CVG Upcoming Events     Boardroom Series               Second Thursday        7:30 AM – 9:00 AM             4:30 PM – 7:00...
Welcome Marketing at the Speed of LightPaul E. KnagChair, Health Law GroupMurtha Cullina LLP, Attorneys at Law
Three Minute Pitches            Matthew Meier            Jolinda Lambert            David Engelhardt            Yann Beaul...
Electronic Health Records   Marketing at the Speed of Light   A Look at the Industry and Its Future                     Pa...
Electronic Health Records: A Look At                                                                     The Industry And ...
General Themes for Presentation                                 Healthcare Information Technology (HCIT) Industry Update ...
Marwood Group Introduction                Founded in 2000, the Marwood Group is a leading healthcare-focused advisory and...
Broad Healthcare Sector Expertise              Marwood has advised clients in over 85 sub-sectors across healthcare servic...
State of HCIT Industry: Tremendous Growth             Healthcare providers continue to adopt EHR technology, driving trem...
Publicly Traded HCIT Revenue Growth & EBITA Multiples                                             Remain Strong With EBITD...
Drivers For EHR Adoption: Regulatory & Market                                                                             ...
Barriers To EHR Adoption                                                                                   Barriers To EHR...
What’s Hot In Healthcare IT: Regulatory Concerns and                                     Potential Opportunities For HCIT ...
Regulatory Issues On The Horizon: Meaningful Use                                     Criteria Stage 3 Definition          ...
Other Regulatory Issues On The Horizon              Issue                                                                 ...
HCIT Opportunities             Marwood has identified the following near and long term opportunities              though ...
Select HCIT Transactions: Different Approaches To                                     Enhance Communication Between Payors...
Other Acquisitions Of Note: Continued Focus On                                     Advanced Data Analytics And IT Infrastr...
Marwood Group Contact Information                      For additional information, please contact:                        ...
Healthcare IT Market User Perspective     Lud Johnson, CIO  Middlesex Health System       April 11, 2013
Middlesex Health System• Health System - most parts of the continuum• About the 12 largest Hospital in CT• Highly Automate...
Healthcare IT Market• Growing much faster than economy• Fueled by:     o Healthcare Transformation     o Government Stimul...
Healthcare is in Transformation    Current State               Future State•   Fee for service         •   Population mgmt...
Opportunities1. Health management2. Connecting the providers3. Intelligent diagnostic support4. Engaging the patient5. Poi...
Healthcare and EMR Adoption          Daniel J. Barchi, SVP & CIO         Yale New Haven Health System             Yale Sch...
Yale-New Haven Health System
Yale School of Medicine
Current State of Healthcare        Technology
National EMR Use
• Institute of Medicine (1999)• Preventable medical errors  • 44,000 deaths annually• Motor vehicle accidents 43,468• Brea...
Isordil –Prevents angina     attacks    Plendil –Calcium channel    blocker
National Electronic Medical     Records Initiative
January 8, 2009
National Electronic Medical     Records Initiative        Aspirational
May 25, 1961
April 12, 1961   May 5, 1961
January 8, 2009
2008 EMR UseHospitals                    Physician Practices1.5% had fully implemented   4% had fully functioning EMRscomp...
American Recovery and  Reinvestment Act      •   $19 B Incentive Grant      •   $44 K for physicians      •   $8 M baselin...
Federal Stimulus Program Year of           FY2011   FY2012   FY2013   FY2014    FY2015     FY2016     FY2017Adoption 2011 ...
Stimulus Funding                                    Year 1    $2.88 M                                    Year 2    $2.16 M...
Imaging                                      EDSpecialty Practice                      Pharmacy                           ...
Imaging                                      EDSpecialty Practice                      Pharmacy                           ...
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13
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Electronic Health Records (EHR) - A Look at the Industry and Its Future, A CVG Second Thursday Event, 4/11/13

  1. 1. CVG Upcoming Events Boardroom Series Second Thursday 7:30 AM – 9:00 AM 4:30 PM – 7:00 PM April 12 May 9 M&A: Tax Considerations Financial Services Glastonbury Stamford April 17 June 13Employment and Immigration Issues BioTech/Pharma Hartford Hartford May 1 July 11 Crowdfunding Stamford Funding New Haven April 8 Investment by Strategics New Haven
  2. 2. Welcome Marketing at the Speed of LightPaul E. KnagChair, Health Law GroupMurtha Cullina LLP, Attorneys at Law
  3. 3. Three Minute Pitches Matthew Meier Jolinda Lambert David Engelhardt Yann Beaullan
  4. 4. Electronic Health Records Marketing at the Speed of Light A Look at the Industry and Its Future Panelists Daniel J. BarchiModerator SVP and CIO Yale New Haven Health System, Yale School of MedicineDave MenardPartner Ludwig “Lud” JohnsonMurtha Cullina LLP Vice President, Information ServicesAttorneys at Law Middlesex Hospital Edward "Ted" M. Kennedy, Jr. Attorney, co-founder and President Marwood Group
  5. 5. Electronic Health Records: A Look At The Industry And Its Future Ted Kennedy, Jr. Crossroads Venture Group April 11, 2013 New York • Washington, D.C. • London© Marwood Group Advisory, LLC 2013 Tel. 212 • 532 • 3651Unauthorized reproduction or distribution of this copyrighted work is prohibited www.marwoodgroup.com
  6. 6. General Themes for Presentation  Healthcare Information Technology (HCIT) Industry Update  Drivers and Barriers to EHR Adoption – Regulatory and Market Dynamics  Regulatory Issues on the Horizon – Meaningful Use Stage 3 Criteria and Others  HCIT Investment Opportunities – Near and Long Term  Select HCIT Transactions – Understanding the Theories and Assumptions Behind the Investment© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  7. 7. Marwood Group Introduction  Founded in 2000, the Marwood Group is a leading healthcare-focused advisory and financial services firm with offices in New York City, Washington, D.C. and London – Professional staff of more than 100 employees including staff of former legislators, regulators and healthcare operators – Nationally recognized provider of research and advisory services to institutional investors and corporations  Provides in-depth healthcare focused research to mutual funds and other investment managers  Completed over 600 advisory engagements for financial sponsors and healthcare companies  Marwood provides advisory services across seven different practice areas: Integrated Analysis Provides Holistic Market Perspective Private Clinical & Federal State Provider Market Financial Payor Compliance Analysis Analysis Research Analysis Analysis Research Diligence ● Legislative ● Legislative ● Reimbursement ● Decision making ● Competitive ● Identify areas of ● Valuation outlook process mapping landscape risk for fraud and ● Regulatory ● Regulatory ● Financial ● Purchasing analysis abuse ● Coverage outlook modeling and ● Medicare ● Medicaid dynamics ● Process ● Assess provider projections reimbursement reimbursement ● Medical policy ● Product selection benchmarking performance review ● Pro forma ● Medicare ● Medicaid coverage criteria through review of ● Market sizing analysis coverage ● Clinical ● Product clinical regulatory surveys ● Workers differentiation differentiation ● FDA regulation compensation© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited 7
  8. 8. Broad Healthcare Sector Expertise Marwood has advised clients in over 85 sub-sectors across healthcare services and products Rehabilitation Managed Care Health IT Pharmaceuticals/Biotechnology ● Inpatient Rehab Facilities ● Commercial Health Plans ● E-Claims Disability Processing ● Biologics (IRFs) ● Medicare Advantage ● Medicaid Management ● Branded/Generic Drugs ● Outpatient Rehab ● Specialty Benefit Managers Information Systems ● Nuclear Pharmacy ● Physical Therapy ● Special Needs Plans ● Pharmacy Benefits Administration ● Pharmaceutical Compounding ● Occupational Therapy ● Disease Management ● Teleradiology ● Specialty Pharmacy Post Acute Care Behavioral Health Care Hospitals Diagnostics ● Adult Day Care ● At-Risk Youth ● Acute Care Hospitals ● In Vitro Diagnostic Multivariate ● Home Health ● Care Management ● Long Term Care Hospitals (LTCHs) Index Assays (IVDMIA) ● Hospice ● Autism ● Specialty Surgical Hospitals ● Clinical Laboratory Improvement ● Long Term Care Pharmacy ● MR/DD ● Psychiatric Hospitals Amendments Labs (CLIA) ● Skilled Nursing Facilities (SNFs) ● Residential Treatment Centers ● Hospital Outsourced Services ● Assisted Living Facilities (ALFs) Ancillary Care Durable Medical Equipment Other Medical Products ● Enteral Therapy ● Diabetic Testing Supplies ● Medical Supply Distribution ● Implantable Devices ● Infusion Therapy ● Power/Complex Wheelchairs ● Group Purchasing (GPOs) ● Single Use Devices (SUDs) ● Inhalation Therapy ● Diabetic Footwear ● Revenue Cycle Management ● Physician Preference Items ● Home Oxygen ● Workers’ Compensation ● Capital Equipment ● Clinical Staffing ● Other Surgical Instrumentation Physician/Medical Laboratory/Radiology/Dialysis ● Transportation Services ● Medical/Surgical Supplies ● Hospitalists ● Contract Manufacturing ● Anesthesiology Groups ● Clinical Labs ● Pharmacy Benefit Managers ● Durable Medical Equipment ● Dental Groups ● Dialysis Clinics ● MSAs/HSAs ● Blood Monitoring ● Dermatology/Dermapathology ● Diagnostic Imaging (MRI, CT, PET) ● Program Integrity ● Contact Lenses ● Emergency Medicine ● Pathology Labs ● Health & Wellness ● Cosmetic Laser Surgery ● Ambulatory Surgery (ASCs) ● Radiation Therapy (IGRT, IMRT) ● Intraoperative Neuromonitoring ● Negative Pressure Wound Therapy ● Pain Management ● Sleep Centers/CPAP ● Prison healthcare ● Leg compression Pumps & Sleeves ● Wound Care ● Urine Drug Testing ● Patient Satisfaction ● Orthotics & Prosthetics ● Medical Education ● Precision Guidewire Healthcare Services Healthcare Products© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  9. 9. State of HCIT Industry: Tremendous Growth  Healthcare providers continue to adopt EHR technology, driving tremendous growth in the HCIT industry – VC HCIT investment has increased significantly, rising to more than $765 million in 2011, according to the National Venture Capital Association  Much of the growth has been driven by Government programs (CMS Meaningful Use) and various market dynamics – CMS reports that 80% of hospitals and 70% of professionals eligible for the Meaningful Use program have registered – As of February 2013, $12.69 billion in Meaningful Use incentive payments has been allocated HCIT Industry Revenue & Market Capitalization Basic EHR Adoption Rate Among Providers $7.82 $26.9 40% $7.01 $6.23 $21.7 $22.4 35% $5.46 $18.4 $17.0 $4.69 30% Office- $3.99 Based 25% Provider Hospital 20% 15% 10% 2008 2009 2010 2011 $ in B $ in B Marwood selected publicly traded company HCIT index, Source: CapIQ Source: The Office of the National Coordinator for Health Information Technology© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  10. 10. Publicly Traded HCIT Revenue Growth & EBITA Multiples Remain Strong With EBITDA Margins Above 25% Revenue Cycle Management EBITDA Multiples Versus Growth 35% AH 30% ATHN 25% 2012 Revenue Growth 20% QSII 15% EM CERN CPSI 10% MDAS MDRX 5% 0% 8.0x 10.0x 12.0x 14.0x 16.0x 18.0x 20.0x 2012 EBITDA Multiple Stock % of Diluted Diluted Enterprise Value as a M ultiple of EBITDA Long-Term Price 5 2 -W k Equity Ent. Revenue EBITDA M argin 2 0 1 2 E Grow th EPS C om pany N am e Tick er 6 /2 4 /1 1 High Value Value 2011E 2012E 2011E 2012E 2011E Revenue EBITDA Grow th Revenue Cycle Management Accretive Health AH $24.54 80.1% $2,572 $2,416 2.87x 2.18x 29.4x 18.5x 9.8% 32.0% 58.8% 34.0% athenahealth ATHN 41.01 81.1% 1,483 1,376 4.43x 3.49x 20.9x 15.6x 21.2% 26.8% 33.4% 35.0% EMR / Diversified Provider HCIT Quality Systems QSII 82.49 90.1% 2,420 2,302 5.68x 4.74x 16.8x 13.6x 33.8% 19.7% 23.1% 18.3% Comp Prog. & Sys. CPSI 58.98 89.4% 648 631 3.63x 3.23x 15.4x 13.2x 23.6% 12.2% 16.3% 16.6% Allscripts MDRX 18.75 81.1% 3,699 4,058 2.82x 2.55x 12.4x 10.4x 22.7% 10.4% 19.4% 19.9% Cerner CERN 115.97 92.1% 10,260 9,517 4.58x 4.07x 14.0x 11.6x 32.6% 12.5% 20.6% 18.2% Diversified MedAssets MDAS 13.18 52.6% 815 1,738 2.91x 2.66x 9.3x 8.1x 31.2% 9.5% 15.2% 24.1% Emdeon EM 13.40 79.6% 1,572 2,419 2.35x 2.12x 8.5x 7.8x 27.8% 10.7% 8.5% 14.3% M ean 3 .6 6 x 3 .1 3 x 1 5 .8 x 1 2 .4 x 2 5 .3 % 1 6 .7 % 2 4 .4 % 2 2 .5 % M edian 3 .2 7 x 2 .9 5 x 1 4 .7 x 1 2 .4 x 2 5 .7 % 1 2 .3 % 2 0 .0 % 1 9 .1 %© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  11. 11. Drivers For EHR Adoption: Regulatory & Market Regulatory Drivers  Medicare incentives include up to $44,000 per year per qualified physician over 5 years Financial Incentives  Medicare incentives for hospitals are based on discharges over a 4 year timeframe  Physician penalties are dependent on the total number of physicians that adopt EHRs as of 2018 – Physicians who do not comply will be cut between 3-5% by 2019 through adjustments to Financial Penalties the physician fee schedule (PFS)  Medicare penalties for hospitals include an increasing market basket reduction starting at -0.25% in 2015 going as high as -0.75% market basket reduction if not compliant by 2017 Market Drivers  As ACOs come into formation, participating providers will need to adopt ACOs sophisticated HCIT platforms based off EHR data in order to drive savings and enhanced care  As large health systems continue to acquire smaller physician practices, such Acquisitions practices are able to utilize the larger systems EHR platforms – One of the reasons why physician practices agree to be acquired in the first place  EHRs are a essential tool required to drive operational efficiency, including Efficiency & Quality maximization of reimbursement, and clinical quality© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  12. 12. Barriers To EHR Adoption Barriers To EHR Adoption  While the Meaningful Use program provides financial incentives to providers, payments are made in increments over a 5 year period, leaving much of the costs associated with converting paper records the responsibility of the physician practice Up front – Companies such as EClinicalWorks, a EHR practice management company, hosts clients EHRs for a fee Cost reducing up-front costs of computerizing provider EHRs  Purchasing and licensing of software remains a big issue for smaller practices, as systems typically cost can be $30,000 or more per doctor EHR  Even after hospitals implement an EHR system, it often takes considerable time for both “Learning clinicians and administrators to learn how to use the new software Curve” – Physician productivity can drop by 30% as physicians learn how to use the new systems  Lack of new technology acceptance, especially for older physicians and physicians Physician practicing in rural areas Acceptance – It is estimated that over 25% of the physician workforce is 60 or older – National Bureau of Economic Research suggests that EHR adoption can be more costly in rural areas  The ability for healthcare providers to exchange EHR information across different Connectivity healthcare systems and settings of care remains limited  Currently EHR product offerings remain fragmented, including sub-sectors and health Product system specific products, fueling connectivity issues Offering – Specialized EHR products range from clinical laboratories to wound care-focused products – In addition, large hospital systems continue to design system-specific specialized platforms© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  13. 13. What’s Hot In Healthcare IT: Regulatory Concerns and Potential Opportunities For HCIT Providers Achieve ICD-10 Readiness 45% Achieve Stage 1 Meaningful-Use Criteria 29% Adopt/Upgrade Financial & Clinical Systems For 26% ACO or Medical Home Readiness Developing Data Warehouses 24% Electronic Health Records 24% Data Privacy & Security 22% Clinical Communications Infrastructure/Links 21% to Physicians Enabling Patient Access To Selected Data Via 21% The Internet Adopt/Extend Ambulatory Clinical IT Systems 16% Regulatory Issues Near Term Opportunities Consolidating All IT Functions Using Common 15% Long Term Opportunities Applications 0% 10% 20% 30% 40% 50% Ranked by % of respondents, based on 110 responses (Source: Modern Healthcare, March 4, 2013)© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  14. 14. Regulatory Issues On The Horizon: Meaningful Use Criteria Stage 3 Definition  “Meaningful Use” is a series of functional benchmarks which need to be met in order to be compliant under the Health Information Technology for Economic and Clinical Health (HITECH) Act Meaningful Use Criteria By Stage Regulation Stage Description Implementation Criteria Examples Finalized Basic HIT structure Recode demographics, vital signs, smoking status and 1 2010 2011 and foundation medication list Focus on information Planned Generate patient lists for quality improvements, send 2 exchange quality of 2012 Implementation in reminders to patients on follow-up care, provide care 2014 electronic clinical summary for each office visit Promote further Proposed: Identify possible medication allergies, provide improvements in Possibly decision support regarding medication requirements and 3 Possibly in 2016 quality, safety and mid-2014 diagnostic testing, electronically submit information to efficiency other entities, such as HIEs or ACOs* * Stage 3 criteria examples are based off proposed criteria from the Health IT Policy Committee which have not been finalized in regulation  Key “Meaningful Use” questions for providers: – What new criteria/requirements will Stage 3 mandate? – Will the implementation of Stage 3 be delayed, similar to Stage 2 delays? – Will Congress, specifically House Republican members, continue to support the program?  Recent studies suggest that EHRs may not be as successful in reducing costs, such as reducing unnecessary diagnostic tests, as previously predicted© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  15. 15. Other Regulatory Issues On The Horizon Issue Description  HHS continues to release additional privacy and security regulations, including Privacy & limitations on the disclosure of personal health information (PHI) Security  Increased privacy safeguards may inhibit innovative HCIT companies’ ability to (HIPPA analyze EHR data Compliance) – On January 17, 2013, HHS issued additional rules adding numerous new privacy and security requirements  HHS continues to investigate EHRs’ role in enabling hospitals to “upcode” for EHRs: A greater reimbursement Tool For – Examples include “cloning” medical records and upcoding the intensity of care in order Upcoding? to inflate provider reimbursement  On September 24, 2012, HHS sent a letter to 4 major hospital associations voicing the agencys concern such practices  While the FDA has largely refrained from enforcing its regulatory authority over FDA medical software, regulators continue to investigate the agency’s jurisdiction Regulation over EHRs  Under ACA, all devices registered by the FDA are subject to the device tax, ACA Device which recently went into effect earlier this year Tax – It remains unclear how many EHR companies are registered with the FDA – Potential for device tax repeal, although would need $29B in offsets© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  16. 16. HCIT Opportunities  Marwood has identified the following near and long term opportunities though our own proprietary industry surveys focused on the HCIT space Near term Opportunities Long Term Opportunities Outsourcing day-to-day services: Advanced data analytics in order to drive operational efficiency: Registration/ Data Center Server Data Analytics To Eligibility Management Streamlined Drive Outcomes Reporting/Data /Clinical Support Analytics Technology Claims Coding, Disaster Including ICD-10 Recovery/Back-up Transition Processes Advanced Cloud Integration Technology Management Collections/ Data Warehouse Bill Scrubbing/ Development/ Quality Assurance Maintenance While there was little directly related to HCIT in healthcare reform (ACA), advanced Travel And Expense EHR System data analytics will play a critical role in Reimbursement Implementation delivering higher quality and lower cost care.© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  17. 17. Select HCIT Transactions: Different Approaches To Enhance Communication Between Payors & Providers  A wide range of strategies have been used to enable providers and payors across the healthcare spectrum to communicate with each other, including: – Healthcare Information Exchanges (HIEs) – Advanced data analytics and care management platforms – Merging of payor and provider Revenue Cycle Management (RCM) companies Year Acquisition Strategy Size ($mm)  At the time, many thought that HIEs were going to be an essential part of the information flow solution, reflected in the acquisition purchase price (10x revenue) Aetna 2010 Medicity $500  Even in 2013, the amount of information actually flowing through HIEs remains limited, leaving some in the market to question the value of HIEs  InforMed combines both provider claims and EMR, essentially Conifer 2012 InforMed creating their own self made version of a HIE - (Tenet) – The acquisition supports hospital trends in providing care management Gateway  Places both provider (Gateway EDI) and payor (TriZetto) RCM TriZetto 2011 - EDI business lines under one corporate umbrella  Emdeon is already entrenched in both provider and payor Blackstone 2011 Emdeon $3,000 markets© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  18. 18. Other Acquisitions Of Note: Continued Focus On Advanced Data Analytics And IT Infrastructure  Recent M&A activity reflects a change in priorities of healthcare executives from “day-to-day” IT to more advanced data analytics and IT infrastructures Year Acquisition Strategy Size ($mm)  Provides United’s healthcare services arm (Optum Health) with a position in the growing health data mining market United 2013 Humedica – The acquisition follows Optum’s partnership with Mayo Clinic, known as - Optum Labs, a research center that will mine clinical and claims data in order to enhance the quality of care  Enables Athena to further penetrate the physician market, selling its cloud-based network technology to Epocrates’s strong network of physician customers 2013 Epocrates $293 – Epocrates is primarily know for its point of care mobile applications Athena  Largest acquisition in Athena’s corporate history representing a 22% Health premium over Epocrates closing stock price  Expands Athena’s cloud-based services strategy Healthcare 2012 Data  Expands population-based cost and quality data analysis and $5.8 Services reporting capabilities, essential as value-based payment models are implemented© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited
  19. 19. Marwood Group Contact Information For additional information, please contact: New York, NY Ian Adler 733 Third Avenue 11th Floor Senior Managing Director of Healthcare New York, NY 10017 iadler@marwoodgroup.com (212) 532-3651 Washington, DC 1025 Connecticut Ave, N.W. 6th Floor Washington, D.C., 20036© Marwood Group Advisory, LLC 2013Unauthorized reproduction or distribution of this copyrighted work is prohibited 19
  20. 20. Healthcare IT Market User Perspective Lud Johnson, CIO Middlesex Health System April 11, 2013
  21. 21. Middlesex Health System• Health System - most parts of the continuum• About the 12 largest Hospital in CT• Highly Automated o Most Wired Hospital 2012 o HIMSS Analytics Automation top 10% of Country• Meaningful Recipient• ACO Participant• Actively hooking up the continuum• IT Operating cost $9.4 Million: 2012• Capital cost $5 million: 2012
  22. 22. Healthcare IT Market• Growing much faster than economy• Fueled by: o Healthcare Transformation o Government Stimulus• Complexity of need• Technology rapid advancements• Growing demand• Need to achieve great quality• Solve the National Economic Fiscal Crisis
  23. 23. Healthcare is in Transformation Current State Future State• Fee for service • Population mgmt.• Volume matters • Appropriate vol.• Care is local • Care is everywhere• Third party payors • Patient involvement• Quality unknown • Quality discernible• Disconnected • Seamless providers• information sharing• Independent providers • Consolidation Independent Clinical Device • Smart Connected Devices
  24. 24. Opportunities1. Health management2. Connecting the providers3. Intelligent diagnostic support4. Engaging the patient5. Point of service devices6. Work process improvement tools7. Clinical Intelligence (Pop. mgmt)8. Mobile computing9. IT Services and Resources10.Smart Clinical Devices
  25. 25. Healthcare and EMR Adoption Daniel J. Barchi, SVP & CIO Yale New Haven Health System Yale School of Medicine
  26. 26. Yale-New Haven Health System
  27. 27. Yale School of Medicine
  28. 28. Current State of Healthcare Technology
  29. 29. National EMR Use
  30. 30. • Institute of Medicine (1999)• Preventable medical errors • 44,000 deaths annually• Motor vehicle accidents 43,468• Breast cancer 42,297• AIDS 16,516
  31. 31. Isordil –Prevents angina attacks Plendil –Calcium channel blocker
  32. 32. National Electronic Medical Records Initiative
  33. 33. January 8, 2009
  34. 34. National Electronic Medical Records Initiative Aspirational
  35. 35. May 25, 1961
  36. 36. April 12, 1961 May 5, 1961
  37. 37. January 8, 2009
  38. 38. 2008 EMR UseHospitals Physician Practices1.5% had fully implemented 4% had fully functioning EMRscomprehensive EMRs in all in their officeunits
  39. 39. American Recovery and Reinvestment Act • $19 B Incentive Grant • $44 K for physicians • $8 M baseline for hospitals • Meaningful use on an EMR • Stage I • Stage II • Stage III
  40. 40. Federal Stimulus Program Year of FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017Adoption 2011 100% 75% 50% 25% 2012 100% 75% 50% 25% 2013 100% 75% 50% 25% 2014 75% 50% 25% 2015 50% 25% 75% of 75% of 75% of percentage percentage annual None increase increase increase reduced by reduced by reduced by 33.3% 66.63% 100%
  41. 41. Stimulus Funding Year 1 $2.88 M Year 2 $2.16 M Year 3 $1.44 M Year 4 $0.72 M Total $7.21 MBed Days 171,569 Discharges 32,281Medicare Days 73,862 Charity Care 4.94%
  42. 42. Imaging EDSpecialty Practice Pharmacy OR Lab Inpatient Care
  43. 43. Imaging EDSpecialty Practice Pharmacy OR Lab Inpatient Care

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