VALLEY MEDICAL CENTER The administration of Valley Medical Center plans to sign a non-binding Letter of Intent to explore

a strategic affiliation with UW Medicine. UW Medicine’s mission is to improve the health of the public by advancing medical knowledge, providing outstanding primary and specialty care to the people of the region, and preparing tomorrow’s physicians, scientists and other health professionals. Valley Medical Center is a health care network committed to improving the overall health of our community. Governed by publicly elected commissioners, VMC provides, in collaboration with our medical staff and community agencies, comprehensive quality care and service in a cost-effective and compassionate manner. Since VMC and UW Medicine are both public agencies and clearly share common goals, the Letter of Intent allows the organizations to explore the feasibility of a strategic alliance. This Question and Answer memorandum is intended to respond to questions our VMC constituents may have regarding the potential strategic alliance. The most important thing to understand at this point in the process is that there are no definitive final answers. The Letter of Intent is a declaration to move forward in a non-binding manner to explore an alliance. Therefore, the Q & A’s must be read in the context that they reflect the current vision of Valley Medical Center and the primary interests that VMC believes to be critical to a successful strategic alliance with UW Medicine. Valley Medical Center Questions and Answers Q: Will the tax money from District property owners be spent for purposes outside the district? A: No. The District's assets (including its tax revenues) will remain those of the District and be dedicated solely to supporting the activities of the District’s healthcare system. Q: How can a public district hospital affiliate with another entity? A: Public district hospitals are allowed to affiliate, merge or jointly operate with other public or nonprofit entities under Washington law. The District does not plan to merge or sell its assets to UW Medicine. Instead, it intends to explore the feasibility of a strategic alliance with US Medicine. Under this plan, the District would continue to own its hospital, neighborhood clinics, and other assets, but those assets, while the strategic alliance were in place, would be managed as a component part of the UW Medicine, subject to the oversight of a newly created intergovernmental board including as members the District's commissioners, community representatives from the District's primary service area and UW Medicine executives. Q: Are there specific benefits that the District could achieve by becoming a component part of UW Medicine? A: Yes: Both organizations share a history and vision of providing outstanding clinical care with a firm commitment to patient safety and excellence. UW Medicine has strong interest in expanding several clinical programs into Southeast King County communities. Based upon

preliminary discussions, the District and UW Medicine wish to explore the possibility of jointly pursuing a number of exciting clinical programs, such as cardiovascular and stroke programs, oncology, emergency medicine and primary care to name just a few. These and many other programs would allow Valley Medical Center to ensure a broader range of local services for the District's residents and others using VMC's facilities. Moreover, integrating existing District services with those of other component parts of UW Medicine is expected to result in cost savings through economies of scale, risk management enhancement, and improved healthcare services. The nature and extent of such joint activities, and integration opportunities, will be the primary area of focus as the District and UW Medicine further define the parameters upon which a strategic alliance might be put into place. Q: Will VMC employed physicians become UW Medicine physicians? A: No. The Valley Medical Center Physician Group will continue as a separate physician group. Many physicians practicing at VMC are currently UW clinical faculty members and an opportunity may be explored to expand the clinical faculty at Valley Medical Center. Q: Will physicians in private practice with medical staff privileges with VMC be forced to join the Medical Staff of UW? A: No. VMC will continue to operate as a hospital with an open medical staff model and subject to the VMC Medical Staff Bylaws, policies and procedures. Q: Would Valley Medical Center's name be changed? A: There will, of course, be no change in the District's name. It will continue to be known as Public Hospital District No. 1 of King County. The District expects the strategic alliance to adopt a co-branding strategy highlighting the uniqueness of the relationship—the District's continuing ownership of the healthcare system, coupled with its integration into UW Medicine's system. The District plans to have VMC continue to be known as "Valley" and to be identified as a District facility. Q: If this affiliation happens, can I continue to receive my care at VMC, or will I need to go to UW for treatment? A: Yes. No patient will be required to look to a new hospital for care. Each of the medical staff for each organization will remain independent. The advantage of this affiliation can mean that additional specialists from UW may spend time or relocate into the VMC community to provide more treatment options for the local community. Additionally, it’s anticipated that many physicians on staff at VMC may seek and secure faculty appointments at the UW. Q: What will happen to the District's Board of Commissioners? A: There will be no change in the District's Board of Commissioners. The District will remain a separate legal entity, and the Board of Commissioners will remain responsible for overseeing the District's participation in the strategic alliance if it is established. Moreover, it is anticipated that

all five of the current commissioners will be appointed to serve on the new Board established to oversee the management of VMC and its clinics as a part of the UW Medicine program. The Board overseeing the strategic alliance will also have other representatives from the community serviced by the District and representation by UW Medicine executives. As a consequence, there should be will even greater public oversight of the District's healthcare system, then is currently the case, if the strategic alliance is established. Q: Will an affiliation change any of the services VMC currently offers? A: VMC will retain all of the core clinical services and medical technologies currently available on the VMC campus and in VMC owned/operated clinics. An affiliation with UW will enhance many of the services provided, as well as increase the likelihood of new clinical services. The first opportunities for clinical cooperation could center around oncology, emergency, obstetrics and neonatology, as well as cardiovascular and stroke services. Because VMC will, however, become a part of UW's system, it is expected that there will be some realignment of services over time to enhance efficiency. None of those changes will, however, impinge upon the core services being rendered at VMC but instead are designed to improve the overall healthcare options available to District residents. Q: If a strategic alliance is put in place, will VMC be gobbled up by a large hospital system? A: No. While VMC will become a part of UW Medicine's system, it is not being acquired by, or merged into, UW Medicine. Through the strategic alliance, however, VMC, as well as the other component parts of UW Medicine, will be operated on an integrated basis to provide greater health care options to patients. This integration will not change the fundamental character of VMC's focus: VMC will remain a community focused organization, with its assets and liabilities separate from those of UW Medicine. By affiliating with one of the nation's leading teaching and research medical institutions VMC expects to capitalize on the research and teaching strengths of UW Medicine, and to build upon the natural advantages expected to come from combining the resources of the District with those of UW Medicine. Q: Who will own the hospital on VMC's campus? A: There is no change in the ownership of the District's assets. All assets, together with all liabilities, will remain those of the District. The strategic alliance will be structured to achieve centralized planning and management, not to shift the benefits of the ownership of the District's assets to UW Medicine. Q: How does such an affiliation make sense for Valley Medical Center? A: The strategic affiliation is consistent with Valley Medical Center's long standing mission statement: the District is a healthcare network committed to improving the overall health of our community. Governed by publicly elected commissioners, it provides in collaboration with its medical staff and community agencies, comprehensive quality care and service in a cost effective and compassionate manner. After additional study enabled by the Letter of Intent, it is anticipated that the collaboration will further enhance this mission.

Q: Will Valley Medical Center employees become employees of UW Medicine? A: No. VMC's employees will continue to be employed by the District. Existing contracts between the District and its employees, including the collective bargaining agreements, will remain in place. Q: Who will be responsible for managing VMC? A: If the strategic alliance is put in place, the District's healthcare system will be under the oversight of the new Board (including the District Commissioners, community representatives, and UW Medicine executives) and be managed by UW Medicine. All VMC employees, including senior executives, will be subject to such oversight. Q: What kind of clinical integration will be made between the medical staffs? A: The VMC medical staff will retain its own unique bylaws, credentialing system and identity. It is anticipated, however, that more physicians on the VMC Medical Staff may seek and receive active clinical appointments at the University of Washington. Q: Will the VIA Board (volunteer organizations) be expected to change in any way? A: No. The volunteer organizations at each entity will remain unchanged and continue to support their own, local individual organization. Q: Who will provide care in the District? A: The staff of VMC will provide the primary, secondary and where practical (i.e., NICU), the tertiary care in the District. Q: When will the strategic alliance become effective? A: The terms of the Letter of Intent are nonbinding, but create a platform whereby the District and UW Medicine can conduct further due diligence to explore the feasibility of establishing the strategic alliance. As the negotiations continue, both institutions will further refine the parameters for the strategic alliance. Assuming they can reach agreement on the details, the contours of the strategic alliance will be in definitive agreements which would subsequently be submitted to the governing bodies of the District and UW Medicine for approval. During this process, both institutions will reach out to the public, including their governing bodies, employees, staff and interested community members, for input. If the requisite support and approvals are obtained, the District and UW Medicine would like to implement the strategic alliance at the beginning of the third quarter of this year.


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