modern surgical suites attest to HRMC's commitment to meet the expanding medical needs of our growing community and has moved the hospital from a primary care facility into a selected HAVASU REGIONAL specialty care center which includes an OPEN-HEART PROGRAM. With patient safety the top medical center priority, superbly-equipped with the latest high tech medical advancements and backed by 24- hour care seven days a week, recruitment of new physicians, HRMC is prepared to perform Open-Heart Procedures. OPEN HEART BUSINESS PLAN Coronary Intervention started in April 2002 and our goal is to keep all PTCA's and STENTs in Havasu with the elective open-heart surgical back up required. With our Payor mix of OVERVIEW approximately 60% Medicare and our service area growing by 5%-6% in population/admissions The development of an open-heart program at Havasu Regional Medical Center involves several per year, Open Heart surgery will become the niche in Northwestern Arizona for HRMC. critical factors including patient volume, a competent team of physicians, nurses and technicians, fiscal/community support and total commitment to quality. INTIAL START It had been determined that the target range of 200 open-heart procedures annually at HRMC would maintain staff competence and keep quality data statistically significant. From Intellimed In 2002, Chad Patrick, CEO, met with Dr. Pierre Tibi of Phoenix Cardiac Surgery to data and the Cardiovascular Lab Performance profile sheet, HRMC referred over 200 cardiac assess HRMC as a potential site for open-heart surgery. Based on his assessment, surgeries to various Phoenix Arizona hospitals during a 12-month period. Assuming a 5%-6% Dr. Tibi would be the surgeon or one provided by his group to provide cardiovascular growth rate in the primary service area and continued growth with the 2d Cath Lab, future surgical services to HRMC for at least 18 months or until Dr. Tibi could recruit another potential open-heart volume will exceed 200 procedures annually. cardiac surgeon to his existing group to provide fulltime coverage to HRMC. The program will consist of an extensive training program, in cooperation with Banner Good * Recruiting and retaining clinical staff will be HRMC's single largest issue in the Samaritan Medical Center , for staff that will be performing the surgeries and after care of the development of a quality program, so a relationship was set up with Good patients. The program is consistent with our 2003/2004 strategic plan, as well as the long-term Samaritan Hospital in Phoenix as a training site. facility master plan being prepared for HRMC. * Dr. Tibi was invited to speak and answer questions of the medical staff concerning an PURPOSE AND MAJOR OBJECTIVES open-heart program. 1) Provide open-heart surgery and back-up capabilities for Coronary Interventional * Province Healthcare commits to the open-heart product line. (PTCA, STENTS) procedures. 2) Meet the growing demands of our primary and secondary markets with expanded service TIMELINE capability and technologically superior equipment that enhances our cardiology scope of services. July 2003 3) Protect our market share from competitive threats in the local market (particularly Assess capabilities of current clinical staff. Western Arizona Regional Medical Center, Bullhead, Kingman Regional Medical Center) Choose capable competent staff that will go to Good Samaritan for training. 4) Continue to reduce out-migration of Coronary Artery Bypass Graft (CABG's) and open- >Determine recruitment needs. heart/angioplasty procedures. Set up 2004 training schedule with Good Samaritan. 5) Enhance Physician recruitment efforts due to our ability to be a full-service, patient- centered, regional referral medical center with all major medical disciplines. August 2003 6) Increase EBITDA by growing additional service lines. 7) Strengthen our mission as a regional referral center for Lake Havasu City and the >Province Healthcare commits to product line. surrounding Colorado River communities. 8) Position the hospital for continued growth as a future tertiary care facility. September/October 2003 PRESENT SITUATION > Prepare job descriptions for new positions. Recruitment of unfilled positions. The role of Havasu Regional Medical Center (HRMC) has expanded dramatically over the years Review State and Medicare Rules and Regulations to insure compliance. with the addition of our $38 million new building which was comprised of many different facets, not least of which was the addition of four new operating rooms. These spacious and ultra-EXPENSES(Extraordinary) November/December 2003 To start the open-heart service line, extraordinary expenses will be incurred before any Back-fill 2 RNs, 2 Scrub Techs for the Operating Room due to these colleagues EBITDA is realized. The expenses are outlined below: going to Good Samaritan for training in January 2004. >Back-fill 4 RNs for the CCU for post-open heart care. 2003 Employee Recruitment , Relocation and Advertising Contract Labor to back-fill positions or colleagues attending training at January-March 2004 BGSMC. Costs of $138,500 for 4th quarter 2003 Begin Good Samaritan Training program. Negotiate Perfusion contract, if needed. Begin credentialing process for surgeon and perfusionst. 2004 Training costs ( Lodging/Meals, Car Rental/Mileage, Preceptor Bonus) Determine additional service coverage for Dialysis, etc. Call Pay Purchase capital equipment. Patient Education Materials Develop/modify Policy and Procedures Cath Lab, OR, ICU, Telemetry, Cardiac Contract Labor for nurses Rehabilitation, prepare for Administrative review. Salary and Benefits for 6 months without performing a case. Formalize educational plan for entire team. Include Pharmacy, Lab, Bio-medical, Costs of $1,589,653 Cardiopulmonary Services, Business Office, Medical Records, Purchasing, Utilization Review, IS, Quality Management, and direct patient care providers. OR/ICU/Telemetry Competency Development Confirm anesthesia group to perform cardiac surgery. Implement marketing plan/strategy Charge Master update. EBITDA OPEN HEART PROCEDURES Develop admitting/pre-operative testing process. Develop standing pre and post operative orders 2003 2004 2005 2006 2007 Review Formulary for any additions in Pharmacy Inform Medical staff, board, and colleagues to status. ($138,500) ($579,653) $1,051,194 $ 1,636,439 $2,328,255 April 2004 Verify any State requirements. Solidify "shuttle of blood products" Obtain preference card from surgeons, verify supplies. Verify all on-call procedures. Inventory EBITDA ADDITIONAL ANGIOPLASTY PROCEDURES Communicate status to Medical Staff. 2003 2004 2005 2006 2007 May/June2004 $0 $131,704 $493,377 $886,619 $1.105 million First case performed at Havasu Regional Medical Ctr.for Northwest Arizona , while providing incremental volumes in other service lines and the continued success of the institution. CAPITAL H 2 Kobe Heart/Lung $200,000 1 back-up machine 1 TEE Intraoperative Probe $ 14,000 New ECHO 03 capital 1 IABP $ 60,000 1 existing; 1 back-up 1 Sternal Saw $ 8,000 1 Code Cart w/Defibrillator $ 12,000 2 existing carts (PACU, OR) Weight Bed (Fluid MGT) $ 0 2 existing beds in ICU Oximeters (Oxygen Monitoring) 0 8 existing modules in ICU 1 Blood Gas $ 28,000 Requested per DR. Tibi Dialysis (room set-up) $ 50,000 1 OR Monitoring Equip. $35,0000 1 ACT Unit $ 5,000 1 Crash Cart $ 1,000 2 K Pad Mattress 5.000 TOTAL CAPITAL EXPENDITURES $418,000 ALTERNATIVES No acceptable alternative can be produced. If we choose to do nothing, an environment will be created that will be conducive to our competition entering the market with open-heart surgery and this will allow our cardiologists to schedule procedures at competing entities, With Province approving this service line the syndication of the hospital will be more attractive to physicians due to the fact that HRMC is investing for the future growth of the institution. SUMMARY A comprehensive cardiac surgical service line will enable HRMC to increase our market share within our primary and secondary markets, while increasing our share in the angioplasty program. Increased patient volume can also be developed from Province owned facilities in Needles and Blythe, California. HRMC must continue to meet the growing needs of our markets and ensure our success. The recruitment of additional cardiologists into our markets shows that there is a commitment to reduce out-migration of procedures that HRMC is capable of performing. The cardiac surgical service line will allow HRMC to truly be a major referral center