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Biotech / Medical : Oxford Health Plan (OXHP) -- Ignore unavailable to you. Want to Upgrade?

To: Thomas Haegin who wrote (834)	1/26/1998 7:51:00 PM
From: jeffbas	Respond to of 2068

I refer you to my recent post commenting on a $125 price (joke). I said to take off the first or last digit. Your analysis just "proved" my point. I think that is also what the stock action is saying.

To: Thomas Haegin who wrote (834)	1/26/1998 8:51:00 PM
From: Johnnie W.	Respond to of 2068

Your analysis is interesting but I worry about OXHP because unlike the old Healthsource it offers the "Cadillac" of health plans. I am not sure anyone in today's day of cheapness, an insuror wants to take on 2 million new clients with caviar taste in healthcare. Most insurors offer cheap plans (must use primary care doctor for referrals, etc) so OXHP may find it hard to find a buyer especially since it is posting losses. I also don't like how the stock is drifting towards new lows.

To: Thomas Haegin who wrote (834)	1/26/1998 9:11:00 PM
From: Tony van Werkhooven	Read Replies (1) \| Respond to of 2068

Thomas- Let me just comment that I do not have a position in OXHP and I have not studied their filings etc. Now the following comments: 1. Indemnity refers to traditional insured plans, in the old days indemnification for loss incurred, subject to deductible and coinsurance and limits. Starting in the early 80's, the industry also developed many versions of indemnity, using Preferred Provider Networks to capture provider discounts. 2. Profitability of indemnity business- "small group" business, insurer has all the risk - employer pays the premium and the insurer holds experience gain or loss. On "large" groups, typically administered by insurer on an ASO (administrative services only) basis, possibly with some stop loss to protect the employer from catasthic loss. This is low margin business. 3. HMO business has traditionally been much more profitable than indemnity business. Although this business has had its snafus- ex. Maxicare in the mid 80's. 4. So, much greater value attached to HMO numbers- probably want to looke to California transactions for better guidance and Aetna/ US healthcare 5. It is my recollection that OXHP is essentially all HMO business- needs to be verified. Some of the plans may have a dual enrollment in an insured plan and HMO (Freedom Plan)- for valuation purposes would consider this HMO 6. In the Healthsource deal, the business was valued at: 1.4 Billion +.25 (debt assumption)- .4 (GAAP Equity)+.15 (good will on the books of Healthsource)=1.4 Billion 7. If we use 1000 per HMO member, we get 1.1 Billion+ 150 per indemnity member, yields .3 Billion. This provides a reasonable split of the 1.4 Billion purchase price. 8. If a use your 2 million hmo lives, would get a value of approx 2 Billion. 9. Positives for Oxford- concentration of business, negatives- concern over earnings prospects for the industry in 1998 and oxford specific problems (known and unknown, and their extent). Please consider my ramblings as input to a process, rather than definitive. Tony