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© 2014 Cognizant October 2015 CodeVantage – A Code Halo System Cognizant Case Competition Final Round Submission

(Final Presentation) CodeVantage Code Halo System UMD 2015

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Page 1: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant

© 2014 Cognizant

October 2015

CodeVantage – A Code Halo SystemCognizant Case CompetitionFinal Round Submission

Page 2: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 2

Meet our team

Bill Fegan2nd Year MBA Student

Gabrielle Kuey1st Year MBA Student

Anna Holland1st Year MBA Student2nd Year MPP Student

Fletcher McCraw2nd Year MBA Student

Focus:Consulting

Internship:Coverent Consulting

Previous Employment:Trade Operations Specialist, State Street Corporation

Focus:Consulting

Internship:USAID

Previous Employment:Living Classrooms Foundation, World Food Programme, Peace Corps

Focus:Healthcare/Consulting

Internship:Consulting Intern, Clinovations

Previous Employment:Consultant, The Advisory Board Company

Focus:Consulting

Internship:Change the World NonProfit Consulting: Today’s Children, Africa’s Future

Previous Employment:International Brand Management and Digital Strategy, Calvin Klein and Kate Spade

Page 3: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 3

Target MarketCode Halo solution targeted to commercial, non-specialty hospitals and health systems with at-risk contracts

Problem StatementHospitals fail to maximize the revenue opportunities associated with risk-based contracts

Solution Introduce predictive model for patient appointment recommendation and performance analytics to capture full revenue potential

Business Benefit for CognizantPositions Cognizant as provider-focused leader in managing patient risk; a strategic mandate for all hospitals across the next 30 years

Medicare Advantage (MA) Enrollment is Growing but Billing Inaccuracies Cost Hospitals Millions Annually

$1.5k - $2k

$412M - $630MEstimated market size

Average revenue lost per Medicare Advantage patient

per year

$10.3MBaseline NPV for

CodeVantage launch

Page 4: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 4

Agenda

Industry Breakdown

Actionable Issues

CodeVantage Solution

Market Demand

Value Proposition and Risk

Next Steps

Page 5: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 5

Declining Traditional Revenue Streams Force Healthcare Industry to Reevaluate

1. The Advisory Board Company. Healthcare Industry Trends 20152. The Office of the National Coordinator for Health Information Technology. Adoption of electronic health record systems among non-federal acute healthcare hospitals. May 2014

CodeVantage systems offers new revenue opportunities with the digitization of patient medical data

Industry

Problem

Code Halo Market Value Risk

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

($4)($14)

($21) ($25)($32)

($42)

($53)

($64)

($75)

($86)

Medicare Fee-for-Service Payment Cuts1

Reductions to Annual Payment Rate Increases (in billions)

Traditional revenue avenues declining: Reductions in fee-for-service reimbursement

rates creating an incentive for hospitals to adopt risk-adjusted contracts

HITECH Act digitizing the hospital landscape 1%-5% of a hospital’s Medicare revenue was at

risk relating to use of electronic medical records

2011 2012 2013

71.90%

85.20%94.00%

Percentage of Hospitals Adoption Electronic Medical Record System2

Page 6: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 6

The rise of Medicare Advantage (MA) and other risk-adjusted contracts

38% of all Medicare revenue will be MA by 2021, up from 32% in 20151

Capture of Medicare Advantage Market is Mission Critical

With risk-adjusted contracts like MA trending to become a greater revenue source, utilizing CodeVantage to efficiently manage these contracts presents a unique growth opportunity

Industry

Problem

Code Halo Market Value Risk

2012 2022

42%58%

19%

15%

33%25%

6% 2%

Medicare Medicaid Commercial Self-Pay

Average Hospital Inpatient Case Mix by Volume3

2008 2009 2010 2011 2012 2013 2014 2015

88.7

9.29.9

10.811.8

12.813.6

MA is expected to be significant portion of a provider’s revenue by 2020

58% of hospital revenues will come from Medicare within the next 5 years

Number of Medicare Advantage Enrollees 2008 - 20152

(in millions)

1. Avalere Health. Medicare Advantage 2015 Snapshot. July 20152. The Henry J. Kaiser Family Foundation. Medicare Advantage 2015 Spotlight: Enrollment Market Update. June 2015

3. The Advisory Board Company. Healthcare Industry Trends 2015

Page 7: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 7

Understanding Medicare Advantage

Insurance Firm Traditional: Medicare Fee for Service

• Revenue on a per service basis Hospital

Hospital submits bill for services rendered

Insurance reimburses on a per-

service basis

Risk-Adjusted Contracts: Medicare Advantage• Revenue a flat payment per patient

based on sickness

Hospital receives flat payment per

patient

Payment amount based on HCC methodology

Insurance Firm Hospital

Industry

Problem

Code Halo Market Value Risk

Page 8: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 8

Hierarchical Condition Categories (HCCs): A New Industry Standard

• Risk-weighting method that determines revenue a hospital receives for each MA patient• A patient with more documented diagnoses receives a higher HCC score• A Higher HCC Score results in more revenue per patient

Definition

$800

HCC Score

1

Revenue per patient per month

1.5

$1,200

2

$1,600

0.5

$400$0

0

CodeVantage helps a hospital increase its patients’ HCC scores, bringing in more revenue

• If a hospital fails to document every disease every year for a MA patient, then the HCC score is not maximized and revenue is lost

Industry

Problem

Code Halo Market Value Risk

Page 9: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 9

MA Revenue Streams Require a Different Approach

Decline in Chronic Diagnosis Coding Across Three Years for Select Diseases1

Issue: Providers fail to document full diagnoses for each patient each year

Issue: Hospitals fail to proactively engage patients to bring them in the door

1 2

$1.5k - $2k

CodeVantage helps identify all diagnoses to document and proactively connects patient to the necessary physician to capture full HCC score

Industry

Problem

Code Halo Market Value Risk

1. Blue Cross Blue Shield. Its All about Coding, Caring, and Collaborating.. Feb. 20132. AAPC Factor HCC with Two Pronged Approach to Risk Management. Aug. 2012

Amount per patient lost due to missing HCCs2

Coronary artery disease COPD Diabetes

100% 100% 100%

17% 16% 12%11% 11% 7%

Year 1 Year 2 Year 3

$7.5M - $10MPotentially lost revenue for hospital with 5,000

MA patients

Page 10: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 10

CodeVantage Data Ecosystem

Hospital Medical Data

Patient Prescription Data

Hospital Billing Data

HCCPredictive Algorithm

Medical Footprint

Physician Appointment Availability

SMS Messaging

Patient Cell Phone

Disease Prediction Appointment Scheduling Performance Tracking

Physician Scorecards

Industry

Problem

Code Halo Market Value Risk

CodeVantage Platform

Page 11: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 11

CodeVantage Impact on Individual Patient Care

Industry

Problem

Code Halo Market Value Risk

Name: MerlAge: 75Health Plan: Medicare AdvantageMedical Footprint:• Chronic Pancreatitis• Active Insulin Prescription• Historical Depression Diag.• Taking Lipitor

Merl calls to schedule annual GI appointment

CodeVantage predicts diseases and identifies

undocumented diagnoses

System prompts registrar to inquire about

scheduling PCP appointment for undocumented

diagnoses

PCP visit results in documentation of

diabetes, depression, obesity, hypertension,

and migraines

Page 12: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 12

CodeVantage’s Implications for Hospital with Merl’s Visit

Without CodeVantage

With CodeVantage

Diagnoses Documented: Revenue Received by Hospital:

• Chronic Pancreatitis

Chronic Pancreatitis Diabetes Mellitus Depression Hypertension Obesity Migraines

$600 per month

$1,640 per month

Resulting HCC Score:

2.051

0.747

Industry

Problem

Code Halo Market Value Risk

Merl’s CodeVantage initiated PCP visit nets the hospital additional payment of $1,040 per month, $12,480 annualized by documenting previously undiagnosed or undocumented diseases

Page 13: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 13

Industry

Problem

Code Halo Market Value Risk

CodeVantage Target Market Defined

>100 Beds• Available resources to

purchase CodeVantage System

VA Hospitals• Federal contracts have a higher

barrier to entry

Non-Specialty Hospitals• Offer diverse services for risk-

based contracts.

At-Risk Contracts• Necessary for risk-adjusted

paymentsChildren’s Hospitals• No Medicare patients

Specialty Hospitals• Lack of diversity in treatment

services

Targeted Segments Purposefully Excluded Segments

Page 14: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 14

CodeVantage Target Market Size

1. Essentials of US hospital IT market; 5 year forecasted spend for US hospitals. HIMSS Analytics 20102. HIMMS 2013 Annual Report of the U.S. Hospital Market

3. “The Advisory Board Company. Healthcare Industry Trends 20154. SearchHealthIT.com, Analytics: Moving Health Care Forward, 2015

Industry

Problem

Code Halo Market Value Risk

1,672 $412M - $630M

Percentage of Hospitals Adoption of Risk Based Contracts2

Likelihood of adoption by year

Estimated number of hospitals in target market4

Estimated CodeVantage market size

CodeVantage is targeted towards a sizable and fast growing market of hospitals adopting risk based contracts

$30.2B - $46.4B

$6.1B - $9.2B

$610M - $920M

$412M - $630M

Hospital CapEx per Year1

20% of CapEx direct to IT2

10% of IT direct to Clinical/Quality Solutions2

91% Non-Specialty and 75% risk based3 2013 2014 2015 2016 2017

8%

23%

54%

69%75%

Determining Market Size

Page 15: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 15

Market Ripe for New Entrants

2011 2012 2013

33.32%38.42%

42.97%

Undifferentiated Competition Cognizant’s competition lacks activation

technology to capture revenue Most competitors are focused on health plans Technology is limited to diagnosis HCC

opportunity

% of Hospitals with Data-Warehouse/Clinical Data Mining Technology1

Industry

Problem

Code Halo Market Value Risk

1. HIMMS 2013 Annual Report of the U.S. Hospital Market

Ineffective Substitutes

Medical Scribes• Pros: Improves in visit coding accuracy• Cons: Cannot proactively ID care gaps

Chart Audit Services• Pros: Good coding quality control process• Cons: Only retrospective, costly, not

comprehensive

CodeVantage is targeted towards a sizable and fast growing market of hospitals adopting risk based contracts

68% 33%Unpenetrated clinical data mining technology market1

Increase in mining technology market

penetration since 20111

Page 16: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 16

TriZetto MA HCC Risk Adjustment Manager leverages a technology developed by the Johns Hopkins’ Bloomberg School of Public Health for insurers

• Estimates HCCs for insurance companies

• Identifies providers and members who most likely need risk adjustment

• Compares coding to determine accuracy of risk-adjusted payments

• Estimates risk scores and evaluates how additional HCCs might impact revenue CodeVantage

Physician Appointme

nt Availability

Tool

TriZetto MA HCC Risk

Adjustment Manager

CodeVantage

SMS Messaging

TriZetto Owned Technology Provides Easy Market Entry

Industry

Problem

Code Halo Market Value Risk

HCC Risk Adjustment Manager

Page 17: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 17

Consulting-Technology Hybrid Offers Recurring Revenue Opportunity

*Billable hours and rate assumptions in Appendix K

Year 1 Year 2 Year 3 Year 4 Year 5

80000

394250

30000

$102,000 $102,000 $102,000 $102,000

Other Fees

Service Fee

Consulting Fees

Implementation Fee

Revenue Recognition for One Engagement

Industry

Problem

Code Halo Market Value Risk

(for the average hospital)

1. Interview. Keyon Crawley, Deputy Director Center for Health information Systems. UMD 20152. Cognizant Technology Solutions 10K

3. Assumes 15% discount rate

$1M $61.5MProjected 5 Year

RevenueInitial Investment1

94 20%Profit margin assumption2

Number of clients acquired over first 5

years

$10.3MNPV3

21 MonthsPayback Period

Page 18: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 18

Additional Engagement Cross-Sell Opportunities

Patient ResponsibilityPatient Eligibility

Registration & Scheduling Assessment

Engagement Activity

HCC Opportunity Analysis

Patient Care-Gap Analysis WellServe: Population

Health Consulting

ICD-10 and Clinical Documentation Improvement

Cognizant Cross-Sell Opportunity

Industry

Problem

Code Halo Market Value Risk

Consulting services created to identify business development opportunities in complementary services

Page 19: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 19

Strategic Benefits and Promising Returns

Industry

Problem

Code Halo Market Value Risk

Strategic Benefits of

CodeVantage Launch

Leader in population health and risk-based contracts for providers

Expertise transferrable to Trizetto’s insurance HCC Risk Adjustment Manager technology

Synergies with HealthActivate will allow Code Halos to expand to patient mobile health

Page 20: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 20

Assessing Business Risk

Market Risk

Prod

uct/T

echn

olog

y R

isk

Same as present Adjacent to present

New to Company

Sam

e as

cur

rent

of

ferin

gsA

djac

ent t

o c

urre

nt

offe

rings

New

to C

ompa

ny

Market/Product Risk Matrix

High Risk

Low Risk

High RiskMedium

Risk

High Risk

Medium Risk

Medium Risk

Low Risk

Low Risk

Industry

Problem

Code Halo Market Value Risk

By modifying a current product and introducing it to an adjacent market, the risk profile of CodeVantage is significantly reduced

Page 21: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 21

Risk Mitigation

Industry

Problem

Code Halo Market Value Risk

Type Risk Statement Mitigation Plan

Product

Privacy ConcernsAccess internal expertise on HIPPA compliance from TriZetto’s work and experience handling patient centric data with its different products targeted to the health insurance and hospital market.

Potentially long sales-cycle as a hospital’s unique

opportunity could be unknown

Create a two-step sales process involving a significantly reduced initial opportunity assessment for a small fee that will translate into a full engagement sale. Focus marketing efforts on campaigns that encourage hospital self-selection.

Scalability of technology across different IT systems

Develop standard extracts for three largest EMR products (EPIC, Cerner, and Meditech) and prioritize hospitals with these systems.

Market

Patient buy-In to appointment visit recommendation

technologyConduct patient surveys to measure; partner with hospital in alpha stage to test patient reaction to recommendation logic.

Increase in vertical support from insurers to providers for

HCC capture

Ensure Cognizant is first to market with CodeVantage technology and builds the capacity of hospitals to increase capture of patients’ HCCs, while developing relationships with insurers to facilitate implementation.

Decrease in Government Medicare spending

Develop bare bones model allowing hospitals to purchase less comprehensive yet effective software.

Page 22: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 22

Next Steps

1. Approval to move ahead 2. Understand different hospital IT systems and scalability for interaction3. Understand the link between hospital and insurers for submitting data4. Identifying and targeting beta partners5. Speak with Cognizant software development team about costs to build

solution6. Identify and train internal team consisting of TriZetto and Cognizant to

be able to deliver consulting service

Page 23: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 23

Appendix A: Marketing Sizing

Bed Segment Avg Cap Ex Median Cap Ex # of Hospital IT Spend as a % of CapEx

100 – 199 $ 8.06 $ 4.89 1063 16%

200 – 299 $ 15.47 $ 9.66 582 19%

300 – 399 $ 22.39 $ 15.86 348 22%

400 – 499 $ 32.89 $ 19.26 192 27%

500+ $ 54.77 $ 38.39 266 18%

• Implies annual hospital IT spend is $9B - $5.9B

• % of hospitals that are specialty = 9%• % of hospitals with at risk contracts – 75%• Our market size = $6.2B - $4.1B

• 2,451 total hospitals greater than 100 beds

• % specialty – 9%• % risk based = 75%• 1,672 hospitals in target market

Page 24: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 24

Appendix B: Marketing Size – Major IT Investment Areas

• Quality/Clinical• Finance• HR• Revenue Cycle• Surgical• Nursing• HIM• Lab• Ancillary• EMR

Cognizant Target IT Segment

10%

Page 25: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 25

Appendix C: Risk Analysis – Intended Market

Intended Market

How familiar is the intended market? Same as Present Market Partial Overlap with Present Market

Entirely Different from our present market Score

Customer's behavior & decision making processes 1 2 3 4 5 3

Our Distribution & sales activities 1 2 3 4 5 3

The competition 1 2 3 4 5 3

Highly relevant Somewhat relevant Not at all relevant

Our brand promise is 1 2 3 4 5 2

Our current customer relationships are 1 2 3 4 5 3

Our knowledge of competitors' behavior and intentions is 1 2 3 4 5 3

Page 26: (Final Presentation) CodeVantage Code Halo System UMD 2015

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Product/Technology

How familiar is the technology? Is fully applicableWill require significant adaptation

Is not applicable Score

Our current development capability 1 2 3 4 5 2

Our technology competency 1 2 3 4 5 1

Our manufacturing & service delivery system 1 2 3 4 5 2

Our intellectual property protection 1 2 3 4 5 1

Identical to those of current offerings

Overlap somewhat Completely differ

The required knowledge & science bases 1 2 3 4 5 1

The necessary product & service functions 1 2 3 4 5 3

The expected quality standards 1 2 3 4 5 2

Total (y-coordinate) 12

Appendix D: Risk Analysis – Product Technology

Page 27: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 27

Appendix E: First To Market with CodeVantage

Adapting current Code Halo/HCC technology to

CodeVantage

Developing streamlined appointment scheduling

technology

Beta Client implementation

Research and development for MA technology

Developing streamlined appointment scheduling

technology Beta Client implementation

Cognizant’s CodeVantage Development Timeline

Competitor's MA technology Development Timeline

12 – 14 months 3 – 4 months 6 – 8 months

3 – 4 months 6 – 8 months3 – 4 months

Market Entry at least

22 Months

Market EntryWithin

15 Months

Leveraging TriZetto’s current MA Insurance Solution technology into CodeVantage MA technology provides a significant competitive advantage and swift market entry opportunity

Page 28: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 28

Appendix F: Proposed Approach to Deliver CodeVantage

Phase 1 •Implementation• 4 -6 Months

Phase 2 •Client Process Overview• 1 Month

Phase 3 •Opportunity Analysis• 1 Month

Phase 4 •Process Change/Training• 3 Months

Phase 5 •On-Going Service• 4 Years

Proposed Service Structure Key Deliverables

Build hospital extract file Interface with registration system Provide training on platform

Process map scheduling, registration, and coding processes

Analyze HCC revenue opportunity Identify largest improvement

opportunities

Full training of schedulers on system Education for physicians about HCC

importance

Monthly progress reports

Page 29: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 29

Appendix G: Four Pillars of the CodeVantage’s Strategy

Capture Patient Medical Footprint

Collect and track medical, pharmacy,

and lab data

Compare to services rendered and documented

diagnoses

Analyze to estimate HCC score

improvement opportunities

Predict Patient Disease Burden

Predict likelihood of each disease for

each patient

Identify patient care gaps

Alert provider to highly likely

undocumented diseases

Hospital Performance

Analytics

Analyze HCC capture

performance at the physician level

Report HCC capture

performance at the department

Track changes in HCC score and

revenue implications over

time

SMS Appointment Scheduling

Compare miss diagnoses to

physician appointment availability

Alert registrar of recommendation when patient calls to schedule any

appointment

Identify patient friendly

appointment suggestions to

schedule appointment

Patient Code Halos will allow hospitals to increase revenue through comprehensive MA claim submissions

Page 30: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 30

Appendix H: Projected Launch Year New Client Acquisition

Sales Activities Frequency (per year)

Exposure per Event

Sales Meeting Conversion Rate

White Papers Published 1 300 2%

Teleconferences Held 3 20 15%Conference Presentations 2 100 5%

Web-Site 1 500 0.05%

  Count Sales Conversion Rate New Clients

Warm Sales Meetings 25.25 30% 7.575

Direct Sales Meetings 96 15% 14.4

Marketing Launch Activities and Sales Meeting Conversion

Marketing Launch New Client Acquisition

Page 31: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 31

Appendix I: NPV Sensitivity and Assumptions

P&L Assumptions NPV Discount Rate Sensitivity

10.22% $ 12.9M 13% $ 11.3M 15% $ 10.3M 17% $ 9.4M19% $ 8.6M

$150k $4.9M $200k $5.7M $250k $6.4M $300k $7.2M $350k $8.0M $400k $8.8M $450k $9.5M $500k $10.3M

Year 1 Price Point NPV Sensitivity

Realized Revenue Year 1 $500,000 Realized Revenue Year 2 $102,000 Realized Revenue Year 3 $102,000 Realized Revenue Year 4 $102,000 Realized Revenue Year 5 $102,000 Renewal Rate 50%Liscensing Fee Rate 10%Sales Growth Rate 3.10%Margin 20%Discount Rate 15%Initial Investment $1,000,000 Negotiation Rate 50%Negotiation Amount $30,000 Tax Rate 35%Amoritization NegligibleChange in Working Capital Negligible

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© 2014 Cognizant 32

Appendix J: Profit and Loss Projections

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

# of Engagements Sold per year

2 22 23 23 24 25 26 26 27 28

Revenues $

1,000,000 $

11,191,500 $

13,773,563 $

16,435,669 $

19,180,301 $

21,908,016 $

23,704,727 $

25,659,138 $

27,466,971 $

29,436,010

Price Concessions

$ 200,000

$ 329,625

$ 339,843

$ 350,379

$ 361,240

$ 372,439

$ 383,984

$ 395,888

$ 408,160

$ 420,813

Net Sales $ 800,000

$ 10,861,875

$ 13,433,719

$ 16,085,290

$ 18,819,060

$ 21,535,577

$ 23,320,743

$ 25,263,250

$ 27,058,811

$ 29,015,197

Costs $ 638,400

$ 8,667,776

$ 10,720,108

$ 12,836,062

$ 15,017,610

$ 17,185,391

$ 18,609,953

$ 20,160,073

$ 21,592,931

$ 23,154,127

Income $ 161,600

$ 2,194,099

$ 2,713,611

$ 3,249,229

$ 3,801,450

$ 4,350,187

$ 4,710,790

$ 5,103,176

$ 5,465,880

$ 5,861,070

After Tax Income

$ 105,040

$ 1,426,164

$ 1,763,847

$ 2,111,999

$ 2,470,943

$ 2,827,621

$ 3,062,014

$ 3,317,065

$ 3,552,822

$ 3,809,695

Product Investment

$ (1,000,000)

$ (300,000)

$ (300,000)

Net Gain $ (894,960)

$ 1,426,164

$ 1,463,847

$ 2,111,999

$ 2,170,943

$ 2,827,621

$ 3,062,014

$ 3,317,065

$ 3,552,822

$ 3,809,695

NPV $

10,302,983

Page 33: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 33

Appendix K: Initial Cost Assumptions

Source Portion of Year Needed CostDevelopers 10 $120,000.00 0.5 $600,000.00

Cloud Costs 1 $50,000.00 1 $50,000.00 Hospital IT Systems Expert 1 $150,000.00 0.5 $75,000.00

Project Management Costs 15% Extra $833,750.00

Project Risk Contingency 20% Extra $1,000,500.00

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© 2014 Cognizant 34

Appendix L: Understanding Risk-Adjust Payments and the HCC Score

HCC risk-adjustment methodology is become widely adopted by CMS for normalization of cost or quality metrics for the level of patient risk making it imperative for providers to manage this metric

CMS requires annual documentation of disease burden to disperse payments therefore capture of comprehensive disease burden is mission critical.

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Appendix M: Customer Service Benefits

2% $2.2M - $5.4M

Annual Medicare revenue at risk for a

provider directly tied to performance on patient

satisfaction surveys

Estimated annual revenue gains for a provider with

$120M in revenues for being in top quartile regarding

patient satisfaction1

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

202

8681135 1172 1220 1355 1418

1743

2243

2868

Estimated Number of Retail Clinics in the US2

The rise of consumerism in health care: Growth of HDHPs1 pushing patients to shop

around for value Proliferation of retail options increasing

competition for traditional providers

Page 36: (Final Presentation) CodeVantage Code Halo System UMD 2015

© 2014 Cognizant 36

Appendix N: Service Fee Structure

Source Contracted Hours Billable Rate Price

Principal 145 hrs $450 $65,250

Manager 280 hrs $325 $91,000

Consultant 600 hrs $250 $1,500,00

Analyst 440 hrs $200 $88,000

Implementation Fee $80,000

Negotiation Buffer $30,000

Estimated Engagement Budgeted Hours and Price

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© 2014 Cognizant 37

Appendix O: Details Service Structure with Deliverables

Service Timeline  Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Service Implementation Client Process Overview Opportunity AnalysisProcess

Change/Training

On-going service

Duration 4-6 months 1 months 1 month 3 months 4 years

Activities Build extract fileUnderstand

registration/scheduling process

Assess HCC opportunity gap

Educate Dr.’s about

importance of HCC capture

Technology maintenance

 Load to Code Halo

PlatformAnalyze risk-based

contractsIdentify missed patient

referrals

Train registration on

new alerts

Monthly progress reports

 Validate Identify patient care

gaps

Build process sustainability infrastructure

 

 Interface with

Registration System        

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Appendix P: Evidence of SMS with Appointments1

Evidence is building that demonstrates applications for the utility of textmessaging for treating, researching and preventing disease across a range of disease conditions and patient types.

Further, research has demonstrated that text messaging improves treatment compliance, medication adherence, immunization literacy and appointment attendance

SMS appears a simple and efficient option that may result in healthbenefits for patients. This review provides evidence substantiating myhypothesis that SMS text messaging will have valuable applications in health services and provides good evidence for use in driving patient visit attendance.

1. In Search of a Effective Mobile-Device-Based Communication Strategies for a Healthier World. Kenyon Crowley. Oct. 2014

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© 2014 Cognizant 39

Appendix Q: Discount Rate Calculation

Cognizant Discount Rate

tax rate 35%

Return Debt 3.14%

Return Equity 10.56%

Debt Value  $     1,637,502,000.00

Equity Value  $   39,560,000,000.00

Cognizant Tech Solutions Discount Rate 10.22%

Risk Premium for Project 5%

Baseline Discount Rate 15%