Annual Report Fiscal Year 2019 Table of Contents Mission Vision President’s Message

President’s Message ...... 3 To improve the health and well-being of Exceptional People. Health systems are under increasing pressure to deliver excellent clinical MemorialCare’s leadership in value-based care has led to improved individuals, families and our communities. Extraordinary Care. care and a simply better patient experience at the lowest possible cost. health among our patients, even better patient experience and reduced Leading Best Practice Care ...... 4 Every Time. Nearly a decade ago, MemorialCare recognized that the most effective overall cost-of-care. As the healthcare landscape continues to transform, way to meet these objectives was through value-based care. We made we will continue to lead the way in revolutionizing value. Please enjoy Clinically Integrated Network ...... 4 Values sizable early investments in network expansion, technology, and the reading more about our developments in 2019 in this annual report. human capital necessary to deliver results in value-based care. In doing Investing in Technology ...... 4 Integrity Best Practices so, we’ve established ourselves as an industry leader. Awards and Accolades ...... 6 Always holding ourselves to the highest ethical Requires us to make choices to maximize standards and values. Doing the right thing, excellence, and to learn from internal and • Today, our commitment to providing high-quality care in the most cost- Value-Based Care...... 7 even when no one is watching. external resources about documented effective way continues to be the driving force behind what we do. Barry Arbuckle, Ph.D. ways to increase effectiveness and/or efficiency. President and Chief Executive Officer • A central part of MemorialCare’s strategy to offer high-value healthcare Network Growth ...... 9 Accountability MemorialCare Being responsible for meeting the Compassion is the expansion of our outpatient network. We’re opening new health Advancing Access ...... 10 commitments we have made, including ethical Serving others through empathy, kindness, centers across the region, making patient access easier and more and professional integrity, meeting budget and caring and respect. convenient than ever. State-of-the-Art Facilities ...... 11 strategic targets, and compliance with legal and Synergy • Together with our health plan partners, we continue to develop MemorialCare Locations and Map ...... 12 regulatory requirements. A combining of our efforts so that together innovative health plan products that hold us accountable for Behavioral Health Integration ...... 14 we are more than the sum of our parts. performance – delivering exceptional quality and patient experience while reducing healthcare spending for employers and their employees Connecting with the Community ...... 15 throughout our region. This past year, we added three new value-based health plan offerings to our expanding portfolio. 2019 Financial Summary...... 18 • MemorialCare Health Alliance, our customized, Direct-To-Employer Senior Executives and Boards contract between MemorialCare and The Boeing Company has of Directors ...... 20 significantly reduced total cost-of-care for both the employees enrolled in the plan and for Boeing. As a result, Boeing and MemorialCare agreed to extend our partnership by another two years.

• In 2018, we developed the MemorialCare Clinically Integrated Network. Today that network, comprised of select physicians working collaboratively with our health system, is demonstrating quality and making dramatic improvements in efficiency, generating more than $7 million in cost savings in its first year.

3 Among the network’s most effective initial efforts are its Hospital Efficiency Leading Best Practice Care Improvement Programs (HEIPs). HEIPs seek to improve patient care in the Each year, MemorialCare sets Bold Goals for excellence. hospital setting by achieving specific quality and efficiency goals. In FY 2019, we achieved: Thus far, our HEIPs have focused on select surgical and procedural specialty areas, including Anesthesiology, General and Colorectal Surgery, Gynecology, Procedural Cardiology, Spine, Total Joint and Vascular. Working together with more than 230 network physicians, we have improved patient outcomes and generated more than $7 million in cost savings through such initiatives as our physician-led, systemwide approach Sepsis survival: Immunizations Cesarean to purchasing and use of select cardiac, orthopedic and spinal implantable 71% improvement for adolescents: section delivery: 42% higher than Honor Roll devices and equipment. Integrated Healthcare (all hospitals) Association (IHA) average In the coming year, MemorialCare’s CIN will more than double in size to include select networks of Primary Care and Obstetric physicians focused on opportunities to improve care across all settings.

Investing in Technology Colorectal cancer Blood pressure control: Diabetes care: screening: 16% higher than 9% better than MemorialCare made significant investments in advanced surgical 26% higher than IHA average IHA average innovations during FY 2019: IHA average • ExactechGPS® provides real-time, 3D visual guidance in total shoulder replacement surgery. • ExcelsiusGPS® combines navigation and robotic-assisted technology for Clinically Integrated Network minimally invasive spine surgery. MemorialCare’s Clinically Integrated Network (CIN) consists of select • SAVI SCOUT® uses radar during lumpectomy procedures, enabling physicians and other individual health providers who work together and surgeons to locate target tissues within 1 millimeter of accuracy. collaboratively with the health system to improve patient care, appropriately • Hybrid Operating Room combines imaging equipment with a 26% decrease costs and demonstrate value to the market. 71% higher colorectal cancer multifunctional surgical table, allowing clinicians to diagnose and treat in improvement in screening than Formed in 2018, our physician-led network is now well-established and a single workspace, improving patient safety while reducing costs. sepsis survival IHA average already demonstrating the results it was created to achieve. • Mako® Robotic-Arm Assisted Technology uses computed tomography (CT) scan information to create 3D images to help doctors personalize each patient’s joint replacement surgery.

4 5 Awards and Accolades Value-Based Care MemorialCare participates in more value-based health plan offerings Long Beach Medical Center Orange Coast Medical Center MemorialCare Medical Group than any other health system in . Through enhanced 2019 U.S. News & World Report Best Hospitals: 2019 U.S. News & World Report Best Hospitals: Integrated Healthcare Association (IHA) Excellence in Healthcare care coordination, chronic disease management, pharmacy cost reduction Highest ranked in Greater Long Beach Region High Performance status in Gastroenterology & Gastrointestinal Award, California’s top honor for physician organizations and caring for patients in the most appropriate settings, we significantly th reduced employers’ healthcare costs. Top 6 in County Surgery, Geriatrics, Nephrology, Neurology & Neurosurgery, 2019 PAS survey: 98 percentile for Overall Rating of Care, Orthopedics, Pulmonology & Lung Surgery, and Urology third in the state Top 9 in Orange and Los Angeles Counties 2019 The Orange County Register’s Best of Orange County: APG Standard of Excellence Elite Status Top 15 in California ranked #1 hospital in Orange County IHA Medicare Advantage – 4.5 stars out of 5 MemorialCare Proven Value-Based Products High Performance status in Cancer, Cardiology & Heart Magnet® designation by American Nurses Credentialing Center’s Surgery, Heart Failure, Heart Bypass Surgery, Orthopedics, (ANCC) Magnet Recognition Program® for nursing excellence Greater Newport Physicians Product Name Type of Product Geriatrics, Neurology & Neurosurgery, Colon Cancer Surgery, IHA Excellence in Healthcare Award, California’s top honor for Gastroenterology & Gastrointestinal Surgery, and more Saddleback Medical Center physician organizations Direct-To-Employer ® MemorialCare Health Alliance Magnet designation by American Nurses Credentialing Center’s 2019 U.S. News & World Report Best Hospitals: APG Standard of Excellence Elite Status Contract with Boeing (ANCC) Magnet Recognition Program® for nursing excellence Top 12 in Orange and Los Angeles Counties IHA Medicare Advantage – 4.5 stars out of 5 Vivity Anthem HMO Miller Children’s & Women’s Hospital Long Beach Top 22 in California Edinger Medical Group 2019 Southern California Super Doctors Report National ranking in Orthopedics IHA score: 90th percentile in Achievement Scores for Clinical Quality Aetna Whole Health HMO, PPO More than 20 physicians recognized in the top 5 percent of their High Performance status in Heart Bypass Surgery, Heart APG Standard of Excellence Elite Status fields by the Southern California Super Doctors Report, which Failure, Geriatrics, Hip Replacement, Knee Replacement, IHA Medicare Advantage – 4.5 stars out of 5 surveyed 30,000 physicians in Southern California Gastroenterology & Gastrointestinal Surgery and Urology United Alliance HMO 2019 Baby-Friendly® designation: ranked in top 10 percent of U.S. 2019 The Orange County Register’s Best of Orange County: hospitals and birth centers by Baby-Friendly USA, Inc. ranked #2 hospital in Orange County Blue Shield Trio HMO Magnet® designation by American Nurses Credentialing Center’s Magnet® designation by American Nurses Credentialing Center’s (ANCC) Magnet Recognition Program® for nursing excellence (ANCC) Magnet Recognition Program® for nursing excellence Disease Specific Certification in Pediatric Asthma from The Joint Geriatric Emergency Department Accreditation by the Blue Shield Tandem PPO Commission for excellence in asthma care American College of Emergency Physicians

6 7 Network Growth Counting on Our Care Our Expanding Network 9,500 babies delivered MemorialCare continues to enhance our geographic footprint by adding more community-based outpatient locations, close to where our patients live and work. In 2019, MemorialCare opened 1,349 licensed beds new health centers in and Tustin, added to our growing network of breast centers with new locations in Irvine and Los Alamitos, as well as a new dialysis center in Huntington Beach. MemorialCare will open additional locations covering a 288,000 patients in value-based plans wide range of services including urgent care, breast care, primary care with pediatrics, obstetrics/gynecology and imaging by the end of 2020. 275,000 patient days (including newborns) By the Numbers:

4 leading hospitals 2,600+ physicians 600,000 medical group visits

2 award-winning medical groups 7 hospital-based breast centers

27 health centers 13 community-based dialysis sites 183,000 emergency department visits

28 ambulatory imaging centers 7 home-based dialysis programs 60,500 patient discharges 8 outpatient surgical centers 1.7M patients each year

9 urgent care centers 14,000+ employees and physicians 63,000 ambulatory surgeries

30,000 hospital-based surgeries

707 average daily census

145,000 home health visits

8 9 Advancing Access State-of-the-Art Facilities

MemorialCare is transforming the patient experience by utilizing the latest MemorialCare is invested in improving digital tools to create a better patient experience. We’re constantly innovating: existing facilities and breaking ground on new ones, including: Navigation Center Emergency Pavilion Expansion at The MemorialCare Navigation Center provides a single point of contact Orange Coast Medical Center for patients and their families to communicate with a Patient Navigator • Doubled the size of the Emergency for any matter related to the MemorialCare network. This includes making Department, added 13 private or changing appointments, obtaining test results, locating a physician in treatment rooms, fast track stations any specialty, and speaking to a telephone advice nurse, to name a few. and bedside registration, among Extended hours are provided to meet the needs of patients’ busy lifestyles. other improvements. Amazing Scheduling Cherese Mari Laulhere Children’s Making appointments is convenient with these scheduling options: Village Groundbreaking • Navigation Center • Named in memory of Cherese Mari • memorialcare.org Laulhere, in acknowledgment of a • MemorialCare myChart app transformative financial gift provided • In person at any of our medical group locations by the Cherese Mari Laulhere Foundation, the Village brings Reserve Your Spot together 36 pediatric specialties in Through memorialcare.org, patients can check the wait times and reserve one location. Opening in 2021. a same-day appointment at any of our nine urgent care centers. Virtual Care MemorialCare’s latest advancements include video visits with behavioral health specialists and access to SilverCloud, an online therapy program. Opening in 36 Epic Refresh pediatric 2021 Set for completion in 2020, Epic Refresh improves our electronic medical specialties record system, standardizes workflows, enhances provider-to-patient communication and makes the myChart app more user-friendly. Wellist Wellist maps out many social services, like grocery delivery and laundry assistance, in patients’ neighborhoods.

10 11 105

MemorialCare Medical Centers 91 Miller Children’s & Women’s Hospital Long Beach 57 MemorialCare Shared Services o Angele 710 91 Children’s Specialty Care Centers Conty 605 ora ina Urgent Care Centers 110 MemorialCare Medical Group Anaheim 55 241 Torrance Breast Centers 5 1 etminter Hospital-Based Imaging Centers 22 Community-Based Imaging Centers

MemorialCare Surgical Centers ontain 261 15 ong Beach alley Dialysis Centers 5 A„liated Physician Groups rine (Includes Greater Newport Physicians) COMING SOON 133 Orange Conty 1 405 Hntington 241 Expanding Beach Laguna Coast Wilderness Park Outpatient 73 Services COMING SOON agna Miion Aliso and Hill ieo Wood Canyons Regional Park 74 ewport agna 1 Beach igel COMING SOON

Breast Center, 5 Los Alamitos Breast Center, Health Center, Irvine — Sand Canyon MemorialCare Breast Tustin Center in Los Alamitos The Irvine – Sand Canyon From routine wellness offers a convenient breast location offers convenient screenings to health imaging satellite location for breast cancer screening, conditions that require residents of north Orange early detection, diagnosis specialized care, the County. The easily accessible Dialysis Center, and treatment. All our award-winning doctors at Health Center, location features a spa-like Huntington Beach breast imaging services our Tustin health center Rancho Mission Viejo environment and the latest use the most advanced deliver the highest quality Our Huntington Beach-based advanced technology, as well If you are looking for top-rated technology, including 3D primary and pediatric care dialysis center, operated in as expert all-female,sub- physicians to keep your family healthy, tomosynthesis and DEXA to our community. partnership with Fresenius specialized breast radiologists. MemorialCare delivers. Our new, two- Dana Point Kidney Care, provides dialysis bone density testing. Two story, 26,000 square foot health center and offers free classes about more locations will open provides everything you need, including kidney disease. in 2020. primary care and specialty care services, an Clemente to the residents of south Orange County. Behavioral Connecting with the Community Health Integration In addition to providing exceptional healthcare, MemorialCare partners with local organizations to promote the health of the MemorialCare introduced our Behavioral Health Integration program entire community. Highlights include: which allows our primary care physicians to provide care options for patients with behavioral health needs. The program includes: Official Healthcare Partner of Angels Baseball • An embedded clinical social worker at each location Through our Angels partnership, we’ve connected with baseball fans around Orange and Los Angeles Counties to raise awareness • Instant referral to needed services of life-altering conditions including pediatric and adult cancer, • Access to a trained psychiatrist via Telehealth and cardiac health, as well as provide support for living a healthy lifestyle. Also, as part of the Angels Partnership, we gathered as • Televideo visits to patients enrolled in the program a MemorialCare community to clean, garden and spruce up the • Online patient self-management tools through our partner, SilverCloud local Boys and Girls Club of Huntington Valley.

Our Behavioral Health Integration program is available at nine locations Naming the Cherese Mari Laulhere Child Life Program with more to be added in 2020. MemorialCare christened our award-winning Child Life Program at Miller Children’s & Women’s Hospital Long Beach, the Cherese Mari Laulhere Child Life Program. The new name Servicing our honors the legacy of local student, Cherese Mari Laulhere, and community acknowledges the financial support provided by the Cherese with health education classes and events Mari Laulhere Foundation to fund the program. March for Babies For more than a decade, MemorialCare has been a primary ® 85% sponsor of the March of Dimes annual March for Babies. We reduction in depression 472 Now in 9 are passionately committed to supporting the March of Dimes patients accepted into primary care locations symptoms in an average mission to improve the health of babies, prevent premature birth and program in 2019 of 31 days infant mortality, and make sure moms and babies are given the best possible care.

14 15 Connecting with the Community Community Benefit (continued) MemorialCare’s mission is to improve the health and well-being of individuals, families and our communities. Through the free and Clinician Mission Trips low-cost community health services our four hospitals provide, we helped enhance the health – and lives – of nearly half a million MemorialCare physicians, nurses and clinicians are devoted to helping people in FY 2019. others in both their professional and personal lives. Each year, many Health and wellness classes to nearly MemorialCare team members go on mission trips around the world, These include our senior health and wellness education classes covering providing support for groups including Aidchild and Otino Waa Children’s topics such as safety, injury prevention, balance and conditioning, which 280,000 seniors Village. Other activities have included hosting women’s conferences, reached nearly 280,000 seniors. Our cancer support groups guided cleaning water wells and teaching classes in impoverished nations. more than 2,300 people as they navigated the journey from diagnosis Supporting Seniors to treatment. Through our prenatal, childbirth and parenting classes, MemorialCare helped 13,500 parents-to-be get ready for the impending We partner with senior centers throughout our service area to provide birth of their baby and provided advice, strategies, and tools on how to resources that help them live their best lives. We offer information about raise their little one once he or she arrived. their Medicare benefits and we introduce them to local MemorialCare doctors. We also offer a variety of classes, including Tai Chi and ATX MemorialCare hospitals also held numerous community-based clinics that cardio classes, a program which focuses on the needs of individuals gave local residents access to healthcare services that they may not have with cardiovascular issues, and technology, smartphone and social otherwise, including blood pressure tests and screenings for heart failure, Cancer support groups for more than media classes. colorectal cancer and hepatitis. Flu shot clinics and behavioral health services were also provided to those in need. 2,300 people Local Chambers of Commerce MemorialCare is proud to support local residents by providing a As part of MemorialCare’s ongoing mission to support business and variety of health education classes, special events and clinical services help ensure the physical and economic health of the communities we specifically tailored to meet the unique needs of the people in the serve, we have taken leadership roles in several local Chambers surrounding communities. of Commerce, including Irvine, Long Beach, Fountain Valley, Huntington Beach and Anaheim.

Prenatal, childbirth and parenting classes for 13,500 parents

16 17 2019 Financial Summary Strong Financial Performance Fiscal Year Results Fiscal Highlights Include: Our Philanthropic Support Our Physicians In 2019, MemorialCare has strengthened our already robust Total assets Total assets: $3.8B Long Beach Medical Center Foundation and Employees financial performance by closely managing costs, increasing Total revenues: $2.5B and Miller Children’s & Women’s Hospital efficiency, leveraging our competitive position and securing more $3,758,918,000 Continued strong operating cash flow Long Beach Foundation clients by expanding our value-based health plan offerings. Fiscal Year Results 2,668 Total assets – $226,257,000 medical staff physicians Net revenue from Food, drugs, other medical Unpaid costs patient services supplies/services of Medicare 76% 44% 49% Saddleback Medical Center Foundation Capitation revenue Unpaid costs Fiscal Year Results of Medi-Cal 16% Capitation claims expenses Total assets – $143,677,000 10,572 Other operating 9% 24% revenue total employees Depreciation and 5% amortization Orange Coast Medical Center Foundation Net investment 4% Charity care Fiscal Year Results income Interest expenses 3% 7% Total assets – $402,000 1% 627 Other resident and fellow non-operating expenses Research Combined total philanthropic income 1% and other physicians for broader growth and contributions back to the Salaries, wages community community across all foundations 1,237 and benefits 20% volunteers 41% Income/Growth * Philanthropic gifts – $38,741,000 Total Revenue Total Expenses Total Community Benefit Support groups – $502,000 $2,523,915,000 $2,344,512,000 $140,481,000 Net revenue from patient services $1,916,150,000 Salaries, wages and benefits $963,430,000 Unpaid costs of Medicare $68,799,000 Contributions back to the community Education, research, community benefit Capitation revenue $410,132,000 Food, drugs, other medical supplies/services Unpaid costs of Medi-Cal $33,658,000 programs – $4,127,000 $1,034,024,000 320 Other operating revenue $112,493,000 Charity care $9,624,000 medical students Capitation claims expenses $202,900,000 Net investment income $85,140,000 Research and other for broader Capital and equipment – $9,319,000 Depreciation and amortization $112,699,000 community $28,400,000 140,797.37 volunteer hours Interest expenses $14,063,000 * Total quantifiable community benefit with Medicare and Seaside Health Plan included Other non-operating expenses $17,396,000 18 19 Senior Executives and Boards of Directors FY 2019

MemorialCare Senior Executives MemorialCare Board of Directors Seaside Health Plan Orange Coast Medical Center MemorialCare Physician Society Barry Arbuckle, Ph.D. Barry Arbuckle, Ph.D. Board of Directors Saddleback Medical Center Board of Directors Board of Directors President and Chief Executive Officer Sharon Cheever Barry Arbuckle, Ph.D., Chair William Armstrong, M.D. Barry Arbuckle, Ph.D. John Bishop Mark Cianciola, M.D. John Bishop Marnie Baker, M.D. Chief Executive Officer Maribel Ferrer Sharon Cheever Gregory Bush, M.D. Long Beach Medical Center Resa Evans Resa Evans, Chair Miller Children’s & Women’s Hospital Long Beach Eric Feldman, M.D. Patrick Kapsner Karen Don, M.D. Thomas Feldmar Lorraine Booth James Gauss, Chair Larry Lambert Brooke LaDuca, M.D. James Gauss Chief Human Resources Officer James Leo, M.D. David Law, M.D., Chair Long Beach Medical Center Catherine Han, M.D. Tammie McMann Brailsford, RN Thomas Rogers Miller Children’s & Women’s Hospital Monica Leff, M.D. Executive Vice President Long Beach Tim Helgeson Helen Macfie, Pharm.D. Chief Operating Officer Robert Schack Board of Directors Julio Ibarra, M.D. Frank Marino, M.D. Rick Graniere Samuel Tang Barry Arbuckle, Ph.D. Lalita Komanapalli, M.D. Chief Investment Officer Bill Webster, M.D. Hiren Patel, D.O. David Carver Joel Lautenschleger Scott Joslyn, Pharm.D. Eric Ramos, M.D. Chief Information Officer MemorialCare Medical Foundation Sathya Chey Thomas Rogers Adam Solomon, M.D. Board of Directors Tom Leary Jane Close Conoley Donna Rane-Szostak, Ed.D. Graham Tse, M.D. Chief Legal Officer Barry Arbuckle, Ph.D. Leslie Edrich, M.D. Lawrence Tran, M.D. William Wallace, M.D. Helen Macfie, Pharm.D. Barry Behrstock, M.D. John Fielder Myron Wacholder, M.D. James Wells, M.D. Chief Transformation Officer Mark Cianciola, M.D., Chair Clifford Hancock, M.D. Andrew Wittenberg, M.D. Marcia Manker Steve Geidt Cynthia Herzog, M.D. Chief Executive Officer James Hillman Orange Coast Medical Center Stephen Hryniewicki, M.D. Saddleback Medical Center Patrick Kapsner Lorna McFarland, M.D. Mark Schafer, M.D. Larry Lambert Braden Phillips Chief Executive Officer Frank Marino, M.D. Robert Schack MemorialCare Medical Foundation Keith Nelson Bill Webster, M.D., Chair Karen Testman Myron Wacholder, M.D. Chief Financial Officer James Wells, M.D. Susan Anderson Wise

20 Long Beach Medical Center MemorialCare Medical Group 2801 Atlantic Ave., Long Beach, CA 90806 Locations throughout Los Angeles and Orange Counties (562) 933-2000 877-MYMEMCARE (696-3622) Miller Children’s & Women’s Hospital Long Beach Greater Newport Physicians 2801 Atlantic Ave., Long Beach, CA 90806 Locations throughout Los Angeles and Orange Counties (562) 933-2000 (800) 553-6537 Orange Coast Medical Center Seaside Health Plan 18111 Brookhurst St., Fountain Valley, CA 92708 17360 Brookhurst St., Fountain Valley, CA 92708 (714) 378-7000 (855) 833-7747 Saddleback Medical Center Shared Services/MemorialCare Medical Foundation 24451 Health Center Drive, Laguna Hills, CA 92653 17360 Brookhurst St., Fountain Valley, CA 92708 (949) 837-4500 (714) 377-2900

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