance purposes.

• Provided numerous fair market value analyses related to other health care entities for transaction purposes and regulatory compliance including:

o Diagnostic imaging centers o Managed care and health plans

o Radiation treatment o Physical therapy/rehab clinics

o Cardiac catheterization labs o Practice management entities

o Dialysis centers o Nursing homes

o Neurosurgery o HMOs/PPOs/MSOs

o Fertility lab o Clinical/anatomic labs Hospitals

• Performed a fair market valuation analysis of a 347-licensed bed, nonprofit hospital in connection with a State Attorney General office’s review of a proposed joint venture with an investor-owned hospital company.

• Performed a fair market valuation analysis of a 367- licensed bed, nonprofit hospital in connection with a State Attorney General office’s review of a proposed joint venture with an investor-owned hospital company.

• Performed a fair market valuation analysis of a 230-bed, nonprofit acute care hospital in connection with a State Attorney General office’s review of the proposed sale of the hospital to a for-profit entity.

• Performed a fair market valuation analysis of a 189-bed acute

Jerry M. Chang, CFA Director (Continued)

care hospital related to the sale of physician shareholder equity ownership interests for transaction planning and regulatory compliance purposes.

• Performed a fair market valuation analysis of a 350-bed children’s hospital and a 220 bed pediatric unit of a general acute care hospital for joint venture planning purposes.

• Performed a fair market valuation analysis of a health system

that included three hospitals with a combined 350 beds and 23 primary care and specialty health clinics for transaction planning purposes.

• Performed a fair market valuation analysis of a 60-bed rural for-profit hospital in Alabama for strategic planning and regulatory compliance purposes.

• Performed a fair market valuation analysis of a 300-bed general acute care hospital in Ohio related to a joint operating agreement.

• Performed a valuation analysis for an 800-bed public acute-care hospital in Texas in order to determine a range of reasonable offer prices for a potential acquisition of a private not-for-profit hospital.

• Performed a fair market valuation analysis for a 70-bed, non-profit community hospital in Mississippi for transaction planning purposes.

• Performed a fair market valuation analysis for a 25-bed rural non-profit hospital for regulatory compliance purposes.


Specialty Practices

• Performed a fair market value analysis of an ambulatory surgery center focused on infertility, gynecology, urology, and plastic surgery for transaction planning and regulatory compliance purposes.

• Performed a fair market value analysis and pro forma strategic analysis of the largest pulmonary physician practice in the State of Georgia.

• Performed a fair market value analysis of one of the largest

private oncology and hematology practices in the U.S.

• Performed a fair market value analysis of a podiatry practice for litigation support purposes.

• Performed a fair market value analysis of two hemo and

peritoneal dialysis centers for joint venture planning and regulatory compliance purposes

• Performed a fair market value analysis of a multi-physician,

multi-specialty practice that included a diagnostic imaging business, gastroenterology, physical therapy, podiatry, and an immediate care clinic for transaction planning and regulatory compliance purposes.

• Performed a fair market valuation and a synergy pricing

analysis of a multi-physician anesthesiology practice for strategic and transaction planning purposes.

• Performed a fair market valuation analysis of a multi-modality

diagnostic center for transaction planning and regulatory compliance purposes.

• Performed an analysis of a specialty pharmacy valuation for

arbitration support purposes. Project included being qualified as an expert rebuttal witness and arbitration testimony.


• Performed a fair market value analysis of a long term specialty

pharmacy company for transaction planning purposes.

• Performed a fair market value analysis of an ophthalmology surgery center for litigation support purposes. Project included being qualified as an expert witness, deposition, and testimony.

• Performed a fair market value analysis of a neurosurgery

practice that included an MRI business and a spine and rehabilitation practice for transaction planning purposes.

• Performed a fair market value analysis of two large cardiology

practices for transaction planning purposes.

• Performed a fair market value analysis of a hospital endoscopy lab for joint venture planning purposes.

• Performed a fair market value analysis of an orthopedic surgery

center for transaction planning purposes.

• Performed a fair market value analysis of a hand surgery center for transaction planning purposes.

Managed Care and Payer Services Companies

• Performed a fair market valuation analysis of a 350,000-member HMO, PPO, and administrative services health plan company owned by a healthcare system for strategic and transaction planning purposes.

• Performed a valuation analysis of a Medicaid managed care plan in connection with a petition filed by our client to the New York Attorney General and New York Supreme Court related to a proposed sale of assets.


• Performed a fair market valuation analysis of the total membership ownership interest in an 80,000-member provider service network focused on Medicaid enrollees.

• Performed a valuation analysis of a medical management

services company focused on catastrophic care management for management planning and regulatory compliance purposes.

• Performed a valuation fairness opinion of a health optimizing

solutions company focused on critical care and disease management for payer customers.

• Performed a pricing analysis of a county-owned Medicaid HMO

for strategic and transaction planning purposes.

• Performed a fair market value analysis of a third party administrator and managed care company.

• Performed a fair market valuation of warrants related to a third

party administrator for financial reporting purposes.

• Valued customer relationships and a provider network related to a managed care company for financial reporting purposes.

Compensation and Services Agreements

• Performed a fair market value analysis related to administrative services, employee lease, purchased services, and IT services provided to an orthopedic hospital co-located within an acute care hospital.

• Performed a fair market value analysis related to call coverage agreements for orthopedic, general surgery, and obstetrics specialties for regulatory compliance purposes

• Performed a fair market value analysis of fees charged to

physicians for certain administrative and marketing services for


regulatory compliance.

• Performed a fair market compensation analysis related to a physician providing anesthesiology services and related medical directorship services for regulatory compliance purposes

• Performed a fixed rate and per-use fair market rate analysis

related to a Gamma Knife leasing arrangement for strategic planning and regulatory compliance purposes.

• Performed a fair market compensation analysis related to an

orthopedic outreach program for regulatory compliance purposes

• Performed a fair market compensation analysis related to critical

care (ICU) coverage for regulatory compliance purposes.

• Conducted a comprehensive valuation analysis of fair market rates related to the facility fee portion of global payments for a University hospital clinic for regulatory compliance purposes.

Other Assets

• Valued a wide variety of intangible assets related to healthcare entities for transaction planning, regulatory compliance, and financial reporting purposes, including assembled provider and non-provider workforce, medical records, trademarks, trade names, non-compete agreements, Certificate of Need (“CON”), and other licenses.

Presentations and Publications

• “Evolving Physician Compensation and Asset Valuation Compliance Issues”; Co-Presenter at the 16th Annual Jones Day/Navigant Consulting Health Care Compliance Forum, October 2012


• “Masters Class: Tackling the Tough Issues in Transaction and

Physician Arrangements”; Panelist at the 16th Annual Jones Day/Navigant Consulting Health Care Compliance Forum, October 2012

• “Evaluation and Valuation: Key Considerations When Analyzing

a Potential Public Health System Transaction”; Co-Presenter on American Health Lawyers Association (AHLA) Public Health System Affinity Group webinar, September 2012

• “Issues in Physician Practice Valuations: Assets and

Compensation”;

• Co-Presenter at the 20th Annual King & Spalding Health Law and Policy Forum, March 2011

• “Ask the Experts Panel”; Panelist at the 13th Annual Jones

Day/Navigant Consulting Health Care Compliance Forum, October 2009

• “Healthcare Valuation Issues Related to Transaction Planning

and Regulatory Compliance”; Continuing Legal Education (CLE) presentation to Delnor-Community Hospital and Chicago Compliance Consortium, July 2009


and Regulatory Compliance”; Continuing Legal Education (CLE) presentation to HealthSouth Corporation, June 2009


and Regulatory Compliance”; Continuing Legal Education (CLE) presentation to the University of Kentucky HealthCare System, February 2009

• “Understanding Fair Market Value”; Presenter at the University

of Kentucky HealthCare Corporate Compliance Conference, November 2008


• “Hospital-Physician Joint Venture Models and Valuation Considerations Post Stark/IDTF Changes”; Co-Presenter at the 12th Annual Jones Day/Navigant Consulting Health Care Compliance Forum, October 2008

• “Fair Market Value: What Does It Mean and What Lawyers

Should Know?”; Co-Presenter at the 10th Annual Jones Day/Navigant Consulting Health Care Compliance Forum, October 2006

• “Navigating Fair Market Value (Safely) in the Healthcare

Industry”; Valuation Viewpoints (Navigant Capital Advisors quarterly newsletter), 2006

• “The Rise and Fall of Physician Practice Management

Companies”; KPMG LLP Quarterly Healthcare Valuation Newsletter, 1999

Peggy Miller Cella Director

Navigant Consulting 3325 Paddocks Parkway Suwanee, GA 30024 Tel: 770-814-4480 Fax: 678-623-3673 [email protected]

Professional History • EthosPartners

Education • Masters of Science – Hospital and

Health Services Administration, University of Alabama, Birmingham

• Bachelor of Science, School of Commerce and Business Administration, University of Alabama, Tuscaloosa

Committees/Associations/Affiliations • Healthcare Financial Management

Association • Women Healthcare Executives – Board

Member • Past Program Chairperson, American

Hospital Association’s Assembly of Ambulatory, Home Care, and Emergency Services Annual Meeting

Peggy Miller Cella

Professional Experience

Ms. Cella has over 30 years of health care experience in both hospital operations and healthcare consulting. Ms. Cella has extensive experience in the operational and strategic issues faced by hospitals. As a healthcare consultant, Ms. Cella assists a diverse hospital client base ranging from small acute care hospitals in rural markets, multi-hospital systems, and statewide organizations. Ms. Cella has extensive experience in modeling market demand and in assessing the impact of socioeconomic and payor factors on market demand for services. » Served in Senior Management positions at three academic medical centers.

» Managed hospital and system strategic planning projects located in large urban, mid-size, and rural markets.

» Managed master facility planning projects and focused facility needs assessments in twelve states.

» Provided Certificate of Need assistance in nine States. Qualified as a health planning expert in Georgia, Florida, and West Virginia.

» Managed statewide strategic planning for large health care systems and state agencies.

» Managed targeted specialty services strategy projects including joint venture program development, cardiology program planning, women’s services, transplant services, ortho/neuro, and behavioral health programs.

» Selected by multiple architectural firms to complete the strategic and market planning components of architecturally driven master planning projects.

» Board and management retreat facilitation

Seminars and Publications

» Moderator: Georgia ACHE Chapter: “Physician Integration – Approaches and Pitfalls”. Atlanta, Georgia. September 2009.

» Webinar: “Is the Primary Care System in Our Community a Sustainable Business Model for the Future?” Noblis Webinar Series. June 9, 2009.

» Webinar: “Top HealthCare Trends in 2009”. Noblis Webinar Series. December 9 and 18, 2009. » Georgia Hospital Association Annual Meeting. “Strengthening Physician-Hospital

Relationships”. February 7, 2008. Atlanta Georgia. » Seminar: Where We Are Now: Receiving Payment for Psych and Rehab under PPS, Iowa

Hospital Association, Des Moines, Iowa. August 2006. » Seminar: Preparing for Psych PPS, Iowa Hospital Association, Des Moines, Iowa, February 2005. » Keynote Address: The Future of U.S. Healthcare: Directions in Healthcare Delivery. Architecture

Magazine Healthcare Care Seminar. Atlanta, GA. November 2004. » Peggy M. Cella and Armand E. Balsano, Healthcare Insights, “Cardiac Services – Where Do We

Go from Here? August 2004. » Healthcare Financial Management Association, Alabama Chapter, Annual Meeting, Destin

Florida, “Meeting Capital Funding Requirements without New Debt”, July 28, 2004. » Healthcare Financial Management Association-Alabama Chapter - Fall Institute, Birmingham

Alabama, “EMTALA”. November 2003. » Healthcare Financial Management Association, Alabama Chapter Annual Meeting, Destin Florida,

“Service Line Growth Trends – What to Expect over the Next Five Years,” June 2003. » Georgia State, Graduate Program, Health Care Policy Trends – Lecture, November 2002. » Health Care Financial Management Association, Summer Institute – Alabama Chapter, “Needs

Assessment Planning-Positioning for the Future,” August 2001. » Health Care Financial Management Association, Fall Institute – Alabama Chapter, “To Be or Not

to Be in Post Acute Care Services Under PPS Reimbursement,” November 2000.

John L. Leary, CFA

John L. Leary, CFA Associate Director Navigant Consulting, Inc. 3325 Paddocks Parkway, Suite 425 Suwanee, Georgia 30024 Tel 678-845-7696 Fax 678-679-1498 Cell 678-429-8899 [email protected] Employment Navigant Consulting, Inc., 2011-Present Associate Director, Healthcare Valuation Services Group CBIZ Valuation Group, LLC, 1989-2011

Director, Southeastern Financial Valuation Services

Carnegie Securities Corporation, 1987- 1989 Vice President Investment Analysis Storer Cable Communication , 1980-1987 Regional Controller Educational and Professional Chartered Financial Analyst (CFA), 1988 Certified Public Accountant (CPA), 1986

(Inactive Permit)

MBA Finance, Georgia State University, 1980 BA Economics and Political Science, Emory University, 1978

John L. Leary is an Associate Director in the Healthcare Valuation Services practice in Atlanta. Mr. Leary is responsible for valuation analysis and financial advisory services for clients seeking transaction/partnership support, financial reporting, strategic decision making, tax compliance, regulatory compliance, and litigation/arbitration support. Mr. Leary has over 20 years of corporate finance and valuation experience and specializes in valuing businesses, equity interests, partnership interests, intangible assets, stock options, and tangible assets. Prior to joining Navigant Consulting, Mr. Leary was a Director of a national valuation practice where he performed services for clients in a wide variety of industry segments, including health care, pharmaceuticals, financial services, technology and manufacturing. Mr. Leary began his career with Storer Cable Communications (acquired by Comcast) managing the financial affairs of cable television operations in five southeastern states. Health Care Provider and Payer Representative Experience Most projects performed for transaction planning and/or regulatory compliance purposes, including compliance with the Medicare and Medicaid fraud and abuse laws (Anti-Kickback Statute), Physician Self Referral Regulation (Stark), and IRS 501(c)(3) (Private Inurement/Private Benefit) • Providing fairness opinions for hospitals transactions. • Providing fair market value analysis for tax-exempt bond offerings

for healthcare facilities financing. • Valuing physician practices being acquired by both not for profit

and for profit health systems. • Providing valuation analysis for hospital affiliated ambulatory

surgery centers, including multi-specialty centers and single specialty centers for transaction purposes and regulatory compliance.

• Providing valuation analysis for Health Maintenance Organizations.

• Providing fair market value opinions related to physician services

John L. Leary, CFA Associate Director (Continued) Professional Associations CFA Institute Atlanta Society of Financial Analysts (ASFA) Testimony Experience Provided court testimony as a valuation expert witness in Circuit Court for Sarasota County Florida regarding damage claims in a physician practice management dispute Provided deposition and court testimony as a valuation expert witness in the Superior Court of Chatham County GA regarding a physician practice acquisition dispute. Provided testimony as a valuation expert witness in arbitration proceedings in the State of Florida regarding the terms of an employment contract. Provided deposition testimony as a valuation expert witness in arbitration proceedings in the State of Georgia regarding an equity interest in a company that owned five community hospitals.

compensation, management services agreements, medical director compensation, call coverage compensation, and equipment leases for regulatory compliance purposes.

• Providing fair market value analyses related to other health care entities for transaction purposes and regulatory compliance including:

Radiation treatment Psychiatric hospitals

Cardiac catheterization labs Practice management entities

Clinical Laboratories

Pharmaceutical research

LTAC facilities

Home health agencies

Hospitals • Delivered a fairness opinion for the sale of a not for profit hospital

to a publicly traded hospital management company in a transaction that was reviewed and upheld by a State Attorney General.

• Performed a fair market valuation analysis of a 400-bed, nonprofit, urban, acute care hospital being acquired by a for profit hospital management company.

• Performed fair market valuations of community hospitals located in 20 States.

• Performed a valuation analysis of a portfolio of tax exempt bonds backed by healthcare facilities located throughout the United States.

• Performed fair market valuation analysis for whole hospital joint ventures with physician investors.

Specialty Practices • Performed a fair market value analysis of management agreements

for a chain of eight hemo and peritoneal dialysis centers for internal planning purposes.

• Performed a fair market value analysis of a multi-state freestanding diagnostic imaging company being acquired by a publicly traded operator of outpatient and inpatient rehabilitation facilities.

• Performed an analysis of a specialty pharmacy and pharmacy benefit management company for financial reporting purposes.

• Performed a fair market value analysis of a hospital endoscopy lab for joint venture planning purposes.

• Performed a fair market valuation analysis of a physician owned multispecialty ambulatory surgery center being acquired by a not-

John L. Leary, CFA Associate Director (Continued)

for profit health system for regulatory compliance purposes. Payers and Payer Services Companies • Performed a fair market value analysis of a provider owned

Medicaid health maintenance organization serving more than 200,000 members being acquired by a publicly traded managed care company.

• Performed a fair market value analysis of a Medicare Advantage health maintenance organization serving approximately 25,000 members.

• Performed a fair market valuation of a workers compensation insurance carrier for transaction purposes.

Compensation and Services Agreements • Performed a fair market value analysis related to call coverage

agreements for anesthesiology and cardiology practices for regulatory compliance purposes.

• Performed a fair market value compensation analysis related medical directorship services for regulatory compliance purposes.

• Performed a fair market value compensation analysis related to incentive stock options for entities engaged in pharmaceutical research and development.

Other Assets • Valued assembled provider and non-provider workforce, medical

records, and other intangible assets related to numerous primary care and specialty physician practices.

• Valued a Certificate of Need (“CON”) being contributed to a hospital joint venture for transaction planning and financial reporting purposes.

• Performed a fair market value royalty rate study for the purpose of licensing certain cardiovascular technology to a not for profit research institution.

APPENDIX B: FINANCIAL STATEMENTS OF BIDDER

See: SEC form 10k http://www.sec.gov/Archives/edgar/data/1019737/000119312512067394/d282198d10k.htm



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