4th Annual Investor Conference May 16, 2001 GOVERNMENT AND SPECIALTY SERVICES DIVISION Jeffrey J. Bairstow President
Mar 20, 2016
4th Annual Investor Conference
May 16, 2001
GOVERNMENT AND SPECIALTY SERVICES DIVISION
Jeffrey J. Bairstow
President
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4 Point Review
Solid performance in 2000
Positioned for consistent results in 2001-2003
Opportunity to reduce costs in base business through technology applications
Opportunity to increase growth and profitability through new products
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HNFS - Health Net Federal Services: Administers the TRICARE Health Care Program to approximately 1.5 million military dependents in 11
states under the Civilian Health and Medical Program of the Uniformed
Services (CHAMPUS)
MHN - Managed Health Network: Provides behavioral health care services to more than 10 million
lives nationwide (Risk, ASO, and EAP)
Overview of Division
Core Assets
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Overview of Division (Continued)
EOS - Employer & Occupational Services: Provides a broad range of administrative services primarily to
the workers’ compensation industry
HBI - Health Benchmarks, Inc: A health information services
company that provides services to managed care organizations,
pharmaceutical & biotechnology companies, & self-insured
employers.
DentiCare/AVP: Provides dental and vision care management services
to more than 800,000 lives.
Other Segments
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2001 Highlights
Achieved global settlement with Department of Defense to reduce receivables to $64 million on 3/31/01
Expanded MHN membership to over 10 million members
Successfully integrated IPS operations into Health Plan Operations
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Roster of PanelJeff Bairstow President, Government & Specialty
Services DivisionJim Woys President, HN Federal ServicesJonathan Scheff, M.D. SVP & Chief Medical Officer,
HN Federal ServicesBen Yates VP & Chief Financial Officer,
HN Federal ServicesDave Buhler Chief Administrative Officer, MHNJim Jones SVP, Sales & Marketing, MHNMike Berlin VP Business Development, New Ventures
Group
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HNFS - Health Net Federal Services
Presenter: Jim WoysPresident, HNFS
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11
10
96
1
34
5 2
Central
TRICARE Regions
Region 11Annual Revenue: $160MEligibles: 244,000Ext. term 3/002/02
Region 6Annual Revenue: $560MEligibles: 611,000Ext. term 11/0010/02
Regions CA/HI/AKAnnual Revenue: $530MEligibles: 608,000Ext. term 4/013/03
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TRICARE Contract Extension Summary
Financial terms of current extensions– Increased profit rates– Increased administrative prices– Re-basing health costs and trends– More favorable risk sharing provisions– Elimination of capitation arrangements
Contractual terms of extensions improve predictability of earnings and receivable levels
Additional two-year extensions likely
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$0
$50
$100
$150
$200
$250
$300
$350
$321
$273
19971997
$ in
mill
ions
Management focused on maintaining low level of Government investment &
maintaining operating cash flow
TRICARE Government Receivable
Expectations for 2001….Accounts receivable levels to be <$125 million
19981998 19991999 20002000 20012001
$334
$64$64
<$125<$125
$290
3/31/013/31/01
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-$150
-$100
-$50
$0
$50
$100
$150
$89
$10
19971997
$ in
mill
ions
Net investment = Government receivable less Government payable less
claims payable
TRICARE Net InvestmentExpectations for 2001….
19981998 19991999 20002000 20012001
$127
$111 $89(Estimated)
$57
3/31/013/31/01
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Enrollment3%
Other30%
Field Operations
12%
Claims & Customer
Service32%
Medical Management
23%
Solutions
Medical Management System
On-Line Billing and Enrollment
Provider ConnectivityQuestiumEnterprise Portal
(HN Connect) Digital Claims Engine
Opportunity to Reduce Cost Through Innovation
Opportunities
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New Business Opportunities
Sales & licensing of new products to other TRICARE Regions/payers/customers
– On-line enrollment– Questium– Medical management system
Veterans Administration opportunity– Repricing arrangements– At-Risk or ASO arrangements similar to DoD– Care delivery operations
DoD Program Changes– TRICARE for Life
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HNFS Opportunity: VA Healthcare Spend Will Increasingly be Outsourced
1999: $19.1 billion 2003: $24.0 billion 2007: $32.7 billion
$18,500 m97%
$630 m3%
$1,500 m6%
$22,500 m94%
$4,000 m12%
$28,700 m88%
Direct Care vs.. Purchased Care
Direct CarePurchased Care
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MHN - Managed Health Network
Presenter: Dave BuhlerChief Administrative Officer
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WA
CA
TX
OK AR
LA
AK
ORMT
NVUT
IDSD
WY
NM
CO
AZ
IA
IL
WI
MO
MN
KS
NE
ND
SC
FL
GAALMS
TNKY
OHIN
MINY
NC
PA
ME
WV VA
HI
MHN - A National Company
National NetworkRevenue $250MLives 10,000,000
East 3,000,000Central 2,000,000West 5,000,000
Providers 33,000Facilities 1,300Offices 43
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Limited Risk
(EAP/ASO)
69%
FullRisk31%
Non-Affiliate
60%
Affiliate40%
MHN Covered Lives
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Positioned for Consistent Results 2001-2003
Expanded to over 10 million members in 2001- #5 behavioral health organization in market share
Continued strength in EAP product line - #2 market share
Web automation through Questium
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Solutions Through Self Service
Questium Life Provider connectivity Enterprise portal
(HN Connect)Intake28%
Other16%
Field Operations
13%
Claims8% Medical
Management9%
Care Management
24%
Enrollment2%
Opportunities
Opportunity to Reduce Cost Through Innovation
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MHN - Managed Health NetworkHuman Capital Solutions
Presenter: Jim JonesSVP, Sales and Marketing
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$5BN Mature Market Opportunity
The Next Behavioral Health Opportunity
Direct Costs•Health care
•Administration
Indirect Costs• Aberrant behaviors
• Reduced productivity & performance
• Drives reduced competitive advantage
Future Industry Focus:Current Industry Focus:$81BN of direct costs $500BN of indirect costs
$25-50BN New Market Opportunity
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MHN is Well-Positioned to Attack This New Market
Leverage national employer distribution channel
Penetrate six million member commercial client base
Use strategic partnerships to accelerate market penetration and expand reach into new markets
Current clients, both large and mid-size, very receptive to idea
Clients see it as an extension of our leading EAP market position
Health Net a pilot client Recently signed first
external client
Market Validation: Market Entry:
25 years as a leader in helping people change behavior
MHN products and services that can be repositioned to impact indirect costs
Core competency in integrating and managing an array of professional service partners
A scaleable delivery platform--Questium
Why MHN?
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QUESTIUM Personal and Professional Life Services
Self-generated referrals and authorizations
On-line access to authorization and utilization history
Wide range of interactive self-care behavioral programs
Broad spectrum of personal and organizational tools/services
Competitive Points of Differentiation
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Government & Specialty Services Summary
Executed on stated plan in 2000
2001-2003 positioned for consistent results
Upside from revenue and cost reduction initiatives