philadelphia investors conference: combined presentations 2nd panel
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The Role of Health Care and Higher Education in Philadelphias Economy:
Vision for the FutureDISCLAIMER
The information contained herein was prepared as part
of a presentation scheduled to have been given April 18
and April 19, 2013, at an investor conference conducted
by the City of Philadelphia, and is provided solely in
response to a Right-to-Know Request, Slaughter CP
2013-1250. No representation is made as to the accuracy
and completeness of such information, nor shall its being
provided herewith create any implication that there has
been no change in the matters described or referred to
therein since the dates of the conference or the date asof which particular information is given, if earlier.
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Dr. Steve Tang
President andChief Executive Officer
University City Science Center
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Chris Myers
Director
Navigant
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2013 PHILADELPHIA INVESTOR CONFERENCE
The Role of Health Care and Higher Education in Philadelphias Economy:
Vision for the Future
Chris Myers
April 18, 2013
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NAVIGANT HEALTHCARE OVERVIEW
Navigant Consul ting (NCI) is a $800M+ global specialty consul ting fi rm wi th headquarters in Chicago. With over 450
dedicated healthcare professionals, Navigant provides a full spectrum of s trategic, operating and financial advisoryservices to the healthcare industry.
Revenue CyclePerformanceImprovement
ClinicalDocumentationImprovement
Reimbursement RateAnalysis
Pricing Analysis
Auditing Services
RevenueManagement
PerformanceImprovement PlanDevelopment ,
Assessment andImplementation
Clinical OperationsImprovement
Interim Management
Supply ChainImprovement
Physician Group andFaculty PracticeManagement
OperationalPerformanceImprovement
Strategic AlternativeAssessments
Merger & AcquisitionAdvisory Services
Capital Placements
Recapitalizations &Restructurings
Valuations & FairnessOpinions
Financial Advisory
Mergers &Acquis it ions ,Restructuring*
Compliance Monitoringof Managed CarePrograms
Reactive Risk MitigationServices
Proactive ComplianceReviews
Developing IntegratedCompliance and RiskManagement,Monitoring and TestingProcesses
Fraud &Compliance
Market Assessments
Real EstateManagement
Program/ServicePortfolio Optimization
Hospital-PhysicianClinical Integration
Pricing &Reimbursement
Delivery Innovation
Managed Care ProgramAnalysis
Strategy
* Investment Banking services provided through Navigant Capital Advisors, LLC, a FINRA Broker Dealer.
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NATIONA LLY, HEAL TH SYSTEMS FOCUSING ON THREEIMPERATIVES
1. Continued and expanded drive toward provider consolidation Thinly capitalized and distressed hospitals and physician groups increasingly will
seek partnerships, resulting in some transactions that could not have beenpredicted two years ago (50% of hospitals in systems in 2000 vs. 67% in 2012)
Growing innovative solution set beyond traditional M&A aimed at economies ofscale, value-based reimbursement and population management, including: ACO,CIN, hybrids (taxable and tax exempt; secular and Catholic), back office
collaboration, minority membership and more Continued consolidation of regional markets and large regional systems breaking
down traditional service areas Continued sponsor-driven reconfiguration of Catholic health systems
2. Reimbursement cuts are requiring improved performance Large federal and state budget deficits have exacerbated Medicare and Medicaid
solvency issues, pressuring provider payment and requiring new discipline andapproaches to performance improvement
3. A new reimbursement paradigm is emerging Value based rather than volume based payment
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PHILADELPHIA IS UNCONCENTRATED FOR HEAL TH SYSTEMS, BUTSUPERCONCENTRATED FOR COMMERCIAL PA YERS
Note: An Elzinga-Hogarty test (based on an analysis of patient origin data) may be used to define the relevant market; the information above is for MSAs.
Sources: US Department of Justice and Federal Trade Commission Horizontal Merger Guidelines (8/19/2010); 2012 AMA Competition in Health InsuranceStudy (January 2010 data) [Data updated November 2012]; HealthLeaders Market Overview Reports [Data updated December 2012]; NCI Analysis.
Commercial Payer HHI vs. Health Sys tem HHI
Health Systems
Commercial Payers
SuperConcentrated (18)
Highly Concentrated(25)
Moderately Concentrated(26)
Unconcentrated(18)
Super Concentrated(16)
Columbi a, SC Grand Rapids Lansing Portland, ME
Scranton Wilmington
Charleston Greenville Honolulu
Birmingham Indianapolis Pittsburgh
Baltimore Chicago Detroit Philadelphia
Highly Concentrated(29)
Aust in Des Moines Cape Coral Fresno Norfolk
Buffalo Harrisburg Hartford Knoxville Las Vegas Lexington Omaha
Raleigh Richmond Rochester Southern CT Syracuse Tucson
Cincinnati Greensboro Louisville Milwaukee
Minneapolis Nashville Providence Southern NJ
Boston Northern NJ Oklahoma City
Moderately Concentrated(42)
Charlotte
ColoradoSprings Dayton Orlando Spokane Toledo Worcester
Albany
Albuquerque Columbus El Paso Madison
Memphis
Salt Lake City Springfield, MA Tulsa
Baton Rouge
Cleveland Dallas Denver Jacksonville Little Rock New Orleans Phoenix
Portland, OR
Sacramento San Antonio San Diego St. Louis Tampa West Palm
Beach
At lan ta
Houston Kansas City Los Angeles Miami New York City
Orange County
Riverside San Francisco Seattle Washington,
DC
Unconcentr ated (0) None None None None
The Herfindahl-Hirschman Index (HHI) is calcu lated as the sum of the squares of each organi zations market share. The US Department ofJust ice and Federal Trade Commiss ion define markets w ith an HHI of >2500 as Highly Conc entrated, 1500 to 2500 as Moderately Concentrated
and 3500.
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PHILADELPHIA PROVIDER SECTOR: EXPECTEDDEVELOPMENTS
1. Large integrated, well-capitalized systems are moving across and beyond Pennsylvania
(UPMC, Geisinger, Community). Regulatory / economic uncertainty in adjacent states(NJ, NY, MD) presents opportunities for strong PA systems
2. Philadelphia systems, despite strong brands, generally have not moved beyondtraditional service areas and are focused on local / regional competition
3. Physicians will continue to join strong health systems
4. Hospital competition and M&A activity in Philadelphia will accelerate across the midterm. Across the longer-term, select Philadelphia systems will expand beyond theregion
Recent: Temple acquired Fox Chase; Prime acquired Roxborough; Catholic HealthEast and Trinity Health are exploring a national merger
Future: Market in play. Continued system formation, mostly around academicmedical centers, with freestanding hospitals and small systems seeking capitaland/or regional partners
5. Market has not been an early adopter of reform (few ACOs, status of InsuranceExchange, etc.), but there will be a greater emphasis on population health as payersand provider partner to bend the cost curve (Medicare and Medicaid are growthsegments)
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Craig R. Carnaroli
Executive Vice President
University of Pennsylvania
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2013 Philadelphia Investor Conference
Craig R. Carnaroli
Executive Vice President
University of Pennsylvania
The Role of Health Care and Higher Education on thePhiladelphia Economy
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Todays Penn
20,000 students (graduate, professional
and undergraduate) 12 undergraduate and graduate schools
300 acres on one contiguous urbancampus
14 million square feet of builtenvironment
$6.2 billion operating budget
$6.8 billion endowment $923 million in Sponsored
Research
2,545 standing faculty
3 hospitals
32,000 employees
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University Snapshot
Academic Component
$2.7 billion Total Revenue
$10.3 billion Total Assets$1.1 billion Debt
$6.4 billion Investments
M/S&P: Aa2/AA+
Health System Component
$3.5 billion Total Revenue
$4.4 billion Total Assets$900 million Debt
$1.8 billion Investments
M/S&P: Aa3/AA-
$6.2 billion Total Revenue$14.7 billion Total Assets
$2.0 billion Debt
$8.2 billion Investments
*For Fiscal Year ended June 30, 2012.
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Revenue $3.5 billion Employees 15,000
Adult/ICN admissions 80,655
Avg. length of stay 5.52
Revenue $651 million
Faculty 1,737
Medical students 725
Residents & Fellows 1,057
NIH awards $398 million
Endowment $848 million
PENN Medicine
University of Pennsylvania
Health System
University of Pennsylvania
School of Medicine
Penn Medicine Snapshot*SEE DISCLAIMER ON COVER PAGE
P E i I t
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Penns Economic Impact
$14 billion in total economic activity
generated for Pennsylvania in 2010
(Equivalent to $38 million per day)
$382 million generated annually in
Pennsylvania tax revenues
$463 million spent on capital investmentsin FY 2010
46.5%Growth since FY 20005
$489 million in private development
attracted to the area since 1997
145,500direct and indirect job creation for
Pennsylvania economy
$26 per day million to the City of Philadelphia
$38.5 million per day to the Commonwealth
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Dr. Neil Theobald
President
Temple University
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Temple is Philadelphias Public University
Providing a Well-Trained Workforce: creatingpathways for high school graduates with strong
academic ability to earn an affordable high-
quality college degree
Increasing Innovation: supporting a researchenterprise that drives economic growth,
provides solutions to societal problems, and
advances health care
State-wide medical education: preparing
Pennsylvanias next generation of physicians
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Providing Philadelphia with a Well-Trained Workforce:Access to College for Low-Income High School Graduates
10,285
7,949
-
2,000
4,000
6,000
8,000
10,000
12,000
Temple University Rest of City 6
Pell Grant Recipients in Phi ladelphia 4-Year Universities2010-2011
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Providing Philadelphia with a Well-Trained Workforce:Across the Professions
1 of 7 college graduates in Philadelphia holds a Temple University degree
83% of Temple bachelors degree recipients in 2012 remained in Philadelphia
More than 1 of 4 attorneys in Philadelphia holds a Temple University law degree
Nearly 1 of 2 dentists in Philadelphia holds a Temple University dental degree
In the face of a nationwide physician shortage, the Temple University School ofMedicine ranks 9thamong highly-ranked schools in supplying physicians (194 MDs
granted in 2012).
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Providing Philadelphia with a Well-Trained Workforce:Increased Temple University Degree Production
5,
754
6,
119
6,
356
7,
049
7,
152
7,
587
7,
705
7,
992
8,
360
8,
670
8,
870
01,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
Total degrees awarded by Temple per year
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Increasing Innovation:Research Expenditures that Drive Economic Development
$99.2
$15.5 $15.2 $14.8
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
Medicine Science and
Technology
Health Professions Liberal Arts
Temple University Research Expenditures (in Millions)by School 2011-2012Total is $169.2 Mill ion
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Increasing Innovation:Making Philadelphia an Appealing City and Boosting Its Economy
$854.9 $828.5
$-
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
$900.0
$1,000.0
Unrestricted Income Expenses
2011 Operating Income and ExpensesAr ts and Culture Sector in Philadelphia
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State-wide medical education:Preparing Pennsylvanias next generation of physicians
Temple University Medical Education Sites
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Temple is Philadelphias Public University
Providing a Well-Trained Workforce: creatingpathways for high school graduates with strong
academic ability to earn an affordable high-
quality college degree
Increasing Innovation: supporting a researchenterprise that drives economic growth,
provides solutions to societal problems, and
advances health care
State-wide medical education: preparing
Pennsylvanias next generation of physicians
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John Fry
President
Drexel University
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*S SC O CO G
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Drexel University
Philadelphia Investors Conference
APRIL 18, 2013
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Drexel at a glance
Student Enrollment > 25,000 including undergrad/grad/onlineand on all other campuses
Operating Budget $800 million
Capital Budget > $300 million
Cooperative Education Co-Op
Translational Research
Economic Development
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Drexels Economic Impact
$2.4 billion: The impact of Drexels spending, the increased earning powerof Drexel alumni and the spending of students and visitors to Drexel.
27,400 jobs for Pennsylvanians: this number goes well beyond the 9,500directly employed by Drexel, and impacts a wide range of employmentsectors.
$68 million in state and local tax revenues: higher education is a drivingeconomic force in the Commonwealth and Drexel is a leader in generatinggovernment revenues.
$110 million: Drexels commitment to life-saving research
$26 million: Civic engagement improves the quality of life forPennsylvanians far beyond the impact of the dollars spent on thoseactivities
Figures based on a 2012 Econsul t Study
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Key Strategic Initiatives:
Create an Innovation Nexus for Research,
Technology Transfer and Economic
Development
Develop the Nations Most Dynamic
Transportation Hub-Based University District
Continue to Grow Drexels Enrollment, from
25,000 to 34,000.
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JFK Boulevard at 30thStreet, Facing WestDrexel Innovation Neighborhood
BEFORE
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