Back in July CLCK signed an agreement with Platinum-ICS, Inc. (PICS) for the processing of its national heath card.
I believe that it is on contracts like this one on which CLCK must be most certainly making progress. When I think about the numbers here you can see why I remain so enthusiastic about the future for CLCK shareholders. Once the BestBank/FDIC situation is behind us that we will see a great awakening in this stock. There is already something of a move underway now in the stock. I think the opportunity here for CLCK is absolutely astounding. I honestly believe we will see these cards being processed very soon.
For those of you who don't remember Platinum-ICS is an integrated communication technology and service company, which has recently signed its first health care industry processing, and receivables management contract with Presbyterian Hospital, Greenville, TX. PICS president, Ed Gerhardt said ''Our concept is a new process for handling receivables for healthcare providers. It is a process designed to reduce costs by spreading these costs among multiple providers who serve a common patient. Instead of multiple providers, each sending bills to patients for amounts due from them after insurance processing, now there will be one statement for all of the providers with an easy payment plan.'' This will significantly reduce billing and collection costs and will result in higher collection ratios.
This was just the first of what I hope will be many contract announcements concerning PICS. What does this contract offer to hospitals, providers(physicians), and patients.
According to Gerhardt, the agreement with FICI will give PICS the back room support to expand rapidly throughout Texas, then nationally. Providers pay fees similar to group purchasing arrangements and earn interest from performing accounts receivables. The results are that for the first time healthcare providers can utilize a better process for collecting amounts owed them at a cost that is significantly below what they have previously experienced. As the number of participating providers increase, the cost to each provider will decrease.
PICS plans to expand through Texas and then nationally. ''FICI has devoted a significant amount of time developing the custom software for this program,'' according to President, Ken Klotz, ''but with each participating provider processing all of its patient pay transactions through FICI, we anticipate that will represent a significant increase in revenue for CLCK.'' Gerhardt said that PICS is making plans to manage $1 billion in accounts receivables by the year 2001.
$1 billion in accounts receivable by the year 2000? What might that mean to CLCK?
Let me explain what PICS is doing here. They are offering a services to patients, hospitals, and providers(physicians) services that benefit each one of these groups.
What will PICS do for the patients? Well each patient is issued a medical credit card. The credit card can be used by those patients who qualify to help them pay off their insurance co-payment or in the case of those uninsured the entire balance after medical services are rendered.
What will PICS do for hospitals? Well, they will offer hospitals money for their accounts receivable right up front. The typical hospital has a great deal of trouble collecting their accounts receivables. PICS can act as a third party collection agency. PICS will be less worried about how it looks when they attempt to collect money than the typical religious associated hospital. They will therefore be able to do a much better job of making these collections. If the account is uncollectible after 90 or 120 days then it once again becomes the hospital's problem but it will be PICS's intention to get active payment from as many of the patients as they are able.
The service offered to an individual physician(provider) will be much the same as the hospital but on a more individual basis. Believe me it can be very difficult for a physician to collect money:
stark-stark.com
So what does CLCK get out of this, and in essence, what do we as CLCK
shareholders have to look forward to?
CLCK will provide back room services to PICS. That means CLCK will handle the card processing, billing, statement production etc. Looking over the press release I began to wonder just how many accounts CLCK could be handling if CLCK was processing $1 billion dollars in accounts receivable by the year The average account receivable on a hospital bill runs about $2500 to $3000. PICS's average accounts receivable are probably pretty similar but for the sake of argument lets take the higher figure and try to figure out how many patients CLCK might be processing accounts for in the future. Ok that's $1,000,000,000 divided by $3,000 which gives us 333,333.33 accounts.
CLCK is paid on average the industry standard of approximately $2.00 per account per month for financial data processing and $3.00 per account per month for customer service.
It seems likely that Columbia Capital will be getting paid $5 a month for each account they process. Just for the sake of argument lets say I'm wrong and all they are paid is $3. Well by my calculations CLCK will receive nearly $1 million dollars a month in revenues in 2001 if they are indeed processing $1 billion in accounts receivable. Last quarter CLCK had revenues of $3,678,395. Add in another $1 million each month from what I consider to be very conservative estimate and you can see how the growth of PICS will eventually nearly double current revenues. That will mean a big increase in earnings.
I think that in the months to come we will see that CLCK is making tremendous progress towards becoming a more diversified company. Their Y2K compliance will bring in new accounts in the debit/credit card area . This contract with PICS and the Millennium Health Card contract and others will give CLCK shareholders the brightest possible future to look forward to.
Especially those who buy at these levels.
Regards, Jeff
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