June 18, 2013 (K3) I<aweah D6113

BARE DISTRICT

Mr. Rich Gianello, Partner
Wipfli, LLP


RE: Response to Tulare Local Healthcare District Request for Proposal
Dear Mr. Gianello,

Thank you for your Request for Proposal (RFP), dated May 25, 2018, inviting Kaweah Delta Health Care
District [Kaweah Delta} to submit a proposal outlining how we might formally affiliate with Tula re Local
Healthcare District As you know, we consider TRMC to be a critically-important member of our
healthcare provider community and have strongly supported its Board's and community?s efforts to re?
open their hospital and facilities. Whatever the outcome of this proposal process, Kaweah Delta will
continue to work with TRMC and its community to help support and meet their healthcare needs.

After very careful consideration of this opportunity, the Kaweah Delta Board of Directors would like to
formally express its affirmative interest in participating in this RFP process. While we believe the
reopening of TRMC and re-establishment of it as a high?quality, well-run and successful acute care
hospital will be hard work, we more importantly believe that a partnership between Kaweah Delta and
TRMC offers a unique opportunity to combine our local talent and resources to deliver high?quality and
well-integrated healthcare services in a very collaborative, cooperative and efficient manner.

With this said, it is important for you to know that Kaweah Delta faces its own challenges right now with
respect to time, money and attention. We have many major projects currently underway that are
consuming the vast majority ofour human and economic resources and we still face the daunting
challenge of replacing 221 of our non?seismically compliant acute care beds by the year 2030. As such,
our participation in the RFP process must come with a number of conditions that you may find
acceptable or not:

1. Kaweah Delta is not in a position to invest in or loan TRMC the requested $22 million of funds
referenced in your RFP. We would only move forward with an affiliation if THMC is able to
secure such funds from another source the State through the budgetary process or
declaration of emergency condition}.

2. We are not able to conduct our necessary due diligence and submit a formal proposal within the
timeframe stipulated in your RFP. We realize that you are pressed to re?open TRMC before your
license-suspension status expires in late October 2018, but given the closure of 
hospital and facilities and the manner in which it was maintained and managed by HCCA, we

400 West Mineral King - Visalia. CA 93291?6263 - 559 624 2000 - FAX 559 535 4021

must be allowed sufficient time to perform a comprehensive assessment of the condition of
facilities, equipment, infrastructure, inventories, financial risks and obligations, etc.

3. To accomplish the above due diligence and to position TRMC to provide safe, high-quality and
cost-effective healthca re services on the first day of its re-opening, we believe it is unrealistic to
try and re-open TRMC by October 1" {as stated in the RFP) or by October 29lh [which we
understand to be the one-year anniversary ofthe license suspension). Rather, we believe you
must immediately secure an extension of the license suSpension to December 31, 2018.

Kaweah Delta is prepared to support you in this effort and believes that our collaborative efforts
can be successful.

is able to successfully secure the $22 million referenced in its RFP and financial proforma; is able
to secure an extension of its license suspension until December 31, 2018; and is able to successfully
satisfy and address all of Kaweah Delta's findings, concerns and issues that may arise out of the due
diligence process, Kaweah Delta would proceed, if selected by the Board of Directors, to establish
a formal affiliation with TRMC. If TRMC is unsuccessful in these pursuits or if Kaweah Delta?s due
diligence findings do not support continued pursuit ofaffiliation, then Kaweah Delta would respectfully
withdraw from the RFP and affiliation process.

Contrary to what some folks might believe, Kaweah Delta fully supports TRMC's desire to operate as an
acute-care hospital?delivering babies, performing surgery, treating a host of medical and surgical
illnesses and injuries and operating a busy emergency department. We don't see TRMC performing
open-heart surgery, neurosurgery or other high-end procedures generally left to tertiary-level hospitals
but we do see TRMC running as a very busy acute?care hospital, helping Kaweah Delta and Sierra View
Medical Center meet the healthcare needs ofTulare County residents.

With respect to the form of affiliation that might emerge, we are very open to considering all options.
As district hospitals, we have the unique opportunity to form joint ventures such asJoint Powers
Authorities or Joint Powers Agreements that could allow Kaweah Delta and TRMC to jointly-manage
operations or to include Sierra View Local Healthcare District in a three-wayjoint venture. We
would also consider a more straight-forward management agreement or a lease agreement as
suggested in the RFP.

Lastly, we want the TRMC Board and management to understand that Kaweah Delta does not see this
potential affiliation as a way to bolster Kaweah Delta's financial standing by extracting profits from
operations. While we do believe that an affiliation between Kaweah Delta and TRMC can help
each of us become more cost-effective through centralization of administrative and support services,
our primary objective ofan affiliation is to enhance the quality and availability of hospital and
healthcare services in Tulare County and our respective healthcare service areas. We continue to
believe strongly in the development of a threevhospital, regional healthcare delivery system for Tula re
County and see this potential affiliation as a positive step in that direction.

If the terms and conditions described above are acceptable to you, we would be excited to sit down with
you and other representatives of TRMC and its management team to develop a plan to move forward. If
these terms and conditions are not acceptable, we fully understand and respectfullyr decline to
participate in the RFP process but will continue to support you. Thank you.

Sincerely,



Gary K. erbst
Chief Executive Officer

Cc: Mr. Dan Heckathorne, ICFO, TRMC
Mr. Tony Taddey, Director, Wipfii
Mr. Kevin President, TRMC Board of Directors
Board of Directors
Dennis M. Legal Counsel