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AUGUST 2019

Richard Rakowski, CEO, Medically Home Group.

This document represents the sole opinion of

Richard Rakowski and the Medically Home

Group. It does not necessarily reflect the

opinions of Medically Home’s Partners and

affiliates.

“Healthcare Brought to Me”

2020 Healthcare Chassis

First-Ever, Non-Partisan, Politics-

Free American Universal

Healthcare Platform

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The Big Idea The Organizing Principle to Rapidly Deploy a New System of Medical Care

“Patient Power”

meets

“Distributed Healthcare”

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Patients as Organizing Principle The Time has Come for Three Powerful Voices to Come Together

Voters American voters are fed up

with ineffective healthcare

reform promises from

politicians

Patients Patients endure unacceptable

levels of dissatisfaction,

negative outcomes and

adverse events

Consumers Patients are rapidly taking on

the mantle of (consumer)

payers, as they experience

explosive growth in their out-

of-pocket spending for

healthcare

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Patient Power It’s Time to Make the Patient the Subject vs. the Object of Healthcare

GUIDING PRINCIPLES

▪ The problem…the current healthcare system:

▪ Is focused on what we do “to” patients vs. “who” they are and what they “want and need”

▪ Uses a reimbursement system that rewards institutional based care vs. care delivered to

support superior patient experience, outcomes and costs

▪ Does horrific harm to patients – adverse events, deaths, cognitive decline, physical de-

conditioning

▪ The heart of the solution…the patient as the center of care

▪ Design care delivery with the patient at the center

▪ Build and deploy systems and technology centered around patients’ homes and

workplace

▪ Empower patients to make the best choices for their health

▪ Reimburse for care, services and social support that support the patient and his/her

maximum engagement and outcomes

▪ Maximize patients’ engagement in their own care

▪ Shift delivery to where patients want and need care

▪ Reimburse for services that support patients where and when they

need care

▪ Make patients’ satisfaction paramount to care delivery’s

success/failure

▪ Give patients real choice fueled by transparency

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Decentralization as an Organizing Principle Amazon has Answered the Question About the Value of Decentralization

▪ Amazon Scale ▪ $178 billion in sales ▪ 5% of all retail sales/47% of all ecommerce ▪ Generates 26 million consumer transactions per day ▪ 100 million Alexa devices sold so far

▪ Amazon Decentralization ▪ Spends $28 billion/annum in shipping ▪ 1million new sellers added in 2018 ▪ 95 million Americans have Amazon Prime memberships.

▪ Amazon Cost Power - Whole Foods prices dropped 43% after Amazon acquired the grocery chain

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America Will Create a True System of Care Around the Fusion of these Two Ideas

▪ COSTS - A decentralized system will result in radically reduced costs that

will create substantially expanded access

▪ OUTCOMES – The system of care will significantly improve patient

engagement, outcomes and patient experience

▪ UNLOCKING POWER – the system of care will transform how we:

▪ More reliably and rapidly access care

▪ More intelligently pay for care

▪ Better align all the stakeholders of care

▪ Enable patients to become truly empowered consumers of

healthcare

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Key Elements of a New Healthcare System Self-Organized by Empowered Patients Meeting Distributed Healthcare Delivered

on a Technology-enabled Distributed Chassis of Care

▪ The value of each of these elements of healthcare delivery and payment

have already proven themselves in a siloed manner.

▪ The newly proposed U.S. Healthcare System integrates many of these

elements as part of a holistic healthcare policy and intelligent system of

care delivery.

▪ The newly proposed elements of care in the proposed model will help

transform the currently non-sustainable siloed care delivery model into a

truly sustainable system. This system can concurrently stabilize healthcare

costs, while building a significant new American export business.

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Transform Healthcare Delivery via a New Decentralized Chassis of Care Delivery

The Problem System economics - Low margin, (high fixed cost) facility-based care delivery (e.g., hospitals and skilled nursing

facilities) is no longer sustainable. As a growing public payer mix drives down the facility margins even further.

Outcomes – High rates of adverse events and low patient satisfaction are common in the current system. The #2

cause of death in hospitals are from adverse events.

Patient economics - High care delivery costs in the current model create massive financial (cost sharing) burdens for

patients and their families.

Employers – large and growing employer costs for healthcare are significantly impacting productivity and ability to

effectively compete with U.S. based employees.

The Solution Decentralize - Shift the principle sites of costly/centralized medical care (hospitals, nursing homes and rehab facilities)

to lower cost decentralized sites of medical care where patients prefer to be cared for (e.g., patient homes).

New Chassis of Care Delivery – Using proven technology and logistics systems, deliver medical care to remote (vs.

centralized) sites of care using the following care platform elements that are integrated with one another into a holistic,

high impact true system of care that operates 24/7.

Broad use cases – De-centrally deliver a wide

(medical intensity) range of care delivery use

cases (e.g., from primary care, ED visits, palliative

care and home hospitalization)

Targeted net impact – Reduce total health

care system costs by +$90 billion (which will

significantly benefit employers, people and

economy, while improving outcomes, saving

lives and significantly improving healthcare

outcomes). Finally, create the chassis for a

vibrant new export business.

Unlocking Power – This technology-enabled clinical and operational healthcare delivery

model has the power to catalyze, enable and unlock other critical elements of a sustainable

healthcare system( e.g., greater-more targeted access, value-based delivery/rational

reimbursement, transparency and the platform to intelligently evolve the current asset heavy

delivery model).

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Transform Healthcare Delivery via the Deployment of a Laser-Focused Paredo Delivery Program

The Problem Asymmetry - While patients with chronic diseases (e.g., heart failure, diabetes, COPD) and cancer only represent 20%

of Americans, they consume +70% of the $3.5 trillion in U.S. healthcare spending. Like the famous Paredo factor

sparsity law (where 80% of the effects come from 20% of the causes), the American Paredo population is worthy of

special care delivery and reimbursement focus.

Unique needs – Patients with chronic disease and cancer have much different needs than those Americans who

occasionally get sick and require medical care. Paredo patients are: (i) often frail and elderly, (ii) highly sensitive to

medication adherence and lifestyle and social determinant considerations, (iii) often experience acute medical

exacerbations requiring hospital level medical care and, (iv) see many specialists above and beyond their primary care

physician. Paredo patients often require intensive care support from family members. Most Paredo patients are never

really cured of their medical challenges, but instead, can be reliably managed with the right combination of medical and

non-medical treatments.

Current system challenges – The current hospital-centric system of care and the reimbursement model that supports

it are rife with specific challenges for Paredo patients. These challenges include: (i) adverse events that are common in

institutional sites of care (infection, falls, sleep challenges, cognitive decline, social isolation, etc.), (ii) access to rapid

24/7 medical care is only available at hospitals, (iii) high patient reimbursement co-pays for medication are often at

odds with the positive outcomes, and (iv) no reimbursement for critical care support functions that help ensure these

patients do not end up in the hospital (e.g., care support at home and disease related nutritional support).

The Solution 365/24/7 care (vs. episodic) – Provide a medical care program for these patients on a 365/24/7 basis as they

require. The proposed (proven) program of care has dedicated teams of clinicians (e.g., physicians, NPs, physician

assistants, pharmacists) and social workers that are configured to keep Paredo patients healthy.

Use the proposed Decentralized Care Delivery Chassis – Provide 365/24/7 access to care from a centralized

biometrically-enhanced telemedical command center that supports the ability to rapidly dispatch care to these patients

when and where they need it.

New reimbursement policies – Align incentives and reimbursement mechanisms for both patients and providers of

care that encourage the proposed model of care and the associated proven behaviors and therapies that create positive

outcomes with a supportive return on investment (e.g., reimburse for care support at home, patient monitoring, and

food for patients with nutrition sensitive disease).

Targeted net impact – Net healthcare savings potential of +$100 billion annually, supported by dramatically improved

patient care access, engagement, satisfaction and outcomes.

Utilizing the Chassis – The proposed technology-enabled clinical and operational

healthcare delivery chassis is designed to monitor and connect patients and their families to

a 24/7/365 medical command center that can rapidly dispatch to patients at bedside. This

ubiquitous surveillance of patients who are chronic and require 24/7 access to care,

meaningfully overcomes most of the dominant challenges that chronic/co-morbid patients

have with the current hospital-centric model of care.

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Transform Healthcare Delivery via the Conversion of Hospitals into Profitable Health Campuses

The Problem Hospital fixed costs – 65% of a cost of a hospital stay are consumed by the fixed costs associated with large and

centralized bricks and mortar industrialized care delivery sites of medical care. These costs create a myriad of

challenges for patients, providers and payers alike. These challenges include: (i) inadequate time in the hospital to

result in a reliable recovery from acute illness, (ii) adverse events, (iii) decline in physician satisfaction, (iv) poor

outcomes, (v) suboptimum patient satisfaction and, (vi) large care costs post hospital discharge.

Mismatched supply and demand – In most U.S. hospital markets, hospitals struggle with either inadequate volume

(under capacity) to achieve financial sustainability or too much volume (over capacity), which creates a host of quality,

financial and regulatory challenges. Right-sizing hospitals with such a large fixed cost burden combined with volume

variability is no small task.

Payer mix is going the wrong way for hospitals – as population aging continues to gain momentum and the rolls of

the more needy in society continue to be a large factor in medical care delivery, patients covered by public payers

(Medicare and Medicaid) are growing in volume. With that growth the ability for hospitals to operate with an acceptable

profit margin is growing more and more vexing every day. Medicare and Medicaid reimbursement levels are intentionally

lower vs. commercial insurers. The accelerating effect of public payer reimbursement strategy with hospitals that have

very high fixed costs is a fundamental challenge to traditional hospital sustainability.

Hospitals are the largest employer – In most American communities, the hospital is the largest single employer and

as a result there is strong public, political and organized labor pressure to keep hospitals open, regardless of their

financial viability.

The Solution Health Campus – Imagine a modern and appealing campus containing: (i) a radically-reduced hospital footprint (40%

less beds) that is integrated with (ii) housing that provides patient and their families with assisted living, skilled nursing

and memory care services and (iii) housing for physicians, nurses and ancillary medical services providers who are

employed at the campus, (iv) health club facilities and, (v) retail providers (restaurants, theater and shops), all

benefitting from captive traffic residing on the campus. This new health campus blueprint would allow hospitals to

rationally transition from their currently unsustainable model into one that integrates a proven multi-use formula for

success.

REITS need to go shopping – Given a host of very favorable market dynamics, Real Estate Investment Trust

Companies (“REITs”) that purchase healthcare real estate assets and then lease them back to healthcare providers as

their business model are the ideal platform for the wholesale conversion of traditional hospitals into a more financially

attractive (healthcare campus)model. Public and tax policy need to support this transition.

Targeted Net Impact – The deployment of this model to 25% of the hospitals operating below ideal capacity

utilization will result in +$25 billion significant savings to the healthcare system.

Utilizing the Chassis – The proposed technology-enabled clinical and operational

healthcare delivery chassis is designed to support high acuity medical care in a decentralized

manner. The health campus model will use the decentralized care chassis to provide hospital

level care in patients in homes both on and off campus, This approach will provide a

significant reduction in the reliance on bricks and mortar hospital level care.

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Transform Healthcare Payment via the Creation of a National Public-Private Payer Partnership

The Problem The existing payer model does not work – The U.S. spends $496 billion on the payment layer of our healthcare

system. This includes all the revenues of all private health insurance companies, plus the cost of Medicare and Medicaid

administration. This extraordinary level of spending consumed to administer payments to healthcare providers on a

mostly fee-for-service basis, (regardless of outcomes or value). The fee-for-service healthcare economy needs to more

rapidly transition to a model based on value (measured by outcomes). While the movement to value has begun, it is in

its infancy of implementation.

Employers are struggling – Since WW II, U.S. employers were saddled with the responsibility of paying for employee

health insurance. In the 1970’s as healthcare costs began to rise, employers concerned about their financial

performance and competitiveness, set the stage for the creation of the managed care industry. This new layer of activity

and cost to the healthcare system was introduced to help employers stem the tide of healthcare cost inflation. While

well-intended, under a managed care system, employers have seen explosive healthcare cost escalation, which in turn,

has forced employers to reduce employee benefits and with this reduction: (i) the financial burden on employees and

their families is now a true national crises and at the same time (ii) has reduced employer competitiveness.

Doctors as financial stewards? – while there are endless stories about health insurance companies denying patients

access to medication, procedures or services, there are many more stories of healthcare providers ordering and

delivering care without any sensitivity to the financial implications of those decisions on all patients, our healthcare

system and economy. Most providers of care do not view themselves as the stewards of their patients’ money, but the

truth is, with rapidly escalating patient cost sharing (growing co-pays and deductibles), physicians are in a role of

financial steward (whether they know it - like it or not).

Exotic solutions – exotic costs – U.S. medical technological innovation (with diagnostics, devices, drugs and surgical

procedures) continue to provide solutions, cures and hope for millions of Americans and non-Americans around the

world. The costs to develop these solutions are often measured in billions of dollars, and frequently, these development

investments do not come to full fruition. American healthcare policy needs to recognize the high costs required for

breakthrough innovation requires a reasonable return on investment (“ROI”), or innovation investments will be

hampered. A pending healthcare system crises on the horizon that stems from the issue of innovation, investment and

ROI is the one related to drug resistant bacteria (a lot of which is generated in the hospital setting). Current antibiotic

product efficacy is severely challenged, as more and more strains of virulent infections are proving resistant to existing

antibiotics. The ROI for a new antibiotic compared to an exotic cancer therapy is not attractive, as we find ourselves

vulnerable to growing challenges to infection risk.

Innovation is not in the DNA of monopolies or governments – A payer and payment solution needs to recognize

that rapid and effective innovation in healthcare will neither come from a “Medicare-for-all” health insurance strategy,

nor will it come from a single source private sector solution alone. Just like the public private partnership that put the

first man on the moon, we need to recognize the power of our people, ingenuity, non-controlled economy and proven

efficacy of public-private partnerships, in any healthcare system solution we configure.

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The Solution Universal coverage – Healthcare is an American right and not a privilege. All American citizens, regardless of age,

race, ethnicity, income or medical condition, deserve nothing less than healthcare coverage.

Remove death and dying from the healthcare system – End of life care requires a completely different social and

spiritual care support model than healthcare is designed for. It is time to recognize and shift our care delivery to

humanely manage end of life with dignity and intelligence. An intelligent and humane healthcare system demands more

organized systems to appropriately transition patients to home-based palliative and hospice care, when the time comes.

Public/private partnership – Convert the current Medicare and Medicaid programs into the public portion of a single

public payer partnership. The public portion will be responsible for the regulatory framework, healthcare policy, payment

levels and compliance aspects of care delivery. There will be a competitive bidding process for the partners that will

operate the private portion of the partnership. The private payer partners will manage the value-based delivery system

and reimbursement services. These private entities will be rewarded with (uncapped) profits based on quality and value

outcomes. Bidding for the private payer partners will take place every seven years to ensure maximum competitiveness.

Phase out employer health insurance – Thoughtfully phase out the massive administrative and financial burdens

associated with employer health insurance. Provide the proper income tax incentives for employers and employees as

the healthcare costs and healthcare cost administration shift from the employer to employees and the federal

government.

Accelerate the decentralization to risk to providers – via policy and reimbursement, accelerate the developing

CMS/CMMI reimbursement and quality programs with bundles and capitation. Declare 2021: “The Year of the

Healthcare Value Revolution”.

Eliminate all deductibles for chronic disease medications - Given the demonstrated ROI associated with chronic

medications, remove all financial disincentives to patients thought elimination of drug co-pays for chronic medications.

Pay for exotic treatments on an outcomes basis – Patterned off of the innovative work being done by Harvard

Pilgrim Healthcare in Boston (in the field of reimbursement for new high cost oncology drugs), reimburse pharma and

device companies for (costly) breakthrough new therapies on an outcome basis (i.e., pay for the therapies in

installments, for each year that patients live as a result of the new therapy).

Replace insurance company and employer sponsored networks with patient choice and transparency -

Utilizing consumer tools like the Healthcare Bluebook, provide consumers with full transparency on providers’ costs and

outcomes. With these tools in place, patients can more rationally choose where they wish to be cared for.

Vouchers and tax policy – Provide consumers with vouchers to pay for their healthcare. Design and deploy the

appropriate tax adjustments to corporate and individual taxpayers to accommodate and fund the new payer model and

the combined savings the delivery and payment innovation will generate.

Targeted net impact – The proposed national public-private payer partnership will result in a healthcare system

savings target of +$100 billion from reduced administrative costs, while supporting freedom in patients choosing their

medical providers.

Utilizing the Chassis – The proposed single public-private payer solution with vouchers,

adjusted tax policy and employer healthcare administration relief, is only realistically viable

with a completely new/more effective healthcare delivery chassis. This proposed chassis and

the value and innovation it will unlock, will eliminate the suspicion associated with

consolidating the currently fragmented and ineffective state- specific commercial insurance

model.

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Transform Healthcare Payment via Strategic Reimbursement for the Social Determinants of Health

The Problem Non-medical problems causing medical costs - Traditional approaches to medical-only interventions and

reimbursement in the health care system, have created large gaps in care for patients. These gaps reliably-result in (the

unintended consequences of) increasing resource and financial demands on our healthcare system. Two examples of

this challenge are: (i) diabetic patients with inadequate resources to purchase fresh foods and (ii) patients without

transportation to access lower cost medical sites of care. Each of these examples highlight how non-medical issues

impact health (and healthcare costs). The emerging recognition of Social Determinants of Health as drivers of

healthcare costs (“SDOH” are conditions in which people are born, grow, live, work and age that impact their health

and the cost of that health to the healthcare system and society) is still in its infancy.

Some patients living conditions are inadequate to deliver medical care there – Many patients being served by

the healthcare system (particularly those in Medicaid Programs), in living conditions that are challenged to serve as a

safe and effective site of decentralized medical care delivery (e.g., no electricity, hot water, violence, hoarding, etc.).

The Solution Reimburse for (ROI-proven) SDOH - Some of the most influential social determinants that can be positively-

influenced (and as a result, create a positive return on investment) by our proposed healthcare platform include access

to: (i) affordable transportation (ii) fresh food, (iii) shelter, (iv) social support for isolation and (v) mobile technology

to enable connectivity to the decentralized medical delivery platform. As part of the solution, patients would receive

reimbursable prescriptions for those social determinants that result in a positive ROI.

“Care BNB” - For those patients whose living conditions are inadequate as a site of decentralized medical care, deliver

medical care in a newly configured non-institution group setting (“Care BNB”) that is staffed 24/7 by unlicensed home

health aides, while being supported by a 24/7 advanced medical care capability that can be delivered on site as needed

on demand.

Targeted net impact – An ROI-based SDOH program deployed on a national basis, would result in a potential savings

of +$25 billion per annum. These savings would be accompanied by: (i) increased patient/family engagement in

health, (ii)a significant improvement in patient outcomes and a reduced burden on facility-based systems.

Utilizing the Chassis – The proposed technology-enabled clinical and operational

(decentralized) healthcare delivery chassis is designed to collect the necessary data to

enable intelligent decisions about SDOH. Because of its design, patients in new more

humane/decentralized and lower cost settings, can have access to safe advanced medical

care on a 24/7 basis.

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What is Intentionally Excluded (but Assumed) In the 2020 Healthcare Chassis Platform for America The proposed 2020 Healthcare Chassis P for America was designed as a cohesive transformation platform to unlock a

truly sustainable U.S. healthcare system. The key elements in the plan provide the necessary chassis to enable rapid

economic disruption that will result in an American system of healthcare that will be both the envy of the world, and the

source of medical care delivered around the world (by American healthcare workers).

There are many thoughtful healthcare reform initiatives with great promise and impact that have been part of the

healthcare debate or are already underway. This plan assumes these initiatives will continue and become part of (vs.

compete with) this proposed platform. These initiatives include:

Drug pricing reform that includes consumer transparency. American healthcare consumers will be able to leverage the

proposed decentralized care delivery chassis to seamlessly (and in real time) access drug and medical procedure

pricing and outcomes information to support more informed value-based decision making.

Government-funded medical school education that will lift the enormous debt burden off the shoulders of our

physicians. The decentralized healthcare delivery chassis will enable a more potent distant learning capability and a

broader access to patients (to learn from and be trained with). The new decentralized healthcare delivery chassis will

expand both access to and quality of medical education.

Patient choice on which physicians they choose to be cared for by. This choice will be powered by real time access (via

the decentralized care delivery chassis) to healthcare provider pricing and outcomes.

A more sensible approach to caring for Americans that are at the end of life. We should not be using our very costly

healthcare delivery assets to apply medical care to Americans who will not be cured by that care. While admittedly

controversial, we all face the end of life and we should not deny those Americans who require medical care because we

have consumed our precious resources on those that need comfort and spiritual care vs. medical care.

Malpractice settlements – While the annual U.S. price tag of $55 billion for medical malpractice settlements are not a

major cause for U.S. healthcare sustainability challenges, none the less, that represents one of many significant aspects

that contribute to the ecosystem of irresponsible healthcare spending that ends up driving the rationing of care. There

are movements underway that would more rationally cap these settlements.

Massively reduce electronic medical record complexity (a dominant source of physician burnout) – This widely known

(and felt) issue will require focus and attention and a decentralized system will heavily rely on user-friend technology at

the point of care.

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Caution Rapid Evolution (vs. Radical Disruptive) Revolution is Advised

Rapid evolution needs to be a guiding principle for the transformation of healthcare delivery and payment in the United

States. While we need to move very quickly to achieve healthcare sustainability, we also need to recognize that a very

significant part of our economy (e.g., tax base, job, stock market) depends on the current (unsustainable) system of

care and payment. In that light, the proposed plan will be thoughtfully implemented in three phases:

▪ Phase one – Those elements of the plan that require rapid introduction of proposed reforms (during 2021-

2023)

▪ Phase two –Those elements that require measured transitioning of care and payment to the new

decentralized model (2022- 2027)

▪ Phase three – Those elements that require a longer-term institutionalization into the new model – (during

2023- 2033)

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Why Medicare for All is Fundamentally a Bad Idea Despite How Appealing (and Obvious) it may Sound A seemingly appealing idea - Senator Bernie Sanders recently announced his Medicare-for-All bill. This is basically the senate version of the congressional bill introduced by Pramila Jayapal that would eliminate the insurance industry

and much of the billing bureaucracy that exists today. It would provide health care coverage for everyone and eliminate

copays and deductibles. It would expand Medicare coverage to include dental, vision and long-term nursing home care.

There are of course other challenging (more conventional issues) with Senator Sanders plan:

▪ The plan does not take into account the immediate insolvency of all U.S. hospitals once a payment system with

Medicare rates are put in place and commercial insurance revenues (to cover losses generated by Medicare

and Medicaid patients) disappear.

▪ The plan does not take into account the massive flight of doctors who would leave the system (in the face of

an already acute shortage of physicians) due to the reimbursement rate decline they would experience from

the proposed plan.

▪ How would this plan be funded? (no budget has been provided to accompany the plan).

▪ Third party estimates of the Medicare for all plan vary from an annual increase in cost of $3.2 trillion to an

annual savings of $600 billion (the latter of which is raising taxes on the wealthy, of up to 70% or taxing

investment income at the same rate as stock sales.

▪ Third party sources project a loss of one million jobs as a result of the plan.

The most important (and glaringly obvious and troubling) part of Sanders

plan is that it DOES NOT change the fundamentally-flawed way in which

healthcare is delivered, but instead, continues to focus attention to new

(more Socialist) ways to pay for a fundamentally unsustainable system.

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Summary of the Numbers The Target Opportunity for the Financial Impact of the 2020

Health Chassis

Current 3rd party projections1 for healthcare spending as a percentage of GDP in 2027 is 19.7%, up from 17.9% in

2017. Healthcare spending is projected to continue growing faster than GDP, and in the process, making healthcare a

strategic national issue and the potential for slipping into a national security issue.

The proposed healthcare system platform has a targeted annual savings potential of $340 billion, or 9% of 2019

healthcare spending. The savings potential of the proposed program will have a positive strategic impact on healthcare

spending growth, and in the process improve the options we as a nation have for the future of our children and the

country.

1- Health Affairs, 2.22.19

As cited earlier, the proposed platform does not include the financial savings benefit of future legislation or revised

policies targeted towards:

▪ Drug pricing reform

▪ A more sensible approach to caring for Americans that are at the end of life

▪ Malpractice reform