MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR ASCENSION

MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR ASCENSION As of and for the six months ended December 31, 2014 and 2013 The following information should be read in conjunction with Ascension s consolidated financial statements and related notes to the consolidated financial statements. 1 ASCENSION MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction to Management s Discussion and Analysis The purpose of Management s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), is to provide a narrative explanation of the financial statements of Ascension Health Alliance, d/b/a Ascension (the System), that enables users of the System s financial statements to better understand the System s operations, to enhance the System s overall financial disclosures, to provide the context within which the System s financial information may be analyzed, and to provide the System s financial condition, results of operations and cash flows. Unless otherwise indicated, all financial and statistical information included herein relates to continuing operations. MD&A, which should be read in conjunction with the accompanying Consolidated Financial Statements and Supplementary Information, includes the following sections: Strategies Driving Our Growth Results of Operations - Consolidated Liquidity and Capital Resources and others along the continuum of care are finding it increasingly important to work together more closely than ever to improve the health and well-being of the communities our System serves. As a result, the System currently is focused on changing how the organization works together as one integrated ministry, to better deliver valuebased healthcare in a way that is more efficient, centralized, standardized, and collaborative. Strategic business imperatives have been implemented around priorities that will enable management to drive our growth and make progress toward that goal. In particular, MissionPoint Health Partners is growing rapidly in four markets, and a new partnership has been created to expand Network Health insurance services into southeastern Wisconsin, as further discussed in this document. MissionPoint Health Partners (Nashville, Tennessee) MissionPoint Health Partners (MissionPoint) has been growing its business around data analytics to identify the accountable care organization (ACO) members in need of the most intensive medical interventions and care coordination. Strategies Driving Our Growth The rapidly evolving healthcare environment has compelled management to accelerate change and engage collaboratively. Physicians, hospitals 2 ASCENSION MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Beginning in January 2015, MissionPoint expanded into markets in Indiana, Florida and Alabama, while also expanding its reach in the Tennessee market. With the experience and success of MissionPoint in managing commercial, Medicare, Medicaid, and marketplace populations, the organization is uniquely positioned to help our ministries across the System prepare for the future. Saint Thomas Health, a subsidiary of Ascension Health located in Nashville, Tenn., launched MissionPoint in 2011, and it became a direct subsidiary of Ascension in July 2014. Since then, MissionPoint has quickly grown to manage the health needs of more than 100,000 members and has consistently lowered healthcare costs while improving health outcomes. and to offer both fully insured and self-funded plans to large employers. The sale of Network Health had an impact on the consolidated financial results as of and for the six months ended December 31, 2014. Included in the consolidated balance sheet of the System as of June 30, 2014, Network Health had $139 million in long-term investments and $68 million in other current liabilities that primarily consisted of incurred but not reported claims liability. As of December 31, 2014, MHC de-consolidated Network Health and recorded an equity investment of approximately $110 million. Network Health (Milwaukee, Wisconsin) On November 1, 2014, Ministry Health Care (MHC), a subsidiary of Ascension Health, sold 50% of its interest in Ministry Holdings, Inc., the parent company of Network Health Plan and Network Health Insurance Corporation (collectively Network Health) to Froedtert Health, Inc. Network Health currently provides commercial and Medicare Advantage health insurance plans to employers and individuals in northeastern Wisconsin. Co-ownership facilitates the opportunity to expand Network Health insurance services into southeastern Wisconsin 3 ASCENSION MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations Consolidated The following table reflects limited financial information, on a consolidated basis. Financial Data (in millions) DECEMBER 31, 2014 JUNE 30, 2014 Current Assets $ 4,874 $ 4,623 Long-Term Investments 14,279 15,327 Property and Equipment 8,355 8,411 Other Assets 3,111 2,938 Total Assets $30,619 $31,299 DECEMBER 31, 2014 JUNE 30, 2014 Current Liabilities $ 4,544 $ 5,015 Long Term Liabilities 7,145 7,309 Total Liabilities 11,689 12,324 Net Assets 18,930 18,975 Total Liabilities and Net Assets $ 30,619 $ 31,299 Financial Data (in millions) SIX MONTHS ENDED DECEMBER 31, 2014 2013 Care of Persons Living in Poverty $ 940 $ 855 and Other Community Benefit Total Operating Revenue 10,444 9,980 Income from Recurring Operations 475 389 Income from Operations 399 334 Net Income 22 1,139 On a consolidated basis, recurring operating margin, excluding self-insurance trust fund (SITF) investment return, was 4.5% for the six months ended December 31, 2014, as compared to 3.9% for the six months ended December 31, 2013. The primary drivers for the increase in the recurring operating margin, excluding SITF investment return, for the six months ended December 31, 2014, as compared to the same period in the prior year include: An increase in net patient service revenue, less provision for doubtful accounts, of $497.4 million, or 5.6%, as compared to the same period in the prior year as further discussed in this document. 4 ASCENSION MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Focused efforts to increase productivity as evidenced by the decrease in FTEs per adjusted occupied bed from 4.52 for the six months ended December 31, 2013, compared to 4.28 for the six months ended December 31, 2014, a decrease of 5.3%, Relatively stable employee benefit costs due to modifications to employee benefit programs, including the addition of care management and wellness programs. Management s efforts to manage expenses in line with patient volumes as further discussed in this document. Net Patient Service Revenue and Volume Trends Despite a national trend toward declining utilization rates in healthcare delivery, for the six months ended December 31, 2014, equivalent discharges increased 1.0% as compared to prior year. While inpatient admissions and inpatient surgeries decreased 0.6% and 2.0%, respectively, observation days and emergency room visits increased 9.8% and 5.5%, respectively, as compared to the same period in the prior year. The increase in observation days is primarily due to increasing limitations on the admission of Medicare and Medicaid patients, due primarily to the Medicare 2-Midnight Rule. Outpatient visits increased 6.2% for the six months ended December 31, 2014, as compared to the same period in the prior year due primarily due to an 11.9% increase in physician office visits consistent with the transition to delivering healthcare services in the outpatient setting. Outpatient surgical, behavioral health, home health and urgent care center visits also increased as compared to the same period in the prior year. Net patient service revenue per equivalent discharge increased 4.5% compared to the same period in the prior year due to a favorable change in payor mix, mix of services provided and favorable rate negotiations in certain markets. Payor mix as a percentage of gross patient service revenue for Medicaid and Commercial payors has increased while self-pay payors has decreased for the six months ended December 31, 2014, compared to the same period in the prior year. Expanded coverage has been made available through the Patient Protection and Affordable Care Act (ACA) and Medicaid expansion in Connecticut, Illinois, Maryland, Michigan, New York, Washington, and the District of Columbia. Additionally, case mix increased to 1.54 for the six months ended December 31, 2014 compared to 1.52 for the same period in the prior year, an increase of 1.3%. Contrary to the declining trend in inpatient volumes, outpatient volumes continue to grow. 5 ASCENSION MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table reflects certain patient volume information and key performance indicators, on a consolidated basis, for the six months ended December 31, 2014 and 2013. Volume Trends and Key Performance Indicators SIX MONTHS ENDED DECEMBER 31, 2014 2013 Volume Trends Equivalent Discharges 773,055 765,428 Total Admissions 381,677 384,036 Case Mix Index 1.54 1.52 Acute Average Length of Stay (days) 4.52 4.43 Observation Days 155,728 141,777 Emergency Room Visits 1,487,183 1,409,599 Surgical Visits (IP & OP) 309,931 308,735 Physician Office Visits 5,097,849 4,555,879 Home Health Visits 406,595 371,634 Key Performance Indicators Recurring Operating Margin 4.4% 4.2% Recurring Operating Margin, excluding SITF investment return 4.5% 3.9% Recurring Operating EBITDA Margin 9.9% 9.7% Operating Margin 3.8% 3.3% Operating EBITDA Margin 9.3% 8.8% 6 ASCENSION MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Uncompensated Care The net cost of providing care to persons living in poverty and other community benefit programs increased $85 million, or 10%, for the six months ended December 31, 2014, as compared to the same period in the prior year. Additionally, total net costs of providing care to persons living in poverty and other community benefit programs as a percentage of total operating expenses has increased to 9.4% for the six months ended December 31, 2014, from 8.9% for the six months ended December 31, 2013. When comparing the six months ended December 31, 2014 to the same period in the prior year, the System experienced decreases in the cost of providing traditional charity care and bad debt expense yet incurred an offsetting increase in unpaid costs of public programs for persons living in poverty, shifts primarily due to the expansion of coverage under the ACA. The unpaid cost of public programs for persons living in poverty, increased $104 million, or 35%, as compared to the same period in the prior year offset by a decrease in traditional charity care costs of $53 million, or 17%, primarily attributable to the expansion of Medicaid in certain states and improved processes for identifying patients qualifying for financial assistance. As compared to the same period in the prior year, bad debt expense decreased $50.5 million or 7.7% due to the previously mentioned expansion of coverage under the ACA, as well as successful collection efforts at certain health ministries. Millions $1,200 $1,000 Care Of Persons Who Are Living In Poverty And Other Vulnerable Persons (in millions) $855 $940 8.9% 9.4% 12% 10% $800 $600 $195 $50 $231 $48 8% 6% $400 $301 $405 4% $200 $0 $309 $256 Six months ended December 31, 2013 Six months ended December 31, 2014 2% 0% Traditional Charity Care (I) Other Programs for Persons Living in Poverty (III) Categories I IV as a % of Total Operating Expense Unpaid Cost of Public Programs (II) Other Programs for the General Community (IV) 7 ASCENSION MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Recurring Operations For the six months ended December 31, 2014: As previously noted, net patient service revenue, less provision for doubtful accounts, increased $497.4 million, or 5.6%, as compared to the same period in the prior year due primarily to an increase in equivalent discharges, favorable changes in payor mix and an increase in case mix index. Other revenue decreased $33.2 million, or 3.2%, as compared to the same period in the prior year due primarily to the previously mentioned sale of Network Health. Total operating expenses increased $378.4 million, or 3.9%, as compared to the same period in the prior year primarily due to the following: Salaries, wages and employee benefits increased $185.5 million, or 3.7%, compared to the six months ended December 31, 2013, due primarily to wage increases offset by increased productivity and relatively stable employee benefit costs. Purchased services expense increased $28.3 million, or 4.8%, as compared to the same period in the prior year due primarily to the implementation of the common practice management software platform for physician practices resulting in reduced costs and improved collections on patient accounts. Other increases are due to the implementation of new billing systems at certain health ministries. Professional fees increased $27.7 million, or 4.6%, as compared to the same period in the prior year in part due to conversion of more health ministries to the System s enterprise resource planning initiative (Symphony) as compared to the prior year. Supplies expense increased $57.8 million, or 4.1%, as compared to the same period in the prior year due primarily to increased pharmacy costs due in part to recent modifications made to the discounts available under the federal government s 340B Drug Pricing Program, increasing generic drug pricing, as well as a higher intensity service mix as demonstrated by the increase in case mix index. Impairment, Restructuring and Nonrecurring Losses Net impairment, restructuring and nonrecurring losses were $59.9 million for the six months ended December 31, 2014, as compared to a loss of $86.0 million during the six months ended December 31, 2013. Losses for the six months ended December 31, 2014, were primarily due to $53.6 million in expenses associated with Symphony, one-time termination expenses of $3.6 million, and other nonrecurring expenses of $2.7 million. Losses for the six months ended December 31, 2013, were primarily due to $79.2 million in Symphony expenses and one-time termination and other nonrecurring expenses of $6.8 million. 8 ASCENSION MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Investment Return For the six months ended December 31, 2014, the long-term investments held in the Alpha Fund, excluding non-controlling interests and long-term investments held by the self-insurance programs, experienced a loss of 2.3%, compared to a return of 6.7% for the six months ended December 31, 2013. The System s cash and investments are invested in a broadly diversified portfolio that is managed by Ascension Investment Management (AIM), a wholly owned subsidiary of Ascension. The System s investment strategy is to invest in global markets across all asset classes and the investment performance for the six months ended December 31, 2014 within most markets (including global equities) have been negative. The System has made no change to its investment strategy during the current fiscal year. Total net investments under management by AIM are $29.2 billion and $29.6 billion at December 31, 2014, and June 30, 2014, respectively. Of the total net investments under AIM management, $13.9 billion and $14.0 billion are included in the total consolidated net assets of the System at December 31, 2014 and June 30, 2014, respectively. Liquidity and Capital Resources The System had net unrestricted cash and investments of $12.7 billion at December 31, 2014, compared to $13.0 billion at June 30, 2014. This decrease is primarily due to investment losses, capital purchases, debt repayments, and the partial sale and deconsolidation of Network Health offset by cash generated by operations for the six months ended December 31, 2014. Days cash on hand decreased 11 days from June 30, 2014 to December 31, 2014 primarily due to items previously mentioned offset by strong expense management with daily operating expenses increasing only 1.9% from the prior fiscal year. Net days in accounts receivable remained consistent at 48 days from June 30, 2014 to December 31, 2014. Cash-to-senior debt and cash-to-debt remain strong at 227.8% and 199.3%, respectively, at December 31, 2014. Debt to capitalization has shown improvement decreasing from 27.6% at June 30, 2014 to 27.2% at December 31, 2014. Balance Sheet Ratios DECEMBER 31, 2014 JUNE 30, 2014 Days Cash on Hand 245 256 Net Days in Accounts Receivable 48 48 Cash-to-Senior Debt 227.8% 224.6% Cash-to-Debt (Senior and Subordinated) 199.3% 201.6% Senior Debt to Capitalization 24.7% 25.5% Total Debt to Capitalization 27.2% 27.6% 9 ASCENSION MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS