Note: Descriptions are shown in the official language in which they were submitted.
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METHOD AND SYSTEM FOR VALUING A VENTURE
[0001]
FIELD OF THE INVENTION
[ 0 0 0 2] The present invention relates to the field of business planning and
project
facilitation systems, methods, and programs, such as planning for and project
facilitation
of a venture, including an existing or a new venture such as a facility for
providing
medical services, surgical procedures, and endoscopic services.
BACKGROUND OF THE INVENTION
[ 0 0 0 3] Starting a new business or venture, or launching a new operation of
an existing
facility requires anticipating the needs of the business, venture, or
operation, and
requires planning therefore. Also, starting an operation of a medical
facility, office or
venture, such as a surgical facility or an ambulatory care facility, or
business modeling
for an existing facility, such as costs, revenues and profitability of an
existing hospital,
hospital wing or unit thereof, involves planning for numerous tasks, financial
needs and
objectives, contingencies, and risks, and requires an understanding of the
needs of the
facility, including its operation, costs, staffing, accreditation, equipment,
finances,
profitability, and the like. Further, an entrepreneur may wish to obtain a
feasibility study
of a venture or a project involving such factors.
[ 0 0 0 4] Business planning systems and software exist to aid entrepreneurs
in planning
for a new venture. For example, U.S. Patent Application Publication No.
2003/0074211
discloses an on-line real-time business planning website that allows the user
to enter
financial data, prospects, and goals as prompted by questions from the
website, and to
forecast financial reports and financial plans for the business.
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[ 0 0 0 5] However, the financial plan and forecast disclosed in the cited
reference does
not provide information customized to the industry and location of the
venture. For
example, the disclosure does not provide a system that includes detailed
information
about a particular industry and type of venture, such as, for example, medical
facilities,
medical offices, hospitals, clinics, and practices providing medical services,
including
ambulatory care, surgical procedures and tests, and endoscopy services. Based
on such
detailed information, business planning and project facilitation can be custom-
tailored to
the specific needs, objectives and requirements of a new or existing venture.
[ 0 0 0 6] Further, the cited reference does not disclose a system that
provides a user with
default values for the venture based on data from a database, which the user
may
override or supplement with venture-specific information and estimates for the
venture,
according to the estimates, needs and goals of the user specific to details of
the venture
and its operation. Also, the reference does not disclose a system that allows
a user to
enter confidence tags for venture-specific information used to flag values
generated
based on the tagged venture-specific information in generating the business
plan and the
project facilitation outline. Moreover, the cited reference does not disclose
planning
based on a business environment specific to the location of the proposed
venture.
[ 0 0 071 Similarly, U.S. Patent Nos. 5,463,555 and 6,141,647 disclose an
integrated
business environment, process control environment and laboratory environment
in which
a business transaction system sends a work order to a manufacturing execution
system,
and uses rules from a database to generate set points for a manufacturing
operation.
When necessary for the manufacturing operation, the system may prompt a user
to enter
additional information, known as enrichment data. However, the above-discussed
limitations and shortcomings with respect to U.S. Patent Application
Publication No.
2003/00074211 apply also to U.S. Patent Nos. 5,463,555 and 6,141,647.
[ 0 0 0 8] There is a need therefore, for a business planning system that has
access to
detailed information about a location and a particular industry for the type
of venture in
which the user is interested, which provides default data customized for the
type of
venture and location of the venture specified, such that the user can
supplement or
override the default data provided by entering venture data or
override/supplemental
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information, and confidence tags that may be used to flag values for the
strategic
business planning, facilitating and modeling scenarios. In this way a business
plan or
project facilitation outline can be provided by the system that is customized
to the type
of venture and location of the venture and may be based on venture-specific
data and
user estimate data for the venture.
[ 0 0 0 91 In addition, there is a need for a system to present a business
plan and/or a
project facilitation outline for a venture, or a portion, project, unit or
aspect of a venture,
that is based on detailed information specific to medical facilities, offices,
and practices,
including ambulatory care, surgical procedures, or endoscopy services.
[ 0 010 ] Further, there is a need for enabling valuation of such or other
ventures, existing
or new, for instance, to identify the financial value of entities such as
medical facilities,
offices, and practices, including ambulatory care, surgical procedures, or
endoscopy
services. Such valuation tool may be useful, for example, for a new potential
partner
that may be purchasing ownership into the ventures or facilities, for an
exiting partner
that may want to be divested of his ownership in an existing entity, a partner
who needs
to know the value of the facility for various purposes, etc.
SUMMARY OF THE INVENTION
[ 0 011 ] It is an obj ect of this invention to provide a business planning
method for a new
venture, such that user-provided venture information is entered by a user,
default values
based on knowledge database-provided data are retrieved according to the user-
provided
venture information and user estimate data, and a business plan, model or
project
facilitation outline are provided to the user. According the present
invention, the venture
information may be provided to a system by a user, who has obtained the
venture
information from a client or customer or end user. At this point, the user may
enter
additional estimate information based on the user's estimate of a value or
criterion for
the venture to supplement and/or override at least one default value of the
plurality of
provided default values, a business plan customized for the venture, including
average
scores for the industry of the venture, taking into account values specific to
a local
business environment according to a location of venture, and based on the
default value
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information and the user estimate information. The user may also be able to
override or
supplement venture information previously provided.
[ 0 012 ] Further, the default values can include such things as requirements,
including
staffing and equipment, goals, forecasts, including revenue, volume,
profitability/return
on investment or return on equity, costs, size, growth, and outputs for the
endoscopy
services venture.
[ 0 013 ] Also, a user confidence tag for the user estimate information may be
entered,
and values and projections of the business plan may thus be flagged according
to the
user confidence tag for the estimate information. For example, the user
confidence tag
can represent a user estimate of the reliability of the tagged value.
[ 0 014 ] The location of the venture may include information about a country,
state,
province, county, and/or town of the venture. Moreover, based on the
information
described above, project facilitation can be provided to facilitate user
tracking and
performance of tasks necessary for the venture.
[ 0 015 ] According to an embodiment, detailed information about the industry
of the
venture would have to be available in the database to generate the business
plan and to
facilitate the project. For example, information specific to a local business
environment
and detailed information about the industry of the target venture, including
for example,
ambulatory surgery centers and facilities, such as facilities providing
endoscopy services
would be available for searching according to the information received from
the user.
[ 0 016 ] Also contemplated are a system and a program embodying the
invention. Yet in
another aspect, business valuation method, system and program storage device
for an
endoscopy services venture are provide. A business valuation method for an
endoscopy
services venture, in one aspect, may comprise receiving information associated
with the
endoscopy services venture; generating a preliminary valuation report based on
the
received information; providing the preliminary valuation report to a user;
allowing the
user to change the received information; and generating a valuation report
customized
for the endoscopy services venture based on the changed information.
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[ 0 017 ] Further features as well as the structure and operation of various
embodiments
are described in detail below with reference to the accompanying drawings. In
the
drawings, like reference numbers indicate identical or functionally similar
elements.
LIST OF FIGURES
[ 0 018 ] The following figures and discussion describe embodiments of
Applicant's
invention as best understood presently by the inventors however, it will be
appreciated
that numerous modifications of the invention are possible and that the
invention may be
embodied in other forms and practiced in other ways without departing from the
spirit of
the invention. Further, features of embodiments described may be omitted,
combined
selectively or as a whole with other embodiments, or used to replace features
of other
embodiments, or parts thereof, without departing from the spirit of the
invention. The
figures and the detailed description are therefore to be considered as an
illustrative
explanation of aspects of the invention, but should not be construed to limit
the scope of
the invention. The scope of the invention is defined by the below-set forth
claims.
[ 0 019 ] Figure 1 shows a process flow diagram according to an embodiment of
the
invention.
[ 0 0 2 0] Figure 2 shows a "Payor Mix" table generated by the system
according to an
embodiment of the invention and values entered by a user.
[ 0 0 21 ] Figure 3 shows as an example of default data a "Financial Goals"
table provided
by the system and values entered by a user according to an embodiment of the
invention.
[ 0 0 2 2] Figures 4a and 4b show an example of a project facilitation outline
generated by
a system according to an embodiment of the invention.
[ 0 0 2 3] Figure 5 shows reimbursement table modeling generated by the system
according to an embodiment of the invention.
[ 0 0 2 4] Figure 6 shows a table with third-party information generated by
the system
according to an embodiment of the invention.
[ 0 0 2 5] Figure 7 shows features of a Generating Section 30 and Knowledge
Database 35
according to an embodiment of the invention.
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[ 0 0 2 6] Figure 8 shows a table with a breakout of total expenses for each
family of
procedure performed according to an embodiment of the invention.
[ 0 0 2 7] Figure 9 shows a graph and a table with a breakout of revenue
provided by each
unit according to an embodiment of the invention.
[ 0 0 2 8] Figure 10 shows a graph and a table with a breakout of revenue
provided by
each physician and a graph and a table with a breakout of revenue provided by
each
payer or insurer according to an embodiment of the invention.
[ 0 0 2 9] Figure 11 shows a graph and a table with a breakout of revenue
provided by
each CPT family according to an embodiment of the invention.
[ 0 0 3 0] Figure 12 shows a table with a breakout of costs for supplies and
equipment for
a venture according to an embodiment of the invention.
[ 0 0 31 ] Figure 13 shows a table with a listing of operating expenses for a
venture
according to an embodiment of the invention.
[ 0 0 3 2] Figure 14 is a table showing a financing cost calculator for a
venture according
to an embodiment of the invention.
[ 0 0 3 3] Figure 15 is a table showing cost for selected items and associated
financing
costs for a venture according to an embodiment of the invention.
[ 0 0 3 4] Figure 16 shows a "Recommended Facility Size" table listing the
cost for
selected items for a venture generated by the system based on user input
according to an
embodiment of the invention.
[ 0 0 3 5] Fig. 17 is a flow diagram illustrating the valuation process of the
present
disclosure in one embodiment.
( 0 0 3 6] Fig. 18 illustrates an example input user interface for allowing a
user to enter
project objective data according to one embodiment of the present invention.
[ 0 0 3 7] Figs. 19A and 19B illustrate input user interface for allowing a
user to enter
modeling preference, for example, for existing practice.
( 0 0 3 8] Figs. 20A and 20B illustrate a user interface via which a user may
enter
modeling preference for a new practice.
[ 0 0 3 9] Figs. 21 A and 21 B illustrate an example user interface via which
a user may
enter various risk factors for assessing risks considered in the valuation
process.
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[ 0 0 4 0] Figs. 22A - 22H illustrate an example of a table that shows
expenses for
existing and new projected medical equipments or assets in the facility being
valued.
[ 0 0411 Figs. 23A and 23B illustrate an example of a table that shows
expenses for
existing and new projected non-medical equipments or assets in the facility
being
valued.
[ 0 0 4 2] Fig. 24 illustrates upfront development cost. A user may inputs
annual
payments on remaining upfront development costs to identify debt load.
[ 0 0 4 31 Fig. 25 illustrates the investment distribution in one embodiment.
[ 0 0 4 4] Fig. 26A and Fig. 26B illustrate a user interface, for example, a
table, in one
embodiment that displays executive summary of the valuation.
[ 0 04 5] Fig. 27 shows a user interface that presents procedure volume and
reimbursement for existing and new practice.
[ 0 0 4 6] Fig. 28 illustrates a table showing physician investment and return
in one
embodiment.
[ 0 04 7] Fig. 29 illustrates a table showing outstanding debt summary in one
embodiment.
[ 0 0 4 8] Fig. 30 illustrates a table showing financing formulas that may be
used in the
valuation process in one embodiment.
DETAILED DESCRIPTION
[ 0 0 4 9] Features of the present invention are described by reference to
embodiments
involving a medical care facility. In particular, reference is made to an
ambulatory
medical care center, office, or facility, and an example involving an
endoscopic services
facility is described. However, it will be understood that Applicant's claimed
invention
may be have applicability in a variety of settings, including applications
ranging from
ambulatory care offices, facilities, surgical centers and facilities to
clinics, hospitals and
physicians' offices and other medical applications, as well as to applications
for non-
medical facilities, businesses and ventures.
[ 0 0 5 0] Further, reference is made to starting or launching a new venture,
however, it
will be understood that the invention may also be useful for business planning
and
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project facilitation for an on-going venture or for a new or continuing
operation of an
existing venture. Also, the invention may have applicability to modeling for
an existing
business or venture in order to obtain a better understanding of costs,
revenue, return on
investment, return on equity, and profits. For example, a hospital or a
hospital wing or
unit of a hospital may wish to identify existing costs. In a such a modeling
application,
the costs of existing equipment and infrastructure, including past, current
and future
financing costs, may have to be taken into account in modeling the costs and
revenues of
an on-going venture or unit thereof.
[ 0 0 51 ] According to an embodiment of the invention, a user interested in
planning for a
venture, such as for example an ambulatory surgery center, may access a system
designed according to the invention, such as a processor running software in
accordance
with the invention, such that the user is helped in planning business
activities, tasks,
financial requirements, financial returns, income streams, accreditation
requirements and
considerations, building size, expenses and equipment needs, staffing
decisions, tax
consequences, and other elements of the ambulatory surgery center or office,
or
endoscopic services facility. Accordingly, a database containing information
specific to
industries for ventures of different types, such as for the ambulatory surgery
industry, is
maintained and accessed by the system to help in the formulation of business
plans and
project facilitation outlines.
[ 0 0 5 2] According to an embodiment of the invention, the system facilitates
user access
and use of specific modules or individual analysis functions and databases
within the
system. User may access only those analysis functions, databases, and system
capabilities as required by the client or user in order to deliver the
services requested.
( 0 0 5 3] For an existing venture, an example, of the type of specific
analysis that may be
provided is the capture and input of the client's overall cost data and
identifying the
actual "cost per procedure" results. For example, for an existing hospital,
operating
costs, the costs of financing equipment and other infrastructure, and other
expenses can
be calculated and analyzed for each GI-related (Gastro-Intestinal Endoscopy)
Current
Procedure Terminology (CPT) code family, that is for each type of GI
procedure, over,
for example, a five-year projected time-frame. Fig. 8 shows a "Total Expenses
by
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Family" table 8-1, showing the total operating and financing costs associated
with each
CPT family. (Bronchs are bronchoscopies, colons are colonoscopies, et cetera.)
Thus,
the current costs for each GI-related CPT code family can be identified and
analyzed.
With respect to the financing costs, as shown in Fig. 15, table 15-1, the
financing costs
associated with a venture, such as the Land and Building costs of row 15-1.2
and the
Medical Equipment and Reprocessing Equipment costs of row 15-1.4 are broken
out,
together with the financing adjustment, shown in column 15-1.c, representing
the cost of
that item after the financing costs for the item are included. All expenses
can therefore
be individualized and appropriately allocated to each CPT family.
[ 0 0 54 ] Similarly, for revenues from various types of procedures, as shown
in Fig. 11,
tables 11-1 and 11-2, specific departments of a hospital, as shown in Fig. 9,
for
individual physician, as shown in Fig. 10, tables 10-1 and 10-2, and for each
type of
insurance or payer, as shown in Fig. 10, tables 10-3 and 10-4 can be
identified and
analyzed. It will be understood that for other types of existing (or new)
ventures, such
costs and revenues for each type of service provided or good sold or for each
unit or
profit center of the venture, can be identified and analyzed, and a better
understanding of
profitability can thus be obtained using the business planning.
[ 0 0 5 5] According to an embodiment of the invention, the system facilitates
"modeling"
of one or more business scenarios to provide the client with various strategic
business
options to consider or pursue. This exploration by a user through modeling of
different
options and strategies according to the modeling aspect of the invention is
accomplished
as the user enters venture information and user estimate information, making
different
assumptions about the venture and different forecasts about likely conditions
that will
prevail.
[ 0 0 5 6] The business plan gives a user such data on costs, requirements,
revenue, risks,
profitability projections and other venture forecasts, while the project
facilitation outline
is provided as a guide for the user, to facilitate the user's development and
operation of
the venture. That is, the project facilitation outline provides the user with
tasks to be
completed and benchmarks to be borne in mind for various phases of the
startup,
completion, and operation of the venture, and allows the user to enter
additional
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information as tasks are completed. Thus, a user can keep track of the
progress of the
development, construction, completion, start-up, and operation of the venture,
and be
kept informed of further tasks and requirements based on the tasks already
completed.
[ 0 0 5 71 According to an embodiment of the invention, a project facilitation
section
enables a user to be aided in tracking the activities necessary for the
venture. For
example, legal and government certification requirements, finance related
tasks, facility
acquisition, design and construction related activities, facility operations,
tasks and
information related to equipment purchase, operation or maintenance, staffing
and
employment needs, and the like, may be tracked. According to an embodiment,
the user
is also given recommended or estimated time duration information, so the user
may
anticipate the approximate time required for the completion of each task, or
each phase
of a task.
[ 0 0 5 8] For example, Fig. 4B shows pages or portions of the project
facilitation labeled
with "R," with links to "results" pages or portions. In an early stage of the
startup of the
venture, in the "Equipment-Tracking Follow-Up" portion of the project
facilitation
outline, the "track medical capital equipment", and other aspects of the
project are not
yet complete. The user may be prompted at various stages of the project to
follow up on
various tasks required.
[ 0 0 5 9] According to an embodiment, in the planning mode, the user may then
test
various options in real-time as part of the modeling of various options and
strategies for
the venture, in order to make strategic business decision possible. In this
way, the
chances are enhanced for developing an efficient, cost-effective venture, such
as an
ambulatory surgery center, that matches the personal and financial objectives
of the user.
[ 0 0 6 0] According to an embodiment, when the user knows exact values for
customer
volume, costs or other values, information may be entered with a high level of
confidence using a confidence rating for the data entered. On the other hand,
when a
user is less certain of the information provided or when the certainty value
is not known
to the user at that time, the user will enter the information with a lower
confidence
rating. Also, when the user does not know or does not provide a confidence
value, a
default value confidence tag may be provided by a Generating Section 30, as
shown for
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example in Fig. 7, based on information available from the database concerning
the type
of venture in the industry in question for the location proposed. According to
an
embodiment, default confidence tags are set to 100%, until changed by a user.
Features of the System
[ 0 0 61 ] Fig. 7 shows features of the system according to an embodiment.
User 20
accesses the Generating Section 30 via a link 21.
[ 0 0 62 ] According to an embodiment, a user has licensed access to software
embodying
instructions to carry out instructions to perform as a Generating Section 30
of the
invention. Also, such software may be sold to a user 20 or custom-configured
for the
user to be run on the user's processor, system, or LAN (Local Area Network).
According to an embodiment, the Generating Section 30 may be accessed by the
user via
a network, such as the Internet, using for example a World Wide Web interface
through
which the user can interact with a server running the Generating Section 30 at
a remote
location, or with access to the Generating Section 30. When the user accesses
the
Generating Section 30 remotely via link 21 over the World Wide Web, the
Generating
Section 30, implemented, for example, as software run on the server or group
of servers,
may have access to a Knowledge Database 35 with detailed information about the
target
industry that concerns the venture proposed by the user.
[ 0 0 63 ] The Generating Section 30 may be comprised of a User Interface 31,
which
handles data received from and provided to the User 20 and is controlled by
the
Controller 32. The Controller 32 processes the information received from the
User
Interface 31, generates data queries to the Knowledge Database 35 and
coordinates the
functioning of the Generating Section 30.
[ 0 0 641 The Generating Section 30 may be implemented as software configured
to be
executed on a data processor comprised of instructions to the method according
to the
present invention. The Generating Section 30 may also be implemented as
hardware,
firmware or a combination of the foregoing, or as any other medium, apparatus,
or
system capable of providing the business planning and project facilitation
functions as
described herein.
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[00651 The Knowledge Database 35 may be logically connected to the Generating
Section 30 via a network link such as via a link on the World Wide Web, or may
be
integral to the Generating Section 30 or to a component thereof. For example,
if the user
is given a software package embodying the Generating Section 30, the Knowledge
Database 35 may be provided therewith as part of the same package or on an
additional
package processed by the same data processor or by a data processor connected
via a
network. Further, if the Generating Section 30 is accessed via a network, the
Knowledge
Database 35 may be provided on the same server or as part of the same server
network
as the Generating Section 30, or may be accessed remotely by the Generating
Section
30. It will also be understood that the Generating Section 30 maybe
implemented as
various modules and need not be executed on the same processor.
[ 0 0 6 6] According to an embodiment, more than one user may collaborate to
enter
information to the Generating Section 30 and/or to review the business plan
and the
project facilitation outline returned by the Generating Section 30. Also, the
Generating
Section 30 could be accessed (information provided and received) from more
than one
processor, location or network. In this way, users, including users with
different types of
interest or expertise in the venture, may collaborate and/or share
information.
[ 0 0 6 7] According to an embodiment, the user who accesses the Generating
Section 30
may be a person with some training or experience in using the system or in the
target
industry. For example, when a medical venture, such as a colonoscopy or
endoscopy
facility is being planned, modeled or facilitated, the user may be a nurse,
registered nurse
or other medical professional, or a person with business, legal, or financial
background
or training. Also, the user may be a person employed by a consulting company
or by a
company that licenses software embodying the system or sells access to the
system, or a
person working under direction of or under contract for such a company.
Further, the
user may be working for or under the direction of a company with access to the
Generating Section 30 and communicating with a client, or customer, such as an
end-
user, about the client, customer or end user's proposed venture or modeling
needs. Such
communication by the user with the client, customer or end-user may be in
person, in
writing, over a telephone or data network, or by other means.
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An Illustration of an Operation of the System
[ 0 0 6 8] An illustrative example of an operation of the system according to
an
embodiment will now be illustrated using the process flow diagram shown in
Fig. 1, and
with reference to Figs. 2-6.
[ 0 0 6 9] At S 1 of Fig. 1, a user interested in modeling a new venture, such
as an
endoscopic services facility, logs on to a network via a web or otherwise
accesses the
Generating Section 30. The user may be prompted to provide information to
authenticate the user. Generating Section 30 authenticates the user at S2
using any one
of a number of known authentications methods. For example, if the system is
implemented via a world wide web interface for the system, the user may be
required to
submit a password with his or her name or credit card information. If the
system is
installed on the user's processor, system, or LAN (Local Area Network), the
user may be
requested to provide information sufficient to authenticate the user's license
to use the
system.
[ 0 0 7 0] After the user is authenticated, at S3, the user enters venture
information
regarding the proposed venture. Such venture information may include basic
information about the venture and its owners, principals or partners; contact
information
and the like; the industry or field or endeavor of the target venture, such as
an
ambulatory surgery center or ambulatory medicine, or an endoscopy services
facility; the
type of venture, such as ASC (Ambulatory Surgical Center) or physician's
office,
whether the facility is to be a multi-disciplinary or a single-specialty
facility; for a
hospital or clinic, whether the facility will be a public or private hospital,
a teaching
hospital, a community hospital, or a VA; the type of services that will be
offered, such as
endoscopic services. Some or all of this information may instead be entered at
a later
stage.
[ 0 0 71 ] Location information may be also entered at this point. The
location
information may consist of the county and state of the proposed venture, and
whether the
location is to be in a metropolitan, suburban or rural area. Also, basic
financial
information about the venture may be entered such as the initial investment
available,
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CA 02626971 2008-03-26
subsequent financing available, and the volume of patients or procedures
forecast for the
initial and subsequent years. The foregoing examples of venture information
are not
intended to be comprehensive. It will be understood that the information may
be entered
at this point or at a later point. Also, not all of this information may be
necessary for any
particular type of venture and some of the information may be entered at later
stages of
the operation of the system or not at all.
[ 0 0 7 21 Further, the Generating Section 30 may be able to provide some or
all of this
information to the user based on the venture information entered by the user.
For
example, the Generating Section 30 may forecast the facility size, number of
rooms and
equipment, personnel and staffing and investment or the like necessary or
desirable,
based on the volume of procedures anticipated and entered by the user, and
vice versa.
[ 0 0 7 31 At S3, the venture information along with user estimate information
(see below)
is submitted to the Generating Section 30. The user may also enter a
confidence tag, for
example shown as a superscript to the first row right hand colunm "80%" of the
"Financial Goals" table 3-1 of Fig. 3, as a tag for an entered value field.
The use of the
confidence tag by the system will be explained below. At S4, the Generating
Section 30
preliminarily processes this information and sends one or more data requests
to the
Knowledge Database 35 based on the venture information.
[ 0 0 7 41 Depending, for example, on the type of venture or the field of
endeavor of the
proposed venture, or on other venture information, the user may be guided to
an
appropriate Generating Section 30, or a module of the Generating Section 30,
that is
configured for that type of venture. Accordingly, a Generating Section 30
designed for
an endoscopy services facility may be one module of the Generating Section 30
to which
the user may be guided, while a different module of the Generating Section 30
designed
for a non-medical application may be the one to which the user is guided based
on the
venture information submitted. In this vein, such Generating Sections or
Generating
Section modules need not be executed on the same data processor or computer.
Similarly, the Knowledge Database 35 may be configured as database modules run
on
separate sites or with one or more processors.
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[ 0 0 7 5] After the venture information is preliminarily processed, such that
search terms
are extracted, at S5, the search terms are passed to the Knowledge Database
35, from
which detailed information for the venture is retrieved (S5A).
[ 0 0 7 6] At S6, based on the data received from the Knowledge Database 3 5,
the
Generating Section 30 generates a preliminary report using default values to
complete
required information. The generated report may include a business plan and/or
a project
facilitation outline, or a portion thereof, and is reported to the user for
example, by
displaying a web page to the user.
[ 0 0 7 7] Fig. 2 shows an example in an ambulatory medical application of a
page
returned to the user with default values to indicate the payer mix and annual
projected
changes therefrom.
[ 0 0 7 8] In addition, the user may be asked for supplemental information for
the venture,
as shown for example in Fig. 3. Fig. 3 shows a "Financial Goals" table, in
which the
user is requested to enter importance points for various financial goals for
the venture.
[ 0 0 7 9] As shown by the "Financial Goals" table, the financial,
professional and other
goals, requirements and conditions of each owner, principal, or professional
involved
with the venture may be reflected in the planning. For example, each
physician's or
owner's needs and goals can be reflected in the information entered for the
"Financial
Goals" table. In this way, the planning can assist in identifying potential
risks or
problems, or confirming whether the physicians or owners have needs,
constraints and
goals that are compatible. Shortfalls and financial or other constraints can
thus be
eliminated at an earlier stage of the process.
[ 0 0 8 0] As shown in Fig. 3, the system may also provide textual information
helpful for
the user to provide information for the target venture useful to user and to
respond to the
request for supplemental information.
[0 0 81 ] Fig. 3 describes that the user is provided with introductory
information about
ASC (Ambulatory Surgery Centers) and financial information in text form
accompanying the "Financial Goals" table. It will be understood of course that
this
information, like the information of the business plan and project
facilitation outline
provided by the Generating Section 30, can be of a text form or may take the
form of
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figures, charts, icons, attachments, web links, multi-media information,
including audio
and visual information designed to be displayed or played to, or to interact
with the user.
[ 0 0 8 2] The default data returned by the Generating Section 30 as part of
the business
plan and the project facilitation outline may be comprised of various types of
data. This
data may include:
financial, professional, available time, and other objectives and constraints
of
partners/owners/principals/directors/physicians, individually and
collectively, for the
venture;
the industry and the type of venture;
historical and projected data and statistics, such as payer mix (insurance
types, Medicare
and Medicaid, HMO patients, patient cash, et cetera);
customer, patient, procedure or gross sales/ revenue volume estimates,
inventory,
purchases, forecasts, historical data, industry averages, benchmarks, and
statistics;
reimbursement and payer information, which may be automatically calculated for
wage
index and geographical adjustment factors for Medicare, Medicaid, and all
major payers
or insurance;
reimbursement rates and amounts discounted automatically for secondary cases;
debt, bad debt, non-recoverable charges, and free care calculations;
facility size, revenue, and customer volume;
room-by-room facility outfitting and equipment needs, costs and schedules;
medical and non-medical supplies and equipment needs and requirements for the
venture,
including equipment and supply replacement costs and schedules;
pricing schedules, discounts and promotions for prospective
customers/patients;
cost-of-living-increases, depreciation, amortization, and the like;
cash to reserve ratios and calculations;
tax estimates, tax timing, taxing preferences and other tax considerations for
the venture
as a whole and for owners and principals thereof;
corporate form and other considerations for the type of business entity
optimal for the
venture;
credit, mortgage, and financing parameters and options;
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investment distribution options;
detailed start-up expenses, including facility and equipment acquisition and
construction,
financing, maintenance and repair, incorporation, local, state and federal
fees, penalties,
and charges, and potential initial downtime for the facility;
market research, product research, product development, and prototype costs;
literature, convention, and marketing costs;
travel and entertainment costs; standard costs;
land size, zoning and site development needs and requirements, and time-frames
for the
foregoing;
break-even analysis, profitability, return on investment, return on equity,
and EBITDA;
contingency cushions;
revenue and cost identification as they relate to procedure or service volume;
distribution patterns and costs;
contracted service needs, including consultants;
staffing needs and goals, including staff wages, payroll, and benefits;
information on state, local, federal and accreditation body licensing and
accreditation for
professionals and the facility;
required or desirable government or other applications, submissions,
resolutions,
meetings, bylaws, plans, and forms to be prepared or scheduled;
government and other inspections, approvals, certificates, fees, surveys and
training,
necessary;
continuing professional education and insurance;
other expenses detailed, such as marketing, IP licensing, and dues for
equipment, office
supplies, and the like;
utilities, insurance and operating costs for the facility; and
working capital requirements and forecasts.
[ 0 0 8 3] According to an embodiment of the present invention, the default
data are drawn
from the Knowledge Database 35 with detailed information about the target
industry to
provide more accurate and comprehensive business planning and project
facilitation.
For example, in the endoscopic services application, sound planning requires
that the
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plan take into consideration the distinctions in the law of many states
between a facility
that comes under the rubric of physician's office, Ambulatory Surgery Centers,
hospitals, clinics, et cetera. An Ambulatory Surgery Center, for example, may
be
governed in some states by regulations particular to such centers, and such
regulations
should be taken into account in planning for the venture, obtaining licenses,
accreditation, and permits, et cetera.
[0 0 84 ] The Generating Section 30 can indicate the averages, "best
practices," industry
benchmarks, and/or target values for the venture as part of the default data
returned. The
business standards may then be a starting point of the user's analysis in
modeling for the
venture, to develop a business plan consistent with the user unique
circumstances, goals,
forecasts, and objectives. That is, the business plan may be based on
historical
information for the industry and expertise acquired for the type of venture
proposed,
industry averages, and industry benchmarks and requirements, taking into
account
conditions specific to the local business environment of the venture.
[ 0 0 8 5] Information about local business conditions may include land
availability,
zoning, development and construction requirements, and costs; legal
requirements and
considerations; staffing availability, costs for the various types of
employees necessary;
availability and cost of financing; cost of living and other expenses, and
factors
applicable to the region or area. In addition the business plan would also be
based on
supplemental and override information entered for the venture.
[ 0 0 8 6] The user may override or supplement information provided as default
values by
the Generating Section 30. Some or all of the data and values enumerated above
as
default values may thus be entered by the user as user estimate information,
supplemental information and/or override information. Thus, a user has a
degree of
control over the modeling of the business or venture assumptions.
[ 0 0 8 7] For example, when specific sizes, costs, or other default
quantities or values are
calculated by the system, the user may be given opportunities to override or
supplement
those values and assumptions with venture-specific input values and forecasts
to
optimize the business plan that is generated. Thus, at S7, based on the
information
available to the user, including user business or venture operation experience
and
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historical information available to the user ("track record"), estimate of
relevant
conditions, goals, perceived requirements, forecasts, operational or financial
constraints
or obligations, or the like, the user enters supplemental information, or
overrides default
data returned by the Generating Section 30, for example, by indicating the
importance
points in the right hand column of the "Financial Goals" table 3-1. By way of
example,
the user may point a cursor to the first row 3-1.2 of the "Importance Points"
column, and
indicate the importance of minimizing initial cash to pay for the venture,
shown in
Figure 3 as 20 out of 100 in row 3-1.2. Values reflecting goals, constraints
and priorities
of individual owners or professionals of the venture, or its partners or
shareholders
(depending on the venture's business form), as well as of the venture as a
whole, may be
entered and taken into account in planning and modeling.
[ 0 0 8 8] The supplement information may be information provided by the user
responsive to a prompt by the Generating Section 30 that allows a user to
enter
information additional to the originally provided venture information about
conditions or
forecasts for the venture. The override information may be based on a user's
knowledge
of factors, conditions, or forecasts for the venture, when they are different
from the
Generating Section 30-provided default values. As discussed, the override
information
and supplement information may also represent a user's rating of the value of
an
outcome for the venture, see for example row 3-1.2 of Fig. 3.
[ 0 0 8 9] In addition, at S8, as at S3, the user may enter a confidence tag,
for example
shown as a superscript to the first row right hand column "80%" of the
"Financial
Goals" table 3-1 of Fig. 3.
[ 0 0 9 0] The confidence tag represents a user's confidence about a forecast
or goal, or
the degree of accuracy of historical data for the venture. For example, the
Payor Mix/
Projected Change table 2-1 of Fig. 2 shows the confidence tag of the estimated
yearly
change in the right hand column, "Estimated Yearly Change" 2-1.3, for each of
the
yearly changes as 100%. The confidence tag may be a user's assessment of a
likelihood
of the prevalence of a present or future condition with regards to the
venture.
[ 0 0 91 ] After the user at S 8 enters the confidence tag, the supplemental
information and
override information and the confidence tag are submitted to the Generating
Section 30,
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which processes this information at S9. The Generating Section 30 at S10 may
send for
additional data from the Database, S 10, as necessitated by the new
information entered
by the user.
[ 0 0 9 2] The confidence tag may be used by the Generating Section 30 to flag
information so tagged, information generated for the plan or model or
facilitation based
on the information tagged, and/or to flag other impacted information
accordingly. For
example, Fig. 5 includes a table entitled "Indicate Modeling Preferences" 5-1,
showing
reimbursement values for different insurers/payers for endoscopic services
rendered. In
the third column, "Medicare Adjustment" 5-1.3, the first row, "B1ueCross/Blue
Shield"
5-1.a, shows that the Blue Cross/Blue Shield reimbursement rate at 20% higher
than the
Medicare figure shown in row 5-1.c of table "Indicate Modeling Preferences" 5-
1.
Together with further information, for example, with information about the
percentage
of endoscopy procedures reimbursed by the respective insurers/payers (not
shown in Fig.
5), the "Medicare Adjustment" information (shown in the "Medicare Adjustment"
column 5-1.3) may be useful in planning for income streams. However, the entry
for the
Blue Cross/Blue Shield reimbursement rate is tagged with a confidence tag of
"80%"
(superscript for the "20" in the first row of the "Medicare Adjustment" column
5-1.3),
which shows that the user's estimate of the entry has a confidence value of
80%. Thus,
the 80% confidence rating would according to this embodiment have to be used
to flag
any planning based on the 20% above Medicare reimbursement rate and values
generated based on the 20% rate, including potentially any values derived from
this
value, with a reliability rating according to the confidence rating, for
example with a
reliability of 80%.
[ 0 0 9 3] The Generating Section 30 processes the override and/or
supplemental
information received.
[ 0 0 9 4] At this point, the Generating Section 30 optionally extracts search
terms to
produce a search request for additional searching of the Knowledge Database 35
(S9).
On the other hand, if the Generating Section 30 determines that no further
information
from the Knowledge Database 35 is necessary, then these steps may be omitted.
At S 10,
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the search request is passed to the Knowledge Database 35, which retrieves the
additional information and provides it to the Generating Section 30 at S l OA.
[0 0 9 5] At S 11, the Generating Section 30 generates a business plan and a
project
facilitation page based on the information retrieved and reported to the user.
For
example, based on a user estimate of the number of procedures to be performed
for a
given period (or based, for example, on gross sales in other applications of
the invention)
by the venture, the Generating Section 30 obtains information about the size
of the
facility, types and number of medical equipment required to provide the
services.
According to an embodiment, the number of procedures forecast may be keyed to
a LUT
(look up table) in the Knowledge Database 35, and the size of the facility and
type and
number of medical equipment required is returned. For example, the LUT may
have a
range corresponding to a number of procedures of a certain type as an entry,
and a
forecast of a number of procedures falling into that range will return a size
of the facility,
types and number of medical equipment required to provide the services. Fig.
16 shows
an illustrative "Recommended Facility Size" table showing a size, number of
rooms and
the like recommended for an ASC (Ambulatory Surgery Center) forecast for
several
years, based on a number of procedures estimate entered by the user. For this
example,
default confidence tags are illustratively set at 100%.
[ 0 0 9 6] In turn, based on the size of the facility and equipment required,
estimates of the
staffing, supply and other needs of the venture may be obtained from the
Knowledge
Database 35 and provided to the user. It will be understood that portions or
aspects of
the business plan and the project facilitation outline may be provided to the
user in
sections as they become available according to the information from the user
and
database. For example, a user may wish to model or facilitate only a unit or
profit center
or aspect of a venture and enter venture data only for that unit or profit
center or aspect
of a venture. The system would model or plan or facilitate for only that part
of the
venture, based on the information available.
[ 0 0 9 7] For example, Figs. 4A and 4B show a summary of a project
facilitation outline
provided to the user in which certain sections are summary pages listing
results pages
(illustratively tagged as "R"), for example, the "Legal/Certifications Summary
Tracking"
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section 4-1.2, while other pages representing portions of the projection
facilitation report
are subset tasks, for example, the "Select Development Team" 4-1.3. Thus,
information
for the sections or modules of the business plan and of the project
facilitation outline
may be individually completed by the user and the respective completed
sections
generated and provided by the Generating Section 30 to the user. It will be
understood
that the project facilitation outline may be of a form that facilitates
interaction with the
user, such that the user may enter values and check off tasks as they are
completed. For
example, Figs. 4A and 4B show a page displayed to a user on a user's display,
such as a
computer monitor or display, that provides the necessary information to the
user.
[ 0 0 9 8] Further, a field returned as part of a results page may be linked
to a data input
page, such that for example by selecting or "clicking" on the field, the user
may be
returned to a corresponding data entry page and given a further opportunity to
view,
adjust, update, correct or supplement corresponding data or data related to
the
corresponding data. For example, an "Operating Expense Overview" table 13-1 of
Fig.
13 contains a "Salaries and Wages" row 13-1.4 with estimates for future years
of the
venture. The underlining of the words "Salaries and Wages" of the row heading
of the
"Salaries and Wages" row 13-1.4 may indicate that a user can click on that
field and be
linked to a data input page where more detailed information about costs
associated with
staff salaries, wages and related expenses were listed. The user can view this
more
detailed information to get a better idea of the factors and assumptions that
went into the
total "Salaries and Wages" expenses, and/or update, adjust, correct or
supplement such
detailed breakout items. For example, by selecting a corresponding item listed
in table
13-1 of Fig. 13, the user is given access to a set of data, such as shown in
Fig. 12, table
12-1, which shows the values that served as the basis for the equipment
expenses.
[ 0 0 9 9] At S 12, a user reviews the information generated. The business
plan and project
facilitation outline may include detailed information about forecasts and
needs of the
target venture, including information such as legal requirements, insurance,
facilities
development and operations, building maintenance and repair, government
(state, local
and federal) licensing and accreditation, financial, accounting, tax,
staffing, employment
rules, equipment and supply procurement and need, industry environment and
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benchmark information about location. The types of information returned may be
of the
same type of information as the default data returned, discussed above.
(001001 There may also be provided contact information and links, such as
world
wide web links, to third parties relevant to the venture, such as state,
federal, local
government and professional accreditation or licensing bodies, vendors,
contractors,
professionals, staffing agencies and the like. Forms necessary to apply for
various
licenses and accreditation can also be provided.
[ 0 0101 ] For example, Fig. 6 includes a table showing third parties that may
have
to be consulted for licensing, such as Medicare Certified Ambulatory Surgery
Center
building regulations. According to an embodiment of the present invention,
contact
information or links to such third parties are provided. In an implementation
in which
the user accesses the Generating Section 30 via the an electronic network,
such as the
Intemet, and the business plan and project facilitation are provided to the
user on a
monitor or display, the third parties listed in Fig. 6 may have hyperlinks
that could send
the user to the web pages of government, state or local agencies, to forms
required for
various types of licenses or accreditation, or to other information.
[ 0 01021 At S 13 of Fig. 1, the user decides whether additional modeling of
the
target venture is desirable at this time and if so, the user may enter
additional
supplemental or override information, or change or update previously entered
supplemental and override information, and enter confidence tags (or change or
update
previously entered confidence tags) by returning to S7 and S8 and submitting
the
information to the Generating Section 30. The Generating Section 30 upon
receiving the
new override, supplemental, and user confidence tag information is returned to
S9.
[ 0 010 3] In this way, the system provides a reiterative process, allowing
the user
to model various assumptions and conditions for the venture or to provide more
comprehensive information for the venture as information about prevalent
conditions
and assumptions become known.
(001041 At S 13, when the user decides that additional modeling for the
venture is
not desired, the user may accept the business plan and project facilitation
outline
generated and proceed to S 14. The information so arrived at may be saved by
the
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CA 02626971 2008-03-26
system for a future presentation to the user in a secure electronic folder,
such that the
folder could later be accessed by the user following the user's authentication
by the
system. The information could also be used in the future, if the user wishes
to run
additional modeling, planning or facilitation. Such future modeling may be
based on
additional information or more accurate or updated information as it becomes
known.
[ 0 010 5] The present invention envisions two functions, a business planning
function and a project facilitation function. However, the system may provide
only the
business plan or the project facilitation for the venture. Also, while two
functions are
described, the business planning function and the project facilitation
function may be
provided to the user in an integrated fashion, as separate functions, or as
separate reports
returned.
(001061 The present invention also provides a method for valuation by
considering the financial parameters and risk assessments. The method in one
aspect
may perform valuation based on the detailed cost identification and revenue
generation
formulas. The method may expand the above-described system by allowing for
additional analysis to identify current capital equipment and costs, and
future capital
needs and replacements. Additionally, it may provide the ability to look at
current
practice compared to future practice scenarios.
(001071 Fig. 17 is a flow diagram illustrating the valuation process of the
present
disclosure in one embodiment. A user may perform similar steps as those
performed for
the planning process shown in Fig. 1, for example, to initiate and enter
values for the
valuation. At S 100, user accesses the generating section and enters user
information and
at S 102, user is authenticated and provided with information entry page in a
similar
manner described with reference to Fig. 1. At 102A, the user specifies a
project
objective, e.g., a 5-year valuation for an existing center. At S 103, the user
enters venture
information with confidence tag,. At S 104, venture information is
preliminarily
processed to extract data search terms. At S 105, using the data search terms,
knowledge
base is queried, and at S 105A, data is retrieved from the database. The
venture
information may include, for example, the data shown in Figs 18-25. At least
some of
the values in those tables may be populated with default values. A user may
change the
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CA 02626971 2008-03-26
entries shown in those tables, for example, by inputting different values in
the fields. At
S 106, preliminary report is generated using the information and the report is
provided to
user. The generated report may include a valuation, business plan and/or a
project
facilitation outline, or a portion thereof, and is reported to the user for
example, via a
user interface such as web pages, etc. At 107, user may override or supplement
the
informationExamples of preliminary reports are shown in Figs. -26-29. At 108,
confidence tag may be adjusted if or as needed. At S 109, the override and/or
supplemental information and confidence tag are preliminarily processed to
extract
search terms. At S 110, a search based on the search terms is requested and at
S 110A,
data is retrieved from the database.
[ 0 010 8] At S 111, valuation report is generated, for example, including
estimated
valuation range, risk level assessment and EBITDA multiple range. An example
of a
valuation report is shown in Figs. 26A-29. The valuation process in one
embodiment
evaluates various information about the facility obtained, for example, from a
user and
for example, from the database to compute the financial value of the facility.
Such
information may include, but is not limited to, amount and types of assets
such as
equipments, future assets, present and future revenues, depreciation factors,
operating
costs and expenses such as staff salaries, supply costs, marketing, dues and
education
costs, insurance costs, maintenance and repair costs, lease, etc. Depreciable
life may
vary from setting to setting. For example, a facility may call for a 5-year
depreciation
schedule. For other, a modified accelerated depreciation method to write off
more of the
equipment faster may be used. Any known or will be known valuation or
accounting
method may be used taking into account various information provided in the
database
and/or by a user.
[ 0 010 9] At S 112, user reviews the valuation report and at S 113, the user
may
decide whether additional modeling for the valuation is desired. If additional
modeling
is desired, the method returns to step S 107, where previously entered data
may be
adjusted to model another valuation.
[0 0110 ] Information collected from a knowledge base and/or user may include,
but is not limited to, contact information and model configuration parameters
such as
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CA 02626971 2008-03-26
key contact or principal advocate, detailed information on new and/or existing
partners,
detailed information about office, wage index and local regulations. Further,
information collected for the strategic plan or valuation may include, but is
not limited
to, project objectives and class, partner objectives and goals such as
information
pertaining to existing practice and new partners. Additional information
collected may
include information about facility revenues, facility size and financing,
information
regarding contingency reserve, tax, and legal considerations, asset financing,
financing
parameters, investment distribution, risk factors, ongoing working capital
and/or
discount rate.
(001111 Information about facility revenues may include, but is not limited
to,
payor information such as current volume and modeling preferences for existing
and
new partners which may describe practice related information such as procedure
carry-
over and ramp-up, estimate payor changes, procedure primacy, reimbursement
modeling
preferences, for instance, naming different insurance institutions, and
information
relating to receivables, bad debt, and free care.
[001121 Facility size and financing information may include itemized medical
equipment, non-medical capital equipment modeling preferences, non-medical
equipments in additional non-GI room, bathroom, consultation and/or nurse
room,
manager's office, general facility, housekeeping, office and/or reception,
recovery bays,
staff lounge, and waiting room. Information relating to contingency reserve,
tax, and
legal considerations may include but is not limited to information about
contract
services, personnel status such as clinical or non-clinical, staffing levels,
compensation,
information about supplies.
[001131 Strategic plan or valuation results may provide an executive summary
including, for example, for a medical facility, facility description,
revenues, capital,
expenses, and valuation; key financial metrics; analysis summary of the
valuation
projection such as physician investment and return, capital requirement
summary,
medical capital equipment requirements, non-medical capital equipment
requirements;
revenue details; procedure mix and growth by partner; procedure mix and
reimbursement for existing and/or new partners; expense details such as
contract service
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costs, staffing expenses, supply costs such as those for accessories, medical
supplies,
medications, office supplies, reprocessing supplies, marketing, dues, and
education
costs, insurance costs, maintenance and/or repair costs, utilities, postage,
and paper
goods costs, depreciation and/or lease expenses; interest and principal
repayments;
break-even analysis. The results further may provide an option for selecting a
developer
for building the facility, suggest timeline, suggest partner objectives
alignment and
vision, and key success factors including information on legal structures
and/or
accredition.
[ 0 0114 ] Fig. 18 illustrates an example input user interface for allowing a
user to
enter project objective data according to one embodiment of the present
invention. For
example, a user may select to perform "5-year valuation" for an exiting ASC
shown in
Fig. 18.
[0 0115 ] Figs. 19A and 19B illustrate a user interface for allowing a user to
enter
modeling preference, for example, for existing practice. A user may select one
of two
methods for projecting future procedure volumes for existing practice. Total
procedures
method may be selected for simplicity when a user expects a relatively
constant mix of
procedures; and itemize procedure method may be selected when a user expects a
changing mix of procedures or when modeling a new partner joining at a later
point in
the valuation period. A user also enters data associated with total number of
procedures
as shown in Figs. 19A-19B. Similarly, Figs. 20A and 20B illustrate a user
interface via
which a user may enter modeling preference for a new practice.
[001161 Figs. 21 A and 21 B illustrate an example user interface via which a
user
may enter various risk factors for assessing risks considered in the valuation
process.
The values identify key risks for the financial success of the center. A user
may also
input values which estimate the severity of risk, for example, based on a
numerical
system from 1(low) to 9(high) for each key risk factor. Risks factors may
include, for
examples, risks associated with revenue, volume of work performed, partners,
local
competition, debt, efficiency, collection, regulations, possible litigations,
operational
performance, etc.
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[001171 Figs. 22A - 22H illustrate an example of a table that shows expenses
for
existing and new projected medical equipments or assets in the facility being
valued.
Valuation for example may include inventorying and inputting the equipment
currently
in the facility and when it will need to be replaced. This provides an
assessment of future
expenses for the facility.
[ 0 0118 ] Figs. 23A and 23B illustrate an example of a table that shows
expenses
for existing and new projected non-medical equipments or assets in the
facility being
valued. General facility valuation may include inventorying and inputting the
equipment
currently in the facility and when it will need to be replaced. This provides
an
assessment of future expenses for the facility.
[ 0 0119 ] Fig. 24 illustrates a table listing upfront development cost. A
user may
inputs annual payments on remaining upfront development costs to identify debt
load.
Development costs, for example, my include architect fee, consultant fees,
site advisor
fees, equipment consultant fees, legal consultant fees, pre-opening staff
salaries,
communications consultant fees, interior designer fees, managed care contract
consultant
fees, etc.
(001201 Fig. 25 illustrates the investment distribution in one embodiment. The
distribution may be tailored to look at current and new investors.
(001211 Figs. 26A and 26B illustrate a user interface, for example, a table,
in one
embodiment that displays executive summary of the valuation. The table
provides a
valuation summary of the calculations performed by the planner to estimate
valuation
range, risk level assessment, and EBITDA Multiple Range.
[0 012 21 Fig. 27 shows a user interface that presents procedure volume and
reimbursement for existing and new practice. The output shown charts medical
procedure volume and reimbursement by existing and new partners.
(001231 Fig. 28 illustrates physician investment and return, which summarizes
the
pre-tax cash flows to existing and new partners, EBITDA multiple range based
on risk
score and risk range and facility valuation.
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[001241 Fig. 29 illustrates a table listing outstanding debt, which summarizes
the
existing debt and anticipated improvements/purchases over the next years of
the
valuation period, for example, next 5 years as entered in Fig. 18.
[ 001251 The valuation process of the present disclosure may utilize any known
or
will be known accounting or like computation or formulas to determine the
valuation
based on the user entered information and information obtained from the
knowledge
base, for example, as described above. In one embodiment of the present
disclosure, a
novel method is used to model a valuation in which cost per procedure (CPP)
and/or
lease financing alternative are added to the upfront working capital. Such
addition may
introduce a secondary effect into modeling that may be described as a
circularity
problem. The planner of the present disclosure in one embodiment calculates
the
amount of working capital required as a percentage of operating costs,
typically 3
months of operating expenses. However, CPP and leasing financing are operating
expenses. As a result, the CPP or lease financing of upfront working capital
becomes
included in the very same operating costs that are used to determine the
working capital
to be financed. The effect is that the working capital calculation is required
as an input
to itself. In order to circumvent the above effect, the method and system of
the present
disclosure uses the following underlying formulas and applications.
[001261 Underlying formulas - Capital lease
Year 1
WCR1 = (OP1 + PMT) * M/12 * (1+(C/100))
PMT = (WCRl + DEV)* (RF*12)
C 1=(OP 1+ PMT) * (C/100)
WCRI = (OP1+ ((WCR1 + DEV) * RF*12)) * (M/12) * (1+(C/100))
Let A = (M/12) * (1+(C/100))WCR1 = OP 1 * A + ((WCR1 + DEV) * (RF* 12))
AWCR1 = OP 1 * A + (WCR1 * (RF* 12)) * A + (DEV * (RF*12)) * AWCR1 -
(WCR*(RF*12/T)*A) = (OP1*A) + (DEV * (RF*12)) * AWCR1 (l-(RF*12)*A)
(OP 1 *A) + (DEV * (RF* 12)) * AWCR1 = ((OP 1 *A) + (DEV * (RF * 12)) * A) /
(1-
(RF* 12)*A)
OP 1= Operating Costs (Year 1)
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DEV = Upfront Development Costs
WCR1 = Working Capital Required (Year 1)PMT = Payment on WCR1
C = Contingency Allowance
C 1 = Contingency (Year 1)
RF = Rate Factor Applied (see next page for RF determination)
M = Months of Working Capital Required
[001271 Underlying formulas - Capital
Year 1
WCR1 = (OP1 + PMT1) * M/12 * (1+(C/100))
PMT1 =(WCR1 + DEV) * RF * P1 / PT
Cl = (OP1 + PMTI) * (C/100)
WCR1 = (OP l+ ((WCRI + DEV) * RF * P 1 / PT)) * (M/12) * (1+(C/100))
Let A = (M/12) * (1+(C/100))WCR1 = OP1 * A + ((WCR1 + DEV) * (RF * P1 / PT)) *
AWCRl = OP1 * A + (WCRl * (RF * P1 / PT)) * A
+ (DEV * (RF * P1 / PT)) * AWCR1 - (WCR * RF * P1 / PT)*A) _
(OP1*A) + (DEV * (RF * P1 / PT)) * AWCR1 (1- (RF * P1 / PT)*A) = (OP1*A)
+ (DEV * (RF * P 1 / PT)) * AWCR1 = ((OP 1 *A) + (DEV * (RF * P 1 / PT)) * A)
/ (1-
(RF * P1 / PT)*A)
PMT1= Payment on WCR1 in Year 1
P 1= Procedures in Year I
PT = Total Procedures in Years 1-5
[ 0 012 8] Using the above underlying formula, correct rate factor may be
applied as
follows for the first year (year 1) as applied to capital lease and capital
CPP. To
compute the required upfront working capital (WCRI), the appropriate rate
factor (RF)
is applied. Since the rate factor is required to compute WCR1, we iterate
through all the
available rate factors to determine the appropriate RF to use:
RF1 = Asset value less than $250K
RF2 = Asset value under $500K but greater than or equal to $250K
RF3 = Asset value greater than or equal to $500K
Step 1: Assume WCR1 < $250K
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Step 2: Calculate WCR 1 based on RF 1(A= WCR 1(RF 1))
Step 3: Test assumption that WCRl <$250K
If WCR1 > $250K then assumption is incorrect, retest with RF2, else
Assumption is correct, RF1 is correct
(If A<250,000 then B=WCR1 (RF2) else B=A)
Step 4: Test assumption that <$500K
If WCR1 >= $500K then assumption is incorrect, use RF3, else
Previous assumption is correct
(If B<500,000 then C=WCR1 (RF3) else C=B)
[0 012 9] Then, the following underlying formulas may be used for years 2-5 of
the
valuation period:
Capital Lease - Years 2-5
PMT = (WCR1 + DEV)* (RF* 12)
CN = (OPN + PMT) * (C/100)
WCRN = (OPN + PMT) * M/12 * (1+(C/100))
Where,
OPN = Operating Costs (Year N)
DEV = Upfront Development Costs
WCR1 = Working Capital Required (Year 1)
WCRN = Working Capital Required (Year N)PMT = Payment on WCR1
C = Contingency Allowance
CN = Contingency (Year N)
RF = Rate Factor Applied (see next page for RF determination)
M = Months of Working Capital RequiredCapital CPP - Year 2-5
PMTN =(WCR1 + DEV) * RF * PN / PT
CN = (OPN + PMTN) * (C/100)
WCRN = (OPN + PMTN) * M/12 * (1+(C/100))
Where,PMTN= Payment on WCR1 in Year N
PN = Procedures in Year N
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PT = Total Procedures in Years 1-5
[ 0 013 01 Fig. 30 illustrates a table showing financing formulas that may be
used in
the valuation process in one embodiment. For example, entries at 3002 show
formulas
that may be used for a new facility, entries at 3004 show formulas that may be
used for
ID cost, and entries at 3006 show formulas that be used for valuation, for
example, for 5-
year valuation.
[001311 The system and method of the present disclosure may be implemented
and run on a general-purpose computer or computer system. The computer system
may
be any type of known or will be known systems and may typically include a
processor,
memory device, a storage device, input/output devices, internal buses, and/or
a
communications interface for communicating with other computer systems in
conjunction with communication hardware and software, etc.
[ 0 013 2] The terms "computer system" and "computer network" as may be used
in
the present application may include a variety of combinations of fixed and/or
portable
computer hardware, software, peripherals, and storage devices. The computer
system
may include a plurality of individual components that are networked or
otherwise linked
to perform collaboratively, or may include one or more stand-alone components.
The
hardware and software components of the computer system of the present
application
may include and may be included within fixed and portable devices such as
desktop,
laptop, server.
[ 0 013 3] The embodiments described above are illustrative examples and it
should
not be construed that the present invention is limited to these particular
embodiments.
Thus, various changes and modifications may be effected by one skilled in the
art
without departing from the spirit or scope of the invention as defined in the
appended
claims.
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