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CHRISTOPHER T. FEY - U.S. PREVENTIVE MEDICINE, INC.
CEO Interview - published 11/05/2007
CHRISTOPHER T. FEY is the Founder, Chairman and Chief Executive Officer of U.S.
Preventive Medicine, Inc. Mr. Fey has been involved in the healthcare industry
for more than three decades. As the Founder, President, and CEO of HealthCare
USA — launched as a startup, with $3.6 million in venture capital — Mr. Fey
assembled and led the team that built HealthCare USA into a profitable, multi-
state licensed HMO that was acquired within two years by publicly held Coventry
Health Care Corporation at a price of $45.3 million. Mr. Fey remained as
President and CEO of HealthCare USA, as well as a senior officer with Coventry
until he resigned to launch a direct-to-consumer diagnostic company,
HealthScreen International, Inc., and HealthScreen America. Small Business
Computing magazine ranked this company one of the most innovative technology
businesses in 2000. The company was also one of 12 runners-up in the prestigious
USA Today/Rochester Institute of Technology Quality Cup the following year.
Other runners up included Master Card and AT&T. Mr. Fey launched U.S. Preventive
Medicine, determined to create the leader in the growing field of prevention,
wellness, and healthy aging through the internal development and/or acquisition
of accretive business models in this space. Mr. Fey is a member of the American
College of Health Care Executives, American Hospital Association, Disease
Management Association of America, and the Society for Atherosclerosis Imaging.
He is a graduate of the University of Florida.
SECTOR - HEALTH SERVICES
TWST: We'd like to begin with a brief historical sketch of the company and the
rationale for your business proposition.
Mr. Fey: The business rationale for U.S. Preventive Medicine® goes back to the
old adage, find a problem, develop a solution, fix the problem. The problem is
our "sick care focused" healthcare system.
Annual health care spending in the US is approaching $3 trillion and is expected
to double in the next 10 years. More importantly, it is estimated that more than
95% of these expenditures are focused on sickness. As a result, needless
suffering and premature death have become everyday occurrences in our families,
our companies and our communities.
On the other hand prevention has been proclaimed as the solution to our health
care crisis. A recent study indicated that we could save $1 trillion through the
use of early detection and chronic disease management or secondary prevention.
Growing evidence suggests that prevention is the solution.
We agree that prevention is the solution. We also recognize that the clinical
discipline of prevention is preventive medicine. U.S. Preventive Medicine was
formed specifically to be the leader in the prevention category.
Consequently, our goal is to turn U.S. Preventive Medicine into the next power
brand in one of the world's largest industries, health care. In creating U.S.
Preventive Medicine as the new power brand in health care and the distinct
leader in prevention, we are focused on growing four integrated business units:
building a national system of Centers for Preventive Medicine; launching a
comprehensive defined health benefit, The Prevention Plan™; expanding the
company's chronic condition and disease management unit, U.S. Care Management™;
and, in select markets, launching integrated health plans focused on prevention.
Finally, we will link all components into a new national network, the U.S.
Prevention Network™.
TWST: Was there a driving reason to start this company, beyond the opportunity
to provide a solution for our country's health care crisis?
Mr. Fey: My father died three days after my first birthday. I had just turned a
year old and he died; he died of colon cancer. I never knew him; I have no
memory of my father whatsoever and that was a tragedy. Today this is still
happening to people throughout the United States where their parents, family
members and business associates are being taken away from them at a very early
age.
My brother-in-law at 39 years old had a massive stroke standing next to me. Can
you imagine — a massive stroke, 39 years old; he survived, but he'll never be
the same. After a couple of life changing events happen to you, whether you are
a year old or whether it's your 39-year old brother-in-law, you step back and
you say, "Is there something I could do to change this picture?"
Our Company's mission is to try to minimize needless suffering and premature
death by providing forward looking thinkers an opportunity for a different
approach to their health care, one that focuses on prevention. Our Company
believes, right down to the individual team member, that we are making a
difference every day in what we are doing to give individuals a new lease on
life, to give them a few more good years.
TWST: The first component you mentioned were the Centers for Preventive
Medicine. Exactly what is or what will constitute a Center?
Mr. Fey: In partnership with hospitals and physician groups, U.S. Preventive
Medicine is developing a national system of preventive care centers, The Center
for Preventive Medicine®. This branded, physician-integrated, pre-symptomatic,
preventive medicine and "early diagnosis" paradigm leverages the use of
hospitals' and physicians' existing excess capacities of sophisticated
diagnostic technologies and proven preventive and interventional therapies. More
than 300 health systems and physician groups have expressed interest in our
Centers for Preventive Medicine.
The company's system provides to hospitals and their physicians, without capital
expenditure, increased profitability by generating incremental, multiple revenue
streams at a time when the entire medical community is facing ever-increasing
pressures in pricing, physician support, outcomes and brand loyalty. This
turnkey system capitalizes on the current and future growth in demand for
preventive medicine, specifically as it relates to prevention, wellness and
healthy aging. For consumers and employers, The Center for Preventive Medicine
provides a comprehensive preventive medicine program that can help individuals
enjoy "more good years."
TWST: Will these make more economic use of the physician's time than the present
situation does?
Mr. Fey: The advantage that our Center for Preventive Medicine brings to a
hospital system or to a physician's practice is that by overlaying on top of the
existing assets that are already there, it does maximize the efficiency of their
office space, of their personnel, of their technology, of their equipment, even
of their time. So, the answer is absolutely yes. The Center for Preventive
Medicine increases the potential for a physician or health system to generate
new revenue out of existing assets. This turnkey system capitalizes on the
current and future growth and demand for preventive medicine specifically as it
relates to prevention, wellness and healthy aging. This is a movement that we
see spreading across the United States, particularly driven by the baby boomer
population. We think that the Centers for Preventive Medicine are positioned
properly to meet that demand.
TWST: You mentioned four initiatives or four elements and you said that they
would be integrated one with the other. Would you explain the way in which they
will be integrated?
Mr. Fey: I think the key to our business is that these business units complement
each other. As the second component of our business plan executes, The
Prevention Plan™ will be reaching into the business community with a new defined
health benefit.
The Prevention Plan will target businesses, state and local government agencies
with an array of services such as, health risk assessments, health management,
behavior modification and disease management services. The Prevention Plan will
build on the evolving concept of "prevention," moving beyond the prevention of
primary disease in the individual to the identification and prevention of
disease in high risk individuals within organized populations, and prevention of
secondary conditions in individuals with existing chronic conditions.
For example, if a member wants to quit smoking but they need some assistance or
they would like to have someone coach them through a weight loss program or get
linked into local providers, we can facilitate these kinds of services. The
Prevention Plan is a really big idea with a comprehensive suite of services, a
new defined health benefit that is packaged around prevention. We will deliver
for the first time ever a comprehensive package of preventive services bundled
into a defined health benefit.
TWST: Tell us about the new disease management acquisition and your intention to
consolidate the disease management industry under your new business unit, U.S.
Care Management.
Mr. Fey: Disease management, also known as secondary prevention, is the third
integrated component of our business. U.S. Care Management is the platform upon
which we plan to grow internally, as well as through acquisitions.
Across the U.S., the business of early detection and chronic condition
management is fragmented. There exists a great opportunity to consolidate this
industry around a new paradigm of what we call 360 degree care management.
Proactive prevention and clinically appropriate chronic and complex disease
management delivered in a total surround of the individual in a high level of
customer satisfaction is what we call 360 degree care management. For this
reason, we are using the 2007 acquisition of Specialty Disease Management
Services as the foundation for our new business unit, U.S. Care Management.
U.S. Care Management is a comprehensive disease management firm that provides
services to public-sector, such as Medicaid, and private-sector health plans,
self-insured organizations, Third Party Administrator organizations, integrated
delivery organizations and physician practices. U.S. Care Management currently
provides a full range of disease and care management and consulting services for
chronic, complex diseases using best practices, including, but not limited to
asthma, diabetes, coronary artery disease, chronic obstructive pulmonary
disease, HIV/AIDS, hypertension, heart failure, obesity, depression, and
schizophrenia.
This business unit will also provide the back-end coaching and disease
management services for The Prevention Plan. U.S. Care Management seeks to
ensure the most appropriate care for its patients at every point in the
healthcare continuum.
TWST: Is there anybody else out there attempting anything similar?
Mr. Fey: Our view is that the business of prevention is extremely
fragmented and immature and there is no national brand. By putting our
integrated business units into deployment for the benefit of consumers and
employers, as well as providers, we think we stand alone in the marketplace.
We believe this market leadership could lead to a mass migration of both
individuals and employers to our brand. We have put all the pieces together in a
way that increases the quality of healthcare, increases outcomes-meaning people
are healthier, and ultimately increases client satisfaction. Our intention is to
manage these integrated business units efficiently. If we do this successfully,
it should result in a benefit to our shareholders.
TWST: With all these integrated business units, might you enter the health plan
business?
Mr. Fey: The company management team is composed of a team that has worked
extensively in the managed care industry both in startups and the ongoing
management of health plans. These health plans have managed employer and
government health benefits across multiple states, including Florida, Missouri
and New York.
Our management team believes there is a potential business opportunity to
combine the benefits of prevention (The Prevention Plan), along with clinically
appropriate chronic disease and care management (U.S. Care Management) into a
next-generation health plan. The business benefits of proactive preventive
services on the front end of a health plan coupled with clinically appropriate,
360 degree care management of chronic conditions on the back end should provide
improved outcomes and enhanced profitability to the company's proposed health
plan model.
The company is conducting research into the best market conditions for new
health plan startups as well as the potential for acquisition candidates.
TWST: How do you link all these businesses together?
Mr. Fey: This next step will enable U.S. Preventive Medicine to offer a
national, and eventually an international, solution to employers — regardless of
where their employees reside. This process will effectively organize an industry
that has predominately been encumbered by chaos and fragmentation due to the
local nature of delivering healthcare services. This final organizational step
will create a powerful national and international network that will accommodate
continued expansion of services and solutions as market need and
medical/technologic innovation dictates by operating under one national brand.
Each member of the U.S. Preventive Medicine Network will continue to enjoy the
benefits of operating under their unique "local/regional" brand, but also
benefit by being associated with a much larger organized national brand.
TWST: Looking out over the next three years or so, what are the main items on
your strategic agenda?
Mr. Fey: Strategically we believe that the company is going to see growth in the
number of Centers for Preventive Medicine that are developed across the country
and potentially internationally. Secondly, we think that we will see a
substantial growth across the U.S. of The Prevention Plan as the first defined
benefit focusing on prevention. We are very excited about the early research on
The Prevention Plan. Focus groups conducted with consumers, employers and
insurance brokers have resulted in very positive comments.
Third, we expect to see growth in our new business platform, U.S. Care
Management. This is due to the aging of our population and as the population
ages more people are becoming ill. What typically happens is people get sick.
When they get sick they go to the doctor; if they are really sick, they go to
the hospital. For the most part, our healthcare system focuses on the very late
stage management of disease, focusing primarily on the treatment of episodic
conditions.
We believe that the U.S. Care Management business model is going to grow
exponentially as a result of delivering a comprehensive solution for chronic and
complex disease management. We think we will see substantial growth across the
entire business unit.
The fourth piece of our business could develop integrated health plans. We have
a great deal of experience in this area and we are going to be very selective in
deciding where to enter markets with a health plan.
We have some strategic differentiations that we believe will position our health
plan model in a class all by itself. Our model would focus on prevention on the
front end, sophisticated disease management on the back end, combined with all
of the necessary insurance and claim processing tools in the middle.
Our sophisticated disease management service would provide a 360 degree care
model. This model would include a very high degree of customer satisfaction. We
think this model is something that the consumer and the employer want. So, we
expect consumers and employers to be receptive to this approach.
There are several other components of our business that will eventually support
these four business units. These include our work in developing a media
property, The Prevention Channel™, and preventionchannel.com. We also will be
developing a research component of our business because we know there are
substantial opportunities in research and data applications. Along these same
lines, we have been presented with technological innovations that could provide
enhanced opportunities for our business. We also have had interest in
opportunities outside the U.S. that will eventually lead to an international
business unit.
Our entire view on our business is that by having an integrated company focused
on prevention, we are going to provide a solution set that is just not available
anywhere in the country or internationally. We think the demand is there and we
believe we have created an enterprise that is going to be the complete solution
set across all market segments.
TWST: What about possible challenges or problems? What will you worry about?
Mr. Fey: The critical success factor in any company is to bring very smart
people into the organization to be able to meet challenges head on, to recognize
where the opportunities are and to recognize where the threats are, but it all
boils down to execution. Can we pull this off? Can we do what I've just
described? Our management team includes some of the best and brightest in the
health care industry. Each one was recruited specifically for the skill set they
bring to the table. They can deliver the results — for our customers, for our
partners and, ultimately, for our shareholders.
Will we face any competitive threats in the future? Certainly. Will we deal with
them? Of course we will. That said, we believe there is a great opportunity for
the leader in this market. I believe we own the leadership position. We intend
to maintain a leadership position in the prevention industry.
TWST: How high are the barriers to entry?
Mr. Fey: The barriers to entry in this business are in timing, people and
capital in the tens of million of dollars to do it correctly. We certainly
expect this company to face competitive threats in the future, but we don't see
anyone as organized, focused or as smart, tough and tenacious as we are. We also
intend to consolidate this industry, so when competitors do emerge, we hope to
bring them under our fold to grow the brand as well as to strengthen our
leadership position.
TWST: What would you hope that the company will look like in about three years?
Mr. Fey: U.S. Preventive Medicine has positioned itself as the leader in
prevention. We are positioning ourselves as the new power brand in one of the
world's largest industries, health care. We are creating the brand that is
focused on quality, outcome measurements, and customer satisfaction. We believe
that the true measure of our company's success will be determined by the value
that our customers place on these attributes. Ultimately, a company's value is
in the eyes of its customers.
TWST: Do you visualize the company going public at some point down the road?
Mr. Fey: All companies must have a future capitalization and liquidity strategy.
While no one can say for sure or guarantee such a strategy, we believe the
company has a number of options to access growth and acquisition capital.
There is a great opportunity for acquisitions, for combinations of companies
that will add more depth and breadth to our company and we are identifying those
opportunities now. This will take additional capital. We do not see our strategy
as a company that is for sale to the highest bidder or one that is looking to
exit in a quick profit scenario.
The U.S. health care market is $2.5 trillion and growing. The opportunities for
U.S. Preventive Medicine are enormous. All we have to do is focus on our mission
of providing more good years for our customers, provide the highest quality, 360
degree care, produce substantiated, improved health outcomes and deliver the
highest levels of customer satisfaction and the rest will take care of itself.
TWST: Would you tell us about your background?
Mr. Fey: My background is 30 years in the healthcare industry specializing in
marketing and branding of healthcare enterprises across a number of different
categories in the healthcare industry. Most of my experience over the last
couple of decades has been in the health plan business, the managed care
industry. My experience includes raising capital, recruiting a management team,
following through with an execution and growth strategy and eventually a
liquidity event for shareholders. This company was called Healthcare USA, now a
leading managed care company in the Midwest.
HealthCare USA was eventually acquired by publicly held Coventry Health Care,
where I became a senior corporate officer for several years. My background
prepares me very strongly for the leadership position at this company as
founder, Chairman and CEO. More important, we have recruited a team of seasoned
healthcare and managed care executives, the majority of whom have worked with me
in the past in our managed care companies.
TWST: As CEO, what occupies your own attention most on a day-by-day basis?
Mr. Fey: The most important thing that any Chief Executive can do is to make
sure that the people operating the business have the resources they need to get
the job done and that they are all very focused on both the short-term and the
long-term strategy of the corporation. So my main focus today has been making
sure that the company has the resources and capital to get the job done.
Secondly, and just as important, is to maintain the strategy upon which the
company was founded, which is to provide individuals the opportunity for "more
good years®."
TWST: How do manage your investor relations?
Mr. Fey: U.S. Preventive Medicine is privately capitalized with individual
accredited investors from across the United States. The great thing about our
investor relations approach is that I know our investors — they have my phone
number and they can call me anytime. Additionally, we constantly communicate
with our shareholders, both quarterly with updates and conference calls, as well
as in between the quarters when something newsworthy occurs. Finally, we hold
our annual shareholders meeting via the Internet, so everyone has an opportunity
to participate.
U.S. Preventive Medicine has raised approximately $20 million to date. We have a
great group of investors who support our vision; they support our overall
strategy, and they have been financially very supportive of the company.
Currently we are working on the future capitalization needs of the company and
are involved in discussions and efforts in this arena.
TWST: What would be the two or three best reasons for a long-term investor to
take a very good look at U.S. Preventive Medicine?
Mr. Fey: One need only look at the stories in the various media today, from the
Internet, newspapers, magazines and television. We have a healthcare crisis in
this country. We have a sickness-focused $2.5 trillion industry that is not
working. People are getting sicker and costs are going up. U.S. Preventive
Medicine provides a solution to this crisis.
We think that our company has an opportunity to increase the amount of money
spent on prevention, which is where we will see our benefits business and our
center business pick up momentum. But we also provide services on the back end
of disease management where we now have U.S. Care Management. As the government
projects, the growing numbers in the budget for our health care expenditures in
the United States are expected to surpass $3 trillion in the next couple of
years. This number is expected to double over the next 10 to 15 years. This is
an unprecedented opportunity. We are creating a path to take advantage of this
opportunity and to follow the money. We will do this by improving the quality,
outcomes and satisfaction of our healthcare system in the process.
We think our company is properly positioned, right in the sweet spot of
providing a solution set and a new way to provide health care benefits focused
on prevention. We believe that our company is going to be able to demonstrate a
value proposition for our customers across all market segments, which should
provide value for our shareholders.
TWST: Would you comment on how you feel about the arc of your career?
Mr. Fey: It is my opinion that I have the greatest job in the world, the
pinnacle of my career. I think the most profound opportunity in the health care
industry resides in our company because we have taken our integrated set of
prevention solutions and are providing them to a market in crisis, a market that
is demanding these exact solutions. We are offering our customers the
opportunity to live a higher quality of life for a longer period of time. Giving
individuals more good years is the most compelling reason why anyone would want
to take a serious look at U.S. Preventive Medicine.
We believe that the company's business proposition of delivering "more good
years" presents a tremendous value proposition for our customers, our provider
partners and our shareholders.
TWST: Thank you. (MC)
CHRISTOPHER T. FEY
Chairman & CEO
U.S. Preventive Medicine, Inc.
(214) 288-7544
www.uspreventivemedicine.com
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