2018

Report to

the Commun

ity

idea is worth exploring. The future of healthcare needs our wildest, boldest ideas.

There’s not a lot of room on a sticky note, so we’ve got to keep it simple. At Altru, that means remembering the reason we’re all here: for the patient. If we keep our focus on taking care of the person, our other priorities will stack accordingly.

The best part about sticky notes? They shift and move and still stick together. Flexibility is part of our continuous evolution. Our people shift and shape and yet, through good times and challenging times, we stick together. Because together, we’re creating a beautiful mosaic of the future of healthcare for the entire Red River Valley.

Boldly,

Brad Wehe, Chief Executive Officer

Sticky notes.

We use them to capture ideas, make a mess, connect the dots, find the flow.

Something so simple can create a complex web of innovation. Sticky notes capture every detail. They pull apart and stick right back together. They’re flexible, allowing ideas to start big then slim down as we find our focus and get to work.

And they stand out. Ever notice how your eye is drawn to a message on a sticky note? These bright squares are not afraid to be bold.

We filled countless sticky notes over the last year at Altru Health System. We used them to map out processes and identify flows of medicine as teams across the health system designed our new, world-class hospital. These colorful connections dotted the white walls of conference rooms buzzing with creative and innovative dreams of a healthy future together. We dove into the details to uncover common threads and find patterns. We reimagined, well, just about everything.

Down the hall from our design meetings, sticky notes spread thick across improvement efforts led by our Kaizen Promotion Office. The bold new era encompasses much more than a brand new facility in 2022. Through Kaizen, a Japanese term meaning continuous improvement , we’re reinventing the way we deliver care. This involves dissecting the elements of our current processes in order to put them back together in a more efficient, meaningful way. A way that creates the most value and best outcomes for our patients.

While we’re breaking up soil now for the future hospital, we also know healthcare itself needs breakthroughs. We’re not going to get there if we don’t roll up our sleeves, sharpen our pencils and get our hands a little smudged. Maybe we’ll crumple a few notes along the way—that’s okay. Every

Executive

Message

Lifetime

Giving

Levels

In 2018, o

ur

donors gifte

d $3.3

million of sup

port

toward the

needs of

our patients

.

Founder ($100,000 and above) Alerus Altru Family Medicine Center Pharmacy Altru Alliance American Heart Association, Inc. AMGEN Pharmaceuticals Bremer Bank Lawrence Brown Perry Bunde C.L. Linfoot Co. Charles Swanson Estate City of Grand Forks Dakota Medical Foundation Engelstad Foundation Epic Systems Corporation Winnifred Falkanger Hugo’s Impact Foundation Knight Foundation Richard Meives David and Karen Molmen Myra Foundation ND Department of Transportation ND Division of Emergency Management ND Department of Health Otto Bremer Trust Harris A. Peterson Ben E. Pinta Linda Redmann Rehab Foundation Dr. Casey and Beverly Ryan Jerry & Sanny Ryan Rydell GM Auto Center Safe Kids Worldwide Sertoma Club of Grand Forks The Farrah Fawcett Foundation UCare UND School of Medicine & Health

Sciences US Department of Agriculture Vaaler Insurance, Inc. VHA N. Birdie Wilcox Yorhom Medical Essentials Partner ($50,000-$99,000) Alliance for Clinical Trials in Oncology Shirley M. Bostrom Brady, Martz & Associates, P.C. Randy and Merrilee Brown Cardinal Health Foundation E. I. Dupont Denemours & Co. Edgar Haunz Foundation

Edgewood Healthcare System Frandsen Bank & Trust Gap Foundation Grand Forks Herald Bill and Joanne Haug Lane and Lavon Jacobson Leighton Broadcasting Lions District 5M8 Dr. Eric Lunn Lunseth Plumbing & Heating Co. Medica Foundation ND Department of Human Services Sandy and Doug Norby Dr. Robert and Genevieve Painter Mike and Tricia Ryan Dr. Mark and Barbara Siegel TAG-The Art of Giving Corp Dwight and Ruth Thompson United Way of Grand Forks, East Grand

Forks and Area US Bank Bill and Cheryl Widman Will Rogers Institute Xcel Energy Benefactor ($25,000-$49,999) Abbott Laboratories Alpha Phi Sorority American Heart Association Arthur and Debbie Bakken Bank of America Bergstrom Electric, Inc. Drs. Ron Brockman and Ellen Feldman Camrud, Maddock, Olson & Larson, Ltd. Choice Financial Group Cincinnati Children's Hospital City of Milton Richard and Phyllis Clark CompHealth Construction Engineers, Inc Coverys Community HealthCare

Foundation Joe and Mary Crary Tim and Sandra Crary Bernard Danielson Delta Dental of Minnesota EAPC Architects Engineers Ecolab Foundation Philip D. Edman Ron and Kellee Fisk Frandsen Bank & Trust – Wealth

Management and Trust Gate City Bank

General Motors Corporation Greg and Michelle Gerloff Dr. Yvonne Gomez and Gregg Halverson Grand Forks Public Schools Graystone Consulting Dr. Greg and Colette Greek Greenberg Realty Jay and Diane Gunderson Alice Hanson Happy Harry’s Bottle Shops Robert M. and Helen Jacobson JLG Architects, Ltd. David and Pamela Kvidt Dr. John and Doris Lambie LifeCare Medical Center Arnold Lindquist Lockton Dunning Benefits Robert and Janice Lorch Merrill Lynch Minnkota Power Cooperative, Inc. Dan and Janelle Mulroy National Breast Cancer Foundation,

Inc. Robert Nelson and Kristi Magnuson-

Nelson Nodak Electric Cooperative, Inc. North Dakota Community Foundation Robert and Jeanine Peabody Porpoura Coffee House Christy Ramsey Red River Lions Club Red River Valley Motorcyclists Sammons Preston Joe and Debroah Shelton Dr. Louis B. and Thelma Silverman Jim and Brenda Sondreal Paul and Susan Sproule St. Ansgar's Hospice Dr. Paul and DeeDee Stadem Swingen Construction Company Marcus and Maura Tanabe Teva Neuroscience, Inc. Texas Biotech Corporation Thrivent Financial for Lutherans VALDAK Corporation dba Valley Dairy Valley Med Flight, Inc. Dr. James and Nancy VanLooy Jeff and Kim Vigen Walmart Foundation Terry L. Watne Brad and Marcia Wehe Lloyd and Donnabelle Weston Wayne and DeAnna Zink

We are so grateful to our generous supporters for their passion for helping those in need. Our donors have helped us to provide outstanding medical services, programs, technology and education for patients of Altru and their families this past year. Their generosity has made an impact throughout our region and we are touched by their compassion and care. The following donors have achieved lifetime giving levels of $25,000 or higher by December 31, 2018. For more information on donating to Altru Health Foundation, please visit altru.org/foundation.

These gifts help us share the healing power of generosity. Every gift, large or small, reinforces our mission of improving health, enriching life in the communities we serve. Below, you will find a few examples of how your gifts supported patients in 2018. Patient Care Programs/Services » Rehab Autism Diagnostic Clinic » Caring for Kids—assisting families with children battling chronic conditions » Infant Bereavement » Multiple Sclerosis Clinic » Suicide prevention and education Patient care equipment » Cardiac/Pulmonary rehabilitation equipment » Telemedicine equipment for rural clinics » Renal Dialysis equipment » Hospice equipment » Cardiology equipment Patient assistance to financially eligible individuals » Free mammograms » Free foot and eye exams for patients with diabetes » Free colonoscopies » Scholarships to Healthy n’ Fit Kids » Filling the Gap gas cards and lodging (patients receiving cancer care) » Caring for Kids gas cards and lodging (children receiving regular treatments)

Altru Clinic

in Crookston

expanded radiology

options, installed

CT scanner

Over $16,000

was raised on

Giving Hearts Day

for Altru’s

Bereavement

Services

Altru providers

made immunization

honor roll list

Spin for Kids raised $178,858.90 for kids with special needs within our

region

Altru Clinic in

Thief River Falls

began renovation

and addition of

services

Announced location

of new hospital

within current

Columbia Road

Campus

Improved patient care with expanded use of cutting-edge

sterilization

technology

Altru Cancer

Center Golf

Tournament raised

over $103,000

for Filling the Gap

and Caring for Kids

Awarded

Distinction

Centers+ for

Maternity Care

Perinatal Ca

re

Certification

from

Joint Commis

sion

Passed

HIMSS Stage 7

Recertification

Survey

Invested in

DaVinci XI Robotic

Surgical System

for enhanced

patient care

Truyu Aesthetic

Center broke

ground on

expansion

Sunshine Hospitality

Home opened doors

to patients and

families

Donor and

Transfusion/Tissue

Services received

AABB

Accreditation

Pathology and

Laboratory Services

received accreditation

from College of

American

Pathologists

Altru’s Gala raised

more than

$387,000 for

Home Visit Program

Named

2018 CHIME

Healthcare’s

Most Wired

(4th in the nation)

Completed design

phase of

new hospital!

JANUARY FEBRUARY APRIL MAY JUNE JULY AUGUST OCTOBER NOVEMBER DECEMBER

American Heart

Association Award

recognized Altru’s

commitment to quality

stroke care

Key Accomplishments

220

200

180

160

140

120

100

80

60

40

20

0

Days Cash on Hand and Days in Accounts Receivable

- 80

- 70

- 60

- 50

- 40

- 30

- 20

- 10

- 0

Days Cash on Hand Days in Accounts Receiveable

2016 2017 2018

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

60%

50%

40%

30%

20%

10%

0

Debt to Capitalization Hospital Discharges

To view Altru's Audited Financial Report for 2018, please visit altru.org/financialreports.

$20,000

$16,000

$12,000

$8,000

$4,000

$0

-$4,000

-$8,000

-$12,000

-$16,000

Operating & Total Profit

Operating Profit (in thousands)

Total Profit (in thousands)

$15,940

$13,254

$16,655

$413

-$4,378

41.5 42.6% 43%

14,829 14,59913,352

2016 2017 2018

2016 2017 2018

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

33,809 33,045 32,348

Emergency Department Visits

2016 2017 2018

2,400

2,000

1,600

1,200

800

400

0

Births

1,828 1,744 1,698

2016 2017 2018

2016 2017 2018

-14,428142.31 141.48

127.77

Financial

Overview

Healthcare Landscape Health systems nationwide are facing a cost-driven market challenge. While operating expenses have continued to grow at rates exceeding annual inflation, revenue growth has dropped off due to declining volumes, downward reimbursement pressure, and the shift of care from hospital inpatient to clinic and community-based services. Patients are also demanding a lower cost of care and more choices in how healthcare services are delivered.

Capital Investment In 2018, Altru committed over $31 million in capital investments. Major renovation and expansion projects continued in Crookston and Thief River Falls, totaling more than $3 million. The footprint of Truyu Aesthetic Center was also nearly doubled with an investment of nearly $4 million. The relocation and expansion of therapy and athletic training to the new Performance Center allocated over $6 million across related programming. Finally, Altru commenced work on a multi-year main hospital replacement project, estimated to be completed in 2022. Total capital investment is expected to be close to $305 million with the first $8 million invested in 2018.

Financial Performance from Operations Declining volumes combined with a tight labor market and rising expenses led to a challenging financial year for Altru. Despite significant effort to control costs, the 2018 loss from operations was $4.3 million, a negative margin of .75%. The investment market downturn late in the year resulted in an overall decrease of net assets of $12.5 million compared to an increase of $16.7 million in 2017. Total unrestricted revenues were $580.5 million compared to $563.2 million in 2017, an increase of 3.2%. Total operating expenses were $584.9 million compared to $562.8 million in 2017, an increase of 3.9%.

Balance Sheet Operational results combined with the decline in investment value contributed to a softening of the balance sheet. Days cash on hand at year-end was 128 days, down from 142 in 2017. Debt to capitalization increased to 43.0% from 42.6% in 2017. Equity decreased by $14 million in 2018, primarily due to the temporary dip in investment value at the end of the year. However, much of this valuation was regained in the first quarter of 2019 as the market rebounded.

Many operational changes and improvements were introduced in 2017 and 2018 that will enhance operations in 2019 and continue to be a focus of executive leadership. While we are facing the same challenges as many other non-profit healthcare organizations, we remain committed to our mission and vision of providing world-class care across the region.

Sara Lusignan, Chief Financial Officer

41.5344.96 42.52

Total community benefit: $28,718,542 Benefits activities relating to charity care, health professional education, community health improvement, research and financial and in-kind contributions. All of our resources are devoted to improving health in the communities we serve. Total cost of providing Charity Care: $26,111,890

Volunteers Adults: 136 Students: 151 Juniors: 23 Total: 310 Departments Served: 51 Service Hours: 16,008 (7.7 FTE) Estimated Dollar Value: $406,614.65

Employees Non-Physician Employees: 3,647 Physicians: 261 Advance Practice Providers: 121 Total Employees: 3,909 Retired: 83 Hired: 449 Average Tenure: 9.97 years Total Salary: $283,873,258 Total Benefits: $60,526,723 Total hours worked: 5,948,780

March

2019

start

construction

7

Stories

Q4

Operational

Date 2022

Hospital in

the Park

528,000

square

feet

310 volunteers provided 16,008 hours of service (7.7 FTE) with an estimated dollar value (based on the Independent Sector) of $406,614.65

Communit

y

Commitme

nt

P.O. Box 6002 Grand Forks, ND

58206-6002 altru.org

Altru Health System complies with applicable Federal civil rights laws and does not discriminate on the basis of race, color, national origin, age, disability, or sex. For more information, see link on our website at altru.org. ATENCIÓN: si habla español, tiene a su disposición servicios gratuitos de asistencia lingüística. Llame al 1.800.732.4277. ACHTUNG: Wenn Sie Deutsch sprechen, stehen Ihnen kostenlos sprachliche Hilfsdienstleistungen zur Verfügung. Rufnummer: 1.800.732.4277. LUS CEEV: Yog tias koj hais lus Hmoob, cov kev pab txog lus, muaj kev pab dawb rau koj. Hu rau 1.800.732.4277.