1999%20CHIM%20EXHIBITOR%20MARKETPLACE

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The next presentation in this room will be
THE DORENFEST CHINA HEALTHCARE GROUP
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AGENDA

• THE DORENFEST GROUP
• OVERVIEW OF BUSINESS OPPORTUNITIES IN CHINESE
  HEALTHCARE
• THE DORENFEST APPROACH TO CHINA
• DISCUSSION

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THE DORENFEST GROUP

• HEALTHCARE CONSULTING AND INVESTMENT FOCUS
• OFFER HEALTHCARE IMPROVEMENT SERVICES TO SUPPORT
  A MORE POSITIVE WORLD FUTURE
• HELP HEALTHCARE ORGANIZATIONS TO IMPROVE
  HEALTHCARE SERVICES WHILE REDUCING COSTS BY
  IMPROVING WORK PROCESSES, MANAGEMENT SYSTEMS,
  SERVICES TO PATIENTS, AND QUALITY OF MEDICAL CARE
• IN 2006 THE DORENFEST GROUP FORMED THE DORENFEST
  CHINA HEALTHCARE GROUP, BASED IN SHANGHAI, TO
  BRING OUR SKILL, TECHNOLOGY, AND CAPITAL TO CHINA
  IN A TWO-PHASE PROGRAM
• WE ARE NOW OPERATING IN PHASE 1 OF THIS PROGRAM,
  OFFERING A VARIETY OF CONSULTING, TRAINING, AND
  EDUCATION SERVICES TO THE CHINA HEALTHCARE SYSTEM
• WE EXPECT TO ENTER PHASE 2 OF OUR ACTIVITIES IN
  CHINA IN 2008 WHEN WE WILL BEGIN TO MAKE
  INVESTMENTS IN WELL-DEFINED, GOOD BUSINESS
  PROJECTS, IN PARTNERSHIP WITH CHINESE HEALTH
  BUREAUS AND HOSPITALS

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BRIEF SUMMARY OF SHELDONS PAST EXPERIENCE IN
H.I.T.

• FORMED COMPUCARE 1969 CEO 1969-1976
• FORMED SHELDON I. DORENFEST ASSOCIATES, LTD. IN
  1976 CEO 1976-2004
• LONG, RICH HISTORY OF MAJOR CONTRIBUTIONS TO
  HEALTHCARE I.T. UNDERSTANDING AND PROGRESS
• WAS RECOGNIZED AS THE LEADING SOURCE OF
  INFORMATION ABOUT HEALTHCARE I.T. AND A LEADING
  HEALTHCARE CONSULTING FIRM
• KEY BUSINESS UNITS INCLUDED THE DORENFEST
  INTEGRATED HEALTHCARE SYSTEM DATABASE AND
  HOSPITAL OPERATIONS IMPROVEMENT AND MEDICAL
  SUPPLIER CONSULTING
• SOLD THE DORENFEST INTEGRATED HEALTHCARE DELIVERY
  SYSTEM (IHDS) DATABASE TO HIMSS ANALYTICS IN
  JULY, 2004

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BRIEF SUMMARY OF SHELDONS PAST EXPERIENCE IN
H.I.T. (CONTINUED)

• DONATED SHELDON I. DORENFEST ASSOCIATES, LTD.
  TO THE HIMSS FOUNDATION TO FORM THE DORENFEST
  INSTITUTE FOR HEALTH INFORMATION TECHNOLOGY
  RESEARCH AND EDUCATION
• THE DORENFEST INSTITUTE CONTAINS A LIBRARY OF
  HISTORIC DATA AND PUBLICATIONS FROM 1986 THROUGH
  2004 WITH HIMSS ANALYTICS DONATING THE NEXT
  CURRENT YEAR OF DATA ANNUALLY
• PROVIDES FREE DATA FOR RESEARCH PURPOSES
  ELECTRONICALLY AND IN PRINT TO UNIVERSITIES,
  STUDENTS, FEDERAL, STATE, LOCAL GOVERNMENT AS
  WELL AS GOVERNMENTS OF OTHER COUNTRIES
• PROVIDES A VARIETY OF FREE REPORTS ON TRENDS IN
  H.I.T. USE
• ENCOURAGES ONGOING RESEARCH INTO USING I.T. TO
  IMPROVE HEALTHCARE

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DORENFEST ACTIVITIES IN OTHER COUNTRIES

• CONDUCT MARKET STUDIES AND CONSULTING ASSIGNMENTS
  ON USE OF INFORMATION TECHNOLOGY IN HEALTH CARE
  IN A NUMBER OF COUNTRIES
• CONDUCT WORLDWIDE STUDIES COMPARING THE STATE OF
  THE ART IN HEALTH CARE I.T.
• CONTINUOUSLY MONITOR AND UPDATE OUR UNDERSTANDING
  OF WORLDWIDE HEALTH CARE I.T. THROUGH A VARIETY
  OF ONGOING ACTIVITIES
• IN-PERSON AND TELEPHONE DISCUSSIONS WITH NUMEROUS
  HOSPITAL EXECUTIVES AND I.T. SUPPLIER PERSONNEL
• REVIEW OF I.T. IN USE AT HOSPITALS THROUGHOUT THE
  WORLD
• WORLDWIDE EDUCATIONAL SERVICES

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DORENFEST INVESTIGATION OF HEALTHCARE IN CHINA

1. VISITED 17 CITIES IN CHINA
2. VISITED WITH HUNDREDS OF LEADERS IN THE
   HEALTHCARE INDUSTRY IN CHINA TO LEARN ABOUT
   HEALTHCARE REFORM IN CHINA ITS PROGRESS, ITS
   PROBLEMS, AND ITS NEXT STEPS
3. VISITED WITH OVER 100 HOSPITALS TO GAIN AN
   UNDERSTANDING OF HOSPITAL OPERATIONS IN CHINA,
   THEIR CURRENT STATUS, AND OPPORTUNITIES FOR
   IMPROVEMENTS
4. VISITED WITH PROVINCIAL AND CITY HEALTH BUREAUS
   TO LEARN WHAT THEIR GOALS ARE FOR THEIR
   PROVINCIAL AND CITY HOSPITALS
5. VISITED PRIVATE HOSPITALS TO OBSERVE THE RESULTS
   OF HEALTHCARE REFORM PRIVATIZATION EFFORTS IN
   CHINA
6. VISITED WITH COMPANIES SELLING PRODUCTS AND
   SERVICES TO THE HEALTHCARE INDUSTRY IN CHINA AND
   WHAT THEY BELIEVE ARE APPROPRIATE NEXT STEPS FOR
   REFORMING THE CHINESE HEALTHCARE SYSTEM
7. EVALUATED A GROUP OF HOSPITAL MANAGEMENT AND
   OWNERSHIP OPPORTUNITIES THAT WERE PRESENTED TO
   THE DORENFEST GROUP TO BECOME MORE FAMILIAR WITH
   THE ALTERNATIVE WAYS TO PROCEED IN BUILDING A
   MODEL HOSPITAL IN CHINA
8. DEVELOPED A STRATEGY FOR BRINGING DORENFEST SKILL
   AND EXPERIENCE TO CHINA

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HOULIHAN LOKEY 6TH ANNUAL HEALTHCARE CONFERENCE

• OVERVIEW OF BUSINESS OPPORTUNITIESIN CHINESE
  HEALTHCARE

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HEALTHCARE COST AS A PERCENT OF GDP ( AND RMB IN
BILLIONS)
in Billions
RMB in Billions
30,000 25,000 20,000 15,000 10,000 5,000
0
3,000 2,500 2,000 1,500 1,000
500 0
Forecast at 7 of GDP
Forecast at 9 of GDP
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AVERAGE MEDICAL EXPENSE PER OUTPATIENT HOSPITAL
VISIT
16 (126RMB)
15 (118RMB)
11.1 (85RMB)
5.1 (39RMB)
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AVERAGE MEDICAL EXPENSE PER INPATIENT HOSPITAL
STAY
601.4 (4661RMB)
552.8(4284RMB)
397(3083RMB)
215.2(1667RMB)
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CHALLENGES OF THE CHINESE HEALTHCARE SYSTEM

• ALMOST 60 OF ALL HEALTHCARE COSTS ARE PAID BY
  PATIENTS OUT-OF- POCKET
• LACK OF MEDICAL INSURANCE OPTIONS
• LOW GOVERNMENT FUNDING
• ACCESS TO HEALTHCARE FOR THE POOR IS LIMITED
• THE MIDDLE AND UPPER CLASSES ARE DISSATISFIED
  WITH HEALTHCARE SERVICES
• THE WAY DOCTORS EARN THEIR INCOME RESULTS IN A
  WEAK DOCTOR-PATIENT RELATIONSHIP
• DRUGS AND DIAGNOSTIC TESTS ARE TOO IMPORTANT TO
  THE FUNDING OF THE HEALTHCARE SYSTEM
• HOSPITALS NEED TO MAKE PROFITS TO SUPPORT
  THEMSELVES
• AT PRESENT, A PRIMARY CARE SYSTEM DOES NOT EXIST
  SEPARATELY FROM HOSPITALS
• AS THE COUNTRY CHANGES ITS HEALTHCARE SYSTEM, THE
  COST OF HEALTHCARE TO THE COUNTRY WILL RISE
  RAPIDLY

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CHINESE HOSPITALS HAVE PATIENT SERVICE AND
QUALITY PROBLEMS

1. LONG WAITING TIMES
2. FEW ADVANCED APPOINTMENT SYSTEMS
3. AVERAGE TIME OF CONSULTATION IS 3-5 MINUTES
4. PHYSICAL ENVIRONMENTS ARE OFTEN CROWDED AND
   UNCLEAN
5. LACK OF PATIENT PRIVACY
6. POOR ATTITUDE TOWARD CUSTOMER SERVICE
7. COLLECTING MONEY AND MAKING PROFITS ARE TOO LARGE
   A FOCUS

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CURRENT ENVIRONMENT CREATES BUSINESS
OPPORTUNITIES IN CHINESE HEALTHCARE

1. THERE IS RAPID GROWTH IN HEALTHCARE SPENDING AND
   A DESIRE TO IMPROVE HEALTHCARE SERVICES
2. THERE IS A DESIRE TO MOVE TOWARD INTERNATIONAL
   STANDARDS FOR SERVING THE GROWING MIDDLE CLASS
   AND WEALTHY POPULATION
3. THERE IS LIMITED SKILL IN CHINA TO ACCOMPLISH
   CHINAS HEALTHCARE IMPROVEMENT OBJECTIVES
4. FOREIGN SKILLS ARE CONSIDERED IMPORTANT AND MANY
   UNIVERSITIES AND HOSPITALS ARE HELPING BY
   BRINGING THEIR SKILLS TO CHINA

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FOREIGNERS CAN HAVE DIFFICULTY IN CHINA

1. THE CHINESE ARE GREAT BUSINESS PEOPLE
2. THE RULES FOR BUSINESS ARE DIFFERENT IN CHINA
3. FOREIGNERS CAN BE IMPATIENT, CAUSING THEM TO MISS
   KEY ISSUES
4. THE CHINESE WANT TO LEARN FROM THE FOREIGNERS AS
   INEXPENSIVELY AS POSSIBLE
5. THE INVESTMENT ENVIRONMENT IS FRAUGHT WITH RISKS,
   AND THERE ARE LOTS OF WAYS TO LOSE MONEY IN CHINA
6. THERE ARE MANY INVESTORS AND LOOKERS IN
   HEALTHCARE IN CHINA, BUT THERE ARE FEW SUCCESSES

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HOULIHAN LOKEY 6TH ANNUAL HEALTHCARE CONFERENCE

• THE DORENFEST APPROACH TO CHINA

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THE DORENFEST APPROACH

1. CREATED A TWO-PHASE PROGRAM FOR CHINA
2. USE PHASE 1 TO LEARN HOW TO DO BUSINESS IN
   CHINESE HEALTHCARE MARKET AND TO CREATE VALUE IN
   CHINA FOR THE SKILLS WE BRING TO THEM
3. SELL AND DELIVER CONSULTING SERVICES FOCUSING ON
   H.I.T. RELATED ISSUES
4. H.I.T. IS A KEY TO MANY OF THE IMPROVEMENTS
   NEEDED IN CHINESE HEALTHCARE SYSTEMS AND IS WHAT
   WE ARE RECOGNIZED FOR THROUGHOUT THE WORLD
5. ENTER PHASE 2 IN 2008 BY MAKING SELECTIVE
   INVESTMENTS IN WELL-DEFINED, GOOD BUSINESS
   PROJECTS
6. SELF-FINANCING PHASE 1, BUT WILL BE RAISING
   ADDITIONAL FUNDS WHEN WE MOVE TO PHASE 2

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THE DORENFEST GROUP VISION FOR CREATING A MODEL
HOSPITAL IN CHINA

• PROVIDES IMPROVED QUALITY OF CARE TO ITS PATIENTS
• OPERATES AT A HIGHLY EFFICIENT LEVEL THROUGH
  EFFECTIVE USE OF SYSTEMS AND BETTER WORK
  PROCESSES
• OFFERS ITS SERVICES TO PATIENTS AT AN AFFORDABLE
  COST
• CREATES A HIGHLY SATISFIED PATIENT POPULATION
  WITH THE PATIENTS OBSERVING A NOTICEABLE
  IMPROVEMENT IN THE SERVICES AND TREATMENTS
  PROVIDED BY THE HOSPITAL
• UTILIZES APPROPRIATE DIGITAL TECHNOLOGY TO CREATE
  A STATE OF THE ART DIGITAL HOSPITAL

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CHINA BUSINESS OPERATIONS

• HOSPITAL MANAGEMENT CONSULTING
• OPERATIONS IMPROVEMENT
• STRATEGIC PLANNING FOR NEW I.T. SYSTEMS
• I.T. SYSTEM SELECTION
• I.T. SYSTEM IMPLEMENTATION
• WORK PROCESS IMPROVEMENT
• MANAGEMENT TRAINING
• OTHER SERVICES
• GENERAL MANAGEMENT CONSULTING FOR HEALTHCARE
  COMPANIES
• MARKET ANALYSES
• PRODUCT STRATEGIES
• MARKET RESEARCH
• HOSPITAL CONTRACT MANAGEMENT
• WORK WITH HOSPITALS NEEDING NEW MANAGEMENT
  (INTERIM OR LONG TERM)
• IMPLEMENT NECESSARY MANAGEMENT PERSONNEL AND
  SUPPORT SYSTEMS
• HOSPITAL OWNERSHIP AND IMPROVEMENT

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CURRENT STATUS OF DORENFEST GROUP CHINA

• FORMED DE RUI YI LIAO ZI XUN, A WFOE BASED IN
  SHANGHAI IN 2006
• RECENTLY COMPLETED PHASE I PROJECT TO HELP
  SHENZHEN HEALTH BUREAU PLAN ITS REGIONAL HEALTH
  NETWORK AND DIGITAL HOSPITAL PROJECTS
• DEVELOPING OTHER PROJECT ACTIVITIES
• REVIEWING CANDIDATES TO IMPLEMENT MODEL HOSPITAL
  VISION
• NOW BUILDING A MANAGEMENT TEAM
• DEVELOPING PARTNERING RELATIONSHIPS TO DELIVER
  SERVICES
• REVIEWING SOFTWARE SYSTEMS IN CHINA AND OTHER
  COUNTRIES TO DEFINE THE BEST SOFTWARE AVAILABLE
  FOR IMPLEMENTATION IN CHINA TO PARTNER ON I.T.
  PROJECTS FOR HOSPITAL CLIENTS

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INTRODUCTION TO CHINA

• WHEN I FIRST CAME TO STUDY THE HEALTHCARE
  INDUSTRY IN CHINA IN LATE 2004, ATTITUDES TOWARD
  H.I.T. WERE VERY CONSERVATIVE
• HOSPITAL MANAGEMENT WAS NOT HAPPY WITH I.T.
  SYSTEMS IN USE
• FUNCTIONALITY OF APPLICATION SOFTWARE AVAILABLE
  FOR PURCHASE IN CHINA WAS VERY LIMITED AND THE
  MOST FUNCTIONAL SYSTEMS WERE SELF-DEVELOPED
• THE SKILLS TO MANAGE MAJOR I.T. UPGRADES WERE
  FELT TO BE IN SHORT SUPPLY
• AS A RESULT, HOSPITAL MANAGEMENT WAS HESITANT TO
  MAKE MAJOR UPGRADES TO I.T. SYSTEMS
• AT THAT TIME, THERE WAS VERY LIMITED BUYING OF
  MAJOR NEW I.T. SYSTEMS IN CHINESE HOSPITALS
• DURING THE PAST 2 YEARS, THE SITUATION HAS
  CHANGED
• MANY HOSPITALS ARE CONSIDERING MAJOR UPGRADES OF
  I.T. SYSTEMS
• BIG BUDGETS ARE STARTING TO BECOME AVAILABLE TO
  MOVE TOWARD DIGITAL HOSPITALS WITH ELECTRONIC
  MEDICAL RECORDS, PACS AND OTHER SYSTEMS
• BUT WEAK APPLICATION SOFTWARE AND IMPLEMENTATION
  SKILLS ARE DELAYING PROGRESS

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CHINA HEALTHCARE I.T. IS MOVING TO ITS SECOND
GENERATION

• CHINA HOSPITAL WORK PROCESSES ARE REDUNDANT AND
  ERROR PRONE WITH GREAT OPPORTUNITIES FOR
  IMPROVEMENT THROUGH APPROPRIATE USE OF I.T.
• CHINESE HOSPITALS WOULD LIKE TO TAKE A BIG LEAP
  FORWARD IN IMPROVING WORK PROCESSES AND IN
  DIGITIZING ITS HOSPITALS
• THE MINISTRY OF HEALTHS GUIDELINES FOR HEALTH
  I.T. DEVELOPMENT (2003-2010) CALLS FOR ELECTRONIC
  MEDICAL RECORDS AND REGIONAL HEALTH NETWORKS TO
  BE IMPLEMENTED PROVIDING MUCH MOMENTUM FOR
  HOSPITALS AND HEALTH BUREAUS TO INVEST MORE IN
  I.T. NOW
• CHINA HAS NOT INVESTED A LOT OF RESOURCES IN I.T.
  SYSTEMS AND INFRASTRUCTURE TO GET TO ITS PRESENT
  LEVEL OF I.T. USE. WHILE CHINA WOULD LIKE TO
  CONTINUE THIS APPROACH AS IT TAKES ITS NEXT STEPS
  FORWARD, CHINAS I.T. GOALS WILL REQUIRE GREATER
  INVESTMENT

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CHINA HEALTHCARE I.T. IS MOVING TO ITS SECOND
GENERATION (CONTINUED)

• THERE IS CONCERN AMONG H.I.T. EXPERTS IN CHINA
  ABOUT THE READINESS OF H.I.T. SOFTWARE PRODUCTS,
  HARDWARE PLATFORMS, AND INTEGRATION TOOLS TO
  FACILITATE THE ACCOMPLISHMENT OF CHINAS GOALS
• THERE IS ALSO CONCERN AMONG H.I.T. EXPERTS IN
  CHINA ABOUT THE IMPLEMENTATION SKILL AND
  EXPERIENCE AVAILABLE IN CHINA TO TAKE THIS BIG
  LEAP FORWARD THAT IS NOW UNDERWAY
• SO CHINESE HOSPITALS AND HEALTH BUREAUS ARE
  CAREFULLY CONSIDERING HOW TO TAKE THEIR NEXT
  STEPS SUCCESSFULLY
• FOR CHINA TO ACCOMPLISH ITS OBJECTIVE
  SUCCESSFULLY REQUIRES THE FOLLOWING
• OVERCOMING RESISTANCE TO CHANGE
• KNOWING HOW TO MANAGE CHANGE
• LEARNING FROM THE U.S. EXPERIENCE
• DOING MORE OF WHAT THE U.S. DID RIGHT AND NOT
  MAKING U.S. MISTAKES
• DEVELOPING EXPERTISE IN AREAS OF NEED

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• THANK YOU.
• FOR MORE INFORMATION CONTACT
• SHELDON I. DORENFEST
• THE DORENFEST CHINA THE DORENFEST GROUP
• HEALTHCARE GROUP NBC TOWER, SUITE 2725
• RENMIN ROAD NO. 988 455 N. CITYFRONT PLAZA.
  DRIVE
• JINGTIANDI INTERNATIONAL TOWER CHICAGO, IL
  60611-5555
• SUITE 908 UNITED STATES OF AMERICA
• SHANGHAI, CHINA PHONE [phone]
• PHONE [phone] FAX [phone]
• WEB SITE ADDRESS www.dorenfest.com
• SHELDONS E-MAIL ADDRESS sheldon_at_dorenfest.com
• E-MAIL ADDRESS info_at_dorenfest.com