Telestroke ROI Case Study

Transcription

1 July 2016 REACH Health has developed this Telestroke Return-on-Investment (ROI) Case Study to provide a factbased and quantifiable framework for evaluating the ROI potential of a telestroke program. The case study is based on a telestroke program that continues to thrive and expand, both in terms of geography and services offered today. Copyright 2016 REACH Health, Inc. All rights Reserved

2 Table of Contents Introduction... 3 Summary of ROI Results... 3 Telestroke Network Attributes... 3 Scope of the ROI Analysis... 4 ROI Drivers... 4 Contributors... 5 Expenses... 5 Not Included... 5 ROI Results... 6 Telestroke Network Results... 6 Telestroke Hub Results... 7 Telestroke Spokes Results... 8 Case Study Assessment Methodologies... 9 General Revenue Methodologies:... 9 Hub Revenue Methodologies:... 9 Spoke Revenue Methodologies:... 9 General Expense Methodologies:... 9 Hub Expense Methodologies:... 9 Spoke Expense Methodologies:... 9 General ROI Methodology:... 9 Conclusion About REACH Health Appendix Detailed ROI Tables Copyright 2016 REACH Health, Inc. All rights Reserved Page 2

3 Introduction The creation of a successful telestroke program requires significant commitments in the form of human and financial resources, clinician buy-in, training for and adoption of new technology, performance monitoring and continuous improvement. Although primarily motivated by the opportunity to improve outcomes for a broader population of stroke patients, some hospital and health system executives remain understandably skeptical of the financial return on investment (ROI) that can be achieved with a telestroke program due to the up-front and on-going commitments required for success, as well as the limited reimbursement in place today for remote care. REACH Health has developed this to provide a fact-based and quantifiable framework for evaluating the ROI potential of a telestroke program. The case study is based on a telestroke program that continues to thrive and expand, both in terms of geography and services offered today. Summary of ROI Results The five-year analysis of the telestroke network revealed the following: ROI of $1.8M (52.0%) for the entire telestroke network ROI of $709K (35.7%) for the Hub hospital ROI of $1.1M (75.7%) combined total for the Spoke partner hospitals Telestroke Network Attributes The telestroke network studied is comprised of a Hub hospital (a Comprehensive Stroke Center) and ten Spoke hospital partners. Three of the Spoke hospitals have achieved a Primary Stroke Center (PSC) certification. Other Spoke hospital partners are working to achieve the new Acute Stroke Ready Hospital (ASRH) Certification from the Joint Commission. The telestroke network was initially established with one Spoke partner hospital. One additional Spoke partner hospital was added each calendar quarter during the first two years of the program. At the end of the second year, the network consisted of the Hub hospital and eight Spoke partner hospitals. At the end of the third year, the ninth Spoke partner hospital was added and at the end of the fourth year, the tenth Spoke partner hospital was added. Copyright 2016 REACH Health, Inc. All rights Reserved Page 3

4 All Spoke partner hospitals in the telestroke network are independent (none of the Spokes are affiliated with the Hub hospital healthcare system). Stroke diagnoses excluding stroke mimics and Transient Ischemic Attacks (TIA): o o 87% of the stroke patients treated by the telestroke network are diagnosed with Acute Ischemic Stroke (AIS). 13% of stroke patients treated by the telestroke network are diagnosed with Hemorrhagic Stroke. Hub transfer statistics: o Twenty-five percent (25%) of the stroke patients diagnosed at the Spoke hospitals are transferred to the Hub hospital for more advanced treatment such as endovascular clot retrieval. Spoke treatment statistics: o o o Prior to telestroke, the Spoke hospitals transferred between 50% - 85% of stroke patients. Now, 75% of the stroke patients diagnosed at the Spoke hospitals remain in the Spoke hospital for treatment. Before implementing telestroke, many of the Spoke hospitals were unable to treat with tpa or administered tpa at rates of less than 5%. Today, 26% of Spoke hospital patients diagnosed with AIS are treated with IV tpa. When a hospital is not stroke ready, EMS often bypasses the facility when transporting suspected stroke patients (sometimes required by law). With the implementation of a telestroke solution and communication to EMS, some of the bypassed volume can be regained. As the Spoke hospitals implemented their telestroke programs and educated local EMS, on average they regained 50% of the bypassed volume of suspected stroke patients. Scope of the ROI Analysis The ROI Case Study covers five (5) years beginning with the program inception and initial investments through the end of the fifth year of program operation. The study includes the ROI achieved by the Hub hospital, the ROI achieved by the Spoke hospitals in aggregate, and the ROI achieved by the overall telestroke network (Hub and all Spokes combined). ROI Drivers The ROI drivers included in the case study are: Copyright 2016 REACH Health, Inc. All rights Reserved Page 4

5 Hub incremental transfers revenue Contributors Hub incremental tpa administration revenue Spoke incremental tpa administration revenue Spoke incremental bypass regained revenue Hub incremental staffing expense Spoke incremental staffing expense Hub incremental transfer case expense Hub incremental tpa expense Spoke incremental tpa expense Expenses Spoke bypass expense Hub Length of Stay (LOS) expense reduction Spoke LOS expense reduction Telestroke system investment (license, implementation services, training and support) Operating overhead expenses (facilities, travel, meetings, etc.) Not Included The following items are not included in the scope of this ROI case study: Cost savings from reduced transportation expenses resulting from reduced patient transfer volume (when the transport service is operated by a Spoke Hospital) Some Hub hospitals charge fees to the Spoke hospitals for participation in the telestroke network. This is often in the form of a daily per-diem fee that varies based on the size or ED patient volume for the Spoke hospital. The telestroke network examined does not charge a participation fee to the spoke hospitals, therefore none is included in the case study. A participation fee would not impact the ROI for the overall network but would simply shift a portion of the ROI from the Spokes to the Hub. Many telestroke networks provide additional pay for the consulting neurologists often in the form of on-call pay. The telestroke network examined does not provide on-call pay as part of the telestroke program, therefore none is included in the case study. A positive impact in the form of reduced readmissions has been observed as a result of the telestroke program but the quantified figures have not been calculated. Copyright 2016 REACH Health, Inc. All rights Reserved Page 5

6 ROI Results Telestroke Network Results Analysis of the five-year ROI for the entire telestroke network revealed the following: A negative contribution margin in the first quarter due to one-time start-up investments, with positive contribution margins in each of the 19 subsequent quarters An overall negative ROI at the end of the first year due to one-time start-up investments, with positive ROIs in each of the four subsequent years The total cumulative ROI for the five years studied was just over $1.8 million or 52.0%. Revenue / Expense Summary Year 1 Year 2 Year 3 Year 4 Year 5 Revenue $ 475,795 $ 1,307,497 $ 1,435,373 $ 1,507,335 $ 1,529,804 Expenses $ (290,868) $ (677,889) $ (730,878) $ (765,623) $ (775,265) Investment $ (200,833) $ (257,167) $ (249,083) $ (261,417) $ (239,000) ROI Summary Year 1 Year 2 Year 3 Year 4 Year 5 Return on Investment $ (15,906) $ 372,442 $ 455,412 $ 480,295 $ 515,538 Accumulating Return on Investment $ (15,906) $ 356,535 $ 811,947 $ 1,292,242 $ 1,807,781 Copyright 2016 REACH Health, Inc. All rights Reserved Page 6

7 Telestroke Hub Results The analysis of the five-year ROI for the Hub hospital revealed the following: A negative contribution margin in the first three quarters due to one-time start-up investments, with positive contribution margins in each of the 17 subsequent quarters An overall negative ROI at the end of the first year due to one-time start-up investments, with positive ROIs in each of the four subsequent years The total cumulative ROI for the five years studied was just over $700,000 or 35.7%. Revenue / Expense Summary Year 1 Year 2 Year 3 Year 4 Year 5 Revenue $ 232,583 $ 706,882 $ 750,227 $ 796,978 $ 806,100 Expenses $ (208,247) $ (473,854) $ (498,127) $ (524,308) $ (529,416) Investment $ (90,000) $ (65,000) $ (65,000) $ (65,000) $ (65,000) ROI Summary Year 1 Year 2 Year 3 Year 4 Year 5 Return on Investment $ (65,663) $ 168,028 $ 187,100 $ 207,670 $ 211,684 Accumulating Return on Investment $ (65,663) $ 102,365 $ 289,465 $ 497,135 $ 708,819 Copyright 2016 REACH Health, Inc. All rights Reserved Page 7

8 Telestroke Spokes Results The analysis of the five-year ROI for the Spoke hospitals in aggregate revealed the following: A positive contribution margin for all 20 quarters of the program A positive ROI for all 20 quarters of the program The total cumulative ROI for the five years studied was just over $1 million or 75.7%. Revenue / Expense Summary Year 1 Year 2 Year 3 Year 4 Year 5 Revenue $ 243,212 $ 600,615 $ 685,146 $ 710,357 $ 723,704 Expenses $ (82,622) $ (204,035) $ (232,751) $ (241,315) $ (245,850) Investment $ (110,833) $ (192,167) $ (184,083) $ (196,417) $ (174,000) ROI Summary Year 1 Year 2 Year 3 Year 4 Year 5 Return on Investment $ 49,757 $ 204,413 $ 268,312 $ 272,625 $ 303,854 Accumulating Return on Investment $ 49,757 $ 254,170 $ 522,482 $ 795,107 $ 1,098,962 Copyright 2016 REACH Health, Inc. All rights Reserved Page 8

9 Case Study Assessment Methodologies The ROI assessment utilized the following industry-standard CMS metrics to model the financial results of the telestroke network: General Revenue Methodologies: The case study utilized the Medicare Acute IPPS (Acute Care Hospital Inpatient Prospective Payment System) rates and the Medicare OPPS (Outpatient Prospective Payment System) rates. Hub Revenue Methodologies: Net Patient Revenue (NPR) of Incremental Transfers in DRGs 20-27, utilizing Medicare Cost Report Ratio of Cost to Charge (RCC) with After Outlier Removed (AOR) Charges and Volumes per DRG per Medicare Cost Center. Spoke Revenue Methodologies: NPR of tpa Administration DRG shift from (without tpa and a lower reimbursement rate) to (with tpa and a higher reimbursement rate). This methodology utilizes Medicare Cost Report Ratio of Cost to Charge (RCC) with After Outlier Removed (AOR) Charges and Volumes per DRG per Medicare Cost Center. The additional cost of the tpa is offset by a reduction in costs of labor, services, tests and procedures, producing a positive contribution. Note: To receive the higher reimbursement (DRGs ) for tpa administration, the patient must be admitted and discharged from the originating site. NPR of Bypass Volume regained utilizing aggregate case rate of inpatient and outpatient with overall low acuity. General Expense Methodologies: The ROI (both Hob and Spoke portions) includes direct expenses for labor, supplies, tests, procedures and T&E. Hub Expense Methodologies: Hub expenses include incremental T&E, such as for a dedicated telestroke coordinator. Spoke Expense Methodologies: LOS savings based on transfer DRG algorithm to determine cost of last day of stay. Reduced average length of stay per DRG by an aggregate of 1.0 day. General ROI Methodology: ROI is calculated as incremental net patient revenue less direct expenses less telemedicine system investment and operating costs. Copyright 2016 REACH Health, Inc. All rights Reserved Page 9

10 Conclusion Some hospital and health system executives remain understandably skeptical of the financial ROI that can be achieved with a telestroke program due to the up-front and on-going commitments required for success. Even a well-run telestroke program is likely to exhibit an initial loss due to one-time, start-up investments. However, these initial losses can be quickly overcome to yield a sustainable, positive financial return and compelling ROI even in the absence of more comprehensive, full-parity reimbursement policies at either the state or federal levels. About REACH Health REACH Health is the leading enterprise telemedicine software company, providing solutions for multiple specialties and settings of care, all supported on one common software platform. Designed by hands-on physicians and expert software engineers, these solutions are recognized for fostering collaboration between bedside clinicians and remote specialists through shared clinical workflows. These solutions are also highly configurable, enabling physicians to tailor each consultation based on personal preferences and the information specific to their medical specialty. REACH Health pioneered one of the nation s first telestroke programs and continues to be the innovation leader, delivering groundbreaking innovations in telemedicine and telehealth. Today, many of the nation s most successful telemedicine programs rely on REACH to achieve measurable improvements in their clinical, operational and financial performance. For more information, visit reachhealth.com. Copyright 2016 REACH Health, Inc. All rights Reserved Page 10

11 Appendix Detailed ROI Tables Network ROI (Years 1-2) Year 1 Year 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ramp up Rate 10% 20% 30% 40% 50% 60% 70% 80% Spokes Sites Live VOLUME Incremental Quarterly Transfers to Tertiary Facility Hub Incremental tpa Administration Cases Spoke Incremental tpa Administration Cases Spoke Bypass Volume Regained REVENUE Hub Incremental Transfers Revenue 27,363 59,286 63,846 82, , , , ,544 Hub Incremental tpa Administration Revenue Spoke Incremental tpa Administration Revenue 34,272 44,064 63,648 58, , , , ,416 Spoke Incremental Bypass Regained Revenue 7,252 9,324 13,468 12,432 24,346 26,418 25,900 28,231 TOTAL REVENUE 68, , , , , , , ,191 EXPENSE Hub Incremental Staffing Expense ###### ###### ###### ###### ###### ###### ###### ###### Spoke Incremental Staffing Expense ###### ###### ###### ###### ###### ###### ###### ###### Hub Incremental Transfer Case Expense ###### ###### ###### ###### ###### ###### ###### ###### Hub Incremental tpa Expense Spoke Incremental tpa Expense ###### ###### ###### ###### ###### ###### ###### ###### Spoke Bypass Expense ###### ###### ###### ###### ###### ###### ###### ###### Hub LOS Expense Reduction Spoke LOS Expense Reduction ###### ###### ###### ###### ###### ###### ###### ###### TELEMEDICINE SYSTEM INVESTMENT Hub Software Installation and Training ###### Hub License ###### ###### ###### ###### ###### ###### ###### ###### Hub Hardware Spoke Installation and Training ###### ###### ###### ###### ###### ###### ###### ###### Spoke License ###### ###### ###### ###### ###### ###### ###### ###### Spoke Hardware ###### ###### ###### ###### ###### ###### ###### ###### TOTAL EXPENSES AND INVESTMENT (110,263) (112,253) (127,951) (141,235) (194,393) (227,769) (259,299) (253,594) CONTRIBUTION MARGIN (41,376) ,011 12,038 71,563 93, ,906 99,596 ACCUMULATING MARGIN (41,376) (40,955) (27,944) (15,906) 55, , , ,535 ROI % -37.5% 0.4% 10.2% 8.5% 36.8% 41.0% 41.6% 39.3% Copyright 2016 REACH Health, Inc. All rights Reserved Page 11

12 Network ROI (Years 3-4) Year 3 Year 4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ramp up Rate 80% 80% 80% 90% 90% 90% 90% 100% Spokes Sites Live VOLUME Incremental Quarterly Transfers to Tertiary Facility Hub Incremental tpa Administration Cases Spoke Incremental tpa Administration Cases Spoke Bypass Volume Regained REVENUE Hub Incremental Transfers Revenue 177, , , , , , , ,950 Hub Incremental tpa Administration Revenue Spoke Incremental tpa Administration Revenue 139, , , , , , , ,328 Spoke Incremental Bypass Regained Revenue 29,526 29,785 29,526 30,821 30,821 30,821 30,821 31,598 TOTAL REVENUE 346, , , , , , , ,876 EXPENSE Hub Incremental Staffing Expense ###### ###### ###### ###### ###### ###### ###### ###### Spoke Incremental Staffing Expense ###### ###### ###### ###### ###### ###### ###### ###### Hub Incremental Transfer Case Expense ###### ###### ###### ###### ###### ###### ###### ###### Hub Incremental tpa Expense Spoke Incremental tpa Expense ###### ###### ###### ###### ###### ###### ###### ###### Spoke Bypass Expense ###### ###### ###### ###### ###### ###### ###### ###### Hub LOS Expense Reduction ###### ###### ###### ###### Spoke LOS Expense Reduction ###### ###### ###### ###### ###### ###### ###### ###### TELEMEDICINE SYSTEM INVESTMENT Hub Software Installation and Training Hub License ###### ###### ###### ###### ###### ###### ###### ###### Hub Hardware Spoke Installation and Training ###### ###### Spoke License ###### ###### ###### ###### ###### ###### ###### ###### Spoke Hardware ###### ###### ###### ###### ###### ###### ###### ###### TOTAL EXPENSES AND INVESTMENT (233,452) (238,427) (239,895) (268,188) (253,188) (251,854) (249,300) (272,698) CONTRIBUTION MARGIN 113, , , , , , , ,178 ACCUMULATING MARGIN 470, , , , ,766 1,058,918 1,181,064 1,292,242 ROI % 48.6% 49.5% 48.4% 40.2% 48.5% 49.3% 49.0% 40.8% Copyright 2016 REACH Health, Inc. All rights Reserved Page 12

13 Network ROI (Year 5) Year 5 Q1 Q2 Q3 Q4 Ramp up Rate 100% 100% 100% 100% Spokes Sites Live VOLUME Incremental Quarterly Transfers to Tertiary Facility Hub Incremental tpa Administration Cases Spoke Incremental tpa Administration Cases Spoke Bypass Volume Regained REVENUE Hub Incremental Transfers Revenue 202, , , ,810 Hub Incremental tpa Administration Revenue Spoke Incremental tpa Administration Revenue 149, , , ,328 Spoke Incremental Bypass Regained Revenue 31,598 31,598 31,598 31,598 TOTAL REVENUE 383, , , ,736 EXPENSE Hub Incremental Staffing Expense ###### ###### ###### ###### Spoke Incremental Staffing Expense ###### ###### ###### ###### Hub Incremental Transfer Case Expense ###### ###### ###### ###### Hub Incremental tpa Expense Spoke Incremental tpa Expense ###### ###### ###### ###### Spoke Bypass Expense ###### ###### ###### ###### Hub LOS Expense Reduction ###### ###### ###### ###### Spoke LOS Expense Reduction ###### ###### ###### ###### TELEMEDICINE SYSTEM INVESTMENT Hub Software Installation and Training Hub License ###### ###### ###### ###### Hub Hardware Spoke Installation and Training Spoke License ###### ###### ###### ###### Spoke Hardware ###### ###### ###### ###### TOTAL EXPENSES AND INVESTMENT (256,364) (255,031) (251,144) (251,726) CONTRIBUTION MARGIN 127, , , ,010 ACCUMULATING MARGIN 1,419,754 1,548,599 1,676,771 1,807,781 ROI % 49.7% 50.5% 51.0% 52.0% Notes: Hub incremental tpa administration revenue and Hub incremental tpa expense = zero: The implementation of the telestroke network did not substantially change the tpa administration rates of the Hub hospital. Consequently, no additional cost or revenue was realized for tpa administration. Hub length of stay (LOS) expense reduction = zero; The average length of stay for AIS patients was not materially impacted by the implementation of the telestroke network. Hub Hardware Expense = zero; The telemedicine system implemented did not require incremental computing hardware investments at the Hub hospital. Copyright 2016 REACH Health, Inc. All rights Reserved Page 13

14 Hub ROI (Years 1-2) Year 1 Year 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ramp up Rate 10% 20% 30% 40% 50% 60% 70% 80% Spokes Sites Live VOLUME Incremental Quarterly Transfers to Tertiary Facility Hub Incremental tpa Administration Cases REVENUE Hub Incremental Transfers Revenue 27,363 59,286 63,846 82, , , , ,544 Hub Incremental tpa Administration Revenue TOTAL REVENUE 27,363 59,286 63,846 82, , , , ,544 EXPENSE Hub Incremental Staffing Expense ###### ###### ###### ###### ###### ###### ###### ###### Hub Incremental Transfer Case Expense ###### ###### ###### ###### ###### ###### ###### ###### Hub Incremental tpa Expense Hub LOS Expense Reduction TELEMEDICINE SYSTEM INVESTMENT Hub Software Installation and Training ###### Hub License ###### ###### ###### ###### ###### ###### ###### ###### Hub Hardware TOTAL EXPENSES AND INVESTMENT (76,073) (68,950) (71,504) (81,719) (106,620) (130,883) (158,337) (143,015) CONTRIBUTION MARGIN (48,710) (9,664) (7,658) ,934 38,997 60,568 48,529 ACCUMULATING MARGIN (48,710) (58,375) (66,032) (65,663) (45,730) (6,733) 53, ,365 ROI % -64.0% -14.0% -10.7% 0.5% 18.7% 29.8% 38.3% 33.9% Copyright 2016 REACH Health, Inc. All rights Reserved Page 14

15 Hub ROI (Years 3-4) Year 3 Year 4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ramp up Rate 80% 80% 80% 90% 90% 90% 90% 100% Spokes Sites Live VOLUME Incremental Quarterly Transfers to Tertiary Facility Hub Incremental tpa Administration Cases REVENUE Hub Incremental Transfers Revenue 177, , , , , , , ,950 Hub Incremental tpa Administration Revenue TOTAL REVENUE 177, , , , , , , ,950 EXPENSE Hub Incremental Staffing Expense ###### ###### ###### ###### ###### ###### ###### ###### Hub Incremental Transfer Case Expense ###### ###### ###### ###### ###### ###### ###### ###### Hub Incremental tpa Expense Hub LOS Expense Reduction TELEMEDICINE SYSTEM INVESTMENT Hub Software Installation and Training Hub License ###### ###### ###### ###### ###### ###### ###### ###### Hub Hardware TOTAL EXPENSES AND INVESTMENT (135,353) (139,824) (140,463) (147,487) (147,487) (147,487) (144,933) (149,402) CONTRIBUTION MARGIN 42,510 46,023 46,525 52,043 52,043 52,043 50,036 53,548 ACCUMULATING MARGIN 144, , , , , , , ,135 ROI % 31.4% 32.9% 33.1% 35.3% 35.3% 35.3% 34.5% 35.8% Copyright 2016 REACH Health, Inc. All rights Reserved Page 15

16 Hub ROI (Year 5) Year 5 Q1 Q2 Q3 Q4 Ramp up Rate 100% 100% 100% 100% Spokes Sites Live VOLUME Incremental Quarterly Transfers to Tertiary Facility Hub Incremental tpa Administration Cases REVENUE Hub Incremental Transfers Revenue 202, , , ,810 Hub Incremental tpa Administration Revenue TOTAL REVENUE 202, , , ,810 EXPENSE Hub Incremental Staffing Expense ###### ###### ###### ###### Hub Incremental Transfer Case Expense ###### ###### ###### ###### Hub Incremental tpa Expense Hub LOS Expense Reduction TELEMEDICINE SYSTEM INVESTMENT Hub Software Installation and Training Hub License ###### ###### ###### ###### Hub Hardware TOTAL EXPENSES AND INVESTMENT (149,402) (149,402) (146,848) (148,764) CONTRIBUTION MARGIN 53,548 53,548 51,541 53,046 ACCUMULATING MARGIN 550, , , ,819 ROI % 35.8% 35.8% 35.1% 35.7% Notes: Hub incremental tpa administration revenue and Hub incremental tpa expense = zero: The implementation of the Telestroke network did not substantially change the tpa administration rates of the Hub hospital. Consequently, no additional cost or revenue was realized for tpa administration. Hub length of stay (LOS) expense reduction = zero; The average length of stay for AIS patients was not materially impacted by the implementation of the telestroke network. Hub Hardware Expense = zero; The telemedicine system implemented did not require incremental computing hardware investments at the Hub hospital. Copyright 2016 REACH Health, Inc. All rights Reserved Page 16

17 Spokes ROI (Years 1-2) Year 1 Year 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ramp up Rate 10% 20% 30% 40% 50% 60% 70% 80% Spokes Sites Live VOLUME Spoke Incremental tpa Administration Cases Spoke Bypass Volume Regained REVENUE Spoke Incremental tpa Administration Revenue 34,272 44,064 63,648 58, , , , ,416 Spoke Incremental Bypass Regained Revenue 7,252 9,324 13,468 12,432 24,346 26,418 25,900 28,231 TOTAL REVENUE 41,524 53,388 77,116 71, , , , ,647 EXPENSE Spoke Incremental Staffing Expense ###### ###### ###### ###### ###### ###### ###### ###### Spoke Incremental tpa Expense ###### ###### ###### ###### ###### ###### ###### ###### Spoke Bypass Expense ###### ###### ###### ###### ###### ###### ###### ###### Spoke LOS Expense Reduction ###### ###### ###### ###### ###### ###### ###### ###### TELEMEDICINE SYSTEM INVESTMENT Spoke Installation ###### ###### ###### ###### ###### ###### ###### ###### Spoke License ###### ###### ###### ###### ###### ###### ###### ###### Spoke Hardware ###### ###### ###### ###### ###### ###### ###### ###### TOTAL EXPENSES AND INVESTMENT (34,189) (43,303) (56,447) (59,515) (87,773) (96,887) (100,962) (110,580) CONTRIBUTION MARGIN 7,335 10,085 20,669 11,669 51,629 54,379 47,338 51,067 ACCUMULATING MARGIN 7,335 17,419 38,088 49, , , , ,170 ROI % 21.5% 23.3% 36.6% 19.6% 58.8% 56.1% 46.9% 46.2% Copyright 2016 REACH Health, Inc. All rights Reserved Page 17

18 Spokes ROI (Years 3-4) Year 3 Year 4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ramp up Rate 80% 80% 80% 90% 90% 90% 90% 100% Spokes Sites Live VOLUME Spoke Incremental tpa Administration Cases Spoke Bypass Volume Regained REVENUE Spoke Incremental tpa Administration Revenue 139, , , , , , , ,328 Spoke Incremental Bypass Regained Revenue 29,526 29,785 29,526 30,821 30,821 30,821 30,821 31,598 TOTAL REVENUE 169, , , , , , , ,926 EXPENSE Spoke Incremental Staffing Expense ###### ###### ###### ###### ###### ###### ###### ###### Spoke Incremental tpa Expense ###### ###### ###### ###### ###### ###### ###### ###### Spoke Bypass Expense ###### ###### ###### ###### ###### ###### ###### ###### Spoke LOS Expense Reduction ###### ###### ###### ###### ###### ###### ###### ###### TELEMEDICINE SYSTEM INVESTMENT Spoke Installation ###### ###### ###### ###### ###### ###### ###### ###### Spoke License ###### ###### ###### ###### ###### ###### ###### ###### Spoke Hardware ###### ###### ###### ###### ###### ###### ###### ###### TOTAL EXPENSES AND INVESTMENT (98,099) (98,603) (99,432) (120,701) (105,701) (104,368) (104,368) (123,296) CONTRIBUTION MARGIN 70,963 71,942 69,630 55,776 70,776 72,109 72,109 57,630 ACCUMULATING MARGIN 325, , , , , , , ,107 ROI % 72.3% 73.0% 70.0% 46.2% 67.0% 69.1% 69.1% 46.7% Copyright 2016 REACH Health, Inc. All rights Reserved Page 18

19 Spokes ROI (Year 5) Year 5 Q1 Q2 Q3 Q4 Ramp up Rate 100% 100% 100% 100% Spokes Sites Live VOLUME Spoke Incremental tpa Administration Cases Spoke Bypass Volume Regained REVENUE Spoke Incremental tpa Administration Revenue 149, , , ,328 Spoke Incremental Bypass Regained Revenue 31,598 31,598 31,598 31,598 TOTAL REVENUE 180, , , ,926 EXPENSE Spoke Incremental Staffing Expense ###### ###### ###### ###### Spoke Incremental tpa Expense ###### ###### ###### ###### Spoke Bypass Expense ###### ###### ###### ###### Spoke LOS Expense Reduction ###### ###### ###### ###### TELEMEDICINE SYSTEM INVESTMENT Spoke Installation ###### ###### ###### ###### Spoke License ###### ###### ###### ###### Spoke Hardware ###### ###### ###### ###### TOTAL EXPENSES AND INVESTMENT (106,962) (105,629) (104,296) (102,962) CONTRIBUTION MARGIN 73,964 75,297 76,630 77,964 ACCUMULATING MARGIN 869, ,368 1,020,998 1,098,962 ROI % 69.1% 71.3% 73.5% 75.7% Copyright 2016 REACH Health, Inc. All rights Reserved Page 19