Prepared For:

Telluride Medical CenterSeptember 28, 2015

Confidential

Introductory Overview

Frauenshuh HealthCare Real Estate Solutions The National Resource for Physicians, Hospitals and Health System Leaders

Our Experience

• We are a healthcare real estate development, financing and

management company with a 31 year operating history and over 75

completed projects nationally.

• We have been re-hired 48 times by 15 leading healthcare systems.

• We focus exclusively on the development of healthcare facilities that:

− Align physicians and hospitals

− Reduce costs and advance quality

− Transform the delivery of ambulatory care

− Anticipate the management of population health

• Our financial strength:

− We have funded and developed in excess of $3 billion in healthcare assets

and have never defaulted on a project

− We have long standing bank and permanent lender relationships in

addition to a successful 8 year capital partnership with Health Care REIT

(NYSE: HCN) with access to a $3.5 billion unsecured line of credit

− We can fund 100% of your project costs

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Greenfield Medical Campuses

Community Health & Wellness Centers

On-Campus MOB Acquisitions

On-Campus MOB Developments

Off-Campus Ambulatory Destinations

Our Clients

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The Transition from Volume to Value

POPULATION FOCUS

APPROPRIATE CARE

PATIENT PREFERENCE

COST & PRODUCTIVITY

QUALITY & HEALTH

• Unrelated facilities dispersed

throughout communities in various

types of real estate

• Independent and employed

physicians in “silo” practice models

• Independent encounters fragment

perception and create “leakage”

risk

• Operational performance

constrained by fragmentation

• Volume and profitability as primary

metrics of success

• Destinations organized around

community need and centers of

excellence

• Collaborative care delivery models

that integrate physicians and

programs

• A common patient experience defines

brand and influences preference

• Provider efficiency, patient

throughput and cost reduction drive

strategic and operational results

• Measurable quality and clinical

outcomes

CURRENT FUTURE

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Developing Effective Ambulatory Destinations

• We utilize medical home, collaborative care and Triple Aim

principles to develop facilities that:

− Improve the patient experience

− Reduce per capita costs

− Enhance quality and clinical outcomes for population health

• We provide a multi-disciplinary team of professionals that:

− Challenge status quo thinking

− Introduce best practices from other health systems

− Ensure that clinical processes drive functional programming

− Engage physicians throughout the process

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Implementation & Financing Model

Ownership Structure

• Developer owned – 3rd party capital

• Combination of Owner equity and flexible debt

• TMC would have long term control of the project through a long term land lease

• To include purchase options & competitive restrictions

• TMC could own up to 50% of the project and partnership

• TMC would invest into the partnership upon commencement of the lease

• Investment would be based on actual cost of the project. No developer mark up.

• All financing guarantees would be the responsibility of Frauenshuh

• TMC would have an option to acquire 100% of the partnership after an agreed

upon initial hold period

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Single Asset

Limited Liability

Company

Telluride

Medical

Center

Partnership Ownership Structure

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Bank Debt

50%

Telluride Medical Center

50%

Frauenshuh

HealthCare

100%

Land Lease

• Strategy • Services• Expansion• Branding• Purchase Options

TMC Controls:

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Lease and Economic Models

• 2 economic options were modeled for this presentation

1. Master Lease Option

• TMC leases the entire project including the shell space

• Gives TMC ultimate control over programs and future space

• Favorable credit lease treatment resulting in lower rents

2. Multi-tenant Lease Up Option

• Frauenshuh takes the risk on lease up

• TMC would not be responsible for any operating or rent cost related to the

shell space

• Tenant Improvement Allowance

• Frauenshuh would provide a standard allowance of $50 per square foot or

• Full turnkey buildout and funding is available

• Allow for future payback of Tenant improvements with a corresponding

reduction in rent10

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Financing Partners

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• Will provide construction and permanent financing

• Flexible pre-payment structures

• Assumable debt

• To provide competitive rates and terms

Our Commitments to You

• We ensure the timely and effective implementation of your strategy.

• A dedicated principal is your primary contact and decision-maker.

• Our approach is transparent (100% “open book” economics).

• We create ambulatory projects with highly competitive rental rates.

• You retain long-term control over your ambulatory facilities.

• We maintain a long-term commitment to the communities you serve.

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A Sample of Our Projects

Lenexa, Kansas

Free Standing Ambulatory Care Center

Developed 2008

80,000 Square Feet

Health System Strategy:

• Respond to rapidly emerging demographics in a highly competitive market

• Attract and align community-based physicians

• Create a new free-standing ambulatory facility that will evolve into a full-service hospital campus over time

Results:

• Established significant Health System branded presence

• Created hospital licensed free standing E.D.

• Expanded existing Surgery JV to new market and enhanced physician relationships

• Relocated bariatric services from main campus to create a “destination feel” for the program

Shawnee Mission Health – Prairie Star I

Includes:

Ambulatory Surgery Bariatric Care

Bariatric Surgery Urology Care

Diagnostic Imaging Wound Care

Emergency Department

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Health System Strategy:

• Create a programmatic “Center of Excellence” to compete regionally

• Co-locate and re-locate specialists, programs and diagnostics in a Class “A”, on-campus facility

• Increase inpatient capacity at main hospital

• Align physician and hospital interests by programmatic affiliation or employment

Results:

• Complete alignment and relocation of all hospital neuro/orthopaedic programs and services

• Transition of key physicians to employed status

• Recruitment of physicians to replace non-participants

Jackson, Michigan

Neuro Musculoskeletal & Orthopaedic Center

Developed 2010

58,000 Square Feet

Allegiance Specialty Center

Includes:

Diagnostic Imaging Center Physical Therapy

Home Medical Equipment Retail Store Rheumatology

Neurology Spine Therapy

Orthopaedics Sports Medicine

Osteoporosis

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Castle Rock, Colorado

On-Campus Specialty Care Center

Developed 2013

60,000 Square FeetScope of Programs:

• Cardiology

• Dermatology

• Gastroenterology

• General Surgery

• OB/GYN

• Oncology

• Outpatient Lab

• Physical Therapy

• Pediatrics

• Primary Care

• Oral & Maxillofacial

Surgery

Castle Rock Adventist Health Campus

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Castle Rock, Colorado

On-Campus Medical Office Building II

Under Development, Opening June 2016

60,000 Square Feet

Scope of Programs:

• Internal Medicine

• Dermatology

• Spine Therapy

• Dental

• Orthopaedics

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Castle Rock Adventist Health Campus

Howell, Michigan

Ambulatory Facility

Under Development, Opening July 2016

50,000 Square Feet

Scope of Programs:

• Cardiology

• Imaging

• Urgent Care

• Physical Therapy

• Pharmacy

• Primary Care

• Ob-Gyn

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St. John Providence Health Center

Bettendorf, Iowa

Free Standing Ambulatory Care Center

Developed 2014

40,000 Square Feet

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Scope of Programs:

• Primary Care

• Convenient Care

• Diagnostic Imaging

including CT and MRI

Genesis Health System

Moline, Illinois

Off-Campus Ambulatory Care Center/First Phase of Wellness Medical Campus

Developed 2013

50,000 Square Feet

Co-Owned with Physician TenantsScope of Programs:

• Convenient Care

• Dialysis Center

• ENT

• Plastics

• Primary Care

Genesis Health System

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Lenexa, Kansas

Two Free Standing Ambulatory Care Centers

Phase I Developed 2008

Phase II Developed 2013

158,000 Square Feet

Co-Owned with Physician Tenants

Scope of Programs:

• Ambulatory Surgery

• Bariatric Surgery

• Diagnostic Imaging

• Emergency Department

• Urology Care

• Bariatric Care

• Wound Care

• Multi-Specialty Suite

• Pharmacy

• Physical Therapy

• Primary Care

• Pain Management

Shawnee Mission Health – Prairie Star I & II

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Pendleton, Oregon

On-Campus Medical Office Building

Developed 2013

50,000 Square Feet

Co-Owned with Physician TenantsScope of Programs:

• Cardiology

• Dentistry

• Hospital Administration

• Infusion Therapy

• Pediatrics

• Retail Gift Shop

• Sleep Lab

St. Anthony Hospital

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