Effect of the Asset Purchase Agreement between Verity Health and AHMC Healthcare, Inc. on the Availability and Accessibility of Healthcare Services to the Communities Served by Seton Medical Center and Seton Coastside Prepared for the Office of the California Attorney General June 18, 2020 Table of Contents Table of Contents ..................................................................................................................... 2 Introduction & Purpose ............................................................................................................ 4 Reasons for the Transaction ............................................................................................................................ 5 Timeline of the Transaction ............................................................................................................................. 6 Summary of the Asset Purchase Agreement ................................................................................................. 12 Use of Net Sale Proceeds ............................................................................................................................... 22 Profile of Verity Health........................................................................................................... 23 Verity Health .................................................................................................................................................. 23 Verity Health Inpatient Statistics ................................................................................................................... 25 Statement of Operations ............................................................................................................................... 27 Net Patient Service Revenue ......................................................................................................................... 27 Operating Expenses ....................................................................................................................................... 28 Financial Position and Debt Obligations ........................................................................................................ 28 Credit Rating and Outlook ............................................................................................................................. 29 Verity Health Payer Mix ................................................................................................................................. 30 Unionized Employees .................................................................................................................................... 30 Profile of Purchaser ................................................................................................................ 32 Overview ........................................................................................................................................................ 32 Hospital Compare .......................................................................................................................................... 36 Leapfrog Hospital Safety Grade ..................................................................................................................... 38 Profile of Seton Medical Center .............................................................................................. 40 Seton Medical Center .................................................................................................................................... 40 Overview of the Hospital ............................................................................................................................... 41 Key Statistics .................................................................................................................................................. 42 Programs and Services ................................................................................................................................... 42 Accreditation.................................................................................................................................................. 44 Quality Measures ........................................................................................................................................... 44 Seismic Issues................................................................................................................................................. 46 Payer Mix ....................................................................................................................................................... 47 Managed Medi-Cal Managed Care ................................................................................................................ 48 Medical Staff .................................................................................................................................................. 49 Patient Utilization Trends .............................................................................................................................. 50 Financial Profile.............................................................................................................................................. 51 Cost of Hospital Services ................................................................................................................................ 52 Charity Care ................................................................................................................................................... 53 Community Benefit Services .......................................................................................................................... 55 Analysis of the Hospital’s Service Area ................................................................................... 57 Service Area Definition .................................................................................................................................. 57 Service Area Map ........................................................................................................................................... 58 Health Professional Shortage Areas, Medically Underserved Areas, & Medically Underserved Populations ....................................................................................................................................................................... 59 STEMI Receiving Centers in San Mateo County ............................................................................................. 61 Certified Stroke Centers in San Mateo County .............................................................................................. 62 Demographic Profile ...................................................................................................................................... 63 Medi-Cal Eligibility ......................................................................................................................................... 64 2 Selected Health Indicators ............................................................................................................................. 65 2019 Community Health Needs Assessment ................................................................................................. 67 Hospital Market Share ................................................................................................................................... 68 Hospital Supply, Demand & Market Share .................................................................................................... 69 Market Share by Payer Type .......................................................................................................................... 70 Market Share by Service Line ........................................................................................................................ 71 Hospital Analysis by Bed Type ................................................................................................ 73 Medical/Surgical Capacity Analysis ................................................................................................................ 73 Intensive Care Capacity Analysis .................................................................................................................... 74 Psychiatric Care Capacity Analysis ................................................................................................................. 75 Subacute Care Capacity Analysis ................................................................................................................... 75 Skilled Nursing Capacity Analysis ................................................................................................................... 77 Emergency Services Analysis ......................................................................................................................... 77 Emergency Services Capacity ......................................................................................................................... 79 Summary of Interviews .......................................................................................................... 80 Reasons for the Proposed Transaction .......................................................................................................... 80 Importance of the Hospital to the Community