Primary Health Care Ltd Primary Health Care Ltd UBS Health Care - PowerPoint PPT Presentation

Primary Health Care Ltd Primary Health Care Ltd UBS Health Care Conference 27 October 2005

The Model The Model Why It Works Why It Works Financial Outcomes Financial Outcomes Future Opportunities Future Opportunities

What We Do What We Do � Community based health care services – Large scale multi-specialty medical centres (>80 medical professionals in established centres) – All out-of-hospital health care services – Including GPs, specialists, day surgery, pharmacy, pathology, radiology, occupational medicine, rehab co-ordination, para-medical (physio, chiro, dental, dietician, etc) – Understanding patient and GP needs and attempting to meet them

� Community based health services – Campbelltown Medical & Dental Centre – Opened 2000 – ~ 13,000 GP consults per month – Consultant Specialists/Para- medical – Diagnostic Imaging (CT, U/S, BMD, etc) – Pathology Collection

– Medical Centre and associated • Multiple businesses within each centre • Growth from a single centre in 1985 to current 27 (24 in 05) – NSW = 20 – S.A. = 4 – Vic = 2 – Qld = 1 • Contribute $57.9m in EBITDA to group in FY05 • Circa 3.5 million primary care consultations in current year

– Pathology • Circa 1.3m episodes in current year • Main lab in North Ryde with expansion of labs interstate • EBITDA of $13.4m contribution in 2005 – Health Technology • First Investment was in DDI Health; purchase of HCN in Jan 2005 • Leading supplier of IT solutions to medical practitioners • “Medical Director” used by majority of doctors in Australia • Contributed $2.5m EBITDA in 5 months of ownership.

Why the Model Works Why the Model Works � Key Benefit to Patients Primary manages and co-ordinates the delivery of services to: Deliver Key Benefit to Patients • Broad range of medical services available under one roof • Highly accessible, community based • Competitively priced • The standard of care in the centres is provided in peer environment � PRACTITIONER EXPERIENCE � , SKILLS � • Extended hours of operation, extended range of services

� Key Benefit to Payor/Govt. – Primary manages and co-ordinates the delivery of various services that results in delivery of Key Benefit to Govt. • Health delivery, cost of service and accessibility consistently ranks in top 2 voter issues. • Aging population and technological advances => continual fiscal pressure • S.A. statewide general rates of bulk-billing up 16 percentage points in twelve months to August 05. • Electorates of Blaxland and Chifley (Bankstown Mt Druitt etc) have bulkbilling rates in general community of 96.4% to 98.3% • Provides health services in an efficient, voter endorsed and cost effective manner

� Key GP Benefits Key GP Benefits � Financial • Capital payment of $300,000 - $350,000 • Increase In Gross Income, immediate and progressive with similar work hours seeing av. 4-6 patients per hour Average increase in gross income in first year of $70,000 to $100,000 above any Medicare fee increases Continued increase in gross income, above Medicare fee increases, in additional years 5th/6th year, attached example, av. $620,000 pa, ie 30% above similar GPs outside Professional Benefits Support, Nurse, Dieticians, Social workers, equipment and facilities No locums, no administration, no isolation Better mix of patients, better clinical skills, more interest Other Options Career paths Financial Services

� Scale & Management Scale & Management � Single Practice PRY Centre (100) Scale Benefit $ p.a . Rent 40,000 pa 10,000 pa/practitioner 3,000,000 Wages 50,000 pa 26,000 pa/practitioner 2,000,000 Supplies 6,500 pa 5,000 pa/practitioner 150,000 - - - . - - - . - - - . Management each business in centre � 8% of turnover 529,000

G.P. Income in 3 Primary Health Care Centres G.P.'s gross income Gross income % increase Est. gross income % increase Dr. No year PRIOR to joining for full year 2003 in in income for full year 2005 in in income Primary Centre Primary Centre Primary Centre 1 $212,000 $310,640 47% $408,338 31% 2 $140,000 $367,527 163% $386,178 5% 3 $260,000 $331,860 28% $337,094 2% 4 $100,000 $198,407 98% $315,890 59% 5 $272,906 $324,990 19% $436,632 34% 6 $195,000 $278,210 43% $389,098 40% 7 $225,000 $234,807 4% $618,338 163% 8 $240,000 $284,562 19% $386,178 36% 9 $100,000 $213,958 114% $251,000 17% 10 $483,000 $512,125 6% $640,566 25% 11 $175,000 $194,652 11% $264,218 36% 12 $260,000 $262,819 1% $544,160 107% 13 $204,956 $263,732 29% $426,020 62% Average $220,605 $290,638 32% [2.8%] $415,670 43% [17.5%] 14 $350,000 $497,286 42% $687,190 38% 15 $220,000 $367,258 67% $448,336 22% 16 $300,000 $480,977 60% $410,166 -15% 17 $300,000 $214,687 -28% $447,578 108% 18 $120,000 $268,838 124% $397,732 48% 19 $180,000 $417,429 132% $624,442 50% 20 $390,000 $433,962 11% $697,222 61% 21 $250,000 $320,962 28% $559,072 74% 22 $315,000 $386,777 23% $570,488 47% 23 $310,000 $377,178 22% $493,332 31% 24 $350,000 $472,651 35% $649,988 38% 25 $350,000 $438,851 25% $648,260 48% Average $286,250 $389,738 36% [2.8%]** $552,817 42% [17.5%] 26 $280,000 $450,459 61% $883,556 96% 27 $203,000 $692,152 241% $1,044,704 51% 28 $313,000 $524,112 67% $830,416 58% 29 $110,000 $289,962 164% $371,918 28% 30 $220,000 $469,921 114% $602,550 28% 31 $100,000 $376,174 276% $456,206 21% 32 $100,000 $199,347 99% $551,480 177% 33 $250,000 $331,678 33% $347,476 5% 34 $362,000 $390,250 8% $673,762 73% 35 $166,736 $173,926 4% $471,026 171% Average $210,474 $389,798 85% [19%] $623,309 60% [17.5%] Note: * Drs 1 - 13 are in a centre that was opened in early 2003 * Drs 14 - 25 are in a centre that was opened in late 2002 * Drs 26 - 35 are in a centre that was opened in 1998 * Doctors are listed in order of joining dates. Drs 33 - 35 joined the centre after 2001 * All contracted doctors who work in each centre and had started at least 30 days prior to 30/6/03 are included * Gross income for year prior to joining Primary Health Care included PIPs * Doctors generally work the same hours that they did prior to joining the centre * Est 2005 is based on 1st half actual c.2005 ** [%] Medicare GP fee increase in relevant interval

Financial Outcomes Financial Outcomes � Normalised NPAT PRY Normalised NPAT 6 Year – EBITDA growth rates generating 45 similar bottom line 40 growth rates ~ 35 35% p.a. 30 $ Million 25 – “Normalised” = 20 remove impact of 15 goodwill 10 amortisation 5 0 FY00 FY01 FY02 FY03 FY04 FY05

Opportunity Opportunity � Looking to grow the business to possess significant presence and strength 10 to 20 years from now – Focus day-to-day upon patient service, provider’s professional satisfaction and remuneration, and staff motivation – Three indicators that we use to monitor our performance : • Revenues per centre + New centre openings • Operating Margins • Capital Expenditure Management

� Broadening and Deepening of Skills – Further establishment of support infrastructure – Bring centres to cashflow positive within 3 to 4 months versus 6 to 18 months historically – Skill set is 30+ years in the making (others have not been able to replicate successfully despite many well capitalized and skilled attempts) – Further development of capable team and skills across the businesses and centres

� A scaleable skillset and model – Proven capability to expand into new and diverse geographic areas – Proven capability to simultaneously further improve existing centres – A model that offers significant economies of scale and scope – Each centre has proven operating leverage

� Growth Growth � More centres 31 by end of financial year 06 � 40 by end of calendar year 07 More doctors to established centres and new centres � More services into centres � More management of each business � Insufficient effective healthcare workforce + increase in demand � � Inevitable fee increases

Questions and Answers? Questions and Answers?