“BETTER MRI” Finding The Best MRI For Your Patients

Ming Yang, Kathleen Brennan-Beshara, Jon Herman, Alex Bagley, Charlie MaherHealthcare VenturesDec 8, 2015

2

58.4% self insured employers > 1000 employees

3

Healthcare cost climbs at 17% anuually

4

Solution/Cost sharing with employees• High Deductible Plans• Average deductible for employee from

• $2000 a year per individual• $4000 a year for family*

• True out of pocket cost >$6000 a year

• HSA help with tax free savings, but not enough.• Most financed with credit debt

*Kaiser family foundation

5

Benefits / Healthcare as key recruitment tool

• Healthy employers, more productive employees, less absenteeism

• Adobe system reports 100k’s in savings and higher retention by investing in enterprise healthcare management tool to support employees

• Management to Cadillac Tax: 40% tax on most expensive private plans

PSU Professor of Economics Dan Goldstein

6

Employer contracts with Better MRI to provide price transparency on costs

• Employees resent high deductible plans as they believe they are bearing all the burden of rising healthcare costs.

• 44% of employers considering it the only option - 18% there already*

• Better MRI helps avoid reaching the high deductible maximum, which shifts all the burden to you once HD achieved.

• Competitors in the field do not offer price integrity, patients frequently disappointed with charges double what appeared on website.

• * pwc healthcare trends 2014

7

Competitive AnalysisCentralized Control of Cost Variables

Dynamic Change of Healthcare Plan

Discount referrals & bonuses

Gurantee Price

Prepaid services with HSC direct Payment

Castlight, CA

Y Y

Vitals SmartshoppersMA, KY, NH,PA

Y

SpeedWell, WA/OR

Y

Better MRI Y Y

8

As deductibles rise consumers forego medical care

9

John and Mary… & mgmt of healthcare costs.

• In order to control healthcare cost, couple has chosen a high deductible healthcare plan from their employer.

• John and Mary are responsible for first $2000 out of pocket and need outpatient MRI.

10

Where do they cut costs?

28% avoid MD visits

24% skip Rx or take less than prescribed

24% skip Specialists referral

18% don’t do reccdm f/u care ie physical therapy

16% delayed or cancelled

procedure, screenings or

treatments

Health and wellness survey 2015

11

NPR One 11/30/15 radio showPricing Tools as ‘imperfect clue of costs’

Better MRI will offer ‘starter kit’ based on size / medical history demographics of employee claims. For example, upfront $10,000 package and if we don’t save at least $10k in covered employee outpatient tests in 6 months…we will refund 120% of the cost of starter package.

Ongoing cost will be a % of the total savings realized by the employees for using Better MRI network

12

Employees need help

13

Shopping in the dark….

14

Value Proposition and Revenue

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

Yr 11

0100200300400500600700800

Value Proposition

Unit of MRI Scans covered(in thousands)Savings brought by using our service(in millions)

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

Yr 11-5.00

0.005.00

10.0015.0020.0025.0030.0035.0040.00

Revenue

Revenue from self insured employer(in millions)Operating Income(in millions)

Yr 1-5 Yr 6-10 Yr 11-Savings per scan(in thousands) 5 3.5 3

Growth in Volume 100% 20% 5%

Charge 5% of cost savings

15

Validation on value proposition

• Companies offering self-insurance to their employees are struggling to control costs of outpatient MRI for employees & families.

At least 1 in 10

Americans need MRI scan each year

3,000Private MRI facilities

$1k-7k at hospital$500 at private

facility for scan of extremity

$5.5Bper year

Better MRI helps to save the self-insured employer approximately 50% of the total cost of scans (extremities to outpatient / more complex to hospital)

Risk Assessment• Market Risk

• Geographic distribution/scalability

• Rely on contracts with imaging centers to limit competitors

• Adoption by self-insured companies

• Reimbursement for non-MRI services

• Financial Risk• Low initial capital will allow for

lower profits in early stages• Technology Risk

• EMRs and payment models in flux

Courtesy of Zen Chu

Questions?