hmp metrics™ report october, 2010

October 2010 2

Table of ContentsExecutive Summary 3 - 5

Financial and Operational Study 6 - 15

• Total Profit Margin 6• Total Operating Profit Margin 7• Days Net Patient Revenue in Accounts Receivable (AR) 8• Full-Time Equivalent (FTE) Staff per Adjusted Occupied Bed (AOB) 9• Total Labor Cost as a Percentage of Net Operating Revenues 10• Average Age of Plant and Equipment 11• Metric Trend by Peer Group 12 – 13• Quartiles by Peer Group 14 - 15

Introduction to Healthcare Management Partners 16 - 20

Clients Our Professionals Have Served 21 - 22

Firm Leadership 23 - 26

Contact Information 27

October 2010 3

Healthcare Management Partners (HMP) is a hospital and healthcare services management firm. For decades, all of its seniorexecutives have been building and operating thriving healthcare organizations, including CEO, COO and CFO assignmentsacross the spectrum of healthcare services providers. This knowledge base gives HMP a unique perspective on what tools arenecessary to handle the issues facing any healthcare provider organization, and is what prompted HMP to create HMPMetricsTM. Our executives understand the value of being able to measure hospital performance relative to comparablefacilities and against “1st Quartile” or “High Performing” competitors.

Utilizing the last six years of publicly available hospital Medicare cost report data, HMP has conducted an extensive studycomparing performance within six hospital peer groups. We can easily create custom peer groups and metrics. These groupsselected include the following:

1. All General Acute Care Hospitals Regardless of Ownership or Sponsorship2. All Investor Owned General Acute Care Hospitals3. All Not-For-Profit General Acute Care Hospitals, including Institutions Sponsored by Religious Organizations4. All State and Local Government Owned General Acute Care Hospitals5. Free Standing Children’s Hospitals6. All Non-Federal Major Teaching Hospitals

Using proprietary filters, data contained in the HMP Metrics database has been “scrubbed” to exclude partial period orstatistically aberrant data elements for individual hospitals or health systems. It also excludes Federal Government hospitals,specialty hospitals (e.g., long-term acute care) and general acute care hospitals for which 30% or more of its total licensedbeds are comprised of sub-acute beds. This data validation process produces highly accurate and defensible peer groupcomparisons for dozens of standard industry metrics.

This report measures several commonly used metrics to further stratify these hospital types into quartiles in order to illustratethe benchmarks for poor to exceptional performance for each of the metrics. With this information, one can quickly assess therelative financial well-being of any facility in any of these groups. HMP can easily create custom reports and mix or createnew peer groups and compare them to state, local or national benchmarks.

Executive Summary – Overview

October 2010 4

All hospitals: Represents over 3,000 short-term general acute care hospitals.

Investor Owned hospitals: Represents short-term general acute care hospitals owned a for-profit chain or owned individually.

Not-for-profit hospitals: Represents short-term general acute care hospitals identified as ‘not-for profit’ (e.g., 501c3).

State and Local owned hospitals: Represents short-term general acute care hospitals controlled by state or local government.

Children’s hospitals: Represents Children’s hospitals regardless of ownership type.

Major Teaching hospitals: Represents hospital and health system members of the Association of American Medical Colleges. For health system members, ‘flagship’ medical centers were included while smaller affiliate community teaching hospitals were excluded.

Quartile Rankings: Quartile rankings were assigned based on the mean values calculated for the hospitals within the peer groups. The first quartile contains the top 25% of the best performing hospitals in an applicable peer group, the second quartile contains those hospitals falling in the 26% to 50% range, the third quartile contains those hospitals falling in the 51% to 75% range, and finally the fourth quartile contains those hospitals falling below 76%.

Mean Value: The mean value is the average of all amounts within a defined group. For example, 8 would be the mean value in an array of the numbers: 2, 4, 10, and 16.

Executive Summary – Key Terms

October 2010 5

Executive Summary – Hospital Performance Metrics

Source: Metrics are based on data extracted from Medicare cost reports filed each year with the Federal Government. Accuracy of the data contained in the Medicare cost reports is certified by hospital management when the report is filed. Any changes resulting from desk or field audits by Medicare and subsequently included in the Hospital Cost Report Information System (HCRIS) database have also been reflected in the calculations. Excludes partial-year Medicare cost reports, hospitals where 30% or more of total inpatient beds are non-acute, and hospitals where the computed metric is more than 2 standard deviations from the mean.

Total Profit Margin A measure of overall hospital profitability presented as a percentage. A negative percentage indicates an overall loss, while a positive percentage indicates profitability.

Total Operating Profit Margin A measure of operating profitability presented as a percentage. A negative percentage indicates overall loss, while a positive percentage indicates profitability.

Total Labor Cost as a Percentage of Total Operating Revenues

A measure of labor productivity. This metric divides labor costs by operating revenues. A higher percentage compared to its peers indicates that a hospital uses more labor to produce its revenue.

Full-Time Equivalent (FTE) Staff per Adjusted Occupied Bed (AOB)

Measures the number of full-time equivalent (FTE) employees used for each occupied bed. Similar to the previous ratio, a higher percentage compared to its peers indicates that a hospital uses more labor to treat its patients.

Average Days Net Patient Revenue in Accounts Receivable (AR)

Measures the number of days it typically takes to collect accounts receivable. A higher percentage compared to its peers indicates that the hospital's revenue cycle is not as efficient as its peers.

Average Age of PlantMeasures the average age of the hospital including capital improvements and major equipment purchases. A higher age compared to its peers indicates that the hospital has deferred the replacement of its capital when compared to its peers, which can lead to further distress.

October 2010 6

Total Profit Margin

All Investor Owned Not-For-Profit State and Local Govt. Owned Childrens Major Teaching

1st Quartile 13.40% 19.16% 11.42% 9.94% 17.11% 12.03%2nd Quartile 4.85% 10.43% 4.04% 3.56% 8.96% 5.65%3rd Quartile 0.57% 4.30% 0.15% -0.03% 4.09% 1.54%4th Quartile -6.80% -4.48% -7.04% -7.07% -5.18% -7.25%

-10.00%-7.00%-4.00%-1.00%2.00%5.00%8.00%

11.00%14.00%17.00%20.00%

Peer Quartiles - FY 2009

0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%

10.00%

2004 2005 2006 2007 2008 2009

6-Year Metric Trend


October 2010 7

Total Operating Profit Margin

-6.00%-5.00%-4.00%-3.00%-2.00%-1.00%0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%

2004 2005 2006 2007 2008 2009

6-Year Metric Trend



1st Quartile 12.32% 20.03% 9.60% 5.89% 13.11% 9.85%2nd Quartile 2.24% 10.48% 1.71% -1.86% 3.60% 1.98%3rd Quartile -2.91% 2.85% -2.54% -7.38% -3.56% -3.08%4th Quartile -11.94% -7.79% -10.89% -16.15% -13.01% -12.77%

-20.00%-15.00%-10.00%

-5.00%0.00%5.00%

10.00%15.00%20.00%25.00%


October 2010 8

Days Net Patient Revenue in Accounts Receivable (AR)


1st Quartile 33.71 35.31 32.36 36.74 36.30 34.742nd Quartile 44.91 45.42 43.26 49.30 46.34 44.703rd Quartile 53.16 53.21 50.64 59.47 53.29 51.484th Quartile 70.26 70.09 65.65 78.31 72.15 68.09

30.0035.0040.0045.0050.0055.0060.0065.0070.0075.0080.00


45.0047.0049.0051.0053.0055.0057.0059.0061.0063.00

2004 2005 2006 2007 2008 2009

6-Year Metric Trend


October 2010 9




3.003.504.004.505.005.506.006.507.007.508.00


3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

2004 2005 2006 2007 2008 2009

6-Year Metric Trend


October 2010 10

Total Labor Cost as a Percentage of Net Operating Revenues

40.00%41.50%43.00%44.50%46.00%47.50%49.00%50.50%52.00%53.50%55.00%

2004 2005 2006 2007 2008 2009

6-Year Metric Trend



1st Quartile 37.97% 34.05% 40.16% 41.26% 36.38% 41.26%2nd Quartile 45.71% 39.04% 46.99% 49.08% 42.20% 47.39%3rd Quartile 51.58% 44.26% 52.13% 54.76% 49.55% 52.08%4th Quartile 59.40% 53.87% 59.19% 62.18% 58.19% 59.05%

30.00%35.00%40.00%45.00%50.00%55.00%60.00%65.00%


October 2010 11

Average Age of Plant and Equipment

Notes:• Excludes partial-year cost reports and those cost reports deemed to be outliers (e.g., values greater than two standard deviations from the mean of the reported population).• Excludes Federal, specialty hospitals and general acute care hospitals for which 30% or more of total licensed beds are comprised of sub acute beds.

5.005.506.006.507.007.508.008.509.009.50

10.0010.5011.0011.50

2004 2005 2006 2007 2008 2009

6-Year Metric Trend




0.002.004.006.008.00

10.0012.0014.0016.0018.00


October 2010 12

Metric Trend by Peer Group


Year 2009 2008 2007 2006 2005 2004

All 2.98% 2.26% 4.56% 4.24% 3.86% 3.28%Investor Owned 7.22% 6.20% 6.57% 6.46% 6.39% 5.79%Not-For-Profit 2.11% 1.08% 4.31% 3.79% 3.45% 2.83%State and Local Government Owned 1.53% 1.86% 3.40% 3.37% 2.64% 2.22%Childrens 5.52% 3.81% 9.36% 7.28% 7.17% 6.46%Major Teaching 2.83% 0.85% 5.20% 4.82% 3.75% 3.20%

All -0.10% -0.59% -0.21% -0.38% -0.29% -0.81%Investor Owned 6.26% 5.67% 5.16% 4.87% 4.86% 4.43%Not-For-Profit -0.54% -1.29% -0.79% -1.07% -0.76% -1.46%State and Local Government Owned -4.97% -4.82% -4.02% -3.75% -4.16% -4.22%Childrens -0.57% -0.51% 0.17% -1.60% 0.03% -1.91%Major Teaching -1.21% -2.82% -2.17% -2.15% -2.88% -3.27%

All 50.52 53.55 54.66 55.28 54.62 56.31Investor Owned 51.21 54.36 55.61 57.77 57.08 57.91Not-For-Profit 48.04 51.18 52.08 52.45 51.95 53.89State and Local Government Owned 56.15 59.44 61.10 60.88 59.92 61.77Childrens 52.85 54.83 56.89 56.66 57.89 55.18Major Teaching 49.98 52.89 52.44 52.88 52.94 54.40

Days Net Patient Revenue in Accounts Receivable (AR)

Total Profit Margin

Total Operating Profit Margin

October 2010 13


Year 2009 2008 2007 2006 2005 2004


All 48.69% 49.54% 49.61% 49.67% 49.79% 50.45%Investor Owned 42.93% 43.97% 44.17% 44.42% 44.85% 45.25%Not-For-Profit 49.66% 50.47% 50.54% 50.59% 50.53% 51.44%State and Local Government Owned 51.90% 52.59% 52.46% 52.36% 52.85% 52.88%Childrens 47.25% 47.39% 47.10% 46.73% 48.21% 48.10%Major Teaching 50.16% 51.31% 50.73% 50.82% 50.75% 51.45%


Average Age of Plant and Equipment

Total Labor Cost as a Percentage of Net Operating Revenues


Metric Trend by Peer Group

October 2010 14

Quartiles by Peer Group


1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4thOverall Profit Margin 13.40% 4.85% 0.57% (6.80%) 19.16% 10.43% 4.30% (4.48%) 11.42% 4.04% 0.15% (7.04%)Operating Profit Margin 12.32% 2.24% (2.91%) (11.94%) 20.03% 10.48% 2.85% (7.79%) 9.60% 1.71% (2.54%) (10.89%)Total Labor Cost as a % of Net Operating Rev. 37.97% 45.71% 51.58% 59.40% 34.05% 39.04% 44.26% 53.87% 40.16% 46.99% 52.13% 59.19%Days Net Patient Revenue in AR 33.71 44.91 53.16 70.26 35.31 45.42 53.21 70.09 32.36 43.26 50.64 65.65FTEs per AOB 3.45 4.37 5.12 6.48 3.21 3.93 4.51 5.76 3.61 4.55 5.27 6.55Average Age of Plant and Equipment 3.63 7.70 10.59 15.39 2.12 4.83 8.23 12.96 4.90 8.65 11.28 15.75

1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4thOverall Profit Margin 9.94% 3.56% (0.03%) (7.07%) 17.11% 8.96% 4.09% (5.18%) 12.03% 5.65% 1.54% (7.25%)Operating Profit Margin 5.89% (1.86%) (7.38%) (16.15%) 13.11% 3.60% (3.56%) (13.01%) 9.85% 1.98% (3.08%) (12.77%)Total Labor Cost as a % of Net Operating Rev. 41.26% 49.08% 54.76% 62.18% 36.38% 42.20% 49.55% 58.19% 41.26% 47.39% 52.08% 59.05%Days Net Patient Revenue in AR 36.74 49.30 59.47 78.31 36.30 46.34 53.29 72.15 34.74 44.70 51.48 68.09FTEs per AOB 3.42 4.44 5.28 6.61 3.79 5.32 6.99 7.78 4.59 5.39 6.03 7.21Average Age of Plant and Equipment 4.55 8.31 10.99 15.92 4.55 6.85 8.30 13.26 6.11 9.02 11.25 15.57

Peer Group Summary by Quartile (Quartile Grouping)For the Year 2009

MetricAll Investor Owned Not-For-Profit

MetricState and Local Government Childrens Major Teaching

October 2010 15


All IO NFP GSL ChildrensMajor

Teaching All IO NFP GSL ChildrensMajor

TeachingOverall Profit Margin 13.40% 19.16% 11.42% 9.94% 17.11% 12.03% 4.85% 10.43% 4.04% 3.56% 8.96% 5.65%Operating Profit Margin 12.32% 20.03% 9.60% 5.89% 13.11% 9.85% 2.24% 10.48% 1.71% (1.86%) 3.60% 1.98%Total Labor Cost as a % of Net Operating Rev. 37.97% 34.05% 40.16% 41.26% 36.38% 41.26% 45.71% 39.04% 46.99% 49.08% 42.20% 47.39%Days Net Patient Revenue in AR 33.71 35.31 32.36 36.74 36.30 34.74 44.91 45.42 43.26 49.30 46.34 44.70FTEs per AOB 3.45 3.21 3.61 3.42 3.79 4.59 4.37 3.93 4.55 4.44 5.32 5.39Average Age of Plant and Equipment 3.63 2.12 4.90 4.55 4.55 6.11 7.70 4.83 8.65 8.31 6.85 9.02

All IO NFP GSL ChildrensMajor

Teaching All IO NFP GSL ChildrensMajor

TeachingOverall Profit Margin 0.57% 4.30% 0.15% (0.03%) 4.09% 1.54% (6.80%) (4.48%) (7.04%) (7.07%) (5.18%) (7.25%)Operating Profit Margin (2.91%) 2.85% (2.54%) (7.38%) (3.56%) (3.08%) (11.94%) (7.79%) (10.89%) (16.15%) (13.01%) (12.77%)Total Labor Cost as a % of Net Operating Rev. 51.58% 44.26% 52.13% 54.76% 49.55% 52.08% 59.40% 53.87% 59.19% 62.18% 58.19% 59.05%Days Net Patient Revenue in AR 53.16 53.21 50.64 59.47 53.29 51.48 70.26 70.09 65.65 78.31 72.15 68.09FTEs per AOB 5.12 4.51 5.27 5.28 6.99 6.03 6.48 5.76 6.55 6.61 7.78 7.21Average Age of Plant and Equipment 10.59 8.23 11.28 10.99 8.30 11.25 15.39 12.96 15.75 15.92 13.26 15.57

Metric3rd Quartile 4th Quartile

Peer Group Summary by Quartile (Peer Grouping)For the Year 2009

Metric1st Quartile 2nd Quartile

Quartiles by Peer Group

October 2010 16

Introduction to Healthcare Management PartnersWho We Are

HMP is a hospital and healthcare services management firm. All of its senior executives have decades of healthcare experienceincluding CEO, COO and CFO assignments across the spectrum of healthcare service providers. Our senior management has deepexperience in building and operating thriving healthcare organizations. Part of that experience includes taking decisive action in crisesor turnaround situations. This knowledge base gives HMP a unique perspective and all the tools necessary to handle the issues facingany healthcare provider organization. HMP provides Hospital Contract Management, Turnaround Management and Interim or CrisisManagement services.

Our Approach

Our approach to every assignment is built upon the straightforward application of three simple steps or guiding principles.

Listen – We listen carefully to our clients, their key stakeholders and the marketplace throughout each assignment.

Evaluate – We employ detailed, fact-based analysis to evaluate and validate assumptions, findings and recommended actions.

Implement – We have a bias toward “getting it done.” We take decisive action to quickly convert opportunities or solve problems .

The HMP Difference Total commitment to providing C-Level attention throughout each assignment by experienced healthcare executives

Small, dedicated teams of operating professionals for each assignment

Absolute integrity of our fact-based approach

Action-oriented diagnostic and business planning processes

Proven ability to drive positive outcomes in all sectors of healthcare

Depth of HMP network, providing critical access to key resources and people

Commitment to the highest professional standards

October 2010 17

Introduction to Healthcare Management Partners

Management Services

HMP is a hospital and healthcare services management firm. All of its senior executives have decades of healthcare experienceincluding CEO, COO and CFO assignments across the spectrum of health services. Examples of specific assignments include serving asthe Chief Executive Officer (CEO) of the following types of healthcare organizations:

Religious affiliated or sponsored multihospital systems

Free standing not-for-profit or government owned community hospitals

University and major teaching hospitals

Single site and multihospital regional operations for investor owned hospital management companies

De Novo organizations (start-up) planning, construction and operation of new general acute care hospitals, free-standing heartand cancer hospitals, a continuing care retirement community and many other related facilities

Hospitals that are in bankruptcy or for sale

Financially distressed skilled nursing facilities

Home health, hospice and physician practices

“HMP’s senior staff members are professional healthcare service executives who also possess consulting skills, not professional consultants. We understand and are committed to the provision of quality healthcare services

at every provider organization where we have a management role.”

October 2010

Hospital Contract Management

HMP is positioned to undertake the long-term (3 to 5 years) contract management of hospitals of all sizes and stages ofdevelopment. Our executives are experienced in leading the development of new or replacement general acute care or specialtyhospitals or the turnaround and repositioning of existing hospitals. They can effectively lead initiatives in the following areas:

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Strategic Leadership Clinical Excellence Operational Excellence Financial Performance

Market Positioning Clinical Process Redesign Patient Throughput Revenue Cycle

Brand Development Evidence‐Based Care Emergency Department Clinical Efficiency

Business Office Consolidation

Service Line Development Resource Utilization and Cost of Quality

Surgical Services Clinical Efficiency

Managed Care Contracting

Capital Planning and Investment Pay for Performance Inpatient Length of Stay and Level of Care

Risk Management and Insurance

Physician Relations Care and Case Management Processes

Human Resources Management Budgeting / Financial Planning

Physician Integration Quality and Safety Indicators Ambulatory Care Capital Programs

Continuum of Care Design and Implementation Strategic Plans

Hospice and Home Care Supply Chain

Corporate and Medical Staff Governance

Mission and Vision Best Practices and Operating Metrics

Financial Reporting and Accounting

We will be directly accountable to the board of directors and will assume full responsibility to plan, organize, staff, direct andcontrol the successful and cost effective operations of the hospital.

Because HMP is not a management consulting firm, our contract management executives are free to always bring the best and mostcost-effective solution, from whatever source, to the hospital should outside assistance prove necessary to implement a givenstrategic or tactical initiative.

October 2010

Turnaround Management

HMP’s executives have served as chief restructuring officers of healthcare companies through bankruptcies, crisis situations and in theearly stages of high-profile criminal and civil fraud investigations. In each of these situations, their leadership helped theseorganizations bolster performance through discipline and carefully planned action.

Some consultants assess your problems and provide a recommended course of action. But HMP executives take the helm of failingorganizations and assume direct responsibility for transforming them. Time and again, they have succeeded in revitalizing providers ofall kinds, from a rural nursing home chain to a 1,000 bed teaching hospital or a 179 bed county owned community hospital.

There are no quick fixes in turnaround management, but HMP has developed a highly effective, streamlined approach for achievinglasting improvements as soon as possible. We begin by developing a strong knowledge base of your organization. Individuals fromevery level of the organization are interviewed: management, medical and nursing staff members, board of directors, employees,patients and their families. Their input, combined with a depth of healthcare industry knowledge, allows HMP to:

Stabilize the crises,

Identify immediate opportunities and challenges,

Develop a strategic plan, including milestones and deadlines,

Define expected outcomes,

Build consensus with all constituents – medical and nursing staffs, management, unions, and the local community,

Change cultures, and

Optimize performance.

In all of its healthcare provider turnaround assignments, HMP has successfully designed and executed plans that simultaneously addedpatient volume and revenues, reduced costs and improved profitability and cash flow.

From the outset, HMP builds on each organization’s strengths, working side‐by‐side with management, directors and other keystakeholders to drive desired results. HMP also focuses on winning the support and active participation of the medical and nursingstaffs, which is fundamental for delivering quality healthcare services and improving financial results.

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October 2010

Interim and Crisis Management

HMP serves in interim and crisis management roles when required to help guide providers through periods of crisis or change.Companies that are underperforming and in crisis, or healthy but in transition, may need additional experienced healthcare industryleaders to stabilize operations and improve financial performance or maintain continuity in the rapid implementation of critical strategicinitiatives.

Our professionals can offer critical advice or step into key leadership positions such as Chief Restructuring Officer, Chief FinancialOfficer, or Chief Executive Officer to provide needed stability during periods of change. Our proven interim management capabilitiesadd valuable support in crisis situations. We immediately fill critical leadership vacancies and shorten the lead‐time for implementingspecific initiatives. HMP provides much needed leadership and speed to create value in executing crisis management and restructuringplans.

Our crisis and interim management services include:

Immediate staffing of critical senior management positions

Reducing lead‐time for implementing strategic initiatives

Managing communications processes with Members of the medical and nursing staffs, board members, employees and regulators,and if required

Bankruptcy process planning and administration

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October 2010

Clients Our Professionals Have Served

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Investor Owned Hospitals or Health SystemsAmeris Health Systems Health South Corporation Integrated Healthcare

Holdings, Inc.Shasta Regional Medical Center

Doctors Hospital, Houston Hospital Corporation of America

Lakeside Hospital at Bastrop St. Joseph Hospital, Houston

Doctors Hospital, Los Angeles Hugh Chatham Memorial Hospital

LifePoint Hospitals Tenet Healthcare Corporation

HealthPlus Hughston Hospital and Clinic Monroe Hospital, LLC Vanguard Health Systems

Hospital Partners of America Integra Healthcare Promise Healthcare

Not-For-Profit or Governmental Hospitals or SystemsBaylor College of Medicine Hahnemann University

HospitalNew York United Hospital Medical Center

Southern Chester County Medical Center

The Brooklyn Hospital Center Health Alliance of Cincinnati Nyack Hospital St Vincent’s Catholic Medical Centers, New York

Devereux Foundation National Health Service, United Kingdom

Rahway Hospital Temple Health System

Franciscan Health System Legacy Health System Raritan Bay Health System Tri‐Lakes Medical Center

General Health System Mercy Health System Robert Wood Johnson Health Network

University Hospital Consortium of Pennsylvania

Good Samaritan Hospital Natchez Regional Medical Center

Sisters of Mercy Health System

October 2010 22

Law and Accounting FirmsBird Marella LLP Deloitte Kantrow, Spaht, Weaver & Blitzer Patton Boggs

Bradley Arant Boult Cummings LLP

Gearhiser, Peters, Lockaby, Cavett & Elliott, PLLC

KPMG Ramirez International, Inc.

Brown McCarroll LLP Hogan & Hartson LLP Latham & Watkins Whiteford Taylor Preston, LLP

Fulbright & Jaworski LLP Hooper, Lundy & Bookman Mancuso & Franco PC Schiavetti, Corgan, Soscia, DiEdwards and Nicholson, LLP

Decosimo Jones Day Milbank, Tweed, Hadley and McCloy LLP

Waller Lansden Dortch & Davis

Senior Care and/or Continuing Care Retirement CommunitiesGrace Care of Texas Monarch Landing, Inc.

Jenner’s Pond Continuing Care Retirement Community National Senior Campuses (Erickson Retirement Communities)

Life Care Centers of America Sedgebrook, Inc.

Linden Ponds, Inc. St. Edward Mercy Health Systems (Ft. Smith, AR)

Mercy Hospitals of Texas St. Johns Nursing Home (St. Louis, MO)

Other Providers / PayorsBlue Cross of Tennessee Best Choice Home Health Community Behavioral Health

Network of PAColumbia Home Care

Clients Our Professionals Have Served

October 2010 23

Firm Leadership

Scott PhillipsTitle Managing Director

Education B.S. from University of FloridaCPA

Boards & Organizations American Bankruptcy Institute Healthcare Subcommittee Chair

Telephone 267.207.2929

Mobile 267.804.3885

E-Mail [email protected]

Scott has more than 30 years of healthcare industry management and consulting experience. Prior to founding HMP in 1997, he served as thepresident and chief executive officer of a 636-bed academic medical center, as national partner and regional healthcare practice director for ToucheRoss & Co., and as the chief financial officer of a faith-based multihospital system operating 12 hospitals across seven states.

Scott has significant management and consulting experience with government, tax-exempt and investor owned healthcare service providers. Heunderstands the organization and delivery of high-quality health services, including the role of corporate and medical staff governance duringdifficult periods of transition. Scott has executive level experience with mergers, acquisitions and turnaround situations, including restructuring inbankruptcy. In all of his many healthcare provider turnaround assignments, he has successfully designed and implemented plans that simultaneouslyadded patient volume and revenues while conserving cash and reducing unit costs. He understands this approach builds on the organization’sstrengths and attracts the support of the local community and medical and nursing staffs, which is essential for the long-term provision of qualityhealthcare services.

Over the past several years, Scott has served as the chairman and CEO of an investor owned healthcare provider with operations in 15 states andchief executive officer of a publicly traded medical staffing company with more than 2,000 employees. Both turnaround assignments included thecrises management of complex organizations in the early stages of high-profile criminal and civil fraud investigations by multiple federal agencies.

Scott has expert knowledge of the bankruptcy process as well as its implications and obligations on an operating provider of healthcare services. Herecently led the successful financial turnaround and Chapter 9 reorganization of a 179-bed county-owned hospital.

Recently he was the financial advisor to 18 tax-exempt continuing care retirement communities with more than 20,000 residents in twelve states,affected by the bankruptcy and sale of Erickson Retirement Communities.

Scott graduated from the University of Florida with a Bachelor of Science in accounting. He is a licensed certified public accountant and member ofnumerous professional organizations. He is currently serving Leader Special Projects, Healthcare Committee, American Bankruptcy Institute.

October 2010 24

Firm Leadership

Michael MorganTitle Managing Director

Education MBA from University of Central OklahomaB.S. from University of Science and Arts of Oklahoma

Boards & Organizations Fellow of American College of Healthcare Executives


Mobile 214.701.9990


Michael is a former hospital chief executive officer with more than 30 years of experience in healthcare management. He brings expertise and talentfor turning around ailing healthcare providers and optimizing healthy organizations.

In his 25-year career at the Sisters of Mercy Health System, Michael was responsible for turning around five of the system’s 19 hospitals. He servedas president and chief executive officer for several Sisters of Mercy hospitals, including St. John’s Mercy Health Care, which has over $800 millionin operating revenues, employs more than 8,000 individuals and includes the system’s flagship 957-bed teaching hospital. As the CEO, he has setsuccessful new strategies, improved clinical and administrative operations and changed organizational cultures. His trademark is developing capablemanagement teams that in turn increase service quality, employee and medical staff satisfaction, patient volume, profitability and maximize cashflow.

After leaving the Sisters of Mercy system, Michael served as the chief restructuring officer and CEO for a two-hospital, investor owned system inTexas. In eight months, he led the successful turnaround, emergence from bankruptcy and recapitalization of the hospitals by a physician-led limitedpartnership. He led the turnaround of a chain of five nursing homes in Texas and the bankruptcy turnaround of a two-campus, acute-care hospital inMississippi. He was the oversight Managing Director for a two-campus rehab and specialty hospital chapter 11 bankruptcy. He also recently servedas the CRO for three individual CCRC’s under a large CCRC management company bankruptcy, and provided financial advisory services for a largeinvestment banking group on a 500-bed hospital system.

Michael holds a Bachelor of Science in business administration from the University of Science and Arts of Oklahoma and a Master of Science inbusiness administration from the University of Central Oklahoma. He is a fellow of the American College of Healthcare Executives and has servedas an officer or director of numerous hospitals and business organizations, including a 280,000-member for-profit health insurance plan.

October 2010 25

Firm Leadership

Bruce BuchananTitle Managing Director

Education MBA from George Mason UniversityMHSA from University of MichiganB.A. from Princeton University

Boards & Organizations Fellow of American College of Healthcare Executives

Mobile 602.363.1140

Fax 866.794.9501


Bruce has more than 30 years of experience in the healthcare field and is a senior healthcare executive with a successful track record in both the not-for-profit and investor owned sectors. He possesses multimarket experience at the hospital and health system chief executive officer level. He hasdeep experience and expertise in revenue growth, physician collaboration/integration, organizational development, productivity improvement andquality enhancement.

Before joining HMP, Bruce served as CEO of Phoenix Baptist Hospital, where he turned around the distressed 236-bed teaching hospital by reducingoperating costs while enhancing the quality of care. Bruce led a similar turnaround of Northeast Baptist Hospital in San Antonio, including recruitingnew physicians, doubling the hospital’s physical space and growing market share. He also served as president and CEO of Atlanta Medical Centerand Mercy Health System Oklahoma and its Mercy Health Center in Oklahoma City. Bruce also held senior management positions with HillcrestHealthcare System and Saint Joseph Hospital and worked for Invalesco Group as an operations consultant to healthcare organizations.

Most recently with HMP, Bruce served as Chief Restructuring Officer for a rehabilitation hospital company with two facilities. He successfully ledthe company through a Chapter 11 bankruptcy process and a Section 363 sale to a new, privately held owner. He also served as CEO of a countyhospital and guided it through a Chapter 9 bankruptcy, which resulted in all unsecured creditors receiving three year notes for full payment plusinterest.

Bruce has a Bachelor of Arts in sociology from Princeton University, a Master of Health Services Administration from University of Michigan, and aMaster of Business Administration from George Mason University. He is board-certified in healthcare management and a Fellow in the AmericanCollege of Healthcare Executives. He also is a member of the Turnaround Management Association.

October 2010 26

Firm Leadership

Derek PierceTitle Managing Director

Education B.S. from Samford University


Mobile 615.584.0719


Derek has over 20 years of professional experience focused solely in the healthcare industry, having served as chief financial officer, chiefrestructuring officer, director of reimbursement, court-appointed examiner, Medicare auditor, Medicare cost report preparer, forensic accountant,compliance consultant, financial auditor, and financial advisor. He has audited, managed and consulted with all types of healthcare providers,including government owned, community not-for-profit, academic, and investor owned entities.

Most recently, Derek served as the restructuring chief financial officer of a two-campus, not-for-profit hospital in Chapter 11 bankruptcy. In additionto his CFO responsibilities, he led the Section 363 sale process and conducted a forensic review into the circumstances that led to the hospital’sbankruptcy filing. Throughout the project, Derek worked closely with senior lenders, debtor-in-possession lenders and the applicable federal loanprogram to a successful plan of reorganization.

Starting his career with the Medicare fiscal intermediary as a Medicare auditor, Derek developed deep expert knowledge of the patient revenue cycle,third-party contracting, and Medicare and Medicaid rules and regulations. He is expert in the areas of corporate and regulatory compliance andforensic accounting in conjunction with the defense of civil and criminal fraud claims or allegations. He led teams conducting forensic analysis insupport of settlement negotiations with the government at both Hospital Corporation of America (HCA) and HealthSouth Corporation, two of thelargest and most complex civil fraud settlements in history.

In his career, Derek has led or participated in interim management and consulting assignments for more than 40 healthcare providers, includingBaptist Memorial Health Care, National Health Service (United Kingdom) Washington Hospital Center, Lifepoint Hospitals, Tampa GeneralHospital, Legacy Health System and IASIS Healthcare.

Prior to joining HMP as a managing director, Derek was a Director with Alvarez & Marsal in its New York-based healthcare practice. Before that,he was a senior manager with Arthur Andersen in its Atlanta-based healthcare consulting practice.

Derek is a graduate of Samford University with a Bachelor of Science in accounting and is a member of numerous professional associations.

October 2010

Contact Information

Philadelphia• Contact: Scott Phillips

Managing Director• Address:

One Liberty Place1650 Market Street36th FloorPhiladelphia, PA 19103

• Phone: 267.804.3885• Fax: 215.689.4386

New York• Contact: Nihal Shah

Director• Address:

1185 Avenue of the Americas30th FloorNew York, NY 10036

• Phone: 212.461.4243• Fax: 212.461.4252

Houston• Contact: Mike Morgan


5100 WestheimerSuite 200Houston, TX 77056

• Phone: 713.968.6521• Fax: 866.422.6176

Birmingham• Contact: Derek Pierce


2001 Park Place, Suite 1400Birmingham, AL 35203

• Phone: 205.202.0459• Fax: 615.523.1835

Phoenix• Contact: Bruce Buchanan


243 E. Glenn DrivePhoenix, AZ 85020

• Mobile: 602.363.1140 • Fax: 866.794.9501

London, UK• Contact: Tim Bolot


Bolt Partners LLP 192 Haverstock Hill,Belsize Park,London NW3 2AJ

• Phone: +44 (0)20 7435 7349

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hmp metrics™ report october, 2010

Business

notforprofit hospitals

individual hospitals

specialty hospitals

local owned hospitals

investor owned hospitals

federal government hospitals

best performing hospitals

longterm acute care