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what's going on??, page-2

  1. 489 Posts.
    ics is alive The past few weeks have seen ICS return to pre-Christmas levels in the mid 50s, but 22 Jan saw ppost Wall St selling bringing price down to 46 cents, before market slowed to 49c.

    New letter to shareholders brings promise of bigger and better things to come with more announcements of contract signings on the way.

    See below:

    2003 looks like being the year everything comes together for us, and THELMA becomes one of Australia's e-commerce success stories.

    Our ASX announcements about THELMA generally relate to new organisations signing up. It's not possible to explain succinctly in these announcements how each new signing contributes towards the national THELMA "revenue jigsaw" we are putting together. So the main objective of this letter is to try to deepen your understanding of the THELMA business, and draw these announcements together into a coherent overall industry picture to provide you with a snapshot of
    where the health industry is at in terms of becoming "THELMA-ised" as we edge towards becoming profitable and delivering value back to our shareholders.

    In summary, the approximate national market share we have achieved through these signings is:

    SIGNED UP

    Health funds (7 in total): 45% of national market
    Private hospital patients (80+ Hospitals): 14% of national market
    Public hospital beds: 31% of NSW
    6% of VIC
    6% of QLD
    Specialists in these hospitals (1,000+): 5% of national market

    The most appropriate way to summarise our progress with THELMA is on a transaction-by-transaction basis, as each of these are the basis upon which we will be earning revenue. But before I do that, let me
    highlight some observations and industry developments during 2002 that will help to explain the political, commercial, and technological landscapes within which THELMA now lives, and why we are increasingly confident that were in a "right place, right time"
    situation with THELMA.

    * 2002 saw the health industry come under enormous pressure to become more efficient. Early in the year, the Federal Government proposed a scheme that would see members of inefficient health funds lose
    immediate access to the 30% premiums rebate as a way of punishing funds which fail to cut management costs. Then there was the national
    furore about the funds increasing their premiums, which is back in the news again now. Issues like these put enormous pressure on the Boards of the health funds to take urgent action, which resulted in the changing of six CEOs out of the 10 largest funds. This sort of
    pressure all works in our favour, as the business benefits of THELMA to health funds are all about process improvement and cost reduction.

    * To our knowledge, THELMA is still the only service currently available, or even on the horizon, that provides the powerful "any-to-any" technology connectivity solution that is necessary to
    solve the range of business and technical issues that has in the past prevented the health industry from moving from manual, paper-based administration to electronic transactions, or e-commerce.

    * Since we signed the deal with Medibank Private in August, our two organisations have developed a good working relationship at both senior management level and operations level. We have developed a
    similar relationship with all the other funds that have signed up, but just by their sheer size, we think Medibank will attract most hospitals nationally to get "off the fence" and use THELMA, and
    thereby solve the "chicken and egg" situation we've been faced with, ie the hospitals waiting for the funds to get connected, and the
    funds waiting for the hospitals.

    * Our ASX announcements often refer to an organisation doing a "pilot" or trial of THELMA. This is essentially a trial that some organisations like to do for various reasons: to assess how their current technology can handle electronic transactions or whether they need to upgrade anything; to gauge the impact on their staff and current business processes; what needs to be done organisationally to get the value out of THELMA; etc. These are the sorts of reasons why, once an organisation signs up to use THELMA, it can be 3 to 6 months before electronic transactions actually go live.

    There are pilots going on with health funds and hospitals that amount to over a quarter of the industry that have not yet signed User Agreements, so have not been announced.

    PROGRESS OF EACH TRANSACTION

    ELIGIBILITY CHECKING

    We are working with Medibank to have hospital eligibility checking via THELMA live as soon as possible. The connection to allow THELMA to access Medibank's membership databases needs to align with Medibank's internal systems upgrade program, and at this stage it
    looks like this will happen over the next few months. Once this is live, indications are most hospitals will want to use the service and that this will trigger a rapid increase in THELMA's hospital customer
    base. Once this happens, there is then a very compelling reason for all other health funds to connect to THELMA, since, through the one link to THELMA they will be able to access all these hospitals as
    well, not just for eligibility, but for the full range of services offered by THELMA.

    As for other funds, we already have connectivity to 38 via the connections we built to the two main business software systems used by the health funds - HAMBS, which is used by 24 health funds, and WHICS, which is used by 14 health funds. The five of these that have
    already signed up - Australian Unity, AHMG, Lysaght Peoplecare, NIB and Teachers Union Health - and are live for eligibility now. The other fund that has signed up, CBHS (ie the Commonwealth Bank's) Health Fund, use their own software system, and are close to
    finalising integration to THELMA.

    HOSPITAL CLAIMS

    We had an interesting meeting with a major hospital just before Christmas: some health funds require that claims are lodged within 3 months, yet when the hospital called a fund close to the deadline to
    see why they hadn't been paid, the fund said they hadn't received the claim. So this triggered a panic then to get the claim in before the 3 month deadline, but it also highlighted an interesting commercial /
    legal issue: while the hospital records showed that the claim had been sent, there was no definitive (legal) way to prove if the paper claim had been sent, or received, and when! As a solution, the hospital's lawyers had advised them to keep duplicate photocopies of each claim, then to telephone the fund a few days after each claim had been sent to ensure the fund had received it, and make a note of
    who they spoke to. You can imagine the increase in administrative overhead this creates!

    So we showed the hospital how THELMA handles hospital claims - how it extracts the claim from the hospital, checks the claim has valid
    data, and creates an electronic audit trail of when each claim was sent over the Internet and when the fund received it. The hospital was hooked!

    Medibank are now ready to receive electronic hospital claims, after a series of pilots with hospitals that allowed the parties involved to trial this new way of doing business. The hospital claims pilots have
    been very successful, with actual hospital claims being extracted from the hospital by THELMA, sent to Medibank over the Internet and approved for payment within a few days.

    Most of the other funds that have signed up are either ready to receive hospital claims or are preparing to.

    MEDICAL CLAIMS

    The Medical claims service THELMA provides at this point relates to in-patient episodes ie they originate from specialists working in
    hospitals - anaesthetists, surgeons, obstetricians, etc. There are therefore on average 2 - 3 medical claims for each hospital claim. As mentioned above, within the public and private hospitals that have signed up for THELMA, there are over 1,000 specialists, about 5% of
    the national market, who are in a position to use THELMA transactions as they go live. So with plenty of potential senders, and the THELMA Medical Claim transaction ready to go, we are just waiting now for
    the funds to agree how and when they want to receive them. This may have to wait until they finish getting Hospital Claims operating, as this is the big priority for the funds right now.

    PATHOLOGY CLAIMS

    The situation with Pathology Claims is similar to that with Medical Claims ie plenty of pathology providers are ready and keen to send the transactions, THELMA is ready, and we are just waiting for the funds to agree how and when they want to receive them electronically.
    While pathology claims are a lower priority for the funds than hospital claims, we should see some activity by June.

    SUPPLY CHAIN / EPROCUREMENT

    This is potentially a very lucrative add-on service to complement the medical transactions. ICSGlobal has signed a six month strategic alliance agreement with Marketboomer Pty Ltd to market an
    e-procurement service to private hospitals through THELMA. Marketboomer is the dominant provider of business to business (B2B) e-procurement to the Australian hospitality industry, covering food,
    cleaning and administration supplies. The Marketboomer / THELMA alliance will combine THELMA's strong brand name with Marketboomer's
    strong, established client base, including Hyatt International Hotels, Six Continents Hotels (which includes Intercontinental, Crown Plaza, Holiday Inn, Park Royal and Centra), Mirvac Group, Voyages
    Hotels & Resorts, Starwood Hotels and Resorts and St.George Bank. If this initial pilot is successful, a long term relationship will be established. Marketboomer are covering the costs of the initial pilot.

    OTHER NEWS

    MARKETING STRATEGY

    Following on from the success of the co-branded Australian Unity / THELMA marketing campaigns to hospitals, we will be expanding this
    marketing model with Medibank Private and NIB during 2003. How it works is the health funds encourage hospitals to use THELMA via a range of direct marketing techniques, such as inserts in envelopes that get sent back to hospitals about the benefits of THELMA and how to contact ICSGlobal about using it. This is the most powerful way to market THELMA to hospitals.

    THELMA INFRASTRUCTURE

    Some of the funds we raised in the last placement were for expansion of the THELMA infrastructure. Migration of the THELMA system to the Unix-based Sun-ONE/Solaris platform has gone splendidly and our
    technical team carried out final testing during the Christmas break. This long-awaited transition marks the elevation of THELMA to a high-availability, high-capacity, industrial strength service in anticipation of the increased transaction volumes expected in 2003.

    I hope that you've found this review of our business status useful.

    If you would like to be included on our email list for company announcements and newsletters, and you haven't done so already, please send me your email address to [email protected].

    The signs are we have a very exciting year ahead of us.

    Thank you for your continued support in helping us to reach this point.

    T Murray
    CHIEF EXECUTIVE OFFICER

 
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