Elevance Health, Inc. · NYSE:ELV
Elevance Health — Anthem — Jeff & Dave's Conference, Lake Wales, Florida (March 2004)
47 slides from Elevance Health's conference presentation, Mar 5, 2004
Slide 1: Jeff & Dave's Conference, Lake Wales Florida
Jeff & Dave’s Conference Lake Wales Florida Mike Smith March 4, 2004
Slide 2: Safe Harbor
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This presentation contains certain forward-looking information about Anthem, Inc. (“Anthem”), WellPoint Health Networks Inc. (“WellPoint”) and the combined company after completion of the transactions that are intended
Slide 3: Additional Information and Where to Find It
ADDITIONAL INFORMATION AND WHERE TO FIND IT This presentation may be deemed to be solicitation material in respect of the proposed merger of Anthem and WellPoint. In connection with the proposed transaction, a registration statement on Form S-4 has been filed with the SEC. SHAREHOLDERS OF ANTHEM AND
Slide 4: Anthem, Inc. Update
Anthem, Inc. Update • Anthem Profile • Pending Merger • A Gathering Storm of Issues
Slide 5: Anthem Profile
Anthem Profile • Full range of healthcare and specialty • Regional business model products • National capabilities • Among the fastest growing healthcare • BCBS licenses in 9 states companies • #1 market share in 8 of 9 states • 11.9 million medical members
Slide 6: A Diversified Health Benefits Company
A Diversified Health Benefits Company Specialty Products Membership (mm) Pharmacy5.3 Dental2.5 Life0.9 New Specialty Products Behavioral Health3.0 Vision0.4
Slide 7: Executing a Simple Strategy
Executing a Simple Strategy Grow Profitable Enrollment Reduce Administrative Costs Optimize the Cost of Healthcare, While Improving the Health of Our Members Provide Distinctive Service Strong Cash Management Drivers to Success Customers Are First Regional Model Disciplined Focus
Slide 8: Profitable Enrollment Growth
Profitable Enrollment Growth 9% Same Store CAGR, 1999—2004E Acquisition-related membership in the applicable year
Slide 9: Administrative Expense Discipline
Administrative Expense Discipline Strategies For Improvement • Systems consolidation • Shared service platform • Investments in technology • Process improvements
Slide 10: Strong Financial Momentum
Strong Financial Momentum Diluted EPS Operating Revenue
Slide 11: Strong Cash Management
Strong Cash Management Operating Cash Flow Net Income Cash Flow
Slide 12: Total Assets and Investment Portfolio
Total Assets and Investment Portfolio At December 31 of the Indicated Year Cash and Invested Assets Other Assets
Slide 13: WellPoint Merger: Taking the Next Step
WellPoint Merger Taking the Next Step
Slide 14: Nation's Leading Health Benefits Company
Nation’s Leading Health Benefits Company Combined size and scale creates leadership position in industry Geographic diversification with local focus and national reach Growth opportunities in regional and national markets Building on combined strength to create operating synergies Operational excell
Slide 15: Transaction Summary
Transaction Summary Value: $16.4 billion Consideration Per WLP Share: 1 ATH share + $23.80 cash Headquarters: Indiana Chairman: Leonard Schaeffer President and CEO: Larry Glasscock Expected Closing: Mid year 2004 Combined 2003 Reported Membership: 27 million Revenue: $37.1 billion Earnings: $1.7 bil
Slide 16: WellPoint + Anthem: A Very Compelling Transaction
WellPoint + Anthem .. . . . . . A Very Compelling Transaction . . . • Geographic diversification with strong local focus and national reach • Diversified membership base • Realize significant growth potential in ISG, national accounts and specialty businesses • Leverage technology Enhance product of
Slide 17: Leading Market Positions
Leading Market Positions Anthem WellPoint UNICARE and HealthLink >100K members
Slide 18: Anthem: A Gathering Storm of Issues
Anthem A Gathering Storm of Issues
Slide 19: Industry Challenges and Opportunities
Industry Challenges and Opportunities Rising Healthcare Aging Costs Population Consumer Uninsured Perceptions
Slide 20: Drivers of Health Care Costs: The Facts
Drivers of Health Care Costs—the Facts • Population dynamics: an aging population with chronic diseases • Medical technology and treatment advances • Medical errors; poor quality care • Consumer education, information, navigating the complex system • Unnecessary care; duplication of medical services
Slide 21: Drivers of Health Care Costs: The Perceptions
Drivers of Health Care Costs—The Perceptions Media Perceptions Business Decision-Makers Perceptions Sources: BCBSA Survey; American Viewpoint, January 2002; NFO Worldwide, December 2001
Slide 22: Percentage of Health Care Bill Paid by Consumers Has Declined
The Percentage of the Health Care Bill Paid by Consumers has Declined Over 25 Years 1980 1990 2000 Consumer out-of-pocket—- expense Private Insurance Medicare Medicaid Other* 100% ($ Millions) = $ $609 $ 1,130 *Includes VA, DOD, other public assistance Source CMS
Slide 23: National Health Expenditures
National Health Expenditures National health expenditures are expected to rise
Slide 24: Strategies to Manage Health Care Costs
Strategies to Manage Health Care Costs Healthy At Risk Behaviors Waiting to Happen Most Complexly ill Strategies Advanced Care Disease Management, of at-risk patients Prevention and education Wellness and product approaches
Slide 25: The Future
The Future • Disease and care management expands as Medicare reimburses care coordination • Agreed upon outcomes measurement • Greater transparency regarding hospital and physician performance in the management of chronic disease • Greater patient self management and shared decision-making • Medical
Slide 26: Advanced Care Management and Disease Management
Advanced Care Management and Disease Management • Disease management defines members/patients by presence of a diagnosis. Enhanced by stratification and management strategies • High risk population-based case management, or Advanced Care Management, defines members/patients on the basis of risk of f
Slide 27: Anthem Care Counselor: A Controlled Study of Disease Management
Anthem Care Counselor: A Controlled Study of Disease Management Average # of # of Average % of Males/ Comorbid Cost Admits Patients Age Females Conditions PMPM / 1000 Control 756 53 54% / 46% 2.00 $2,189 1,997 Group Intervention 1,154 55 58% / 42% 2.04 $2,186 1,898 Group Diseases: Stroke, renal fail
Slide 28: Anthem Care Counselor: Clinical Outcomes
Anthem Care Counselor: Clinical Outcomes • 13% stopped smoking; 19% following low cholesterol diet • 13% with Coronary Artery Disease (CAD) reduced cholesterol levels to below 200 • 27% increase in Heart Failure (HF) members weighing themselves daily • Diabetic members improved in key areas • 65% fo
Slide 29: Proactive Care Management Participants: Members with Diabetes
Proactive Care Management Participants Members with Diabetes Pre-Program Post-Program
Slide 30: Anthem Care Counselor: Financial Outcomes
Anthem Care Counselor – Financial Outcomes: Reductions in Costs Percent Reductions in PMPM Costs Control Group Intervention Group
Slide 31: Holistic Approach: Benefit Design
Holistic Approach: Benefit Design Employee Perspective • Increased involvement in healthcare decisions • Technology-enabled tools for self-management • Demand that nothing comes between them and their doctor • Product choice and hassle-free Employer Perspective • Stabilize benefit costs or affordabl
Slide 32: PCA Product Components: How They Work
Holistic Approach: Benefit Design PCA Product Components—How They Work
Slide 33: Anthem ByDesign: A Consumer-Centric Solution
Anthem ByDesign: A Consumer-Centric Solution • Innovative, market-based solution that provides more choice and helps control health care costs for employers and their employees • Customization & personalization Total benefits solution Cost control Ease of administration Employee involvement in manag
Slide 34: MyHealth@Anthem
MyHealth@Anthem • Health information resource meets market demands for online resources that allow members to better manage their health • Interactive, personalized content is medically certified and reviewed consistently • Encourages doctor-patient communication and cultivation of relationships res
Slide 35: MiSalud@Anthem: A Spanish Health Resource
MiSalud@Anthem: A Spanish Health Resource Offers culturally specific information and interactive services to our diverse membership Meets demands of the growing Spanish-speaking population Meets Spanish-speaking population’s online needs; three of four Spanish-speaking people who have Internet acces
Slide 36: Enhancing Affordability and Product Value
Enhancing Affordability and Product Value % Spread: Highest Priced to Lowest Price Product 2001 Price Range Spread 2003 Price Range Spread
Slide 37: Health Care Quality: An Overview
Health Care Quality: An Overview • Institute of Medicine Reports: To Err is Human and Crossing the Quality Chasm: Medical errors account for 50,000—100,000 deaths each year in hospitals; more than from breast cancer, AIDS or motor vehicle accidents. US health care system does not apply evidenced-bas
Slide 38: Health Care Quality Problems: Institute of Medicine Categories
Health Care Quality Problems Institute of Medicine Categories • Overuse – provision of a health care service when potential harm exceeds possible benefits • Underuse – failure to provide a health care service that would have produced a favorable outcome for a patient • Misuse – provision of appropri
Slide 39: Common Health Services Documented to Be Overused
Common Health Services Documented to be Overused • Antibiotics • Cardiac pacemakers • Tranquilizers • Hysterectomy • Sedatives • Upper GI endoscopy • Non-steroidal anti- • Coronary angiography inflammatory drugs • Tympanostomy tubes • Endarterectomy • SSRI’s
Slide 40: Causes of Overuse in Health Care
Causes of Overuse in Health Care • Misaligned incentives • Enthusiasm for new technology • Lack of appreciation for harmful effects • PCP-Specialist referral patterns and incentives • Social and cultural norms of “activism” • Fear of malpractice
Slide 41: Proven Effective Interventions That Are Underused
Proven Effective Interventions That Are Underused • Heart attack care • Inhaled steroids • Breast cancer care • Depression detection and treatment • Hypertension detection and treatment • ACE inhibitors in heart failure • Anticoagulation in atrial fibrillation • Diabetic retinal exam • Immunizations
Slide 42: Causes of Underuse in Health Care
Causes of Underuse in Health Care • Barriers to accessing care Lack of insurance Co-payments/deductibles Restricted benefits • Clinician knowledge deficits Rapid accumulation of medical knowledge • Inadequate supporting processes Medical records Information technology Processes of care
Slide 43: Improving Health Care: Financial Incentives for Quality
Improving Health Care: Financial Incentives for Quality • Dominant methods of payment today don’t achieve goal of clinical quality. Fee-for-service payments encourage overuse Capitated payments encourage underuse Neither systematically rewards excellence in quality • Strategy is undercut by difficul
Slide 44: Improvement on Clinical Efficiency: Impact on Net Income to Hospitals
Improvement on Clinical Efficiency: Impact on Net Income to Hospitals Payment Mechanism Improvement to Discounted Per Per Case Shared Cost Structure FFS Diem (DRG) Risk Decrease unit cost
Slide 45: Rewarding High Scores Creates a Tangible Incentive for Progress
Rewarding High Scores Creates a Tangible Incentive for Progress Reimbursement Increase Schedule Proportion of rate increase based on clinical quality Base increase in hospital contract rate
Slide 46: Uninsured Opportunity
Uninsured Opportunity Uninsured Potential Solutions million • • Demonstrate value • Existing Moderate to high income • Potential tax subsidies commercial • 11.4 million earn >300% FPL programs • 6.4 million earn 200–299% FPL million • Enrollment programs • • Education Existing Medicaid • Eligible fo
Slide 47: Questions?
Questions?
Anthem — Jeff & Dave's Conference, Lake Wales, Florida (March 2004) on 6ix