From the VPS business model at the ETCR website:
(It shows the huge market and potential. I'd imagine some of this has been streamlined since it was written last year. I suggest reading the whole VPS business model at the link below)
Revenue Model
A pricing structure established for VPS users will vary based upon membership levels.
1. Regulatory Agencies license VPSTM System.
2. Regulatory Agencies pay transaction fee each time a scheduled substance is prescribed and dispensed.
3. Practitioners and pharmacies have the option to pay set-up, maintenance, and transaction fees for non-scheduled drug VPS system usage and other enhanced functions.
4. Third-Party Payers (HMOs, etc.) have option to pay fees for covered practitioners to use system for its non-scheduled drugs.
5. Pharmacy pays transaction fee each time a non-scheduled drug is dispensed.
Example of Volume Projections
The Commonwealth of Kentucky collected 19 million fill records in 27 months of KASPER (“Kentucky All Schedule Prescription Electronic Reporting”) operation. Below are the projections from that data:Factor Value
Total KASPER Transactions 19,000,000
KASPER Months 27
Fills per Month 703,703
Kentucky Pharmacists* 3,046
Fills per Pharmacist/Month 231
Kentucky Practitioners* 13,830
Fills per Practitioner/Month 51
Fills per Prescription Written 1.5 (est.)
Prescriptions/Practitioner/Month 34
Extrapolating the KASPER data to all diversion-tracking states provides the following results:Factor Value
Practitioners* 421,389
Pharmacists* 91,729
Prescriptions Written per Month 14,327,226
Fills per Month 21,189,399
Total Transactions per Month 35,516,625
*2000 U.S. Census (Practitioners is the total of Physicians, Dentists, and Veterinarians)
Pricing and Projected Financial Information
VPSTM System fees are structured in a manner consistent with existing market pricing for the Healthcare Industry to simplify the process and speed market penetration. The medical billing companies and switching companies currently serving about 5% of the practices and pharmacies charge a set-up fee for the software and a monthly maintenance fee and/or a nominal transactional fee for transmitting the information. Set-up fees cover the cost of equipment and software. Maintenance fees include the ongoing cost of maintaining users, supporting customer inquiries, and upgrading the software.
Cost of Revenue and Net Profit
VPS estimates that its expenses will be no greater than 40% of gross revenue. This includes approximately 20% for all administrative costs and overhead (rent, salaries, commissions, employee benefits, etc.) and 20% for cost of goods sold and services provided (technical infrastructure, hardware, software, bandwidth).
Example of Revenue, Cost, and Profit Projections
The following revenue, cost, and profit figures are projections based on research and analysis, and do not represent any obligation on the part of the Company, either express or implied.(all figures 000,000) Year 1 Year 2 Year 3 Year 4 Year 5
Gross Revenue $2.9 $131.3 $308.4 $438.8 $628.6
G&A $1.1 $1.2 $1.4 $1.5 $1.6
Costs: Goods/Svs. $3.4 $21.2 $39.4 $58.1 $79.5
Pre-Tax Income ($1.7) $108.9 $267.6 $379.2 $547.5
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