Filed by ProxyMed, Inc.
Pursuant to Rule 425 Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: PlanVista Corporation
Commission File No: 001-13772
On December 8, 2003, ProxyMed, Inc. and PlanVista Corporation conducted a
conference call to discuss the proposed merger between ProxyMed and PlanVista.
The audio replay of the conference call has been made available to the public on
ProxyMed's web site. The text of transcript of the conference call and the
materials made available to investors on ProxyMed's web site follow.
ProxyMed/PlanVista Conference Call
December 8, 2003 1:00 p.m. ET
CORPORATE PARTICIPANTS
Michael Hoover
ProxyMed - CEO
Phil Dingle
PlanVista - CEO
CONFERENCE CALL PARTICIPANTS
David Francis
Jefferies & Co.
Kris Hundley
St. Petersburg Times
John Szabo
CIBC World Markets
PRESENTATION
Operator
Good afternoon. I'd like to welcome everyone to the ProxyMed conference call to
discuss the announced merger with the PlanVista Corporation. At this time I
would like to inform you all that all participants are in a listen only mode. At
the request of the company, we will open the conference up for questions and
answers after the presentation. We would appreciate it if you would limit your
questions to one, and then get back in the queue if you have a follow up
question or another question to ask. Today's conference is being web cast, and
replays of this call will be available on the Internet at www.proxymed.com,
shortly after this call. Leading today's call, from ProxyMed, are Mike Hoover,
Chairman and Chief Executive Officer, and joining him from PlanVista, is Phil
Dingle, Chairman and Chief Executive Officer.
Before the discussion begins, please be reminded that statements from ProxyMed
and PlanVista during this call, including answers given in response to
questions, are intended to fall within the safe harbor provisions of the
securities laws, and that actual results may differ materially from those in
these statements. Such statements are subject to a variety of risks, many of
which are discussed in both companies' most recent Form 10K and other SEC
filings, which the company strongly urges you to read. At this time, I will turn
the presentation over to Mr. Mike Hoover. Sir, you may begin.
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Michael Hoover - ProxyMed - CEO
Thank you, Judy. Good afternoon, everyone, this is Mike Hoover, Chairman and CEO
of ProxyMed. Joining me from PlanVista's Tampa headquarters is my new colleague,
Phil Dingle, Chairman and CEO of PlanVista Corporation.
This morning before the market opened, we announced some very exciting news to
our prospective customers, our associates, and our shareholders. In particular,
we announced that ProxyMed and PlanVista have signed a definitive merger
agreement, by which ProxyMed will be acquiring all of PlanVista in a stock for
stock transaction, that will create the healthcare market's first transaction
processing company with integrated medical cost containment capabilities. This
is a highly strategic transaction for both companies in that it greatly enhances
our separate and combined growth prospects, especially with the larger
healthcare payers, including the MedUnite founders.
Together we have a comprehensive and innovative end-to-end claims processing
solution that encompasses inbound claims transactions, claims repricing and
claims payment. So what does all that mean? It means that we
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can increase our value to our payers by providing them two areas of
administrative savings now instead of just one. First, through ProxyMed
converting paper claims to electronic ones, and second, through PlanVista
repricing out of network claims. Any time you can save your customers money you
will generally be very well received.
In addition, the merger combines two technology leaders whose management teams
have been working closely together for the better part of this year, in a highly
symbiotic manner. It is also an opportunistic financial transaction for both
companies, because of the combined revenues and earnings it will create on a
going forward basis before you even start including the growth opportunities
associated with our current joint marketing program. We described the terms and
transaction structure in our joint press release this morning, so I will not
duplicate all of the details on this call.
Let me just recap the highlights. ProxyMed will issue 3.6 million shares of our
stock for all the capital stock of PlanVista. In addition, we will assume up to
$26.5 million in debt at closing and we will raise $24.1 million to fund the
retirement of another $18 million of PlanVista's bank debt and other business
obligations. PlanVista's common shareholders will receive approximately .0869
shares of ProxyMed common stock for each share of PlanVista common stock they
own today, making the value for them approximately $1.39 at ProxyMed's share
price as of the close of business on Friday.
Closing of the merger is subject to other customary terms and conditions,
including shareholder approval by both companies, and we expect it to close late
in the first quarter of 2004. To help you better understand our rationale for
this merger, let me briefly review ProxyMed's strategic pursuits during the past
year, and how we have been building out our payer strategy and capabilities. As
you know, we acquired MedUnite last December, and through that acquisition we
strengthened our relationship with seven of the nation's largest payers. Our
focus throughout 2003 has been the integration of MedUnite and successfully
meeting our commitment to bring MedUnite to EBITDA profitability in the third
quarter.
Once we were confident about our progress on the integration, our management
team started to focus on identifying and exploring other strategic products and
services that might benefit our expanded customer base of the largest healthcare
payers. The bottom line is that we wanted to create more value to our customers
and more operating profit per claim to us with respect to each and every claim
that moves through our clearinghouse. Two capabilities on which we chose to
focus and pursue were, number one, the electronic payment of healthcare
transactions, and number two, saving our payer customers money on their medical
claims cost.
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In June we commenced our first proxy partnership with First Data Corporation,
and announced our first joint marketing product offering, First Proxy ERA/EFT.
In the claims processing cycle the very last step is to give back to the
original healthcare provider an explanation of payment, called a remittance
advice, and an actual payment, which today is almost always a paper check. Under
HIPAA, for the first time, payers are required to offer an electronic remittance
advice, or an ERA, and in conjunction with that, most payers also want to move
to an electronic payment through electronic funds transfer, or an EFT.
Many payer systems are not equipped to manage these new electronic solutions
efficiently, and at scale. Therefore, First Proxy is a complete outsourcing
solution for payers to handle ERA and EFT, which unlocks significant
administrative savings by eliminating a huge amount of paper, and helps our
payer customers comply with HIPAA. We are pleased with the early results of our
joint sales and marketing efforts with First Data, and with the ability to offer
our payer partners such a valuable solution to one of their most pressing
problems.
Another pressing problem for payers is that not all of their patients go to see
physicians who are in that payer's provider network. As a result, payers receive
claims on which they have to pay retail, or the full amount of the bill charged.
Let's walk through an example. A patient sees an out of network physician, the
physician bills the payer $100 for that visit. Since the payer does not have a
contract with that physician, the payer is obligated to pay the full retail cost
of $100. When out of network charges are often up to 20%-30% of total claims
this can present a significant financial burden to payers. That's where we step
in.
PlanVista has contracts with over 400,000 providers to reprice claims on a
discounted basis. The payer sends us the claim and we see if it's a match for
our network. Over 50% of the time we can reprice that claim, say to $80. That's
a $20 or 20% savings to the payer. We get paid a percentage of those savings,
perhaps $3-$4. So everyone wins. The payer gets a discount of $20, less our fee,
we make $3-$4, the provider is paid faster in exchange for giving the discount,
and of course the normal transaction fee, we get more than just our normal
transaction fee, which is normally a quarter.
It's such a compelling business model, why isn't this more prevalent, you may
ask. Well historically the process to try to reprice these out of network claims
has been very maddening, and as a result, payers typically were only able to
work on hospital claims and the most expensive physician claims. They did not
have an electronic and efficient way to try to realize the savings on all their
out of network claims, no matter the amount of the claim. As we studied this
issue, we quickly realized that in order to help our payer customers save money
on all their network claims, from the smallest physician claim to the
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largest hospital claim, we needed a strong technology solution, and one that we
could not easily build.
We therefore started searching for a possible partner in this area, which has
often been called medical cost containment. We evaluated several leading
companies in the space, which is highly fragmented. The components of our
evaluation were, number one, the breadth, scope, quality and diversity of their
cost containment product and services; and number two, the technological
capabilities of the company. Finally, the quality of their management team and
associates delivering those medical cost savings. After a thorough search, we
found all three attributes in PlanVista Solutions, which has built one of the
nation's largest provider based networks for physicians and hospitals in the
United States; 400,000 physicians, 55,000 ancillary providers, and 4,000
hospitals. They also built a leading edge proprietary technology, which we
believe makes it one of the most efficient and effective claim repricers in the
industry, and leadership team with over 80 years experience in healthcare and
claims transaction business.
As you recall, we signed a joint marketing agreement with PlanVista in June, and
just this morning we announced our first customer, Great West Healthcare. Under
this deal, Great West will be able to use PlanVista's integrated claims
repricing solution payer service to outsource facility and physician claims
repricing for their entire proprietary CPO. The Great West Healthcare network
will benefit from the establishment of electronic links to select business
partners through which repriced claims will be forwarded for adjudication. We
are pleased at this exciting opportunity to assist Great West Healthcare, an
existing ProxyMed client, and to expand their product and service offerings to
their customers by leveraging our combined unique ability, network data
management, claims repricing, and electronic connectivity.
Through PlanVista we can now electronically reprice claims on a seamless basis
for our payer customers by simply directing such claims to PlanVista and
returning them to the payer on completion of the process. Based upon the
feedback we have received from our payer customers to date, as well as our
ongoing discussions with several current prospects, we've gained a high degree
of confidence that we can grow the program successfully through our continued
sales and marketing effort. Given this positive market feedback, we felt that
the best course of action for us and our customers and shareholders, was to
merge the company together now, to create a clear and best of breed capability
with the most comprehensive and innovative end-to-end solution for processing
claims and payment transactions both pre and post adjudication. In PlanVista we
are acquiring more than just its leading edge products, technology and core
business capabilities. We are buying a business with annual recurring revenues
and EBITDA of over $30 million and $10 million respectively, and a highly
talented management team.
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In general, we believe in conducting business on a win/win basis, and this
transaction is no exception. That is, we believe it is a good transaction for
PlanVista, its shareholders, its customers, its associates, as well as ours. Let
me turn it over to Phil to lay out some of the underlying rationale for the
merger, and how his board viewed the prospect of coming together to create
something we believe will be dynamite. Phil.
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Phil Dingle - PlanVista - CEO
Thank you, Mike, and good afternoon, everyone. We too are excited about the
pending transaction and believe it is one that will truly benefit all of our
constituents. We when combine ProxyMed's presence, as the nation's second
largest claims clearinghouse, with our value added claims repricing and cost
containment capabilities, we will clearly have created an appealing alternative
for healthcare payers in the United States. In addition to cross selling our
products to our existing customer bases, we will be well positioned to exploit
our breadth of services to new customers, which is exciting.
As you know, PlanVista is already the technology leader in our space, and has
achieved a greater proportion of electronic transmission than our competition,
which has helped us become the low cost producer, and also helped us compete in
the face of significant balance sheet challenges. When I trace how our sales,
operating and technology teams have been interfacing with ProxyMed's respective
teams during the past 9 months, and especially since early summer, I have even
more confidence in our ability to effectively integrate our two companies in a
seamless manner, causing minimal disruption to our operating plans. There are
tremendous opportunities for growth with our combined enterprises.
It's been a long road for PlanVista and it's shareholders. On which, on the one
hand has resulted in the creation of a lean and robust healthcare company with
some highly specialized capabilities, but on the other also a highly leveraged
balance sheet which has held back our growth. When I consider the alternatives
and opportunities we face for the future, I am absolutely confident this is the
best transaction for us and for our shareholders. I view it in three ways, from
a business perspective, from a financial perspective, and from a shareholder
perspective, all of which, of course, are intertwined.
From a business perspective the transaction creates appealing growth
opportunities by allowing us to effectively and permanently market our products
and services to ProxyMed's 450 large payer customers. You know, in spite of the
way in which we deliver significant value to our payer customers in the form of
either claim cost reduction or administrative savings, there's no doubt that
we've been competitively disadvantaged by our financial structure
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during the past 24 to 36 months. As a result, we haven't grown. Since there is
virtually no overlap between ProxyMed and PlanVista's respective current
customer basis, this is a significant growth opportunity for PlanVista.
Let me tell you how, and I'll use some metrics during the first six months of
2003 by way of example. We received roughly 1.8 million claims during Q's 1 and
2. We were able to effectively reprice just over 1 million of those claims,
meaning we captured them in our network. On roughly $16 million of revenue
during those quarters, that's approximately $15 of revenue per repriced claim.
When you deduct our fully loaded operating expenses, our EBITDA per repriced
claim is approximately $5. Again, that's on annual repriced claims volume for
PlanVista of approximately 2 million claims.
Now ProxyMed processes over 200 million claims per year. We want to deliver our
value proposition with respect to those claims, and that's what makes this a
huge opportunity. The merger also gives us access to ProxyMed's greater
financial, technological and human resources, which will help us develop and
promote our own services more broadly and effectively. From a financial
perspective, the merger resolves our refinancing pressures. As you know,
approximately $40 million in debt is due in May of 2004, just six short months
away. We have been unsuccessful in refinancing the debt during the past few
years, and given some of the alternatives we have evaluated this year, would
have faced very significant dilution to our common shareholders without the
corresponding opportunities for creating shareholder value.
This transaction removes a significant impediment to our future growth. Most
importantly from a shareholder perspective this transaction will give our common
shareholders much improved liquidity with respect to their shares. For over a
year now, as you know, we have traded on an over the counter bulletin board,
which has resulted in low trading profiles for our stock. By combining with a
larger NASDAQ company like ProxyMed, our shareholders will have a real security,
not to mention a company with combined earnings power that will attract more
prominent institutional investors, and hopefully more interest for coverage.
We are excited about this merger, and look forward to providing more information
to our shareholders and others, as we are able during the next few months. Back
to you, Mike.
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Michael Hoover - ProxyMed - CEO
Thanks, Phil. We want everyone to know that ProxyMed and PlanVista will be
filing a very detailed joint proxy and registration statement on Form S4 this
week, in conjunction with our merger. Once the registration statement is
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cleared through the Securities and Exchange Commission, ProxyMed and PlanVista
will be mailing proxies to our respective shareholders so that they can vote on
the merger. We expect the merger to be completed on or before the need of first
quarter 2004.
ProxyMed also announced today another important step in building our company for
the future, which was the appointment of Greg Eisenhauer as the combined
companies' new Chief Financial Officer. Greg has started today, and is actually
listening in on the call. We're glad to have him. I won't repeat Greg's
impressive experience from the press release, but we are extremely pleased to
have an executive of Greg Eisenhauer's caliber and breadth of experience join us
at this critical growth juncture. His proven track record of success as a
strong, disciplined financial leader, with the skills to deliver results within
budgeted guidelines while representing us effectively in the investment
community will prove invaluable to ProxyMed.
Some people, through calls this morning, have asked me about the timing of
hiring Greg, and if this is somehow a sign of any issues or problems at
ProxyMed. I want to state very clearly, absolutely not. ProxyMed has always
prided itself on running a very clean house financially, subscribing toward
conservative accounting combined with maximum visibility and integrity. We
simply believe in being proactive. With our growth last year, and now with the
acquisition of PlanVista, we just decided that it was time to add strength to
our management team so that we may be sure that we continue to execute at the
highest levels. With Greg coming on board, Judd Schmid, our current Chief
Financial Officer, [inaudible] with the financial systems integration of
MedUnite, PlanVista, as well as ProxyMed's internal controls and Sarbanes-Oxley
compliance programs. I'd like to thank Judd for his many contributions to
ProxyMed to date. He has been, and will continue to be a key member of our
senior management team, and we look forward to his ongoing contributions to
ProxyMed.
As you can tell, things have been a little hectic around here. We were
previously scheduled to provide 2004 guidance later this month. However, as a
result of the pending merger with PlanVista, ProxyMed will be postponing
providing our 2004 guidance until January. At that time we will provide guidance
for ProxyMed on a stand-alone basis, as well as on an integrated basis with
PlanVista, post merger. As a result, PlanVista will not be providing independent
2004 guidance.
In summary, we believe that the combination of ProxyMed and PlanVista creates a
compelling solution for our customers, and a strong investment opportunity for
both groups of shareholders. First, we will become a much larger company with a
higher public profile. Together we reported $26.1 million in revenue and $4.5
million in EBITDA for the quarter ended September 30. Do some simple math, add
it together and annualize, this is $104 million
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in revenue and $18 million in EBITDA. This, of course, does not include the more
than $1 million in operating synergies. In addition, it does not include any
growth from our third quarter results, although we are clearly positive about
the growth prospects in 2004 from our combined offering.
For PlanVista's shareholders and customers, the transaction removes a
significant and pressing issue of the debt-refinancing overhang. We truly
believe that this transaction is a win/win for ProxyMed and PlanVista's
customers, associates and shareholders. That completes our prepared comments
this afternoon. Operator, we would like to open the lines up for any questions.
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Operator
Thank you, sir. At this time we are ready to begin the question and answer
session. If you would like to ask a question, please press star, one. You will
be announced prior to asking your question. To withdraw your question, please
press star, two. Once again, to ask a question, please press star, one. One
moment, sir. Our first question comes from Mr. David Francis with Jefferies and
Company.
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David Francis - Jefferies & Company
Good morning, Mike, congratulations. A couple of questions. First, can you, just
from a dollars and cents perspective, back of the envelope calculations looking
at some PlanVista documents, it looks as though they were generating about $20
per repriced claim in 2002, and I think the numbers you guys used on this call
were $15. Can you, A, tell us what the pricing dynamics in the business are; and
B, understanding that PlanVista has been held back by their balance sheet
issues, what 30,000 foot growth plans and objectives you guys have as you look
into 2004?
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Michael Hoover - ProxyMed - CEO
Phil, maybe you want to comment on the performance of 2002 versus 2003 on the
profitability per claim, and then I'll comment on the growth aspect.
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Phil Dingle - PlanVista - CEO
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Yes, absolutely. We have taken on, during the past few years, several customers
for which we serve as what I'll call the virtual mailroom. Meaning, we receive
all of their out of network claims, whether or not eligibility has already been
determined. So there are some claims that we provide services on without
generating any real revenue and profitability, because at the end of the day
they aren't determined to be eligible claims. So that clearly changes some of
the metrics. We're doing fewer and fewer of those customers, but at various
points in time during the past few years there have been some variations in
that.
There's also been some variations in our business mix between hospital and
physician claims, so I think those are the principle differences between this
year and last year.
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David Francis - Jefferies and Company - Analyst
Right.
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Michael Hoover - ProxyMed - CEO
Dave, let me just comment, from a strategy perspective, on the growth. We
believe we're going to bring to the market something new that has never really
been offered before. Where most of the payers we're talking with are simply
repricing the higher dollar claims, typically institutional claims from
hospitals, or higher dollar physician claims, what we bring to the market and to
our customers potentially, is a way to reprice dollar one claims, any volume.
Since we're doing this on a completely electronic integrated fashion, claims can
move seamlessly electronically from ProxyMed through PlanVista to the payer and
then back and forth.
So we're going to give these payers an ability to reprice a level of claim that
they've never been able to reprice before. So for them, this is kind of found
money. For us, it is a new service that we don't believe has ever been
introduced in the market before. Several of the payer customers that we're
discussing this capability with are very excited, and it brings us a new growth
potential, again, not necessarily taking any business away from anyone. This is
new business that we're creating that has never been available to the market
before. So we're very excited. You know the majority of our 200 million
transactions we process on an annual basis are physician based claims, so we
think that we can take a large percentage of those claims and apply the
discounts that PlanVista can provide, and so far we've seen that our payer
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customers are very receptive to it. I know you want more back of the envelope
type of numbers, but I will reference those details in our guidance in January.
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David Francis - Jefferies & Company
So if I hear you correctly, Mike, we should expect to see that the shared
savings model will continue in place and that you'll probably have a somewhat
lower price per repriced claim, but certainly make a lot of that up on
significantly increased volume, that should be our expectation?
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Michael Hoover - ProxyMed - CEO
That is correct.
That is correct.
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David Francis - Jefferies & Co.
OK and then lastly and I'll turn over the floor, can you tell me how you arrived
at the discount on the new equity coming in, which I think works out to 11
percent, based on Friday's close? Thanks.
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Michael Hoover - ProxyMed - CEO
Historically, you mean the $14.25 price?
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David Francis - Jefferies & Co.
Right.
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Michael Hoover - ProxyMed - CEO
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Again, we are raising approximately $24 million, $24.1 million from two of our
existing shareholders, General Atlantic Partners and Commonwealth. We have been
working on pricing this offering for some time and it really worked out that we
took a trading average over - I don't have the exact number of days - we applied
a standard discount of about 10 percent at the point we took the trading
average. And that's how we came up with the price.
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David Francis - Jefferies & Co.
Thank you.
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Michael Hoover - ProxyMed - CEO
You bet.
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Operator
Once again, to ask a question, please press star one. One moment. Your next
question comes from Mr. Kris Hundley with "St. Petersburg Times."
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Kris Hundley - St. Petersburg Times
Hi, it's Ms. but that's OK. I have a housekeeping detail here, we just wonder
about PlanVista, will you be keeping any presence in Tampa or will you be
relocating to Ft. Lauderdale? And how many of your employees will go with you?
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Phil Dingle - PlanVista - Chairman and CEO
Hi, Kris, this is Phil Dingle.
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Kris Hundley - St. Petersburg Times
Hi, Phil.
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Phil Dingle - PlanVista - Chairman and CEO
As you know, presently we house roughly 25 associates in our Tampa office, which
includes our sales team, our product development, some what I'll call actuarial
experts, as well as several executives and financial contributors to the
business. We didn't come into this transaction needing to get rid of any offices
because we are a profitable entity, as we speak. Now that said, what we can't
tell you yet, because we don't know fully, is who should be moving around where
to be best geographically situated to make this a profitable enterprise that
will grow in the future. We may have certain executives joining Mike Hoover in
Atlanta. There may be some executives who move to Ft. Lauderdale as appropriate.
And there still may be some who move to Middletown, New York. And those are the
kinds of details that we'll clearly be focusing on between now and the day we
close the transaction.
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Kris Hundley - St. Petersburg Times
Do you expect you will be closing the Tampa office?
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Phil Dingle - PlanVista - Chairman and CEO
No at this point we do not, but anything's possible. We have a lot of work to
do, Kris.
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Kris Hundley - St. Petersburg Times
OK, let me ask you about the value of the deal. I understand it's $57.6 million,
and then in addition the assumption of debt and retirement of debt, is that
correct?
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Phil Dingle - PlanVista - Chairman and CEO
The overall enterprise value of the deal is just over $100 million, yes.
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Kris Hundley - St. Petersburg Times
OK, thank you.
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Michael Hoover - ProxyMed - CEO
Thank you. Any more questions?
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Operator
Yes, I do have another question for you. One moment. Mr. John Szabo with CIBC
World Markets, you may ask your question.
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John Szabo - CIBC World Markets
Thank you. Just so that I understand, did you say that there were 200 million
claims that ProxyMed was processing and that you would expect to use the
PlanVista repricing engine to capture some of that volume? An I guess if you
could just give us a little bit more color, what percentage of those 200 million
claims are from payers that already have their own reprocessing capabilities
versus, you know, using other outsourced providers?
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Michael Hoover - ProxyMed - CEO
Sure, John. This is Mike Hoover. Today we have about 450 large insurance
companies connected to the ProxyMed network. We have about 140,000 health care
providers, both physician and hospital providers, sending us in excess of about
200 million transactions on an annual basis. The majority of those are physician
claims, with quite a few being institutional claims. And today, as we just
described, historically PlanVista processed I think last year about 3.9 million
claims, most of those being institutional claims, that created revenues in
excess of 30 million and EBITDA in excess of 10 million. So it's a very
profitable company on a very small number of institutional claims.
What we were pointing out is that we're doing two things: number one is that
we're going to market these repricing services to our 450 payers. Every one of
those payers either currently uses some type of repricing service or has a need
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for repricing service. Most of them do some type of repricing today on high
dollar volume institutional claims and maybe they do processing, repricing for
high dollar physician claims. Very few do repricing for normal physician
out-of-network claims. And we see this as a brand new market opportunity. And
that represents the majority of our claims volume. So we're taking to the market
a new opportunity. It seems so far to be very well received. I can't give you
any other financial metrics on that at this point in time, other than we signed
our first client. We have a very nice backlog of additional clients that have an
interest in this repricing service. And as we sign those contracts and as we can
quantify what this means to the combined company and from a financial
perspective, we'll do that.
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John Szabo - CIBC World Markets
And the new client, Great West? [crosstalk] Are you replacing an existing
repricing service exclusively with this combined offering or is it you're one of
several that are being offered and then it's a question of what your market
share with them would be?
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Phil Dingle - PlanVista - Chairman and CEO
John, this is Phil. We are not repricing for Great West. We're actually serving
as a network manager for Great West, utilizing our Payer Serve product, which is
one of the new products that we've developed in our business development group
that had not generated any revenue prior to 2002 calendar year but even last
year, represented about 5 percent of our revenue and it's clearly a fast-growing
product for us coming into this year. We'll probably generate 10 percent of our
revenue through these new business products. So one of the pleasant surprises
with landing a company like Great West is that it wasn't with our historical
core access network access product, but rather with one of our new products.
And we are currently quoting to Great West using the full repricing service.
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John Szabo - CIBC World Markets
OK, great, and one last thing, and I'm sorry if this is a naive question but I'm
just trying to understand this a little bit better. Is ProxyMed generating
revenue from the physicians in any way on those 200 million claims or is that
mostly coming from the payers? And if it is coming from the physicians, is
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there a potential conflict there in terms of those guys getting their payments
cut because you're going to the payers for lower reimbursement to them,
essentially?
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Phil Dingle - PlanVista - Chairman and CEO
What we do receive a portion of our revenues from the physicians absolutely in
the form of either transaction fees or monthly subscription fees. One of the
things that maybe we didn't make real clear here is for the payer to receive
this discount, they have to agree to several things: number one, they must pay
the provider quickly for - in exchange for giving this discount and they must
promote this provider to other member of their plan. So the provider is getting
significant benefit by giving this discount. So we don't really foresee any
conflicts or problems. Any time you can work with a provider, get him paid
faster, he's typically already giving these discounts to someone else; they get
very excited about this prospect.
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John Szabo - CIBC World Markets
So your customer base, your provider customer base, is not going to mind if you
guys start to reprice a significantly higher percentage of their claims?
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Phil Dingle - PlanVista - Chairman and CEO
As long as they receive significant benefits in exchange for that discount, such
as improved and quicker payment.
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John Szabo - CIBC World Markets
OK, great, thanks very much.
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Operator
Once again, to ask a question, please press star one. Sir, at this time there
are no further questions.
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Michael Hoover - ProxyMed - CEO
Very good.
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Operator
I do have a question for you.
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Michael Hoover - ProxyMed - CEO
We do have a question?
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Operator
Yes, you want to just - Mr. Szabo again with CIBC World Markets, your line is
open again.
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John Szabo - CIBC World Markets
Hi, thanks. I thought I'd get back in queue. Just so I understand on the Great
West just as an example in terms of what you're trying to do here, can you
describe PlanVista's, on the institutional repricing business, where that
company is versus its peers in terms of its cost structure? And I guess what I
mean by that is, is that business based primarily on administrative costs or on
the actual unit cost when you reprice it? I assume you're hooking up with other
networks when you do that. Could you just help me out with that a little?
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Phil Dingle - PlanVista - Chairman and CEO
John, this is Phil. Let me make sure I understand your question. And I take it
it's not in connection with Great West, it's in connection with the general
metrics of our business?
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John Szabo - CIBC World Markets
Yeah and I wanted to use that to kind of get into a deeper discussion about
Great West. But however you want to do it.
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Phil Dingle - PlanVista - Chairman and CEO
Remember we are not repricing claims for Great West. We are not offering our
network access to Great West. That is a totally different product that we are
providing for them.
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John Szabo - CIBC World Markets
OK, all right.
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Phil Dingle - PlanVista - Chairman and CEO
All right not that said, we typically market our services and products on the
basis of several principles. One is we have a vast and broad network that is
national in scope and that has very competitive discounts that we can utilize
and saving our payer customers a lot of money. So that's clearly a key component
of the equation.
A second key component to the equation is our ability to reprice more and more
claims by electronic means, and by that I mean electronic data interchange over
the Internet. Our customers appreciate the quicker turnaround times and the
greater accuracy that you get when you have human hands touching the claim. And
of course, for us it lowers the cost pretty dramatically.
And the third is, we remain one of the only firms in the industry that does
guarantee our turnaround times. So back to Mike's point on quicker payment, if
we have business with a customer that is paper or fax - and as you know that's
never going away - we'll be around, we'll guarantee turnaround time in three
days and typically deliver in 2.2 days. If it's an EDI business link we have
with customers, we tend to turn that around within 24 hours, I should say that's
our guarantee. And we'll turn it around within about 8, and then Internet is by
and large real time except for pendent or unusual claims. And
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by the way, that allows our customer to maintain control of the claim as they
reprice it. So those are the different ways we do it, those are some of the
value propositions.
The last piece is administrative services. We have between 35 and 40 service and
operation professionals in Middletown who spend a lot of time on the telephone.
And they provide for claim services, customer services, as well as some provider
services. And they stand by ready to help folks when needed, when there's an
issue with the claim. So I think administrative services have become a greater
differentiating factor between us and our competition and clearly plays a role
in our value proposition.
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John Szabo - CIBC World Markets
OK and then in terms of the network, is that something that you've established
directly or you've done by - I think it's subcontracting with like a Peach
Street [sp] or something like that?
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Phil Dingle - PlanVista - Chairman and CEO
We built our network during the past 10 years, both directly through our own
physicians and hospitals and roughly 15 percent of our network is our own; and
through strong regional partnerships with some of the best networks around the
country. And by way of example, roughly 80 percent of our partner base of
networks has been with us five years or more. So we've built it both directly
and indirectly. We have pursued that model because we believe health care is
local and we go to some of the strong regional networks that help us deliver
ultimately value and savings to our customers.
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John Szabo - CIBC World Markets
OK, so in terms of offering the joint product, you feel that the network
component of that, your competitiveness in the network component of those one,
two, three, four things that you mentioned would not prevent an insurance
company from taking this, the joint offering?
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Phil Dingle - PlanVista - Chairman and CEO
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Not sure I understand your question.
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John Szabo - CIBC World Markets
Well I guess - just your feeling that you're price competitive on the network
side and what I'm looking at it and saying, well gee if you're going to combine
the two, is there a reason why ProxyMed's customer base didn't take your
offering?
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Phil Dingle - PlanVista - Chairman and CEO
Got it. No, remember that our customers today have strong network capabilities
and many hospitals and physicians throughout the country, our power alley is in
capturing out-of-network claims so we don't compete head-to-head with our payer
customers. Rather, we help supplement their capturing of out-of-network claims
so as to deliver greater savings vis-a-vis their ultimate billed charges.
----------------------------------------
John Szabo - CIBC World Markets
OK, great. Just one last thing. United and I think even Humana have been talking
about sort of using a Visa or MasterCard as a way to facilitate payments with
providers and with their own customers. How does this combined company fit in
with that or is it not really something you guys really worry about?
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Phil Dingle - PlanVista - Chairman and CEO
It actually fits in very well because we have our partner, First Data, which has
a card service as well that we're marketing to payers. And as part of this, it
plays into our electronic funds transfer and ERA function, that as providers -
our providers, our PlanVista providers, agree to give this discount to our
payers, then once they have adjudicated the claim, taken the discount, then we
can facilitate the very timely payment electronically from the payer [inaudible]
med to the provider where we deposit those funds directly into their bank
account, eliminating the paper check. We provide and electronic ERA which can be
posed electronically right into their accounting system, eliminating the whole
keypunch problem. So we offer a whole suite of payment services now to
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these same providers that will get them paid much quicker, more efficiently and
drive value for the whole industry. So it actually plays in very nicely.
----------------------------------------
John Szabo - CIBC World Markets
Great, congratulations.
----------------------------------------
Michael Hoover - ProxyMed - CEO
Well thank you, John, for your questions. I believe that's all the time that we
have for today. And I'd love to offer that we'd be glad to follow up with any
questions you may have directly, either calling Phil or myself. Thank you for
your time today and we'll be talking soon when we announce our 2004 guidance in
January. Take care. Bye.
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ADDITIONAL INFORMATION AND WHERE TO FIND IT
ProxyMed intends to file a registration statement on Form S-4 in connection with
the transaction, and ProxyMed and PlanVista intend to mail a joint proxy
statement/prospectus to their respective stockholders in connection with the
transaction. Investors and security holders of ProxyMed and PlanVista are urged
to read the joint proxy statement/prospectus when it becomes available because
it will contain important information about ProxyMed, PlanVista and the
transaction. Investors and security holders may obtain a free copy of the joint
proxy statement/prospectus (when it is available) at the SEC's web site at
www.sec.gov. A free copy of the joint proxy statement/prospectus may also be
obtained from ProxyMed or PlanVista.
ProxyMed and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from the stockholders of ProxyMed
and PlanVista in favor of the transaction. Information regarding the interests
of ProxyMed's officers and directors in the transaction will be included in the
joint proxy statement/prospectus.
PlanVista and its executive officers and directors also may be deemed to be
participants in the solicitation of proxies from the stockholders of ProxyMed
and PlanVista in favor of the transaction. Information regarding the interests
of PlanVista's officers and directors in the transaction will be included in the
joint proxy statement/prospectus.
21
In addition to the registration statement on Form S-4 to be filed by ProxyMed in
connection with the transaction, and the joint proxy statement/prospectus to be
mailed to the stockholders of ProxyMed and PlanVista in connection with the
transaction, each of ProxyMed and PlanVista file annual, quarterly and special
reports, proxy and information statements, and other information with the SEC.
Investors may read and copy any of these reports, statements and other
information at the SEC's public reference rooms located at 450 5th Street, N.W.,
Washington, D.C., 20549, or any of the SEC's other public reference rooms
located in New York and Chicago. Investors should call the SEC at 1-800-SEC-0330
for further information on these public reference rooms. The reports, statements
and other information filed by ProxyMed and PlanVista with the SEC are also
available for free at the SEC's web site at www.sec.gov. A free copy of these
reports, statements and other information may also be obtained from ProxyMed at
its website www.proxymed.com or PlanVista at its website at www.planvista.com.
FORWARD LOOKING STATEMENTS
ProxyMed and PlanVista caution that forward-looking statements contained in this
document are based on current plans and expectations, and that a number of
factors could cause the actual results to differ materially from the guidance
given at this time. These factors are described in the Safe Harbor statement
below.
Except for the historical information contained herein, the matters discussed in
this document may constitute forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
projected. These statements include those concerning the consummation of the
acquisition and, if consummated, its potential benefits and effects, including
but not limited to any expectations as to profitability of the combined company.
In some cases, forward-looking statements can be identified by terminology such
as "may," "will," "should," "potential," "continue," "expects," "anticipates,"
"intends," "plans," "believes," "estimates," and similar expressions. For
further cautions about the risks of investing in ProxyMed or PlanVista, we refer
you to the documents ProxyMed and PlanVista file from time to time with the
Securities and Exchange Commission, particularly ProxyMed's Form 10-K for the
year ended December 31, 2002, PlanVista's Form 10-K for the year ended December
31, 2003, as amended, and the registration statement relating to the acquisition
to be filed subsequently.
In this regard, investors are cautioned that the acquisition may not be
consummated on the terms proposed or at all, and, if consummated, the combined
companies will be subject to numerous risks and uncertainties, including, but
not limited to, the risks inherent in acquisitions of technologies and
businesses, including the integration of separate workforces, the timing and
successful completion of technology and product development through
22
production readiness, integration of such technologies and businesses into the
combined company, unanticipated expenditures, changing relationships with
customers, suppliers and strategic partners, and other factors.
ProxyMed and PlanVista assume no obligation to update information contained in
this document, including for example guidance regarding future performance,
which represents the companies' expectations only as of the date of this release
and should not be viewed as a statement about the companies' expectations after
such date. Although this release may remain available on the companies' websites
or elsewhere, its continued availability does not indicate that the companies
are reaffirming or confirming any of the information contained herein.
23