University of Alabama Health Services Foundation, P.C.

A brief glimpse inside a Faculty Practice Plan...

Not a Typical MD Practice

• A bona fide corporation

• “Shareholder value and earnings” not in annual distributions but for– program development / expansion

– compensation / expenses for operation

– retention for business downturns

• MDs are “fully employed / only here”

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A Brief View of our History

• Founded in 1973 – IRS Tax Exempt 501(c)(3)

• As a physician-led company– Superior Patient Care

– Group Practice in an Academic Environment

– Establish Funds for Program Development

• The era was ripe for such activities– Medical Practice Plans birthed out of “university anxieties”

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The “Stages of our Growth”

• 1970s - a benefit plan and to bill and collect professional revenue

• 1980s - organizational development– University Affiliation– Ambulatory Clinics– Complete Health Joint Venture

• 1990s - corporate style behavior– The Kirklin Clinic– UAB Prime Care– Sale of Complete Health– UAB Health System

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Board of Directors• Purpose

– Develop major policy and strategy– Provide a balanced perspective to our goals– Recruit key executives and hold them accountable for success

• Membership– 10 public members (“outside directors”)– 9 physician leaders (“internal directors”)– Executive leadership

Public Board Members• Eddie Adair Cordova Ventures

• Dr. Neal Berte Birmingham Southern College

• Donald James Vulcan Materials Company

• Charles Perry, Jr. Highland Associates

• Dowd Ritter AmSouth Bank

• Van Richey American Cast Iron Pipe Company

• Jerome Rose Lehr, MiddleBrooks, Price & Proctor

• James Stephens EBSCO Industries, Inc.

• Lee Styslinger, III Altec, Inc.

• Michael Warren, Jr. Energen Corporation

Executive Leadership

• A uniquely balanced and important partnership of MD / business leadership

• Corporate service functions– General Counsel, Finance, Human

Resources, Treasury, Corporate Compliance, et al

UNIVERSITY OF ALABAMA HEALTH SERVICES FOUNDATION

Clinical Services Managed byUAB Health SystemUAHSF

Board of Directors

Executive OfficersRay L. Watts, M.D.

PresidentReid F. Jones

Executive Vice President

UAB Health System

Director Insurance

Risk Management

DirectorHuman

Resources

Chief FinancialOfficer

General Counsel

ManagementServices

Organization

ExecutiveDirector

TKC

ChiefInformation

Officer

Corporate Services

Financial Overview

• $1 billion economic impact

• extremely strong Balance Sheet– $434 M endowments, $163 M debt

• FY 2005 Total Operating Revenue = $349 M

• FY 2005 Net Patient Care Revenue = $298M

Total Payor MixBlue Cross Blue Shield 37%Medicare 21%Medicaid 9%United Health Care 3%Viva 8%Commercial Insurance 5%Self Pay 9%Other 8%

Payor Mix - Commercial

Blue Cross Blue Shield 76%

United Healthcare 6%

Viva 8%

Other Commercial Insurance 10%

UAHSF Expense Structure

Salaries and Benefits $205 59%

Medical and Laboratory 41 11%

Administrative and General 39 11%

Contributions to UAB 17 5%

Internal Research Funding 16 5%

Other 29 8%

($ in millions)

General Endowment Fund

• The Successful Failure

• Over $100 million dollars

• Research Initiatives

• Creation and Implementation of the MSO

• Faculty Recruitment

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Scope of Services Portfolio

• Offers services in 32 clinical specialties … primary and specialty care

• Employs 850 physicians and 1,800 non-physician employees

• 22nd largest employer in the State of Alabama

Service Locations• Have the “clinical franchise” for

physician services at UA Hospital

• Also provide services at other hospitals, in TKC, at selected regional clinics, and in “local offices”

• The Kirklin Clinic Acton Road

The Kirklin Clinic

• Designed by World Renowned Architect I.M. Pei

• Imported Italian Marble

• 1,752 rooms

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The Kirklin ClinicOpened June 15, 1992

• 454,000 Square Feet

• Clinic Visits– 427,000 in 1994– 473,000 in 1996– 543,000 in 1998– 588,000 in 2000– 671,000 in 2002– 769,000 in 2004

John N. Whitaker Building

• Opened in March 2000• 180,000 Square Feet• Located on the old IRS Lot• Named after UAHSF President, John N. Whitaker M.D. Years of Service (1992-2001)• UAB Health System and Alabama Organ Center in JNW Building