1. CVG Upcoming Events
Boardroom Series Second Thursday
7:30 AM – 9:00 AM 4:30 PM – 7:00 PM
April 12 May 9
M&A: Tax Considerations Financial Services
Glastonbury Stamford
April 17 June 13
Employment and Immigration Issues BioTech/Pharma
Hartford Hartford
May 1
July 11
Crowdfunding
Stamford Funding
New Haven
April 8
Investment by Strategics
New Haven

2. Welcome
Marketing at the Speed of Light
Paul E. Knag
Chair, Health Law Group
Murtha Cullina LLP, Attorneys at Law

3. Three Minute Pitches
Matthew Meier
Jolinda Lambert
David Engelhardt
Yann Beaullan

4. Electronic Health Records
Marketing at the Speed of Light
A Look at the Industry and Its Future
Panelists
Daniel J. Barchi
Moderator SVP and CIO
Yale New Haven Health System,
Yale School of Medicine
Dave Menard
Partner Ludwig “Lud” Johnson
Murtha Cullina LLP Vice President, Information Services
Attorneys at Law Middlesex Hospital
Edward "Ted" M. Kennedy, Jr.
Attorney, co-founder and President
Marwood Group

5. Electronic Health Records: A Look At
The Industry And Its Future
Ted Kennedy, Jr.
Crossroads Venture Group
April 11, 2013
New York • Washington, D.C. • London
© Marwood Group Advisory, LLC 2013 Tel. 212 • 532 • 3651
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6. General Themes for Presentation
 Healthcare Information Technology (HCIT) Industry Update
 Drivers and Barriers to EHR Adoption
– Regulatory and Market Dynamics
 Regulatory Issues on the Horizon
– Meaningful Use Stage 3 Criteria and Others
 HCIT Investment Opportunities
– Near and Long Term
 Select HCIT Transactions
– Understanding the Theories and Assumptions Behind the Investment
© Marwood Group Advisory, LLC 2013
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7. Marwood Group Introduction
 Founded in 2000, the Marwood Group is a leading healthcare-focused advisory and financial
services firm with offices in New York City, Washington, D.C. and London
– Professional staff of more than 100 employees including staff of former legislators, regulators and
healthcare operators
– Nationally recognized provider of research and advisory services to institutional investors and
corporations
 Provides in-depth healthcare focused research to mutual funds and other investment managers
 Completed over 600 advisory engagements for financial sponsors and healthcare companies
 Marwood provides advisory services across seven different practice areas:
Integrated Analysis Provides Holistic Market Perspective
Private Clinical &
Federal State Provider Market Financial
Payor Compliance
Analysis Analysis Research Analysis Analysis
Research Diligence
● Legislative ● Legislative ● Reimbursement ● Decision making ● Competitive ● Identify areas of ● Valuation
outlook process mapping landscape risk for fraud and
● Regulatory ● Regulatory ● Financial
● Purchasing analysis abuse
● Coverage outlook modeling and
● Medicare ● Medicaid dynamics ● Process ● Assess provider projections
reimbursement reimbursement ● Medical policy
● Product selection benchmarking performance
review ● Pro forma
● Medicare ● Medicaid coverage criteria through review of
● Market sizing analysis
coverage ● Clinical ● Product clinical regulatory surveys
● Workers
differentiation differentiation
● FDA regulation compensation
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8. Broad Healthcare Sector Expertise
Marwood has advised clients in over 85 sub-sectors across healthcare services and products
Rehabilitation Managed Care Health IT Pharmaceuticals/Biotechnology
● Inpatient Rehab Facilities ● Commercial Health Plans ● E-Claims Disability Processing ● Biologics
(IRFs) ● Medicare Advantage ● Medicaid Management ● Branded/Generic Drugs
● Outpatient Rehab ● Specialty Benefit Managers Information Systems ● Nuclear Pharmacy
● Physical Therapy ● Special Needs Plans ● Pharmacy Benefits Administration ● Pharmaceutical Compounding
● Occupational Therapy ● Disease Management ● Teleradiology ● Specialty Pharmacy
Post Acute Care Behavioral Health Care Hospitals Diagnostics
● Adult Day Care ● At-Risk Youth ● Acute Care Hospitals ● In Vitro Diagnostic Multivariate
● Home Health ● Care Management ● Long Term Care Hospitals (LTCHs) Index Assays (IVDMIA)
● Hospice ● Autism ● Specialty Surgical Hospitals ● Clinical Laboratory Improvement
● Long Term Care Pharmacy ● MR/DD ● Psychiatric Hospitals Amendments Labs (CLIA)
● Skilled Nursing Facilities (SNFs) ● Residential Treatment Centers ● Hospital Outsourced Services
● Assisted Living Facilities (ALFs)
Ancillary Care Durable Medical Equipment Other Medical Products
● Enteral Therapy ● Diabetic Testing Supplies ● Medical Supply Distribution ● Implantable Devices
● Infusion Therapy ● Power/Complex Wheelchairs ● Group Purchasing (GPOs) ● Single Use Devices (SUDs)
● Inhalation Therapy ● Diabetic Footwear ● Revenue Cycle Management ● Physician Preference Items
● Home Oxygen ● Workers’ Compensation ● Capital Equipment
● Clinical Staffing ● Other Surgical Instrumentation
Physician/Medical Laboratory/Radiology/Dialysis ● Transportation Services ● Medical/Surgical Supplies
● Hospitalists ● Contract Manufacturing
● Anesthesiology Groups ● Clinical Labs
● Pharmacy Benefit Managers ● Durable Medical Equipment
● Dental Groups ● Dialysis Clinics
● MSAs/HSAs ● Blood Monitoring
● Dermatology/Dermapathology ● Diagnostic Imaging (MRI, CT, PET)
● Program Integrity ● Contact Lenses
● Emergency Medicine ● Pathology Labs
● Health & Wellness ● Cosmetic Laser Surgery
● Ambulatory Surgery (ASCs) ● Radiation Therapy (IGRT, IMRT)
● Intraoperative Neuromonitoring ● Negative Pressure Wound Therapy
● Pain Management ● Sleep Centers/CPAP
● Prison healthcare ● Leg compression Pumps & Sleeves
● Wound Care ● Urine Drug Testing
● Patient Satisfaction ● Orthotics & Prosthetics
● Medical Education ● Precision Guidewire
Healthcare Services Healthcare Products
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9. State of HCIT Industry: Tremendous Growth
 Healthcare providers continue to adopt EHR technology, driving tremendous growth in the
HCIT industry
– VC HCIT investment has increased significantly, rising to more than $765 million in 2011, according to
the National Venture Capital Association
 Much of the growth has been driven by Government programs (CMS Meaningful Use) and
various market dynamics
– CMS reports that 80% of hospitals and 70% of professionals eligible for the Meaningful Use program
have registered
– As of February 2013, $12.69 billion in Meaningful Use incentive payments has been allocated
HCIT Industry Revenue & Market Capitalization Basic EHR Adoption Rate Among Providers
$7.82 $26.9 40%
$7.01
$6.23 $21.7 $22.4 35%
$5.46 $18.4
$17.0
$4.69 30% Office-
$3.99 Based
25% Provider
Hospital
20%
15%
10%
2008 2009 2010 2011
$ in B $ in B
Marwood selected publicly traded company HCIT index, Source: CapIQ Source: The Office of the National Coordinator for Health Information Technology
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10. Publicly Traded HCIT Revenue Growth & EBITA Multiples
Remain Strong With EBITDA Margins Above 25%
Revenue Cycle Management EBITDA Multiples Versus Growth
35%
AH
30%
ATHN
25%
2012 Revenue Growth
20% QSII
15%
EM CERN CPSI
10% MDAS MDRX
5%
0%
8.0x 10.0x 12.0x 14.0x 16.0x 18.0x 20.0x
2012 EBITDA Multiple
Stock % of Diluted Diluted Enterprise Value as a M ultiple of EBITDA Long-Term
Price 5 2 -W k Equity Ent. Revenue EBITDA M argin 2 0 1 2 E Grow th EPS
C om pany N am e Tick er 6 /2 4 /1 1 High Value Value 2011E 2012E 2011E 2012E 2011E Revenue EBITDA Grow th
Revenue Cycle Management
Accretive Health AH $24.54 80.1% $2,572 $2,416 2.87x 2.18x 29.4x 18.5x 9.8% 32.0% 58.8% 34.0%
athenahealth ATHN 41.01 81.1% 1,483 1,376 4.43x 3.49x 20.9x 15.6x 21.2% 26.8% 33.4% 35.0%
EMR / Diversified Provider HCIT
Quality Systems QSII 82.49 90.1% 2,420 2,302 5.68x 4.74x 16.8x 13.6x 33.8% 19.7% 23.1% 18.3%
Comp Prog. & Sys. CPSI 58.98 89.4% 648 631 3.63x 3.23x 15.4x 13.2x 23.6% 12.2% 16.3% 16.6%
Allscripts MDRX 18.75 81.1% 3,699 4,058 2.82x 2.55x 12.4x 10.4x 22.7% 10.4% 19.4% 19.9%
Cerner CERN 115.97 92.1% 10,260 9,517 4.58x 4.07x 14.0x 11.6x 32.6% 12.5% 20.6% 18.2%
Diversified
MedAssets MDAS 13.18 52.6% 815 1,738 2.91x 2.66x 9.3x 8.1x 31.2% 9.5% 15.2% 24.1%
Emdeon EM 13.40 79.6% 1,572 2,419 2.35x 2.12x 8.5x 7.8x 27.8% 10.7% 8.5% 14.3%
M ean 3 .6 6 x 3 .1 3 x 1 5 .8 x 1 2 .4 x 2 5 .3 % 1 6 .7 % 2 4 .4 % 2 2 .5 %
M edian 3 .2 7 x 2 .9 5 x 1 4 .7 x 1 2 .4 x 2 5 .7 % 1 2 .3 % 2 0 .0 % 1 9 .1 %
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11. Drivers For EHR Adoption: Regulatory & Market
Regulatory Drivers
 Medicare incentives include up to $44,000 per year per qualified physician over
5 years
Financial Incentives
 Medicare incentives for hospitals are based on discharges over a 4 year
timeframe
 Physician penalties are dependent on the total number of physicians that adopt
EHRs as of 2018
– Physicians who do not comply will be cut between 3-5% by 2019 through adjustments to
Financial Penalties the physician fee schedule (PFS)
 Medicare penalties for hospitals include an increasing market basket reduction
starting at -0.25% in 2015 going as high as -0.75% market basket reduction if
not compliant by 2017
Market Drivers
 As ACOs come into formation, participating providers will need to adopt
ACOs sophisticated HCIT platforms based off EHR data in order to drive savings and
enhanced care
 As large health systems continue to acquire smaller physician practices, such
Acquisitions practices are able to utilize the larger systems EHR platforms
– One of the reasons why physician practices agree to be acquired in the first place
 EHRs are a essential tool required to drive operational efficiency, including
Efficiency & Quality maximization of reimbursement, and clinical quality
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12. Barriers To EHR Adoption
Barriers To EHR Adoption
 While the Meaningful Use program provides financial incentives to providers, payments are
made in increments over a 5 year period, leaving much of the costs associated with
converting paper records the responsibility of the physician practice
Up front
– Companies such as EClinicalWorks, a EHR practice management company, hosts clients EHRs for a fee
Cost reducing up-front costs of computerizing provider EHRs
 Purchasing and licensing of software remains a big issue for smaller practices, as systems
typically cost can be $30,000 or more per doctor
EHR  Even after hospitals implement an EHR system, it often takes considerable time for both
“Learning clinicians and administrators to learn how to use the new software
Curve” – Physician productivity can drop by 30% as physicians learn how to use the new systems
 Lack of new technology acceptance, especially for older physicians and physicians
Physician practicing in rural areas
Acceptance – It is estimated that over 25% of the physician workforce is 60 or older
– National Bureau of Economic Research suggests that EHR adoption can be more costly in rural areas
 The ability for healthcare providers to exchange EHR information across different
Connectivity
healthcare systems and settings of care remains limited
 Currently EHR product offerings remain fragmented, including sub-sectors and health
Product system specific products, fueling connectivity issues
Offering – Specialized EHR products range from clinical laboratories to wound care-focused products
– In addition, large hospital systems continue to design system-specific specialized platforms
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13. What’s Hot In Healthcare IT: Regulatory Concerns and
Potential Opportunities For HCIT Providers
Achieve ICD-10 Readiness 45%
Achieve Stage 1 Meaningful-Use Criteria 29%
Adopt/Upgrade Financial & Clinical Systems For
26%
ACO or Medical Home Readiness
Developing Data Warehouses 24%
Electronic Health Records 24%
Data Privacy & Security 22%
Clinical Communications Infrastructure/Links
21%
to Physicians
Enabling Patient Access To Selected Data Via
21%
The Internet
Adopt/Extend Ambulatory Clinical IT Systems 16% Regulatory Issues
Near Term Opportunities
Consolidating All IT Functions Using Common
15% Long Term Opportunities
Applications
0% 10% 20% 30% 40% 50%
Ranked by % of respondents, based on 110 responses (Source: Modern Healthcare, March 4, 2013)
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14. Regulatory Issues On The Horizon: Meaningful Use
Criteria Stage 3 Definition
 “Meaningful Use” is a series of functional benchmarks which need to be met in order to be compliant
under the Health Information Technology for Economic and Clinical Health (HITECH) Act
Meaningful Use Criteria By Stage
Regulation
Stage Description Implementation Criteria Examples
Finalized
Basic HIT structure Recode demographics, vital signs, smoking status and
1 2010 2011
and foundation medication list
Focus on information Planned Generate patient lists for quality improvements, send
2 exchange quality of 2012 Implementation in reminders to patients on follow-up care, provide
care 2014 electronic clinical summary for each office visit
Promote further Proposed: Identify possible medication allergies, provide
improvements in Possibly decision support regarding medication requirements and
3 Possibly in 2016
quality, safety and mid-2014 diagnostic testing, electronically submit information to
efficiency other entities, such as HIEs or ACOs*
* Stage 3 criteria examples are based off proposed criteria from the Health IT Policy Committee which have not been finalized in regulation
 Key “Meaningful Use” questions for providers:
– What new criteria/requirements will Stage 3 mandate?
– Will the implementation of Stage 3 be delayed, similar to Stage 2 delays?
– Will Congress, specifically House Republican members, continue to support the program?
 Recent studies suggest that EHRs may not be as successful in reducing costs, such as reducing unnecessary diagnostic tests, as
previously predicted
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15. Other Regulatory Issues On The Horizon
Issue Description
 HHS continues to release additional privacy and security regulations, including
Privacy & limitations on the disclosure of personal health information (PHI)
Security  Increased privacy safeguards may inhibit innovative HCIT companies’ ability to
(HIPPA analyze EHR data
Compliance)
– On January 17, 2013, HHS issued additional rules adding numerous new privacy and
security requirements
 HHS continues to investigate EHRs’ role in enabling hospitals to “upcode” for
EHRs: A greater reimbursement
Tool For – Examples include “cloning” medical records and upcoding the intensity of care in order
Upcoding? to inflate provider reimbursement
 On September 24, 2012, HHS sent a letter to 4 major hospital associations voicing the agency's
concern such practices
 While the FDA has largely refrained from enforcing its regulatory authority over
FDA
medical software, regulators continue to investigate the agency’s jurisdiction
Regulation
over EHRs
 Under ACA, all devices registered by the FDA are subject to the device tax,
ACA Device which recently went into effect earlier this year
Tax – It remains unclear how many EHR companies are registered with the FDA
– Potential for device tax repeal, although would need $29B in offsets
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16. HCIT Opportunities
 Marwood has identified the following near and long term opportunities
though our own proprietary industry surveys focused on the HCIT space
Near term Opportunities Long Term Opportunities
Outsourcing day-to-day services: Advanced data analytics in order to drive
operational efficiency:
Registration/ Data Center Server
Data Analytics To
Eligibility Management Streamlined
Drive Outcomes
Reporting/Data
/Clinical Support
Analytics
Technology
Claims Coding, Disaster
Including ICD-10 Recovery/Back-up
Transition Processes
Advanced Cloud Integration
Technology Management
Collections/ Data Warehouse
Bill Scrubbing/ Development/
Quality Assurance Maintenance While there was little directly related to
HCIT in healthcare reform (ACA), advanced
Travel And Expense EHR System data analytics will play a critical role in
Reimbursement Implementation delivering higher quality and lower cost
care.
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17. Select HCIT Transactions: Different Approaches To
Enhance Communication Between Payors & Providers
 A wide range of strategies have been used to enable providers and payors across
the healthcare spectrum to communicate with each other, including:
– Healthcare Information Exchanges (HIEs)
– Advanced data analytics and care management platforms
– Merging of payor and provider Revenue Cycle Management (RCM) companies
Year Acquisition Strategy Size
($mm)
 At the time, many thought that HIEs were going to be an essential
part of the information flow solution, reflected in the acquisition
purchase price (10x revenue)
Aetna 2010 Medicity $500
 Even in 2013, the amount of information actually flowing through
HIEs remains limited, leaving some in the market to question the
value of HIEs
 InforMed combines both provider claims and EMR, essentially
Conifer
2012 InforMed creating their own self made version of a HIE -
(Tenet)
– The acquisition supports hospital trends in providing care management
Gateway  Places both provider (Gateway EDI) and payor (TriZetto) RCM
TriZetto 2011 -
EDI business lines under one corporate umbrella
 Emdeon is already entrenched in both provider and payor
Blackstone 2011 Emdeon $3,000
markets
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18. Other Acquisitions Of Note: Continued Focus On
Advanced Data Analytics And IT Infrastructure
 Recent M&A activity reflects a change in priorities of healthcare executives from
“day-to-day” IT to more advanced data analytics and IT infrastructures
Year Acquisition Strategy Size
($mm)
 Provides United’s healthcare services arm (Optum Health) with a
position in the growing health data mining market
United 2013 Humedica – The acquisition follows Optum’s partnership with Mayo Clinic, known as -
Optum Labs, a research center that will mine clinical and claims data in order
to enhance the quality of care
 Enables Athena to further penetrate the physician market, selling its
cloud-based network technology to Epocrates’s strong network of
physician customers
2013 Epocrates $293
– Epocrates is primarily know for its point of care mobile applications
Athena  Largest acquisition in Athena’s corporate history representing a 22%
Health premium over Epocrates closing stock price
 Expands Athena’s cloud-based services strategy
Healthcare
2012 Data  Expands population-based cost and quality data analysis and $5.8
Services reporting capabilities, essential as value-based payment models are
implemented
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19. Marwood Group Contact Information
For additional information, please contact:
New York, NY
Ian Adler 733 Third Avenue
11th Floor
Senior Managing Director of Healthcare New York, NY 10017
iadler@marwoodgroup.com
(212) 532-3651
Washington, DC
1025 Connecticut Ave, N.W.
6th Floor
Washington, D.C., 20036
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20. Healthcare IT Market
User Perspective
Lud Johnson, CIO
Middlesex Health System
April 11, 2013

21. Middlesex Health System
• Health System - most parts of the continuum
• About the 12 largest Hospital in CT
• Highly Automated
o Most Wired Hospital 2012
o HIMSS Analytics Automation top 10% of Country
• Meaningful Recipient
• ACO Participant
• Actively hooking up the continuum
• IT Operating cost $9.4 Million: 2012
• Capital cost $5 million: 2012

22. Healthcare IT Market
• Growing much faster than economy
• Fueled by:
o Healthcare Transformation
o Government Stimulus
• Complexity of need
• Technology rapid advancements
• Growing demand
• Need to achieve great quality
• Solve the National Economic Fiscal Crisis

23. Healthcare is in Transformation
Current State Future State
• Fee for service • Population mgmt.
• Volume matters • Appropriate vol.
• Care is local • Care is everywhere
• Third party payors • Patient involvement
• Quality unknown • Quality discernible
• Disconnected • Seamless
providers
•
information sharing
•
Independent providers • Consolidation
Independent Clinical
Device
• Smart Connected
Devices

24. Opportunities
1. Health management
2. Connecting the providers
3. Intelligent diagnostic support
4. Engaging the patient
5. Point of service devices
6. Work process improvement tools
7. Clinical Intelligence (Pop. mgmt)
8. Mobile computing
9. IT Services and Resources
10.Smart Clinical Devices

25. Healthcare and EMR Adoption
Daniel J. Barchi, SVP & CIO
Yale New Haven Health System
Yale School of Medicine

26. Yale-New Haven Health System

27. Yale School of Medicine

28. Current State of Healthcare
Technology

29. National EMR Use

30. • Institute of Medicine (1999)
• Preventable medical errors
• 44,000 deaths annually
• Motor vehicle accidents 43,468
• Breast cancer 42,297
• AIDS 16,516

32. Isordil –
Prevents angina
attacks
Plendil –
Calcium channel
blocker

33. National Electronic Medical
Records Initiative

34. January 8, 2009

35. National Electronic Medical
Records Initiative
Aspirational

36. May 25, 1961

37. April 12, 1961 May 5, 1961

41. January 8, 2009

42. 2008 EMR Use
Hospitals Physician Practices
1.5% had fully implemented 4% had fully functioning EMRs
comprehensive EMRs in all in their office
units

45. American Recovery and
Reinvestment Act
• $19 B Incentive Grant
• $44 K for physicians
• $8 M baseline for hospitals
• Meaningful use on an EMR
• Stage I
• Stage II
• Stage III

46. Federal Stimulus Program
Year of
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017
Adoption
2011 100% 75% 50% 25%
2012 100% 75% 50% 25%
2013 100% 75% 50% 25%
2014 75% 50% 25%
2015 50% 25%
75% of 75% of 75% of
percentage percentage annual
None increase increase increase
reduced by reduced by reduced by
33.3% 66.63% 100%

47. Stimulus Funding
Year 1 $2.88 M
Year 2 $2.16 M
Year 3 $1.44 M
Year 4 $0.72 M
Total $7.21 M
Bed Days 171,569 Discharges 32,281
Medicare Days 73,862 Charity Care 4.94%

50. Imaging
ED
Specialty Practice
Pharmacy
OR
Lab
Inpatient Care

51. Imaging
ED
Specialty Practice
Pharmacy
OR
Lab
Inpatient Care