Agency market

© 2012 API Healthcare Corporation. Confidential Information. All Rights Reserved.

Agency Solutions & Market


Strategic Plan

•Market Update•Strategic Issues & Opportunities

Situation Summary

•Vision•Where Will We Compete? (Target Markets)•Who Must We Beat? (Competitors)•How Will We Win? (Value Strategy)•How Will We Grow? (Growth Strategy)

Strategic Choices

•What Will We Achieve? (Strategic Objectives)•What Must We Do? (Strategic Roadmap)•Summary of Growth Initiatives

Strategic Roadmap

•Pro Forma•Risks•Investment Requirements

Financials


How we Segment the Market

Who buys, what's important to them

• Enterprise Clients• Multi-regional presence • Has multiple Lines of Business • Multiple Services • Front-end centralization• Back-end centralization

• Regional Clients •Multi-locations in a given market region•May have Multiple Lines of Business •May provide Multiple Services •Back-end centralization

• Local Clients •Client has a 1 or 2 offices in a MSA•Focused on 1 or 2 Lines of Business•Focused on a single Staffing Service

and what they offer

• Lines of Business • Per Diem Nurse• Nurse Travel• Allied• Locums

• Services• Per Diem Staffing• Long-term Staffing• Permanent Placement• MSP

0

10

10

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100

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Use

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ead

cou

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Features B

enefit Flow


Client Segments

Enterprise

31 Agencies

2 % of Market

40% of Revenue

Regional

361 Agencies

22 % of Market

30% of Revenue

Local

1266 Agencies

76% of Market

30% of Revenue

Market trends favor Enterprise Players


Our Position in Lines of Business Segement

Per Diem Nurse Nurse Travel Allied Locums

Focus on Nurse Travel will give us the biggest bang for our Buck!

We are the Market Leader


Our Position in the Service Segments

Per Diem Staffing

Long-term Staffing

Permanent Placement MSP

Daily Shifts Travel and Local Contract

Fee for Service Agency Based VMS

Enterprise Clients need Solutions that manage all Service Segments

Largest Service Segment of Enterprise Clients we Need

Long-term strategy on many Enterprise Clients


Recovering Market

Industry Revenue (Billions)

2008 2009 2010 2011 2012 20130.00

2.00

4.00

6.00

8.00

10.00

12.00

2.401.20 0.90 1.13 1.26 1.35

3.71

2.602.50

2.65 2.78 2.87

1.82

1.801.80

1.962.10 2.27

3.47

2.602.40

2.662.98

3.28

Nurse Travel Nurse Per Diem Locum Allied

At RiskTherapy Cap Legislation.

• Market tanked in ’09 due to economy and uncertainty of Healthcare Reform. Workers sought security in fulltime employment

• Nurse Travel & Allied recovering fastest due to increased FTE employment confidence and Health Systems willingness to make long-term contingent staffing commitments

11%

8%

5%

14%

2010 - 13 CAGR


Our Industry Share in 2011

o 28M shift hours processed by API Healthcare Agency solution in 20112, est. total agencies revenue of $1.2B

o Of estimated $8.4B1 market in 2011, API Healthcare processed 14% of that spend2

1.2B14%

2011$8.4 Billion Market

Paid to Agencies by Health Systems

© 2012 API Healthcare Corporation. Confidential Information. All Rights Reserved. 9

Our 2011 Est. Share by Line of Business Segment

API4%

Competition96%

2011 Allied

API40%

Competition60%

2011 Nurse Per Diem

API12%

Competition88%

2011 Nurse Travel

API1%

Competition99%

2011 Locum


Current Client Matrix

Enterrprise2

Regional79

Local218

Enterrprise1%

Regional26%

Local73%

% of Clients

Enterrprise13%

Regional44%

Local42%

% of Total Recuring Rev

Client Headcount by Segment


2013 Estimated Recurring Revenue Potential

Nurse Per Diem

$14.5M

Nurse Travel

$5.2M

Allied

$14M

Locum

10.5M

Based on historical trend of ½% of Industry Revenue equaling staffing software expenditures

12% Nurse FTE Quits will help to maintain Per Diem Market segment and fuel Nurse Travel Growth


Historic Total Contract Value

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

Q4

Q3

Q2

Q1

$1.4 M SOW and Completed Implementation of Enterprise Client


Historic Actual Contract Value

2009 2010 2011 2012

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Q4

Q3

Q2

Q1

Impacted by Completed Implementation of Enterprise Client


What we’ve been up to last 2 years

• Scalability & Reliability & Single Code Line• Base for expansion of Enterprise Market

Vitality and move to Logicalis

• Titanium & Platinum Release• 256 User to ~700

• Silver Release ($1.4 M EA Module)• 300 Users to ~ 600

• Configurations NOT Customizations

Enterprise Client SOWs


Enterprise Agency Growth• M&A Activity projected to continue• 16 Agencies have 50% Market Revenue• API has only 2 of the Top 16 Agencies

Travel Nurse Market Projected to Continue its Rebound• Increase in Open Orders• Increase in Bill Rate & Margins• Travel was the entry product for our two Enterprise Clients (MSN and

Maxim), who are actually #1 & #2 in Per Diem Nurse staffing.

Healthcare Employment• Shortage Nurses > 700K & Family Physicians > 40K • Nursing FTE Quits up by 12% y/y (BLS)• 16 Million Jobs with average turn over rate of 13.5%

MSP & VMS Growth• Service delivery models

Focus on Quality• ACOs/Reimbursement based on quality• Joint Commission Accreditation Required to Play• Joint Commission Credential, HR and Reporting measures

Agency Market Trends

New $$ Entry

Barrier

• Effective human capital management tools & services that help providers attract talent, better develop and utilize current staff could be a powerful weapon in the coming battle for talent.

• Addressing Travel Nurse market needs is strategy that will improve our Enterprise and Allied position as well

• API Healthcare Connect is timing well with market MSP trends

• Solutions that promote and measure quality outcomes will have a competitive edge over those that don’t.


Situation Summary

Issue Description Opportunity

M&A Activity Enterprise clients represent 40% of all revenue potential, are expanding into LOB and Staffing services their in-house application cannot manage without costly enhancements.

Leverage our strength in Per Diem nurse staffing to increase our share in Per Diem Nurse staffing with Enterprise clients, with long-term goal to replace in-house solutions with single API solution. Potential Revenue of signing a AMN healthcare using this strategy is projected to have 1.75 M in TCV.

Travel and Allied Services

Travel and Allied services are largest service offering of those Enterprise and Regional clients API must pursue to increase our share of these client segments.

Improvements in travel and long-term contract functionality by 4th QTR 2012, will give API Healthcare the potential to close deals in 2014 that could increase in ACV by 50%

MSP Service Growth

Enterprise Clients are attacking the 3rd Party VMS providers by developing their own MSP product and are gaining in popularity and scope.

MSP should find traction with ACO’s because the ACO can hold MSP accountable for quality and performance

Need pricing strategy with Sales. Recommend based upon either transactional percentage, order volume or subcontractor vendor license fees?


Situation Summary

Issue Description Opportunity

Healthcare Employers are hiring

With 16 Billion healthcare jobs and a 13.5% turnover average, the need to onboard, test and manage credentials is strong across the industry including the new ACOs, but we only address a small part of the market.

Enhance our ARS solution so that it can be used across the entire healthcare industry as the standard for onboarding, compliance monitoring and credential management.

High cost of implementation and training of our base solution

In terms of prospects, the Local client segment represents 76% of the Healthcare Staffing Market and our implementation and training costs obstacles our competitors don’t have. Successful Local Client grow and increase ACV through additional User Licenses, hosting and maintenance fees

Improvement in implementation, training and pricing strategies would significantly Increase our wins in $8M in ACV Local Client Segment. This will directly attack BlueSky, our largest competitor in the segment. Attacking BlueSky can have trickle affect on our largest testing competitor Prophecy

Focus on Quality

• Joint Commission• Compliance• ACOs

Joint Commission accreditation is necessary to participate in larger contracts

As ACO’s impact our clients, the need to track and measure quality indicators will only increase.

Improve our solution to properly track and report against Joint Commission performance measures and ACO quality indicators. Close Gaps in compliance functionality which will help us compete for larger share of the 31M ACV Enterprise and Regional client base.


Strategic Plan


Situation Summary


Strategic Choices


Strategic Roadmap


Financials


Short-term Goals

Retain Current and Grow Per Diem Market Share

Increase Travel and Allied Share Funded Enterprise Development with

Solution ROI Clinical Content Product for API Healthcare Independent Recruiting Solution for

Healthcare Industry API Healthcare Connect MSP Solution


Long-term Vision

Leading Domestic SaaS Solution for all LOBs and Staffing Services that works for all Client Market Segments

API Connect Vendor Neutral Contingent Workforce Solution Utilize Health System Solution technologies for common workforce

business processes in Connect and .net rewrite of CSS• ShiftSelect for Connect and Contingent Staffing Solution• API Healthcare Connect Credentialing and Compliance Engine for all

solutions• HPS Payroll for Connect Contingent Staffing Solution

Expand our English International Market Share Healthcare Staffing Industry Analytics Product Set Industry Standards in Workforce Profiles and Order Data Definition User Certification Programs for Enterprise Solution


Who we compete with

US THEM US THEM US THEM

In-house Workflow is customized, but expensive to maintain and update

BlueSky Heathcare Specifc, low cost and integrated with Prophecy

StaffMed Heathcare Specifc and low cost. Lost focus while persuing VMS

MicroStaffer Heathcare Specifc and low cost. Out of date Technology

Bullhorn Low cost with good CRM functionality. Not Heatlhcare Specific

Akken Low cost, but not Heatlhcare Specific

BondAdapt Good Brand and customizable. Not healthcare specific

Prophecy Good Brand, clinical content and does not require BlueSky

Disadvantage Neutral Advantage

Enterprise Regional Local


Strategic Plan


Situation Summary


Strategic Choices


Strategic Roadmap


Financials


Strategic Choices

Segment Buyers EstimatedOpportunity Goal

NearTerm

Local Client 1000 $3- $6M ACV

Increase Close Rate by restructure pricing, small improvements in configuration options and work with services to restructure training and implementation to reduce cost for this market

Travel Service 200+ $4 - $6M ACV Improve Travel and CRM functionality to close travel clients sales has lost based upon missing functionality

MSP Service 2-3 Existing (work with sales) 4th QTR 2012 go to market Connect Agency MSP solution

for existing ACS Clients

Per Diem Clients 1500 Order SMS, Joint Commission DNR, Orientation and Compliance Enhancements

LongTerm

Enterprise and Regional Clients 300 $20 - $25M ACV ACS Rewrite in Connect Platform with goal of closing gaps

needed by Enterprise and Regional Clients

Healthcare Onboarding & Credentialing 3000+ UNK **

ARS Connect Platform solution for ALL healthcare workforce onboarding, credential and compliance management.

Connect Vendor Neutral Solution 1500 UNK ** Solution that allows purchaser to install Vendor Neutral

VMS in a healthcare system


Strategic Roadmap

Q3 2013 Q4 2012 Q1 2013

Maxim Live on 7.08

MSN Live on Silver

MSN Silver Phase II, III Development

Maxim Custom Development/Government Services

AMN

Travel/Allied Enhancements

Per Diem Shift SMS

Local Client Pricing and Packaging

API Healthcare Connect & CSS MSP SolutionAPI Connect MSP R 2 & Vendor Neutral Solution

Achieves Enterprise Goals

Clinical Content Product


Strategic Roadmap

Q2 2013 Q3 2013 Q4 2013

Recruiting Solution Healthcare Industry Solution

API Connect MSP R 2 & Vendor Neutral Solution

Helps Achieve Enterprise Goals

CSS Connect Enterprise

AMN

Travel CRM & Contracts

MSN Silver Phase II, III Development

Maxim Custom Development/Government Services


Roadmap Obstacles

Support Funded

Development

Monopolize development

resources

PRO: Adds new

functionality

.net Conversion

Timing of Major Changes

ServicesLack of Domain

Knowledge

Implementation & Training

Costs


API Healthcare Connect Vision


Minimal Viable Products

Agency MSP with ACS

• Multiple Per Diem Order Management

• Multiple Long-term Order Management

• Worker Profile, Credential and Document Sharing

• Integration with ACS• User Management

Agency MSP without ACS




• Integration with ACS• User Management• Compliance• Vendor Management

and Order Control

Vendor Neutral VMS




• Integration with ACS• User Management• Compliance• Vendor Management

and Order Control• Integration with

TASS/ShiftSelect• More…


Connect MSP: Minimal Value Adds

Both: • Work in a ONE Solution

- Health System: Connect- Agency: CSS

• Productive View vs. Mobile View Agency

• Health System Self Order Entry and Temp Credential Retrieval Adoption in Connect

• Control over Order Publication to Subcontractors in CSS• Worker Evaluation Request in CSS and Completion in Connect

Health System• Multiple order suggestion review and confirmation Process in Connect• Access Temp Profile and Credential Documents in Connect• User friendly multiple order entry and schedule view in Connect• Fill Statistics in Connect


Concerns

Single Order Focus• Need to be able to quickly add, modify,

cancel, void and confirm a list of orders No Long-term Orders

• Need to manage long-term orders Lack of Filters and IDs for reference Profile Submission and Review

• Too cumbersome


Order Entered by Health System

Worker Submitted by

Agency

Profile Reviewed by Health System

List of Acceptable Workers sent by Health System

Agency Confirms Worker from List

Health System Confirms Worker (auto or manual)

Worker Performs Services


Agency Solutions


• Order Management• Recruiting & Client Sales CRM• Worker Profile and Evaluation • Staffing & Scheduling• Temp and Client Portals• Operational and Financial Reporting• 3rd Party System Integrations

Agency Operations Solution

• Compliance • Payroll (all 50 states)• Invoicing

Key Differentiators


• Travel Module• Pay Check Printing Module• Vendor Management Solution• Job Board• Enterprise Accounting Module• ARS Integration• ClearConnect Web Services

Add-ons and Options


• Online Application and Routing• Competency Testing • Self Skills Assessments• e-Documents and Signatures• Direct Integration with ACS• ClearConnect Web Services

Onboarding & Credential Mgt.


SaaS Revenue

Annual Contract Value (ACV)

Software, Hosting and Maintenance

Total Contract (TCV)

•ACV•Implementation•Training•Integrations•Customizations