Sample Business Plan TransitionCare

0 0 0 0 0 0 0 0 0 0 0 TransitionCare 0 TRANSITION 0 BUSINESS CARE CASE 0 0 TRANSITION O 0 CARE 80 WEST BOWERY STREET SUITE 302 AKRON, OH 44308 O (OFFICE) (FAX) O 330.253.6040 330.253.6065 \vv'wW.TRAN SITI ON CARE.COM O O O O O COPYRIGHT2001 EMEDSELECT, DBA -- TRANSITIONCARE ALL RIGHTS RESERVED. PRIOR WRITT'EN PROPRIETARY INFORMATION. EMEDSELECT THIS DOCUMENT CONSENT OF MAY NOT BE COPIED OR DISTRIBUTED, IN WHOLE OR IN PART, WITHOUT O O O O --- TransitionCare O i "l_ JJP_IJ'_}'_" BUSINESS CASE O TABLE OF CONTENTS BUSINESS OVERVIEW ............................................................................................................................................................................................................................................. 4 O O O O Overview ................................................................................................................................................................................................................................................................. 4 Purpose ................................................................................................................................................................................................................................................................... 4 Mission Statement.................................................................................................................................................................................................................................................. 5 Statementof Ethics................................................................................................................................................................................................................................................. 5 SERVICE OFFERING ................................................................................................................................................................................................................................................ 6 O O O O Solution Profile ....................................................................................................................................................................................................................................................... 6 IntegratedServiceDelivery Model............................................................................................................................................................................................................................ 7 Go-To-MARKET AND MARKETING STRATEGY ............................................................................................................................................................................................. 10 O O O O Key StrategicMarkets........................................................................................................................................................................................................................................... 10 TargetMarket andMarket Research Techniques................................................................................................................................................................................................ . 10 Development f Cote Revenue o Streams.................................................................................................................................................................................................................. 11 Marketing Slralegiesor the Development TransitionCateProducts f of .................................................................................................................................................................. 11 SocialMatketi@ Concepts.................................................................................................................................................................................................................................. . 11 COMPETITIVE FORCES AND INDUSTRY ............................................................................................................................................................................................................ 13 The lntemet bt the Healthcatelndust{7 ................................................................................................................................................................................................................ 13 Industry Challetges ............................................................................................................................................................................................................................................... 13 Integrationoflndustt7 Needs and TransitionCateSohctions.................................................................................................................. . 14 CompetitorAnalysis............................................................................................................................................................................................................................................. 15 O O O O O MANAGEMENTTEAM & ADVISORS .................................................................................................................................................................................................................. 17 O O ManagementTeam ............................................................................................................................................................................................................................................... 17 BoardofA ddsors................................................................................................................................................................................................................................................. 18 FINANCIAL PROJECTIONS ................................................................................................................................................................................................................................... 19 O O Capital Somres and Requirements ........................................................................................................................................................................................................................ 19 Exit Strategies..................................................................................................................................................................................................................................................... . 19 Finandal High_ghts ............................................................................................................................................................................................................................................. 20 APPENDIX A - CORPORATE POWERPOINT OVERVIEW ............................................................................................................................................................................... 21 O O O O O CONFIDENTIAL O O O 0 - _--TransitionCare 0 ___*_ BUSINESS CASE @ O O CONTACTS MANAGEMENT Greg Lawton Chief Executive Officer Transition Care 80 West Bowery Suite 302 Akron, OH 44308 330.253.6040 O LEGAL COUNSEL Jason Berk Attorney at Law ArterEuclid Avenue 925 & Hadden LLP Cleveland, OH 216.696.2171 FINANCIAL Patty Rubin Director Saltz, Shamis & Goldfarb 31105 Bainbridge Road COUNSEL 44115 O Cleveland, OH 440.248.8787 44139 Michael C. DeAloia Strategic Advisory Services Saltz, Shamis & Goldfarb 301 Springside Drive Akron, OH 44333 330.668.9696 O O O O CONFIDENTIAL O O 0 _----TransitionCare 0 0 BUSINESS OVER VIEW O i_ Overview EMedSelect, d.b.a. - TransitionCare {"TransitionCare" or the "Company") has created a business-to-business _"B2B") information management platform for healthcare providers who want to create a virtual collaborative continuum of care. The Company's model also helps healthcare providers to collect, consolidate and analyze information relating to continuum trends. TransitionCare, with its proprietary offering, can help providers better understand their consumers, decision-making processes, and perceptions of services relative to competitors. help healthcare providers reduce support staffwhile supplying better service. Perhaps as important in the coming yeats, TransitionCare will O Currently, the Company has a working beta program established at Cuyahoga Falls General Hospital, in Cuyalloga Falls Ohio. In addition, TrmsitionCare has entered into high-level negotiations with a large hospital system in Northeast Ohio that will use the TransitionCare platfonn througtmut its entire network of medical facilities. Management of TransitionCare has initiated numerous discussions with other medical providers and expects completion of these negotiations during file coming months. The combination of aging societies, file expanding possibilities offered by medical science and a shortage of qualified caregivers will continue to economically challenge the nation's heald_care system. Organizations, whether they are hospitals, medical groups or health insurers, must change their processes, technology and organizational structure with a particular emphasis on integrating delivery systems. Healthcare systems will seek to optimize the strengths of local healthcare networks and associate with organizations that offer an effective e-business approach. TransitionCare has developed a system that offers a solution to the healthcare system under crisis. i_ 0 Purpose TransitionCare has created a communications tool that can change the way care is facilitated through healthcare providers. The combination of Internet and telecommunications technologies has created a new model for distribution of software; one that drastically lowers tim cost for sharing data and information over widely distributed networks. The utilization of a case manager's time to make phone calls, send faxes and field follow-up phone calls has become exceptionally inefficient. TransitionCare's easy-to-use and cost-effective programs allow healdlcare providers to connecta desktop computer to software applications located anywhere in the wodd, in effect using the Internet as a "data utility" not unlike electricity. No software other than an operating system and Internet browser need reside on the desktop computer. A behind-the-scenes Client Service Center assures functionality, allowing our clients and their staff to focus on doing their jobs. Case managers, whether they prefer it or not, are on the front line with regards to the security of confidential patient information. Health Insurance Portability Accountability Act ("HIPAA") regulations require security and privacy of confidential patient information and mandate organizational fines and criminal penalties if not complied wit1. TransitionCare goes beyond helping to integrate a virtual collaborative continuum of care. The Company's programs T,'ansitionCare offers interactive HIPAA regulations help healthcare providers collect, consolidate and analyze information relating to continuum connectivity to local delivery systems. TransitionCare provides flmse services in conjunction continuum of care provide caregivers with real-time decision assistance. trends. Ultimately, with ever-changing tO 0 while helping the integrated 0 O O O CONFIDENTIAL PAGE 4 0 - _--TransitionCare 0 i__,_ BUSINESS CASE O O 0 Mission Statement TransitionCare believes that healthcare is a locally driven public service. The Company is a for-profit entity that employs technology and skilled healthcare professionals to assist members of file healthcare continuum with file transition of patients between care venues. TransitionCare provides these services while ensuring individual choice to patients, families, discharge planners, case managers and physicians. Statement of Ethics TransitionCare, as a company, strives to achieve file goals of its founder and management team by operating in such a way that earns the continued loyalty and patronage of its clients. All members of the organization must be held to the same high standards of customer satisfaction and earning tile trust of file Company's users. All members of management recognize their role as tile stewards of tile money, trust and financial security of 0 others - clients, partners and investors alike - and take that role seriously. Also, in accordance healthcare community, tile Company seeks to maintain traditional business values. In doing so, file Company will assure that its employees: • • • • • • • Treat all people fairly and with respect; Honor their cotrunitments; Act fairly, honestly, and diligently in all flleir dealings; Communicate in a timely fashion; Remain accountable for results; Work fervently to resolve unfavorable results or issues; or conflicts therein; Achieve a level of service beyond self-interest with tile goal of creating a community of users in the O 0 O O O O O O O O O • • Contitme to learn, develop and maintain professional skills and knowledge base, and; Maintain the confidentiality of privileged information. CONFIDENTIAL PAGE 5 O O 0 Q O _ I_7 TransitionCare BUSINESSCASE O 0 O SER VICE OFFERING Solution Profile TransitionCare brings connectivity to the local healthcare continuum. The Company's business model can help healthcare delivery systems and insurance companies reduce inpatient lengda-of-stay, track transfer diagnostic related group CDRG '') patients, reduce staffing and streamline the transition of patients to local ancillat 7 healthcare resources. Management of TransidonCare believes Intemet teclmology coupled wifla new workflow processes can help progressive healthcare systems and insurance companies advance more rapidly in file future. The Company provides a systematic approach for strengthening the sophisticated communication needs of integrated healthcare systems, ancillary delivery systems and insurance companies. TransitionCare's goal is to securely link efforts such as case management, disease management and ct,stomer relationship management to electronic communication networks and database repositories. Ultimately, flais information is distributed fllroughout file integrated continuum of care to provide caregivers with real-time decision assistance. O consumer include: • • • • • • • single point of access for scheduling all ancillary care such as: extended care facilities, home medical equipment, long term acute care, transportation and hospice; rapid resource matching to determine tile most appropriate local providers; home health services, rehabilitation, Management of the Company believes could be well served by the assistance that hospitals, TransitionCare insurance companies, ancillary healthcare providers, physicians and ultimately file can bring to the care coordination process. The components of such an endeavor a system for presenting client case managers with a register ofpre-qt,alified ancillary providers, normally within 45 minutes of each request; a paperless system designed to eliminate u,mecessary phone calls and facsimiles; creation and management of a local multi-dimensional provider network or electronic delivery system; a secure HIPAA compliant interactive Internet application designed to ensure rapid network communication, a consistent process that ensures and documents that each patient receives an adequate opportunity and; choose an ancillary provider. to reasonably Utilizing the security of tile Internet, proprietary software, client driven protocols and a hosted B2B information logistics center, TransitionCare can help entire delivery systems close the loop on integration. This allows healthcare systems and regional healthcare insurers to better focus on a O mission to semnlessly serve file health needs of file community, and in fl_e future add new programs and expand on community-wide efforts in health maintenance and disease prevention. that educate patients, create new market economies An integrated healthcare system makes it easier for patients to receive the care. TransitionCare helps fl_e integrated services to quickly communicate and coordinate availability to assure care is never delayed. The Company's platform streamlines the information management process, eliminating unsecured faxes and redundant phone calls. Tile combination of these processes improves access to healthcare services and measurably reduces the cost of care for hospitals and insurance companies. PAGE 6 @ @ @ O CONFIDENTIAL 0 _=--TransitionCare O Bustr Ess CASE TransitionCare can st,pply ancillary healthcare providers with an enterprise Web portal to connect participating healthcare delivery systems and mine data, then use it for reporting, monitoring utilization, ensure compliance, and conduct training. When physicians, hospitals, ancillary providers and health plans are all working together, integration can improve quality of their care. TransitionCare assures that patients move easily through the system through timely coordination of services and secure rapid communication amongst care providers. Integrated Service Delivery Model TransitionCare has carefully planned an integrated service delivery model that provides three offerings to its target user base. This section details the three offerings and their meflaods of deployment. Community-IVideCase ManagementSupport - TransitionCare's Community-wide Support System ("CSS") is committed tO integrating care across file continuum for complex-illness patients requiring post acute care. CSS is a provider-oriented program focused on the assumption that healtbcare is ahnost always accessed locally. O O O O The managed care environment has focused primarily on decreasing the number of hospital admissions and decreasing the inpatient length of stays by providing care in less intensive, non-institutional environments for as long as possible and easing community re-entry after laospitatization, prompting the need for increased coordination of ancillary services. Typically, a case manager is assigned by the laealthcare system to facilitate the needs of dae patie,lt. TransitionCare's CSS program is designed to assist where rapid coordination, centralized information management mad a documented list of applicable vendors assures exemplary quality of care for both patients and their families. For example, while tile case manager is coordinating a patient's acute-care needs with the appropriate internal team members, TransitionCare puts its system to work coordinating after-care. TransitionCare queries the availability of services throughout tile local continut,m tailored to the specific needs of the patient. The system electronically supplies potential continuum providers (extended care, home health agencies, hospice, assisted living and transportation) with clinical, Minimum Data Set ("MDS"), and demographic information. If file continuunl provider has an interest in serving file patient, they respond electronically. Tile TransitionCare system documents and tracks every encounter of the patient's utilization of continuum services. This process eliminates multiple faxes, phone calls mad follow-up phone calls. Since the Healthcare Finance Administration ("HCFA") mandates a patient's right to choose a coqtinuum laealthcare provider, the case manager is normally required to work through this time consuming process. Often, the case manager's only tools are a notepad, a telephone and an unsecured fax machine. The Company's connectivity to continuum providers and centralized information management process is a very effective alternative. Transitio,aCare's ability to coordinate fi'agmented services and make them rapidly accessible to a wide range of patients has proven economically efficient. The CSS program can provide hospitals with a measurable reduction in geometric length of stay. Tile Company's process can allow a healthcare system to restructure dleir model of care. TransitionCare can provide file case management team wida 25% more time to focus on dae O O O O O O patient's total illness episode. Tile TransitionCare system also documents and tracks every encounter of the patient's utilization of continuum services. Historical utilization reports are always a "mouse click away" for case managers of participating healthcare systems. CONFIDENTIAL PAGE 7 0 0 =l_ TransitionCare 0 O It should be noted fllat TransitionCare's CSS program does not participate in directing, changing or assigning referral patterns. The intent of the organization is to implement a system capable of ide,atifying appropriate potential provider options for referral sources mad to ease the transition-ofcare via consistent and efficient communication paths and methods. All decisions regarding patient referrals remain with the sending healdacare system, physician and patient. Healthcare systems rely on case management programs as an essential component of the managed care process. TransitionCare's Web-based application, centralized information management system madprotocols help extended the interdisciplinary case management team approach throughout the local community of ancillary providers. TransitionCare's CSS support provides the tools to link key patient information among healthcare team members across various settings; eliminates wasted time by eliminating redundancies and follows targeted complex-illness patients over time. O Managed Care Health-netStq)porl- TransitionCare's Managed Care Health-net Support ("MCHS") program is a series of tools and techniques created specifically for healthcare inst, rance companies. The program is designed to assist case managers, employed by insurance companies and I,adependent Practice Agencies, to streamline the use of healdacare services and reduce direct costs. Most healflmare plans assume die faiancial risk of die entire continuum of care, which includes acute care services as well as ancillary healthcare services. Insurance companies have specific needs beyond centralized information management, speed of transition and historical tracking of patient activities. TransitionCare's MCHS program is designed to provide all of the services supplied through the Community-wide Co,itinuum model plus add a network pricing strategy. Once a case manager has determined a specific ancillar , service is medically necessary,TransitionCare's MCHS will assist in identifying appropriate 3 commt.nity providers based upon clinic,d, financial,geographic indicatot_. The progrmn is used to literallybroadcast an intended reimbursement price or perdiem rate to its network of providers or a group of non-contracted providers. The process enhances the case managers ability to make healflacare delivery arrangements and coordinate use of health services by its enrolled members. Usually within one hour of a request, TransitionCate provides dm case manager with a tailored list of applicable ancillary providers, within a particular geographic location, who will agree to provide die prescribed clinical services under the conditions specified by the insut'ance company. O O "li'ansitionCare's MCHS permits shared access of assessment and administrative information to pre-certify and authorize care among caregivers in the hospital, emergency room, nursing home, physician's office, home laealth agency, medical transportation, etc. Clinical and demographic information can be forwarded to case managers for evaluation of medical necessity. The system can be used to quantify a company's Long-term Care Policy and identify existing network members for inquiring healthcare systems. This subsequently reduces phone calls and clinician downtime. TrandtionCare'sPHO Web-Portal- Currendy, more than 75 % of die employees protected by group healda progranas participate in self-funded (stop-loss) plans, mad dais number has continued to increase. Employers seeking to manage escalating health costs have adopted self-funded health plans to provide quality healthcare at an affordable cost. According to file Re-Insurance Carriers of America, over 100 million U.S. employees mad their family members receive health benefits througla self-funded plans. 0 0 O CON FI D ENTI AL PAGE 8 O O 0 0 H O -I_--TransitionCare i ,I_._ BUSINESS CASE H H H H H H H H The TransitionCare's Physician Hospital Organization ("PHO") Web-portal program is designed to promote secure communication and connectivity between employers, Physician Hospital Organizations and healfllcare delivery systems. The program is intended to provide fluid communication and connectivity to access healdlcare and not replace die need for a Third Party Administrator ("TPA") as a facilitator of self funded insurance programs. The Company's PHO Web-portal program c,mlhelp TPAs direct non-emergency care to contracted healfllcare providers. Tile program helps tile ERISA compliant self-funded product act like a managed care organization. Access to healthcare can be channeled to contracted healti_care systems and PHOs. This program can be tailored to allow the employer to directly access a primary care physician through a contracted PHO or healthcare delivery network. The p,'ogram can provide TPA case managers witil real-time rapid access to providers within an employer network. The progrmn can also identify file availability of provider services. HIPAA compliant communication network. Tile confidential patient information is passed throughout the continuum fllrougb a secure H H H H H Tile future of this program includes tile addition of rules-based search engines to allow file employer/payer to post pre-certification protocols to ti_e provider information network. TransitionCare's involvement as a "switching" and communication service virtually reduces fragmentation by centralizing the co,rununications between self-insured employers, d_e Primary Care Physician, case managers, patient/family, and other multidisciplinary team members. All electronic communication can be generated through a standard Web browser. Tile program is HIPAA compliant meeting security measures for electronically transmitted or stored health information. H H H H H H H H H H H H H H H H H CONFIDENTIAl, PAGE 9 0 0 O _=--TransitionCare mmq Im#¢ > GO- TO-MARKETAND MARKETING STRATEGY nuSlNESS CASE O O O Healthcare providers are faced with a barrage of demands: constant pressure to deliver care under a fixed or declining rate of reimbursement, increasing costs, the nursing shortage, measurable losses due to uncompensated care, and the need to continually strengthen market position and improve service quality. Healthcare providers are beginning to look at new opportunities that reduce costs through innovation. Managers within most healtl_care delivery systems are being asked to reduce costs by cutting services and staff. Most managers realize they cannot cut their way to success. TransitionCare offers healthcare systems an opportunity to reduce cost by working smarter and faster. Healthcare providers are leery of new technical innovations. Pockets of providers and payers are beginning to connect over tlae Internet. It's working. Ratlaer tlaan sitting on the phone, faxing and mailing, hospital and insurance company clerks are using their computers to connect to other computers for insurance verification and referrals online. This represents a first step by laealthcare providers to embrace a change toward a more automated process; connecting the local continuum. TransitionCare believes the best strategy for rolling out its connectivity agenda is to work with local groups of providers, payers and strategic partners to supply meaningfid education throughout each medical trade zone. TransitionCare will employ the following business development strategies to secure its place in each target market. Key Strategic Markets TransitionCare will work with key ancillary regional and national providers to create strategic relationships. The intent is to link with providers capable of providing TransitionCare with access to new markets. Strategic partners could include local medical transportation organizations or software companies with products that integrate with TransitionCare systems. The Company will use the following sales and promotional concepts to penetrate its key strategic markets. 10 10 O Q • • • • • • Case studies and testimonials documenting the actual value of the TransitionCare's system. Educational materials describing tim system madlinking options Implementation of Patient opinion surveys focused on the outcome mad ease of the transition event. Printed materials and direct mailings listing services, policies and procedures, and staff expertise Participation in regional and national trade shows Hosting provider luncheons and educational seminars. Teach the corrununity about the opportunities and productivity gained through a connected market. Target Market and Market Research Techniques TransitionCare performs one-to-one interviews with potential users to determine preferences, appropriates uses mad system downside. The Company utilizes this internal research technique to confirm file requirements of projected users, or target audiences. The use of target-market techniques is intended identify segments of potential users who are likely to embrace changes in the delivery paradigm. To identify potential users, TransitionCare considers a combination of factors such as demographics, local healthcare economics, level of system integration, degree of market t0 competition and specific local healflacare issues. Ultimately focusing on appropriate prospects and increasing brand-awareness through social marketing _ts O is the goal of the target-marketing program. PAGE 10 CONFIDENTIAL O O O 0 =-_ TransitionCare • O O O O O O O O O O O O O O O O O O O O O Development of Core Revenue Streams TransitionCare will focus on building client support from four distinct revenue silos: a) license fees, b) services to hospitals and insurance companies, c) website advertising, d) dissemination of demographic data throughout the healthcare continuum. The Company maintains the perspective that that each of these core revenue streams must be cultivated and leveraged. Properly implementing a mix of core revenue streams in a client's intervention portfolio will create a less volatile cash flow mix. This will make an explicit contribution to shareholder value. Marketing Strategies for the Development of TransitionCare Products Healthcare providers are looking for logical new opportunities that reduce costs through innovation. Managers within most healthcare delivery systems are being asked to reduce costs by cutting services and staff. Most managers realize they cannot cut their way to success. TransitionCare offers Ilealthcare systems an opportunity to reduce cost by working smarter and faster. The efficiencies proposed by TransitionCare require a shift in paradigm. Not surprisingly, TransitionCare's inmlediate marketing strategy must focus on changing the way the current culture thinks about communicating and ordering healthcare services throughout the local continuum. Social Marketing Concepts Social marketing is the planning and implementation of programs designed to bring about social change using concepts from commercial marketing. TransitionCare employs an emphasis on cause-related or "social-marketing". The ultimate objective of social marketing is to influence action. Action is undertaken whenever target audiences believe that the benefits they receive will be greater than the costs they incur. This strategy focuses program benefits on a target audience, with a "bottom techniques. line" of behavior change. Social marketing is less invasive and does not employ cold- calling or push-teclmology Target-market research techniques serve a unique purpose and can help the company understand die needs and interest of a projected user. Armed with that kaiowledge, social marketing requires file company to play an active part in assisting potential clients with technical integration planning, information security analysis and internal training. TransitionCare takes responsibility for developing an initial assessment of how die company's programs can best support the potential clients multiple co,nmunity relationships, its owned ancillary continuum providers mad related projects. Ultimately, TransitionCare Social marketing and the client will work together to create an intervention The intent is to link with providers transportation organizations portfolio. capable of providing TransitionCare companies with products with access to new d_at integrate with also creates strategic relationships. could indude local medical O O O O O O O markets. Strategic partners TransitionCare systems. or software CONFIDENTIAL PAGE 11 O O . 0 _=--TransitionCare 0 I__ BUSINESS ASE C 0 0 Securing a position of trust with a potential user also requires a plan for communicating with the market place. Again, keeping within the confines of a well-conceived and non-invasive social-marketing approach, TransitionCare embraces the following communication strategies: • • • • Case studies and testimonials documenting the actual value of the TransitionCare's system; Educational materials describing file system and linking options; hnplementation of Patient opinion surveys focused on the outcome and ease of the transition event; Enhancement of product awareness and image through printed materials, direct mailings and listing services; Customer Value / Shape Perception Elements that _ • • • • • Hostingthrough regional and national Participation in a connected market; trade shows; gained provider luncheons and educational seminars. Teach the community about the opportunities and productivity On-site demonstrations and training programs; Client intervention through strategic parmers relationships, and; Speaking engagements and presentation tour. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O CONFIDENTIAL PAGE 12 O O O, 0 - =_.-Transition Care 0 0 O J _,_ BUSINESS CASE COMPETITIVE FORCES AND INDUSTRY Q The Internet in the Healthcare Industry The Intemet offers a unique method for heahhcare providers to establish and maintain communications between cooperating clinical and financial providers, including hospitals, long-term care facilities, clinics, payers, insurers, and fiscal intermediaries. The opportunities can be expanded to solutions for institutional pharmacies and laboratories, medical suppliers and food vendors. Ahhot,gh Intemet related solutions have not recently proven to be a popular investment strategy, new help has arrived in the form of a mandate by the Department of Health mad Human Services ("DHHS") regarding privacy regulations for electronic health information. Despite heated opposition, the Federal Government made the surprising decision on April 12, 2001 to put controversial new medical-privacy roles into effect immediately. The guidelines, which will, among other things, give patients access to their charts and a record of who has seen them. This action is part Of compliance with HIPAA and industry experts predict that the act will usher the medical system into the electronic age. Because TransitionCare's data utilities can immediately provide healthcare systems with cost effective compliance to HIPAA privacy requirements, d_e product has become a more viable web-based Heahhcare purchasing solution. have already begun shifting toward online procurement are beginning of medical supplies. Real-time products inventories to create and prices corrununity allow data systems departments to plan buying and compare prices. Hospitals to use Intemet-based depositories, patient subscription services, transmit electronic medical records and digital scanning. According to Arc Consulting Group Ltd., a healthcare consuhing firm in Houston, Texas, "There is a potential (for healthcare systems) to save 10 to 20 % through Web-based strategies, which would translate to a 2 to 4 % increase in the bottom line." According to dae Forrester Report, an Internet watchdog publication, "healthcare Internet commerce is the US will reach $22 billion by 2004." continues, "To get there, healthcareproviders will organize around in Internet based healthcare, a laealthcare e-Business network that serves consumers, (B2B) segment, providers, which will Forrester distribution chains, and payers. "l"he real growth however, will be in the business-to-business escalate to $19 billion in 2004." Although TransitionCare does not promote itself simply as an "e-solution", the company's hosted external Web portal does provide laealdacat'e clients with a secure link to community resources beyond their corporate walls. TransitionCare provides its Intemet-based software through a dedicated server within the Operations Center. This allows the company to deliver a complete range of products and services without the requirement of loading software on every applicable point-of-service computer within..a community. Ultimately, this strategy provides low-cost, highly reliable information systems that can be scaled to a client's specific requirements. Industry Challenges Most hospitals and some health insurance companies in the United States are integrated systems of care. These delivery systems normally include acute care, inpatient and outpatient services. The integrated delivery systems normally rely on a comprehensive network of ancillary healthcare providers to supply post-acute or extended care, home healtla care, specialized medical equipment services for the home, hospice, assisted living and medical transportation services. . PAGE 13 O O O O CONFID ENTI At, 0 _=--TransitionCare 0 O Medicare In 1997, file United States Congress enacted file Balanced Budget Act ("BBA"). The act had a significant effect on revenue derived from the program, tl_e nations largest payer of healthcare services. In addition to file revenue streams already eroded as a result of managed care penetration and diminishing private payer opportunities, the BBA brought unwelcome financial reform to traditional Medicare programs. For example: according to "A Comprehensive Review of Hospital Finances" by Ernst & Young, LLP in 1999, "Total hospital margins are expected to decline from 4.3 % in FY 1997 to 0.1% in FY 1999" (as a result of tim BBA reforms). By FY 2002, the report concluded, "there will be an estimated 11.1% reduction in Medicare payments to hospitals." The BBA also had a significant impact on post-acute care providers, specifically skilled nursing facilities ("SNFs") and Home Health Associations ("HHAs"). The BBA projected a reduction of $30 billion over a five-year period to SNFs and HHAs. The reductions were implemented through changes in payment methodologies phased in over four years. revenue changes fot'ced all healthcare providers to rethink the many processes effecting operating The agga'egate impact of all these significant cost. Since revent,e is certainly destined to decline over the next 5 years and costs such as technology, pharmaceuticals and labor will increase, healthcare providers must react aggressively. Improving the transition-of-care process can have a significant effect on both cost and revenue for providers within the continuum of care. TransitionCare provides hospitals and nursing homes with an efficient and comprehensive end-to-end Internet-based Integration solution continut,m management solution. Solutions of Industry Needs and TransitionCare The healthcare industtT's developing embrace of the lntemet is a matter of perspective. To clinicians treating patients, their application is the single most important issue; everydli,lg else is ancillary. The accompanying need to disseminate current clinical knowledge to the entire integrated healthcare team requires improved interfaces. When clinicians turn to tlleir system for information, they expect to find it. To that end, TransitionCare has designed its system to initially populate its Patient Information Forms directly through the census data files of the client heahhcare system. O O To comply with the confidential operational standards for example: patient information mandates of HIPAA, communicating with continuum providers requires specific Business Parlner Agreements: TransitionCare must require all members of file delivery system to sign "Business Associate Agreements" as required by HIPAA. In addition, the company must assure that only applicable healthcare organizations, as defined by HIPAA, are permitted to participate as a Business Parmer. Delivery system participants who sigaa the Agreement agree to secure confidential patient information received through the TransitionCare System. Specifically, participants agree to exchange confidential healthcare information in compliance widl Title II Subtitle F Section 261-264 of the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191. O O O O O O O O CONFIDENTIAL PAGE 14 0 _ O TransitionCare BUSINESSCASE l_i_ O O O .ANSI ASC XI2N 278 Referral Certification attd Authoriwtion: HIPAA also mandates the format in which healflacare information is structured when transmitted. TransitionCare translator (SQL) software utilizes industry standards for conforming to ASC X12 requirements. In addition to meeting the parameters of the direct electronic inquiry mad response requirement, the ASC X12N 278 standard allows connectivity through point of service terminals. The requirement also allows an entity st,ch as healthcare systems to act as the review (or control) entity in the primary exchange of information. Lastly, the mandate allows for the "request and response" of a variety of healtlacare information events, including reviews for: treatment at, thorization, specialty referrals, pre-admission certifications, and certifications for healthcare services. For healthcare systems mad insurance companies desiring an opportunity to electronically communicate with local ancillary providers, connectivity is no longer a problem. However, the ability to leverage the latest technologies, such as Internet encryption and public key infrastructure (Pl/-A), has become an absolute requirement. software is provided to licensed members through an ASP model, which provides tim following benefits: TransitionCare's • proprietary Clients avoid loading software on in-house systems and personal computers; Proprietary Distributive Product tools enable various options for a site's branded look and feel; Content Technology enables real-time site management, and; instantly. O O • • • maintenance, enhancements, mad new features are implemented Competitor Analysis EXTENDEDCARE.COM PROFILE (http://www.extendedcare,com) A Chicago based e-health organization specializing in web-based discharge-planning solutions for the healfl_care industry. The company consolidates information for hospital based discharge planners for support during d_e care planning process. The system helps patients make ,an informed decision on the best post-acute care options. The system provides a secure communication link between hospitals ,and tile community of long-term care providers. 0 FUNDING Initially funded through private investments by two physicians, extendedcare.com,obtained $11 million in equity financing led by William Blair' VI, O O O O O O O Capital Partners in April 2000. In Marcia 2001 raised an additional L.P Gm_maa Investors and Tenet Healdacare Corporation. $5 million in equity financing primarily through William Blair Capital Parmers CONFIDENTIAL PAGE 15 0 =_ TransitionCare Q O mm_> CANOPY PROFILE SYSTEMS_, INC. BUSINESS CASE O (http://www.canopysystenls.conl) Canopy Systems provides healfllcare clients widi information technology capable of supporting clinical and administrative processes. The company has a strong propensity for focusing on meflaods that influence cost-effectiveness, patient safety, and quality of care. Canopy utilizes a third generation ASP model to provide case management applications across the continuum of care. The progrmn allows organizations to access a variety of software applications over file Intemet on a subscription basis. FUNDING Recently purchased by The Medical Mutual Group of Raleigh, NC. Medical Mutual provides a wide range of healfll insurance products throughout Arkansas, Georgia, Mat3,1and North Carolina, and Virginia. , CURASPAN, PROFILE INC. (FORMERLY INTEGRATED HEALTHCARE NE71r/ORKS, INC.) t_ ,fllttp://www.curaspan.com/) A provider of Intemet-based connectivity, content and management tools for healfll care organizations, focused on the New York Metro, Texas, Florida and New England markets. The company's flagship product, eDischarge, was designed to expedite patient assessment, care planning and discharge in acute and post acute settings. Last year, Curaspan purchased CareView an Intemet based multimedia information guide to skilled nursing and assisted living facilities FUNDING Funded primarily through private investments. The company hired Mike Cayer as its Corporate Development officer in September 2000. Mr. O O O O O O O O O O O Cayer has experience in acquiring capital for new economy companies. Prior to joining CuraSpan, he served as Vice President of Trellix Corporation whe,:e he was responsible for negotiating a $35 million offering through Goldman Sachs. CONFIDENTIAL PAGE 16 O O O 0 0 O 0 _=--__ TransitionCare m S,NEsSC E MANAGEMENT TEAM & ADVISORS Management Team Grego_ D. Lawton. President ChielExecz_tive & Officer Greg has over 20 years of experience managing ancillary healthcare service companies. Most recently, Greg was Vice President of Business Development for American Medical Response's Eastern Region (a $165 million operation). His ability to coordinate fast paced projects and system design are important assets as TransitionCare begins to generate industry credibility. His focus on service-leadership within the healthcare industry will help the Company differentiate itself as an essential partner to heahhcare organizations seeking operational and economic excellence. HarryJ. Kuhn. Vice President f Co,orate Devdopmetlt o Hart 3, has a proven track record of sales and marketing within the healthcare industry. Harry is primarily responsible for identifying, negotiating, and managing strategic partnerships. He spent the last 4 years as a consultant to Akron General Medical Center ("AGMC") creating a dynamic new value proposition that propelled flae organization's occupational medicine program to be d_e largest such program in the northeast Ohio region. Harry has held various management, sales and marketing positions, including his previous position as founder and former president of Marden Rehabilitation Associates, Inc. Harry has a Masters Degree in file field of occupational therapy from the Medical College of Virginia. He has an active leader in medical management and consulting for multiple phases of medical service delivery including acute care, long-term care, community service provision, and home health. Gre£o{y MoteplD.O., Directorof C_'nt'cal Integrity Greg is a board-certified family practice physician who trained at the West Virginia School of Osteopathic Medicine. He has been involved in tile development of multiple family practice locations throughout his career. Greg is a physician who enjoys continuing to provide clinical care in the realm of occupational medicine. His interaction with the medical community from a provider perspective provides insight and access for TransitionCare endeavors. Greg provides direction in the area of medical management from die provider's perspective to ensure clinical integrity of the process. O Matt Kulchins.RN, a background in CaseMan_emenl Coord/na#o,¢ critical pathways and other programs to promote quality health services throt.gh tile Mat3, has MSN. Directorof facilitating die development of appropriate and efficient use of resources. She has collaborated with interdisciplinary case management groups to improve care and outcomes across the healthcare contint, um. Prior to working witll TransitionCare, Mary was a Coordinator for Case Management at AGMC in Akron, Ohio. She also managed special projects for AGMC such as coordination of hospital documentation systems and compliance with regulatory and licensing standards. Mary has a Master of Science Degree in Nursing and is currently enrolled in the Nursing Doctorate program at the University of Akron. SteveKannen.DirectoroFTcchnoh_v Steve leads the design and management of software product development. He graduated from Tile Ohio State University with a Bachelor of Science degree in Industrial Engineering. In 1982, he founded HiTech Programming, Inc., located in Waterville, Ohio. Steve specializes in programming for the Fi.lancial and Medical sectors. He has considerable experience with programming multi-tiered client/server systems using protocols such as TCP/IP and HTTP. His programming langt,ages include C, C++, Delphi, Visual Basic, Active Server Pages, HTML and XML. O O CONFIDENTIAL PAGE 17 Q O Q 0 _ O I_7 Board of Advisors The successful i_ execution of the Company's business plan depends upon dm strong board of advisors and directors that RTB retains. One of the Company's top priorities, during the capital funding phase, is to develop a strong board of advisors, with a direct goal that one or more of file advisors will have public company experience. These board members can provide the expertise necessary to ensure file Company's financial viability during file Company's high growth phase and is familiar with the reporting requirements of a public company. TransitionCare is in fl_e process of identifying mad meeting with potential candidates for the board positions. TransitionCare BUSINESSCASE O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O O CONFIDENTIAL PAGE 18 0 0 _ O n_i_ TransitionCare BUSINESS CASE O O O O O O O O O O O O O O O O O O O O O O 2. FINANCIAL PROJECTIONS Capital Sources and Requirements TransitionCare has ,already committed significant resources and performed many activities designed to develop and execute its business case. The Company has also worked with file Capital Markets and Strategic Advisory Services groups at Saltz, Shamis & Goldfarb ("SS&G") to develop and research tim comprehensive strategic plan for the business. SS&G has aided management by thoroughly researching the market opportunity, competition and potential business models as well as to develop file financial model based on Management's needs exist to fully launch all of the operational aspects of TransitionCare's financial estimates. business case. Key areas for expenditure Significant funding inch,de the development, acquisition and installation of the hardware infrastructure, software development and licenses, office leasehold improvements, recruiting and staffing, as well as go-to-market strategies. These expenses amount to $500,000, which would allow the company sufficient capital to reach significant milestones key to the Company's long-term success. Management has self-financed all expenses pertaining to the enterprise startup to date, including operational website conceptualization, development and prototype, relationship building and maintenance, market research, talent search, and expenses since inception. These expenses exceed $230,000 in investment from the founders and management of the Company. Exit Strategies Management of TransitionCare and the Capital Markets Group at SS&G have intensively studied possible liquidity events and exit strategies. All parties have agreed that the three following scenarios present the best opportunity for a liquidity event for institutional investors or strategic parmers: 1. Acquisition by a significant Strategic Buyer. The primary strategy for investors is an acquisition by a strategic partner. there is a considerable possibility that one of the large health care concerns could prove interested in acquiring TransitionCare Management believes to enhance its market 3. O O O O O O @ @ position. The strategic buyer would probably take the form of an established "brick and mortar" industry stakeholder buying its way into a B2B platform. Acquisition by significant New Economy company. Although it is not considered a primary exit strategy, the Company's management believes there is a considerable possibility that a new economy healthcare player or industry consolidators could be interested in acquiring TransitionCare to keep the technology away from competitors in the marketplace or to increase their own market presence. While there is not currendy any discussion regarding fllis particular exit strategy, management believes there exists a viable potential here for future liqt,idation. Initial Public Offering ("IPO"). It is a considered goal of TransitionCare's management and advisors to work towards an IPO of the Company's stock. Co,npany will be managed with the intent of an IPO, should management and the Board of Director's deem it appropriate for the shareholders of the firm. CONFIDENTIAL PAGE 19 O O -_-- TransitionCare O i _D_>_*" BUSINESS CASE O O O Financial The following table demonstrates Highlights set of financial projections :_._:_ ........................................ • IN_O_iE::.STATEMENT -::3:::::::": TransitionCare's projected income, cash flow and asset utilization for file next d_t'ee years. A comprehensive has been prepared by SS&G and will be provided upon request. :_:_:_:_::/" 2001 :>:2002 .,,..!:.:..::::::>:y.:.:::>..:..:i: ..........:_ili;>::_:_::_:_:::2003 " :::. : .... :..i::.::.::.:.:::.::::::::.:::::.:......:.._.i/::.i.::i::.i.:.:ii:.iii::ii_i:_.:: .:.?:.?:_:.. _:...... ::::::':::::": . "......... O O :........::3:..:..y.:_..i::..:._3:3.: .::.::...........: ':_.":.:_:>:::.:.:_::.:::..::i::i::::i • O O O saie.s.::: . .......... •.... _:::GrossPrbfit - ::.Gross:M_irgm Operating profit op._;_ati:n_::..lVl_ii_n .. '" .......... . :-......: .......-:.. • ... $.1:1:2i925.......::_..-:;_.:.:::.::..:...::._ _::_.:..:._:......::::: ....... ................. -.....-:._..:.:._:_.::._._:::_:::_:::::::::::::_::.._._::__568,195 _:i:::::_:_i_.ii:_:!i:._::::_iii:/i:::i.-.:.[. :_. $:!:._97s:,51:2 _. :..::::.:::...i.:. .9,751 8.6% (27 !:,19.3) .(24.0..2%) :68_2_v:. _ 12:0% 56*;:550 :._8._% :..:.:::..........._:.....:....:..... ............................ 4!.!,735 :_:::_:::: :..._..::..:_.:..:....:._.::::._::._:.:_._...:._.!..:_:... 72_5.0Z0 17:],:::.c)% ..................................... ........ ".'..'.:...:........ :....;..... :.:.:..:..........:..:.:...:..... O O O O EBITDA - ::>"::;::::"":!::i.! : .:::._:.. :..:::.:.::.:.::..::.:.::ii::i"_":_::::ii$216,61 ?l):: ........_i:.i::iiii:: ............... ............. i:.._...:..:..:::::!..: ::::::::....::.:....._.: $!:27:,632 _:_/ :$620ic)36 BALANCE SHEET .:.!2t_rreiit.Assets $324,9.89 $¢ta_,7.89 $716i9.891 .::_:::;;:i.i:::Neti:I_P.E:. ::....:..:._: : :":.ii_.":".:::. :/::i:_: !:::_:/:::::_:::"::::.:.:::_r:;":"!... . .. :. • :....r.._..:.:.i;i_:!:_:_{{!.):_: _;..... 69;321 ,I .........84:_536:. 1.:!:_);9.S.! ::."..:. Totai:.Ngsets.::.::::..:::.i!::.:.. ' LT.:: . '"_::i:..:.i:i.::::::--:.i..-.: .:::::.:-.;.:.... ._.:::: :....:-:. :-:.:...:..: :::::.:.:_:_:_:_.:_:_:_::_:_:{_:::_:::::!.:.:)::.!:!i.::..494:_3].1 "'"!._5da_3_6" ............... ::::_::i:";;:_!::ii::::_:_:_:_:..:.!-'._i!:!!i_i:..:i:.::..- :::;:_:i::::::-#.:. ................. " :".: :::_; " 836;9140 O O O O O O O O O O O O O O O O CONFIDENTIAL PAGE 20 0 _----TransitionCare @ II__ APPENDIXA -- CORPORA TE POWER.POINT OVER VIEW n_SiNESS C_E 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O O CONFIDENTIAL PAGE 21 0 0 0 0 0 0 0 0 0 0 : ; O TransitionCare , ._i onnectzng the contznuum of care C _r""_---'_-'----'.??Z_L.-.._.2 _22" L? .: _ . . .. • • O O O O 0 0 0 0 0 0 0 0 0 Providing • 0 Healthcare Communication and Integration Tools 0 0 0 0 0 0 O 0 • O f-., - 0 0 • @ • _ _ • @ @ @ @ @ @ @ @ @ @ The "new golden age" of nursing case management is on the horizon. The aging of America, the national spread of managed care, the information/Internet revolution, and rising healthcare costs will be among the most important driving forces. Russell C. Coile, Jr., MBA, BS, Healthcare Futurist O 0 0 0 0 O O 0 0 0 • @ @ The Value Proposition Information to Healthcare Systems o • • 0 • • • • 0 @ @ @ systems and the Internet offer a new set of strategies to leap over the limits of the current paradigm. Nurse case managers have but to reach out and doubleclick to seize the opportunities. • Reduce the cost of uncompensated care (Measured by GMLOS) • Identify the activities of Transfer DRG patients (Eliminate Surprises) • System branding for the Integrated Healthcare Clients • @ @ • Provide connectivity and reliability to ancillary delivery systems. patient outcomes and on • @ @ @ @ • More data and reporting on individual population-based outcomes 0 0 0 0 O 0 O 0 O i: - 0 • o • o • • @ • O The Value Proposition to Sub-acute Care Providers Continuum based information links will become more critical in managing the aging population's multiple diagnoses and more complex data sets in the managed care environment. • Reduce costs through interface download of patient information into provider information systems. Improve patient care by providing the ancillary nursing/therapy staff with more timely patient information • Provide demographic utilization data by payer and IDS • • O • O • • @ • @ • Provide Client owned sub-acute and ancillaries with system discharge/transfer data -An opportunity to pre-determine RUGS III scores. (Improve Mix) • @ @ @ 0 0 0 • • e • • • 0 e _l I . AI_ of this is about te change° The combination of several Internet and telecommunications technologies has created a new model for the distribution of data. I _ibbe, " - MD, MBA, President Canopy Health Systems . . ---.--___.. .- .... .. = .= = . :, . -. . ,.. , - e ' ": " i. ' _!!2 :_ '; _ --'"-. ,. _ ." ' -.-." : .... ".;_::.'. '. ',_b --._',: ":" "_&l:_"_ • ; '.' " .:'. : _ "' '_ " e • 0 0 information, ee • 0 0 0 0 0 0 __ __,_ _.,. _:_ f_,:--_ _i_ _!i • Discharge:planner ubmitsthe s requ_electronically. Provides transfer infoonce. Getssolutionsin abouthalf the time. 0 0 0 0 0 0 0 0 • 0 !. . "i • • @ @ Expanding Core Competencies • TransitionCare's data center provides functionality, allowing Case Management to focus on the Patient • The TransitionCare platform can be expanded to link computerized care management plans and clinical pathways, disease management and CRM. • TransitionCare collects information and suggests appropriate local providers with immediate access. The Case Manager is armed with a list of pre-approved potential providers based upon geographic needs, acuity and payer status. • • @ 0 • • • @ • @ @ @ 0 O O O O 0 • Will Healthcare Systems Participate? • The product is a cost-effective adjunct to help healthcare systems comply with federal privacy and confidentiality mandates. • Time Magazine (4/17) in an article discussing the need for the new medical-privacy rules describes the healthcare industry in the following terms: "[healthcare] is a bureaucratic-hernia. No other malor business relies so heavilyand so inefficientlyon old fashioned pencil and paper." • Similar systems are catching on in Boston & New York (Curaspan), Chicago, Miami, Philadelphia & Kansas City (ExtendedCare) and Chapel Hill NC (Canopy) O O O • • O • @ • • O • • @ • • @ • @ @ @ @ 0 0 0 0 0 @ 0 0 0 • • e • • • @ @ @ = Over the next 2 years, HIPAA will require healthcare providers and insurance plans to institute security measures for electronically transmitted or stored health information and stringent privacy standards. Faxing does not comply! = 128-bit SSL encryption is the standard for financial and healthcare security. Our system assures message privacy and integrity. In addition, the information moves 100 times faster than faxed information. • • @ • e • @ @ @ O @ @