GuardianElder Care

2016

Annual Review

Who are we?

Guardian Elder Care is both our name and our philosophy. We strive to make service to others and the people we serve the pillars that set us apart in the delivery of skilled nursing and rehabilitation services in our communities.

Guardian Elder Care is a privately owned Healthcare Organization providing services to communities in Pennsylvania, Ohio, and West Virginia. Today, Guardian has over 4,300 skilled nursing, personal care, and independent living units.

Since we began in 1995, Guardian has grown to 46 Healthcare Communities, with 40 of those located in Pennsylvania, 5 in Ohio, and 1 in West Virginia. Today Guardian operates ancillary divisions to providePharmacy, Rehabilitation, Home Health and Home Care Services. Thesedivisions were formed to provide excellent support to our communitiesand neighbors in the surrounding areas.

Guardian is proud to be a recognized industry leader in providing healthcare and rehabilitation services to today’s seniors.

Table of Contents

I. Our Mission

II. Leadership

III. Our People

IV. Core Business

V. Quality

“The Year of accounTabiliTY”

2016 is now in the history books! So what can we say about it? With the industry changing at record-breaking levels, we asked ourselves what was needed to be successful in 2016. We kept it simple: Accountability! After all, Accountability is one of the core philosophies of our OnGuard Culture! Accountability is the obligation to accept responsibilities for our actions and to disclose them in a transparent manner. So let’s review some of our actions in 2016:

Nothing was more significant to Guardian than the transfer of operations of 14 Skilled Nursing Facilities in Western Pennsylvania. With this transaction, Guardian now has 44 Skilled Nursing Facilities in 3 different states and we employ over 5,500 employees. While some may criticize this move, we believe it was necessary. In an era of diminishing revenues, this transaction brought an immediate and substantial increase in revenue to the organization. With this revenue, we are able to recruit and hire additional talent, particularly in our Clinical & Quality Operations and Human Resources divisions. While it has never been important for us to grow for growth’s sake, this transaction has helped us become a dominant player in the tri-state area. We intend to use this “recognition” to help us build stronger relationships with our Vendor Partners, our Preferred Health Partners, and our Managed Care Partners. We accept the Responsibility that comes with our growth in 2016!

One of Guardian’s legacy values is the concept of Constant and Never Ending Improvement or CANI. There is nothing more important to Guardian than applying this legacy value to our ongoing commitment to enhance and improve the quality of our services. That is why we are significantly investing in Human Resources as well as our Clinical Services Division. Guardian is fortunate to have recruited some of the most talented Clinical resources in the tri-state area. Also in 2017, we remain committed to hiring more resources to enhance our Dining, Activities, and Social Services Programs! We accept the Responsibility of Constant and Never Ending Improvement of our Quality!

There is no greater opportunity for Guardian than to stay the course and make Service and People the pillars that can set us apart from our competition. That is why we are making significant investments to recruit and train quality caregivers so we never have to rely on agency nursing to take care of our precious residents. That is why we have adopted American Health Care Association’s Core Q survey in measuring the satisfaction of our residents’ short and long term stays. We accept the Responsibility that comes with the high expectations from our customers!

The year of Accountability was a challenging one but a successful one. While staying focused on Accountability, we realized a 25% increase in admissions even though average lengths of stay continue to spiral downward. While the industry has innovated as a result of the Affordable Care Act, so has Guardian and this year we kicked off our Bundling initiative with Remedy Partners.

So what is the key to success for the years to come? Let’s keep it simple one more time. How about Hard Work! I learned a new word this year while at The John R. Wooden Leadership Course: “Industriousness”. Worthwhile results come from hard work and careful planning. This was a cornerstone to Coach Wooden’s Pyramid of Success. Coach Wooden is a Hall of Fame college basketball coach regarded by many as the Best Coach Ever. Industriousness means there is no substitute for hard work in the pursuit of worthwhile results.

Eddy Inzana

Eddy InzanaPresident and Chief Executive Officer, Guardian Elder Care

“There is no greater opportunity for Guardian than to stay the course and make Service and People the pillars that can set us apart from our competition.”

Eddy Inzana, CEO

Our Mission

Guardian Elder Care’s core philosophy is deeply rooted in tradition. Our founding owners/partners understood that community and faith are the cornerstones of a successfully run organization. To support Guardian’s core mission of investing in rural communities, the organization is led by a Senior Leadership team which has over 175 years of cumulative experience in the Long Term Care Industry. They share in Guardian’s philosophy of servant leadership.

Operational Pillars We base our strategic vision on five core principles:

QUALITYOur primary focus in quality lies with the recruitment of key support staff that guide our direct care. Our facility leadership is tasked to achieve a new level of both compliance (regulatory) and quality outcomes for the residents and families we serve.

GROWTHGiven the dynamic state of our industry, we are focusing our attention on developing integration with our acute care partners and managed care stakeholders. Those relationships are based on shared outcomes, customer satisfaction and experience, and overall quality of care. PEOPLEGuardian measures and evaluates employee engagement versus satisfaction. Employee engagement is reflected in employee satisfaction as demonstrated by their interactions with our residents and customers. We utilize both external industry measurements as well as internal assessment tools to benchmark the effectiveness of our people. FINANCEGuardian was founded by families whose values focused on effective, efficient care delivery in a safe, clean and comfortable environment. We continue those values and understand that a healthy financial plan is necessary to continue operating and providing all our stakeholders with what is needed – residents, families, employees and ownership.

SERVICECommunity and customer support is Guardian’s most valued asset. We take great pride in the loyalty our customers place on us. We routinely score above 90% in customer satisfaction as measured by our residents and patients recommending our services.

“Allow the way to your great work to be guided by your serviceto others.” Mollie Marti

Leadership

SENIOR LEAdERSHIP:

Eddy InzanaPresident, Chief Executive Officer

Brian RendosChief Financial Officer

Rita MaherSenior Vice President, Operations

Rhonda GallaherSenior Vice President, Ancillary Operations

Colleen EnglerSenior Vice President, Human Resources

David HollabaughSenior Vice President, Census & Network Development

Greg SeipleSenior Vice President, Quality and Clinical Operations

The 2016 Guardian Leadership Retreat was held at The Penn Stater Hotel and Conference Center in State College, PA. Pictured are all of those who attended, including Corporate Leadership and new Facility Administrators and Directors of Nursing.

GUARdIAN ANNUAL LEAdERSHIP RETREAT

Each year Guardian Elder Care hosts an Annual Leadership Retreat bringing together our organizational leaders to promote learning, innovation and engagement. This year’s gathering included guest speakers who present motivational and informative speeches on people, service, quality, and growth. Administrators, Directors of Nursing, and Regional support teams gather to learn alongside one another to facilitate work sessions aimed at fostering leaders that think outside of the box.

Guardian Senior Vice President of Human Resources Colleen Engler welcomed Guest Speaker Jeff Tobe to the Retreat. Jeff Tobe spoke about the important relationship between people and service with key points from his book “Coloring Outside The Lines: Business Thoughts on Creativity, Marketing, and Sales.”

“In a servant leadership culture we learn by choice or example that if we want to be great, we have to serve others respectfully.”

Vern Dosch, Wired Differently

Our People

ACCOUNTABILITY

FOUNDATIONS

ROLES

GOALS

Guardian establishes afoundational understanding of

employee engagement:Our team implements a

transformational model ofengagement by our current culture.

Clarify roles and responsibilities:A strong culture starts with the

leadership team. Organization and facilitycommunity leaders and departmentmanagers must collaboratively work

together to lead the way.

We utilize engagement goals and metrics:A tangible target for our engagements

efforts enables our teams to aligntheir efforts with our facility/community

engagement strategies.

Establish a united effort: Greatteams are comprised of team

members who hold each otheraccountable. Each team member

commits to collaboratively workingtogether to achieve engagement goals.

OnGuard is a system of six core values enacted by our company founders purposed to provide employees with a meaningful and sustainable culture. Comprised of six core values, the employee culture serves to not only highlight key values of the company itself, but also to demonstrate a commitment to quality via relatable means.

Honesty: a commitment to being transparent and forthright with those we serve

Respect: the pledge to treat our customers with discretion and humanity

Compassion: to constantly utilize kindness with quality

Dedication: to provide quality in all environments

Unity: to stand together as a team and with those we serve

Accountability: to recognize ways to improve and embrace change

Employee Engagement At Guardian, we strive to create a positive employee environment and experience to increase their engagement, overall retention, and quality in our delivery of service to others. The employee experience thus can be reflected in the outcomes of those we serve. We have established a foundational understanding of employee engagement with OnGuard, a set of values on which employee culture is based. The importance of each and every employee is clearly defined, allowing employees to collaborate more easily and effectively. The engagement of our employees ensures their commitment to our organizational goals and values, motivation to succeed at delivery of care to others, and also enhances their own wellbeing. The positive correlation between employee engagement and business strategy affirms the importance of accountability and unified efforts to act as a team; by holding each other accountable, each team member can commit to working together in order to achieve engagement goals. We believe that the experiences of our patients, residents, and families are inextricably linked to employee engagement.

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Acquisitions and Investments

Guardian historical acquisitions include profit, non-profit and County based facilities. These acquisitions are supported by a transitional team made up of operators, clinical specialists and business office managers. In 2016, Guardian’s total portfolio has grown to 44 skilled nursing centers:

BROOKMONT/BLOUGH (PROMET HOLDINGS)Brookmont is a 119 bed, family-owned, for-profit facility located in Effort, PA. Blough is a 44 bed, family-owned, for-profit facility located in Bethlehem, PA. Guardian purchased these facilities in September 2015.

14 GOLDEN LIVING FACILITIESOn October 1, 2016, Guardian acquired 14 Western Pennsylvania facilities from Golden Living, including 1,580 skilled nursing and personal care beds. In the upcoming year, Guardian‘s strategic plan calls for investments in these newly acquired facilities.

Brookmont Healthcare and Rehabilitation Center

Hillview Healthcare and Rehabilitation Center

CAPITAL EXPENDITURES Guardian maintains comfortable and functional accommodations to meet our residents social and clinical needs. Average annual capital expenditures over the past 5 years have exceeded $1,450 per licensed bed. In 2015-16, Guardian spent an estimated $5.7 million in capital equipment expenditures that included short term rehab unit renovations, capital equipment purchases such as new generators, sprinkler systems, oil to natural gas conversion, etc. The safety and comfort of our customers drive the investment of capital resources.

Park Center Healthcare and Rehabilitation Center

Epworth Healthcare and Rehabilitation Center

Ancillary Services

Guardian Rehabilitation Services, Inc

With over 350 therapists, Guardian Rehabilitation Services provides physical, occupational and speech therapies to all 44 Guardian skilled nursing facilities. Our primary goal is to return our patients to their highest functional ability following surgery, accident or illness. A comprehensive and innovative, interdisciplinary treatment is developed with the patient’s goals at the heart of the plan.

Guardian Rehabilitation therapists receive ongoing specialized training to provide the most effective treatment using cutting edge technologies. 53% of our employees have specialized clinical certifications:• Vital Stimulation• LSVT Loud• LSVT Big• Lymphedema• Kinesiotaping

Guardian Rehabilitation uses the CARE TOOL to determine functional outcome improvements. Guardian Rehabilitation is participating in OutcomeMeasures.org- a repository for the collection and scoring of CARE Self- Care and Mobility item assessments, and related clinical data. The repository is administered by an industry wide nonprofit corporation.

• Dementia Specialist• Wound Care Specialist• Delay the Disease™• Myofascial Release• Synchrony

Guardian has partnered with Accelerated Care Plus (ACP) the nation’s leading provider of “modality based” clinical programs for post-acute and chronic rehabilitation. The clinical programs are a combination of proven medical technology, evidenced based treatment protocols and advanced therapist training which provides improved clinical outcomes. As a result of ACP and our utilization of the specialized clinical programs our teams are able to accommodate higher acuity patients, a broader patient population and conditions of increased medical complexity. ACP is the latest technology in non-surgical, medication-free treatment options and specialized treatment programs utilizing therapeutic modalities.

ACP ModalitiesOmnistand Balance Trainer

Omni VR • DiathermyUltrasound • E-Stim

Synchrony

ACP Specialized Programs Offered in all 44 locations• Pain • Edema • Wound Healing • Neuromuscular Dysfunction• Stroke • COPD • Osteoarthritis • TKA • THA • UI • Carpal Tunnel • Peripheral Neuropathy • Swallowing • Rheumatoid Arthritis

2016 Rehab Statistics:• 476,833 patient visits in 2016 • 3 States Guardian Rehab Provides Service• 44 Total Locations serviced by Guardian Rehabilitation• 37.5% Growth Rate in New Locations • 12.8% Increase in Number of Patients Served• 30 Outpatient Locations (43% increase from 2015)• 5,485 Outpatient visits in 2016 (30% increase from 2015)• 96% Customer Satisfaction in 2016• Delay the Disease ™ offered in 18 locations• 55 Delay the Disease ™ Certified Clinicians (Delay the Disease™ is a community based fitness program designed to empower people with Parkinson’s disease to take control of the disease with daily exercise.)

• 357 Employees• Average LOS for short term to home 25 days• 47.4% of patients had a 30 day Return to Community

Home Health and Home Care

Guardian Home & Community Services provides services to a patient or client wherever they call home.

Home Health provides skilled services to a patient in the comfort of their home and they are regulated by the Department of Health, Home Health Division.

The services that can be provided include but are not limited to: • Wound care • Medication education and management • Disease education • Nutritional education and counseling • Observation and assessment

Services can be provided by: • Skilled nurses • Therapies: PT, OT, ST • Social Worker • Dietitian • Home Health Aides

Guardian Home Care Specialties

• Non- medical Home Care services available 24 hours per day, 365 days per year • On average the daily census is 1200 patients • Services 33 counties in Pennsylvania from 18 office locations across the commonwealth. • Employs approximately 550 employees. • 28 administrative staff • Approximately 525 direct care staff.

Guardian Pharmacy

Guardian Long-Term Care Pharmacy opened in 2006 with Company ownership recognized a disparity in services available to and provided by the multiple LTC pharmacies that were previously serving residents.

Today the pharmacy focuses its service efforts on facilities affiliated exclusively with Guardian Elder Care, providing pharmaceutical services 24 hours per day, 365 days per year. Ten years later, Guardian Long Term Care Pharmacy fills over 400,000 prescription orders annually with patient populations in Pennsylvania, Ohio, and West Virginia:

• 30 skilled nursing facilities • 6 personal care facilities • 1 inpatient rehabilitation facility

The pharmacy currently employs 48 pharmacy associates:

• 9 licensed pharmacists including 2 board certified geriatric pharmacists • 3 licensed nurses • 33 pharmacy technicians and support associates (15 of which are certified by the Pharmacy Technician Certification Board) • 3 pharmacy students / interns (actively enrolled in schools of pharmacy) • Combined 350+ years of pharmacy experience by staff members

Guardian Long Term Care Pharmacy assists facilities and families with managing pharmacy expenses through Prior Authorizations and also utilizes technology to promote efficiencies and ensure patient needs are met in a timely manner:

• Emergency drug kits (manual and automated) • Robotic technology utilized for medication packaging • Barcode scanning technology to ensure the dispensing accuracy • Electronic record storage utilized to archive all faxes received and for communication to nursing staff

“When health is absent, wisdom cannot reveal itself...”

Herophilus

Quality

Guardian Bundling and Quality Innovations

Guardian Elder Care began bundling Patients in July of 2015 and participates in the Bundled Payments for Care Improvement (BPCI) initiative,as a Model 3 convening organization through Remedy Partners. BPCI is comprised of four broadly defined models of care, which link payments for the multiple services beneficiaries receive during an episode of care. Under the initiative, organizations enter into payment arrangements that include financial and performance accountability for episodes of care. These models may lead to higher quality and more coordinated care at a lower cost to Medicare.

Currently, 28 of Guardian’s Skilled Nursing Centers participate in the Bundling Initiative. In 2016, Guardian had 151 bundled patients, more than doubling 73 bundled patients in 2015.

Guardian’s Partnership with Remedy:

Remedy Partners is the largest convener of Skilled Nursing Facilities within the Bundled Payments for Care Improvement (BPCI) initiative. Guardian Elder Care and Remedy Partners share risk within BPCI and work together to improve the quality and efficiency of care delivery in the post acute space.

To help drive change and achieve success, Remedy Partners provides Guardian Elder Care with enterprise software, data analytics services, care redesign training, and bundled payment expertise. Since launching our partnership, Remedy and Guardian Elder Care have worked together to deliver a better patient experience and reduce healthcare costs by aligning the financial and performance goals by focusing on the entire episode of care.

Guardian Recipients for Bronze Quality Award 2015Darway Healthcare and Rehabilitation CenterForest Park Healthcare and Rehabilitation CenterLakeview Healthcare and Rehabilitation CenterMountain Top Healthcare and Rehabilitation Center

The AHCA/NCAL National Quality Award Program provides a pathway for providers of long term and post-acute care services to journey towards performance excellence. The program is based on the core values and criteria of the Baldridge Performance Excellence Program.

Member centers may apply for three progressive levels of awards: Bronze - Commitment to Quality, Silver - Achievement in Quality, or Gold - Excellence in Quality. Each level has its own distinct rigors and requirements for quality and performance excellence.

Guardian has won a total of 20 Bronze awards and 3 Silver, making over 50% of the organizational compliment recognized AHCA/NCAL award winners.

Quality Measures

At the forefront of Guardian Elder Care’s Quality Initiatives is our

commitment to regulatory compliance, employee engagement, and

customer experience. Engagement has been the key to Guardian’s quality

outcomes; the organization is steadfast in its commitment to education,

oversight and engagement with our center care teams to improve quality

measures. Despite the challenging landscape with increased regulatory

scrutiny, Guardian is pleased to be among the highest satisfaction

rankings from both our Long-Stay and Short Term customers.

2015-2016Patient and Family Survey Results

90%Overall Average Rating By Our Patients of Care Received

91%Average of Short-Stay Patients Who Would Recommend

Their Stay to Others

87%Average of Long Term Families Surveyed Who Would

Recommend Us to Others

Focal Clinical Outcomes

Re-Hospitalizations25.00%

22.50%

20.00%

17.50%

15.00%

18.1%

2015

2015

2015

2016 (YTD)

2016 (YTD)

2016 (YTD)

Medicare 30-Day All-Payer 30-Day

16.9%17.8%

16.9%

% of Residents w/ Declining Independent Movement35%

32.80%

19.40%

30%

25%

20%

15%

% of Residents w/ Moderate to Severe Pain (LT)12%

8%

10%

6%

4%

2%

11.20%

9.60%

GuardianElder Care

8796 Route 219 • Brockway, PA 15824Phone: 814.265.1164

www.guardianeldercare.com