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AAB Annual Meeting 2007Orlando, FL

May 17 – 19th, 2007

Larry Siedlick, CEOSunrise Medical Laboratories

Sunrise Medical Sunrise Medical LaboratoriesLaboratories

Sunrise OverviewSunrise Overview

• Located Just Outside New York City• 1972 – Founded as Local Community Lab• 2007

– Over 300 Employees– 1.4 million Patients projected– $72 million projected revenue– Largest Private Regional Lab in NY

Sunrise GrowthSunrise Growth

15.418.3 19.3 20.7

25.529.5

37.441.6

48.2 50.3

60

72

01020304050607080

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Revenue in millions

Share of Physician Office Market Share of Physician Office Market in the New York City Areain the New York City Area

Source: Laboratory Economics January 2007

Estimated Total Market Size = $ 1 billion

LabCorp7%

Sunrise6%

Other labs10%

Quest62%

Bio-Reference12%

Enzo3%

How Did We Get There? How Did We Get There? Sunrise Rule #1Sunrise Rule #1

No WhiningNo Whining

How We Actually Got ThereHow We Actually Got There

• Great Management Team and Happy Staff

• Financial Discipline

• Organic Sales Growth

• Early Adopters of Technology

• Creative Business Solutions

• We Know When We Don’t Know

• We Never Help Our Competitors

Strategies for GrowthStrategies for Growth

• Strong Financial Controls and Discipline

• Service Culture

• Sales Driven Company

• IT Connectivity Strategy

Financial Realities Financial Realities ““What a ConceptWhat a Concept””

• Reality # 1 - Most labs have little or no control over reimbursement levels from third party payers

• Reality # 2 – A major part of a financially successful lab is the ability to manage and control their costs

Understanding Your Costs Understanding Your Costs The BasicsThe Basics

• Supply Cost/Accession–For client supplies, lab supplies, etc.

• Total Labor Cost/Accession–All your labor expense

These 2 together give you a pretty good idea of your main cost to

process an accession.

Understanding Your RevenueUnderstanding Your RevenueKey Financial Metrics Key Financial Metrics

• Days Sales Outstanding (DSO)• Average Time Between Lab Service and Payment • Measures your cash flow – Lower is better

• Bad Debt as % of Total Sales• Compare to other labs

• Bad Debt as % of Patient Sales

“ The profit and growth of a laboratory is directly proportional to its billing capabilities”

““Show Me The MoneyShow Me The Money””

If you don’t have a lot of money to start

You Must

““Quickly learn how to collect it.Quickly learn how to collect it.””

“ The profit and growth of a laboratory is directly proportional to its billing capabilities”

How Well Did Sunrise Learn?How Well Did Sunrise Learn?

Days Sales Outstanding (DSO)

• Average Time Between Lab Service and Payment

• Measures your cash flow – Lower is better

• Quest is 48 days and LabCorp is 54 days*

• Sunrise is currently 35 days

* LIR April 2007

Successful Pricing StrategySuccessful Pricing Strategy

““If you live by price If you live by price ––you die by price.you die by price.””

– Pat Lanza

•No Loss Leaders

•Pull-Through = Myth

Sunrise Service CultureSunrise Service Culture““Hiring for DummiesHiring for Dummies””

• Customer Service is a personality trait and not a learned technical skill.

• Most companies hire people for what they know… then they fire them for who they are.

• Sunrise spends more time in the hiring process finding out who people are

Sunrise CultureSunrise Culture

• #1 Priority is our Internal Customers– Management recognizes our staff as customers

– Strong emphasis on both teamwork and responsiveness to individuals

– Senior Management is accessible and places strong emphasis on work environment

• “Perception is Reality”We understand that our staff’s perception of culture is their reality – no matter what we think.

Sunrise Cultural ResultsSunrise Cultural Results

• Productivity Metric - Annual Requisitions/FTE – Quest is 3,639 and LabCorp is 3,820*

– Sunrise is 3,776

• Financial Benchmark - Revenue Per FTE– Quest is $151,053 and LabCorp is $143,632*

– Sunrise is $206,220

• Financial Results - Similar to National Labs

• High organic growth rates

• Low staff turn-over at all levels

• High customer retention

* LIR April 2007

Customer ServiceCustomer Service““ItIt’’s More Than Lab Resultss More Than Lab Results””

• We Solve Problems Quicker

• Customization of Service– We Do It and We Do It Quicker

• Customer Call Centers (Lab/Billing)– Senior Management Monitors and Measure

it Every Day

• Couriers – We Treat Them Right – They’re the Face of Our Lab

• IT Services– IT Staff has a culture of customer service

““The Sales Driven LifeThe Sales Driven Life””

• Sales Driven Company vs Technically Driven

• Management – Total Commitment to Sales– New tests or services to present on regular

basis

• Management Understands Sales Psychology– Incentives and Immediate Gratification

SalesSalesThe Good, The Bad and The UglyThe Good, The Bad and The Ugly

• First Sales Rep Should Be from Lab Industry

• Basic Sales Compensation– “Cash collected” not “Cash Expected”

– Compensation Weighted to Commission

– Performance Incentives

– Non-solicitation Agreement

What Does a Sales Person Do?What Does a Sales Person Do?““The Simplified VersionThe Simplified Version””

• Uncover service issues with physician’s current lab

• Present your lab’s solutions that expose the service level differences between national lab and your lab

• Once on-board monitor service level to client

• Develop relationship that results in lab loyalty

Guerilla Marketing 101Guerilla Marketing 101

Marketing is Not Complicated

• Physician Database (www.infousa.com, www.physicianlistline.com, www.skainfo.com)

• Learn to Use Word and Mail Merge

• Buy a Color Laser Printer

Develop Name RecognitionDevelop Name RecognitionMarketing LettersMarketing Letters

• Why Marketing Letters?- Build Name Recognition – NEVER assume doctors know your lab

- Generate leads for sales people

• Where to Get the Mailing Lists- From Internet sites like www.infousa.com, www.physicianlistline.com, www.skainfo.com

Develop Name RecognitionDevelop Name RecognitionMarketing LeaveMarketing Leave--BehindsBehinds

• Leave-Behinds Build Name Recognition

• Gives Sales person another reason to go back into office

• Examples : Insurance Lists, CV’s of Pathologists/Key Technical Staff, Test Information, Educational Info

• Sources for Marketing Photoswww.istockphoto.com (Downloadable Photos for $5 )http://phil.cdc.gov/Phil/home.asp (1000s of FREE “public domain” medical and disease related photos are available from the CDC Public Health Image Library)

Develop Name RecognitionDevelop Name RecognitionPress ReleasesPress Releases

• Build name recognition

• Helps create a larger, more credible image for lab

• Where to Get Media Contacts- From the internet and phone book

Develop Name RecognitionDevelop Name RecognitionPress ReleasesPress Releases

• What subjects are worth a press release?- Anything

• Where to Send Press Releases- All news media (papers, radio stations, TV)- DO NOT limit press releases to news media only- Send them to prospective physician clients- Lab employees

Keep Your Friends Close Keep Your Friends Close and Your Competitors Closerand Your Competitors Closer• Know our competitors’ weaknesses• Check their websites• Listen to quarterly web casts where they will

discuss new initiatives• Monitor their websites (Get on their emailing

notification list)• Talk to everyone – attend conferences and

belong to industry organizations

Information ConnectivityInformation Connectivity

• Sunrise Recognized the Importance– Sunrise’s First Physician System Installed in 1992

• Over 500 sites with Electronic Orders/Results

• Approximately 60% of our lab orders are electronic

• Interfaces to all major practice management and EMR systems

Top Ten Lab Top Ten Lab ““ToTo--Do ListDo List””

1. Understand and Use Financial Controls

2. Look at Your Billing Process – Get Help

3. Use Better Hiring Practices to Hire Helpful People

4. Understood What Motivates Your Staff

5. Make Some People “Available to the Industry”Sooner

Top Ten Lab Top Ten Lab ““ToTo--Do ListDo List””

6. Be a Sales Driven Laboratory

7. Increase Your Sales Force Sooner

8. Let Customers Define “Service Levels”

9. Spend Some Time Understanding the Dynamics of Insurers

10. Information Technology – Get as much as you can afford

Contact InformationContact Information

Larry SiedlickSunrise Medical Laboratories

240 Motor Parkway Hauppauge, NY 11788

Email:Lsiedlick@sunriselab.comPhone 631-435-1515