© Desert Ridge Photography / Gary Steiner

We all want to be our best. Which is what Phoenix Children’s Hospital formally set out to be in 2002, when we crafted our bold vision for the future. Over the past two years, we were recognized for achieving that goal as Phoenix Children’s was again ranked by U.S. News & World Report’s Best Children’s Hospitals. The list specifically recognized our excellence in these subspecialties:• Cardiologyand Cardiovascular surgery (2013-14)• Neonatology(2012-14)• Nephrology(2012-14)• NeurologyandNeurosurgery(2012-14)• Pulmonology(2012-13)• Urology(2013-14) These rankings are particularly gratifying because they are based both on a hospital’s reputation among doctors, which is an honor in itself, and on objective analysis of patient outcomes and data on the structural resources for pediatric care. Phoenix Children’s was the only Arizona hospital to make this prestigious list. Also rewarding in 2012 was being named to The Leapfrog Group’s annual rankings of the Top Children’s Hospitals in the nation. With more than 1,200 institutions

under consideration, this distinction is by far the most competitive award a hospital can receive. Our selection was based on the results of The Leapfrog Group’s annual hospital survey, which focuses on three critical areas of hospital care: how patients fare, resource use, and management structures in place to prevent errors.

In 2012 we continued to position ourselves to be the best locally, regionally and nationally. We remain Arizona’s only licensed, freestanding children’s hospital, among the ten largest such institutions in the United States. We extended our reach to children and parents throughout the state, offering both specialty and urgent care in Avondale, Glendale, Mesa, and Scottsdale. We also established a specialty care clinic in Yuma. We are home to six comprehensive, multidisciplinary Centers of Excellence led by renowned pediatric specialists. We are changing the landscape of pediatric medicine. We’ve joined forces with Mayo Clinic-Scottsdale to institute a formal Pediatric Liver Transplant program, performing the very first such transplant in the Valley in over two decades. And we launched a new center that not so long ago would have been considered the stuff of pure imagination: the Ronald A. Matricaria Institute of Molecular Medicine, dedicated to unlocking the genomic secrets of pediatric disease. I could go on, but that’s what this Annual Report is for: to deliver the hopeful news on the progress we’ve made toward being the very best, bringing hope, healing and high-quality health care to our children and their families.

Yours in Good Health,

Robert L. MeyerPresident and CEO

PROUD TO BE THE

Phoenix Children’s was one of only 12 children’s hospitals in the country

to meet these rigorous standards.

GROWTH in EVERY CATEGORY

13,834 ADMISSIONS 76,006 EMERGENCYDEPARTMENT VISITS

15,424 SURGICAL CASES351,060 PHYSICIAN VISITS

13,4

04

13,8

34

302,

853

351,0

60

65,

420

76,0

06

13,7

45

15,4

24

2 0 1 1

2 0 1 2

2012 wasn’t just a big year for Phoenix Children’s Hospital. It was our best so far, resulting in a breadth and depth of pediatric medical services and specialties unmatched in our 30-year history. We saw growth in nearly every area of the Hospital, including physician visits, surgeries, emergency department visits, and sheer square footage of facility space. That’s good news not only for our Hospital, but for the children and families of Phoenix and our state who look to Phoenix Children’s to provide exceptional pediatric care that meets the highest standards through our broad range of specialty programs. Two major milestones contributed to the tremendous advances we made in 2012. We finished our first full year in our new 11-story, state-of-the-art tower, a facility that has significantly expanded both our capacity and our capabilities. This was also the first complete year of patient service following our landmark strategic alliance with Dignity Health Arizona, a combining of resources that brought the majority of St. Joseph’s Hospital and Medical Center pediatric services and corresponding patients to Phoenix Children’s. As a result of both expansions, Phoenix Children’s was named among Modern Healthcare’s Largest Children’s Hospitals.

When it comes to providing the very best care, with the best outcomes, size really does matter.

It also means we see more patients and treat a wider variety of cases—from routine to rare—giving our physicians and staff vital clinical experience and expertise found nowhere else in the region. Experience leads directly to the quality outcomes we’ve posted, outcomes on par with other leading pediatric institutions across the country. Our growing size gives us the resources to conduct innovative research, including clinical trials for developing new diagnostic methods and treatments. It allows us to provide advanced education and training for our clinical providers. And it makes us incredibly knowledgeable and effective advocates for Arizona’s children. As the country’s fifth-largest city, Phoenix deserves a children’s hospital that ranks among the nation’s very best. By almost every measure, Phoenix Children’s has achieved that goal, continuing to fulfill our vision to be the premier regional pediatric center in the Southwest—a top-tier hospital that is

BIGGER so WE CAN SERVE BETTER

GROWTH // Phoenix Children’s Hospital 2012 page 2

Being bigger means we are able to offer the Southwest’s most

comprehensive medical services solely dedicated to children.

New Specialty and Urgent Care Centers opened in Scottsdale and Avondale, providing convenient pediatric-focused medical services closer to home for our families. In addition, Phoenix Children’s specialty care services are now available in Yuma, through a collaboration with Yuma Regional Medical Center.

Responding to the growing number of patients in need, our Level I Pediatric Trauma Center doubled its capacity, expanding from 2 to 4 resuscitation units.

The Phoenix Children’s Surgery Center opened a second location, inside the East Valley Center in Mesa and offers two high-tech operating rooms and a gastrointestinal endoscopy suite.

In 2012 we contInued thIs commItment to InvestIng In servIces, Improvements and growth.

Growth is a fundamental part of our mission to provide hope, healing and the best health care for children and their families. Broadening our geographic coverage and increasing our facility square footage expands our service lines and enhances our care. It brings care closer to home for our growing number of patients and families.

GROWTH // Phoenix Children’s Hospital 2012 page 3

The new Phoenix Children’s Heart Center opened on the 2nd Floor of the main building, bringing together all the resources to serve the complex needs of patients with heart conditions.

The Emergency Department (ED) expanded, adding 16 much needed exam rooms to ease patient flow, especially during peak emergency season. A new Observation Unit features 24 private rooms, including 8 monitored beds for patients who require observation but not admission. This not only increases our ED capacity and our compliance with correct patient status, it improves our services by streamlining triage, modifying patient flow, optimizing throughput and, ultimately, reducing the length of stay.

© Desert Ridge Photography / Louise Debusk

© Desert Ridge Photography / Shawna Mummert

© Desert Ridge Photography / Kate McElwee

© Desert Ridge Photography / Chris Barr

Barrow Neurological Institute at Phoenix Children’s Hospital

Patients that suffer from complex and interrelated neurological and behavioral

conditions require a team of medical professionals. Barrow at Phoenix Children’s earned its ranking on the list of U.S. News & World

Report Best Children’s Hospitals for Neurology and Neurosurgery by taking a collaborative, multidisciplinary approach to treating the growing number of children diagnosed with neurological conditions such as developmental delays, autism, epilepsy, and

traumatic brain injuries. Collaborating to treat these patients enhances care and improves outcomes. Barrow at Phoenix Children’s brought together the divisions of neurology, neurosurgery, psychiatry, and psychology to form Barrow Neurological Institute at Phoenix Children’s Hospital. The Institute places a large

emphasis on teaching and research activities to train the doctors—and seek the cures—of tomorrow.

Center for Cancer and Blood Disorders

This Center is the largest pediatric program of its kind in Arizona, providing complete care for children diagnosed with malignancies and life-threatening hematologic diseases. Our team includes many specialists, each with a specific area of expertise within the hematology and oncology fields, including the areas of blood and marrow transplant, neuro-oncology, solid tumors, survivorship, early drug development, andliquid tumors. A family-centered approach is essential as we provide comprehensive, personalized care to every

Phoenix Children’s six Centers of Excellence are among the Hospital’s largest

clinical programs, and represent the very finest in pediatric health care in Arizona.

Our investment in building these programs ensures that children with complex and

acute conditions will receive the highest quality care right here in Arizona.

CENTERS of EXCELLENCE

© Desert Ridge Photography / Anna Kupperberg

Barrow at Phoenix Children’s is the largest pediatric neuosciences program in the country.

patient visits in 2012; an increase of

© Desert Ridge Photography / Lynn Dao

CENTERS OF EXCELLENCE // Phoenix Children’s Hospital 2012 page 4

hematology and oncology patient. Each child has his or her own team of physicians, nurses, social workers, physical therapists, nutritionists, and more that provide care throughout the treatment and healing process. The team works to make sure that the care regimen fits in with the child’s—and the family’s—needs. One of the many highlights of 2012 occurred when The Center’s Ottosen Family Blood and Marrow Transplant Program, a collaboration with Mayo Clinic-Scottsdale, ranked second among all U.S. BMT programs with a 75 percent one-year survival rate for patients undergoing their first allogeneic stem cell transplant compared to a median of 62 percent for all programs ranked.

Phoenix Children’s Heart CenterThe Phoenix Children’s Heart Center is the premier regional referral center in the Southwest for children with heart conditions and the fifth-largest program of its kind in the U.S. It offers the most comprehensive inpatient

and outpatient pediatric cardiac care services to infants, children, teens, and even adults with congenital heart defects. Children with rhythm disturbances, heart failure, and other cardiac-related problems receive the highest level of care here. Led by a comprehensive, multidisciplinary team, which includes subspecialty trained physicians and cardiac nurses, the Children’s Heart Center provides

advanced family-centered care for simple and complex heart conditions, care that earned its ranking in the U.S. News & World Report Best Children’s Hospitals for Cardiology and Heart Surgery. In 2012, the Phoenix Children’s heart transplant program received certification by United Network for Organ Sharing (UNOS), becoming the Valley’s only pediatric heart transplant program.

Through a grant from the Phoenix Children’s Leadership Circle, the Phoenix Children’s Heart Center acquired a 3D printer to create life-sized models of defective hearts. These anatomically correct models help doctors explain the intricacies of treatment to patient families, help orient cardiovascular surgeons to the defective heart prior to surgery, and are eventually used to train future pediatric specialists studying at the University of Arizona College of Medicine-Phoenix.

35% 80%Before modern treatments were developed, most patients didn’t survive 5 years past diagnosis.

of childhood cancer diagnoses are leukemia, making it the most common childhood cancer.

With today’s modern treatment protocols, more than

of those patientssurvive into adulthood.

Ranging from infants to teens

Since receiving heart transplant certification from United Network for Organ Sharing (UNOS), the Phoenix Children’s Heart Center has conducted more than 24 heart transplants.

© Desert Ridge Photography / Corey Schwartz

CENTERS OF EXCELLENCE // Phoenix Children’s Hospital 2012 page 5

Center for Pediatric Orthopaedics Ranked as the sixth-largest program of its kind in

the U.S., the Center for Pediatric Orthopaedics is

dedicated to offering the most comprehensive,

state-of-the-art care for children’s orthopaedic and

musculoskeletal disorders.

One of the standouts of our orthopaedic care is

Spinal Fusion Surgery for patients with scoliosis and

other spinal deformities. In 2012, our team developed a

scoring methodology to predict risk of complications

following the treatment of scoliosis. The result is the

highest level of care that provides optimal treatment

for all patients. We also launched a Comprehensive Hip

Preservation Program and a multidisciplinary Cerebral

Palsy Clinic.

Other key programs include treatment for sports

injuries, clubfoot, and muscular dystrophy. As the Center

for Pediatric Orthopaedics grows, other programs

being developed include clinics for children with limb

deficiencies, musculoskeletal tumors, and skeletal

dysplasia. On the horizon is a state-of-the-art motion

analysis lab, the Bubba Watson and PING Golf Gait Lab.

Level One Pediatric Trauma Center The only verified Level I Pediatric Trauma Center in

Arizona, this is the state’s premier site for the evaluation,

stabilization, treatment, and care of children who have

experienced a traumatic injury.

Care at an ACS-verified Level I Pediatric Trauma

Center lowers the risk of death by 25 percent, and children

cared for here have a lower mortality rate and shorter

lengths of stay compared to care at adult trauma centers.

We made an investment in this Center of Excellence

that has exceeded all expectations in quality and quantity

of care. With an expansion of trauma bays in 2012, we

effectively doubled our capacity, ensuring our ability

to accept multiple severely injured patients. We have

ensured that Emergency Medical Services (EMS) does

not have to choose which children in a crash receive the

highest level of care due to capacity constraints.

Our relationship with the EMS personnel is an

important one. In 2012, we provided pediatric trauma

education to more than 1,000 Emergency Medical

Services members. This advanced training ensures the

highest level of care in the field, even before the patient

arrives at Phoenix Children’s.

CENTERS OF EXCELLENCE // Phoenix Children’s Hospital 2012 page 6

FAST FACTPhoenix Children’s has Arizona’s only physician certified in the non-surgical Ponseti method for treating clubfoot. Dr. Lee Segal,

Herbert J. Louis, MD, Endowed Chair of Pediatric Orthopaedic Surgery, studied the method internationally to bring this expertise to Phoenix Children’s.

2,355Phoenix Children’s treated 2,355 total trauma patients in 2012 making it one of the busiest pediatric trauma centers in the nation.

Newborn Intensive Care Unit (NICU) In late 2012, we centralized our newborn services

on the Phoenix Children’s campus. Our Level IIIC

nursery holds the highest certification awarded by the

Arizona Perinatal Trust, and is ranked among the U.S.

News & World Report Best Children’s Hospitals for

Neonatology. In addition, we expanded comprehensive

physician specialty services for Dignity Health Arizona

NICUs, including their 65-bed Level III NICU and two

Level II NICUs representing 40 beds.

Each year, hundreds of babies throughout

Arizona and the Southwest are admitted to this

intensive care nursery—many born prematurely

with an array of medical conditions related to their

immaturity, including respiratory distress syndrome,

heart problems, immature skin and eyes, and under-

developed digestive and neurological systems. Other

patients are born full-term, but suffer from infection,

congenital birth defects, in-utero drug exposure, and

complications from traumatic birth. Many of these

infants require surgical and subspecialist services,

which are all available here at Phoenix Children’s NICU

in a remarkably warm, personal and family-centered

setting, giving them the best chance to survive and

grow to reach their maximum potential.

CENTERS OF EXCELLENCE // Phoenix Children’s Hospital 2012 page 7

FAST FACTPhoenix Children’s is also home to one of only two Neuro-NICUs in the country. This Center treats infants who may suffer severe

consequences related to lack of oxygen during birth. Cooling therapy and advanced technological monitoring improves outcomes and can even reverse the effects of brain damage.

© Desert Ridge Photography / Allen Ayers

• AdolescentMedicine

• Allergy&Immunology

• Anesthesiology

• Audiology

• BoneMarrow Transplant

• Cardiology

• Cardiovascular Critical Care

• ChildProtectionTeam

• CranialFacial

• Dentistry&Oral Surgery

• Dermatology

• Developmental Medicine

• ExtraCorporeal Membrane Oxygenation (ECMO)

• EmergencyMedicine

• Endocrinology

• FamilyMedicine

• Forensics

• Gastroenterology

• GeneralPediatrics

• Genetics&Metabolism

• Gynecology

• HeartTransplant

• Hematology

• Hepatology

• HIVClinic

• Immunology

• InfectiousDisease

• KidneyTransplant

• LiverTransplant

• MolecularMedicine

• NaturopathicMedicine

• Neonatology

• Nephrology

• NeuroCriticalCare

• Neurology

• Neuro-Oncology

• Neurophysiology

• Neuropsychology

• Neurosurgery

• NuclearMedicine

• Nutrition

• OccupationalTherapy

•Oncology

•Ophthalmology

• OrthopaedicSurgery

• Otolaryngology

• PainManagement

• Pathology

• PediatricCriticalCare

• PediatricHospitalistMedicine

• PediatricSurgery

• Pharmacy

• PhysicalMedicine&Rehabilitation

• PhysicalTherapy

• PlasticSurgery

• Podiatry

• Psychiatry

• Psychology

• Pulmonology

• RadiationOncology

• Radiology

• Rheumatology

• SleepMedicine

• SpeechLanguage Pathology

• SportsMedicine

• Telemedicine

• Thoracic&Cardiac Surgery

• Toxicology

• Trauma

• UrgentCare

• Urology

• VascularSurgery

SUBSPECIALTIES SHOW BREADTH and QUALITY GROWTHno other medIcal group In arIzona has thIs breadth and depth of pedIatrIc subspecIalty servIces.

SUBSPECIALTIES//Phoenix Children’s Hospital 2012 page 8

Phoenix Children’s pediatric specialists work as a team to meet the needs of each child by drawing from the resources of our world-class clinical programs. Our talented group of doctors, nurses, and other health care professionals—along with pediatric-dedicated facilities, equipment, and technology—have made Phoenix Children’s a leader in more than 70 areas of pediatric medicine.

ADVANCED RESEARCH and EDUCATION

New Research Laboratory Phoenix Children’s acquired a leading Neuro-Trauma research lab, along with its vast databank of ongoing case studies and three federal grants, moving it from the University of Kentucky to the University of Arizona College of Medicine-Phoenix, Department of Child Health. The lab is our first “wet bench” facility, meaning it’s equipped to store and analyze living organisms, chemicals and drugs—an important component of medical research.

Resident Success Phoenix Children’s Residency Program earned a ringing endorsement in 2012 from the Accreditation Council for Graduate Medical Education (ACGME), which granted its maximum accreditation time period of five years, which means Phoenix Children’s met the highest standards of excellence.

In related developments, pediatric resident match results for Phoenix Children’s residents were better than the national average in 2012. Residents request, in order of preference, where they want to go into practice or fellowship after graduation from their residency program. Competition for the most coveted locations can be intense. Our residents were awarded their first picks more often than the national average, which indicates the quality and desirability of our training. Pediatric residents continuing to fellowship training were consistently selected by top-tier institutions, for example, UCLA, UC-Davis, Denver Children’s, Northwestern, Children’s Mercy, Mott Children’s, and Seattle Children’s. As part of our strategic alliance with Dignity Health Arizona, we augmented our academic programs significantly with the successful transition of the Child Neurology Residency from St. Joseph’s Hospital to Barrow at Phoenix Children’s, enabling us to better train the pediatric specialists of tomorrow with neurological

subspecialties.

If you’re going to be the best—in our case, the most comprehensive pediatric care provider in the Southwest region—you have to prepare for it. That’s why Phoenix Children’s is committed to innovative research supported by leading clinical trials that uncover new treatment and diagnostic methods, while educating and training the pediatricians and pediatric specialists of tomorrow through respected residencies and fellowships.

hIghlIghted here are some of the ways we expanded research, strengthened academIc programs, and advanced patIent care In 2012.

NEW IRB STUDIES:

A GROWTH OF 60% IN ONE YEAR A GROWTH OF 87% IN ONE YEAR

A GROWTH OF 72%(INCLUDING DEPARTMENTOF CHILD HEALTH)

INVESTIGATOR INITIATED IRB STUDIES:

EXTERNAL STATE & FEDERALRESEARCH GRANTS:

EXTERNAL RESEARCHFUNDING:

150

31 $3 MILLION+

100+

RESEARCH // Phoenix Children’s Hospital 2012 page 9

Pediatric Center of Excellence for Extracorporeal Life Support (ECLS) in Arizona Award We offered the first pediatric and neonatal Extracorporeal Membrane Oxygenation (ECMO) service program in Arizona, used to assist patients whose hearts cannot pump blood on their own. As a member of the Extracorporeal Life Support Organization (ELSO) since 1989, Phoenix Children’s is the recognized expert in the state on all forms of extracorporeal life support. This year, our ECMO program became the first in the state to twice receive ELSO’s “Center of Excellence” Award in Extracorporeal Life Support.

Pediatric Liver Transplant Program In March 2012, Phoenix Children’s Hospital’s Pediatric Liver Transplant Program was certified by the United Network for Organ Sharing (UNOS), paving the way for

the first such program in Arizona to provide an integrated, child-centered liver transplant program within a dedicated pediatric hospital. It also produced another first for the Valley in more than two decades: a pediatric liver transplant, the result of collaboration between Phoenix Children’s and Mayo Clinic- Scottsdale.

Pediatric Nephrology and Urology Earn “BEST” Rankings

U.S. News & World Report recognized both the Pediatric Nephrology and Pediatric Urology Departments in their annual rankings of the country’s Best Children’s Hospitals. As the largest treatment center in the Southwest for infants, children, and adolescents with kidney (renal) disorders and high blood pressure

(hypertension), the Nephrology Department serves more than 90 percent of the pediatric kidney transplants, hemodialysis, and peritoneal dialysis in the Southwest. Phoenix Children’s is also home to Arizona’s only dedicated Pediatric Dialysis Center. Our Pediatric Urology Department is ranked one of the best in the country for the comprehensive management of children’s health problems related to the urinary tract. The medical and surgical treatment for problems such as urinary tract infection, incontinence and genital malformation, takes into consideration the special developmental needs of the child.

Ronald A. Matricaria Institute of Molecular Medicine

Ronald A. Matricaria, a Phoenix

Children’s Hospital board member, made the founding gift to create the Hospital’s Molecular Medicine program that bears his name.

Beyond our Centers of Excellence are additional programs that highlight Phoenix Children’s commitment to the highest quality care, clinical research, medical education, and child advocacy.

2012 HOSPITAL PROGRAM HIGHLIGHTS

HOSPITAL PROGRAM HIGHLIGHTS // Phoenix Children’s Hospital 2012 page 10

© Desert Ridge Photography / Stuart Thurkill

© Desert Ridge Photography / Keith Pitts

This advanced medical research institute brings new hope to young patients facing life-threatening diseases with sophisticated genomic analysis and real-time access to drug therapies. Phoenix Children’s is collaborating with leading bioscience organizations in this venture, including the University of Arizona College of Medicine-Phoenix and Translational Genomics Research Institute (TGen). Molecular, or personalized, medicine uses genetic information to determine the right treatment for the right patient at the right time. By studying a patient’s genetic makeup, researchers can identify the individual’s susceptibility to disease, predict their response to a particular drug, and match the patient with a specific therapy. The Institute charts a new course for addressing the unique needs of children with cancer and other serious diseases.

Frances H. McClelland Pediatric Rehabilitation Center

Phoenix Children’s approved a business plan for the Frances H. McClelland Pediatric Rehabilitation Center in 2012, which will include a

12-bed Acute Rehab Inpatient Unit and an Outpatient Therapy Center on the Thomas Campus. Our inpatient rehabilitation program is the only one just for kids in Arizona, and has been caring for hospitalized patients for more than 15 years. The program offers a comprehensive, multidisciplinary approach by a team of experienced pediatric professionals to maximize recovery of children.

SimonMed PartnershipPhoenix Children’s entered into an affiliation agreement with leading diagnostic imaging provider

SimonMed to provide pediatric radiology interpretations to all 30 SimonMed locations. This enables SimonMed to offer parents and referring pediatricians reassurance that their young patients’ imaging results will be reviewed by a board-certified pediatric radiologist from Phoenix Children’s, providing the highest level of specialized expertise in interpreting, diagnosing, and recommending treatment.

Continuous Quality Improvement for our Kids

Phoenix Children’s joined the Ohio Children’s Hospitals Solution for Patient Safety (OCHSPS), one of 25 Health Engagement Networks nationally, and the only one dedicated

to pediatrics. This consortium of leading children’s hospitals works to eliminate serious harm across all children’s hospitals in the U.S. Together, we have established aggressive goals for reducing hospital-acquired conditions, readmissions, and serious safety events. We are sharing processes, data, and outcomes to ensure that this Partnership for Patients results in safe medical care for children that continues to get safer.

Phoenix Children’sCare Network

With an eye on the changing landscape of health care, we laid the groundwork in 2012 for clinical integration and established the infrastructure for Phoenix Children’s Care Network (PCCN). This is the very first pediatric-dedicated clinically integrated organization in the region. PCCN is led by physicians who are committed to providing measurable improvements in quality pediatric care while managing the overall cost of care and improving reimbursement opportunities. The alignment of community pediatricians, subspecialists and Phoenix Children’s Hospital also will contribute to improved population health.

HOSPITAL PROGRAM HIGHLIGHTS // Phoenix Children’s Hospital 2012 page 11

© Desert Ridge Photography / Anna Kuperberg

FOUNDATION // Phoenix Children’s Hospital 2012 page 12

The Child Life ZoneThe Child Life Zone officially opened on November 9, 2012 thanks to the generosity of Garth Brooks, Troy Aikman, and their Teammates for

Kids Foundation, which funded construction costs and additional support for the first three years of operation. Kitchell and its subcontractors also donated their resources to this invaluable addition to our Hospital.

Herbert J. Louis, MD Motion Analysis Center

Phoenix Children’s will open the Herbert J. Louis, MD Motion Analysis Center and the Bubba Watson and PING Golf Gait Lab in 2014 thanks to generous gifts made by Dr. Louis and his wife, Julie, pro golfer Bubba Watson and PING Golf.

Pediatric Down Syndrome ClinicA generous gift made by the Board of Visitors, as well as donations from private individuals, made Phoenix Children’s home to the state’s first multidisciplinary and comprehensive Pediatric Down Syndrome Clinic.

PetSmart Paws Can Heal

More than 40 dogs are part of our animal-assisted therapy program. In 2012, PetSmart made a generous commitment to keep them roaming our halls with a $425,000 gift to underwrite the program–now officially called PetSmart

Paws Can Heal.

Behind many of the year’s most noteworthy achievements were friends and partners who understand the significance of what we do, and share in our desire to provide only the best care for our patients. It was a year where the spirit of our community was celebrated, and the power of philanthropy was demonstrated throughout our Hospital.

the PHOENIX CHILDREN’S HOSPITAL FOUNDATIONIn 2012, gIfts of extraordInary Impact to the phoenIx chIldren’s hospItal foundatIon totaled $35.7 mIllIon.

FOUNDATION // Phoenix Children’s Hospital 2012 page 13

The Center for Cancer and Blood DisordersTwo beautiful children who lost their lives to cancer were honored by their families in 2012 with legacy gifts to the Center for Cancer and Blood Disorders

that will impact other children battling the disease for years to come. Cami and Jeff King dedicated The Jaydie Lynn King Neuro-Oncology Center in honor of their daughter, Jaydie Lynn. McKenzie was honored by her parents, Richard and Denise Monks, with the naming of the Kenzie Center.

KTAR Give-A-Thon2012 was another record-breaking year for the KTAR Give-A-Thon. Broadcasting live from Phoenix Children’s, News-Talk 92.3 and Arizona Sports 620 raised $1,061,601 in support of our patients and families.

19th Annual Beach Ball Guests were transported to St. Barts during the 19th Annual Beach Ball. The $850,000 raised that night benefited The Need is Now campaign to build a new Emergency Department

and Trauma Center. The doctors from Pediatric Surgeons of Phoenix were honored during the event for their collective leadership level gift made to the campaign.

The Sioles Family FoundationHonoring their commitment to serve the families of Phoenix Children’s Hospital, the Sioles Family Foundation dedicated the seventh floor family lounge in honor of Harriet Z. Sioles.

Ignite HopeThe first Ignite Hope was held in 2012–a candlelight walk that culminated in front of the Hospital, where patients watched

the celebration from their rooms. More than $15,000 in toys were placed under the holiday tree that night, with another $45,000 raised in donations.

We Got HEART!Through our annual We Got HEART! employee giving campaign, the staff of Phoenix Children’s contributed more than $527,000 to the Hospital in 2012.

The Leadership CircleIn all, the 226 members of Leadership Circle collectively contributed $434,492–a number that more than doubled the amount donated in 2010.

TECHNOLOGY // Phoenix Children’s Hospital 2012 page 14

TECHNOLOGY IMPROVEMENTS,IMPACT CARE, SAFETY and QUALITY

Pediatric Dose Range Checking The Phoenix Children’s Pediatric Dose Range Checking Safety Alert has garnered national and international recognition. With approximately 1,200 prescriptions on its formulary—given the wide range in patient body mass, age, and other factors —a formula entered into the Electronic Medical Record (EMR) system could generate an excessive variety of alerts. With a goal to make these alerts less frequent but more meaningful, the IT team began evaluating records from more than 750,000 orders over an eleven-year period and wrote individual medical alert modules for the EMR, a type of artificial intelligence code, to create more specific dosing alerts. This innovative use of technology optimized the pharmacy order entry process and ensured that hard alerts occurred when they were critical to preventing an adverse event. To date, there has not been a single prescription overdose error since the program’s inception.

Preventing IV Infiltration IV infiltration is a complication of treatment that can result in pain, rash or even tissue damage requiring surgical repair. At Phoenix Children’s,

approximately 200 patients are on an IV daily and face a risk for IV infiltration. In a collaborative effort by IT and nursing staff, knowledge-based charting electronically monitors and documents a patient’s status on a host of clinical measures, including the health of their IV site. Employing historical data in the EMR system, the team initiated a real-time surveillance program to capture at-risk patients. The system automatically generates a message based on cumulative patient data to text the IV specialists to consult with the nurses on the status of the patient’s IV and

Much of health care is dependent upon technology. Phoenix Children’s has begun the transformation to an information-centric organization with a goal to create exponential progress, implementing new technology rapidly, with minimal disruptions.

phoenIx chIldren’s InformatIon technology department addressed a number of Issues In 2012, buIldIng technology Infrastructure to benefIt physIcIans, patIents and the communIty.

TECHNOLOGY // Phoenix Children’s Hospital 2012 page 15

BENEFITS of an ELECTRONIC MEDICAL RECORD• Real-time hospital data collected in our EMR will

help us analyze wait times and patient volume so we can staff appropriately, flexing up or down as conditions change. Since labor is our primary cost factor, managing it effectively by optimizing scheduling is especially important for a non-profit organization like Phoenix Children’s.

• Transferring from paper-based charting to an online digital system has the added benefit of improving quality control, with built-in checks that ensure correct diagnosis and treatment.

• Accurate clinical documentation from our EMR system will help us comply with Meaningful Use attestation and payment provisions in the new federal mandates.

• Improved communication with primary care physicians helps us understand referral patterns so we can better plan and anticipate patient needs.

• Better technology tracks trends over time and gives us an accurate assessment of the current picture so we can streamline our business processes and make better purchasing and HR decisions.

An EMR is a significant investment in efficiency and improved patient outcomes throughout the continuum of care.

determine if a new line placement is required. Phoenix Children’s has seen a significant decrease in incidences of IV infiltration, particularly in certain units where this complication was more likely to arise. The result? Increased patient comfort, and potentially decreased expensive and avoidable interventions to correct infiltration.

Smart Pumps We made a major investment in new infusion technology—smart infusion pumps that regulate the rate, dosage, timing, and other factors associated with intravenous therapies requiring infusion (e.g. chemotherapy). Pediatric patients present additional difficulties given dramatic variances in body mass. Precise administration of medications is often life-saving, requiring very specific titration and delivery that only an automated system can deliver. The team used data from the electronic medical record to develop a dashboard that identifies high risk medications, sets safety limits, and provides a clear and safe check within the system to ensure that the proper medication dose is being administered with the new pumps. In addition, using RFID tagging, the pumps are tracked electronically from initial use through replenishment, further ensuring patient safety.

Electronic Medical Record Phoenix Children’s worked toward full implementation of an Electronic Medical Record (EMR) system in 2012, as mandated by federal law. But that’s not the only reason we’re making the switch. An EMR system just makes sense. It gathers and reports valuable information that improves operational efficiency, increases safety, and quality for the patient and allows for better care that costs less.

COMMUNITY // Phoenix Children’s Hospital 2012 page 16

We have implemented unique programs that have been successful in promoting exercise and nutrition, and making homes safer. We’re working to prevent child abuse, and helping parents understand child development. Injury Prevention Programs are critical. Our state ranks 38th in deaths for children ages one to 14, and 37th in teen deaths due to injury. Water Watchers promotes water safety awareness and drowning prevention through schools and community organizations. We live in a state where more than 20 children die of drowning each year. Crews’n Healthmobiles are Mobile Medical Units that bring free, comprehensive medical help

directly to at-risk neighborhoods where homeless children, adolescents and young adults are known to gather. Phoenix Children’s Breathmobile is a self-contained mobile asthma clinic that travels to inner-city schools, where air quality is often poor and patients have little or no health insurance, to provide asthma identification, teaching, treatment, and follow-up. The Kids Rock Stars Program promotes better health through nutrition and exercise, encouraging kids to be active at least 60 minutes a day. The program is part of Kohl’s Healthy Kids and Families, and is available online and in select schools.

At Phoenix Children’s Hospital we’ve made a commitment to improving the health and lives of all children in our community—not just the ones we see as patients. We’re working to improve the overall wellbeing of the children of Arizona.

WHERE it COUNTSCOMMUNITY OUTREACH:

KIDS RIDE SAFE Kids Ride Safe is a public

advocacy and education program

that promotes child passenger

safety in automobiles. In 2012,

Phoenix Children’s sponsored new

booster seat legislation, which was signed into law. The

correct use of booster seats can reduce the risk of injury in

a crash by 59 percent. To educate families about the new

law, Phoenix Children’s created a Car Seat Helper mobile

app that assists parents and caregivers in choosing the

right seat for their child.

SPECIAL NEEDS RESTRAINTS GIVEN TO FAMILIES:

BOOSTER SEATS GIVEN OUT AT BARNYARD BOOSTER BASH:

CAR SEAT HELPER APP DOWNLOADS:

GROUNDBREAKING SAFETYLAWS PASSED DUE TO OUR EFFORTS:

5,000 1

330 40

In 2013, Phoenix Children’s Hospital will celebrate its 30th birthday. Like the world around us, we are practically unrecognizable from the fledgling institution we were when we first opened within Good Samaritan Hospital in 1983. Back then, the hope of being among the nation’s best children’s hospitals was just that: a hope. Today that hope has become a reality many times over, not just for us, but for the children and families we serve. And we have good reason to expect great things of ourselves in the years ahead. Phoenix Children’s Hospital has changed the landscape of pediatric medicine in our state, and we’ve cast a bold vision for the future. We will become the premier regional pediatric center in the Southwest, nationally recognized as one of the best for pediatric care, providing a full range of services solely dedicated to children. We will continue to grow, adding programs, satellite centers, physicians and staff, so we can

serve the needs of our region’s growing population. We will work to continually improve our quality care and patient safety, so parents know they will receive the best care at Phoenix Children’s, and our patients will go on to live the lives they dreamed. We will contribute significant knowledge in pediatric care with new research studies and leading clinical trials of new treatment and

diagnostic methods. We will continue to provide advanced training in pediatrics and pediatric subspecialties so that as our community grows, the supply of well-trained physicians is sufficient for the need. And we will be known as an effective advocate for Arizona’s children. It won’t be easy. The politics surrounding health

care largely ignore the needs of children. We will continue to fight, so our patients today and those who come to us in the future have a voice at the highest levels of state and federal government. And we will be here, today and every day. From our vantage point, the future doesn’t just look bright; it’s boundless.

A BRIGHTER FUTURE for PHOENIX CHILDREN

THE FUTURE // Phoenix Children’s Hospital 2012 page 17

© Desert Ridge Photography / Jamelle Kelly

FINANCIALS AND STATS // Phoenix Children’s Hospital 2012 page 18

Strong Cost Controls Managing costs has always been a prime focus for

Phoenix Children’s, but became an even greater focus

with the financial challenges of the past several years.

This focus is working; Phoenix Children’s sits below the

national Children’s Hospital Association average on two

key indicators:

• Overall operating cost per adjusted patient day is 16.5%

below CHA average in 2011 ($3,601 v. $4,312).

• Full Time Employees (FTEs) per adjusted occupied bed

is 15% below CHA average in 2011.

This is especially impressive given the FTEs and

other operating costs required by the build up for the new

tower and market consolidation with Dignity Health

in 2011.

Access to Care Ordinance Phoenix Children’s, in coordination with the

Children’s Action Alliance and other child health

advocates, successfully lobbied the Phoenix City Council

to pass the Access to Care Ordinance, which will generate

more than $200 million in federal funding to pay for

uncompensated medical care for the uninsured through

programs like KidsCare.

Revenue Cycle Improvements We began evaluating our Revenue Cycle in 2010, with

implementation in 2011. By 2012, we could measure more

than $20 million in improvements recorded in 2011 alone.

Improvements have come from:

Safety Net Care Pool (SNCP) As the Arizona economy declined, Phoenix Children’s

leadership reached out to Arizona executive and legislative

leadership to effectively create a “partnership” between

the Hospital and the state. As a result, legislation passed

in 2010 (HB 2116) and in 2011 (SB1357) that enabled other

public entities to be considered as sourcing entities for

public match as part of an intergovernmental transfer

agreement.

E-INSURANCE(financial counseling):

CLINICAL DOCUMENTATION:

SHORT PAYREVIEW PROGRAM:

PATIENT ACCESS REDESIGN:

ED AND URGENT CARE CODING:

$10 MILLION

$3 MILLION

$4 MILLION

$3 MILLION$1 MILLION

As our economy makes its slow recovery from the 2008 recession, Phoenix Children’s continued key management initiatives to mitigate the impact and ensure we retained the resources needed to continue serving the needs of our patients and families. We took several important steps to manage expenses, reinforce financial reserves, increase revenues, and restore cash on hand in 2012.

OUR FINANCIAL HEALTH

FINANCIALS AND STATS // Phoenix Children’s Hospital 2012 page 19

Thus, Phoenix Children’s led the creation of the

Safety Net Care Pool (SNCP) AHCCCS funding of $110

million. This funding allowed the state to expand statewide

KidsCare enrollment in 2012 by 20,000. Governor Brewer

hailed this as “a creative solution to the funding crisis”

and complimented Phoenix Children’s and the other

participating safety net hospitals for developing and

providing the funding for an affordable and sustainable

solution to the health care crisis.

Financing Achievements• Successfully refinanced $225 million in bonds with

long-term fixed rate bonds at the lowest BBB+ rates at the

time, providing a stable long-term debt base structure.

• Achieved a BBB+ rating with a stable outlook from S&P.

• Increased cash at the end of the year to pre-tower

construction levels.

• Entered into the Dignity Health/Premier group

purchasing agreement and implemented conversions

with annual savings of $2.5 million.

Our fiscal strength is directly related to our ability

to carry out our vision to offer the most comprehensive

pediatric care services in the Southwest. With these and

other developments, Phoenix Children’s can continue to

implement changes that improve clinical quality, patient

safety, and customer service, allowing us to achieve our

goal to be the very best for children.

* Reduced by SNCP; see page 18.

Complete financial report available at www.DACBond.com

D O L L A R S I N T H O U S A N D S

D O L L A R S I N T H O U S A N D S

D O L L A R S I N T H O U S A N D S

FTEs and Employees

Fundraising Revenue

Charity & Uncompensated Care

2,53

9

2,55

5

2,50

6

2,9

22

3,22

3

2,78

4

2,76

3

2,6

65

3,26

6

3,4

22

Select Financial Summary

Summary Income Statement 2011 2012

Net Operating Revenue $502,388 $668,685

Operating Expenses $509,105 $640,551

Income from Operations ($6,717) $28,134

Income from Operations as % -1.3% 4.2%

EBIDA (Earnings Before Interest, Depreciation and Amortization) $40,287 $84,191

EBIDA as % of Revenue 8.0% 12.6%

Employee Compensation $265,856 $304,566 and Benefits

F U L L T I M E E q U I v A L E N T S E M P L O Y E E S

$19,849

$12,700

2008

2008

2008

2009

2009

2009

2010

2010

2010

2011

2011

2011

2012

2012

2012

$23,280

$29,708

$27,191

$40,675

$28,656

$60,195

$35,672

$15,166

Mark Bonsall Chairman of the Board General Manager, Salt River Project

Jon Hulburd Vice Chairman Community Volunteer

David Cavazos Immediate Past Chairman City Manager, City of Phoenix

Robert L. Meyer President and Chief Executive Officer Phoenix Children’s Hospital

Randal Christensen, MD Vice President Phoenix Children’s Medical Staff

Robert M. Delgado President and Chief Executive Officer Hensley Beverage Company

Mark DeMichele Community Volunteer

Ken Kendrick Managing General Partner Arizona Diamondbacks

David Lenhardt Chief Executive Officer PetSmart

Connie Mariano, MD, FACP President Center Executive Medicine

Ronald A. Matricaria Community Volunteer Founder of the Ronald A. Matricaria Institute of Molecular Medicine

Jeffrey P. Morray, MD President Phoenix Children’s Medical Staff

Jacque J. Sokolov, MD Chairman and Senior Partner SSB Solutions

Brian Swartz Chairman of the Foundation Board Phoenix Children’s Hospital

Brian Swartz Chairman of the Foundation Board Phoenix Children’s Hospital

Sheila Zuieback Board Secretary Trustee, Halle Family Foundation

Robert L. Meyer President and Chief Executive Officer Phoenix Children’s Hospital

Steven S. Schnall Senior Vice President Chief Development Officer Phoenix Children’s Hospital Foundation

Taylor Burke President Rainy Partners

Larry Clemmensen Community Volunteer

Greg Kruzel Partner Braun Siler Kruzel PC

Rick Kuhle President Vestar Development

Herbert J. Louis, MD Director Emertus

Mark Love President and Chief Executive Officer LKL Partners, LLC

Manny Molina President Molina Media Group

Jonathan Pinkus President and Chief Executive Officer Arizona Nutritional Supplements

Frank Placenti Senior Partner Squire, Sanders & Dempsey

Dave Ralston Chairman and Chief Executive Officer Bank of Arizona

Scott Rehorn Partner Red Development, LLC

David Watson President Revolution Tea

BOARD of DIRECTORSBOARD OF DIRECTORS BOARD OF DIRECTORS

© Desert Ridge Photography / Allen Ayers

© Desert Ridge Photography / Chris Barr © Desert Ridge Photography / Jamelle Kelly