| WHO IS VANGUARD HEALTH SYSTEMS?
Vanguard Health Systems, based in Nashville, Tennessee, is an investor-owned hospital company with 15 facilities in four large urban markets in the country. Founded in 1998, we provide capital access, thought leadership and the benefits of national scale to health care delivery systems. Health care is personal and local and therefore Vanguard's regional systems carry local brands and reflect the heritage and culture of their local markets.
The company's mission is to help people in the communities we serve achieve health for life. This mission means our company is focused far beyond just the care we provide in our hospitals; rather we are active in identifying and delivering solutions for the overall health needs of community. At Vanguard, we believe in the mission of providing health care to everyone and we act on that belief. We provide funding to local charitable foundations and activities, and our hospitals address important issues affecting surrounding neighborhoods. Our ultimate goal is to develop systems that offer comprehensive health services for the communities we serve and to be a visible corporate leader in those communities.
Leadership
Charles N. Martin, Jr., Chairman and Chief Executive Officer
Charlie has served as Vanguard's Chairman and CEO since the company's inception in 1997. Prior to forming Vanguard, he served as Chairman, President and Chief Executive Officer of OrNda HealthCorp. Under his leadership, OrNda grew from revenue of $450 million to $3 billion in four years to become the nation's third largest investor-owned hospital management company. His career includes serving as President, Director and Chief Operating Officer of HealthTrust Inc., as well as Executive Vice President and Director of Hospital Corporation of America, and Chief Operating Officer and Director of General Care Corp.
Kent H. Wallace, President and Chief Operating Officer
Kent has served as Vanguard's President and Chief Operating Officer since 2005. Prior to being named as Vanguard's President and Chief Operating Officer, he served for three years as Market President for Vanguard's Texas Region, 'the Baptist Health System', a leading provider of health care in San Antonio and South Texas comprised of five acute-care hospitals and other related health care services. Prior to Vanguard, he was Group President for Province Healthcare, Columbia/HCA and HealthTrust. He has over twenty-five years of healthcare operations experience.
Keith B. Pitts, Vice Chairman Keith has served as Vice Chairman, Vanguard Health Systems since 1999. Prior to joining Vanguard, Keith was the Chairman and CEO of Mariner Post-Acute Network and its predecessor, Paragon Health Network. His career includes serving as OrNda HealthCorp's Executive Vice President and Chief Financial Officer as well as over 15 years as a consultant to health care organizations, most recently as a Partner in Ernst & Young's Healthcare Consulting practice.
Dr. Herman Williams, Vice President, Medical Affairs Herman holds the position of Vice President for Medical Affairs, where his primary role in this newly created position is to design innovative strategies to maximize Physician-Hospital Integration. Previously, he served as Chief Medical Officer (CMO) for the five-hospital Baptist Health System in San Antonio, Texas. With an M.D. from Boston University and an M.P.H. from Harvard University, Herman began his career in administrative medicine in 1993 with Anderson Consulting. He subsequently had positions with the Greeley Company and Christus Health before joining Vanguard as Baptist Health Systems' CMO.
Bradley A. Perkins, MD, Chief Transformation Officer/ EVP Strategy and Innovation Brad joined Vanguard in 2009 as Executive Vice President of Strategy and Innovation and Chief Transformation Officer. In this capacity, he will accelerate Vanguard's transformation to compete more successfully in the rapidly changing health and healthcare delivery environment. Brad oversees the company's business strategy and innovation efforts including clinical safety and quality programs, clinical service line improvement and development and information systems/medical informatics. He is also leading efforts to develop an enterprise-wide culture that embraces new ideas for improving health of communities and patient outcomes in ways that drive margin & efficiencies. He brings more than 20 years leadership from the widely respected Centers for Disease Control and Prevention, including his role as the Chief of Strategy & Innovation.
Mark R. Montoney, M.D., Executive Vice President/Chief Medical Officer Mark joined Vanguard in 2009 as Executive Vice President and Chief Medical Officer. Dr. Montoney is responsible for leading system-wide clinical quality improvement and advancing patient safety across the organization. His additional responsibilities include driving value-based outcomes with effective clinical resource management, while establishing a model of clinical integration. Prior to joining Vanguard, Dr. Montoney most recently served as System Vice President and Chief Medical Officer for OhioHealth where he led clinical quality and patient safety initiatives across the system.
Phillip W. Roe, Chief Financial Officer and Treasurer Phil began serving as Executive Vice President, Chief Financial Officer and Treasurer for Vanguard in November 2007. He previously served as Vanguard's Controller and Chief Accounting Officer since the company's founding in July 1997. Prior to joining Vanguard, he served as Senior Vice President, Controller and Chief Accounting Officer of OrNda HealthCorp. Prior to joining OrNda, Phil was associated with Ernst & Young for ten years supervising healthcare and insurance industry audits as Senior Manager.
Joseph D. Moore, Executive Vice President Joe serves as Vanguard's Executive Vice President with responsibility over risk management, capital related expenditures and assets, facilities development and real estate. He previously served in the position of Chief Financial Officer and Treasurer. He has been with Vanguard since the company's inception in 1997. Joe's experience in the hospital industry has spanned the breadth of management responsibilities - from financial functions to development and acquisitions. He was formerly Senior Vice President - Development at Columbia/HCA. He has more than 25 years of experience with Hospital Corporation of America, including 11 years in hospital operations and most recently as Senior Vice President - Finance and Development.
Ronald P. Soltman, Executive Vice President, General Counsel and Director Ron has served as Vanguard's Executive Vice President, General Counsel and Director since the company's inception in 1997. Prior to joining Vanguard, Ron was Senior Vice President and General Counsel of OrNda HealthCorp. Prior to that, he was Vice President and Assistant General Counsel for Hospital Corporation of America, and Assistant General Counsel with Hospital Affiliates International. Ron has extensive experience in health care law and sophisticated health care transactions.
Trip Pilgrim, Chief Development Officer and Senior Vice President Trip Pilgrim is Senior Vice President and Chief Development Officer of Vanguard Health Systems, Nashville, TN, where he has held that title since July 2009. Prior to his current position, Trip was President & CEO of Vanguard's Baptist Health System, San Antonio, TX. Trip has served as the Chair of the Council on Policy Development for the Texas Hospital Association, is past Chair of the Greater San Antonio Hospital and Health Care Council and is active in the Federation of American Hospital Systems. Mr. Pilgrim earned a BA degree from Vanderbilt University and received his MBA degree from the Owen School of Management at Vanderbilt University.
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VANGUARD HEALTH SYSTEMS MISSION
About Vanguard
- Nashville, Tennessee based healthcare management company founded in 1997
- 15 Hospitals and complementary services located in and around the four largest cities in the U.S
- Medicaid & Medicare health plans in Arizona with approximately 200,000 members and growing
- $3.2 billion annual revenue
- Approximately $100M in charity care and over $300M in total uncompensated care
- Strong balance sheet and flexible access to capital on a consistent basis
| Safety |
We put safety first, for our patients, their families and all who work here. |
| Excellence |
We advance health through the continuous pursuit of evidence-based, coordinated care. |
| Respect |
We treat each other with dignity and value the ideas & perspectives each individual brings. |
| Integrity |
We are open, honest & trustworthy. We live our values. |
| Accountability |
We take full ownership of our actions and their outcomes. |
| Innovation |
We will embrace new ideas & thinking to improve what we do. |
Our Commitment
Vanguard believes that to be successful in the future, we must differentiate ourselves by providing excellent clinical care and high quality patient experiences through a dedicated and engaged workforce. Over the past few years, we have invested significantly in workforce initiatives, patient experience initiatives and innovative clinical care. Vanguard's operating strategy is managed through a balanced scorecard, ensuring the proper balance of achievement in growth, patient safety, quality outcomes, patient/guest experience, employee engagement goals and community leadership.
Examples of Recent Achievements
People
- With over 20,000 employees, our people are our most valuable asset, and we measure their engagement utilizing the Gallup organization. As a company, Vanguard has increased our employee satisfaction grand mean score from 3.97 in 2008 to 4.14 in 2009, which places the company in the 66th percentile of Gallup's healthcare database.
- In 2009, three of our facilities were ranked as 'Best Places to Work' in their communities.
- In 2009, we launched the Vanguard Leadership Academy for physicians, nurses and operational leaders ' a three-phase process to develop future leaders from administration to the front line.
- Vanguard recently received the Gallup Great Workplace Award, one of 25 winners out of 500+ Gallup clients.
Quality
- Vanguard was recognized by the Advisory Board Nurse Executive Center in 2009 as a 'best practice' in the treatment of pressure ulcers.
- Vanguard Hospitals have reached a low of 0.5 Ventilator Associated Pneumonia (VAP) cases per 1,000 ventilator days in the most recent reporting month. This places us among the top 10% of all teaching hospitals per the National Healthcare Safety Network Report issued in November 2008.
- Many of our hospitals have been recognized for their quality achievements including:
- Arrowhead Hospital, Arizona, recently chosen as a winner of the 2009 Reuters 100 Top Hospitals: Cardiovascular Benchmarks Award
- Saint Vincent Hospital, Massachusetts which recently received the Harvard Pilgrim Quality Award and the Data Advantage Best in Value Award
- The five hospital Baptist Health System achieved Stroke Center Accreditation from The Joint Commission for all five facilities and was the first hospital system in San Antonio to do so
Community
- In Phoenix, through our School Based Health Centers, we provide free medical and dental care to more than 5,000 children (K-high school) each year. The program, which is celebrating its 12th anniversary, reaches 50 schools in the Phoenix area to provide health care to underprivileged children.
- Vanguard recently opened the Faith Family Clinic a fully-staffed primary care center providing a medical home for San Antonio's working uninsured population.
- In addition to hundreds of community health fairs hosted by our hospitals, our employees commit their own time and own money to many organizations including the United Way, American Heart Association, American Diabetes Association and Susan G. Komen.
- We have partnered with federally qualified health clinics in many of our communities.
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VANGUARD HEALTH SYSTEMS COMMITMENT
Vanguard's Contractual Commitments to DMC's Historic Missions
- Agreement to Operate Hospitals. For 10 years from closing date, unless otherwise agreed to by DMC Board, will maintain operation of the following hospitals, including maintaining an agreed-upon set of core services:
Children's
Detroit Receiving
Harper/Hutzel/Cardiovascular Institute/Surgery Hospital
RIM
Sinai-Grace
Huron Valley-Sinai
- Agreement Not to Sell Hospitals. Will not sell any of these hospitals to an unrelated party for up to 10 years from the date of closing without the consent of the DMC Board.
- Commitment to Provide Indigent Care. For 10 years from the date of closing, will provide charity care at the listed hospitals according to the historic policies at those hospitals.
- Commitment to Education Mission. Commits to supporting fully DMC's historic education mission for undergraduate and graduate medical education, nursing education, and allied health services education. Will honor DMC's contracts with Wayne State University, Michigan State University, and other existing educational programs.
- Commitment to Research Mission. Commits to supporting fully DMC's historic research mission and will honor DMC's contract with the National Institute of Health for the Perinatal Research Branch operation.
- Commitment to Karmanos Partnership. Commits to supporting DMC's historic partnership with the Karmanos Cancer Center and will honor DMC's contract with Karmanos.
- Commitment to Quality, Wellness, and Prevention Programs. Pledges to enhance DMC's health and wellness initiatives, community outreach and prevention programs, and quality improvement programs.
- Supplier Diversity Program. Fully support DMC's Supplier Diversity Program to provide opportunities for minority-owned, women-owned, and Detroit-based businesses.
- Project Genesis. Continue to support Project Genesis summer employment/internship program for Detroit Public High School students
- Commitment to Detroit-based System. Will operate DMC as a Detroit-based system and will maintain its regional headquarters in the City of Detroit.
- Commitment to Consider Detroit for Future Service Centers. In the event company is looking to establish national centers for system support services, the City of Detroit will be given a full opportunity to present proposals for basing such centers in Detroit prior to a siting decision being made.
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DMC AND VANGUARD HEALTH SYSTEM
Proposed Investment and Estimated Cost Project List
| Project |
Hospital |
Estimated Cost |
Total |
| Pediatric Specialty Center |
Children's |
$ 33,000,000 |
|
| Children's New Tower |
Children's |
$170,000,000 |
|
| Clinic Building Backfill |
Children's |
$ 5,200,000 |
$208,200,000 |
| Patient Care Unit Renovations |
Detroit Receiving |
$ 20,000,000 |
|
| Pre/Post Op Space Enhancement |
Detroit Receiving |
$ 2,400,000 |
|
| 2 Additional Operating Rooms |
Detroit Receiving |
$ 6,400,000 |
$ 28,800,000 |
| Surgical Services Renovation |
Harper/Hutzel/CVI |
$ 20,000,000 |
|
| Lobby Expansion/Renovation |
Harper/Hutzel/CVI |
$ 10,000,000 |
|
| Ground Floor Redesign |
Harper/Hutzel/CVI |
$ 20,000,000 |
|
| Inpatient Unit Renovations |
Harper/Hutzel/CVI |
$ 11,250,000 |
|
Cardiovascular Institute &
Outpatient Specialty Bldg |
Harper/Hutzel/CVI |
$ 75,140,000 |
$136,390,000 |
| Rebuilding Mack Parking Deck |
Central Campus |
$ 35,300,000 |
$ 35,300,000 |
| 6th Floor Renovation |
Rehab Hospital |
$ 2,850,000 |
$ 2,850,000 |
| Emergency Dept Expansion |
Sinai-Grace |
$ 33,000,000 |
|
| Facade/Front Entrance |
Sinai-Grace |
$ 10,000,000 |
|
| Outpatient Ambulatory Bldg |
Sinai-Grace |
$ 25,500,000 |
|
| ICU Expansion |
Sinai-Grace |
$ 5,000,000 |
|
| Radiology Relocation |
Sinai-Grace |
$ 4,200,000 |
$ 77,700,000 |
| Private Room Renovation |
Huron Valley |
$ 6,800,000 |
|
| ICU Bed Expansion |
Huron Valley |
$ 4,000,000 |
$ 10,800,000 |
| Routine Capital Expenditures |
|
|
$350,000,000 |
| |
|
|
$850,040,000 |
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How would the DMC/Vanguard Partnership be Structured?
Vanguard Health Systems will acquire the DMC system, which will become Vanguard's Michigan subsidiary (Vanguard currently operates subsidiaries in Arizona, Illinois, Texas, California, and Massachusetts).
DMC operations will be overseen by a Michigan subsidiary advisory board made up of 4 members appointed by Vanguard and 3 members appointed by DMC Board.
DMC will continue to operate under our historic names. The current management team will remain in place.
Vanguard will invest $850 million in DMC hospitals for capital and equipment in the next 5 years, with $800 million being spent in the City of Detroit.
Employees will continue in their same jobs and their seniority, pay, and benefits will be protected. All union contracts will be honored.
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The Difference between Non-Profits and Investor-Owned For Profits
As Detroit has seen all too well, non-profit hospital systems today are very much bottom-line driven. 14 hospitals have been closed in Detroit over the last 20 years, all by non-profits, many of whom built new hospitals in the suburbs.
Non-profits have some financial advantages, such as not paying taxes.
The biggest disadvantage of a non-profit is that it has no investors. To raise money for modern facilities, a nonprofit has only two choices: get donations or borrow. With what happened on Wall Street in 2008, DMC has no ability to borrow. Donors in Detroit are overburdened. If DMC remained non-profit, we had no ability to modernize our hospitals for years to come.
By becoming investor-owned for profit, we can partner with an investor who believes in DMC, the City of Detroit, and our future. Vanguard is willing to invest $850 million into our hospitals because they believe we can create a medical system that rivals the Cleveland Clinic right here in Detroit. If they are right, new patients and new jobs will return to the DMC campus in record numbers. At a time when other investors are leaving Detroit, Vanguard has chosen to bet heavily on DMC's future success. With our track record the last six years, we think they are making a good bet.
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Vanguard's Commitment to DMC's Historic Mission
Vanguard is unique in that it is a national investor-owned system whose strategy has been to acquire hospital systems in urban areas and to treat everyone, regardless of ability to pay. Vanguard currently operates hospitals in San Antonio with higher rates of uninsured patients than DMC. They've been successful while embracing this mission.
Vanguard has made several contractual commitments in the contract with DMC:
- To continue operating our hospitals for a minimum of 10 years
Not to sell any hospital for a minimum of 10 years.
- To provide charity care under DMC's historic policies for a minimum of 10 years.
- To support fully DMC's education mission and to honor all educational contracts, including those with WSU and MSU.
- To support DMC's research mission and to honor the NIH Perinatal Research Branch contract.
- To support the DMC's partner Karmanos Cancer Center and to honor all contracts with Karmanos.
- To fully support DMC's Supplier Diversity Program to provide opportunities for minority-owned, women-owned and Detroit-based businesses.
- To operate DMC as a Detroit based system and to maintain its regional headquarters in the City of Detroit.
- To honor all historic donor naming agreements for facilities or programs.
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What happens next?
The DMC and Vanguard have signed a non-binding letter of intent. The parties expect to have a formally binding contract by June 1, 2010. That contract is conditioned on a Wayne County Renaissance Zone receiving state, city, and county governmental approval. Once the Binding Contract is signed by June 1, 2010, the agreement is reviewed by the Michigan Attorney General to verify that Vanguard is providing fair value to the community. Once Attorney General approval is received, DMC would formally become part of the Vanguard system, making it one of the five largest private health care systems in America.
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