Metropolitan Medical Care Inc

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Metropolitan Medical Care Inc

• Business Plan

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Mission Statement

• Development of a facilities-based health plan
  for the US
• Phase 1 Build complete doctor-JVd ambulatory
  medical facilities with hotel and attendant
  commercial activity (100 projects over 10 years)
  Bundled medical services offered at savings over
  hospital-delivered services.
• . Phase 2 At 3-5 years,on behalf of each Center,
  MMC offers direct contracting for health care to
  employers locally.
• Phase 3 with sufficient geographic confluence,
  MMC offers plan to employers regionally and
  nationally.

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The Team

• David T Schwartz, MD (CEO) 32 years of
  practice,facility, medical IT, and health system
  development.
• Joseph M Cross, Jr. (VP Construction) 35 years
  successful experience in planning and building
  projects to 100 MM,including residential,commerci
  al and health care.
• Chris Ackerman MD( VP Medical Affairs) 17 years
  of successful practice development and medical
  direction of privatized health care system for
  the District of Columbia.
• Leslie Coppin (VP Medical Practice Management)
  after 15 years of Medical practice, tax, and
  accountancy, Leslie built a successful medical
  billing company in Denver which increased her
  clients collections by as much as 100.

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The Team

• Richard J Spillett (KELCO Partners- Hotel JV
  partner) 32 years success , with over 3000 rooms
  under ownership or management. Mr Spillet is a
  proven leader and well-known turn-around expert
  in the hospitality industry.

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Market Forces

• Healthcare The US still spends 13 of GDP on
  health care(other western nations spend 6-10),
  Managed care has not controlled costs but has
  simply caused a shift in payments from providers
  ( to 30 of UCR) and Hospitals , to insurance
  company administration (20) and profits (15),
  and to marketing.. Surviving hospitals, unable to
  shift costs further, have cut staff and quality
  of supplies. Providers have either seen more
  patients (and spending less time), invested in
  facilities (surgical centers, litho
  units,cardioscans), or sustained a fall in
  income. Patients and employers have been only
  variably dissatisfied with the rationing of
  care.
• Hospitality and commercial activity .have shown a
  downturn since 9/11, but at least in fast-growing
  areas, are already showing signs of recovery.

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National Healthcare Expenditure, 2000 (HCFA)
(corrected)
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Opportunity/Concept

• Healthcare Informed providers are looking for
  ways to maximize their income and also preserve
  the freedom to render optimal care to their
  patients. By practicing in a complete
  jointly-owned ambulatory medical center with
  integrated hotel, and with MMCs assistance,
  providers can a) receive the facility-based
  portion of income from their practice (often
  triple their professional fees) which currently
  goes to the hospital, b) by being part of a
  larger project, realize equity in their practice
  facility up to 7 times that realized from a
  typical office condominium, and c) in phases 2
  and 3, preserve their patient base by being part
  of a feasible alternative to managed care
• Patients and employers benefit in phases 2 and 3
  from health care premium reductions of 20-40,(by
  reducing the 35 cost of managed care to 15,and
  by eliminating half of the current cost of
  hospital care) and in all phases from receiving
  care in a convenient, hospitable atmosphere.

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Opportunity/Concept

• The need for Hotel and commercial development
  will be a requisite part of each Centers site
  selection. The medical activity will be
  transparent to the commercial and other guests of
  the hotel, yet the medical occupancy should
  bolster hotel feasibility during start-up.
  The inclusion of non-traditional activity (such
  as medical, or social services) in commercial and
  shopping developments has been increasing across
  the country, and should be well-received.

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Competition (Solution)

• Resistance from hospitals,who may lose revenue
  Avoid CON conflicts.
• Other medical buildings compete for occupancy
  Advertise concept- participants can realize
  equity up to 7 times that from conventional
  condo, and can increase practice income by
  sharing in facility-based revenue.
• Single-specialty groups who already own their own
  facilities (eg surgical center) can still
  increase revenues from bundling of services
  otherwise provided in the hospital
• Multispecialty groups who own their own
  facilities and currently do direct contracting
  should be invited to meet QA and cost standards
  and then affiliate with the Plan for regional and
  national marketing.
• In phase 2 and 3 services will be sold in
  competition with traditional and managed
  insurance plans, but at 60-80 of the price.

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Goals Objectives

• Three years- 8 Centers running,cash flow
  positive,
• Five years- 20 centers open, ROI50
• Ten years 60 centers open, Plan operational,ROI
  930
• 14 Years 100 centers, 10,000 doctors (2 of US
  market), Plan fully operational, revenues 1.7B.

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Financial Plan

• Assumptions1) Each Center costs 51MM MMC
  invests 10 MM, but earns 5 MM in construction
• 2) Yield to MMC from each center is 4MM/year
  (REgt 2, Meds svc 2 ), at year 10 yield goes to
  10 MM (37).
• 3) HMO covers 50K lives per center premium
  200/mo, 5 profit to MMC.
• 4) Each Center (real estate) is refinanced at 10
  years, estimate value then 125 MM yield to
  MMC 50MM/center)

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MMC plan Real estate centers net
revenue RE total revenue stk(75) stock
price cct bal 1 acct bal assets year new
ctrs In out in up ops HMO refinance
ROI(75) ROI(250) (P/E 10 1 4 40 4 -40
1 1 35 250 2 4 40 2016 8 4 -4
1.00 1 31 206 3 4 40 2032 12 8 12 12 16 4.8
0 1.60 0.48 43 218 4 8 48 2040-80 20 12 32
32 42.64 12.8 4.264 1.28 75 250 5 8 - 4080-80 2
8 20 40 40 53.33 16 5.333 1.6 115 290 6 8 - 40
112-80 36 28 82 140 222 296 88.8 29.6 8.88 337 5
12 HMO start year 67 284 378 93.6 37.86 9.36 62
1 796 8 8 - 40176-80 52 44 136 220
356 474.66 113.6 47.46 11.36 977 8 40144-80 44
36 104 180 1152 9 8 40208-80 60 52 168 260 42
8 570.66 171.2 57.06 17.12 1405 1580 10 8 4024
0-80 68 60 200 300 200 700 930.33 280 93.03 28 210
5 2280 RE refi'd year 1011 8 40680-80 76 68 64
0 340 200 1180 1574.66 472 157.466 47.2 3285 3460
12 8 40760-80 84 76 720 380 200 1300 1746.66 5
20 174.66 52 4585 4760 13 8 40840-80 92 84 800
420 200 1420 1893.33 568 189.33 56.8 6005 5180
14 8 40920-80 100 92 880 460 400 1740 2350 696 2
35 69.6 7745 7920
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Resource Requirements

• Technology IT systems designed to selectively
  communicate and share between providers, Centers,
  and the Company.
• Personnel Each Division hires and rewards their
  own personnel, within their own budget
• Resource requirements
• All costs (construction, marketing, IT, admin)are
  distributed to the Centers benefiting.
• External requirements
• Initially, Construction, marketing, and RE
  brokerage services will be engaged locally

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Risks Rewards

• Risks
• The plan assumes each project is 90 leased at
  completion,and that bundled services,direct
  contracting, and Plan services can be sold (that
  Universal Health Insurance will not be
  available).
• Addressing risk
• Projects should be substantially pre-leased or
  pre-committed before commencing . .Universal
  Health Insurance seems to be a political
  impossibility in the US.
• Rewards
• ThE Investors equity required could be
  returned at year 6 the share value should grow
  30X at year 6, and 230X at year 14.