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Mother’s Touch Hospice

Mother’s Touch, Inc.Business Plan

Obtain Licensure 2015 - 2016Operate 2016 -2019

Business PlanPrivate and Confidential

4/22/15

Business Plan No.____

Mother's Touch, Inc.Confidential Business Plan

Mother's Touch, Inc. ("Mother's Touch", "MTI" or the "Company") is exploring the potential of the placement of $250,000 of promissory notes for the Company. This Confidential Business Plan (this "Plan") has been prepared from information from warranties Company management and from other sources believed to be reliable. The Company does not make any representations or, express or implied, as to the accuracy or completeness of such information. This Plan has been prepared on a confidential basis solely for the benefit of qualified parties that are Accredited Investors in connection with the analysis of the potential debt financing of the Company.

This Plan is not and should not be construed as an offer to sell nor a solicitation of bids to buy securities, nor can or should this Plan be relied upon to provide necessary or sufficient information for potential debt financing lenders to make a determination on whether to participate in the debt financing of the Company. Any party desiring to explore a possible financing transaction with the Company must do so solely on the basis of that party's own due diligence review of the Company.

The Company expressly disclaims any and all liability which may be based on this Plan or any of its contents, errors therein or omissions therefrom. The recipient shall be entitled to rely solely on the representations and warranties made to it in any definitive debt financing agreement or debt placement agreement.

This Plan includes statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the Company's expectations, hopes, beliefs, intentions or strategies regarding the future. All statements, other than statements of historical facts included in this Plan regarding the Company's financial position, business strategy and other plans and objectives for future operations, are forward-looking statements. All forward-looking statements included in this Plan are based on information available to the Company on the date hereof, and the Company assumes no obligation to update such forward-looking statements. Although the Company believes that the assumptions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct or that the Company will take any actions that may presently be planned.

Mother’s Touch Hospice Business Plan Page 2 of 26

THIS PLAN IS BEING PROVIDED TO YOU UNDER A CONFIDENTIALITY AGREEMENT.

CONSEQUENTLY, YOU ARE URGED TO EXERCISE THE UTMOST DISCRETION IN MAKING THE

ENCLOSED INFORMATION AVAILABLE TO YOUR EMPLOYEES, AFFILIATES OR ADVISORS

WHO MAY NEED TO ANALYZE SUCH MATERIAL IN THE COURSE OF YOUR EVALUATION OF

A TRANSACTION WITH THE COMPANY. THIS PLAN AND ANY SUBSEQUENTLY FURNISHED

INFORMATION MUST BE RETURNED TO THE COMPANY, WITHOUT RETAINING COPIES,

EXCERPTS OR ANALYSIS THEREOF, IF YOU DETERMINE NOT TO PROCEED WITH A

TRANSACTION WITH THE COMPANY. INQUIRIES AND REQUESTS FOR FURTHER

INFORMATION SHOULD BE DIRECTED TO THE FOLLOWING:

Mike Nicholas

President

[email protected]

Mother's Touch, Inc.319 North Dowell Street

Wichita, Kansas 67206-2789

316-682-1232


Business Plan

Table of Contents

I. The Business…………………………………………………………...….. 5II. Strategy Summarized ……………………….…………………………….. 7III. Why The Time is Right…………………………………………………… 7IV. The Market……………………………………………………………..…. 8V. Marketing …………………...…………………………………………….. 11VI. Mission – Vision – Values – Value Proposition…………..……..………….. 14VII. Potential Risks……………………………………………………….......... 15VIII. The Industry………………………………………………………….......... 16IX. Management Start-up ……………………………………………………... 23X. Funding …………………………………………………………………… 24XI. Three Year Financial Summary……...……………………………………. 26


I. The Business

A. Company Ownership/Legal Entity Mother’s Touch, Inc., (Referred to hereafter as “Mother’s Touch” or “MT”) is a Corporation currently 100% owned by Patty Nicholas.

B. LocationThe current location is in Wichita, Kansas. As soon as Investor loans are committed, current owners will lease living accommodations in Denver to start their third hospice. Simultaneous with Medicare certification, appropriate commercial space in the appropriate location will be leased.

C. Three Year Financial Goals (based upon average increase in census of 2 patients per month for first 2 years).

Year-1 - Total Revenues $826,681 Net Income $132,247 Year-2 – Total Revenues $2, 286,108 Net Income $730,497 Year-3 – Total Revenues $3, 000,096 Net Income $1, 042,920 3-Years – Total Revenues $6,112,885 Net Income $1,905,664

Year 1 Year 2 Year 3 $-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$826,681

$2,286,108

$3,000,096

$132,247

$730,497

$1,042,920

RevenueNet Income

NOTES:1. Year 1 of financial presentations contained herein begin when Medicare reimbursements are

received (Approximately 3 months after certification which is approximately 8 months after starting the certification process. I.E. a total of approximately 11 months from start of Medicare certification process until Medicare funds are received by Mother’s Touch).

2. Revenue goals are based on a growth in census of 2 patients per month with an average daily reimbursement 7 days a week of $166.87/$169.04/$171.24 in years 1, 2 and 3. See appendix B.

3. National Hospice and Palliative Care Organization (NHPCO) has a consulting arm called NHPCO Edge. That group was engaged to do a review of this business plan. In their review dated 03/06/2015 it stated “Assumptions for census growth seem reasonable, given the fragmented nature of the Denver market and the client’s past experience in hospice startups”.

D. Service Delivery

1. Hospice Care is considered the model for quality compassionate care for people facing a life-limiting illness. Mother’s Touch will build and deliver a hospice service model that provides expert medical care, pain management, and emotional and spiritual support


expressly tailored to the patient’s needs and wishes. Support will also be provided to the patient’s loved ones as requested and required.

2. Hospice care focuses on caring, not curing. In most cases, care is provided in the patient’s home, but may also be provided in nursing homes, and other long-term care facilities. Hospice services will be available to patients with any terminal illness or of any age, religion, or race. Mother’s Touch Hospice care can be provided anywhere the patient considers “home”.

3. Hospice care delivery Process Typically, a family member serves as the primary caregiver and, when appropriate, helps make decisions for the terminally ill individual. Members of Mother’s Touch staff make regular visits to assess the patient and provide additional care or other services. Mother’s Touch staff will be on-call 24 hours a day, seven days a week.

4. The care plan The Mother’s Touch team will develop a plan that meets each patient’s individual needs for pain management and symptom control. This interdisciplinary team, (Figure 1 below) usually consists of the patient’s personal physician, a hospice physician or medical director, nurses, hospice aides, social workers, bereavement counselors, clergy or other spiritual counselors, trained volunteers, and speech, physical, and occupational therapists, if needed. All of these services are mandatory Medicare requirements (Conditions of Participation). Mother’s Touch will develop an experienced team in Denver.

Figure 1 Interdisciplinary Team


II. Strategy Summarized

A. Target the fast growing population in Denver, Colorado and surrounding counties where the potential for increased utilization and taking market share from competitors of hospice care exists.

B. Use the management experience gained in two prior hospice start-ups to create a high quality service delivery model and manage the growth potential of the market while maintaining the quality service.

C. Make full use of 15 years of administrative and accounting experience as controller for companies as small as 250 employees to as large as Koch Industries of Wichita reporting to the Controller of all Divisions for 2 years. Mother’s Touch will be run efficiently to deliver quality service at optimum cost.

D. Develop the service to achieve Medicare certification faster than average using lessons learned in the prior start-ups.

E. Focus time and people resources to develop in depth relationships with key people and organizations in the Denver medical and social services community.

F. Hire and train a staff that fits the best profile for the quality care our mission requires service-wise.

G. Introduce and build awareness for the “Mother’s Touch” brand which with excellent operational execution can embody our value proposition in the minds of the community.

III. Why the Time is Right

A. Demographics support the need for additional Hospice Care facilities. According to Department of Health and Human Services the United States population age 65 and older is expected to more than double between 2010 and 2050, from 40.2 million to 88.5 million. The increase in the number of the "oldest old" would be even more dramatic — those 85 and older are projected to more than triple from 5.7 million to 19 million.

B. The Older Population is increasing faster than average in key Midwest states and markets. This is particularly true for Colorado and the Denver metro area. See H, H.1 and H.2 above.

C. Increasing need requires additional hospice care providers; however, obtaining Medicare certification makes it difficult for new services to start up where needed. Mother’s Touch management has that experience.

D. The Patient Protection and Affordable Care Act (PPACA) make government requirements more stringent for hospices than before PPACA. This law requires experienced and professional operators such as MT to successfully maneuver and incurs penalties upon those that may be less experienced or are not of the highest quality.


http://www.aoa.acl.gov/Aging_Statistics/future_growth/future_growth.aspx

E. The 2010 PPACA will have additional advantages for MT. “Medicaid will have new incentives to shift spending away from nursing home care and toward services in the home and community, which will expand availability of services, such as at-home hospice care, home delivered meals and transportation to doctor’s appointments for all older people, regardless of income. This shift comes as government seeks to reduce costs, and hospice care is considered a cost-effective alternative to skilled-nursing facilities and hospitals.” (Source: Wichita State University, Center for Economic Development & Business Research (CEDBR) contracted research report for Mother’s Touch, pages 10-11)

F. Mother’s Touch founders have a proven capability of creating a hospice service and obtaining certification in faster than normal timeframes. This puts Mother’s Touch in an ideal position to fill a growing need for experienced hospice care providers that can deliver high quality service.

IV. The Market

A. Target Area

1. The four counties specifically targeted will be Adams, Arapahoe, Denver, and Jefferson.


2. These counties were targeted per the population distribution as seen on the below-map.

3. The Denver area is large and growing. Age 65+ 2015 population is expected to grow from 293,613 to 515,325 by 2030 according to Colorado Department of Local Affairs, Population Data (as of 03/31/15).

Denver Area Population Increase, 65+, from 2015 to 2030

Jeffers

on, 75% In

crease

Arapah

oe, 88% In

crease

Denve

r, 5

2% Incre

ase

Adams,

95% In

crease

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

88,02177,690 78,659

49,243

154,019145,911

119,191

96,204

20152030

4. Age 85+ 2015 population is expected to grow from 36,409 to 60,894 by 2030.


https://dola.colorado.gov/demog_webapps/pagCategory.jsf

https://dola.colorado.gov/demog_webapps/pagCategory.jsf

Denver Area Population Increase, 85+, from 2015 to 2030

Jeffers

on, 75% In

crease

Arapah

oe, 79% In

crease

Denve

r, 3

2% Incre

ase

Adams,

102% In

crease

0.02,000.04,000.06,000.08,000.0

10,000.012,000.014,000.016,000.018,000.020,000.0

10,803 9,465 10,703

5,438

18,886

16,912

14,115

10,981

20152030

5. Overall Denver Area Population: a. According to an article by Jackie Fortier titled Are You Ready? Denver is in the Top

10 of Fastest Growing U.S. Cities the “Metro Denver has jumped to No. 6 of Forbes’ annual ranking of the 20 fastest growing cities in the nation [2014]”.

b. The Colorado Department of Local Affairs also estimates (as of 03/31/2015) that the four, targeted counties have a 2015 projected, total population of 2,356,449.

6. Hospice utilization is the percentage of Medicare beneficiaries that are also on hospice. In the Denver area it was 52% in 2013 which was below an estimated max 70% potential utilization per Hospice Analytics. Jefferson County utilization was 56.3%. It has a higher percentage of elderly population than the other targeted counties. Those counties of Arapahoe, Adams, and Denver had utilizations of 51.2%, 51.0%, and 50.6%. These are all above the national average of 45.4%, but there are reasons for that. The Denver area has a superior health care system thereby providing better community education about hospice. It also offers greater availability of hospice care than is the case in some of the other counties and states that are in the national percentage. Denver has a highly concentrated population in a relatively small area. Some states in the national percentage (North Dakota, Alaska, and Mississippi as examples) have much lower populations and are more rural. See Appendix D for more information.

7. The Denver Hospice and Gentiva/Harden have a large asset base. In spite of their large base, however, these two are not highly profitable and in fact The Denver Hospice showed a net loss in 2013 primarily because of “Fund raising compensation” and compensation expense in general.

8. Industry data indicate there is an opportunity for a high quality and efficient hospice care service to capture a profitable share of the Denver market.

9. The Denver economy is strong and growing. “From 2010 to 2015 the region’s economy should add approximately 20,000 new jobs, averaging 2.5% annual growth.” ( State Demography Office).

B. Competition


1. Competition is more of a local issue vs. national brands2. Denver competition is fragmented with no dominate organization

a. There are 24 hospice care services in the Denver area.b. They range in size from 28.4% share of admits for Denver hospices to half of the

providers with shares of 2% or less.c. Average daily census ranges from 424 to 27 in the top 10. Mother’s Touch

conservative projection would be in the top 10 by year two. A more optimistic potential would reach the top 5 by year two.

3. One indicator of quality care can be the amount of lab work done to determine the appropriate care treatment. The top 8 providers currently spend very little in this area. (0.1% to none of revenues) Mother’s Touch will spend the necessary amounts needed to accurately diagnose the needs of each patient. (Typically 1% or more of revenues)

4. Many Denver hospice care services appear to have management issues as evidenced by losses, little or no cash in the bank, and high (62%) administrative compensation costs vs. a reasonable level (40%). Additionally, they may not use comprehensive management quality control systems such as Mother’s Touch Care Audits.

V. Marketing

A. Our immediate strategic goal is to create a profitable business model in Denver, CO that can be expanded and replicated within the Denver Core Based Statistical Area (CBSA).

B. Because hospice care service is a “relationship” business, it requires the ability to initiate, develop, and maintain key relationships with medical care providers and other individuals from the community that support patient care (These include among others such as volunteers, spiritual counselors, social workers, legal and financial advisers).

C. Mother’s Touch management will primarily focus resources on personal one-on-one relationship building in the market. We have the experience needed to create and deliver value through in-depth and professional relationships throughout the entire hospice care process

D. Mother’s Touch will build a dedicated care team of committed individuals with the skills and personalities to provide the very best service. Mother’s Touch will aggressively pursue long term Denver experienced and successful staff starting with the Director of Nursing. This will allow us to take advantage of existing community relationships to educate staff and the market about the unique Mother’s Touch hospice care service delivery system.

E. Mother’s Touch operational management experience has developed successful systems, control and processes in two other hospice care businesses. These provide a capability to continuously monitor and improve care delivery quickly so we deliver the best individual patient care possible.

F. Developing and communicating timely and relevant information to the important people in the process for each patient is a critical priority. Information as well as care must be specific to each patient. While this will be done primarily one-to-one, professionally printed materials and an interactive website are additional vehicles for continuous communication. There will be a website www.motherstouchhospice.net with “member only” access for physicians.


http://www.motherstouchhospice.net/

However, information is also available that is relevant, timely, useful and current for patients/their families, hospital discharge planners, and skilled nursing facility staff. This is a valuable communication tool before, during and after service is provided. Note that .com and other versions of the domain name are owned currently by Mother’s Touch. See Appendix E and F for additional details related to Advertising Plan and marketing of the Mother’s Touch website.

G. Key Elements

1. Purpose – Mother’s Touch marketing activity will focus on the following:a. Building awareness for the Mother’s Touch brand; the services offered; its

advantages with the aid of physician investors and quality staff with deep roots in our target markets.

b. Generate referrals through developing relationships with the key community individuals and organizations that make referrals to patients and their families.

c. Communicate the “Mother’s Touch Story” and Value Proposition to the medical community and the to the general public target audience.

d. Educate the medical and patient support community on benefits of hospice care and Mother’s Touch in particular.

e. Generate inquiries for information via website, flyers, brochures, promotional materials, etc.

2. Target Customera. Patients with life limiting health conditions.b. Denver area population age 65+, but more potential exists with those 85+.c. Medical and medical support community that refer or influence hospice care

placement:1) Hospitals2) Family Doctors3) Physician Groups4) Social Workers5) Home Health Agencies6) Nursing Homes and Assisted Livings7) Public. Direct request from patient/their family to be admitted. (word of mouth)

3. Competitive Advantagea. Quality of staffb. Quality of in-depth caringc. Mother’s Touch is a for-profit organization, so cash flow not used for executive

salaries/bonuses/perks and for fundraising to get funds are not invested back into the service delivery system.

d. Locally owned and operated so policies and decision-making are timely and tailored to the Denver areas specific needs. Decision approval from a corporate headquarters in another city is not required. We answer to the patients and their families.

4. Just the right size. Small enough to be responsive to needed changes quickly but large enough to manage ever-increasing regulatory costs without the risk of negative cash flow as a result.

5. Technical capabilities to monitor all areas of patient care with proven systems, controls and processes.

6. Position and Identitya. Positioning: “Mother’s Touch where care and medical care come together”.


b. Care given like a good mother wouldc. Mother’s Touch brand

7. Direct Marketing Teama. The entire staff of Mother’s touch will be capable of communicating effectively to

the patients, their families and other related individuals.

H. Action Programs

1. Develop an Interactive/industry best!/cutting edge website to launch by (date TBD)2. Produce High quality educational and promotional materials

a. Brochures, flyers, etc., Slide presentations, Information packets, Videos, Training materials, as examples.

3. Educational and informational presentations to groups.4. Research plan? 5. Recruiting staff6. Recruiting referral sources & investors.

[Remainder of Page Intentionally Blank]


VI. Mission – Vision – Values – Value Proposition

Mission – PurposeTo enhance the quality of life for those facing advancing illness, death, and bereavement through research, skilled and compassionate care, education, understanding, and advocacy.

VisionQuality End-of-life Care Wherever Mother’s Touch is Available

ValuesOur organization embraces and demonstrates a number of core values that will not be compromised. Embracing our organizational values help us direct decisions and define what the company “will always do” and “will never do.”

RESPECT We respect the intrinsic worth of each individual.

COMPASSIONCompassion underscores all our actions and decision-making. We demonstrate an empathic, non-judgmental manner. We believe in the power of tender acts of kindness.

INTEGRITYIntegrity forms the basis of personal and professional practice. We take individual and collective responsibility for our actions. We are accountable, honest, and fair in all we do within an ethical framework.

COMMITMENTCommitment to quality end-of-life care is fundamental to our work and our relationships. Through our dedication, we honor the people we serve, each other and our community.

COLLABORATIONCollaboration is fundamental to achieving our best work. Respectful and honest communication with appreciation for diversity enables us to accomplish together what could not be achieved alone.

EXCELLENCEThrough the active pursuit of skills, knowledge, growth and innovation, we achieve our highest personal and professional potential in our unwavering quest for the highest quality of end-of-life care.

Value Proposition

When you weren’t feeling well, Mother did everything possible at whatever emotional, physical, or monetary cost to her to make sure you were comfortable and taken care of the best she could. It was about your needs not hers. We provide just that kind of care. We know you need quality care with a

Mother’s Touch.


VII. Potential Risks

The Pro Forma projections included in this plan can be adversely affected by significant changes in the following current trends and assumptions:

A. Adverse Federal and/or State Legislation

B. Federal reduction in Medicare reimbursement rates.

C. Significant inflation impact on payroll and expense rates.

D. Slowing growth or major decline in target population in Colorado because of changing social, cultural and/or political climate.

E. Availability of qualified care team members when needed.

F. Market entry may be more difficult than assumed because of competitor’s affiliations in the medical-hospice community.

G. Medicare Certification not achieved within a years’ time.

Conversely, the opposite of some of these risks can positively affect the projected results such as: A sharp increase of in migration of population age 65+. An increase in Medicare rates because of political pressure from the “Boomer” generation.


VIII. The Industry

A. Hospice Care in the U.S. is large and growing.

1. How many patients receive care each year? a. In 2013, an estimated 1.5 to 1.6 million patients received services from

hospice (Figure 2) . This estimate includes:

patients who died while receiving hospice care

patients who received care in 2012 and who continued to receive care into 2013 (known as “carryovers”)

patients who left hospice care alive in 2013 for various reasons including extended prognosis, desire for curative treatment, and other reasons (known as “live discharges”)

b. Figure 2 also indicates the number of patients and families served by hospice has increased significantly since 2009.

2009 2010 2011 2012 20131,200,000

1,250,000

1,300,000

1,350,000

1,400,000

1,450,000

1,500,000

1,550,000

1,600,000

1,341,3911,380,680

1,458,477

1,532,304 1,542,737

Total Population Served by Year

Total Population Served

Figure 2. National Population Receiving Hospice

2. How long do most patients receive care? The total number of days that a hospice patient receives care is referred to as the length of service (or length of stay). Length of service can be influenced by a number of factors including disease course, timing of referral, and access to care (Figure 3).

a. In recent years the median length of service has declined slightly while the average length of stay has increased by 3.5 days.



Average Length of Service

Median Length of Service

01020304050607080

69.1

19.1

71.8

18.7

72.6

18.5

201120122013

Figure 3. National Length of Service

b. Denver data for 2013 is similar to the US in average length of service (69.9 days in 2013).

c. The length of stay is important since Medicare reimburses hospice care by the day. As Figure 4 shows over a third of patients stay less than 7 days, a significant percentage stay in excess of 180 days.

< 7 days; 34.50%

8 - 14 days; 14.30%15 - 20 days; 12.70%

30 - 89 days; 18.00%

90 - 179 days; 9.20%

180+; 11.50%

Figure 4. Proportion of Patients by Length of Service in 2013

3. Where do hospice patients receive care? a. The majority of patient care is provided in the place the patient call home

(Table 1). In addition to private residences this includes skilled nursing facilities and residential facilities (e.g. Independent living centers). The percentage of hospice patients receiving care in a hospice inpatient facility is decreasing. In recent years the median length of service has declined slightly while the average length of stay has increased.

1. Table 1. Location of Hospice Patients at DeathLocation of Death 2013 2012

Patient’s Place of Residence 66 .6% 66 .0%Private Residence 41 .7% 41 .5%Nursing Home 17 .9% 17 Residential Facility 7 .0% 7 .3%Hospice Inpatient Facility 26 .4% 27

.4%Acute Care Hospital 7 .0% 6 .6%


b. Hospice in the Nursing Home. As the average life span in the United States has increased so has the number of individuals who die of chronic progressive diseases that require longer and more sustained care. An increasing number of these individuals reside in nursing homes prior to their death. This increases the importance of Nursing Homes as the place where hospice care is received.

4. What are the characteristics of the hospice patient population?

a. Patient Gender – More than half of hospice patients were female (Table 2).

Table 2. Percentage of Hospice Patients by GenderPatient Gender 2013 2012Female 54 .7% 56 .4%Male 45 .3% 43 .6%

b. Patient Age - In 2013, approximately 84% of hospice patients were 65 years of age or older—with 41 .2% being 85 or older (Table 3).

Table 3. Percentage of Hospice Patients by AgePatient Age Category 2013 2012Less than 24 years 0 .4% 0 .4%25 - 34 years 0 .4% 0 .4%35 - 64 years 15 .3% 15 .7%65 - 74 years 16 .6% 16 .3%75 - 84 years 26 .1% 27

.7%85+ years 41 .2% 40 .5%

c. Patient Ethnicity and Race - Following U .S. Census guidelines, NHPCO reports Hispanic ethnicity as different from race. In 2013, more than 6% of patients were identified as being of Hispanic or Latino origin (Table 4).

Table 4. Percentage of Hospice Patients by EthnicityPatient Ethnicity 2013 2012Non-Hispanic or Latino origin 93 .2% 93

.1%Hispanic or Latino origin 6 .8% 6 .9%

d. Patients of minority (non-Caucasian) race accounted for less than one fifth of hospice patients in 2013 (Table 5).



Table 5. Percentage of Hospice Patients by RacePatient Race 2013White/Caucasian 80 .9% 81 .5%

Multiracial or Other Race 7 .5% 6 .7%Black/African American 8 .4% 8 .6%Asian, Hawaiian, Other Pacific Islander 2 .9% 2 .8%American Indian or Alaskan Native 0 .3% 0 .3%

e. Patient Primary Diagnosis – 75% of hospice care patients have a diagnosis of cancer, dementia, heart disease and lung disease. Cancer is # 1 at 36.5%.

B. The Providers

1. The number of hospice programs nationwide continues to increase — from the first program that opened in 1974 to over 5,800 programs today (Figure 5). This estimate includes both primary locations and satellite offices. Hospices are located in all 50 states, the District of Columbia, Puerto Rico, Guam, and the U .S. Virgin Islands.

2. The majority of hospices are independent, freestanding agencies (Table 6). The remaining agencies are either part of a hospital system, home health agency, or nursing home.

2009 2010 2011 2012 20134,6004,8005,0005,2005,4005,6005,8006,000

5,0005,150

5,300

5,5605,800

Hospice Providers in US

Hospice Providers in US

Figure 5. Total Hospice Agencies by Year

Agency Type 2013 2012Free Standing/Independent Hospice

58 .3% 57 .4%Part of a Hospital System 19 .8% 20 .5%

Part of a Home Health Agency 16 .7% 16 Part of a Nursing Home 5 .1% 5 .2%

Table 6. Agency Type

3. Agency Size

a. Hospices range in size from small all-volunteer agencies that care for fewer


than 50 patients per year to large, national corporate chains that care for thousands of patients each day.

b. One measure of agency size is total admissions over the course of a year. In 2013, 78.7% of hospices had 500 or fewer total admissions (Table 7)

Table 7. Total Patient AdmissionsTotal Patient Admissions 2013 2012

1 to 49 16 .1% 15 .7%

50 to 150 29 .5% 28 .7%

151 to 500 33 .1% 33 .0%

501 to 1,500 16 .4% 17 .7%

> 1,500 4 .9% 4 .9%

c. Denver’s agency size is very similar to the US profile for annual 2013 data except for the very small 1 – 49 size agency (Figure 6).

1 - 49 50 - 150

151 - 500

501 - 1500

1500+0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%

Agency Size by USAAgency Size by Denver

Figure 6. Hospice Agency Size

4. Hospice Agencies are organized into three tax status categories. a. Not-for-profit [charitable organization subject to 501(c)3 tax provisions] - (30%)a. For-profit (privately owned or publicly held entities) - (66%)

b. Government (owned and operated by federal, state, or local municipality) - (4%)

The number of for-profit Medicare-certified hospice providers has been steadily increasing in recent years. In contrast, the number of Medicare - certified not-for-profit or government providers has declined over the same period.

C. Hospice Care payment comes predominately from Medicare

1. Medicare, Medicaid and most private insurance plans cover hospice care. However, since passage of Hospice benefit in 1982, Medicare is the primary source of payment as indicated below (Tables 8 and 9).



2. Most hospice agencies (92 .7%) have been certified by the Centers for Medicare and Medicaid Services (CMS) to provide services under the Medicare hospice benefit. In 2013, there were more than 3,900 certified hospice agencies.

3. Medicare certification is a must.

Table 8. Percentage of Patients Served by PayerPayer 2013 2012

Medicare Hospice Benefit 87 .2% 83 .7%

Managed Care or Private Insurance 6 .2% 7 .6%

Medicaid Hospice Benefit 3 .8% 5 .5%

Uncompensated or Charity Care 0 .9% 1 .2%

Self Pay 0 .8% 0 .9%

Other Payment Source 1 .2% 1 .2%

Table 9. Percentage of Patient Care Days by PayerPayer 2013 2012

Medicare Hospice Benefit 91 .2% 89 .0%

Managed Care or Private Insurance 4 .0% 4 .4%

Medicaid Hospice Benefit 3 .1% 4 .3%

Uncompensated or Charity Care 0 .6% 0 .8%

Self Pay 0 .5% 0 .6%

Other Payment Source 0 .6% 0 .9%

D. Level of Care Provided

1. An interdisciplinary team is required for hospice care. Among its major responsibilities, the team:

a. Manages the patient’s pain and symptoms

Assists the patient with the emotional, psychosocial, and spiritual aspects of dying.

Provides needed drugs, medical supplies, and equipment. Instructs the family on how to care for the patient. Delivers special services like speech and physical therapy when

needed. Makes short-term inpatient care available when pain or symptoms

become too difficult to treat at home, or the caregiver needs respite. Provides bereavement care and counseling to surviving family and

friends.



2. There are four general levels of hospice care (Figure 7): Home-based carea. Routine Home Care where the patient resides. b. Continuous Home Care: Primarily provided by licensed nursing care on a continuous

basis during brief periods of crisis as necessary to maintain a terminally ill patient at home.

Inpatient Care a. General Inpatient Care: Patient receives general care in an inpatient facility for pain

control or acute or complex symptom management which cannot be managed in other settings.

Inpatient Respite Carea. Short-term, inpatient care to provide respite for the caregiver.

Routine Home Care Is the Primary Care Provided

Figure 7. National Percentage of Patient Care Days by Level of Care

Level of Care 2013 2012Routine Home Care 94 .1% 96 .5%General Inpatient Care 4 .8% 2 .7%Continuous Care 0 .8% 0 .5%Respite Care 0 .3% 0 .3%

E. Staffing Management and Service Delivery

1. Hospice staff time centers on direct care for the patient and family: 71.8% of full time equivalent employees (FTE’s) in 2013.

2. Staff/patient average case load varies by discipline. a. Hospice aide – 10.7 patients b. Nurse case manager – 11.2c. Social Worker – 25.2

3. Volunteers are required by Medicare to provide at least 5% of total patient care hours.4. Bereavement Education and Support is provided to grieving families for a minimum of

one year following a loved one’s death.

The levels of care and the variety of team disciplines including volunteers increases the need for the kind of experienced hospice care management Mother’s Touch has in order to deliver the quality of care promised.



IX. Management Start-up Team: Mike and Patty Nicholas

It is rare to find people who have the medical and business management background as well as the compassion for patients that is required to provide exceptional hospice care. Mike and Patty have those qualities and a track record as successful hospice care providers. They have been married since 1981 and 3 children.

Mike Nicholas has a BS in Accounting from Missouri State University and is a licensed RN. After various accounting and managerial assignments, Mike went back to school to receive

his nursing education. He then worked as a Hospice RN at Hospice Care of Kansas and saw an opportunity to bring

improvements to the industry in terms of quality care with improved efficiency of operations. Mike started National Hospice, Inc. (d.b.a. Promises Kept hospice) in May 2007 which sold in

April 2011 as an asset sale. He followed that with the start of Promises Kept, Inc. (also called Promises Kept hospice) founded

in 2012 which he built and operated. Its Medicare license was sold to Phoenix Home Health Care May 30, 2014.

Patty Nicholas has over 30 years’ experience as a licensed nurse’s aide. She was the Office Manager of both hospices and helped the Director of Nursing supervise the Home Health Aides for Promises Kept Hospice.


X. Funding:

A. Initial start-up funding of approximately $100,000 has been provided by Mike and Patty Nicholas.1. The total of all start-up cost prior to certification will not be reimbursed by Medicare.

This means the entire initial investment by the Nicholas’ is at risk. 2. The founders will initially retain 100 % of the company stock.

B. Mother’s Touch Hospice is asking for a total investment of $280,000 in the form of a subordinated/unsecured loan.

Terms of Debt FinancingMaker: Mother's Touch, Inc. (MT), a Kansas corporation

Total debt placement: Two-hundred, eighty-thousand dollars ($280,000)Minimum note amount: $50,000 and then in $10,000 increments thereafterPayments: Semi-annual interest payments for 5 years with principal payoff

at end of year 5.Annual interest rate: 8%Use of funds: To support the ongoing operations and expansion in the Denver

market after Medicare certification (a).

Payment terms:

1. Upon MT’s receipt of Lender’s signed Letter of Intent, MT will cause to be drafted a Debt Placement Agreement and a Promissory Note.

2. Once funds are in MT bank account, interest per bank for this checking account will accrue on the investor’s deposit balance. This interest is to be remitted to Lender monthly until the loan repayment month (3.b.).

3. At repayment month, MT will begin making monthly principle and interest payments in the amount of five-thousand, three-hundred, eleven dollars and 76/100 ($5,311.76) and deposited funds will be used as needed and per sole discretion of MT management.

a. If Medicare certification is not obtained within eighteen (18) months of date of deposit of those funds, Lender's entire principal plus any remaining accrued interest will be remitted to Lender as will be outlined in the debt instrument at Lender's option.

b. Loan repayment month: The first month any of the deposited funds are used.

Lender:The lender must be an "Accredited Investor" as defined in Rule 501 of Regulation D of the Securities Act of 1933, as amended.

Additional terms:● Company has right to prepay without penalty at any time● Not secured or guaranteed● Not transferable


Expenses:The parties will bear their own respective expenses in connection with the negotiation and consummation of the debt placement transaction.

The Company plans to enter into the promissory notes on a best-efforts basis through the Company's executive officers. The Company is paying no cash commissions for the placement of such debt. In order to enter into a promissory note, the lender must complete and execute a Debt Placement Agreement and any other closing document. Any entering into of a promissory note must be accompanied by a tender of the original principal amount of the note. The notes will be accepted or rejected by the Company's President by Closing. The placement will end on ___________________, 2015 (unless extended by the Company up to ___________________, 2015).

Debt funds will be deposited by the Company in an account for the Company at a financial institution in Denver, Colorado, until Closing. Until Closing, the Company may elect to return any or all of the proceeds from the debt placement funds, without interest thereon, in the Company's sole discretion. The Company anticipates accepting the debt placement funds if such amount is at least $50,000 per deposit.



XI. Three Year Financial Summary

Details and Assumptions Available in Appendix B

Year 1 Year 2 Year 3 3 Year Total RatiosRevenue $826,681 $2,286,108 $3,000,096 $6,112,885 100%Total Labor 368,150 803,380 1,004,761 2,176,291 33.6%Gross Margin 368,150 1,482,728 1,995,335 3,936,595 35.6%Operational 291,294 717,231 917,416 1,925,930 31.5%Fixed Expenses 35,000 35,000 35,000 105,000 1.7%Total Expenses 694,434 1,555,611 1,957,176 4,207,221 68.8%Net Income $132,247 $730,498 $1,042,921 $1,905,665 31.2%



Documents

Service Delivery - Mother's Touch Web viewThis Plan is not and should not be construed as an offer to sell nor a solicitation of bids to buy securities, nor can or should this Plan