Non-Profit Health Care Investor Conference. SSM Health Care May 22, 2014

Transcription

1 Non-Profit Health Care Investor Conference SSM Health Care May 22, 2014

2 Disclaimer The statements made by representatives of SSM Health Care that are not historical facts are forward-looking statements. The forward-looking statements generally can be identified with words or phrases such as anticipates, believes, could, pro forma, estimates, expects, foresees, may, plan, predict, should, will or other words or phrases of similar import. All statements included in this presentation that any person expects or anticipates will, should or may occur in the future are forwardlooking statements. These statements are based on assumptions and analyses made by SSM Health Care in light of its experience and perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments conform to expectations and predictions is subject to a number of risks and uncertainties as well as additional factors beyond SSM Health Care s control. All of the forwardlooking statements made in this presentation are qualified by these cautionary statements. There can be no assurance that the actual results or developments anticipated will be realized or, even if substantially realized, that they will have the expected consequences to or effects on SSM Health Care s business or operations. All subsequent forward looking statements attributable to SSM Health Care or persons acting on their behalf are expressly qualified in their entirety by the factors and assumptions described above and in any documents containing those forward-looking statements. The information contained in this presentation speaks only as of the date stated, or if no date is stated, as of the date of this presentation. SSM Health Care is not under any obligation and does not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this presentation to reflect circumstances existing after the date of this presentation or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized. 2

3 Presenters: William P. Thompson, President & Chief Executive Officer Gaurov Dayal, MD, President Health Care Delivery, Finance & Integration Kris Zimmer, Senior Vice President of Finance Attendees: Charlie Johnson, System Vice President of Finance Mike Malewicz, System Treasurer and Chief Investment Officer 3

4 Presentation Overview I. SSM Health Care Overview II. III. IV. SSM Health Care Strategic Direction Financial Update Closing Remarks 4

5 SSM Health Care Rooted in Mission & Values Our Mission: Through our exceptional health care services, we reveal the healing presence of God. 5

6 SSM Health Care is a Leading Integrated Health Care System SSM Health Care is well positioned as one of the largest IDN s in the nation Maintains multiple access points and is diversified across geography and revenue sources History of successfully incorporating strategic investments, including recent acquisitions of Dean Health System and Audrain Health Care Significant financial resources 1 $4.7bn in annual net revenue; assets of $6.0bn Unrestricted cash and investments of $2.1bn Deep and experienced management team that has positioned SSM Health Care well for the future 1 SSMHC 2013 results, pro forma for Dean acquisition. 6

7 SSM Health Care Senior Leadership 7

8 To Achieve its Strategic Direction, SSM Health Care has Created Three Operating Divisions Hospital Operations Acute Care Hospitals Hospital-Based Services: - Outpatient Care - Outpatient Surgery - Ancillary Services Behavioral Medicine - Hospitals/services Long-Term Acute Care Health Care Delivery, Finance & Integration Dean Health Plan Navitus Center for Clinical Excellence Clinical Analytics Employee Health Plans Managed Care Contracting Population Health Management Tele-health Physician & Ambulatory Services Physician Clinics Ambulatory Platforms - Urgent Care - Diagnostics - Surgery Centers Post-Acute Care Home Care Skilled Nursing Centers Rehabilitation Services Collaborate to Optimize Patient Care Integration and to Achieve Growth Strategies of SSM Health Care 8

9 SSM Health Care Strategic Direction 2020 Working with our physicians and other partners, we will be an indispensable, top-performing, Mission-based Integrated Health Care Delivery system achieving $7 billion in revenue. We create market-based Integrated Delivery Networks to improve the patient experience, to improve the health of defined populations, and, ultimately, to lower the total cost of care. 9

10 SSM Health Care is Creating Market-Based Integrated Delivery Networks Focused on Achieving the Triple Aim Manage Population Health Grow Integrated Delivery Networks in each of our markets - Develop/operationalize CIO/ACO - Expand infrastructure/diverse access points - Successfully integrate acquired companies and affiliates - Increase physician alignment Grow Direct-To-Employer relationships, Exchanges, Medicare Advantage, DHP and Navitus Improve Patient Experience Achieve best in class quality, service, and safety standards through the implementation of behavioral & operational standards - Customer-centered, best-in-class clinical care - Unparalleled customer service at every touch point - State of the art customer engagement tools Lower Total Cost of Care Lower total cost of care for employers, payors, patients, and selfinsured SSM population Enhance analytics and reporting capabilities 10

11 Recent Accomplishments Toward Value-Based Care Delivery Completed merger with Dean Health System Participating in the CMS Medicare Shared Savings Program Accountable Care Organization Wisconsin (established 2012): 18,000 attributed beneficiaries St. Louis (effective January 2014): 22,400 attributed beneficiaries Southern Illinois (effective January 2014) through ACCS, PC CMS to provide beneficiary attribution 2 nd / 3 rd quarter of 2014 Oklahoma: Preparing for application for January 2015 start date DHP has enrolled approximately 15,000 members in Wisconsin through the public insurance exchange as of early April Anthem Enhanced Personal Health Care (effective January 2014) > 20,000 lives (adults and children) ACO model to control cost and improve quality Clinically Integrated Organization (CIO) St. Louis CIO: Gateway Quality Physician Alliance Multi-specialty network with 800+ anticipated physicians and mid-level providers; 6 adult hospitals; 1 academic medical center; and 1 children s hospital Oklahoma CIO Anticipating launching in

12 Who is Dean? $1.3 billion for-profit organization Dean Health Systems (DHS): Approximately 500 physicians (including SMDV physicians) Approximately 2.8 million annual visits St Mary s Dean Ventures (SMDV): 23 medical primary care, 15 eye clinic locations, and 2 surgery centers 160 member total medical staff Dean Health Plan (DHP): Largest health insurance company in Southern Wisconsin with 405,000 members (including ASO members) Dean Export: Offering that allows third party providers to enhance care delivery and develop population health capabilities Navitus: Key Strategic Rationale for Acquisition: Strengthens SSM Health Care s position as a fully integrated delivery and financing network Enhances SSM Health Care s capabilities for value-based care delivery Ability to take financial risk through novel payment methods or capitation Creates opportunity to improve the value to all of the communities SSM Health Care serves through scale, standardization and transfer of best practices, and population health management capabilities Pharmacy benefit management company with 2.8 million members Dean Retail Services: A network of pharmacies and optical centers primarily located within the Dean Clinic sites Wisconsin Integrated Information Technology and Telemedicine System (WIITTS): Invests in/develops clinical & administrative IT technology 12

13 Leveraging Capabilities of Dean Managing Care and Cost of Our SSM Health Care Population Dean Health Plan assumed medical management of SSM St. Louis self-insured population Effective March 1, 2014 >23,000 members Navitus is pharmacy benefits manager for all SSM Health Care self-insured employees and dependents Effective January 2014 Employee Health Plan Cost Reduction Workgroup Launched February 2014 Reduce cost and utilization of high cost services, e.g. emergency department, inpatient admissions Dean Health Plan currently manages the care of the SSM Wisconsin population and has realized a reduction in medical cost per member per month for the same time period as St. Louis Expanding the medical management of Dean Health Plan to the St. Louis region is expected to result in a greater reduction in medical cost per member per month Leveraging Dean Clinic operational model throughout SSM 13

14 SSM Health Care Has Entered into Innovative Partnerships with Major Corporations Completed participation in Boeing s Intensive Outpatient Care Program Realized 13% decrease in Emergency Department Visits per 1,000 1 Realized 12% decrease in Inpatient Admissions per 1,000 1 SSM Health Care and Walgreens launched a collaboration to improve access to care and care coordination for patients, effective January 2014 Co-brands 12 St. Louis area Walgreens Healthcare Clinics New referral source for SSM primary care physicians Approximately 40% of Healthcare Clinic patients do not have an established primary care physician Bilateral health information exchange for continuity of care 1 Reflects data for time period of January 2012 through September

15 Future Strategies Medicare Advantage Direct-to-Employer Commercial MCO Strategy Public and Private Exchanges Navitus (PBM) New Metrics 15

16 By integrating our hospitals, clinics and health plan, we are uniquely positioned to provide valuebased, quality care to more people over the course of their lifetimes. 16

17 Strategic Investments Have Driven Growth and Diversified Revenue Sources Revenue growth from $2.6bn in 2008 to $4.7bn Annualized FY 2014 Sources of FY 2008 Revenue Sources of FY 2014 Annualized Revenue Hospital Outpatient 32% Home Health / Skilled Nursing 2% Hospital Inpatient 49% Other 6% Physician / Ambulatory 5% Hospital Other 6% Home Health / Skilled Nursing 2% Hospital Outpatient 28% Hospital Inpatient 29% Other 2% Physician / Ambulatory 13% Insurance Premium 24% Hospital Other 2% 17

18 Total Revenues ($mn) CAGR: +9.1% $4,986 $2, PF 2014B

19 Operating Cash Flow ($mn) CAGR: +7.9% $416 $ PF 2014B

20 Total Assets ($mn) CAGR: +7.5% $6,201 $3, Q1 '14

21 Unrestricted Cash and Investments ($mn) CAGR: +5.2% $2,138 $1, Q1 '14

22 Goals and Objectives of 2014 Financing Capital Structure Goals Reduce cost of capital Simplify debt portfolio Increase flexibility 2014 Financing Objectives Provide permanent financing for $400m bridge loan Integrate Dean into SSM Health Care s capital structure Improve costs and amortization of variable rate portfolio Integrate Dean s Capital Structure Establish self-liquidity program Optimize exposure to unhedged variable rate debt Diversify variable rate portfolio Improve operating income Unify reporting 22

23 Series SSMHC Debt Profile Par Outstanding ($000) Underlying Interest Credit Enhancement Bank Facility Exp. Date Mode Final Maturity 2012A (Tax-Exempt) $108,900 Synthetic Fixed Citi Direct Purchase 7/26/2017 Direct Purchase 6/1/ B (Tax-Exempt) 72,430 Synthetic Fixed PNC Direct Purchase 7/26/2021 Direct Purchase 6/1/ H (Tax-Exempt) 100,000 Synthetic Fixed Union Bank Direct Purchase 6/1/2024 Direct Purchase 6/1/ I (Tax-Exempt) 60,000 Synthetic Fixed US Bank Direct Purchase 6/1/2019 Direct Purchase 6/1/ J (Tax-Exempt) (2010D) 95,050 Synthetic Fixed JPM Direct Purchase 6/1/2019 Direct Purchase 6/1/ K (Tax-Exempt) (2010E) 77,105 Synthetic Fixed PNC Direct Purchase 6/1/2021 Direct Purchase 6/1/2045 Variable Loans $513, B 50,000 Synthetic Fixed Self-Liquidity NA VRDO (Window) 6/1/ C 50,000 Synthetic Fixed Self-Liquidity NA VRDO (Window) 6/1/ D 50,000 Variable Self-Liquidity NA VRDO (CP Mode) 6/1/ E 50,000 Variable Self-Liquidity NA VRDO (CP Mode) 6/1/ F 50,000 Variable Self-Liquidity NA VRDO (Weekly) 6/1/ G 50,000 Variable Self-Liquidity NA VRDO (Weekly) 6/1/2044 VRDOs $300, B 47,350 Variable Ambac Insured NA ARS (35-Day) 6/1/ B (WI) 13,250 Variable MBIA Insured NA ARS (35-Day) 6/1/ B (OK) 36,400 Variable MBIA Insured NA ARS (35-Day) 6/1/ B (IL) 24,300 Variable MBIA Insured NA ARS (35-Day) 6/1/2019 ARS $121,300 Taxable Commercial Paper 175,000 Variable Self-Liquidity NA CP NA Commercial Paper $175, A 236,570 Fixed NA NA Fixed Rate 6/1/ A 117,415 Fixed NA NA Fixed Rate 6/1/ B 152,970 Fixed NA NA Fixed Rate 6/1/ A 104,000 Fixed NA NA Fixed Rate 6/1/ A 5,050 Fixed Ambac Insured NA Fixed Rate 1/1/2015 Traditional Fixed $616, Term Loan (Taxable) 96,953 Fixed Bank of America 6/27/2019 Fixed Rate 6/27/2019 Fixed Rate Loan $96,953 Notes payable / Other 52,953 - NA Capital lease obligation 29,214 - NA Total $1,904,910 23

24 Debt Mix and Debt Service Requirements SSMHC s goal is to maintain a conservative effective debt mix of 75% / 25% fixed to variable rate Underlying Fixed / Variable Mix (Before Swaps)* Effective Fixed / Variable Mix (Post-Swaps) Product Mix Variable 61% Fixed 39% Variable 25% Fixed 75% Self- Liquidity 26% Taxable CP 10% Window VRDB 6% CP Mode VRDB 6% Weekly VRDB (S-L) 6% ARS 7% Direct Placement 28% Fixed 39% MADS: $110.1mn Estimated Annual Debt Service Requirements ($mn) Existing DS 2014A (Fixed) 2014B/C (Window) 2014D/E (CP Mode) 2014F/G (Weekly) 2014H/I (DP) 2014J/K (DP) CP Note: Debt breakdown excludes notes payable and capital lease obligations. MADS includes notes payable and capital lease obligations. Totals may not add due to rounding. 24

25 SSM Health Care Experience Exceptional Integrated Care Processes Operating Efficiencies Exceptional Quality & Safety Care Management Exceptional Service Population Health Management Engaged Team Efficient Flexible Capital Structure Strong Balance Sheet 25