Patients First Health Care Announces Plan to Address Impact of Health Care Reform

WASHINGTON, Mo., Sept. 2, 2011 - Patients First Health Care announces a plan to respond to market factors affecting the health care industry and its business. While these factors are not uncommon, they are a direct result of health care reform legislation and a slower than anticipated economic recovery:

• • Lower reimbursements with cuts in Medicare by 29% (effective Jan. 1, 2012)
• • Decline in accounts receivable as a result of patients' inability to pay
• • Addition of new specialties, physicians and markets, which require start-up time before becoming profitable

"None of us could have predicted the impact health care reform would have on our business at a time of economic uncertainty,” said David E. Chalk, MD, chairman of Patients First Health Care. “Patients First is a strong company and the core of our business is strong. Our vision has been to remain an independent, physician-directed, multispecialty organization that will invest, grow and innovate to bring quality, coordinated and cost-effective health care to the patients, families and communities we serve. However, for the company’s future, we will need to pause and respond to factors affecting the health care industry and our business."

In an attempt to get ahead of the problem and minimize the impact to Patients First patients, employees and communities, Chief Executive Officer Joseph Gubbels will begin to implement a strategy that will allow the company to address new health care realities and the unprofitable parts of its business.

Phase 1: Downsize

• • Restructure the Patients First administrative team to be more efficient and effective, including eliminating employees and/or consolidating positions
• • Restructure the board to become a physician-directed organization and add additional members to the board to reflect the growth and diversity of the company
• • Reduce Patients First workforce by 5% to meet changing patient demands, bring into profitability certain unprofitable divisions and eliminate inefficiencies

Phase 2: Rightsize

• • Freeze or reduce spending, including all non-essential business travel and employee benefits (i.e. 401k match, cell phones)
• • Evaluate workflow across the company, including rightsizing departments and recruiting from within to fill any open positions
• • Assess the viability of clinical services/diagnostics provided in community locations, including phlebotomy and x-ray

Phase 3: Integrate

• • Integrate with another health care system to ensure profitability under facility/provider-based billing, while retaining independence to allow for quality, coordinated and cost-effective health care for the patients, families and communities we serve

Patients First will complete phase 1 measures by Sept. 2, 2011 offering outplacement resources and remaining vacation benefits to employees whose positions have been eliminated. The company will keep its patients, employees and the community informed by using both direct channels and the media.

"These steps are both critical and necessary to bring into profitability certain unprofitable divisions and add even greater strength and financial stability to our company,” said Joseph Gubbels, chief executive officer of Patients First Health Care. “Our mission has and will continue to be about putting the needs of the patient first. We will do everything in our power to get ahead of the problem and minimize the impact to our patients, employees and communities."