Business Plan & Investment Presentation Researched & Prepared By HealthTech Maine PO Box 5035 Portland, Maine 0401 www.healthtechmaine.com Page 1
TABLE OF CONTENTS Executive Summary 3 Market Analysis 5 Market Program 6 Management Team & Organizational Structure 8 Financials 9 Appendices 12 Page 2
Company Description PatientPoint Healthcare IT Business Plan Executive Summary PatientPoint Healthcare IT is a software development firm. In particular, the company specializes in helping office-based physician practices incorporate and cost-effectively utilize electronic health records (EHRs) data. Company Background The company was started to provide electronic health records (EHR) deployment services to office-based physician practices. Through this experience, the company s leadership discovered an opportunity to assist physicians, using of data-mining techniques, on how to better utilize their data produced from electronic health records. Electronic Health Record Data-mining Service PatientPoint Healthcare IT helps physician practices examine and analyze patient data contained in electronic health records (EHRs). The service benefits include helping providers (1) determine more precise treatment plans for patients, (2) track payments from private and government insurers, (3) meet meaningful use requirements to earn federal government incentive payments and (4) improve overall practice management. Info-Health Documents Data-Mining Software Data-mining software designed to sift through electronic health records data to detect patterns and assist healthcare providers with the clinical decision process. Product Development & Product Intellectual Property Status The software product is fully developed and tested. And, the company filed a provisional patent with the United States Patent and Trademark Office (USPTO). Target Buyers PatientPoint Healthcare IT offers its data-mining service to office-based, non-hospital owned, primary care physician practice, with one or five physicians, using a basic EHR system that captures patient history and demographics, patient problem lists, physician clinical notes, comprehensive lists of patients medications and allergies, computerized orders for prescriptions and laboratory and imaging results. Market Size The US Bureau of Labor Statistics indicates that are approximately 230,187 physician practices in the United States. Among these physician practices, 52.8% consist of only one office-based physician. Physician group practices with 2-5 physicians make up 37.1% of physician offices in the United States. An estimated 76.4% of all establishments have less than five employees, and about 46.0% have no employees at all. Page 3
Market Analysis The Health Information Technology for Economic and Clinical Health Act (HITECH) authorized incentive payments through Medicare and Medicaid to clinicians when they use EHRs privately and securely to achieve specified improvements in care delivery. Through HITECH, the federal government offers money and resources to support the adoption and use of EHRs. The federal government is providing incentive payments totaling up to $27 billion over 10 years, or as much as $44,000 (through Medicare) and $63,750 (through Medicaid) per clinician. Research data, from SK&A Cegedim, indicated dialysis and internal medicine/pediatrics are the two practice specialties are the heaviest uses of electronic record-keeping, at 80.6% and 75.8%, respectively. According to market research firm Markets & Markets, the healthcare analytics market shows a double-digit growth rate due to supportive elements such as digitization of world commerce, the emergence of Big Data, and also due to the increase in the number of advanced technologies. Factors such as federal healthcare mandates, growing healthcare IT adoption across the globe, growing fields of predictive and prescriptive analytics, and venture capital investments are driving the market. Competitors PatientPoint Healthcare IT competes against a fragment industry of small, medium and large size firms offering EHR and data mining services. According to SK&A, market share among the EHR vendors: Epic Systems's EHR 10.8%, eclinicalworks 10%, Allscripts 9.5%, and PracticeFusion 6.4%. Other key industry competitors include Cerner, McKesson, MedeAnalytics, Optum, Oracle and IBM. Marketing & Promotion Positioned as a service provider helping physicians transform their EHRs into revenue investments, the company s marketing & promotional strategies encompass conference trade shows, direct-mail, person-to-person direct sales, and advertisement in targeted trade association publications. Leadership and Management Team A group of seasoned professionals possessing a combined 40 years in the healthcare IT industry leads the company. In particular, Robert Dibble, the firm s President & Chief Executive Officer, has been directly involved in the healthcare IT arena for twenty four years; while the vice-president for operations has fifteen years of direct industry experience and the director of marketing and business development has six-teen years of direct industry experience. Financials The company generates revenue through fee-for services and acquiring federal Small Business Innovation Research (SBIR) R&D grants. In 2012, the company generated nearly $250 thousand dollars in total revenues. The company reached the break-even point in 2013, and earned a profit in 2014. From 2015 until 2018, the company is projected to be profitable. The company is seeking $1.3 million in equity financing for a 20% position in the firm, which includes using buy-back as an exit strategy. Page 4
Market Analysis Market Size PatientPoint Healthcare IT Business Plan The US Bureau of Labor Statistics indicates that are approximately 230,187 physician practices in the United States. Among these physician practices, 52.8% consist of only one office-based physician. Physician group practices with 2-5 physicians make up 37.1% of physician offices in the United States. An estimated 76.4% of all establishments have less than five employees, and about 46.0% have no employees at all. Electronic Health Record Usage In 2013, 78% of office-based physicians used any type of electronic health record (EHR) system, up from 18% in 2001; In 2013, 69% of office-based physicians reported that they intended to participate (i.e., they planned to apply or already had applied) in meaningful use incentives. Almost 70% of office-based physicians noted their intent to participate in the EHR incentive program. Smaller practices are the driving force in EHR usage. In January 2013, 42.3% of one-physician practices and 53.7% of two-physician practices had reported using EHRs. Those numbers grew by 11% in just one year, with solo offices coming in at 53.7% and two-physician groups climbing to 64.9% for 2014. Market Drivers As part of the American Recover and Reinvestment Act (ARRA) of 2009, the U.S. federal government set aside nearly $20 in incentives for hospitals and physician practices adopting electronic medical records. As of November 2014, more than 428,000 health care providers, mostly physicians, received payment for participating in the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs. In May 2013, CMS announced that more than half of all eligible health care providers had been paid under the Medicare and Medicaid EHR Incentive Programs The Primary Care Doctors industry is projected to benefit from the healthcare reform laws of 2010 and revenue will increase in the five years to 2019. As more individuals gain health insurance due to the reform, demand for primary care services will increase, growing industry revenue in turn. Competitors In a fragmented marketplace, industry estimates indicate nearly 1,000 companies actively compete in the EHR product market. The most recognized companies include Epic Systems, Allscripts, Misys Healthcare, eclinicalworks, NextGen Healthcare Information Systems, GE Healthcare, Cerner, McKesson, and Siemens. Other notable competitors include: Amazing Charts, CareRevolution, Medent, MPM Suite, Practice Partner and Praxis. Other significant competitors are Athenahealth, Abraxas, Ingenix, Integritas, Intivia, isalus, Keane, Visonta, Advanced Data Systems, AllMeds, AmazingCharts, Aprima, ChartLogic, CliniComp, CPSI, Greenway Medical, Healthland, HMS, and CureMD. Many of these companies have the ability to provide data-mining services to physician practices. Page 5
Marketing Program PatientPoint Healthcare IT marketing program seeks to maximize resources, time and efforts in order to attract new clients, retain existing clients, generate consistent revenues and gain market share. The foundation of the company s marketing program includes a sound price structure, a unique competitive advantage, a proactive promotional strategy, and a reliable, efficient service delivery process. Primary Client Profile PatientPoint Healthcare IT s primary clients are small private practice physician offices. The ideal primary client profile consists of the following: Type of Business: Size of Operation: Medical Specialty Ownership Type: Primary Physician Practice 1 5 Physician Practice Family Medicine, Internal Medicine, Pediatrics & Obstetrics Independently Owned Owner s Age Range: 50-65 Estimated Annual Revenues: Years in Business: Geographical Area(s): $250K - $5 million 2-12 years From Maine to Florida Price Structure The company offers its service as a fee-for service. Clients are able to select from three service modules based on their practice size. The modules range from $2,500 to $4,000. Page 6
Service Fees Chart Service Modules Physician Practice Size Service Price Basic Module 1 to 2 Physicians $2,500 Intermediate Module 3 to 5 Physicians $3,000 Grand Module 5 to 7 Physicians $4,000 Competitive Advantage The competitive advantage is the company s skilled, experienced personnel with past accomplishments working within the industry and working successfully with physician practices. Barriers to Entry The barrier to entry is very low. At the same time, the industry is consolidating rapidly and very few large EHR vendors offer data-mining services to the company s target clients. Thus, the company has an opportunity to acquire and dominate a sizable marketshare within its targeted market segment. Promotional Activities In targeting the membership of state medical associations/societies, from Maine to Florida, the company plans to implement the following promotional strategy to recruit new clients. Promotional Activities Direct Mail Guest Speaking Advertisement Networking Events Conference Exhibits Approach Educating and informing physicians about the benefits of using data-mining for EHRs. Sharing knowledge and expertise the use of data-mining EHRs at state medical associations conferences. Placing ads in targeted physician and Healthcare Information Technology (HIT) trade publications. Attending and developing contacts at state medical association s conferences. Hosting a booth and providing information at state medical association s conferences. Page 7
Management Team & Organizational Structure Management Team Chief Executive Officer & President Vice President Of Operations Vice- President Marketing & Business Development Robert Dibble Jack Sanata Tina Jones Professional Staff Chief Technical Officer Software Engineer Information Technology Specialist Mary Armstrong Ben Jetta Trisha McDonald Appendix A contains a detailed profile of the company s management team and professional staff. Outside Professional Assistance PatientPoint Healthcare IT has engaged the services of an attorney and an accountant as professional representatives for legal and financial/tax advice. Page 8
Financials Expense Structure The company s operating expenses include salaries with benefits, office space, taxes, office equipment, information technology services, travel, promotions, office utilities, and professional services. Revenue Structure Revenue Sources Percentage of Annual Revenues EHR Data-mining Service 75% EHR Deployment Consulting 20% SBIR R&D Government Contracting 5% EHR Data-mining Service Clients are able to select from the three EHR Data-mining service modules based on their practice size. The modules range from $2,500 to $4,000 per month. Service Modules Physician Practice Size Service Price Basic Module 1 to 2 Physicians $2,500 Intermediate Module 3 to 5 Physicians $3,000 Grand Module 5 to 7 Physicians $4,000 EHR Deployment Consulting Service For the EHR deployment service, which involves installing an electronic health record system, the company uses a fee-for-service pricing structure. The service price depends on what is required to start and complete the assignment. Generally, the company s typical service charges range from $25,000 to 40,000 dollars. Page 9
Current Company Shareholders Owner Percentage Ownership Robert Dibble 100% Investment Amount/Funding Amount Needed and Usage The company is seeking $1.3 million in equity capital for a 20 % ownership, which includes using buy-back as an exit strategy. The funding is needed for operating and marketing expenses over the next two years. The use of funds includes: Use of Capital Investment Funds Amount Staffing (New Hires) Salaries/Benefits $600,000 Computer/Electronic Equipment $150,000 Marketing & Promotion $250,000 Product Launch $300,000 TOTAL $1,300,000 Page 10
Income Statement 2015 2016 2017 2018 EHR Data Mining 480,000 520,000 560,000 600,000 EHR Deployment 120,000 130,000 130,000 140,000 SBIR Grants 1,400 1,400 1,400 1,400 TOTAL REVENUES 601,400 651,400 691,400 741,400 Office Lease 24,000 26,000 28,000 30,000 Utilities 4,800 4,800 6,000 6,000 Business Insurance 1,500 1,500 1,500 1,500 IT Services 2,000 2,500 2,500 2,500 Banking 400 400 400 400 Promotional 20,000 20,000 15,000 15,000 Salaries 350,000 400,000 430,000 480,000 Office Equipment 70,000 40,000 30,000 30,000 Travel 25,000 25,000 25,000 25,000 Professional Services 10,000 10,000 10,000 10,000 Taxes 25,000 25,000 30,000 40,000 TOTAL EXPENSES 532,700 555,200 578,400 640,400 PROFITS 68,700 96,200 113,000 101,000 Page 11
Appendix A Management Team & Staff Profiles Page 13 Appendix B Data Mining EHR Software Product Page 14 Appendix C Appendix D Implementation Plan & Milestone Funding Sources Page 15 Page 16 Page 12
Appendix A: Management Team & Staff Profiles Management Team Robert Dibble, President & Chief Executive Officer With over twenty years as a professional in the healthcare IT industry, Mr. Dibble founded X to provide innovative software and RFID technology solutions for medical centers. Mr. Dibble earned a B.S. in mechanical engineering and a M.S. in mechanical engineering from the University of Michigan, and a MBA from Ohio State University. Jack Sanata, Vice-President of Operations Mr. Sanata, who has a B.S. in accounting and an MBA from Boston College, has held a number of positions with both large and small companies focused on operational budgets and accounting matters. Mr. Sanata served as the Chief Financial Officer for two start-up software firms. Tina Jones, Vice- President Marketing & Business Development Starting her professional career in the Public Relations arena, Ms. Jones, over a ten year period, expanded her knowledge, experience and skills to become an expert in both marketing and business development. Ms. Jones possess over 10 years of experience in healthcare sales, 5 of which have been in key leadership and management roles directly associated with providing RFID enterprise solutions to the Acute and Sub-Acute Healthcare facilities. Ms. Jones earned a B.A. in English Literature from Fairleigh Dickinson University and an MBA from New York University. Professional Staff Mary Armstrong, Chief Technical Officer Ms. Armstrong has 15 years experience in health care information technology management. She previously worked for a software vendor and a national IT consulting firm. She received a BS and a MS in Computer Science from North Carolina State University and an MBA from Duke University. Ben Jetta, Software Engineer He has over 17 years of embedded systems, software, and hardware design and development experience, and has been active in relevant standards working groups. Mr. Jetta holds a BS in Mechanical Engineering from American University. Trisha McDonald, Information Technology Specialist Ms. McDonald earned an associates degree, in Computer Science, from Staten Island Community College, City University of New York and a BS in Computer Science from the University at Albany, State University of New York. Page 13
Appendix B: Data Mining EHR Software Product Product Description Info-Health Documents is a predictive analytics software product designed to sift through electronic health records (EHRs) data to detect patterns and improve patient care. Product & Service Benefits With the use of the product and the service, the client benefits in the following ways: Improvement of practice protocols and quality of care delivery Identification of trends and recognition of best practices for different disease treatments Pay-for-performance programs Meet eligible incentive payment requirements under meaningful use Product and Service Implementation In applying the product and implementing the service, the company uses the Cross-Industry Standard Process for Data Mining (CRISP-DM). This process includes: 1) identifying the project s objectives, 2) collecting the initial data, 3) building a dataset, 4) analyzing the data, 5) evaluating the project s objectives and achievements and 6) presenting the data-mining results. Product Uniqueness The product is unique because it is designed to accept a wider range of data formats. In addition, the product can capture complex patterns about patients genetic, clinical, and socio-demographic characteristics. Page 14
Appendix C: Implementation Plan & Milestone Activities 03/09 02/12 03/13 11/13 2/14 11/ 16 Responsible SBIR NIH Phase I Awarded President/Grant Writer SBIR Phase II Awarded Market Strategy Implementation Partnership Agreements Signed President/Grant Writer Marketing Director Marketing Director Product Launch Personnel Addition Marketing Director CEO & Executive Staff Page 1
Appendix D: Funding Sources Financing Stages Seed Start-Up Expansion Funding Needs Business & Organizational Start up New Product Development Marketing & Promotional: Client Recruitment Type of Funding Personal, Family & Colleagues Federal SBIR Grants Business Angel $50,000 (Raised) $1,725,000 (Grants Awarded) $1,300,000 (Seeking) Management & Personnel Recruitment Business Angel and/or Venture Capital $5 Million -$10 Million (Future Need) Page 2