COMMUNITY MEDICAL CENTERS June 18, 2018 Via Email and Certified Mail Kevin Norcraft Chairman of the Board Tulare Local Health Care District 869 N. Cherry Street Tulare, CA 93274-2207 Dear Kevin: This is Community Medical Centers? response to the Tulare Local Healthcare District (the District) Request For Proposal issued May 25, 2018. Community Medical Centers (CMC) is the Central Valley?s largest and most comprehensive healthcare provider. We're a private, not-for-profit network led by local leaders and physicians, focused on addressing the diverse health needs of the region. Naturally, with our long commitment to all residents of central California, CMC and Sa nt? are interested in helping the District reopen Tulare Regional Medical Center (the hospital) as early as possible. Over the past 12 months, we have worked with the District toward this goal, demonstrating our commitment by advancing funds for quality?assurance fee obligations, creating access to loans, making legal services available, and providing countless hours of consulting at no cost to the District. However, our assessment of the circumstances leads us to conclude that reopening the hospital by your October 2018 target without first addressing critical needs would be premature-risking financial projections and creating an unstable financial future for the hospital. In addition to $21 million in working capital identified by the District, CMC has determined that significant capital is required to replace aging equipment, finish construction projects, address seismic compliance, and complete critical safety and infection?control repairs. Many of these repairs and equipment replacements, in our estimation, must be completed prior to opening the hospital. In addition, questions remain about bankruptcy proceedings, litigation, medical-staff organization, Medicare recertification, and other items that should be addressed before attempting to reopen the hospital. Kevin, we recognize that our response may be disappointing, falling short of the commitment you desire to reopen the hospital by October 2018. But we must be honest in our assessment, even if it means that the District ultimately chooses to pursue a different partnership. Should the District not find a better business proposition through its RFP process, please know that CMC remains interested in continuing dialogue on the possibility of a long?term lease or acquisition of hospital. If you have any questions, please feel free to contact me directly at (559) 260-0083. P.0. 80x1232. Fresno, California 93i?15-1232 - Clovis Communlty Medloal Center Community Regional Medical Center - Fresno Heart Surgical Hospital - California CaneerCentor Community Behavioral Health Center - Community Health Center~Sierra - Community Subacute Transitional Care Center Community Medical Center-Oakhurst - Deran Koligian Care Center - Community Medical Foundation Kevin Norcraft Page 2 June 18, 2018 Sincerely, Tim A. Joslin President and Chief Executive Officer cc: Rich Gianello Dan Heckathorne Tony Taddey