Finance Monthly March 2020 Edition

As a result, the most ill employees and their families will jump at the chance to avoid losing thousands of dollars in out-of-pocket expenses that they currently spend – because they are Super Utilisers! They avoid losing money by enrolling in alternate group health plans, which could include a participant with a second job, parent’s coverage or spouse’s group medical plans. When employees and their families receive richer benefits by enrolling in 100% medical coverage, claims are eliminated, cash flow is generated and the balance sheet improves. VALUE PROPOSITION The SIHRA is accretive to earnings, which gives you tremendous ROIC. • Results are cash flow positive in thefirst 30days,withmeasurable, predictable and certain results produced. • Our compensation is 100% performance-based. • We earn a gain share of 30%. • Multiple billion-dollar stop-loss carriers offer premiumdiscounts. Maybe even more importantly, the PE firm reduces its risk. PE firms that utilise first-mover advantage with SIHRA will be able to see unrecognised risk and liberate trapped capital from overfunded defined-benefit health and welfare plans. For PE firm clients, suboptimal risk management and financial infidelity caused by taking on too much adverse selection can be improved and reformed. Healthcare can be a competitive advantage that can act as a handcuff for talent retention and a magnet for recruiting. The indirect benefits that Catilize Health delivers in part impacts everything that matters in a company, whether it’s human capital-directed or financial results- focused. How often is a PE firm reviewing a profit opportunity that is tested and proven with financial results that are irrefutable? Replicating the same performance and outcomes is only incumbent upon taking action. The blueprint is defined, and the full potential can be modelled. By harnessing the Catilize Health SIHRA technology, healthcare can be transformed from “a tapeworm on corporate America” as Warren Buffett stated, into a competitive advantage that is accretive to the bottom line and increases enterprise value. All that is left for PE firms to ask is why they haven’t applied the disciplined SIHRA strategy as a profit lever because the status quo is a perennial loser of profits and enterprise value. Before you purchase a company, picture being able to see around all corners. You could know in advance how much exploitable liability is currently trapped inside the target company’s healthcare budget. Lack says: “ I can’t imagine that wouldn’t be on everyone’s to-do list .” CATILIZE HEALTH SIHRA PROGRAM AT WORK Last year, a health insurance company implemented the Catilize HealthSIHRAprogramandoffered it to its workforce. After experiencing the program’s positive fiscal impact, it has now created a retail health plan that includes a multi-year rate guarantee when the SIHRA is designed and communicated per specifications. In addition, many of the largest publicly traded, privately held and PE-owned insurance agencies are contracted with Catilize Health. The largest privately-held insurance agency in the United States utilises the SIHRA program for its 11,000-plus employees, and its private-equity-backed owners are experiencing a higher ROIC, lower costs and higher enterprise value. Now, the question is whether a PE firm’s investment thesis can afford to be laissez-faire with passively “managed” healthcare at their portfolio companies knowing that there are tens and hundreds of millions of dollars of unrealised enterprise value trapped as stranded costs. Before you purchase a company, picture being able to see around all corners. You could know in advance how much exploitable liability is currently trapped inside the target company’s healthcare budget. Lack says: “ I can’t imagine that wouldn’t be on everyone’s to-do list. ” 15 www.finance-monthly.com FRONT COVER FEATURE - RECAPTURE LOST PROFITS