Sutter

2200 River Plaza Drive Sacramento, CA 95833

June 9, 2015 The following information for Sutter Health and Affiliates (the “Presentation”) will be shared by Sutter Health’s President and Chief Operating Officer, Sarah Krevans, along with Jeff Sprague, Senior Vice President and Chief Financial Officer of Sutter Health, and Don Wreden, M.D., Senior Vice President, Patient Experience of Sutter Health at the Citi Non-Profit Health Care Investor Conference on June 11 and 12, 2015, in New York City. The filing of this information does not constitute or imply any representation (i) that all of the information provided herein is material to investors, (ii) regarding any other financial, operating or other information about Sutter Health, the Obligated Group Members or any related bonds (the “Bonds”), (iii) that no changes, circumstances or events have occurred since the end of the fiscal year to which this information relates, or any other date specified with respect to any of the information contained in the following, or that no other information exists, which may have a bearing on the security for the Bonds, or an investor’s decision to buy, sell, or hold the Bonds or (iv) that Sutter Health is obligated to, or plans to, update or revise the information that is presented. The information has been obtained from sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness. No statement in the following information should be construed as a prediction or representation about future financial performance of Sutter Health or any Obligated Group Member. Should you have questions, please contact the Sutter Health Finance support staff at (916) 286-6557.

{00678639 v.1}

Sixteenth Annual Not-for-Profit Health Care Investor Conference

Sutter Health June, 2015

Unless otherwise noted, the financial information related to fiscal year 2014 contained in this presentation has been obtained from Sutter Health Audited Financial Statements

Certain statements in this presentation constitute “forward-looking statements.” Such statements generally are identifiable by the terminology used, such as “plan,” “expect,” “estimate,” “budget” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond Sutter Health’s control, that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements that reflect management's view only as of the date of this presentation or as of such earlier date as indicated. All forward-looking statements included in this presentation and all subsequent forward-looking statements attributable to Sutter Health or persons acting on Sutter Health’s behalf are expressly qualified in their entirety by these cautionary statements. The information contained in this presentation speaks only as of the date stated, or if no date is stated, as of the date of this presentation. Sutter Health is not under any obligations and does not intend to issue any updates or revisions to those forward-looking statements if, or when, its expectations or events, conditions or circumstances on which such statements are based occur or fail to occur, except as required by law.

2

Caution regarding forward-looking statements

Sarah Krevans President & Chief Operating Officer

Sutter Health

Sutter is nationally significant

Broad Reach Largest contiguous not-for-profit health system in the US

Diverse Patients 100+ languages Serving some of the richest and poorest areas in the nation

National Health Impact 1 in 100 Americans receives care at Sutter

Economic Contributor Among the largest US employers

Community impact $3M of charity care provided every week

Sutter Health system snapshot (2014)

5

Bay Area Operating

Unit

Valley Area Operating

Unit

Physicians (members of Sutter Medical Network)

5,000

Network and affiliate employees 49,381

Licensed acute care beds 4,321

2014 by Numbers

Births 35,463

Discharges 190,054

Outpatient visits 11,121,733

Operations of most Sutter Health affiliates recently consolidated from five regions into two distinct Northern California geographic operating units. It is anticipated that the legal consolidation of these Sutter Health affiliates will be complete by Fiscal Year ending 2017

Sutter Health Facts at a Glance

*Not shown on map: - Sutter Coast Hospital (Crescent City, CA) - Kahi Mohala Behavioral Health Hospital (Ewa Beach, HI)

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$(100)

$-

$100

$200

$300

$400

$500

$600

2012 2013 2014

Strong 2014 Financial Performance

Business Segments • Acute Hospital

– Focusing on high quality, affordable care

• Medical Foundations – Focusing on growth, affordable care

• Other Providers Growing Rapidly

– Sutter Care at Home – Ambulatory Surgery Center Joint Ventures – System Lab

• Additional Diversification Investments

7 Confidential

One Sutter

Focus on continued operational excellence

Focus on the market, and enhance our presence

Focus on the holistic patient experience

Focus on the future – innovation and growth

9 Confidential

10

Support Function Transformation Project Summary

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Support Function Transformation

Twelve Months Ending December 2014

11

2014 Planned

2014 Actual

2014 Variance

Sutter Research Enterprise

R

S

Hospital

Ambulatory Surgery Center

R Sutter Rehabilitation Institute

Care Center

Valley Area Snapshot (2014) 12 Counties

Population: 4.4M

Square Miles: 13,800

Med Group Physicians: 1,040

Independent Physicians: 864

Foundation Patient Visits: 5.4M

Employees: 17k

Acute Facilities: 11

ASCs: 13

Licensed Beds: 1,855+

Inpatient Discharges: 87k

Care Centers: 107

Gross Patient Rev: $11,737M

Net Operating Rev: $3,819M

Operating Expense: $3,559M

Operating Income: $260M

EBITDA: $457M


Bay Area Snaphot (2014) Counties: 8

Population: 7.2M

Square Miles: 5,781

Med Group Physicians: 1,921

Independent Physicians: 1,704

Foundation Patient Visits: 5.5M

Employees: 19,927

Acute Facilities: 16

ASCs: 16

Licensed Beds: 2,250+

Inpatient Discharges: 101K

Care Centers: 147

Gross Patient Rev: $14,920M

Net Operating Rev: $5,856M

Operating Expense: $5,497M

Operating Income: $359M

EBITDA: $751M

S

Bay Area Hospital

Ambulatory Surgery Center

Care Center Outreach Center


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One Sutter Team Success

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End

of Life

Complex Case Management

Acute Case Management

Chronic Disease Management

Wellness Management

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…Celebrating AIM (Advanced Illness Management)

Within 90 days of entering the program, AIM patients experience: 56% reduction in hospital stays 19% reduction in ER visits 59% reduction in time spent in ICU

Jeff Sprague Sr. Vice President and Chief Financial Officer

Sutter Health

Revenue Diversification

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2013 2014

Confidential

Hospital Inpatient

39%

Hospital Outpatient

20%

Medical Foundations

28%

Joint Ventures2%

SPS1%

Home Health2%

Investment Income

3%Retirement Plans

5%Hospital Inpatient

40%

Hospital Outpatient

21%

Medical Foundations

32%

Joint Ventures3%

SPS2%

Home Health2%

Investment Income

0% Retirement Plans0%

Medical Foundations, Joint Ventures and Sutter Physician Services represent 37% of revenues in 2014, up from 31% in the previous year

Cash Flow Diversification

20

2013 2014

Confidential

($100)

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

Hospitals Medical Foundations

Surgicenters Health Plan Other Ops Investment Income

Retirement Plans

Diversified portfolio of non correlated assets supports expectation of a steady source of cash flow to continue to invest in transformation, EHR and retirement plans

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Liquidity Remains Strong

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0

20

40

60

80

100

120

140

160

180

200

220

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

$5,500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Tot

al D

ays

Cas

h o

n H

and

Tot

al C

ash

& I

nve

stm

ents

in M

illi

ons

Total Liquidity

Cash & Investments Days Cash on Hand

Source: Audited Financial Statements2005 - 2010 adjusted to reflect FASB ASU No. 2011-07, Healthcare Entities Topic 954

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Growth in Net Assets Reflects Our Low Risk Profile

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0

35

70

105

140

175

210

245

280

315

350

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Day

s N

et A

sset

s

Net

Ass

ets

in M

illi

ons

Net Asset

Net Assets Days Net Assets


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Hospital Replacements Under Way Using Integrated Lean Project Delivery Method

Sacramento San Francisco Van Ness Geary

San Francisco

St. Luke’s

$0

$150

$300

$450

$600

$750

$900

$1,050

$1,200

$1,350

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

$ in

Mill

ionsCapital Investment Forecast

Additions to PP&E

Routine

Discretionary

IT

Regulatory

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Sufficient Sources of Capital On Hand to Complete SB1953 Mandate

Long term thinking. Flexibility forward

Future Flexibility

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--------------- Projection ----------------

0.0%

1.5%

3.0%

4.5%

6.0%

7.5%

9.0%

10.5%

12.0%

13.5%

15.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Operating Cash Flow Margin


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Impact on operating cash flow margin -2.1% in 2013 from cost of investments that must be expensed due to GAAP

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Transformation Investments and Strong Operations are Favorably Impacting Operating Cash Flows

*

*

0.0%

1.2%

2.4%

3.6%

4.8%

6.0%

7.2%

8.4%

9.6%

10.8%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Net Income Margin


26

Even during periods of financial market distress (2008) and heavy transformation investment (2013) net margins still exceeded 2%

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Impact on operating cash flow margin -2.1% in 2013 from cost of investments that must be expensed due to GAAP *

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Affordability*

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$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

-

50,000

100,000

150,000

200,000

250,000

300,000

2011 2012 2013 2014

Discharges Net Revenue per CMI Adjusted Discharge

3 year = -2.7%

3 year = 0.1%

*Small revenue increase per discharge translates to lower cost increase to payers

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Affordability*

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$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

2011 2012 2013 2014

Cost per CMI and WI Adjusted Discharge

3 year = 0.5%

*Small revenue increase per discharge is a result of low increase in underlying costs

Medical Foundation Transparency and Affordability

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• Website posting-Consumer Facing Basket of Service ~200 services – anticipate posting January 2016

• Patient Interactive Tool Self service web application allowing patients with

My Health Online to determine the total allowed amount and patient responsibility (anticipate implementation in early 2016)

30

Balance Sheet Strike Zone Continued focus on a rational capital plan that matches the performance from operations is having the desired outcome on our balance sheet

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22%

24%

26%

28%

30%

32%

34%

36%

38%

40%

42%

130

145

160

175

190

205

220

235

250

265

280

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Unre

stric

ted

Syst

em D

ebt

Leve

rage

Tota

l Day

s Ca

sh

Total Days Cash and System Debt Leverage

Total Days Cash Unrestricted System Debt Leverage

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Permanent Capital Base No Puttable Debt, No Swaps

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$0

$1,250

$2,500

$3,750

$5,000

$6,250

$7,500

$8,750

$10,000

$11,250

$12,500

$13,750

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

in M

illio

ns

Capital (Long Term Debt + Net Assets)

Net Assets Fixed Debt Variable Debt Line of Credit

Source: Audited Financial Statements

A strong pension plan is highly valued by employees

32

Keeping the Pension Plan Fully Funded Keeps the Cost Manageable

$0

$100

$200

$300

$400

$500

$600

600800

1,0001,2001,4001,6001,8002,0002,200

S&P

500

Major Funding in Down MarketsBias to Buy Low Produces Stronger Returns

Funding S&P500

2014 Highlights $ in Millions

• Profit & Loss

– Operating income $419 – Income attributable to Sutter $402

• Infrastructure Investments

– Capital expenditures $983 – Healthcare diversification investments $55 – Operations investments

• Balance Sheet – Net assets $8.0 billion – Cash and investments $4.9 billion – 198 total days on hand (170 days unrestricted)

33

Don Wreden, M.D. Senior Vice President, Patient Experience

Sutter Health

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Elective Delivery < 39 Weeks: Sutter Health System

Sys P90 P50

OB Care: Elective Delivery < 39 Weeks B

etter

Benchmark is based on Leapfrog Group 2011 U.S. Goal and 2010 P50.

Target = 5.0% Threshold = 9.0%

Sepsis Mortality Reduction Initiative

36

UCL

LCL

CL

Rolling 12 month sepsis mortality rate

ICU IV Liberation Improvement Process

Interprofessional Team Development eICU Telemedicine data collection

Interprofessional Rounding

A- Awake B-Breathing C-Coordination D-Delirium E-Exercise F-Family

Results

ICU Liberation Improving Patient Outcomes

• ICU acquired delirium • ICU and hospital length of stay • 1.11 ventilator day reduction • ICU and 6-month mortality post discharge

Variation Reduction: Doctors agree to avoid ordering labs as “Repeat Daily”

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47% 35%

September 2014: 40 doctors meet and review differences

Impact in one hospital: 2,964 blood draws avoided

$95,000 saved

How did Sutter Hospitals perform compared to other hospitals nationally?

Source: http://www.hospitalsafetyscore.org/media/file/ExplanationofSafetyScoreGrades_April2015.pdf and www.hospitalsafetyscore.org

0%

10%

20%

30%

40%

50%

60%

70%

A B C D F

Percent of All Hospitals

Percent of Sutter Hospitals

Better Worse

http://www.hospitalsafetyscore.org/media/file/ExplanationofSafetyScoreGrades_April2015.pdf

http://www.hospitalsafetyscore.org/

End

of Life

Complex Case Management

Acute Case Management

Chronic Disease Management

Wellness Management

41

Confidential 42

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