Accretive Health - Physician Advisory Services - Medical Coding

DECEMBER 3, 2012

Physician Advisory Services

Driving Growth Through Measured Results

Driving Growth Through Measured Results 2

Certain statements contained in this presentation may be considered forward-looking as defined by the Private Securities Litigation Reform Act of 1995. In particular, any statements made about Accretive Health’s expectations for future financial and operational performance, expected growth, new services, profitability or business outlook are forward-looking statements. Investors are cautioned not to place undue reliance on such forward-looking statements. There is no assurance that the matters contained in such statements will occur since these statements involve various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. These risks and uncertainties include those listed under the heading Risk Factors in the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, which is available on the SEC’s website as well as in the investor relations portion of Accretive Health’s website at www.accretivehealth.com. The forward-looking statements made in this presentation are based on the company’s beliefs and expectations as of December 3, 2012 only and should not be relied upon as representing the company’s views as of any subsequent date. While the company may elect to update these forward-looking statements at some point in the future, Accretive Health specifically disclaims any obligation to do so, even if its views change.

Safe Harbor


Use of Non-GAAP Financial Measures

*Reconciliations of non-GAAP measures to their most directly comparable GAAP measures are presented, where possible in the Appendix, as well as in the Company’s financial press releases and related Form 8-K filings with the Securities and Exchange Commission. This information can be accessed for free in the Investor Relations section of the Company’s website at www.accretivehealth.com

We believe adjusted EBITDA is useful to stockholders in evaluating our operating performance for the following reasons:

• these and similar non-GAAP measures are widely used by investors to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, capital structures and the methods by which assets were acquired;

• securities analysts often use adjusted EBITDA and similar non-GAAP measures as supplemental measures to evaluate the overall operating performance of companies; and

• by comparing our adjusted EBITDA in different historical periods, our stockholders can evaluate our operating results without the additional variations of interest income (expense), income tax expense (benefit), depreciation and amortization expense and share-based compensation expense.

We understand that, although measures similar to adjusted EBITDA are frequently used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider it in isolation or as a substitute for analysis of our results of operations as reported under GAAP. To properly and prudently evaluate our business, we encourage you to review the GAAP financial statements included elsewhere in our regulatory filings, including the Preliminary Prospectus, Form 8-K, and Form 10-K, and not to rely on any single financial measure to evaluate our business.

In order to provide stockholders with greater insight and to allow for better understanding of how our management and board of directors analyze our financial performance and make operational decisions, we supplement our condensed consolidated financial statements presented on a GAAP basis with the adjusted EBITDA and adjusted net income measures *.

Adjusted EBITDA measure has limitations, as noted below, and should not be considered in isolation or in substitute for analysis of our results as reported under GAAP.

Our management uses adjusted EBITDA:

• as a measure of operating performance, because it does not include the impact of items that we do not consider indicative of our core operating performance;

• for planning purposes, including the preparation of our annual operating budget;

• to allocate resources to enhance the financial performance of our business;

• to evaluate the effectiveness of our business strategies; and

• in communications with our board of directors and investors concerning our financial performance.


Agenda

Accretive Health Overview Mary Tolan – Founder and Chief Executive Officer

Revenue Cycle Management Joe Bellini – Chief Revenue Officer, RCM Michael Rosenthal – Senior Vice President, RCM Operations

Quality and Care Services Tim Barry – President, Quality and Care CoordinationDr. Walter Ettinger – Chief Medical Officer

Physician Advisory Services Patrick Sinclair – General Manager, PAS

Client Panel Greg Kazarian – Chief Talent Officer (Moderator)

Financial Overview John Staton – Chief Financial Officer

Q&A Accretive Health Executive Team

Lunch Accretive Health Executive Team


MARY TOLAN Founder and Chief Executive Officer


ACCRETIVE HEALTH OVERVIEW


• Our primary goal is to help our healthcare clients strengthen their financial stability and deliver better care to the communities they serve

• We use technology to drive best practices and best outcomes

• We work collaboratively with clients to create solutions to existing challenges

• We promote an entrepreneurial culture to encourage innovation and continuously upgrade our functionality with a focus on value creation

Our Guiding Principles


Founded in 2003, headquartered in Chicago

Win – Win Proposition with our Client Partners

• We are paid based on our results; no upfront costs for Quality or Revenue Cycle Services

• We have partnered with some of the most well-respected health systems in the U.S.

We Drive Measured Results for our Partners

• Since inception we have delivered $1.5 billion in cash benefits to clients

Innovation and Operational Excellence is at the Core of What We Do

• Success of our RCM offering is driven by applying technology and innovative process improvements to drive measurable results

• Seeded Physician Advisory Services in 2009, now a $60 million run-rate business

• Developed unique offerings to improve care quality at lower costs – Intra-Stay Quality and Population Health Management Infrastructure

Accretive Health Snapshot


Three Distinct Offerings

Proven end-to-end solution that lowers collection costs and

reduces yield leakage

Utilize physician-driven best practices to

improve care quality at a lower cost

Compliance services that maintain detailed audit trails for claims


Quality and Care Coordination

Revenue Cycle Management


Revenue Cycle Management

• Large market opportunity, low current penetration

• Proven end-to-end solution with a win-win proposition

• Margin expansion by driving further efficiency and reducing reimbursement leakage

Quality and Care Coordination

• Population Health Management is developing as the next frontier of healthcare

• Lack of provider infrastructure for population health management

• Intra-Stay Quality has broad appeal and could create beachhead into new hospitals


• Increasing frequency of audits

• Opportunity for continued market share gains

• Expansion into compliance and workflow advisory services

Multiple Growth Drivers in Each Business


Providers are Getting Squeezed

• Capital constraints

• Significant variance in provision and quality of care

• Declining reimbursement

• Rising bad debt

• Rising costs from medical innovation

• Value-based payment models

• Medicaid expansion/State budget constraints

• Insurance exchanges

• ICD-10

• RAC Audits

• Patient satisfaction scores

• Higher out-of-pocket costs

• Aging population

• Personalized medicine

Patients

Compliance

HealthReform

Economic

Insufficient Resources


Market Size

% to AH Revenue

Revenue Opportunity

Sources: CMS National Healthcare Expenditures, September 2011 and Definitive HealthcareRCM market scope includes net patient revenue at all hospitals based on CMS 2014 projected expendituresQuality market scope includes all hospital and physician expendituresPAS market scope includes all hospitals with >$250 million in net patient revenue

Market Opportunity

$50Billion

$100Billion

$850Million

0.12%6.25% 5.0%

$1.0 Trillion $1.6 Trillion $ 710 billion

PASQualityRCM


Revenue Cycle and Quality Require No Upfront Investment from Clients

• Accretive Health is compensated based on Measured Value delivered to clients

Our End-to-End Solution Delivers Superior Results by Combining People, Process and Technology

• People: Well-trained professionals who work directly with the client

• Process: Market-leading best practices to allow seamless workflow at all stages of the revenue collection process

• Technology: Comprehensive tools to measure and improve efficiency for clinical and financial outcomes

Value Proposition


Pay for measured results

Unparalleled form of collaboration

End-to-end scope

AH makes significant investment of resources

Pay for results not input

A Differentiated Offering

We create operating partnerships that result in distinctly

different outcomes than other models

NOT a consulting firm

Accretive Health Operating Partnership

NOT a software provider

NOT an outsourcing model

http://www.aurorahealthcare.org/


SaaS / Technology-

Supported RCM

Consulting

IT Outsourcing / Non-HC BPO

PayorFollow-Up

Patient Advocacy

Patient Share

LostCharges

Compliance

4-6% (Measured)

Value Proposition

(% revenue lift)

Est. 0.5-1% (Not Measured)

Est. 0.5-1% (Measured)

Est. 0.5-1.5% (Not Measured)

Note: Based on Accretive Health’s estimates

End-to-End RCM Solution Provides Competitive Advantages


Partnering with Innovative Leaders

http://www.beaumont.edu/

http://www.borgess.com/default.aspx


JOE BELLINI Chief Revenue Officer, RCM

MICHAEL ROSENTHAL Senior Vice President, RCM Operations


QUALITY AND CARE COORDINATION


DR. WALTER ETTINGER

TIM BARRYPresident, Quality and Care Coordination

Chief Medical Officer


Market Overview

1960 1970 1980 1990 2000 2009 $-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

$148 $356

$1,102

$2,851

$4,791

$8,223

$78 $187 $628

$1,185

$1,888

$3,265

5.1%

7.1%

9.0%

12.4%

13.7%

17.6%

3.8%

5.1%

6.6%

6.9%7.8%

9.5%

USA

Hea

lth

care

Sp

end

per

Cap

ita

(US

D)

Hea

lth

care

Sp

end

as

a %

of

GD

P

Source: The Organization for Economic Cooperation and Development (OECD) Health Expenditure Data

2010

Healthcare Spend in the U.S. is Unsustainable…


IRE

Market Overview

...and Care Quality Outcomes are Sub-Optimal

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,00070

75

80

85

TUR

MEX

HUN

SLREST

POL

CHL

CZH

ISR

KORSLV

JPN

ITASPA

NZLGRC

POR

ICE

FINGBR

AUSSWE

FRN

BLG

DMK

GER

AUTCAN

SWI

NOR

HOLLUX

USA

Source: OECD Health Expenditure Data

Health Spending per Capita (USD)

Lif

e E

xp

ec

tan

cy

in

Ye

ars

“If home building were like healthcare, carpenters, electricians, and plumbers each would work with different blueprints, with very little coordination.”

–Institute of Medicine 2012 Report on Best Care at Lower cost


Market Drivers

• Shift away from fee-for-service model to population-based accountability

• Provider performance standards tied to total patient quality and cost

• Systems required to provide insight into total patient medical history

• Requires significant investment and expertise for population-based delivery

Accretive Health Solution

• Turn-key accountability-based model that improves quality of patient care

• Strengthens relationship between hospitals and physicians

• Creates aligned interest between payors, hospitals, physicians and Accretive Health

• Generates significant savings for the healthcare system

Quality & Care Initiative


Intra-Stay

Quality

PopulationHealth

Quality and Care Initiative

Optimizing

quality and

financial results

within each

episode of care Physician Engagement

Predictive Analytics

Workflow and Decision Support Technology

Optimal Skill Sets for Execution

Optimizing quality

and financial

results across all

episodes of care

Accretive Health

Quality &Care


Continuous care assessment allows physicians to focus on the sickest patients and coordinate care to improve outcomes

End-to-end Infrastructure for Population Health Management

Sickest and most

responsive patients

Patient-specific care

plans and care

coordination workflow

Real-time clinical

pathway adjustment

Starting point


End-to-End Infrastructure for Population Health

Sophisticated Business and Payor Contracting Model

Proprietary Data and Technology Platform

Physician Performance and Change Management

Patient Engagement and Real-time Care Management

Continuous R&D and Predictive Performance


Year 0 Year 1 Year 2 Year 3

Cost and Saving Trend

$1,000

$1,050

$1,158

$1,103

$290

Saving ($ in mm)

$945

$904

$868

10% 18% 25%

Market Trend:

5%ACO

Savings Efficiency

To Accretive Health

To participating providers and payors

(splits may vary)

$70

$220

Projected Cost and Savings Trend

Note: Based on Accretive Health’s estimates


Oncology Care: A Complex System for the Patient to Navigate

Routine Visit/ Maintenance

CriticalTrial

Infusion TherapyLab

Psych Counseling

Pharmacy

Palliative Care

Nutritional Counseling

Genetic Testing

Imaging

Genetic Counseling

E/RVisit

Oncology Consult

In-patientstayLab

ImagingPCP

Pharmacy Specialist

Other Counseling

Surgery RadiationOncology

Cancer related

Non-Cancer related

Executed at Oncology ClinicMay or may not be executed at Oncology ClinicUsually not executed at Oncology Clinic


% of Membership % of Total Spend

Cost of Care – Cancer v. Non-Cancer (PMPM) ($)*

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,0002010A

2020E

39% Adjusted+ Growth

Total Expenditures (2010A): $124.5Total Expenditures (2020E adjusted): $157.7+

$10,317.76

$2,708.16

$363.64

Oncology Care: Significant & Growing Costs

<1%4%

<1%4%

99+%92%

National Health Expenditures – Oncology (US) ($ in bn)**

* Source: Milliman, 2010; study of costs for ~14mm commercially-insured lives; assumes 11 mm’s / member; all figures depicted in 2013 $’s** Source: Yabroff, 2011; 2020 figures depicted in 2010 $’s + Adjusted for recent trends in dx incidence, survival, and cost


Simplifying a Complex Process

Outside clinic activities: cancer related

Outside clinic activities: non-cancer related

In clinic activities (existing)

In clinic proposed pilot activities

Care coordinationCare coordinator ‘connects

dots’ across full care spectrum to anticipate / respond to care

gaps to drive triple aim

24X7 symptom management

On-call triage helps ensures patient centric, cost effective

solutions to current symptom(s)

End of life/Palliative CareConsistent approach to

EOL discussions to ensure patient fully understands

treatment / quality of life tradeoffs

Evidence-based protocolsDevelopment and consistent

application of best practice treatment protocols

Optimal lab and Imaging utilization

Application of protocols to remove unneeded / redundant utilization

30

5 High Impact Interventions to:• Improve the patient experience• Manage complexity • Enhance outcomes• Reduce cost


The Need for Intra-Stay Quality

Source: AHD, October 2012

$10,255

$16,533

-$6,278

$6,255

$16,533

-$6,278• Reduced

payments

• Readmission penalties

• Penalties for hospital acquired conditions

• Wage increases

• Investment in new technologies

• Aging population

Source: AHA, June 2012

$4,749Direct Care Cost

Many US hospitals do not recoup the cost of care provided for Medicare beneficiaries

Medical CenterMedPar FY11 Medicare P/L per Patient

Potential FutureMedicare P/L per Patient

Payment Cost Operating Income

-$15,000

-$10,000

-$5,000

$0

$5,000

$10,000

$15,000

$20,000

Payment Cost Operating Income


Intra-Stay Quality Timeline

ISQ Solution Today Tomorrow

Align Partners • Establish a shared vision• Prepare for changes from Health Reform• Administer payment model and disburse

payments

Analytics and Reporting

• Analyze DRG and service level performance

• Establish system/hospital scorecard and targets

• Introduce real time DRG cost buildup tool• Establish evidence-based plans of care to

reduce variation

Accountability Across the Continuum

• Implement defined plan of care model for high priority patients

• Implement tools and technology to support efficient through-put

• Establish post discharge relationships and communication

• Introduce pre-stay communication, education, and decision support

• Integrate care plans with primary care providers

Operational Excellence and Innovation

• Identify enterprise wide and DRG specific opportunities and implement solutions

• Identify and implement next wave of enterprise-wide and DRG opportunities

• Embed CI behaviors and outcomes into individual performance goals


DRG X

98 avoidable days per yearfor DRG (16% reduction)

Top performer (shortest LOS)

Bottom performer

Top quartile cut-off (target)

Client

“Avoidable days” calculated as difference between client and bottom of top quartile

FacilityAvg

cases/yrGMLOS AMLOS Median Quartile

Site 1 7 3.44 5.04 4 1

Site 2 34 3.96 4.79 4 1

Site 3 27 4.09 5.06 4 1

Site 4 14 4.22 4.96 4 1

Site 5 31 4.37 5.16 5 1

Site 6 35 4.41 5.77 5 1

Site 7 14 4.48 5.46 4 1

Site 8 12 4.49 5.58 4 1

Site 9 40 4.51 5.49 4 2

Site 10 18 4.56 5.87 5 2

Site 11 64 4.58 5.80 5 2

Site 12 54 4.63 5.50 5 2

Site 13 247 4.66 5.77 5 2

Site 14 128 4.70 5.61 5 2

Site 15 83 4.84 6.22 5 2

Site 16 108 5.09 6.45 5 2

Site 17 35 5.10 6.11 5 2

Site 18 13 5.29 6.63 5 3

Site 19 129 5.31 6.34 6 3

Site 20 64 5.38 6.55 5 3

Site 21 210 5.38 6.90 5 3

Site 22 51 5.58 6.59 5 3

Site 23 43 5.60 6.44 6 3

Client 88 5.60 6.97 6 3

Site 25 55 5.66 6.72 5 3

Site 26 32 5.73 6.75 6 3

Site 27 54 5.75 7.16 6 4

Site 28 21 5.86 7.00 6 4

Site 29 24 5.94 7.43 6 4

Site 30 68 6.21 7.85 6 4

Site 31 46 6.50 8.32 7 4

Site 32 76 6.62 8.26 7 4

Site 33 64 6.63 8.60 6 4

Site 34 6 6.79 8.96 9 4

Total 2264 5.04 6.33

CMS (2011) 5.22 6.61

3.44

4.49

5.60

6.79

1.11 days per case

Database mean 5.04CMS 5.22

GMLOS

x 88 cases per year

=

Our database calculates “avoidable days” opportunity for each DRG

Based on Accretive Health data


ISQ Objectives

Lower Cost of Care

Reduce costs per inpatient encounter due to optimized resource utilization, correct care setting, and reduced practice variation

Improve Quality

Improve quality metrics (readmissions, core measures, falls, hospital-acquired infections, pressure ulcers, adverse drug events, serious safety events, medication management)

Improve Patient Satisfaction

Improve communication with patients about their condition, their care plan, and expectations for their stay and discharge plan, resulting in higher HCAHPS scores

Improve Reimbursement

Improve value-based purchasing and affordable care metrics resulting in reduced hold-backs and increased pay for above-average performance

Lower Cost of Care

Reduce costs per inpatient encounter due to optimized resource utilization, correct care setting, and reduced practice variation

Improve Quality

Improve quality metrics (readmissions, core measures, falls, hospital-acquired infections, pressure ulcers, adverse drug events, serious safety events, medication management)

Improve Patient Satisfaction

Improve communication with patients about their condition, their care plan, and expectations for their stay and discharge plan, resulting in higher HCAHPS scores

Improve Reimbursement

Improve value-based purchasing and affordable care metrics resulting in reduced hold-backs and increased pay for above-average performance


• Current episodic care environment offers tremendous opportunity to improve resource utilization, reduce variation in treatment practices and ensure care is provided in the optimal setting

• Competitors have not driven successful or sustainable results

• Accretive believes it can favorably impact length of stay and improve quality through:

• Patient care coordination

• Physician engagement

• Optimal care setting

• Proprietary tools and technology

• Quick deployment upon contract execution

Maximizing Value in Episodic Care


PHYSICIAN ADVISORY SERVICES


PAS provides a range of compliance services to help hospitals with billing classification

• Concurrent or Preemptive Reviews: Proactively manage cases at the point of entry to provide proper classification

• Retrospective or Appeals Management Services

• Fixed-fee pricing model (per case)

• Rapid implementation process

$850 million market opportunity

• We estimate PAS has ~7% market share

• Growth drivers include:

• Changing audit criteria and regulations

• Increased frequency of formal audits

PAS Overview


Our priority is to identify misclassified patients, and to protect compliant revenue

PAS Value Proposition

Low

High

ComplianceRev

enu

e in

teg

rity

Low

ACCRETIVE PAS® OBJECTIVE• High Compliance• High Revenue Integrity

OVER CLASSIFYING• Low Compliance• Revenue At Risk

PROBLEMATIC• Low Compliance• Low Revenue Integrity

UNDER CLASSIFYING• Perception of High Compliance• Lost Revenue


The decision to classify a patient as inpatient versus observation for billing purposes is based on complex medical judgment

Accretive’s licensed physicians consider a number of factors when making their billing classification recommendations to our clients’ medical staff:

• Patient’s medical history and current medical needs

• Types of facilities available to outpatients and inpatients

• Relative appropriateness of treatment in each setting

• Severity of signs and symptoms

• Medical predictability of adverse events

Process - The Classification Decision


PAS Value Proposition

Similar to our other businesses, PAS provides superior people, process and technology to deliver value

• Only licensed

physicians

• Thorough training on

CMS rules and

regulations

• Workflow focused on

service levels by

patient location

• On-site process

improvement

discussions with

hospital staff

• Automated referral management

• Integration with hospital EMR and/or Case Management suites

• Operational reports

• Monthly reports highlighting risk areas

• Real-time analytics – key stats and metrics

• Case level detail with drill down capabilities

• End-of-quarter reconciliation report

People Process Technology

Accretive Health - Physician Advisory Services - Medical Coding

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