Emergency Physicians' Medical Group Purchases Meriten Management Assets From Catholic Healthcare West.

Business Editors and Health/Medical Writers

ROSEVILLE, Calif.--(BUSINESS WIRE)--June 4, 2001

Emergency Physicians' Medical Group (EPMG) and two affiliated medical groups today announced the purchase of selected assets of Meriten Emergency Medicine Management from Catholic Healthcare West (CHW).

Purchased assets include the physician practice management and billing services and the Center for Emergency Medicine Education, the highly regarded educational arm of Meriten. The two other medical groups involved in the purchase are Emergency Physicians Medical Group - Northwest (EPMG-NW) of Washington State and Sutter Emergency Medical Associates (SEMA), headquartered in Sacramento (California).

Final agreement among the parties regarding the sale was reached on May 31.

The purchased assets will be folded into a new medical management organization to be known as EMSource, LLC. Dr. B. Joshua Rubin, FACEP, will serve as the president and chief executive officer of EMSource. Dr. John R. Bauer will serve as chairman of the EMSource board.

"We are very pleased to be able to purchase the medical group management assets from CHW," Dr. Rubin said. "This will allow us to re-establish a strong, independent, physician-owned and democratically governed emergency medicine management organization."

EMSource will provide comprehensive management services to the three purchasing medical groups, according to Dr. Rubin. He said expansion of management services to other medical groups is an important part of EMSource's strategic plan going forward.

According to John Wray, CHW senior vice president for managed care, a change in business strategy prompted CHW to sell Meriten, three years after originally purchasing the management business from EPMG.

When EPMG sold Meriten to CHW, affiliation of medical group management services with hospital systems was very much the future, Dr. Rubin said. "However," he added, "the last two years have seen significant changes in financial issues for hospital systems and physician groups. What was the right move in 1998 is no longer an appropriate business strategy for either CHW or for our three medical groups."

Dr. Rubin said current Meriten employees will be offered similar positions with EMSource. "Our goal is to make this as seamless as possible for all concerned." Details of the sale are confidential, Dr. Rubin said. EMSource will be located in Roseville (CA) near Sacramento.

Rubin added that the goal of the new management organization, EMSource, will be to be the "leader in emergency medicine practice management.

"Our job will be to support the delivery of high-quality health care by the three medical groups through collaborative leadership, a commitment to excellence, innovation and education, and the delivery of high-value business support services and strategic counsel."

Rubin also announced the senior management team for EMSource: himself as president and chief executive officer; Dr. Graham Billingham, FACEP, as chief medical officer, Robert F. Spinelli, CPA, as chief financial officer, Bradford W. Gould, MHA as chief operating officer, and Catherine C. Haydn, MBA as director of business development. Dr. John R. Bauer will serve as chairman of the EMSource board.

Established in 1973, EPMG is a leading provider of emergency physician staffing and emergency department management services to 23 hospitals in California, Nevada and Hawaii. A medical group with broad based physician ownership, EPMG currently employs 188 full-time and 132 part-time physicians at its client hospitals and serves more than 650,000 patients annually. Dr. Norman Label, FACEP, is the president and chairman of the EPMG board.

EPMG-NW provides emergency physician staffing services to emergency departments in the State of Washington. The medical group currently employs 23 full-time and four part-time physicians at its client hospitals, serving more than 90,000 patients annually. EPMG-NW has a longstanding relationship with Providence Health System and Valley General Hospital in the Pacific Northwest. Originally incorporated in 1969 as Emergency Room Physicians, Inc., the group was renamed in 1996 as Snohomish Valley Emergency Physicians and in 1998 as EPMG-NW. Dr. Michael A. Ingram, FACEP, is the president of EPMG-NW.

SEMA provides emergency department management consulting services and emergency physician staffing to four Sutter Health hospitals in the Sacramento region, serving more than 106,000 combined annual patient visits. An equity based group of emergency physicians with a 25-year history of community service, SEMA currently employs 34 full-time physicians and three part-time physicians. Dr. Kelly Nations, FACEP, is the president of SEMA.

CHW is the largest Catholic health care system based in the western United States, and one of the leading not-for-profit health systems in the country. Its network of more than 40,000 employees and 48 acute care facilities in California, Arizona, and Nevada provides 1.6 million patient days of care per year to more than 368,000 people in the communities they serve. In addition, in fiscal year 2000, CHW contributed more than $400 million in community benefits and care for the poor.

       Facilities Served by EMSource Emergency Physician Groups

PC         Hospital                                    City      State

SEMA      Sutter Auburn Faith Hospital                Auburn        CA
EPMG      Mercy San Juan Hospital                     Carmichael    CA
SEMA      Sutter Davis Hospital                       Davis         CA
EPMG      Saint Rose Hospital                         Hayward       CA
EPMG      Saint Dominic's Hospital                    Manteca       CA
EPMG      Mercy Hospital and Health Services          Merced        CA
EPMG      Moreno Valley Community Hospital            Moreno Valley CA
EPMG      Marshall Hospital                           Placerville   CA
EPMG      Parkview Community Hospital                 Riverside     CA
EPMG      Mercy General Hospital                      Sacramento    CA
EPMG      Methodist Hospital of Sacramento            Sacramento    CA
SEMA      Sutter General Hospital                     Sacramento    CA
SEMA      Sutter Memorial Hospital                    Sacramento    CA
EPMG      Natividad Medical Center                    Salinas       CA
EPMG      Mark Twain St. Joseph's Hospital            San Andreas   CA
EPMG      Community Hospital of San Bernardino        San BernardinoCA
EPMG      San Clemente Hospital and Medical Center    San Clemente  CA
EPMG      Scripps Mercy Hospital                      San Diego     CA
EMPG      Chinese Hospital                            San Francisco CA
EPMG      Saint Joseph's Medical Center of Stockton   Stockton      CA
EPMG      Kapiolani Medical Center at Pali Miml       Aiea          HI
EPMG      Kapiolani Medical Center                    Honolulu      HI
EPMG      Saint Rose Dominican Hospital - De Lima     Henderson     NV
EPMG      Saint Rose Dominican Hospital - Siena       Henderson     NV
EPMG      Saint Rose Urgent Care - Hartwell           Henderson     NV
EPMG      Saint Rose Urgent Care - Parkway            Henderson     NV
EPMG      Univ. Medical Center of Northern Nevada     Las Vegas     NV
EPMG      Univ. Medical Center of S. NV, Pediatrics   Las Vegas     NV
EPMG-NW   Providence Everett Med. Center - Colby      Everett       WA
EPMG-NW   Providence Everett Med. Center - Pacific    Everett       WA
EPMG-NW   Valley General Hospital                     Monroe        WA

                      Frequently Asked Questions


1. Why did CHW decide to sell Meriten?

         During the past two years, CHW has re-examined its business
       strategy including affiliations with physician group practices.
       CHW has determined that ownership of an emergency medicine
       management services organization no longer fits its strategic
       objectives.

2. What are the assets being purchased by the three emergency
physician groups?

         Meriten assets that are being purchased by the three emergency
       physician groups include the physician practice management
       services, the billing services and the Center for Emergency
       Medicine Education (CEME).

3. With the asset purchase, what of Meriten will remain with CHW?

         Meriten will continue to remain a wholly owned subsidiary of
       CHW. Selected assets will remain with CHW, although it is
       anticipated that its remaining operations will be wound down in
       the next year or so.

4. How will the Meriten assets be incorporated into a management
structure for the three emergency physician groups?

         The three emergency physician groups will jointly own the
       assets, which will be reorganized into a new management
       structure, to be known as EMSource, LLC. A senior management
       team, headed by Dr. B. Joshua Rubin, FACEP, will run EMSource.
       The management team will report to a board of directors
       comprised of representatives of the three medical groups. Dr.
       John R. Bauer, chief financial officer of SEMA, will be
       chairman of the EMSource board.

5. What are the benefits to the physician groups of reestablishing an
independent physician practice management organization?

         The primary benefits of re-establishing an independent
       physician management organization include having lower
       administrative costs, greater opportunity for appreciation of
       equity for individual shareholders, and integration of medical
       group strategies and mission.

6. What will be the relationship and interaction between the three
physician groups and the new management organization, EMSource?

         EMSource will operate under a management services agreement
       (MSA) signed by the three medical groups. The MSA will outline
       the respective duties of the three medical groups and EMSource.


7. Will EMSource seek out management contracts with other emergency
physician groups not affiliated with the three partners?

         EMSource will provide comprehensive management services to the
       three purchasing medical groups to start. Expansion of those
       services to other medical groups is an important part of
       EMSource's strategic plan going forward.

8. What will happen to those individuals who are now Meriten
employees?

         All current staff members of Meriten will be employed by
       EMSource, the new management services organization of the three
       physician groups. There are no plans to reduce staff.

9. What will be the disposition of the ACHP lawsuit?

         With the sale of Meriten assets to the three physician groups,
       the alleged basis of the ACHP complaint -- the claim that CHW's
       ownership of Meriten and EPMG violated the corporate practice
       of medicine bar and laws prohibiting fee-splitting arrangements
       -- will no longer apply. It is anticipated that the lawsuit
       will be terminated as a result. However, until the lawsuit is
       terminated, EPMG, Meriten and CHW will continue to aggressively
       defend their legal rights.

10. Was the purpose of the sale by CHW to bring an end to the ACHP
lawsuit?

         No. CHW made a business decision to sell Meriten. This business
       decision is in line with CHW's strategy to consolidate its
       business operations and to concentrate on its core business,
       operating hospitals.


                        Background Information

EMSource:

--   EMSource will provide a wide variety of management services to
     EPMG, EPMG-NW and SEMA. Its goal is to be the leader in emergency
     medicine practice management.

--   EMSource's mission is to support the delivery of high-quality
     health care by the three medical groups. This will be
     accomplished through an environment that fosters collaborative
     leadership, trust and mutual respect and through the
     organization's commitment to the delivery of high-value business
     support services and strategic counsel.

--   EMSource will provide the three medical groups with an
     independent physician management organization resulting in more
     control over the business aspects of their practices, lower
     administrative costs, greater opportunity for appreciation of
     equity for individual shareholders, improved clinical outcomes,
     and integration of medical group strategies and mission.

--  EMSource senior management team will include: B. Joshua Rubin, MD,
    FACEP as President and Chief Executive Officer; Graham Billingham,
    MD, FACEP as Chief Medical Officer, Robert F. Spinelli, CPA as
    Chief Financial Officer, Bradford W. Gould, MHA as Chief Operating
    Officer, and Catherine C. Haydn, MBA as Director of Business
    Development. John R. Bauer, MD, will serve as Chairman of the
    Board of EMSource.

--  Current employees of Meriten have been offered similar positions
    with EMSource. The new organization will begin operating
    immediately upon the completion of the sale and will have offices
    in Roseville, CA, near Sacramento.

Purchased Assets:

--  Meriten assets purchased from Catholic Healthcare West included
    the physician practice management and billing services and the
    Center for Emergency Medicine Education (CEME).

      --  CEME was established in 1994 to provide educational
        opportunities for emergency physicians and allied health
        professionals with the ultimate goal of improving emergency
        healthcare.

      --  To date, CEME has sponsored more than 80 educational courses
        with total registrations exceeding 8,000 physicians.

      --  Areas of specific expertise include pediatric emergency
        medicine, risk management, cost containment, length of stay,
        patient satisfaction, and emergency medicine board
        preparation.

      --  Dr. Graham T. Billingham, FACEP, is CEME's medical director.


Emergency Physicians' Medical Group:

      --  Emergency Physicians' Medical Group (EPMG) is a leading
        provider of emergency physician staffing and emergency
        department management services to hospitals.

      --  The company currently manages emergency departments in
        California, Nevada and Hawaii, providing emergency and urgent
        care patient services to more than 650,000 patients annually.

      --  EPMG currently employs 188 full-time and 132 part-time
        physicians at its client hospitals.

      --  Dr. Norman Label, FACEP, is the president and chairman of the
        EPMG board. EPMG was founded in 1973 by Dr. Art Wong, FACEP.

      --  EPMG is known for its high-quality, multi-disciplinary quality
        improvement program support to hospitals as well as its
        commitment to the education of its emergency physicians. It is
        the second largest provider of emergency medicine services in
        California.

Emergency Physicians' Medical Group - Northwest:

      --  EPMG-NW provides emergency physician staffing services to
        emergency departments in the State of Washington. Combined,
        the emergency rooms served by EPMG-NW have more than 90,000
        annual patient visits. EPMG-NW has a longstanding relationship
        with Providence Health System in the Pacific Northwest.

      --  EPMG-NW currently employs 23 full-time and four part-time
        physicians at its client hospitals.

      --  Dr. Michael A. Ingram, FACEP, is the president of EPMG-NW.

      --  The group was originally incorporated in 1969 as Emergency
        Room Physicians, Inc. The name was changed in 1996 to
        Snohomish Valley Emergency Physicians, Inc. and then in 1998
        to EPMG-NW.


Sutter Emergency Medical Associates:

      --  SEMA provides emergency physician staffing and emergency
        department management to four Sutter Health hospitals in the
        Sacramento region. SEMA is an equity-based group of emergency
        physicians with a 25-year history of community service.

      --  Annual patient visits at the Sutter facilities served by SEMA
        have more than 106,000 combined annual patient visits.

      --  SEMA currently employs 34 full-time physicians and three
        part-time physicians at its client hospitals.

      --  Dr. Kelly Nations, FACEP, is the president of SEMA.


Catholic Healthcare West:

      --  Catholic Healthcare West (CHW) is a system of hospitals,
        ancillary facilities, home care and physician organizations in
        California, Arizona and Nevada committed to providing
        compassionate, high-quality, affordable health care to the
        communities it serves.

      --  Last year, CHW provided more than $400 million in free or
        low-cost community benefits and care for the poor.

      --  The CHW provider network includes more than 40,000 employees,
        nearly 8,000 physicians, 48 hospitals, assets of approximately
        $6 billion and net operating revenues of $4.5 billion.

JOHN R. BAUER, MD

Chairman of the Board

EMSource

Dr. John R. Bauer has served as the chief financial officer of Sutter Emergency Medical Associates for the past two years. With the formation of EMSource, he will serve as the chairman of the board for the new company which will provide administrative services to Emergency Physicians' Medical Group, Sutter Emergency Medical Associates, and Emergency Physicians' Medical Group-Northwest. These three groups together staff 30 West Coast emergency departments and urgent care centers.

Dr. Bauer attended medical school at Baylor College of Medicine in Houston, Texas, graduating in 1980. He completed his internal medicine residency at Baylor in 1984 and is board certified. Dr. Bauer has been practicing as a full-time emergency room physician since January 1985. In addition to his responsibilities with Sutter Emergency Medical Associates and EMSource, Dr. Bauer also serves as medical director at Sutter Auburn Faith.

Dr. Bauer resides in Nevada City, California with his wife and two children.

B. JOSHUA RUBIN, MD

Chief Executive Officer

EMSource

Dr. B. Joshua Rubin, FACEP, has served as chief medical officer and chief executive officer of Meriten Emergency Medicine Management for the past three years. With the formation of EMSource, Dr. Rubin will become chief executive officer of this new company which will provide administrative services to Emergency Physicians' Medical Group, Sutter Emergency Medical Associates, and Emergency Physicians' Medical Group-Northwest. These three groups together staff 30 west coast emergency departments and urgent care centers.

Dr. Rubin attended medical school at Albert Einstein College of Medicine, graduating in 1978. He completed an internal medicine residency at the University of California at Davis Medical Center in 1984 and is board certified in both internal medicine and emergency medicine.

Dr. Rubin is well known in the emergency medicine field and directs an annual course in emergency medicine risk management.

Dr. Rubin resides in Granite Bay, California with his wife and two children.

Note to Editors: This release and accompanying materials are posted on the EMSource website: www.theemsource.com