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HOSPITAL MERGERS ANDACQUISITIONS AND THE GEORGIA

ACQUISITION ACT

Michelle Williams, JDPartner, Alston & Bird LLP

Michael J. FinnertySenior Vice President, Kaufman, Hall & Associates, Inc.

W. Wright Banks, Jr., JDDeputy Attorney General, Office of the Attorney General

SEPTEMBER 28, 2012

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MOODY’S Factors Behind Current Consolidation Strategies

Current Factors

All payers creating reimbursement pressures

Increased need for capital for outpatient facilities, information technology

Pressure to justify tax-exempt status

Costly access to capital for smaller hospitals

Need for fundamental changes in healthcare delivery

Need to increase covered lives

Need for size and scale to gain greater efficiencies

Costly regulatory and compliance changes

Riskier debt structures with costly interest rate swaps, onerous bank covenants

Need for greater alignment with physicians, payers to create ACO or ACO-like structures

Spiraling healthcare costs and insurmountable federal deficit

Large unfunded pension liabilities

Prolonged economic downturn

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2012 Georgia Transactions

Client Partner AG

Emory Healthcare (Buyer)

St Joseph’s Healthcare Yes

McDuffie Regional Health System (Seller)

University Hospitals of Augusta Yes

Satilla Regional Health System (Seller)

Mayo Clinic Jacksonville Yes

Medical Center of Central Georgia (Buyer)

Peach Regional Medical Center Yes

Tift Regional Medical Center (Buyer)

Adel Memorial No

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Copyright 2012 Kaufman, Hall & Associates, Inc. All rights reserved.

Kaufman Hall and Associates

Changes to the Georgia Provider Landscape Since 2008

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South Georgia Medical Center acquires Smith Northview Hospital from Ameris Health System

(May 2011)

St. Mary’s Healthcare acquires St. Joseph’s East Georgia from St. Joseph’s Health System

(January 2012)

Piedmont Healthcare acquires Henry Medical Center

(January 2012)

Erlanger Health acquires Hutcheson Medical Center

(April 2011)

Emory Healthcare and St. Joseph Hospital announce partnership

(March 2011)

Phoebe Putney acquires Palmyra Medical Center from HCA

(December 2011)

HCA acquires Emory Healthcare’s interest in Eastside Medical Center

(March 2010)

Emory Healthcare acquires HCA’s interest in Emory John’s Creek Hospital

(March 2010)

Restoration Healthcare acquires Banks-Jackson

Commerce Hospital

(October 2009)

LifePoint Hospitals acquires Rockdale Medical Center

(February 2009)

Phoebe Putney acquires Sumter Regional Hospital

(October 2008)

Medical Center Hospital Authority acquires Hughston Hospital

(April 2008)

Medical Center Hospital Authority acquires Columbus Doctors Hospital

(February 2008)

Tift Regional acquires Memorial Hospital of Adel from SunLink

(March 2012)

Mayo Clinic Jacksonville acquires Satilla Regional Medical Center

(March 2012)

Southern Regional Health System announces affiliation with Emory

(May 2012)

Elbert Memorial Hospital enters into letter of intent to initiate management agreement with

AnMed Health

(October 2012)

University Hospital announces acquisition of McDuffie Regional Medical Center

(October 2011)Partnership announced between Medical Center of Central Georgia and Peach Regional Medical Center results

in the construction of replacement hospital

(June 2011)

Copyright 2012 Kaufman, Hall & Associates, Inc. All rights reserved.

Kaufman Hall and Associates

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Michael J. Finnerty, Senior Vice President Kaufman, Hall & Associates, Inc. Mike Finnerty is a Senior Vice President of Kaufman Hall and a member of the firm’s mergers and acquisitions group. Mr. Finnerty advises on all facets of the merger and acquisition (M&A) process, valuations, and joint venture execution, working with a variety of clients, including not-for-profit hospitals and health systems, managed care plans, and other for-profit and not-for-profit entities. He also has significant experience working with academic medical centers. Prior to joining Kaufman Hall, Mr. Finnerty was an investment banker with Shattuck Hammond Partners, where his responsibilities focused on M&A advisory and capital raising services related to or for hospitals, imaging, managed care, and healthcare information technology. Prior to this, Mr. Finnerty worked at APM/CSC Healthcare as an Operations Consultant to hospitals and academic medical centers nationwide. Mr. Finnerty has an M.B.A. in Finance and Healthcare Management from the Wharton School of the University of Pennsylvania and a B.A. from Middlebury College.

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Michelle A. Williams, JDPartner

Michelle Williams practices health care law and is a member of the Firm’s Regulatory Health Care Group and the Products Liability Group. Ms. Williams concentrates her practice on the regulatory aspects of health law and handles Medicare/Medicaid termination actions, EMTALA defense and peer review organization hearings, professional agency actions and administrative agency proceedings including those involved in food poisonings and infectious disease look backs. She also works with the Corporate Health Care Practice Group advising on the fraud and abuse and Stark aspects of health care transactions, and the Government Investigations Practice Group advising on qui tam actions.

Prior to law school, Ms. Williams completed her Medical Technologist internship at Butterworth Hospital, an affiliate of Michigan State University, where she received a B.S. in microbiology and public health and a B.S. in animal husbandry.

Ms. Williams was a registered medical technologist at University Hospitals of Cleveland, Lansing General Hospital and Baystate Medical Center and a laboratory assistant at Michigan State University where she worked on vaccine projects for Brucellosis and Marek’s Disease Herpes Virus. While an undergraduate, she worked at the Michigan State University abattoir in all phases of meat production.

She received her J.D. in 1986 from Case Western University School of Law where she was the Executive Editor of Health Matrix: Quarterly Journal of Health Services Management.

Following law school, she served as assistant counsel of University Hospitals of Cleveland, Ohio, a teaching hospital of Case Western Reserve University School of Medicine, and then as associate general counsel of The Mt. Sinai Medical Center, Cleveland, Ohio.

She is a member of the American Health Lawyers Association (AHLA), Vice Chair of the ALAH Hospitals and Health Systems Practice Group, Chair of the American Red Cross Blood Services Southern Region Life Board, past Chair of the Board of Directors of the American Red Cross Southern Region Blood Services, and past Chair of the Board of Directors of the American Red Cross Fulton County Advisory Board. She is a member of the National Advocacy Council for the CDC Foundation, Inc. and was selected to Best Lawyers in America 2006.

Michelle A. WilliamsAlston & Bird LLPOne Atlantic Center1201 West Peachtree St.Atlanta, GA 30309-3424 404-881-7594mawilliams@alston.com

Practice AreasCompliance Health Care - Regulatory Internet & E-Business Life Sciences Privacy & Data Management Products Liability

EducationCase Western Reserve University(J.D., 1986)

Butterworth Hospital(M.T., 1981)

Michigan State University (B.S., B.S., 1978)

Admitted to Practice 1992, Georgia1991, Colorado1987, Ohio

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W. Wright Banks, Jr.Georgia Office of Attorney General

W. Wright Banks, Jr. is a Deputy Attorney General with the Office of the Georgia Attorney General.   He serves as the Director of the Commercial Transactions and Litigation Division which includes three sections: Business and Finance; Real Property, Construction, Transportation and Authorities; and Tax. From 2007 to 2012, he served as the Section Leader of the Business and Finance Section.  Prior to the time that he served as Section Leader, he worked in the Business and Finance Section practicing in a number of areas of law, including alcoholic beverage regulation, bankruptcy, insurance, and procurements handling both transactions and litigation matters. He has provided general representation to a number of entities of the State, including the Department of Administrative Services, the Alcohol and Tobacco Division of the Department of Revenue, the Georgia Lottery Corporation, the Financing and Investment Division of the Georgia State Financing and Investment Commission and the Georgia Superior Court Clerks’ Cooperative Authority. He graduated from the University of Georgia with an A.B. degree in Political Science in 1990. He received his law degree from Mercer University cum laude in 1993 where he was a member of the Mercer Law Review and Phi Kappa Phi and received three American Jurisprudence Awards. Among other responsibilities, the Commercial Transactions and Litigation Division is charged with administering the responsibilities of the Attorney General under the Hospital Acquisition Act, O.C.G.A. §§ 31-7-400 through 31-7-412.  Wright has served in a variety of roles related to a number of hospital transactions including serving as hearing officer in four recent transactions involving hospitals ranging from twenty-five to in excess of three hundred beds.