Jerry Vaccaro, M.D.

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.a health and consumer services company making
peoples lives better
Jerry Vaccaro, M.D. SVP, Specialty Health
Businesses
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Specialty Companies

• Best in Class Margins
• Best in Class Care and Service
• Steady Growth and Profitability

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PacifiCare Behavioral HealthCompany Overview
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Downward Spending Leveling Off

• 1988 - 1998
• Behavioral health spending continuously declined,
  reaching a total drop of 54.7
• As a percent of premium, behavioral health
  dropped from 6.2 to 3.1
• 1998 - 1999
• Behavioral health spending experienced its lowest
  drop in a decade of 1.5
• Declining trend appears to have leveled off

U.S. Annual Behavioral Health Spending per
Covered Life
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National Competitive Landscape
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CA Market Share by Revenue
1 in CA
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PBH Today

• In operation since 1986
• 4.3 million members in 12 states
• NCQA accredited in Western, NW Regions
• Only fully accredited MBHO in CA
• CA Knox-Keene licensed

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Internal vs. External Membership
As of June 2002
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PBH Differentiators
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Product Leadership

• ALERTSM
• Best CareSM
• PBH Spectrum
• PBH Caregiver
• Taking Charge of DepressionSM
• Taking ChargeSM Health Improvement Series
• LifeStrategies

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ALERTSM

• Groundbreaking Outcomes Management Program
• Decreases medical errors (35, year one)
• Next generation Provider Report Cards

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Growth Strategy

• Super-Regional Company
• Market Leader in California
• Selective expansion (health plans, Labor/ Trust,
  other niches)
• Evaluate Acquisition Opportunities
• Take advantage of Federal Parity Legislation
• PBH risk-based experience

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Steady Growth
1996 1997 1998
1999 2000 2001 2002 (est.)
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Net Income Analysis(in 000s)
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PacifiCare Dental VisionCompany Overview
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Market at a Glance

• Dental penetration 50-60 purchase dental
  benefits
• Vision penetration 20-40 purchase vision
  benefits
• DHMO growth flat, PPO expanding

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PDV Today

• Largest California DHMO network
• PacifiCare Dental penetration 13
• PacifiCare Vision penetration under 5
• Product offerings in all PacifiCare states

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Growth Strategy

• Super-Regional Company
• Service Excellence 1 in Service
• Maximize penetration within PacifiCare

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Steady Growth
2002 estimate
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Total Commercial Membership Penetration
2002 estimate