Transition Healthcare Company, LLC (THC”) is a newly formed company with offices in Chicago, IL and Nashville, TN. The management team at THC, together with its financial backers at Falcon Investors, LLC (“Falcon”), provide a unique blend of experienced hospital turnaround and management expertise, financial resources, and financial market savvy as well as the ability to act quickly and discreetly.

On July 30, 2008, THC and Falcon announced that MSMC Investors, LLC (jointly owned by THC and Falcon) had completed the acquisition of St. Francis Hospital & Health Center (“St. Francis”) in Blue Island, Illinois, SSM Hospice at St. Francis and SSM Home Care at St. Francis from SSM Health Care Corporation (“SSM”) and renamed the hospital MetroSouth Medical Center (see www.MetroSouthMedicalCenter.com ).

Previously, notwithstanding the investment of in excess of $75 million dollars over the past few years to make St. Francis a state-of-the-art facility with the latest technology, the hospital had lost millions of dollars and was projected to lose even more. On April 2, 2008, after repeated, unsuccessful attempts to sell or even give away St. Francis to faith-based providers, SSM made the difficult and heart wrenching decision to close the hospital. That decision was made more difficult because St. Francis is not only needed to continue providing quality healthcare to the community, but is also the largest employer in Blue Island. MSMC was the only buyer willing to step forward, agree to invest more than $30m, and take the risk of a turnaround.

Since the acquisition of the hospital by MSMC, the following are some of the changes that have been, or are in the process of being, made:

1. The Governing Board has been reconstituted to contain a majority of physicians.

2. OB-GYN services have been expanded by adding 10 OB Board certified physicians and two nurse mid-wives. Two of those physicians are maternal, fetal medicine sub-specialist obstetricians to better serve high-risk maternity patients. The NICU has been expanded in size and scope to provide enhanced care to sicker, lower weight babies. 24/7 in-house obstetric coverage has also been added to foster a safer environment in which to deliver babies.

3. The community outreach programs have been expanded by adding several grant-supported health programs, including multi-lingual, culturally diverse outreach teams and screening for breast, cervical and prostate cancer.

4. The emergency department has been upgraded, bringing in a new ER team, and reducing discharge times to provide higher levels of care.

5. Conversion to all private rooms has continued so that, by the end of 2009, MetroSouth Medical Center will be the first hospital in the Chicago Southland communities to consist entirely of private rooms.

6. A commitment to make substantial capital improvements has been made including, without limitation, the addition of state-of-the-art equipment such as digital imaging and a 64-slice CT Scanner.

7. Aggressive hiring to round out departments and reduce agency.

MOST IMPORTANTLY, MetroSouth Medical Center was close to breakeven in the first month of operation, a slight gain was achieved in September, and profitability is expected to be restored by the end of calendar year 2008; a result which is critical for the long term sustainability and growth of the hospital. At MetroSouth Medical Center, the slogan is:

“Committed to providing another century of
quality care to our community.”

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THC is actively seeking to acquire additional hospitals in a variety of locations. We are looking for hospitals that are located in or around urban areas which have been distressed financially but which continue to be needed to provide quality healthcare to their community.

The principal lesson the management team at THC has gleaned through dozens of hospital turnarounds and business plan developments is that no turnaround / business plan is the same. All healthcare is local, solutions must be tailored to local circumstances and cannot be successfully developed or implemented without first garnering input from stakeholders. Having said that, THC will approach turnarounds / business plans with certain biases:

QUALITY. THC’s strong bias is that providing demonstrably high quality care is the primary obligation of any of its hospitals. Further, our belief is that providing the right service the right way at the right time and the first time is the most efficient way to deliver care.

PHYSICIAN LEADERSHIP. THC’s bias is to focus on the local market and to foster tighter relations with physicians by exploring whole hospital syndications, joint ventures (surgicenters, diagnostic centers, etc.), majority representation on the local Board, and a policy and practice of supporting current medical staff members, new physicians and new services.

EFFICIENCY. THC will examine all opportunities including, without limitation, revenue cycle, supply chain and clinical resource management. THC knows which vendors to use and which ones not to use. THC knows whether a service should be outsourced or brought back into a hospital. The THC approach is one of process reengineering: developing with managers, employees and caregivers, a more efficient way of doing things.

MANAGED CARE AND COMMERCIAL CONTRACTS. THC will closely analyze existing and potential managed care and commercial contracts to insure fair and timely reimbursement.

EMPLOYEES are the most important asset of any hospital. THC will work closely with employees in a variety of ways and will offer competitive wages and benefits. Employee satisfaction is a key measure of quality.

CAREGIVERS. THC will focus on retaining and recruiting top clinicians (nurses, therapists, technologists, et al.) and decreasing agency use.

COMMUNITY BENEFIT. THC will strive to serve the community in many ways including delivery of quality healthcare, development of more extensive outreach programs and the restoration of the financial health of the hospital as a significant employer in its community. THC is committed to providing care to the underserved.