solicitation of interest public information memorandum · disclaimer 1 this public information...

Solicitation of InterestPublic Information Memorandum

October, 22 2018

https://health.uconn.edu/about/path-forward

https://health.uconn.edu/about/path-forward

Disclaimer

1

This Public Information Memorandum (“PIM”) has been prepared on University of Connecticut Health Center (“UConn Health” or “UCH”), based on information from UCH and published sources, and is being furnished through Cain

Brothers, a division of KeyBanc Capital Markets (“Cain Brothers”), as UCH’s exclusive authorized representative, for informational purposes solely for use by qualified prospects in considering their interest in entering into a potential

partnership with UConn Health (a “Transaction”). The information contained herein is subject to change without notice. Neither UCH nor Cain Brothers assumes any responsibility to update any information contained in this PIM or to

inform the recipient of information which may affect this PIM. This PIM has been prepared to assist interested parties in making their own evaluation of UConn Health and does not purport to be all-inclusive or to contain all information

that a prospective partner may desire or that may be required in order to properly evaluate the business, prospects or value of UCH. In all cases, interested parties should conduct their own investigation and analysis of UCH and the data

set forth in this PIM. Industry data and statistics have been obtained or derived from UCH and published industry sources.

By accepting this PIM, the recipient will not reproduce this PIM in whole or in part.

Cain Brothers has not independently verified any of the information contained herein, and neither UCH, Cain Brothers nor any of their respective affiliates makes any representation or warranty (expressed or implied) as to the accuracy or

completeness of this PIM or any statements, estimates or projections contained herein. Such statements, estimates and projections reflect various assumptions made by UCH concerning anticipated results, which are subject to business,

economic and competitive uncertainties and contingencies, many of which are beyond the control of UCH and which may or may not prove to be correct. As a result, no representation or warranty is made as to the feasibility or attainability

of the projected financial information or the accuracy or completeness of the assumptions from which the projected financial information is derived. There can be no assurance that the projections will be realized. Additionally, certain

provisions of various agreements are summarized in this PIM, but interested parties should not assume that such summaries are complete. Such summaries are qualified in their entirety by reference to the complete text of such

agreements. This PIM speaks only as of the date hereof or as of the date indicated. This PIM does not constitute an offer or invitation for the sale or purchase of the securities, assets or business described herein. The only information that

will have any legal effect will be that specifically represented, warranted and contained in a definitive agreement relating to a Transaction and executed by UCH (or one or more affiliate(s)) and a purchaser, and UCH and Cain Brothers

disclaim liability for any loss or damage incurred as a result of any information contained in or omitted from this PIM.

UCH reserves the right to negotiate with one or more qualified prospects at any time and to enter into a definitive agreement relating to a Transaction without prior notice to the recipient or other prospective partners. Further, UCH

reserves the right, at any time, to terminate participation in the investigation and proposal process by any party and to modify any procedures without giving advance notice or providing any reason therefor. UCH also reserves the right

during the evaluation period to take any action, whether within or outside the ordinary course of business.

“Cain Brothers, a division of KeyBanc Capital Markets” is a trade name of Cain Brothers & Company, LLC Member FINRA/SIPC. Cain Brothers & Company, LLC is a wholly-owned subsidiary of KeyBanc Capital Markets Inc. Member

NYSE/FINRA/SIPC.

Cain Brothers & Company, LLC, KeyBanc Capital Markets Inc. and KeyBank National Association are separate but affiliated companies. Securities products and services are offered by Cain Brothers & Company, LLC, KeyBanc Capital

Markets Inc. and their respective licensed securities representatives. Banking products and services are offered by KeyBank National Association. Credit products are subject to credit approval.

Carsten BeithManaging Director

(312) 604-0500

[email protected]

Dave MorlockManaging Director

(312) 604-0575

[email protected]

David LevineVice President

(212) 981-6941

[email protected]

Ethan HallbergAssociate

(415) 962-2930

[email protected]

Drew McCormickAnalyst

(212) 981-6957

[email protected]

Cain Brothers, a division of KeyBanc Capital Markets

Table of Contents

2

Section I. Executive Summary

Section III. Overview of UConn Health

Section IV. Organization and Management

Section V. Market Overview

Section VI. Financial Overview

Appendix

Executive Summary

• History of high-quality research programs has enabled

UCH to recruit distinguished researchers in neuroscience,

molecular biology, molecular pharmacology, biochemistry,

cell physiology, toxicology, and endocrinology

• UCH’s Alcohol Research Center is one of only 27 such

federally supported centers in the nation; the Connecticut

Clinical Chemosensory Research Center is one of only

ten

• UConn Technology Incubation Program – 28,000 sq. ft.

state-of-the-art wet labs/office space for small start-ups

• Located in Farmington, UConn Health is Connecticut’s flagship public

academic health center, with an integrated 3-part mission focused

around Education, Research and Patient Care

• Includes UConn School of Medicine (“SOM”); UConn School of

Dental Medicine (“SODM”); the Graduate School; John Dempsey

Hospital (“JDH”); UConn Medical Group (“UMG”); UConn Dental

Clinics; Research Laboratories; and technology incubation facilities for

start-up companies

• Critical source of the State’s future health care professionals, with 37%

of medicine and 44% of dental graduates practicing in the State

• Essential provider of healthcare and dental services to underserved

populations

Organizational Overview

Overview of UConn Health

4

Overview

Education Research Patient Care

• Enrollment in Fall, 2018 was 408 in SOM, 189 in SODM,

and 324 in the Graduate School.

• Outstanding national board performance and residency

placement

• Residency/GME program boasts 781 residents (675 medical

and 106 dental) who train and provide patient care in local

hospitals and dozens of settings in more than 20

communities across the state

• JDH and UMG make up the combined entity

(referred herein as the “clinical enterprise”)

soliciting a potential partner through this

public-private partnership process

• Provides medical services at seventeen locations

throughout Connecticut

• Essential healthcare provider to CT’s underserved citizens

with ~23% Medicaid inpatient days

• All UConn Health clinical care venues serve as sites for

teaching and learning

Key Statistics

• $758M of total operating revenue in 2017, including $540M of net

patient revenue

• Operating budget of >$1B, including ~$235M in state appropriations

annually

• Employs nearly 5,000 full- and part-time individuals across the clinical,

research, and academic missions, with over 2,300 devoted to the

clinical enterprise

• 10,000 inpatient discharges, 1.1M outpatient encounters and over

35,000 ER visits

• $87M+ in federal and non-federal research grants and contracts in

2017

The three major, interdependent missions of UConn Health, combined with Bioscience Connecticut, contribute to excellence in patient care, teaching, research, technology transfer and commercialization

The UConn Health Ecosystem

5

About Bioscience Connecticut

• Bioscience Connecticut aims to strengthen Connecticut’s position as a

national and global center for bioscience innovation, to grow

enrollment in the medical and dental school and to improve access to

quality health care for Connecticut citizens while simultaneously

securing UConn Health’s future as a top tier academic medical center

• Championed by the Governor and approved by the General Assembly,

the Bioscience Connecticut initiative was enacted in 2011 through

Public Act 11‐75

• Bioscience Connecticut is composed of two major components:

> Infrastructure expansion and renovation – the buildings and facilities that

house doctors and scientists and education and training programs for

medical, dental and graduate students

> Programs to improve access to quality healthcare

• Notable infrastructure achievements include (among many others):

> Incubator Lab: Completed a new 28,000 net sq. ft. building to foster new

business start-ups in the technology and biomedical fields

> New Hospital Tower: Completed a new 169-bed, 384,000 sq. ft.

hospital tower housing the ED, surgery suite, MRI suite, renal dialysis,

among other key patient areas, clinical support and a patient education

space at JDH

> Outpatient Pavilion: Completed a new 306,880 sq. ft. ambulatory care

facility in Farmington, occupied by the Carole and Ray Neag

Comprehensive Cancer Center and other outpatient services

> Lab Renovations: Renovated 205,000 sq. ft. of research facilities

PATIENT

CARE

MEDICAL

AND DENTAL

SCHOOLS

RESEARCH

BIOSCIENCE

CONNECTICUT

ECONOMIC

GROWTH

QUALITY

HEALTHCARE

Revenue from patient

care comprises nearly

50% of operating budget

and helps finance

schools and subsidizes

salaries, tuition, and

operations

Academic influence

precipitates research

interest and thought

leadership necessary for

start-ups and viable

technology transfers

Research stimulates

innovations that attract

business ventures and

build industry, securing

grants and contracts

from outside the State

($100M annually)

Schools provide the

next generation of

premier doctors and

dentists, who

strengthen our

healthcare sector, tax

base and communities

Research enables

schools to stay

competitive and attract

the best faculty and

students

Innovation drives

commercialization and

business development,

as well as bioscience

knowledge and patents

that spur high-skills

research jobs

State appropriation cuts, UCH’s challenging clinical cost structure and the evolving healthcare landscape are driving UCH to find a sustainable, long-term solution via a partnership for the UCH clinical enterprise

Transaction Rationale

6

State Appropriation Cuts:

• Budget adjustments made in the 2018 Legislative Session cut UCH’s state appropriation by $15.4M, bringing the total reduction in FY18 and

FY19 to $32.2M compared to FY17 appropriations

• Today, state appropriations, which are used entirely to pay employee salaries and benefits, fund 22% of UConn Health’s $1+ billion budget –

this dollar amount covers approximately 33% of UCH employee salary and benefits

• Further strain will be put on the clinical enterprise to perform financially to fill in the gap left by budget cuts, although state support is likely

to continue in the near-term

1

Clinical Cost Structure:

• The State’s fringe benefit rates have risen dramatically over recent years, driven by the State’s obligation to service the unfunded pension

liability

• The fringe rate at JDH has risen to an average 71% in FY 2019, compared to an average of just under 30% for other hospitals in CT

• In addition, planned salary increases in FY 2020 and FY 2021, negotiated by SEBAC,(1) will increase salaries for the vast majority of UCH’s

employees, with limits on layoffs until 6/30/2021 for unionized employees hired before July 1, 2017

• There may be opportunities to negotiate changes to the overall collective bargaining agreement cost structure effective July 1, 2021

2

Hospital Consolidation in Connecticut:

• Consolidation among CT hospitals has created larger, integrated delivery systems in the State

• Competitors are expanding rapidly and beginning to create sizeable, limited networks in partnership with third-party payors

• Partnering with a larger system will allow UCH to benefit from economies of scale and more effectively compete in the evolving healthcare

ecosystem

• Partnering will also increase opportunities for UCH residents, fellows, students and researchers

3

____________________

Notes:

1. State Employee Bargaining Agent Coalition that includes Connecticut’s collective bargaining coalition of which there are 7 unions

covering employees at UConn Health

UConn Health Clinical Partnership Opportunity

• The only public academic medical center in Connecticut

• Provides high quality patient care to over one million patients annually, with the clinical

enterprise employing over 2,300

• Educates the next generation of Connecticut’s healthcare providers and is on the cutting

edge of healthcare research and innovation

• Tremendous support from the State through Bioscience Connecticut

• Recently completed a $200M+ Outpatient Pavilion and $300M+ inpatient University Tower

• The inpatient tower was funded through general obligation state bond funds (1)

• System-wide Epic implementation, which went live in April, 2018, was primarily financed

through state bonds

• Low average age of facilities means capex requirements are minimal over the next few years

• Numerous awards and recognitions, including the Joint Commission Gold Seal of Approval ®,

American Heart Association’s Gold Plus Achievement Awards, BlueCross BlueShield

Association Distinctions in Maternity Care and Spine Surgery and Joint Replacement, among

others

• UConn Health is also an American Association of Gynecologic Laparoscopists Center of

Excellence in Minimally Invasive Gynecology

Premier Public Academic

Medical Center in

Connecticut

Brand New, State-of-the-

Art Facilities

Clinical Quality and

Excellence

7

John Dempsey Hospital, combined with UMG, has accomplished a great deal, and has capacity for further clinical,

operational and financial growth

____________________

Notes:

1. The bonds were issued through the UConn 2000 Act and are represented as a liability on the University of Connecticut’s balance

sheet. The State appropriates monies to the University to offset this liability.

UConn Health Clinical Partnership Opportunity

• Evidenced by lower unemployment, higher median home prices and higher median household

income when compared to state and national averages

• The neighboring communities, from where a significant number of UCH’s patients originate,

have extremely strong per capita income

• Despite negative industry trends, clinical volumes at UCH are strong, with patient days at

John Dempsey Hospital seeing 10+% year-over-year growth from 2017 to 2018

> Patient days growth achieved through true operational improvements, without a corresponding

increase to average length of stay

• Clinical operating initiatives such as lowering length of stay and improving provider

productivity are underway to further improve utilization

• Financial performance has improved materially over the past year

• UCH is at the cutting edge of biomedical research and innovation and has ~$100 million in

extramural research support for the current year

• Patients have access to quality care and the latest clinical trials through Type II Centers in

cardiology, cancer care, musculoskeletal care, breast imaging and geriatrics, as well as other

programs

• Partnering will increase opportunities for UCH residents, fellows, students and researchers

Attractive Demographics

and Market Dynamics

Strong Operating Metrics

Research and Innovation

8

UConn Health’s reasons for exploring a public-private partnership for its clinical enterprise

Partnership Objectives

9

Provide scale and market positioning to enhance UConn Health’s patient volume, clinical performance, and

network expansion

Provide financial sustainability for UCH’s clinical enterprise

Expand and support research opportunities for UConn faculty, including fulfillment of the goals of

Bioscience Connecticut so that it can positively impact the lives of the citizens of Connecticut and the

world

Expand and support the educational mission for the residents, fellows, and students at the UConn School of

Medicine, School of Dental Medicine, and Graduate School, including preserving the integrity of the Schools’

academic affiliations

The University of Connecticut Board of Trustees has delegated to the UConn Health Board of Directors certain responsibility and authority

Organizational Structure

10

University

Board of Trustees

UConn Health

Board of Directors

University of Connecticut

University of Connecticut

Health Center

(UConn Health)

John Dempsey

Hospital

UConn Medical

Group

Central

Administration and

Finance

University of Connecticut Health

Center Finance Corporation

UCHCFC Circle

Road Corporation

UConn Health

Pharmacy Services

Inc.

School of MedicineSchool of Dental

Medicine

Educational Clinics

(includes University

Dentists)

Clinical enterprise

____________________

Notes: UMG providers are faculty members of The School of Medicine

$375 $395 $437

$102 $103 $110

$477 $499 $547

2016 2017 2018

JDH UMG

Clinical Enterprise Financial Summary

Salaries and Fringe Benefits

Payor Mix (2018)(3)

Revenue(1)

Total Capital Expenditures(2)

($ in millions)

$233 $258 $277

$136 $144 $139 $369

$402 $416

77% 80% 76%

56%

70% 74%

2016 2017 2018

UMG Salaries & Benefits JDH Salaries & Benefits

Salaries & Benefits as % of Revenue Fringe as % of Salaries

($ in millions)

$10

$296

$57 $27

86.3%

2095.4%

231.9% 103.4%

(5000.0%)

(4000.0%)

(3000.0%)

(2000.0%)

(1000.0%)

0.0%

1000.0%

2000.0%

2015 2016 2017 2018

Capital Expenditures Capex as % of Depreciation

($ in millions)

____________________

Notes:

1. Eliminating entries of ~$4M pre year are subtracted from UMG revenue

2. Includes Transfers from UConn Health for New Hospital Tower of $273.3M and $21.3M in 2016 and 2017, respectively.

3. Unaudited year-to-date April 2018

Commercial / HMO

31% Medicare28%

Medicaid23%Managed

Medicare

13%

Self-Pay / Other

5%

Gross Patient Revenue Net Patient Revenue

Commercial / HMO

43%

Medicare25%

Medicaid18%

Managed Medicare

10%

Self-Pay / Other

4%

11

Overview of UConn Health

Our Mission

13

UConn Health is dedicated to helping people achieve and

maintain healthy lives and restoring wellness/health to

maximum attainable levels.

In this quest, UConn Health will continuously enable students,

professionals and agencies to promote the health of

Connecticut’s citizens. UConn Health will consistently pursue

excellence and innovation in the education of health

professionals; the discovery, dissemination and utilization of

new knowledge; the provision of patient care; and the

promotion of wellness.

“

”

UConn Health has been on the cutting edge since its inception. Recent capital improvements have brought the campus even further into the 21st century

History

14

1881 – The University of

Connecticut is founded

2012 – UConn, in

partnership with the

State, launches Bioscience

Connecticut

2015 – UConn Health

opens its new state-of-

the-art Outpatient

Pavilion 2016 – UConn Health

completes the

construction of

University Tower

1961 – UConn Health

is established

1975 – John Dempsey

Hospital opened in

Farmington, CT

2014 – Jackson

Laboratory for Genomic

Medicine opens on

UConn Health’s campus

Overview of UConn Health Entities

15

Entity Description

UConn Health

An organizational unit of the University of Connecticut, UConn Health is a comprehensive state-owned academic medical center, which has the traditional

tripartite missions of education, patient care and research as well as community service and public health. Its main campus is located in a complex of buildings in

suburban Farmington, Connecticut. UConn Health was established in 1961 and is currently comprised of the School of Medicine, the School of Dental Medicine

and their associated Educational Clinics, the Graduate School, John Dempsey Hospital, University Medical Group, University of Connecticut Health Center

Finance Corporation, research laboratories, a health sciences/medical library and administrative and other support facilities. It operates more than 400 clinical

and educational programs throughout Connecticut and is a referral center for persons with certain illnesses requiring complex patient care.

John Dempsey Hospital

JDH has 234 licensed beds (193 staffed), and is located in Farmington, a suburb of Hartford. It serves as a primary teaching hospital for the Schools of Medicine

and Dental Medicine, and participates in the clinical education of students from other health profession education programs. JDH provides a full range of

services, including surgery, medicine, cardiac care, psychiatry, and obstetrics and gynecology. JDH is also the focus of specialized services, including programs for

the treatment of arthritis, lupus, alcoholism, cancer, hemophilia, high-risk pregnancies, dental diseases in the handicapped, and taste and smell deficiencies. JDH

also provides emergency dental care through an agreement with the Educational Clinics.

UConn Medical Group

The faculty practice of UConn Health, UMG is a key component of UConn Health's integrated health care delivery system. UMG operates as a separate,

identifiable entity of UCH. As one of the largest medical practices in Greater Hartford, UMG has an extensive array of ambulatory care clinics and over 420

providers offering over 50 specialty care services as well as primary care.

Finance Corporation

The University of Connecticut Health Center Finance Corporation (“Finance Corporation”) was established in 1987 pursuant to Public Act No. 87-458. The

purpose of the Finance Corporation is to provide greater flexibility for JDH, UMG, and other UCH entities and to promote the more efficient provision of

healthcare services. The Finance Corporation is empowered to purchase supplies and equipment, acquire facilities, approve write-offs of accounts receivable,

negotiate joint ventures and shared services and other agreements, and process malpractice claims on behalf of UConn Health, all for the clinical enterprise.

School of Medicine,

School of Dental

Medicine and the

Graduate School

The UConn School of Medicine (including, SOM and SODM and Graduate School) was established in 1961 on the then new 160-acre campus in Farmington. The

SOM and SODM offer four-year post-baccalaureate programs leading to the M.D. and D.M.D. degrees, respectively, as well as residency programs which

provide advanced training in preparation for licensure practice and certification within a field of specialization. The Graduate School offers Ph.D. and Master's

degree programs in nine biomedical sciences and in community health and dental sciences. SOM and SODM faculty are generally expected to develop an active

research program, both to advance knowledge within their field of expertise and to enhance the quality of patient care and education. Approximately $100

million was generated in FY 2017 by the research activities of the various faculties, which supplements appropriations from the State. Enrollment in Fall, 2018

was 408 in SOM, 189 in SODM, and 324 in the Graduate School.

These entities make up the clinical enterprise – UConn Health would consider a

partnership with one or both of the clinical entities

FY 2016A FY 2017A FY 2018A

Net Patient Care $351.9 $367.7 $398.7

Other Income 26.2 30.6 40.8

Total Revenue 378.1 398.3 439.6

Personnel Services 145.7 146.0 148.8

Fringe Benefits 87.2 112.0 128.3

Medical & Internal Contractual Support 45.9 47.7 51.1

Medical Supplies 35.6 39.0 43.5

Outside & Other Purchased Services 29.0 30.4 39.3

Other 67.2 78.9 93.5

Total Expenses 410.6 454.0 504.5

Operating Income (32.5) (55.8) (64.9)

Depreciation 8.9 18.8 20.1

Transfers from UConn 8.0 15.5 26.9

EBITDA ($15.6) ($21.5) ($17.9)

FY 2016A FY 2017A FY 2018A

Discharges 9,061 9,240 10,105

Adjusted Discharges 25,365 26,673 27,823

ALOS 4.1 4.2 4.1

Patient Days 37,357 38,339 42,303

Average Daily Census 102.1 105.0 115.9

Adj Patient Days 104,578 110,673 116,316

Total Surgical Cases 10,840 10,559 11,651

ER Visits 32,762 34,199 35,595

Deliveries 744 852 872

Overview of John Dempsey Hospital

16

• Flagship state-owned acute care teaching hospital in Connecticut, with 234

licensed beds and 193 staffed acute care beds

• Provides specialized and routine inpatient and outpatient services, including

comprehensive cardiovascular, cancer and musculoskeletal services, as well

as, high risk maternity and, through Connecticut Children’s Medical Center,

neonatal intensive care

• Home to the only Emergency Department in the Farmington Valley

• 169-bed, $318 million new patient tower opened in June, 2016

• Recent financial and operating performance characterized by steady revenue

growth and robust patient volumes

• Profitability has declined in recent years due to UConn Health’s

unsustainable all-in clinical cost structure

Overview Summary Income Statement (1)

Key Operating Statistics

____________________

Notes:

1. Unaudited pro forma financials

($ in millions)

FY 2016A FY 2017A FY 2018A

Net Patient Care $92.5 $93.2 $101.5


Total Revenue 102.8 104.1 110.9



Medical & Internal Contractual Support 20.1 21.4 21.5



Other 17.2 14.2 18.6


Operating Income (79.8) (85.2) (80.6)


Transfers from UConn 54.2 53.0 63.0

EBITDA ($20.3) ($26.4) ($11.8)

Internal Medicine 27

Surgery 24

Dermatology 14

Hospitalist 11

Obstetrics 8

Radiology 7

Cardiology 7 Pathology 7

Orthopaedics 6 Neurology 6 General Medicine 5 Gastroenterology 5 Geriatrics 5 Psychiatry 4 Ophthalmology 4 Nephrology 4

Other 50

Other 90

UMG Physician Composition by Specialty

Overview of UConn Medical Group

17

Overview

• UMG is one of the region’s largest multi-specialty faculty clinical practices

• Clinical operations are modeled, in part, on private group practices and

include over 420 providers in a wide variety of specialties

> Includes 316 physicians and 107 advanced practice providers

• UMG’s operation is an essential element for the education and training of

medical students that enables the SOM to accomplish its mission

• Physicians act as both SOM faculty and clinical providers under UMG –

compensation split between the two entities based on time spent teaching

or treating patients, respectively

• The vast majority of UMG physicians are unionized under AAUP(1)

• While productivity and volumes continue to grow, there is opportunity to

better support the approximately 55% of physicians who are below their

wRVU targets(2). This speaks to the opportunity to improve access, enhance

clinical growth, make practices more efficient, and support operations

____________________

Notes:

1. American Association of University Professors

2. Based on the target benchmark developed by United HealthSystem Consortium (UHC). UMG physician productivity is adjusted for

effective clinical time spent by the physician

3. Unaudited pro forma financials

Summary Income Statement (3)

($ in millions)

Graduate Medical Education

18

Overview

• The Schools of Medicine and Dental Medicine sponsor 65 residency and fellowship programs,

supporting over 781 residents (675 medical and 106 dental) in graduate medical education at JDH

and other hospitals, all of which are part of the Capital Area Health Consortium

• UCH sponsors residency programs in the following categories:

> Anesthesiology

> Dental

> Dermatology

> Emergency Medicine

> Family Medicine

> Internal Medicine

> Neurology

> OB/GYN

• Residents provide patient care in more than 20 communities across the state, including: Hartford,

Bridgeport, New Britain, Middletown, East Hartford, Manchester, Waterbury, Norwich, New

Haven, Derby, Willimantic, Putnam, Torrington, Farmington, West Hartford, Meriden, Suffield,

Cheshire and Newington

• UConn’s SOM and SODM residency programs are critical to ensuring the future medical and

dental workforce in the State, contributing to the quality of health care provided by participating

hospitals, and bringing in additional Medicare reimbursement revenues to Connecticut

> Orthopaedic Surgery

> Otolaryngology

> Pediatrics

> Preliminary Medicine

> Primary Care Internal Medicine

> Psychiatry

> Radiology

> Surgery

Consortium Hospitals

Residents train and provide patient care in local hospitals and dozens of neighborhood settings in more than 20 communities across Connecticut

To fulfill the academic mission, UConn Health and the SOM must maintain adequate control

over the conduct of GME programs and medical school education programs and comply with

all LCME and ACGME accreditation standards

Overview of Jackson Laboratory for Genomic Medicine

19

Overview

• Located on UCH’s lower campus, the Jackson Laboratory for Genomic Medicine (“JAX”) collaborates with Connecticut’s leading medical institutions, including

UConn Health and the Yale University School of Medicine, to find new ways to predict, prevent, diagnose and treat diseases such as cancer, heart disease, infectious

diseases, Alzheimer’s and diabetes

> The Jackson Laboratory, is an independent, nonprofit research organization that expanded to Connecticut to translate its fundamental science to the clinic and further

their mission in the area

> In addition to the Farmington location, JAX has a mammalian genetics headquarters in Bar Harbor, Maine and a facility in Sacramento, CA

• Since its opening in 2014, JAX has worked with hospitals in Connecticut and beyond to find precise genomic solutions for disease and to empower the global

biomedical community to improve human health

• The 183,500 sq. ft. facility currently houses over 350 biomedical researchers, technicians and support staff in state-of-the-art computing facilities and laboratories

Areas of Clinical Excellence –Type II Centers

20

UCH is home to multiple Type II centers for excellence in clinical care and institutional research, including clinical centers for cardiology, cancer care, musculoskeletal care and imaging

The Pat and Jim Calhoun Cardiology Center Carole and Ray Neag Comprehensive Cancer Center

• Offers a complete range of services, from preventative cardiology to

sophisticated interventional and surgical procedures

> Also offers specialized services to manage high blood pressure, including

treatment-resistant hypertension, as well as complete care to diagnose and

treat heart failure, heart rhythm disorders and vascular disorders such as

peripheral arterial disease, abdominal aortic aneurisms and carotid disease

• Patients have access to the latest research and clinical trials; many of these

research projects build upon unique research strengths at UCH and areas of

excellence like the Center for Vascular Biology, which is focused solely on the

study of blood vessel function

• Received the AHA Mission: Lifeline STEMI Receiving Center Gold Performance

Achievement Award in 2014 and 2015

• Provides evaluation, individual counseling, rehabilitation and treatment by

physicians and nurses from multiple specialties for cancer patients

> Areas of expertise include medical oncology, radiotherapy, surgical

oncology and gynecologic oncology

• Accredited by the Commission on Cancer, a program of the American College

of Surgeons that recognizes cancer programs nationwide for excellence

> First won Commission on Cancer approval in 1977 and has maintained

that status in every subsequent review

• The Clinical and Translational Breast Program at the Carole and Ray Neag

Comprehensive Cancer Center is accredited by the National Accreditation

Program for Breast Centers (NAPBC)

Annual Encounters

53,361 53,852

57,020

50,000

51,000

52,000

53,000

54,000

55,000

56,000

57,000

58,000

59,000

2016 2017 2018

24,805 26,250

24,850

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2016 2017 2018

Annual Encounters

UConn Musculoskeletal Institute The Beekley Imaging Center

Areas of Clinical Excellence –Type II Centers (cont’d)

21

UCH is home to multiple Type II centers for excellence in clinical care and institutional research, including clinical centers for cardiology, cancer care, musculoskeletal care and imaging

• The UConn Musculoskeletal Institute is the region’s premier choice for

complete care for a range of problems affecting bones, joints, muscles and

connective tissue

• Team includes nationally and internationally recognized experts in orthopaedic

surgery and sports medicine, comprehensive spine care, rheumatology, and

osteoporosis

• Combines patient care with education, including an orthopaedic residency

program and fellowship programs in endocrinology, family medicine, sports

medicine, hand surgery, orthopaedic sports medicine, pediatric orthopaedics

and rheumatology

• National and international scientists and clinicians pursue research in a variety of

areas including bone repair, osteoporosis, cartilage metabolism, soft tissue

repair, stem cell therapies, tissue engineering, etc.Center on Aging

• Offers the latest technologies in detecting

breast cancer, including leading-edge breast

imaging and digital mammography

• All-digital mammography and computer aided

detection system searches for patterns that

are typically recognized as indicators for

cancer

• First healthcare provider in the region to

provide 3D Mammography (Tomosynthesis)

• Team of board-certified geriatricians provide

comprehensive, individualized care for aging

adults

• Faculty conduct world-class research on

geriatric medicine, supported by a research

portfolio of more than $5M per scientist

• Geriatric Medicine Fellowship trains internal

medicine and family medicine graduates for

leadership careers in geriatric medicine

74,379 71,640 79,698

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100 ,000

2016 2017 2018

Annual Encounters

UConn Health maintains a significant portfolio of clinical offerings

Overview of Services

22

Primary Care

• Aging & Geriatrics

• Family Medicine

• Internal Medicine

• Pediatrics

Behavioral Health

Cancer Care

• Bladder, Breast, Colon, Head and

Neck, Kidney, Lung, Ovarian,

Prostate, and Skin Cancer

Solutions

• Cancer Screening, Risk Assessment

• Hematology/Oncology

Diagnostic & Testing

• Bone Density

• Diagnostic Imaging/Radiology

• Laboratory and Blood Draw

• MRI

• Neuropsychology

Emergency Services

• Emergency Medical Services

• Poison Control

• Urgent Care

Specialty Care

• Audiology

• Cardiology

• Dental Care

• Dermatology/Dermatopathology

• Endocrinology

• Gastroenterology

• Infectious Disease

• Neonatal Intensive Care (1)

• Nephrology

• Neurology

• Osteoporosis & Metabolic Bone

Diseases

• Podiatry

• Pulmonary Medicine, Hypertension

• Rheumatology

• Urology

Physical Medicine

• Physical Therapy & Rehabilitation

• Speech/Language Pathology

• Nutritional Counseling

• Orthopedics & Sports Medicine

Surgical Care

• Cardiac Surgery

• Colorectal Surgery

• Cosmetic Plastic Surgery

• General Surgery

• Gynecologic Surgery

• Hand & Wrist

• Neurosurgery

• Orthopedic Surgery

• Ophthalmology

• Otolaryngology

• Hip & Knee Replacement Surgery

• Urological Surgery

• Vascular Surgery

Women’s Health

• Pregnancy & Birth

• Mammography

• Maternal Fetal Medicine

• OB/GYN

Other

• Clinical Research & Trials

• Ergonomics

• Child and Adolescent Behavior

Health

• Mental Health

• Psychiatric Services

• Sleep Disorders

____________________

Notes:

1. In partnership with Connecticut Children’s Medical Center, which holds the license for this service

Service Physicians % of Total

Internal Medicine 192 28.6%

Surgery (general) 95 14.1%

Diagnostic Imaging & Therapeutics 73 10.9%

Obstetrics & Gynecology 48 7.1%

Psychiatry 46 6.8%

Pediatrics 41 6.1%

Anesthesiology 36 5.4%

Orthopaedics 31 4.6%

Emergency Medicine 28 4.2%

Dental 34 5.1%

Dermatology 25 3.7%

Family Medicine 13 1.9%

Pathology 7 1.0%

Podiatry 3 0.4%

Total 672 100.0%

Board

Certified

91%

Not Board

Certified

9%

UConn Health’s medical staff numbers 672, including both employed providers and independent community medical staff

Physician Staff Overview

23

Medical Staff by SpecialtyPhysician Board Certification Status

N = 672

Average Age of Physicians:

49 Years Old

859 866 868 894

0

200

400

600

800

1000

FY16 FY17 FY18 FY19 YTD

Total Providers

UConn Health’s robust recruiting engine allows it to maintain its world-class faculty and physician base

Medical Staff Recruitment

24

• Between August, 2017 and August, 2018, UCH’s Clinical Council

approved 54 faculty requests. To date:

> 31 of these positions have been filled

> 4 are scheduled to be filled

> 19 remain open and are being recruited

Recent and Planned Hiring Integration Plan

Recruitment Overview

• UMG is co-led by an administrator and a physician, working

collaboratively with a Clinical Council to set recruitment priorities,

allocate resources and strengthen the practice

• UCH employs two provider relations professionals who focus on the

onboarding/ramp-up of all clinical providers, connecting specialists to

referral sources with a goal of reaching full productivity before budgeted

target

• Success in employee recruitment, both with clinical physicians and in the

basic sciences, has been strong and steady

> Basic sciences are the departments in the medical school where

PhD faculty conduct research

• UConn Health leverages its thriving and transformative research

enterprise to attract best-in-class talent

> Research capacity and productivity has grown due to recent

investments in existing and new facilities

Provider Growth

FY 2016A FY 2017A FY 2018A

Unique Visits - excl Anesthesia 659,656 656,848 667,009

Unique Anesthesia Visits 15,939 16,486 17,210

Total Invoices 821,641 819,422 592,784

Total Invoices per Unique Visits 1.2 1.2 0.9

Physician RVUs 1,031,645 1,054,534 1,084,289

Physician RVUs per Visit 1.6 1.6 1.6

FTEs - Support Staff 561 562 577

FTEs - Providers 189 192 185

Total FTEs 750 754 762

Gross Charge per Unique Visit $305.6 $308.3 $336.1

Gross Charge per RVU $195.4 $192.0 $206.8

Total Revenue per Unique Visit $154.8 $156.7 $166.2

Total Revenue per RVU $99.0 $97.6 $102.3

Expense per Unique Visit $251.9 $263.0 $252.9

Expense per RVU $161.1 $161.8 $157.5

FY 2016A FY 2017A FY 2018A

Discharges 9,061 9,240 10,105

Adjusted Discharges 25,365 26,673 27,823

Average Length of Stay 4.1 4.2 4.1

Admissions 9,068 9,245 10,082

Patient Days 37,357 38,339 42,303

Adjusted Patient Days 104,578 110,673 116,316

Average Daily Census 102.1 105.0 115.9

Total Surgical Cases 10,840 10,559 11,651

Adj. Occupied Bed 285.7 303.2 318.7

FTEs per Adj. Occupied Bed 4.65 4.56 5.39

Case Mix Index 1.52 1.53 1.54

Occupancy Rate 56.7% 58.4% 64.4%

ER Visits 32,762 34,199 35,595

OP Equivalents 16,304 17,433 17,680

Deliveries 744 852 872

Despite industry headwinds, volume and utilization is strong, with patient days at JDH growing over 10% between 2017 and 2018

Key Operating Statistics

25

UMG Utilization StatisticsJDH Utilization Statistics

____________________

Notes:

1. Increase in FTE per Adjusted Occupied Bed from FY17 to FY18 is mainly due to an increase in employees, offset by a decrease

in contractual employees

(1)

Footnote

Department FTE Count

NICU 93Emergency Room Unit 77UMG-Call Center 67Medicine 3 Unit 65Neag Cancer Center Unit 64UMG-Orthopaedics 63Surgery/Orthopaedics Unit 62Intermediate Unit 58Intensive Care Unit 55UMG-Univ Phy Patient Accts 52Dermatology Clinic 52Operating Room Unit 50Pharmacy 50OB/GYN 43Psychiatry 1 Unit 43Radiology 42Medical/Surgical/Oncology Unit 38Patient Services 38Health Information Management 37Core Lab 35Cardiology 32Phlebotomy-Lab Med 30Patient Access 26UMG-Administration 25UMG-Internal Medicine 24Anesthesiology Operating Statement 23UMG-IMA West Hartford 23Psychiatric Clinic 22UConn Health Surgery Center-OR 22UMG-Surgery - Ophthalmology 22UMG-General OB 22Other (134 Depts.) 992

Employee Overview

26

Division FTE Count

Hospital 1,568

SOM 976

UMG 779

Institutional Support 700

SODM 279

Total 4,302

UCH-Paid FTEs JDH and UMG FTEs by Department

____________________

Notes:

1. Licensed and operated by Connecticut Children’s

(1)

SEBAC 5-Year Wage Package

Year Dates Wage Increase

FY 17 7/1/16 - 6/30/17 Hard 0% Freeze

FY 18 7/1/17 - 6/30/18 Hard 0% Freeze

FY 19 7/1/18 - 6/30/19Hard 0% Freeze + $2,000 lump-sum payment, or

top step lump sum plus $1,000 if greater

FY 20 7/1/19 - 6/30/20 3.5% GWI increase plus step increment

FY 21 7/1/20 - 6/30/21 3.5% GWI increase plus step increment

Union employees are governed by many provisions of the 2017 SEBAC agreement negotiated with the State

Summary of Unions

27

Bargaining Unit Full Name FTE Count Head Count

1199 - Para-Professional Health Care (NP-6) New England Healthcare Employees Union District 1199 265 292

A&R - Administrative and Residual (P-5) Administrative & Residual Employees Union 10 10

AAUP - Faculty American Association of University Professors 547 590

AFSCME - Administrative Clerical (NP-3) American Federation of State, County and Municipal Employees 246 266

CEUI - Maintenance & Service (NP-2) Connecticut Employees Union Independent 195 209

CPFU - Protective Services (NP-5) Protective Services Employee Coalition 2 2

UHP - University Health Professionals University Health Professionals 2,533 2,708

Total Represented 3,797 4,077

Not Represented 554 801

Total Employees 4,352 4,878

% Represented 87.3% 83.6%

Summary of UConn Health Union Employees

Summary of Key SEBAC and Other Collective Bargaining Terms

• On July 31, 2017, the CT General Assembly approved the SEBAC Agreement, which includes 7

UCH bargaining units representing ~4,000 public services employees at UConn Health

• Under the SEBAC Agreement, the parties agreed to certain structural pension plan changes for

employees hired after July 1, 2017 and made certain modifications to existing health and pension

plans to increase contributions for current employees. The SEBAC Agreement, together with the

individually negotiated union agreements, also provides certain protections from lay-off (and in the

case of faculty, non-renewal) for employees hired prior to July 1, 2017. For faculty, the protections

extend through June 30, 2020; for other employees, the protections extend through June 30, 2021.

• The Agreement also provides for certain across-the-board wage provisions and changes in terms

and conditions of employment sought by management, to be negotiated with each of the unions.

The negotiated wage increases are outlined in the table to the right

New Enterprise-wide EMR System

28

UCH recently installed an enterprise-wide Epic EMR product, which went live on April 28, 2018

• UCH’s new integrated electronic health record system launched in April, 2018, making patient records easily accessible to all members of the care team and

to the patient

• UCH’s EMR System represents a technological, clinical, and operational transformation aimed at enhancing the patient experience. At its heart is an EHR

platform powered by Epic that facilitates collaboration, knowledge-driven care coordination, and continuous improvement

Overview of UConn Health’s EMR

Providers Patients Non-Clinical Advantages

• Seamless flow of information following the

patient throughout their encounter not only

with UConn Health, but also with other health

care systems through Epic’s interoperable Care

Everywhere tool

• All members of the care team, including

referring physicians, have simultaneous access

to up-to-date patient information

• Patients get more efficient care and can

access their test results and other health

information at any time

• A secure online portal enables patients to

message their care team, request

prescription refills, and manage appointments

• Positions JDH to be Meaningful Use Stage 3

compliant

• Creates additional opportunities to improve

clinical business office functions and other

potential operational processes, including:

> Revenue cycle management

> Training internal IT/EMR staff

> Healthcare reform and regulatory

compliance (MU, ICD-10, MACRA, PQRS,

etc.)

Aerial View

Campus Map

29

Map Legend

Academic Building…………………………………………………………………………………………………………AB

Academic Entrance…………………………………………………………………………………………………………AE

Academic Research Building…………………………………………………………………………………………………………AR

Administrative Services Building…………………………………………………………………………………………………………AS

Creative Child Center…………………………………………………………………………………………………………CC

Center for Comparative Medicine…………………………………………………………………………………………………………CM

Emergency Department…………………………………………………………………………………………………………ED

195 Farmington Avenue…………………………………………………………………………………………………………FA

Fire Department…………………………………………………………………………………………………………FD

Garage 1…………………………………………………………………………………………………………G1

Garage 2…………………………………………………………………………………………………………G2

Garage 3…………………………………………………………………………………………………………G3

UConn John Dempsey Hosptial…………………………………………………………………………………………………………H

Jackson Laboratory for Genomic Medicine…………………………………………………………………………………………………………JL

Laboratory…………………………………………………………………………………………………………L

Main Building…………………………………………………………………………………………………………MB

Medical Examiner…………………………………………………………………………………………………………ME

Musculoskeletal Institute…………………………………………………………………………………………………………MI

Outpatient Pavilion…………………………………………………………………………………………………………OP

Warehouse …………………………………………………………………………………………………………W

Campus Map

Description Gross SF Interior SF Net SF Education Research Patient Care & Admin Inst. Support Primary Usage

Administration Instructional Wet Lab Office Outpatient Inpatient

MAIN BUILDING 1,760,258 1,548,599 938,066 22,694 57,839 117,600 91,210 212,805 240,704 113,736 Multiple

MUSCULOSKELETAL INSTITUTE 103,396 94,816 76,970 0 0 10,289 8,859 56,413 0 1,409 Clinic

OUTPATIENT PAVILION 318,759 286,607 204,828 0 0 0 0 201,521 0 0 Clinic

UNIVERSITY TOWER 410,438 350,827 225,065 0 0 0 0 44,782 137,956 14,264 Hospital

CLINIC 344,847 310,439 191,646 240 15,843 5,962 25,922 89,148 24,210 6,534 Clinic

CONNECTICUT TOWER 190,621 166,832 120,764 0 0 0 1,845 30,692 60,022 278 Hospital

CANZONETTI 95,999 86,364 64,222 0 0 0 0 48,184 9,433 6,605 Hospital

Farmington

Overview of Clinical Facilities

30

Main Building

• The Main Building on the UCH Upper Campus includes the Connecticut Tower and several other areas for patient care, research and Medical and Dental School education functions

• JDH operations in the Main Building and Connecticut Tower include the Pat and Jim Calhoun Cardiology Center with three Cath/EP lab rooms, the Procedure Center for GI/Endo procedures, blood draw services, the clinical pharmacy and clinical lab, OB/GYN/labor and delivery, inpatient psychiatry, neurophysiology, radiology, nuclear medicine, pulmonary, nephrology, and various administrative office functions

• The NICU is located in the Main Building, but is leased and managed by Connecticut Children’s Medical Center (not licensed under JDH)

Musculoskeletal Institute

• The MSI, built in 2005, houses 100,000 sq. ft. of clinical and research activity focused on musculoskeletal health

• JDH functions include a 6-room outpatient surgery center as well as clinical practices for orthopaedics and sports medicine, rheumatology, osteoporosis, and comprehensive spine center.

• Rehab and imaging services are also provided at this location

Described on following slides

Musculoskeletal

Institute

Main Building

____________________

Notes:

1. Academic offices located in UCH are part of the School of Medicine

(1)

Outpatient Pavilion

31

• Opened in 2015, the Outpatient Pavilion is an approximately 320,000 sq. ft. state-of-the-art multispecialty outpatient clinical building on UCH’s Lower Campus and includes a 1,400 space parking garage

• The 8-story building is home to the majority of UMG’s physician practices and JDH outpatient services

• The building also includes patient-centered services such as a café, a commercial pharmacy and an optical shop

• Construction of the Outpatient Pavilion was funded by a $203M mortgage with TIAA-CREF, which is held by Circle Road Corporation (a subsidiary of the Finance Corporation)

> Circle Road Corporation holds a direct financing lease with UCH for the Outpatient Pavilion and associated equipment

> Mortgage payments are funded by lease payments to the Finance Corporation, which in turn makes the scheduled mortgage payments

> Outstanding balance on the mortgage is $188.2M as of June 30, 2018

• Departments include: Internal Medicine, Neurology, Occupational Medicine, Ophthalmology, Orthodontics, Physical Therapy, Plastic Surgery, Radiation Oncology, including TomoTherapy, Rheumatology, Urology, Vascular Surgery, Blood Drawing Stations, Carole and Ray Neag Comprehensive Cancer Center, Comprehensive Spine Center and Neurosurgery, Diagnostic Imaging, Ear, Nose and Throat, (Otolaryngology), Endocrinology, Gastroenterology, General Medicine, General Surgery, Women’s Center, Center for Healthy Aging (Geriatrics), and Infectious Diseases

Overview

Overview of Clinical Facilities (cont’d)

32

University Tower

Overview

• UCH completed the construction of the University Tower in 2016 – the

new hospital building is an addition to the existing Upper Campus Main

Building

> Replaced outdated space and expanded JDH services

> Includes 169 single inpatient bed room, a 42-bay Emergency

Department, surgery suite with 11 OR rooms and 1 hybrid OR

room, an MRI suite, renal dialysis, respiratory therapy, inpatient

rehabilitation, a clinical support floor and other support services

> Also includes two 400-car parking garages

• The $318 million new patient tower was funded from State general

obligation bonds

> Single patient rooms are designed to reduce stress, improve patient

safety, maintain confidentiality, minimize hospital-acquired infections,

enhance privacy and speed recovery

> Decentralized nursing stations enable nurses to remain in close

proximity to their patients

• Convenience and Access

> Farmington Valley’s only full-service 24/7 ED is all-new and has more

than doubled the capacity of the former ED

• Technology-enabled

> Voalte Platform for communications, Black Diamond Video

integration information delivery system in the OR, robotic surgery,

“TUG” robotic pharmacy delivery units, Epic EMR

Overview of Clinical Facilities (cont’d)

Accolades / Awards

33

Select Awards Year Description

ACTION Registry Gold Performance

Award2017

• For delivering the highest quality of cardiovascular care (as determined by the

ACTION Registry)

BlueCross BlueShield Association's Blue

Distinction Center in:

• Maternity Care

• Spine Surgery and Joint Replacement

Maternity

2017

Spine Surgery

2009

• For demonstrating expertise and a commitment to quality care for vaginal and

cesarean section deliveries, and for better overall patient satisfaction and a

lower percentage of early elective deliveries

• For expertise in safe, efficient, and cost-effective delivery of quality care for

knee and hip replacement and spine surgery

American Heart Association’s Gold Plus

Achievement Award, Elite Honor Roll

Stroke Award

2015• For treating patients with 85% or higher compliance to core standard levels of

care for two consecutive years.

American Heart Association’s Heart

Failure Gold Plus Quality Achievement

Award

2017• Recognizes the hospital’s commitment to ensuring heart failure patients receive

the most appropriate treatment to speed recovery and reduce readmissions

Mission: Lifeline® Gold Receiving Quality

Achievement Award2017

• Awarded for implementing specific quality improvement measures for the

treatment of patients who suffer severe heart attacks

• JDH is the only hospital in the State to win Mission: Lifeline Gold in heart

attack care for three consecutive years

AAGL Center of Excellence in Minimally

Invasive Gynecology2017

• Recognizes hospitals and surgeons around the world providing exceptional

minimally invasive gynecologic surgical care and dedicated to continuously

improving healthcare quality and patient safety

Commission on Cancer Accreditation 2017

• Recognizes cancer programs nationwide for excellence

• First won Commission on Cancer approval in 1977 and has maintained that

status in every subsequent review

National Accreditation Program for

Breast Centers (NAPBC)2017

• Awarded to organizations dedicated to the improvement of the quality of care

and monitoring of outcomes

The Joint Commission on Accreditation

of Health Care Organizations2017

• For demonstrating compliance with The Joint Commission’s national standards

for health care quality and safety in hospitals

Organization and Management

UConn Health has an experienced and dedicated senior management team

Organizational Chart

35

Andrew Agwunobi

UConn Health CEO &

Executive VP of Health Affairs

Jeff

Blumenthal

Chief Counsel

Susan Herbst

UConn President

Anne

Horbatuck

VP UMG

Administration

D. Stanley

Chief Medical

Information

Officer

Cindy

Molin

VP Patient

Experience

Vacant

CEO of UMG

Denis

Lafreniere

UMG Medical

Director

Bruce

Metz

Chief

Information

Officer

Jeff

Geoghegan

Chief Financial

Officer

Deb

Abromaitis

Compliance Officer

Chris Hyers

Director Business

Development &

Decision Support,

Chief

Communications

Officer

Carolle

Andrews

Chief Administrative

Officer / VP Human

Resources

JDH Administration:

• Andrew Agwunobi, JDH CEO

• Richard Simon, Chief of Medical Staff

• Ann Marie Capo, CNO & VP, Quality & Patient Care Service

• Scott Allen, Medical Director, Clinical Effectiveness & Patient Safety

Andrea

KeiltyDirector of

Government

Relations,

Health Affairs

Executive

Board of Directors

36

Kenneth Alleyne, M.D.

Orthopedic Surgeon, Healthcare Entrepreneur

A graduate of Williams College, Dr. Alleyne carried out his orthopedic residency at Howard University Hospital

and a fellowship in knee and shoulder surgery and sports medicine at Yale University. He is the managing partner

of Harthaven Capital Partners, a health care consultancy and investment firm based in Connecticut and New York,

and a founder of NextLevel Health Partners, a Medicaid and Medicare managed care company

Francis X. Archambault Jr, Ph.D.

Professor Emeritus at UConn, Board of Trustees

Mr. Archambault was an assistant professor at Boston University and later a social scientist at Abt Associates, Inc.

in Cambridge, Massachusetts before joining the UConn faculty in 1978. He has conducted research, evaluations

and policy analyses for a variety of governmental agencies and private organizations at the national, state, and local

levels

Richard M. Barry

Deputy Chief Risk Officer at Keybank

Richard is the deputy chief risk officer for KeyBank, and is also responsible for the credit risk, market risk, and

risk information and reporting functions of the company. Rich joined Keybank through the acquisition of First

Niagara Financial Group, where he was the chief risk officer. He was responsible for enterprise risk management,

operations, corporate compliance and regulatory risk, credit risk, consumer collections, market risk, fraud risk,

and operational risk

Andy F. Bessette

Executive Vice President, Chief Administrative Officer of The

Travelers Companies, Inc.

Andy Bessette is an executive vice president and the chief administrative officer of the Travelers Companies, Inc.

He has responsibility for corporate real estate, administrative service, community affairs, aviation, internal

investigations, event management, business continuity, and sports sponsorships. Bessette has been with Travelers

Companies, Inc. for 29 years and has held a variety of management positions

UConn Health Board of Directors: The University of Connecticut Board of Trustees governs both the University and UCH; however, UCH also has as a Board

of Directors to which the Board of Trustees has delegated certain responsibility and authority. Subject to duties reserved to the Board of Trustees, the UCH Board

of Directors is authorized to establish rules and general policies for the governance of UCH and its academic programs. The Board of Directors manages and directs

the expenditures of UCH. The Board of Directors is required by law to review and approve UCH budget requests and propose facility, planning and capital

expenditure budget priorities. The Board of Directors consists of up to 18 members, nine of which are appointed by a nominating committee of the Board of

Directors, three members appointed by the Chairperson of the Board of Trustees, three members appointed by the Governor and three voting ex-officio members

(the State’s Office of Policy and Management, the President of the University and the Commissioner of Public Health (or their designees)).

Experience

Board of Directors

37

Richard T. Carbray Jr.

Owner of Apex Pharmacy, Home Care and Nutritional

Center

Richard Carbray is co-owner of Apex Pharmacy and Home Care Center. Prior to this, he served as an adjunct

lecturer for pharmacy practice at the UConn School of Pharmacy and as legislative chairman of Connecticut

Pharmacists Association. Mr. Carbray graduated cum laude from the UConn School of Pharmacy.

Cheryl A. Chase, Vice Chair

Executive Vice President, Principal and General Counsel

Chase Enterprises

Cheryl Chase present affiliations include a trustee of the University of Connecticut Law School Foundation, a

member of the Connecticut Science Center, a trustee of the Wadsworth Atheneum Museum of Art, and a past

director of numerous public and private institutions. A graduate of Tufts University, she received her J.D. from

the University of Connecticut School of Law.

Sanford Cloud Jr., Chair

Chairman and Chief Executive Officer of Cloud Company,

LLC

Sandy Cloud is Chairman and CEO of The Cloud Company, LLC, a real estate development and investment firm.

Mr. Cloud is a lawyer and former two-term Connecticut State Senator and was the primary sponsor of legislation

creating the State Department of Housing. He currently serves on the boards of Eversource Energy, Ironwood

Mezzanine Fund FP, Thomas J. Dodd Research Center, The Connecticut Health Foundation, and The Greater

Hartford Metro-Alliance.

Anne Foley

Senior Policy Advisor to the Secretary of Connecticut’s Office

of Policy and Management (OPM)

Anne Foley is a thirty-year employee at OPM, and she has significant experience as a state government policy-

maker. Her previous positions with OPM included Undersecretary of Planning, Legislative Program Manager, and

Planning Specialist. Anne was an adjunct lecturer at the University of Connecticut School of Social Work from

1992 to 2016. Anne is a graduate of Providence College, earned a Master of Social Work from the University of

Connecticut, and earned a Master of Arts in Social Policy from Brandeis University.

John F. Droney, J.D.

Partner, Hinckley Allen Snyder, LLP

John Droney has served as a special state’s attorney for the judicial districts of Hartford and Waterbury, and is a

recipient of the UConn School of Law Distinguished Alumni Award. He has lectured at UConn and Quinnipiac

Law Schools, and was a founding principal of the Farmington law firm Levy & Droney. He received his J.D. with

honors from the UConn School of Law.

Joel Freedman

Independent Public Policy Consultant

Joel Freedman has been in the insurance and financial services industry for 40 years. He retired from The Hartford

Financial Services Corporation in 2008, after a 25-year tenure spent primarily as the director of Government and

Regulatory Affairs.

Executive Experience

Board of Directors

38

Susan Herbst, Ph.D.

President, UConn

Prior to her appointment to the presidency, Susan Herbst served as executive vice chancellor and chief academic

officer at the University System of Georgia, where she led 15 university presidents and oversaw the academic

missions for all 35 public universities in Georgia.

Timothy A. Holt

Independent Business Consultant

Timothy Holt previously served as the senior vice president and chief investment officer for Aetna, Inc., where he

held many positions throughout his career. He also retired as a director of Virtus Investment Partners and MGIC

Investment Corporation.

Dr. Raul Pino

Commissioner, Connecticut Department of Public Health

Dr. Raul Pino has served as the commissioner of the Connecticut Department of Public Health since he was

appointed in December of 2015. Prior to this, he worked for the city of Hartford as director of the city’s

Department of Health and Human Services where he managed the budget, oversaw labor relations and code

enforcement. He is a member of the American Public Health Association, and National Hispanic Science Network

on Drug Abuse

Dr. Wayne Rawlins, M.D., M.B.A

Vice President and Senior Medical Director Healthcare

Services, ConnectiCare, Inc.

Before his position at ConnectiCare, Dr. Wayne Rawlins spent time as the national medical director for racial and

ethnic equality initiatives at Aetna. He joined Aetna in 1997, and held a variety of leadership positions. Prior to

Aetna, he was a physician manager with the Northeast Permanent Medical Group for 13 years. He received his

medical degree form the UConn School of Medicine and completed his chief residency at the University of

Rochester in New York

Teresa M. Ressel

Private Company Management

Teresa Ressel served as the chief operating officer of UBS Securities and UBS Americas from 2004 until 2012.

Prior to UBS, she was confirmed by the U.S. Senate as assistant secretary for management and chief financial

officer of the Department of Treasury. She also spent time at Kaiser Permanente leading regulatory compliance,

change management, and financial matters related to corporate governance.

Kathleen D. Woods

Chairperson, Farmington Woods Golf Club

Kathleen Woods is a former vice president at various Bank of America institutions focusing primarily on

corporate trust and investment activities in the municipal, health care, higher education, and housing area in New

England. She has extensive experience in the administration of trustee services in connection with debt financings.

She has been a member of the Government Finance Officers Association, the Connecticut Women’s Council, and

the board of the Downtown Hartford YMCA


UConn Health Leadership Team

39

Andrew Agwunobi, M.D., M.B.A.

UConn Health Chief Executive Officer, Executive

Vice President for Health Affairs

Prior to joining UConn Health, Andrew Agwunobi served as managing director and a co-leader of Berkley

Research Group’s Health System performance improvement consulting practice. He has also served as the

CEO of Providence Healthcare, of Grady Health System, and of Tenet South Fulton Hospital in East Point,

GA. He currently serves on the board of Dignity Health in California

Carolle Andrews

Chief Administrative Officer & VP, Human

Resources

Carolle serves as the Chief Administrative Officer at UConn Health for the past decade. In this position, she

has directed the administrative services that support the entire institution, including, Information Technology,

Human Resources, Facilities Management, Student Services, Campus Planning and Construction, Parking &

Transportation as well as Police and Fire Services. She was the executive responsible for the $800 million

capital improvement construction project Bioscience Connecticut. Mrs. Andrews has more than 25 years of

experience working in the insurance industry, with extensive operations, project management and regulatory

legal experience. She graduated from UConn Law in 1996

Jeffrey M. Blumenthal

Chief Counsel

Jeff leads UConn Health’s legal team within UConn’s Office of General Counsel, representing and advising

UConn Health on the many legal matters related to its clinical, academic and research missions. Previously,

Jeff represented UConn Health first as Assistant Attorney General and then as Senior Health Attorney. His

career includes serving as a transactional attorney at Debevoise & Plimpton; Vice President for government

affairs for a real estate development firm; and for many years as a lawyer, policy advisor and claims executive

in the insurance industry. He graduated from UVA Law in 1985

Jeffrey P. Geoghegan

Chief Financial Officer

Jeffrey manages all financial transactions for the School of Medicine, School of Dental Medicine, UMG and

John Dempsey Hospital. He also supervises the financial services departments, consisting of Accounting,

Budget, Procurement, Clinical Reimbursement, Patient Financial Service, Research and more. He previously

spent time at PricewaterhouseCoopers as a Senior Accountant, and was previously a board member of

CTHFMA

Chris Hyers

Chief Communications Officer

Prior to joining UConn Health in 2015, Chris oversaw Field Marketing & Communications for Mercy Health

based in Cincinnati, Ohio. In his healthcare career he has worked in academic, faith-based and investor

owned systems across the country. He is a fellow of the American College of Health Care Executives and

holds several academic appointments teaching health marketing and communications


UConn Health Leadership Team (cont’d)

40

Andrea Keilty

Director, Governmental Relations

Andrea has served as UConn Health’s primary contact with state elected and appointed officials since 2015.

She has nearly 20 years of experience in Connecticut state government providing legal and policy advice and

support to agency leaders. Prior to joining UConn, Andrea worked as head counsel at the Department of

Administrative Services, and previously at the law firm of Wiggin & Dana

Bruce T. Liang, M.D., FACC

Dean, School of Medicine

Dr. Liang received his M.D. from Harvard Medical School in 1982, and completed his residency in internal

medicine at the UPenn University Hospital from 1982 to 1985, and his cardiology fellowship at Brigham and

Women’s Hospital/Harvard Medical School. He specializes in cardiovascular diseases, ischemic heart disease,

arrhythmias, peripheral arterial disease, and preventative cardiology. Dr. Liang is a fellow of the American

College of Cardiology and the American Heart Association to name a few

Sharon M. Gordon, D.D.S., M.P.H.,

Ph.D.

Dean, School of Dental Medicine

Dr. Gordon received her doctoral degree in dental surgery from the University of Texas Health Science

Center Dental School at San Antonio, and a Master of Public Health in epidemiology and a Ph.D. in clinical

investigation at Johns Hopkins University. She has spent time at the NIH, the University of Maryland, and

most recently at East Carolina University’s School of Dental Medicine in Greenville, North Carolina

Bruce Metz

Chief Information Officer

Bruce Metz has served as chief information officer for a number of leading organizations including Lahey

Health, Thomas Jefferson University and Jefferson University Physicians.. He also ran his own healthcare IT

consulting practice, Bruce Metz & Associates, LLC. Mr. Metz has a B.S. in Industrial and Management

Engineering from Columbia University, a M.A. in Organizational Development from New York University,

and a Ph.D. in Applied Psychology from New York University


Market Overview

UCH maintains care sites across its primary service area

Geographic Footprint

42

• UCH serves patients from 73 different zip codes

within Connecticut

> Hartford County is UCH’s primary service area

(PSA)

• Total population for Hartford County reached 895,388

in 2017 (1)

• UCH provides medical services at 17 sites of care

across the service area

• On the main campus, in addition to JDH, UCH

provides specialized care in its Outpatient Pavilion,

Musculoskeletal Institute and Surgery Center, and

Procedures Center

> UCH also operates 3 distinct off-campus locations

in Farmington, as well as 3 locations in Storrs, CT

Legend

Community Locations (10 Sites of Care)

JDH / Farmington (7 Sites of Care)

Storrs (3 Sites of Care)

Canton (2 Sites of Care)

East Hartford

West Hartford

Southington

Simsbury

Avon

____________________

Notes:

1. U.S. Census Bureau

Overview UCH Sites of Care

UCH benefits from positive demographics in Hartford County

Demographic Snapshot

43

Overview of Local Area(1) Hartford County Population

Educational Attainment

0-4

5.4%

5-14

12.3%

15-24

13.2% 25-44

25.3%

45-64

28.2%

65+

15.6%

Hartford County Age Distribution

857,183

894,014

925,492

820 ,000

840 ,000

860 ,000

880 ,000

900 ,000

920 ,000

940 ,000

2000 2010 2020

2016-2020 CAGR: 0.8%

Unemployment Rate: 3.6%

(State: 5.1%)

Median Housing Price:

$341,000

(State: $269,300)

Median HH Income

(’12-’16): $103,880

(State: $71,755)

Hartford County State of CT

0-4

5.3%

5-14

12.2%

15-24

13.8% 25-44

24.5%

45-64

28.8%

65+

15.5% High School

Graduate

33%

Associates

Degree

10%

Bachelors or

Higher

57%

High School

Graduate

38%

Associates

Degree

10%

Bachelors or

Higher

52%

Hartford County State of CT

Town of Avon Median HH

Income: $124,608

____________________

Notes: CT Data Collaborative

1. Local area includes average metrics across the towns of Avon, Farmington, and West Hartford

UCH patients are predominately from West Hartford, Hartford, and Farmington, CT

Patient Origin

44

JDH Patient Origin

Farmington

14.0%

West Hartford

9.3%

New Britain

7.1%

Hartford

7.1%

Bristol

5.4%Avon

5.0%

Other Towns

52.1%

Outpatient

West Hartford

8.9%

Farmington

8.2%

Hartford

7.8%

New Britain

6.2%Bristol

5.2%Avon

3.5%

Other Towns

60.3%

Inpatient

50,000+

20,001 - 50,000

0 - 20,000

Inpatient and Outpatient Cases by County

Fairfield

Hartford

Litchfield

Middlesex

New Haven

Tolland

Windham

New

London

West Hartford

Hartford

New Britain

Bristol

Avon

John Dempsey Hospital (Farmington)

Patient Origin(1) Cases(2) %

Primary Service Area 221,179 51.0%

Secondary Service Area 119,205 27.5%

Other CT 93,274 21.5%

Total 433,658 100%

____________________

1. Primary Service Area (“PSA”) is defined as Avon, Bloomfield, Burlington, Canton, East Hartford, Granby, Hartford, Farmington, New

Britain, Newington, Simsbury, West Hartford.

Secondary Service Area (“SSA’) defined as Barkhamsted, Berlin, Bristol, Cromwell, East Granby, East Windsor, Glastonbury, Hartland,

Harwinton, Litchfield, Manchester, New Hartford, Plainville, Plymouth, Rocky Hill, South Windsor, Southington, Torrington, Vernon,

Wethersfield, Winchester, Windsor

2. Inpatient and outpatient

Primary Service Area

45

1

2

3

1

2

4

1

UConn Health

UConn John Dempsey Hospital

Hartford Healthcare

Hartford Hospital

Institute of Living

The Hospital of Central Connecticut – New

Britain General Campus

The Hospital of Central Connecticut –

Bradley Memorial Campus

Trinity Health

Mount Sinai Rehabilitation Hospital

Saint Francis Hospital and Medical Center

Bristol Hospital

Bristol Hospital

1

2

1

2

3

4

1

46

Market Share

Inpatient Discharges Market Share by PSA

Inpatient Discharges Market Share by PSA + SSA

JDH has market share of 11% in its primary service area (“PSA”) (1) and 8% in its secondary service area (“SSA”) (2) with tremendous opportunity to improve market share with the right partner

____________________

Notes:

1. Defined as Avon, Bloomfield, Burlington, Canton, East Hartford, Granby, Hartford, Farmington, New Britain, Newington, Simsbury, West

Hartford

2. Defined as Barkhamsted, Berlin, Bristol, Cromwell, East Granby, East Windsor, Glastonbury, Hartland, Harwinton, Litchfield, Manchester,

New Hartford, Plainville, Plymouth, Rocky Hill, South Windsor, Southington, Torrington, Vernon, Wethersfield, Winchester, Windsor

Numbers may not add to 100% due to rounding

10%

36%

29%

16%

1%

8% 11%

36%

30%

15%

1%

8% 11%

36%

30%

14%

1%

8% 11%

36%

30%

13%

1%

9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

JDH Hartford Hospital St Francis Hospital Hospital of Central

Connecticut

Bristol Hospital Other

2014 2015 2016 2017

7%

29%

22%

14%

6%

21%

8%

30%

23%

13%

6%

21%

8%

30%

23%

12%

6%

21%

8%

30%

24%

11%

6%

21%

0%

5%

10%

15%

20%

25%

30%

35%

JDH Hartford Hospital St Francis Hospital Hospital of Central

Connecticut

Bristol Hospital Other

2014 2015 2016 2017

Other

Other

Financial Overview

($ in millions) 2016 Audited 2017 Audited 2018 Unaudited

Operating revenues:Student tuition and fees (net of scholarship allowances) $15.7 $17.5 $18.6Patient services 532.9 539.8 582.9Federal grants and contracts 59.5 58.1 50.7Nonfederal grants and contracts 27.1 29.0 29.3Contract grants and contracts 108.0 114.3 125.0

Total operating revenues 743.3 758.7 806.6

Operating expenses:Instructions 168.3 169.1 176.6Research 58.2 59.4 55.0Patient services 648.1 713.3 756.8Academic support 18.1 19.2 18.9Institutional support 98.0 82.2 100.7Operations and maintenance of plant 21.4 37.3 28.7Depreciation and amortization 41.5 52.0 52.6Student aid 0.1 0.2 0.3

Total operating expenses 1,053.6 1,132.8 1,189.6Operating loss (310.3) (374.1) (383.0)

Nonoperating revenues (expenses):State appropriations 289.3 278.2 275.2Gifts 6.9 4.1 5.7Investment income (net of investment expenses) 0.1 0.1 0.7Interest on capital asset - related debt (10.5) (10.2) (9.9)

Net nonoperating revenues 285.8 272.2 271.6Loss before other charges in net position (24.5) (101.9) (111.4)

Other changes in net position:Capital appropriations 175.0 43.5 88.8Loss on disposal (0.7) (1.0) (3.1)

Net other changes in net position 174.3 42.5 85.7Increase (decrease) in net position 149.8 (59.4) (25.7)

Net position-beginning of year 36.0 185.8 126.3Cumulative effect of implementing GASB 68 and 71 - - (1,099.2)

Net position - Beginning of year, as adjusted 36.0 185.8 (972.9)Net position - End of year $185.8 $126.3 ($998.6)

Income Statement

UConn Health Financial Statements

48

____________________

Notes: UCH includes clinical, academic and research activities

Pro Forma

2016

Pro Forma

2017

Pro Forma

2018

Revenues:

Net Patient Care $444.4 $461.0 $500.2


Total Revenues 477.1 498.5 546.8

Expenses:



Medical Contractual Support 6.6 7.0 7.4

Internal Contractual Support - Overhead 18.9 21.8 23.8

Internal Contractual Support - Rent 14.3 14.1 14.1

Internal Contractual Support - Intern and Residents 22.3 22.4 23.6

Allocation of Inst. Support - Other 20.0 7.9 16.0

Medical/Dental House Staff 3.0 3.3 2.6

Outside Agency Per Diems 1.6 3.3 4.2

Drugs 29.8 36.3 39.8


Utilities 2.5 3.6 3.5


Insurance 3.7 3.7 4.1

Repairs & Maintenance 6.6 7.9 9.1

Other Expenses 3.1 2.5 7.0



Operating Income (Loss) (112.3) (141.0) (145.5)

Nonoperating Revenues (Expenses)

Gift Income 0.6 0.7 -

Interest Expense - (0.0) (0.0)

Loss on disposals (0.4) (0.2) (2.8)

Net Nonoperating Revenues 0.2 0.4 (2.8)

(Loss) Income before Transfers (112.0) (140.6) (148.3)

Transfer from UConn Health for new Hospital Tower 273.3 21.3 9.8

Transfers (to)from UConn Health - Unrestricted 31.4 34.0 40.0

Transfers from UConn Health - In Kind Fringe 30.9 34.5 49.9

Increase in Net Position $223.5 ($50.8) ($48.6)

Income Statement

Pro Forma Financial Statements – Clinical Enterprise (1)

49

($ in millions)

(8)

(9)

____________________

Notes: Personnel Services and Fringe Benefits include allocation of institutional support

See “Financial Statement Adjustments” pages for numbered adjustment explanation

Refer to appendix A for detailed explanation of pro forma financial presentation

(1) The clinical enterprise includes John Dempsey Hospital and the UConn Medical Group

(2)

Pro Forma

2016

Pro Forma

2017

Pro Forma

2018

Revenues:

Net Patient Care $351.9 $367.7 $398.7



Expenses:










Drugs 26.0 32.2 34.9

















Transfers (to)from UConn Health - Unrestricted (0.9) 2.8 1.4



Income Statement

Pro Forma Financial Statements – John Dempsey Hospital

50

(8)

($ in millions)

(9)

____________________

Notes: Personnel Services and Fringe Benefits include internal contractual support and allocation of institutional support



(2)

Pro Forma

2016

Pro Forma

2017

Pro Forma

2018

Revenues:




Expenses:








Drugs 3.7 4.1 4.9











Gift Income 0.0 - -

Interest Expense - - -


Net Nonoperating Revenues 0.0 (0.1) (2.4)


Transfer from UConn Health for new Hospital Tower - - -

Transfers from UConn Health - Unrestricted 32.3 31.2 38.6


Increase in Net Position ($25.5) ($32.3) ($20.0)

Income Statement

51

($ in millions)

(8)

(9)

Pro Forma Financial Statements – UConn Medical Group

____________________




2019 Budget

UCH JDH UMG

Revenues:Tuition & Fees $25.5 $0.0 $0.0Research Grants and Contracts 80.2 - -Auxiliary Enterprises 18.7 3.4 -Interns and Residents 69.0 0.7 -Net Patient Care 538.3 426.6 101.5 Gift & Endowment Income 5.4 0.9 -Other Income 47.9 39.6 16.5

Total Revenue 785.1 471.1 118.0

Expenses:Salary Expense 412.5 139.2 92.4 Fringe Benefits 247.9 97.6 48.9 Internal Contractual Support - 51.7 14.0 Medical/Dental House Staff 55.8 3.4 -Medical Contractual Support 16.8 0.2 6.8 Temporary/Per Diem Staff 1.7 1.3 0.4 Utilities 13.1 3.3 0.2 Outside & Other Purchased Services 96.2 37.9 10.0 Insurance 3.6 2.5 0.2 Repair and Maintenance 15.1 7.8 1.1 Drugs 42.2 38.0 4.1 Medical Supplies 56.4 44.6 1.7 Other Expenses 30.7 2.0 0.5 Debt Service 9.6 0.0 -Depreciation 34.5 7.9 4.2

Total Expenses 1,036.0 437.5 184.5 Excess/(Deficiency) of Revenues over Expenses (250.9) 33.7 (66.5)

State Appropriation-Block Grant 119.0 - -State Supported Fringe Benefits 115.5 - -GF Appropriation Rescission - - -Workers Compensation Net of Appropriation (1.8) - -Transfer to State of CT - - -

Excess/(Deficiency) ($18.2) $33.7 ($66.5)

Total State Support 232.7 - -Percent of Total Revenues 22.9% - -

Income Statement

UCH, JDH, and UMG FY 2019 Proposed Operating Budget

52

($ in millions)

UCH has undertaken extensive financial improvement projects (“FIP”), and has targeted creating an additional $22.3M of savings in FY 2019

Cost Savings and Strategic Growth Initiatives

53

Financial Improvement Projects: FY 14 – FY 17 Financial Improvement Projects: FY 18 – FY 19

• Clinical Initiatives: Decrease Length of Stay in OB, cancer, 30 day readmissions, C-

sections, partial hospitalization; increase provider productivity, use of scribes,

onboarding/ interview savings, coding and revenue enhancements

• Revenue Initiatives: Coding & documentation optimization, collection process

improvements, managed care contract and revenue recovery efforts and revisions to

point of collection policy

• Workforce Initiatives: Workforce tracker implemented to review all clinical

positions and nursing staff grids using volume to approve positions

• Non-Labor: Extensive contract improvements yielding savings on medical devices,

pharmaceuticals, lab supplies, surgery, radiology

• Workers’ Compensation: Program improvements; Incident Review

• Strategic Growth Initiatives: Increase clinical volume through strategic faculty-

clinician hiring; identify new patient revenue streams; other new revenue generating

initiatives

Financial Improvement Project Total Savings

FIP FY 14 – 16 $13.7M

FIP FY 17 $11.1M

Total $24.8M

Financial Improvement Project Total Savings

FIP FY 18 $12.3M

FIP FY 19 - expected $22.3M

Total $34.6M

• Clinical Initiatives: Contract pharmacy revenue, provider productivity, contracts

review, Scribe implementation

• Workforce Initiatives: Restricted hiring to only vital positions

• Non-Labor: Extensive contract improvements yielding savings on medical devices,

pharmaceuticals, lab supplies, Surgery, Radiology

• Workers’ Compensation: Incident Review

• Strategic Growth Initiatives: Increase clinical volume through strategic faculty-

clinician hiring; identify new patient revenue streams; other new revenue generating

initiatives

($18.4)

($40.5)

-

($9.9)

($8.8)

($14.0)

($7.8)

$14.7

$3.7 $0.4

$3.5

$18.2

FY 18B Run Rate Salary Fringe Benefits EPIC Initial FY19B Clinical - JDH Clinical - UMG Non-Labor Other

Reduced

Operating CapitalSpend Final FY19B

FIP will be a key driver in materially improving FY19 financial performance to limit the impact of increased costs associated with salaries, fringe benefits and Epic

Financial Improvement Project (FY19)

54

FIP FY19 Key Initiatives Target Savings

Clinical Operational Initiatives – JDH $14.7M

Clinical Operational Initiatives – UMG $3.7M

Non-Labor $0.4M

Other Initiatives $3.5M

Total $22.3M

Budget Impact

FY19B Drivers

$0.0

$145 $145 $136 $118 $119

$83 $91 $88 $107 $116

$227 $236 $224 $226 $235

2015A 2016A 2017A 2018A 2019B

Block Grant State-Supported Fringe Benefits

UCH receives state appropriations, but budget cuts have caused a decrease in state support in FY18 and FY19

State Appropriations

55

• State appropriation dollars fund ~22% of

UCH’s $1+ billion budget

• These funds are used entirely to pay employee

salaries and benefits (equates to ~33% of UCH

employee salary and benefits)

> State reimburses UCH for fringe benefit

costs incurred to those employees whose

salaries are paid for using state

appropriation dollars

> All other employee compensation and

UCH expenses are paid using clinical

revenues, external grant funds and other

revenues

• Budget adjustments made in the 2018

Legislative Session cut UCH’s state

appropriation by an additional $15.4M,

bringing the total reduction in FY18 and FY19

to $32.2M as compared to FY17

($ in millions)

Historical and Budget State Appropriations

Recent increases in fringe benefit rates due to State’s obligation to service unfunded pension liabilities

Rising Fringe Benefit Costs

56

29.5% 30.1% 31.1% 30.6% 28.8% 28.8% 28.1% 28.7% 29.3% 29.9%

44.3% 44.1% 43.4%46.1%

53.3% 54.5%57.4% 58.9%

63.4%

71.1%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

CHA Rate JDH Rate

JDH Fringe Rate vs Average Connecticut Hospital Fringe Rate (1)

The State’s fringe benefit rates

have risen dramatically over

recent years (driven by the State’s

obligation to service the unfunded

pension liability), while rates at

other CT hospitals have remained

relatively stable

Fringe Benefit Costs Compared with Other CT Hospitals

$13.1 $13.3 $13.1 $17.1

$25.6 $27.6 $24.3

$35.4

$46.4

$57.5

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Fringe Benefit Differential vs Other CT Hospitals

____________________

Notes:

(1) Per Connecticut Hospital Association (“CHA”)

Trended Payor Mix at John Dempsey Hospital

57

32.0% 30.5%

22.9%

9.3%

5.3%

31.4%29.7%

23.1%

10.3%

5.5%

30.5%27.8%

23.1%

13.2%

5.4%

Commercial/HMO Medicare Medicaid Managed Medicare Self-Pay / Other

FY 2016 FY 2017 YTD Apr-18

40.9%

26.9%

19.6%

7.5%5.1%

43.1%

26.2%

17.2%

8.2%5.3%

43.3%

25.0%

17.6%

10.5%

3.7%

Commercial/HMO Medicare Medicaid Managed Medicare Self-Pay / Other

FY 2016 FY 2017 YTD Apr-18

Payor Mix - Gross Patient Revenue

Payor Mix - Net Patient Revenue

Major capital projects such as the new patient tower, Outpatient Pavilion and Epic implementation, have recently been completed with no major capex needs in the near term

UCH Historical and Projected Capital Expenditures

58

($ in millions)

$171 $154 $116

$93

$97

$42

$22

$268

$197

$138

$93

$7

2015A 2016A 2017A 2018A 2019B

Capital Appropriations Other

Historical and Projected Capital Expenditures• Given UCH’s recent completion of a number of major capital

projects and a low average age of plant, go-forward capital

needs in the near term are limited

> Projected capital expenditures are limited mainly to routine

maintenance of existing facilities

• The $318 million new patient tower was funded completely by

state bonds

• Epic implementation was funded by UCH operating funds and

state bonds

• Construction of the Outpatient Pavilion was funded by a

mortgage with TIAA-CREF, which is held by the Circle Road

Corporation (a subsidiary of the Finance Corporation)

> TIAA-CREF mortgage is supported by a 25-year fixed term

lease between UCH and the Finance Corporation which

ends March, 2040

Appendix A: Consolidated Financial Statements

• Presented herein are audited and pro forma income statements for JDH and UMG

• The pro forma financial statements for JDH and UMG reflect (1) adjustments made to get from UConn Health’s internal

accounting systems to the audited financial statements and (2) to include a full allocation of home office support provided

to JDH and UMG (“Institutional Support”)

• (1) Adjustments to reach the audited financial figures mainly pertain to an increase in fringe benefit costs due to the

adoption of GASB 68, GASB 75 and additional depreciation associated with Bond Funding

> The GASB 68 adjustment is a result of accounting and financial reporting requirements for governmental employers that provide their

employees with pension benefits administered through a qualified trust. GASB 68 establishes standards to measure and recognize pension

liabilities, deferred outflows of resources, deferred inflows of resources and expenses

> The GASB 75 adjustment is similar to GASB 68 except it is for postemployment benefits other than pensions

> The depreciation associated with Bond Funding is a result of purchases with State of CT general obligation bonds. UConn Health recorded

the bonds as State of CT Capital Appropriations (revenue) in the audit in the years sold. The corresponding depreciation expense is

recorded over the useful life (expense) in the audited statements. The revenue and expense were not part of JDH or UMG pro forma

financial statements

• (2) Adjustments are made to reflect the fact that JDH and UMG do not include a full allocation of Institutional Support,

which includes functions such as Human Resources, IT services and Facility Costs. The final pro forma Financial Statements

represent the audited financials plus the full allocation of Institutional Support

• Please refer to the Notes to Financial Statements later in this section for detailed descriptions of each adjustment

• All balance sheets presented in Appendix B are unadjusted and audited for 2016 and 2017 and unaudited for 2018

Financial Statement Presentation

60

Pro Forma

2016

Pro Forma

2017

Pro Forma

2018

Revenues:

Net Patient Care $444.4 $461.0 $500.2



Expenses:










Drugs 29.8 36.3 39.8

















Transfers (to)from UConn Health - Unrestricted 31.4 34.0 40.0



Income Statement

Pro Forma Financial Statements – Clinical Enterprise (1)

61

($ in millions)

(8)

(9)

____________________




(1) The clinical enterprise includes John Dempsey Hospital and the UConn Medical Group

(2)

Actual Common Size (%)

2016 Audited 2017 Audited 2018 Prelim. Audited

Operating revenues:

Net patient service revenues $351.9 $367.7 $398.7

Contract and other revenues 26.2 30.6 40.8


Operating expenses:

Salaries and wages 117.0 117.4 138.4

Fringe benefits 67.2 89.5 120.4

Medical/dental house staff 3.0 3.3 2.6

Medical contractual support 0.2 0.2 0.3

Internal contractual support 71.9 76.1 50.8

Outside agency per diems 1.3 3.0 3.7

Depreciation and amortization 8.9 18.8 20.1

Pharmaceutical/medical supplies 61.6 71.2 78.4


Outside and other purchased services 29.0 30.4 39.3


Repairs and maintenance 5.7 7.1 8.2

Other expenses 2.4 2.0 5.5

Total operating expenses 373.8 425.8 474.7

Operating income (loss) 4.2 (27.6) (35.1)

Nonoperating revenues (expenses):

Gift income 0.6 0.7 0.0

Interest expense - (0.0) (0.0)


Net nonoperating revenues (expenses) 0.2 0.5 (0.5)

Income (loss) before transfers 4.4 (27.1) (35.6)


Transfers from UConn Health for New Hospital Tower 273.3 21.3 9.8

Increase (decrease) in net position 285.8 9.7 1.1

Net Position - Beginning of year (39.6) 246.2 255.8

Cumulative Effect of Implementing GASB 68 and 71 - - -

Net position - Beginning of year (39.6) 246.2 255.8

Net position - End of year $246.2 $255.8 $256.9

Income Statement

Financial Statements – John Dempsey Hospital

62

($ in millions)

Pro Forma

2016

Pro Forma

2017

Pro Forma

2018

Revenues:

Net Patient Care $351.9 $367.7 $398.7



Expenses:










Drugs 26.0 32.2 34.9

















Transfers (to)from UConn Health - Unrestricted (0.9) 2.8 1.4



Income Statement

Pro Forma Financial Statements – John Dempsey Hospital

63

(8)

($ in millions)

(9)

(4)

(5)

(1)

(2)

(7)

(3)

____________________



Actual Common Size (%)

2016 Audited 2017 Audited 2018 Prelim. Audited

Operating revenues:

Net patient service revenues $92.5 $93.2 $101.5

Contract and other revenues 10.4 10.8 9.4


Operating expenses:

Salaries and wages 85.6 85.4 86.0

Fringe benefits 40.8 49.5 46.0

Medical contractual support 6.5 6.8 7.1

Internal contractual support 13.6 14.7 14.4

Outside agency per diems 0.3 0.3 0.5

Depreciation and amortization 5.2 5.8 5.8

Pharmaceutical/medical supplies 4.8 5.7 6.6


Outside and other purchased services 8.1 7.8 10.5


Repairs and maintenance 0.8 0.7 0.9

Other expenses 0.6 0.5 1.5

Total operating expenses 166.9 177.8 180.0

Operating loss (64.1) (73.8) (69.1)

Nonoperating revenues (expenses):

Gift income 0.0 - -


Net nonoperating revenues (expenses) 0.0 (0.1) (2.4)

Loss before transfers (64.0) (73.9) (71.5)

Net Transfers from UConn Health - Unrestricted 54.2 53.0 63.0

Decrease in Net Position (9.8) (20.9) (8.5)

Net Position - Beginning of year (48.1) (57.9) (78.8)

Cumulative Effect of Implementing GASB 68 and 71 - - -

Net position - Beginning of year (48.1) (57.9) (78.8)

Net position - End of year ($57.9) ($78.8) ($87.3)

Income Statement

Financial Statements – UConn Medical Group

64

($ in millions)

Pro Forma

2016

Pro Forma

2017

Pro Forma

2018

Revenues:




Expenses:








Drugs 3.7 4.1 4.9











Gift Income 0.0 - -

Interest Expense - - -


Net Nonoperating Revenues 0.0 (0.1) (2.4)


Transfer from UConn Health for new Hospital Tower - - -



Increase in Net Position ($25.5) ($32.3) ($20.0)

Income Statement

65

($ in millions)

(8)

Pro Forma Financial Statements – UConn Medical Group

(6)

(4)

(5)

(1)

(7)

(3)

____________________



• (1) – Includes depreciation associated with Bond Funded Assets

• (2) – Fair value transfer to JDH for cost UConn Health incurred to build new Hospital Tower

• (3) – In kind fringe associated with Internal charges for Salary and Fringe

• (4) – Includes worker comp paid to Third Party for Claims in Excess of Appropriation

• (5) – Includes expense EPIC project costs that were deemed not capital

• (6) – SOM funding for Faculty Support

• (7) – FY 2018 Net transfer between JDH and UConn Health and UMG (see detail below). A - EPIC Bond Funds from State of CT was recognized as

income by UConn Health in issuance year. JDH and UMG reported as transfers in years spent.

List of Adjustments - Legend

Notes to Financial Statements

66

Breakdown of unrestricted transfer

FY2018 JDH UMG Total

JDH portion of Appropriation 25,514,324 30,487,282 56,001,606

EPIC Funds received from State Bond Funds 16,311,494 A 4,083,304 20,394,798

Storrs EPIC Reimbursement 16,014,893 4,003,723 20,018,616

Return to UConn Health prior year funding of losses (4,049,405) (4,049,405)

Clinical Fund Transfer to UConn Health (52,455,634) (52,455,634)

Total Transfers to UConn Health - Unrestricted 1,335,672 38,574,309 39,909,981

• (8) – Prior to GASB 68 and 75 adjustment for FY18. This will be first year for GASB 75. In prior year GASB 68 had the following impact

• (9) 19 – Includes EPIC at the elbow cost of the following:

JDH $7,135,224

UMG 1,983,806

Total at the elbow cost $9,119,030

JDH UMG Total

FY18 33,073,276 4,212,692 37,285,968

FY17 20,371,914 10,603,144 30,975,058

FY16 338,440 1,655,382 1,993,822

Appendix B: Balance Sheets


Current Assets

Cash and cash equivalents $99.6 $104.5 $118.8

Patient receivables, net 50.6 51.7 57.2

Contract and other receivables 33.5 30.3 33.7

Construction escrow account 10.3 2.5 0.5

Due from Affiliates 88.1 11.5 35.4

Due from State of Connecticut 11.0 10.5 6.9

Due from Department of Correction 8.4 10.9 0.0

Inventories 11.7 11.8 11.5

Prepaid expenses 8.5 6.6 12.2

Total current assets 321.8 240.2 276.2

Noncurrent Assets

Restricted cash and cash equivalents 0.4 1.2 0.5

Other assets 4.5 3.0 3.7

Due from State of Connecticut 19.0 23.1 1.7

Capital assets, net 945.2 1,030.4 1,068.2

Total noncurrent assets 969.1 1,057.7 1,074.1

Total assets 1,290.9 1,297.9 1,350.4

Deferred Outflows of Resources 167.6 464.5

LIABILITIESCurrent Liabilities

Accounts payable and accrued liabilities 43.6 48.1 55.7

Due to State of Connecticut 7.0 7.6 7.6

Accrued salaries 27.2 27.6 27.0

Compensated absences - current portion 21.7 20.8 18.5

Due to third party payors 24.0 23.2 28.1

Unearned revenues 1.2 2.1 0.9

Malpractice reserve 5.6 5.9 3.3

Long-term debt - current portion 5.8 6.6 6.9

Total current liabilities 136.1 141.8 148.0

Noncurrent Liabilities

Malpractice reserve 26.0 19.0 11.7

Compensated absences 31.3 31.2 30.7

Pension Liability 874.4 1,233.4 2,370.3

Long-term debt 204.9 200.5 193.6

Total noncurrent liabilities 1,136.6 1,484.1 2,606.3

Total liabilities 1,272.7 1,625.9 2,754.3

Deferred Inflows of Resources 0.0 10.2

NET POSITION

Net investment in capital assets 734.5 823.3 867.6

Restricted for

Nonexpendable Scholarships 0.1 0.1 0.1

Expendable

Research (0.9) (0.0) (0.1)

Loans 1.0 0.0 0.5

Capital projects 117.5 37.1 37.7

Unrestricted (666.3) (734.1) (1,904.3)

Total net position $185.8 $126.3 ($998.6)

Balance Sheet

UConn Health Financial Statements

68


Current AssetsCash $35.9 $36.9 $57.0Patient accounts receivable 40.0 40.9 47.9 Inventory 9.0 9.0 9.2 Contract and other receivables 8.8 10.9 11.6 Due from UMG - 9.6 5.6 Due from Finance Corporation, current portion 5.7 2.0 2.0 Prepaid expenses 5.9 5.8 7.2

Total Current Assets 105.4 115.2 140.5

Noncurrent AssetsOther assets 0.8 0.8 0.8 Due from Finance Corporation, noncurrent portion 9.0 2.7 2.7 Capital assets, net 331.9 366.5 386.1

Total Noncurrent Assets 341.7 370.0 389.7 Total Assets 447.1 485.2 530.2

Deferred Outflows of ResourcesDeferred amount for pensions 50.4 129.8 145.1

Current LiabilitiesAccounts payable and accrued expenses 12.4 18.4 27.1 Accrued payroll 6.7 6.8 8.3 Due to UConn Health Malpractice Fund 0.3 0.3 0.2 Due to State of Connecticut 4.0 4.2 5.2 Due to third-party payors 24.0 23.2 19.8 Deferred revenues 0.0 0.2 0.0 Capital leases, current portion - 0.5 0.5 Accrued compensated absences, current portion 6.4 6.3 7.3

Total Current Liabilities 53.7 59.9 68.5

Noncurrent LiabilitiesPension liabilities 188.4 288.1 653.9 Capital leases, net of current portion - 1.7 1.2 Accrued compensated absences, net of current portion 9.2 9.4 12.1

Total Noncurrent Liabilities 197.6 299.3 667.3 Total Liabilities 251.3 359.2 735.8

Deferred Inflows of ResourcesDeferred amount for pensions 0.0 0.0 9.2

Net PositionNet investment in capital assets 331.9 364.3 384.4 Unrestricted (85.7) (108.4) (454.2)

Total Net Position $246.2 $255.8 ($69.7)

Balance Sheet

Financial Statements – John Dempsey Hospital

69


Current AssetsCash $0.0 $0.0 $0.0Patient accounts receivable 10.4 10.6 9.1Inventory 0.6 0.6 0.3Contract and other receivables 0.1 0.4 0.1Prepaid expenses 0.1 0.1 0.1

Total Current Assets 11.2 11.7 9.6

Noncurrent AssetsDue from Finance Corporation - - -Capital assets, net 21.8 21.9 21.1

Total Noncurrent Assets 21.8 21.9 21.1Total Assets 32.9 33.6 30.7

Deferred Outflows of ResourcesDeferred amount of pensions 24.4 60.2 50.9

Current LiabilitiesCash overdraft 2.9 3.6 5.6Accounts payable and accrued expenses 2.0 2.1 4.3Accrued payroll 7.1 7.4 7.9Due to UConn Health Malpractice Fund 0.0 0.0 0.0Due to JDH - 9.6 5.6Accrued compensated absences, current portion 2.9 3.0 3.0

Total Current Liabilities 15.0 25.7 26.4

Noncurrent LiabilitiesPension liabilities 96.1 142.5 320.2Accrued compensated absences, noncurrent portion 4.2 4.4 5.0

Total Noncurrent Liabilities 100.3 146.9 325.2Total Liabilities 115.3 172.6 351.6

Net PositionNet investment in capital assets 21.8 21.9 21.1Unrestricted (79.7) (100.7) (295.9)

Total Net Position ($57.9) ($78.8) ($274.8)

Balance Sheet

Financial Statements – UConn Medical Group

70

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