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Exhibit 99.1 (a)
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NDC Health Business Description
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NDC Health is the healthcare information business of National Data Corporation
("NDC"). Following the spin-off of Global Payments Inc., NDC's eCommerce
businesses, NDC Health will operate as a stand-alone integrated company. NDC
Health will continue its focus on providing a full range of services to the
healthcare industry through our integrated intelligent network solutions and
point of service systems and information management solutions. Our point of
service systems, offered directly and indirectly through alliances, are often
tightly linked to our intelligent network and serve to enhance our connectivity
and increase our transaction volume and data sources.
We provide high volume, network based information solutions and point of service
systems to the healthcare industry. Our products and services also include
electronic claims processing, eligibility, claims adjudication and payment
systems, processing of administrative and clinical transactions, database
information reporting on prescription drug sales and pharmacy operations,
consulting services, and practice management systems. We provide products and
services to pharmacies, physicians, hospitals, integrated delivery systems,
managed care organizations, payers, government healthcare agencies,
distributors, clinics, Internet portals, pharmaceutical manufacturers and other
healthcare providers and those who serve them and who have need for our
services.
Our business strategy centers on providing integrated solutions, which means
that we believe we offer answers to fulfill all of our customers' needs with
respect to information processing services to the healthcare industry. We
believe that this strategy provides the greatest opportunity for leveraging our
existing infrastructure to maintain a consistent base of recurring revenues.
We believe that the healthcare market offers attractive opportunities for
continued growth. In pursuing our business strategy, we seek both to increase
our penetration of existing markets and to identify and create new related
markets through the development of new applications, enhancement of existing
products, and increasing Internet utilization. Additionally, we are expanding
our distribution channels, including through the Internet, and, where
appropriate, investing in or forging alliances with companies that have
compatible products, services, development and/or distribution capabilities.
NDC Health serves a diverse customer base comprised of more than 180,000
physicians, ninety percent of the pharmacies in North America and greater than
thirty percent of the pharmacies in the United Kingdom, more than twenty percent
of the nation's hospitals, over 100 pharmaceutical manufacturers and over 1,000
health care payers. In addition, we are in the start up phase of entering the
German and U.K. information markets. We believe that our presence in the
multiple pharmacy, managed care organization, physician, hospital,
pharmaceutical manufacturer, and healthcare payer markets is broader than any
other
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similar healthcare information company and provides us with a strong competitive
advantage.
Further, the Internet provides NDC Health with new product opportunities for
handling financial, administrative and clinical transactions as well as for
information management services. We are aggressively building on our systems,
network and information management capabilities to take advantage of the
Internet. As the Internet has expanded the market to new users and provided new
distribution channels, we have and will continue to Internet-enable our existing
and new products and services in a robust security environment.
Our intelligent network solutions provide transaction processing services
between providers and payers. Our intelligent network goes beyond simple data
transport by offering customized validation and information processes for a
broad range of transaction types between multiple providers and payers. The
point-of-service systems that we offer directly and through various alliances
and strategic investments provide our customers with applications to improve
their efficiency of operation, promote cost containment and enhance the overall
quality and predictability of patient care outcomes, while providing enhanced
connectivity and additional transaction volume to our intelligent network. Our
information management service solutions include proprietary healthcare
information, consulting services and customized business intelligence solutions
for our customers' emerging healthcare business issues. These services are
currently offered primarily to pharmaceutical manufacturers and retail chain
pharmacies. It is our intent to expand our markets to include hospitals,
physicians and payers.
Our services assist our customers to manage costs and enhance the quality of
patient care. Our applications strengthen their management of revenue and cash
flow, reduce overhead costs, react quickly to changing market conditions,
improve business operations and streamline administrative processes. Our revenue
consists of recurring transaction processing fees, monthly maintenance and
support fees, information management subscription fees, consulting services and
software license revenue.
Healthcare Market
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We believe that the integrated services that we offer to the healthcare industry
place us strategically in the center of a very dynamic marketplace. Because of
our unique position, we manage healthcare related information from the point of
patient contact through the point of payment. Through our information management
service solutions we provide our customers with useable information from such
data while maintaining the highest standards for patient confidentiality.
There is a growing worldwide need in healthcare for information solutions and
health information technology services. Industry estimates are that over $1.2
trillion is spent annually on healthcare in the United States alone. Of this
amount, $210 billion is spent on administrative tasks and $400 billion is spent
on inappropriate treatment, while only
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$590 billion is spent on appropriate treatment. We believe that our integrated
solutions provide information and services useful in reducing administrative and
other related healthcare costs and expenses. Additionally, the aging worldwide
population is providing more need for improved information technology services
relating to the healthcare industry. Because a high percentage of healthcare
transactions are still handled using manual, paper-based methods, or are not
being consistently performed, we believe that the healthcare industry is one of
the largest untapped markets for providing information services. Our solutions
provide the tools to help providers and payers reduce administrative expense and
improve the clinical experience, while at the same time providing a robust
source for statistical and analytical information required by our customers.
The healthcare industry is heavily regulated at both the federal and state
level. Recent legislation offers unique opportunities to NDC Health. We expect
that the Health Insurance Portability and Accountability Act of 1996 ("HIPAA")
will have far reaching effects on the healthcare industry. HIPAA requires
healthcare providers and payers electronically transmitting healthcare
information (e.g. eligibility, claims/encounters, and remittance advice) to use
a standard format by October 16, 2002. Providers and payers are able to satisfy
many HIPAA obligations through the solutions offered by NDC Health. We believe
that we are well positioned to provide these solutions as we currently provide
many of the services that meet the expected HIPAA requirements.
Products, Services and Distribution Channels
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The following discussion provides greater detail on our major products and
services and our distribution channels.
Provider and Payer Solutions
We believe our intelligent network and the point-of-service systems that we
offer streamline our customers' workflow, improve cash flow, provide real-time
information to help providers better manage their practices, and give the
healthcare industry new and improved methods to assure a higher quality of care
at a lower cost. We process over 4 billion transactions per year including
those that we process for Global Payments Inc. Over 2 billion of these
transactions are healthcare transactions and the value of the claims processed
is over $250 billion. NDC Health believes that its real-time health intelligent
network is the world's largest and most advanced. Since 1996, Faulkner & Gray's
Health Data Directory has listed the NDC Health intelligent network as the
largest independent clearinghouse for healthcare transaction processing in the
nation. We offer our customers NDC proprietary solutions as well as those of our
alliance partners, such as the pharmacy solution we sell for our partner TechRx.
The point-of-service systems that we offer help our clients to improve
efficiency and reduce costs while also serving as an additional source of
transaction volume for our intelligent network.
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NDC Health offers payers customized real-time electronic connectivity to their
provider networks through the NDC Health intelligent network including Internet
access for claims/encounter editing, submission and adjudication, eligibility
verification, remittance advice, referral authorization, claim status and
tracking and provider enrollment services. NDC Health also offers payers the
ability to submit or receive non-HIPAA transactions through the NDC Health
intelligent network, saving payers from costly legacy system conversions.
Electronic transactions demand in the healthcare market is generally under
penetrated. We believe that with the growing acceptance of healthcare technology
and the need to speed payment while reducing costs, there will be a significant
increase in the number and types of electronic transactions. Many of the new
transaction types may have broad impact across the health care continuum. For
example, new solutions such as electronic prescriptions add new information
needs as well as directly impacting the way physicians, hospitals, pharmacies
and payers practice and do business. Other examples include electronic referrals
from physicians to hospitals and the increased use of medical data from
physicians, hospitals and other providers to satisfy new types of healthcare
information needs.
Accordingly, we expect significant growth opportunities from further automating
existing NDC Health customers. This will happen as a result of the continued
increase in transactions as the population ages and increased use of electronic
transmission for both existing transaction sets and new transaction sets. We
believe that the HIPAA standards will accelerate this trend.
Our provider and payer solutions distributed to the pharmacy, hospital and
physician markets are described below:
Pharmacy Solutions
Our pharmacy solutions include transaction processing, information
management services, value added pre- and post-transaction edit processes,
payer adjudication services and in-store practice management systems. We
currently provide one or more of these solutions to more than 90% of the
pharmacies in North America and 30% of the pharmacies in the United
Kingdom, totaling over 55,000 chain, independent, mail order, managed care
and institutional outlets. Pharmacy practice management systems in North
America are offered through our strategic alliance with TechRx and our
payer adjudication services are offered through our relationship with
HealthTrans. We are often able to leverage the non-patient identifiable
anonymous data from these transactions by providing input not only for our
pharmacy information management service solutions but also for the
solutions we provide to pharmaceutical manufacturers.
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Our pharmacy solutions are currently offered in the United States and the
United Kingdom through both the Internet and our direct sales force. We
compete with many companies; however, we believe that we are the largest
provider of pharmacy solutions in North America.
Hospital Solutions
We provide hospitals with transaction processing, Internet-based services
and application software to support the administrative, financial and
clinical information management requirements of over 1,200 hospitals and
health systems in the United States. Our customers represent almost 40% of
those hospitals in the United States with more than 400 beds. Our
application software solutions include claims preparation and submission,
payer specific edits, eligibility verification, remittance management,
compliance management and document storage. These solutions provide
additional transaction volume and interface with our intelligent network to
access our transaction processing solutions. We compete with many
companies; however, we believe that we are the largest provider of hospital
solutions in North America.
Our hospital solutions are offered in the United States through our direct
sales force as well as through multiple strategic alliances, such as with
Shared Medical Systems.
Physician Solutions
Our physician solutions provide practice management systems, transaction
processing and Internet-based services to support the administrative,
financial and clinical information management requirements of physicians.
We believe more than 180,000 physicians in the United States use one or
more of our services. In addition, we have a number of alliance partners,
such as InfoCure, ParkStone Medical Information Systems, Healinx, Trizetto,
Galt Associates, Cybear and Medscape, through which we offer our solutions.
Our industry leading, Windows-based practice management systems include
MediSoft patient accounting software and LYTEC practice management systems.
We believe that approximately 130,000 physicians (29% of the available
market) use our MediSoft or LYTEC systems. Our transaction processing
solutions provide claim/encounter editing, submission and adjudication,
authorization, and prescription order and refill authorization through our
intelligent network. We recently established relationships with providers
of hand-held personal digital assistant systems to exchange real-time
physician prescription orders with our pharmacy solutions customers via our
intelligent network. We believe we are the leading direct provider of
physician intelligent solutions in our targeted market segment in the
United States.
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Our physician solutions are offered in the United States through value-
added resellers, direct mail, our direct sales force and the Internet.
Our provider and payer solutions generally represent between 55 and 60% of our
revenues.
Information Management Solutions
We provide sales and marketing management information, research and consulting
services, and customized business intelligence information solutions to more
than 100 pharmaceutical manufacturers and 45 pharmacy chains. Our offerings
include numerous major products and services and customized solutions that draw
statistical and analytical inferences and models from our data repository. Our
repository is managed and maintained in a 28-terabyte dynamic data warehouse.
Our solutions transform this vast volume of patient anonymous data into
information that our customers can use in order to more effectively manage their
businesses and provide better patient care. This information includes data sets
with information on prescription sales, rebates, and sampling as well as
demographic and prescription information on managed care payers, pharmacy
providers, physician over the counter recommendations, physician and healthcare
providers, retail prescription sales, non-retail institutional sales and non-
retail outlets. NDC Health is able to provide this information in a secure
environment respecting the confidentiality, privacy and ownership of patient and
provider records. Our customers are able to use this information in analyzing
issues such as prescriber targeting and profiling, product research and
development, new product launch, sales compensation and management, the
influence of managed care, pricing, clinical information and payment
information. These solutions generally represent between 40 and 45% of our
revenue.
Our information solutions are offered in the United States and in start-up
operations in the United Kingdom and Germany through our direct sales force.
Our primary competitor in providing these solutions is IMS Health.
Operations and Systems Infrastructure
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We operate multiple data and customer support facilities. The primary
facilities are in Atlanta, Georgia; Phoenix, Arizona; Tulsa, Oklahoma; the
United Kingdom; and Germany.
Because of the large number and variety of our products and services, we do not
rely on a single technology to satisfy our sophisticated computer systems needs
but instead employ technology that is suitable for each particular processing
requirement. Given this approach, we utilize (i) fault-tolerant computers for
high volume, real time transaction processing; (ii) award-winning client-
server technology for end-user data base applications; (iii) Internet technology
for transaction processing among computers in our solutions; (iv) Internet
solutions to reach directly to providers and pharmaceutical
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manufacturers; (v) the latest central systems for large scale transaction and
batch data processing; and (vi) HP, Compaq, SUN, IBM, UNIX, Dell, NT and
Windows-based systems for specialized communication and data base applications
systems. The larger systems are linked via high speed, fiber optic-based
networked backbones for file exchange and inter-system communication purposes;
other systems use high speed LAN connections. The bulk of these system
connections utilize the Internet TCP/IP architecture. We also maintain storage
systems connected to the backbones, including robotic tape libraries and optical
storage for archival purposes. Our experienced systems, operations and
production control staff support our systems, with advanced network control.
Our communications network is made up of numerous discrete networks, each
designed for a different purpose. We maintain three primary networks in addition
to our support of the public Internet: a dial-up, short transaction network; a
private line nationwide high bandwidth network; and a dial-up voice/data network
for interactive and voice traffic. We also maintain a number of support services
offering wireless, Internet and ISDN connectivity. The network environment
supports a diverse set of telecommunication protocols to respond to its diverse
customer requirements.
Employees
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As of November 30, 2000, NDC Health had approximately 1,600 employees. Many of
our employees are highly skilled in technical areas specific to the healthcare
industry, and we believe that our current and future operations depend
substantially on retaining such employees. Our employees are not represented by
any labor union and we believe our employee relations to be excellent.
Line of Credit Commitment
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NDC Health has a commitment for a new credit facility providing a $50 million
revolving line of credit. This credit facility will become effective upon
completion of the spin-off and will be available for working capital and general
corporate purposes after the spin-off. The line will have a variable interest
rate based on market rates and customary origination-related fees and expenses.
The credit agreement will contain certain financial and non-financial covenants
customary for financings of this nature. The facility will have a one-year term,
with the option for NDC Health to convert any outstanding borrowings at the
maturity date to a term loan repayable at the first anniversary of the initial
maturity date. We feel that this facility meets our requirements over the two-
year period, while allowing us the flexibility to reset our credit facility
based on requirements that solidify over the next twelve months.
