Telehealth Failures & Secrets to Success Conference 2017 by VSee Speaker Series Karyn DiGiorgio (University of California) More info at: vsee.com/conference

1. UC Davis Health UC Irvine Health UCLA Health UC San Diego Health UCSF Health UC Riverside Health
University of California Telehealth:
Vision, Barriers, Realization
Karyn DiGiorgio, Exec Director, UC Center for Health Quality and Innovation
September 20, 2017

2. Problem Statement
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 Demand for virtual care
 Demand for improved access to clinical services
 Large, unmet need for mental health services
 National competitors are moving into California
 For-profit companies are currently offering telehealth services
 UC Health can and should be providing/leading virtual care to
California residents

3. Current State at UC Medical Centers
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 Each campus has some telemedicine offerings, but
difficult to grow services independently
 Varies by specialty, capacity, synchronous vs
asynchronous
 The customer experience is variable
 Standardize: protocols, policies, etc.
 Value proposition varies by campus leadership

4. Proposal
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 Create a unified UCTelemedicine entity by
establishing a system-wide UC Health (6 UC
Medical Centers and campuses) telemedicine
program integrating medical expertise from all
campuses, is seamlessly available to patients,
referring providers, and payers using
telemedicine and complementary
technologies; and aligns with UC’s mission of
clinical care, research and education.

5. Market Overview
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 Telehealth overview
 North America is telehealth expected to grow from $7.9B in 2015 to $24.3B in 2021.
 1.2 million U.S. teleconsultations with doctors in 2015, expected to grow by 25% in 2016
 By 2018 it is expected that 80% of employers will offer Telehealth up from 32% today
 Top services offered today (Employer offered)
 Urgent care 70%
 General Health – 32%
 Behavioral Health – 23%  growing to 50%
 Diet and nutrition – 22%  growing to 46%
 Diabetes – 20%  growing to 40%
 Key drivers
 Improvements in technology
 Pressure to decrease health costs
 Drive to make care more consumer friendly
 Critical Risks
 Regulatory environment
 Pricing pressure and requirement to target value added specialties
 Moving too slowly
Sources: Transparency Market Research, Mordor Intelligence, HealthTech Maine, 38 Degrees

6. Telemedicine Market Projections
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Tele-psychiatry (Nat’l):
Projected revenue: Market of $175M in 2015
with average price per consult of $175.00.
Estimated to grow to $519M in 2021
Projected demand: 25% of
Americans suffer from some form of mental health
condition and 1 in 17 suffers from serious mental
illness – (National Institute of Mental Health). Mix
of patients:
 Schizophrenia – 26%
 Substance induced mood disorders – 14%
 Bipolar – 18%
 Clinical depression – 35%
Source: Mordor Intelligence
GlobalTelemedicineMarket,ClinicalServices($USMillion)
Segmentation 2014 2015 2016 2021 CAGR
Teleconsultation 2,040 2,426 2,884 6,855 18.9%
Telepathology 832 992 1,182 2,841 19.2%
Telecardiology 3,527 4,191 4,979 11,791 18.8%
Telesurgery 620 746 898 2,273 20.4%
Teleradiology 2,341 2,778 3,297 7,764 18.7%
Teledermatology 1,181 1,404 1,671 3,977 18.9%
Telepyschiatry 146 175 210 519 19.9%
OtherService 833 924 1,027 1,856 11.5%
Total 11,521 13,637 16,149 37,875 18.2%
Source:MordorIntelligence“GlobalTelemedicineMarket2016–2021”
Telemedicine:
Projected revenues:
CAGR: Compound Annual Growth
Rate

7. Potential UC Markets
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 California, national, international and corporate
 We currently have full geographic distribution
 International demand for second opinions
 Companies want more efficient work force
 Characteristics of our proposed system
 Access to all of UC Health from anywhere
 Efficiency
 Cost effective
 Ease of use
 For patients and providers

8. Why Is Now The Time?
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 Demand outstripping supply for health care providers
 A new generation of consumers want to interact in
different ways—comfortable with electronic and virtual
engagement
 Employers are looking for more efficient/lower cost
health care delivery systems
 UC’s are taking financial contracting risk
 Market dynamics
 UC reputation, breadth/scale and deep expertise is very attractive to
payers, employers, investors

9. UC Health Telehealth Pilot Program Overview
 UC Health is proposing to develop a system-wide telehealth
program aimed at leveraging individual campus expertise and
best practices based upon a scalable business model
 Business model leverages/scales shared services
 Billing
 Administration
 Credentialing
 Contracting
 Call-center/Triage
 Telehealth Pilot Program Requirements
Approved business plan 3 year loan Loan guarantee 6-9 month go-live
 Ease of use for providers, patients. Greater provider, patient satisfaction
 Development and maintenance of
shared telemedicine platform
 Physician compensation
 Scheduling
 Business Development
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10. Go to Market Strategy: Start Small,
Perfect, Expand
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 Initial target: One focused service
 Tele-mental health
 Highly targeted initial customer base – UC Care forTele-
mental health only
 Test the business case with MinimumViable Product (MVP)
 Build success case to leverage future expansion
 Outsource operational information systems to minimize
initial investment
 Focus on internal coordination between UC medical centers and
physicians
 Focus on marketing and partner development
 World-class experience is ESSENTIAL
 Customers: Patients, Providers and Payers
 Access to physicians – UC System wide

11. Tele-mental Health and Beyond
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 Overall:
 Operating costs are relatively fixed, therefore will decrease as services and providers
are added
 WhyTele-mental health:
 US Market of $175M in 2015 with average price per consult of $175.00. Estimated to
grow to $519M in 2021
 All campuses provide some amount of service currently
 TM is a vehicle that will assist in meeting the requirement to treat patients who
screen positive for mental health problems.
 Increasing appropriate utilization will lead to potential cost savings/revenue
enhancement
 Beyond:
 Propose starting with Tele-mental health, by year 2 adding in additional services
 There is a great deal of outside interest in our deep domain T/Q expertise. Investors
and payers are interested in being able to access all of the UCs via a single access
point.

12. Barriers/ Critical Risks
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 Internal competition
 Availability of Physicians to dedicate time
 Actual operating and billing costs may be higher than
expected
 Availability of funding for the project
 Acquiring enough customers to reach scale and profit

13. Competition/ Market Differentiation
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 Top Competitors
 Other health systems
 For-Profit Entities:
 Urgent Care Centers
 Minute Clinics
 Who are Potential New Entrants
 National Systems such as Mayo and Cleveland Clinic
 New for-profit tele-health entities
 Technology and app developers
 What is UC Health’s Market Differentiation
 Outstanding Reputation—leader in cutting-edge research and specialty care
 State-wide size and reach
 We have a supply of providers and constantly produce more
 We have deep domain specialty expertise and a place for follow-up

14. Business Model: Pricing, Revenue
Streams
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 Revenue Streams
 Service agreements
 Contracts
 Coverage: 5150 ED and tele-stroke as example
 Payor contracts for specific services
 National and International contracts for specific services
 PMPM contracts
 Pricing model
 Pricing will need to cover expenses of overhead, staff, IT and
providers
 Will vary by specialty
 Recurring revenue
 All revenue is potentially recurring

15. Immediate Next Steps
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 Choosing vendor partners
 Contracting with existing staff
 IT integration
 Establishing scheduling and billing systems