Accretive Health - Reputation - Accretive Health

DECEMBER 3, 2012

2012 INVESTOR DAY

Driving Growth Through Measured Results


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

2


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.

3


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 Coordination

Dr. 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

4


MARY TOLAN Founder and Chief Executive Officer

5


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

7


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

8

Driving Growth Through Measured Results 9

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

Physician Advisory Services

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

Physician Advisory Services

• Increasing frequency of audits

• Opportunity for continued market share gains

• Expansion into compliance and workflow advisory services

Multiple Growth Drivers in Each Business

10


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

Health

Reform

Economic

Insufficient

Resources


Market Size

% to AH Revenue

Revenue Opportunity

Sources: CMS National Healthcare Expenditures, September 2011 and Definitive Healthcare

RCM market scope includes net patient revenue at all hospitals based on CMS 2014 projected expenditures

Quality market scope includes all hospital and physician expenditures

PAS market scope includes all hospitals with >$250 million in net patient revenue

12

Market Opportunity

$50 Billion

$100 Billion

$850 Million

0.12% 6.25% 5.0%

$1.0 Trillion $1.6 Trillion $ 710 billion

PAS Quality RCM


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

13


Pay for measured results

Unparalleled form of collaboration

End-to-end scope

AH makes significant investment of resources

Pay for results not input

14

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

Payor Follow-Up

Patient Advocacy

Patient Share

Lost Charges

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

15

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

17


REVENUE CYCLE MANAGEMENT


Market Drivers for RCM Solutions

• Declining

reimbursement

• Increasing

patient

responsibility

• Poor collection

rates

• ICD-10

• Health

Reform

• Old-generation

financial systems

still in use

• Fragmented

solutions

• No upfront

investment

with Accretive

Health

We compete with numerous vendors who approach the

market with incomplete solutions

Financial Pressures

Increasing Complexity

Obsolete Technology

Investment Risk


Collection Yield: Uncovering Hidden Leakage

Less: Payor write-offs

Less: Bad debt Less: Hidden leakage

Cash collected

Opacity in the revenue cycle process hides leakage

$435

Less: Accurate contractual adjustments

Less: Hidden leakage disguised as contractual adjustments

- 500

- 35

Typical hospital

calculation

Calculation after

AH analysis

$1,000 $1,000 Gross charges

- 500

0

Gross charges less contractuals (collectable cash) $465 $500

-5

-25 0

$435

Yield (cash collected/collectable cash): = 94% $435

$465 = 87% $435

$500

We uncover hidden leakage to derive a real picture of collection yield

-5

-25 -35

Areas for AH

to drive improvement


12-month period

All contracts

All patient visits and charge information

Best Possible Revenue

21

How do we Uncover Hidden Leakage?

AHtoContract Tool

Our proprietary AHtoContract tool is vital in calculating Best Possible revenue


Understanding Leakage: Illustrative Example

88.2%

7.7%

4.1%

2.3% 30% Insured patient responsibility

5% 0.2% Uninsured

87.0% Overall Collection Rate:

84.5% 95.8% Payors

Yield % of Total

Revenue Mix

4.1% x 5.0% = 0.2%

7.7% x 30% = 2.3%

88.2% x 95.8% = 84.5%

In an industry where operating margins average ~2%,

13% revenue leakage is significant

100%

75%

50%

25%

0% Payor reimbursement

Insured patients residual responsibility

Uninsured patients



Payor yield: 2%

Insured

patient yield: 1%

Patient self-pay

conversion: 1%

Increase to

“Best Possible”: 1%

• Pre-registration

• Automated insurance verification

• Automated plan code correction

• Prior authorizations

• Continuous denials review/fix

• Automated denial resolution

• Automated underpayment trolling

• Proper contractualization of receivables

• Specialized physicians to appeal denials

• Real-time patient responsibility estimation

• Simplified billing statements

• Prior balance visibility

• Patient education

• Alternate sources of coverage

• Expeditious charity care application

• Manage secondary coverage as backup

• Identification of missing or unbilled charges

• Pricing initiatives

• Post-coding, pre-bill quality review

We retain a portion of the revenue lift as our Incentive Fee

23

RCM Win-Win Proposition I: Improved Revenue Lift

5%

0%

1%

2%

3%

4%


Middle

Transcription

Coding

Case coordination

Records storage

Clinical documentation

Release of information

Medical records

Charge capture

Back-End

Billing

Claim follow–up

Cash posting

Pre-collect

Underpayments

Denial management

Contract compliance

Front-End

Scheduling

Pre–registration

Registration

Eligibility

Insurance verification

Pre–authorization

Financial counseling

Admitting

We help our clients reduce costs through:

What services are included?

24

Reducing Collection Costs: Methodology

• Process efficiency – eliminate

redundant effort

• Technology-driven productivity improvements – automation

• Vendor cost management

• Demand-driven staffing and scheduling

• Use of Shared Service Centers to drive economies of scale


Cost Baseline: Hospitals spend about 4.0-4.5% of NPR on their collection effort

• This baseline serves as the initial basis of our Base Fee

15-30% expense

reduction after engaging with AH

Cost Baseline

25

RCM Win-Win Proposition II: Reducing Collection Costs

Reducing collection costs:

• Accretive Health aims to reduce cost to collect by 15-20%, or 20-30% if services are migrated to Shared

Service Centers

• Cost savings are shared with clients, providing a mutual incentive

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

$0

$20

$40

$60

$80

$100

$120


We operate 10 Shared Service Centers domestically and offshore

89% of revenue cycle management customers utilize at least one shared

service; 55% of customers utilize at least three shared services

Shared services deliver enhanced benefits – more cost savings than

processing on-site

Services delivered via Shared Service Centers:

• Financial Clearance

• Customer Service

• Pre-collect

• Medicaid Eligibility

• Patient Financial Services

• Underpayments

• Transcription

• Coding

Shared Service Centers

26


MIDDLE FRONT BACK Patient

Information

(input)

Cash

Collected

(output)

Competitors with

limited scope

Accretive Health Oversight

Superior results through complete oversight of the revenue cycle

• Fragmented solutions are sub-optimal, with no complete view of data

• Competitors with limited scope can only deliver limited value

• Root cause analysis shows significant problems are caused by poor inputs

• Garbage in…garbage out!

• Effective revenue cycle must capture all inputs and outputs at the front, middle

and back end

Why Our End-to-End Solution is Better

27


Accretive Health technology integrates with client patient accounting,

scheduling, and electronic health record systems

• Existing patient accounting system remains

“System of Truth”

• Industry-standard protocols (HL7, EDI, etc)

• Seamless interfacing, NOT a system conversion

• Experienced implementation teams

• No local hardware or software installation

• Hosted in world-class SAS-70 compliant data center

Our Technology is a Critical Piece of our Offering

28


Our technology…

Detects accounts that have financial risk

Streamlines the Execution of resolving the risk

Measures the efficiency and effectiveness of our process and outcomes

Technology Model

29


AHtoAnalytics™

Operational reporting and analytics with drill-through to account level detail

Yield-Based Follow Up™

Follow up for un-billed and billed claims with payors

AHtoCharge™

Charge integrity and compliance

AHtoAccess™

Patient pre-registration and registration, insurance eligibility checking

AHtoContract™

Best payment calculation, contract modeling, insurance payer follow up

AHtoAnalytics™




AHtoCharge™


AHtoAccess™


AHtoContract™


30

Core Revenue Cycle Technology

Proprietary & Confidential

AHtoAnalytics™




AHtoCharge™


AHtoAccess™


AHtoContract™


AHtoAnalytics™


Yield-Based Follow-Up™

Follow-up for un-billed and billed claims with payors

AHtoCharge™


AHtoAccess™


AHtoContract™

Best Possible calculation, contract modeling, insurance payer follow up


Potential Sources of Leakage Throughout End-to-End Process Actual Leakage

Realized

Hidden Leakage in

• Contractuals

(Underpayments,

misclassified denials)

Uncompensated Care

• Bad debt

• Charity care

• Denial write-offs

Hidden Leakage Due to

• Missing charges

• Documentation and

coding errors

31

Eliminating Leakage Drives Returns

FRONT-END

• Incomplete patient data

• Incomplete insurance

verification

• Incorrect payor code

• Failure to obtain

pre-authorization

• Incorrect residual

estimate

• Failure to discuss patient

share/ prior balance

• Failure to find

secondary insurance

• Coordination of benefits

• Insufficient follow up

with payer/patient

• Failure to appeal

denial

• Billing errors

• Discharge not final

billed (DNFB)

• Cash posting errors

• Failure to bill

secondary

• Delays in timely filing

• Third-party take

backs

• Insufficient or

incomplete

documentation

• Coding errors

• Missed charges

Registration and Financial Clearance

MIDDLE BACK-END

Health Information Management

Billing and Follow-up


AHtoCharge

Metrics Manual Internal Audit* AHtoCharge

Total Registered Visits 1,000,000 1,000,000

Reviewed Accounts 1,000 1,000,000

% Reviewed 0.1% 100%

Worked Accounts 1,000 30,000

Reconciled Revenue Leakage (# of accounts) 100 8,000

Gross $'s Reconciled $50,000 $4,000,000

*Based on Accretive Health’s estimates


Lifecycle of a Claim

Thorough analysis of claims

Balance (BAL) Compare to:

Charges

Payments

Patient Payments

Insurance Payments

Adjustments

Exp Reimbursement

Aug.15,2012 – Nov 13, 2012 BAL $0 CHR $9423.75 PMT $4642.01 ADJ $4781.74 REI $4642.01

8000.00

6000.00

4000.00

2000.00

0

Aug 20 Aug 27 Sep Sep 20 Sep 17 Sep 24 Oct Oct 8 Oct 15 Oct 22 Oct 29 Nov

L

S

R

P

E

L L

R

C

A U

U

T B 2 8 C

Y

Z 8 Y 2 8 $ B 2 8 $ $

Pre-Registration 8/15/2012 Insurance

plan info added

Insurance

Payment 10/11/2012 Insurance

payment

Admitted 8/18/2012

Discharged 8/22/2012

Patient Payment 11/7/2012

Contractual

Allowance 11/7/2012 Insurance

adjustment


Workflow Management

• Grouping of accounts into risk levels

• Campaigns focused on specific claim types

Advanced Prioritization Algorithms

• Customizable business rules engine utilizing 30+

variables for each account

• Insights from predictive models based on analysis of

historical data

Prioritized claims for each follow-up representative

34

Yield-Based Follow-up

Initial Prioritization based on factors including:

• Payor type and plan code

• Current insurance balance

• Expected reimbursement

• Denial type (if any)

• Days from discharge

• Days before filing appeals deadline

• Most recent activity on the account

• Recommended follow-up date

The Yield-Based Follow-up Tool utilizes proprietary algorithms and business

logic to assign accounts to appropriate risk categories.


• Technology is integrated into all key steps in the revenue cycle process

• Industry knowledge, reporting, and analytics capabilities are integrated into

management of the operations

• Embedded management teams are integral to execution of revenue

cycle processes

• Utilization of Shared Service Centers delivers additional cost savings

• Operational excellence and a focus on continuous improvement, combined

with consistent financial results, generates loyalty

Factors that Contribute to Long-Term Client Partnerships

35



Q&A



QUALITY AND CARE COORDINATION


DR. WALTER ETTINGER

TIM BARRY President, Quality and Care Coordination

Chief Medical Officer

38


Market Overview

$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%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

1960 1970 1980 1990 2000 2009

He

alt

hcare

Sp

en

d a

s a

% o

f G

DP

He

alt

hcare

Sp

en

d p

er

Cap

ita (U

SD

)

USA OECD

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

2010

Healthcare Spend in the U.S. is Unsustainable…


IRE

40

Market Overview

...and Care Quality Outcomes are Sub-Optimal

70

75

80

85

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

TUR

MEX

HUN

SLR EST

POL

CHL

CZH

ISR

KOR

SLV

JPN

ITA SPA

NZL

GRC

POR

ICE

FIN GBR

AUS SWE

FRN

BLG

DMK

GER

AUT

CAN SWI

NOR

HOL LUX

USA

Source: OECD Health Expenditure Data

Health Spending per Capita (USD)

Lif

e E

xp

ec

tan

cy

in Y

ea

rs

“If home building were like healthcare,

carpenters, electricians, and plumbers each

would work with different blueprints, with very

little coordination.”

41

–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

42


Intra-Stay

Quality

Population

Health

43

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

44

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

46

Projected Cost and Savings Trend



Oncology Care: A Complex System for the Patient to Navigate

Routine Visit/

Maintenance

Critical

Trial

Infusion Therapy

Lab

Psych

Counseling

Pharmacy

Palliative

Care

Nutritional Counseling

Genetic

Testing

Imaging

Genetic Counseling

E/R Visit

Oncology Consult

In-patient stay Lab

Imaging PCP

Pharmacy Specialist

Other Counseling

Surgery Radiation Oncology

Cancer related

Non-Cancer related

Executed at Oncology Clinic

May or may not be executed at Oncology Clinic

Usually not executed at Oncology Clinic


% of Membership % of Total Spend

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

$0

$10

$20

$30

$40

$50

$602010A

2020E

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

$10,317.76

$2,708.16

$363.64

Cancer Dx + ActiveChemo Tx

Cancer Dx w/o ActiveChemo Tx

All Non-Cancer

48

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 coordination Care 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 Care Consistent approach to

EOL discussions to ensure

patient fully understands

treatment / quality of life tradeoffs

Evidence-based protocols Development and consistent

application of

best practice treatment protocols

Optimal lab and

Imaging utilization Application of protocols to remove

unneeded / redundant utilization

49

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

$4,749 Direct Care Cost

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

Medical Center

MedPar FY11 Medicare P/L per Patient

Potential Future

Medicare 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 year

for 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

Facility Avg cases/yr GMLOS AMLOS Median Quartile

Sit e 1 7 3.44 5.04 4 1

Sit e 2 34 3.96 4.79 4 1

Sit e 3 27 4.09 5.06 4 1

Sit e 4 14 4.22 4.96 4 1

Sit e 5 31 4.37 5.16 5 1

Sit e 6 35 4.41 5.77 5 1

Sit e 7 14 4.48 5.46 4 1

Sit e 8 12 4.49 5.58 4 1

Sit e 9 40 4.51 5.49 4 2

Sit e 10 18 4.56 5.87 5 2

Sit e 11 64 4.58 5.80 5 2

Sit e 12 54 4.63 5.50 5 2

Sit e 13 247 4.66 5.77 5 2

Sit e 14 128 4.70 5.61 5 2

Sit e 15 83 4.84 6.22 5 2

Sit e 16 108 5.09 6.45 5 2

Sit e 17 35 5.10 6.11 5 2

Sit e 18 13 5.29 6.63 5 3

Sit e 19 129 5.31 6.34 6 3

Sit e 20 64 5.38 6.55 5 3

Sit e 21 210 5.38 6.90 5 3

Sit e 22 51 5.58 6.59 5 3

Sit e 23 43 5.60 6.44 6 3

Client 88 5.60 6.97 6 3

Sit e 25 55 5.66 6.72 5 3

Sit e 26 32 5.73 6.75 6 3

Sit e 27 54 5.75 7.16 6 4

Sit e 28 21 5.86 7.00 6 4

Sit e 29 24 5.94 7.43 6 4

Sit e 30 68 6.21 7.85 6 4

Sit e 31 46 6.50 8.32 7 4

Sit e 32 76 6.62 8.26 7 4

Sit e 33 64 6.63 8.60 6 4

Sit e 34 6 6.79 8.96 9 4

Tot al 2264 5.04 6.33

CM S (2011) 5.22 6.61

3.44

4.49

5.60

6.79

1.11 days

per case

Database mean 5.04

CMS 5.22

GMLOS

x 88 cases

per year

=

52

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

54


Q&A


PATRICK SINCLAIR General Manager, AccretivePAS

56


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

58


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

59

PAS Value Proposition

Low

High

Compliance Re

ve

nu

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

60


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


Q&A


CLIENT PANEL


GREG KAZARIAN Chief Talent Officer – Accretive Health (Moderator)

CYNTHIA FRY, Ph.D Corporate Vice President, Revenue – Catholic Health East

RICH FELBINGER Chief Financial Officer – Borgess Health

IKE NICOLL Chief Executive Officer – Cancer Clinics of Excellence

64


JOHN STATON Chief Financial Officer

65


FINANCIAL OVERVIEW


• Large market opportunity

• Highly recurring revenue and earnings through long-term contracts

• Strong balance sheet with minimal capital requirements

• Expanding contract margins

• Limited exposure to macroeconomic headwinds

Business Model Highlights

67

Win-Win Value Proposition with Clients


$50 Billion $100 Billion $850 Million Revenue

Opportunity

AH Share

2% 0% 7%

68

Large Market Opportunity

Quality RCM PAS


$2.4

$4.1

$6.7

$9.2

$12

$15

$22

$19

2005 2006 2007 2008 2009 2010 2011 2012E

69

Solid Growth in NPR Under Management

34% CAGR in Net Patient Revenue since 2005 for contracts

under management in our core revenue cycle offering

($ in billions)


$111 $161

$241

$398

$510

$606

$826

~$948

2005 2006 2007 2008 2009 2010 2011 2012E

70

Highly Visible Revenue

36% revenue CAGR since 2005

High Visibility: <6% of current contracted revenue

up for renewal in the next twelve months*

($ in millions)

*$53m of PCARR due for renewal in the next twelve months as of 9/30/12, compared to $889 million to $906 million PCARR as of 9/30/12


Cost Takeout Trajectory Revenue Lift Trajectory

15-30% Lower Cost to Collect 4% - 6% Revenue Yield Lift

0%

100%

0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

20% - 30% Cost

Takeout

with Shared Services

15% - 20% Cost Takeout

4% - 6%

>$30 million in additional value annually for a typical hospital with $1billion in NPR

71

RCM Contract Economics – Putting it Together

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Accretive Health shares cost savings with the client, and retains a portion

of the revenue lift


$6.8 $12.2

$32.9

$45.0

$81.6

$50- $55

$0

$20

$40

$60

$80

2007 2008 2009 2010 2011 2012E

$30-

$33

72

Improved Efficiency Drives EBITDA Margin

2.8% 3.1%

6.5%

7.4%

Adjusted EBITDA adds back stock-based compensation expense to EBITDA. See discussion on the use of Non GAAP measures

9.9%

5.3%-5.8%

Non-GAAP Adj. EBITDA and EBITDA Margin

($ in millions) 8.4%-9.3%


Year Ended

Dec. 31, 2011 Target

($ in millions)

73

5-Year Outlook

Adj. EBITDA Margin 9.9% 14% - 18%

$826.3 Net Revenue 20% - 25%

CAGR

Adjusted EBITDA adds back stock-based compensation expense to EBITDA. See discussion on the use of Non GAAP measures


Cash and Cash Equivalents $196.7

Capital Lease Obligations (Including Short-term) 0.0

Other Indebtedness (Including Short-term) 0.0

Total Stockholders' Equity $238.1

December 31, 2011 September 30, 2012

$196.4

0.0

0.0

$258.0

$15.1

$32.0

$16.4 $21.8

2009 2010 2011 YTD 2012

Operating Cash Flow

74

Strong Balance Sheet and Cash Flows

($ in millions)

($ in millions)


2012 Outlook

As provided on November 7, 2012

Includes negative impact of $30 to $33 million of non-recurring items

PCARR

Net Revenue

Adjusted EBITDA

Adjusted EPS

$930M - $960M

$948M - $980M

$50M - $55M

$0.23 - $0.27

(low end of range)

(Projected contracted annual revenue run rate)


Appendix - Reconciliation of Non-GAAP Financial Measures

The following table presents a reconciliation of adjusted EBITDA to

net income, the most comparable GAAP measure

2007 2008 2009 2010 2011

Net Income $0.8 $1.2 $14.6 $12.6 $29.2

Net Interest Expense (Income) (1.7) (0.7) 0.0 (0.0) (0.0)

Provision for Taxes 0.5 2.3 3.0 9.7 18.9

Depreciation & Amortization Expense 1.3 2.5 3.9 6.2 8.3

EBITDA $0.8 $5.3 $21.5 $28.5 $56.4

Stock Compensation Expense 6.0 6.9 11.4 16.5 25.2

Adjusted EBITDA* $6.8 $12.2 $32.9 $45.0 $81.6

($ in millions)

*Adjusted EBITDA adds back stock-based compensation to EBITDA


MARY TOLAN Founder and Chief Executive Officer

77


LOOKING AHEAD


• The opportunities for our business are promising given the challenges facing

healthcare providers

• There are numerous growth avenues within each of our businesses

• Revenue Cycle Management

• Large market opportunity, low current penetration

• Margin expansion opportunities

• Quality and Total Cost of Care

• Market is ripe for solutions geared to population health management

• Physician Advisory Services

• Increasing complexity and frequency of audits

• Expand relationships with existing clients by driving growth through measured results

• Strong balance sheet and cash flows to execute on our objectives

In Summary

79



Q & A

Documents

Accretive Health - Reputation - Accretive Health