Sample Business Plan Nycom Inc

A Solution for Occupational Medicine Claims & Reporting NYCOlVl iNC. Business with Plan Proforma • • • • • • Introduction Executive Summary Organization & Personnel The ComPartner System Marketing 3 year Proforma Introduction NYCOM Inc. was incorporated as a C corporation on April 21 st , 1988 for the primary purpose of developing, designing, manufacturing, promoting, marketing and selling computer software and hardware to include computer networking and connectivity technologies. During the initial years of operation, NYCOM Inc. was very successful at finding opportunities to develop and design software for a variety of companies. During the more recent years, however, NYCOM Inc. has had limited contract programming. The software design work which has been contracted has been accomplished by Gary Hill. In reviewing the following data, NYCOM Inc. and the proposed project should be treated and viewed, in many ways, as a start-up. On the other hand, the knowledge and experience of the key employees along with the design and technology behind the system make the company much more than a start-up. In front of both of these premises is the fact that the market is in dire need of the proposed system and appears to be begging for the solutions that it can provide. NYCOM Inc. stands at the forefront as a provider of a solution to a series of needs within occupational medicine. The NYCOM System will service the employers, medical providers, insurers and the various state agencies. NYCOM Inc has consultants well grounded in the industry and key employees in system design, marketing in health industry and management. NYCOM Inc. can successfully enter the market and implement the solution. With the proper capitalization, NYCOM Inc. can finish the design of the system and support the company while in proves the product through beta and moves into the national market. As you review the various sections of this response you will find many area of inquiry without substantial response. These situations exist because of the current nature and status of NYCOM Inc. Others areas will have substantial empirical data but little quantitative supporting data. The history, in many of these cases, does not exist or the market has not been defined within the industry to provide an substantial or validating experience. It is our hope that you will find the information inquiry and eventual full evolvement. herein sufficient to justify further Leonard Black, Executive Vice President Executive Summary The following business plan gives investors and other interested parties an understanding of who NYCOM Inc. is, what their products and services are, what their market place is, how large their market is, what business opportunities exist and how the company can become very profitable in a short period of time. NYCOM Inc. is a privately held Utah "C" corporation, incorporated in April 1988 for the purpose of developing and marketing proprietary software. The current project of NYCOM Inc. focuses on the occupational health care market and they have assembled a management team that include some of the top experts in the occupational health care industry in the state of Utah, combined with software professionals who have a proven track record of quality engineering. Together, they have developed proprietary technology and services to form a system called "ComPartner". ComPartner has been developed as a result of talking with employers and medical providers concerning the complicated manner in which the workers' compensation claims process currently flows. Employers need to be in communication carriers, case workers, and file mandated throughout the claims process. with medical providers, therapists, insurance paperwork with government agencies Medical providers also need to communicate with employers, therapists, insurance carriers, case workers and file mandated paperwork with government agencies. Many of these entities also need to communicate with each other. As a result of this complicated and time-consuming process, miss-communication happens more often than not and as a result, claims remain open for extended periods. These events cost employers money on insurance premiums, lost work time, and compensation costs while providers lose money as a result of providing unauthorized services. ( see chart: Occ. Med. Communication Channels ) ComPartner is a complete worker' compensation claims management system that introduces revolutionary ways to streamline the claims process and improve communication between medical providers, employers and all other parties involved in the claims process. (see chart: NYCOM Inc. Host System ) The system is also designed to reduce fraudulent claims, electronically file mandated paperwork and provide electronic payment to medical providers and claimants from insurance carriers through ACH transactions. The ComPartner system has universal applications in all 50 states, and in some cases, international applications. The system gives employers tools to work with that can help them: • Reduce Insurance Costs • Reduce Claims Administration Costs • Reduce Fraud • Eliminate Excess Reserves • • • • • Eliminate the headache of Claims Paperwork Create better communication between Medical Providers Streamline OSHA Surveillance Procedures Get Claims Closed Faster Get Employees Features: Healthy and Back to Work Sooner. and Employers ComPartner • ComPartner manages industrial injury care for both medical providers and employers. The system provides case management, tracking, establishing reserves, billing, coding, controlling lost time, and the OSHA 200 log. ComPartner allows mandated employer reports and physician reports to be filed electronically with state agencies. Employers can significantly reduce their workers' compensation insurance premiums through effective claims management. ComPartner allows implementation and management of a full range of OSHA surveillance and risk management services such as drug screening, audiometric testing, respirator fitness exams, DOT exams, heavy metal and toxicology testing, vision testing, and wellness and safety programs. ComPartner provides strategies to help employers save money on their employee benefits. Through use of the ComPartner system, health insurance premiums can be reduced by up to 50%, without replacing policies. Also, for Section 125 Cafeteria Flex Spending Accounts, both the employee's wait for reimbursement of eligible expenses and the risk of the "use it or lose it" clause can be eliminated. Market Niches • • ComPartner • Workers' compensation Claims Management Market - A service that can help employers save time in managing claims and money on their administration costs and insurance premiums. Employer OSHA Surveillance Services Market - A service that helps employers remain in compliance with OSHA requirements and improves long term employee health and productivity. • • Medical Records Storage Market - Using ComPartner to store surveillance test results for up to 30 years as required by OSHA reduces the need for current paper based systems. Employee data records can easily be accessed through the system, even if the employee changes jobs. Third Party Administrator Market - NYCOM Inc. could perform as a TPA by having a medical provider group or PPO working with the company through the ComPartner system. Existing TPA companies could use the ComPartner system to communicate with medical providers, employers, etc. to streamline their own management processes. Sources Transfer fees services • Revenue • • • • Claims Information Fees for performing surveillance Case Management service fees Medical record storage fees Initial hnplelnentation ComPartner Program NYCOM Inc., in cooperation with Work Care Industrial Clinic has the employer relationships in place to initiate implementation of the ComPartner system. Work Care is the largest privately owned industrial clinic in the state of Utah and will install the ComPartner system in 3 clinics. Work Care has over 5,000 employer approximately 750,000 Equity Investment Needed clients that provide an employee base of NYCOM Inc. provides products and services that are needed within the occupational health care market. The company management team can clearly demonstrate their industry expertise and they have the potential to create and sustain market leadership. NYCOM Inc. has employer relationships in place and the infrastructure of management and programmer personnel to completed and implement Compartner into the market place. NYCOM Inc. needs a financial resource that can provide the necessary funding to complete the development of the ComPartner System, do the initial implementation, develop the product line and to execute the marketing plan for taking their products and services into the national market place. r a i ati er e NYCOM Inc's management team provides proven experience and a track record of success in technology, medicine, and marketing. This management team has been working closely together over the past year to identify and understand some major needs in the employer/provider occupational medicine market place. Gary Dan Hill - President, NYCOM Inc. MBA from the University of Utah, with over 25 years experience in computer engineering. Gary has a broad base of experience in managing many complex projects from initial design and development through product implementation. His experience includes helping Novell and Eaton Kenway Corporations bring their products into the market place. Gary was the first to demonstrate a fully functioning stored value Smart Card application in the U.S. for the Smart Card Forum. Currently Gary is doing contract work for Top Speed Corp., maker of the Clarion 4GL programming language. Leonard Black - Senior Vice President, NYCOM Inc. MBA from the University of Utah with over 30 years experience in business development, management and marketing. Of those 30 years, 9 were spent as a consultant to businesses in a growth mode and 4 were as a chief executive officer of a management corporation. Leonard has over 7 years in the healthcare software information industry. Currently consulting nationally in the health industry on information software as well as project management consulting for Y2K upgrades and teaching at the University of Utah College of Business as an adjunct professor. Nathan Hill - Vice President, NYCOM Inc. Has over 10 years in the software industry. Nathan has extensive knowledge and experience with Smart Cards, relational databases, accounting systems, dealer/host management systems, Y2K testing projects, operating system interfaces and communication protocols. Nathan is currently doing contract work for Bell and Howell as a Y2K manager. David Holford - Manager, NYCOM Inc. David has over 15 years of experience in banking and as an independent agent, selling life insurance and retirement planning to consumers and small businesses. Open Positions: Nycom Inc. has targeted specific individuals for the positions of Manager of Operations and Manager of System Integration. There are also some identified individuals who could fill the positions of system and design programmers and marketing staff. There is an ample supply of well qualified programmers and system engineers throughout the Wasatch front (Provo to Ogden) and NYCOM Inc. will have no problem finding the appropriate resources to meet the growth of the company. Positions • • • • • • • that require staffing: Manager, Operations and related network support Staff Manager, Technical Support and related Engineering support Staff Manager, System Integration and related system integration support Staff Senior Progran_ners (Several have been identified and are committed) Accountant (This position will initially be filled via sub-contract support) Marketing Staff Office Manager Consulting: The following consultants have been involved with NYCOM Inc. for the past several years as we have been exploring and developing the software program to support the communication and reporting needs of the occupational medicine industry. These individuals are committed to the needs and solutions within the industry and they are also committed to NYCOM Inc. and the programs that we have developed. These consultants have worked to date without compensation but are anticipating a share interest in the future of NYCOM Inc. Charles O. Canfield M.D. - Work Care Primary Physician Dr. Canfield received his medical degree from Baylor College of Medicine in Houston, Texas and completed his internship and general residency of general surgery at Providence Hospital, Providence, MI. Dr. Canfield has also received certifications in ACLS and ATLS. Dr. Canfield began his practice as an ER physician and surgical assistant in the late '80s and from there migrated through family practice service until specializing as an Occupational Industrial Physician in 1994. Chuck has worked in the field of occupational medicine for the past six years while also providing services as an urgent care physician and a family practitioner. Francie Barber R.N. - President, HealthWorks Francie Barber, President of HealthWorks has worked in the occupational health field for eighteen years. Ms. Barber has a bachelor's degree in nursing and a master's degree in organizational management. She is board certified in occupational health nursing and nursing case management. Ms. Barber began her career in occupational health with Sperry Corporation in 1979. She managed the health care needs of over 5,000 employees in some nineteen facilities. She was one of the first graduates of the University of Utah's program in occupational health nursing, graduating with a certificate in occupational health nursing in 1981. From her experience with Sperry Corp., Francie moved into the health promotion field exclusively as the Western Regional Manager for Health Promotion. In 1989, Ms, Barber began her work in case management for the Traveler's Insurance Group handling worker's compensation, automobile and general disability cases. She also began working with Union Pacific Rail Road as a medical manager for their workrelated injury cases. In 1991, Ms. Barber began working with the Holy Cross Health Care System. She was responsible for the creation and implementation of the acute care case management that is found in almost all-acute care clinics in Utah today. In 1993, she was named Director of the Occupational Health Services for Holy Cross and remained in this capacity through two separate buy-outs by HealthTrust, Inc. and Columbia HCA. Ms. Barber currently sits on the board of Directors for the American Board of Occupational Health Nurses and is also a member of the Nursing Case Management Task Development Committee for the American Nurses Association in Washington D. C. Hugh Johnson - Former Vice President, Paracelcius Health Care Corp. As the Vice President of Occupational Health Services at CLINICARE of UTAH, Hugh directed the activities of occupational health program for Paracelsus Healthcare Corporation in Utah. In this role he was responsible for solidifying the program and growing the business into new areas. Hugh carried the primarily responsible for managing the Salt Lake Industrial Clinic. Hugh co-authored an article on successful worker's compensation concepts Up Against Workplace Injuries" which was published in Risk Management, 1992. "Teaming October As the director of occupational health for the Mountain View Hospital in Payson, Utah, Hugh developed occupational health services out of the hospital ER. They offered the service to businesses in the hospital's market area. He also created a satellite clinic (FirstMed) in cooperation with a regional office, to compete for occupational health services 30 miles away from hospital. Hugh designed some promotional brochures, contracted directly with companies for services and developed other promotional programs. In the process he was able to captured 50% of the market in less than two years. Previous to the Mountain View experience, Hugh directed risk and insurance programs for the 400+ employees working for the city of Orem, Utah. He managed the selfinsured worker's compensation program, investigated and settled liability and worker's compensation claims, and developed and implemented successful loss control and safety programs. During his services to the City of Orem, Hugh was able to reduce medical costs by developing a medical provider network and reduce lost time expense by creating a modified duty program. Compensation: At the end of this section is a staffing plan that shows the anticipated salary for those currently shown in the corporate organization chart. These salaries are scheduled to remain constant for the first 24 months of operation. The key personnel, directors and above, will receive a performance bonus at the end of the 2nd year of operations if the proforma bottom line has been achieved. No other staff members are currently scheduled for any performance bonuses. The initial sales staff will be compensated strictly on a commission basis of 3% of revenue generated from their sales efforts. Commissions will be paid monthly in arrears based on the previous months booked revenue credited to their client base. There are, currently, no granted nor vested options on corporate stock or annual profits. It is anticipated that such options will be defined and offered to key personnel as the corporation becomes profitable and moves successfully into the national market place. Employee Agreements: or non-compete agreements are on file with the which include a Non-Compete and Non- At this current time, no employment company. Employment Agreements Disclosure clause similar to that found at the end of this section will be required key employees when the company and entry into the market. Benefits: moves forward with its final product of all development NYCOM Inc. employees will have a basic benefits package to include health insurance, life insurance, dental insurance, short and long term disability insurance and vision coverage. These benefits will be accompanied with a generous vacation and sick leave policy, comfortable work station environments and supporting facilities for work breaks, lunch and restrooms. The C m art er Sy tem The product developed by NYCOM Inc is a powerful workers' compensation and industrial accident management and reporting system. It is designed to help employers manage workers' compensation claims and OSHA reporting requirements easily and quickly - allowing employers to stay focused on their business. The system creates a strategic partnership between employers and medical providers by streamlining the communication lines. It also expedites the claims process. The system has built in strategies to help an employer take control of a claim the moment an accident or illness occurs. Other strategies involve reducing fraud, reducing the burden of mandated paperwork, reducing insurance costs, and getting claims closed faster. There are features for the medical provider as well. The system allows the provider streamline the patient check in process, do electronic filing of mandated paperwork with government agencies and have electronic funds transfer (EFT) procedures to substantially reduce the term on receivables. The NYCOM Inc. system has an open architecture host centric network system. This system is used as a central source for secure, timely and reliable two way communication and distribution of claims information between all parties involved with an industrial claim. (see attached chart of communication links ) A database is built for each employer which stores basic demographic information of each employee, which would easily be retrieved and updated to process an industrial claim or for mandatory OSHA surveillance testing. Access to the host is controlled by user authentication protocols, which limit or deny end user access based on source, destination address, and type of application. This permits the information to be partitioned and allows for protection of confidential information. How it works: When an employee is injured or becomes ill on the job, they are directed to the designated medical facility. Once there, instead of filling out paperwork, the employee identifies himself by name or with an employee identification number. The entry of the name or identification number creates access to all of the necessary employee and employer data and a claim is immediately opened. to Employer instructions to the medical provider regarding treatment, drugs testing requirements and billing information are also included in the system database. The medical provider updates the claim information on the system using the First Aid Only Injury Report or the Light Duty / Work Modification Report. All treatment and billing information downloads to the host and can be immediately sent electronically to the Employer, a third party administrator or forwarded to the insurance carrier. All information is date/time stamped for accurate tracking of information and timing of events. The insurance can also receive the information directly through carrier who is online with the system the system. The medical provider is then able to instantly print the Physicians First Report of Injury for their files and send it through the system directly to the industrial commission. Once the claim is stored in the host, it can be managed efficiently by the employer until the claim is closed. The system automatically merges all of the claims information into logs that are easily retrieved by employers at any time during the claims process. Unlimited notes capability for each claim permits comprehensive recording of witness and supervisor comments, specific details about a claim (such as work place conditions), or appointments with medical providers. Some of the various logs found within the system are: • • • • • • Witness Log Supervisor Log Physicians Log Adjuster Comments and Claims Payment Log Attorney Comments Log To Do List Log - that automatically activates on dates that are set for follow-up A variety of flexible reports can be generated from the system that enables an employer to track and analyze the frequency and severity of claims. These reports can empower an employer in designing their safety programs. The reports can also be used to audit their insurance carrier or claims administrator loss runs - to make sure they are not paying too much. These reports can also help management identify fraudulent, excessive or repetitive claims. Some of these valuable reports include: • • • • First Aid Report Open Claims Reports Open Medical Claims Report Compensation Claims by Location Report The claim information mandated reports: • • is automatically consolidated allowing employers to print their Employers' First Report of Injury - customized in the state specific form. OSHA 200 log - a task that can otherwise take days or weeks to organize. will be continually updated with new data as the employee visits to the health care provider or specialist. claims can be supported The systems database returns for additional Many other services that are related to workers' compensation by the database, these include: OSHA Surveillance Requirements Surveillance gets very little attention in most employer programs. Most programs are managed by people who wear "multiple hats", who are not specialists and include a very paper intensive record keeping system. Surveillance case managers work either in or out of a particular company to provide services such as government mandated testing, injury management and monitoring to assure OSHA compliance. Quick and reliable service for case managers exists within the database. The software will provide medical providers with the ability to communicate directly with a large number of existing surveillance devices. As a test is performed, test results can be captured directly off of the measuring instrument being used for each test. This eliminates expensive and error prone data entry processes. The test results are recorded on the host system, where they can be instantly communicated to the employer, more closely assuring OSHA compliance. From the host, case managers can easily retrieve data for analysis and communicate any results that are not consistent with OSHA requirements to the employer and medical provider in an easy to understand format. Medical Records Storage OSHA requires surveillance medical records to be stored for up to 30 years. Using the NYCOM Inc. database as a medical storage facility is another valued use. Current systems are very paper intense. From the host system, retrieving medical record data for comparative baseline testing from previous test periods becomes a quick, labor free, and reliable service. NYCOM Inc. has in place the necessary employer and medical provider relationships to complete the initial implementation of the program in the state of Utah. The Utah state industrial commission is also interested in working with the company and wanted the company to participate September 1999. System Benefits For the Employer: Claims management controls, fast and reliable communication provider and control of access to medical information. For the Medical Provider: Accuracy and reliability of patient data, improved quality of care delivered. For the Employee: Quicker access to a health care provider, history. Workers' Compensation Insurance as well as an accurate and reliable medical office efficiency, enhanced overall with their health care in their national conference in Washington D.C. this last - The Market Need In its basic form, workers' compensation is insurance coverage, purchased by an employer that covers occupational accidents and illnesses. If an employee is injured or becomes ill while "on the job" - appropriate medical expenses, partial or total reimbursement for wages lost, or possible lump sum payments for permanent injuries or illnesses are covered and paid. By law, workers' compensation coverage must be purchased for any business that has employees. The workers' compensation is national is scope but the system is legislated at the state level and varies substantially from state to state. Individual states determine who can sell workers' compensation insurance inside their borders. In some states, policies can only be purchased from the state, others allow private companies to sell policies at rates set by the state, and other states let private insurers sell at market driven rates. Each state system has a couple of COlnmon problems: ¢" Since the financial beneficiary of a workers' compensation claim is not the employer or business that paid the premium, and all claims are compensated for time loss and medical expenses, many victims have little incentive to forego or minimize a claim. ¢" Because damage to a worker is harder to validate, has become prevalent. document, and measure - fraud In the United States, workers' compensation legislation was first written into law in 1917. At that time it was an understandable and straightforward agreement between employers and their employees about funding the cost of work related injuries and disease. Today, workers' compensation coverage is mandatory for all employers in all 50 states and is no longer the simple and straightforward agreement it was in 1917. Since 1917, legislation, court decisions, and state and federal regulations have complicate the workers' compensation system. Employers are increasingly frustrated by the complexity of the law, the rising cost of their insurance premiums, and exaggerated or fraudulent claims. Rising costs have devastated small companies and weakened the competitiveness of entire industries. Workers' compensation insurance and claims costs are frequently an employers second highest expense (wages being the highest). Due to the complexities of the system, workers' compensation is often overlooked as an expense that can be controlled and reduced. All too often, employers receive their bill and pay the premium, all the while asking, "why am I paying so much"? Employers pay well over $60 Billion to public and private insurers for their coverage each year. Many employers are fed up with the system, but they don't know what to do about it. No matter how careful an employer is, he can expect continuing workers' compensation losses. The goal for every employer is to minimize these costs. According to the Bureau of Labor Statistics, a total of 6.6 Million work place injuries and illnesses were reported in 1995, resulting in a rate of 8.1 cases for every 100 equivalent full-time workers. Nearly 3 million injuries and illnesses in 1995 were lost workday cases, which means that they required recuperation away from work or restricted duties at work or both. Of the 6.6 Million nonfatal injuries and illnesses in 1995 - nearly 6.1 Million injuries resulted in either lost work time, medical treatment other than first aid, loss of consciousness, restriction of work motion, or transfer to another job. Eight industries accounted for about 1.8 Million injuries, or nearly 30% of the 6.1 Million total. Among goods producing industries, manufacturing had the highest incidence rate in 1995 (11.6 cases per 100 full-time workers) followed by construction (10.6 cases per 100 full-time workers). Injury rates generally are higher for mid-size establishments employing 50-249 workers than for smaller or larger establishments, although this pattern does not hold within certain industry divisions. In the 1990's, fraud has become extremely common in the workers' compensation system. Fraud and exaggerated claims are driving up the cost of workers' compensation insurance by billions of dollars a year, and have become a significant factor in the skyrocketing cost of health care. Although other factors are contributing to the more than $60 billion paid out by employers to public and private insurers for their workers' compensation each year state officials in Oregon, California, New Jersey and other states say that as much as 20% or more of claims may involve fraud. Not only have workers' compensation insurance premiums continued to rise, but costs also arise when work time is lost due to on-the-job injury or illness. Higher than average lost time rates increase the probability of a federal inspection by the Occupational Safety and Health Administration (OSHA), with the prospect of even more outlays for expensive abatement activities, as well as fines for cited violations. Safety issues are expensive, so is it any wonder that employers are constantly looking for ways to cut costs in this area. Sometimes this can lead to unsafe incentive programs, such as "Safety Bingo" where management is offered cash bonuses if the number of claims is reduced in the work place. This sometimes results in reportable and sometimes serious injuries not being reported so that the managers won't miss out on their anticipated bonus. Effective claims management, along with a strong safety and loss prevention program are the keys that help an employer save money over time. By reducing losses, experience modification factors decline, which directly impact the cost of workers' compensation insurance. It is safe to say at this point that there is no direct competition in the market place for the system that we have developed and plan to implement within the health sector dedicated to the occupational health needs. As our system gains recognition in the industry, others will recognize the need and the expanse of the potential market. In so doing, they will try to duplicate, improve upon or acquire the NYCOM Inc. system. Majors in the industry like McKesson HBOC, Cerner, SMS, Meditech as well as many of the niche vendors have built their success and size on acquisition growth. Of the clinical products that are currently in the market, none are a direct duplicate of the NYCOM Inc. system. Several, however, are great compliments. An outcrop of the NYCOM Inc. system will be the various ways that it can be interfaced to existing clinical products to enhance the availability and professional efficiencies. Product Development and R & D of information the and improvement of operational The system that is being proposed by NYCOM Inc. was conceived almost two years ago. Some of the premise behind the system is tied into previous work done by NYCOM Inc. in the area of smart card applications. Concept meetings were held and the elements of the system were defined in committee. The committee consisted of Clinic owners/practitioners, employers, and insurance providers, surveillance program administrators, state compliance administrators and NYCOM Inc. staff. After the needs and problems had been well defined and discussed, NYCOM Inc. programmers began to create the systems. Decisions as to program language, platforms and WEB technology were made and programming began. The project was shelved prior to completion for lack of funding and marketing direction. The NYCOM Inc. system is 85% programmed with demonstrable software in place. Final communication protocols and a few final screen are all that remain to complete the system. It is anticipated that a product can be ready for implementation within 90 days of start-up. The system being designed by NYCOM Inc. has perpetuity to its life cycle. Once the system is in place and being used, the user will become dependent on it and as a result a perpetual cash flow will be created. It goes without saying that software technology, medical technology, communications technology and state and federal regulatory policies and procedures are forever dynamic and changing. The NYCOM Inc. system will be updated regularly to meet these changing circumstances and implemented at the user sites without charge, thereby maintaining an ever-growing satisfied client base. Any subsequent product development and/or the introduction of new services will be a result of complimentary market offspring. Their markets and the tasks of entering those markets will define these products. System quality assurance, de-bug, recompiling and program fixes with-in the NYCOM Inc. system and subsequent developments are an ongoing function within development. We have anticipated a 60-day beta test environment with the first implementation using a single clinic with 4 to 5 of their existing employer base. Promotion and marketing will be in progress during this beta testing period, however no sales or implementations will begin until the system has demonstrated its functionality is in line with expectations. Key system designers and programmers currently working with NYCOM Inc. have a strong history of on time delivery of products under their supervision or personal development. The Market The market for the NYCOM Inc. product is in two major segments with some complimentary parts. The first primary market is any employer that is employing a reasonable number of employees who have some element of risk of injury in the workplace. The second primary target is composed of the clinics throughout any given community that provide primary care in occupational medicine. The complimentary markets are composed of the insurance providers of occupation risk coverage, the various state labor commissions and referral medical providers. Market Share: The market is wide open for the product being developed and marketed by NYCOM Inc. Within the Information Technology Market, there are a variety of system providers whose products support some aspects of the clinic market, focusing mostly on clinic management, financials, scheduling and medical records. The employer systems today do not deal with medical history issues other than logging sick leave and filing incident reports. No one provides communication links to the state or between provider and employer. An extensive search for a similar product was conducted at the 1999 HIMSS Conference this past February in Atlanta. No-one had a product the was designed to support the information needs of the occupation health providers, the employers nor the governing agencies. The only geographic market that we have examined in detail is along the Wasatch front, from Provo, Utah north to Ogden, Utah. The demographics within this area have a select few in the medical profession that target specifically the occupational medicine market. Customization of the product will be limited. The major customization work really comes with the implementation of the product to align existing information products allow minimum human intervention in the extraction of essential data. to The development of the client base will be through direct sales. Salesmen will work on a commission basis with an initial production period of 90 days, during which draws against commissions will be paid. Commissions will be paid at a rate of 3% of the previous months revenues earned by NYCOM Inc. from clients created and worked by the salesman. Salesmen will be considered as employees, not independent contractors. NYCOM Inc. is proposing a new pricing paradigm in the Health Information Software System market. Almost all products sold to providers in healthcare today are sold on the basis of software price with additional costs for implementation, training and documentation. Additional cost are associated with hardware needs. NYCOM Inc. will give the software to the end users and charge a minimum rate fee to do any programming to build compatibility with the NYCOM Inc. system. End users will then pay a per-use fee, monthly, for their use of the system. A table of usage fees and programming rates is provided below. NYCOM Fee $2.00 $0.50 $0.50 $2.00 $2.00 $0.50 I $80.00 Inc. Usage Rate Table per monthper in a Cafeteria Plan in a Surveillance Program in the database submittal of Mandatory Report Employee Employee Employee Electronic Electronic transfer of payable/receivable Smart Card Transaction ISystem Integration Rate per Hour I There is an element of elasticity in the above pricing structure. We are certain the market will bear the basic rates, however, some adjustment to the per employee rate for storage would be appropriate for employers with a large employee base. NYCOM. Inc. does not have current OEM or strategic marketing agreements at this time. It is anticipated that a channel relationship will be established with a major provider of personal computers. All users of the NYCOM Inc. system will need a PC with reasonable capacity and speed. A reseller's agreement with someone like Compaq, Sun or IBM would allow us to provide hardware support to our clients while carrying a margin on sales. Channel relationships with other software vendors will be identified and developed as the NYCOM Inc. product begins to receive market recognition. The initial organization will have proper staffing to create the marketing materials and initiate relationships with our first clients. Additional marketing staff and sales personnel will be added as growth in sales and exposure creates the need. The initial proforma uses 5% of revenue to support sales and marketing. Geographic exposure and development is planned to radiate outward from the Corporate base in Salt Lake City and our initial implementation along the Wasatch front. The natural growth of this perimeter would focus on larger industrial areas, thus providing early target markets in Denver, Phoenix, Las Vegas, Boise, and Albuquerque. From these markets, geographic movement would first move West and then into the Heartland. An initial jump into New England may occur, depending on product demand from the most market dense area in the U.S. Timing of the projected • • • Year One: Year Two: Year Three: geographic growth would be as follows: Final development of product, beta implementation, initials sales and implementation. Denver, Phoenix, Albuquerque, Las Vegas, Boise San Diego, Los Angeles, San Francisco, Portland, Seattle These areas of growth are defined by their proximity to and are a natural outgrowth of their proximity to NYCOM Inc.'s base of operations. It could be more prudent to seek markets outside of this defined growth because of market density or other contributing factors as State Industrial Regulatory Statutes or a more obvious need. The nature of the system supports the idea of a natural geographic expansion and network development. There are numerous workers' compensation claims management software products in the marketplace. An exhaustive review of these is not needed, as none have significant name recognition or market share. Below, are a couple worth mentioning which are typical of most software programs available on the market. CompWatch from Benefit Software: Designed to collect and print information used for the employers' first report of injury and produces an OSHA 200 log. CompWatch produces management reports, statistical data, and graphs which can be used to monitor the employers safety programs. CompWatch is primarily marketed through an internet home page and claims to have "hundreds of employers" using their software across the country. Workers Companion from Mountain View Software Corp.: Designed to complete an employers first report of injury and OSHA 200 log. Workers companion can produce reports such as loss runs, audits, and claims filed by category. Workers companion provides a calendar and tickler file to produce to do lists and other actions needed for claims. The system also has a financial tracking file for tracking insurance payments and tracking the cost of claims, including reserves. Claims data can be sent electronically between versions of workers companion software for employers with more than one location. These software programs are a valuable tool to employers to help them analyze and gain control over many of their workers' compensation claims costs. These and other programs provide analysis functions that may include charts and graphs, customized reports, and will usually print an employers first report of injury and OSHA 200 log. All of these software programs are designed strictly for employer use only. Recent Supporting Information: in December 1999. The two reports which follow this page were published From the "BROKER News", December 1999 by Michael D. Gantt, CPCU, CLU, CfC Technology allows for some long-overdue W. C. Improvements As the family sat down for Thanksgiving dinner, so the story goes, the husband asked the wife why she always served the ham with the ends cut off. She replied that her mother had always done so, but became curious herself. She asked her mother, who replied that her own mother had established the pattern. The two of them then asked the matriarch what gave rise to the practice. She revealed that her oven had been too small to hold a ham big enough for the whole family and it would only fit if the ends were cut off. Cutting off the ends of the ham had become an unnecessary, nonvalueadding step because of new, bigger ovens. Similarly, there are steps in the workers' compensation claims settlement process that are unnecessary and valueless. And the evolution of technology will now allow us to eliminate those steps saving both time and money. Take, for example, the first notice of loss. Why do we have to fill out a paper form? Does paper somehow legitimize the information we are providing? Personal computers with browsers are becoming only slightly less ubiquitous in today's offices and plants than paper and pencils. Even a hunt-and-pecker can enter information into an online form in relatively short order. Moreover, the information is instantly transferred to the other party -- no mail, no clunky fax, no hunt-and-pecker on the other end having to read someone's handwriting. But the improvements the same information technology allows are even more significant than this Much of on a notice of loss is found on the medical reports filled out at the hospital or doctor's office. Why not have one set of reports automatically generate a portion or all of the other without further human typing? I mean, after all, must we forever cut off the ends of thc ham? G Larry Wilson, chief executive officer of Policy Management Systems Corp., a computer software and services firm based in Columbia, S.C., has floated a novel idea with South Carolina state legislators that could provoke some solutions. The idea is to pass legislation that makes it illegal for any state agency to ask for personal information from a citizen more than once. For example, if you have a driver's license and now want a fishing license, you can't be asked for your address information because the state already has it through the department of motor vehicles. The state employee could ask you whether you want a license for freshwater fishing or saltwater fishing, but nothing that could be found in the DMV database. With such a law in place, state IT professionals would quickly have to find ways to connect systems and share information. Whether such a law will ever be passed is questionable, but the principle behind it is sound. Data that is once digitized should never have to be re-digitized. It is indeed a sad sight to see a human being entering data at a personal computer keyboard and then notice that the source document itself was printed by a computer. If a computer can print it for a human, it ought to be able to pass it to another computer in computer readable form. With doctors' offices getting connected to the Web, more possibilities exist for improving the work flow and speeding the process of paying workers' compensation claims and getting injured workers back on the job. If a physician enters in the patient's record that work can resume in two weeks, that data should be passed instantly to the employer's HR system. From there, notification can be sent to the employee's supervisor for workload planning (Do I hire a temp? For how long?). Given today's telecommunications capabilities, the supervisor could actually see the employee's return-to-work date before the employee got to his car in the doctor's parking lot. It doesn't take too much imagination to realize that all sorts of inefficiencies are built into many of the business processes associated with workers' compensation. Each workers' compensation state commission requires a variety of forms to be filed during the life of the claim. These forms have not changed over the years and often slow down the adjusters, claim work flow. Similarly, the QWERTY keyboard found on all typewriters and computers was originally designed not to speed along the typist, but to slow the typist down. The reason? The keys of a manual typewriter (the predecessor to today's computer keyboard) would jam if the typist went too fast. Like the QWERTY keyboard on which I'm typing this article, some processes were designed to slow things down -for good reasons that no longer exist. Just as new ovens make it no longer necessary to cut off the ends of the ham, new computer systems can make it no longer necessary to take certain time-consuming manual steps. All it takes is an inquisitive person to launch an innovation. • Michael D. Gantt, CPCU, CLU, CfC, is senior vice president of Policy Management Systems Corp., where he is responsible in leading the claims and benefits solutions business group. He has served as chief quality officer and led PMSC's efforts to obtain ISO 9000 certification. Most recently, he served as PMSC's Chief Technology Officer, responsible for establishing PMSC's technology standards and priorities and coordinating technology projects involving PMSC's eight worldwide, development locations. He holds bachelor's, master's, and doctoral degrees and many professional designations, including Certified Data Processor; Certified Insurance Data Manager and Certified Quality' Manager. He has authored a number of articles and books, including An Article from the managedcomp.com WEB page: Survey Says: Managed Workers' Comp Costs by James M. Walter Care Can Help Reduce Your On average, 24 percent of workplace injuries result in lost time. This is significant because wage-replacement costs represent the single biggest expense driving workers' compensation costs. Is so much lost time necessary? Our experience with more than 3,000 employers nationwide told us no. To test that, we surveyed a group of occupational physicians and asked them to estimate how many of the work-related injuries that they treat require two or more lost time days for purely medical reasons. An overwhelming majority -more than 90 percent - said that less than 10% fell into this category. Even more telling was that 60 percent of those polled felt that less than 5 percent of injuries should result in lost time. If these experts are to be believed, it would follow that as much as 60 percent to 80 percent of all lost time might be preventable. Why the disconnect? Physicians responded that often lost time has less to do with medical than non-medical reasons, ranging from inadequate employer/physician communication to a lack of modified duty positions at the workplace. In other words, preventable circumstances or poor communication, and not the injury, are often the culprits. The lesson is clear: To minimize lost time, the non-medical as well as the medical factors surrounding an injury must be managed. Employers who want to dramatically reduce their workers' compensation costs need to build a closed-loop system of managed care. What It All Means When most consumers hear the term "managed care," they're usually very unclear as to its meaning. In a recent survey, 56 percent of HMO and PPO enrollees stated that they have never been in a managed care plan, apparently unaware that those arrangements are at the very heart of managed care. Others have a tendency to think of the narrowest definition, strictly in the context of medical care. So what exactly is managed care? The operative word here is "managed." At its most basic, managed care is the establishment of systems and protocols to "manage" a previously unmanaged insurance scenario. Managed care first evolved as a part of group health-care to provide relief for skyrocketing medical and insurance costs. Proponents believed that it was possible to anticipate efficient, the amount of medical care for a given population, and to develop an cost-effective system to deliver the care to meet, or "manage" those needs. Early models focused strictly on cost control and discounts, but as plans evolved, they adopted increasingly sophisticated strategies, focusing on preventive medicine, behavior changes and the realignment of incentives that were in turn applied to some of the primary cost drivers (unnecessarily long hospital stays and inappropriate use of emergency room services, etc.) Many employers who enjoyed real savings in the group-health arena began clamoring for managed care in their costly workers' compensation programs, as well. However, it quickly became clear that retrofitted group-health strategies were inadequate to meet the complex challenges of the workers' compensation system. Managing medical costs and usage patterns alone was insufficient, since the lion's share of the cost to employers was actually in wage replacement. So what exactly is managed care in the context of workers' compensation? There are so many misconceptions about managed care that it is sometimes easier to describe what it's not, rather than what it is. True managed care is not slash-and-burn medical costcutting, or a telephone book of approved physicians, nor is it simply contracting with the network offering the deepest discounts. Just as in group health, the most effective managed care focuses on producing fundamental change through behavior modification, outcome management and aligned incentives for the injured employee, the employer and the physician. The ultimate goal of an effective managed care workers' compensation program and its participants should be an economical, quality system of medical care that will manage every possible intervention opportunity on the continuum. These include: preventive programs or comprehensive health & safety programs aimed at creating a zero-incident environment and preventing workplace injuries; point-of-injury management programs, which provide immediate care for any injured employee and contain a preestablished medical treatment plan; and finally, post-injury management programs, which help injured employees access the medical care they need for recuperation and a speedy return to work, even if in a diminished capacity. A shopping list of components How does an employer build an effective program and find the right managed care resources? Among the tangle of acronyms and medical jargon, it can be a daunting task. First and foremost, employers need to be aware that managed care is not a commodity service, and there are vast differences among service providers. While it is up to the buyer to determine which plan will best meet the company's needs, it's helpful to know the key components that must be present for a successful plan. Keep in mind that some can be self administered, while others are more effective if outsourced: * Prevention: The least expensive injuries are the ones that never occur. Behavior based programs that go beyond hazard control to explore to the root cause of an injury are the most effective. Remember, no matter how excellent an outside service provider, the success or failure of a safety program lies right in the workplace and hinges upon the demonstrated support of senior management. * Early reporting: The sooner you report an injury, the sooner the care and planning can begin. Make it a goal to report all injuries in 24 hours or less. Learn about the early reporting services available from your insurer or third-party administrator, as well those available from any managed care companies you interview. * Case Management: Case managers are nurses who serve as advocates for injured employees, guiding them through the complex medical maze, and establishing return-to-work targets and plans. The biggest mistake made by most employers and insurers is initiating case management far too late, after the treatment trajectory is firmly rooted. The most effective case management programs begin as soon as signs suggest an injury may result in lost time. When shopping for case management services, find out at what point the service provider typically begins an intervention, and the ratio of case managers to cases. Some vendors tout case management services, but only have a handful of nurses to cover thousands of cases. * Physician networks: Many employers choose their network based on whomever offers the biggest discount, a critical mistake because, when it comes to workers' compensation, cheap medical care is rarely a bargain. Shop for a quality network that pays physicians fairly to provide prompt, superior care and one that will work with you to make your return-to-work program a success. Look for a network that has occupational expertise (Board Certified practitioners, when possible) and make sure physicians' credentials have been verified. Check to see how quality and outcomes are measured - report cards or any other methods? Some of the most evolved networks are moving the initial case management straight into the doctors' offices, asking that doctors not only manage the medical care, but also to provide "situation management." This means that the doctor participates in return-to-work planning and keeps in touch with the employer throughout the case's early stages. * Supervisory training: Supervisors are often the first ones to deal with an injured employee and therefore, set the tone for future events. Be sure they're properly trained in prompt injury response and early reporting procedures. Make sure they know who the provider of choice is, and require that they accompany or refer any injured employees to that provider. Supervisors are critical to the success of return-to-work programs, so it's a good idea to educate them in this area. Some managed care providers will offer onsite supervisory training programs. * Return-to-work programs: Establish a strong transitional duty program, and bring recuperating employees back to work as soon as medically possible. Most injuries heal faster when a person is active. Disability syndrome can set in early. It is reasonable to expect that your managed care provider will assist you in building a strong program, gaining management support and helping to overcome any obstacles on a case by case basis. * Medical cost management tools: Bill and utilization review are important in minimizing unnecessary or duplicate care, detecting billing errors and ensuring adherence to state fee schedules. Be sure that these services are available from your managed care provider. tools * Claims management: Claims adjusters determine compensability, set reserves and generally manage the claim. Ask your insurer or claims management service about caseloads. For the best results, ensure a team effort exists between your case and claims managers. Look to see how claims are managed, both individually and as a group. Cases should be aged and managed like accounts receivable, and each should have a strategic plan that works to either a full return to work or to the earliest possible closure. Choosing a Provider While these services can be purchased individually, for a tightly managed system, it is preferable to engage a provider that can offer all or most of these services under one roof to ensure that the various elements work seamlessly together. Work to tighten the loop by keeping the lines of communication open between all parties and minimizing any time gaps. Establish performance targets and measure progress at frequent intervals. Some of the most basic areas to measure are cost per claim, ratio of lost time to all claims, and overall frequency of claims. Many service providers offer on-line data transference so that you can receive real-time claim information, and a program overview. f Largely, the process of managing care will entail a system of attention to detail and continuous improvement, but the rewards are out there. What can you hope to achieve for all your hard work? For starters, a safer and more productive work environment, reduced rates of injury, high quality medical care for your employees and fewer cases of litigation and fraud. Then, too, there are the reduced costs per claim and fewer lost time claims when compared to total claims, as well as long-term insurance savings through improved performance. Many of our clients are experiencing lost time ratios between 10 percent and 12% percent, while those who religiously report claims early and refer within our designated networks of primary occupational physicians experience lost time claims 40 percent below the national average cost. (see attached charts) But remember, while the right managed care services can be invaluable in achieving your goals, you as the employer are the party that holds the most control when it comes to workers' compensation. Clients Who Channel % of Cases Channeled 0-25 25-50 50-75 75-100 to POPs Get the Best Results Lost Time Claims $11,374 10,968 9,376 9,411 Total Claim Cost $2,987 2,690 1,983 1,854 Medical Only $341 344 368 387