Accentia Technologies Ltd Management Discussions

THE EVOLUTION - 1998 to 2006

Humble beginnings...

The promoters of Accentia had initially ventured into ITES business through Geosoft Technologies (Trivandrum) Ltd. Geosoft was started by a trio of enthusiastic entrepreneurs led by Pradeep Viswambharan and supported by Sooraj and Rajeev and was located at Technopark, Trivandrum, known as the greenest and the oldest techno polis in India. The Company was set up to offer documentation services to the Healthcare industry, basically medical transcription. Accentia right from the beginning had always believed in the value-added service in every client engagement and thus the model designed by the team was based on a strong foundation towards client commitment and quality.

After a rigorous selection process and interviews, Geosoft started with thirteen employees, who all had prior experience working in the same field. Geosoft hired young people with high calibre to fill all major areas required to run the business – namely Transcriptionist, Editor, Proofers, Quality Manager andTrainer.They also started a training department to impart training for entire batches of fresh graduates, since there was no availability of trained manpower for the required skills at the time. The initial days were tough as the costs were high and it was not easy for a start-up Company from the hitherto unknown city of Trivandrum in Kerala to bag orders from any major client. Accentia was initially executing work for smaller clinics and physician groups, when it formed an association with US based major MT Company. This association helped Accentia put in place a lot of the delivery and training processes to help stabilize the back-end. Accentia invested significantly in improving its back end delivery capabilities between 2000 and 2005.

Geosoft was now firmly grounded to the roots with its vision to become the leader in the healthcare segment; working with firm ethics towards customer delight and commitment without compromising on the focus of growth. The BPO division of Geosoft Technologies with its excellent customer services positioned itself as one of the leading companies in its segment in South India. With some of the best intellects from the industry in its ranks, Geosoft Technologies soon started catering to the requirements of the other companies in the similar industry by starting a consultancy division.

Going up the value chain

With the vast experience gained, Geosoft decided to venture into providing consultancies to share the knowledge the aspirants starting Healthcare Documentation units in India and set up its consultancy division to provide end-to-end consultancy services to start ups. Most of these units spread across India which received hand holding from Geosoft, are running successfully now.

With the increasing requirement to match with the ongoing technological changes, Geosoft started a Product Division under the name of Iridium. With a focused approach, the product team was able to come up with end-to-end global work flow automation systems that help in the day-to-day work flow. Products like Iridium Medical Transcription Automation Software (iMTAS), Iridium Certified Home Based Medical Transcription (iCHMT), Iridium Certified Medical Transcription (iCMT), Falcon-2000, F1 HBPO automation Software, iridium Real Time School (iRTS), iridium Accounts Management System (iAMS), iridium Inventory Management System (iIMS), iridium Payroll Management System (iPMS), iridium Business Transcription System (iBT), iridium Hospital Management System (iHMS) are few of the products that got wide acceptance among its customers.

High performance combined with six sigma standards at every step in the SDLC process was an added advantage for our clients who have placed their confidence in the Company. Our solutions focus on leveraging the latest technologies in innovative ways, which boost the bottom line of the customer and ensure that the products and services redefine the way the industry functions.

Very soon Geosoft Technologies became one of the pioneers in Healthcare BPO and the Product Division segment in India, with a capacity of 675 seats and infrastructure of 8,000 sq ft atTechnopark,Trivandrum.

THE GIANT LEAP - 2006 to 2010

As part of the expansion plan, in the year 2006, the giant leap that the promoter Pradeep Viswambharan took was to take over a Mumbai listed Company named HiTech Entertainment Limited through an open offer. The same year, as a part of consolidation and Inorganic growth, HiTech Entertainment Limited took over Geosoft and Iridium. Further the name HiTech Entertainment was changed to Accentia Technologies Ltd. to better represent the business activities of the Company.

Reorganisation of Business

Having stabilised the business in the healthcare documentation (medical transcription) over a period of 8 years, Accentia management decided to venture into integrated Healthcare Receivables Cycle Management (HRCM), which was a logical extension of its ongoing business.

In the US, a vast majority of healthcare services are reimbursed through insurance companies and it is mandatory to document, code and prepare detailed bill to be submitted to insurance companies for reimbursement.

Traditionally the above services are offered by separate service organisations.

In the light of the Accentia’s past bitter experiences in stabilising MT business from scratch which consumed a huge amount of capital in the first 4 years from inception, the management decided to inorganically acquire the necessary skills, professional expertise, intangible processes and systems and a set of high calibre professional employees through acquisition of companies in the field of medical coding and medical billing & collections. The management believed that acquisitions on the above lines would lead to Accentia offering end-to-end services in HRCM, which would reduce cost and improve the revenue cycle time and increase the profitability of clients in the US.

Inorganic growth path

Pradeep was one of the pioneers who believed in the concept of inorganic growth in Business Process Outsourcing in the healthcare segment. He believed that it is the fastest and easiest way to expand the business to a global scale.

The first step towards consolidation and increasing the size through inorganic growth was taken with the acquisition of companies in the US namely GSR Physicians Billing Services Inc., GSR Systems Inc and Denmed Inc. In order to augment the capacities in the Indian back end delivery side, Accentia zeroed in on a few stabilised and established healthcare BPO outfits like Asscent Infoserve Pvt Ltd. and Thunga Software Limited in India. Both these companies were healthcare documentation outsourcing service providers. With these acquisitions the workforce and infrastructure grew multi-fold. This inorganic growth, accompanied by much higher organic traction after the creation of a US based localised front-end, has helped Accentia increase revenues significantly between FY 2007 and FY 2011.

In the year 2008, as part of inorganic growth, Accentia Technologies Ltd acquired the US based Oak Technologies Inc, which had Indian back-end operations at three locations in Hyderabad and one in Bhubaneswar.

THE NEW HEALTHCARE POLICY IN THE US AND ITS IMPACT

The emergence of EMR

The current incumbent President of the USA has taken keen interest in bringing about a radical change in the healthcare system and as a result, the US Senate passed a historic Healthcare Bill in 2010 that is set to eliminate gross inefficiencies in the system which was leading to wastage of billions of dollars.

The new law has paved way for a rethinking in the way documentation and healthcare receivables cycle management has been conducted. One of the major mandatory requirements as per the new Obama Healthcare Bill is the usage of an Electronic Medical Records (EMR) suite to capture and record patients’ demographical, clinical and all other related data into a database, which can be accessed anytime for future reference and analysis.

In order to motivate all the physicians and healthcare organisations in the US to adopt the new EMR based clinical management, Obama administration has offered an incentive scheme. Monetary incentives of up to US$ 44,000 is payable to all physicians who adopt any EMR software which is certified by the ONC-ATCB (Office of the National Coordinator – Authorised Testing and Certification Body). This certification does not represent an endorsement of the US Department of Health and Human Services nor guarantee the receipt of incentive payments. Use of ONC-ATCB certified EMR software is a required first step in qualifying eligible healthcare providers for incentive funding under the American Recovery and Reinvestment Act (ARRA). The US government has set apart more than US$ 80 billion specifically for this mission. However the physicians have to prove meaningful use of EMR technology in their clinical practice to claim the incentive amount.

As explained above, EMR captures and stores all clinical and demographic data in a database format compared to physical reports created and maintained through the age old practice of medical transcription which has been the major business area of Accentia over the years

Remodelling of Business Plan

The adoption of EMR based clinical practice has opened up avenues for an integrated end-to-end SaaS model (Software as a Service) of service delivery. Since August 2010, Accentia’s product development team along with their functional experts and development partners have been involved in the mission of designing and developing a world class, fully integrated, multi disciplined, cloud based hosted application which integrates all services from electronic medical records(EMR)-practice management system(PMS)-code mapping/scrubbing-medical billing & receivables management system(RCM)-electronic data interchange (EDI) with insurance companies(payer). The above seamlessly integrated SaaS system functions as a one-stop shop for a clinical provider that manages all their healthcare documentation needs, receivables management needs, performance tracking and reporting and would eliminate the need to keep networking and technology personnel at their end to manage the software system, since it is served by a hosted server.

AUDITOR’S CERTIFICATE

To,

The Members of

Accentia Technologies Limited

We have examined the compliance of conditions of Corporate Governance by Accentia Technologies Limited, for the year ended on March 31, 2014, as stipulated in Clause 49 of the Listing Agreement of the Company with the Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We state that no Investor Grievances are pending for a period exceeding one month against the Company as per the records maintained by the Shareholder/ Investors Grievance Committee.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For DMKH & CO.

Chartered Accountants.

Firm Registration No. 116886W

CA. Durgesh Kabra

Partner

Membership No. : 44075

Navi Mumbai

November 25, 2014