February 26th

Team Makena Sales Meeting

Toxicology for Pain Medication Monitoring

Michael Sinel, M.D. is a board certified nationally recognized expert in physical medicine, back pain andrehabilitation medicine and a successful entrepreneur in medical and surgical ventures.

Dr. Sinel practiced for 12 years as the Director of Physical Medicine and Rehabilitation for a prestigiousSouthern California Spine Institute. He served as Director of Physical Medicine at Cedars-Sinai Hospital inLos Angeles. He is an Assistant Clinical Professor in the Department of Medicine at UCLA, and the author ofseveral scientific publications and two popular books on pain.

Anthony Kjenstad has 20 years of experience in healthcare sales and consulting with an emphasis onancillary programs, surgical devices and DME products. Anthony has worked with major orthopedic practicesthroughout the country to maximize clinical outcomes and profitability.

Previously Anthony led a series of acquisitions and roll-up transactions to help create Team Makena, a market-leading provider of hundreds of high quality technologically advanced products available to surgeons andpatients with best-in-class service and support.

orthotox Leadership

Michael Roub has served in executive capacities in operations, business development and finance roles. Hehas co-founded multiple successful healthcare sales and management organizations.

Michael previously served as head of acquisitions for a national healthcare provider and also developedmultiple surgery centers with 100+ physician partners. He is a former investment banker who received anM.B.A. from the University of Chicago Booth School of Business and a B.S. from the Wharton School ofBusiness.

orthotox provides an unparalleled level of healthcare expertise to better serve our physician clients. Our executive team has more than 60years of leadership in clinical, operational, sales and financial capacities. These synergistic skillsets enable us to truly understand the needsof the physician for optimal patient care and practice efficiency.

Overview

Urine drug screen (UDS) for the monitoring of patients’ pain medication usehas become an increasingly effective and accepted treatment tool

orthotox has partnered with premier laboratories and service providers tooffer physicians a comprehensive UDS program

The CDC recommends UDS for patients using prescription painkillers Several states have developed medical treatment guidelines that include painmedication monitoring via UDS

Turnkey program – minimal paperwork and rapid implementation We have developed protocols and systems to provide a paperless, efficientplatform with superior customer support for its clients.

For practices with significant toxicology testing volume potential, orthotox canassess and implement an in‐office analyzer program

Why Perform Compliance Drug Testing

Center for Disease Control and Prevention1/13/2012 / 61(01);10‐13:

Prescription Drug Overdoses — a U.S. Epidemic ‐Prescription drug abuse is the fastest growingdrug problem in the United States.

Joseph E. Couto, PharmD., M.B.A.:

“Data from 938,586 patient test samples showedthat 75% of patients were unlikely to be takingtheir medications in a manner consistent withtheir prescribed pain regimen.”

Opioid Guidelines in the Management of Chronic Non‐Cancer Pain. Pain Physician Vol. 9, Chapter 7.3:

"Urine drug testing can improve a physician's professional ability to manage therapeuticprescription drugs with controlled substances, and to diagnose substance abuse or appropriateintake of drugs, thereby leading to proper treatment.“

Information on AAOS Website

Pain medications and patient safetyAfter the AAOS Patient Safety Summit in 2012, a group of hand and foot surgeons looked at major safety issues regarding outpatient surgery. According to David C. Ring, MD, chief of the Harvard Hand Service, opioid misuse was one of the major safety risks identified. Because the number one cause of death in young adults is opioid overdose, the group believes that the way physicians think about and manage postoperative pain needs to undergo a paradigm shift.

“Physicians should also consider adopting pain management protocols to mitigate risk and reach out to pain management and hospice services when those protocols do not adequately control pain.”

“Deaths from prescription opioid overdoses in the United States exceed the deaths from heroin and cocaine combined.”Opioids and orthopaedicsOpioid medications are commonly prescribed in orthopaedics for a short term after surgery for acute pain control. Studies have examined the risk of chronic opioid use after ambulatory surgeries. In a 2012 retrospective, population-based study, researchers found that patients who had not previously used opioids and received a prescription for opioids within a week after a short-stay surgery were 44 percent more likely to still be using opioids at 1 year from surgery than those who did not receive such prescriptions.

Example taken from AZ Opiate Guidelines

Summary of Arizona Opioid Prescribing Guidelines for the Treatment of Chronic Non-Terminal Pain (CNTP)

(7) For patients on chronic opioid therapy (COT), monitoring progress and adherence to the treatment plan is essential to optimize patient care and the overall benefit to risk profile. Appropriate monitoring for COT includes, at a minimum: (1) regular assessment with face to face encounters (2) assessment of response to therapy including assessment of the 6 A’s (analgesia, activity, aberrant drug related behaviors, adverse effects, affect, and adjuncts), (3) periodic query of the AZ Controlled Substances Prescription Monitoring Program, and (4) periodic completion of UDT. Frequency of monitoring should be determined by risk category.

http://www.azdhs.gov/clinicians/documents/clinical-guidelines-recommendations/prescribing-guidelines/draft-opioid-prescribing-guidelines.pdf

Rampant Painkiller Prescribing in U.S.

The quantity of prescription painkillers sold to pharmacies, hospitals and doctors’ offices was 4times larger in 2010 than in 1999

Epidemic Drug Overdose Rates 

Nearly 15,000 annual deaths from prescription painkiller overdoses

In 2010, 1 in 20 people in the U.S. (age 12+) reported using prescription painkillers fornon‐medical reasons in the past year

Benefits to EmployeeBenefits to Employee

Establish efficient treatment plans with monitoring ability

More accurate assessment of patient’s condition

Compliance with suggested pain medication guidelines

Rapid report turnaround (48 hours) with EMR integration

Revenue for point of service testing For workers comp patients in several states an optional medical record review can be produced and billed by practice

Decreased abuse of prescribed medications Detection of medication diversion Improved overall pain management More effective treatment compliance

Significant cost savings due to conservative confirmatory testing and billing practices

Improved pain management through early detection of abuse or diversion may result in:

Earlier return to work Faster closure of claim Reduction of medical costs

Benefits of Compliance Drug Testing

Benefits to Physician PracticeBenefits to Physician Practice

Benefits to EmployerBenefits to Employer

Program Benefits

Extensive expertise with orthopedic practices, including clinical advisors to review protocols with physicians

Easy to read lab reports Conservative laboratory partners Unique software solution

• Paperless system (practices can opt to use/receive hard copies)• View toxicology reports online• Integrate with EMR system

High level of customer service Assistance with set‐up, billing and ongoing support Customized panels available to meet physician needs Work Comp:  optional medical record review consideration(not in CA.) Analyzer:  large volume practices may have the opportunity to bring testing capabilities in‐house and generate additional income

Possible Fractional Ownership of Lab if Qualfied(More to come)

Toxicology Management Testing Protocol Workers Comp

• New Patient – baseline test• Test every 3 months thereafter

• Established Patient – pre/post surgical visit• Prescribing narcotics• Concern of drug use• Every 3 months thereafter

Private Insurance/Medicare• New Patient

• Prescribing narcotics• Concern of drug use

• Established Patient – pre/post surgical visit• Prescribing narcotics• Concern of drug use

Test New and Existing Patients Based Upon Protocols(to establish baseline for pharmaceutical management)

Review Results

Consult ‐ ReviewPhysician consult/review medication regimen with patient

RetestNEGATIVE results:  Retest at next visit or as medically necessaryPOSITIVE results:  Retest at 90 days or as medically necessary

Check to make sure patient is consistent with prescribed medications

Sample Laboratory Report

Easily interpreted report uploaded to secure website

Medication inconsistencies highlighted in lab report

Files can be manually added to EMR or automatic upload is available

MD Patients Software

Web based application Requires no hardware or software infrastructure at client site Allows for paperless management of program HIPAA and Hi‐Tech compliant Ability to integrate into different EMR/EHR programs

‐This always comes at a cost that can sometimes be significant.

Functionality includes: Patient maintenance Label creation  Shipping Manifest Entry of Rapid Test Results Review of Lab Results including optional review of record report

Online Laboratory Report

Lab reports easily located with downloadable files available with one click Inconsistent results flagged for review Test status and/or delivery issues are also flagged for practice

Review of Record Report

4 page Review of Record report available online by clicking “ROR”

Creates a billable event for workers comp patients

Files can be manually added to EMR or automatic upload is available

EMR Considerations

MD Patients software can be integrated with most EMR platforms After contracts signed, our team will coordinate with EMR provider and 

MD Patients integration team for an initial assessment Time to implement and potential cost considerations will be evaluated

Alternative for EMR use Practice can provide software/billing provider with EMR access Reports can then be manually transferred into the practice’s EMR system 

without the use of practice staff This can be an interim solution to full EMR integration or an on‐going 

process depending upon practice needs

Paper‐based (hard copy) If there are any system issues, a practice can always use paper requisition 

forms and receive their reporting via fax or mail

Toxicology Staffing

Most practices utilize an existing employee to manage their toxicology program

Some practices with staffing constraints and/or large toxicology needs may require additional support

orthotox’s lab/billing partner can potentially place an employee on site to manage paperwork and processing needs Costs of employee are that of lab/billing partner, not the practice Practice can recommend an employee for high or one will be recruited by 

lab/billing partner Employee cannot handle specimens directly

Conservative Approach

In addition to standard panels, orthotox lab partners offer customizable panels to test panels only as specified by the physician

Client Set Up and Support Protocols

orthotox works closely with its sales reps to ensure that client setup is simple, thorough and effective

orthotox will ensure that set up and initial support for a practice maximizes testing potential

Analyzer Opportunity

orthotox and its partners will analyze the potential to place an analyzer within a physician practice Revenue of approximately $100/test to physician practice Sufficient complex testing volume needed to implement

Analyzer can be purchased, leased or used on a cost per test basis

orthotox will coordinate all certifications, equipment and installation

Staffing required for running lab will be provided for the practice, including all necessary clinical supervisors

Practice will be running tests within 60 days

Confirmatory tests will be sent to an orthotox lab partner

Toxicology Sample Pro Forma

Sample Assumptions

Payor Mix:50% PPO, 10% WC, 40% Medicare

50% of claims paid by carriers

Rapid Cup Revenue:G0434 ‐ $31/testG0434 Medicare ‐ $22/test

Review of Record Revenue:$200 on paid W/C claims

ESTIMATED PROFIT

Monthly Tests 100              200              300              400              500             

PPO Rapid Cup (G0434) Tests 50                100              150              200              250             PPO Est. Revenue 775              1,550           2,325           3,100           3,875          Avg. Revenue per Test 16$                   16$                   16$                   16$                   16$                  

Medicare Rapid Cup (G0434) Tests 40                80                120              160              200             Medicare Rapid Cup (80101) Tests ‐                   ‐                   ‐                   ‐                   ‐                  Medicare Est. Revenue 880              1,760           2,640           3,520           4,400          Avg. Revenue per Test 22$                   22$                   22$                   22$                   22$                  

Work Comp Rapid Cup (G0434) Tests 10                20                30                40                50               Work Comp Est. Revenue 1,155           2,310           3,465           4,620           5,775          Avg. Revenue per Test 116$                 116$                 116$                 116$                 116$                

Gross Revenue 2,810$         5,620$         8,430$         11,240$       14,050$      

Cup Expense $5/Test 500$            1,000$         1,500$         2,000$         2,500$        

Monthly Net Profit 2,310$         4,620$         6,930$         9,240$         11,550$      Annual Net Profit 27,720$       55,440$       83,160$       110,880$     138,600$    

Things to consider/what I have learned.  Ask your physician where they are sending their pain patients . This opensdoor for new opportunity and new customer. Not only are they doing Toxalready but they probably are not using bracing as much as they could be.

Not limited to Ortho. Primary care #1 prescriber of meds. Pain Management,Internal Medicine Guys(Preops)

Lots of Revenue in Tox but don’t forget your core business. Educating Ortho’s on use of Tox can be challenging. Make sure your customeris not just looking at economics of transaction and cares what the results ofthe test are and is willing to manage them. Protect your customer fromthemselves.

Reimbursement and coverage change drastically in this new healthcareenvironment so be flexible in your understanding and presentation. We seereimbursement from lab test all over the map from $0‐$1800.

You are on the front edge of this opportunity. If you missed the DVT train 4years ago don’t miss this train. Ask people who were early adoptors.

Although the lab hires the collectors we essentially manage them in the field.

Thank You

To help you get started or to address any questions, please contact orthotox at any time.

Michael Sinel, M.D.Founder, Clinical Advisor

310.345.9049 ǀ drsinel@orthotox.com

Anthony KjenstadNational Sales Manager

310.628.5163 ǀ akjenstad@orthotox.com